Quarterly report [Sections 13 or 15(d)]

Acquisitions

v3.25.3
Acquisitions
 9 Months Ended
Sep. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions Acquisitions
Acquisition of Keystone Perfusion Services, LLC.

As discussed in Note 1, on September 16, 2025, the Company acquired 100% of the equity interests in Keystone, an organ recovery and normothermic regional perfusion service provider to the transplant industry, for the following upfront payments: cash $109,963 (comprised of $65,624 paid directly to the seller and $44,339 directed by the seller to other parties on the close date) and 3,434,609 shares (valued at $16,828 based on the closing date share price) of which 1,717,303 shares are held in escrow.

The purchase price is subject to final adjustment, upward or downward by up to $12,400, based on Keystone’s actual 2025 adjusted EBITDA performance, with the adjustment to be determined by March 2026. In addition, potential earn-out payments of up to $23,000 may be made contingent upon Keystone’s achievement of gross profit targets (as defined in the Keystone Purchase Agreement) for each of the years 2026 to 2028. Acquisition-related costs totaling $1,157 were expensed as incurred and are included in general and administrative expenses in the unaudited interim condensed consolidated statements of operations for the nine months ended September 30, 2025. Keystone is a wholly-owned
subsidiary of the Company and the results of Keystone for the period from September 16, 2025 (“acquisition date”) to September 30, 2025 are included in the unaudited interim condensed consolidated financial statements.

Escrow Consideration

$315 in cash and 1,717,303 shares (valued at $8,414 based on the closing date share price) of the Company’s common stock are held in escrow as of the acquisition date for a period of 12 months. The Company determined that there are two components to the escrow consideration related to purchase consideration and contingent consideration. The common stock balance in escrow is designated for indemnification obligations, net working capital adjustments, and a portion of the purchase price adjustment following the determination of Keystone’s 2025 adjusted EBITDA.

The Company accounted for the $8,414 value of shares in escrow as a liability on the unaudited interim condensed consolidated balance sheet. As of the acquisition date, the contingent equity consideration was estimated to be $8,414. The shares in escrow are classified as a liability rather than equity because the Company remains the beneficial owner of the shares while they are held in escrow, with voting rights and dividends retained by the Company, and their release depends on Keystone’s future financial performance. The contingent equity consideration will be subsequently remeasured at each reporting date with changes in fair value recognized as a component of operating expense on the Company’s consolidated statements of operations, until settlement in the second quarter of 2026, when determination of the 2025 EBITDA earn-out will finalize the contingency and end remeasurement.

Contingent Considerations

The Company is required to calculate fair value of contingent considerations on each balance sheet date which will be subsequently remeasured at each reporting date with changes in fair value recognized as a component of operating expense on the Company’s consolidated statements of operations. Refer to Note 11 for additional information.

As of the acquisition date, the net contingent considerations was estimated to be a liability of $800 comprised of the following: the fair value of the potential purchase adjustment (an upward or downward adjustment by up to $12,400 to be settled by March 2026) was determined to be a $2,800 receivable, and the fair value of the potential earn-out payments of up to $23,000, contingent upon Keystone’s achievement of gross profit targets in each of the years 2026 to 2028, was determined to be a $3,600 payable.

Net Assets Acquired

The assets acquired and liabilities assumed have been included in the unaudited interim condensed consolidated financial statements as of the acquisition date. Total assets acquired included a preliminary estimate of identifiable intangible assets of $42,600. At the time of acquisition, the Company recognized an asset for a preliminary estimate of goodwill, determined as the excess of the purchase price over the net fair value of the assets acquired and liabilities assumed that amounted to $69,067. Goodwill primarily reflects expected revenue and cost synergies from expansion into additional medical services, the strategic benefit of offering a comprehensive suite of transplant solutions (surgical recovery, normothermic regional perfusion, air and ground logistics, and organ placement), and the value of the assembled workforce and their industry expertise. The acquisition is considered a taxable business combination, and goodwill is deductible for tax purposes.

The purchase price allocation is preliminary and, as additional information becomes available, the Company may further revise the preliminary purchase price allocation during the remainder of the measurement period, which will not exceed 12 months from the acquisition date. Measurement period adjustments will be recognized in the reporting period in which the adjustment amounts are determined. The purchase price was allocated on a preliminary basis as follows:
Cash paid directly to seller $ 65,624 
Equity consideration 8,414 
Equity consideration in escrow 8,414 
Contingent considerations (1) 800 
Total purchase consideration $ 83,252 
Assets acquired:
Cash $ 450 
Accounts receivable 11,674 
Prepaid expenses and other current assets 3,420 
Property and equipment, net 4,996 
Identifiable intangible assets 42,600 
Other non-current assets 10 
Total identifiable assets acquired 63,150 
Liabilities assumed:
Acquiree liabilities settled by the buyer in cash on close date (2) 44,339 
Accounts payable and accrued expenses 3,964 
Deferred revenue 662 
Total liabilities assumed 48,965 
Net assets acquired 14,185 
Goodwill 69,067 
Total consideration $ 83,252 
(1) Comprised of the 2026 to 2028 gross profit earn-out payments of $3,600 net of purchase price final adjustment of $2,800 following the determination of Keystone’s final 2025 adjusted EBITDA.
(2) Seller transaction expenses paid in cash by the Company at closing to third parties at the direction of the seller.

A preliminary assessment of the fair value of identified intangible assets and their respective lives as of the acquisition date are as follows:
Estimated Useful Life Fair Value
Customer list 10 $ 32,800 
Trademarks 10 8,800 
Developed technology 3 1,000 
Total identifiable intangible assets $ 42,600 

Identified intangible assets in the table above are amortized on a straight-line basis over the estimated useful lives. The Company believes that the straight-line method of amortization is the most appropriate methodology as it is supported by the pattern in which the economic benefits of the intangible assets are consumed.

The fair value of the customer relationships was determined using the multi-period excess earnings method (“MPEEM”). MPEEM is an income approach methodology which measures economic benefits by calculating the cash flow attributable to an asset after deducting appropriate returns for contributory assets used by the business in generating the asset’s revenue and earnings. The fair value of the trademark and developed technology were determined using the relief-from-royalty approach. This approach is commonly used for measuring the fair value of intangible assets that are often the subject of licensing, such as trade names, patents, and proprietary technologies. The fundamental concept underlying this method is that in lieu of ownership, the acquirer can obtain comparable rights to use the subject asset via a license from a hypothetical third-party owner. The asset’s fair value is the present value of license fees avoided by owning it (i.e., the royalty savings).

Unaudited Pro Forma Information
The following unaudited pro forma financial information presents what our results would have been had Keystone been acquired on January 1, 2024. The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our unaudited interim condensed consolidated results of operations of the consolidated business had the Keystone acquisition actually occurred on January 1, 2024 or of the results of our future operations of the consolidated business.
Three Months Ended September 30,
Nine Months Ended September 30,
2025 2024 2025 2024
Reported revenue $ 49,298  $ 36,062  $ 130,354  $ 110,429 
Impact of Keystone 16,969  11,757  49,096  30,234 
Pro forma revenue $ 66,267  $ 47,819  $ 179,450  $ 140,663 
Reported loss from continuing operations before income taxes $ (9,657) $ (5,627) $ (14,678) $ (8,731)
Impact of Keystone 2,090  1,220  7,261  3,262 
Pro forma loss from continuing operations before income taxes $ (7,567) $ (4,407) $ (7,417) $ (5,469)