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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2020.
OR
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from
to
.
Commission file number 001-33528
OPKO Health, Inc.
(Exact Name of Registrant as Specified in Its Charter)
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Delaware |
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75-2402409 |
(State or Other Jurisdiction of
Incorporation or Organization) |
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(I.R.S. Employer
Identification No.) |
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4400 Biscayne Blvd. |
Miami |
FL |
33137 |
(Address of Principal Executive Offices) (Zip Code) |
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(305) |
575-4100 |
(Registrant’s Telephone Number, Including Area Code) |
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Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol |
Name of each exchange on which registered |
Common Stock, par value $0.01 per share |
OPK |
NASDAQ Global Select Market |
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past
90 days. ý Yes ¨ NO
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such files). ý Yes ¨ NO
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth
company”
in Rule 12b-2 of the Exchange Act:
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Large accelerated filer |
x |
Accelerated filer |
☐ |
Non-accelerated filer |
¨ |
Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
¨
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act): ☐ YES ý NO
As of October 20, 2020, the registrant had 670,000,024 shares
of Common Stock outstanding.
TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking
statements,” as that term is defined under the Private Securities
Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). Forward-looking statements include statements
about our expectations, beliefs or intentions regarding our product
development efforts, business, financial condition, results of
operations, strategies or prospects, including the potential impact
of the COVID-19 pandemic on our businesses, operating results, cash
flows and/or financial condition. You can identify forward-looking
statements by the fact that these statements do not relate strictly
to historical or current matters. Rather, forward-looking
statements relate to anticipated or expected events, activities,
trends or results as of the date they are made. Because
forward-looking statements relate to matters that have not yet
occurred, these statements are inherently subject to risks and
uncertainties that could cause our actual results to differ
materially from any future results expressed or implied by the
forward-looking statements. Many factors could cause our actual
activities or results to differ materially from the activities and
results anticipated in forward-looking statements. These factors
include those described below and in “Item 1A-Risk Factors” of our
Annual Report on Form 10-K for the year ended December 31,
2019 and this Quarterly Report on Form 10-Q, and described from
time to time in our other filings with the Securities and Exchange
Commission (the “SEC”). We do not undertake any obligation to
update forward-looking statements, except to the extent required by
applicable law. We intend that all forward-looking statements be
subject to the safe-harbor provisions of the PSLRA. These
forward-looking statements are only predictions and reflect our
views as of the date they are made with respect to future events
and financial performance.
Risks and uncertainties, the occurrence of which could adversely
affect our business, include the following:
•our
business may be materially adversely affected by the coronavirus
(COVID-19) pandemic, including impact on our sales and operations
from continued or increasing infection rates and potential declines
in testing needs should infection rates decline;
•we
have a history of losses and may not generate sustained positive
cash flow sufficient to fund our operations and research and
development programs;
•our
need for, and ability to obtain, additional financing when needed
on favorable terms, or at all;
•adverse
results in material litigation matters or governmental
inquiries;
•the
risks inherent in developing, obtaining regulatory approvals for
and commercializing new, commercially viable and competitive
products and treatments;
•our
research and development activities may not result in commercially
viable products;
•that
earlier clinical results of effectiveness and safety may not be
reproducible or indicative of future results;
•that
we may fail to obtain regulatory approval for hGH-CTP or
successfully commercialize
Rayaldee
and hGH-CTP;
•that
we may not generate profits or cash flow from our laboratory
operations or substantial revenue from
Rayaldee
and our other pharmaceutical and diagnostic products;
•that
currently available over-the-counter and prescription products, as
well as products under development by others, may prove to be as or
more effective than our products for the indications being
studied;
•our
ability and our distribution and marketing partners’ ability to
comply with regulatory requirements regarding the sales, marketing
and manufacturing of our products and product candidates and the
operation of our laboratories;
•the
performance of our third-party distribution partners, licensees and
manufacturers over which we have limited control;
•our
success is dependent on the involvement and continued efforts of
our Chairman and Chief Executive Officer;
•availability
of insurance coverage with respect to material litigation
matters;
•changes
in regulation and policies in the United States (“U.S.”) and other
countries, including increasing downward pressure on healthcare
reimbursement;
•our
ability to manage our growth and our expanded
operations;
•increased
competition, including price competition;
•changing
relationships with payors, including the various state and
multi-state Blues programs, suppliers and strategic
partners;
•efforts
by third-party payors to reduce utilization and reimbursement for
clinical testing services;
•our
ability to maintain reimbursement coverage for our products and
services, including
Rayaldee
and the
4Kscore
test;
•failure
to timely or accurately bill and collect for our
services;
•the
information technology systems that we rely on may be subject to
unauthorized tampering, cyberattack or other data security or
privacy incidents that could impact our billing processes or
disrupt our operations;
•failure
to obtain and retain new clients and business partners, or a
reduction in tests ordered or specimens submitted by existing
clients;
•failure
to establish, and perform to, appropriate quality standards to
assure that the highest level of quality is observed in the
performance of our testing services;
•failure
to maintain the security of patient-related
information;
•our
ability to obtain and maintain intellectual property protection for
our products;
•our
ability to defend our intellectual property rights with respect to
our products;
•our
ability to operate our business without infringing the intellectual
property rights of others;
•our
ability to attract and retain key scientific and management
personnel;
•the
risk that the carrying value of certain assets may exceed the fair
value of the assets causing us to impair goodwill or other
intangible assets;
•failure
to obtain and maintain regulatory approval outside the U.S.;
and
•legal,
economic, political, regulatory, currency exchange, and other risks
associated with international operations.
PART I. FINANCIAL INFORMATION
Unless the context otherwise requires, all references in this
Quarterly Report on Form 10-Q to the “Company”, “OPKO”, “we”,
“our”, “ours”, and “us” refer to OPKO Health, Inc., a Delaware
corporation, including our consolidated subsidiaries.
Item 1. Financial Statements
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
6
OPKO Health, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
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September 30, 2020 |
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December 31, 2019 |
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
36,294 |
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$ |
85,452 |
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Accounts receivable, net |
241,544 |
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134,617 |
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Inventory, net |
111,873 |
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53,434 |
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Other current assets and prepaid expenses |
38,398 |
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50,542 |
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Total current assets |
428,109 |
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324,045 |
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Property, plant and equipment, net |
134,102 |
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127,111 |
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Intangible assets, net |
486,418 |
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528,962 |
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In-process research and development |
590,200 |
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590,200 |
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Goodwill |
675,795 |
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671,940 |
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Investments |
14,325 |
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20,746 |
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Operating lease right-of-use assets |
36,485 |
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39,380 |
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Other assets |
5,857 |
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6,888 |
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Total assets |
$ |
2,371,291 |
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$ |
2,309,272 |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable |
$ |
65,685 |
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$ |
62,537 |
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Accrued expenses |
248,422 |
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164,925 |
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Current maturities of operating leases |
9,080 |
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12,038 |
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Current portion of lines of credit and notes payable |
12,702 |
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9,619 |
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Total current liabilities |
335,889 |
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|
249,119 |
|
Operating lease liabilities |
28,225 |
|
|
27,665 |
|
Convertible notes |
219,194 |
|
|
211,208 |
|
Deferred tax liabilities, net |
119,182 |
|
|
118,717 |
|
Other long-term liabilities, principally contract liabilities,
contingent consideration and line of credit |
45,031 |
|
|
87,804 |
|
Total long-term liabilities |
411,632 |
|
|
445,394 |
|
Total liabilities |
747,521 |
|
|
694,513 |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
Common Stock - $0.01 par value, 1,000,000,000 shares authorized;
670,550,201 and 670,378,701 shares issued at September 30, 2020 and
December 31, 2019, respectively
|
6,706 |
|
|
6,704 |
|
Treasury Stock - 549,907 shares at September 30, 2020 and
December 31, 2019, respectively
|
(1,791) |
|
|
(1,791) |
|
Additional paid-in capital |
3,150,437 |
|
|
3,142,993 |
|
Accumulated other comprehensive loss |
(17,451) |
|
|
(22,070) |
|
Accumulated deficit |
(1,514,131) |
|
|
(1,511,077) |
|
|
|
|
|
|
|
|
|
Total shareholders’ equity |
1,623,770 |
|
|
1,614,759 |
|
Total liabilities and equity |
$ |
2,371,291 |
|
|
$ |
2,309,272 |
|
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
7
OPKO Health, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Revenue from services |
$ |
382,498 |
|
|
$ |
181,139 |
|
|
$ |
804,309 |
|
|
$ |
538,488 |
|
Revenue from products |
28,702 |
|
|
26,161 |
|
|
89,133 |
|
|
80,143 |
|
Revenue from transfer of intellectual property and
other |
16,864 |
|
|
21,472 |
|
|
47,297 |
|
|
58,961 |
|
Total revenues |
428,064 |
|
|
228,772 |
|
|
940,739 |
|
|
677,592 |
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of service revenue |
255,292 |
|
|
126,348 |
|
|
522,973 |
|
|
386,329 |
|
Cost of product revenue |
17,481 |
|
|
15,573 |
|
|
52,710 |
|
|
43,874 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
99,897 |
|
|
80,542 |
|
|
253,749 |
|
|
264,175 |
|
Research and development |
18,493 |
|
|
30,017 |
|
|
57,862 |
|
|
94,832 |
|
|
|
|
|
|
|
|
|
Contingent consideration |
1,083 |
|
|
(1,109) |
|
|
1,334 |
|
|
(78) |
|
Amortization of intangible assets |
13,879 |
|
|
16,412 |
|
|
43,753 |
|
|
49,393 |
|
Asset impairment charges |
— |
|
|
— |
|
|
— |
|
|
655 |
|
Total costs and expenses |
406,125 |
|
|
267,783 |
|
|
932,381 |
|
|
839,180 |
|
Operating income (loss) |
21,939 |
|
|
(39,011) |
|
|
8,358 |
|
|
(161,588) |
|
Other income and (expense), net: |
|
|
|
|
|
|
|
Interest income |
1 |
|
|
350 |
|
|
149 |
|
|
1,477 |
|
Interest expense |
(5,544) |
|
|
(5,792) |
|
|
(16,514) |
|
|
(16,048) |
|
Fair value changes of derivative instruments, net |
(496) |
|
|
(21) |
|
|
112 |
|
|
6 |
|
Other income (expense), net |
4,749 |
|
|
(15,470) |
|
|
10,637 |
|
|
(20,367) |
|
Other income and (expense), net |
(1,290) |
|
|
(20,933) |
|
|
(5,616) |
|
|
(34,932) |
|
Income (loss) before income taxes and investment losses |
20,649 |
|
|
(59,944) |
|
|
2,742 |
|
|
(196,520) |
|
Income tax benefit (provision) |
3,178 |
|
|
(1,769) |
|
|
(4,021) |
|
|
(3,636) |
|
Net income (loss) before investment losses |
23,827 |
|
|
(61,713) |
|
|
(1,279) |
|
|
(200,156) |
|
Loss from investments in investees |
(110) |
|
|
(294) |
|
|
(433) |
|
|
(2,419) |
|
Net Income (loss) |
$ |
23,717 |
|
|
$ |
(62,007) |
|
|
$ |
(1,712) |
|
|
$ |
(202,575) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share, basic and diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share |
$ |
0.04 |
|
|
$ |
(0.11) |
|
|
$ |
0.00 |
|
|
$ |
(0.35) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and
diluted |
640,699,982 |
|
|
586,351,045 |
|
|
640,619,485 |
|
|
586,348,791 |
|
|
|
|
|
|
|
|
|
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
8
OPKO Health, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net income (loss) |
$ |
23,717 |
|
|
$ |
(62,007) |
|
|
$ |
(1,712) |
|
|
$ |
(202,575) |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
Change in foreign currency translation and other comprehensive
income (loss) |
8,301 |
|
|
(8,423) |
|
|
4,619 |
|
|
(8,643) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
$ |
32,018 |
|
|
$ |
(70,430) |
|
|
$ |
2,907 |
|
|
$ |
(211,218) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
9
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except share and per share data)
For the three and nine months ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Treasury |
|
Additional
Paid-In
Capital |
|
Accumulated Other
Comprehensive
Loss |
|
Accumulated
Deficit |
|
|
|
Total |
|
|
|
|
|
Shares |
|
Dollars |
|
Shares |
|
Dollars |
|
|
|
Balance at June 30, 2020 |
|
|
|
|
670,378,701 |
|
|
$ |
6,704 |
|
|
$ |
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,147,030 |
|
|
$ |
(25,752) |
|
|
$ |
(1,537,848) |
|
|
|
|
$ |
1,588,343 |
|
Equity-based compensation expense |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,740 |
|
|
— |
|
|
— |
|
|
|
|
2,740 |
|
Exercise of Common Stock options and warrants |
|
|
|
|
171,500 |
|
|
2 |
|
|
— |
|
|
— |
|
|
667 |
|
|
— |
|
|
— |
|
|
|
|
669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
23,717 |
|
|
|
|
23,717 |
|
Other comprehensive income |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8,301 |
|
|
— |
|
|
|
|
8,301 |
|
Balance at September 30, 2020 |
|
|
|
|
670,550,201 |
|
|
$ |
6,706 |
|
|
$ |
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,150,437 |
|
|
$ |
(17,451) |
|
|
$ |
(1,514,131) |
|
|
|
|
$ |
1,623,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Treasury |
|
Additional
Paid-In
Capital |
|
Accumulated Other
Comprehensive
Loss |
|
Accumulated
Deficit |
|
|
|
Total |
|
|
|
|
|
Shares |
|
Dollars |
|
Shares |
|
Dollars |
|
|
|
Balance at December 31, 2019 |
|
|
|
|
670,378,701 |
|
|
$ |
6,704 |
|
|
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,142,993 |
|
|
$ |
(22,070) |
|
|
$ |
(1,511,077) |
|
|
|
|
$ |
1,614,759 |
|
Equity-based compensation expense |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,777 |
|
|
— |
|
|
— |
|
|
|
|
6,777 |
|
Exercise of Common Stock options and warrants |
|
|
|
|
171,500 |
|
|
2 |
|
|
— |
|
|
— |
|
|
667 |
|
|
— |
|
|
— |
|
|
|
|
669 |
|
Adoption of ASC 326 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,342) |
|
|
|
|
(1,342) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,712) |
|
|
|
|
(1,712) |
|
Other comprehensive income |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,619 |
|
|
— |
|
|
|
|
4,619 |
|
Balance at September 30, 2020 |
|
|
|
|
670,550,201 |
|
|
$ |
6,706 |
|
|
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,150,437 |
|
|
$ |
(17,451) |
|
|
$ |
(1,514,131) |
|
|
|
|
$ |
1,623,770 |
|
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
10
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In thousands, except share and per share data)
For the three and
nine months ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Treasury |
|
Additional
Paid-In
Capital |
|
Accumulated Other
Comprehensive
Loss |
|
Accumulated
Deficit |
|
|
|
Total |
|
|
|
|
|
Shares |
|
Dollars |
|
Shares |
|
Dollars |
|
|
|
Balance at June 30, 2019 |
|
|
|
|
616,150,952 |
|
|
$ |
6,162 |
|
|
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,061,631 |
|
|
$ |
(20,351) |
|
|
$ |
(1,336,720) |
|
|
|
|
$ |
1,708,931 |
|
Equity-based compensation expense |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,428 |
|
|
— |
|
|
— |
|
|
|
|
3,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(62,007) |
|
|
|
|
(62,007) |
|
Other comprehensive loss |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,423) |
|
|
— |
|
|
|
|
(8,423) |
|
Balance at September 30, 2019 |
|
|
|
|
616,150,952 |
|
|
$ |
6,162 |
|
|
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,065,059 |
|
|
$ |
(28,774) |
|
|
$ |
(1,398,727) |
|
|
|
|
$ |
1,641,929 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
Treasury |
|
Additional
Paid-In
Capital |
|
Accumulated Other
Comprehensive
Loss |
|
Accumulated
Deficit |
|
|
|
Total |
|
|
|
|
|
Shares |
|
Dollars |
|
Shares |
|
Dollars |
|
|
|
Balance at December 31, 2018 |
|
|
|
|
586,881,720 |
|
|
$ |
5,869 |
|
|
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,004,422 |
|
|
$ |
(20,131) |
|
|
$ |
(1,197,078) |
|
|
|
|
$ |
1,791,291 |
|
Equity-based compensation expense |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11,007 |
|
|
— |
|
|
— |
|
|
|
|
11,007 |
|
Exercise of common stock options and warrants |
|
|
|
|
19,232 |
|
|
— |
|
|
— |
|
|
— |
|
|
(3) |
|
|
— |
|
|
— |
|
|
|
|
(3) |
|
Adoption of ASU 2018-07 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(926) |
|
|
— |
|
|
926 |
|
|
|
|
— |
|
2025 convertible notes including share lending
arrangement |
|
|
|
|
29,250,000 |
|
|
293 |
|
|
— |
|
|
— |
|
|
50,559 |
|
|
— |
|
|
— |
|
|
|
|
50,852 |
|
Net loss |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(202,575) |
|
|
|
|
(202,575) |
|
Other comprehensive loss |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(8,643) |
|
|
— |
|
|
|
|
(8,643) |
|
Balance at September 30, 2019 |
|
|
|
|
616,150,952 |
|
|
$ |
6,162 |
|
|
(549,907) |
|
|
$ |
(1,791) |
|
|
$ |
3,065,059 |
|
|
$ |
(28,774) |
|
|
$ |
(1,398,727) |
|
|
|
|
$ |
1,641,929 |
|
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
11
OPKO Health, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the nine months ended September 30, |
|
2020 |
|
2019 |
Cash flows from operating activities: |
|
|
|
Net loss |
$ |
(1,712) |
|
|
$ |
(202,575) |
|
|
|
|
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
Depreciation and amortization |
65,295 |
|
|
71,281 |
|
Non-cash interest |
7,639 |
|
|
4,558 |
|
Amortization of deferred financing costs |
626 |
|
|
506 |
|
|
|
|
|
Losses from investments in investees |
433 |
|
|
2,419 |
|
Equity-based compensation – employees and non-employees |
6,777 |
|
|
11,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized loss (gain) on disposal of fixed assets and sales of
equity securities |
(10,172) |
|
|
1,455 |
|
|
|
|
|
|
|
|
|
Change in fair value of equity securities and derivative
instruments |
1,253 |
|
|
17,178 |
|
|
|
|
|
Change in fair value of contingent consideration |
1,334 |
|
|
(78) |
|
|
|
|
|
|
|
|
|
Impairment of assets |
— |
|
|
655 |
|
Deferred income tax provision |
1,974 |
|
|
2,065 |
|
Changes in assets and liabilities: |
|
|
|
Accounts receivable, net |
(107,255) |
|
|
3,257 |
|
Inventory, net |
(60,565) |
|
|
(9,543) |
|
Other current assets and prepaid expenses |
13,111 |
|
|
(2,556) |
|
Other assets |
(270) |
|
|
240 |
|
Accounts payable |
3,261 |
|
|
30,597 |
|
Foreign currency measurement |
(782) |
|
|
147 |
|
Contract liabilities |
(4,717) |
|
|
(56,860) |
|
Accrued expenses and other liabilities |
88,988 |
|
|
(238) |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities |
5,218 |
|
|
(126,485) |
|
Cash flows from investing activities: |
|
|
|
Investments in investees |
— |
|
|
(1,200) |
|
Proceeds from sale of investments |
15,110 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from the sale of property, plant and equipment |
192 |
|
|
552 |
|
|
|
|
|
Capital expenditures |
(26,885) |
|
|
(8,866) |
|
Net cash used in investing activities |
(11,583) |
|
|
(9,514) |
|
Cash flows from financing activities: |
|
|
|
Issuance of convertible notes, including to related
parties |
— |
|
|
200,293 |
|
Debt issuance costs |
— |
|
|
(7,762) |
|
|
|
|
|
Proceeds from the exercise of common stock options and
warrants |
669 |
|
|
(3) |
|
|
|
|
|
|
|
|
|
Borrowings on lines of credit |
699,079 |
|
|
99,353 |
|
Repayments of lines of credit |
(742,932) |
|
|
(158,477) |
|
|
|
|
|
|
|
|
|
Redemption of 2033 Senior Notes |
— |
|
|
(28,800) |
|
Net cash (used in) provided by financing activities |
(43,184) |
|
|
104,604 |
|
Effect of exchange rate changes on cash and cash
equivalents |
391 |
|
|
(411) |
|
Net decrease in cash and cash equivalents |
(49,158) |
|
|
(31,806) |
|
Cash and cash equivalents at beginning of period |
85,452 |
|
|
96,473 |
|
Cash and cash equivalents at end of period |
$ |
36,294 |
|
|
$ |
64,667 |
|
SUPPLEMENTAL INFORMATION: |
|
|
|
Interest paid |
$ |
10,657 |
|
|
$ |
11,084 |
|
Income taxes paid, net of refunds |
$ |
148 |
|
|
$ |
3,103 |
|
Operating lease right-of-use assets due to adoption of ASU No.
2016-02 |
$ |
— |
|
|
$ |
35,826 |
|
Operating lease liabilities due to adoption of ASU No.
2016-02 |
$ |
— |
|
|
$ |
36,239 |
|
Non-cash financing: |
|
|
|
|
|
|
|
Shares issued upon the conversion of: |
|
|
|
|
|
|
|
|
|
|
|
Common stock options and warrants, surrendered in net
exercise |
$ |
— |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying unaudited Notes to Condensed Consolidated
Financial Statements are an integral part of these
statements.
12
OPKO Health, Inc. and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 BUSINESS AND ORGANIZATION
We are a diversified healthcare company that seeks to establish
industry-leading positions in large and rapidly growing medical
markets. Our diagnostics business includes BioReference
Laboratories, Inc. (“BioReference”), one of the nation’s largest
full service laboratories with a core genetic testing business and
an almost 300-person sales and marketing team focused on driving
growth and leveraging new products, including the
4Kscore
test. Our pharmaceutical business features
Rayaldee,
an FDA-approved treatment for secondary hyperparathyroidism
(“SHPT”) in adults with stage 3 or 4 chronic kidney disease (“CKD”)
and vitamin D insufficiency (launched in November 2016) and a
pipeline of products in various stages of development. Our leading
product in development is hGH-CTP, a once-weekly human growth
hormone that successfully completed a phase 3 trial and for which
we have partnered with Pfizer Inc. (“Pfizer”). We are incorporated
in Delaware, and our principal executive offices are located in
leased offices in Miami, Florida.
Through BioReference, we provide laboratory testing services,
primarily to customers in the larger metropolitan areas across New
York, New Jersey, Florida, Texas, Maryland, California,
Pennsylvania, Delaware, Washington, DC, Illinois and Massachusetts,
as well as to customers in a number of other states. We offer a
comprehensive test menu of clinical diagnostics for blood, urine
and tissue analysis. This includes hematology, clinical chemistry,
immunoassay, infectious diseases, serology, hormones, and
toxicology assays, as well as Pap smear, anatomic pathology
(biopsies) and other types of tissue analysis. We market our
laboratory testing services directly to physicians, geneticists,
hospitals, clinics, correctional and other health
facilities.
We operate established pharmaceutical platforms in Ireland, Chile,
Spain, and Mexico, which are generating revenue and from which we
expect to generate positive cash flow and facilitate future market
entry for our products currently in development. In addition, we
have a development and commercial supply pharmaceutical company and
a global supply chain operation and holding company in Ireland. We
own a specialty active pharmaceutical ingredients (“APIs”)
manufacturer in Israel, which we expect will facilitate the
development of our pipeline of molecules and compounds for our
proprietary molecular diagnostic and therapeutic
products.
Our research and development activities are primarily performed at
facilities in Woburn, MA, Waterford, Ireland, Kiryat Gat, Israel,
and Barcelona, Spain.
NOTE 2 IMPACT OF COVID-19
Impact of COVID-19.
As the disease caused by SARS-CoV-2, a novel strain of coronavirus,
COVID-19 continues to spread and severely impact the economy of the
United States and other countries around the world, we are
committed to being a part of the coordinated public and private
sector response to this unprecedented challenge. In response to the
COVID-19 pandemic, BioReference is accepting specimens from U.S
healthcare providers, clinics and health and hospital systems for
two types of COVID-19 testing, diagnostic molecular testing and
serology antibody testing, which is intended to promote earlier
diagnosis of the coronavirus, assess a patient’s immune response to
the virus and aid in limiting the spread of infection. In addition
to its robust nationwide COVID-19 testing offering, BioReference
has partnerships with the National Football League (NFL),
National Basketball Association (NBA), CVS, Rite-Aid, New York
State Department of Health, the New York City Health and
Hospital Corporation (NYC Health + Hospitals), the State
of New Jersey, the State of Florida and the cities
of Detroit and Miami, among others, to provide
COVID-19 testing. BioReference performed approximately
0.3 million serology antibody tests and 3.5 million
diagnostic molecular tests for COVID-19 during the three months
ended September 30, 2020, which represented 63% of BioReference’s
total test volume during the third quarter of 2020. Additionally,
BioReference has partnered with the State of New York, New York
City, the U.S. Center for Disease Control and Prevention (CDC) and
a number of employers and government agencies to perform serologic
antibody testing, with the capacity to perform up to 400,000 tests
per day, and BioReference has additional capacity to perform more
than 70,000 diagnostic molecular tests per day.
We have put preparedness plans in place at our facilities to
maintain continuity of operations, while also taking steps designed
to keep colleagues and customers healthy and safe. In line with
recommendations to reduce large gatherings and increase social
distancing, we have, where practical, transitioned many
office-based colleagues to a remote work
environment.
Beginning in March 2020, BioReference experienced, and continues to
experience, a decline in routine clinical and genomics testing
volumes due to the COVID-19 pandemic. Excluding COVID-19 test
volumes, for the three months ended September 30, 2020, volumes in
our diagnostics segment declined 9.1% as compared to volumes in the
third quarter of 2019. Additionally, sales of
Rayaldee
have not increased in accordance with its expected growth
trajectory as a result of challenges in
onboarding new patients due to the COVID-19 pandemic. Federal,
state and local governmental policies and initiatives designed to
reduce the transmission of COVID-19 have resulted in, among other
things, a significant reduction in physician office visits, the
cancellation of elective medical procedures, customers closing or
severely curtailing their operations (voluntarily or in response to
government orders), and the adoption of work-from-home or
shelter-in-place policies, all of which have had, and may continue
to have, an adverse impact on our operating results, cash flows and
financial condition, including continued declines in testing
volumes. As stay at home orders and other restrictions have been
lifted, we have seen our routine clinical and genomic testing
volumes trending towards normalization with prior periods; however
should stay at home orders or other restrictions be reenacted, we
could see our routine testing levels decline. We also continue to
see a substantial need for COVID-19 testing by our existing clients
and expect new clients as infection rates for the virus continue to
increase across the country.
In March 2020, in response to the COVID-19 pandemic, the
Coronovirus Aid, Relief, and Economic Security Act (“CARES Act”)
was signed into law. The CARES Act provides numerous tax provisions
and other stimulus measures, including temporary changes regarding
the prior and future utilization of net operating losses, temporary
changes to the prior and future limitations on interest deductions,
temporary suspension of certain payment requirements for the
employer portion of Social Security taxes, technical corrections
from prior tax legislation for tax depreciation of certain
qualified improvement property, and the creation of certain payroll
tax credits associated with the retention of
employees.
We have received, or expect to receive a number of benefits under
The CARES Act including, but not limited to:
•During
the second quarter of 2020, we received approximately
$14 million under The Centers for Medicare & Medicaid
Services (CMS) Accelerated and Advance Payment Program, which
provides accelerated payments to Medicare providers/suppliers
working to provide treatment to patients and combat the COVID-19
pandemic, and the amounts advanced are loans which will be offset
against future claims and must be repaid in 2021. These loans are
initially recorded as contract liabilities included in Accrued
expenses and are recognized in Revenue from services when
earned;
•We
are eligible to defer depositing the employer’s share of Social
Security taxes for payments due from March 27, 2020 through
December 31, 2020, interest-free and penalty-free;
•We
received approximately $10.0 million and $16.2 million
during the three and nine months ended September 30, 2020 from the
funds that were distributed to healthcare providers for related
expenses or lost revenues that are attributable to the COVID-19
pandemic. We recognized the $16.2 million grant in other
revenues for the nine months ended September 30, 2020;
•U.S.
Department of Health and Human Services (HHS), will provide claims
reimbursement to healthcare providers generally at Medicare rates
for testing uninsured patients; and
•Clinical
laboratories are provided a one-year reprieve from the reporting
requirements under the Protecting Access to Medicare Act (“PAMA”)
as well as a one-year delay of reimbursement rate reductions for
clinical laboratory services provided under Medicare that were
scheduled to take place in 2021.
Since the pandemic began in the U.S., we have invested, and expect
to continue to invest, in testing capabilities and infrastructure
to meet demand for our molecular and antibody testing for
COVID-19.
NOTE 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation.
The accompanying unaudited Condensed Consolidated Financial
Statements have been prepared in accordance with accounting
principles generally accepted in the U.S. (“GAAP”) and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all information and notes required
by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring
adjustments or adjustments otherwise disclosed herein) considered
necessary to present fairly the Company’s results of operations,
financial position and cash flows have been made. The results of
operations and cash flows for the three and nine months ended
September 30, 2020 are not necessarily indicative of the results of
operations and cash flows that may be reported for the remainder of
2020 or any other future periods. The unaudited Condensed
Consolidated Financial Statements should be read in conjunction
with the audited Consolidated Financial Statements and the Notes to
Consolidated Financial Statements included in our Annual Report on
Form 10-K for the year ended December 31, 2019.
Principles of consolidation.
The accompanying unaudited Condensed Consolidated Financial
Statements include the accounts of OPKO Health, Inc. and our wholly
owned subsidiaries. All intercompany accounts and transactions are
eliminated in consolidation.
Use of estimates.
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 significantly
from these estimates.
Cash and cash equivalents.
Cash and cash equivalents include short-term, interest-bearing
instruments with original maturities of 90 days or less at the date
of purchase. We also consider all highly liquid investments with
original maturities at the date of purchase of 90 days or less as
cash equivalents. These investments include money markets, bank
deposits, certificates of deposit and U.S. treasury
securities.
Inventories.
Inventories are valued at the lower of cost and net realizable
value. Cost is determined by the first-in, first-out method. We
consider such factors as the amount of inventory on hand, estimated
time required to sell such inventories, remaining shelf-life, and
current market conditions to determine whether inventories are
stated at the lower of cost and net realizable value. Inventories
at our diagnostics segment consist primarily of purchased
laboratory supplies, which is used in our testing laboratories.
Inventory obsolescence expense for the nine months ended
September 30, 2020 and 2019 was $3.4 million and $1.4 million,
respectively.
Pre-launch inventories.
We may accumulate commercial quantities of certain product
candidates prior to the date we anticipate that such products will
receive final U.S. FDA approval. The accumulation of such
pre-launch inventories involves the risk that such products may not
be approved for marketing by the FDA on a timely basis, or ever.
This risk notwithstanding, we may accumulate pre-launch inventories
of certain products when such action is appropriate in relation to
the commercial value of the product launch opportunity. In
accordance with our policy, this pre-launch inventory is
expensed.
Goodwill and intangible assets.
Goodwill represents the difference between the purchase price and
the estimated fair value of the net assets acquired accounted for
by the acquisition method of accounting. Refer to Note 5. Goodwill,
in-process research and development (“IPR&D”) and other
intangible assets acquired in business combinations, licensing and
other transactions was $1.8 billion at both at September 30,
2020 and December 31, 2019.
Assets acquired and liabilities assumed in business combinations,
licensing and other transactions are generally recognized at the
date of acquisition at their respective fair values. Any excess of
the purchase price over the estimated fair values of the net assets
acquired is recognized as goodwill. At acquisition, we generally
determine the fair value of intangible assets, including IPR&D,
using the “income method.”
Subsequent to their acquisition, goodwill and indefinite lived
intangible assets are tested at least annually as of October 1 for
impairment, or when events or changes in circumstances indicate it
is more likely than not that the carrying amount of such assets may
not be recoverable.
Goodwill was $675.8 million and $671.9 million respectively,
at September 30, 2020 and December 31, 2019. Estimating
the fair value of a reporting unit for goodwill impairment is
highly sensitive to changes in projections and assumptions and
changes in assumptions could potentially lead to impairment. We
perform sensitivity analyses around our assumptions in order to
assess the reasonableness of the assumptions and the results of our
testing. Ultimately, potential changes in these assumptions may
impact the estimated fair value of a reporting unit and result in
an impairment if the fair value of such reporting unit is less than
its carrying value.
Net intangible assets other than goodwill was $1.1 billion,
including IPR&D of $590.2 million, at both September 30,
2020 and December 31, 2019. Intangible assets are highly
vulnerable to impairment charges, particularly newly acquired
assets for recently launched products and IPR&D. Considering
the high risk nature of research and development and the industry’s
success rate of bringing developmental compounds to market,
IPR&D impairment charges may occur in future periods.
Estimating the fair value of IPR&D for potential impairment is
highly sensitive to changes in projections and assumptions and
changes in assumptions could potentially lead to
impairment.
Upon obtaining regulatory approval, IPR&D assets are then
accounted for as a finite-lived intangible asset and amortized on a
straight-line basis over its estimated useful life. If the project
is abandoned, the IPR&D asset is charged to expense. Finite
lived intangible assets are tested for impairment when events or
changes in circumstances indicate it is more likely than not that
the carrying amount of such assets may not be recoverable. The
testing includes a comparison of the carrying amount of the asset
to its estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an
asset
exceeds its estimated undiscounted future cash flows, then an
impairment charge is recognized for the amount by which the
carrying amount of the asset exceeds the fair value of the
asset.
We believe that our estimates and assumptions are reasonable and
otherwise consistent with assumptions that marketplace participants
would use in their estimates of fair value. However, if
future results are not consistent with our estimates and
assumptions, including as a result of the COVID-19 global pandemic,
then we may be exposed to an impairment charge, which could be
material.
We amortize intangible assets with definite lives on a
straight-line basis over their estimated useful lives, ranging from
3 to 20 years. We use the straight-line method of amortization as
there is no reliably determinable pattern in which the economic
benefits of our intangible assets are consumed or otherwise used
up. Amortization expense was $43.8 million and $49.4 million for
the nine months ended September 30, 2020 and 2019,
respectively.
Fair value measurements.
The carrying amounts of our cash and cash equivalents, accounts
receivable, accounts payable and short-term debt approximate their
fair value due to the short-term maturities of these instruments.
Investments that are considered equity securities as of
September 30, 2020 and December 31, 2019 are
predominately carried at fair value. Our debt under the credit
agreement with JPMorgan Chase Bank, N.A. approximates fair value
due to the variable rate of interest applicable to such
debt.
In evaluating the fair value information, considerable judgment is
required to interpret the market data used to develop the
estimates. The use of different market assumptions and/or different
valuation techniques may have a material effect on the estimated
fair value amounts. Accordingly, the estimates of fair value
presented herein may not be indicative of the amounts that could be
realized in a current market exchange. Refer to Note
9.
Contingent consideration.
Each period we revalue the contingent consideration obligations
associated with certain prior acquisitions to their fair value and
record increases in the fair value as contingent consideration
expense and decreases in the fair value as a reduction in
contingent consideration expense. Changes in contingent
consideration result from changes in the assumptions regarding
probabilities of successful achievement of related milestones, the
estimated timing in which the milestones are achieved and the
discount rate used to estimate the fair value of the liability.
Contingent consideration may change significantly as our
development programs progress, revenue estimates evolve and
additional data is obtained, impacting our assumptions. The
assumptions used in estimating fair value require significant
judgment. The use of different assumptions and judgments could
result in a materially different estimate of fair value which may
have a material impact on our results from operations and financial
position.
Derivative financial instruments.
We record derivative financial instruments on our Condensed
Consolidated Balance Sheet at their fair value and recognize the
changes in the fair value in our Condensed Consolidated Statement
of Operations when they occur, the only exception being derivatives
that qualify as hedges. For the derivative instrument to qualify as
a hedge, we are required to meet strict hedge effectiveness and
contemporaneous documentation requirements at the initiation of the
hedge and assess the hedge effectiveness on an ongoing basis over
the life of the hedge. At September 30, 2020 and
December 31, 2019, our foreign currency forward contracts held
to economically hedge inventory purchases did not meet the
documentation requirements to be designated as hedges. Accordingly,
we recognize all changes in the fair values of our derivatives
instruments, net, in our Condensed Consolidated Statement of
Operations. Refer to Note 10.
Property, plant and equipment.
Property, plant and equipment are recorded at cost or fair value if
acquired in a business combination. Depreciation is provided using
the straight-line method over the estimated useful lives of the
assets and includes amortization expense for assets capitalized
under finance leases. The estimated useful lives by asset class are
as follows: software - 3 years, machinery, medical and other
equipment - 5-8 years, furniture and fixtures - 5-12 years,
leasehold improvements - the lesser of their useful life or the
lease term, buildings and improvements - 10-40 years, and
automobiles - 3-5 years. Expenditures for repairs and maintenance
are charged to expense as incurred. Depreciation expense was $21.5
million and $21.9 million for the nine months ended September 30,
2020 and 2019, respectively. Assets held under finance leases are
included within Property, plant and equipment, net in our Condensed
Consolidated Balance Sheet and are amortized over the shorter of
their useful lives or the expected term of their related
leases.
Impairment of long-lived assets.
Long-lived assets, such as property and equipment, are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to estimated
undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated
future cash flows, then an impairment charge is recognized for the
amount by which the carrying amount of the asset exceeds the fair
value of the asset.
Income taxes.
Income taxes are accounted for under the asset-and-liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and the respective tax bases and for operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
operations in the period that includes the enactment date. We
periodically evaluate the realizability of our
net deferred tax assets. Our tax accruals are analyzed periodically
and adjustments are made as events occur to warrant
such
adjustment. Valuation allowances on certain U.S. deferred tax
assets and non-U.S. deferred tax assets are established, because
realization of these tax benefits through future taxable income
does not meet the more-likely-than-not threshold.
We operate in various countries and tax jurisdictions
globally. For interim reporting purposes, we record income
taxes based on the expected effective income tax rate, taking into
consideration year to date and global forecasted tax results.
For the three and nine months ended September 30, 2020, the tax
rate differed from the U.S. federal statutory rate of 21% primarily
due to the valuation allowance against certain U.S. and non-U.S.
deferred tax assets, the relative mix in earnings and losses in the
U.S. versus foreign tax jurisdictions, and the impact of certain
discrete tax events and operating results in tax jurisdictions
which do not result in a tax benefit.
Revenue recognition.
We recognize revenue when a customer obtains control of promised
goods or services in accordance with Accounting Standards
Codification Topic 606,
Revenue from Contracts with Customers
(“Topic 606”). The amount of revenue that is recorded reflects the
consideration that we expect to receive in exchange for those goods
or services. We apply the following five-step model in order to
determine this amount: (i) identify the contract(s) with a
customer; (ii) identify the performance obligations in the
contract; (iii) determine the transaction price; (iv) allocate the
transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) we satisfy a performance
obligation.
We apply the five-step model to contracts when it is probable that
we will collect the consideration we are entitled to in exchange
for the goods or services we transfer to the customer. At contract
inception, once the contract is determined to be within the scope
of Topic 606, we review the contract to determine which performance
obligations we must deliver and which of these performance
obligations are distinct. We recognize as revenue the amount of the
transaction price that is allocated to the respective performance
obligation when the performance obligation is satisfied or as it is
satisfied. For a complete discussion of accounting for Revenues
from services, Revenues from products and Revenue from transfer of
intellectual property and other, refer to Note 13.
Concentration of credit risk and allowance for credit
losses.
Financial instruments that potentially subject us to concentrations
of credit risk consist primarily of accounts receivable.
Substantially all of our accounts receivable are with either
companies in the healthcare industry or patients. However, credit
risk is limited due to the number of our clients as well as their
dispersion across many different geographic regions.
While we have receivables due from federal and state governmental
agencies, we do not believe that such receivables represent a
credit risk because the related healthcare programs are funded by
federal and state governments, and payment is primarily dependent
upon submitting appropriate documentation. At September 30,
2020 and December 31, 2019, receivable balances (net of
explicit and implicit price concessions) from Medicare and Medicaid
were 7% and 6%, respectively, of our consolidated Accounts
receivable, net. At September 30, 2020, receivable balances
(net of explicit and implicit price concessions) due directly from
states, cities and other municipalities, specifically related to
our real-time reverse-transcription polymerase chain reaction
(real-time RT-PCR) assay to detect COVID-19, were 8.1% of our
consolidated accounts receivable, net.
The portion of our accounts receivable due from individual patients
comprises the largest portion of credit risk. At September 30,
2020 and December 31, 2019, receivables due from patients
represented approximately 1.0% and 2.5%, respectively, of our
consolidated Accounts receivable, net.
We assess the collectability of accounts receivable balances by
considering factors such as historical collection experience,
customer credit worthiness, the age of accounts receivable
balances, regulatory changes and current economic conditions and
trends that may affect a customer’s ability to pay. Actual results
could differ from those estimates. The allowance for credit losses
was $2.0 million and $1.9 million at September 30, 2020 and
December 31, 2019, respectively. The credit loss expense for
the nine months ended September 30, 2020 and 2019 was $0.3 million
and $0.3 million, respectively.
Equity-based compensation.
We measure the cost of services received in exchange for an award
of equity instruments based on the grant-date fair value of the
award. That cost is recognized in the Condensed Consolidated
Statement of Operations over the period during which an employee is
required to provide service in exchange for the award. We record
excess tax benefits realized from the exercise of stock options as
cash flows from operations. For the nine months ended September 30,
2020 and 2019, we recorded $6.8 million and $11.0 million,
respectively, of equity-based compensation expense.
Research and development expenses.
Research and development expenses include external and internal
expenses. External expenses include clinical and non-clinical
activities performed by contract research organizations, lab
services, purchases of drug and diagnostic product materials and
manufacturing development costs. Research and development
employee-related expenses include salaries, benefits and
equity-based compensation expense. Other internal research and
development expenses are incurred to support overall research and
development activities and include expenses related to general
overhead and facilities. We expense these costs in the period in
which they are incurred. We estimate our liabilities for research
and development expenses in order to match the recognition of
expenses to the period in which the actual services are received.
As such, accrued liabilities related to third party research and
development activities are recognized based upon our estimate of
services received and degree of completion of the services in
accordance with the specific third party contract.
Research and development expense includes costs for in-process
research and development projects acquired in asset acquisitions
which have not reached technological feasibility and which have no
alternative future use. For in-process research and development
projects acquired in business combinations, the in-process research
and development project is capitalized and evaluated for impairment
until the development process has been completed. Once the
development process has been completed the asset will be amortized
over its remaining estimated useful life.
Segment reporting.
Our chief operating decision-maker (“CODM”) is Phillip Frost, M.D.,
our Chairman and Chief Executive Officer. Our CODM reviews our
operating results and operating plans and makes resource allocation
decisions on a Company-wide or aggregate basis. We manage our
operations in two reportable segments, pharmaceutical and
diagnostics. The pharmaceutical segment consists of our
pharmaceutical operations in Chile, Mexico, Ireland, Israel and
Spain,
Rayaldee
product sales and our pharmaceutical research and development. The
diagnostics segment primarily consists of clinical laboratory
operations through BioReference and point-of-care operations. There
are no significant inter-segment sales. We evaluate the performance
of each segment based on operating profit or loss. There is no
inter-segment allocation of interest expense or income taxes. Refer
to Note 15.
Shipping and handling costs.
We do not charge customers for shipping and handling costs.
Shipping and handling costs are classified as Cost of revenues in
the Condensed Consolidated Statement of Operations.
Foreign currency translation.
The financial statements of certain of our foreign operations are
measured using the local currency as the functional currency. The
local currency assets and liabilities are generally translated at
the rate of exchange to the U.S. dollar on the balance sheet date
and the local currency revenues and expenses are translated at
average rates of exchange to the U.S. dollar during the reporting
periods. Foreign currency transaction gains (losses) have been
reflected as a component of Other income (expense), net within the
Condensed Consolidated Statement of Operations and foreign currency
translation gains (losses) have been included as a component of the
Condensed Consolidated Statement of Comprehensive Income
(Loss).
Variable interest entities.
The consolidation of a variable interest entity (“VIE”) is required
when an enterprise has a controlling financial interest. A
controlling financial interest in a VIE will have both of the
following characteristics: (a) the power to direct the activities
of a VIE that most significantly impact the VIE’s economic
performance and (b) the obligation to absorb losses of the VIE that
could potentially be significant to the VIE. Refer to Note
6.
Investments.
We have made strategic investments in development stage and
emerging companies. We record these investments as equity method
investments or as equity securities based on our percentage of
ownership and whether we have significant influence over the
operations of the investees. For investments classified under the
equity method of accounting, we record our proportionate share of
their losses in Losses from investments in investees in our
Condensed Consolidated Statement of Operations. Refer to Note 6.
For investments classified as equity securities, we record changes
in their fair value as Other income (expense) in our Condensed
Consolidated Statement of Operations based on their closing price
per share at the end of each reporting period, unless the equity
security does not have a readily determinable fair value. Refer to
Note 6.
Recently adopted accounting pronouncements.
In June 2016, the FASB issued ASU No. 2016-13, “Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments,” which amends the impairment model
by requiring entities to use a forward-looking approach based on
expected losses rather than incurred losses to estimate credit
losses on certain types of financial instruments, including trade
receivables. This may result in the earlier recognition of
allowances for losses. The ASU is effective for public entities for
fiscal years beginning after December 15, 2019, with early
adoption permitted. The adoption of ASU 2016-13 on January 1, 2020,
did not have a significant impact on our Condensed Consolidated
Financial Statements.
Pending accounting pronouncements.
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity's Own Equity (Subtopic 815-40).” ASU
2020-06 will simplify the accounting for convertible instruments by
reducing the number of accounting models for convertible debt
instruments and convertible preferred stock. The ASU is effective
for public entities for fiscal years beginning after
December 15, 2021, with early adoption permitted. We are
currently evaluating the impact of this new guidance on our
Condensed Consolidated Financial Statements.
NOTE 4 EARNINGS (LOSS) PER SHARE
Basic income (loss) per share is computed by dividing our net
income (loss) by the weighted average number of shares of our
common stock par value $0.01 per share (“Common Stock”) outstanding
during the period. Shares of Common Stock outstanding under
the share lending arrangement entered into in conjunction
with the 2025 Notes (as defined in Note 7) are excluded from the
calculation of basic and diluted earnings per share because the
borrower of the shares is required under the share lending
arrangement to refund any dividends paid on the shares lent. Refer
to Note 7. For diluted earnings per share, the dilutive impact of
stock options and warrants is determined by applying the “treasury
stock” method. The dilutive impact of the 2033 Senior Notes, the
2023 Convertible Notes and the 2025 Notes (each, as defined and
discussed in Note 7) has been considered using the “if converted”
method. For periods in which their effect would be antidilutive, no
effect is given to outstanding options, warrants or the potentially
dilutive shares issuable pursuant to the 2033 Senior Notes, the
2023 Convertible Notes and the 2025 Notes in the dilutive
computation.
A total of 73,412,800 and 69,072,430 potential shares of Common
Stock were excluded from the calculation of diluted net loss per
share for the three months ended September 30, 2020, and 2019,
respectively, because their inclusion would be antidilutive. A
total of 69,661,016 and 65,778,754 potential shares of Common Stock
were excluded from the calculation of diluted net loss per share
for the nine months ended September 30, 2020, and 2019,
respectively, because their inclusion would be antidilutive. A full
presentation of diluted earnings per share has not been provided
because the required adjustments to the numerator and denominator
resulted in diluted earnings per share equivalent to basic earnings
per share.
During the three and nine months ended September 30, 2020, 171,500
Common Stock options and Common Stock warrants to purchase shares
of our Common Stock were exercised, resulting in the issuance of
171,500 shares of Common Stock. Of the 171,500 Common Stock options
and Common Stock warrants exercised, no shares of Common Stock were
surrendered in lieu of a cash payment via the net exercise feature
of the agreements.
During the three months ended September 30, 2019, no Common
Stock options or Common Stock warrants to purchase shares of our
Common Stock were exercised, resulting in the issuance of no shares
of Common Stock.
During the nine months ended September 30, 2019, 24,877 Common
Stock options and Common Stock warrants to purchase shares of our
Common Stock were exercised, resulting in the issuance of 19,232
shares of Common Stock. Of the 24,877 Common Stock options and
Common Stock warrants exercised, 5,645 shares of Common Stock were
surrendered in lieu of a cash payment via the net exercise feature
of the agreements.
NOTE 5 COMPOSITION OF CERTAIN FINANCIAL STATEMENT
CAPTIONS
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30,
2020 |
|
December 31,
2019 |
Accounts receivable, net: |
|
|
|
Accounts receivable |
$ |
243,540 |
|
|
$ |
136,551 |
|
Less: allowance for credit losses |
(1,996) |
|
|
(1,934) |
|
|
$ |
241,544 |
|
|
$ |
134,617 |
|
Inventories, net: |
|
|
|
Consumable supplies |
$ |
72,518 |
|
|
$ |
23,005 |
|
Finished products |
30,268 |
|
|
25,142 |
|
Work in-process |
6,425 |
|
|
3,238 |
|
Raw materials |
6,343 |
|
|
4,586 |
|
Less: inventory reserve |
(3,681) |
|
|
(2,537) |
|
|
$ |
111,873 |
|
|
$ |
53,434 |
|
Other current assets and prepaid expenses: |
|
|
|
Taxes recoverable |
$ |
14,072 |
|
|
$ |
19,808 |
|
Prepaid expenses |
9,435 |
|
|
8,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid insurance |
6,635 |
|
|
3,486 |
|
Other receivables |
714 |
|
|
3,262 |
|
Other |
7,542 |
|
|
15,839 |
|
|
$ |
38,398 |
|
|
$ |
50,542 |
|
Intangible assets, net: |
|
|
|
Customer relationships |
$ |
446,794 |
|
|
$ |
445,408 |
|
Technologies |
296,429 |
|
|
296,246 |
|
Trade names |
49,791 |
|
|
49,786 |
|
|
|
|
|
Covenants not to compete |
16,326 |
|
|
16,318 |
|
Licenses |
5,766 |
|
|
5,766 |
|
Product registrations |
7,430 |
|
|
7,578 |
|
Other |
6,296 |
|
|
6,094 |
|
Less: accumulated amortization |
(342,414) |
|
|
(298,234) |
|
|
$ |
486,418 |
|
|
$ |
528,962 |
|
Accrued expenses: |
|
|
|
Inventory received but not invoiced |
$ |
84,768 |
|
|
$ |
13,751 |
|
Commitments and Contingencies |
22,669 |
|
|
38,635 |
|
Employee benefits |
37,671 |
|
|
33,671 |
|
Contract liabilities |
14,099 |
|
|
19,196 |
|
Clinical trials |
5,912 |
|
|
8,122 |
|
|
|
|
|
Contingent consideration |
2,374 |
|
|
2,375 |
|
Finance leases short-term |
2,343 |
|
|
2,743 |
|
|
|
|
|
Professional fees |
5,340 |
|
|
1,333 |
|
|
|
|
|
|
|
|
|
Other |
73,246 |
|
|
45,099 |
|
|
$ |
248,422 |
|
|
$ |
164,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30,
2020 |
|
December 31,
2019 |
|
|
|
|
Other long-term liabilities: |
|
|
|
|
|
|
|
Line of credit (see Note) |
$ |
— |
|
|
$ |
44,749 |
|
Contingent consideration |
8,643 |
|
|
7,308 |
|
|
|
|
|
Mortgages and other debts payable |
4,010 |
|
|
3,906 |
|
Finance leases long-term |
2,538 |
|
|
4,046 |
|
Contract liabilities |
2,951 |
|
|
2,571 |
|
Other |
26,889 |
|
|
25,224 |
|
|
$ |
45,031 |
|
|
$ |
87,804 |
|
Note: Our line of credit with JPMorgan Chase Bank, N.A. was fully
repaid as of September 30, 2020.
Our intangible assets and goodwill relate principally to our
completed acquisitions of OPKO Renal, OPKO Biologics, EirGen Pharma
Limited (“EirGen”) and BioReference. We amortize intangible assets
with definite lives on a straight-line basis over their estimated
useful lives. The estimated useful lives by asset class are as
follows: technologies - 7-17 years, customer relationships - 7-20
years, product registrations - 7-10 years, covenants not to compete
- 5 years, trade names - 5-10 years, other 9-13 years. We do not
anticipate capitalizing the cost of product registration renewals,
rather we expect to expense these costs, as incurred. Our goodwill
is not tax deductible for income tax purposes in any jurisdiction
in which we operate.
The changes in value of the intangible assets and goodwill during
the nine months ended September 30, 2020 were primarily due to
foreign currency fluctuations between the Chilean Peso, the Euro
and the Shekel against the U.S. dollar.
The following table summarizes the changes in Goodwill by reporting
unit during the nine months ended September 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
(In thousands) |
Balance at January 1 |
|
|
|
Foreign exchange and other |
|
Balance at September 30th |
Pharmaceuticals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rayaldee |
$ |
85,605 |
|
|
|
|
$ |
3,791 |
|
|
$ |
89,396 |
|
|
|
|
|
|
|
|
|
OPKO Chile |
4,348 |
|
|
|
|
(272) |
|
|
4,076 |
|
OPKO Biologics |
139,784 |
|
|
|
|
— |
|
|
139,784 |
|
OPKO Health Europe |
7,394 |
|
|
|
|
336 |
|
|
7,730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diagnostics |
|
|
|
|
|
|
|
BioReference |
434,809 |
|
|
|
|
— |
|
|
434,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
671,940 |
|
|
|
|
$ |
3,855 |
|
|
$ |
675,795 |
|
NOTE 6 INVESTMENTS
Investments
The following table reflects the accounting method, carrying value
and underlying equity in net assets of our unconsolidated
investments as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
Investment type |
|
Investment Carrying Value |
|
Underlying Equity in Net Assets |
Equity method investments |
|
$ |
496 |
|
|
$ |
2,374 |
|
Variable interest entity, equity method |
|
1,036 |
|
|
— |
|
Equity securities |
|
12,720 |
|
|
|
Equity securities with no readily determinable fair
value |
|
35 |
|
|
|
Warrants and options |
|
38 |
|
|
|
Total carrying value of investments |
|
$ |
14,325 |
|
|
|
Equity method investments
Our equity method investments consist of investments in
Pharmsynthez (ownership 9%), Cocrystal Pharma, Inc. (“COCP”) (5%),
Non-Invasive Monitoring Systems, Inc. (“NIMS”) (1%), Neovasc, Inc.
(“Neovasc”) (2%), InCellDx, Inc. (“InCellDx”) (29%), BioCardia,
Inc. (“BioCardia”) (2%), and Xenetic Biosciences, Inc. (“Xenetic”)
(3%). The aggregate total assets, liabilities, and net losses of
our equity method investees as of and for the nine months ended
September 30, 2020 were $89.2 million, $37.0 million, and $51.2
million, respectively. We have determined that we and/or our
related parties can significantly influence control of our equity
method investments through our board representation and/or voting
power. Accordingly, we account for our investment in these entities
under the equity method and record our proportionate share of their
losses in Loss from investments in investees in our Condensed
Consolidated Statement of Operations. The aggregate value of our
equity method investments based on the quoted market prices of
their respective shares of common stock and the number of shares
held by us as of September 30, 2020 was $6.2
million.
Investments in Equity Securities
Our equity securities consist of investments in Phio
Pharmaceuticals (“Phio”) (ownership 0.01%), VBI Vaccines Inc.
(“VBI”) (1%), ChromaDex Corporation (“ChromaDex”) (0.1%), MabVax
Therapeutics Holdings, Inc. (“MabVax”) (1%), and Eloxx
Pharmaceuticals, Inc. (“Eloxx”) (3%). We have determined that our
ownership, along with that of our related parties, does not provide
us with significant influence over the operations of these
investments. Accordingly, we account for our investment in these
entities as equity securities, and we record changes in the fair
value of these investments in Other income (expense) each reporting
period when they have readily determinable fair value. Equity
securities without a readily determinable fair value are adjusted
to fair value when there is an observable price change. Net gains
and losses on our equity securities for the nine months ended
September 30, 2020 were as follows:
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
Investments in Equity Securities |
|
For the nine months ended September 30, 2020 |
Net gains and losses recognized during the period on equity
securities |
|
$ |
8,959 |
|
Less: Net gains realized during the period on equity
securities |
|
10,324 |
|
Unrealized net losses recognized during the period on equity
securities still held at the reporting date |
|
$ |
(1,365) |
|
|
|
|
|
|
|
Sales of investments
Gains (losses) included in earnings from sales of our investments
are recorded in Other income (expense), net in our Condensed
Consolidated Statement of Operations. The cost of securities sold
is based on the specific identification method.
Warrants and options
In addition to our equity method investments and equity securities,
we hold options to purchase 47 thousand additional shares of
BioCardia, 37 thousand of which were vested as of
September 30, 2020, and 33 thousand, 0.7 million, 40 thousand
and 404 warrants to purchase shares of COCP, InCellDx, Inc.,
Xenetic, and Phio, respectively. We recorded the changes in
the
fair value of the options and warrants in Fair value changes of
derivative instruments, net in our Condensed Consolidated Statement
of Operations. We also recorded the fair value of the options and
warrants in Investments, net in our Condensed Consolidated Balance
Sheet. See further discussion of the Company’s options and warrants
in Note 9 and Note 10.
Investments in variable interest entities
We have determined that we hold variable interests in Detect
Genomix, LLC (“Detect Genomix”) and Zebra Biologics, Inc.
(“Zebra”). We made this determination as a result of our assessment
that they do not have sufficient resources to carry out their
principal activities without additional financial
support.
In August 2020, GeneDx, Inc., a subsidiary of BioReference,
announced that it had entered into an agreement with Pediatrix
Medical Group (“Pediatrix”), a provider of maternal-fetal, and
pediatric medical and surgical subspecialty physician services, to
offer genomic sequencing to support clinical diagnosis in neonatal
intensive care units staffed by Pediatrix’s affiliated
neonatologists. The offering is planned to include whole exome and
whole genome sequencing and genomic support services under the
brand Detect Genomix.
Our initial capital investment in Detect Genomix was $245,000 for
which we received a 49% ownership interest in Detect Genomix. We
are required to make additional capital contributions to Detect
Genomix in accordance with our percentage interests if Detect
Genomix is unable to generate positive cash flow from operations or
is unable to obtain alternative financing. We have not made any
other investments in or loans to Detect Genomix through September
30, 2020.
In order to determine the primary beneficiary of Detect Genomix, we
evaluated our investment to identify if we had the power to direct
the activities that most significantly impact the economic
performance of Detect Genomix. Based on the capital structure,
governing documents and overall business operations of Detect
Genomix, we determined that, while a VIE, we do not have the power
to direct the activities that most significantly impact Detect
Genomix’s economic performance. We determined, however, that we can
significantly influence control of Detect Genomix through our board
representation and voting power. Therefore, we have the ability to
exercise significant influence over Detect Genomix’s operations and
account for our investment in Detect Genomix under the equity
method.
We own 1,260,000 shares of Zebra Series A-2 Preferred Stock and
900,000 shares of Zebra restricted common stock (ownership 29% at
September 30, 2020). Zebra is a privately held biotechnology
company focused on the discovery and development of biosuperior
antibody therapeutics and complex drugs. Dr. Richard Lerner, M.D.,
a member of our Board of Directors, is a founder of Zebra and,
along with Dr. Frost, serves as a member of Zebra’s Board of
Directors.
In order to determine the primary beneficiary of Zebra, we
evaluated our investment and our related parties’ investment, as
well as our investment combined with the related parties’
investment to identify if we had the power to direct the activities
that most significantly impact the economic performance of Zebra.
Based on the capital structure, governing documents and overall
business operations of Zebra, we determined that, while a VIE, we
do not have the power to direct the activities that most
significantly impact Zebra’s economic performance and have no
obligation to fund expected losses. We determined, however, that we
can significantly influence control of Zebra through our board
representation and voting power. Therefore, we have the ability to
exercise significant influence over Zebra’s operations and account
for our investment in Zebra under the equity method.
NOTE 7 DEBT
On February 25, 2020, we entered into a credit agreement with an
affiliate of Dr. Frost, pursuant to which the lender committed to
provide us with an unsecured line of credit in the amount of $100
million. Borrowings under the line of credit will bear interest at
a rate of 11% per annum and may be repaid and reborrowed at any
time. The credit agreement includes various customary remedies for
the lender following an event of default, including the
acceleration of repayment of outstanding amounts under line of
credit. The line of credit matures on February 25, 2025. The line
of credit also calls for a commitment fee equal to 0.25% per annum
of the unused portion of the line. As of September 30, 2020, no
funds were borrowed under the line of credit.
In February 2019, we issued $200.0 million aggregate principal
amount of Convertible Senior Notes due 2025 (the “2025 Notes”) in
an underwritten public offering. The 2025 Notes bear interest at a
rate of 4.50% per year, payable semiannually in arrears on
February 15 and August 15 of each year. The notes mature
on February 15, 2025, unless earlier repurchased, redeemed or
converted.
Holders may convert their 2025 Notes into shares of Common Stock at
their option at any time prior to the close of business on the
business day immediately preceding November 15, 2024 only
under the following circumstances: (1) during any calendar
quarter commencing after the calendar quarter ended March 31,
2019 (and only during such calendar quarter), if
the last reported sale price of our Common Stock for at least 20
trading days (whether or not consecutive) during a period of 30
consecutive trading days ending on the last trading day of the
immediately preceding calendar quarter is greater than or equal to
130% of the conversion price on each applicable trading day;
(2) during the five business day period after any five
consecutive trading day period (the “measurement period”) in which
the trading price per $1,000 principal amount of 2025 Notes for
each trading day of the measurement period was less than 98% of the
product of the last reported sale price of our Common Stock and the
conversion rate on each such trading day; (3) if we call any
or all of the 2025 Notes for redemption, at any time prior to the
close of business on the scheduled trading day immediately
preceding the redemption date; or (4) upon the occurrence of
specified corporate events set forth in the indenture governing the
2025 Notes. On or after November 15, 2024, until the close of
business on the business day immediately preceding the maturity
date, holders of the 2025 Notes may convert their notes at any
time, regardless of the foregoing conditions. Upon conversion, we
will pay or deliver, as the case may be, cash, shares of our Common
Stock, or a combination of cash and shares of our Common Stock, at
our election.
The initial and current conversion rate for the 2025 Notes is
236.7424 shares of Common Stock per $1,000 principal amount of 2025
Notes (equivalent to a conversion price of approximately $4.22 per
share of Common Stock). The conversion rate for the 2025 Notes is
subject to adjustment in certain events, but will not be adjusted
for any accrued and unpaid interest. In addition, following certain
corporate events that occur prior to the maturity date of the 2025
Notes or if we deliver a notice of redemption, in certain
circumstances the indenture governing the 2025 Notes requires an
increase in the conversion rate of the 2025 Notes for a holder who
elects to convert its notes in connection with such a corporate
event or notice of redemption, as the case may be.
We may not redeem the 2025 Notes prior to February 15, 2022.
We may redeem for cash any or all of the 2025 Notes, at our option,
on or after February 15, 2022, if the last reported sale price
of our Common Stock has been at least 130% of the then current
conversion price for the notes for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day
period (including the last trading day of such period) ending on,
and including, the trading day immediately preceding the date on
which we provide a notice of redemption at a redemption price equal
to 100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest to, but excluding, the redemption date.
No sinking fund is provided for the 2025 Notes.
If we undergo a fundamental change, as defined in the indenture
governing the 2025 Notes, prior to the maturity date of the 2025
Notes, holders may require us to repurchase for cash all or any
portion of their notes at a repurchase price equal to 100% of the
principal amount of the notes to be repurchased, plus accrued and
unpaid interest to, but excluding, the fundamental change
repurchase date. The 2025 Notes are our senior unsecured
obligations and rank senior in right of payment to any of our
indebtedness that is expressly subordinated in right of payment to
the 2025 Notes; equal in right of payment to any of our existing
and future liabilities that are not so subordinated; effectively
junior in right of payment to any of our secured indebtedness to
the extent of the value of the assets securing such indebtedness;
and structurally junior to all indebtedness and other liabilities
(including trade payables) of our current or future
subsidiaries.
In conjunction with the issuance of the 2025 Notes, we agreed to
loan up to 30,000,000 shares of our Common Stock to affiliates of
the underwriter in order to assist investors in the 2025 Notes to
hedge their position. As of September 30, 2020, a total
of 29,250,000 shares were issued under the share
lending arrangement. We will not receive any of the proceeds
from the sale of the borrowed shares, but we received a one-time
nominal fee of $0.3 million for the newly issued shares. Shares of
our Common Stock outstanding under the share
lending arrangement are excluded from the calculation of basic
and diluted earnings per share. See Note 4.
As required by ASC 470-20, “Debt with Conversion and Other
Options,” we calculated the equity component of the 2025 Notes,
taking into account both the fair value of the conversion option
and the fair value of the share lending arrangement. The
equity component was valued at $52.6 million at issue
date and this amount was recorded as Additional paid-in capital,
which resulted in a discount on the 2025 Notes. The discount is
being amortized to Interest expense over the term of the 2025
Notes, which results in an effective interest rate on the 2025
Notes of 11.2%.
The following table sets forth information related to the 2025
Notes which is included in our Condensed Consolidated Balance Sheet
as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
2025 Senior Notes |
|
Discount |
|
Debt Issuance Cost |
|
Total |
Balance at December 31, 2019 |
$ |
200,000 |
|
|
$ |
(46,774) |
|
|
$ |
(5,086) |
|
|
$ |
148,140 |
|
|
|
|
|
|
|
|
|
Amortization of debt discount and debt issuance costs |
— |
|
|
5,341 |
|
|
580 |
|
|
5,921 |
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020 |
$ |
200,000 |
|
|
$ |
(41,433) |
|
|
$ |
(4,506) |
|
|
$ |
154,061 |
|
On November 8, 2018, we entered into a credit agreement with an
affiliate of Dr. Frost, pursuant to which the lender committed to
provide us with an unsecured line of credit in the aggregate
principal amount of $60 million. The credit agreement was
terminated on or around February 20, 2019 and we repaid the $28.8
million outstanding thereunder from the proceeds of the 2025 Notes
offering.
In February 2018, we issued a series of 5% Convertible Promissory
Notes (the “2023 Convertible Notes”) in the aggregate principal
amount of $55.0 million. The 2023 Convertible Notes mature five
years following the date of issuance. Each holder of a 2023
Convertible Note has the option, from time to time, to convert all
or any portion of the outstanding principal balance of such 2023
Convertible Note, together with accrued and unpaid interest
thereon, into shares of our Common Stock at a conversion price of
$5.00 per share. We may redeem all or any part of the then issued
and outstanding 2023 Convertible Notes, together with accrued and
unpaid interest thereon, pro rata among the holders, upon no fewer
than 30 days, and no more than 60 days, notice to the holders. The
2023 Convertible Notes contain customary events of default and
representations and warranties of OPKO.
Purchasers of the 2023 Convertible Notes included an affiliate of
Dr. Phillip Frost, M.D., our Chairman and Chief Executive Officer,
and Dr. Jane H. Hsiao, Ph.D., MBA, our Vice-Chairman and Chief
Technical Officer.
In January 2013, we entered into note purchase agreements with
respect to the issuance and sale of our 3.0% Senior Notes due 2033
(the “2033 Senior Notes”) in a private placement exempt from
registration under the Securities Act. We issued the 2033 Senior
Notes on January 30, 2013. The 2033 Senior Notes, which
totaled $175.0 million in original principal amount, bear interest
at the rate of 3.0% per year, payable semiannually on
February 1 and August 1 of each year. The 2033 Senior
Notes mature on February 1, 2033, unless earlier repurchased,
redeemed or converted. Upon a fundamental change, as defined in the
indenture governing the 2033 Senior Notes, subject to certain
exceptions, the holders may require us to repurchase all or any
portion of their 2033 Senior Notes for cash at a repurchase price
equal to 100% of the principal amount of the 2033 Senior Notes
being repurchased, plus any accrued and unpaid interest to, but not
including, the related fundamental change repurchase
date.
From 2013 to 2016, holders of the 2033 Senior Notes converted
$143.2 million in aggregate principal amount into an aggregate of
21,539,873 shares of Common Stock. On February 1, 2019,
approximately $28.8 million aggregate principal amount of 2033
Senior Notes were tendered by holders pursuant to such holders’
option to require us to repurchase the 2033 Senior Notes as set
forth in the indenture, governing the 2033 Senior Notes, following
which repurchase only $3.0 million aggregate principal amount of
the 2033 Senior Notes remained outstanding. Holders of the
remaining $3.0 million principal amount of the 2033 Senior Notes
may require us to repurchase such notes for 100% of their principal
amount, plus accrued and unpaid interest, on February 1, 2023, on
February 1, 2028, or following the occurrence of a fundamental
change as described above.
The terms of the 2033 Senior Notes, include, among others: (i)
rights to convert the notes into shares of our Common Stock,
including upon a fundamental change; and (ii) a coupon make-whole
payment in the event of a conversion by the holders of the 2033
Senior Notes on or after February 1, 2017 but prior to February 1,
2019. We determined that these specific terms were embedded
derivatives. Embedded derivatives are required to be separated from
the host contract, the 2033 Senior Notes, and carried at fair value
when: (a) the embedded derivative possesses economic
characteristics that are not clearly and closely related to the
economic characteristics of the host contract; and (b) a separate,
stand-alone instrument with the same terms would qualify as a
derivative instrument. We concluded that the embedded derivatives
within the 2033 Senior Notes met these criteria and, as such, were
valued separate and apart from the 2033 Senior Notes and recorded
at fair value each reporting period.
For accounting and financial reporting purposes, we combined these
embedded derivatives and valued them together as one unit of
accounting. In 2017, certain terms of the embedded derivatives
expired pursuant to the original agreement and the embedded
derivatives no longer met the criteria to be separated from the
host contract and, as a result, the embedded derivatives were no
longer required to be valued separate and apart from the 2033
Senior Notes and were reclassified to additional paid in
capital.
In November 2015, BioReference and certain of its subsidiaries
entered into a credit agreement with JPMorgan Chase Bank, N.A.
(“CB”), as lender and administrative agent, as amended (the “Credit
Agreement”). The Credit Agreement provides for a $75.0 million
secured revolving credit facility and includes a $20.0 million
sub-facility for swingline loans and a $20.0 million sub-facility
for the issuance of letters of credit. The Credit Agreement matures
on November 5, 2021 and is guaranteed by all of BioReference’s
domestic subsidiaries. The Credit Agreement is also secured by
substantially all assets of BioReference and its domestic
subsidiaries, as well as a non-recourse pledge by us of our equity
interest in BioReference. Availability under the Credit Agreement
is based on a borrowing base composed of eligible accounts
receivables of
BioReference and certain of its subsidiaries, as specified therein.
As of September 30, 2020, $64.7 million remained available for
borrowing under the Credit Agreement. Principal under the Credit
Agreement is due upon maturity on November 5, 2021.
At BioReference’s option, borrowings under the Credit Agreement
(other than swingline loans) will bear interest at (i) the CB
floating rate (defined as the higher of (a) the prime rate and (b)
the LIBOR rate (adjusted for statutory reserve requirements for
Eurocurrency liabilities) for an interest period of one month plus
2.50%) plus an applicable margin of 0.35% for the first 12 months
and 0.50% thereafter or (ii) the LIBOR rate (adjusted for statutory
reserve requirements for Eurocurrency liabilities) plus an
applicable margin of 1.35% for the first 12 months and 1.50%
thereafter. Swingline loans will bear interest at the CB floating
rate plus the applicable margin. The Credit Agreement also calls
for other customary fees and charges, including an unused
commitment fee of 0.25% of the lending commitments.
As of September 30, 2020, no amount was
outstanding under the Credit Agreement.
The Credit Agreement contains customary covenants and restrictions,
including, without limitation, covenants that require BioReference
and its subsidiaries to maintain a minimum fixed charge coverage
ratio if availability under the new credit facility falls below a
specified amount and to comply with laws and restrictions on the
ability of BioReference and its subsidiaries to incur additional
indebtedness or to pay dividends and make certain other
distributions to the Company, subject to certain exceptions as
specified therein. Failure to comply with these covenants would
constitute an event of default under the Credit Agreement,
notwithstanding the ability of BioReference to meet its debt
service obligations. The Credit Agreement also includes various
customary remedies for the lenders following an event of default,
including the acceleration of repayment of outstanding amounts
under the Credit Agreement and execution upon the collateral
securing obligations under the Credit Agreement. Substantially all
the assets of BioReference and its subsidiaries are restricted from
sale, transfer, lease, disposal or distributions to the Company,
subject to certain exceptions. As of September 30, 2020,
BioReference and its subsidiaries had net assets of approximately
$968.0 million, which included goodwill of $434.8 million and
intangible assets of $337.1 million.
In addition to the Credit Agreement with CB, we had line of credit
agreements with eleven other financial institutions as of both
September 30, 2020 and December 31, 2019 in the U.S.,
Chile and Spain. These lines of credit are used primarily as
sources of working capital for inventory purchases.
The following table summarizes the amounts outstanding under the
CB, Chilean and Spanish lines of credit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
|
|
|
|
Balance Outstanding |
Lender |
|
Interest rate on
borrowings at
September 30, 2020 |
|
Credit line
capacity |
|
September 30,
2020 |
|
December 31,
2019 |
JPMorgan Chase |
|
3.50% |
|
$ |
75,000 |
|
|
$ |
— |
|
|
$ |
44,750 |
|
Itau Bank |
|
5.50% |
|
1,810 |
|
|
549 |
|
|
472 |
|
Bank of Chile |
|
6.60% |
|
3,800 |
|
|
76 |
|
|
851 |
|
BICE Bank |
|
5.50% |
|
2,500 |
|
|
2,019 |
|
|
1,429 |
|
BBVA Bank |
|
5.50% |
|
3,250 |
|
|
— |
|
|
11 |
|
Security Bank |
|
5.50% |
|
— |
|
|
— |
|
|
588 |
|
Estado Bank |
|
5.50% |
|
3,500 |
|
|
1,450 |
|
|
1,365 |
|
Santander Bank |
|
5.50% |
|
4,500 |
|
|
1,783 |
|
|
1,943 |
|
Scotiabank |
|
5.00% |
|
1,800 |
|
|
1,826 |
|
|
668 |
|
Corpbanca |
|
5.00% |
|
3,290 |
|
|
3,290 |
|
|
— |
|
Banco De Sabadell |
|
1.75% |
|
586 |
|
|
— |
|
|
— |
|
Banco Bilbao Vizcaya |
|
1.70% |
|
352 |
|
|
— |
|
|
— |
|
Banco Santander |
|
1.82% |
|
586 |
|
|
— |
|
|
— |
|
Total |
|
|
|
$ |
100,974 |
|
|
$ |
10,993 |
|
|
$ |
52,077 |
|
At September 30, 2020 and December 31, 2019, the weighted
average interest rate on our lines of credit was approximately 5.3%
and 4.0%, respectively.
At September 30, 2020 and December 31, 2019, we had notes
payable and other debt (excluding the 2033 Senior Notes, the 2023
Convertible Notes, the 2025 Notes, the Credit Agreement and amounts
outstanding under lines of credit described above) as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
September 30,
2020 |
|
December 31,
2019 |
Current portion of notes payable |
$ |
1,914 |
|
|
$ |
2,494 |
|
Other long-term liabilities |
4,708 |
|
|
4,723 |
|
Total |
$ |
6,622 |
|
|
$ |
7,217 |
|
The notes and other debt mature at various dates ranging from 2020
through 2024, bearing variable interest rates from 0.7% up to 3.8%.
The weighted average interest rate on the notes and other debt was
2.8% and 2.7% on September 30, 2020 and December 31,
2019. The notes are partially secured by our office space in
Barcelona.
NOTE 8 ACCUMULATED OTHER COMPREHENSIVE LOSS
For the nine months ended September 30, 2020, changes in
Accumulated other comprehensive loss, net of tax, were as
follows:
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Foreign
currency
translation |
|
|
|
|
Balance at December 31, 2019 |
$ |
(22,070) |
|
|
|
|
|
Other comprehensive income |
4,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020 |
$ |
(17,451) |
|
|
|
|
|
NOTE 9 FAIR VALUE MEASUREMENTS
We record fair values at an exit price, representing the amount
that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. As
such, fair value is a market-based measurement determined based on
assumptions that market participants would use in pricing an asset
or liability. We utilize a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value. These tiers
are: Level 1, defined as observable inputs such as quoted prices in
active markets; Level 2, defined as inputs other than quoted prices
in active markets that are either directly or indirectly
observable; and Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to
develop its own assumptions.
As of September 30, 2020, we had equity securities (refer to
Note 6), forward foreign currency exchange contracts for inventory
purchases (refer to Note 10) and contingent consideration related
to the acquisitions of CURNA, OPKO Diagnostics and OPKO Renal that
are required to be measured at fair value on a recurring basis. In
addition, in connection with our investment and our consulting
agreement with BioCardia, we record the related BioCardia options
at fair value as well as the warrants from COCP, InCellDx, Xenetic
and Phio.
Our financial assets and liabilities measured at fair value on a
recurring basis are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements as of September 30, 2020 |
(In thousands) |
Quoted
prices in
active
markets for
identical
assets
(Level 1) |
|
Significant
other
observable
inputs
(Level 2) |
|
Significant
unobservable
inputs
(Level 3) |
|
Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
$ |
12,720 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
12,720 |
|
Common stock options/warrants |
— |
|
|
38 |
|
|
— |
|
|
38 |
|
Forward contracts |
— |
|
|
171 |
|
|
— |
|
|
171 |
|
Total assets |
$ |
12,720 |
|
|
$ |
209 |
|
|
$ |
— |
|
|
$ |
12,929 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration |
— |
|
|
— |
|
|
11,017 |
|
|
11,017 |
|
Total liabilities |
$ |
— |
|
|
$ |
— |
|
|
$ |
11,017 |
|
|
$ |
11,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements as of December 31, 2019 |
(In thousands) |
Quoted
prices in
active
markets for
identical
assets
(Level 1) |
|
Significant
other
observable
inputs
(Level 2) |
|
Significant
unobservable
inputs
(Level 3) |
|
Total |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities |
$ |
18,870 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
18,870 |
|
Common stock options/warrants |
— |
|
|
120 |
|
|
— |
|
|
120 |
|
Forward contracts |
— |
|
|
133 |
|
|
— |
|
|
133 |
|
Total assets |
$ |
18,870 |
|
|
$ |
253 |
|
|
$ |
— |
|
|
$ |
19,123 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration |
— |
|
|
— |
|
|
9,683 |
|
|
9,683 |
|
Total liabilities |
$ |
— |
|
|
$ |
— |
|
|
$ |
9,683 |
|
|
$ |
9,683 |
|
The carrying amount and estimated fair value of our 2025 Notes, as
well as the applicable fair value hierarchy tiers, are contained in
the table below. The fair value of the 2025 Notes is determined
using inputs other than quoted prices in active markets that are
directly observable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
(In thousands) |
Carrying
Value |
|
Total
Fair Value |
|
Level 1 |
|
Level 2 |
|
Level 3 |
2025 Notes |
$ |
154,061 |
|
|
$ |
247,158 |
|
|
$ |
— |
|
|
$ |
247,158 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There have been no transfers between Level 1 and Level 2 and no
transfers to or from Level 3 of the fair value
hierarchy.
As of September 30, 2020 and December 31, 2019, the
carrying value of our other financial instrument assets
approximates their fair value due to their short-term nature or
variable rate of interest.
The following table reconciles the beginning and ending balances of
our Level 3 assets and liabilities as of September 30,
2020:
|
|
|
|
|
|
|
|
|
|
|
September 30, 2020 |
(In thousands) |
Contingent
consideration |
|
|
|
|
Balance at December 31, 2019 |
$ |
9,683 |
|
|
|
|
|
|
|
|
|
|
|
Change in fair value: |
|
|
|
|
|
Included in results of operations |
1,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020 |
$ |
11,017 |
|
|
|
|
|
The estimated fair values of our financial instruments have been
determined by using available market information and what we
believe to be appropriate valuation methodologies. We use the
following methods and assumptions in estimating fair
value:
Contingent consideration
– We estimate the fair value of the contingent consideration
utilizing a discounted cash flow model for the expected payments
based on estimated timing and expected revenues. We use several
discount rates depending on each type of contingent consideration
related to OPKO Diagnostics, CURNA and OPKO Renal transactions. As
of September 30, 2020, of the $11.0 million of contingent
consideration, $2.4 million was recorded in Accrued expenses and
$8.6 million was recorded in Other long-term liabilities. As of
December 31, 2019, of the $9.7 million of contingent
consideration, $2.4 million was recorded in Accrued expenses and
$7.3 million was recorded in Other long-term
liabilities.
NOTE 10 DERIVATIVE CONTRACTS
The following table summarizes the fair values and the presentation
of our derivative assets (liabilities) in the Condensed
Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
Balance Sheet Component |
|
September 30,
2020 |
|
December 31,
2019 |
Derivative financial instruments: |
|
|
|
|
|
|
|
|
|
|
|
Common Stock options/warrants |
Investments, net |
|
$ |
38 |
|
|
$ |
120 |
|
|
|
|
|
|
|
Forward contracts |
Unrealized gains on forward contracts are recorded in Other current
assets and prepaid expenses. Unrealized (losses) on forward
contracts are recorded in Accrued expenses. |
|
$ |
171 |
|
|
$ |
133 |
|
We enter into foreign currency forward exchange contracts in an
effort to mitigate the effects of exchange rate differences arising
from inventory purchases on letters of credit. Under these forward
contracts, for any rate above or below the fixed rate, we receive
or pay the difference between the spot rate and the fixed rate for
the given amount at the settlement date.
To qualify the derivative instrument as a hedge, we are required to
meet strict hedge effectiveness and contemporaneous documentation
requirements at the initiation of the hedge and assess the hedge
effectiveness on an ongoing basis over the life of the hedge. At
September 30, 2020 and December 31, 2019, our derivative
financial instruments did not meet the documentation requirements
to be designated as hedges. Accordingly, we recognize the changes
in Fair value of derivative instruments, net in our Condensed
Consolidated Statement of Operations. The following table
summarizes the losses and gains recorded for the three and nine
months ended September 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
(In thousands) |
2020 |
|
2019 |
|
|
2020 |
|
2019 |
Derivative gain (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock options/warrants |
$ |
(13) |
|
|
$ |
(368) |
|
|
|
$ |
(82) |
|
|
$ |
(392) |
|
|
|
|
|
|
|
|
|
|
Forward contracts |
(483) |
|
|
347 |
|
|
|
194 |
|
|
398 |
|
Total |
$ |
(496) |
|
|
$ |
(21) |
|
|
|
$ |
112 |
|
|
$ |
6 |
|
NOTE 11 RELATED PARTY TRANSACTIONS
In August 2020, we paid a $125,000 filing fee to the Federal Trade
Commission (the “FTC”) in connection with filings made by us and
Dr. Jane Hsiao, our Vice Chairman and Chief Technical Officer,
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(“HSR Act”) relating to her percentage equity ownership interest in
OPKO and potential future purchases of our Common
Stock.
In August 2020, Dr. Phillip Frost, our Chairman and Chief Executive
Officer, paid a filing fee of $280,000 to the FTC under the HSR Act
in connection with filings made by us and Dr. Frost, relating to
his percentage equity ownership interest in OPKO and potential
future purchases of our Common Stock. We will reimburse Dr.
Frost for the HSR filing fee.
On February 25, 2020, we entered into a credit agreement with an
affiliate of Dr. Frost, pursuant to which the lender committed to
provide us with an unsecured line of credit in the amount of $100
million. Borrowings under the line of credit will bear interest at
a rate of 11% per annum and may be repaid and reborrowed at any
time. The credit agreement includes various customary remedies for
the lender following an event of default, including the
acceleration of repayment of outstanding amounts under line of
credit. The line of credit matures on February 25, 2025. The line
of credit also calls for a commitment fee equal to 0.25% per annum
of the unused portion of the line. As of September 30, 2020, no
funds were borrowed under the line of credit.
On October 29, 2019, we issued 50 million shares of our Common
Stock at a price of $1.50 per share in an underwritten public
offering (the “Offering”), resulting in net proceeds to the Company
of approximately $70 million, after deducting underwriting
commissions and offering expenses. In November 2019, pursuant to an
option the Company granted the underwriters, we issued an
additional 4,227,749 shares at the public offering price, less
underwriting discounts and commissions, resulting in net proceeds
to the Company of approximately $6 million. Drs. Frost and Hsiao
and Mr. Steven Rubin, members of OPKO’s senior management purchased
an aggregate of 2,415,000 shares of Common Stock in the
Offering.
On March 1, 2019, OPKO Pharmaceuticals, LLC entered into an
assignment agreement with Xenetic Biosciences, Inc., as amended
from time to time (the “Assignment Agreement”), pursuant to which
Xenetic acquired all of OPKO Pharmaceuticals’ right, title and
interest in and to that certain Intellectual Property License
Agreement (the “IP License Agreement”), entered into between The
Scripps Research Institute and OPKO Pharmaceuticals, regarding
certain patents for novel CAR T platform technology and through
which the Scripps Research Institute granted an exclusive
royalty-bearing license in exchange for royalties, subject to the
terms of the IP License Agreement.
Under the Assignment Agreement and the IP License Agreement,
Xenetic issued to OPKO Pharmaceuticals 164,062 shares of Xenetic
common stock (the “OPKO Transaction Shares”). In connection with
the Assignment Agreement, OPKO Pharmaceuticals entered into a
voting agreement pursuant to which OPKO Pharmaceuticals agreed,
among other things, to vote its shares in Xenetic in favor of the
transactions contemplated by the Assignment Agreement, and a
lock-up agreement with Xenetic which restricts OPKO
Pharmaceuticals’ sale or transfer of any of the OPKO Transaction
Shares as provided therein and as otherwise required by law. The
Assignment Agreement and the obligations thereunder took effect on
July 19, 2019, after Xenetic satisfied certain closing conditions,
including obtaining stockholder approval and securing certain
financing.
The Company owns approximately 9% of Pharmsynthez and Pharmsynthez
is Xenetic’s largest and controlling stockholder. Dr. Richard
Lerner, a director of the Company, is a co-inventor of Xenetic’s
technology and received 31,240 shares of Xenetic upon the closing
of the Xenetic transactions described above. Adam Logal, our Senior
Vice President and Chief Financial Officer, is a director of
Xenetic.
In March 2019, we paid the $125,000 filing fee to the FTC in
connection with filings made by us and Dr. Jane Hsiao, our Vice
Chairman and Chief Technical Officer, under the HSR Act relating to
her purchases of Common Stock.
In February 2019, Dr. Phillip Frost, our Chairman and Chief
Executive Officer, paid a filing fee of $280,000 to the FTC under
the HSR Act in connection with filings made by us and Dr. Frost,
relating to his purchases of Common Stock. We reimbursed Dr.
Frost for the HSR filing fee.
On November 8, 2018, we entered into a credit agreement with an
affiliate of Dr. Frost, pursuant to which the lender committed to
provide us with an unsecured line of credit in the amount of $60
million. Borrowings under the line of credit bore interest at a
rate of 10% per annum and could have been repaid and reborrowed at
any time. The credit agreement included various customary remedies
for the lender following an event of default, including the
acceleration of repayment of outstanding amounts under line of
credit. The line of credit would have matured on November 8, 2023.
We repaid approximately $28.8 million that was borrowed in 2019 and
terminated the line of credit on or around February 20,
2019.
In February 2018, we issued the 2023 Convertible Notes in the
aggregate principal amount of $55.0 million. Refer to Note 7.
Purchasers of the 2023 Convertible Notes included Dr. Hsiao and an
affiliate of Dr. Frost.
We hold investments in Zebra (ownership 29%), Neovasc (2%),
ChromaDex Corporation (0.1%), MabVax (1%), COCP (5%), NIMS (1%),
Eloxx (3%), and BioCardia (2%). These investments were considered
related party transactions as a result of our executive
management’s ownership interests and/or board representation in
these entities. See further discussion of our investments in Note
6.
In February 2018, we invested an additional $1.0 million in COCP
for a convertible note, which was converted into 538,544 shares of
its common stock in May 2018. In April 2017, we invested an
additional $1.0 million in COCP for 138,889 shares of its common
stock.
In November 2017, we invested an additional $3.0 million in Neovasc
for 20,547 shares of its common stock, 20,547 Series A warrants,
20,547 Series B warrants and 8,221 Series C warrants, after
adjusting for a 1-for-100 reverse stock split in 2018. In April
2018, we exercised the Series B warrants in a cashless exercise and
received 10,690 shares of Neovasc common stock. In the first
quarter of 2019, we exercised the Series C warrants for $1.2
million and exchanged the Series A warrants and received a total of
22,660 additional shares of Neovasc common stock.
In November 2016, we entered into a Pledge Agreement with the
Museum of Science, Inc. and the Museum of Science Endowment Fund,
Inc. pursuant to which we agreed to contribute an aggregate of $1.0
million over a four-year period for constructing, equipping and the
general operation of the Frost Science Museum. Dr. Frost and Mr.
Richard Pfenniger serve on the Board of Trustees of the Frost
Science Museum and Mr. Pfenniger is the Vice Chairman of the Board
of Trustees.
We lease office space from Frost Real Estate Holdings, LLC (“Frost
Holdings”) in Miami, Florida, where our principal executive offices
are located. Effective August 1, 2019, we entered into an amendment
to our lease agreement with Frost Holdings. The lease, as amended,
is for approximately 29,500 square feet of space. The lease
provides for payments of
approximately $89 thousand per month in the first year increasing
annually to $101 thousand per month in the fifth year, plus
applicable sales tax. The rent is inclusive of operating expenses,
property taxes and parking.
BioReference purchases and uses certain products acquired from
InCellDx, a company in which we hold a 29% minority
interest.
We reimburse Dr. Frost for Company-related use by
Dr. Frost and our other executives of an airplane owned by a
company that is beneficially owned by Dr. Frost. We reimburse
Dr. Frost for out-of-pocket operating costs for the use of the
airplane by Dr. Frost or Company executives for Company-related
business. We do not reimburse Dr. Frost for personal use of
the airplane by Dr. Frost or any other executive. For the
three and nine months ended September 30, 2020, we reimbursed
approximately $62 thousand and $156 thousand, respectively, for
Company-related travel by Dr. Frost and other OPKO executives. For
the three and nine months ended September 30, 2019, we reimbursed
approximately $0 thousand and $160 thousand,
respectively, for Company-related travel by Dr. Frost and other
OPKO executives.
NOTE 12 COMMITMENTS AND CONTINGENCIES
In connection with our acquisitions of CURNA, OPKO Diagnostics and
OPKO Renal, we agreed to pay future consideration to the sellers
upon the achievement of certain events. As a result,
as of September 30, 2020,
we recorded $11.0 million as contingent consideration, with $2.4
million recorded within Accrued expenses and $8.6 million recorded
within Other long-term liabilities in the accompanying Condensed
Consolidated Balance Sheets. Refer to Note 5.
On June 3, 2019, BioReference reported that Retrieval-Masters
Creditors Bureau, Inc. d/b/a American Medical Collection Agency
(“AMCA”), had notified BioReference about a data security incident
involving AMCA (the “AMCA Incident”). AMCA informed BioReference
that an unauthorized user had access to AMCA’s system between
August 1, 2018 and March 30, 2019. AMCA advised that AMCA’s
affected system may have included patient name, date of birth,
address, phone, date of service, provider, and balance information,
as well as credit card information, bank account information (but
no passwords or security questions) and email addresses that were
provided by the consumer to AMCA. AMCA advised BioReference that no
Social Security Numbers were compromised, and BioReference provided
no laboratory results or diagnostic information to AMCA.
BioReference notified patients and provided notice to the Office of
Civil Rights of the AMCA Incident. BioReference had been named in
at least two class action lawsuits against AMCA and other
defendants in connection with the AMCA Incident. In April 2020, the
class action lawsuits against BioReference were dismissed without
prejudice. The Office of Inspector General and Office for Civil
Rights (“OCR”) of the Department of Health and Human Services, as
well as the attorney generals’ offices from certain states have
contacted BioReference to request additional information relating
to the AMCA Incident. On June 22, 2020 the OCR advised us it was
closing its file regarding the AHCA matter and no further action is
required of BioReference with respect to this matter. The
resolution with the OCR does not, however, foreclose continued
inquiries from attorney generals’ offices from other states.
Accordingly, it is not possible at this time to estimate the amount
of loss or range of loss, if any, that might result from adverse
judgments, settlements, fines, penalties, or other resolution of
these investigations based on the stage of these investigations,
and the absence of specific allegations.
As previously disclosed, on September 7, 2018, the Securities and
Exchange Commission (the “SEC”) filed a lawsuit in the Southern
District of New York (the “SEC Complaint”) against a number of
individuals and entities (the “Defendants”), including the Company
and its CEO and Chairman, Dr. Phillip Frost. The SEC alleged, among
other things, that the Company (i) aided and abetted an illegal
“pump and dump” scheme perpetrated by a number of the Defendants,
and (ii) failed to file required Schedules 13D or 13G with the SEC.
The Company and Dr. Frost entered into settlement agreements with
the SEC that resolved the SEC Complaint against each of them. The
settlement agreements were approved by the court in January 2019.
Pursuant to the settlement, and without admitting or denying any of
the allegations of the SEC Complaint, the Company is enjoined from
violating Section 13(d) of the Exchange Act and paid a $100,000
penalty. Liability under Section 13(d) can be established without
any showing of wrongful intent or negligence.
Following the SEC’s announcement of the SEC Complaint, we were
named in several class action lawsuits, more than a dozen
derivative suits, and other litigation relating to the allegations
in the SEC Complaint among other matters. On June 26, 2020, The
Amitim Funds, the lead plaintiff in the class action lawsuits,
filed a Stipulation of Settlement in the Southern District of
Florida of behalf of itself and the remainder of the class, which,
if approved, will provide for the settlement of and release of the
class action claims against the Company and Dr. Frost for
$16.5 million. On September 4, 2020, an Order Preliminarily
Approving Settlement was entered and a settlement hearing is
scheduled for December 15, 2020. The settlement remains subject to
certain terms and conditions including court approval. Our
insurance carriers have agreed to provide coverage for a
significant portion of the currently contemplated settlement
amounts in connection with the class action and derivative
lawsuits.
With respect to the derivative suits, a Stipulation and Agreement
of Compromise and Settlement dated August 14, 2020 was entered with
the Delaware Chancery Court and a settlement hearing has been
scheduled for November 2, 2020. The settlement amount of
$3.1 million, if approved, is to be paid by the individual
defendants’ insurance company.
In April 2017, the Civil Division of the United States Attorney’s
Office for the Southern District of New York (the “SDNY”) informed
BioReference that it believed that, from 2008 to 2012, BioReference
had, in violation of the False Claims Act, improperly billed
Medicare and TRICARE (both are federal government healthcare
programs) for clinical laboratory services provided to hospital
inpatient beneficiaries at certain hospitals. In April 2019, the
SDNY also informed BioReference that it believed that BioReference
provided physicians subsidies for electronic health record systems
prior to 2012 that violated regulations adopted by HHS in 2006
which allowed laboratories to provide these donations under certain
conditions. BioReference and the SDNY reached a settlement with
respect to these matters and a final settlement and release,
including BioReference’s payment of an approximately
$11.5 million settlement amount, was approved on September 22,
2020. The amount of related attorneys’ fees is currently being
negotiated.
On October 11, 2019, GeneDx received a letter from the Centers
for Medicare and Medicaid Services (“CMS”), notifying
GeneDx of CMS’ determination to suspend Medicare payments to
GeneDx, which suspension became effective on September 27,
2019 (the “CMS Letter”). CMS advised that it suspended payments due
to possible overpayments to GeneDx in connection with reimbursement
claims for genetic testing services based on a diagnosis of family
history of cancer, which testing CMS has alleged is not covered by
Medicare under the applicable provisions of the Social Security Act
on the basis that such testing is not reasonable and necessary for
the diagnosis or treatment of illness or injury.
CMS lifted the suspension on February 3, 2020, and issued an
extrapolated overpayment finding of approximately $576,332, which
GeneDx paid.
From time to time, we may receive inquiries, document requests,
Civil Investigative Demands (“CIDs”) or subpoenas from the
Department of Justice, OCR, CMS, various payors and fiscal
intermediaries, and other state and federal regulators regarding
investigations, audits and reviews. In addition to the matters
discussed in this note, we are currently responding to CIDs,
subpoenas, payor audits, and document requests for various matters
relating to our laboratory operations. Some pending or threatened
proceedings against us may involve potentially substantial amounts
as well as the possibility of civil, criminal, or administrative
fines, penalties, or other sanctions, which could be material.
Settlements of suits involving the types of issues that we
routinely confront may require monetary payments as well as
corporate integrity agreements. Additionally, qui tam or
“whistleblower” actions initiated under the civil False Claims Act
may be pending but placed under seal by the court to comply with
the False Claims Act’s requirements for filing such suits. Also,
from time to time, we may detect issues of non-compliance with
federal healthcare laws pertaining to claims submission and
reimbursement practices and/or financial relationships with
physicians, among other things. We may avail ourselves of various
mechanisms to address these issues, including participation in
voluntary disclosure protocols. Participating in voluntary
disclosure protocols can have the potential for significant
settlement obligations or even enforcement action. The Company
generally has cooperated, and intends to continue to cooperate,
with appropriate regulatory authorities as and when investigations,
audits and inquiries arise.
We are a party to other litigation in the ordinary course of
business. While we cannot predict the ultimate outcome of legal
matters, we accrue a liability for legal contingencies when we
believe that it is both probable that a liability has been incurred
and that we can reasonably estimate the amount of the loss. It’s
reasonably possible the ultimate liability could exceed amounts
currently estimated and we review established accruals and adjust
them to reflect ongoing negotiations, settlements, rulings, advice
of legal counsel and other relevant information. To the extent new
information is obtained and our views on the probable outcomes of
claims, suits, assessments, investigations or legal proceedings
change, changes in our accrued liabilities would be recorded in the
period in which such determination is made. Because of the high
degree of judgment involved in establishing loss estimates, the
ultimate outcome of such matters will differ from our estimates and
such differences may be material to our business, financial
condition, results of operations, and cash flows.
At September 30, 2020, we were committed to make future
purchases for inventory and other items in 2020 that occur in the
ordinary course of business under various purchase arrangements
with fixed purchase provisions aggregating approximately $196.1
million.
NOTE 13 REVENUE RECOGNITION
We generate revenues from services, products and intellectual
property as follows:
Revenue from services
Revenue for laboratory services is recognized at the time test
results are reported, which approximates when services are provided
and the performance obligations are satisfied. Services are
provided to patients covered by various third-party payor programs
including various managed care organizations, as well as the
Medicare and Medicaid programs. Billings for services are included
in revenue net of allowances for contractual discounts, allowances
for differences between the amounts billed and
estimated program payment amounts, and implicit price concessions
provided to uninsured patients which are all elements of variable
consideration.
The following are descriptions of our payors for laboratory
services:
Healthcare Insurers.
Reimbursements from healthcare insurers are based on negotiated
fee-for-service schedules. Revenues consist of amounts billed, net
of contractual allowances for differences between amounts billed
and the estimated consideration we expect to receive from such
payors, which considers historical denial and collection experience
and the terms of our contractual arrangements. Adjustments to the
allowances, based on actual receipts from the third-party payors,
are recorded upon settlement.
Government Payors.
Reimbursements from government payors are based on fee-for-service
schedules set by governmental authorities, including traditional
Medicare and Medicaid. Revenues consist of amounts billed, net of
contractual allowances for differences between amounts billed and
the estimated consideration we expect to receive from such payors,
which considers historical denial and collection experience and the
terms of our contractual arrangements. Adjustments to the
allowances, based on actual receipts from the government payors,
are recorded upon settlement.
Client Payors.
Client payors include physicians, hospitals, employers, and other
institutions for which services are performed on a wholesale basis,
and are billed and recognized as revenue based on negotiated fee
schedules.
Patients.
Uninsured patients are billed based on established patient fee
schedules or fees negotiated with physicians on behalf of their
patients. Insured patients (including amounts for coinsurance and
deductible responsibilities) are billed based on fees negotiated
with healthcare insurers. Collection of billings from patients is
subject to credit risk and ability of the patients to pay. Revenues
consist of amounts billed net of discounts provided to uninsured
patients in accordance with our policies and implicit price
concessions. Implicit price concessions represent differences
between amounts billed and the estimated consideration that we
expect to receive from patients, which considers historical
collection experience and other factors including current market
conditions. Adjustments to the estimated allowances, based on
actual receipts from the patients, are recorded upon
settlement.
The complexities and ambiguities of billing, reimbursement
regulations and claims processing, as well as considerations unique
to Medicare and Medicaid programs, require us to estimate the
potential for retroactive adjustments as an element of variable
consideration in the recognition of revenue in the period the
related services are rendered. Actual amounts are adjusted in the
period those adjustments become known. For the nine months ended
September 30, 2020 and 2019, revenue reductions due to changes in
estimates of implicit price concessions for performance obligations
satisfied in prior periods of $1.6 million and $25.8 million,
respectively, were recognized.
Third-party payors, including government programs, may decide to
deny payment or recoup payments for testing they contend were
improperly billed or not medically necessary, against their
coverage determinations, or for which they believe they have
otherwise overpaid (including as a result of their own error), and
we may be required to refund payments already received. Our
revenues may be subject to retroactive adjustment as a result of
these factors among others, including without limitation, differing
interpretations of billing and coding guidance and changes by
government agencies and payors in interpretations, requirements,
and “conditions of participation” in various programs. We have
processed requests for recoupment from third-party payors in the
ordinary course of our business, and it is likely that we will
continue to do so in the future. If a third-party payer denies
payment for testing or recoups money from us in a later period,
reimbursement for our testing could decline.
As an integral part of our billing compliance program, we
periodically assess our billing and coding practices, respond to
payor audits on a routine basis, and investigate reported failures
or suspected failures to comply with federal and state healthcare
reimbursement requirements, as well as overpayment claims which may
arise from time to time without fault on the part of the Company.
We may have an obligation to reimburse Medicare, Medicaid, and
third-party payors for overpayments regardless of fault. We
have periodically identified and reported overpayments,
reimbursed payors for overpayments and taken appropriate
corrective action.
Settlements with third-party payors for retroactive adjustments due
to audits, reviews or investigations are also considered variable
consideration and are included in the determination of the
estimated transaction price for providing services. These
settlements are estimated based on the terms of the payment
agreement with the payor, correspondence from the payor and our
historical settlement activity, including an assessment of the
probability a significant reversal of cumulative revenue recognized
will occur when the uncertainty is subsequently resolved. Estimated
settlements are adjusted in future periods as adjustments become
known (that is, new information becomes available), or as years are
settled or are no longer subject to such audits, reviews, and
investigations. As of September 30, 2020 and December 31,
2019, we had liabilities of approximately $21.4
million and $27.3 million, respectively, within Accrued expenses
and Other long-term liabilities related to reimbursements for payor
overpayments.
The composition of Revenue from services by payor for the nine
months ended September 30, 2020 and 2019 was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
(In thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Healthcare insurers |
$ |
136,531 |
|
|
$ |
104,020 |
|
|
$ |
319,763 |
|
|
$ |
315,227 |
|
Government payers |
21,537 |
|
|
28,206 |
|
|
64,322 |
|
|
87,243 |
|
Client payers |
207,886 |
|
|
43,750 |
|
|
388,078 |
|
|
120,309 |
|
Patients |
16,544 |
|
|
5,163 |
|
|
32,146 |
|
|
15,709 |
|
Total |
$ |
382,498 |
|
|
$ |
181,139 |
|
|
$ |
804,309 |
|
|
$ |
538,488 |
|
Client payers include cities, states and companies for which
BioReference provides COVID-19 testing services.
Revenue from products
We recognize revenue from product sales when a customer obtains
control of promised goods or services. The amount of revenue that
is recorded reflects the consideration that we expect to receive in
exchange for those goods or services. Our estimates for sales
returns and allowances are based upon the historical patterns of
product returns and allowances taken, matched against the sales
from which they originated, and our evaluation of specific factors
that may increase or decrease the risk of product returns. Product
revenues are recorded net of estimated rebates, chargebacks,
discounts, co-pay assistance and other deductions (collectively,
“Sales Deductions”) as well as estimated product returns which are
all elements of variable consideration. Allowances are recorded as
a reduction of revenue at the time product revenues are recognized.
The actual amounts of consideration ultimately received may differ
from our estimates. If actual results in the future vary from our
estimates, we will adjust these estimates, which would affect
Revenue from products in the period such variances become
known.
Rayaldee
is distributed in the U.S. principally through the retail pharmacy
channel, which initiates with the largest wholesalers in the U.S.
(collectively, “Rayaldee
Customers”). In addition to distribution agreements with
Rayaldee
Customers, we have entered into arrangements with many healthcare
providers and payors that provide for government-mandated and/or
privately-negotiated rebates, chargebacks and discounts with
respect to the purchase of
Rayaldee.
We recognize revenue for shipments of
Rayaldee
at the time of delivery to customers after estimating Sales
Deductions and product returns as elements of variable
consideration utilizing historical information and market research
projections. For the three and nine months ended September 30,
2020, we recognized $8.1 million and $26.7 million,
respectively, in net product revenue from sales of
Rayaldee.
For the three and nine months ended September 30, 2019, we
recognized $7.4 million and $18.8 million, respectively, in
net product revenue from sales of
Rayaldee.
The following table presents an analysis of product sales
allowances and accruals for the three and nine months ended
September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Chargebacks, discounts, rebates and fees |
|
Governmental |
|
Returns |
|
Total |
Balance at June 30, 2020 |
|
$ |
2,890 |
|
|
$ |
6,999 |
|
|
$ |
3,830 |
|
|
$ |
13,719 |
|
Provision related to current period sales |
|
4,269 |
|
|
9,335 |
|
|
264 |
|
|
13,868 |
|
|
|
|
|
|
|
|
|
|
Credits or payments made |
|
(4,965) |
|
|
(6,522) |
|
|
(159) |
|
|
(11,646) |
|
Balance at September 30, 2020 |
|
$ |
2,194 |
|
|
$ |
9,812 |
|
|
$ |
3,935 |
|
|
$ |
15,941 |
|
|
|
|
|
|
|
|
|
|
Total gross
Rayaldee
sales
|
|
|
|
|
|
|
|
$ |
22,010 |
|
Provision for
Rayaldee
sales allowances and accruals as a percentage of gross
Rayaldee
sales
|
|
|
|
|
|
|
|
63% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Chargebacks, discounts, rebates and fees |
|
Governmental |
|
Returns |
|
Total |
Balance at December 31, 2019 |
|
$ |
3,194 |
|
|
$ |
5,841 |
|
|
$ |
2,751 |
|
|
$ |
11,786 |
|
Provision related to current period sales |
|
13,562 |
|
|
25,615 |
|
|
1,654 |
|
|
40,831 |
|
|
|
|
|
|
|
|
|
|
Credits or payments made |
|
(14,562) |
|
|
(21,644) |
|
|
(470) |
|
|
(36,676) |
|
Balance at September 30, 2020 |
|
$ |
2,194 |
|
|
$ |
9,812 |
|
|
$ |
3,935 |
|
|
$ |
15,941 |
|
|
|
|
|
|
|
|
|
|
Total gross
Rayaldee
sales
|
|
|
|
|
|
|
|
$ |
67,569 |
|
Provision for
Rayaldee
sales allowances and accruals as a percentage of gross
Rayaldee
sales
|
|
|
|
|
|
|
|
60% |
|
|
|
|
|
|
|
|
|
Taxes collected from customers related to revenues from services
and revenues from products are excluded from revenues.
Revenue from intellectual property
We recognize revenues from the transfer of intellectual property
generated through license, development, collaboration and/or
commercialization agreements. The terms of these agreements
typically include payment to us for one or more of the following:
non-refundable, up-front license fees; development and
commercialization milestone payments; funding of research and/or
development activities; and royalties on sales of licensed
products. Revenue is recognized upon satisfaction of a performance
obligation by transferring control of a good or service to the
customer.
For research, development and/or commercialization agreements that
result in revenues, we identify all material performance
obligations, which may include a license to intellectual property
and know-how, and research and development activities. In order to
determine the transaction price, in addition to any upfront
payment, we estimate the amount of variable consideration at the
outset of the contract either utilizing the expected value or most
likely amount method, depending on the facts and circumstances
relative to the contract. We constrain (reduce) our estimates of
variable consideration such that it is probable that a significant
reversal of previously recognized revenue will not occur throughout
the life of the contract. When determining if variable
consideration should be constrained, we consider whether there are
factors outside of our control that could result in a significant
reversal of revenue. In making these assessments, we consider the
likelihood and magnitude of a potential reversal of revenue. These
estimates are re-assessed each reporting period as
required.
Upfront License Fees: If a license to our intellectual property is
determined to be functional intellectual property distinct from the
other performance obligations identified in the arrangement, we
recognize revenue from nonrefundable, upfront license fees based on
the relative value prescribed to the license compared to the total
value of the arrangement. The revenue is recognized when the
license is transferred to the customer and the customer is able to
use and benefit from the license. For licenses that are not
distinct from other obligations identified in the arrangement, we
utilize judgment to assess the nature of the combined performance
obligation to determine whether the combined performance obligation
is satisfied over time or at a point in time. If the combined
performance obligation is satisfied over time, we apply an
appropriate method of measuring progress for purposes of
recognizing revenue from nonrefundable, upfront license fees. We
evaluate the measure of progress each reporting period and, if
necessary, adjust the measure of performance and related revenue
recognition.
Development and Regulatory Milestone Payments: Depending on facts
and circumstances, we may conclude that it is appropriate to
include the milestone in the estimated transaction price or that it
is appropriate to fully constrain the milestone. A milestone
payment is included in the transaction price in the reporting
period that we conclude that it is probable that recording revenue
in the period will not result in a significant reversal in amounts
recognized in future periods. We may record revenues from certain
milestones in a reporting period before the milestone is achieved
if we conclude that achievement of the milestone is probable and
that recognition of revenue related to the milestone will not
result in a significant reversal in amounts recognized in future
periods. We record a corresponding contract asset when this
conclusion is reached. Milestone payments that have been fully
constrained are not included in the transaction price to date.
These milestones remain fully constrained until we conclude that
achievement of the milestone is probable and that recognition of
revenue related to the milestone will not result in a significant
reversal in amounts recognized in future periods. We re-evaluate
the probability of achievement of such development milestones and
any related constraint each reporting period. We adjust our
estimate of the overall transaction price, including the amount of
revenue recorded, if necessary.
Research and Development Activities: If we are entitled to
reimbursement from our customers for specified research and
development expenses, we account for them as separate performance
obligations if distinct. We also determine whether the
research and development funding would result in revenues or an
offset to research and development expenses in accordance with
provisions of gross or net revenue presentation. The corresponding
revenues or offset to research and development expenses are
recognized as the related performance obligations are
satisfied.
Sales-based Milestone and Royalty Payments: Our customers may be
required to pay us sales-based milestone payments or royalties on
future sales of commercial products. We recognize revenues related
to sales-based milestone and royalty payments upon the later to
occur of (i) achievement of the customer’s underlying sales or (ii)
satisfaction of any performance obligation(s) related to these
sales, in each case assuming the license to our intellectual
property is deemed to be the predominant item to which the
sales-based milestones and/or royalties relate.
Other Potential Products and Services: Arrangements may include an
option for license rights, future supply of drug substance or drug
product for either clinical development or commercial supply at the
licensee’s election. We assess if these options provide a material
right to the licensee and if so, they are accounted for as separate
performance obligations at the inception of the contract and
revenue is recognized only if the option is exercised and products
or services are subsequently delivered or when the rights expire.
If the promise is based on market terms and not considered a
material right, the option is accounted for if and when exercised.
If we are entitled to additional payments when the licensee
exercises these options, any additional payments are generally
recorded in license or other revenues when the licensee obtains
control of the goods, which is upon delivery.
For the three and nine months ended September 30, 2020, revenue
from transfer of intellectual property principally reflects $3.1
million and $25.8 million of revenue, respectively, related to the
Pfizer Transaction (as defined below). In addition, revenue from
the transfer of intellectual property and other for the three and
nine months ended September 30, 2020 includes $10.0 million
and $16.2 million, respectively, of grants received by
BioReference from the CARES Act. For the three and nine months
ended September 30, 2019, revenue from the transfer of intellectual
property principally reflects $19.5 million and $55.1 million of
revenue, respectively, related to the Pfizer Transaction. Refer to
Note 14 for discussion of the Pfizer Transaction.
Contract liabilities relate to cash consideration that OPKO
receives in advance of satisfying the related performance
obligations. Changes in the contractual liabilities balance during
the nine months ended September 30, 2020 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
Balance at December 31, 2019 |
|
$ |
21,767 |
|
|
|
Balance at September 30, 2020 |
|
17,050 |
|
|
|
Revenue recognized in the period from: |
|
|
|
|
Amounts included in contracts liability at the beginning of the
period |
|
18,376 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The contract liability balance at September 30, 2020 related
primarily to accelerated payments received as part of the CARES
Act. Refer to Note 3.
NOTE 14 STRATEGIC ALLIANCES
Japan Tobacco Inc.
On October 12, 2017, EirGen, our wholly owned subsidiary, and Japan
Tobacco Inc. (“JT”) entered into a Development and License
Agreement (the “JT Agreement”) granting JT the exclusive rights for
the development and commercialization of
Rayaldee
in Japan (the “JT Territory”). The license grant to JT covers the
therapeutic and preventative use of the product for (i) SHPT
in non-dialysis and dialysis patients with CKD, (ii) rickets,
and (iii) osteomalacia (the “JT Initial Indications”), as well
as such additional indications as may be added to the scope of the
license subject to the terms of the JT Agreement (the “JT
Additional Indications” and together with the JT Initial
Indications, the “JT Field”).
In connection with the license, OPKO received an initial upfront
payment of $6 million and received another $6 million upon the
initiation of OPKO’s phase 2 study for
Rayaldee
in dialysis patients in the U.S. in September 2018 (the “Initial
Consideration”). OPKO is also eligible to receive up to an
additional aggregate amount of $31 million upon the achievement of
certain regulatory and development milestones by JT for
Rayaldee
in the JT Territory, and $75 million upon the achievement of
certain sales based milestones by JT in the JT Territory. OPKO is
also entitled to receive tiered, double digit royalty payments at
percentages ranging from low double digits to mid-teens on net
sales of
Rayaldee
within the JT Territory. JT will, at its sole cost and expense, be
responsible for performing all development activities necessary to
obtain all regulatory approvals for
Rayaldee
in Japan and for all commercial activities pertaining to
Rayaldee
in Japan.
The JT Agreement provides for the following: (1) an exclusive
license in the JT Territory in the JT Field for the development and
commercialization of
Rayaldee;
and (2) at JT’s option, EirGen will supply products to support the
development, sale and commercialization of the products to JT in
the JT Territory.
The Initial Consideration will be recognized over the performance
period through 2021, when we anticipate completing the transfer of
license materials specified in the JT Agreement and our performance
obligation is complete. Payments received for regulatory,
development and sales milestones are non-refundable. The milestones
are payable if and when the associated milestone is achieved and
will be recognized as revenue in the period in which the associated
milestone is achieved, assuming all other revenue recognition
criteria are met. To date, no revenue has been recognized related
to these milestones.
Vifor Fresenius Medical Care Renal Pharma Ltd
In May 2016, EirGen and Vifor Fresenius Medical Care Renal Pharma
Ltd (“VFMCRP”), entered into a Development and License Agreement
(the “VFMCRP Agreement”) for the development and commercialization
of
Rayaldee
(the “Product”) worldwide, except for (i) the U.S., (ii) any
country in Central America or South America (excluding Mexico),
(iii) Russia, (iv) China, (v) Japan, (vi) Ukraine, (vii)
Belorussia, (viii) Azerbaijan, (ix) Kazakhstan, and (x) Taiwan (the
“VFMCRP Territory”). The license to VFMCRP potentially covers all
therapeutic and prophylactic uses of the Product in human patients
(the “VFMCRP Field”), provided that initially the license is for
the use of the Product for the treatment or prevention of SHPT
related to patients with CKD and vitamin D insufficiency/deficiency
(the “VFMCRP Initial Indication”).
Effective May 5, 2020, we entered into an amendment to the VFMCRP
Agreement (the “VFMCRP Amendment”), pursuant to which the parties
agreed to exclude Mexico, South Korea, the Middle East and all of
the countries of Africa from the VFMCRP Territory. In addition, the
parties agreed to certain amendments to the milestone structure and
to reduce minimum royalties payable. As revised, EirGen is eligible
to receive up to $20 million in regulatory milestones
(“Regulatory Milestones”) and $210 million in sales milestones
(“Sales Milestones”) tied to launch, pricing and sales of
Rayaldee.
Under the terms of the VFMCRP Agreement, as amended, EirGen granted
to VFMCRP an exclusive license in the VFMCRP Territory in the
VFMCRP Field to use certain EirGen patents and technology to make,
have made, use, sell, offer for sale, and import Products and to
develop, commercialize, have commercialized, and otherwise exploit
the Product. EirGen received a non-refundable and non-creditable
initial payment of $50 million, which was recognized in Revenue
from the transfer of intellectual property and other in our
Consolidated Statement of Operations in 2016. EirGen also received
a $2.0 million payment triggered by the approval of
Rayaldee
in Canada for the treatment of SHPT in adults with stage 3 or 4 CKD
and vitamin D insufficiency in July 2018. EirGen is also eligible
to receive up to an additional $20 million in Regulatory
Milestones and $210 million in Sales Milestones tied to
launch, pricing and sales of
Rayaldee,
and will receive tiered royalties on sales of the product at
percentage rates that range from the mid-teens to the mid-twenties
or a minimum royalty, whichever is greater, upon the commencement
of sales of the Product within the VFMCRP Territory and in the
VFMCRP Field.
We plan to share responsibility with VFMCRP for the conduct of
trials specified within an agreed-upon development plan, with each
company leading certain activities within the plan. EirGen will
lead the manufacturing activities within and outside the VFMCRP
Territory and the commercialization activities outside the VFMCRP
Territory and outside the VFMCRP Field in the VFMCRP Territory and
VFMCRP will lead the commercialization activities in the VFMCRP
Territory and the VFMCRP Field. For the initial development plan,
the companies have agreed to certain cost sharing arrangements.
VFMCRP will be responsible for all other development costs that
VFMCRP considers necessary to develop the Product for the use of
the Product for the VFMCRP Initial Indication in the VFMCRP
Territory in the VFMCRP Field except as otherwise provided in the
VFMCRP Agreement. The first of the clinical studies provided for in
the development activities commenced in September
2018.
In connection with the VFMCRP Agreement, the parties entered into a
letter agreement pursuant to which EirGen granted to VFMCRP an
exclusive option (the “Option”) to acquire an exclusive license
under certain EirGen patents and technology to use, import, offer
for sale, sell, distribute and commercialize the Product in the
U.S. solely for the treatment of SHPT in dialysis patients with CKD
and vitamin D insufficiency (the “Dialysis Indication”). Upon
exercise of the Option, VFMCRP will reimburse EirGen for all of the
development costs incurred by EirGen with respect to the Product
for the Dialysis Indication in the U.S. VFMCRP would also pay
EirGen up to an additional aggregate amount of $555 million of
sales-based milestones upon the achievement of certain milestones
and would be obligated to pay royalties at percentage rates that
range from the mid-teens to the mid-twenties on sales of the
Product in the U.S. for the Dialysis Indication. To date, VFMCRP
has not exercised its option.
Payments received for Regulatory Milestones and Sales Milestones
are non-refundable. The Regulatory Milestones are payable if and
when VFMCRP obtains approval from certain regulatory authorities
and will be recognized as revenue in the period in which the
associated milestone is achieved, assuming all other revenue
recognition criteria are met. We account for
the Sales Milestones as royalties and Sales Milestones payments
will be recognized as revenue in the period in which the associated
milestone is achieved or sales occur, assuming all other revenue
recognition criteria are met.
Pfizer Inc.
In December 2014, we entered into an exclusive worldwide agreement
(the “Pfizer Agreement”) with Pfizer for the development and
commercialization of our long-acting hGH-CTP (Somatrogon) for the
treatment of growth hormone deficiency (“GHD”) in adults and
children, as well as for the treatment of growth failure in
children born small for gestational age (the “Pfizer
Transaction”).
In May 2020, we entered into an Amended and Restated Development
and Commercialization License Agreement (the “Restated Agreement”)
with Pfizer, effective January 1, 2020, pursuant to which the
parties agreed, among other things, to share all costs for
Manufacturing Activities, as defined in the Restated Agreement, for
developing a licensed product for the three indications included in
the Restated Agreement.
On October 21, 2019, we and Pfizer announced that the global phase
3 trial evaluating Somatrogon (hGH-CTP) dosed once-weekly in
prepubertal children with GHD met its primary endpoint of
non-inferiority to daily Genotropin® (somatropin) for injection, as
measured by annual height velocity at 12 months.
Under the terms of the Pfizer Transaction, as restated, we received
non-refundable and non-creditable upfront payments of $295.0
million and are eligible to receive up to an additional $275.0
million upon the achievement of certain regulatory milestones.
Pfizer received the exclusive license to commercialize hGH-CTP
worldwide. In addition, we are eligible to receive initial tiered
royalty payments associated with the commercialization of hGH-CTP
for adult GHD with percentage rates ranging from the high teens to
mid-twenties. Upon the launch of hGH-CTP for pediatric GHD in
certain major markets, the royalties will transition to regional,
tiered gross profit sharing for both hGH-CTP and Pfizer’s
Genotropin®.
The agreement with Pfizer will remain in effect until the last sale
of the licensed product, unless earlier terminated as permitted
under the Pfizer Agreement. In addition to termination rights for
material breach and bankruptcy, Pfizer is permitted to terminate
the Pfizer Agreement in its entirety, or with respect to one or
more world regions, without cause after a specified notice period.
If the Pfizer Agreement is terminated by us for Pfizer’s uncured
material breach, or by Pfizer without cause, provision has been
made for transition of product and product responsibilities to us
for the terminated regions, as well as continued supply of product
by Pfizer or transfer of supply to us in order to support the
terminated regions.
We recognized the non-refundable $295.0 million upfront payments as
revenue as the research and development services were completed and
as of September 30, 2020, we had no contract liabilities related to
the Pfizer Transaction.
The Pfizer Transaction includes milestone payments of $275.0
million upon the achievement of certain milestones. The milestones
range from $20.0 million to $90.0 million each and are based on
achievement of regulatory approval in the U.S. and regulatory
approval and price approval in other major markets. The milestone
payments will be recognized as revenue in the period in which the
associated milestone is achieved, assuming all other revenue
recognition criteria are met. To date, no revenue has been
recognized related to the achievement of the
milestones.
TESARO
In November 2009, we entered into an asset purchase agreement (the
“NK-1 Agreement”) under which we acquired VARUBI™ (rolapitant) and
other neurokinin-1 (“NK-1”) assets from Merck. In December 2010, we
entered into an exclusive license agreement with TESARO, Inc.
(“TESARO”), in which we out-licensed the development, manufacture,
commercialization and distribution of our lead NK-1 candidate,
VARUBI™ (the “TESARO License”). Under the terms of the license, we
received a $6.0 million upfront payment from TESARO and we received
$30 million of milestone payments from TESARO upon achievement of
certain regulatory and commercial sale milestones and we are
eligible to receive additional commercial milestone payments of up
to $85 million if specified levels of annual net sales are
achieved. The sales based milestone payments will be recognized as
revenue in full in the period in which the associated sales occur.
For the nine months ended September 30, 2020 and 2019, no revenue
was recognized related to the achievement of the milestones under
the TESARO License.
Under the TESARO License, TESARO was also obligated to pay us
tiered royalties on annual net sales achieved in the U.S. and
Europe at percentage rates that range from the low double digits to
the low twenties, and outside of the U.S. and Europe at low
double-digit percentage rates until the later of the date that all
of the patent rights licensed from us and covering VARUBI™ expire,
are invalidated or are not enforceable and 12 years from the first
commercial sale of the product. TESARO announced in 2018 that it
had elected to suspend further distribution of Varubi IV. In June
2018, TESARO assigned its rights and obligations under the
agreement to TerSera Therapeutics LLC (“TerSera”) pursuant to an
asset purchase agreement. Under
the asset purchase agreement, TerSera is responsible for VARUBI in
the U.S. and Canada and TESARO was permitted to continue to
commercialize VARUBY® in Europe and the rest of the world though a
sublicense with TerSera. In September 2019, TESARO informed us and
TerSera that it intends to stop selling VARUBY®
in the TESARO Territory and that it intends to withdraw its
marketing authorization for VARUBY®
in Europe.
The term of the license with TerSera will remain in force until the
expiration of the royalty term in each country, unless we terminate
the license earlier for material breach of the license or
bankruptcy. TerSera has a right to terminate the license at any
time during the term for any reason on three months’ written
notice.
Pharmsynthez
In April 2013, we entered into a series of concurrent transactions
with Pharmsynthez, a Russian pharmaceutical company traded on the
Moscow Stock Exchange, pursuant to which we acquired an equity
method investment in Pharmsynthez (ownership 9%). We also granted
rights to certain technologies in the Russian Federation, Ukraine,
Belarus, Azerbaijan and Kazakhstan (the “Pharmsynthez Territories”)
to Pharmsynthez and agreed to perform certain development
activities. We will receive from Pharmsynthez royalties on net
sales of products incorporating the technologies in the
Pharmsynthez Territories, as well as a percentage of any sublicense
income from third parties for the technologies in the Pharmsynthez
Territories.
Phio Pharmaceuticals Corp.
In March 2013, we completed the sale to RXi Pharmaceuticals
Corporation (now known as Phio Pharmaceuticals Corp.) of
substantially all of our assets in the field of RNA interference
(the “RNAi Assets”) (collectively, the “Asset Purchase Agreement”).
Pursuant to the Asset Purchase Agreement, Phio will be required to
pay us up to $50.0 million in milestone payments upon the
successful development and commercialization of each drug developed
by Phio, certain of its affiliates or any of its or their licensees
or sublicensees utilizing patents included within the RNAi Assets
(each, a “Qualified Drug”). In addition, Phio will also be required
to pay us royalties equal to: (a) a mid single-digit
percentage of “Net Sales” (as defined in the Asset Purchase
Agreement) with respect to each Qualified Drug sold for an
ophthalmologic use during the applicable “Royalty Period” (as
defined in the Asset Purchase Agreement); and (b) a low
single-digit percentage of net sales with respect to each Qualified
Drug sold for a non-ophthalmologic use during the applicable
Royalty Period.
Other
We have completed strategic deals with numerous institutions and
commercial partners. In connection with these agreements, upon the
achievement of certain milestones we are obligated to make certain
payments and have royalty obligations upon sales of products
developed under the license agreements. At this time, we are unable
to estimate the timing and amounts of payments as the obligations
are based on future development of the licensed
products.
NOTE 15 SEGMENTS
We manage our operations in two reportable segments, pharmaceutical
and diagnostics. The pharmaceutical segment consists of our
pharmaceutical operations in Chile, Mexico, Ireland, Israel and
Spain,
Rayaldee
product sales and our pharmaceutical research and development. The
diagnostics segment primarily consists of our clinical laboratory
operations through BioReference and our point-of-care operations.
There are no significant inter-segment sales. We evaluate the
performance of each segment based on operating profit or loss.
There is no inter-segment allocation of interest expense and income
taxes.
Information regarding our operations and assets for our operating
segments and the unallocated corporate operations as well as
geographic information are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30, |
|
For the nine months ended September 30, |
(In thousands) |
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue from services: |
|
|
|
|
|
|
|
Pharmaceutical |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Diagnostics |
382,498 |
|
|
181,139 |
|
|
804,309 |
|
|
538,488 |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
382,498 |
|
|
$ |
181,139 |
|
|
$ |
804,309 |
|
|
$ |
538,488 |
|
Revenue from products: |
|
|
|
|
|
|
|
Pharmaceutical |
$ |
28,702 |
|
|
$ |
26,161 |
|
|
$ |
89,133 |
|
|
$ |
80,143 |
|
Diagnostics |
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
28,702 |
|
|
$ |
26,161 |
|
|
$ |
89,133 |
|
|
$ |
80,143 |
|
Revenue from transfer of intellectual property and
other: |
|
|
|
|
|
|
|
Pharmaceutical |
$ |
6,819 |
|
|
$ |
20,676 |
|
|
$ |
31,057 |
|
|
$ |
58,165 |
|
Diagnostics |
10,045 |
|
|
— |
|
|
16,240 |
|
|
— |
|
Corporate |
— |
|
|
796 |
|
|
— |
|
|
796 |
|
|
$ |
16,864 |
|
|
$ |
21,472 |
|
|
$ |
47,297 |
|
|
$ |
58,961 |
|
Operating income (loss): |
|
|
|
|
|
|
|
Pharmaceutical |
$ |
(14,425) |
|
|
$ |
(14,232) |
|
|
$ |
(34,546) |
|
|
$ |
(52,265) |
|
Diagnostics |
46,172 |
|
|
(16,363) |
|
|
68,975 |
|
|
(77,945) |
|
Corporate |
(9,808) |
|
|
(8,416) |
|
|
(26,071) |
|
|
(31,378) |
|
|
|
|
|
|
|
|
|
|
$ |
21,939 |
|
|
$ |
(39,011) |
|
|
$ |
8,358 |
|
|
$ |
(161,588) |
|
Depreciation and amortization: |
|
|
|
|
|
|
|
Pharmaceutical |
$ |
7,316 |
|
|
$ |
7,673 |
|
|
$ |
21,556 |
|
|
$ |
22,580 |
|
Diagnostics |
13,720 |
|
|
16,116 |
|
|
43,739 |
|
|
48,647 |
|
Corporate |
— |
|
|
16 |
|
|
— |
|
|
54 |
|
|
$ |
21,036 |
|
|
$ |
23,805 |
|
|
$ |
65,295 |
|
|
$ |
71,281 |
|
Loss from investment in investees: |
|
|
|
|
|
|
|
Pharmaceutical |
$ |
(110) |
|
|
$ |
(294) |
|
|
$ |
(433) |
|
|
$ |
(2,419) |
|
Diagnostics |
— |
|
|
— |
|
|
— |
|
|
— |
|
Corporate |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
(110) |
|
|
$ |
(294) |
|
|
$ |
(433) |
|
|
$ |
(2,419) |
|
Revenues: |
|
|
|
|
|
|
|
United States |
$ |
400,778 |
|
|
$ |
189,485 |
|
|
$ |
847,539 |
|
|
$ |
558,688 |
|
Ireland |
8,988 |
|
|
22,968 |
|
|
37,736 |
|
|
65,675 |
|
Chile |
11,062 |
|
|
8,436 |
|
|
33,064 |
|
|
25,352 |
|
Spain |
3,713 |
|
|
4,172 |
|
|
12,005 |
|
|
13,466 |
|
Israel |
1,119 |
|
|
1,938 |
|
|
4,010 |
|
|
8,822 |
|
Mexico |
2,280 |
|
|
1,642 |
|
|
5,987 |
|
|
5,231 |
|
Other |
124 |
|
|
131 |
|
|
398 |
|
|
358 |
|
|
$ |
428,064 |
|
|
$ |
228,772 |
|
|
$ |
|