Goodwill and Other Intangible Assets

9 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The following is a summary of the changes in the carrying value of goodwill, by reportable segment, for the nine months ended June 30, 2020:


(in thousands)	Pharmaceutical Distribution Services		Other		Total
Goodwill as of September 30, 2019	$	4,852,775	$	1,852,732	$	6,705,507

Foreign currency translation	—		(377)		(377)
Goodwill as of June 30, 2020	$	4,852,775	$	1,852,355	$	6,705,130

The following is a summary of other intangible assets:


	June 30, 2020													September 30, 2019
(in thousands)	Weighted Average Remaining Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived trade names		$	685,271	$	—	$	685,271	$	685,324	$	—	$	685,324
Finite-lived:
Customer relationships	13 years	1,670,783		(542,655)		1,128,128		1,931,212		(489,471)		1,441,741
Trade names and other	14 years	209,787		(112,639)		97,148		271,521		(103,750)		167,771
Total other intangible assets		$	2,565,841	$	(655,294)	$	1,910,547	$	2,888,057	$	(593,221)	$	2,294,836

Amortization expense for finite-lived intangible assets was $25.8 million and $35.9 million in the three months ended June 30, 2020 and 2019, respectively. Amortization expense for finite-lived intangible assets was $85.1 million and $131.6 million in the nine months ended June 30, 2020 and 2019, respectively. Amortization expense for finite-lived intangible assets is estimated to be $111.0 million in fiscal 2020, $101.7 million in fiscal 2021, $100.1 million in fiscal 2022, $98.5 million in fiscal 2023, $97.3 million in fiscal 2024, and $801.8 million thereafter.

As a result of the continued suspension of the production activities at PharMEDium's compounding facility located in Memphis, Tennessee, certain regulatory matters, ongoing operational challenges, and lower-than-expected operating results, the Company updated its recoverability assessment of PharMEDium’s long-lived assets as of December 31, 2019. The recoverability assessment was based upon comparing PharMEDium's forecasted undiscounted cash flows to the carrying value of its asset group. The PharMEDium asset group is included in the Pharmaceutical Distribution Services reportable segment. Using forecasted undiscounted cash flows that were based on the weighted average of multiple strategic alternatives, the Company concluded that the carrying value of the PharMEDium long-lived asset group was not recoverable as of December 31, 2019. The forecasted undiscounted cash flows as of December 31, 2019 were lower than the forecasted undiscounted cash flows as of September 30, 2019 due to a change in weighting of multiple strategic alternatives and lower operating results in the three months ended December 31, 2019 compared to expectations. The Company then performed an impairment test by

comparing the PharMEDium asset group's fair value of $145 million to its carrying value, which resulted in a $138.0 million impairment loss in the three months ended December 31, 2019. Significant assumptions used in estimating the fair value of PharMEDium's asset group included (i) a 17% discount rate, which contemplated a higher risk at PharMEDium; (ii) the period in which PharMEDium will resume production at or near capacity; and (iii) the estimated EBITDA (earnings before interest, taxes, depreciation, and amortization) margins when considering the likelihood of higher operating and compliance costs. The Company believed that its fair value assumptions were representative of market participant assumptions; however, the forecasted cash flows used to estimate fair value and measure the related impairment were inherently uncertain and included assumptions that differed from actual results in future periods (see below). This represented a Level 3 nonrecurring fair value measurement. The Company allocated $123.2 million of the impairment to finite-lived intangibles, $11.6 million of the impairment to property and equipment, and $3.2 million to ROU assets.

In January 2020, the Company decided to permanently exit the PharMEDium compounding business, and, as a result, the Company has ceased all commercial operations and will cease all administrative operations related to this business in fiscal 2020. The decision to permanently exit the PharMEDium business was due to a number of factors including, but not limited to, ongoing operational, regulatory, and commercial challenges, such as PharMEDium's decision in January 2020 to suspend production at the compounding facility in New Jersey pending facility upgrades related to the air handling and filtration systems. In connection with the decision to exit the PharMEDium business, the Company recorded an impairment of PharMEDium's assets of $223.7 million in the three months ended March 31, 2020, which included impairments of the remaining finite-lived intangible assets and the majority of the remaining tangible assets.