Acquisitions

During the three months ended September 30, 2015, we completed several acquisitions, the most significant of which are described in more detail below. The pro forma results of operations and the results of operations for acquired businesses since the acquisition dates have not been separately disclosed because the effects were not significant compared to the condensed consolidated financial statements, individually or in the aggregate.

Harvard Drug

On July 2, 2015, we completed the acquisition of The Harvard Drug Group ("Harvard Drug") for $1.1 billion using cash on hand and proceeds from our debt offering in June 2015. The acquisition of Harvard Drug, a distributor of generic pharmaceuticals, over-the-counter healthcare and related products to retail, institutional and alternate care customers, enhances our Pharmaceutical segment's generic pharmaceutical distribution and related services businesses. Harvard Drug also manufactures and repackages generic pharmaceuticals and over-the-counter health care products.

naviHealth

On August 26, 2015, we acquired a 71 percent ownership interest in naviHealth Group Holdings, L.P. ("naviHealth") for a purchase price of $238 million, net of cash acquired of $53 million, in an all-cash transaction. We funded the acquisition with cash on hand. The acquisition of naviHealth, a leader in post-acute care management solutions, expands our ability to serve health plans, health systems, and providers that are facing a shift to a value-based reimbursement environment. The terms of the agreement provide us with the option to acquire the remaining 29 percent noncontrolling interests at any time after the two-year anniversary of the closing. The third-party noncontrolling interests holders also hold an option, which allows them to sell their noncontrolling interests to us at any time after the two-year anniversary of the closing. Refer to Note 10 for further information on the redeemable noncontrolling interests.

Fair Value of Assets Acquired and Liabilities Assumed

The allocation of the purchase price for the acquisitions of naviHealth and Harvard Drug are not yet finalized and are subject to adjustment as we complete the valuation analysis for these acquisitions. The purchase prices are also subject to adjustment based on working capital requirements as set forth in the acquisition agreements.

The valuation of identifiable intangible assets utilizes significant unobservable inputs and thus represents a Level 3 nonrecurring fair value measurement. The estimated fair value of the identifiable intangible assets was determined using an income-based approach, which includes market participant expectations of the cash flows that an asset could generate over its remaining useful life, discounted back to present value using an appropriate rate of return. The discount rates used to arrive at the present value of the identifiable intangible assets ranged from 12 percent to 14 percent, and reflect the internal rate of return and uncertainty in the cash flow projections.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition dates for naviHealth and Harvard Drug:



(in millions)	naviHealth			Harvard Drug
Identifiable intangible assets:
Customer relationships (1)	$	38		$	260
Trade names (2)	16			130
Developed technology (3)	61			—
Total identifiable intangible assets acquired	115			390

Cash and equivalents	53			44
Trade receivables	36			67
Inventories	—			49
Prepaid expenses and other	15			13
Property and equipment	5			16
Accounts payable	(2		)	(48		)
Other accrued liabilities	(95		)	(39		)
Deferred income taxes and other liabilities	(42		)	(104		)
Redeemable noncontrolling interests	(119		)	—
Total identifiable net assets/(liabilities) acquired	(34		)	388
Goodwill	325			763
Total net assets acquired	$	291		$	1,151


(1)	The weighted-average useful lives of customer relationships range from 4 to 14 years.


(2)	The weighted-average useful lives of trade names range from 3 to 16 years.


(3)	The weighted-average useful life of developed technology is 10 years.

Cordis

On October 2, 2015, we acquired the Cordis business from Ethicon, Inc., a wholly-owned subsidiary of Johnson & Johnson, for $1.9 billion in an all-cash transaction. We financed the acquisition using proceeds from our debt offering in June 2015, and cash on hand. The acquisition of Cordis, a manufacturer and distributor of interventional cardiology devices and endovascular solutions, expands our Medical segment's portfolio of self-manufactured products and its geographic scope. Cordis is a global company, with operations in more than 50 countries. Transaction and integration costs associated with the acquisition of Cordis were $21 million during the three months ended September 30, 2015, and are included in amortization and other acquisition-related costs in the condensed consolidated statements of earnings.