The Company's preliminary allocation of the fair value of assets acquired and liabilities assumed as of the acquisition date of July 1, 2018 is as follows ($ in millions):
|
|
|
|
|
|
Assets acquired and liabilities assumed |
|
|
Cash and cash equivalents |
|
$ |
2,001 |
|
Premium and related receivables |
|
510 |
|
Other current assets |
|
31 |
|
Restricted deposits |
|
495 |
|
Property, software and equipment, net |
|
48 |
|
Intangible assets (a)
|
|
956 |
|
Other long-term assets |
|
1 |
|
Total assets acquired |
|
4,042 |
|
|
|
|
Medical claims liability |
|
1,210 |
|
Accounts payable and accrued expenses |
|
258 |
|
Return of premium payable |
|
123 |
|
Unearned revenue |
|
115 |
|
Other long-term liabilities |
|
300 |
|
Total liabilities assumed |
|
2,006 |
|
|
|
|
Total identifiable net assets |
|
2,036 |
|
Goodwill (b)
|
|
1,591 |
|
Total assets acquired and liabilities assumed |
|
$ |
3,627 |
|
The Company has made the following preliminary fair value adjustments based on information reviewed through March 31, 2019. Significant fair value adjustments are noted as follows:
|
|
(a) |
The identifiable intangible assets acquired are to be measured at fair value as of the completion of the acquisition. The preliminary fair value of intangible assets is determined primarily using variations of the "income approach," which is based on the present value of the future after tax cash flows attributable to each identified intangible asset. Other valuation methods, including the market approach and cost approach, were also considered in estimating the fair value. The Company has estimated the fair value of intangible assets to be $956 million with a weighted average life of 13 years. The identifiable intangible assets include customer relationships, trade names, provider contracts and developed technology.
|
The fair values and weighted average useful lives for identifiable intangible assets acquired are as follows:
|
|
|
|
|
|
|
|
|
|
Fair Value |
|
Weighted Average Useful Life (in years) |
Customer relationships |
|
$ |
711 |
|
|
11 |
Trade name |
|
196 |
|
|
20 |
Provider contracts |
|
33 |
|
|
15 |
Developed technologies |
|
16 |
|
|
2 |
Total intangible assets acquired |
|
$ |
956 |
|
|
13 |
|
|
(b) |
The acquisition resulted in $1.6 billion of goodwill related primarily to synergies expected from the acquisition and the assembled workforce of Fidelis Care. All of the goodwill has been assigned to the Managed Care segment. The goodwill is deductible for income tax purposes.
|
|