ACQUISITION

12 Months Ended

Dec. 31, 2024

ACQUISITION

ACQUISITION

5.   ACQUISITION

Effective as of December 9, 2024, the Company completed the acquisition of Greenbrook whereby the Company acquired 100% of the outstanding equity of Greenbrook, which became a wholly owned subsidiary. The results of operations and financial position of Greenbrook are included in the Company’s consolidated financial statements from the date of acquisition.

Greenbrook operates treatment centers across the United States, offering both NeuroStar Advanced Therapy and SPRAVATO for the treatment of MDD and other mental health disorders. The transaction strengthened the Company’s ability to expand patient access to mental health treatments by capitalizing on the consolidated Company’s stronger revenue base and cost synergy opportunities.

In connection with the acquisition, the Company issued 25,304,971 shares of common stock and paid $4.2 million in cash consideration. The aggregate fair value of the common stock issued was $29.1 million. The aggregate fair value of the non-controlling interest acquired was $4.1 million and represents the equity value of Greenbrook not acquired in the transaction, stated at its estimated fair value determined by using an income method approach. The acquisition meets the criteria to be accounted for as a business in accordance with ASC 805, Business Combinations (“ASC 805”). This method requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date and that the difference between the fair value of the consideration paid for the acquired entity and the fair value of the net assets acquired be recorded as goodwill, which is tested at least annually for impairment. The allocation of the purchase price to the assets acquired and liabilities assumed is based on preliminary information and is subject to further adjustment within the measurement period.

In accordance with the acquisition method of accounting for a business combination, the purchase price of $38.8 million was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition as follows (in thousands, except share data):

Consideration transferred:
Common stock	$	29,101
Cash consideration		4,175
Settlement of preexisting relationships		5,538
Total consideration transferred	$	38,814
Assets acquired and liabilities assumed at fair value:
Cash and Cash Equivalents	$	622
Restricted Cash		1,000
Accounts Receivable		8,837
Prepaid Expenses and Other Assets		1,917
Property and Equipment		4,561
Intangible Assets		19,690
Operating Right of Use Asset		24,835
Accounts Payable and Accrued Expenses		(11,057)
Other Payables		(671)
Deferred and Contingent Consideration		(1,000)
Operating Lease Liabilities		(24,442)
Total identifiable net assets	$	24,292
Non-controlling interest		(4,112)
Fair value of net assets acquired less noncontrolling interests acquired	$	20,180
Goodwill		18,634
	$	38,814

The Company incurred $3.8 million in legal and consulting fees related to the acquisition which were expensed as incurred and recognized in general and administrative expenses in the Consolidated Statement of Operations.

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their preliminary estimated fair values at the acquisition date. The identifiable intangible assets included management services agreements of $17.1 million and tradename of $2.6 million and are being amortized on a straight-line basis over a range of 17-21 years and 5 years, respectively. The management services agreements and tradename were valued using a multi-period excess earnings method (“MPEEM”) and the relief from royalty method (“RFR”), respectively. These valuation methods are specific forms of the Income Approach which is a valuation technique that drives value by estimating the fair value of after-tax cash flows attributable to the acquired intangibles. The valuation methods require several judgments and assumptions to determine the fair value of the intangible assets, including growth rates, discount rates, expected levels of cash flows, and tax rate. Key assumptions used included revenue projections, a tax rate of 25%, a discount rate of 23%, and a royalty rate of 1%.

Goodwill is attributable to the workforce of Greenbrook as well as the benefits the Company expects to realize, as Greenbrook complements the Company’s business and will provide various synergies.

For the year ended December 31, 2024, Greenbrook contributed approximately $4.4 million of revenue and approximately $1.7 million of net loss to the Company’s operating results.

Unaudited Pro Forma Financial Information

The following table reflects the pro forma operating results for the Company which gives effect to the acquisition of Greenbrook as if it had occurred on January 1, 2023. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of future results. The pro forma financial information includes the historical results of the Company and Greenbrook with eliminations for all intercompany transactions and excludes the effects of any synergies or cost reduction initiatives related to the acquisition Greenbrook.

		Unaudited Pro Forma
		Year ended December 31,
	2024		2023
Revenue	$	137,110	$	134,740
Net loss	$	(75,290)	$	(66,732)