GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Changes in the carrying amount of goodwill for the nine-month period ended September 30, 2023 were as follows:


Dollars in thousands	Codman Specialty Surgical		Tissue Technologies		Total
Goodwill at December 31, 2022	$	656,219	$	382,662	$	1,038,881
SIA Acquisition Working Capital Adjustment	—		(382)		(382)
Foreign currency translation	(1,486)		(867)		(2,353)
Goodwill at September 30, 2023	$	654,733	$	381,413	$	1,036,146

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC Topic 350. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or indefinite lived intangible asset below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

The Company tests for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative evaluation for some or all of its reporting units and perform a quantitative test. The quantitative test estimates the fair value of the reporting unit using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty

In the second quarter of 2023, due to the Boston recall, as well as the associated drop in the Company's stock price in that quarter, the Company elected to perform a quantitative analysis for its TT reporting unit. The quantitative test utilized a long-term growth rate of 2% and a discount rate of 10%. The Company determined, after performing the quantitative analysis, that the fair value of the goodwill of the reporting unit was not less than the carrying amount, with more than 20% headroom.

In the third quarter of 2023, the Company performed the annual qualitative analysis for its three reporting units and intangible assets with indefinite lives. The Company determined, after performing the qualitative analysis, that there was no evidence that it is more likely than not that the fair value was less than the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test.

Other Intangible Assets

The components of the Company’s identifiable intangible assets were as follows:


	September 30, 2023
Dollars in thousands	Weighted Average Life	Cost		Accumulated Amortization		Net
Completed technology	18 years	$	1,206,522	$	(424,244)	$	782,278
Customer relationships	12 years	$	192,566	$	(149,243)	$	43,323
Trademarks/brand names	28 years	$	97,228	$	(37,363)	$	59,865
Codman tradename	Indefinite	$	167,520	$	—	$	167,520
Supplier relationships	30 years	$	30,211	$	(17,904)	$	12,307
All other	11 years	$	5,932	$	(4,202)	$	1,730
		$	1,699,979	$	(632,956)	$	1,067,023


	December 31, 2022
Dollars in thousands	Weighted Average Life	Cost		Accumulated Amortization		Net
Completed technology	18 years	$	1,204,325	$	(370,968)	$	833,357
Customer relationships	12 years	193,081		(144,040)		49,041
Trademarks/brand names	28 years	97,265		(34,674)		62,591
Codman tradename	Indefinite	166,693		—		166,693
Supplier relationships	30 years	30,211		(17,170)		13,041
All other	11 years	5,957		(4,071)		1,886
		$	1,697,532	$	(570,923)	$	1,126,609

Total amortization of intangible assets for the three and nine months ended September 30, 2023 was $20.9 million and $62.1 million, respectively. Of these amounts, $17.7 million and $52.8 million, respectively was related to amortization of technology based intangibles and included in cost of goods sold, with the remainder included in intangible amortization in the statement of operations.

Total amortization of intangible assets for the three and nine months ended September 30, 2022 was $19.2 million and $58.7 million, respectively. Of these amounts, $16.1 million and $48.3 million, respectively was related to amortization of technology based intangibles and included in cost of goods sold, with the remainder included in intangible amortization in the statement of operations.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of goods sold) is expected to be approximately $20.7 million for the remainder of 2023, $82.2 million in 2024, $82.1 million in 2025, $82.0 million in 2026, $80.0 million in 2027, $78.5 million in 2028 and $477.1 million thereafter.

The Company periodically performs testing for impairment on certain long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

In the second quarter of 2023, due to the Boston recall, the Company elected to perform impairment testing on certain definite lived intangibles. The intangible components associated with the recalled products include completed technology and customer relationships with a net book value of $29.9 million and $8.1 million, respectively, as of September 30, 2023. The company used an undiscounted cash flow methodology and obtained revenue projections through the useful life of the intangibles. After performing the analysis, no impairment was noted. The Company will continue to monitor these intangibles as we return to the market and evaluate any changes that would impact our sales of these products.