Segment Reporting

3 Months Ended

Mar. 31, 2017

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, naloxone, lidocaine, as well as various other critical and non-critical care drugs.  The API segment manufactures and distributes recombinant human insulin API and porcine insulin API for external customers and internal product development.

Selected financial information by reporting segment is presented below:

	Three Months Ended
	March 31,
	2017		2016
	(in thousands)
Net revenues:
Finished pharmaceutical products	$	55,934	$	58,554
API		736		812
Total net revenues		56,670		59,366
Gross profit:
Finished pharmaceutical products		24,310		25,824
API		(1,482)		(922)
Total gross profit		22,828		24,902
Operating expenses		21,424		20,827
Income from operations		1,404		4,075
Non-operating income (expenses)		100		(259)
Income before income taxes	$	1,504	$	3,816

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.

The amount of net revenues in the finished pharmaceutical product segment is presented below:

	Three Months Ended
	March 31,
	2017		2016
	(in thousands)
Finished pharmaceutical products net revenues:
Enoxaparin	$	10,410	$	18,358
Naloxone		10,939		10,254
Epinephrine		9,574		4,392
Lidocaine		8,289		9,908
Phytonadione		7,886		6,126
Other finished pharmaceutical products		8,836		9,516
Total finished pharmaceutical products net revenues	$	55,934	$	58,554

Discontinuation of epinephrine injection, USP vial product

In March 2017, the FDA requested the Company to discontinue the manufacturing and distribution of its epinephrine injection, USP vial product, which has been marketed under the “grandfather” exception to the FDA’s “Prescription Drug Wrap-Up” program. Unless the FDA grants the Company’s request for an extension of time to sell epinephrine vials, the Company will discontinue selling this product in the second quarter of 2017. For the year ended December 31, 2016, the Company recognized $18.6 million in net revenues for the sale of this product. A charge of $3.3 million was included in the cost of revenues in its consolidated statements of operations for the year ended December 31, 2016 to adjust the related inventory items and firm purchase commitments to their net realizable value due to the anticipated discontinuation of the product.

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
	March 31,				March 31,		December 31,
	2017		2016		2017		2016
	(in thousands)
United States	$	55,930	$	58,538	$	106,352	$	104,110
China		—		—		36,034		35,085
France		740		828		14,914		13,659
United Kingdom		—		—		89		90
Total	$	56,670	$	59,366	$	157,389	$	152,944