Business Combinations

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

In 2022, we closed on two business combinations primarily in the Medicaid segment, consistent with our growth strategy. For these transactions, we applied the acquisition method of accounting, where the total purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed, based on their fair values as of the acquisition date. The proforma effects of these acquisitions for prior periods were not material to our consolidated results of operations. Costs to complete acquisitions amounted to $2 million in the aggregate for the year ended December 31, 2022, and were recorded as “General and administrative expenses” in the accompanying consolidated statements of income.

AgeWell. On October 1, 2022, we closed on our acquisition of the Medicaid Managed Long Term Care business of AgeWell New York for purchase consideration of approximately $134 million. We acquired membership and a provider network with a fair value of approximately $47 million. We allocated the remaining $87 million of purchase consideration to goodwill, which relates to future economic benefits arising from expected synergies from the use of our existing infrastructure to support the added membership. The goodwill is deductible for income tax purposes.

Cigna. On January 1, 2022, we closed on our acquisition of Cigna Corporation’s Texas Medicaid and Medicare-Medicaid Plan contracts, along with certain operating assets, for purchase consideration of approximately $60 million. Because the closing date fell on a holiday, the purchase price was paid on December 31, 2021 and was recorded to prepaid expenses and other assets. We acquired membership and a provider network with a fair value of approximately $35 million. We allocated the remaining $25 million of purchase consideration to goodwill, primarily in the Medicaid segment, which relates to future economic benefits arising from expected synergies from the use of our existing infrastructure to support the added membership, and from the assembled workforce. The goodwill is deductible for income tax purposes.

The table below presents intangible assets acquired, by major class, for the AgeWell and Cigna acquisitions.


	Fair Value		Life			Weighted-Average Life

	(In millions)		(Years)			(Years)
Contract rights - member list	$	81	2	-	5	3.7
Provider network	1		2	-	5	4.0
	$	82				3.7

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 purchase consideration of approximately $176 million. In the year ended December 31, 2022, we recorded various measurement period adjustments, including an increase of $12 million to “Medical claims and benefits payable,” and an increase of $4 million to “Amounts due government agencies” net of “Receivables.” In the aggregate, we recorded a net increase of $21 million to goodwill for these measurement period adjustments and various purchase price adjustments, which have been finalized as of December 31, 2022.