Entry into a Definitive Agreement

On April 20, 2015 (the “Closing Date”), the Company closed on the acquisition of substantially all of the assets of Ciscura Holding Company, Inc., and its subsidiaries (“Ciscura”). Ciscura, based in Alpharetta, GA, was a privately-held Southeastern regional provider of ambulatory infusion pumps and services to medical facilities.

The Company acquired approximately 1,800 infusion pumps from Ciscura, its four person field sales team, as well as its facilities management personnel, which will become the foundation of the Company’s new Southeast facility. With this new regional facility, the Company will be in close proximity to a number of its largest existing customers, in addition to new customers previously serviced by Ciscura, enabling same day service for equipment and supplies to much of the Southeast region.

Ciscura’s results of operations are included in the Company’s consolidated statements of operations from the Closing Date which include one-time integration, professional, and other related expenses totaling approximately $0.6 million.

Purchase Price Allocation

Pursuant to ASC 805, “Business Combinations,” the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated fair values as of the Closing Date. The purchase price allocation was primarily based upon a valuation using income and cost approaches and management’s estimates and assumptions. The excess of the purchase price over the net tangible and identifiable intangible assets was preliminary recorded as goodwill. For tax purposes, goodwill consisted of both identifiable intangible assets (customer relationships and non-competition agreements from the table below) and unidentifiable intangible assets (goodwill from the table below). The Company expects goodwill to be partially deductible for tax purposes. The purchase price allocation was based on a preliminary analysis and is subject to further adjustments. Upon completion of the final purchase price allocation, the Company expects goodwill to significantly decrease and the corresponding intangible assets, including customer relationships and non-competition agreements, to significantly increase. The allocation of the purchase price to the fair values of the assets acquired and liabilities assumed as of the Closing Date is presented below (in thousands):

The asset purchase agreement provided for an adjustment to the purchase price based on the final number of pumps acquired and the associated treatments, which will be generated during the 90 day period post-closing from the approximately 100 medical facility relationships Ciscura had prior to the acquisition. The Company currently estimates that the total purchase price, which is based on the estimated number of acquired pumps and associated treatments, will be approximately $5.4 million. The Company does not expect the total purchase price to exceed $5.9 million based on management’s current estimates.

On the Closing Date, the Company made an initial payment of $3.8 million. Any increase adjustment to the purchase price above the initial payment will be based on the factors referred to above as of the 110^th day and the 140^th day after the Closing Date. As of June 30, 2015, the Company recorded an estimated remaining liability of $1.6 million, which is recorded in the balance sheet under the heading for accounts payable.

The Company has estimated that the associated integration and transaction costs will be approximately $0.7 million, of which $0.6 million has been recognized as of June 30, 2015.

Acquired property and equipment are being depreciated on a straight-line basis with estimated remaining lives ranging from 1 year to 7 years.

Unaudited Pro Forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations of the Company and Ciscura as though the companies had been combined as of the beginning of the three and six month periods ended June 30, 2015. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each period presented nor is it indicative of future results. We did not disclose the revenue and income of Ciscura separately as it is not practical due to the fact that the operations are substantially integrated. The following pro forma financial information presented also includes the pro forma depreciation and amortization charges from acquired tangible and intangible assets, and related tax effects (subject to the impact of the changes in purchase price allocation mentioned above) for the three and six months ended June 30, 2015 and 2014 (in thousands):