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Business Combinations | 12 Months Ended
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Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Business Combinations | Business Combinations In the fourth quarter of 2021, we closed on one business combination in the Medicaid segment, consistent with our strategy to grow in our existing markets. For this transaction, we applied the acquisition method of accounting, where the total purchase price was allocated, or preliminarily allocated, to the tangible and intangible assets acquired and liabilities assumed, based on their fair values as of the acquisition date. We expect to complete the final determination of the purchase price allocation as soon as practicable, but no later than one year following the acquisition’s closing date in accordance with Accounting Standards Codification Topic 805, Business Combinations. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. Acquisition costs amounted to $34 million in the aggregate for the year ended December 31, 2021, and were recorded as “General and administrative expenses” in the accompanying consolidated statements of income. Affinity. On October 25, 2021, we closed on our acquisition of substantially all of the assets of Affinity Health Plan, Inc., a Medicaid health plan in New York, for initial purchase consideration of approximately $176 million. Finalization of purchase price adjustments as provided in the asset purchase agreement is expected to occur in the second half of 2022. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Such assets include synergies we expect to achieve, such as the use of our existing infrastructure to support the added membership, and future economic benefits arising from the assembled workforce. Approximately 100% of the goodwill is deductible for income tax purposes. The following table summarizes the provisional fair values assigned to assets acquired and liabilities assumed, in millions.
Assets acquired: |
Current assets | $ | 234 |
Goodwill | 280 |
Intangible assets | 69 |
Other long-term assets | 8 |
Liabilities assumed: |
Medical claims and benefits payable | (224) |
Amounts due government agencies | (155) |
Accounts payable, accrued and other long-term liabilities | (36) |
Net consideration transferred | $ | 176 |
The table below presents intangible assets acquired, by major class, for the Affinity acquisition. The weighted-average amortization period, in the aggregate, is 5.4 years.
| Fair Value |  | Life
| (In millions) |  | (Years)
Contract rights - member list | $ | 56 |  |  | 5
Provider network | 9 |  |  | 10
Trade name | 4 |  |  | 1.5
| $ | 69 |  |  |
Magellan Complete Care. On December 31, 2020, we closed on our acquisition of 100% of the outstanding equity interests of the Magellan Complete Care line of business of Magellan Health, Inc., for initial purchase consideration of approximately $1,037 million. In the fourth quarter of 2021, we paid additional purchase consideration of $28 million as a result of final purchase price adjustments as provided in the stock and asset purchase agreement. In the year ended December 31, 2021, we recorded various measurement period adjustments, including a decrease of $7 million to “Receivables,” a decrease of $27 million to “Medical claims and benefits payable,” and an increase of $18 million to “Amounts due government agencies.” In the aggregate, we recorded a net increase of $10 million to goodwill for these measurement period adjustments and purchase price adjustments, which has been finalized as of December 31, 2021.Cigna. As described in Note 1, “Organization and Basis of Presentation,” we announced this acquisition closed on January 1, 2022. Because the closing date fell on a holiday, the $58 million purchase price was paid on December 31, 2021 and was recorded to prepaid expenses and other assets. Such amounts are reported in investing activities in the accompanying consolidated statements of cash flows. The initial accounting for this transaction is incomplete.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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