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Contingent Consideration Payable (Tables)
 6 Months Ended
Jun. 30, 2020
Debt Disclosure [Abstract]  
Schedule of Related Party Transactions
Contingent consideration payable and related activity are reported at fair value and consist of the following at June 30, 2020 and December 31, 2019:
 
 
 
Activity during the six months ended
June 30, 2020
 
 
 
 
 
 
 
Changes in Fair Value of Contingent Consideration Payable
 
 
 
 
Contingent Consideration Payable:
Balance,
December 31, 2019
 
Payments
 
Operating Expense
 
Other
Expense
 
Disposition of the Hospital Business
 
Balance, June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related contingent consideration:
 

 
 

 
 

 
 

 
 
 
 

Earn-out payments - Éclat Pharmaceuticals (a) (d)
$
15,472

 
$
(3,736
)
 
$
3,396

 
$
—

 
(13,476
)
 
$
1,656

Financing-related:
 

 
 

 
 

 
 

 
 
 
 
Royalty agreement - Deerfield (b) (d)
1,251

 
(412
)
 
—

 
272

 
(936
)
 
175

Royalty agreement - Broadfin (c) (d)
604

 
(196
)
 
—

 
163

 
(488
)
 
83

Total contingent consideration payable
17,327

 
$
(4,344
)
 
$
3,396

 
$
435

 
$
(14,900
)
 
1,914

Less: current portion
(5,554
)
 
 

 
 

 
 

 
 
 
(1,914
)
Long-term contingent consideration payable
$
11,773

 
 

 
 

 
 

 
 
 
$
—



Long-term related party payable and related activity are reported at fair value and consist of the following at June 30, 2020 and March 31, 2020:

 
 
 
Activity during the three months ended
June 30, 2020
 
 
 
 
 
 
 
Changes in Fair Value of Contingent Consideration Payable
 
 
 
 
Contingent Consideration Payable:
Balance,
March 31, 2020
 
Payments
 
Operating Expense
 
Other
Expense
 
Disposition of the Hospital Business
 
Balance, June 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition-related contingent consideration:
 

 
 

 
 

 
 

 
 
 
 

Earn-out payments - Éclat Pharmaceuticals (a) (d)
$
16,176

 
$
(1,962
)
 
$
918

 
$
—

 
(13,476
)
 
$
1,656

Financing-related:
 

 
 

 
 

 
 

 
 
 
 
Royalty agreement - Deerfield (b) (d)
1,242

 
(215
)
 
—

 
84

 
(936
)
 
175

Royalty agreement - Broadfin (c) (d)
632

 
(102
)
 
—

 
41

 
(488
)
 
83

Total contingent consideration payable
18,050

 
$
(2,279
)
 
$
918

 
$
125

 
$
(14,900
)
 
1,914

Less: current portion
(5,855
)
 
 

 
 

 
 

 
 
 
(1,914
)
Long-term contingent consideration payable
$
12,195

 
 

 
 

 
 

 
 
 
$
—


(a) In March 2012, the Company acquired all of the membership interests of Éclat from Breaking Stick Holdings, L.L.C. (“Breaking Stick”, formerly Éclat Holdings), an affiliate of Deerfield. Breaking Stick is majority owned by Deerfield, with a minority interest owned by the Company’s former CEO, and certain other current and former employees. As part of the consideration, the Company committed to provide quarterly earn-out payments equal to 20% of any gross profit generated by certain Éclat products. These payments will continue in perpetuity, to the extent gross profit of the related products also continue in perpetuity. In connection with the disposition of the hospital business on June 30, 2020 as discussed in Note 4: Disposition of the Hospital Business, the Deerfield MIPA (with respect to certain sections thereof) and the Royalty Agreement were assigned to the Exela Buyer. Pursuant to the Purchase Agreement, the Exela Buyer assumed and will pay, perform, satisfy and discharge the liabilities and obligations of Avadel Legacy and the Company under the Deerfield Royalty Agreement.

(b)
As part of a February 2013 debt financing transaction conducted with Deerfield, the Company received cash of $2,600 in exchange for entering into a royalty agreement whereby the Company is obligated to pay quarterly a 1.75% royalty on the net sales of certain Éclat products until December 31, 2024. In connection with such debt financing transaction, the Company granted Deerfield a security interest in the product registration rights of the Éclat products. In connection with the disposition of the hospital business on June 30, 2020 as discussed in Note 4: Disposition of the Hospital Business, the Deerfield MIPA (with respect to certain sections thereof) and the Royalty Agreement were assigned to the Exela Buyer. Pursuant to the Purchase Agreement, the Exela Buyer assumed and will pay, perform, satisfy and discharge the liabilities and obligations of Avadel Legacy and the Company under the Deerfield Royalty Agreement.
(c)
As part of a December 2013 debt financing transaction conducted with Broadfin Healthcare Master Fund, a former related party and shareholder, the Company received cash of $2,200 in exchange for entering into a royalty agreement whereby the Company is obligated to pay quarterly a 0.834% royalty on the net sales of certain Éclat products until December 31, 2024. In connection with the disposition of the hospital business on June 30, 2020 as discussed in Note 4: Disposition of the Hospital Business, the Broadfin Royalty Agreement was assigned to the Exela Buyer and the Exela Buyer assumed and shall pay, perform, satisfy and discharge the liabilities and obligations of the Company under the Broadfin Royalty Agreement.
(d)
Deerfield and Broadfin Healthcare Master Trust disposed of their 2023 Notes and ordinary shares in the Company during the six months ended June 30, 2020 and are no longer considered related parties.
The following table summarizes changes to the contingent consideration payables, a recurring Level 3 measurement, for the six-month periods ended June 30, 2020 and 2019, respectively:
Contingent Consideration Payable Rollforward:
 
Balance
 
 
 
Balance, December 31, 2018
 
$
28,840

Payments of contingent consideration
 
(6,707
)
Fair value adjustments (1)
 
2,114

Balance, June 30, 2019
 
$
24,247

 
 
 
Balance, December 31, 2019
 
$
17,327

Payments of contingent consideration
 
(4,344
)
Fair value adjustments (1)
 
3,831

   Disposition of the hospital business
 
(14,900
)
Balance, June 30, 2020
 
$
1,914

(1) Fair value adjustments are reported as changes in fair value of contingent consideration and other expense - changes in fair value of contingent consideration payable in the unaudited condensed consolidated statements of income (loss).