Annual report pursuant to Section 13 and 15(d)

GOODWILL AND OTHER INTANGIBLE ASSETS

v3.23.1
GOODWILL AND OTHER INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND OTHER INTANGIBLE ASSETS
 8. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill, carrying amount, as of January 1, 2021 $ 19,093 
Additions from acquisitions 28,518 
Impairment (1,783)
Goodwill, carrying amount, as of December 31, 2021
 $ 45,828 
Additions from acquisitions, including reclassification of $254
 35,480 
Impairment (39,643)
Measurement period adjustment (3,426)
Goodwill, carrying amount, as of December 31, 2022 $ 38,239 
Other Intangible Assets
The components of other intangible assets are as follows:
As of December 31, Estimated Useful
Life
2022 2021
Licenses $ 82,401  $ 174,662  Indefinite
Intellectual Property 9,580  9,580  10 years
Tradenames 12,800  10,200 
1 - 15 years
Patient/Customer database 3,195  2,795 
5 - 10 years
Non-compete 155  155  3 years
Website development 61  61  3 years
Formulations 50  50  Indefinite
Total gross amount $ 108,242  $ 197,503 
Less: Accumulated Amortization (8,160) (5,037)
Other Intangible Assets, net $ 100,082  $ 192,466 
Amortization expense for the years ended December 31, 2022, 2021 and 2020 was $3,123, $1,977 and $2,202, respectively, and is included in operating expenses in the consolidated statements of operations and comprehensive income (loss). For the years ended December 31, 2022, and 2021, all additions to intangible assets were from acquisitions.
The estimated future annual amortization expense related to intangible assets as of December 31, 2022 are as follows:
2023 $ 3,237 
2024 3,214 
2025 3,182 
2026 2,911 
2027 1,912 
Thereafter 3,175 
   Total estimated future amortization expense $ 17,631 
Impairment of Goodwill and Other intangible assets

2022 Impairments
During the year ended December 31, 2022, management determined that the Company’s goodwill and certain intangible assets in California, Massachusetts, Nevada, Ohio, and Pennsylvania were impaired due to the Company’s lower than expected operating results, driven in part by significant price compression and the overall economy in the respective state. The Company utilized a combination of the income approach (discounted cash flow method) and market approach (a combination of the guideline transactions method and guideline company method) for its impairment test for each state, resulting in goodwill and intangible impairment charges reflected below. The goodwill and intangible asset impairment is recorded within operating expenses in the consolidated statements of operations and comprehensive income (loss).

Year Ended December 31, 2022 Key Assumptions
State Goodwill Impairment Intangible Asset Impairment Perpetual Growth Rate Discount Rate Weighted Average Cost of Capital Cash Flow Forecast
California $ 2,432  $ 10,142  2% 22.5% 21.5% 5 years
Massachusetts
 12,231 37,954 2% 21.0% 20.0% 5 years
Nevada
 24,980 22,150 2% 21.0% 20.0% 5 years
Ohio
 —  5,317 2% 24.5% 23.5% 5 years
Pennsylvania
 —  35,952 2% 22.0% 21.0% 5 years
$ 39,643  $ 111,515 

2021 Impairments
Nevada
During the year ended December 31, 2021, management determined that the lower than expected operating results of the Company’s Nevada operations was an indicator of impairment. The Company utilized the discounted cash flow method for its impairment test, and as a result, recorded a goodwill impairment charge of $1,783. The key inputs and assumptions used in the fair valuation of Nevada include: (i) a five-year cash flow forecast, which is based on the Company’s actual operating results and business plans; (ii) a perpetual growth rate of 3%; and (iii) an estimated discount rate of 16.5%. The goodwill impairment is recorded within operating expenses in the consolidated statements of operations and comprehensive income (loss).