Goodwill and Identifiable Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

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 three months ended March 31, 2023 was as follows (in thousands):


	Gross carrying amount
Balance at December 31, 2022	$	3,545,297
Goodwill from acquisitions	64
Balance at March 31, 2023	$	3,545,361

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 sustained decreases 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, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. The Company considered such sustained decrease to represent a triggering event requiring management to perform a quantitative goodwill impairment test as of March 31, 2023. Based on the results of the quantitative goodwill impairment test, 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, 2023. While the Company's quantitative goodwill impairment test did not result in an impairment charge, based on the results of such test at March 31, 2023, the excess of the estimated fair value of the

Company's reporting unit over its carrying value was less than 20% of such carrying value. In future periods, if the Company were to experience a further decline in its market capitalization or expected results for a sustained period of time, the Company may be required to perform an additional 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.

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 March 31, 2023 and December 31, 2022 (dollars in thousands):


	March 31, 2023
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $28,702	$	84,098	7.3
Payor contracts, net of accumulated amortization of $22,066	59,934		7.3
Contractual rental agreements, net of accumulated amortization of $48,293	5,907		0.5
Developed technology, net of accumulated amortization of $3,465	2,835		2.3
Identifiable intangible assets, net	$	152,774


	December 31, 2022
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $25,498	$	87,302	7.5
Payor contracts, net of accumulated amortization of $20,016	61,984		7.6
Contractual rental agreements, net of accumulated amortization of $43,863	10,337		0.8
Developed technology, net of accumulated amortization of $3,150	3,150		2.5
Identifiable intangible assets, net	$	162,773

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 $10.0 million for the three months ended March 31, 2023 and 2022, respectively.

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


Twelve months ending March 31,
2024	$	28,183
2025	22,262
2026	20,759
2027	18,784
2028	17,936
Thereafter	44,850
Total	$	152,774

The Company did not recognize any impairment charges related to identifiable intangible assets during the three months ended March 31, 2023 and 2022.