Segment Reporting

6 Months Ended

Jun. 30, 2016

Segment Reporting

Segment Reporting

6.  Segment Reporting

The Company’s business is the development, manufacture, and marketing of pharmaceutical products. The Company has established two reporting segments that each report to the Chief Operating Decision Maker, or CODM, as defined in ASC 280, Segment Reporting.  The Company’s performance is assessed and resources are allocated by the CODM based on the following two reportable segments:

· Finished pharmaceutical products

· Active pharmaceutical ingredients, or API

The finished pharmaceutical products segment manufactures, markets and distributes enoxaparin, Cortrosyn®, Amphadase®, naloxone, lidocaine jelly, as well as various other critical and non-critical care drugs.  The API segment manufactures and distributes RHI and porcine insulin. The Company also uses RHI for internal product development.

Selected financial information by reporting segment is presented below:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
	(in thousands)
Net revenues:
Finished pharmaceutical products	$	63,756	$	50,075	$	122,310	$	100,947
API		4,277		3,778		5,089		9,792
Total net revenues		68,033		53,853		127,399		110,739
Gross profit:
Finished pharmaceutical products		30,598		12,634		56,422		25,487
API		1,116		684		194		1,111
Total gross profit		31,714		13,318		56,616		26,598
Operating expenses		21,384		23,578		42,211		44,119
Income (loss) from operations		10,330		(10,260)		14,405		(17,521)
Non-operating income (expenses)		(578)		31		(837)		1,095
Income (loss) before income taxes	$	9,752	$	(10,229)	$	13,568	$	(16,426)

The Company manages its business segments to the gross profit level and manages its operating and other costs on a company-wide basis.  The Company does not identify total assets by segment for internal purposes, as the Company’s CODM does not assess performance, make strategic decisions, or allocate resources based on assets.

Prior to the Merck API Transaction on April 30, 2014, Merck notified the Company of several environmental items that were not in alignment with Merck’s own internal policies and procedures.  None of these items were in violation of any French environmental law or regulation. The Company has assessed the nature of the remedial actions to be undertaken and since April 30, 2014, recorded the related expenses of €0.6 million as incurred in cost of sales within the API segment.  Based on the letter of understanding signed in conjunction with the acquisition on April 30, 2014, the Company and Merck further entered into an agreement on May 11, 2016, pursuant to which Merck shall reimburse the Company for the costs to complete the remedial actions up to €6.0 million. Accordingly, in the three months and six months ended June 30, 2016, the Company recorded the reimbursement of €0.6 million for the expenses already incurred as a reduction of cost of sales within the API segment.

Net revenues and carrying values of long-lived assets of enterprises by geographic regions are as follows:

	Net Revenue								Long-Lived Assets
	Three Months Ended				Six Months Ended
	June 30,				June 30,				June 30,		December 31,
	2016		2015		2016		2015		2016		2015
	(in thousands)
U.S.	$	67,550	$	52,757	$	126,089	$	105,717	$	101,430	$	100,404
China		—		—		—		—		33,835		28,547
France		483		1,096		1,310		5,022		13,382		13,210
Total	$	68,033	$	53,853	$	127,399	$	110,739	$	148,647	$	142,161