GOODWILL AND INTANGIBLE ASSETS

(9) GOODWILL AND INTANGIBLE ASSETS

Beginning in fiscal year 2025, the digital invoicing and payables automation business is reported as a component of the Supply Chain Services segment. For comparability purposes, fiscal year 2024 financial measures are presented with the digital invoicing and payables automation business as a component of Supply Chain Services.

Fiscal Year 2025 Impairment

In connection with the preparation of its quarterly financial statements during the second quarter of fiscal year 2025, the Company assessed changes in circumstances that occurred during the quarter to determine whether it was more likely than not that the fair values of any of its reporting units were below their carrying amounts. Triggering events during the second quarter of fiscal year 2025 related to a reduction in short-term financial projections and a higher discount rate led the Company to conclude that when considering the events and factors in totality, it was more likely than not that the fair value of the ITS reporting unit would be below its carrying value at December 31, 2024. The fair value of the reporting unit was computed using reasonable valuation methodologies, the most significant of which being the discounted cash flow analysis. The discounted cash flow model uses 9.5 years of forecasted cash flows plus a terminal value based on capitalizing the last period’s cash flows using a perpetual growth rate. The Company’s significant assumptions in the discounted cash flow model include, but are not limited to, Level 3 inputs such as a discount rate utilizing a weighted average cost of capital, revenue growth rates (including perpetual growth rate), EBITDA margin percentages and debt-free net cash flows of the reporting unit’s business. These assumptions were developed in consideration of current market conditions and future expectations, which include, but were not limited to, new product offerings, market demand and impacts from competition. As a result, during the second quarter of fiscal year 2025, the Company recorded a pre-tax goodwill impairment charge of $126.8 million related to the ITS reporting unit recorded in

selling, general, and administrative expense in the accompanying Consolidated Statements of Income and Comprehensive Income.

Fiscal Year 2024 Impairment

During the year ended June 30, 2024, the Company recorded impairment charges related to the Contigo Health reporting unit in the accompanying Consolidated Statements of Income and Comprehensive Income. The pre-tax impairment charges comprised of $16.5 million for goodwill, $96.1 million for the provider network, $11.9 million for customer relationships, $0.6 million for technology, $0.3 million for non-compete agreements, and $4.6 million for other intangible assets. At June 30, 2024, the Contigo Health reporting unit’s goodwill and intangible assets were fully impaired.

Fiscal Year 2023 Impairment

During the year ended June 30, 2023, the Company recorded pre-tax goodwill impairment charges of $54.4 million related to the Contigo Health reporting unit in the accompanying Consolidated Statements of Income and Comprehensive Income.

A reconciliation of goodwill by segment is as follows (in thousands):


	Supply Chain Services		Performance Services		Total
June 30, 2024	$	408,309	$	587,543	$	995,852
Acquisition of IllumiCare	—		28,860		28,860
Impairment of ITS	—		(126,818)		(126,818)
June 30, 2025	$	408,309	$	489,585	$	897,894

Goodwill decreased due to the current year impairment, partially offset by the IllumiCare acquisition (see Note 3 - Business Acquisitions). Goodwill recorded as part of the IllumiCare acquisition was included in the ITS reporting unit at June 30, 2025.

At June 30, 2025, the Company had accumulated impairment losses to goodwill at Performance Services of $197.7 million. At June 30, 2024, the Company had accumulated impairment losses to goodwill at Performance Services of $70.9 million.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):


		June 30, 2025						June 30, 2024
	Useful Life	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Member relationships	14.7 years	$	386,100	$	(189,068)	$	197,032	$	386,100	$	(162,910)	$	223,190

Technology	6.0 years	117,017		(79,268)		37,749		98,517		(73,441)		25,076
Customer relationships	9.1 years	42,430		(33,357)		9,073		41,430		(31,612)		9,818
Trade names	6.7 years	18,620		(15,594)		3,026		18,420		(13,574)		4,846
Non-compete agreements	5.2 years	17,315		(14,148)		3,167		17,315		(12,063)		5,252
Other	5.1 years	1,810		(1,087)		723		1,810		(733)		1,077
Total		$	583,292	$	(332,522)	$	250,770	$	563,592	$	(294,333)	$	269,259

The net carrying value of intangible assets by segment was as follows (in thousands):


	June 30,
	2025		2024
Supply Chain Services	$	223,745	$	258,480
Performance Services	27,025		10,779
Total intangible assets, net	$	250,770	$	269,259

The estimated amortization expense for each of the next five fiscal years and thereafter is as follows (in thousands):


2026	$	39,988
2027	37,136
2028	33,524
2029	31,530
2030	30,538
Thereafter	78,054
Total amortization expense	$	250,770