GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

The Company's policy is to assess goodwill and indefinite-lived intangible assets for impairment annually as of April 1, with more frequent assessments if events or changes in circumstances indicate the asset might be impaired.

In the three months ended March 31, 2024, the Company identified indicators of a more likely than not impairment related to certain indefinite-lived imaging product trade names within the Connected Technology Solutions segment. The decline in fair value of these indefinite-lived trade names was driven by declines in volumes during the first quarter of 2024, which is due in part to a loss in market share from competitive pricing pressures, as well as unfavorable economic conditions in certain markets. These factors contributed to a reduction in forecasted revenues in the near term. The trade names were evaluated for impairment using an income approach, specifically a relief from royalty method. Significant assumptions used in the relief from royalty method included, but were not limited to, a discount rate of 11%, revenue growth rates (including perpetual growth rates), and royalty rates. As a result, the Company recorded an indefinite-lived intangible asset impairment charge of $6 million for the three months ended March 31, 2024. The remaining carrying value of this intangible asset group was $22 million as of March 31, 2024. As the fair value of these indefinite-lived intangible assets approximates carrying value, any further decline in key assumptions could result in additional impairment in the future.

Based on the interim quantitative and qualitative assessments performed for the Company's other indefinite-lived intangible assets and reporting units, the Company does not believe that the carrying value more likely than not exceeds the fair value in each case as of March 31, 2024; therefore, the Company did not identify any indicators of a more likely than not impairment related to its goodwill or intangible assets, other than as noted above. However, any further deterioration in key assumptions could result in impairment charges in the future. The Company applied a hypothetical sensitivity analysis by increasing the discount rate used to value these indefinite-lived intangible assets and reporting units by 100 basis points. As of March 31, 2024, the estimated fair value of the Implants & Prosthetics reporting unit within the Orthodontic and Implant Solutions segment exceeded its carrying value by less than 15%. If discount rates were hypothetically increased by 100 basis points, this reporting unit would have an estimated fair value less than 10% in excess of its carrying value. Goodwill associated with this reporting unit was $1,148 million as of March 31, 2024.

The fair values of certain indefinite-lived intangible assets within the Connected Technology Solutions and Orthodontic and Implants Solutions segments continued to approximate carrying values as of March 31, 2024. Any further decline in key assumptions could result in additional impairments in future periods. The carrying values of these assets within the aforementioned segments were $182 million and $23 million, respectively, as of March 31, 2024.

There is a risk of future impairment charges if there is a decline in the fair value of the reporting units or indefinite-lived intangible assets as a result of, among other things, actual financial results that are lower than forecasts, an adverse change in valuation assumptions, a decline in equity valuations, increases in interest rates, or changes in the use of intangible assets. There can be no assurance that the Company’s future asset impairment testing will not result in a material charge to earnings.

A reconciliation of changes in the Company’s goodwill by reportable segment were as follows:


(in millions)	Connected Technology Solutions		Essential Dental Solutions		Orthodontic and Implant Solutions		Wellspect Healthcare		Total






















Balance at December 31, 2023
Goodwill	$	291	$	840	$	1,323	$	275	$	2,729
Accumulated impairment losses (a)	(291)		—		—		—		(291)
Goodwill, net at December 31, 2023	—		840		1,323		275		2,438

Impairment	—		—		—		—		—
Foreign Currency Translation	—		(5)		(30)		(3)		(38)

Balance at March 31, 2024
Goodwill	291		835		1,293		272		2,400
Accumulated impairment losses	(291)		—		—		—		—
Goodwill, net at March 31, 2024	$	—	$	835	$	1,293	$	272	$	2,400

(a) The Company realigned segments in 2023, and at that time, there was an accumulated impairment loss that was not allocated to the new segments.

Identifiable definite-lived and indefinite-lived intangible assets were as follows:


	March 31, 2024						December 31, 2023
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Developed technology and patents	$	1,667	$	(1,016)	$	651	$	1,697	$	(1,006)	$	691
Trade names and trademarks	270		(104)		166		271		(102)		169
Licensing agreements	30		(28)		2		30		(27)		3
Customer relationships	1,050		(684)		366		1,070		(680)		390
Total definite-lived	3,017		(1,832)		1,185		3,068		(1,815)		1,253

Indefinite-lived trade names and trademarks	428		—		428		447		—		447
In-process R&D (a)	5		—		5		5		—		5
Total indefinite-lived	433		—		433		452		—		452

Total identifiable intangible assets	$	3,450	$	(1,832)	$	1,618	$	3,520	$	(1,815)	$	1,705

(a) Intangible assets acquired in a business combination that are in-process and used in research and development ("R&D") activities are considered indefinite-lived until the completion or abandonment of the R&D efforts. The useful life and amortization of those assets will be determined once the R&D efforts are completed.

In 2021, the Company purchased certain developed technology rights for an initial payment of $3 million and minimum guaranteed contingent payments of $17 million to be made upon reaching certain regulatory and commercial milestones. The contingent payments are not considered probable as of March 31, 2024.