Acquisition of EPI Health (Tables)

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Schedule of Acquisitions

The following table presents the estimated fair value of purchase consideration as of each interim reporting period end date since the EPI Health Acquisition date, including measurement period adjustments made during each interim period. The estimated fair value of purchase consideration is then allocated to the estimated fair values of the net assets acquired at the EPI Health Acquisition date, as described further following the table under the section entitled Provisional Allocation of Purchase Consideration to Estimated Fair Values of Net Assets Acquired.

	As of March 11, 2022		Measurement Period Adjustments			As of June 30, 2022		Measurement Period Adjustments			As of September 30, 2022
Initial cash consideration to Seller	$	11,000	$	—		$	11,000	$	—		$	11,000
Secured promissory note issued to Seller	16,500		—			16,500		(3,195)		(B)	13,305
Closing date fair value of contingent consideration liability	3,773		—			3,773		(125)		(C)	3,648
Remaining working capital adjustment to be paid	4,069		(969)		(A)	3,100		—			3,100
Working capital adjustment paid at close	993		—			993		—			993
Total estimated purchase consideration	$	36,335	$	(969)		$	35,366	$	(3,320)		$	32,046

A.On July 7, 2022, the Company and EPG agreed to the final net working capital adjustment amount (the “Total Adjustment Amount”), as defined in the EPI Health Purchase Agreement, as part of the post-closing adjustment to the estimated purchase price for the EPI Health Acquisition. The Total Adjustment Amount was determined to be positive

and in the amount of $3,100, which was paid to EPG on July 7, 2022. As of March 31, 2022, the Company had previously estimated that the Total Adjustment Amount would be $4,069. Therefore, the Company has reflected a $969 measurement period adjustment to the estimated fair value of total purchase consideration. As this adjustment related to the estimated fair value of purchase consideration and did not affect the fair value of any assets acquired or liabilities assumed, it resulted in a reduction of goodwill.

B.During the third quarter of 2022, the Company, with the assistance of a third-party valuation specialist, continued to conduct a fair value assessment of the Seller Note as of the EPI Health Acquisition date of March 11, 2022. The Company completed the fair value assessment and updated the Seller Note fair value estimate as of March 11, 2022 to $13,305 via a downward measurement period adjustment of $3,195 during the interim quarterly period ended September 30, 2022. See Note 9—“Notes Payable” to these condensed consolidated interim financial statements for further discussion regarding the Seller Note, including its repayment and termination during the third quarter of 2022.

C.During the third quarter of 2022, the Company, with the assistance of a third-party valuation specialist, continued to conduct a fair value assessment of the contingent consideration liability as of the EPI Health Acquisition date of March 11, 2022. The Company updated the contingent consideration provisional fair value estimate as of March 11, 2022 to $3,648 via a downward measurement period adjustment of $125 during the interim quarterly period ended September 30, 2022, based on progression of the fair value assessment procedures conducted to date.

Schedule of Purchase Consideration, Assets Acquired and Liabilities Assumed

The total estimated purchase consideration was provisionally allocated to the estimated fair values of the assets acquired and liabilities assumed as of March 11, 2022 as follows:

	As of March 11, 2022		Measurement Period Adjustments			As of June 30, 2022		Measurement Period Adjustments			As of September 30, 2022
Assets acquired and liabilities assumed:
Accounts receivable	$	20,083	$	—		$	20,083	$	—		$	20,083
Inventory	1,710		—			1,710		(410)		(B)	1,300
Prepaid expenses and other current assets	3,692		—			3,692		—			3,692
Property and equipment	100		—			100		—			100
Intangible assets	33,000		—			33,000		(4,000)		(C)	29,000
Other assets	27		—			27		—			27
Right-of-use lease assets	400		—			400		—			400
Total assets	$	59,012	$	—		$	59,012	$	(4,410)		$	54,602
Accounts payable	$	947	$	—		$	947	$	—		$	947
Accrued expenses	24,892		—			24,892		—			24,892
Operating lease liabilities, current portion	208		—			208		—			208
Operating lease liabilities, net of current portion	342		—			342		—			342
Other long-term liabilities	290		—			290		—			290
Total liabilities	$	26,679	$	—		$	26,679	$	—		$	26,679
Total identifiable net assets acquired	$	32,333	$	—		$	32,333	$	(4,410)		$	27,923
Goodwill	4,002		(969)		(A)	3,033		1,090		(D)	4,123
Total estimated purchase consideration	$	36,335	$	(969)		$	35,366	$	(3,320)		$	32,046

A.On July 7, 2022, the Company and EPG agreed to the final net working capital adjustment amount (the “Total Adjustment Amount”), as defined in the EPI Health Purchase Agreement, as part of the post-closing adjustment to the estimated purchase price for the EPI Health Acquisition. The Total Adjustment Amount was determined to be positive and in the amount of $3,100, which was paid to EPG on July 7, 2022. As of March 31, 2022, the Company had

previously estimated that the Total Adjustment Amount would be $4,069. Therefore, the Company has reflected a $969 measurement period downward adjustment to the estimated fair value of total purchase consideration. As this adjustment related to the estimated fair value of purchase consideration and did not affect the fair value of any assets acquired or liabilities assumed, it resulted in a reduction of goodwill.

B.During the third quarter of 2022, the Company, with the assistance of a third-party valuation specialist, continued to conduct a fair value assessment of the trade inventory on hand as of the EPI Health Acquisition date of March 11, 2022. The Company updated the trade inventory’s provisional fair value estimate as of March 11, 2022 to $1,300 via a downward measurement period adjustment of $410 during the interim quarterly period ended September 30, 2022, based on progression of the fair value assessment procedures conducted to date.

C.During the third quarter of 2022, the Company, with the assistance of a third-party valuation specialist, continued to conduct a fair value assessment of the acquired definite-lived intangible product rights assets as of the EPI Health Acquisition date of March 11, 2022, which included further analysis of the forecasts used in the initial preliminary valuation. This downward measurement period adjustment also resulted in the recognition of $192 of additional amortization expense during the interim quarterly period ended September 30, 2022.

D.The aforementioned measurement period adjustments made to the acquired assets and assumed liabilities, as well as the measurement period adjustments made to the estimated fair value of purchase consideration in the preceding section entitled Purchase Consideration, result in an updated goodwill balance of $4,123 as of September 30, 2022 based on a net upward adjustment of $1,090 during the interim quarterly period ended September 30, 2022.

Schedule of Pro Forma Financial Information

The pro forma financial information has been calculated after applying the Company’s accounting policies and includes adjustments for transaction-related costs.

	Three Months Ended				Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Total revenue	$	5,115	$	4,292	$	17,220	$	14,182
Net loss and comprehensive loss	(6,030)		(21,029)		(29,342)		(42,034)
Net loss per share, basic and diluted	$	(0.25)	$	(1.12)	$	(1.38)	$	(2.55)