13. Goodwill and Other Intangibles

Goodwill and indefinitely-lived assets, such as certain trademarks acquired in connection with acquisition transactions, are not amortized, but are instead evaluated for impairment on an annual basis at the end of the fiscal year, or more frequently if events or circumstances indicate it may be more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, the Company performs a quantitative goodwill impairment test. The fair value estimates used in the quantitative impairment test are calculated using an average of the income and market approaches. The income approach is based on the present value of future cash flows of each reporting unit, while the market approach is based on certain multiples of selected guideline public companies or selected guideline transactions. The approaches, which qualify as Level 3 within the fair value hierarchy, incorporate a number of market participant assumptions including future growth rates, discount rates, income tax rates and market activity in assessing fair value and are reporting unit specific. If the carrying amount exceeds the reporting unit’s fair value, the Company recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, the Company considers the income tax effect of any tax deductible goodwill when measuring a goodwill impairment loss.

In the fiscal second quarter of fiscal 2019 and the fourth quarter of fiscal 2018, the Company completed a qualitative goodwill impairment assessment, at which time it was determined after evaluating results, events and circumstances that a quantitative assessment was necessary for the Pharmacy Services segment. The quantitative assessment concluded that the carrying amount of the Pharmacy Services segment exceeded its fair value principally due to a decrease in Adjusted EBITDA that was driven by commercial business compression and an increase in SG&A expenses. This resulted in goodwill impairment charges of $312,985 ($235,698 net of the related income tax benefit) and $261,727 ($191,000 net of the related income tax benefit) for the fiscal years ended March 2, 2019 and March 3, 2018, respectively. As of March 2, 2019 and March 3, 2018, the accumulated impairment losses for the Pharmacy Services segment was $574,712 and $261,727, respectively. There was no impairment charge for the fiscal year ended March 4, 2017 as the Company determined that the fair value of the reporting units exceeded their carrying amounts.

Below is a summary of the changes in the carrying amount of goodwill by segment for the fiscal years ended March 2, 2019 and March 3, 2018:


	Retail		Pharmacy
	Pharmacy		Services		Total
Balance, March 4, 2017	$	43,492	$	1,639,355	$	1,682,847
Goodwill impairment		—		(261,727)		(261,727)
Balance, March 3, 2018		43,492		1,377,628		1,421,120
Goodwill impairment		—		(312,984)		(312,984)
Balance, March 2, 2019	$	43,492	$	1,064,644	$	1,108,136

The Company’s intangible assets are primarily finite-lived and amortized over their useful lives. Following is a summary of the Company’s finite-lived and indefinite-lived intangible assets as of March 2, 2019 and March 3, 2018.


	2019								2018
							Remaining								Remaining
							Weighted								Weighted
	Gross						Average		Gross						Average
	Carrying		Accumulated				Amortization		Carrying		Accumulated				Amortization
	Amount		Amortization		Net		Period		Amount		Amortization		Net		Period
Favorable leases and other(a)	$	370,855	$	(318,503)	$	52,352	7	years	$	379,355	$	(316,798)	$	62,557	7	years
Prescription files		919,749		(827,222)		92,527	3	years		900,111		(801,706)		98,405	3	years
Customer relationships(a)		388,000		(193,352)		194,648	13	years		465,000		(172,635)		292,365	15	years
CMS license		57,500		(8,472)		49,028	22	years		57,500		(6,172)		51,328	23	years
Claims adjudication and other developed software		58,985		(31,030)		27,955	4	years		58,985		(22,617)		36,368	5	years
Trademarks		20,100		(7,404)		12,696	7	years		20,100		(5,394)		14,706	8	years
Backlog		11,500		(11,500)		—	0	years		11,500		(10,286)		1,214	1	year
Total finite	$	1,826,689	$	(1,397,483)	$	429,206			$	1,892,551	$	(1,335,608)	$	556,943
Trademarks		19,500		—		19,500	Indefinite			33,500		—		33,500	Indefinite
Total	$	1,846,189	$	(1,397,483)	$	448,706			$	1,926,051	$	(1,335,608)	$	590,443

(a)

Amortized on an accelerated basis which is determined based on the remaining useful economic lives of the customer relationships that are expected to contribute directly or indirectly to future cash flows.

During fiscal 2019, the Company has recorded an impairment charge to reduce the book value of customer relationships by $48,205 (gross carrying amount of $77,000 less accumulated amortization of $28,795), and indefinite lived trademarks by $14,000, both of which charges are included within goodwill and intangible asset impairment charges within the consolidated statement of operations.

Also included in other non‑current liabilities as of March 2, 2019 and March 3, 2018 are unfavorable lease intangibles with a net carrying amount of $14,763 and $18,888, respectively. These intangible liabilities are amortized over their remaining lease terms at time of acquisition.

Amortization expense for these intangible assets and liabilities was $125,640, $147,739 and $165,579 for fiscal 2019, 2018 and 2017, respectively. The anticipated annual amortization expense for these intangible assets and liabilities is 2020—$100,892; 2021—$77,824; 2022—$56,890; 2023—$41,344 and 2024—$28,905.