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Goodwill and Identifiable Intangible Assets
 12 Months Ended
Dec. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Identifiable Intangible Assets 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. As a result of the Company’s change in its reportable segments effective in the fourth quarter of 2024, the Company reallocated total consolidated net goodwill to align with the new reporting units.
The change in the carrying amount of goodwill by reportable segment for the years ended December 31, 2024 and 2023 was as follows (in thousands):
Sleep HealthRespiratory HealthDiabetes HealthWellness at HomeTotal
Balance at December 31, 2022$3,545,297 
Goodwill from acquisitions9,616 
Net increase relating to measurement period adjustments832 
Goodwill impairment (1)(830,787)
Balance at December 31, 2023$2,724,958 
Goodwill impairment prior to change in segment reporting (1)(13,078)
Write off from sale of assets(4,598)
Reallocation adjustment (2)$1,581,039 $676,747 $211,796 $237,700 $2,707,282 
Goodwill classified as assets held for sale (note 4)— — — (41,211)(41,211)
Goodwill from acquisitions (note 3)— — — 9,095 9,095 
Balance at December 31, 2024$1,581,039 $676,747 $211,796 $205,584 $2,675,166 
(1)    On a consolidated basis, gross and net goodwill as of December 31, 2024 was $3.6 billion and $2.7 billion, respectively. The goodwill impairment charge recognized during the year ended December 31, 2024 prior to the change in segment reporting relates to the disposition of certain immaterial custom rehab technology assets. The total amount of accumulated impairment charges as of December 31, 2024 was $0.8 billion, which was recognized prior to the change in segment reporting.
(2) Represents the reallocation of goodwill from one reportable segment to the Sleep Health, Respiratory Health, Diabetes Health, and Wellness at Home reportable segments, using a relative fair value approach, as a result of the change in reportable segments in the fourth quarter of 2024.
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.
In the fourth quarter of 2024, the Company separated its single reporting unit into multiple reporting units as a result of organizational changes. Prior to this change, the Company performed a quantitative goodwill impairment test on its single reporting unit under the former structure. The fair value of the Company’s former reporting unit prior to the change was computed using (1) a discounted cash flow method which includes assumptions on the projected future cash flows, earnings, discount rates, working capital adjustments, long-term growth rates, and others, and (2) a market approach method to estimate value through the analysis of recent sales of comparable assets or business entities. The results of the impairment test indicated that the estimated fair value of the Company’s former reporting unit was greater than its carrying value, as such, the Company did not recognize a goodwill impairment charge as a result of the impairment test. Subsequent to the change, the Company reallocated goodwill to its four new reporting units using a relative fair value approach and performed a quantitative goodwill impairment test under the new structure. The fair values of the Company’s reporting units subsequent to the change were computed using the same methods described above. The impairment test performed subsequent to the change indicated that the estimated fair values of the Company’s reporting units were greater than their respective carrying values, as such, the Company did not recognize a goodwill impairment charge as a result of the impairment test.
As described above, the Company performed a quantitative goodwill impairment test subsequent to the change from separating its single reporting unit into multiple reporting units, which indicated that the estimated fair values of the Company’s reporting units were greater than their respective carrying values. While the Company's quantitative goodwill impairment test did not result in an impairment charge, based on the results of such test, the excess of the estimated fair values of the Company's Respiratory Health, Diabetes Health and Wellness at Home reporting units over their respective carrying values was less than 20% of such carrying values. In future periods, if the Company were to experience a decline in its market capitalization or expected results for its reporting units for a sustained period of time, the Company may be required to perform an additional quantitative goodwill impairment test 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.
During the year ended December 31, 2023, the Company experienced declines in its market capitalization as a result of sustained decreases in the Company's stock price and also revised its financial projections. The Company considered these items to represent triggering events and performed a goodwill impairment test at each quarterly reporting date during 2023. Based on the results of the tests performed as of September 30, 2023 and December 31, 2023, it was concluded that the estimated fair value of the Company’s single reporting unit at that time was less than its carrying values at such dates; as such, the Company recognized an aggregate non-cash goodwill impairment charge of $830.8 million during the year ended December 31, 2023.
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 December 31, 2024 and 2023 (in thousands):
December 31, 2024
Weighted-Average
Remaining Life (Years)
Tradenames, net of accumulated amortization of $49,736
$59,964 5.6
Payor contracts, net of accumulated amortization of $36,416
45,584 5.6
Identifiable intangible assets, net$105,548 
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 $22.3 million, $32.6 million and $40.0 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Future amortization expense related to identifiable intangible assets is estimated to be as follows (in thousands):
Twelve months ending December 31,
2025$20,388 
202618,953 
202717,650 
202817,626 
202917,626 
Thereafter13,305 
Total$105,548 
The Company did not recognize any impairment charges related to identifiable intangible assets during the years ended December 31, 2024, 2023 and 2022.