QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
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(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
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PAGE |
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PART I—FINANCIAL INFORMATION |
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Item 1. |
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3 |
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4 |
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5 |
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7 |
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8 |
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Item 2. |
28 |
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Item 3. |
37 |
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Item 4. |
37 |
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PART II—OTHER INFORMATION |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 2. |
39 |
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Item 3. |
39 |
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Item 4. |
39 |
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Item 5. |
39 |
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Item 6. |
40 |
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41 |
ITEM 1. |
Financial Statements |
September 30, |
December 31, |
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2019 |
2018 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | |
$ | |
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Restricted cash |
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— |
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Accounts receivable, less reserve for doubtful accounts of $ December |
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Royalties and other receivables |
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Unbilled receivables |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Intangible assets, net |
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Goodwill |
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Deferred tax assets |
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Operating lease right of use assets |
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— |
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Other assets |
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Total assets |
$ | |
$ | |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
$ | |
$ | |
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Operating lease liability |
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— |
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Accrued liabilities |
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Convertible senior notes, current portion |
— |
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Total current liabilities |
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Convertible senior notes |
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— |
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Deferred tax liabilities |
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Operating lease liability, long-term |
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— |
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Other liabilities, long-term |
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Total liabilities |
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Commitments and contingencies (Note 10) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Accumulated earnings (deficit) |
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( |
) | |||||
Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | |
$ | |
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2019 |
2018 |
2019 |
2018 |
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Revenue: |
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Products |
$ | |
$ | |
$ | |
$ | |
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Royalty and other revenue |
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Total revenue |
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Costs and operating expenses: |
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Cost of product revenue |
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Research and development |
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Selling, general and administrative |
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Total costs and operating expenses |
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Income from operations |
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Other income (expenses): |
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Investment income |
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Loss on extinguishment of debt |
( |
) | — |
( |
) | — |
||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income (expenses) |
|
( |
) | ( |
) | |
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Other expenses, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income before income taxes |
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Income tax provision |
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Net income |
$ | |
$ | |
$ | |
$ | |
||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | |
$ | |
$ | |
$ | |
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Diluted |
$ | |
$ | |
$ | |
$ | |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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Net income |
$ | |
$ | |
$ | |
$ | |
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Other comprehensive income (loss): |
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Foreign currency translation adjustment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Comprehensive (loss) income |
$ | ( |
) | $ | |
$ | |
$ | |
|||||||
Nine Months Ended September 30, 2019 |
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Common Stock |
|||||||||||||||||||||||
Number of Shares |
Par Value |
Additional Paid- In Capital |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Earnings (Deficit) |
Total Stockholders’ Equity |
|||||||||||||||||||
Balance at December 31, 2018 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
Net income |
— |
— |
— |
— |
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|
||||||||||||||||||
Issuance of common stock for debt conversion |
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|
— |
— |
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||||||||||||||||||
Reduction for equity component from debt conversion , net of tax |
— |
— |
( |
) | — |
— |
( |
) | ||||||||||||||||
Exercise of stock options and releases of restricted stock |
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— |
— |
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Issuance of common stock pursuant to the acquisition of C Technologies, Inc. |
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— |
— |
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Tax withholding on vesting of restricted stock units |
( |
) | — |
( |
) | — |
— |
( |
) | |||||||||||||||
Equity component of of tax |
— |
— |
|
— |
— |
|
||||||||||||||||||
Proceeds from issuance of common stock, net of issuance costs of $ |
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— |
— |
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Stock-based compensation expense |
— |
— |
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— |
— |
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Translation adjustment |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balance as of September 30, 2019 |
|
$ | |
$ |
|
$ | ( |
) | $ | |
$ | |
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Three Months Ended September 30, 2019 |
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Common Stock |
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Number of Shares |
Par Value |
Additional Paid- In Capital |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Earnings |
Total Stockholders’ Equity |
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Balance at June 30, 2019 |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||||
Net income |
— |
— |
— |
— |
|
|
||||||||||||||||||
Issuance of common stock for debt conversion |
|
|
|
— |
— |
|
||||||||||||||||||
Reduction for equity component from debt conversion , net of tax |
— |
— |
( |
) | — |
— |
( |
) | ||||||||||||||||
Exercise of stock options and releases of restricted stock |
|
|
|
— |
— |
|
||||||||||||||||||
Tax withholding on vesting of restricted stock units |
( |
) | — |
( |
) | — |
— |
( |
) | |||||||||||||||
Equity component of of tax |
— |
— |
|
— |
— |
|
||||||||||||||||||
Proceeds from issuance of common stock, net of issuance costs of $ |
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|
|
— |
— |
|
||||||||||||||||||
Stock-based compensation expense |
— |
— |
|
— |
— |
|
||||||||||||||||||
Translation adjustment |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balance as of September 30, 2019 |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||||
Nine Months Ended September 30, 2018 |
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|
Common Stock |
|||||||||||||||||||||||
Number of Shares |
Par Value |
Additional Paid- In Capital |
Accumulated Other Comprehensive Income (Loss) |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||||
Balance at December 31, 2017 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
Net income |
— |
— |
— |
— |
|
|
||||||||||||||||||
Issuance of common stock for debt conversion |
|
|
|
— |
— |
|
||||||||||||||||||
Exercise of stock options and releases of restricted stock |
|
|
|
— |
— |
|
||||||||||||||||||
Stock-based compensation expense |
— |
— |
|
— |
— |
|
||||||||||||||||||
Cumulative effect of accounting changes |
— |
— |
— |
— |
( |
) | ( |
) | ||||||||||||||||
Translation adjustment |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balance as of September 30 , 2018 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
Three Months Ended September 30, 2018 |
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Common Stock |
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Accumulated |
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Additional |
Other |
Total |
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Number of |
Par |
Paid- |
Comprehensive |
Accumulated |
Stockholders’ |
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Shares |
Value |
In Capital |
Income (Loss) |
Deficit |
Equity |
|||||||||||||||||||
Balance at June 30, 2018 |
$ |
$ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Net income |
— |
— |
— |
— |
||||||||||||||||||||
Exercise of stock options and releases of restricted stock |
— |
— |
||||||||||||||||||||||
Stock-based compensation expense |
— |
— |
— |
— |
||||||||||||||||||||
Translation adjustment |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Balance as of September 30 , 2018 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Nine Months Ended September 30, |
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|
2019 |
2018 |
||||||
Cash flows from operating activities: |
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Net income |
$ | |
$ | |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
|
|
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Non-cash interest expense |
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|
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Stock-based compensation expense |
|
|
||||||
Deferred tax es |
( |
) | |
|||||
Loss on extinguishment of debt |
|
— |
||||||
Other |
|
|
||||||
Changes in operating assets and liabilities, excluding impact of acquisitions: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Royalties and other receivables |
|
( |
) | |||||
Unbilled receivables |
|
— |
||||||
Inventories |
( |
) | ( |
) | ||||
Prepaid expenses and other assets |
( |
) | ( |
) | ||||
Operating lease right of use assets |
|
— |
||||||
Other assets |
( |
) | ( |
) | ||||
Accounts payable |
( |
) | |
|||||
Accrued expenses |
|
( |
) | |||||
Operating lease liability |
( |
) | — |
|||||
Long-term liabilities |
|
|
||||||
Total cash provided by operating activities |
|
|
||||||
Cash flows from investing activities: |
||||||||
Acquisition of C Technologies, Inc., net of cash acquired |
( |
) | — |
|||||
Additions to capitalized software costs |
( |
) | ( |
) | ||||
Purchases of property, plant and equipment |
( |
) | ( |
) | ||||
Total cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Exercise of stock options |
|
|
||||||
Payment of tax withholding obligation on vesting of restricted stock |
( |
) | — |
|||||
Proceeds from issuance of convertible debt, net |
|
— |
||||||
Proceeds from issuance of common stock, net |
|
— |
||||||
Repayment of senior convertible notes |
( |
) | ( |
) | ||||
Total cash provided by financing activities |
|
|
||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
( |
) | ( |
) | ||||
Net increase in cash, cash equivalents and restricted cash |
|
|
||||||
Cash, cash equivalents and restricted cash, beginning of period |
|
|
||||||
Cash, cash equivalents and restricted cash, end of period |
$ | |
$ | |
||||
Supplemental disclosure of cash flow information: |
||||||||
Income taxes paid |
$ | |
$ | |
||||
Interest paid |
$ | |
$ | |
||||
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
Fair value of |
$ | |
$ | — |
||||
Fair value of common stock issued for acquisition of C Technologies, Inc. |
$ | |
$ | — |
||||
Property, plant and equipment related to lease incentives |
$ | — |
$ | |
||||
Non-cash effect of adoption of ASU 2016-16 |
$ | — |
$ | |
||||
Business Acquisitions: |
||||||||
Fair value of tangible assets acquired |
$ | |
$ | — |
||||
Fair value of accounts receivables |
|
— |
||||||
Fair value of other assets |
|
— |
||||||
Liabilities assumed |
( |
) | — |
|||||
Fair value of stock issued |
( |
) | — |
|||||
Cost in excess of fair value of assets acquired (goodwill) |
|
— |
||||||
Acquired identifiable intangible assets |
|
— |
||||||
Net cash paid for business acquisitions |
$ | |
$ | — |
||||
1. |
Basis of Presentation |
2. |
Fair Value Measurements |
Level 1 – |
Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. | |
Level 2 – |
Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly. | |
Level 3 – |
Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
3. |
Acquisition of C Technologies, Inc. |
Cash consideration |
$ |
|
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Equity consideration |
|
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Fair value of net assets acquired |
$ |
|
||
Cash and cash equivalents |
$ | |
||
Restricted cash |
|
|||
Accounts receivable |
|
|||
Inventory |
|
|||
Prepaid expenses and other current assets |
|
|||
Fixed assets |
|
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Operating lease right of use asset |
|
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Customer relationships |
|
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Developed technology |
|
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Trademark and tradename |
|
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Non-competition agreements |
|
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Goodwill |
|
|||
Accounts payable |
( |
) | ||
Accrued liabilities |
( |
) | ||
Accrued bonus |
( |
) | ||
Deferred revenue |
( |
) | ||
Operating lease liability |
( |
) | ||
Operating lease liability, long-term |
( |
) | ||
Fair value of net assets acquired |
$ |
|
||
Useful Life |
Fair Value |
|||||||
(Amounts in thousands) |
||||||||
Customer relationships |
|
$ |
|
|||||
Developed technology |
|
|
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Trademark and tradename |
|
|
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Non-competition agreements |
|
|
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$ |
|
|||||||
Nine Months Ended September 30, |
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2019 |
2018 |
|||||||
(Amounts in thousands, except per share data) |
||||||||
Pro forma total revenue |
$ | $ | ||||||
Pro forma net income |
$ | $ | ||||||
Pro forma earnings per share: |
||||||||
Basic |
$ | $ | ||||||
Diluted |
$ | $ | ||||||
4. |
Revenue Recognition |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
Product revenue |
$ | $ | $ | $ | ||||||||||||
Royalty and other income |
||||||||||||||||
Total revenue |
$ | $ | $ | $ | ||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
GE Healthcare |
$ | $ | $ | $ | ||||||||||||
MilliporeSigma |
$ | $ | $ | $ |
2019 |
||||
Balances from contracts with customers only: |
||||
Accounts receivable |
$ | |
||
Deferred revenue (included in accrued liabilities in the consolidated balance sheets) |
|
|||
Revenue recognized during the nine |
||||
The beginning deferred revenue balance |
$ | |
||
Changes in pricing related to products or services satisfied in previous periods |
— |
5. |
Leases |
As of September 30, 2019 |
Amount |
|||
2019 (remaining three months) |
$ | |
||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 and thereafter |
|
|||
Total future minimum lease payments |
|
|||
Less : amount of lease payment representing interest |
|
|||
Total operating lease liabilities |
$ | |
||
As of September 30, 2019 |
||||
Operating lease liability |
$ | |||
Operating lease liability, long-term |
||||
Minimum operating lease payments |
$ | |||
Three Months Ended |
Nine Months Ended |
|||||||
Lease Cost |
September 30, 2019 |
September 30, 2019 |
||||||
(Amounts in thousands) |
||||||||
Operating lease cost |
$ | $ | ||||||
Variable operating lease cost |
||||||||
Lease cost |
$ | $ | ||||||
Nine Months Ended |
||||
September 30, 2019 |
||||
Operating cash flows from operating leases |
$ | ( |
) |
Weighted average remaining lease term (years) |
||||
Weighted average discount rate |
% |
For the Years Ended December 31, |
Amount |
|||
2019 |
$ | |||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 and thereafter |
||||
Minimum operating lease payments |
$ | |||
Balance as of December 31, 2018 |
$ | |||
Cumulative translation adjustment |
( |
) | ||
Acquisition of C Technologies, Inc. |
||||
Balance as of September 30, 2019 |
$ | |||
September 30, 2019 |
||||||||||||||||
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
Weighted Average Useful Life (in years) |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
Finite-lived intangible assets: |
||||||||||||||||
Technology — developed |
$ | $ | ( |
) | $ | |||||||||||
Patents |
( |
) | — |
|||||||||||||
Customer relationships |
( |
) | ||||||||||||||
Trademarks |
( |
) | ||||||||||||||
Other intangibles |
( |
) | ||||||||||||||
Total finite-lived intangible assets |
( |
) | ||||||||||||||
Indefinite-lived intangible asset: |
||||||||||||||||
Trademarks |
— |
— |
||||||||||||||
Total intangible assets |
$ | $ | ( |
) | $ | |||||||||||
December 31, 2018 |
||||||||||||||||
Gross Carrying Value |
Accumulated Amortization |
Net Carrying Value |
Weighted Average Useful Life (in years) |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
Finite-lived intangible assets: |
||||||||||||||||
Technology — developed |
$ | |
$ | ( |
) | $ | |
|
||||||||
Patents |
|
( |
) | — |
|
|||||||||||
Customer relationships |
|
( |
) | |
|
|||||||||||
Trademarks |
|
( |
) | |
|
|||||||||||
Other intangibles |
|
( |
) | |
|
|||||||||||
Total finite-lived intangible assets |
|
( |
) | |
|
|||||||||||
Indefinite-lived intangible asset: |
||||||||||||||||
Trademarks |
|
— |
|
— |
||||||||||||
Total intangible assets |
$ | |
$ | ( |
) | $ | |
|||||||||
Estimated |
||||
Amortization |
||||
Nine Months Ended September 30, |
Expense |
|||
2019 (remaining three months) |
$ | |
||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 and thereafter |
|
|||
Total |
$ | |
||
As of |
||||||||
September 30, |
December 31, |
|||||||
2019 |
2018 |
|||||||
(Amounts in thousands) |
||||||||
Raw materials |
$ | |
$ | |
||||
Work-in-process |
|
|
||||||
Finished products |
|
|
||||||
Total inventories, net |
$ | |
$ | |
||||
As of |
||||||||
September 30, |
December 31, |
|||||||
2019 |
2018 |
|||||||
(Amounts in thousands) |
||||||||
Land |
$ | |
$ | |
||||
Buildings |
|
|
||||||
Leasehold improvements |
|
|
||||||
Equipment |
|
|
||||||
Furniture and fixtures |
|
|
||||||
Construction in progress (1) |
|
|
||||||
Other |
|
— |
||||||
Total property, plant and equipment |
|
|
||||||
Less—Accumulated depreciation |
( |
) | ( |
) | ||||
Total property, plant and equipment, net |
$ | |
$ | |
||||
(1) | Construction in progress as of September 30, 2019 , includes $, which is primarily related to various manufacturing expansion projects at our Waltham , Massachusetts and Rancho Dominguez, California facilities. Construction in progress as of December 31, 2018 includes $internal-use software development costs and $, Massachusetts facility. Both projects have since been placed into service and as a result , $ . |
As of |
||||||||
September 30, |
December 31, |
|||||||
2019 |
2018 |
|||||||
(Amounts in thousands) |
||||||||
Employee compensation |
$ | |
$ | |
||||
Taxes |
|
|
||||||
Royalty and license fees |
|
|
||||||
Warranties |
|
|
||||||
Professional fees |
|
|
||||||
Deferred revenue |
|
|
||||||
Other |
|
|
||||||
Total accrued liabilities |
$ | |
$ | |
||||
September 30, |
||||
2019 |
||||
0.375% Convertible Senior Notes due July 15, 2024 |
$ | |
||
Less: u namortized debt discount |
( |
) | ||
Less: u namortized debt issuance costs |
( |
) | ||
Total debt |
|
|||
Less: c urrent portion |
— |
|||
Net carrying amount |
$ | |
||
September 30, |
||||
2019 |
||||
Proceeds allocated to the conversion feature |
$ | |
||
Less: transaction costs allocated to the conversion feature |
( |
) | ||
Less: deferred taxes |
|
|
( |
) |
Net carrying value |
$ | |
||
9. |
Stockholders’ Equity |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
Cost of product revenue |
$ | |
$ | |
$ | |
$ | |
||||||||
Research and development |
|
|
|
|
||||||||||||
Selling, general and administrative |
|
|
|
|
||||||||||||
Total stock-based compensation |
$ |
|
$ |
|
$ | |
$ | |
||||||||
Shares |
Weighted average exercise price |
Weighted- Average Remaining Contractual Term (in Years) |
Aggregate Intrinsic Value (in Thousands) |
|||||||||||||
Options outstanding at December 31, 2018 |
|
$ | |
|||||||||||||
Granted |
|
$ | |
|||||||||||||
Exercised |
( |
) | $ | |
||||||||||||
Forfeited/expired/cancelled |
— |
$ | — |
|||||||||||||
Options outstanding at September 30, 2019 |
|
$ | |
|
$ | |
||||||||||
Options exercisable at September 30, 2019 |
|
$ | |
|
$ | |
||||||||||
Vested and expected to vest at September 30, 2019 (1) |
|
|
$ | |
||||||||||||
(1) | Represents the number of vested options as of September 30, 2019 plus the number of unvested options expected to vest as of September 30, 2019 based on the unvested outstanding options at September 30, 2019 adjusted for estimated forfeiture rates of non-executive level employees and |
Shares |
Weighted- Average Remaining Contractual Term (in Years) |
Aggregate Intrinsic Value (in Thousands) |
||||||||||
Unvested at December 31, 2018 |
|
|||||||||||
Awarded |
|
|||||||||||
Vested |
( |
) | ||||||||||
Forfeited/expired/cancelled |
( |
) | ||||||||||
Unvested at September 30, 2019 |
|
|
$ | |
||||||||
10. |
Commitments and Contingencies |
11. |
Accumulated Other Comprehensive Loss |
Foreign Currency Translation Adjustment |
||||
Balance as of December 31 , 2018 |
$ |
( |
) | |
Other comprehensive loss |
( |
) | ||
Balance as of September 30, 2019 |
$ | ( |
) | |
12. |
Income Taxes |
Jurisdiction |
Fiscal Years Subject to Examination |
|||
United States—federal and state |
|
|||
Sweden |
|
|||
Germany |
|
|||
Netherlands |
|
13. |
Earnings Per Share |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Amounts in thousands, except per share data) |
||||||||||||||||
Net income |
$ | |
$ | |
$ |
|
$ | |
||||||||
Weighted average shares used in computing net income per share—basic |
|
|
|
|
||||||||||||
Effect of dilutive shares: |
||||||||||||||||
Stock options and restricted stock awards |
|
|
|
|
||||||||||||
Convertible senior notes |
— |
|
— |
|
||||||||||||
Dilutive potential common shares |
|
|
|
|
||||||||||||
Weighted average shares used in computing net income per share—diluted |
|
|
|
|
||||||||||||
Earnings per share: |
||||||||||||||||
Basic |
$ | |
$ | |
$ | |
$ | |
||||||||
Diluted |
$ | |
$ | |
$ |
|
$ | |
||||||||
14. |
Related Party Transactions |
15. |
Segment Reporting |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
September 30, |
September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Revenue by customers’ geographic locations: |
||||||||||||||||
North America |
|
% | |
% | |
% | |
% | ||||||||
Europe |
|
% | |
% | |
% | |
% | ||||||||
APAC |
|
% | |
% | |
% | |
% | ||||||||
Other |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
Total revenue |
|
% | |
% | |
% | |
% |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
GE Healthcare |
N/A |
|
% | |
% | |
% | |||||||||
MilliporeSigma |
|
% | |
% | |
% | |
% |
September 30, |
December 31, |
|||||||
2019 |
2018 |
|||||||
GE Healthcare |
|
% | |
% | ||||
MilliporeSigma |
N/A |
|
% |
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended September 30, |
Increase/ (Decrease) |
Nine Months Ended September 30, |
Increase/ (Decrease) |
|||||||||||||||||||||||||||||
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||||||||||||
(Amounts in thousands, except for percentage data) |
||||||||||||||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||||||
Products |
$ | 69,419 |
$ | 49,500 |
$ | 19,919 |
40.2 |
% | $ | 200,701 |
$ | 142,042 |
$ | 58,659 |
41.3 |
% | ||||||||||||||||
Royalty and other |
26 |
29 |
(3 |
) | (10.3 |
%) | 70 |
48 |
22 |
45.8 |
% | |||||||||||||||||||||
Total revenue |
$ | 69,445 |
$ | 49,529 |
$ | 19,916 |
40.2 |
% | $ | 200,771 |
$ | 142,090 |
$ | 58,681 |
41.3 |
% | ||||||||||||||||
Three Months Ended September 30, |
Increase/ (Decrease) |
Nine Months Ended September 30, |
Increase/ (Decrease) |
|||||||||||||||||||||||||||||
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||||||||||||
(Amounts in thousands, except for percentage data) |
||||||||||||||||||||||||||||||||
Cost of product revenue |
$ | 31,425 |
$ | 22,183 |
$ | 9,242 |
41.7 |
% | $ | 88,978 |
$ | 62,939 |
$ | 26,039 |
41.4 |
% | ||||||||||||||||
Research and development |
5,427 |
3,601 |
1,826 |
50.7 |
% | 14,278 |
12,669 |
1,609 |
12.7 |
% | ||||||||||||||||||||||
Selling, general and administrative |
24,629 |
15,859 |
8,770 |
55.3 |
% | 67,326 |
48,347 |
18,979 |
39.3 |
% | ||||||||||||||||||||||
Total costs and operating expenses |
$ | 61,481 |
$ | 41,643 |
$ | 19,838 |
47.6 |
% | $ | 170,582 |
$ | 123,955 |
$ | 46,627 |
37.6 |
% | ||||||||||||||||
Three Months Ended September 30, |
Increase/ (Decrease) |
Nine Months Ended September 30, |
Increase/ (Decrease) |
|||||||||||||||||||||||||||||
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||||||||||||
(Amounts in thousands, except for percentage data) |
||||||||||||||||||||||||||||||||
Investment income |
$ | 1,898 |
$ | 558 |
$ | 1,340 |
240.1 |
% | $ | 3,616 |
$ | 1,251 |
$ | 2,365 |
189.0 |
% | ||||||||||||||||
Loss on extinguishment of debt |
(5,650 |
) | — |
(5,650 |
) | 100.0 |
% | (5,650 |
) | — |
(5,650 |
) | 100.0 |
% | ||||||||||||||||||
Interest expense |
(2,857 |
) | (1,687 |
) | (1,170 |
) | 69.4 |
% | (6,326 |
) | (5,008 |
) | (1,318 |
) | 26.3 |
% | ||||||||||||||||
Other income (expenses) |
316 |
(134 |
) | 450 |
(335.8 |
%) | (23 |
) | 187 |
(210 |
) | (112.3 |
%) | |||||||||||||||||||
Total other expense, net |
$ | (6,293 |
) | $ | (1,263 |
) | $ | (5,030 |
) | 398.3 |
% | $ | (8,383 |
) | $ | (3,570 |
) | $ | (4,813 |
) | 134.8. |
% | ||||||||||
Three Months Ended September 30, |
Increase/ (Decrease) |
Nine Months Ended September 30, |
Increase/ (Decrease) |
|||||||||||||||||||||||||||||
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||||||||||||
(Amounts in thousands, except for percentage data) |
||||||||||||||||||||||||||||||||
Income tax provision |
$ | 12 |
$ | 1,829 |
$ | (1,817 |
) | (99.3 |
%) | $ | 3,999 |
$ | 3,586 |
$ | 413 |
11.5 |
% | |||||||||||||||
Effective tax rate |
0.7 |
% | 27.6 |
% | 18.3 |
% | 24.6 |
% |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
GAAP income from operations |
$ | 7,964 |
$ | 7,886 |
$ | 30,189 |
$ | 18,135 |
||||||||
Non-GAAP adjustments to income from operations: |
||||||||||||||||
Acquisition and integration costs |
2,953 |
805 |
9,573 |
2,313 |
||||||||||||
Intangible amortization |
3,900 |
2,608 |
9,562 |
7,906 |
||||||||||||
Inventory step-up charges |
314 |
— |
1,483 |
— |
||||||||||||
Non-GAAP adjusted income from operations |
$ | 15,131 |
$ | 11,299 |
$ | 50,807 |
$ | 28,354 |
||||||||
Three Months Ended September 30, |
||||||||||||||||
2019 |
2018 |
|||||||||||||||
Amount |
Fully Diluted Earnings per Share |
Amount |
Fully Diluted Earnings per Share |
|||||||||||||
(Amounts in thousands, except per share data) |
||||||||||||||||
GAAP net income |
$ | 1,659 |
$ | 0.03 |
$ | 4,794 |
$ | 0.10 |
||||||||
Non-GAAP adjustments to net income: |
||||||||||||||||
Acquisition and integration costs |
2,953 |
0.06 |
805 |
0.02 |
||||||||||||
Intangible amortization |
3,900 |
0.08 |
2,608 |
0.06 |
||||||||||||
Loss on extinguishment of debt |
5,650 |
0.11 |
— |
— |
||||||||||||
Inventory step-up charges |
314 |
0.01 |
— |
— |
||||||||||||
Non-cash interest expense |
2,631 |
0.05 |
1,071 |
0.02 |
||||||||||||
Tax effect of intangible amortization and acquisition costs |
(3,781 |
) | (0.07 |
) | (1,063 |
) | (0.02 |
) | ||||||||
Non-GAAP adjusted net income |
$ | 13,326 |
$ | 0.26 |
$ | 8,215 |
$ | 0.18 |
||||||||
Nine Months Ended September 30, |
||||||||||||||||
2019 |
2018 |
|||||||||||||||
Amount |
Fully Diluted Earnings per Share |
Amount |
Fully Diluted Earnings per Share |
|||||||||||||
(Amounts in thousands, except per share data) |
||||||||||||||||
GAAP net income |
$ | 17,807 |
$ | 0.37 |
$ | 10,979 |
$ | 0.24 |
||||||||
Non-GAAP adjustments to net income: |
||||||||||||||||
Acquisition and integration costs |
10,074 |
0.21 |
2,313 |
0.05 |
||||||||||||
Intangible amortization |
9,562 |
0.20 |
7,906 |
0.18 |
||||||||||||
Inventory step-up charges |
1,483 |
0.03 |
— |
— |
||||||||||||
Loss on extinguishment of debt |
5,650 |
0.12 |
— |
— |
||||||||||||
Non-cash interest expense |
4,863 |
0.10 |
3,160 |
0.07 |
||||||||||||
Tax effect of intangible amortization and acquisition costs |
(7,742 |
) | (0.16 |
) | (3,171 |
) | (0.07 |
) | ||||||||
Non-GAAP adjusted net income |
$ | 41,697 |
$ | 0.87 |
$ | 21,187 |
$ | 0.47 |
||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(Amounts in thousands) |
||||||||||||||||
GAAP net income |
$ | 1,659 |
$ | 4,794 |
$ | 17,807 |
$ | 10,979 |
||||||||
Non-GAAP EBITDA adjustments to net income: |
||||||||||||||||
Investment income |
(1,898 |
) | (558 |
) | (3,616 |
) | (1,251 |
) | ||||||||
Interest expense |
2,857 |
1,687 |
6,326 |
5,008 |
||||||||||||
Tax provision |
12 |
1,829 |
3,999 |
3,586 |
||||||||||||
Depreciation |
1,810 |
1,273 |
5,147 |
3,871 |
||||||||||||
Amortization |
3,928 |
2,608 |
9,644 |
7,906 |
||||||||||||
EBITDA |
8,368 |
11,633 |
39,307 |
30,099 |
||||||||||||
Other non-GAAP adjustments: |
||||||||||||||||
Acquisition and integration costs |
2,953 |
805 |
10,074 |
2,313 |
||||||||||||
Loss on extinguishment of debt |
5,650 |
— |
5,650 |
— |
||||||||||||
Inventory step-up charges |
314 |
— |
1,483 |
— |
||||||||||||
Adjusted EBITDA |
$ | 17,285 |
$ | 12,438 |
$ | 56,514 |
$ | 32,412 |
||||||||
Nine Months Ended September 30, |
Increase/(Decrease) $ Change |
|||||||||||
2019 |
2018 |
|||||||||||
(Amounts in thousands) |
||||||||||||
Operating activities |
$ | 49,542 |
$ | 27,215 |
$ | 22,327 |
||||||
Investing activities |
(198,197 |
) | (8,580 |
) | (189,617 |
) | ||||||
Financing activities |
485,047 |
2,363 |
482,684 |
|||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(7,785 |
) | (4,453 |
) | (3,332 |
) | ||||||
Net increase in cash, cash equivalents and restricted cash |
$ | 328,607 |
$ | 16,545 |
$ | 312,062 |
||||||
• | the expansion of our bioprocessing business; |
• | the ability to sustain sales and profits of our bioprocessing products; |
• | our ability to acquire additional bioprocessing products; |
• | our identification and execution of strategic acquisitions or business combinations; |
• | the resources required to successfully integrate our recently acquired businesses and recognize expected synergies; |
• | the scope of and progress made in our research and development activities; |
• | the extent of any share repurchase activity; and |
• | the success of any proposed financing efforts. |
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. |
CONTROLS AND PROCEDURES |
ITEM 1. |
LEGAL PROCEEDINGS |
ITEM 1A. |
RISK FACTORS |
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. |
MINE SAFETY DISCLOSURES |
ITEM 5. |
OTHER INFORMATION |
ITEM 6. |
EXHIBITS |
(a) |
Exhibits |
Exhibit Number |
Document Description | |||
3.1 |
||||
3.2 |
||||
3.3 |
||||
4.1 |
||||
4.2 |
||||
4.3 |
||||
31.1 + |
||||
31.2 + |
||||
32.1 * |
||||
101.INS+ |
Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||
101.SCH+ |
Inline XBRL Taxonomy Extension Schema Document. | |||
101.CAL+ |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF+ |
Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB+ |
Inline XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE+ |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104+ |
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*). |
† | Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the Securities and Exchange Commission. |
# | Management contract or compensatory plan or arrangement. |
+ | Filed herewith. |
* | Furnished herewith. |
REPLIGEN CORPORATION | ||||||
Date: October 31, 2019 |
By: |
/s/ T ony unt | ||||
Tony J. Hunt | ||||||
President and Chief Executive Officer (Principal executive officer) Repligen Corporation | ||||||
Date: October 31, 2019 |
By: |
/s/ J on Snodgres | ||||
Jon Snodgres | ||||||
Chief Financial Officer (Principal financial officer) Repligen Corporation |
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) / RULE 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Tony J. Hunt, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Repligen Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: October 31, 2019 |
/s/ TONY J. HUNT |
Tony J. Hunt |
President and Chief Executive Officer |
(Principal executive officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) / RULE 15d-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Jon Snodgres, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Repligen Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: October 31, 2019 |
/s/ JON SNODGRES |
Jon Snodgres |
Chief Financial Officer |
(Principal financial officer) |
Exhibit 32.1*
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Repligen Corporation (the Company) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned officers of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 31, 2019 | By: | /s/ TONY J. HUNT | ||||
Tony J. Hunt | ||||||
Chief Executive Officer and President | ||||||
(Principal executive officer) | ||||||
Date: October 31, 2019 | By: | /s/ JON SNODGRES | ||||
Jon Snodgres | ||||||
Chief Financial Officer | ||||||
(Principal financial officer) |
* | This certification shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. |
Leases - Additional Information (Detail) $ in Thousands |
3 Months Ended | ||
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Sep. 30, 2019
USD ($)
Lease
|
Jan. 01, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
|
|
Operating lease right of use assets | $ 24,845 | ||
Operating lease liabilities | 29,100 | ||
Deferred Rent Credit | $ 4,000 | ||
Operating leases | $ 18,034 | ||
Increase in right of use asset | 6,200 | ||
Increase in operating lease liabilities | $ 6,200 | ||
Waltham And Massachusetts [Member] | |||
Number Of Operating leases | Lease | 0.02 | ||
Accounting Standards Update 2016-02 [Member] | |||
Operating lease right of use assets | $ 17,000 | ||
Operating lease liabilities | $ 21,000 |
Summary of Disaggregation of Product Revenues from Contracts with Customers by Major Product Line (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 69,445 | $ 49,529 | $ 200,771 | $ 142,090 |
Product | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 69,419 | 49,500 | 200,701 | 142,042 |
Royalty and Other Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 26 | $ 29 | $ 70 | $ 48 |
Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 3,175 | $ 2,779 | $ 9,459 | $ 7,672 |
Cost of product revenue | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 375 | 277 | 992 | 777 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 351 | 253 | 992 | 650 |
Selling, general and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 2,449 | $ 2,249 | $ 7,475 | $ 6,245 |
Segment Reporting |
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Segment Reporting |
The Company views its operations, makes decisions regarding how to allocate resources and manages its business as one operating segment. As a result, the financial information disclosed herein represents all of the material financial information related to the Company’s sole operating segment. Revenue from filtration products includes our XCell ATF Systems and consumables as well as our KrosFlo and SIUS filtration products. Revenue from chromatography products includes our OPUS and OPUS PD chromatography columns, chromatography resins and ELISA test kits. Revenue from protein products includes our Protein A ligands and cell culture growth factors. Revenue from our process analytics products includes the sale of our SoloVPE and FlowVPE systems and consumables. Other revenue primarily consists of revenue from the sale of operating room products to hospitals as well as freight revenue. The following table represents the Company’s total revenue by geographic area (based on the location of the customer):
Concentrations of Credit Risk and Significant Customers Financial instruments that subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents, marketable securities and accounts receivable. Per the Company’s investment policy, cash equivalents and marketable securities are invested in financial instruments with high credit ratings and credit exposure to any one issue, issuer (with the exception of U.S. treasury obligations) and type of instrument is limited. At September 30, 2019 and December 31, 2018, the Company had no investments associated with foreign exchange contracts, options contracts or other foreign hedging arrangements. Concentration of credit risk with respect to accounts receivable is limited to customers to whom the Company makes significant sales. While a reserve for the potential write-off of accounts receivable is maintained, the Company has not written off any significant accounts to date. To control credit risk, the Company performs regular credit evaluations of its customers’ financial condition.Revenue from significant customers as a percentage of the Company’s total revenue is as follows:
Significant accounts receivable balances as a percentage of the Company’s total trade accounts receivable are as follows:
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Goodwill and Other Intangible Assets (Tables) |
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Changes in Carrying Value of Goodwill |
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Intangible assets | Intangible assets, net consisted of the following at September 30, 2019:
Intangible assets consisted of the following at December 31, 2018:
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Schedule of Amortization Expense for Amortized Intangible Assets | As of September 30, 2019, the Company expects to record the following amortization expense (amounts in thousands):
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Acquisition of C Technologies, Inc |
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Acquisition of C Technologies, Inc. |
On April 25, 2019, Repligen agreed to acquire C Technologies, pursuant to the terms of a Stock Purchase Agreement (the “Agreement”), by and among Repligen, C Technologies and Craig Harrison, an individual and sole stockholder of C Technologies (such acquisition, the “C Technologies Acquisition”). C Technologies’ business consists of two major product categories (i) biotechnology, or Biotech, and (ii) Legacy and Other. Through its Biotech category, C Technologies sells instruments, consumables and accessories that are designed to allow bioprocessing technicians to measure the protein concentration of a liquid sample using C Technologies’ Slope Spectroscopy method, which eliminates the need for manual sample dilution. C Technologies’ lead product, the SoloVPE instrument platform, was launched in 2008 for off-line and at-line protein concentration measurements conducted in quality control, process development and manufacturing labs in the production of biological therapeutics. C Technologies’ FlowVPE platform, an extension of the SoloVPE technology, was designed to allow end users to make in-line protein concentration measurements in filtration, chromatography and fill-finish applications, designed to allow for real-time process monitoring.Consideration Transferred The C Technologies Acquisition was accounted for as a purchase of a business under Accounting Standards Codification No. (“ASC”) 805, “Business Combinations” is consideration transferred pursuant to ASC 805, and $9.0 million of which will be compensation expense for future employment, and 779,221 unregistered shares of the Company’s common stock totaling $53.9 million for a total purchase price of $239.9 million. Under the acquisition method of accounting, the assets of C Technologies were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net tangible assets acquired is estimated to be approximately $6.2 million, the fair value of the intangible assets acquired is estimated to be approximately $90.8 million, and the residual goodwill is estimated to be approximately $142.9 million. The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation. The final purchase price allocation will be completed upon closing of the transaction. The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that Repligen believes to be reasonable. However, actual results may differ from these estimates.Total consideration transferred is as follows (amounts in thousands):
Acquisition related costs are not included as a component of consideration transferred but are expensed in the periods in which the costs are incurred. The Company incurred an immaterial amount of acquisition related costs in the third quarter of 2019 and $4.0 million in transaction costs for the nine-month period ended September 30, 2019. The transaction costs are included in selling, general and administrative expenses in the consolidated statements of comprehensive income (loss) . In connection with the transaction, an additional $9.0 million in cash will be due to employees based on their continued employment with the Company one year after the date of the close of the C Technologies Acquisition. Fair Value of Net Assets Acquired The allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date, based on the preliminary valuation. The Company obtains this information during due diligence and through other sources. In the months after closing, the Company may obtain additional information about these assets and liabilities as it learns more about C Technologies and will refine the estimates of fair value to more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. We will make appropriate adjustments to the purchase price allocation, if any, prior to the completion of the measurement period, which is up to one year from the acquisition date. The components and allocation of the purchase price consists of the following amounts (amounts in thousands):
Acquired Goodwill The goodwill of $142.9 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. Substantially all of the goodwill recorded is expected to be deductible for income tax purposes. Intangible Assets The following table sets forth the components of the identified intangible assets associated with the C Technologies Acquisition and their estimated useful lives:
Revenue, Net Income and Pro Forma Presentation The Company recorded revenue from C Technologies of $7.0 million and a net loss of $1.2 million for the three months ended September 30, 2019 and revenue of $9.1 million and a net loss of $2.7 million from May 31, 2019 , the date of acquisition to September 30, 2019. The Company has included the operating results of C Technologies in its consolidated statements of comprehensive (loss) income since the May 31, 2019 acquisition date. The following pro forma financial information presents the combined results of operations of Repligen and C Technologies as if the acquisition had occurred on January 1, 2018 after giving effect to certain pro forma adjustments. The pro forma adjustments reflected herein include only those adjustments that are directly attributable to the C Technologies Acquisition, factually supportable and have a recurring impact. These pro forma adjustments include a $3.6 million and a $4.0 million net increase in amortization expense in 2019 and 2018, respectively, to record amortization expense for the $90.8 million of acquired identifiable intangible assets, adjustments to stock-based compensation of $0.5 million in both years, for equity compensation issued to C Technologies employees and the income tax effect of the adjustments made at the , blended federal and state statutory tax rate (approximately 25%). In addition, acquisition-related transaction costs of $4.0 million and a $1.5 million purchase accounting adjustment to record inventory at fair value were excluded from pro forma net income in 2019. The following pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the acquisition and is not necessarily indicative of the operating results that would have actually occurred had the transaction been consummated on January 1, 2018 or of future results:
Prior to the C Technologies Acquisition, C Technologies did not generate monthly or quarterly financial statements that were prepared in accordance with U.S. GAAP. |
Consolidated Balance Sheet Detail |
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Consolidated Balance Sheet Detail | 7. Consolidated Balance Sheet Detail Inventories, net Inventories, net consists of the following:
Property, Plant and Equipment Property, plant and equipment consist of the following:
Depreciation expenses totaled $1.8 million and $1.3 million for the three months ended September 30, 2019 and 2018, respectively. Depreciation expenses totaled $5.2 million and $3.9 million for the nine months ended September 30, 2019 and 2018, respectively. Accrued Liabilities Accrued liabilities consist of the following:
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Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss |
The following shows the changes in the components of accumulated other comprehensive loss for the nine months ended September 30, 2019 which consisted of only foreign currency translation adjustments for the periods shown (amounts in thousands):
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Fair Value Measurement - Additional Information (Detail) - USD ($) |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
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Jul. 31, 2019 |
Dec. 31, 2018 |
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Summary Of Significant Accounting Policies [Line Items] | ||||
Cash and cash equivalents | $ 513,454,000 | $ 513,454,000 | $ 193,822,000 | |
Loss on extinguishment of debt | (5,650,000) | (5,650,000) | ||
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Cash and cash equivalents | $ 414,700,000 | $ 414,700,000 | $ 126,600,000 | |
0.375% Convertible Senior Notes due 2024 | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Principal amount | $ 287,500,000 | |||
Notes, due date | Jul. 15, 2024 | |||
Notes, frequency of periodic payment | semi-annually | |||
Total convertible senior notes | 230,200,000 | |||
Fair value of convertible senior notes | $ 287,900,000 | |||
Senior convertible notes | 0.375% | 0.375% | 0.375% |
Income Taxes (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||
Summary of Tax Returns Periods Subject to Examination by Federal, State and International Taxing Authorities | The Company’s tax returns are subject to examination by federal, state and international tax authorities for the following periods:
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Revenue: | ||||
Revenue | $ 69,445 | $ 49,529 | $ 200,771 | $ 142,090 |
Costs and operating expenses: | ||||
Cost of product revenue | 31,425 | 22,183 | 88,978 | 62,939 |
Research and development | 5,427 | 3,601 | 14,278 | 12,669 |
Selling, general and administrative | 24,629 | 15,859 | 67,326 | 48,347 |
Total costs and operating expenses | 61,481 | 41,643 | 170,582 | 123,955 |
Income from operations | 7,964 | 7,886 | 30,189 | 18,135 |
Other income (expenses): | ||||
Investment income | 1,898 | 558 | 3,616 | 1,251 |
Loss on extinguishment of debt | (5,650) | (5,650) | ||
Interest expense | (2,857) | (1,687) | (6,326) | (5,008) |
Other income (expenses) | 316 | (134) | (23) | 187 |
Other expenses, net | (6,293) | (1,263) | (8,383) | (3,570) |
Income before income taxes | 1,671 | 6,623 | 21,806 | 14,565 |
Income tax provision | 12 | 1,829 | 3,999 | 3,586 |
Net income | $ 1,659 | $ 4,794 | $ 17,807 | $ 10,979 |
Earnings per share: | ||||
Basic | $ 0.03 | $ 0.11 | $ 0.38 | $ 0.25 |
Diluted | $ 0.03 | $ 0.10 | $ 0.37 | $ 0.24 |
Weighted average common shares outstanding: | ||||
Basic | 50,852 | 43,822 | 47,087 | 43,729 |
Diluted | 51,809 | 45,828 | 47,930 | 45,132 |
Net income | $ 1,659 | $ 4,794 | $ 17,807 | $ 10,979 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (6,741) | (630) | (9,901) | (5,410) |
Comprehensive (loss) income | (5,082) | 4,164 | 7,906 | 5,569 |
Products | ||||
Revenue: | ||||
Revenue | 69,419 | 49,500 | 200,701 | 142,042 |
Royalty and Other Revenue | ||||
Revenue: | ||||
Revenue | $ 26 | $ 29 | $ 70 | $ 48 |
Changes in Carrying Value of Goodwill (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Goodwill [Line Items] | |
Balance as of December 31, 2018 | $ 326,735 |
Cumulative translation adjustment | (793) |
Acquisition of C Technologies, Inc. | 142,903 |
Balance as of September 30, 2019 | $ 468,845 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
shares
| |
Business Acquisitions: | |
Fair value of tangible assets acquired | $ 30,756 |
Fair value of accounts receivable | 3,044 |
Fair value of other assets | 3,929 |
Liabilities assumed | (35,370) |
Fair value of stock issued | (53,938) |
Cost in excess of fair value of assets acquired (Goodwill) | 142,903 |
Acquired identifiable intangible assets | 90,830 |
Net cash paid for business acquisitions | $ 182,154 |
Number of shares Issued for Conversion | shares | 2,316,229 |
Schedule of Inventories (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Inventory [Line Items] | ||
Raw materials | $ 29,197 | $ 24,937 |
Work-in-process | 5,438 | 5,185 |
Finished products | 16,944 | 12,141 |
Total inventories, net | $ 51,579 | $ 42,263 |
Segment Reporting - Percentage of Revenue from Significant Customers (Detail) - Customer Concentration Risk - Sales Revenue |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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GE Healthcare | ||||
Revenue, Major Customer [Line Items] | ||||
Revenue from significant customers as a percentage of total revenue | 16.00% | 12.00% | 16.00% | |
MilliporeSigma | ||||
Revenue, Major Customer [Line Items] | ||||
Revenue from significant customers as a percentage of total revenue | 14.00% | 18.00% | 14.00% | 17.00% |
Earnings Per Share - (Reconciliation of Basic and Diluted Shares Amounts) (Detail) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Schedule Of Earnings Per Share Basic And Diluted [Line Items] | ||||
Net income | $ 1,659 | $ 4,794 | $ 17,807 | $ 10,979 |
Weighted average shares used in computing net income per share - basic | 50,852 | 43,822 | 47,087 | 43,729 |
Effect of dilutive shares: | ||||
Stock options and restricted stock awards | 957 | 651 | 843 | 511 |
Convertible senior notes | 1,355 | 892 | ||
Dilutive potential common shares | 957 | 2,006 | 843 | 1,403 |
Weighted average shares used in computing net income per share - diluted | 51,809 | 45,828 | 47,930 | 45,132 |
Earnings per share: | ||||
Basic | $ 0.03 | $ 0.11 | $ 0.38 | $ 0.25 |
Diluted | $ 0.03 | $ 0.10 | $ 0.37 | $ 0.24 |
Change in Accumulated Other Comprehensive Loss (Detail) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
| |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Balance | $ 615,568 |
Balance | 1,045,118 |
Foreign Currency Translation Adjustment | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Balance | (11,893) |
Other comprehensive loss | (9,901) |
Balance | $ (21,794) |
Commitments and Contingencies |
9 Months Ended | ||
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Sep. 30, 2019 | |||
Commitments and Contingencies |
Lease Commitments In May 2019, the Company entered into a fifth amendment of the existing lease to expand the rented space from approximately 76,000 square feet to approximately 108,000 square feet at 41 Seyon Street, Waltham, Massachusetts, the Company’s corporate headquarters and primary location for all manufacturing, research and development, sales and marketing and administrative operations. The Company expects to be completely moved into the new space by the third quarter of 2020. Under the terms of the fifth amendment lease, the initial fixed rental rate is $29.00 per square foot, per annum, of the additional square footage (approximately 32,000 square feet) and will increase at a rate of $1.00 per annum. Licensing and Research Agreements The Company licenses certain technologies that are, or may be, incorporated into its technology under several agreements and also has entered into several clinical research agreements which require the Company to fund certain research projects. Generally, the license agreements require the Company to pay annual maintenance fees and royalties on product sales once a product has been established using the technologies. Research and development expenses associated with license agreements were immaterial amounts for the three months ended September 30, 2019 and 2018. In September 2018, we entered into a collaboration agreement with Sartorius Stedim Biotech, a leading international supplier for the biopharmaceutical industry, to integrate XCell ™ ® STR large-scale, single-use bioreactors to create novel perfusion-enabled bioreactors. As a result of this collaboration, end-users will stand to benefit from a single control system for 50L to 2,000L bioreactors used in perfusion cell culture applications. The single interface is designed to control cell growth, fluid management and cell retention in continuous and intensified bioprocessing and, ultimately, simplify the development and manufacture of biotechnological drugs under current good manufacturing practices.In June 2018, we secured an agreement with Navigo for the exclusive
co-development of multiple affinity ligands for which Repligen holds commercialization rights. We are manufacturing and have agreed to supply the first of these ligands, NGL-Impact ™ NGL-Impact A and other potential additional affinity ligands that may advance from our Navigo collaboration. The Navigo and Purolite agreements are supportive of our strategy to secure and reinforce our proteins business. We made payments to Navigo of $2.4 million during the year ended December 31, 2018 in connection with this program, which were recorded to research and development expenses in our consolidated statements of comprehensive income (loss). |
Fair Value Measurements |
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Sep. 30, 2019 | ||||||||||||||||||
Fair Value Measurements |
In determining the fair value of its assets and liabilities, the Company uses various valuation approaches. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement. As of September 30, 2019 and December 31, 2018, cash and cash equivalents on the Company’s consolidated balance sheets included $414.7 million and $126.6 million, respectively, in a money market account. These funds are valued on a recurring basis using Level 1 inputs. In July 2019, the Company issued $287.5 July 15, 2024 unless earlier converted or repurchased in accordance with their terms. As of September“Convertible Senior Notes” Nonrecurring Fair Value Measurements We hold certain assets and liabilities that are measured at fair value on a nonrecurring basis in periods subsequent to initial recognition. Refer to Note 8, “Convertible Senior Notes,” to these consolidated financial statements for disclosure of the nonrecurring fair value measurement related to the $5.6 million loss on extinguishment of debt recorded in the third quarter of 2019. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | 6. Goodwill and Other Intangible Assets Goodwill Goodwill represents the difference between the purchase price and the estimated fair value of identifiable assets acquired and liabilities assumed. Goodwill acquired in a business combination and determined to have an indefinite useful life is not amortized, but instead is tested for impairment at least annually in accordance with ASC 350.
During each of the fourth quarters of 2018, 2017 and 2016, we completed our annual impairment assessments and concluded that goodwill was not impaired in any of those years. The Company has not identified any “triggering” events which indicate an impairment of goodwill in the three months ended September 30, 2019. Other Intangible Assets Intangible assets, except for the ATF tradename, are amortized over their useful lives using the estimated economic benefit method, as applicable, and the amortization expense is recorded within selling, general and administrative expense in the Company’s statements of comprehensive income (loss). The Company reviews its indefinite-lived intangible assets not subject to amortization, including the ATF tradename, to determine if adverse conditions exist or a change in circumstances exists that would indicate an impairment. Intangible assets and their related useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. More frequent impairment assessments are conducted if certain conditions exist, including a change in the competitive landscape, any internal decisions to pursue new or different technology strategies, a loss of a significant customer, or a significant change in the marketplace, including changes in the prices paid for our products or changes in the size of the market for our products. An impairment results if the carrying value of the asset exceeds the estimated fair value of the asset. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company continues to believe that its intangible assets are recoverable at September 30, 2019. Intangible assets, net consisted of the following at September 30, 2019:
Intangible assets consisted of the following at December 31, 2018:
The increase in intangible assets during 2019 is related to the acquisition of C Technologies on May 31, 2019. See Note 3, “Acquisition of C Technologies, Inc.” Amortization expense for finite-lived intangible assets was $3.9 million and $2.6 million for the three months ended September 30, 2019 and 2018, respectively. Amortization expense for finite-lived intangible assets was $9.6 million and $7.9 million for the nine months ended September 30, 2019 and 2018, respectively. As of September 30, 2019, the Company expects to record the following amortization expense (amounts in thousands):
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Earnings Per Share (Tables) |
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Basic and Diluted Weighted Average Shares Outstanding | Basic and diluted weighted average shares outstanding were as follows:
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Leases (Obligations Under Non-Cancelable Operating Leases) (Detail) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Operating Leased Assets [Line Items] | |
2019 | $ 4,021 |
2020 | 3,599 |
2021 | 3,263 |
2022 | 2,213 |
2023 | 1,316 |
2024 and thereafter | 3,622 |
Minimum operating lease payments | $ 18,034 |
Basis of Presentation |
9 Months Ended | ||
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Sep. 30, 2019 | |||
Basis of Presentation |
The consolidated financial statements included herein have been prepared by Repligen Corporation (the “Company”, “Repligen” or “we”) in accordance with generally accepted accounting principles in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnote disclosures required by GAAP. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB, Repligen GmbH, Spectrum LifeSciences, LLC and its subsidiaries (“Spectrum”), C Technologies, Inc. (“C Technologies,” acquired on May 31, 2019), and Repligen Singapore Pte. Ltd. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year. Recent Accounting Standards Updates We consider the applicability and impact of all Accounting Standards Updates on our consolidated financial statements. Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. Recently issued Accounting Standards Updates which we feel may be applicable to us are as follows: Recently Issued Accounting Standard Updates – Not Yet Adopted In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”) 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” 2018-13 includes amendments that aim to improve the effectiveness of fair value measurement disclosures. The amendments in this guidance modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, “Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements ” In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance also requires the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. The guidance becomes effective for the Company in the year ending December 31, 2020 and early adoption is permitted. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements.In November 2018, the FASB issued ASU 2018-18, “Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606.” 2018-18 clarifies the interaction between Topic 808, “Collaborative Arrangements,” “Revenue from Contracts with Customers,” collaborative arrangement participants by allowing presentation of the units of account in collaborative arrangements that are within the scope of Topic 606 together with revenue accounted for under Topic 606. The guidance becomes effective for the Company in the year ending December 31, 2020 and early adoption is permitted. The Company is currently assessing the impact that this guidance will have on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments-Credit Losses (Topic 326).” ASU 2016-13 significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments, including short-term trade receivables and contract assets, and expands disclosure requirements for credit quality of financial assets. ASU 2016-13 becomes effective for the Company in the year ending December 31, 2020, including interim periods. Early adoption is permitted. The Company is currently assessing the potential impact of the adoption of ASU 2016-13 on its consolidated financial statements. Recently Issued Accounting Standard Updates – Adopted During the Period In February 2016, the FASB issued ASU
2016-02, “Leases (Topic 842).” 2016-02, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-02 (collectively known as “ASC 842”), establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all leases with terms longer than 12 months. Certain qualitative and quantitative disclosures are also required. The Company adopted ASU 2016-02 and related amendments on January 1, 2019 using an optional transition method allowed with the issuance of ASU 2018-11, “Leases – Targeted Improvements (Topic 842),” 2018-11 gives entities the option to not provide comparative period financial statements and instead apply the transition requirements as of the effective date of the new standard. Pursuant to additional guidance under ASC 842, the Company also elected the optional package of practical expedients, which allowed the Company to not reassess: (i) whether expired or existing contracts contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC 840, “Leases”, non-lease components and not to record leases with an initial term of 12 months or less on the consolidated balance sheet. The Company adopted ASC 842 using the optional transition method for all leases existing at January 1, 2019. The adoption had a substantial impact on our balance sheet. The most significant impact was the recognition of the operating lease ROU assets and lease liabilities for operating leases. Upon adoption, leases that were classified as operating leases under ASC 840 were classified as operating leases under ASC 842, and we recorded ROU assets of $17.0 million and lease liabilities of $21.0 million, before considering deferred taxes. The lease liability is based on the present value of the remaining minimum lease payments, determined under ASC 840, discounted using our incremental borrowing rate at the effective date January 1, 2019. The difference between the ROU assets and the lease liabilities is due to $4.0 million of unamortized lease incentives and deferred rent at the Company’s Marlborough and Waltham facilities as of December 31, 2018. There was no impact to our beginning retained earnings upon adoption of ASC 842. See Note 5, “Leases,” |
Amortization Expense for Amortized Intangible Assets (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Finite-Lived Intangible Liabilities [Line Items] | ||
2019 (remaining three months) | $ 3,918 | |
2020 | 15,129 | |
2021 | 14,633 | |
2022 | 14,631 | |
2023 | 14,631 | |
2024 and thereafter | 152,647 | |
Total | $ 215,589 | $ 134,738 |
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
May 03, 2019 |
Sep. 30, 2019 |
Dec. 31, 2018 |
|
Spectrum Inc. | |||
Related Party Transaction [Line Items] | |||
Spectrum Acquisition, tax preparation and other fees | $ 0.4 | $ 0.2 | |
Principal Owner | |||
Related Party Transaction [Line Items] | |||
Accrued refunds current | $ 1.7 | ||
Principal Owner | Spectrum Inc. | IPO [Member] | |||
Related Party Transaction [Line Items] | |||
Outstanding common stock until the company completed its public offering | 3,144,531 | ||
Principal Owner | Minimum | Spectrum Inc. | IPO [Member] | |||
Related Party Transaction [Line Items] | |||
Non controlling ownership interest minimum | 10.00% |
Segment Reporting - Percentage of Accounts Receivable by Significant Customers (Detail) - Customer Concentration Risk - Accounts Receivable |
9 Months Ended | 12 Months Ended |
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Sep. 30, 2019 |
Dec. 31, 2018 |
|
GE Healthcare | ||
Concentration Risk [Line Items] | ||
Accounts receivable, percentage by customer | 10.00% | 17.00% |
MilliporeSigma | ||
Concentration Risk [Line Items] | ||
Accounts receivable, percentage by customer | 11.00% |
Leases (Maturities of lease liabilities) (Detail) $ in Thousands |
Sep. 30, 2019
USD ($)
|
---|---|
2019 (remaining three months) | $ 920 |
2020 | 4,966 |
2021 | 5,388 |
2022 | 4,438 |
2023 | 3,517 |
2024 and thereafter | 17,530 |
Total future minimum lease payments | 36,759 |
Less: amount of lease payment representing interest | 7,659 |
Total operating lease liabilities | $ 29,100 |
Revenue from Significant Customers (Detail) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Concentration Risk [Line Items] | ||||
Revenue | $ 69,445 | $ 49,529 | $ 200,771 | $ 142,090 |
GE Healthcare | ||||
Concentration Risk [Line Items] | ||||
Revenue | 5,010 | 7,743 | 23,759 | 22,253 |
MilliporeSigma | ||||
Concentration Risk [Line Items] | ||||
Revenue | $ 9,458 | $ 8,791 | $ 28,354 | $ 24,181 |
Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units (RSUs) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2019
USD ($)
shares
| |
Options Outstanding | |
Unvested at December 31, 2018 | 707,413 |
Awarded | 297,086 |
Vested | (228,103) |
Forfeited/expired/cancelled | (36,183) |
Unvested at September 30, 2019 | 740,213 |
Weighted-Average Remaining Contractual Term (in years) | |
Unvested at September 30, 2019 | 3 years 10 months 6 days |
Aggregate Intrinsic Value | |
Unvested at September 30, 2019 | $ | $ 56,767 |
Schedule of Accrued Liabilities (Detail) - USD ($) $ in Thousands |
Sep. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Schedule of Accrued Liabilities [Line Items] | ||
Employee compensation | $ 14,451 | $ 9,953 |
Taxes | 3,071 | 1,024 |
Royalty and license fees | 707 | 242 |
Warranties | 1,255 | 546 |
Professional fees | 715 | 942 |
Deferred revenue | 4,286 | 1,290 |
Other | 1,285 | 1,868 |
Total accrued liabilities | $ 25,770 | $ 15,865 |
Related Party Transactions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2019 | |||
Related Party Transactions |
Certain facilities leased by Spectrum LifeSciences, LLC (“Spectrum”) are owned by the former owner of Spectrum. The former owner held greater than 10% of the Company’s outstanding commons stock until the Company completed its public offering of 3,144,531 shares of its common stock on May 3, 2019. The lease amounts paid to this former owner and current shareholder were negotiated in connection with the Spectrum Acquisition. The Company has incurred rent expense totaling $0.4 million for the nine months ended September 30, 2019 related to these leases. As part of the Spectrum Acquisition, the Company was responsible for filing all tax returns for Spectrum for the period from January 1, 2017 through July 31, 2017, the day before the Spectrum Acquisition. The Company was responsible for collecting any tax refunds from federal and state authorities and remitting these refunds to the former shareholders of Spectrum, including the former owner of Spectrum who held greater than 10% of the Company’s outstanding common stock prior to May 3, 2019. During 2018, the Company collected $1.7 million of these tax refunds, which the Company paid to the Spectrum shareholders during the fourth quarter of 2018, net of $0.2 million of expenses paid by the Company on behalf of Spectrum for tax preparation and other fees. |
Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of lease liabilities | Amounts related to financing leases were immaterial. The maturity of the Company’s operating lease liabilities as of September 30, 2019 are as follows (amounts in thousands):
|
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Abstract of operating lease liability | Total operating lease liabilities is included on the Company’s consolidated balance sheet is as follows (amounts in thousands):
|
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Lease, Cost | For the three and nine months ended September 30, 2019, total lease cost is comprised of the following:
|
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Schedule Of Supplemental Disclosure Of Cash Flows Related To Operating Leases | The following information represents supplemental disclosure for the consolidated statements of cash flows related to operating leases (amounts in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Discount Rate And Lease Term Used In Calculating Lease Liabilities And Assets | The weighted average remaining lease term and the weighted average discount rate used to measure our operating lease liabilities as of September 30, 2019 were:
|
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Prior Accounting Standard [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Rental Payments for Operating Leases | As previously disclosed in the Company’s 2018 Annual Report on Form 10-K and under the previous lease accounting standard, ASC 840, “Leases,” the total commitment for non-cancelable operating leases was $ 18.0 million as of December 31, 2018 (amounts in thousands):
|
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