Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.24.2.u1
Acquisitions
6 Months Ended
Jun. 30, 2024
Business Combinations [Abstract]  
Acquisitions

3. Acquisitions

On July 10, 2023, the Company entered into a share purchase agreement to acquire Physio-Assist, which is in the business of the design, production, and marketing of medical devices for bronchial decongestion (airway clearance technique) for patients suffering from obstructive respiratory diseases. On September 14, 2023, the Company completed the acquisition of all of the issued and outstanding capital stock of Physio-Assist and its wholly-owned subsidiary PhysioAssist GmbH for a purchase price consisting of $32,250 in cash consideration and the fair value of a potential earnout of $3,178 based on future regulatory clearances.

A potential earnout payment of either $13,000 (without a clinical trial requirement) or $11,000 (with a required clinical trial less related development costs) is dependent upon the achievement of one of two milestones related to U.S. Food and Drug Administration (FDA) de novo authorization or 510(k) clearance for the Simeox Airway Clearance System within four years of the date of the closing of the transaction. The fair value of the earnout liability was measured using the probability weighted expected return methodology and was discounted using a rate and probability that appropriately captures the risk associated with the obligation.

Assets and liabilities of the acquired company were recorded at their estimated fair values at the date of acquisition. The excess purchase price over the fair value of net tangible assets and identifiable intangible assets acquired has been allocated to goodwill. Goodwill represents the expected synergies with the existing business, the acquired assembled workforce, and future cash flows after the acquisition. The fair value assigned to the identifiable intangible assets was determined primarily by using the excess earnings method. The key assumptions included in the excess earnings method included revenue recognized, cost of revenue, and the discount rate.

The Company's allocation of the purchase price of Physio-Assist is preliminary and any measurement period adjustments that result from the finalization of the purchase price allocation will be recorded retrospectively to the acquisition date. Changes are possible and could change the allocation of the purchase price.

The following table summarizes the preliminary allocation of the purchase price over the estimated fair value of the assets acquired and liabilities assumed in the acquisition of Physio-Assist:

Cash

 

$

2,617

 

Accounts receivable

 

 

184

 

Inventories

 

 

296

 

Other assets

 

 

325

 

Property and equipment

 

 

82

 

Operating lease right-of-use asset

 

 

306

 

Intangible assets

 

 

34,100

 

Goodwill

 

 

9,755

 

Total assets acquired

 

$

47,665

 

 

 

 

 

Accounts payable and accrued expenses

 

$

1,108

 

Bank loans

 

 

1,922

 

Other current liabilities

 

 

376

 

Operating lease liability

 

 

306

 

Deferred tax liability - noncurrent

 

 

8,525

 

Total liabilities assumed

 

 

12,237

 

Total identifiable net assets

 

$

35,428

 

 

 

 

 

Cash consideration

 

$

32,250

 

Fair value of contingent earnout consideration

 

 

3,178

 

Total purchase price

 

$

35,428

 

The consolidated financial and operating results reflect the Physio-Assist operations beginning September 14, 2023. The following unaudited pro forma information for the three and six months ended June 30, 2023 presents total revenue and net loss assuming the acquisition of Physio-Assist had occurred as of January 1, 2023.

 

 

Three months ended

 

 

Six months ended

 

 

 

June 30, 2023

 

 

June 30, 2023

 

Total revenue

 

$

84,366

 

 

$

157,374

 

Net loss

 

$

(10,081

)

 

$

(30,770

)