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Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Goodwill and Other Intangibles Goodwill Below is a summary of the changes in the carrying amount of goodwill by segment for the years ended December 31, 2018 and 2017:
In millions | Pharmacy Services |  | Retail/LTC |  | Health Care Benefits |  | Total
Balance at December 31, 2016 | $ | 21,637 |  |  | $ | 16,612 |  |  | $ | — |  |  | $ | 38,249 |
Acquisitions | 182 |  |  | 203 |  |  | — |  |  | 385 |
Foreign currency translation adjustments | — |  |  | (2 | ) |  | — |  |  | (2 | )
Impairments | — |  |  | (181 | ) |  | — |  |  | (181 | )
Balance at December 31, 2017 | 21,819 |  |  | 16,632 |  |  | — |  |  | 38,451 |
Acquisitions | 1,569 |  |  | 735 |  |  | 44,484 |  |  | 46,788 |
Foreign currency translation adjustments | — |  |  | (14 | ) |  | — |  |  | (14 | )
Divestiture of RxCrossroads subsidiary | — |  |  | (398 | ) |  | — |  |  | (398 | )
Impairments | — |  |  | (6,149 | ) |  | — |  |  | (6,149 | )
Balance at December 31, 2018 | $ | 23,388 |  |  | $ | 10,806 |  |  | $ | 44,484 |  |  | $ | 78,678 |
Cumulative goodwill impairments as of December 31, 2018 and 2017 were $6.1 billion and $181 million, respectively. The changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017 reflect the following activity: Aetna Acquisition On November 28, 2018, the Company completed the Aetna Acquisition. The majority of the preliminary valuation of goodwill associated with the Aetna Acquisition was recorded in the Health Care Benefits segment. The Company also allocated a portion of such goodwill to the Retail/LTC and Pharmacy Services segments related to the fair value of identified synergies that are expected to directly benefit those segments. See Note 2 ‘‘Acquisition of Aetna’’ for further discussion regarding the Aetna Acquisition. LTC During 2018, the LTC reporting unit continued to experience industry wide challenges that have impacted management’s ability to grow the business at the rate that was originally estimated when the Company acquired Omnicare and when the 2017 annual goodwill impairment test was performed. These challenges include lower client retention rates, lower occupancy rates in skilled nursing facilities, the deteriorating financial health of numerous skilled nursing facility customers which resulted in a number of customer bankruptcies in 2018, and continued facility reimbursement pressures. In June 2018, LTC management submitted its initial budget for 2019 and updated the 2018 annual forecast which showed a projected deterioration in the financial results for the remainder of 2018 and in 2019, which also caused management to update its long-term forecast beyond 2019. Based on these updated projections, management determined that there were indicators that the LTC reporting unit’s goodwill may be impaired and, accordingly, management performed an interim goodwill impairment test as of June 30, 2018. The results of that interim impairment test showed that the fair value of the LTC reporting unit was lower than the carrying value, resulting in a $3.9 billion pre-tax goodwill impairment charge in the second quarter of 2018. The fair value of the LTC reporting unit was determined using a combination of a discounted cash flow method and a market multiple method. In addition to the lower financial projections, higher risk-free interest rates and lower market multiples of peer group companies contributed to the amount of the second quarter 2018 goodwill impairment charge. During the third quarter of 2018, the Company performed its required annual impairment tests of goodwill and concluded there was no impairment of goodwill or trade names. During the fourth quarter of 2018, the LTC reporting unit missed its forecast primarily due to operational issues and customer liquidity issues, including one significant customer bankruptcy. Additionally, LTC management submitted an updated final budget for 2019 which showed significant additional deterioration in the projected financial results for 2019 compared to the analyses performed in the second and third quarters of 2018 primarily due to continued industry and operational challenges, which also caused management to make further updates to its long-term forecast beyond 2019. The updated projections continue to reflect industry wide challenges including lower occupancy rates in skilled nursing facilities, significant deterioration in the financial health of numerous skilled nursing facility customers and continued facility reimbursement pressures. Based on these updated projections, management determined that there were indicators that the LTC reporting unit’s goodwill may be further impaired and, accordingly, an interim goodwill impairment test was performed during the fourth quarter of 2018. The results of that impairment test showed that the fair value of the LTC reporting unit was lower than the carrying value, resulting in an additional $2.2 billion goodwill impairment charge in the fourth quarter of 2018. In addition to the lower financial projections, lower market multiples of peer group companies also contributed to the amount of the fourth quarter 2018 goodwill impairment charge. The fair value of the LTC reporting unit was determined using a methodology consistent with the methodology described above for the analyses performed during the second and third quarters of 2018. As of December 31, 2018, the remaining goodwill balance in the LTC reporting unit is approximately $431 million. RxCrossroads During 2017, the Company began pursuing various strategic alternatives for its RxCrossroads reporting unit. In connection with this effort, the Company performed an interim goodwill impairment test in the second quarter of 2017. The results of that impairment test showed that the fair value of the RxCrossroads reporting unit was lower than the carrying value, resulting in a $135 million pre-tax goodwill impairment charge in the second quarter of 2017. The TCJA was enacted on December 22, 2017 and reduced the United States federal corporate income tax rate from 35% to 21% effective January 1, 2018 (see Note 10 ‘‘Income Taxes’’). As a result, the RxCrossroads deferred income tax liabilities were reduced by $47 million and an income tax benefit of $47 million was recorded in the 2017 statement of operations. The reduction in the deferred income tax liabilities increased the carrying value of the RxCrossroads reporting unit by $47 million which triggered an additional goodwill impairment charge in the RxCrossroads reporting unit of $46 million during the fourth quarter of 2017. On January 2, 2018, the Company sold its RxCrossroads subsidiary to McKesson Corporation for $725 million, at which time the remaining goodwill of this reporting unit was removed from the consolidated balance sheet. Intangible Assets The following table is a summary of the Company’s intangible assets as of December 31:
In millions, except weighted average life | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Weighted Average Life (years)
2018 |  |  |  |  |  |  |
Trademarks (indefinitely-lived) | $ | 10,498 |  |  | $ | — |  |  | $ | 10,498 |  |  | N/A
Customer contracts/relationships and covenants not to compete | 26,213 |  |  | (6,349 | ) |  | 19,864 |  |  | 14.8
Technology | 1,060 |  |  | (31 | ) |  | 1,029 |  |  | 3.0
Provider networks | 4,200 |  |  | (19 | ) |  | 4,181 |  |  | 20.0
Value of Business Acquired | 590 |  |  | (7 | ) |  | 583 |  |  | 20.0
Favorable leases and other | 1,177 |  |  | (808 | ) |  | 369 |  |  | 17.1
Total | $ | 43,738 |  |  | $ | (7,214 | ) |  | $ | 36,524 |  |  | 15.3
2017 |  |  |  |  |  |  |
Trademark (indefinitely-lived) | $ | 6,398 |  |  | $ | — |  |  | $ | 6,398 |  |  | N/A
Customer contracts/relationships and covenants not to compete | 12,341 |  |  | (5,536 | ) |  | 6,805 |  |  | 15.3
Favorable leases and other | 1,190 |  |  | (763 | ) |  | 427 |  |  | 16.2
Total | $ | 19,929 |  |  | $ | (6,299 | ) |  | $ | 13,630 |  |  | 15.4
Amortization expense for intangible assets totaled $1.0 billion, $817 million and $795 million for the years ended December 31, 2018, 2017 and 2016, respectively. The projected annual amortization expense for the Company’s intangible assets for the next five years is as follows:
In millions |
2019 | $ | 2,563 |
2020 | 2,350 |
2021 | 2,253 |
2022 | 1,879 |
2023 | 1,844 |

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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