v3.26.3
Business Combinations
 9 Months Ended
Sep. 27, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
Canary Connect, Inc.

On March 11, 2026, we entered into and simultaneously closed an Asset Purchase Agreement with Canary Connect, Inc. (“Canary”), a New York-based Internet of Things (“IoT”) company that designs and sells smart home security devices and SaaS solutions. The purpose of this transaction is to expand our presence in the AI-driven smart home security market. The transaction is accounted for as a business combination in accordance with ASC 805, Business Combinations. As a result of the transaction, we obtained control of Canary by obtaining the ability to direct its ongoing operations and to receive substantially all of the economic benefits associated with Canary.

As part of this transaction, we also entered into a Transitional Service Agreement with Canary and a Platform Transformation Agreement with Smartfrog & Canary Holdings, Inc. (“Smartfrog Group”) in order to continue servicing Canary’s existing customers and subscribers.

We allocate the purchase consideration to the identifiable assets acquired and liabilities assumed in this business combination based on their acquisition-date fair values, which are determined using income and market-based valuation techniques that require significant judgments and assumptions, including projected revenue, profitability and cash flows. Goodwill recognized through the Canary acquisition represents the excess of the purchase price over the fair value of identifiable net assets and is primarily attributable to expected synergies and operational efficiencies and anticipated future economic benefits. The resulting goodwill associated with Canary is deductible for income tax purposes.

The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period, which is up to one year from the acquisition date. As of September 27, 2026, the purchase accounting is not yet complete and as such, the final allocation between intangible assets and goodwill may be subject to change. Adjustments, if any, to the preliminary purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The acquired intangible assets will be amortized over their estimated useful lives.

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

Cash paid at close$36,000 
Fixed deferred acquisition consideration (1)
12,907 
Total purchase consideration$48,907 
_________________________
(1)    Represents the present value of thirty-six monthly license fee payments to be made at interest rate of 5.8%.
The purchase price allocation is as follows (in thousands):

Assets acquired:
Inventory$1,911 
Intangible assets19,090 
Goodwill27,906 
Total assets acquired$48,907 
Liabilities assumed:
Total liabilities assumed— 
Fair value of assets acquired and liabilities assumed, net$48,907 

The fair values and useful lives of identifiable intangible assets were as follows:

Gross
Amount		Weighted Average Amortization Period
(In thousands)(In years)
Customer relationship (1)
$8,320 10
Proprietary technologies (2)
9,670 
5 - 10
Trade names (3)
1,100 13
Total intangible assets$19,090 10
_________________________
(1)    Customer relationship intangible assets were valued using the multi-period excess earnings method, which is the present value of the projected cash flows expected to be generated by the existing customer relationships, after deducting contributory asset charges representing a fair return on other assets required to generate those cash flows. Key assumptions included discounted cash flow and estimated customer retention rates.

(2)    Proprietary technologies intangible assets comprised of various developed technologies, which were valued using the relief-from-royalty method and the multi-period excess earnings method. The relief-from-royalty method is based on the discounted cash flow savings accruing to the owner from not having to license the technology from a third party. Key assumptions included attributable revenue, royalty rates, and technology obsolescence rates. The multi-period excess earnings method is based on the discounted cash flows after deducting contributory asset charges representing a fair return on other assets required to generate those cash flows. Key assumptions included attributable revenue, profitability, cash flows, and technology obsolescence rates.

(3)    Trade names intangible assets were valued using the relief from royalty method, which is the discounted cash flow savings accruing to the owner by virtue of the fact that the owner is not required to license the trade names from a third party. Key assumptions included attributable revenue expected from the trade names, royalty rates, and assumed asset life.

Aloe Care Health, Inc.

On April 16, 2026, we entered into and simultaneously closed a Merger Agreement with Aloe Care Health, Inc. (“Aloe Care”), a privately held company that provides an AI-powered medical alert and fall prevention platform for patients and their caregivers. The transaction is intended to accelerate the expansion of our AI-powered services for aging-in-place care in collaboration with health providers, patients and their families. The transaction is accounted for as a business combination in accordance with ASC 805, Business Combinations. As a result of the transaction, we obtained control of Aloe Care by obtaining the ability to direct its ongoing operations and to receive substantially all of the economic benefits associated with Aloe Care. Under the Merger Agreement, we acquired 100% of the outstanding equity interests of Aloe Care in exchange for (i) $15.0 million of cash consideration paid at closing; and (ii) contingent earnout of up to $25.0 million, payable, at our option, in cash, shares of our common stock, or a combination of cash and shares, subject to the terms of the Merger Agreement.
We allocate the purchase consideration to the identifiable assets acquired and liabilities assumed in this business combination based on their acquisition-date fair values, which are determined using income and market-based valuation techniques that require significant judgments and assumptions, including projected revenue, profitability and cash flows. Goodwill recognized through the Aloe Care acquisition represents the excess of the purchase price over the fair value of identifiable net assets and is primarily attributable to expected synergies and operational efficiencies and anticipated future economic benefits. The resulting goodwill associated with Aloe Care is not deductible for income tax purposes.

The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period, which is up to one year from the acquisition date. As of September 27, 2026, the purchase accounting and opening balance sheet are not yet complete and as such, the final working capital and allocation between intangible assets and goodwill may be subject to change. Adjustments, if any, to the preliminary purchase price allocation will be made in the periods in which the adjustments are determined, and the cumulative effect of such adjustments will be calculated as if the adjustments had been completed as of the acquisition date. The acquired intangible assets will be amortized over their estimated useful lives.

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

Cash paid at close (1)
$14,102 
Earnout contingent consideration (2)
5,380 
Total purchase consideration$19,482 
_________________________
(1)    Cash paid at close does not include the acquisition-related costs which are expensed when incurred and are not purchase consideration.

(2)    The earnout was accounted for as contingent consideration at fair value and was valued using a Monte Carlo simulation model, applying a revenue discount rate of 6.3% to the projected revenue inputs and a discount rate of 7.8% to present value the resulting payment as of the acquisition date. The fair value measurement was based on significant inputs not observable in the market, including projected revenue, probability, and the timing of achieving the earnout targets.

The purchase price allocation is as follows (in thousands):

Assets acquired:
Cash$27 
Restricted cash (1)
1,920 
Inventories2,455 
Other acquired assets433 
Intangible assets7,840 
Goodwill8,992 
Total assets acquired$21,667 
Liabilities assumed:
Accounts payable$1,960 
Other assumed liabilities225 
Total liabilities assumed$2,185 
Fair value of assets acquired and liabilities assumed, net$19,482 
_________________________
(1)    Restricted cash is in escrow funds to secure post-acquisition indemnification obligations and working capital adjustments.
The fair values and useful lives of identifiable intangible assets were as follows:

Gross
Amount		Weighted Average Amortization Period
(In thousands)(In years)
Customer relationship (1)
$470 5
Proprietary technologies (2)
4,810 10
Trade names (3)
2,560 10
Total intangible assets$7,840 10
_________________________
(1)    Customer relationship intangible assets were valued using the distributor method, which is the present value of the after-tax cash flows expected to be generated by the existing customer relationships, after reduction by an estimated fair rate of return on contributory assets required to generate the customer relationship revenues. Key assumptions included the discount rate, estimated customer retention rates, and the selected distributor profit margin derived from guideline public distributor companies.

(2)    Proprietary technologies intangible assets were valued using the multi-period excess earnings method based on the discounted cash flows and technology obsolescence rate. Key assumptions included attributable revenue, profitability, cash flows, and technology obsolescence rates.

(3)    Trade names intangible assets were valued using the relief from royalty method, which is the discounted cash flow savings accruing to the owner by virtue of the fact that the owner is not required to license the trade names from a third party. Key assumptions included attributable revenue expected from the trade names, royalty rates, and assumed asset life.

During the nine months ended September 27, 2026, we recorded $0.8 million and $2.2 million in acquisition-related costs for Canary and Aloe Care, respectively, which are expensed when incurred and included in other operating expense on the unaudited condensed consolidated statements of operations and comprehensive income.

During the nine months ended September 27, 2026, we recorded $7.8 million of subscriptions and services revenue and $2.0 million of operating income from Canary and Aloe Care, which are included within our unaudited condensed consolidated statements of operations and comprehensive income from their respective effective dates. The effect of these business combinations was not material to our financial results. Therefore, the actual and pro-forma results of operations from the respective acquisition dates to September 27, 2026 have not been presented.