Goodwill and Other Intangible Assets

3 Months Ended

May 28, 2022

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

10. Goodwill and Other Intangible Assets

At May 28, 2022, the goodwill related to the Pharmacy Services segment is at risk of future impairment if the fair value of this segment, and its associated assets, decrease in value due to further declines in its operating results or an inability to execute management’s business strategies. Future cash flow estimates are, by their nature, subjective, and actual results may differ materially from the Company's estimates. If the Company's ongoing cash flow projections are not met or if market factors utilized in the impairment test deteriorate, including an unfavorable change in the terminal growth rate or the weighted-average cost of capital, the Company may have to record impairment charges in future periods. As of May 28, 2022, the Pharmacy Services segment had goodwill of $835,644.

There was no goodwill impairment charge for the thirteen week period ended May 28, 2022. At May 28, 2022 and February 26, 2022, accumulated impairment losses for the Pharmacy Services segment was $803,712.

The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of May 28, 2022 and February 26, 2022.

	May 28, 2022								February 26, 2022
							Remaining								Remaining
							Weighted								Weighted
	Gross						Average		Gross						Average
	Carrying		Accumulated				Amortization		Carrying		Accumulated				Amortization
	Amount		Amortization		Net		Period		Amount		Amortization		Net		Period
Non-compete agreements and other(a)	$	199,351	$	(179,046)	$	20,305	3	years	$	197,651	$	(178,958)	$	18,693	3	years
Prescription files		1,026,342		(914,911)		111,431	5	years		1,030,169		(918,773)		111,396	6	years
Customer relationships(a)		388,000		(291,770)		96,230	9	years		388,000		(286,090)		101,910	10	years
CMS license		57,500		(17,478)		40,022	4	years		57,500		(15,372)		42,128	5	years
Claims adjudication and other developed software		58,985		(58,423)		562	0	years		58,985		(56,316)		2,669	1	years
Backlog		11,500		(11,500)		—	0	years		11,500		(11,500)		—	0	years
Total finite	$	1,741,678	$	(1,473,128)		268,550			$	1,743,805	$	(1,467,009)	$	276,796
Trademarks		14,400		—		14,400	Indefinite			14,400		—		14,400	Indefinite
Total	$	1,756,078	$	(1,473,128)	$	282,950			$	1,758,205	$	(1,467,009)	$	291,196

(a) Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows.

The Company is continuing to reposition its approach to the Elixir Insurance Part D business including an expectation of a purposeful shrinkage of the business. As a result, at the end of fiscal 2022, the Company adjusted the remaining amortization period of the CMS License to 5 years. Prior to such adjustment, the remaining life was 19 years.

Amortization expense for these intangible assets and liabilities was $20,626 and $20,460 for the thirteen week periods ended May 28, 2022 and May 29, 2021, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2023—$71,185; 2024—$57,613; 2025—$46,393; 2026—$35,802 and 2027—$28,815.