XML 25 R11.htm IDEA: XBRL DOCUMENT v3.19.1
Business Combinations
12 Months Ended
Mar. 31, 2019
Business Combinations [Abstract]  
Business Combinations

5. Business Combinations

On January 31, 2018, we completed the acquisition of Inforth Technologies, LLC ("Inforth") pursuant to the Membership Interest Purchase Agreement, dated January 31, 2018. Headquartered in Traverse City, MI, Inforth was one of our premier clinical content and technical services partners specializing in comprehensive solutions for physician practices. The purchase price of Inforth totaled $4,337 and was funded by cash flows from operations. The acquisition of Inforth also included contingent consideration up to an additional $4,000 of cash in the form of an earnout, subject to Inforth achieving certain applicable bookings targets through March 31, 2020. The initial estimated fair value of the contingent consideration was zero based on a Monte Carlo-based valuation model that considered, among other assumptions and inputs, our estimate of projected Inforth applicable bookings. As of March 31, 2019, the fair value of the contingent consideration was $1,000 (see Note 4).

On August 16, 2017, we completed the acquisition of EagleDream Health, Inc. ("EagleDream") pursuant to the Agreement and Plan of Merger, dated July 31, 2017. Headquartered in Rochester, NY, EagleDream provides cloud-based analytics that drives meaningful insight across clinical, financial and administrative data to optimize practice performance. The purchase price of EagleDream totaled $25,609, which included certain working capital and other customary adjustments, and was partially funded by a draw against our revolving credit agreement (see Note 9).

On April 14, 2017, we completed our acquisition of Entrada, Inc. ("Entrada") pursuant to the terms of the Agreement and Plan of Merger, dated April 11, 2017. Based in Nashville, TN, Entrada is a leading provider of cloud-based solutions that are reshaping the way care is delivered by leveraging the power of mobile whenever and wherever care happens. Entrada’s best-in-class mobile application integrates with multiple clinical platforms and all major electronic health record systems. Entrada enables organizations to maximize their existing technology investments while simultaneously enhancing physician and staff productivity. The acquisition of Entrada and its cloud-based, mobile application is part of our commitment to deliver systematic solutions that meet its clients' transforming work requirements to become increasingly nimble and mobile. The purchase price of Entrada totaled $33,958, which included certain working capital and other customary adjustments and was primarily funded by a draw against our revolving credit agreement (see Note 9).

We accounted for the acquisitions noted above as purchase business combinations using the acquisition method of accounting. The purchase price allocations of the Inforth, EagleDream, and Entrada acquisitions are considered final.

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 dates. 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 Inforth is considered deductible for tax purposes, and goodwill arising from the acquisitions of EagleDream and Entrada are not deductible for tax purposes.

The final purchase price for the acquisitions of Inforth, EagleDream, and Entrada are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Inforth

 

 

EagleDream

 

 

Entrada

 

Initial purchase price

$

4,000

 

 

$

26,000

 

 

$

34,000

 

Settlement of pre-existing net liabilities

 

337

 

 

 

 

 

 

 

Working capital and other adjustments

 

 

 

 

(391

)

 

 

(42

)

Total purchase price

$

4,337

 

 

$

25,609

 

 

$

33,958

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of the net tangible assets acquired and liabilities assumed:

 

 

 

 

 

 

 

 

 

 

 

Acquired cash and cash equivalents

$

25

 

 

$

573

 

 

$

102

 

Accounts receivable

 

6

 

 

 

217

 

 

 

1,836

 

Prepaid expense and other current assets

 

 

 

 

20

 

 

 

145

 

Equipment and improvements

 

 

 

 

 

 

 

163

 

Capitalized software costs

 

 

 

 

 

 

 

364

 

Deferred income tax asset

 

 

 

 

 

 

 

117

 

Accounts payable

 

 

 

 

(115

)

 

 

(639

)

Accrued compensation and related benefits

 

(49

)

 

 

(691

)

 

 

(120

)

Deferred revenues

 

 

 

 

(394

)

 

 

(234

)

Deferred income tax liability

 

 

 

 

(1,707

)

 

 

 

Other liabilities

 

(22

)

 

 

(122

)

 

 

(444

)

Total net tangible assets acquired and liabilities assumed

 

(40

)

 

 

(2,219

)

 

 

1,290

 

Fair value of identifiable intangible assets acquired:

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

1,177

 

 

 

14,428

 

 

 

17,268

 

Software technology

 

3,200

 

 

 

12,800

 

 

 

10,500

 

Customer relationships

 

 

 

 

600

 

 

 

3,300

 

Trade name

 

 

 

 

 

 

 

1,600

 

Total identifiable intangible assets acquired

 

4,377

 

 

 

27,828

 

 

 

32,668

 

Total purchase price

$

4,337

 

 

$

25,609

 

 

$

33,958

 

 

As noted in the table above, we recorded $3,200 of Inforth intangible assets related to software technology, which is being amortized over 5 years. We recorded $13,400 of EagleDream intangible assets related to customer relationships and software technology, which are being amortized over 8 years and 5 years, respectively. The weighted average amortization period for the acquired EagleDream intangible assets is 5.1 years. We also recorded $15,400 of Entrada intangible assets related to customer relationships, trade names, and software technology, which are being amortized over 10 years, 5 years, and 5 years, respectively. The weighted average amortization period for the acquired Entrada intangible assets is 6.1 years.

During the year ended March 31, 2018, we recorded a measurement period adjustment of $274 to EagleDream goodwill related to liabilities which existed at the time of acquisition, partially offset by changes in deferred taxes based on the filing of tax returns, and a measurement period adjustment of $924 to Entrada goodwill related to changes in deferred taxes based on the filing of tax returns.

The revenues, earnings, and pro forma effects of the Inforth, EagleDream, and Entrada acquisitions would not have been material to our results of operations, individually and in aggregate, and are therefore not presented.