Express Scripts 2013 Annual Report Download - page 73

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73 Express Scripts 2013 Annual Report
Express Scripts finalized the purchase price allocation and push down accounting as of March 31, 2013. The
following table summarizes Express Scripts’ estimates of the fair values of the assets acquired and liabilities assumed in the
Merger:
(in millions)
Amounts Recognized
as of
Acquisition Date
Current assets $ 6,934.9
Property and equipment 1,390.6
Goodwill 23,965.6
Acquired intangible assets 16,216.7
Other noncurrent assets 48.3
Current liabilities (8,966.4)
Long-term debt (3,008.3)
Deferred income taxes (5,875.2)
Other noncurrent liabilities (551.8)
Total $ 30,154.4
A portion of the excess of purchase price over tangible net assets acquired was allocated to intangible assets
consisting of customer contracts in the amount of $15,935.0 million with an estimated weighted-average amortization period of
16 years. Additional intangible assets consist of trade names in the amount of $273.0 million with an estimated weighted-
average amortization period of 10 years and miscellaneous intangible assets of $8.7 million with an estimated weighted-
average amortization period of 5 years. The acquired intangible assets have been valued using an income approach and are
being amortized on a basis that approximates the pattern of benefit.
The excess of purchase price over tangible net assets and identified intangible assets acquired was allocated to
goodwill in the amount of $23,965.6 million. The majority of the goodwill recognized as part of the Merger is reported under
our PBM segment and reflects our expected synergies from combining operations, such as improved economies of scale and
cost savings. Goodwill recognized is not expected to be deductible for income tax purposes and is not amortized.
As a result of the Merger on April 2, 2012, we acquired the receivables of Medco. The gross contractual amounts
receivable and fair value of these receivables as of the acquisition date are shown below. Of the gross amounts due under the
contracts as of the date of acquisition, we estimated $43.6 million related to client accounts receivables to be uncollectible.
(in millions)
Gross
Contractual
Amounts
Receivable
Fair
Value
Manufacturer Accounts Receivables $ 1,895.2 $ 1,895.2
Client Accounts Receivables 2,432.2 2,388.6
Total $ 4,327.4 $ 4,283.8
ESI and Medco each retained a one-sixth ownership in Surescripts, resulting in a combined one-third ownership in
Surescripts. Due to the increased ownership percentage following the Merger, we account for the investment in Surescripts
using the equity method and have recorded equity income of $32.8 million and $14.9 million for the years ended December 31,
2013 and 2012, respectively. Our investment in Surescripts (approximately $30.2 million and $11.9 million as of December 31,
2013 and 2012, respectively) is recorded in “Other assets” in our consolidated balance sheet.