TACTILE SYSTEMS TECHNOLOGY INC Goodwill & Intangibles Disclosure
Note 7. Goodwill and Intangible Assets
Goodwill
In the third quarter of fiscal 2021, we completed the AffloVest acquisition. The purchase price of the AffloVest business exceeded the net acquisition-date estimated fair value amounts of the identifiable assets acquired and the liabilities assumed by $31.1 million, which was assigned to goodwill.
Intangible Assets
Our patents and other intangible assets are summarized as follows:
Weighted- | At December 31, 2025 | ||||||||||
Average | Gross | ||||||||||
Amortization | Carrying | Accumulated | Net | ||||||||
(In thousands) | | Period | Amount | Amortization | Amount | ||||||
Definite-lived intangible assets: | |||||||||||
Patents | 11 years | $ | 1,083 | $ | 318 | $ | 765 | ||||
Customer relationships | 9 years | 31,000 | 10,280 | 20,720 | |||||||
Developed technology | 7 years | 13,000 | 5,095 | 7,905 | |||||||
Subtotal | 45,083 | 15,693 | 29,390 | ||||||||
Unamortized intangible assets: | |||||||||||
Tradenames | 9,500 | — | 9,500 | ||||||||
Patents pending | 277 | — | 277 | ||||||||
Total intangible assets | $ | 54,860 | $ | 15,693 | $ | 39,167 | |||||
Weighted- | At December 31, 2024 | ||||||||||
Average | Gross | ||||||||||
Amortization | Carrying | Accumulated | Net | ||||||||
(In thousands) | | Period | Amount | Amortization | Amount | ||||||
Definite-lived intangible assets: | |||||||||||
Patents | 12 years | $ | 1,148 | $ | 333 | $ | 815 | ||||
Defensive intangible assets | 1,125 | 1,065 | 60 | ||||||||
Customer accounts | 125 | 125 |
| — | |||||||
Customer relationships | 10 years | 31,000 | 7,896 | 23,104 | |||||||
Developed technology | 8 years | 13,000 | 3,913 | 9,087 | |||||||
Subtotal | 46,398 | 13,332 | 33,066 | ||||||||
Unamortized intangible assets: | |||||||||||
Tradenames | 9,500 | — | 9,500 | ||||||||
Patents pending | 223 | — | 223 | ||||||||
Total intangible assets | $ | 56,121 | $ | 13,332 | $ | 42,789 | |||||
Amortization expense was $3.7 million for the year ended December 31, 2025, and $3.8 million for each of the years ended December 31, 2024 and 2023, of which $1.3 million in each of the years ended December 31, 2025, 2024 and 2023, were recorded in cost of sales revenue. Future amortization expenses are expected as follows:
(In thousands) | |||
2026 | | $ | 3,648 |
2027 | 3,640 | ||
2028 |
| 3,640 | |
2029 |
| 3,637 | |
2030 |
| 3,632 | |
Thereafter |
| 11,193 | |
Total | $ | 29,390 |
The weighted-average remaining amortization period for these intangible assets was 8.2 years as of December 31, 2025.
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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.