Discontinued Operations

3 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

        Overview

In March 2019, we completed the Commercial Product Portfolio Transaction -- see Note 1(b) (we first announced the Commercial Product Portfolio Transaction on January 17, 2019 on Form 8-K, upon the signing of the definitive asset purchase agreement).

In accordance with applicable GAAP (ASC 205-20, Presentation of Financial Statements), the revenue-deriving activities and allocable expenses of our sold commercial operation, connected to the Commercial Product Portfolio, are separately classified as “discontinued” for all periods presented within the accompanying Condensed Consolidated Statements of Operations. See Note 13 for a discussion of certain immaterial corrections affecting the presented amounts below.

Condensed Consolidated Statements of Operations

The following table presents the various elements of “income from discontinued operations, net of income taxes” as reported in the accompanying Condensed Consolidated Statements of Operations (inclusive of the immaterial corrections as discussed in Note 13):

	Three Months Ended March 31,
	2020		2019
Revenues:
Product sales, net*	$	(220)	$	14,079
License fees and service revenue	—		290
Total revenues	$	(220)	$	14,369
Operating costs and expenses:
Cost of sales (excluding amortization of intangible assets)	(229)		3,168
Selling, general and administrative	(1)		5,951
Research and development	(35)		2,536
Amortization of intangible assets	—		1,248
Restructuring charges - employee severance (Note 11)	—		6,297
Total operating costs and expenses	$	(265)	$	19,200
Income (loss) from discontinued operations	$	45	$	(4,831)
Other (expense) income:
Change in fair value of contingent consideration	—		(1,478)
Gain on sale of Commercial Product Portfolio**	—		33,644
Total other (expense) income	$	—	$	32,166
Income from discontinued operations before income taxes	45		27,335
Provision for income taxes from discontinued operations***	—		(6,748)
Income from discontinued operations, net of income taxes	$	45	$	20,587

* This revenue for the three months ended March 31, 2019 includes: (i) sales from our Commercial Product Portfolio in January and February 2019 (prior to the completion of the Commercial Product Portfolio Transaction) and (ii) EVOMELA sales to a specific licensee (see Note 7). This amount was corrected to reflect the immaterial error identified by management as described above (see Note 13).

** The pre-tax gain on sale for the three months ended March 31, 2019 represents the $158.8 million gross proceeds from the Commercial Product Portfolio Transaction less our $121.2 book value of transferred net assets (inclusive of assumed liabilities) to Acrotech on the March 1, 2019 closing date less legal and banker fees aggregating $3.9 million.

*** Given the immaterial error corrections identified above, there was a corresponding tax impact for the three months ended March 31, 2019. This income tax provision represents an allocation of taxes as required under intraperiod allocation guidance that was in affect at that time (see Note 9). This amount was corrected to reflect the immaterial error identified by management as described above (see Note 13).

Condensed Consolidated Balance Sheets

Accounts receivable derived from our product sales on and prior to February 28, 2019 were not transferred to Acrotech as part of Commercial Product Portfolio Transaction, nor were our GTN liabilities and trade accounts payable assumed by Acrotech that were associated with our commercial activities on and prior to February 28, 2019 (see Note 3(g)). Accordingly, these specific assets and liabilities remain presented within “accounts receivable, net of allowance for credit losses” and “accounts payable and other accrued liabilities” on the accompanying Condensed Consolidated Balance Sheets.

Condensed Consolidated Statement of Cash Flows

The following table presents significant non-cash items for our discontinued operations that are included as adjustments in the accompanying Condensed Consolidated Statements of Cash Flows:

	Three Months Ended March 31,
	2020		2019
Depreciation and amortization	$	—	$	1,263
Stock-based compensation	$	—	$	3,405
Change in fair value of contingent consideration	$	—	$	1,478