Acquisitions

The Company's 2018 acquisitions are described below. With the exception of the distributor to direct sales conversions, the transactions were accounted for as business combinations. The Company accounts for business combinations under the acquisition method of accounting. This method requires the recording of acquired assets, including separately identifiable intangible assets, and assumed liabilities at their respective acquisition date estimated fair values. The results of operations of the acquired businesses and assets are included in the consolidated statements of income from their respective acquisition dates.

On December 20, 2018, the Company acquired certain assets of Specialty Surgical Instrumentation, Inc., which complement the Company's surgical product portfolio. The aggregate consideration transferred for the assets, which principally consisted of customer relationships of $20.0 million, intellectual property of $3.0 million and $10.0 million of goodwill, was $37.0 million. The finite lived intangible assets are being amortized over a useful life of 15 years.

On October 4, 2018, the Company acquired Essential Medical, Inc., a medical device company that developed the MANTA Vascular Closure Device, which is designed for closure of large bore arteriotomies and complements the Company's interventional product portfolio. The fair value of the consideration transferred was $114.7 million, which included an initial payment of $60.4 million and $54.3 million in estimated fair value of contingent consideration. The contingent consideration liability represents the estimated fair value of the Company's obligations, under the acquisition agreement, to make additional payments of up to $100 million if certain sales and regulatory goals are met. Based on the preliminary purchase price allocation, the assets acquired principally consist of $103.2 million of intellectual property, $2.0 million of customer relationship assets and $30.1 million of goodwill. The intangible assets are being amortized over a useful life of 20 years. The fair value of the contingent consideration was estimated using the Monte Carlo valuation approach. See Note 11 for additional information related to the fair value measurement of the contingent consideration. Goodwill arising from the acquisition represents revenue growth attributable to anticipated increased market penetration from acquired products and future customers and is not tax deductible.

On June 21, 2018, the Company acquired certain assets of QT Vascular LTD, a medical device company that developed and marketed coronary balloon catheters, which complement the Company's interventional product portfolio. The aggregate consideration transferred for the assets, which primarily consisted of intellectual property, was $20.6 million.

During the year ended December 31, 2018, the Company completed several distributor to direct sales conversions. The aggregate consideration transferred by the Company in connection with these transactions was $4.9 million.

Pro forma information for 2018 acquisitions is not presented as the operations of the acquired businesses are not material to the overall operations of the Company.

2017 acquisitions

NeoTract

On October 2, 2017, the Company acquired NeoTract, Inc. ("NeoTract"), a medical device company that developed and commercialized the UroLift System, a minimally invasive medical device for treating lower urinary tract symptoms due to benign prostatic hyperplasia, or BPH. The Company made initial payments of $725.6 million in cash less a favorable working capital adjustment of $1.4 million. Additionally, the estimated fair value of contingent consideration related to NeoTract sales-based milestones as of December 31, 2018 was $234.4 million. The contingent consideration liability represents the estimated fair value of the Company’s obligations, under the acquisition agreement, to make additional payments of up to $300 million in the aggregate if specified sales goals through the end of 2020 are achieved. The Company made a payment of $75.0 million during 2018 as a result of the achievement of a sales goal for the period from January 1, 2018 to April 30, 2018. NeoTract financial information is primarily presented within the Interventional Urology North America operating segment, which is included in the "all other" category in the Company's presentation of segment information.

Vascular Solutions, Inc.

On February 17, 2017, the Company acquired Vascular Solutions, a medical device company that developed and marketed products for use in minimally invasive coronary and peripheral vascular procedures. The aggregate consideration paid by the Company in connection with the acquisition was $975.5 million.

Other acquisitions

During the year ended December 31, 2017, we also completed acquisitions related to our anesthesia and respiratory product portfolios and distributor to direct sales conversions. The total fair value of the consideration related to these acquisitions was $80.1 million.

Pro forma combined financial information

The following unaudited pro forma combined financial information for the years ended December 31, 2017 and 2016, respectively, gives effect to the Vascular Solutions and NeoTract acquisitions as if they were completed at the beginning of the earliest period presented. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have occurred under the ownership and management of the Company.



	2017		2016
	(unaudited)
Net revenue	$	2,255,696	$	2,084,439
Net income	$	119,934	$	106,512
Basic earnings per common share:
Net income	$	2.66	$	2.46
Diluted earnings per common share:
Net income	$	2.57	$	2.24
Weighted average common shares outstanding:
Basic	45,004		43,325
Diluted	46,664		47,646

The unaudited pro forma combined financial information presented above includes the accounting effects of the Vascular Solutions and NeoTract acquisitions, including, to the extent applicable, amortization charges from acquired intangible assets; adjustments for depreciation of property, plant and equipment; interest expense; and the related tax effects.