ANGIODYNAMICS INCANGO
ANGIODYNAMICS INC Goodwill & Intangibles Disclosure
GOODWILL AND INTANGIBLE ASSETS
Goodwill
Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if impairment indicators arise. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination.
The Company's annual testing for impairment of goodwill was completed as of April 30, 2023. To determine the fair value of the two reporting units as of April 30, 2023, the Company utilized the income approach for Med Tech and a combination of the income approach and market approach for Med Device. Based on the results of this evaluation, there were no adjustments to goodwill for either reporting unit as of April 30, 2023.
In the fourth quarter of fiscal year 2023, the Company concluded that the sale of the dialysis and BioSentry businesses to Merit Medical Systems, Inc. was a triggering event for the Med Device reporting unit. As the Company concluded that this was the sale of a business, goodwill was allocated to the sale based on the relative fair value of the dialysis and BioSentry
businesses and is included in assets held for sale as of May 31, 2023. To determine the fair value of the remaining Med Device reporting unit as of May 31, 2023, the Company utilized the income approach, as it was determined to be a better representation of the remaining Med Device reporting unit's projected long-term performance. Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $14.5 million for the year ended May 31, 2023 to write down the carrying value of the Med Device reporting unit to fair value.
In the third quarter of fiscal year 2024, the Company concluded that the sustained decline in our stock price was a triggering event for the Med Tech reporting unit. To determine the fair value of the remaining Med Tech reporting unit as of February 29, 2024, the Company utilized the income approach, as it was determined to be a better representation of the remaining Med Tech reporting unit's projected long-term performance. The income approach is based on the projected cash flows discounted to their present value using discount rates, that in the Company's judgment, consider the timing and risk of the forecasted cash flows using internally developed forecasts and assumptions. Under the income approach, the discount rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics. Other significant assumptions include revenue growth rates, profitability projections, and terminal value growth rates. Based on the results of this evaluation, the Company recorded a goodwill impairment charge of $159.5 million for the year ended May 31, 2024 to write down the carrying value of the Med Tech reporting unit to fair value. The impairment loss is disclosed separately on the face of the accompanying consolidated statements of operations.
Goodwill for each reporting unit is allocated as follows:
| Year ended May 31, 2024 | |||||||||||||||||
| (in thousands) | Med Tech | Med Device | Total | ||||||||||||||
| Balance June 1, 2023 | $ | 159,238 | $ | — | $ | 159,238 | |||||||||||
| Goodwill impairment | (159,476) | — | (159,476) | ||||||||||||||
| Foreign currency translation adjustments | 238 | — | 238 | ||||||||||||||
| Balance May 31, 2024 | $ | — | $ | — | $ | — | |||||||||||
| Year ended May 31, 2023 | |||||||||||||||||
| (in thousands) | Med Tech | Med Device | Total | ||||||||||||||
| Balance June 1, 2022 | $ | 160,529 | $ | 40,529 | $ | 201,058 | |||||||||||
| Goodwill impairment | — | (14,549) | (14,549) | ||||||||||||||
| Assets held for sale | — | (25,980) | (25,980) | ||||||||||||||
| Foreign currency translation adjustments | (1,291) | — | (1,291) | ||||||||||||||
| Balance May 31, 2023 | $ | 159,238 | $ | — | $ | 159,238 | |||||||||||
Definite Lived Intangible Assets
Intangible assets other than goodwill are amortized over their estimated useful lives on a straight-line basis. Useful lives range from to eighteen years. The Company periodically reviews, and adjusts, if necessary, the estimated useful lives of its intangible assets and reviews such assets or asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets or asset groups may not be recoverable. If an intangible asset or asset group is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.
In connection with the triggering event for the Med Tech reporting unit as of February 29, 2024, long-lived assets were tested for impairment. As a result of the undiscounted cash flow analysis that was performed, there were no impairments identified as of February 29, 2024. There were no impairment charges on definite lived intangible assets for the year ended May 31, 2024.
During the third quarter of fiscal year 2024, the Company made the decision to abandon the Syntrax product line. This resulted in an of $3.3 million. The impairment charge is recorded in "Acquisition, restructuring and other items, net", on the Consolidated Statements of Operations (see Note 19 "Acquisition, restructuring and other items, net" as set forth in the Notes to the consolidated financial statements in this Annual Report on Form 10-K).
Intangible assets consisted of the following:
| May 31, 2024 | |||||||||||||||||
| (in thousands) | Gross carrying value | Accumulated amortization | Net carrying value | ||||||||||||||
| Product technologies | $ | 176,227 | $ | (102,468) | $ | 73,759 | |||||||||||
| Customer relationships | 9,028 | (5,628) | 3,400 | ||||||||||||||
| Trademarks | 2,100 | (2,024) | 76 | ||||||||||||||
| Licenses | 3,837 | (3,689) | 148 | ||||||||||||||
| $ | 191,192 | $ | (113,809) | $ | 77,383 | ||||||||||||
| May 31, 2023 | |||||||||||||||||
| (in thousands) | Gross carrying value | Accumulated amortization | Net carrying value | ||||||||||||||
| Product technologies | $ | 211,751 | $ | (118,314) | $ | 93,437 | |||||||||||
| Customer relationships | 57,509 | (40,755) | 16,754 | ||||||||||||||
| Trademarks | 7,450 | (6,660) | 790 | ||||||||||||||
| Licenses | 4,837 | (4,674) | 163 | ||||||||||||||
| $ | 281,547 | $ | (170,403) | $ | 111,144 | ||||||||||||
Amortization expense was $13.0 million, $18.8 million and $19.5 million for fiscal years 2024, 2023 and 2022, respectively.
Expected future amortization expense related to the intangible assets for each of the following fiscal years is as follows:
| (in thousands) | |||||
| 2025 | $ | 10,269 | |||
| 2026 | 10,088 | ||||
| 2027 | 9,997 | ||||
| 2028 | 9,948 | ||||
| 2029 | 9,851 | ||||
| 2030 and thereafter | 27,230 | ||||
| $ | 77,383 | ||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Jul 25, 2024 | Showing above |
| 2023 | Aug 3, 2023 | |
| 2022 | Jul 22, 2022 | |
| 2021 | Jul 27, 2021 | |
| 2020 | Aug 10, 2020 | |
| 2019 | Jul 25, 2019 | |
| 2018 | Jul 23, 2018 | |
| 2017 | Aug 4, 2017 | |
| 2016 | Aug 1, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.