Mirion Technologies, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill is calculated as the excess of consideration transferred over the net assets recognized for acquired businesses and represents future economic benefits arising from the other assets acquired that could not be individually identified and separately recognized. Goodwill is assigned to reporting units at the date the goodwill is initially recorded and is reallocated as necessary based on the composition of reporting units over time.

The Company assesses goodwill for impairment at the reporting unit level annually on the first day of the fourth quarter and upon the occurrence of a triggering event or change in circumstance that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

A quantitative test performed upon the occurrence of a triggering event compares the fair value of a reporting unit with its carrying amount. The Company determines fair values for each of the reporting units, as applicable, using the market approach, when available and appropriate, or the income approach, or a combination of both. The Company assesses the valuation methodology based upon the relevance and availability of the data at the time the Company performs the valuation. If multiple valuation methodologies are used, the results are weighted appropriately.

Valuations using the market approach are derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. A market approach is limited to reporting units for which there are publicly traded companies that have characteristics similar to the Company's businesses.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for each business. Actual results may differ from those assumed in the forecasts. The Company derives its discount rates using a capital asset pricing model and by analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in internally developed forecasts.

No goodwill impairment was recognized for the three and six months ended June 30, 2024 and June 30, 2023, respectively.

The following table shows changes in the carrying amount of goodwill by reportable segment as of June 30, 2024 and December 31, 2023 (in millions):


	Medical		Technologies		Consolidated
Balance—December 31, 2023	$	633.4	$	814.2	$	1,447.6
Measurement period adjustment	0.6		—		0.6
Translation adjustment	—		(11.8)		(11.8)
Balance—June 30, 2024	$	634.0	$	802.4	$	1,436.4

A portion of goodwill is deductible for income tax purposes.

Gross carrying amounts and cumulative goodwill impairment losses are as follows (in millions):


	June 30, 2024				December 31, 2023
	Gross Carrying Amount		Cumulative Impairment		Gross Carrying Amount		Cumulative Impairment
Goodwill	$	1,648.2	$	(211.8)	$	1,659.4	$	(211.8)

Intangible Assets

Intangible assets consist of our developed technology, customer relationships, backlog, trade names, and non-compete agreements at the time of acquisition through business combinations. The customer relationships definite lived intangible assets are amortized using the double declining balance method while all other definite lived intangible assets are amortized on a straight-line basis over their estimated useful lives.

Many of our intangible assets are not deductible for income tax purposes. A summary of intangible assets useful lives, gross carrying value and related accumulated amortization is below (in millions):


		June 30, 2024
	Original Average Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	6 - 13	$	338.5	$	(168.4)	$	170.2
Distributor relationships	7 - 13	60.9		(19.6)		41.3
Developed technology	5 - 16	261.3		(82.6)		178.7
Trade names	3 - 10	98.7		(26.8)		71.9
Backlog and other	1 - 4	74.8		(65.0)		9.8
Total		$	834.2	$	(362.4)	$	471.9

		December 31, 2023
	Original Average Life in Years	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	6 - 13	$	340.8	$	(143.1)	$	197.7
Distributor relationships	7 - 13	60.9		(16.0)		44.9
Developed technology	5 - 16	264.1		(67.8)		196.3
Trade names	3 - 10	99.7		(22.1)		77.6
Backlog and other	1 - 4	76.0		(53.7)		22.3
Total		$	841.5	$	(302.7)	$	538.8

Aggregate amortization expense for intangible assets included in cost of revenues and operating expenses was as follows (in millions):


	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2024		2023		2024		2023
Amortization expense for intangible assets in:
Cost of revenues	$	6.8	$	6.8	$	13.6	$	13.5
Operating expenses	$	24.2	$	26.4	$	48.9	$	53.3