Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill, by reportable segment, were as follows:
|
| | | | | | | | | | | | | | | | | | | | |
(in millions) | | UnitedHealthcare | | OptumHealth | | OptumInsight | | OptumRx | | Consolidated |
Balance at January 1, 2012 | | $ | 17,932 |
| | $ | 2,113 |
| | $ | 3,090 |
| | $ | 840 |
| | $ | 23,975 |
|
Acquisitions | | 6,557 |
| | 705 |
| | 98 |
| | — |
| | 7,360 |
|
Foreign currency effects and adjustments, net | | (30 | ) | | — |
| | (19 | ) | | — |
| | (49 | ) |
Balance at December 31, 2012 | | 24,459 |
| | 2,818 |
| | 3,169 |
| | 840 |
| | 31,286 |
|
Acquisitions | | 408 |
| | 48 |
| | 483 |
| | — |
| | 939 |
|
Dispositions | | (5 | ) | | — |
| | — |
| | — |
| | (5 | ) |
Foreign currency effects and adjustments, net | | (611 | ) | | (6 | ) | | 1 |
| | — |
| | (616 | ) |
Balance at December 31, 2013 | | $ | 24,251 |
| | $ | 2,860 |
| | $ | 3,653 |
| | $ | 840 |
| | $ | 31,604 |
|
In the fourth quarter of 2012, the Company purchased Amil, a health care company located in Brazil, providing health and dental benefits, hospital and clinical services, and advanced care management resources to nearly 7 million people. During 2013, the Company acquired all of Amil’s remaining public shares for $1.5 billion, bringing the Company’s ownership of Amil to 90%. The remaining stake in Amil is held by shareholders, including Amil’s CEO, who has been a member of the Company’s Board of Directors since October 2012, who have committed to retain the shares for at least five years, through October 2017. These shareholders have the right to put the shares to the Company and the Company has the right to call these shares upon expiration of the five year term, unless accelerated upon certain events, at fair market value. Related to this acquisition, Amil’s CEO invested approximately $470 million in unregistered UnitedHealth Group common shares in the fourth quarter of 2012 and has committed to hold those shares for the same five year term, subject to certain exceptions.
The total consideration paid and fair value of the noncontrolling interest exceeded the estimated fair value of the net tangible assets acquired by $6.0 billion, of which $0.7 billion has been allocated to finite-lived intangible assets, $0.7 billion to indefinite-lived intangible assets and $4.6 billion to goodwill. In conjunction with the Amil share purchases, the Company generated Brazilian tax deductible goodwill of approximately R$8.9 billion ($3.8 billion in U.S. dollars at December 31, 2013).
For the years ended December 31, 2013, 2012 and 2011, aggregate consideration paid, net of cash assumed, for acquisitions other than Amil was $0.4 billion, $3.3 billion and $1.8 billion, respectively. These acquisitions were not material to the Company’s Consolidated Financial Statements.
The gross carrying value, accumulated amortization and net carrying value of other intangible assets were as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2013 | | December 31, 2012 |
(in millions) | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value | | Gross Carrying Value | | Accumulated Amortization | | Net Carrying Value |
Customer-related | | $ | 4,821 |
| | $ | (2,028 | ) | | $ | 2,793 |
| | $ | 5,229 |
| | $ | (1,629 | ) | | $ | 3,600 |
|
Trademarks and technology | | 433 |
| | (191 | ) | | 242 |
| | 445 |
| | (146 | ) | | 299 |
|
Trademarks - indefinite-lived | | 589 |
| | — |
| | 589 |
| | 611 |
| | — |
| | 611 |
|
Other | | 284 |
| | (64 | ) | | 220 |
| | 221 |
| | (49 | ) | | 172 |
|
Total | | $ | 6,127 |
| | $ | (2,283 | ) | | $ | 3,844 |
| | $ | 6,506 |
| | $ | (1,824 | ) | | $ | 4,682 |
|
The acquisition date fair values and weighted-average useful lives assigned to finite-lived intangible assets acquired in business combinations consisted of the following by year of acquisition: |
| | | | | | | | | | | | |
| | 2013 | | 2012 |
(in millions, except years) | | Fair Value | | Weighted-Average Useful Life | | Fair Value | | Weighted-Average Useful Life |
Customer-related | | $ | 55 |
| | 12 years | | $ | 1,530 |
| | 8 years |
Trademarks and technology | | 27 |
| | 12 years | | 79 |
| | 4 years |
Other | | — |
| | | | 111 |
| | 15 years |
Total acquired finite-lived intangible assets | | $ | 82 |
| | 12 years | | $ | 1,720 |
| | 9 years |
Estimated full year amortization expense relating to intangible assets for each of the next five years ending December 31 is as follows: |
| | | | |
(in millions) | | |
2014 | | $ | 500 |
|
2015 | | 478 |
|
2016 | | 449 |
|
2017 | | 411 |
|
2018 | | 332 |
|
Amortization expense relating to intangible assets for 2013, 2012 and 2011 was $519 million, $448 million and $361 million, respectively.
