Note 7. Goodwill and Other Intangible Assets

The Company tests goodwill and indefinite‑lived intangible assets for impairment annually as of October 1st, or more frequently whenever events or changes in circumstances indicate that the asset might be impaired. As further described below, in December 2018, changes in events and circumstances made it more likely than not goodwill had been impaired. As a result we recognized a goodwill impairment charge of $86.3 million. The following table sets forth the carrying value of goodwill as of December 31, 2017, 2018 and 2019, respectively (in thousands).


	Goodwill
December 31, 2017	$	187,173
Impairments		(86,318)
December 31, 2018	$	100,855
Impairments		—
December 31, 2019	$	100,855

The following tables sets forth the major categories of the Company’s intangible assets and the weighted‑average remaining amortization period as of December 31, 2019 and 2018, for those assets that are not already fully amortized (in thousands):


	December 31, 2019
									Weighted
									Average
									Remaining
	Gross						Net		Amortization
	Carrying		Accumulated				Carrying		Period
	Amount		Amortization		Impairment		Amount		(Years)
Distribution Rights	$	98,433	$	(22,291)	$	(64,719)	$	11,423	10.1
Product Rights		348,600		(152,348)		(146,033)		50,219	3.1
Tradenames		13,485		(3,035)		—		10,450	15.0
Developed Technology		125,461		(34,572)		(72,995)		17,894	10.9
IPR&D		64,000		—		—		64,000	Indefinite Lived
	$	649,979	$	(212,246)	$	(283,747)	$	153,986

The gross carrying amount of $28.3 million and $10.4 million of accumulated amortization for assets that have been fully impaired in the table above is inclusive as of December 31, 2019.


	December 31, 2018
									Weighted
									Average
	Gross						Net		Remaining
	Carrying		Accumulated				Carrying		Amortization
	Amount		Amortization		Impairment		Amount		Period (Years)
Distribution Rights	$	98,433	$	(17,229)	$	—	$	81,204	12.0
Product Rights		326,530		(109,057)		—		217,473	4.0
Tradenames		13,485		(2,329)		—		11,156	16.0
Developed Technology		138,134		(30,974)		(10,303)		96,857	12.6
IPR&D		91,300		—		(7,600)		83,700	Indefinite Lived
	$	667,882	$	(159,589)	$	(17,903)	$	490,390

The gross carrying amount of $17.9 million and $6.2 million of accumulated amortization for assets that have been fully impaired in the table above is inclusive as of December 31, 2018.

Changes in intangible assets during the years ended December 31, 2017, 2018 and 2019, were as follows (in thousands):


	Distribution		Product				Developed
	Rights		Rights		Tradenames		Technology		IPR&D		Total
December 31, 2017	$	88,543	$	276,628	$	11,862	$	117,056	$	91,300	$	585,389
Amortization		(7,339)		(59,155)		(706)		(9,896)		—		(77,096)
Impairments		—		—		—		(10,303)		(7,600)		(17,903)
December 31, 2018	$	81,204	$	217,473	$	11,156	$	96,857	$	83,700	$	490,390
Amortization		(5,062)		(40,921)		(706)		(5,968)		—		(52,657)
Impairments		(64,719)		(146,033)		—		(72,995)		—		(283,747)
Reclassifications(A)		—		19,700		—		—		(19,700)		—
December 31, 2019	$	11,423	$	50,219	$	10,450	$	17,894	$	64,000	$	153,986

^(A)

IPR&D in the amount of $19.7 million related to Osmolex ER was reclassified to Product Rights in the first quarter of 2019 when the product was launched. Osmolex ER was fully impaired during the second quarter of 2019.

As part of the Company’s goodwill and intangible asset impairment assessments and when IPR&D assets are put into service, the Company estimates the fair values of the intangible assets using an income approach that utilizes a discounted cash flow model, or, where appropriate, a market approach. The discounted cash flow models are dependent upon our estimates of future cash flows and other factors. These estimates of future cash flows involve assumptions concerning (i) future operating performance, including future sales, long‑term growth rates, operating margins, variations in the amounts, allocation and timing of cash flows and the probability of achieving the estimated cash flows and (ii) future economic conditions. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The discount rates applied to the estimated cash flows for the Company’s October 1, 2019 and 2018 annual goodwill and indefinite‑lived intangible assets impairment test ranged from 16.5% to 14.0%, respectively, depending on the overall risk associated with the particular assets and other market factors. The Company believes the discount rates and other inputs and assumptions are consistent with those that a market participant would use. Impairment charges resulting from annual or interim goodwill and intangible asset impairment assessments, if any, are recorded to Impairment of intangible assets in the Consolidated Statements of Operations and Comprehensive Loss.

In December 2018, we determined that, subsequent to our annual impairment testing, circumstances and events related to pricing on certain of our generic assets together with our decision to discontinue commercialization of a developed technology asset, and discontinue development of an IPR&D asset, made it more likely than not that goodwill had become impaired. As a result, we performed an assessment of goodwill as of December 31, 2018. Based on the results of this assessment, it was determined that the carrying value of goodwill exceeded its fair value by approximately $86.3 million and an impairment charge was recognized for the year end December 31, 2018. There was no impairment charge recognized for the year end December 31, 2019.

During 2019, we recognized impairments of finite-lived intangible assets of $283.7 million, consisting primarily of write-downs to fair value of methylphenidate ER, VERT, Osmolex ER, and Corvite of $128.1 million, $137.7 million, $17.7 million, and $0.2 million, respectively. Methylphenidate ER tablets and VERT were impaired due to lower revenues reflecting an increasingly competitive environment which deteriorated pricing and volumes; Osmolex ER was impaired due to underperforming revenue expectations subsequent to the launch of the product; and Corvite due to the discontinuation of the product. In the third and fourth quarter of 2019 we also recognized an impairment of finite-lived development technology and distribution rights for VERT of $73.0 million and $64.7 million, respectively, due to approvals of competing products which deteriorated pricing and volumes.

Amortization expense was $52.7 million and $77.1 million for the years ended December 31, 2019 and 2018, respectively.

The amortization expense of acquired intangible assets for each of the following five years are expected to be as follows (in thousands):


	Amortization
Years ending December 31	Expense
2020	$	17,450
2021		17,161
2022		12,685
2023		11,805
2024		10,682
Thereafter		20,203
Total	$	89,986