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Goodwill and Intangible Assets
12 Months Ended
Jun. 30, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets

5.

GOODWILL AND INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill for the years ended June 30, 2020 and 2019 are as follows:

 

 

 

Diagnostic

 

 

Other

 

 

Total

 

 

 

Years Ended June 30,

 

 

Years Ended June 30,

 

 

Years Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Beginning balance

 

$

351.6

 

 

$

252.8

 

 

$

65.6

 

 

$

65.8

 

 

$

417.2

 

 

$

318.6

 

Acquisitions (see note 19)

 

 

 

 

 

94.9

 

 

 

 

 

 

 

 

 

 

 

 

94.9

 

Adjustments to acquisitions (see note 19)

 

 

 

 

 

4.4

 

 

 

 

 

 

 

 

 

 

 

 

4.4

 

Goodwill deconsolidated on sale of Clinic

 

 

 

 

 

 

 

 

(7.3

)

 

 

 

 

 

(7.3

)

 

 

 

Goodwill impairment charge

 

 

(80.7

)

 

 

 

 

 

(1.3

)

 

 

 

 

 

(82.0

)

 

 

 

Translation adjustments

 

 

(0.2

)

 

 

(0.5

)

 

 

(0.1

)

 

 

(0.2

)

 

 

(0.3

)

 

 

(0.7

)

Ending balance

 

$

270.7

 

 

$

351.6

 

 

$

56.9

 

 

$

65.6

 

 

$

327.6

 

 

$

417.2

 

 

As a result of the effect of COVID-19 on expected future cash flows and a corresponding decline in market capitalization and enterprise value, the Company performed an interim quantitative impairment review of goodwill for the Assurex, Crescendo Bioscience and Myriad International reporting units as of March 31, 2020. The Company estimated the fair values of each reporting unit using both the market approach, applying a multiple of earnings based on observable multiples for guideline publicly traded companies, and the income approach, discounting future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The Company

corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. Based on this analysis, the Company recognized a goodwill impairment charge of $80.7 related to the goodwill from the Crescendo reporting unit in the third quarter of fiscal year 2020. The Crescendo reporting unit is part of the Company’s diagnostic segment. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The goodwill impairment charge is reflected in goodwill and intangible asset impairment charges in the Consolidated Statements of Operations.  

 

As a result of further decline in market capitalization and enterprise value during the fourth quarter, the Company also performed an interim quantitative impairment review of goodwill for the Assurex, Crescendo Bioscience and Myriad International reporting units as of June 30, 2020. The Company estimated the fair values of each reporting unit using both the market approach, applying a multiple of earnings based on observable multiples for guideline publicly traded companies, and the income approach, discounting future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. The goodwill balance at each reporting unit was determined not to be impaired as of June 30, 2020.

 

The Company recognized a $1.3 impairment charge for goodwill allocated to the Clinic asset group during the second quarter of fiscal year 2020 that is included in goodwill and intangible asset impairment charges in the Consolidated Statements of Operations. The Clinic asset group was part of the Company’s other segment. See Note 16 for further discussions regarding the deconsolidation of goodwill upon the closing of the sale of the Clinic.  

 

The Company did not record an impairment of goodwill for the periods ended June 30, 2019 or 2018.

Intangible Assets

 

Intangible assets primarily consist of amortizable assets of purchased licenses and technologies, developed technology, a laboratory database, trademarks, and customer relationships as well as non-amortizable intangible assets of in-process technologies, research and development.  The Company’s developed technology and database acquired have estimated remaining useful lives between 3 and 16 years, trademarks acquired have an estimated remaining useful life of approximately 8 years and customer relationships have an estimated remaining useful life of approximately 1 year.  The estimated useful life of acquired in-process research and development was also evaluated in conjunction with the annual impairment analysis of intangible assets.  The classification of the acquired in-process research and development as an indefinite lived asset was deemed appropriate as the related research and development was not yet complete nor had it been abandoned. During the third quarter of fiscal year 2020, the Company decided to abandon the development of one of its in-process research and development intangible assets, and as a result the Company recognized a charge of $17.7, which is reflected in goodwill and intangible asset impairment charges in the Consolidated Statements of Operations. The in-process research and development intangible asset was reported as part of the Company’s diagnostic segment. The Company concluded there was no impairment of long-lived assets for the years ended June 30, 2020, 2019 and 2018.

The following summarizes the amounts reported as intangible assets:

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accumulated

 

 

 

 

 

At June 30, 2020:

 

Amount

 

 

Amortization

 

 

Net

 

Purchased licenses and technologies

 

$

815.6

 

 

$

(217.1

)

 

$

598.5

 

Customer relationships

 

 

4.6

 

 

 

(4.2

)

 

 

0.4

 

Trademarks

 

 

3.0

 

 

 

(1.4

)

 

 

1.6

 

Total amortizable intangible assets

 

 

823.2

 

 

 

(222.7

)

 

 

600.5

 

In-process research and development

 

 

4.8

 

 

 

 

 

 

4.8

 

Total unamortized intangible assets

 

 

4.8

 

 

 

 

 

 

4.8

 

Total intangible assets

 

$

828.0

 

 

$

(222.7

)

 

$

605.3

 

 

 

 

Gross

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

 

Accumulated

 

 

 

 

 

At June 30, 2019:

 

Amount

 

 

Amortization

 

 

Net

 

Purchased licenses and technologies

 

$

815.7

 

 

$

(156.6

)

 

$

659.1

 

Customer relationships

 

 

4.6

 

 

 

(3.8

)

 

 

0.8

 

Trademarks

 

 

3.0

 

 

 

(1.2

)

 

 

1.8

 

Total amortizable intangible assets

 

 

823.3

 

 

 

(161.6

)

 

 

661.7

 

In-process research and development

 

 

23.0

 

 

 

 

 

 

23.0

 

Total unamortized intangible assets

 

 

23.0

 

 

 

 

 

 

23.0

 

Total intangible assets

 

$

846.3

 

 

$

(161.6

)

 

$

684.7

 

 

As of June 30, 2020 the weighted average remaining amortization period for purchased licenses and technologies, trademarks, and customer relationships is approximately 11 years.

The Company recorded amortization during the respective periods for these intangible assets as follows:

 

 

 

Years Ended June 30,

 

 

 

2020

 

 

2019

 

 

2018

 

Amortization of intangible assets

 

$

61.0

 

 

$

59.3

 

 

$

37.3

 

 

Amortization expense of intangible assets is estimated to be $51.9 in 2021, $45.0 in 2022, $43.6 in 2023, $43.4 in 2024 and $43.4 in 2025 and $373.2 thereafter.