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GOODWILL & INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2022

11. GOODWILL & INTANGIBLE ASSETS

The carrying amount of goodwill at December 31, 2022 and 2021 was $113.0 million and $639.3 million, respectively, and has been recorded in connection with the Company’s acquisitions. The goodwill activity is as follows (in thousands):


	2022		2021
Balance, beginning of year	$	639,301	$	2,252
Goodwill impairment		(498,800)		—
Foreign currency translation adjustment		(26,940)		(4,568)
Measurement period adjustments⁽¹⁾		(606)		—
Additions⁽²⁾		—		641,617
Balance, end of year	$	112,955	$	639,301

⁽¹⁾Represents final measurement period adjustments related to the May Dental and ExOne acquisitions. Refer to Note 4. Acquisitions for further information.

⁽²⁾The additions to goodwill during fiscal year 2021 are related to the acquisitions of EnvisionTEC, Adaptive3D, Aerosint, Dental Arts Labs, A.I.D.R.O., Brewer Dental, May Dental, and ExOne. Refer to Note 4. Acquisitions for further information.

Due to sustained declines in the Company’s stock price and the stock prices of comparable companies, we performed interim quantitative assessments as of June 30, 2022 and December 31, 2022, utilizing a combination of the income and market approaches. The results of the quantitative analysis performed indicated that the carrying value of the reporting unit exceeded the fair value. As such, $498.8 million of goodwill impairment charges was recorded during the year ended December 31, 2022.

The Company estimated the fair value using a weighted average of the income and market approaches. Specifically, the discounted cash flow method was used under the income approach and the guideline public company and guideline merged and acquired company methods were used under the market approach. The significant assumptions used under the income approach include management’s forecasts of future revenues and EBITDA margins used to calculate projected future cash flows, discount rates, and the terminal growth rate. The terminal value is based on an exit revenue multiple which requires significant assumptions regarding the selections of appropriate multiples that consider relevant market trading data. The Company bases its estimates and assumptions on its knowledge of the additive manufacturing industry, recent performance, expectations of future performance and other assumptions the Company believes to be reasonable. The significant assumptions used under the market approach include the control premium and selection of comparable companies and comparable transactions. Comparable companies and transactions are chosen based on factors including industry classification, geographic region, product offerings, earnings growth and profitability.

The Company determined that the estimated fair value of the reporting unit was less than its carrying amount. During the year ended December 31, 2022, the Company recorded goodwill impairment charges of $498.8 million, in the condensed consolidated statements of operations. The Company did not record any goodwill impairment charges during the years ended December 31, 2021 and 2020.

The following table sets forth the major categories of intangible assets and the weighted-average remaining useful lives for those assets that are not already fully amortized (in thousands):


		December 31, 2022						December 31, 2021
	Weighted Average	Gross				Net		Gross				Net
	Remaining Useful	Carrying		Accumulated		Carrying		Carrying		Accumulated		Carrying
	Lives (in years)	Amount		Amortization		Amount		Amount		Amortization		Amount
Acquired technology	8.4	$	196,367	$	36,919	$	159,448	$	198,631	$	11,421	$	187,210
Trade name	10.3		12,459		2,374		10,085		12,475		684		11,791
Customer relationships	9.8		67,915		17,663		50,252		69,127		6,296		62,831
Capitalized software	0.5		518		473		45		518		366		152
Total intangible assets		$	277,259	$	57,429	$	219,830	$	280,751	$	18,767	$	261,984

The Company recognized amortization expense for years ended December 31, 2022, 2021 and 2020, respectively, as follows (in thousands):


	Statement of	Year Ended December 31,
Category	Operations Line Item	2022		2021		2020
Acquired technology	Cost of Sales	$	23,707	$	8,569	$	114
Acquired technology	Research and Development		1,748		1,761		646
Trade name	General and Administrative		1,688		685		—
Customer relationships	Sales and Marketing		11,412		6,339		—
Capitalized software	Research and Development		107		161		128
		$	38,662	$	17,515	$	888

The Company expects to recognize the following amortization expense (in thousands):


	Amortization Expense
2023	$	41,659
2024		41,722
2025		39,229
2026		29,215
2027		21,005
2028 and after		47,000
Total intangible amortization	$	219,830