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Business Combinations and Asset Acquisitions | 9 Months Ended
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Mar. 31, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Business Combination | 2. Acquisitions Integrated Oncology Network ("ION") On December 2, 2024, we completed the acquisition of ION, a physician-led independent community oncology network, for a purchase price of $1.1 billion in cash, subject to certain adjustments. ION is a management services organization that supports more than 50 practice sites in 10 states representing more than 100 providers. ION supports a continuum of care across its member sites including medical oncology, radiation oncology, urology diagnostic testing and other ancillary services. As part of the transaction, ION practices will be integrated into Navista, our managed services organization intended to enhance efficiency for providers and patients, enable additional capabilities, and increase practice profitability of independent community oncologists. We report ION results within our Pharma segment. The portion of ION net earnings attributable to noncontrolling interest holders is reported as a reduction to net earnings in the condensed consolidated statements of earnings. The acquisition was funded with available cash on hand. Transaction and integration costs associated with the ION acquisition were $6 million and $25 million during the three and nine months ended March 31, 2025, respectively, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings. GI Alliance ("GIA") On January 30, 2025, we completed the acquisition of 73 percent ownership interest in GIA, a gastroenterology management services organization, for a purchase price of approximately $2.8 billion in cash, subject to certain adjustments. Beginning on the third anniversary of the closing, we have the ability to exercise a call right to purchase up to 100 percent of the remaining outstanding equity. GIA's management services organization platform includes over 900 physicians across 345 practice locations in 20 states and has the ability to further expand both geographically and in other key therapeutic areas. We have accounted for the acquisition of the ownership interest in GIA as a business combination in accordance with ASC 805. We consolidate the results of GIA in our condensed consolidated financial statements and report those consolidated results within our Pharma segment. The portion of GIA net earnings attributable to noncontrolling interest holders is reported as a reduction to net earnings in the condensed consolidated statements of earnings. Transaction and integration costs associated with the GIA acquisition were $59 million and $69 million during the three and nine months ended March 31, 2025, respectively, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings. On April 14, 2025, we announced that we entered into a definitive agreement to acquire Urology America. This transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals. Advanced Diabetes Supply Group ("ADSG") On April 1, 2025, we completed the acquisition of ADSG, one of the country's leading diabetic medical supplies providers, for a purchase price of approximately $1.1 billion in cash, subject to certain adjustments. ADSG serves approximately 500,000 patients annually by providing the latest innovations in diabetes therapies from leading manufacturers. ADSG will become part of our at-Home Solutions operating segment and we will report ADSG results in Other. We financed the acquisition of ADSG with a combination of cash on hand and cash proceeds from new debt financing as described in Note 6. Specialty Networks On March 18, 2024, we completed the acquisition of Specialty Networks for a purchase price of $1.2 billion in cash. Specialty Networks creates clinical and economic value for providers and partners across multiple specialty group purchasing organizations ("GPOs"): UroGPO, Gastrologix and GastroGPO, and United Rheumatology. Specialty Networks results are reflected within our Pharma segment. Transaction and integration costs associated with the Specialty Network acquisition were $2 million and $6 million during the three and nine months ended March 31, 2025, respectively and transaction costs were $15 million during the three and nine months ended March 31, 2024. These are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings. Fair Value of Assets Acquired and Liabilities Assumed The allocation of the purchase price for the acquisitions of ION and GIA are not yet finalized and are subject to adjustment as we complete the valuation analysis of these acquisitions. The purchase prices are also subject to adjustment based on working capital requirements as set forth in the acquisition agreements. The pro forma results of operations and the results of operations for these acquisitions have not been separately disclosed because the effects were not significant compared to the consolidated financial statements. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date for ION and GIA:
(in millions) | ION |  | GIA
Identifiable intangible assets: |  |  |
Customer contracts (1) | $ | 235 |  |  | $ | — |
Trademarks (2) | 78 |  |  | 256 |
Non-competition agreements (3) | — |  |  | 24 |
Total identifiable intangible assets acquired | 313 |  |  | 280 |
Identifiable net assets/(liabilities): |  |  |
Cash and equivalents | 8 |  |  | 76 |
Trade receivables, net | 59 |  |  | 195 |
Inventories | 4 |  |  | 21 |
Prepaid expenses and other | 5 |  |  | 13 |
Property and equipment, net | 32 |  |  | 67 |
Other assets | 45 |  |  | 287 |
Accounts payable | (10) |  |  | (89) |
Current portion of long-term obligations and other short-term borrowings | (3) |  |  | (1) |
Other accrued liabilities | (38) |  |  | (171) |
Long-term obligations, less current portion | (14) |  |  | (15) |
Deferred income taxes and other liabilities | (88) |  |  | (209) |
Total identifiable net assets/(liabilities) acquired | 313 |  |  | 454 |
Noncontrolling interest | (151) |  |  | (884) |
Goodwill | 908 |  |  | 3,241 |
Total net assets acquired | $ | 1,070 |  |  | $ | 2,811 |
(1) The weighted-average useful life of customer contracts is 20 years. (2) The weighted-average useful life of trademarks is 10 years. (3) The weighted-average useful life of non-competition agreements is 4 years. The valuation of identifiable intangible assets utilizes significant unobservable inputs and thus represents a Level 3 nonrecurring fair value measurement. The discount rates used to arrive at the present values of the identifiable intangible assets were 9.5 percent and 10.0 percent for ION and GIA, respectively, and reflect their internal rates of return and uncertainty in the cash flow projections, which is reflective of market participant assumptions. The estimated fair value of ION customer contracts were determined using an income-based approach, which includes market participant expectations of the cash flows that an asset could generate over its remaining useful life, discounted back to present value using an appropriate rate of return. The fair value of the ION and GIA trademark intangible assets were determined utilizing the relief from royalty method, an income-based approach. Under this method, a royalty rate based on observed market royalties is applied to projected revenue supporting the trademarks and discounted to present value using an appropriate discount rate. The fair value of the non-compete intangibles acquired from GIA were determined by applying the differential cash flow method which compares the present value of cash flows with and without the non-compete agreements in place. The noncontrolling interests were recognized at their acquisition-date fair values of $151 million and $884 million for ION and GIA, respectively. For GIA, the fair value was determined based on the fair value of GIA's common units. The allocation of the fair value of assets acquired and liabilities assumed for the Specialty Networks acquisition was finalized during the nine months ended March 31, 2025, resulting in goodwill of $784 million. There were no significant adjustments to the allocation of the fair value of assets acquired and liabilities assumed for the Specialty Networks acquisition from those disclosed in our fiscal 2024 Form 10-K.

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