Goodwill

The Company does not amortize goodwill as it has been determined to have an indefinite useful life.

Goodwill by division consists of the following:



	March 31, 2012		Acquisitions		December 31, 2012
QSI Dental Division
ViaTrack Systems, LLC	$	7,289	$	—	$	7,289
Total QSI Dental Division goodwill	7,289		—		7,289
NextGen Division
NextGen Healthcare Information Systems, LLC	1,840		—		1,840
Total NextGen Division goodwill	1,840		—		1,840
Hospital Solutions Division
The Poseidon Group, Inc.	—		419		419
CQI Solutions, Inc.	4,863		—		4,863
IntraNexus, Inc.	1,903		—		1,903
Opus Healthcare Solutions, Inc.	13,537		—		13,537
Sphere Health Systems, Inc.	1,020		—		1,020
Total Hospital Solutions Division goodwill	21,323		419		21,742
RCM Services Division
Matrix Management Solutions, LLC	—		1,966		1,966
Practice Management Partners, Inc.	19,485		—		19,485
Healthcare Strategic Initiatives	10,839		—		10,839
Total RCM Services Division goodwill	30,324		1,966		32,290
Total goodwill	$	60,776	$	2,385	$	63,161

During the quarter ended December 31, 2012, certain events and circumstances indicated the possibility that the carrying amount of goodwill of the Hospital Solutions Division (“Hospital reporting unit”) could potentially be impaired. The primary factor giving rise to this consideration was the recent operating performance of the Hospital reporting unit which reported a net loss from operations for both the quarters ended September 30, 2012 and December 31, 2012. Prior to these periods, the Hospital reporting unit had consistently generated income from operations. In the quarter ended September 30, 2012, the Hospital reporting unit began experiencing a decline in operating performance attributable to the aggregation of several factors, including: a) higher costs related to the expansion of implementation and support infrastructure; b) increased investment in selling, general, and administrative costs; c) a reduction in maintenance revenue; d) comparatively lower system sales revenues, and e) higher levels of sales credits. As of September 30, 2012, the circumstances that gave rise to the operating loss for the quarter then ended did not appear to be long-term in nature. However, prior to the end of the quarter ended December 31, 2012, the Company anticipated that the Hospital reporting unit would incur a sequential operating loss. Such expectation indicated that the goodwill of the Hospital reporting unit could potentially be impaired.

Based upon the above, the Company performed an assessment of the fair value of all of its reporting units, which concluded that all reporting units have a fair value in excess of 100% of their respective carrying amounts, with the exception of the Hospital reporting unit, which had an excess of fair value over its carrying amount of approximately 30%. Total goodwill in this division as of December 31, 2012 is $21.7 million. As a result, the Company concluded that no goodwill impairment existed in any of its reporting units as of December 31, 2012. The Company will continue to monitor the operating performance of its reporting units in future periods, however, for evidence of additional indicators of potential impairment.

The assessment of fair value of all of our reporting units during the quarter ended December 31, 2012 was based upon discounted cash flow analysis and a market approach, in which the valuation of comparable business enterprises is considered. The total of the values ascribed to the components of our business was also evaluated in light of our market capitalization, as of the valuation date.

Key assumptions affecting the results of the discounted cash flow analysis include our future revenues and operating margins. For the Hospital Solutions Division, revenue-related assumptions include sustained growth in revenues from future systems sales and improvements in operating efficiency, over time. We believe that sustained growth in our system sales will be achievable if we are able to effectively execute our growth strategies, including the expanded use of the NextGen Division sales force to cross sell hospital products to both new and existing NextGen Division customers. We also believe that we will be able to generate operational improvements and efficiencies in our implementation of new customers and that there continues to be meaningful opportunity in the Hospital Solutions Division market. Though we have confidence in our assumptions and the future performance of the Hospital Solutions Division, if the Hospital Solutions Division fails to achieve sustained revenue growth and improved operating margins, the fair value of the reporting unit could be negatively impacted, resulting in an impairment of goodwill and/or other intangible assets.