Company Quick10K Filing
Quick10K
Merit Medical Systems
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$60.88 55 $3,340
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2018-12-20 Officers
8-K 2018-11-14 M&A, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2018-10-25 Earnings, Regulation FD, Exhibits
8-K 2018-10-01 Enter Agreement, Regulation FD, Exhibits
8-K 2018-07-25 Enter Agreement, Other Events, Exhibits
8-K 2018-07-24 Regulation FD, Exhibits
8-K 2018-07-23 Earnings, Officers, Regulation FD, Exhibits
8-K 2018-06-06 Regulation FD, Exhibits
8-K 2018-05-31 Officers, Amend Bylaw, Shareholder Vote, Regulation FD, Exhibits
8-K 2018-04-25 Earnings, Regulation FD, Exhibits
8-K 2018-02-28 Earnings, Regulation FD, Exhibits
8-K 2018-02-21 M&A, Off-BS Arrangement, Regulation FD, Exhibits
RMD Resmed
ATRC Atricure
SRDX Surmodics
UTMD Utah Medical Products
ICAD iCAD
ATEC Alphatec Holdings
LLIT Lianluo Smart
NVCN Neovasc
DYNT Dynatronics
CYTX Cytori Therapeutics
MMSI 2018-09-30
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 mmsi-9302018x10qxex311.htm
EX-31.2 mmsi-9302018x10qxex312.htm
EX-32.1 mmsi-9302018x10qxex321.htm
EX-32.2 mmsi-9302018x10qxex322.htm

Merit Medical Systems Earnings 2018-09-30

MMSI 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018 
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
Commission File Number 0-18592
 
mmsi-20180930_g1.jpg
MERIT MEDICAL SYSTEMS, INC. 
(Exact name of registrant as specified in its charter)
Utah
87-0447695
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 1600 West Merit Parkway, South Jordan, Utah 84095
(Address of principal executive offices, including zip code) 
Registrant’s telephone number, including area code: (801) 253-1600
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer x
Accelerated Filer o
Non-Accelerated Filer o

Smaller Reporting Company o
Emerging Growth Company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.
Common Stock
54,833,602 
Title or class
Number of Shares
Outstanding at November 5, 2018




Table of Contents
TABLE OF CONTENTS





Table of Contents
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017 
(In thousands) 
September 30, December 31,
2018 2017 
(unaudited)
ASSETS 
CURRENT ASSETS: 
Cash and cash equivalents
$51,955 $32,336 
Trade receivables — net of allowance for uncollectible accounts — 2018 — $2,011 and 2017 — $1,769 129,282 105,536 
Other receivables
8,903 9,429 
Inventories
181,439 155,288 
Prepaid expenses and other assets
11,720 9,096 
Prepaid income taxes
3,307 3,225 
Income tax refund receivables
1,043 1,211 
Total current assets
387,649 316,121 
PROPERTY AND EQUIPMENT: 
Land and land improvements
26,926 19,877 
Buildings
150,880 147,356 
Manufacturing equipment
211,215 197,651 
Furniture and fixtures
53,869 49,528 
Leasehold improvements
33,365 31,161 
Construction-in-progress
48,166 32,896 
Total property and equipment
524,421 478,469 
Less accumulated depreciation
(204,496)(185,649)
Property and equipment — net
319,925 292,820 
OTHER ASSETS: 
Intangible assets:
Developed technology — net of accumulated amortization — 2018 — $93,680 and 2017 — $72,420 224,540 167,771 
Other — net of accumulated amortization — 2018 — $46,088 and 2017 — $38,127 64,565 59,553 
Goodwill
249,023 238,147 
Deferred income tax assets
2,254 2,359 
Other assets
61,927 35,040 
Total other assets
602,309 502,870 
TOTAL $1,309,883 $1,111,811 
See condensed notes to consolidated financial statements. (continued) 
3

Table of Contents
MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS 
AS OF SEPTEMBER 30, 2018 AND DECEMBER 31, 2017 
(In thousands) 
September 30, December 31,
2018 2017 
(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY 
CURRENT LIABILITIES: 
Trade payables
$50,697 $34,931 
Accrued expenses
65,530 58,932 
Current portion of long-term debt
22,000 19,459 
Income taxes payable
1,598 2,298 
Total current liabilities
139,825 115,620 
LONG-TERM DEBT 186,867 259,013 
DEFERRED INCOME TAX LIABILITIES 23,102 23,289 
LONG-TERM INCOME TAXES PAYABLE 4,846 4,846 
LIABILITIES RELATED TO UNRECOGNIZED TAX BENEFITS 2,746 2,746 
DEFERRED COMPENSATION PAYABLE 12,176 11,181 
DEFERRED CREDITS 2,296 2,403 
OTHER LONG-TERM OBLIGATIONS 14,814 16,379 
Total liabilities
386,672 435,477 
COMMITMENTS AND CONTINGENCIES (Notes 5, 10, 11, and 14) 
STOCKHOLDERS’ EQUITY: 
Preferred stock — 5,000 shares authorized as of September 30, 2018 and December 31, 2017; no shares issued   
Common stock, no par value; shares authorized — 2018 and 2017 - 100,000; issued and outstanding as of September 30, 2018 - 54,802 and December 31, 2017 - 50,248 568,051 353,392 
Retained earnings
354,236 321,408 
Accumulated other comprehensive income
924 1,534 
Total stockholders’ equity
923,211 676,334 
TOTAL $1,309,883 $1,111,811 
See condensed notes to consolidated financial statements. (concluded) 


4

Table of Contents
MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF INCOME 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 
(In thousands, except per share amounts - unaudited) 
Three Months Ended September 30, Nine Months Ended September 30, 
2018 2017 2018 2017 
NET SALES $221,659 $179,337 $649,504 $536,955 
COST OF SALES 119,620 98,823 359,400 296,358 
GROSS PROFIT 102,039 80,514 290,104 240,597 
OPERATING EXPENSES: 
Selling, general and administrative
66,382 54,716 200,389 169,896 
Research and development
14,525 12,838 44,163 38,676 
Intangible asset impairment charge 657  657  
Contingent consideration expense (benefit)
(661)20 (442)39 
Acquired in-process research and development
75 12,061 382 12,136 
Total operating expenses
80,978 79,635 245,149 220,747 
INCOME FROM OPERATIONS 21,061 879 44,955 19,850 
OTHER INCOME (EXPENSE): 
Interest income
359 94 847 266 
Interest expense
(2,329)(1,590)(8,064)(5,935)
Gain on bargain purchase
 (778) 10,796 
Other income (expense) - net
294 (810)(429)(376)
Other income (expense) — net
(1,676)(3,084)(7,646)4,751 
INCOME (LOSS) BEFORE INCOME TAXES 19,385 (2,205)37,309 24,601 
INCOME TAX EXPENSE 2,766 1,364 4,481 3,884 
NET INCOME (LOSS) $16,619 $(3,569)$32,828 $20,717 
EARNINGS PER COMMON SHARE: 
Basic
$0.31 $(0.07)$0.64 $0.43 
Diluted
$0.30 $(0.07)$0.62 $0.42 
AVERAGE COMMON SHARES: 
Basic
53,431 50,150 51,434 48,332 
Diluted
55,103 51,599 53,096 49,555 
See condensed notes to consolidated financial statements. 

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Table of Contents
MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
(In thousands - unaudited)

Three Months Ended September 30, Nine Months Ended September 30, 
2018201720182017
Net income $16,619 $(3,569)$32,828 $20,717 
Other comprehensive income (loss): 
Cash flow hedges
667 (144)3,541 166 
Less income tax benefit (expense)
(172)56 (910)(64)
Foreign currency translation adjustment
(1,637)721 (3,241)2,925 
Less income tax (expense)
   (252)
Total other comprehensive income (loss) (1,142)633 (610)2,775 
Total comprehensive income (loss) $15,477 $(2,936)$32,218 $23,492 
See condensed notes to consolidated financial statements. 



6

Table of Contents
MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 
(In thousands - unaudited) 
Nine Months Ended September 30, 
2018 2017 
CASH FLOWS FROM OPERATING ACTIVITIES: 
Net income
$32,828 $20,717 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
50,436 39,388 
Gain on bargain purchase
 (10,796)
Loss on sales and/or abandonment of property and equipment
425 219 
Write-off of patents and intangible assets
744 86 
Acquired in-process research and development
382 12,136 
Amortization of deferred credits
(106)(111)
Amortization of long-term debt issuance costs
603 514 
Deferred income taxes
 (290)
Stock-based compensation expense
4,494 2,883 
Changes in operating assets and liabilities, net of effects from acquisitions:
Trade receivables
(25,482)(10,963)
Other receivables
255 (449)
Inventories
(19,375)(9,922)
Prepaid expenses and other current assets
(2,719)(1,587)
Prepaid income taxes
(120)(231)
Income tax refund receivables
134 280 
Other assets
(1,370)(2,992)
Trade payables
15,936 (876)
Accrued expenses
7,707 4,470 
Income taxes payable
(1,528)(764)
Deferred compensation payable
994 1,107 
Other long-term obligations
(1,381)574 
Total adjustments
30,029 22,676 
Net cash provided by operating activities
62,857 43,393 
CASH FLOWS FROM INVESTING ACTIVITIES: 
Capital expenditures for:
Property and equipment
(47,024)(29,522)
Intangible assets
(2,234)(1,927)
Proceeds from the sale of property and equipment
7 9 
Issuance of note receivable
(10,750) 
Cash paid in acquisitions, net of cash acquired
(122,770)(103,500)
Net cash used in investing activities
(182,771)(134,940)
See condensed notes to consolidated financial statements. (continued) 
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MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 
(In thousands - unaudited) 
Nine Months Ended September 30, 
20182017
CASH FLOWS FROM FINANCING ACTIVITIES: 
Proceeds from issuance of common stock
$213,276 $143,069 
Offering costs
(366)(816)
Proceeds from issuance of long-term debt
380,825 151,462 
Payments on long-term debt
(450,575)(197,962)
Contingent payments related to acquisitions
(184)(45)
Payment of taxes related to an exchange of common stock
(2,616) 
Net cash provided by financing activities
140,360 95,708 
EFFECT OF EXCHANGE RATES ON CASH (827)30 
NET INCREASE IN CASH AND CASH EQUIVALENTS 19,619 4,191 
CASH AND CASH EQUIVALENTS: 
Beginning of period
32,336 19,171 
End of period
$51,955 $23,362 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION 
Cash paid during the period for: 
Interest (net of capitalized interest of $468 and $371, respectively) $8,018 $5,953 
Income taxes
$6,069 $4,029 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES 
Property and equipment purchases in accounts payable $3,058 $1,394 
Acquisition purchases in accrued expenses and other long-term obligations $ $12,000 
Merit common stock surrendered (43 and 0 shares, respectively) in exchange for exercise of stock options $2,262 $ 
See condensed notes to consolidated financial statements. (concluded) 

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MERIT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1. Basis of Presentation. The interim consolidated financial statements of Merit Medical Systems, Inc. ("Merit," "we" or "us") for the three and nine-month periods ended September 30, 2018 and 2017 are not audited. Our consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods and, consequently, do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America. In the opinion of our management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of September 30, 2018 and December 31, 2017, and our results of operations and cash flows for the three and nine-month periods ended September 30, 2018 and 2017. The results of operations for the three and nine-month periods ended September 30, 2018 and 2017 are not necessarily indicative of the results for a full-year period. These interim consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K (the "2017 Form 10-K") for the year ended December 31, 2017, which was filed with the Securities and Exchange Commission (the "SEC") on March 1, 2018.


2. Inventories. Inventories at September 30, 2018 and December 31, 2017, consisted of the following (in thousands):
September 30, December 31, 
2018 2017 
Finished goods $103,258 $86,555 
Work-in-process 20,546 12,799 
Raw materials 57,635 55,934 
Total Inventories $181,439 $155,288 
 

3. Stock-Based Compensation ExpenseStock-based compensation expense before income tax expense for the three and nine months ended September 30, 2018 and 2017, consisted of the following (in thousands):

Three Months Ended September 30, Nine Months Ended September 30, 
2018 2017 2018 2017 
Cost of sales $241 $189 $657 $453 
Research and development 141 110 412 262 
Selling, general and administrative 1,291 893 3,425 2,168 
Stock-based compensation expense before taxes $1,673 $1,192 $4,494 $2,883 

We recognize stock-based compensation expense (net of a forfeiture rate) for those awards which are expected to vest on a straight-line basis over the requisite service period. We estimate the forfeiture rate based on our historical experience and expectations about future forfeitures. As of September 30, 2018, the total remaining unrecognized compensation cost related to non-vested stock options, net of expected forfeitures, was approximately $20.7 million and is expected to be recognized over a weighted average period of 3.25 years.

During the three-month period ended September 30, 2018, we did not grant any new stock-based awards. During the nine-month period ended September 30, 2018, we granted stock-based awards representing 692,002 shares of our common stock. During the three and nine-month periods ended September 30, 2017, we granted stock-based awards representing 20,000 and approximately 1.3 million shares of our common stock, respectively. We use the Black-Scholes methodology to value the stock-based compensation expense for options. In applying the Black-Scholes methodology to the option grants, the fair value of our stock-based awards granted was estimated using the following assumptions for the periods indicated below:

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Nine Months Ended September 30, 
20182017
Risk-free interest rate 2.63% - 2.77%1.77% - 1.83%
Expected option life 5.0 years5.0 years
Expected dividend yield   
Expected price volatility 34.06% - 34.32% 33.81% - 34.07% 

The average risk-free interest rate is determined using the U.S. Treasury rate in effect as of the date of grant, based on the expected term of the stock options. We determine the expected term of the stock options using the historical exercise behavior of employees. The expected price volatility was determined using a weighted average of daily historical volatility of our stock price over the corresponding expected option life and implied volatility based on recent trends of the daily historical volatility. For options with a vesting period, compensation expense is recognized on a straight-line basis over the service period, which corresponds to the vesting period. 


4. Earnings Per Common Share (EPS). The computation of weighted average shares outstanding and the basic and diluted earnings per common share for the following periods consisted of the following (in thousands, except per share amounts):

Three Months Nine Months 
Net
Income
Shares 
Per Share
Amount
Net
Income
Shares 
Per Share
Amount
Period ended September 30, 2018: 
Basic EPS
$16,619 53,431 $0.31 $32,828 51,434 $0.64 
Effect of dilutive stock options and warrants
1,672 1,662 
Diluted EPS $16,619 55,103 $0.30 $32,828 53,096 $0.62 
Stock options excluded from the calculation of common stock equivalents as the impact was anti-dilutive 667 462 
Period ended September 30, 2017: 
Basic EPS
$(3,569)50,150 $(0.07)$20,717 48,332 $0.43 
Effect of dilutive stock options and warrants
1,449 1,223 
Diluted EPS $(3,569)51,599 $(0.07)$20,717 49,555 $0.42 
Stock options excluded from the calculation of common stock equivalents as the impact was anti-dilutive 200 434 


5. Acquisitions. During July 2018, we purchased 1,786,000 preferred limited liability company units of Cagent Vascular, LLC, a medical device company ("Cagent"), for approximately $2.2 million. Our investment has been accounted for as an equity investment reflected within other assets in the accompanying consolidated balance sheets because we are not able to exercise significant influence over the operations of Cagent. Our total investment in Cagent represents an ownership of approximately 19.5% of the outstanding limited liability company units.

On May 23, 2018, we entered into an asset purchase agreement with DirectACCESS Medical, LLC (“DirectACCESS”) to acquire its assets, including, certain product distribution agreements for the FirstChoice™ Ultra High Pressure PTA Balloon Catheter. We accounted for this acquisition as a business combination. The purchase price for the assets was approximately $7.3 million. The sales and results of operations related to the acquisition have been included in our cardiovascular segment since the acquisition date and were not material. Acquisition-related costs associated with the DirectACCESS acquisition, which were included in selling, general and administrative expenses in our consolidated statements of income, were not material. The purchase price was preliminarily allocated as follows (in thousands):

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Inventories
$971 
Intangibles
Developed technology
4,840 
Customer list
120 
Trademarks
400 
Goodwill
938 
Total assets acquired $7,269 

We are amortizing the developed technology intangible asset over ten years, the related trademarks over ten years and the customer list on an accelerated basis over five years. The total weighted-average amortization period for these acquired intangible assets is approximately 9.9 years.

On May 18, 2018, we paid $750,000 for a distribution agreement with QXMédical, LLC ("QXMédical") for the Q50® PLUS Stent Graft Balloon Catheter. We accounted for this acquisition as an asset purchase. We are amortizing the distribution agreement as an intangible asset over a period of ten years.

On April 6, 2018, we entered into long-term agreements with NinePoint Medical, Inc. (“NinePoint”), pursuant to which, we (a) became the exclusive worldwide distributor for the NvisionVLE® Imaging System with Real-time Targeting™ using Optical Coherence Tomography (OCT) and (b) acquired an option to purchase up to 100% of the outstanding equity in NinePoint throughout a three-month period commencing 18 months subsequent to the agreement date, both in exchange for total consideration of $10.0 million. We accounted for this transaction as an asset purchase. The results of operations related to the distribution agreement have been included in our endoscopy operating segment since the acquisition date. During the three and nine months ended September 30, 2018, our net sales of NinePoint products were approximately $1.4 million and $2.5 million, respectively. We believe the NinePoint products will enhance the product offerings of our endoscopy operating segment and will be another step in our strategy to add therapy and disease-state products to our portfolio. The NinePoint products have 510(k) clearance in the United States, and NinePoint is preparing a CE mark application. We plan to launch the NinePoint products globally on a measured basis.

In addition, on April 6, 2018, we made a loan to NinePoint for $10.5 million with a maturity date of April 6, 2023, at which time the loan, together with accrued interest thereon, will be due and payable. The loan bears interest at an annual rate of 9% and is collateralized by NinePoint's rights, interest and title to the NvisionVLE® Imaging System and substantially all other assets of NinePoint. This loan has been recorded as a note receivable within other long-term assets in our consolidated balance sheets.

On February 14, 2018, we acquired certain divested assets from Becton, Dickinson and Company ("BD"), for an aggregate purchase price of $100.3 million. The assets acquired include the soft tissue core needle biopsy products sold under the tradenames of Achieve® Programmable Automatic Biopsy System, Temno® Biopsy System, Tru-Cut® Biopsy Needles as well as Aspira® Pleural Effusion Drainage Kits, and the Aspira® Peritoneal Drainage System. We accounted for this acquisition as a business combination.

During the three and nine-month periods ended September 30, 2018, our net sales of BD products were approximately $11.8 million and $30.3 million, respectively. It is not practical to separately report earnings related to the products acquired from BD, as we cannot split out sales costs related solely to the products we acquired from BD, principally because our sales representatives sell multiple products (including the products we acquired from BD) in our cardiovascular business segment. Acquisition-related costs associated with the BD acquisition, which are included in selling, general and administrative expenses in the accompanying consolidated statements of income, were approximately $1.8 million for the nine-month period ended September 30, 2018. The following table summarizes the purchase price allocated to the assets acquired from BD (in thousands):
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Inventories
$5,804 
Property and equipment
748 
Intangibles
Developed technology
74,000 
Customer list
4,200 
Trademarks
4,900 
Goodwill
10,613 
Total assets acquired $100,265 

We are amortizing the developed technology intangible assets over eight years, the related trademarks over nine years, and the customer lists on an accelerated basis over seven years. The total weighted-average amortization period for these acquired intangible assets is approximately eight years.

On October 2, 2017, we acquired a custom procedure pack business located in Melbourne, Australia from ITL Healthcare Pty Ltd. ("ITL"), for an aggregate purchase price of $11.3 million. We accounted for this acquisition as a business combination. The following table summarizes the aggregate purchase price allocated to the assets acquired from ITL (in thousands):
Assets Acquired 
Trade receivables
$1,287 
Other receivables
56 
Inventories
1,808 
Prepaid expenses and other assets
65 
Property and equipment
1,053 
Intangibles
Customer lists
5,940 
Goodwill
3,945 
Total assets acquired 14,154 
Liabilities Assumed 
Trade payables
(216)
Accrued expenses
(747)
Deferred income tax liabilities
(1,901)
Total liabilities assumed (2,864)
Total net assets acquired $11,290 

We are amortizing the customer list on an accelerated basis over seven years. Acquisition-related costs associated with the ITL acquisition, which were included in selling, general and administrative expenses in the consolidated statements of income in the 2017 Form 10-K, were not material. The results of operations related to this acquisition have been included in our cardiovascular operating segment since the acquisition date. During the three and nine months ended September 30, 2018, our net sales of ITL products were approximately $1.9 million and $6.1 million, respectively. It is not practical to separately report the earnings related to the ITL acquisition, as we cannot split out sales costs related solely to the products we acquired from ITL, principally because our sales representatives sell multiple products (including the products we acquired from ITL) in our cardiovascular business segment.

On August 4, 2017, we acquired from Laurane Medical S.A.S. ("Laurane") and its shareholders inventories and the intellectual property rights associated with certain manual bone biopsy devices, manual bone marrow needles and muscle biopsy kits for an aggregate purchase price of $16.5 million. We also recorded a contingent consideration liability of $5.5 million related to royalties potentially payable to Laurane's shareholders pursuant to the terms of an intellectual property purchase agreement. We accounted for this acquisition as a business combination. The following table summarizes the aggregate purchase price (including contingent royalty payment liabilities) allocated to the assets acquired from Laurane (in thousands):
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Inventories
$594 
Intangibles
Developed technology
14,920 
Customer list 120 
Goodwill 6,366 
Total assets acquired $22,000 

We are amortizing the developed technology intangible asset over 12 years and the customer list on an accelerated basis over one year. The total weighted-average amortization period for these acquired intangible assets is 11.9 years. The sales and results of operations related to the acquisition have been included in our cardiovascular segment since the acquisition date and were not material. Acquisition-related costs associated with the Laurane acquisition, which were included in selling, general and administrative expenses in the consolidated statements of income of our 2017 Form 10-K, were not material.

On July 3, 2017, we acquired from Osseon LLC (“Osseon”) substantially all the assets related to Osseon’s vertebral augmentation products. We accounted for this acquisition as a business combination. The purchase price for the assets was approximately $6.8 million. Acquisition-related costs associated with the Osseon acquisition, which were included in selling, general and administrative expenses in the consolidated statements of income of our 2017 Form 10-K, were not material. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the three and nine months ended September 30, 2018, our net sales of Osseon products were approximately $478,000 and $1.6 million, respectively. It is not practical to separately report the earnings related to the Osseon acquisition, as we cannot split out sales costs related solely to the products we acquired from Osseon, principally because our sales representatives sell multiple products (including the products we acquired from Osseon) in our cardiovascular business segment. The following table summarizes the purchase price allocated to the assets acquired (in thousands):
Inventories $979 
Property and equipment 58 
Intangibles 
Developed technology 5,400 
Customer list 200 
Goodwill 203 
Total assets acquired $6,840 

We are amortizing the developed technology intangible asset over nine years and customer lists on an accelerated basis over eight years. The total weighted-average amortization period for these acquired intangible assets is approximately 9.0 years.

On May 1, 2017, we entered into an agreement and plan of merger with Vascular Access Technologies, Inc. ("VAT"), pursuant to which we acquired the SAFECVAD™ device. We accounted for this acquisition as a business combination. The purchase price for the acquisition was $5.0 million. We also recorded $4.9 million of contingent consideration related to royalties potentially payable to VAT pursuant to the merger agreement. The following table summarizes the purchase price allocated to the net assets acquired (in thousands):
Intangibles 
Developed technology $7,800 
In-process technology 920 
Goodwill 4,281 
Deferred tax liabilities (3,101)
Total net assets acquired $9,900 

We are amortizing the developed technology intangible asset over 15 years. The sales and results of operations related to the acquisition have been included in our cardiovascular segment since the acquisition date and were not material. Acquisition-related costs associated with the VAT acquisition, which were included in selling, general and administrative expenses in the consolidated statements of income of our 2017 Form 10-K, were not material.

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On January 31, 2017, we acquired the critical care division of Argon Medical Devices, Inc. ("Argon"), including a manufacturing facility in Singapore, the related commercial operations in Europe and Japan, and certain inventories and intellectual property rights within the United States. We made an initial payment of approximately $10.9 million and received a subsequent reduction to the purchase price of approximately $797,000 related to a working capital adjustment according to the terms of the purchase agreement. We accounted for the acquisition as a business combination.

Acquisition-related costs associated with the acquisition of the Argon critical care division during the year ended December 31, 2017, which were included in selling, general and administrative expenses in the consolidated statements of income of our 2017 Form 10-K, were approximately $2.6 million. The results of operations related to this acquisition have been included in our cardiovascular segment since the acquisition date. During the three and nine months ended September 30, 2018, our net sales of the Argon critical care products were approximately $11.0 million and $34.2 million, respectively. It is not practical to separately report the earnings related to the Argon critical care acquisition, as we cannot split out sales costs related solely to the products we acquired from Argon, principally because our sales representatives sell multiple products (including the products we acquired from Argon) in our cardiovascular business segment.

The assets and liabilities in the purchase price allocation for the Argon critical care acquisition are stated at fair value based on estimates of fair value using available information and making assumptions our management believes are reasonable. The following table summarizes the purchase price allocated to the net tangible and intangible assets acquired and liabilities assumed (in thousands):
Assets Acquired
Cash and cash equivalents $1,436 
Trade receivables 8,351 
Inventories 11,222 
Prepaid expenses and other assets 1,275 
Income tax refund receivables 165 
Property and equipment 2,319 
Deferred income tax assets 202 
Intangibles 
Developed technology 2,200 
Customer lists 1,500 
Trademarks 900 
Total assets acquired 29,570 
Liabilities Assumed 
Trade payables (2,414)
Accrued expenses (5,083)
Deferred income tax liabilities (934)
Total liabilities assumed (8,431)
Total net assets acquired 21,139 
Gain on bargain purchase (1)
(11,039)
Total purchase price $10,100 
(1)
The total fair value of the net assets acquired from Argon exceeded the purchase price, resulting in a gain on bargain purchase which was recorded within other income (expense) in our consolidated statements of income. We believe the reason for the gain on bargain purchase was a result of the divestiture of a non-strategic, slow-growth critical care business for Argon. It is our understanding that the divestiture allows Argon to focus on its higher growth interventional portfolio. A reduction of $1.2 million was recorded since the bargain purchase gain was first presented in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, resulting from our ongoing activities, including reassessment of the assets acquired and liabilities assumed. The purchase price allocation for this acquisition is now final.

With respect to the Argon critical care assets, we are amortizing developed technology over seven years and customer lists on an accelerated basis over five years. While U.S. trademarks can be renewed indefinitely, we estimate that we will generate cash flow from the acquired trademarks for a period of five years from the acquisition date. The total weighted-average amortization period for these acquired intangible assets is approximately 6.0 years.

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