On November 2, 2021, HGE affiliated with a leading pulmonology practice in Tulsa, Oklahoma known as RespirCare. RespirCare provides in-person and virtual care to COPD and other respiratory distress patients in Oklahoma (and potentially other states with licensure reciprocity). This affiliation was structured as an acquisition of RespirCare’s management company, PCI and PCI’s arrangements with RespirCare and its physician shareholder. The Company consolidates PCI and RespirCare for accounting and tax purposes. The principal assets acquired included goodwill and property and equipment. The Company undertook the acquisition in order to increase the number of patients for its Vapotherm Access remote patient monitoring service.

The purchase price, net of cash acquired, of $1.7 million was funded with cash payments of approximately $1.3 million and the settlement of $0.4 million of preexisting transactions. The acquisition has been accounted for as an acquisition of a business. The following table summarizes the preliminary purchase price allocation that includes the fair value of the separately identifiable assets acquired and liabilities assumed as of November 2, 2021:


Cash	$	39
Accounts receivable		101
Prepaids and other current assets		11
Property and equipment		397
Operating lease right-of-use assets		316
Goodwill		1,302
Other long-term assets		9
Total assets acquired		2,175
Accounts payable		(29	)
Other current liabilities		(111	)
Other long-term liabilities		(264	)
Total liabilities assumed		(404	)
Total purchase price	$	1,771

The excess of purchase consideration over the fair value of net tangible assets acquired was recorded as goodwill. Goodwill associated with the acquisition was primarily attributable to the expansion opportunity of the Vapotherm Access remote patient monitoring platform and the value of the acquired workforce. The goodwill is deductible for tax purposes. The fair values assigned to tangible assets acquired and liabilities assumed are based on management’s estimates and assumptions. There were no intangible assets identified as part of the acquisition. The Company finalized the purchase price allocation during the second quarter of 2022.

During the second quarter of 2022, the Company wrote down the value of goodwill recorded in connection with the acquisition due to a decrease in the fair value of the Vapotherm Access reporting unit below its carrying value. The decrease was attributable to a significant decrease in future forecasted revenues and uncertainty related to the Company's ability to scale its remote patient monitoring business given slower than expected patient enrollment.

The Company has included the financial results of PCI and RespirCare in the condensed consolidated financial statements from the date of acquisition. Pro forma financial information has not been presented as the impact to the financial results is immaterial. The transaction costs associated with the acquisition were approximately $0.5 million and were recorded in general and administrative expenses as incurred during the fourth quarter of 2021.