Assets Held for Sale

6 Months Ended

Dec. 31, 2019

Note 19. Assets Held for Sale

In the first quarter of Fiscal 2019, the Company approved a plan to sell the Cody API business, which includes the manufacturing and distribution of active pharmaceutical ingredients for use in finished goods production. As a result of the plan, the Company recorded the assets of the Cody API business at fair value less costs to sell. The Company performed a fair value analysis which resulted in a $29.9 million impairment of the Cody Labs’ long-lived assets in the first quarter of Fiscal 2019.

The Company was unable to sell the Cody API business as an ongoing operation and intended to sell the equipment utilized by the Cody API business as well as the real estate upon receiving approval of the Company’s cocaine hydrochloride solution Section 505(b)(2) NDA application and to have Cody Labs cease all operations. In the first quarter of Fiscal 2020, the Company completed the sale of a portion of the equipment associated with the Cody API business for $2.0 million. In the second quarter of Fiscal 2020, the Company signed a two-year agreement to lease a portion of the real estate. As of December 31, 2019, the real estate and remaining equipment associated with the Cody API business, totaling $3.8 million, was recorded in the assets held for sale caption in the Consolidated Balance Sheet.

The following table summarizes the financial results of the Cody API business for the three and six months ended December 31, 2019 and 2018:


	Three Months Ended				Six Months Ended
	December 31,				December 31,
(In thousands)	2019		2018		2019		2018
Net sales	$	669	$	654	$	1,736	$	2,142
Pretax loss attributable to Cody API business		(644)		(4,314)		(5,061)		(39,335)

The pretax loss attributable to the Cody API business during the six months ended December 31, 2019 includes a full impairment of the ROU lease asset, totaling $1.2 million, that was recorded upon adoption of ASU No. 2016-02 on July 1, 2019.

The pretax loss attributable to the Cody API business during the six months ended December 31, 2018 includes impairment charges totaling $29.9 million to adjust the long-lived assets to its fair value less costs to sell.