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73
2015 Annual Report
realized. The change in fair value of the contingent consideration liability recognized in earnings for the year ended
December 31, 2014 was immaterial and for the year ended December 31, 2015 was approximately $4 million. During
the year ended December 31, 2015, the Company made contingent consideration payments to Apria of approxi-
mately $58 million.
The Company recognized approximately $1.6 billion of goodwill in connection with the acquisition. The goodwill
represents future economic benefits expected to arise from the Company’s expanded presence in the specialty
pharmaceuticals market, the assembled workforce acquired, and the expected synergies from combining operations
with Coram. The goodwill is nondeductible for income tax purposes.
Coram’s results of operations are included in the Company’s PSS beginning on January 16, 2014. Pro forma informa-
tion for this acquisition is not presented as Coram’s results are immaterial to the Company’s consolidated financial
statements. During the year ended December 31, 2014, acquisition costs of $15 million were expensed as incurred
within operating expenses.
4 | Goodwill and Other Intangibles
Goodwill and other indefinitely-lived assets are not amortized, but are subject to annual impairment reviews, or more
frequent reviews if events or circumstances indicate an impairment may exist.
When evaluating goodwill for potential impairment, the Company first compares the fair value of its reporting units
to their respective carrying amounts. The Company estimates the fair value of its reporting units using a combination
of a future discounted cash flow valuation model and a comparable market transaction model. If the estimated fair
value of the reporting unit is less than its carrying amount, an impairment loss calculation is prepared. The impair-
ment loss calculation compares the implied fair value of a reporting unit’s goodwill with the carrying amount of its
goodwill. If the carrying amount of the goodwill exceeds the implied fair value, an impairment loss is recognized
in an amount equal to the excess. During the third quarter of 2015, the Company performed its required annual
goodwill impairment tests. The Company concluded there were no goodwill impairments as of the testing date.
Below is a summary of the changes in the carrying amount of goodwill by segment for the years ended December 31,
2015 and 2014:
IN MILLIONS Pharmacy Services Retail/LTC Total
Balance, December 31, 2013 $ 19,658 $ 6,884 $ 26,542
Acquisitions 1,578 38 1,616
Foreign currency translation adjustments — (14) (14)
Other (1) (2) — (2)
Balance, December 31, 2014 21,234 6,908 28,142
Acquisitions 452 9,554 10,006
Foreign currency translation adjustments — (40) (40)
Other (1) (1) (1) (2)
Balance, December 31, 2015
$ 21,685 $ 16,421 $ 38,106
(1) “Other” represents immaterial purchase accounting adjustments for acquisitions.
Indefinitely-lived intangible assets are tested for impairment by comparing the estimated fair value of the asset to its
carrying value. The Company estimates the fair value of its indefinitely-lived trademark using the relief from royalty
method under the income approach. If the carrying value of the asset exceeds its estimated fair value, an impair-
ment loss is recognized and the asset is written down to its estimated fair value. During the third quarter of 2015,
the Company performed its annual impairment test of the indefinitely-lived trademark and concluded there was
no impairment as of the testing date. The carrying amount of its indefinitely-lived trademark was $6.4 billion as of
December 31, 2015 and 2014.