Business Combinations and Asset Acquisitions

6 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

2. Acquisitions

Integrated Oncology Network ("ION")

On December 2, 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ION is a management services organization that supports more than 50 practice sites in 10 states representing more than 100 providers. ION supports a continuum of care across its member sites including medical oncology, radiation oncology, urology diagnostic testing and other ancillary services. As part of the transaction, ION practices will be integrated into Navista, our managed services organization intended to enhance efficiency for providers and patients, enable additional capabilities, and increase practice profitability of independent community oncologists. We report ION results within our Pharma segment. The acquisition was funded with available cash on hand.

GI Alliance ("GIA")

On January 30, 2025, we completed the acquisition of 73 percent ownership interest in GIA, a gastroenterology management services organization, for a purchase price of approximately $2.8 billion in cash, subject to certain adjustments. Beginning on the third anniversary of GIA's closing, we have the ability to exercise a call right to purchase up to 100 percent of the remaining outstanding equity. GIA's management services organization platform includes over 900 physicians across 345 practice locations in 20 states and has the ability to further expand both geographically and in other key therapeutic areas. We will consolidate the results of GIA in our condensed consolidated financial statements and report those consolidated results within our Pharma segment. The portion of GIA net earnings attributable to third-party interest holders will be reported as a reduction to net earnings in the condensed consolidated statements of earnings.

Advanced Diabetes Supply Group ("ADSG")

On November 11, 2024, we announced that we have entered into a definitive agreement to acquire ADSG, one of the country's leading diabetic medical supplies providers, for a purchase price of approximately $1.1 billion in cash, subject to certain adjustments. ADSG serves approximately 500,000 patients annually by providing the latest innovations in diabetes therapies from leading manufacturers. ADSG will become part of our at-Home Solutions operating segment and we will report ADSG results in Other. This transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals.

We intend to finance the announced transactions of GIA and ADSG with a combination of cash on hand and cash proceeds from new debt financing as described in Note 6.

Specialty Networks

On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash. Specialty Networks creates clinical and economic value for providers and partners across multiple specialty group purchasing organizations

("GPOs"): UroGPO, Gastrologix and GastroGPO, and United Rheumatology. Specialty Networks results are reflected within our Pharma segment.

Transaction and integration costs associated with acquisitions were $36 million and $42 million during the three and six months ended December 31, 2024, respectively, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings.

Fair Value of Assets Acquired and Liabilities Assumed

The allocation of the purchase price for the acquisition of ION and Specialty Networks is not yet finalized and is subject to adjustment as we complete the valuation analysis of the acquisition. The purchase price is also subject to adjustment based on working capital requirements as set forth in the acquisition agreement. The pro forma results of operations and the results of operations for these acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements.

The valuation of identifiable intangible assets utilizes significant unobservable inputs and thus represents a Level 3 nonrecurring fair value measurement. The estimated fair value of ION customer contracts was determined using an income-based approach, which includes market participant expectations of the cash flows that an asset could generate over its remaining useful life, discounted back to present value using an appropriate rate of return. The discount rate used to arrive at the present value of the identifiable intangible assets was 9.5 percent, and reflects the internal rate of return and uncertainty in the cash flow projections. The fair values of the ION trademark intangible assets were determined utilizing the relief from royalty method, which is also a form of the income approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate.

There were no significant adjustments to the allocation of the fair value of assets acquired and liabilities assumed for the Specialty Networks acquisition from those disclosed in our fiscal 2024 Form 10-K.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for ION:


(in millions)	ION
Identifiable intangible assets:
Customer contracts (1)	$	279
Trademarks (2)	78


Total identifiable intangible assets acquired	357

Identifiable net assets/(liabilities):
Cash and equivalents	8
Trade receivables, net	60
Inventories	4
Prepaid expenses and other	5
Property and equipment, net	31
Other assets	45
Accounts payable	(9)
Current portion of long-term obligations and other short-term borrowings	(3)
Other accrued liabilities	(38)
Long-term obligations, less current portion	(14)
Deferred income taxes and other liabilities	(62)
Total identifiable net assets/(liabilities) acquired	384
Noncontrolling interest	(72)
Goodwill	772
Total net assets acquired	$	1,084

(1) The weighted-average useful life of customer contracts is 20 years.

(2) The weighted-average useful life of trademarks is 10 years.