Business Combination

6 Months Ended

Jun. 30, 2016

Business Combination

Business Combination

6. Business Combination

Avatar International Holding Company and Avatar International LLC

On May 2, 2016, the Company acquired Avatar International Holding Company and its subsidiary Avatar International LLC (“Avatar”). Avatar was a competitor in the patient experience and caregiver engagement markets. The purchase price for Avatar was $16.7 million, net of cash acquired.

The acquisition was accounted for under the purchase method of accounting and the total purchase price was allocated to the net tangible and identifiable intangible assets based on their estimated fair values (based on Level 3 measurements) as of May 2, 2016. The excess purchase price over the net tangible and intangible assets was preliminarily recorded to goodwill as the valuation of such assets has not yet been completed. Estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company is waiting for additional information necessary to finalize those fair values. Therefore, the provisional measurements of fair value reflected are subject to change and such changes could be significant. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date.

The following table summarizes the preliminary allocation of the fair value of the acquisition:

Accounts receivable	$	2,632
Unbilled revenue		952
Other current assets		538
Property and equipment		495
Goodwill and intangible assets		15,470
Total assets acquired		20,087
Liabilities assumed:
Deferred revenue		(1,659)
Other current liabilities		(1,684)
Net assets acquired	$	16,744

Transaction expenses of $934,000 and $969,000 relating to the purchase are included in general and administrative expenses for the three and six months ended June 30, 2016, respectively.