DISCONTINUED OPERATIONS

3 Months Ended

Mar. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONSOn January 12, 2022, the Company entered into the Purchase Agreement with Journey pursuant to which the Company sold its MST Franchise to Journey. The Company has determined that the sale of the MST Franchise represents a strategic shift that had a major effect on the business and therefore the MST Franchise met the criteria for classification as discontinued operations at March 31, 2022. Accordingly the MST Franchise is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. Amounts applicable to prior years have been recast to conform to the discontinued operations presentation. The Company recognized a gain on the sale of the MST Franchise upon closing.

The following table presents the combined results of discontinued operations of the MST Franchise:

	Three Months Ended March 31
(in thousands)	2023		2022
Product sales, net	$	—	$	106
Cost of goods sold	—		80
Operating expenses:
Research and development	—		—
Selling, general and administrative	(10)		(333)
Total operating expenses	(10)		(333)
(Loss) income from discontinued operations	(10)		359
Gain on the sale of the MST Franchise	—		13,005
(Loss) income from discontinued operations, before income taxes	(10)		13,364
Income tax expense	—		—
Net (loss) income from discontinued operations	$	(10)	$	13,364

The following table presents non-cash items related to discontinued operations, which are included in the Company's unaudited condensed consolidated statement of cash flows for the three months ended March 31, 2022. There were no non-cash items related to discontinued operations as of March 31, 2023.

(in thousands)	Three Months Ended March 31, 2022
Cash Flows From Operating Activities:
Stock-based compensation (income) expense*	$	(352)
Gain on the sale of the MST Franchise	(13,005)
Total non-cash items of discontinued operations	$	(13,357)
Supplemental disclosure of cash flow information:
Amount due from sale of MST Franchise	$	5,000

*Income from stock-based compensation is related to forfeitures.

The following table presents the gain on the sale of the MST Franchise:

(in thousands)	Three Months Ended March 31, 2022
Cash proceeds	$	20,000
Proceeds paid in January 2023	5,000
	25,000
Less transaction costs	(4,247)
Less carrying value of assets sold	(7,748)
Gain on sale, before income taxes	13,005
Income tax expense	—
Gain on sale net of tax	$	13,005

In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the research and development, marketing, selling and general and administrative expenses in discontinued operations include corporate costs incurred directly to solely support the MST Franchise.

The milestone payments for sales of ZILXI, AMZEEQ and FCD105 represent contingent consideration. Contingent consideration has been accounted for as a gain contingency in accordance with ASC 450, Contingencies, and will be recognized in earnings in the period when realizable.