XML 36 R20.htm IDEA: XBRL DOCUMENT
v3.21.1

Goodwill and Intangible Assets, Net | 12 Months Ended
--- | ---
Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill Changes in the carrying amount of goodwill were as follows:
(In millions) | U.S. Pharmaceutical |  | International |  | Medical-Surgical Solutions |  | Prescription Technology Solutions |  | Total
Balance, March 31, 2019 | $ | 3,935 |  |  | $ | 1,446 |  |  | $ | 2,451 |  |  | $ | 1,526 |  |  | $ | 9,358 |
Goodwill acquired | — |  |  | 62 |  |  | — |  |  | 14 |  |  | 76 |
Acquisition accounting, transfers and other adjustments | 1 |  |  | 4 |  |  | 7 |  |  | — |  |  | 12 |
Other changes/disposals | (1) |  |  | — |  |  | (5) |  |  | — |  |  | (6) |
Impairment charges | — |  |  | (2) |  |  | — |  |  | — |  |  | (2) |
Foreign currency translation adjustments, net | (11) |  |  | (67) |  |  | — |  |  | — |  |  | (78) |
Balance, March 31, 2020 | 3,924 |  |  | 1,443 |  |  | 2,453 |  |  | 1,540 |  |  | 9,360 |
Goodwill acquired | — |  |  | 5 |  |  | — |  |  | — |  |  | 5 |
Acquisition accounting, transfers and other adjustments | — |  |  | — |  |  | — |  |  | 2 |  |  | 2 |
Other changes/disposals | (1) |  |  | — |  |  | — |  |  | — |  |  | (1) |
Impairment charges | — |  |  | (69) |  |  | — |  |  | — |  |  | (69) |
Foreign currency translation adjustments, net | 40 |  |  | 156 |  |  | — |  |  | — |  |  | 196 |
Balance, March 31, 2021 | $ | 3,963 |  |  | $ | 1,535 |  |  | $ | 2,453 |  |  | $ | 1,542 |  |  | $ | 9,493 |
Goodwill Impairment Charges The Company evaluates goodwill for impairment on an annual basis each year and at an interim date, if indicators of potential impairment exist. On October 1, 2019, the Company voluntarily changed its annual goodwill impairment testing date from January 1 to October 1 to better align with the timing of the Company’s annual long-term planning process. Accordingly, management determined that the change in accounting principle is preferable under the circumstance. This change has been applied prospectively from October 1, 2019 as retrospective application is deemed impracticable due to the inability to objectively determine the assumptions and significant estimates used in earlier periods without the benefit of hindsight. This change was not material to the Company’s consolidated financial statements as it did not delay, accelerate, or avoid any potential goodwill impairment charge. Goodwill impairment testing is conducted at the reporting unit level, which is generally defined as an operating segment or one level below an operating segment (also known as a component), for which discrete financial information is available and segment management regularly reviews the operating results of that reporting unit. The fair value of the reporting units was determined using a combination of an income approach based on a DCF model and a market approach based on appropriate valuation multiples observed for the reporting unit’s guideline public companies. Fair value estimates result from a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions that have been deemed reasonable by management as of the measurement date. Any material changes in key assumptions, including failure to improve operations of certain retail pharmacy stores, additional government reimbursement reductions, deterioration in the financial markets, an increase in interest rates or an increase in the cost of equity financing by market participants within the industry, or other unanticipated events and circumstances, may affect such estimates. The discount rates are the weighted-average cost of capital measuring the reporting unit’s cost of debt and equity financing weighted by the percentage of debt and percentage of equity in a company’s target capital. The unsystematic risk premium is an input factor used in calculating the discount rate that specifically addresses uncertainty related to the reporting unit’s future cash flow projections. Fair value assessments of the reporting unit are considered a Level 3 measurement due to the significance of unobservable inputs developed using company-specific information. Goodwill charges listed below were recorded in “Goodwill impairment charges” in the Consolidated Statements of Operations. Most of the goodwill impairment for these reporting units were generally not deductible for income tax purposes. Fiscal 2021 In the second quarter of 2021, the Company implemented a new segment reporting structure which resulted in four reportable segments: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and RxTS. These reportable segments encompass all operating segments of the Company. This segment change prompted changes in multiple reporting units across the Company. As a result, goodwill included in impacted reporting units was reallocated using a relative fair value approach and assessed for impairment both before and after the reallocation. The Company recorded a goodwill impairment charge of $69 million in 2021 as the estimated fair value of the Europe Retail Pharmacy reporting unit was lower than its reassigned carrying value based on changes in the composition of the Europe Retail Pharmacy reporting unit within the International segment. At March 31, 2021, the balance of goodwill for the reporting units in Europe was approximately nil and the remaining balance of goodwill in the International segment primarily relates to one of its reporting units in Canada. The annual impairment testing performed for 2021 did not indicate any impairment of goodwill. Fiscal 2020 The impairment testing performed in 2020 did not indicate any material impairment of goodwill. Fiscal 2019 The impairment testing performed in 2019 resulted in the following impairment charges:
(In millions, except rates) |  |  |  |  |  |  |  |  |
Quarter Ended |  | Reporting Unit |  | Segment (1) |  | Discount Rate |  | Terminal Growth Rate |  | Goodwill Impairment (2) |
June 2018 |  | Pharmaceutical Distribution |  | International |  | 8.0 | % |  | 1.25 | % |  | $ | 238 |  | (3)
June 2018 |  | Retail Pharmacy |  | International |  | 8.5 | % |  | 1.25 | % |  | 251 |  | (4)
June 2018 |  | Pharmaceutical Distribution |  | International |  | 8.0 | % |  | 1.25 | % |  | 81 |  | (4)
March 2019 |  | Retail Pharmacy |  | International |  | 10.0 | % |  | 1.25 | % |  | 465 |  | (5)
March 2019 |  | Pharmaceutical Distribution |  | International |  | 9.0 | % |  | 1.25 | % |  | 741 |  | (5)
|  |  |  | Total |  |  |  |  |  | $ | 1,776 |  |
(1)As described above, the Company implemented its new segment reporting structure in the second quarter of 2021 and its European Pharmaceutical Solutions segment and its Rexall Health business in Canada became part of the International segment. Amounts included herein were previously included within the former European Pharmaceutical Solutions segment. (2)Represents pre-tax and after-tax amounts, except for an aggregate $20 million of tax charges related to the March 2019 Retail Pharmacy impairment. Total goodwill impairment for 2019 also included $21 million related to the Company’s Rexall Health business, within the International segment, recorded in the third quarter of 2019. (3)Prior to implementing its new segment reporting structure in the first quarter of 2019, the Company’s European operations were considered a single reporting unit. Following the change in reportable segments, its European Pharmaceutical Solutions segment was divided into two distinct reporting units, Retail Pharmacy (“RP”), formerly Consumer Solutions, and Pharmaceutical Distribution (“PD”), formerly Pharmacy Solutions, for the purposes of goodwill impairment testing. This change required performance of a goodwill impairment test for these two new reporting units which resulted in a goodwill impairment charge as PD’s estimated fair value was lower than its reassigned carrying value. (4)Both RP and PD projected a decline in the estimated future cash flows primarily triggered by U.K. government actions which were announced on June 29, 2018. An interim goodwill impairment test for these reporting units identified that their carrying values exceeded their estimated fair value and resulted in an impairment charge. (5)As a result of the annual goodwill impairment test, the carrying values of the PD and RP reporting units exceeded their estimated fair value which required the Company to record impairment charges for the reporting units. These additional impairments were primarily due to declines in the reporting units’ estimated future cash flows and the selection of higher discount rates. The declines in estimated future cash flows were primarily attributed to additional government reimbursement reductions and competitive pressures within the U.K. The risk of successfully achieving certain business initiatives was the primary factor in the use of a higher discount rate. As of March 31, 2019 the entire remaining goodwill balances of both reporting units were impaired. Refer to Financial Note 17, “Fair Value Measurements,” for more information on these nonrecurring fair value measurements. As of March 31, 2021 and 2020, accumulated goodwill impairment losses in the Company’s International segment were $3.6 billion and $3.5 billion, respectively. Intangible Assets Information regarding intangible assets is as follows:
| March 31, 2021 |  | March 31, 2020
(Dollars in millions) | Weighted- Average Remaining Amortization Period (Years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Customer relationships | 12 |  | $ | 3,739 |  |  | $ | (2,269) |  |  | $ | 1,470 |  |  | $ | 3,650 |  |  | $ | (1,950) |  |  | $ | 1,700 |
Service agreements | 10 |  | 1,081 |  |  | (513) |  |  | 568 |  |  | 994 |  |  | (480) |  |  | 514 |
Pharmacy licenses | 23 |  | 497 |  |  | (244) |  |  | 253 |  |  | 492 |  |  | (232) |  |  | 260 |
Trademarks and trade names | 12 |  | 925 |  |  | (394) |  |  | 531 |  |  | 808 |  |  | (242) |  |  | 566 |
Technology | 4 |  | 150 |  |  | (122) |  |  | 28 |  |  | 175 |  |  | (111) |  |  | 64 |
Other | 6 |  | 254 |  |  | (226) |  |  | 28 |  |  | 273 |  |  | (221) |  |  | 52 |
Total |  |  | $ | 6,646 |  |  | $ | (3,768) |  |  | $ | 2,878 |  |  | $ | 6,392 |  |  | $ | (3,236) |  |  | $ | 3,156 |
Amortization expense of intangible assets was $422 million, $462 million, and $485 million for 2021, 2020, and 2019, respectively. Estimated annual amortization expense of intangible assets is as follows: $370 million, $270 million, $259 million, $253 million, and $220 million for 2022 through 2026, and $1.5 billion thereafter. All intangible assets were subject to amortization as of March 31, 2021 and 2020. Refer to Financial Note 4, “Restructuring, Impairment, and Related Charges,” for more information on intangible asset impairment charges recorded in 2021, 2020, and 2019.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration