Business Combinations

12 Months Ended

Mar. 31, 2011

5. Business Combinations

On February 10, 2010, the Company acquired Opus, a provider of clinical information systems to the small hospital inpatient market. The Opus purchase price totaled $21,113, which includes a fair value adjustment of $532 to goodwill and the contingent consideration liability that was recorded during the year ended March 31, 2011. The fair value of the total Opus contingent consideration of $12,048 was estimated at the time of purchase based on the probability of Opus achieving certain earnout payments to be paid over a two year period to the selling security holders and former stock option holders (“option holders”) of Opus if certain operational and strategic objectives were met.

On March 30, 2011, the Company entered into an amendment to the merger agreement to early terminate the terms of the earnout under the original merger agreement for $12,250, payable in 143,000 shares of Company common stock to the selling security holders and $856 in cash to the option holders.

The fair value of the Opus earnout settlement was $12,743, which is the fair value of the Opus contingent consideration recorded in other current liabilities as of March 31, 2011. In reviewing the final settlement, the Company identified an error in the initial purchase price allocation related to the fair value of the price collar provisions in the merger agreement. As a result, the Company recorded an adjustment of $532 to goodwill and contingent consideration liability to correct the initial purchase price allocation as of February 10, 2010. The Company has concluded that this correction is not material to any periods affected.

On August 12, 2009, the Company acquired NextGen IS, a provider of financial information systems to the small hospital inpatient market. The NextGen IS purchase price totaled $1,374, including contingent consideration payable over a five year period, consisting of maintenance revenue and license fee payments, estimated at approximately $1,074 based on the probability of achieving certain business milestones, but which in no event shall exceed $2,500.

The Company accounted for the Opus and NextGen IS acquisitions as a purchase business combination as defined in FASB ASC Topic 805, Business Combinations, or ASC 805. Under the acquisition method of accounting, the purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The fair value of the assets acquired and liabilities assumed represent management’s estimate of fair value. The estimated fair value of the acquired tangible and intangible assets and liabilities assumed were determined using multiple valuation approaches depending on the type of tangible or intangible asset acquired, including but not limited to the income approach, the excess earnings method as well as the relief from royalty method approach.

The total purchase price for Opus and NextGen IS is summarized as follows:


	Opus		NextGen IS
Cash paid	$	250	$	300
Common stock issued at fair value		8,815		—
Contingent consideration		12,048		1,074


Total purchase price	$	21,113	$	1,374

The following table summarizes the final allocation of the Opus and NextGen IS purchase price:


	Opus			NextGen IS
Fair value of the net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	$	2,036		$	—
Current assets (including accounts receivable of $1,753 and $158 for Opus and NextGen IS, respectively)		3,435			158
Equipment and improvements and other long-term assets		483			—
Accounts payable and accrued liabilities		(7,678	)		—
Current liabilities, including long-term debt due within one year		—			(79	)
Deferred revenues		(3,950	)		—


Total tangible assets acquired and liabilities assumed		(5,674	)		79

Fair value of identifiable intangible assets acquired:
Customer relationships		1,250			156
Software technology		12,000			119
Goodwill (including assembled workforce of $1,000 and and $84 for Opus and NextGen IS, respectively)		13,537			1,020


Total identifiable intangible assets acquired		26,787			1,295


Total purchase price	$	21,113		$	1,374

The pro forma effects of the Opus and NextGen IS acquisitions would not have been material to the Company’s results of operations for the year ended March 31, 2010 and is therefore not presented.