Acquisition of Molecular Profiles Limited

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Acquisition of Molecular Profiles Limited

(3) Acquisition of Molecular Profiles Limited

On September 12, 2013, Columbia acquired all of the outstanding capital stock of Molecular Profiles Limited (“Molecular Profiles”), a U.K.-based pharmaceutical development services company. The main service lines that have been added to our portfolio as a result of the acquisition include:

• Formulation, scale-up and clinical trial manufacturing supply service;

• Advanced physical and chemical analysis; and,

• Consulting services.

The acquisition expands Columbia’s business model and customer base while diversifying the Company’s revenue streams. With the addition of Molecular Profiles, the Company has broadened its technical expertise in the field of pharmaceutical development and analytical services. As a result of the transaction, former Molecular Profiles stockholders, in the aggregate received for their shares of Molecular Profiles common stock $16.7 million in cash and 1,051,323 shares of Columbia common stock. The total consideration is valued at $24.9 million, based upon the closing price of Columbia’s common stock on September 12, 2013. The goodwill recognized is attributable to expected synergies as the formulation, clinical trial manufacturing and consulting business lines are integrated into Columbia’s business model. The goodwill is deductible for tax purposes. Columbia accounted for this transaction using the acquisition method under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations.

Columbia has retained an independent valuation firm to assess the fair value of the identifiable intangible assets acquired and is currently assessing the fair value of other assets acquired and liabilities assumed and plans to file pro forma financial information with the SEC within the applicable time period. Columbia has preliminarily allocated the purchase price to the net tangible and intangible assets based on their estimated fair values as of September 12, 2013. As such, the assets acquired and liabilities assumed, including intangible assets, presented in the table below are provisional and will be finalized in a later period once the fair value procedures are completed.

The following table summarizes the preliminary purchase price allocation, net of the cash and debt acquired:

Purchase price:
Cash and stock paid	$	24,852,511
Cash acquired		(2,230,514	)
Debt assumed		3,889,486
Purchase price, net	$	26,511,483
Assets (liabilities) acquired:
Accounts receivable	$	3,583,614
Prepaid expenses and other current assets		970,380
Property and equipment		11,690,239
Goodwill		15,201,557
Accounts payable		(999,539	)
Accrued expenses		(1,045,389	)
Deferred revenue		(2,889,379	)
Total	$	26,511,483

Revenue related to Molecular Profiles operations was $0.6 million following the September 12, 2013 acquisition date, and is included in Columbia’s consolidated statements of operations for the three and nine months ended September 30, 2013. As a result of the integration of the operations of Molecular Profiles into Columbia’s operations, disclosure of earnings included in the accompanying consolidated statements of operations since the acquisition date is not practicable.

The following unaudited pro forma condensed consolidated operating results for the three and nine months ended September 30, 2013 and 2012 summarize the combined results of operations for Columbia and Molecular Profiles. The unaudited pro forma consolidated operating results include the business combination accounting effects as if the acquisitions had been completed as of January 1, 2012 (for both the 2013 and 2012 period results). These pro forma amounts are for informational purposes only and are not indicative of the operating results that would have occurred if the transaction had occurred on such date. No effect has been given for synergies, if any, that may be realized through the acquisition.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012		2013		2012
Revenue	$	9,518,660		$	8,967,687	$	28,267,722	$	23,874,436
Pre-tax (loss) income		(3,083,927	)		872,798		778,009		7,507,825

For the three and nine months ended September 30, 2013, Columbia recorded $0.9 million and $1.0 million, respectively, in costs associated with the acquisition of Molecular Profiles. These amounts are recorded as operating expenses in the general and administrative line on the consolidated statements of operations.