Goodwill and Intangible Assets, Net

Goodwill

Goodwill has an estimated indefinite life and is not amortized; rather, it is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The Company has two reporting units: Services and True Health. Our annual goodwill impairment review occurs during the fourth quarter of each fiscal year. In interim periods between annual goodwill reviews, we also evaluate qualitative factors that could cause us to believe the estimated fair value of each of our reporting units may be lower than the carrying value and trigger a quantitative assessment, including, but not limited to (i) macroeconomic conditions, (ii) industry and market considerations, (iii) our overall financial performance, including an analysis of our current and projected cash flows, revenues and earnings, (iv) a sustained decrease in share price and (v) other relevant entity-specific events including changes in strategy, partners, or litigation.

We did not identify any qualitative factors that would trigger a quantitative goodwill impairment test during the nine months ended September 30, 2018. We will perform our annual impairment test as of October 31, 2018.

The following tables summarize the changes in the carrying amount of goodwill, by reportable segment, for the periods presented (in thousands):



	For the Nine Months Ended September 30, 2018
	Services			True Health		Consolidated
Balance as of beginning-of-period ⁽¹⁾	$	628,186		$	—		$	628,186
Goodwill Acquired ⁽²⁾	1,234			5,826			7,060
Measurement period adjustments ⁽²⁾	4			—			4
Foreign currency translation ⁽²⁾	(162		)	—			(162		)
Balance as of end-of-period	$	629,262		$	5,826		$	635,088

⁽¹⁾ Net of cumulative inception to date impairment of $160.6 million.

⁽²⁾Goodwill acquired, measurement period adjustments and foreign currency translation are all related to transactions completed during the first quarter of 2018.



	For the Year
	Ended
	December 31,
	2017 ⁽¹⁾
Balance as of beginning-of-period ⁽²⁾	$	626,569
Measurement period adjustments ⁽³⁾	1,617
Balance as of end-of-period	$	628,186

⁽¹⁾ All of the goodwill was allocated to the Services segment as of December 31, 2017, as the True Health segment was not established until the first quarter of 2018.

⁽²⁾ Net of cumulative inception to date impairment of $160.6 million.

⁽³⁾ Represents measurement period adjustments related to Valence Health and Aldera. See “Part II - Item 8. Financial Statements and Supplementary Data - Note 4” in our 2017 Form 10-K for further information regarding the Valence Health and Aldera transactions.

Intangible Assets, Net

Details of our intangible assets (in thousands) are presented below:



		As of September 30, 2018
		Weighted-
		Average	Gross					Net
	Remaining		Carrying		Accumulated			Carrying
	Useful Life		Amount		Amortization			Value
Corporate trade name		16.7	$	19,000		$	3,166	$	15,834
Customer relationships ⁽¹⁾		19.5	208,719			25,550		183,169
Technology		2.4	55,933			27,264		28,669
Below market lease, net		4.3	4,097			2,918		1,179
Provider network contracts		4.3	2,300			345		1,955
Total			$	290,049		$	59,243	$	230,806

⁽¹⁾ The increase in the gross carrying amount of the customer relationships intangible is attributable to $2.7 million of acquired customer relationships from the NMHC transaction and $2.5 million related the Vestica Healthcare LLC (“Vestica”) transaction. The Company acquired certain assets from Vestica in March 2016. The transaction included additional consideration of up to $4.0 million, which was being held in escrow and was recorded within “Prepaid expenses and other noncurrent assets” on our Consolidated Balance Sheets. In February 2018, the Company and Vestica reached an agreement to settle $3.5 million of the $4.0 million in escrow. Based on the terms of the settlement agreement, the Company reclassified the unamortized portion of the additional consideration from “Prepaid expenses and other noncurrent assets” into “Customer relationships” as of the settlement date. See Note 4 for further information about the NMHC transaction and see “Part II - Item 8. Financial Statements and Supplementary Data - Note 4” of our 2017 Form 10-K for further information about the Vestica transaction.



		As of December 31, 2017
		Weighted-
		Average	Gross					Net
	Remaining		Carrying		Accumulated			Carrying
	Useful Life		Amount		Amortization			Value
Corporate trade name		17.4	$	19,000		$	2,454	$	16,546
Customer relationships		20.5	203,500			18,312		185,188
Technology		3.1	55,802			17,810		37,992
Below market lease, net		4.8	4,197			2,662		1,535
Total			$	282,499		$	41,238	$	241,261

Amortization expense related to intangible assets was $6.1 million and $18.0 million for the three and nine months ended September 30, 2018, respectively, and $5.3 million and $15.0 million for the three and nine months ended September 30, 2017, respectively.

Intangible assets are reviewed for impairment if circumstances indicate the Company may not be able to recover the assets’ carrying value. We did not identify any circumstances during nine months ended September 30, 2018, that would require an impairment test for our intangible assets.