On April 14, 2022, we acquired all of the equity interests of vitaCare Prescription Services, Inc. (“vitaCare”) from TherapeuticsMD, Inc. (the "Seller"), the sole stockholder of vitaCare for an initial cash payment of approximately $150.0 million, subject to customary adjustments, and additional payment or adjustment for contingent consideration payable of up to $7.0 million in cash and contingent consideration receivable based upon vitaCare's achievement of certain specified revenue described further below. We incurred a total of $1.6 million of transaction costs associated with this acquisition during 2022 consisting primarily of professional fees which were expensed as incurred and included within general and administrative expenses of our condensed consolidated statement of operations. vitaCare is a prescription technology and service platform that simplifies the prescription fulfillment process for consumers taking brand medications by helping them gain access to therapies and stay on those therapies for as long as medically appropriate. The purpose of the acquisition was to strengthen and expand the services currently available under our existing pharma manufacturer solutions platform.

We accounted for the vitaCare acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations and recorded tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The estimated fair values of the acquired intangible assets are determined primarily by using a discounted cash flow method which is a non-recurring fair value measurement based on Level 3 inputs. Goodwill is measured as the excess of purchase consideration over the estimated fair value of tangible and intangible assets acquired and liabilities assumed. The goodwill recorded in connection with this acquisition primarily relates to the expected long-term synergies and other benefits from the acquisition, including the acquired assembled workforce, and is expected to be tax deductible. The acquisition date estimated fair values of the contingent consideration payable and receivable associated with the business combination are based on the amounts of the consideration expected to be transferred or received using significant inputs that are not observable in the market (Level 3 inputs). The contingent consideration payable and receivable are remeasured to their estimated fair values on a recurring basis. Changes in the estimated fair values of the contingent consideration payable and receivable, if any, are recorded within general and administrative expenses in our condensed consolidated statements of operations.

The acquisition method of accounting for vitaCare remains incomplete with respect to the acquired intangible assets, contingent consideration receivable and payable, as we continue to gather and evaluate information about circumstances that existed as of the acquisition date. The activities we are currently undertaking, include, but are not limited to, the following: review and evaluation of third-party valuations that assist us in determining the estimated fair values of the acquired intangible assets, contingent consideration receivable and payable, which have been measured based on preliminary estimates using assumptions that we believe are reasonable, utilizing information that is currently available. Measurement period adjustments, if any, will be recognized in the reporting period in which the adjustment amounts are determined within twelve months from the acquisition date.

We also established a management incentive plan under which certain continuing vitaCare employees are eligible to receive up to $10.0 million of additional cash compensation upon achievement of certain performance milestones through 2023. This management incentive plan has been accounted for separately from the business combination, excluded from the estimated purchase consideration, and is recognized as post-combination expense over the performance period to the extent the specified performance milestones are probable of being met.

The components of the estimated purchase consideration for vitaCare are as follows:


(in thousands)
Cash	$	149,877
Fair value of contingent consideration payable		1,684
Fair value of contingent consideration receivable		(19,741	)
Total estimated purchase consideration	$	131,820

The preliminary allocation of the estimated purchase consideration for vitaCare is as follows:


(in thousands)
Accounts receivable	$	433
Prepaid expenses and other current assets		50
Property and equipment		255
Intangible assets		52,000
Accounts payable		(752	)
Accrued expenses and other current liabilities		(780	)
Goodwill		80,614
Total estimated purchase consideration	$	131,820


(dollars in thousands)	Fair Value		Weighted Average Useful Life (in years)
Developed technology	$	30,000		5.0
Customer relationships		21,000		11.0
Tradename		1,000		3.0
	$	52,000		7.4

Contingent Consideration Payable - The contingent consideration payable of up to $7.0 million in cash is based upon vitaCare's achievement of certain specified revenue results through 2023 as stipulated by the purchase agreement. The estimated fair value of the contingent consideration payable is based on the present value of the expected future payments to be made to the Seller using an option pricing model. As of September 30, 2022, no future contingent payments are expected to be made to the Seller as vitaCare's achievement of the specified revenue results through 2023 are no longer probable of being met. The change in the fair value of the contingent consideration payable of approximately $1.8 million and $1.7 million for the three and nine months ended September 30, 2022, respectively, were recorded within general and administrative expenses in our accompanying condensed consolidated statements of operations.

Contingent Consideration Receivable - vitaCare entered into a commercial agreement with the Seller in connection with the acquisition. In accordance with the terms and conditions of the commercial agreement, the Seller is required to compensate vitaCare for certain pharmacy services over an initial 5-year term following the acquisition, with annual minimum guaranteed payments over the 5-year term totaling $66.3 million. The estimated fair value of the contingent consideration receivable at the acquisition date and as of June 30, 2022 were based on the present value of the expected future annual minimum guaranteed payments in excess of the estimated fair value of pharmacy services expected to be provided to the Seller for each respective year over the initial 5-year term and contains significant unobservable inputs (Level 3 inputs). Key inputs used in this estimate include projected revenue and a discount rate which incorporate the risk of achievement associated with the forecasts and the credit risk of the Seller. Significant changes in the projected revenue or discount rate would result in a significantly higher or lower fair value measurement. As of September 30, 2022, the fair value of the contingent consideration receivable was remeasured based on a probability weighting certain scenarios which incorporates the increased risk of collectability of the contingent consideration principally due to certain events that occurred during the three months ended September 30, 2022 with respect to the Seller's financing activities that we believe cast substantial doubt on the Seller's ability to pay. Scenarios in the fair value remeasurement include (i) the Seller is no longer able to pay the contingent consideration, and (ii) the Seller obtains sufficient funding to pay the obligations and achieves the projected revenue over the 5-year term. The key inputs used in this estimate are the probabilities applied to the above

two assumed scenarios. A significant change in the probability weighting would result in a significantly higher fair value measurement.

The following table shows a reconciliation of the beginning and ending fair value of the contingent consideration receivable during the three and nine months ended September 30, 2022:


(in thousands)	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Beginning balance	$	19,632		$	—
vitaCare acquisition		—			19,741
Changes in fair value		(18,432	)		(18,541	)
Ending balance	$	1,200		$	1,200

The following table reflects the pro forma unaudited consolidated results of operations for the periods presented as if the acquisition of vitaCare had occurred on January 1, 2021. The pro forma unaudited consolidated results of operations give effect to certain adjustments including: (i) transaction and severance costs incurred in connection with the acquisition; (ii) amortization expense related to the acquired intangible assets; and (iii) elimination of vitaCare's allocated interest expense related to the Seller's financing agreement whereby vitaCare was released from as guarantor upon the consummation of the acquisition. The pro forma unaudited consolidated results of operations are not necessarily indicative of the operating results that would have occurred if the acquisition had been consummated as of the date indicated, nor are they necessarily indicative of future operating results.


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Pro forma revenue	$	187,318		$	195,299		$	583,016		$	532,784
Pro forma net loss		(41,734	)		(26,719	)		(38,929	)		(11,544	)

vitaCare's revenue for the three and nine months ended September 30, 2022 of $2.0 million and $3.4 million, respectively, is included in our accompanying condensed consolidated statements of operations. Disclosure of the standalone earnings or loss of vitaCare is not practicable as expenses associated with significant back-office, product development and technology and go-to-market processes of the vitaCare business have been substantially integrated into our consolidated operations.

On February 18, 2022, we acquired all of the equity interests of flipMD, Inc. ("flipMD") for $7.0 million in cash, subject to customary closing adjustments. flipMD is a marketplace connecting practicing physicians with organizations seeking on-demand medical expertise and expands both our engagement with healthcare providers and services currently available under our existing pharma manufacturer solutions platform. Unaudited supplemental pro forma financial information and the revenue and earnings from the acquisition date through September 30, 2022 for the flipMD acquisition has not been presented because the effects are not material to our condensed consolidated financial statements.

The acquisition method of accounting for the flipMD acquisition remains incomplete. Measurement period adjustments, if any, will be recognized in the reporting period in which the adjustment amounts are determined within twelve months from the acquisition date.