Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2022

Goodwill and Identifiable Intangible Assets

Goodwill and Identifiable Intangible Assets

(5)          Goodwill and Identifiable Intangible Assets

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The change in the carrying amount of goodwill for the nine months ended September 30, 2022 was as follows (in thousands):

	Gross carrying
	amount
Balance at December 31, 2021	$	3,512,567
Goodwill from acquisitions		11,788
Net cash receipts relating to prior acquisitions		(188)
Net increase relating to measurement period adjustments		832
Balance at September 30, 2022	$	3,524,999

Management is required to perform an assessment of the recoverability of goodwill on an annual basis and upon the identification of a triggering event. Triggering events potentially warranting an interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating results or cash flows, and

declines in the Company’s stock price or market capitalization. While management cannot predict if or when future goodwill impairments may occur, a non-cash goodwill impairment charge could have a material adverse effect on the Company’s operating results, net assets and the Company’s cost of, or access to, capital. During the three months ended March 31, 2022, the Company experienced a decline in its market capitalization as a result of a decline in the Company’s stock price. The Company considered such decline to represent a triggering event requiring management to perform a quantitative goodwill impairment assessment as of March 31, 2022. Based on the results of the quantitative goodwill impairment assessment, it was concluded that the estimated fair value of the Company’s reporting unit was greater than its carrying value, as such, the Company did not record a goodwill impairment charge during the three months ended March 31, 2022. No such triggering events were identified during the three months ended September 30, 2022. The Company did not record a goodwill impairment charge during the three and nine months ended September 30, 2022 and 2021. Subsequent to September 30, 2022, the Company has not experienced a decline in its market capitalization, however, if the Company were to experience a decline for a sustained period of time, the Company may be required to perform a quantitative goodwill impairment assessment at an interim or annual period and could be required to recognize a non-cash goodwill impairment charge at that time, which could be material.

As discussed in Note 3, Acquisitions, during the nine months ended September 30, 2022, the Company received net cash of $0.2 million relating to working capital and other adjustments associated with businesses that were acquired during 2021, which was recorded as a decrease to goodwill during the period.

Identifiable intangible assets that are separable and have determinable useful lives are valued separately and amortized over the period which reflects the pattern in which the economic benefits of the assets are expected to be consumed. Identifiable intangible assets consisted of the following at September 30, 2022 and December 31, 2021 (in thousands):

	September 30, 2022
			Weighted-Average
			Remaining Life (Years)
Tradenames, net of accumulated amortization of $22,294	$	90,506	7.7
Payor contracts, net of accumulated amortization of $17,966		64,034	7.8
Contractual rental agreements, net of accumulated amortization of $39,433		14,767	1.0
Developed technology, net of accumulated amortization of $2,835		3,465	2.8
Identifiable intangible assets, net	$	172,772

	December 31, 2021
			Weighted-Average
			Remaining Life (Years)
Tradenames, net of accumulated amortization of $12,705	$	99,595	8.4
Payor contracts, net of accumulated amortization of $11,816		70,184	8.6
Contractual rental agreements, net of accumulated amortization of $26,158		28,042	1.8
Developed technology, net of accumulated amortization of $1,890		4,410	3.5
Identifiable intangible assets, net	$	202,231

Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization, excluding patient equipment depreciation, in the accompanying statements of operations, was $10.0 million and $30.0 million for the three and nine months ended September 30, 2022, respectively. Amortization expense related to identifiable intangible assets, which is included in depreciation and amortization, excluding patient equipment depreciation, in the accompanying statements of operations, was $10.1 million and $34.4 million for the three and nine months ended September 30, 2021, respectively.

Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):

Twelve months ending September 30,
2023	$	37,043
2024		22,276
2025		21,828
2026		19,618
2027		18,190
Thereafter		53,817
Total	$	172,772

The Company recorded no impairment charges related to identifiable intangible assets during the three and nine months ended September 30, 2022 and 2021.