GoHealth, Inc.GOCOQ

GoHealth, Inc. Goodwill & Intangibles Disclosure

10-KFiled Mar 14, 20243 min read
GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
Fourth Quarter 2021 Goodwill Impairment Charges
During AEP in the fourth quarter of 2021, the Company and the broader industry experienced an increase in consumer shopping which led to lower policy persistency than anticipated and resulted in lower LTV performance. Additionally, operating margins in the fourth quarter of 2021 declined significantly which was primarily driven by tight labor markets and resulted in higher than expected customer care and enrollment costs. As such and in connection with the Company’s annual and long-range planning process, which coincided with the Company’s annual goodwill impairment test as of November 30, 2021, the Company recognized aggregate goodwill impairment charges of $386.6 million, representing the full amount of goodwill recorded on the Consolidated Balance Sheets.
The quantitative goodwill impairment test performed by the Company as of November 30, 2021, included significant level 3 fair value estimates and assumptions including, among others, cash flow projections and selecting an appropriate discount rate.
Intangible Assets
Fourth Quarter 2023 Indefinite-Lived Intangible Asset Impairment Charges
In connection with its annual indefinite-lived impairment test performed as of November 30, 2023, the Company determined that the fair value of its indefinite-lived trade names no longer exceeded their carrying value. As a result, during the twelve months ended December 31, 2023, the Company recorded indefinite-lived trade names impairment charges of $10.0 million to write down the carrying value of the indefinite-lived trade names to their fair value of $73.0 million. Determination of fair value involves utilizing the relief-from-royalty under the income approach which contains significant estimates and assumptions including, among others, revenue projections as well as selecting appropriate royalty and discount rates, which are considered a level 3 input in the fair value hierarchy. The indefinite-lived trade names impairment charge was a result of an increase in the discount rate driven by changes in forecast assumptions from the prior year. While the Company believes the judgments and assumptions are reasonable, different assumptions could change the estimated fair value and, therefore, additional impairments could be required. Weakening industry or economic trends, disruptions to the Company's business, changes in discount rate assumptions, unexpected significant changes or planned changes in the use of the assets or in the Company’s entity structure are all factors which may adversely impact the assumptions used in the valuation.
The impairment charge is included in the “Goodwill and intangible asset impairment charges” on the Consolidated Statement of Operations for the year ended December 31, 2023. There was no impairment of indefinite-lived intangible assets for the twelve months ended December 31, 2022 and 2021.
The gross carrying amounts, accumulated amortization and net carrying amounts of the Company’s definite-lived amortizable intangible assets, as well as its indefinite-lived intangible trade names, are as follows:
Dec. 31, 2023
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology$496,000 $304,686 $191,314 
Customer relationships232,000 99,760 132,240 
Total intangible assets subject to amortization$728,000 $404,446 $323,554 
Indefinite-lived trade names73,000 
Total intangible assets$396,554 
Dec. 31, 2022
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying Amount
Developed technology$496,000 $233,829 $262,171 
Customer relationships232,000 76,560 155,440 
Total intangible assets subject to amortization$728,000 $310,389 $417,611 
Indefinite-lived trade names83,000 
Total intangible assets$500,611 
As of December 31, 2023, expected annual amortization expense related to intangible assets for each of the five succeeding years is as follows:
(in thousands)Developed TechnologyCustomer RelationshipsTotal
2024$70,857 $23,200 $94,057 
202570,857 23,200 94,057 
202649,600 23,200 72,800 
2027— 23,200 23,200 
2028— 23,200 23,200 
Thereafter— 16,240 16,240 
Total$191,314 $132,240 $323,554 
As of December 31, 2023, the weighted-average remaining amortization period for amortizable intangible assets was 2.8 years for developed technology and 5.8 years for customer relationships.
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About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

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