Goodwill and Other Intangible Assets, net

12 Months Ended

Dec. 31, 2016

Goodwill and Other Intangible Assets, net

Goodwill and Other Intangible Assets, net

(5) Goodwill and Other Intangible Assets, net

(a)Goodwill

The Company has determined that it has one reporting unit and evaluates goodwill for impairment at least annually on October 1st and whenever circumstances suggest that goodwill may be impaired.

The changes in the carrying amount of goodwill during the years ended December 31, 2016 and 2015 were as follows (in thousands):



Balances as of December 31, 2014
Goodwill	$	14,278
Accumulated impairment losses		—
Goodwill, net	$	14,278

Goodwill impairment		(14,278)

Balances as of December 31, 2015
Goodwill	$	14,278
Accumulated impairment losses		(14,278)
Goodwill, net	$	—

Goodwill acquired (Note 3)		4,878

Balances as of December 31, 2016
Goodwill	$	19,156
Accumulated impairment losses		(14,278)
Goodwill, net	$	4,878

On September 24, 2015, the Company experienced a significant decline in its common stock price, which was sustained through September 30, 2015. The significant decline in the Company’s common stock price for a sustained period, along with the impact from regulatory inquiries related to medical devices manufactured by Silimed, the Company’s contract manufacturer, were identified as potential indicators of impairment of goodwill and other intangibles. As a result, the Company was required to assess whether or not an impairment of its goodwill had occurred as of September 30, 2015. The Company assessed the impact of the recent downward volatility in the Company's common stock price and concluded that the sustained decline constituted a triggering event requiring an interim goodwill impairment test. The Company conducted the first step of the goodwill impairment test described above for its single reporting unit as of September 30, 2015. The fair value of the reporting unit exceeded its carrying value as of September 30, 2015 by 24.7%, and therefore goodwill was determined to not be impaired as of September 30, 2015.

As a result of the actions taken by the Brazilian regulatory agency ANVISA on October 2, 2015, the Company voluntarily placing a hold on the sale of all Sientra devices manufactured by Silimed on October 9, 2015, and the burning down of Silimed’s facility for manufacturing Sientra’s breast implants on October 22, 2015, the Company experienced a significant decline in its common stock price, which was sustained through December 31, 2015. The significant decline in the Company’s common stock price for a sustained period, along with the impact from recent regulatory inquiries related to medical devices manufactured by Silimed, the Company’s contract manufacturer, and the fire at Silimed’s facility for manufacturing Sientra’s breast implants, were identified as potential indicators of impairment of goodwill and the Company concluded that these events constituted a triggering event requiring a goodwill impairment test. The Company conducted a step one analysis which consists of a comparison of the fair value of the Company as a single reporting unit using a market approach against its carrying amount, including goodwill. As a result of the step one analysis, it was determined that the carrying value exceeded its fair value; therefore, the Company proceeded to step two of the goodwill impairment analysis. For step two, the Company compared the implied fair value of goodwill with the carrying amount of goodwill and based on the analysis, there was no implied goodwill; therefore, the Company recorded a goodwill impairment charge of $14.3 million for the quarter ended December 31, 2015.

The Company conducted the annual goodwill impairment test in the fourth quarter of 2016 and determined goodwill had not been impaired for the year ended December 31, 2016.

(b)Other Intangible Assets

The components of the Company’s other intangible assets consist of the following definite-lived and indefinite-lived assets (in thousands):


		December 31, 2016
	Average Amortization
	Period	Gross Carrying		Accumulated		Intangible
Intangibles with definite lives	(in years)	Amount		Amortization		Assets, net
Acquired FDA non-gel product approval	11	$	1,713	$	(1,696)	$	17
Customer relationships	9.5		4,940		(602)		4,338
Trade names - finite life	12		800		(56)		744
Regulatory approvals	1.17		670		(96)		574
Non-compete agreement	2.0		80		(17)		63
Total definite-lived intangible assets		$	8,203	$	(2,467)	$	5,736

Intangibles with indefinite lives
Trade names - indefinite life	—		450		—		450
Total indefinite-lived intangible assets		$	450	$	—	$	450


		December 31, 2015
	Average Amortization
	Period	Gross Carrying		Accumulated		Intangible
Intangibles with definite lives	(in years)	Amount		Amortization		Assets, net
Acquired FDA non-gel product approval	11	$	1,713	$	(1,660)	$	53
Total definite-lived intangible assets		$	1,713	$	(1,660)	$	53

Amortization expense for the year ended December 31, 2016, 2015 and 2014 was $0.8 million, $0.1 million and $0.1 million, respectively. The following table summarizes the estimated amortization expense relating to the Company's intangible assets as of December 31, 2016 (in thousands):


	Amortization
Period	Expense
2017	$	1,708
2018		1,090
2019		794
2020		582
2021		435
	$	4,609

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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