Business Combination Disclosure [Text Block] | 3. Business Combinations Parcus Medical, LLC On January 24, 2020, January 4, 2020 ( The acquisition of Parcus Medical has been accounted for as a business combination under ASC 805. 805, Business Combinations, January 24, 2020 Consideration Transferred Pursuant to the Parcus Medical Merger Agreement, the Company acquired all outstanding equity of Parcus Medical for estimated total purchase consideration of $75.1 million, as of January 24, 2020, Cash consideration $ 32,794 Deferred consideration 1,642 Estimated fair value of contingent consideration 40,700 Estimated total purchase consideration $ 75,136 Contingent consideration represents additional payments that the Company may 2020 2022. January 24, 2020 one December 31, 2020. 4, Fair Value Measurements June 30, 2021 December 31, 2020. Acquisition-related costs are not three March 31, 2020. March 31, 2020 Fair Value of Net Assets Acquired The estimate of fair value as of the acquisition date required the use of significant assumptions and estimates. Critical estimates included, but were not may The allocation of purchase price to the identifiable assets acquired and liabilities assumed was based on estimates of fair value as of January 24, 2020, Recognized identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 196 Accounts receivable 2,029 Inventories 10,968 Prepaid expenses and other current assets 364 Property and equipment, net 1,099 Right-of-use assets 944 Intangible assets 44,000 Accounts payable, accrued expenses and other current liabilities (2,763 ) Other long-term liabilities (594 ) Lease liabilities (735 ) Net assets acquired 55,508 Goodwill 19,628 Estimated total purchase consideration $ 75,136 Subsequent to the acquisition date, during the three September 30, 2020, January 24, 2020 not The acquired intangible assets based on estimates of fair value as of January 24, 2020 Developed technology $ 41,100 Trade name 1,800 Customer relationships 1,100 Total acquired intangible assets $ 44,000 The fair value of the developed technology intangible assets has been estimated using the multi-period excess earnings method, which is based on the principle that the value of an intangible asset is equal to the present value of the incremental after-tax cash flow attributable to the asset, after charges for other assets employed by the business. The fair value of the customer relationships has been estimated using the avoided costs/lost profits method, which is based on the principle that the value of an intangible asset is based on consideration of the total costs that would be avoided by having this asset in place. The fair value of the trade name has been estimated using the relief from royalty method of the income approach, which is based on the principle that the value of an intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. Key estimates and assumptions used in these models are projected revenues and expenses related to the asset, estimated contributory asset charges, estimated costs to recreate the asset, and a risk-adjusted discount rate used to calculate the present value of the future expected cash inflows or cash outflows avoided from the asset. The fair value of developed technology will be amortized over a useful life of 15 years, the fair value of customer relationships over 10 years, and the fair value of the trade name over 5 years. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill and assigned to the newly established reporting unit for Parcus Medical and Arthrosurface. The goodwill is attributable to the workforce of the business and the value of future technologies expected to arise after the acquisition. Goodwill will not 7, Goodwill Arthrosurface, Inc. On February 3, 2020, January 4, 2020 ( The acquisition of Arthrosurface has been accounted for as a business combination under ASC 805. 805, February 3, 2020 Consideration Transferred Pursuant to the Arthrosurface Merger Agreement, the Company acquired all outstanding equity of Arthrosurface for estimated total purchase consideration of $90.3 million, as of February 3, 2020, Cash consideration $ 61,909 Estimated fair value of contingent consideration 28,376 Estimated total purchase consideration $ 90,285 Pursuant to the Arthrosurface Merger Agreement, the Company could be required to make future payments up to $40.0 million depending on the achievement of regulatory milestones and the level of net sales of Arthrosurface products in 2020 2021. February 3, 2020 February 3, 2020 October 2020 July 2021, two 4, Fair Value Measurements June 30, 2021 December 31, 2020. Acquisition-related costs are not three March 31, 2020. March 31, 2020 Fair Value of Net Assets Acquired The estimate of fair value required the use of significant assumptions and estimates. Critical estimates included, but were not may The allocation of purchase price to the identifiable assets acquired and liabilities assumed was based on estimates of fair value as of February 3, 2020, Recognized identifiable assets acquired and liabilities assumed: Cash and cash equivalents $ 1,072 Accounts receivable 5,368 Inventories 15,652 Prepaid expenses and other current assets 535 Property, plant and equipment 3,394 Other long-term assets 7,548 Intangible assets 48,900 Accounts payable, accrued expenses and other liabilities (3,929 ) Deferred tax liabilities (11,147 ) Net assets acquired 67,393 Goodwill 22,892 Estimated total purchase consideration $ 90,285 Intangible assets acquired consist of: Developed technology $ 37,000 Trade name 3,400 Customer relationships 7,900 IPR&D 600 Total acquired intangible assets $ 48,900 The fair value of the developed technology intangible assets has been estimated using the multi-period excess earnings method, which is based on the principle that the value of an intangible asset is equal to the present value of the incremental after-tax cash flow attributable to the asset, after charges for other assets employed by the business. The fair value of the customer relationships has been estimated using the avoided costs/lost profits method, which is based on the principle that the value of an intangible asset is based on consideration of the total costs that would be avoided by having this asset in place. The fair value of the trade name has been estimated using the relief from royalty method of the income approach, which is based on the principle that the value of an intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. Key estimates and assumptions used in these models are projected revenues and expenses related to the asset, estimated contributory asset charges, estimated costs to recreate the asset, and a risk-adjusted discount rate used to calculate the present value of the future expected cash inflows or cash outflows avoided from the asset. The fair value of developed technology will be amortized over an estimated useful life of 15 years, the fair value of customer relationships over 10 years, and the fair value of the trade name over 5 years. A total of $0.6 million represents the fair value of IPR&D with an indefinite useful life that will be evaluated for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill and assigned to the newly established reporting unit for Parcus Medical and Arthrosurface. The goodwill is attributable to the workforce of the business and the value of future technologies expected to arise after the acquisition. Goodwill will not not 7, Goodwill Pro forma Information The Parcus Medical and Arthrosurface acquisitions were both completed in the first 2020. The unaudited pro forma information for the three six June 30, 2021 2020 January 1, 2019 These pro forma adjustments include: (i) a net increase in amortization expense to record amortization expense for the aforementioned acquired identifiable intangible assets, (ii) an adjustment to cost of revenue based on the preliminary inventory step-up and the anticipated inventory turnover, (iii) a net decrease in interest expense as a result of eliminating interest expense and interest income related to borrowings that were settled in accordance with the respective Parcus Medical Merger Agreement and Arthrosurface Merger Agreement, (iv) an adjustment to record the acquisition-related transaction costs in the period required, and (v) the tax effect of the pro forma adjustments using the anticipated effective tax rate. The effective tax rate of the combined company could be materially different from the effective rate presented in this unaudited pro forma combined financial information. As a result of the transaction, the combined company may not The following table presents unaudited supplemental pro forma information: Six Months ended June 30, 2021 2020 Total revenue $ 72,437 $ 70,028 Net income (loss) 9,369 (917 ) |