Acquisitions and Disposals

6 Months Ended

Jun. 30, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Acquisitions and Disposals

Acquisition of Pathline, LLC

On April 4, 2025 (the “Pathline Acquisition Date”), the Company completed the acquisition of a 100% ownership interest in Pathline LLC (“Pathline”), a CLIA/CAP/NYS-certified laboratory based in New Jersey. The purchase price consisted of (i) gross initial consideration of $8.0 million, which was reduced by a net adjustment of $0.7 million reflective of cash and other adjustments and (ii) up to $2.0 million of contingent consideration if Pathline completes certain validation milestones within a specific timeline. As of the Pathline Acquisition Date, the Company estimated the contingent consideration liability to be $1.0 million, reflecting its best estimate regarding the achievement of the validation milestone. The Pathline acquisition aligns with the Company's strategic objective of expanding its presence, capabilities, and offerings in the Northeastern United States.

The acquisition of Pathline was determined to be a business combination and has been accounted for using the acquisition method. The purchase price and purchase price allocation were based upon Management’s best estimates and assumptions and were considered preliminary as of June 30, 2025, and are subject to future revision. The following table summarizes the estimated purchase consideration recorded for the acquisition of Pathline, the estimated fair value of the net assets acquired and liabilities assumed, and the preliminary calculation of goodwill based on the excess of the consideration transferred over the fair value of the net assets acquired and liabilities assumed at the Pathline Acquisition Date (in thousands, except per share data):


	Amount
Purchase consideration:
Initial cash consideration, net(1)	$	7,275


Contingent consideration	1,000
Total purchase consideration	$	8,275

Allocation of the purchase consideration:
Cash and cash equivalents	$	317
Accounts receivable, net	3,324
Inventories	657
Prepaid and other current assets	443
Intangible assets	1,200
Property and equipment	1,264
Operating lease right-of-use assets	6,632
Other non-current assets	200
Total identifiable assets acquired	14,037




Total identifiable liabilities assumed	10,602
Net identifiable assets acquired	3,435
Goodwill	4,840
Total purchase consideration	$	8,275

(1) Includes net adjustments of $0.7 million reflective of cash and other adjustments.

Due to the timing of the acquisition, the preliminary estimates and measurements are subject to change during the measurement period for assets acquired, liabilities assumed, and tax adjustments. The Company will finalize these amounts no later than one year from the acquisition date once it obtains the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition date may result in adjustments to the preliminary amounts disclosed above which may impact the reported results in the period those adjustments are identified.

The goodwill recognized was primarily attributable to expected synergies of the combined businesses, increased market penetration, and expanded service capabilities in the Northeast resulting from the acquisition. A majority of the goodwill resulting from the acquisition of Pathline is expected to be deductible for income tax purposes.

Acquired intangible assets consist of customer relationships, which were valued using an income-based approach by discounting expected cash flows from existing customer relationships to determine the economic benefit expected to be realized post-acquisition. These assets will be amortized over a weighted average period of seven years.

Acquisition and integration costs related to Pathline were approximately $3.2 million and $4.4 million, respectively, for the three and six months ended June 30, 2025 and are recorded as general and administrative expenses in the Company’s Consolidated Statements of Operations. There were no such amounts recorded for the three and six months ended June 30, 2024.

The results of operations of Pathline are included in the Company’s Consolidated Financial Statements beginning on the Pathline Acquisition Date. For the three and six months ended June 30, 2025, revenue related to Pathline was approximately $4.7 million. Net loss related to Pathline was approximately $2.7 million for the three and six months ended June 30, 2025. No pro forma information has been included relating to the Pathline acquisition, as this acquisition was not deemed to be material to the Company’s revenue or net loss on a pro forma basis.

Planned sale of Trapelo Health, LLC

In the second quarter of 2025, the Company initiated a plan to sell Trapelo Health, LLC (“Trapelo”), its wholly owned subsidiary, as a result of Management's assessment of the Company's long-term strategy. Management determined that the sale of Trapelo will allow the Company to focus on its core strategic operations. The sale is expected to close within a year, subject to regulatory and other customary closing conditions.

The assets and liabilities of Trapelo met the criteria for classification as held for sale and are reported at fair value less costs to sell in the Consolidated Balance Sheets as of June 30, 2025. The assets held for sale primarily consist of intangible assets. The liabilities held for sale include accrued compensation and other liabilities.

In connection with the classification of these assets and liabilities as held for sale, Management evaluated the fair value of assets for recoverability, then evaluated the fair value of the disposal group, including goodwill. The fair value of the disposal group was determined using significant unobservable inputs (Level 3) based on expected proceeds to be received upon the sale of the business. As a result of this evaluation, it was determined that the fair value of the disposal group, less costs to sell, was less than its carrying value. Accordingly, an impairment of $8.2 million, consisting of a $3.5 million loss on goodwill and a $4.7 million loss on developed technology, was recognized for both the three and six months ended June 30, 2025, under impairment charges in the Consolidated Statements of Operations.

The following table summarizes the major classes of assets and liabilities of Trapelo that were classified as held for sale in the Consolidated Balance Sheets as of June 30, 2025 (in thousands).


	June 30, 2025
ASSETS
Intangible assets, net	$	7,167
Property and equipment, net	1,378
Other assets	411
Total assets held for sale	$	8,956

LIABILITIES	$	456
Total liabilities held for sale	$	456

This disposition is not accounted for as discontinued operations as it does not represent a strategic shift that will have a major effect on the Company's operations and financial results.

NEOGENOMICS INC 10-Q