XML 27 R15.htm IDEA: XBRL DOCUMENT
v3.20.2

GKCE Acquisition | 9 Months Ended
--- | ---
Sep. 30, 2020
Business Combinations [Abstract] |
GKCE Acquisition | GKCE Acquisition On June 18, 2019, the Company entered into a Stock Purchase Agreement (the “Agreement”) to acquire Gamma Knife Center Ecuador S.A. (“GKCE”) from GKCE’s selling majority shareholders. GKCE is a well-established Gamma Knife operation founded in 2009 as a private clinic to introduce advanced stereotactic radiosurgery into Ecuador and continues to operate the only Gamma Knife unit in the country. The Company acquired GKCE for the continued expansion of its business internationally. On June 12, 2020 (the “Closing Date”), the Company acquired approximately 98% of the total outstanding shares of GKCE. As of September 30, 2020, the Company acquired approximately 99.3% of the total outstanding shares of GKCE and intends to acquire the remaining 0.7% at a later date. The fair value of the non-controlling interests (“NCI”) on the Closing Date was approximately $58,000, which was consistent with the purchase price in the executed NCI agreements. The total purchase consideration for 100% of the outstanding shares of GKCE was $2,869,000, including $2,000,000 of base purchase price, subject to certain price adjustments for current assets and liabilities and tax withholding. The base purchase price of $2,000,000 was paid with $575,000 of cash and a $1,425,000 loan from the United States International Development Finance Corporation (“DFC”). The DFC loan is denominated in U.S. dollars, which is also the currency of Ecuador. The price adjustments will be paid by the Company in the post-closing period with the adjustments related to the amount of working capital that GKCE had as of the Closing Date. The first price adjustment for working capital as of the Closing Date was approximately $515,000, which was paid by the Company in August 2020. As of September 30, 2020, the Company owes the withholding taxes related to this payment totaling approximately $43,000. The Company estimates an additional contingent consideration of approximately $354,000 will be remitted to the seller based on the collection of Closing Date accounts receivable balances, net of related costs, during the three-month, six-month and twelve-month periods after the Closing Date. The Company reviewed historical patient treatments, invoice, and collection data from GKCE to determine an appropriate estimate of the contingent consideration at the Closing Date. The acquisition has been accounted for according to ASC 805 Business Combinations using the acquisition method. Under the acquisition method of accounting, all assets acquired, including goodwill and other intangible assets, should be stated on the financial statements at fair value. The allocation of purchase price consideration is preliminary, pending the completion of the fair value of certain tangible, intangible assets, and residual goodwill. During the measurement period, which can be no more than one year from the Closing Date, the Company expects to continue to obtain information to assist in determining the final fair value of assets acquired. The assets acquired were recorded based on valuations derived from estimated fair value assessments and assumptions used by the Company. Thus, the provisional measurements of fair value discussed below are subject to change. The Company expects to finalize the valuation as soon as practicable, but no later than one year from the Closing Date. While the Company believes its estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired, and the resulting amount of goodwill. The major classes of assets and liabilities to which the Company has preliminarily allocated the fair value of purchase price consideration were as follows:
|  |  |  | June 12, 2020
Cash and cash equivalents |  |  |  | $ | 432,000 |
Accounts receivable |  |  |  | 827,000 |
Prepaid expense and other |  |  |  | 22,000 |
Building |  |  |  | 404,000 |
Medical equipment |  |  |  | 319,000 |
Purchased intangible assets |  |  |  | 78,000 |
Goodwill |  |  |  | 1,265,000 |
Total assets acquired |  |  |  | $ | 3,347,000 |
Accounts payable |  |  |  | (193,000) |
Income taxes payable |  |  |  | (136,000) |
Deferred income taxes |  |  |  | (66,000) |
Employee compensation and benefits |  |  |  | (83,000) |
Total liabilities assumed |  |  |  | $ | (478,000) |
Consideration allocated to assets acquired and liabilities assumed |  | $ | 2,869,000 |
First working capital payment |  |  |  | $ | (515,000) |
Estimated subsequent working capital payment |  |  |  | (354,000) |
Base purchase consideration |  |  |  | $ | 2,000,000 |
The Company has allocated the purchase price of GKCE to the tangible assets, liabilities, and intangible asset acquired, based on their estimated fair values. Goodwill of $1,265,000 represents the excess of the purchase price consideration over the fair value of the identifiable tangible and intangible assets assumed of $801,000. The Company believes the amount of goodwill resulting from the acquisition is primarily attributable to expected synergies from an assembled and trained workforce and enhanced opportunities for growth and innovation. The goodwill resulting from the acquisition is not tax deductible. The preliminary value of the acquired tangible assets acquired are as follows:
| Fair Value |  | Useful Life (in Years) |
Building | $ | 404,000 |  |  | 20 |
Medical equipment | 302,000 |  |  | 2 |
Other fixed assets | 17,000 |  |  | 2 |
Total tangible assets | $ | 723,000 |  |  |  |
The Company also acquired intangible assets with a fair value of $78,000. The intangible asset identified was GKCE's trade name and the Company assigned an indefinite useful life to the asset. The Company incurred costs related to the acquisition of approximately $93,000 for the three-month period ended June 30, 2020 and $69,000 for the three-month period ended September 30, 2020. All acquisition related costs were expensed as incurred and have been recorded in selling and administrative expense in the Company's condensed consolidated statement of operations. The revenue and earnings of GKCE have been included in the Company’s condensed consolidated results since the Closing Date and are not material to the Company’s consolidated financial results. Historical financial statements and pro forma results of the operations of GKCE as if the Acquisition occurred earlier than the Closing Date have not been presented, as the applicable significance thresholds are not exceeded by the Acquisition and the corresponding requirements to provide historical financial statements and corresponding pro forma financial information are not applicable to the Acquisition. In addition, the Company believes that the financial impact of the Acquisition to the Company’s condensed consolidated financial statements is not material and such historical financial information and pro forma financial information would not be meaningful for investors and financial statement users.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration