Goodwill, In-Process Research and Development and Intellectual Property

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, In-Process Research and Development and Intellectual Property

Goodwill

Goodwill of $93.8 million was recorded in connection with the Merger, as described in Note 1, goodwill of $38.3 million was recorded in connection with the Senhance Acquisition, as described in Note 3, and goodwill of $9.6 million was recorded in connection with the MST Acquisition, as described in Note 3. The carrying value of goodwill and the change in the balance for the nine months ended September 30, 2019 is as follows:



	Goodwill
	(In thousands) (unaudited)
Balance at December 31, 2018	$80,131
Impairment	(78,969		)
Foreign currency translation impact	(1,162		)
Balance at September 30, 2019	$	—

As of September 30, 2019, goodwill was deemed to be fully impaired, and the Company recorded an impairment charge of $79.0 million. See Note 2. No impairment was recorded during the nine months ended September 30, 2018.

Accumulated impairment of goodwill as of September 30, 2019 and December 31, 2018 was $140.8 million and $61.8 million, respectively.

In-Process Research and Development

As described in Note 3, on October 31, 2018, the Company acquired the MST assets, technology and business from MST and recorded $10.6 million of IPR&D. The estimated fair value of the IPR&D was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 15% and cash flows that have been probability adjusted to reflect the risks of product integration, which the Company believes are appropriate and representative of market participant assumptions.

As of September 30, 2019, IPR&D was deemed to be significantly impaired, and the Company recorded an impairment charge of $7.9 million. See Note 2.

The carrying value of the Company’s IPR&D assets and the change in the balance for the nine months ended September 30, 2019 is as follows:



	In-Process Research and Development
	(In thousands) (unaudited)
Balance at December 31, 2018	$	10,747
Impairment	(7,912		)
Foreign currency translation impact	(435		)
Balance at September 30, 2019	$	2,400

Intellectual Property

As described in Note 3, on September 21, 2015, the Company acquired all of the developed technology related to the Senhance System and recorded $48.5 million of intellectual property. The estimated fair value of the intellectual property was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 45% and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions.

As described in Note 3, on September 21, 2015, the Company acquired all of the assets related to the Senhance System and recorded $17.1 million of IPR&D. The estimated fair value of the IPR&D was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 45% and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions. On October 13, 2017, upon regulatory approval and the ability to commercialize the products associated with the IPR&D assets, the assets were deemed definite-lived, reclassified to intellectual property and are now being amortized based on their estimated useful lives.

The components of gross intellectual property, accumulated amortization, and net intellectual property as of September 30, 2019 and December 31, 2018 are as follows:



	September 30, 2019									December 31, 2018
	(In thousands) (unaudited)									(In thousands)
	Gross Carrying Amount		Accumulated Amortization			Foreign currency translation impact		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Foreign currency translation impact		Net Carrying Amount
Developed technology	$	66,413	$	(38,272	)	$	1,838	$	29,979	$	66,413	$	(30,550	)	$	3,495	$	39,358
Technology and patents purchased	400		(104		)	14		310		400		(72		)	30		358
Total intellectual property	$	66,813	$	(38,376	)	$	1,852	$	30,289	$	66,813	$	(30,622	)	$	3,525	$	39,716

The weighted average remaining useful life of the developed technology and technology and patents purchased was 3.0 years and 7.6 years, respectively as of September 30, 2019. The weighted average remaining useful life of the developed technology and technology and patents purchased was 3.8 years and 8.3 years, respectively as of December 31, 2018.