Acquisitions (Notes)

12 Months Ended

Dec. 31, 2021

Business Combination Disclosure [Text Block]

ACQUISITIONS

2019 Acquisitions

On November 2, 2019, we acquired 100% interest in Pursuit for cash consideration of approximately $75.0 million. Additionally, Pursuit's equity holders were potentially entitled up to $50.0 million in additional cash consideration contingent upon the achievement of certain sales and gross profit targets for specific customers. The earn-out paid was calculated as a percentage of gross profit achieved during the earn-out period against a pre-determined target gross profit, not to exceed $50.0 million. As of June 30, 2021, the earn-out measurement period ended and based on the actual sales and gross profit achieved during the measurement period, we calculated the actual earn-out amount to be $26.3 million. The $26.3 million earn-out calculation was finalized and accepted by Pursuit's former equity holders and was paid out in during the fourth quarter of 2021. The acquisition of Pursuit and their ClearGuard HD is a natural extension of our needlefree IV connector and other infection control technologies, which together provides us the best of breed solutions.

Final Purchase Price

The following table summarizes the final purchase price and the final allocation of the purchase price related to the assets and liabilities purchased (in thousands):


Cash consideration for acquired assets, net	$	71,533
Fair value of contingent consideration	17,300
Total Consideration	$	88,833

Final Purchase Price Allocation:
Trade receivables	$	973
Inventories	2,464
Prepaid expenses and other current assets	74
Property, plant and equipment	609
Intangible assets(1)	82,300
Accounts payable	(215)
Accrued liabilities	(2,065)
Total identifiable net assets acquired	$	84,140
Goodwill - not tax deductible	20,462
Deferred tax liability	(15,769)
Purchase Consideration	$	88,833

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(1) Identifiable intangible assets included $69.0 million of developed technology, $10.8 million of trade name and $2.5 million of non-compete agreement. The weighted-average amortization periods for the identifiable intangible assets are as follows: approximately fifteen years for developed technology, fifteen years for trade name and three years for the non-compete agreement.

The identifiable intangible assets acquired have been valued as Level 3 assets at fair market value. The estimated fair value of identifiable intangible assets were developed using the income approach and are based on critical estimates, judgments and assumptions derived from: analysis of market conditions; discount rate; discounted cash flows; royalty rates; and estimated useful lives. Fixed assets were valued with the consideration of remaining economic lives. The raw materials inventory was valued at historical cost and adjusted for any obsolescence and finished goods inventory was valued at estimated sales proceeds less a nominal profit and costs to sell. The trade receivables, prepaid expenses and other current assets and assumed liabilities were recorded at their carrying values as of the date of the acquisition, as their carrying values approximated their fair values due to their short-term nature.

During 2019, we also acquired a small foreign distributor for approximately $4.6 million in cash.

2021 Acquisitions

During November 2021, we acquired a small foreign infusion systems supplier and paid an initial gross cash payment of approximately $15.4 million. The total consideration and purchase price allocation is preliminary pending the finalization of the valuation. In addition to the initial cash consideration, total consideration for the acquisition includes an additional holdback of $0.5 million, to be paid two years from the completion date of the acquisition, and also a potential earn-out payment of up to $2.5 million, consisting of (i) a cash payment of $1.0 million contingent on the achievement of certain revenue targets for the annual period ending December 31, 2022 and, separately, (ii) a cash payment of $1.5 million contingent on certain product-related regulatory certifications obtained by May 26, 2024.