Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2024

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 nine months ended September 30, 2024 was as follows (in thousands):


	Gross carrying amount
Balance at December 31, 2023	$	2,724,958
Goodwill impairment	(13,078)
Write off from sale of assets	(4,598)
Balance at September 30, 2024	$	2,707,282

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. The Company did not identify any triggering events indicating a possible impairment of goodwill at September 30, 2024.

During the nine months ended September 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price and also revised its financial projections. The Company considered these items to represent a triggering event and performed a goodwill impairment test as of September 30, 2023. Based on the results of the test performed as of that date, it was concluded that the estimated fair value of the Company’s reporting unit was less than its carrying value, as such, the Company recognized a non-cash goodwill impairment charge of $511.9 million during the three and nine months ended September 30, 2023.

The non-cash goodwill impairment charges included in the table above, includes $6.6 million and $6.5 million recognized during the three months ended March 31, 2024 and June 30, 2024, respectively, related to the disposition of certain immaterial custom rehab technology assets, which closed in the third quarter of 2024. The Company recognized an immaterial loss as a result of this transaction.

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, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $47,927	$	64,873	6.0
Payor contracts, net of accumulated amortization of $34,366	47,634		5.8
Developed technology, net of accumulated amortization of $5,355	945		0.8
Identifiable intangible assets, net	$	113,452


	December 31, 2023
			Weighted-Average Remaining Life (Years)
Tradenames, net of accumulated amortization of $38,314	$	74,486	6.6
Payor contracts, net of accumulated amortization of $28,216	53,784		6.6
Developed technology, net of accumulated amortization of $4,410	1,890		1.5
Identifiable intangible assets, net	$	130,160

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 $5.6 million and $16.7 million for the three and nine months ended September 30, 2024, respectively, and was $7.0 million and $27.0 million for the three and nine months ended September 30, 2023, respectively.

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


Twelve months ending September 30,
2025	$	21,828
2026	19,618
2027	18,190
2028	17,936
2029	17,936
Thereafter	17,944
Total	$	113,452

The Company did not recognize any impairment charges related to identifiable intangible assets during the nine months ended September 30, 2024 and 2023.