On January 6, 2025, the Company completed its acquisition of EvolutionIQ, Inc. (“EvolutionIQ”), a privately held company that provides AI-powered guidance for disability and injury claims management. Leveraging EvolutionIQ’s platform, the acquisition will broaden the Company’s portfolio of AI-based solutions available to insurance customers.

The Company acquired all the outstanding shares of EvolutionIQ in exchange for total consideration of $674.3 million upon closing, subject to certain post-closing adjustments. In accordance with the acquisition agreement, the Company placed $8.9 million in escrow for general indemnity and purchase price adjustment holdbacks to be paid to the sellers within 36 months of closing, subject to reduction for certain indemnifications and other potential obligations of the selling shareholders.

The acquisition date fair value of the consideration transferred consisted of the following (in thousands):


Cash consideration	$	420,642
Fair value of common stock issued		250,441
Fair value of option holdback		3,184
Total acquisition date fair value of the consideration transferred	$	674,267

As part of the acquisition, the Company issued 26,035,603 shares of common stock. The number of shares of common stock issued was based on a 9-day volume weighted average price of $11.83, established prior to the closing date of January 6, 2025. On the date of acquisition, the Company's closing stock price was $11.41.

Included in the shares of common stock issued are 10,356,096 restricted shares of common stock subject to re-vesting provisions. The restricted shares have a fair value as of the acquisition date of $118.2 million, of which $71.5 million is included in the consideration transferred in the table above (see Note 17).

The fair value of the option holdback corresponds to the fair value of certain unvested EvolutionIQ stock options subject to future vesting as of the acquisition date. If the optionholder does not meet the time-based vesting requirement, the corresponding holdback amount will be released to the selling shareholders. If the optionholder does meet the time-based vesting requirement, the optionholder will receive the corresponding holdback amount in shares of CCC common stock, and the holdback cash amount is retained by the Company.

The acquisition of EvolutionIQ was accounted for as a business combination and reflects the application of acquisition accounting in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations. The total purchase consideration was allocated to the assets acquired and liabilities assumed based on fair value as of the acquisition date with the excess purchase price assigned to goodwill. Goodwill was primarily attributable to expected synergies from the combined service offerings and the value of the acquired workforce. Goodwill and intangible assets are not deductible for tax purposes.

The Company’s estimates of the fair values of the assets acquired and liabilities assumed are based on information available at the date of acquisition. During the measurement period, which may be up to one year from the acquisition date, adjustments may be recorded to the fair values of these tangible and intangible assets acquired and liabilities assumed, including uncertain tax positions and tax-related valuation allowances, with the corresponding offset to goodwill. As of June 30, 2025, there have been no significant changes to the preliminary purchase price allocation.


Assets acquired:
Current assets	$	11,250
Intangible assets		167,900
Other non-current assets		8,947
Total assets acquired		188,097
Liabilities assumed:
Deferred revenue		21,461
Other current liabilities		3,976
Deferred tax liabilities		16,916
Non-current liabilities		10,238
Total liabilities assumed		52,591
Net assets acquired		135,506
Goodwill		538,761
Total purchase price	$	674,267

A summary of the fair values, discount rates and estimated useful lives of the acquired intangible assets is as follows (dollars is thousands):


Intangible Asset	Fair Value		Discount Rate	Estimated Useful Life
Acquired technology	$	134,300	12.0%	8 years
Customer relationships		32,300	11.5%	16 years
Trademark		1,300	11.5%	5 years

The Company utilizes different valuation approaches and methodologies to determine the fair values of acquired intangible assets. The valuation approaches and methodologies are based on estimates of future operating projections as well as judgments on the discount rate and other variables. These fair values are based on significant unobservable inputs, including management estimates and assumptions and thus represent Level 3 measures in the fair value hierarchy.

Acquired technology was valued using the multi-period excess earnings method. This method of valuation reflects the present value of the projected cash flows that are expected to be generated by the acquired technology less charges representing the contribution of other assets to those cash flows.

Customer relationships were valued using a distributor method, which uses market-based inputs to value an asset. Under the distributor method, the value of the customer relationships is a function of several components, including revenue associated with the existing customers, distributor profit margin, charges for use of other assets and discount rate.

The trademark was valued under the relief from royalty method, which is equal to the present value of the after-tax royalty savings attributable to owning the trademark as opposed to paying a third party for its use.

The acquired intangible assets, with a weighted average useful life of 9.5 years, are being amortized on a straight-line basis.

For the period from the date of acquisition through June 30, 2025, EvolutionIQ's revenues were less than 5.0% of the Company's total revenues and not material. For the three months ended June 30, 2025, EvolutionIQ's pretax loss was $23.6 million, including $14.8 million of stock-based compensation expense and $4.8 million of amortization expense. For the period from the date of acquisition through June 30, 2025, EvolutionIQ's pretax loss was $51.8 million, including $34.9 million of stock-based compensation expense and $9.5 million of amortization expense.

The Company incurred transaction costs associated with the acquisition of $16.3 million. During the three and six months ended June 30, 2025, the Company incurred transaction costs of $0.1 million and $7.6 million, respectively, included in general and administrative expenses within the condensed consolidated statements of operations and comprehensive income (loss).