Acquisitions

6 Months Ended

Jun. 30, 2021

Business Combination and Asset Acquisition [Abstract]

In June 2021, the Company acquired all of the outstanding equity of Honest Health Limited ("HHL"), an entity located in the United Kingdom that offers health and wellness products and services, to further expand its operations in the United Kingdom. The purchase price for accounting purposes was $4.8 million, including cash paid upfront and payable in the future, common stock of $1.9 million, and contingent consideration of $1.2 million. The purchase agreement includes up to $10.0 million of potential earn-out payable upon achievement of revenue targets, which is recognized as contingent consideration as well as post-acquisition employment expense.

The purchase price for accounting purposes excludes stock and cash consideration paid by the Company that is subject to vesting, which will be recognized as selling, general, and administrative expenses post-acquisition. The Company also incurred acquisition costs of $1.5 million directly related to the acquisition which were recorded within selling, general, and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.

The acquisition was accounted for under the acquisition method with the purchase price being allocated to tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. Fair values were determined using income approaches. The purchase price allocation was prepared on a preliminary basis and may be subject to further adjustments as additional information becomes available concerning the fair value of the assets

acquired and liabilities assumed. The following table summarizes the preliminary acquisition date fair values of assets acquired and liabilities assumed (in thousands):


Identifiable intangible assets	$	2,040
Goodwill	2,739
Other net assets	24
Net assets acquired	$	4,803

Amortization expense related to identified intangible assets, which include trade name, developed technology, and customer relationships, is recognized on a straight-line basis over the assets’ useful lives of two to five years, within selling, general, and administrative expense on the condensed consolidated statements of operations and comprehensive loss.

The excess of the consideration paid over the fair value of the net assets acquired is recorded as goodwill. The acquired goodwill of $2.7 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. The goodwill recognized upon acquisition is not expected to be deductible for U.S. or U.K. income tax purposes.

The pro forma financial information, assuming the acquisition had occurred as of the beginning of the fiscal year prior to the fiscal year of the acquisition, as well as the revenue and earnings generated during the period after the acquisition date, were not material and accordingly have not been presented.