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GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 12 Months Ended
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Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET
Goodwill The following is a reconciliation of goodwill by business segment.
(in millions) | Americas | EMEA | APAC | Medical Products and Therapies | Healthcare Systems and Technologies 1 | Pharmaceuticals | Kidney Care | Total
December 31, 2021 | $ | 2,099 |  | $ | 309 |  | $ | 224 |  | $ | — |  | $ | 6,786 |  | $ | — |  | $ | — |  | $ | 9,418 |
Impairments | — |  | — |  | — |  | — |  | (2,812) |  | — |  | — |  | (2,812) |
Measurement period adjustments | — |  | — |  | — |  | — |  | 49 |  | — |  | — |  | 49 |
Currency translation | (134) |  | (20) |  | (14) |  | — |  | (35) |  | — |  | — |  | (203) |
December 31, 2022 | $ | 1,965 |  | $ | 289 |  | $ | 210 |  | $ | — |  | $ | 3,988 |  | $ | — |  | $ | — |  | $ | 6,452 |
Currency translation and other | (27) |  | (4) |  | (3) |  | 46 |  | 1 |  | 21 |  | 28 |  | 62 |
Reallocation of goodwill | (1,938) |  | (285) |  | (207) |  | 1,195 |  | — |  | 542 |  | 693 |  | — |
December 31, 2023 | $ | — |  | $ | — |  | $ | — |  | $ | 1,241 |  | $ | 3,989 |  | $ | 563 |  | $ | 721 |  | $ | 6,514 |
1 Prior to the third quarter of 2023, our Healthcare Systems and Technologies segment was referred to as our Hillrom segment. Change in Reportable Segments As discussed in Note 18, Segment Information, our reportable segments were previously comprised of the following geographic segments related to our legacy Baxter business: Americas (North and South America), EMEA (Europe, Middle East and Africa) and APAC (Asia Pacific), and a global segment for our Hillrom business. In the third quarter of 2023, we completed the implementation of a new operating model intended to simplify and streamline our operations and better align our manufacturing and supply chain to our commercial activities. Our segments were changed during the third quarter of 2023 to align with our new operating model. Under this new operating model, our business is comprised of four segments: Medical Products and Therapies, Healthcare Systems and Technologies (formerly referred to as our Hillrom segment), Pharmaceuticals and Kidney Care. As a result of this segment change, we reallocated the goodwill from our previous Americas, EMEA and APAC segments to the reporting units within our new Medical Products and Therapies, Pharmaceuticals and Kidney Care segments based on the relative fair values of those reporting units. We performed goodwill impairment assessments both before and after the reporting unit change and we did not identify any goodwill impairments. In connection with our November 1, 2023 annual goodwill impairment tests, we determined that no goodwill impairments had occurred. The fair values of the Front Line Care reporting unit within our Healthcare Systems and Technologies segment and the Chronic Therapies reporting unit within our Kidney Care segment exceeded their carrying values by approximately 5% and 6%, respectively. We are continuing to closely monitor the performance of those reporting units, and if there is a significant adverse change in our outlook for those businesses in the future, a goodwill impairment could arise at that time. As of December 31, 2023, the carrying amounts of goodwill for our Front Line Care and Chronic Therapies reporting units were $2.42 billion and $444 million, respectively. Goodwill Impairments As described in Note 3, we acquired Hillrom on December 13, 2021 and recognized $6.83 billion of goodwill and $6.03 billion of other intangible assets, including $1.91 billion of indefinite-lived intangible assets, in connection with that acquisition. During the third quarter of 2022, we performed trigger-based impairment tests of the goodwill of each of the reporting units within our Hillrom segment (currently referred to as our Healthcare Systems and Technologies segment), as well as the indefinite-lived intangible assets, consisting primarily of trade names, that we acquired in connection with the Hillrom acquisition. We performed those tests as of September 30, 2022 due to (a) current macroeconomic conditions, including the rising interest rate environment and broad declines in equity valuations, and (b) reduced earnings forecasts for our Hillrom reporting units, driven primarily by shortages of certain component parts used in our products, raw materials inflation and increased supply chain costs. Those impairment tests resulted in total pre-tax goodwill impairment charges of $2.79 billion in the third quarter of 2022. In connection with our annual goodwill impairment assessment in the fourth quarter of 2022, we performed quantitative impairment tests for all of our reporting units and recorded an additional $27 million goodwill impairment related to our Hillrom segment. No goodwill impairments were recorded for our remaining reporting units in connection with our annual goodwill impairment tests because the fair values of those reporting units exceeded their carrying amounts. The fair values of the reporting units tested for impairment during 2022 were determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach) based on the guideline public company method. Significant assumptions used in the determination of the fair values of our reporting units generally include forecasted cash flows, discount rates, terminal growth rates and earnings multiples. The discounted cash flow models used to determine the fair values of our reporting units during 2022 reflected our most recent cash flow projections, discount rates ranging from 9% to 10% and terminal growth rates ranging from 2% to 3%. Our reporting unit fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. See further discussion below for information regarding intangible asset impairment charges recognized during the third and fourth quarters of 2022. Other Intangible Assets, Net The following is a summary of our other intangible assets.
|  |  |  |  | Indefinite-lived intangible assets |
(in millions) | Customer relationships | Developed technology, including patents | Trade Names | Other amortized intangible assets | Trade Names | In process Research and Development | Total
December 31, 2023 |  |  |  |  |  |  |
Gross other intangible assets | $ | 3,446 |  | $ | 3,823 |  | $ | 1,106 |  | $ | 120 |  | $ | 680 |  | $ | 157 |  | $ | 9,332 |
Accumulated amortization | (689) |  | (2,285) |  | (180) |  | (99) |  | — |  | — |  | (3,253) |
Other intangible assets, net | $ | 2,757 |  | $ | 1,538 |  | $ | 926 |  | $ | 21 |  | $ | 680 |  | $ | 157 |  | $ | 6,079 |
December 31, 2022 |  |  |  |  |  |  |
Gross other intangible assets | $ | 3,442 |  | $ | 3,836 |  | $ | 209 |  | $ | 116 |  | $ | 1,571 |  | $ | 202 |  | $ | 9,376 |
Accumulated amortization | (460) |  | (1,888) |  | (147) |  | (88) |  | — |  | — |  | $ | (2,583) |
Other intangible assets, net | $ | 2,982 |  | $ | 1,948 |  | $ | 62 |  | $ | 28 |  | $ | 1,571 |  | $ | 202 |  | $ | 6,793 |
Intangible asset amortization expense was $652 million in 2023, $753 million in 2022 and $298 million in 2021. The anticipated annual amortization expense for definite-lived intangible assets recorded as of December 31, 2023 is $665 million in 2024, $632 million in 2025, $602 million in 2026, $437 million in 2027 and $427 million in 2028. As a result of an update to our long-term branding strategy, we reclassified two trade name intangible assets with carrying amounts of $870 million and $21 million from indefinite-lived intangible assets to amortizing intangible assets during the fourth quarter of 2023. The estimated useful lives assigned to those assets were 15 years and 5 years, respectively, and we recognized $10 million of amortization expense on those intangible assets from the date of reclassification through December 31, 2023. Intangible Asset Impairments Impairment of Developed Technology Intangible Asset Related to HD Business In the third quarter of 2023, we reviewed the long-lived assets of our HD reporting unit for potential impairment and recognized a $77 million impairment of developed technology intangible assets, in addition to other impairments of property, plant and equipment and operating lease right-of-use assets. See Note 4, Supplemental Financial Information, for information about the impairment of this intangible asset, impairments of other long-lived assets related to our HD business and related fair value measurements. Impairment of Indefinite-Lived Intangible Assets from Our Hillrom Acquisition In addition to the goodwill impairments discussed above, we recognized pre-tax impairment charges of $332 million in the third quarter of 2022 to reduce the carrying amounts of certain indefinite-lived intangible assets, which primarily related to the Hillrom and Welch Allyn trade names acquired in the Hillrom acquisition, to their estimated fair values. Those intangible asset impairment charges are classified within cost of sales in the accompanying consolidated statements of income (loss) for the year ended December 31, 2022. The fair values of the trade name intangible assets were determined using the relief from royalty method. Significant assumptions used in the determination of the fair value of the trade name intangible assets included revenue growth rates, terminal growth rates, discount rates and royalty rates. The relief from royalty models used in the determination of the fair values of our trade name intangible assets during 2022 reflected our most recent revenue projections, a discount rate of 9.5%, royalty rates ranging from 3% to 5% and terminal growth rates ranging from 2% to 3%. Our trade name intangible asset fair value measurements are classified as Level 3 in the fair value hierarchy because they involve significant unobservable inputs. In the fourth quarter of 2022, we recognized an impairment charge of $12 million related to developed-technology intangible assets due to declines in market expectations for the related products. The fair values of the intangible assets were measured using a discounted cash flow approach and the charge is classified within cost of sales in the accompanying consolidated statements of income (loss) for the year ended December 31, 2022. We consider the fair values of the assets to be Level 3 measurements due to the significant estimates and assumptions, including forecasted future cash flows, that we used in establishing the estimated fair values.

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