14.

Discontinued operations

September 25, 2018,

the Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with Quest, Oxford Immunotec Limited and Oxford Immunotec, LLC, a Delaware limited liability company (formerly known as Oxford Immunotec, Inc., a Delaware corporation) and a wholly owned subsidiary of the Company (“Oxford LLC”), pursuant to which Oxford Limited agreed to sell, and Quest agreed to acquire, the Company’s U.S. laboratory services business (the “U.S. Laboratory Services Business”) for gross proceeds of

$170

million in cash (the “Transaction”). Of this amount, approximately

$33

million was paid directly to MidCap in settlement of all amounts due, which included prepayment and exit fees of approximately

million as described in Note

Loans payable

As contemplated in the Purchase Agreement, Oxford Immunotec USA, Inc., a Delaware corporation and a newly formed wholly owned subsidiary of Oxford Immunotec Limited (“Oxford USA”), joined the Purchase Agreement by way of a Joinder Agreement dated

October 1, 2018.

The Transaction was consummated in accordance with the terms and conditions of the Purchase Agreement on

November 6, 2018 (

the “Closing Date”). Prior to and in connection with consummation of the Transaction, Oxford USA and Oxford LLC carried out a corporate restructuring pursuant to which (i) the assets and businesses of Oxford LLC other than the U.S. Laboratory Services Business were transferred to Oxford USA and (ii) Oxford LLC was converted into a limited liability company.

Additionally, pursuant to the terms of the Purchase Agreement, the parties entered into certain ancillary agreements as of the Closing Date, including: (i) a transitional services agreement, (ii) a technology license agreement and (iii) a long-term supply agreement (the “Supply Agreement”), pursuant to which Oxford USA agreed to sell, and Quest agreed to purchase, T-SPOT.

test kits and related accessories from Oxford USA. In addition, the parties entered into a strategic collaboration agreement to drive continued growth of T.SPOT.TB testing in the U.S.

In conjunction with the Purchase Agreement, Quest has agreed to purchase kits and accessories from the Company for an initial period of

seven

years after the effective date of the Purchase Agreement unless a party to the Purchase Agreement earlier terminates, as provided for in the Purchase Agreement.

During the

three

months ended

September 30, 2018

and

2017,

Oxford Immunotec Limited sold kits to its discontinued operations, Oxford Immunotec, Inc. for use in the lab services business of

$1.8

million and

$1.4

million, respectively, that were eliminated in the Company’s consolidated results. During the

nine

months ended

September 30, 2018

and

2017,

Oxford Immunotec Limited sold kits to its discontinued operations, Oxford Immunotec, Inc. for use in the lab services business of

$7.3

million and

$6.9

million, respectively, that were eliminated in the Company’s consolidated results.

Transaction expenses of

$2.4

million, primarily comprised of investment banking, legal, and accounting fees related to the pending disposition, were included in general and administrative expense for the

three

months ended

September 30, 2018.

The table below provides a reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued operations that are disclosed in these notes to unaudited condensed consolidated financial statements to the total assets and liabilities of the disposal group classified as held for sale that are presented separately in the condensed consolidated balance sheets. Note that the assets and liabilities of the disposal group classified as held for sale are classified as current on the

September 30, 2018

condensed consolidated balance sheet because it is probable that the sale will occur and proceeds will be collected within

one

year.

	September 30 ,		December 31,
(in thousands)	201 8		201 7
Carrying amounts of major classes of assets included as part of discontinued operations:
Current assets:
Accounts receivable, net	$	14,375	$	10,961
Inventory, net		2,205		3,005
Prepaid expenses and other assets		378		315
Property and equipment, net		6,874		—
Goodwill		1,484		—
Other intangible assets, net		6,400		—
Other assets		183		—
Total major classes of current assets of the discontinued operations		31,899		14,281
Property and equipment, net		—		6,303
Goodwill		—		1,484
Other intangible assets, net		—		6,813
Other assets		—		185
Total major classes of noncurrent assets of the discontinued operations		—		14,785
Total assets of the disposal group classified as held for sale in the condensed consolidated balance sheets	$	31,899	$	29,066

Carrying amounts of major classes of liabilities included as part of discontinued operations:
Current liabilities:
Accounts payable	$	1,235	$	1,290
Accrued liabilities		3,006		3,326
Other liabilities		120		14
Total major classes of current liabilities of the discontinued operations		4,361		4,630
Total major classes of noncurrent liabilities of the discontinued operations		37		48
Total liabilities of the disposal group classified as held for sale in the condensed consolidated balance sheets	$	4,398	$	4,678

The following table presents the results of discontinued operations:

	Three months ended September 30 ,						Nine months ended September 30 ,
(in thousands)	201 8			201 7			201 8			201 7
Major classes of line items constituting loss from discontinued operations before income taxes:
Service revenue	$	18,446		$	16,836		$	46,265		$	42,825
Cost of service revenue		(9,889	)		(9,340	)		(30,359	)		(28,219	)
Gross profit		8,557			7,496			15,906			14,606
Research and development		(2,077	)		(1,535	)		(4,989	)		(4,127	)
Sales and marketing		(2,093	)		(2,239	)		(6,582	)		(6,999	)
General and administrative		(1,613	)		(1,072	)		(4,439	)		(3,553	)
Income (loss) from discontinued operations before income taxes		2,774			2,650			(104	)		(73	)
Income tax (expense) benefit		—			—			—			—
Income from discontinued operations	$	2,774		$	2,650		$	(104	)	$	(73	)