Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired. Goodwill is tested annually for impairment at the reporting unit level during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. There were no indicators of impairment in the three months ended March 31, 2020. The following table presents details of the Company's goodwill for the three months ended March 31, 2020 (in thousands): Total Balance as of January 1, 2020 $ 23,857 Goodwill acquired — Balance as of March 31, 2020 $ 23,857 Intangible Assets The following tables present details of the Company’s intangible assets as of March 31, 2020 ($ in thousands): March 31, 2020 Gross Accumulated Foreign Net Carrying Weighted Average Remaining Intangible assets with finite lives: Acquired and developed technology $ 29,106 $ (7,063) $ (2,480) $ 19,563 9.4 Customer relationships 18,168 (3,709) (2,051) 12,408 11.6 Commercialization rights 8,079 (433) — 7,646 9.4 Trademarks and tradenames 2,360 (663) (305) 1,392 10.4 Total intangible assets with finite lives $ 57,713 $ (11,868) $ (4,836) $ 41,009 Acquired in-process technology 2,103 — — 2,103 Total intangible assets $ 59,816 $ (11,868) $ (4,836) $ 43,112 The following table presents details of the Company’s intangible assets as of December 31, 2019 ($ in thousands): 12/31/2019 Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Weighted Average Remaining Useful Life (In Years) Intangible assets with finite lives: Acquired and developed technology $ 29,106 $ (6,473) $ (1,852) $ 20,781 8.2 Customer relationships 18,168 (3,397) (1,498) 13,273 10.1 Commercialization rights 8,079 (231) — 7,848 9.7 Trademarks and tradenames 2,360 (618) (206) 1,536 9.1 Total intangible assets with finite lives $ 57,713 $ (10,719) $ (3,556) $ 43,438 Acquired in-process technology 2,103 — — 2,103 Total intangible assets $ 59,816 $ (10,719) $ (3,556) $ 45,541 Acquisition of intangible assets Cibiltech License and Commercialization Agreement Effective April 30, 2019, the Company entered into a license and commercialization agreement (the “Cibiltech Agreement”) with Cibiltech SAS (“Cibiltech”). Cibiltech is a French company engaged in the development and support of predictive medicine and artificial intelligence software, services and technology, with an emphasis on personalized patient care and clinical research, including its proprietary software and service offering known in the U.S. as KidneyCare iBox for the predictive analysis of post-transplantation kidney allograft loss. The Cibiltech Agreement provides the Company with an irrevocable, non-transferable right to commercialize Cibiltech’s proprietary software in the field of transplantation in the U.S. for a period of ten years. The Company estimated the fair value of the acquired commercialization rights intangible asset based on expected contractual payments discounted to present value using a discount rate of 6%. In September 2019, the Company initiated the OKRA clinical study, which incorporates KidneyCare iBox. On such date, the Company commenced amortization of the acquired commercialization intangible asset. On July 26, 2019, pursuant to the Cibiltech Agreement, the Company purchased $1.0 million of convertible preferred shares of Cibiltech, which is recorded in other assets. The Company does not have a significant influence on Cibiltech’s operations. The net carrying amount of intangible assets and the related amortization expense of intangible assets may change due to the effects of foreign currency fluctuations as a result of acquiring an entity with a functional currency other than the U.S. dollar. Amortization expense was $1.1 million and $0.6 million for the three months ended March 31, 2020 and 2019, respectively. For the three months ended March 31, 2020, expenses of $0.8 million and $0.3 million were amortized to cost of revenue and sales and marketing expense, respectively. For the three months ended March 31, 2019, expenses of $0.3 million and $0.3 million were amortized to cost of product and sales and marketing expense, respectively. The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of March 31, 2020 (in thousands): Years Ending December 31, Cost of Sales and Total Remainder of 2020 $ 2,341 $ 1,048 $ 3,389 2021 3,081 1,209 4,290 2022 3,081 1,192 4,273 2023 3,081 1,192 4,273 2024 3,081 1,192 4,273 Thereafter 12,547 7,964 20,511 Total future amortization expense $ 27,212 $ 13,797 $ 41,009 |