10-K Business Acquisitions

9 Months Ended

12 Months Ended

Sep. 30, 2023

Dec. 31, 2022

Business Acquisitions and Divestitures

Pending Divestiture

On March 28, 2023, we announced our entrance into an agreement to sell our life and disability businesses to StanCorp Financial Group, Inc. (“The Standard”), a provider of financial protection products and services for employers and individuals. Upon closing, we and The Standard will enter into a product distribution partnership. The divestiture is expected to close in the first half of 2024 and is subject to standard closing conditions and customary approvals. The related net assets held for sale and results of operations for the life and disability businesses to be divested as of and for the three and nine months ending September 30, 2023 were not material.

Pending Acquisition

On January 23, 2023, we announced our entrance into an agreement to acquire Louisiana Health Service & Indemnity Company, d/b/a Blue Cross and Blue Shield of Louisiana (“BCBSLA”), an independent licensee of the BCBSA that provides healthcare plans to the Individual, Employer Group, Medicaid and Medicare markets, primarily in the State of Louisiana. This acquisition aligns with our mission to become a lifetime, trusted health partner as we bring our innovative whole-health solutions to BCBSLA’s members. The acquisition is expected to close in the first half of 2024 and is subject to standard closing conditions and customary approvals.

Completed Acquisitions

On February 15, 2023, we completed our acquisition of BioPlus Parent, LLC and subsidiaries (“BioPlus”) from CarepathRx Aggregator, LLC. Prior to the acquisition, BioPlus was one of the largest independent specialty pharmacy organizations in the United States. BioPlus, which operates as part of CarelonRx, seeks to connect payors and providers of specialty pharmaceuticals to meet the medication therapy needs of patients with complex medical conditions. This acquisition aligns with our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve. As of September 30, 2023, the purchase price was allocated to the tangible and intangible net assets acquired based on management’s initial estimates of their fair values, of which $820 has been allocated to finite-lived intangible assets and $877 to goodwill. There were no changes to goodwill for measurement period adjustments during the three months ended September 30, 2023. The majority of goodwill is not deductible for income tax purposes. As of September 30, 2023, the initial accounting for the acquisition had not been finalized. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

On May 5, 2022, we completed our acquisition of Integra Managed Care (“Integra”). Integra is a managed long-term care plan that serves New York state Medicaid members, enabling adults with long-term care needs and disabilities to live safely and independently in their own homes. The initial accounting for this acquisition was finalized as of June 30, 2023. The purchase price was allocated to tangible and intangible net assets acquired based on management’s estimates of their fair values, of which $89 was allocated to finite-lived intangible assets, $250 to indefinite-lived intangible assets, and $139 to goodwill. The majority of goodwill is deductible for income tax purposes. The proforma effects of this acquisition for prior periods were not material to our consolidated results of operations.

Business Acquisitions

Completed Acquisitions

During the year ended December 31, 2022, we completed business combinations for total cash consideration of approximately $752. These acquisitions included Integra MLTC, Inc. (“Integra”), acquired May 2022, which is a managed long-term care plan that serves New York state Medicaid members, enabling adults with long-term care needs and disabilities to live safely and independently in their own homes. The purchase prices for all business combinations were allocated to the tangible and intangible net assets acquired based on management’s initial estimates of their fair values, of which $89 was allocated to finite-lived intangible assets, $250 to indefinite-lived intangible assets, and $145 to goodwill. The intangible assets and goodwill acquired were assigned to our Health Benefits reportable segment. The majority of goodwill is deductible for income tax purposes. As of December 31, 2022, the initial accounting for the acquisitions completed in 2022 had not been finalized. Any subsequent adjustments made to the assets acquired or liabilities assumed during the measurement period will be recorded as an adjustment to goodwill. The proforma effects of these acquisitions for prior periods were not material to our consolidated results of operations.

During the year ended December 31, 2021, we completed business combinations for total cash consideration of approximately $4,021. These acquisitions included myNEXUS, Inc. (“myNEXUS”), acquired April 2021, a comprehensive home-based nursing management company for payors, and MMM Holdings, LLC (“MMM”), acquired June 2021, including its Medicare Advantage plan, Medicaid plan, and other affiliated companies. The purchase prices for all business combinations were allocated to the tangible and intangible net assets acquired based on management’s final estimates of their fair values, of which $1,577 was allocated to finite-lived intangible assets, $20 to indefinite-lived intangible assets, and $2,531 to goodwill, including measurement period adjustments of $10 during the year ended December 31, 2022. Of these amounts, $795 was allocated to our Carelon Services reportable segment and $3,333 to our Health Benefits reportable segment. The majority of goodwill is not deductible for income tax purposes.

Acquired tangible assets (liabilities) at the acquisition date were:


	2022		2021
Cash, cash equivalents and short-term investments	$	170	$	808
Accounts receivable and other current assets	240		295
Property, equipment and other long-term assets	109		102
Medical claims and other policyholder liabilities payable	(185)		(571)
Accounts payable and other current liabilities	(20)		(179)
Other long-term liabilities	(15)		(6)
Deferred tax liabilities	(32)		(556)
Total net tangible assets	$	267	$	(107)

The preliminary purchase price allocations for the various business combinations are subject to adjustment as valuation analyses, primarily related to intangible assets and contingent and tax liabilities, are finalized.

Acquisition date fair values and weighted-average useful lives assigned to intangible assets include:


	2022			2021
	Fair Value		Weighted Average Useful Life	Fair Value		Weighted Average Useful Life
Customer-related	$	85	10 years	$	1,313	13 years
Provider and hospital relationships	2		15 years	240		14 years
Other	2		0.5 years	24		13 years
State Medicaid licenses	250		Indefinite	20		Indefinite
Total intangible assets	$	339		$	1,597

The results of operations and financial condition of acquired entities have been included in our consolidated results and the results of the corresponding operating segment as of the date of acquisition. Through December 31, 2022, the impact of the acquired entities on revenue and net earnings was not material. Unaudited pro forma revenues for the years ended December 31, 2022 and 2021 as if the acquisitions had occurred on January 1, 2021 were immaterial for both periods. The pro forma effects of the acquisitions on net earnings were immaterial for both years.

Pending Acquisitions

Louisiana Health Service & Indemnity Company (d/b/a Blue Cross and Blue Shield of Louisiana)

On January 23, 2023, we announced our entrance into an agreement to acquire Louisiana Health Service & Indemnity Company, d/b/a Blue Cross and Blue Shield of Louisiana, an independent licensee of the BCBSA that provides healthcare plans to the Individual, Employer Group, Medicaid and Medicare markets, primarily in the State of Louisiana. This acquisition aligns with our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve. The acquisition is expected to close by the end of the fourth quarter of 2023 and is subject to standard closing conditions and customary approvals.

BioPlus Parent, LLC

On November 9, 2022, we announced our entrance into an agreement with CarepathRx Aggregator, LLC to acquire its specialty pharmacy division, which includes BioPlus Parent, LLC (“BioPlus”) and subsidiaries. BioPlus is one of the largest independent specialty pharmacy organizations in the United States and seeks to connect payors and providers of specialty pharmaceuticals to meet the medication therapy needs of patients with complex medical conditions. This acquisition aligns with our vision to be an innovative, valuable and inclusive healthcare partner by providing care management programs that improve the lives of the people we serve. The acquisition was completed on February 15, 2023, and initial purchase accounting for the acquisition has not been finalized.