Discontinued Operations

3 Months Ended

Mar. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Sale of Hemostasis Business

On February 1, 2016, the Company completed the sale of its Hemostasis Business to Mallinckrodt pursuant to the Purchase and Sale Agreement dated December 18, 2015 between the Company and Mallinckrodt. At the completion of the sale, the Company received approximately $174.1 million in cash from Mallinckrodt, and may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa. As a result of the transaction, the Company accounted for the assets and liabilities of the Hemostasis Business that were sold as held for sale at December 31, 2015. As a result of the classification as held for sale, the Company recorded impairment charges of $133.3 million, including $24.5 million related to goodwill, to reduce the Hemostasis Business disposal group’s carrying value to its estimated fair value, less costs to sell for the year ended December 31, 2015. The determination of fair value for these assets was based on the best information available that resided within Level 3 of the fair value hierarchy, including internal cash flow estimates discounted at an appropriate interest rate.

Financial results of the Hemostasis Business are presented as “(Loss) income from discontinued operations, net of tax” on the accompanying condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015. Assets and liabilities of the Hemostasis Business to be disposed of are presented as “Current assets held for sale” and “Current liabilities held for sale” on the accompanying condensed consolidated balance sheet as of December 31, 2015.

The following table presents key financial results of the Hemostasis Business included in “(Loss) income from discontinued operations, net of tax” for the three months ended March 31, 2016 and 2015:

	Three Months Ended March 31,
	2016			2015
	(in thousands)
Net product revenues	$	62		$	16,402
Operating expenses:
Cost of product revenue	2,293			13,199
Research and development	146			666
Selling, general and administrative	693			(250		)
Total operating expenses	3,132			13,615
(Loss) income from operations	(3,070		)	2,787
Gain from sale of business	1,004			—
Other expense, net	(39		)	(350		)
(Loss) income from discontinuing operations before income taxes	(2,105		)	2,437
Provision for income taxes	—			1,776
Net (loss) income from discontinued operations	$	(2,105	)	$	661

Cumulative translation adjustment (“CTA”) gains or losses of foreign subsidiaries related to divested businesses are reclassified into income once the liquidation of the respective foreign subsidiaries is substantially complete. At the completion of the sale of the Hemostasis Business, the Company reclassified $9.6 million, net of tax, of CTA gains from accumulated comprehensive loss to the Company’s results of discontinued operations. Of this amount, $8.4 million was included in the impairment loss recorded to reduce the Hemostasis Business disposal group’s carrying value to its estimated fair value, less costs to sell as of December 31, 2015 and $1.2 million was included in gain from sale of business for the quarter ended March 31, 2016.

The following table presents the major classes of assets and liabilities at December 31, 2015 related to the Hemostasis Business which were reclassified as held for sale:

	December 31, 2015
	(in thousands)
Assets:
Inventory	$	53,765
Prepaid expenses and other current assets	1,153
Fixed assets, net	1,913
Intangibles, net	374,779
Allowance for reduction of assets of business held for sale	(108,773		)
Total assets held for sale	$	322,837
Liabilities:
Contingent purchase price - current	$	28,600
Deferred tax liability	38,915
Total liabilities held for sale	$	67,515

Depreciation and amortization were ceased upon determination that the held for sale criteria were met in the fourth quarter of 2015. The significant cash flow items from discontinued operations for the three months ended March 31, 2016 and 2015 were as follows:

	Three Months Ended March 31,
	2016			2015
	(in thousands)
Depreciation from discontinued operations	$	—		$	25
Amortization from discontinued operations	—			4,730
Gain on sale of business	(1,004		)	—
Change in contingent consideration obligation	—			(1,600		)
Proceeds from sale of business	174,068			—
Capital expenditures	—			82