Intangible Assets

9 Months Ended

Sep. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table shows changes in the carrying amounts of goodwill by reporting unit for the nine months ended September 30, 2018:



	Critical Illness Recovery Hospital⁽¹⁾		Rehabilitation Hospital⁽¹⁾		Outpatient Rehabilitation			Concentra			Total
	(in thousands)
Balance as of December 31, 2017	$	1,045,220	$	415,528	$	647,522		$	674,542		$	2,782,812
Acquired	—		1,118		2,465			536,945			540,528
Measurement period adjustment	—		—		—			(2,472		)	(2,472		)
Sold	—		—		(9,409		)	—			(9,409		)
Balance as of September 30, 2018	$	1,045,220	$	416,646	$	640,578		$	1,209,015		$	3,311,459

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(1)	The critical illness recovery hospital reporting unit was previously referred to as the long term acute care reporting unit. The rehabilitation hospital reporting unit was previously referred to as the inpatient rehabilitation reporting unit.

Identifiable Intangible Assets

The following table provides the gross carrying amounts, accumulated amortization, and net carrying amounts for the Company’s identifiable intangible assets:



	December 31, 2017							September 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in thousands)
Indefinite-lived intangible assets:
Trademarks	$	166,698	$	—		$	166,698	$	166,698	$	—		$	166,698
Certificates of need	19,155		—			19,155		19,118		—			19,118
Accreditations	1,895		—			1,895		1,857		—			1,857
Finite-lived intangible assets:
Trademarks	—		—			—		5,000		(3,333		)	1,667
Customer relationships	143,953		(38,281		)	105,672		279,967		(55,760		)	224,207
Favorable leasehold interests	13,295		(4,319		)	8,976		13,553		(5,653		)	7,900
Non-compete agreements	28,023		(3,900		)	24,123		28,953		(5,553		)	23,400
Total identifiable intangible assets	$	373,019	$	(46,500	)	$	326,519	$	515,146	$	(70,299	)	$	444,847

The Company’s accreditations and indefinite-lived trademarks have renewal terms and the costs to renew these intangible assets are expensed as incurred. At September 30, 2018, the accreditations and indefinite-lived trademarks have a weighted average time until next renewal of 1.5 years and 8.4 years, respectively.

The Company’s finite-lived customer relationships, non-compete agreements, and trademarks amortize over their estimated useful lives. Amortization expense was $4.4 million and $7.9 million for the three months ended September 30, 2017 and 2018, respectively. Amortization expense was $13.1 million and $22.1 million for the nine months ended September 30, 2017 and 2018, respectively. The Company’s leasehold interests have finite lives and are amortized to rent expense over the remaining term of their respective leases to reflect a market rent per period based upon the market conditions present at the acquisition date.

Estimated amortization expense for the Company’s finite-lived customer relationships, non-compete agreements, and trademarks for the remaining period of 2018 and each of the four succeeding years is as follows:



	2018		2019		2020		2021		2022
	(in thousands)
Amortization expense	$	7,811	$	26,490	$	25,864	$	25,648	$	25,443

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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