Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

v3.19.3.a.u2
Goodwill and Intangible Assets
12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Goodwill and Intangible Assets

The following table summarizes the changes in goodwill by operating segment ($ in millions):  
 
 Managed Care 
 
Specialty Services
 
Total 
Balance as of December 31, 2017
$
4,015

 
$
734

 
$
4,749

Acquisitions and purchase accounting adjustments
1,671

 
595

 
2,266

Balance as of December 31, 2018
5,686

 
1,329

 
7,015

Acquisitions and purchase accounting adjustments
61

 
47

 
108

Impairment
(16
)
 
(243
)
 
(259
)
Translation impact
(1
)
 

 
(1
)
Balance as of December 31, 2019
$
5,730

 
$
1,133

 
$
6,863



During the third quarter of 2019, the Company recorded $271 million of non-cash goodwill ($259 million) and intangible asset ($12 million) impairment, substantially all associated with the Company's U.S. Medical Management (USMM) physician home health business in the Specialty Services segment. The impairment was identified as part of the Company's quarterly review procedures, which included an analysis of new information related to its shared savings demonstration programs, slower than expected penetration of the physician home health business model into its Medicaid population, and the related impact to revised forecasts. The Company conducted an impairment analysis of the identifiable intangible assets and goodwill of the reporting unit using the income approach, in which fair value is derived based on the present value of discounted expected cash flows.

The majority of the increase in the managed care segment goodwill in 2018 was related to the acquisition and fair value allocations related to the Fidelis Care acquisition discussed in Note 3. Acquisitions. The majority of the increase in the specialty services segment goodwill related to other acquisitions discussed in Note 12. Stockholders' Equity.

Intangible assets at December 31, consist of the following ($ in millions):  
 
 
 
 
 
Weighted Average Life in Years
 
2019
 
2018
 
2019
 
2018
Purchased contract rights
$
1,214

 
$
1,173

 
12.8
 
12.6
Provider contracts
299

 
311

 
12.4
 
12.3
Customer relationships
812

 
769

 
10.8
 
10.9
Trade names
361

 
361

 
15.2
 
15.2
Developed technologies
179

 
180

 
5.2
 
5.2
Other intangibles
5

 
5

 
2.7
 
2.7
Intangible assets
2,870

 
2,799

 
12.0
 
11.9
Less accumulated amortization:
 
 
 
 
 
 
 
Purchased contract rights
(375
)
 
(283
)
 
 
 
 
Provider contracts
(115
)
 
(90
)
 
 
 
 
Customer relationships
(122
)
 
(57
)
 
 
 
 
Trade names
(80
)
 
(55
)
 
 
 
 
Developed technologies
(111
)
 
(72
)
 
 
 
 
Other intangibles
(4
)
 
(3
)
 
 
 
 
Total accumulated amortization
(807
)
 
(560
)
 
 
 
 
Intangible assets, net
$
2,063

 
$
2,239

 
 
 
 


Amortization expense was $258 million, $211 million and $156 million for the years ended December 31, 2019, 2018 and 2017, respectively. Estimated total amortization expense related to the December 31, 2019 intangible assets for each of the five succeeding fiscal years is as follows ($ in millions):
Year
 
Expense
2020
 
$
252

2021
 
228

2022
 
222

2023
 
220

2024
 
213