Discontinued Operations

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Trans Ova

As part of the Company's strategic shift to becoming a healthcare company, in August 2022, the Company completed the sale of 100% of the issued and outstanding membership interests in its wholly-owned subsidiary, Trans Ova, to Spring Bidco LLC (the “Buyer”), a Delaware limited liability company for $170,000 and up to $10,000 in cash earn-out payments contingent upon the performance of Trans Ova in each of 2022 and 2023, consisting of $5,000 for each year (the “Transaction”). The Company received $162,306 in proceeds, net of certain transaction costs, on August 18, 2022, after giving effect to the preliminary closing purchase price adjustments. The final working capital adjustment of $936 was received in the fourth quarter of 2022. In February 2023, the buyer notified the Company that Trans Ova did not meet the financial measures required in 2022 in order to require the first $5,000 earn-out payment.

The Company elected to account for the contingent consideration arrangement as a gain contingency in accordance with ASC 450, Contingencies (Subtopic 450-30). Under this approach, the Company recognizes the contingent consideration receivable in earnings after the contingency is resolved. Accordingly, to determine the initial gain on the sale of Trans Ova, the Company did not include an amount related to the contingent consideration arrangement as part of the consideration received.

In connection with the Transaction, the Company held restricted cash in a segregated account to be used for certain permitted purposes, including resolution of the Company’s outstanding Convertible Notes which were retired in the second quarter of 2023, as discussed further in Note 9. In addition, the Company is required to indemnify the Buyer for certain expenses incurred post close (related to covenants and certain additional specified liabilities including certain patent infringement lawsuits), if incurred, in amounts not to exceed $5,750. Such indemnification was recorded as a reduction of the gain on divestiture in the third quarter of 2022. As of September 30, 2023 and December 31, 2022, $5,075 and $5,750 were included in settlement and indemnification accruals on the condensed consolidated balance sheets, respectively, related to this indemnification liability. During the three-months ended September 30, 2023, the Company paid $675 for indemnification claims against this liability.

The following table presents the financial results of discontinued operations related to Trans Ova for the three and nine months ended September 30, 2022:


	Three months ended September 30,		Nine Months Ended September 30,
	2022
Product revenues	$	4,322	$	21,494
Service revenues	7,880		49,657
Total revenues	12,202		71,151
Cost of products and services	8,515		41,335

Research and development	481		2,348
Selling, general and administrative	3,204		15,215
Total operating expenses	12,200		58,898
Operating income	2		12,253
Other income, net	319		1,139
Gain on divesture	94,702		94,702
Income before income taxes	$	95,023	$	108,094
Income tax (expense) benefit	—
Income from discontinued operations	$	95,023	$	108,094

The following table presents the significant noncash items, purchases of property, plant and equipment, and proceeds from sales of assets for the discontinued operations related to Trans Ova for the nine months ended September 30, 2022 that are included in the accompanying condensed consolidated statements of cash flows.




Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization	$	3,574
Loss on disposal of assets	421




Stock-based compensation expense	9

Provision for credit losses	944
Cash flows from investing activities
Purchases of property, plant and equipment	(3,529)
Proceeds from sale of assets	594