Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Intangible assets resulting from the acquisitions of entities accounted for using the acquisition method of accounting are recorded at the estimated fair value of the assets acquired. Purchased intangibles include certain patents and license rights, 510(k) authorization by the FDA to sell a medical device and other intangible assets.

The Company’s goodwill and most intangibles at March 31, 2020 are the result of acquisitions of certain assets formerly owned by VeriTeQ Corporation in November 2015 and Femiline AB in November 2017, and business acquisitions of Establishment Labs Brasil Productos para Saude Ltda. in January 2016, European Distribution Center Motiva BVBA in March 2016 and Motiva Implants France in September 2016. Finite-lived intangibles are amortized over their estimated useful lives based on expected future benefit.

In addition to the intangibles acquired, the Company capitalized certain patent and license rights as identified intangibles based on patent and license rights agreements entered into over the past several years. Additionally, the Company capitalized certain software development costs.

There were no changes in the carrying amount of goodwill during the three months ended March 31, 2020:




	Balance as of January 1, 2020		Additions		Accumulated Impairment Losses		Balance as of March 31, 2020

	(in thousands)
Goodwill	$	465	$	—	$	—	$	465

The carrying amounts of these intangible assets other than goodwill as of March 31, 2020 were as follows:




	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Estimated Useful Lives

	(in thousands)							(in years)
Patents and license rights	$	1,735	$	(804	)	$	931	7-12
Customer relationships	1,896		(971		)	925		4-10
510(k) authorization	567		(165		)	402		15
Developed technology	62		(40		)	22		10
Capitalized software development costs	980		(132		)	848		2-5
Other	75		(29		)	46		2-5
Capitalized patents and license rights not yet amortized	291		—			291
	$	5,606	$	(2,141	)	$	3,465

The carrying amounts of intangible assets other than goodwill as of December 31, 2019 were as follows:




	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Estimated Useful Lives

	(in thousands)							(in years)
Patents and license rights	$	1,693	$	(766	)	$	927	7-12
Customer relationships	1,896		(836		)	1,060		4-10
510(k) authorization	567		(156		)	411		15
Developed technology	62		(39		)	23		10
Capitalized software development costs	780		(98		)	682		2-5
Other	75		(28		)	47		2-5
Capitalized patents and license rights not yet amortized	291		—			291
	$	5,364	$	(1,923	)	$	3,441

For each of the three months ended March 31, 2020 and 2019, amortization expense related to intangible assets was $0.2 million. Non-product related amortization is recorded in SG&A while product related amortization is recorded in cost of revenue.

As of March 31, 2020, the amortization expense related to identifiable intangible assets, with definite useful lives, in future periods is expected to be as follows:




Year Ending December 31,	(in thousands)
2020 (remaining)	$	695
2021	863
2022	537
2023	293
2024	277
Thereafter	509
Total	$	3,174

The Company evaluates the recoverability of goodwill and indefinite-lived intangible assets annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. As of March 31, 2020, there has been no impairment of goodwill or intangible assets based on the qualitative assessments performed by the Company.