Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Except for items detailed below there have been no material changes to goodwill and intangible assets as reported within the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

During the first quarter of 2020, in conjunction with the preparation of the 2020 annual guidance, the Board of Directors approved a significant change in our overall business strategy to accelerate growth within the Medicare segment. The Company planned to de-emphasize its IFP segment while maximizing cash flows and enhancing e-commerce capabilities within IFP. By decreasing emphasis on new IFP business, the Company plans to use cash flows from the IFP segment to invest in accelerating growth of the Medicare segment.

As the Company progressed with its plans to shift toward Medicare and away from IFP, the Company decreased the number and amount of advance commissions made to certain third-party distributors while redeploying that capital to a limited number of our highest-quality IFP third-party distributors. This action in conjunction with the planned decrease in forecasted IFP revenue was deemed to be a triggering event for impairment testing. The Company performed a quantitative analysis as of February 29, 2020 using both market and income approaches (comparative company and discounted cash flow, respectively) to estimate the fair value of our reporting units. Forecasts of future cash flows were based on our best estimate of future revenues and operating expenses, based primarily on expected Company growth, pricing, market share, and general economic conditions, which at the time did not consider an estimate for the impact of COVID-19, if any. As a result of the impairment analysis, the Company determined that the carrying value of the IFP segment exceeded its fair value, such that the Company recorded a $41.1 million impairment charge to reduce goodwill which is recorded as loss on impairment on the condensed consolidated statement of operations for the six months ended June 30, 2020. The loss on impairment has no impact on operating cash flows, debt covenants or on the metrics for which the Company evaluates itself.

The changes in the carrying amounts of goodwill were as follows ($ in thousands):


	IFP		Medicare		Total
Balance as of December 31, 2019	$	41,076	$	94,106	$	135,182
Purchase accounting measurement period adjustment	—		708		708
Goodwill impairment adjustment	(41,076)		—		(41,076)
Balance as of June 30, 2020	$	—	$	94,814	$	94,814

Amortization expense for the three and six months ended June 30, 2020 was $3.7 million and $7.2 million, respectively. No impairment was present for definite lived intangibles as of June 30, 2020 or December 31, 2019.

Benefytt Technologies, Inc. 10-Q