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ACQUISITIONS, GOODWILL, AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

ACQUISITIONS, GOODWILL, AND OTHER INTANGIBLE ASSETS

ACQUISITIONS.

On February 17, 2023, the Company acquired 100% of the stock of Caption Health, Inc. (“Caption Health”) for $127 million of upfront payment, $10 million of future holdback payment, and potential earn-out payments valued at $13 million based primarily on various milestones and sales targets. This transaction was accounted for as a business combination. The preliminary purchase price allocation resulted in goodwill of $94 million, intangible assets of $60 million, and deferred tax liabilities of $3 million. Our estimates and assumptions are subject to change within the measurement period. The goodwill associated with the acquired business is non-deductible for tax purposes and is reported in the Ultrasound segment. Caption Health is an artificial intelligence (“AI”) company whose technology expands access to AI-guided ultrasound screening for novice users.

See Note 13, “Financial Instruments and Fair Value Measurements” for further information about the fair value measurement of contingent consideration.


Goodwill
	Imaging		Ultrasound		PCS		PDx		Total
Balance at December 31, 2021	$	4,433	$	3,876	$	2,049	$	2,534	$	12,892
Acquisitions	—		—		—		—		—
Foreign currency exchange and other(1)	(24)		(41)		(13)		(1)		(79)
Balance at December 31, 2022	4,409		3,835		2,036		2,533		12,813
Acquisitions(2)	16		94		—		—		110
Foreign currency exchange and other	6		4		2		1		13
Balance at December 31, 2023	$	4,431	$	3,933	$	2,038	$	2,534	$	12,936

(1) Other includes purchase accounting adjustments for prior year acquisitions.

(2) Includes the acquisition of IMACTIS SAS in the second quarter of 2023.

The Company performs an impairment test of goodwill annually in the fourth quarter. In 2023, the Company performed qualitative testing for all reporting units that carried goodwill. Based on the results of the qualitative testing, the Company concluded that it was more likely than not that the fair value of each reporting unit exceeded its carrying value and no quantitative testing was required. Quantitative testing was performed for all reporting units in 2022 and 2021. The quantitative testing conducted in 2022 and 2021 concluded that no goodwill impairments existed.


Intangible Assets
	As of December 31, 2023						As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer-related	$	60	$	(16)	$	44	$	60	$	(10)	$	50
Patents and technology	2,541		(1,867)		674		2,544		(1,815)		729
Capitalized software	1,963		(1,509)		454		2,309		(1,638)		671
Trademarks and other	33		(27)		6		35		(27)		8
Indefinite-lived assets(1)	75		—		75		62		—		62
Total	$	4,672	$	(3,419)	$	1,253	$	5,010	$	(3,490)	$	1,520

(1) Indefinite-lived intangible assets relate to acquired IPR&D prior to project completion and are not amortized.

The Company performs an impairment test of IPR&D in the third quarter. In 2023, the Company performed qualitative testing for all IPR&D assets. Based on the results of the qualitative testing, the Company concluded that it was more likely than not that the fair value of each IPR&D asset exceeded its carrying value and no quantitative testing was required, with one exception. A quantitative test was performed for one IPR&D asset. Quantitative testing was performed for all IPR&D assets in 2022 and 2021. There were no material impairments of indefinite-lived intangible assets recognized in the years ended December 31, 2023, 2022, or 2021.

During the year ended December 31, 2023, we recorded additions to acquired intangible assets subject to amortization of $62 million, primarily related to patents and technology, with a weighted-average useful life of nine years.

Amortization expense was $362 million, $405 million, and $400 million for the years ended December 31, 2023, 2022, and 2021, respectively. There were no material impairments of definite-lived intangible assets recognized in the years ended December 31, 2023, 2022, or 2021.

Estimated annual pre-tax amortization expense for intangible assets as of December 31, 2023 over the next five calendar years is as follows.


Estimated Intangible Pre-tax Amortization
	2024		2025		2026		2027		2028
Estimated annual pre-tax amortization	$	303	$	259	$	207	$	122	$	71