Discontinued Operations

6 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Dispositions

On June 21, 2016, the Company completed the sale of its Non-Core ACC Products pursuant to the purchase and sale agreement dated May 9, 2016 by and among the Company, Chiesi USA and Chiesi.  At the completion of the sale, the Company received approximately $263.8 million in cash, which included the value of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal.

The following table presents the consideration received, major classes of assets sold and the gain recognized on the sale of the Non-Core ACC Products:

	(in thousands)
Sale price:
Cash	$	263,807
Contingent purchase price from sale of business	65,700
Total sale price	329,507
Assets:
Inventory	2,184
Intangibles	5,210
Goodwill	33,812
Total assets sold	41,206
Gain on sale of business	$	288,301

The Company recognized a gain on sale of business of approximately $288.3 million for the three and six months ended June 30, 2016 in continuing operations in the accompanying condensed consolidated statements of operations. Disposition related costs during 2016 of approximately $7.9 million for advisory, legal and regulatory fees incurred in connection with the sale of the Non-Core ACC Products have been recorded in selling, general and administrative expenses. See Note 7, “Fair Value Measurements,” for further details on the contingent purchase price from sale of businesses.

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 “Income (loss) from discontinued operations, net of tax” on the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 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 “Income (loss) from discontinued operations, net of tax” for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(in thousands)
Net product revenues	$	(12	)	$	15,953		$	50		$	32,355
Operating expenses:
Cost of product revenue	(589		)	12,244			1,704			25,443
Research and development	(27		)	3,187			119			3,853
Selling, general and administrative	(15		)	2,937			678			2,687
Total operating expenses	(631		)	18,368			2,501			31,983
Income (loss) from operations	619			(2,415		)	(2,451		)	372
Gain from sale of business	—			—			1,004			—
Other expense, net	—			(139		)	(39		)	(489		)
Income (loss) from discontinued operations before income taxes	619			(2,554		)	(1,486		)	(117		)
Benefit for income taxes	—			(23,407		)	—			(21,631		)
Income (loss) from discontinued operations, net of tax	$	619		$	20,853		$	(1,486	)	$	21,514

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 six months ended June 30, 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 six months ended June 30, 2016 and 2015 were as follows:

	Six Months Ended June 30,
	2016			2015
	(in thousands)
Depreciation from discontinued operations	$	—		$	144
Amortization from discontinued operations	—			9,021
Gain on sale of business	(1,004		)	—
Change in contingent consideration obligation	—			(900		)
Proceeds from sale of business	174,068			—
Capital expenditures	—			406