Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2019

2019 Divestitures

On February 4, 2019, we sold substantially all of the assets related to our vein catheter reprocessing business for $12.6 million. We recognized a $2.7 million pre-tax gain on the sale of assets, which represents the excess of the $9.7 million fair value of consideration received over the carrying value of the assets sold. In connection with the sale, the purchaser of the assets issued a secured promissory note to us in the principal amount of $10.5 million. The purchaser's obligations under the notes are secured by a lien on substantially all of the purchaser's assets. The purchaser is obligated to repay the principal amount of the promissory note in annual installments of $2.1 million on each of the first five anniversaries of the date of sale. On the date of sale, the fair value of the promissory note was $7.6 million, which we calculated by applying a discount rate determined after taking into account the creditworthiness of the purchaser. As of December 31, 2019, we had $6.8 million in receivables related to the promissory note, of which $2.3 million and $4.5 million are included in accounts receivable, net and other assets, respectively, within the consolidated balance sheet.

2018 Acquisitions

In October 2018, we 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 our 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 our obligations (using a Monte Carlo valuation approach), under the acquisition agreement, to make additional payments of up to $100 million if certain sales and regulatory goals are met. See Note 12 for additional information related to the fair value measurement of the contingent consideration. Based on the 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. 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.

Other acquisitions

During 2018, we also completed acquisitions related to our surgical and interventional product portfolios and distributor to direct sales conversions. The total fair value of the consideration transferred in connection with these transactions was $62.5 million.

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

Pro forma combined financial information

The following unaudited pro forma combined financial information for the years ended December 31, 2017 gives effect to the 2017 acquisitions of Vascular Solutions, Inc. ("Vascular Solutions") and NeoTract, Inc ("NeoTract") as if they were completed at the beginning of 2016. The operating results of the Vascular Solutions and NeoTract acquisitions are included in our interventional and interventional urology product categories, respectively. 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 our ownership and management.


	2017

	(unaudited)
Net revenue	$	2,255,696
Net income	$	119,934
Basic earnings per common share:
Net income	$	2.66
Diluted earnings per common share:
Net income	$	2.57
Weighted average common shares outstanding:
Basic	45,004
Diluted	46,664

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.

Supplemental cash flow information


	Year Ended December 31,
	2019		2018		2017
	(Dollars in thousands)
Non cash investing and financing activities of continuing operations:
Acquisition of businesses	$	—	$	54,696	$	261,733