CareCloud, Inc. Goodwill & Intangibles Disclosure
3. GOODWILL AND INTANGIBLE ASSETS – NET
Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. At December 31, 2024, and 2023, approximately $90,000 of goodwill was allocated to the Medical Practice Management segment and the balance was allocated to the Healthcare IT segment. The following is the summary of the changes to the carrying amount of goodwill for the years ended December 31, 2024 and 2023:
| Year Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| ($ in thousands) | ||||||||
| Beginning gross balance | $ | 19,186 | $ | 61,186 | ||||
| Impairment charges | (42,000 | ) | ||||||
| Ending gross balance | $ | 19,186 | $ | 19,186 | ||||
As a result of a triggering event in December 2023 resulting from the suspension of the Preferred Stock dividend, the Company updated its annual goodwill impairment test that was performed as of October 31, 2023 for the Healthcare IT segment. It was determined that the fair value of the Healthcare IT reporting unit was less than the carrying value at both October 31, 2023 and as a result of the December 2023 triggering event. Accordingly, impairment charges of approximately $2.0 million and $40.0 million, respectively, were recorded. There was goodwill impairment recorded during the year ended December 31, 2024.
Below is a summary of intangible asset activity for the years ended December 31, 2024 and 2023:
| Customer | Capitalized | Other Intangible | ||||||||||||||
| Relationships | Software | Assets | Total | |||||||||||||
| ($ in thousands) | ||||||||||||||||
| COST | ||||||||||||||||
| Balance, January 1, 2024 | $ | 47,597 | $ | 29,379 | $ | 9,653 | $ | 86,629 | ||||||||
| Additions | 5,709 | 5,709 | ||||||||||||||
| Translation gain | 20 | 20 | ||||||||||||||
| Balance, December 31, 2024 | $ | 47,597 | $ | 35,108 | $ | 9,653 | $ | 92,358 | ||||||||
| Useful lives | 3-12 years | 3 years | 3 years | |||||||||||||
| ACCUMULATED AMORTIZATION | ||||||||||||||||
| Balance, January 1, 2024 | $ | 44,372 | $ | 12,237 | $ | 4,946 | $ | 61,555 | ||||||||
| Amortization expense | 1,575 | 10,522 | 1 | 12,098 | ||||||||||||
| Translation gain | 7 | 7 | ||||||||||||||
| Balance, December 31, 2024 | 45,947 | 22,766 | 4,947 | 73,660 | ||||||||||||
| Net book value | $ | 1,650 | $ | 12,342 | $ | 4,706 | $ | 18,698 | ||||||||
| COST | ||||||||||||||||
| Balance, January 1, 2023 | $ | 47,597 | $ | 21,547 | $ | 9,651 | $ | 78,795 | ||||||||
| Additions | 8,548 | 2 | 8,550 | |||||||||||||
| Translation loss | (716 | ) | (716 | ) | ||||||||||||
| Balance, December 31, 2023 | $ | 47,597 | $ | 29,379 | $ | 9,653 | $ | 86,629 | ||||||||
| Useful lives | 3-12 years | 3 years | 3 years | |||||||||||||
| ACCUMULATED AMORTIZATION | ||||||||||||||||
| Balance, January 1, 2023 | $ | 39,523 | $ | 4,932 | $ | 4,820 | $ | 49,275 | ||||||||
| Amortization expense | 4,849 | 7,426 | 126 | 12,401 | ||||||||||||
| Translation loss | (121 | ) | (121 | ) | ||||||||||||
| Balance, December 31, 2023 | 44,372 | 12,237 | 4,946 | 61,555 | ||||||||||||
| Net book value | $ | 3,225 | $ | 17,142 | $ | 4,707 | $ | 25,074 | ||||||||
As a result of a triggering event in December 2023, we also reviewed our other long term assets for impairment. We determined that the fair value of these assets exceeded their carrying value and that there was no impairment. There were no triggering events during the year ended December 31, 2024.
The amount for capitalized software represents payroll and development costs incurred for internally developed software. Other intangible assets primarily represent non-compete agreements, purchased and acquired software and trademarks. Amortization expense was approximately $12.1 million and $12.4 million for the years ended December 31, 2024 and 2023, respectively. The weighted-average amortization period is three years.
As of December 31, 2024, future amortization expense scheduled to be expensed is as follows:
| Years ending December 31, | ($ in thousands) | |||
| 2025 | $ | 10,291 | ||
| 2026 | 5,911 | |||
| 2027 | 1,746 | |||
| 2028 | 300 | |||
| 2029 | 300 | |||
| Thereafter | 150 | |||
| Total | $ | 18,698 | ||
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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.