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GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended
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Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass the qualitative assessment for its three reporting units and perform a quantitative test. The assumptions used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management. The quantitative test estimates the fair value of its three reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following:
• | The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans.
• | The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans.
• | The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.
The Company elected to perform a qualitative analysis for its three reporting units as of July 31, 2019. The Company determined, after performing qualitative analysis, that there was no evidence that it is more likely than not that the fair value of any identified reporting unit was less that the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test. Changes in the carrying amount of goodwill in 2019 and 2018 were as follows:
| Codman Specialty Surgical |  | Orthopedics and Tissue Technologies |  | Total
| (In thousands)
Goodwill at January 1, 2018 | $ | 634,767 |  |  | $ | 303,138 |  |  | $ | 937,905 |
Codman acquisition measurement period adjustments | (3,964 | ) |  | — |  |  | (3,964 | )
Foreign currency translation | (5,043 | ) |  | (2,423 | ) |  | (7,466 | )
Goodwill at December 31, 2018 | $ | 625,760 |  |  | $ | 300,715 |  |  | $ | 926,475 |
Arkis Acquisition | 27,600 |  |  | — |  |  | 27,600 |
Foreign currency translation | 140 |  |  | 65 |  |  | 205 |
Goodwill at December 31, 2019 | $ | 653,500 |  |  | $ | 300,780 |  |  | $ | 954,280 |
Other Intangible Assets The components of the Company's identifiable intangible assets were as follows:
| Weighted Average Life |  | December 31, 2019
| Cost |  | Accumulated Amortization |  | Net
| (Dollars in Thousands)
Completed technology | 19 years |  | $ | 880,623 |  |  | $ | (213,702 | ) |  | $ | 666,921 |
Customer relationships | 12 years |  | 222,575 |  |  | (119,393 | ) |  | 103,182 |
Trademarks/brand names | 28 years |  | 103,873 |  |  | (28,514 | ) |  | 75,359 |
Codman trade name | Indefinite |  | 163,126 |  |  | — |  |  | 163,126 |
Supplier relationships | 27 years |  | 34,721 |  |  | (17,947 | ) |  | 16,774 |
All other (1) | 4 years |  | 10,869 |  |  | (4,640 | ) |  | 6,229 |
|  |  | $ | 1,415,787 |  |  | $ | (384,196 | ) |  | $ | 1,031,591 |
| Weighted Average Life |  | December 31, 2018
|  | Cost |  | Accumulated Amortization |  | Net
| (Dollars in Thousands)
Completed technology | 19 years |  | $ | 855,679 |  |  | $ | (167,384 | ) |  | $ | 688,295 |
Customer relationships | 13 years |  | 231,448 |  |  | (106,859 | ) |  | 124,589 |
Trademarks/brand names | 28 years |  | 104,061 |  |  | (24,764 | ) |  | 79,297 |
Codman trade name | Indefinite |  | 162,054 |  |  | — |  |  | 162,054 |
Supplier relationships | 27 years |  | 34,721 |  |  | (16,519 | ) |  | 18,202 |
All other (1) | 4 years |  | 10,958 |  |  | (3,899 | ) |  | 7,059 |
|  |  | $ | 1,398,921 |  |  | $ | (319,425 | ) |  | $ | 1,079,496 |
(1) | At December 31, 2019 and 2018, all other included IPR&D of $1.0 million, which was indefinite-lived.
The company tests intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC Topic 350. The Company elected to bypass the qualitative evaluation for its Codman tradename intangible asset and perform a quantitative test during the third quarter of 2019. In performing this test, the Company utilized a range of projected sales growth rates, a royalty rate of 5.0%, a range of tax rates between 17.4-20.7%, and a discount rate of 12.5%. The assumptions used in evaluating the Codman tradename for impairment are subject to change and are tracked against historical results by management. Based on the results of the quantitative test, the Company recorded no impairment to the Codman tradename intangible asset. Product rights and other definite-lived intangible assets are tested periodically for impairment in accordance with ASC Topic 360 when events or changes in circumstances indicate that an asset’s carrying value may not be recoverable. The impairment testing involves comparing the carrying amount of the asset or asset group to the forecasted undiscounted future cash flows. In the event the carrying value of the asset exceeds the undiscounted future cash flows, the carrying value is considered not recoverable and an impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using discounted future cash flows. The computed impairment loss is recognized in the period that the impairment occurs. During the second quarter of 2019, a contract manufacturing customer of the private label product line received a notification from the FDA ordering them to remove their product from the market. The Company recorded an impairment charge of $5.8 million in intangible asset amortization in the consolidated statement of operations related to the customer relationship intangible asset acquired from TEI Biosciences, Inc. and TEI Medical Inc. (collectively "TEI") due to revised future projections based on the contract termination. During the third quarter of 2018, the Company recorded an impairment charge of $4.9 million in cost of goods sold related to completed technology assets acquired from Koby Ventures II, L.P dba Metasurg ("Metasurg Technology") due to recent contract negotiations and revised future projections. Metasurg Technology is included in the Orthopedic and Tissue Technology segment. Of the total impairment charge of $4.9 million, $2.5 million was related to an out-of-period adjustment included in the twelve months ended December 31, 2018. The out-of-period adjustment is attributed to the timing of performing the impairment test based on the contract termination associated with the intangible asset. The Company determined that the adjustment was not material to the consolidated financial statements for any previously reported annual or interim period and the adjustment to correct the misstatements is not material to the period ended December 31, 2018. During the third quarter of 2017, the Company recorded an impairment charge of $3.3 million in cost of goods sold related to completed technology assets acquired from Tarsus Medical, Inc. ("Tarsus Technology"), since the underlying product will no longer be sold. Tarsus Technology was included in the Orthopedic and Tissue Technology segment. Amortization expense (including amounts reported in cost of product revenues, but excluding any possible future amortization associated with acquired IPR&D) for the years ended December 31, 2019, 2018 and 2017 was $72.8 million, $71.6 million and $52.8 million, respectively. Annual amortization expense is expected to approximate $74.6 million in 2020, $64.1 million in 2021, $60.6 million in 2022, $59.7 million in 2023, $58.9 million in 2024 and $547.7 million thereafter. Amortization of product technology based intangible assets totaled $45.8 million, $50.4 million and $35.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, and is presented by the Company within cost of goods sold.

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