From $91 million in cold hard cash to zero in three years … talk about a “burn rate.”

The value of Medfusion, a company grown in Cary to the point it was worth $91 million when Intuit bought it from entrepreneur Steve Malik three years ago, went to “zero” in a recent Intuit filing. (Malik had already moved on, becoming an investor. WRALTechWire reached out to him for comment Monday but has yet to hear back.)

A month later, the company decided to sell.

What the heck happened?

Followers of Intuit (Nasdaq: INTU) stock and employees shouldn’t have been surprised Monday when Intuit said Intuit Health was up for sale. The company, best known for its income tax products, also announced the sale of a finance unit for which it had already found a buyer.

But selling Intuit Health may be tougher.

Basically, the company surrendered in the health business when its largest customer, Allscripts, bought another company and became a direct competitor. (An Intuit spokesperson told Bloomberg that Allscripts was the customer.)

The doom of Intuit Health was spelled out in an SEC filing on May 30 when Intuit zeroed-out the value of the group.

Handwriting on the Wall

Here’s the filing details:

“In March 2013 the largest customer for our Intuit Health business acquired a company that offers similar solutions and competes with us directly in that market space.

“As a result, we performed an interim impairment test of goodwill and acquired intangible assets during the third quarter of fiscal 2013.

“We concluded that the carrying amounts of goodwill and certain definite-lived acquired intangible assets associated with our Intuit Health business were impaired and recorded an impairment charge of $46 million that reduced the carrying value of those assets to zero. [Emphasis added.]

“For goodwill, the amount of the impairment charge was determined by comparing the carrying value of goodwill assigned to the reporting unit with the implied fair value of the goodwill.

“We used a weighted combination of a discounted cash flow model (income approach) and comparisons to publicly traded companies engaged in similar businesses (market approach) to estimate the fair value of our Intuit Health reporting unit. Key assumptions that we used in the income approach included the amount and timing of estimated future cash flows to be generated by the business over an extended period of time, long-term growth rates for the business, and a rate of return that considered the relative risk of achieving the cash flows and the time value of money.

“For the market approach, we estimated the fair value of the reporting unit based on market multiples of revenue, operating income, and earnings for comparable publicly traded companies engaged in similar businesses.

“For those acquired intangible assets where the unamortized balances exceeded the undiscounted future net cash flows, we measured the amount of the impairment by calculating the amount by which the carrying values exceeded the estimated fair values, which were based on projected discounted future net cash flows.

“We believe that the assumptions used to determine the impairment amounts for the goodwill and acquired intangible assets for this business unit are reasonable. Intuit Health is part of our Other Businesses reportable segment.”

Warning Signs 

As WRALTechWire reported Monday, in a recent earnings conference call, Intuit executives acknowledged declining revenue and the loss of the big customer.

CFO R. Neil Williams noted:

“Our primary customer in Intuit Health is an EHR [electronic health records] provider, and they made an acquisition … of a competing product,” Williams said, according to a transcript of the call provided by SeekingAlpha. “And that caused us to reevaluate our plans going forward and things like that. And we usually take a really conservative approach on these types of things as we evaluate our asset-carrying values each quarter. And we felt like this adjustment was the appropriate thing to do.”

So now Intuit cashes out … probably for a lot less than the $91 million play it made.

“The Intuit Health assets will be a better fit for an organization with a stronger focus on the healthcare industry,” Intuit said Monday.

Who will buy?