On November 30, 2022, we completed the acquisition of TSI Healthcare, LLC ("TSI") pursuant to a securities purchase agreement dated November 30, 2022. TSI is based in Chapel Hill, NC and is a value-added reseller of NextGen Practice Management and Electronic Health Record software and solutions.

The purchase price was $50,449, subject to customary working capital and other adjustments. Additionally, under the provisions of the securities purchase agreement, we may pay up to an additional $22,000 of cash contingent consideration in the form of an earnout, subject to TSI achieving certain revenue targets through March 2025. The initial fair value of the contingent consideration was $3,700, which was estimated using a Monte Carlo simulation in a risk-neutral framework. The purchase price of TSI is summarized in the table below. The acquisition of TSI was funded by cash flows from operations and cash proceeds from our convertible senior notes (see Note 11).

We accounted for the acquisition as a business combination using 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 values of acquired assets and liabilities assumed represent management’s estimate of fair value. During the six months ended September 30, 2023, we recorded a measurement period adjustment of $245 to our goodwill associated with the filing of final tax returns. The purchase price allocation of the TSI acquisition was considered final as of September 30, 2023.

Identifiable intangible assets acquired from TSI include re-acquired rights, customer relationships, and data health database. The fair values of the acquired intangible assets were determined using the distributor method of the income approach for customer relationships and the multi-period excess earnings method of the income approach for re-acquired rights and the data health database. The valuation model inputs involved the use of significant assumptions, such as distributor margin and discount rate for customer relationships and revenue forecasts, cost of sales and operating expenses as a percentage of revenue, distributor margin, and discount rate for re-acquired rights, which required the application of significant judgment by management. Goodwill represents the excess of the purchase price over the net identifiable assets acquired and liabilities assumed. Goodwill primarily represents, among other factors, the value of synergies expected to be realized and the assemblage of all assets that enable us to create new client relationships, neither of which qualify as separate amortizable intangible assets. Goodwill arising from the acquisition of TSI is considered deductible for tax purposes.




	Purchase Price
Initial purchase price	$	50,449
Fair value of contingent consideration		3,700
Payment for option to early terminate lease		2,000
Working capital adjustment		(430	)
Total purchase price	$	55,719

Fair value of the net tangible assets acquired and liabilities assumed:
Cash and cash equivalents	$	717
Accounts receivable		2,011
Contract assets		1,415
Prepaid expense and other assets		308
Equipment and improvements		879
Contract assets, net of current		2,581
Operating lease assets		957
Deferred income tax asset		1,028
Other assets		50
Accounts payable		(1,773	)
Accrued compensation and related benefits		(917	)
Contract liabilities		(6,247	)
Operating lease liabilities		(533	)
Other current liabilities		(964	)
Contract liabilities, net of current		(11,644	)
Operating lease liabilities, net of current		(639	)
Total net tangible assets acquired and liabilities assumed		(12,771	)
Fair value of identifiable intangible assets acquired:
Goodwill		54,790
Re-acquired rights		6,250
Customer relationships		5,500
Data health database		1,950
Total identifiable intangible assets acquired		68,490
Total purchase price	$	55,719

The re-acquired rights intangible asset will be amortized over 4 years, the acquired customer relationships intangible assets will be amortized over 11 years, and the acquired data health database intangible asset will be amortized over 3 years. The weighted average amortization period for the acquired TSI intangible assets is 6.8 years.

The results of operations of TSI have been included in our consolidated results of operations since the date of acquisition. The results of operations of TSI were not material to our consolidated results of operations for the six months ended September 30, 2023.

On July 26, 2022, we executed an Asset Purchase Agreement for the sale of certain non-strategic dental related (“Commercial Dental”) assets for $12,000, subject to certain holdback and other adjustments. Total consideration consisted of $11,253 in cash received and $600 additional cash expected to be received approximately twelve months from the close date. We recognized a gain on disposition of $10,296 in our consolidated statement of net income and comprehensive income as a component of other income (expense). The gain was measured as the total consideration received and expected to be received, less net assets and liabilities included in the transaction, consisting primarily of previously capitalized dental related software development costs, and contract liabilities, less direct incremental transaction costs. The impact of the disposition was not significant and does not qualify for

reporting as a discontinued operation because it did not represent a strategic shift that would have a major effect on our operations and financial results.