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Express Scripts 2014 Annual Report
68
TheMergerwasaccountedforundertheacquisitionmethodofaccountingwithESItreatedastheacquirerfor
accountingpurposes.Thepurchasepricewasallocatedbasedontheestimatedfairvalueofnetassetsacquiredandliabilities
assumedatthedateoftheacquisition.
DuringthequarterendedMarch31,2013,theCompanymaderefinementstoitspreliminaryallocationofpurchase
pricerelatedtoaccruedliabilitiesduetothefinalizationofassumptionsutilizedtovaluetheliabilitiesacquired.These
adjustmentshadtheeffectofincreasingcurrentassetsandothernoncurrentliabilitiesanddecreasinggoodwill,deferredtax
liabilitiesandcurrentliabilities.
ExpressScriptsfinalizedthepurchasepriceallocationandpushdownaccountingasofMarch31,2013.Following
isasummaryof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.
ESIandMedcoeachretainaone-sixthownershipinSurescripts,resultinginacombinedone-thirdownershipin
Surescripts.WeaccountfortheinvestmentinSurescriptsusingtheequitymethodandhaverecordedequityincomeof$18.7
million,$32.8million,$14.9millionandfortheyearsendedDecember31,2014,2013and2012,respectively.Ourinvestment
inSurescripts(approximately$40.3millionand$30.2millionasofDecember31,2014and2013,respectively)isrecordedin
otherassetsinourconsolidatedbalancesheet.
64