Hanger, Austin, Texas, filed a Current Report, Form 8-K, with the U.S. Securities and Exchange Commission (SEC) on June 22, in which it announced that it is required to test its goodwill for impairment due to the “significant decline in the market capitalization of the company’s common stock following the company’s announcements included in its Form 8-K” that was filed with the SEC on February 26. As such, Hanger management engaged a third-party valuation firm to prepare the first of a two-step interim impairment test of its goodwill as of March 31. Based on the results of the first step impairment test, it is more likely than not the company will record a material non-cash goodwill impairment charge in the first quarter of 2016. However, the final determination regarding the existence of the impairment charge, the amount of the likely impairment charge, or the period in which the impairment charge will occur will not take place until the company has completed its financial accounting for 2014, 2015, and the first quarter of 2016, and has performed the second required step of its goodwill impairment analysis, which will involve the measurement of the impairment amount.
Editor’s note: “Goodwill” is an intangible asset and represents the value of a company’s brand name, customer base, customer relations, employee relations, and patents or proprietary technology, according to Investopedia. “Goodwill impairment” is a charge that companies record when goodwill’s carrying value on financial statements exceeds its fair value.
