Goodwill

9 Months Ended

Sep. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill is not amortized, but is subject to annual impairment reviews, or more frequent reviews if events or circumstances indicate there may be impairment. Goodwill is evaluated for possible impairment by comparing the fair value of a reporting unit to its carrying value, including the goodwill assigned to that reporting unit.

During the third quarter of 2021, the Company performed its required annual impairment tests of goodwill. The results of the impairment tests indicated an impairment of the goodwill associated with the LTC reporting unit, as the reporting unit’s carrying value exceeded its fair value as of the testing date. The results of the impairment tests of the remaining reporting units indicated that there was no impairment of goodwill as of the testing date.

During 2021, the LTC reporting unit has continued to face challenges that have impacted the Company’s ability to grow the LTC reporting unit’s business at the rate estimated when its 2020 goodwill impairment test was performed. These challenges include lower net facility admissions, net long-term care facility customer losses and the prolonged adverse impact of the COVID-19 pandemic and the emerging new variants, which resulted in more significant declines in occupancy rates experienced by the Company’s long-term care facility customers than previously anticipated. During the third quarter of 2021, LTC management updated their 2021 annual forecast and submitted their long-term plan which showed deterioration in the financial results for the remainder of 2021 and beyond. The Company utilized these updated projections in performing its annual impairment test, which indicated that the fair value of the LTC reporting unit was lower than its carrying value, resulting in a $431 million goodwill impairment charge in the third quarter of 2021. The fair value of the LTC reporting unit was determined using a combination of a discounted cash flow method and a market multiple method. As of September 30, 2021, there was no remaining goodwill balance in the LTC reporting unit. The Company also performed an impairment test of the intangible assets of the LTC reporting unit and concluded these assets were not impaired as of September 30, 2021.

Cumulative goodwill impairments were $6.6 billion and $6.1 billion at September 30, 2021 and December 31, 2020, respectively.

Below is a summary of the changes in the carrying value of goodwill by segment for the nine months ended September 30, 2021:


In millions	Health Care Benefits		Pharmacy Services		Retail/ LTC		Total
Balance at December 31, 2020	$	45,130	$	23,615	$	10,807	$	79,552

Impairment	—		—		(431)		(431)


Balance at September 30, 2021	$	45,130	$	23,615	$	10,376	$	79,121