Profound Medical Corp. Goodwill & Intangibles Disclosure
6 | Intangible assets |
The major components of intangible assets as of December 31, 2024 and 2023 consist of:
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| 2024 |
| 2023 | |||||||||
$ | $ | |||||||||||||
| Weighted |
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Average |
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Remaining | Accumulated |
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| Accumulated |
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Useful | Gross | Amortization | Net | Gross | Amortization | Net | ||||||||
Lives | Carrying | and | Carrying | Carrying | and | Carrying | ||||||||
(Years) | Amount | Impairments |
| Amount | Amount | Impairments | Amount | |||||||
Exclusive licence agreement | 4.7 | 231 | (142) | 89 | 231 | (114) | 117 | |||||||
Software | 1 | 978 | (806) | 172 | 978 | (605) | 373 | |||||||
1,209 | (948) | 261 | 1,209 | (719) | 490 | |||||||||
The Company has a licence agreement (the licence) with Sunnybrook Health Sciences Centre (Sunnybrook), pursuant to which Sunnybrook licenses to the Company certain intellectual property and exclusively licenced-in rights that enable the Company to use Sunnybrook’s technology for MRI-guided trans-urethral ultrasound therapy. The Company has the option to acquire rights to improvements to the relevant technology and intellectual property. If the Company fails to comply with any of its obligations or otherwise breaches this agreement, Sunnybrook may have the right to terminate the licence.
Amortization expense for the year ended December 31, 2024 was $229 (2023 - $202). Aggregate amortization expense for each of the five succeeding years related to intangible assets held as of December 31, 2024 is estimated as follows:
2025 |
| 189 |
2026 |
| 21 |
2027 |
| 19 |
2028 |
| 19 |
2029 |
| 13 |
Total |
| 261 |
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.