Acquisitions, License Agreements and Other Investments

6 Months Ended

Jun. 30, 2017

Acquisitions [Abstract]

Acquisitions, License Agreements and Other Investments

4. Acquisitions, License Agreements and Other Investments

The Company did not have any acquisitions during the six months ended June 30, 2017. The Company had acquisitions in prior periods that may affect the comparability of the unaudited condensed consolidated statements of income in this Quarterly Report on Form 10-Q. During the three months ended June 30, 2017 and June 24, 2016, the Company recognized $2.9 million and $2.6 million, respectively, of expense primarily associated with fair value adjustments of acquired inventory. During the six months ended June 30, 2017 and June 24, 2016, the Company recognized $5.9 million and $4.7 million, respectively, of expense primarily associated with fair value adjustments of acquired inventory. The amount of acquisition-related costs included within operating income for the three and six months ended June 30, 2017 was $1.1 million. The amount of acquisition-related costs included within operating income for the three and six months ended June 24, 2016 was $0.1 million and $2.0 million, respectively.

The Company's acquisitions and license agreements are described further within the notes to the financial statements included within the Company's Annual Report filed on Form 10-K for the fiscal year ended September 30, 2016.

Hemostasis Products

On February 1, 2016, the Company acquired three commercial stage topical hemostasis drugs from The Medicines Company ("the Hemostasis Acquisition") - RECOTHROM® Thrombin topical (Recombinant) ("Recothrom"), PreveLeak^TM Surgical Sealant ("PreveLeak"), and RAPLIXA^TM (Fibrin Sealant (Human)) ("Raplixa") - for upfront consideration of $173.5 million, inclusive of existing inventory, and contingent sales-based milestone payments that could result in up to $395.0 million of additional consideration. The fair value of the contingent consideration and acquired contingent liabilities associated with the transaction were $52.0 million and $10.6 million, respectively, at February 1, 2016. The Hemostasis Acquisition was funded with cash on hand.

Licenses and Other Investments

In January 2017, $21.5 million of consideration was remitted to Mesoblast Limited ("Mesoblast") in exchange for equity shares and rights to a nine month exclusivity period related to any potential commercial and development agreements the Company may enter into for Mesoblast's therapy products used to treat acute graft versus host disease and/or chronic low back pain. As a result of this transaction the Company recorded an available for sale investment of $19.7 million included within prepaid and other current assets and an intangible asset of $1.8 million, which is being amortized over the nine month exclusivity period, in the unaudited condensed consolidated balance sheet.