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Acquisitions and Strategic Investments | 12 Months Ended
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Dec. 31, 2024
Business Combinations [Abstract] |
ACQUISITIONS AND STRATEGIC INVESTMENTS | NOTE B – ACQUISITIONS AND STRATEGIC INVESTMENTS Our consolidated financial statements include the operating results for acquired entities from the respective dates of acquisition. We have not presented supplemental pro forma financial information for completed acquisitions or divestitures given their results are not material to our consolidated financial statements. Further, transaction costs were immaterial to our consolidated financial statements and were expensed as incurred. On January 24, 2025, we completed our acquisition of 100 percent of Cortex, Inc. (Cortex), a privately held medical technology company focused on the development of a diagnostic mapping solution which may identify triggers and drivers outside of the pulmonary veins that are foundational to atrial fibrillation (AF). The transaction consisted of an upfront cash payment of $248 million, net of cash acquired, and up to approximately $50 million in future payments upon achievement of certain regulatory milestones. The Cortex business will be integrated into our Cardiology division. On January 8, 2025, we announced our entry into a definitive agreement to acquire Bolt Medical, Inc. (Bolt Medical), the developer of an intravascular lithotripsy advanced laser-based platform for the treatment of coronary and peripheral artery disease. We have been an investor in Bolt Medical since 2019 and currently hold an equity stake of approximately 26 percent. The transaction price to acquire the remaining stake is expected to result in an upfront cash payment of approximately $443 million upon closing and up to an additional $221 million in future payments upon achievement of certain regulatory milestones. The transaction is expected to close during the first half of 2025, subject to customary closing conditions. The Bolt Medical business will be integrated into our Cardiology and Peripheral Interventions divisions. On November 25, 2024, we announced our entry into a definitive agreement to acquire 100 percent of Intera Oncology®, Inc. (Intera), a privately held medical device company that provides the Intera 3000 Hepatic Artery Infusion Pump and floxuridine – a chemotherapy drug – both of which are approved by the U.S. Food and Drug Administration. The Intera 3000 pump is used to administer hepatic artery infusion therapy to treat tumors in the liver primarily caused by metastatic colorectal cancer. The purchase price consists of an upfront cash payment of approximately $175 million. The transaction is expected to close in the first half of 2025, subject to customary closing conditions. The Intera business will be integrated into our Peripheral Interventions division. 2024 Acquisitions On September 17, 2024, we completed our acquisition of 100 percent of the outstanding equity of Silk Road Medical, Inc. (Silk Road Medical), a publicly traded medical device company that has developed an innovative platform of products to prevent stroke in patients with carotid artery disease through a minimally-invasive procedure called transcarotid artery revascularization. The transaction consisted of an upfront cash payment of $27.50 per share, or approximately $1.126 billion, net of cash acquired. The Silk Road Medical business is being integrated into our Peripheral Interventions division. On November 15, 2024, we completed our acquisition of 100 percent of the outstanding equity of Axonics, Inc. (Axonics), a public medical technology company focused on the development and commercialization of differentiated devices to treat urinary and bowel dysfunction. The transaction consisted of an upfront cash payment of $71.00 per share, or approximately $3.409 billion, net of cash acquired. The Axonics business is being integrated into our Urology division. Purchase Price Allocation We accounted for these transactions as business combinations in accordance with FASB ASC Topic 805, Business Combinations (FASB ASC Topic 805). The preliminary purchase prices were comprised of the amounts presented below:
(in millions) | Silk Road Medical | Axonics
Payment for acquisition, net of cash acquired | $ | 1,126 |  | $ | 3,409 |
| $ | 1,126 |  | $ | 3,409 |
We recorded the assets acquired and liabilities assumed at their respective fair values as of the closing date of the transaction. The preliminary purchase price allocations were comprised of the components presented below, which represent the preliminary determination of the fair value of assets acquired and liabilities assumed, with the excess of the purchase price over the fair value of net identifiable assets acquired recorded to goodwill. The final determination of the fair value of certain assets and liabilities will be completed within the measurement period in accordance with FASB ASC Topic 805.
(in millions) | Silk Road Medical | Axonics
Goodwill | $ | 569 |  | $ | 2,147 |
Amortizable intangible assets | 507 |  | 1,242 |
Other assets acquired | 117 |  | 423 |
Liabilities assumed | (45) |  | (167) |
Net deferred tax liabilities | (23) |  | (237) |
| $ | 1,126 |  | $ | 3,409 |
Goodwill was primarily established for Silk Road Medical and Axonics due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies, none of which is deductible for tax purposes. We allocated a portion of the purchase price to the specific intangible asset categories as follows:
| Amount Assigned (in millions) |  | Weighted Average Amortization Period (in years) |  | Risk-Adjusted Discount Rates used in Purchase Price Allocation
Silk Road Medical: |  |  |  |  |
Amortizable intangible assets: |  |  |  |  |
Technology-related | $ | 447 |  |  | 12 |  | 13%
Customer relationships | 61 |  |  | 12 |  | 13%
| $ | 507 |  |  |  |  |
Axonics |  |  |  |  |
Amortizable intangible assets: |  |  |  |  |
Technology-related | $ | 1,157 |  |  | 12 |  | 10%
Customer relationships | 85 |  |  | 12 |  | 10%
| $ | 1,242 |  |  |  |  |
Our technology-related intangible assets consist of technical processes, intellectual property and institutional understanding with respect to products and processes that we intend to leverage in future products or processes. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets and are amortizing them on a straight-line basis over their assigned estimated useful lives. 2023 Acquisitions On February 20, 2023, we completed the acquisition of a majority stake investment in Acotec, a publicly traded Chinese manufacturer of drug-coated balloons and other products used in the treatment of vascular and other diseases. We consolidated this majority stake investment in Acotec based on the conclusion we control the entity, and recorded a noncontrolling interest for the portion we do not own. We acquired approximately 65 percent of the outstanding shares of Acotec, for an upfront cash payment of HK$20.00 per share, or $519 million at foreign currency exchange rates at closing. The Acotec portfolio complements our existing Peripheral Interventions portfolio. On April 4, 2023, we completed our acquisition of 100 percent of the outstanding equity of Apollo Endosurgery, Inc. (Apollo), a public company which offers a portfolio of devices used during endoluminal procedures to close gastrointestinal defects, manage gastrointestinal complications and aid in weight loss for patients suffering from obesity. The transaction consisted of an upfront cash payment of $636 million, net of cash acquired. The Apollo business is being integrated into our Endoscopy division. On November 17, 2023, we completed our acquisition of 100 percent of the outstanding equity of Relievant Medsystems, Inc. (Relievant), a privately held medical technology company that developed and commercialized the Intracept® Intraosseous Nerve Ablation System to treat vertebrogenic pain, a form of chronic low back pain. The transaction consisted of an upfront cash payment of $794 million, net of cash acquired, and additional sales-based milestones over the three years following the transaction close. These milestones, certain of which are uncapped, were estimated to have a fair value of $273 million as of the acquisition date. The Relievant business is being integrated into our Neuromodulation division. Purchase Price Allocation We accounted for these transactions as business combinations in accordance with FASB ASC Topic 805. The final purchase prices were comprised of the amounts presented below:
(in millions) | Acotec(1) | Apollo | Relievant |
Payment for acquisition, net of cash acquired (2) | $ | 381 |  | $ | 636 |  | $ | 794 |  |
Fair value of contingent consideration | — |  | — |  | 273 |  |
| $ | 381 |  | $ | 636 |  | $ | 1,067 |  |
(1) Excludes approximately $140 million of cash on hand at the closing of the transaction (2) Related to Acotec, represents our majority stake investment We recorded the assets acquired, liabilities assumed and specific to Acotec, the noncontrolling interest, at their respective fair values as of the closing date of the transaction. The final purchase price allocations were comprised of the components presented below, with the excess of the purchase price over the fair value of net identifiable assets acquired recorded to goodwill:
(in millions) | Acotec | Apollo | Relievant
Goodwill | $ | 337 |  | $ | 378 |  | $ | 731 |
Amortizable intangible assets | 334 |  | 248 |  | 325 |
Other assets acquired | 93 |  | 50 |  | 24 |
Liabilities assumed | (48) |  | (33) |  | (15) |
Net deferred tax liabilities | (76) |  | (5) |  | 1 |
Fair value of noncontrolling interest | (259) |  | — |  | — |
| $ | 381 |  | $ | 636 |  | $ | 1,067 |
The fair value of Acotec's noncontrolling interest was based on the publicly traded market value of the remaining 35 percent of the outstanding shares we did not acquire as of the transaction date and is presented within Stockholders' equity within our accompanying consolidated balance sheets. Goodwill was primarily established for Acotec due to opportunities for collaboration in research and development, manufacturing and commercial strategies, and for Apollo and Relievant, due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies, none of which is deductible for tax purposes. We allocated a portion of the purchase price to the specific intangible asset categories as follows:
| Amount Assigned (in millions) |  | Weighted Average Amortization Period (in years) |  | Risk-Adjusted Discount Rates used in Purchase Price Allocation
Acotec: |  |  |  |  |
Amortizable intangible assets: |  |  |  |  |
Technology-related | $ | 308 |  |  | 11 |  | 14%
Customer relationships | 15 |  |  | 11 |  | 14%
Other intangible assets | 11 |  |  | 13 |  | 14%
| $ | 334 |  |  |  |  |
Apollo: |  |  |  |  |
Amortizable intangible assets: |  |  |  |  |
Technology-related | $ | 222 |  |  | 11 |  | 12%
Customer relationships | 26 |  |  | 11 |  | 12%
| $ | 248 |  |  |  |  |
Relievant: |  |  |  |  |
Amortizable intangible assets: |  |  |  |  |
Technology-related | $ | 287 |  |  | 12 |  | 12%
Customer relationships | 38 |  |  | 12 |  | 12%
| $ | 325 |  |  |  |  |
Our technology-related intangible assets consist of technical processes, intellectual property and institutional understanding with respect to products and processes that we intend to leverage in future products or processes. We used the multi-period excess earnings method, a form of the income approach, to derive the fair value of the technology-related intangible assets and are amortizing them on a straight-line basis over their assigned estimated useful lives. Contingent Consideration Changes in the fair value of our contingent consideration liability during 2024 and 2023 associated with current and prior period acquisitions were as follows:
(in millions) |
Balance as of December 31, 2022 | $ | 149 |
Amount recorded related to current year acquisitions | 273 |
Contingent consideration net expense (benefit) | 58 |
Contingent consideration payments | (76) |
Balance as of December 31, 2023 | $ | 404 |
Amount recorded related to current year acquisitions | 29 |
Contingent consideration net expense (benefit) | (5) |
Contingent consideration payments and other adjustments | (257) |
Balance as of December 31, 2024 | $ | 171 |
In 2024, payments were primarily related to our acquisition of Farapulse, Inc. (Farapulse) and Relievant following the achievement of revenue-based earnouts and sales milestones, respectively. In 2023, payments were primarily related to our acquisition of Farapulse following the achievement of revenue milestones. The maximum amount for certain contingent consideration is not determinable as it is uncapped and based on a percent of certain sales. As of December 31, 2024, the fair value of such uncapped contingent consideration is estimated at $147 million. As of December 31, 2024, the maximum amount that we could be required to pay under our other capped contingent consideration arrangements (undiscounted) is approximately $220 million. The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:
Contingent Consideration Liability | Fair Value as of December 31, 2024 | Valuation Technique | Unobservable Input | Range | Weighted Average(1)
Revenue-based Payments and Commercialization Milestones | $171 million | Discounted Cash Flow | Discount Rate | 6 | % | - | 15% | 7%
Probability of Payment | 40% | - | 100% | 96%
Projected Year of Payment | 2025 | - | 2029 | 2027
(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected year of payment, the amount represents the median of the inputs and is not a weighted average. Projected contingent payment amounts related to our revenue-based payments and commercialization milestones are discounted back to the current period, primarily using a discounted cash flow model. Significant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement as of December 31, 2024. Strategic Investments The aggregate carrying amount of our strategic investments was comprised of the following:
| As of December 31,
(in millions) | 2024 |  | 2023
Equity method investments | $ | 278 |  |  | $ | 219 |
Measurement alternative investments(1, 2) | 277 |  |  | 194 |
| $ | 555 |  |  | $ | 413 |
(1) Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying consolidated statements of operations. (2) Includes publicly-held equity securities and convertible notes measured at fair value with changes in fair value recognized in Other, net within our consolidated statements of operations. These investments are classified as Other long-term assets within our consolidated balance sheets, in accordance with GAAP and our accounting policies. In 2024, the cost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by $333 million, which represents amortizable intangible assets, IPR&D, goodwill and deferred tax liabilities.

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