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GOODWILL & INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2023

11. GOODWILL & INTANGIBLE ASSETS

The carrying amount of goodwill at September 30, 2023 and December 31, 2022 was $108.7 million and $113.0 million respectively, and has been recorded in connection with the Company’s acquisitions. The goodwill activity is as follows (in thousands):


	September 30,		December 31,
	2023		2022
Balance, beginning of year	$	112,955	$	639,301
Goodwill impairment		(2,450)		(498,800)
Foreign currency translation adjustment		(1,854)		(26,940)
Measurement period adjustments		—		(606)
Balance, end of period	$	108,651	$	112,955

During the three and nine months ended September 30, 2023, the Company recorded a goodwill impairment charge of $2.5 million related to the sale of Aerosint. During the three and nine months ended September 30, 2022, the Company recorded goodwill impairment charges of $0 and $229.5 million, respectively, in the condensed consolidated statements of operations.

Due to sustained declines in the Company’s stock price and the stock prices of comparable companies, the Company 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 were 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 measurement period adjustments of $0.6 million during 2022 represent the final measurement period adjustments related to the acquisition of May Dental Lab, Inc. in October 2021 and the acquisition of the ExOne Company in November 2021.

Intangible assets consisted of the following (in thousands):


		September 30, 2023						December 31, 2022
	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	7.8	$	185,669	$	58,039	$	127,630	$	196,367	$	36,919	$	159,448
Trade name	9.9		12,297		3,545		8,752		12,459		2,374		10,085
Customer relationships	9.1		67,565		25,145		42,420		67,915		17,663		50,252
Capitalized software	—		518		518		—		518		473		45
Total intangible assets		$	266,049	$	87,247	$	178,802	$	277,259	$	57,429	$	219,830

During the three and nine months ended September 30, 2023 and 2022, the Company recognized the following amortization expense (in thousands):


	Statement of	Three Months Ended September 30,				Nine Months Ended September 30,
Category	Operations Line Item	2023		2022		2023		2022
Acquired technology	Cost of Sales	$	6,889	$	5,877	$	20,744	$	17,817
Acquired technology	Research and Development		556		466		1,665		1,314
Trade name	General and Administrative		416		424		1,249		1,267
Customer relationships	Sales and Marketing		2,537		2,276		7,594		8,044
Capitalized software	Research and Development		0		26		45		80
		$	10,398	$	9,069	$	31,297	$	28,522

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


	Amortization Expense
2023 (remaining 3 months)	$	10,148
2024		40,323
2025		37,476
2026		27,276
2027		19,296
2028 and after		44,283
Total intangible amortization	$	178,802