Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7. Goodwill and Intangible Assets

The following table represents our finite-lived and indefinite-lived intangible assets as of December 31, 2021 and 2020 (in thousands):


	2021		2020
Finite-lived intangible assets:
Customer relationships	$	192,800	$	202,546
Developed technology	219,706		227,247
Trade names	25,154		26,261
Other intangible assets	616		1,035
Total gross finite-lived intangible assets	438,276		457,089
Accumulated amortization - Customer relationships	65,106		56,787
Accumulated amortization - Developed technology	68,488		56,933
Accumulated amortization - Trade names	16,500		16,837
Accumulated amortization - Other intangible assets	506		902
Total accumulated amortization	150,600		131,459
Net finite-lived intangible assets	$	287,676	$	325,630
Indefinite-lived intangible assets:
IPR&D	$	112,006	$	112,006
Goodwill	899,525		922,318
Total indefinite-lived intangible assets	$	1,011,531	$	1,034,324

The amortization periods for our finite-lived intangible assets as of December 31, 2021, are as follows:


	Minimum Life in years	Maximum Life in years
Customer relationships	8	18
Developed technology	14	17
Trade names	15	15

The estimated future amortization expense based on our finite-lived intangible assets at December 31, 2021, is as follows (in thousands):


2022	$	25,980
2023	25,980
2024	25,980
2025	25,980
2026	25,980
Thereafter	157,776
Total	$	287,676

Intangible Asset Impairments

In November 2019, we announced that we would be ending our Caisson TMVR program. The announcement triggered an evaluation of finite and indefinite lived assets for impairment. As a result, we fully impaired the IPR&D asset and goodwill of $89.0 million and $42.4 million, respectively.

During the second quarter of 2019, we determined that there would be a delay in the estimated commercialization date of our obstructive sleep apnea product currently under development, which was acquired in the ImThera acquisition. This delay constituted a triggering event that required an evaluation of the IPR&D asset arising from the ImThera acquisition for impairment. Based on the assessment performed, we determined that the IPR&D asset was impaired and as a result, recorded an impairment of $50.3 million, which is included in our Neuromodulation segment. The estimated fair value of IPR&D was determined using the income approach. Estimating the fair value of the IPR&D asset requires various assumptions, including

revenue growth rates, timing and probability of commercialization and the discount rate. Future delays in commercialization or changes in management estimates could result in further impairment.

Intangible Asset Reclassification

During the third quarter of 2019, upon receiving FDA approval of the LifeSPARC system, we reclassified the IPR&D asset of $107.5 million from the acquisition of TandemLife to finite-lived developed technology intangible assets and began amortizing the intangible asset over a useful life of 15 years.

Goodwill

The following table represents the changes in the carrying amount of goodwill by reportable segment (in thousands):


	Cardiopulmonary		Neuromodulation		Advanced Circulatory Support		Other (1)		Total
December 31, 2019	$	394,735	$	398,754	$	102,526	$	19,779	$	915,794
Impairment (2)	—		—		—		(21,269)		(21,269)
Foreign currency adjustments	26,303		—		—		1,490		27,793
December 31, 2020	421,038		398,754		102,526		—		922,318

Foreign currency adjustments	(22,793)		—		—		—		(22,793)
December 31, 2021	$	398,245	$	398,754	$	102,526	$	—	$	899,525

(1)Other includes goodwill associated the Company’s Heart Valves business, which was disposed of on June 1, 2021.

(2)During the year ended December 31, 2020, the Company recognized a $21.3 million impairment of goodwill allocated to Heart Valves. Refer to “Note 4. Divestiture of Heart Valve Business” for additional information.

Due to our change in reportable segments, as discussed in “Note 1. Nature of Operations,” we performed a quantitative assessment as of October 1, 2021 of the goodwill associated with the previously reported Cardiovascular reporting unit and concluded that the goodwill was not impaired. We then allocated $403.9 million and $102.5 million of the previously reported Cardiovascular goodwill to the new Cardiopulmonary and Advanced Circulatory Support reporting units, respectively, based on their relative fair values.

We performed a quantitative assessment for our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support reporting units as of October 1, 2021. The quantitative impairment assessment was performed using management’s current estimate of future cash flows. We concluded that the fair value of our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support segments exceeded the carrying value of the respective reporting units by 60%, 658% and 45%, respectively, as evidenced by the estimated fair value of our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support reporting units calculated for the purpose of reconciling the fair value of our reporting units to our market capitalization. Therefore, we concluded that our Cardiopulmonary, Neuromodulation and Advanced Circulatory Support reporting units’ goodwill was not impaired on the October 1, 2021 test date.

On December 2, 2020, LivaNova entered into a Purchase Agreement for the divestiture of certain of LivaNova’s subsidiaries as well as certain other assets and liabilities relating to the Company’s Heart Valve business. We performed a quantitative assessment as of December 2, 2020 of the goodwill associated with the previously reported Cardiovascular reporting unit and concluded that the goodwill was not impaired. We then allocated $21.3 million of the previously reported Cardiovascular goodwill to the Heart Valves disposal group based on the relative fair values of the businesses within the previously reported Cardiovascular reporting unit and recognized a $21.3 million impairment to the allocated goodwill. For additional information refer to “Note 4. Divestiture of Heart Valve Business.”

Cumulative goodwill impairments from continuing operations since the merger of Cyberonics, Inc. and Sorin S.p.A. in October 2015 total $63.7 million.