Certara, Inc.CERT
Certara, Inc. Goodwill & Intangibles Disclosure
Goodwill and Intangible Assets
The following table presents the Company’s intangible assets (other than goodwill) and the related amortization:
| WEIGHTED AVERAGE AMORTIZATION PERIOD (IN YEARS) | DECEMBER 31, 2025 | DECEMBER 31, 2024 | |||||||||||||||||||||||||||||||||||||||
| GROSS CARRYING AMOUNT | ACCUMULATED AMORTIZATION | NET | GROSS CARRYING AMOUNT | ACCUMULATED AMORTIZATION | NET | ||||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
| Acquired software | 9.60 | $ | 200,818 | $ | (65,925) | $ | 134,893 | $ | 193,257 | $ | (46,261) | $ | 146,996 | ||||||||||||||||||||||||||||
| Capitalized software development costs | 2.51 | 101,196 | (64,739) | 36,457 | 74,684 | (46,756) | 27,928 | ||||||||||||||||||||||||||||||||||
| Non-compete agreements | 3.17 | 2,748 | (1,953) | 795 | 2,634 | (1,630) | 1,004 | ||||||||||||||||||||||||||||||||||
| Trade names | 12.11 | 59,998 | (21,748) | 38,250 | 59,461 | (18,472) | 40,989 | ||||||||||||||||||||||||||||||||||
| Customer relationships | 7.39 | 498,341 | (261,284) | 237,057 | 493,815 | (225,549) | 268,266 | ||||||||||||||||||||||||||||||||||
| Patents | 2.00 | 179 | (155) | 24 | 172 | (141) | 31 | ||||||||||||||||||||||||||||||||||
| Total | $ | 863,280 | $ | (415,804) | $ | 447,476 | $ | 824,023 | $ | (338,809) | $ | 485,214 | |||||||||||||||||||||||||||||
Amortization expense for intangible assets was $73,000, $66,039, and $54,519 for the years ended December 31, 2025, 2024 and 2023, respectively. Amortization expense of $18,607, $14,440, and $10,546 was recorded in cost of revenues for the years ended December 31, 2025, 2024, and 2023, respectively.
The remaining amortization of $54,393, $51,599, and $43,973 was recorded in operating expenses for the years ended December 31, 2025, 2024, and 2023, respectively.
Based on the current amount of intangibles subject to amortization, the estimated annual amortization expense for each of the succeeding five years and thereafter is as follows:
| ACQUIRED SOFTWARE | CAPITALIZED SOFTWARE DEVELOPMENT COSTS | NON- COMPETE AGREEMENTS | TRADE NAMES | PATENTS | CUSTOMER RELATIONSHIPS | TOTAL | |||||||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||||||||
| 2026 | $ | 18,158 | $ | 16,606 | $ | 268 | $ | 3,269 | $ | 12 | $ | 33,669 | $ | 71,982 | |||||||||||||||||||||||||||
| 2027 | 16,244 | 12,294 | 248 | 3,269 | 12 | 33,669 | 65,736 | ||||||||||||||||||||||||||||||||||
| 2028 | 16,034 | 7,557 | 224 | 3,269 | — | 33,669 | 60,753 | ||||||||||||||||||||||||||||||||||
| 2029 | 15,861 | — | 55 | 3,269 | — | 33,669 | 52,854 | ||||||||||||||||||||||||||||||||||
| 2030 | 15,314 | — | — | 3,269 | — | 33,401 | 51,984 | ||||||||||||||||||||||||||||||||||
| Thereafter | 53,282 | — | — | 21,905 | — | 68,980 | 144,167 | ||||||||||||||||||||||||||||||||||
| Total | $ | 134,893 | $ | 36,457 | $ | 795 | $ | 38,250 | $ | 24 | $ | 237,057 | $ | 447,476 | |||||||||||||||||||||||||||
Goodwill
The goodwill impairment test is performed at least annually at the reporting unit level. An interim test is performed when events or circumstances occur that may indicate that it is more likely than not that the fair value of any reporting unit may be less than its carrying value. For the years ended December 31, 2025, 2024, and 2023, the Company performed annual quantitative assessments of goodwill, with the most recent assessment performed on October 1, 2025. The annual quantitative assessments resulted in no impairment as the estimated fair value of each reporting unit exceeded its carrying value.
During the third quarter of 2023, the Company performed interim goodwill impairment tests for the prior regulatory writing reporting unit, which was integrated into the CDDS at the end of third quarter 2023. The fair value of the regulatory writing reporting unit was determined to be less than its carrying value, resulting in a goodwill impairment charge of $46,984 for the reporting unit. The fair value of that reporting unit was estimated using a combination of the discounted cash flow method and the guideline public company method. The decline in the fair value of the regulatory writing reporting unit was driven by revised revenue growth and profitability forecasts resulting from certain reductions in our financial planning assumptions. These reductions were primarily attributable to a decrease in demand from certain customer groups for the legacy reporting unit. As the result, the Company recorded impairment charges of $46,984 for the year ended December 31, 2023. The Company did not recognize any goodwill impairment charges for the years ended December 31, 2025 and 2024.
A reconciliation of the change in the carrying value of goodwill is as follows:
| (In thousands) | |||||
| Balance, December 31, 2023 | $ | 716,333 | |||
| Goodwill associated with 2024 business acquisitions | 46,483 | ||||
| Foreign currency translation | (5,778) | ||||
| Balance, December 31, 2024 | 757,038 | ||||
| Goodwill adjustment associated with 2024 business acquisitions | 2,947 | ||||
| Tax adjustment to goodwill associated with previous business acquisitions | (402) | ||||
| Foreign currency translation | 13,728 | ||||
| Balance, December 31, 2025 | $ | 773,311 | |||
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.