ESTABLISHMENT LABS HOLDINGS INC.ESTA

ESTABLISHMENT LABS HOLDINGS INC. Goodwill & Intangibles Disclosure

10-KFiled Feb 27, 20263 min read
Goodwill and Other Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Purchased intangibles include certain patents and license rights, 510(k) authorization by the FDA to sell a medical device and other intangible assets.
The Company’s goodwill and most intangibles at December 31, 2025 are the result of previous asset and business acquisitions. Finite-lived intangibles are amortized over their estimated useful lives based on expected future benefit.
In addition to the intangibles acquired, the Company capitalized certain patent and license rights as identified intangibles based on patent and license rights agreements entered into over the past several years. Additionally, the Company capitalized certain software development costs.
Changes in the carrying amount of goodwill during the year ended December 31, 2025 were as follows:
Balance as of January 1, 2025
AdditionsAccumulated Impairment Losses
Balance as of December 31, 2025
(in thousands)
Goodwill$1,209 $— $— $1,209 
The carrying amounts of these intangible assets other than goodwill as of December 31, 2025 were as follows:
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountEstimated Useful Lives
(in thousands)(in years)
Patents and license rights$2,033 $(1,593)$440 
7-12
Customer relationships3,658 (2,142)1,516 
4-10
510(k) authorization567 (481)86 15
Developed technology62 (62)— 10
Capitalized software development costs14,678 (7,480)7,198 
2-5
Other183 (92)91 
2-5
Capitalized software development costs not yet amortized170 — 170 
Patents and license rights not yet amortized441 — 441 
Total intangibles other than goodwill$21,792 $(11,850)$9,942 

The carrying amounts of intangible assets other than goodwill as of December 31, 2024 were as follows:
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountEstimated Useful Lives
(in thousands)(in years)
Patents and license rights$2,033 $(1,509)$524 
7-12
Customer relationships3,466 (1,997)1,469 
4-10
510(k) authorization567 (345)222 15
Developed technology62 (62)— 10
Capitalized software development costs13,559 (4,839)8,720 
2-5
Other183 (91)92 
2-5
Capitalized patents and license rights not yet amortized215 — 215 
Patents and license rights not yet amortized441 — 441 
Total intangibles other than goodwill$20,526 $(8,843)$11,683 
The amortization expense associated with intangible assets was $3.3 million, $2.1 million, $1.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. Non-product related amortization is recorded in SG&A while product related amortization is recorded in cost of revenue.
As of December 31, 2025, the amortization expense related to identifiable intangible assets, with definite useful lives, in future periods is expected to be as follows:
Year Ending December 31,(in thousands)
2026
$2,877 
20272,314 
20281,951 
2029950 
2030258 
Thereafter981 
Total expected future amortization expense$9,331 
The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. During the three years ended December 31, 2025, there was no impairment of goodwill or intangible assets based on the qualitative assessments performed by the Company. As of December 31, 2025, no triggering events have occurred which would indicate that the acquired intangible asset values may not be recoverable.

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 28, 2025
2023Mar 4, 2024
2022Mar 1, 2023
2021Mar 1, 2022
2020Mar 15, 2021
2019Mar 16, 2020
2018Mar 20, 2019

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.

Other Available Disclosures

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