Goodwill and Other Intangible Assets

12 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

5. Goodwill and Other Intangible Assets

Goodwill

The following table summarizes the changes in the carrying amount of goodwill for the two reportable segments and the remaining operating segments, included in Other and in total:

(in millions)	Pharmaceutical and Specialty Solutions		Global Medical Products and Distribution (1)		Other (2) (3) (4)		Total
Balance at June 30, 2022 (5)	$	2,787	$	1,899	$	1,170	$	5,856
Goodwill acquired, net of purchase price adjustments	—		15		—		15
Foreign currency translation adjustments and other	(1)		(6)		—		(7)
Goodwill Impairment	—		(1,227)		—		(1,227)
Outcomes goodwill reclassified to assets held for sale	(24)		—		—		(24)
Balance at June 30, 2023	$	2,762	$	681	$	1,170	$	4,613
Goodwill acquired, net of purchase price adjustments	793		(3)		—		790
Foreign currency translation adjustments and other	—		(3)		—		(3)
Goodwill Impairment	—		(675)		—		(675)
Balance at June 30, 2024	$	3,555	$	—	$	1,170	$	4,725

(1)    Prior-period goodwill impairment charges related to the former Medical segment were allocated to the GMPD segment. At June 30, 2024 and 2023, the GMPD segment accumulated goodwill impairment loss was $5.4 billion and $4.7 billion, respectively.

(2)    Comprised of the remaining operating segments, Nuclear and Precision Health Solutions, at-Home Solutions and OptiFreight® Logistics.

(3)    At June 30, 2024 and 2023, Other accumulated goodwill impairment loss was $829 million which was related to Nuclear and Precision Health Solutions.

(4)    Reflects $48 million allocated to OptiFreight® Logistics.

(5)    Reflects a $110 million reclassification between Pharmaceutical and Specialty Solutions and Other, which does not impact our previously reported consolidated financial statements or results of our impairment tests.

The increase in the Pharmaceutical and Specialty Solutions segment goodwill is due to the Specialty Networks acquisition. Goodwill recognized in connection with this acquisition primarily represents the expected benefits from anticipated growth from new technology capabilities, synergies of integrating this business and the assembled workforce of the acquired entity.

As a result of the segment change discussed in Note 1, we allocated $90 million and $48 million of goodwill from the former Medical Unit to GMPD and OptiFreight® Logistics, respectively, based on the estimated relative fair values of the reporting units. We also assessed goodwill for impairment for these reporting units before and after the reallocation and determined there was no impairment for the Medical Unit and OptiFreight® Logistics during the three months ended March 31, 2024 as their fair values substantially exceeded their carrying values. However, the quantitative test resulted in an impairment of GMPD’s remaining goodwill balance of $90 million.

Our determination of the estimated fair value of the GMPD reporting unit is based on a combination of the income-based approach (using a discount rate of 11 percent and a terminal growth rate of 2 percent), and market-based approaches. Additionally, we assigned a weighting of 80 percent to the discounted cash flow method, 10 percent to the guideline public company method, and 10 percent to the guideline transaction method. Our fair value estimates utilize significant unobservable inputs and thus represent Level 3 fair value measurements.

During the three months ended December 31, 2023, we did not identify any indicators of impairment within our reporting units. During the three months ended September 30, 2023, we elected to bypass the qualitative assessment and perform quantitative goodwill impairment testing for the former Medical Unit due to an increase in the risk-free interest rate used in the discount rate. The carrying amount exceeded the fair value, which resulted in a pre-tax impairment charge of $585 million for the former Medical Unit, which was recognized during the three months ended September 30, 2023 and is included in impairments and (gain)/loss on disposal of assets, net in our consolidated statements of earnings/(loss). This impairment charge was driven by an increase of 1 percent in the discount rate primarily due to an increase in the risk-free interest rate.

During fiscal 2023 and 2022, we performed quantitative goodwill impairment testing for the former Medical Unit which resulted in cumulative pre-tax impairment charges $1.2 billion and $2.1 billion, respectively, which were included in impairments and (gain)/loss on disposal of assets, net in our consolidated statements of earnings/(loss).

In connection with the divestiture of the Outcomes business, during fiscal 2023, we allocated and reclassified $24 million of goodwill from the Pharmaceutical and Specialty Solutions operating segment to the Outcomes disposal group based on the

estimated relative fair values of the business to be disposed of and the portion of the reporting unit that was retained.

Other Intangible Assets

The following tables summarize other intangible assets by class at June 30:

	2024
(in millions)	Gross Intangible		Accumulated Amortization		Net Intangible		Weighted- Average Remaining Amortization Period (Years)
Indefinite-life intangibles:
Trademarks and patents	$	12	$	—	$	12	N/A
Total indefinite-life intangibles	12		—		12		N/A
Definite-life intangibles:
Customer relationships	3,628		2,431		1,197		11
Trademarks, trade names and patents	561		408		153		7
Developed technology and other	1,047		684		363		7
Total definite-life intangibles	5,236		3,523		1,713		10
Total other intangible assets	$	5,248	$	3,523	$	1,725	N/A

	2023
(in millions)	Gross Intangible		Accumulated Amortization		Net Intangible
Indefinite-life intangibles:
Trademarks and patents	$	11	$	—	$	11
Total indefinite-life intangibles	11		—		11
Definite-life intangibles:
Customer relationships	3,174		2,274		900
Trademarks, trade names and patents	546		380		166
Developed technology and other	1,021		626		395
Total definite-life intangibles	4,741		3,280		1,461
Total other intangible assets	$	4,752	$	3,280	$	1,472

The increase in definite-life intangibles is due to the Specialty Networks acquisition. Total amortization of intangible assets was $264 million, $281 million and $311 million for fiscal 2024, 2023 and 2022, respectively. The estimated annual amortization for intangible assets for fiscal 2025 through 2029 is as follows: $255 million, $244 million, $217 million, $190 million and $186 million.