Business and basis of presentation

Description of business

Oxford Immunotec Global PLC, or the Company, is a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for underserved immune-regulated conditions. The Company’s focus is on

four

areas: infectious diseases, transplantation, autoimmune and inflammatory disease and immune-oncology. The Company believes these areas are particularly attractive because they involve large patient populations and chronic conditions that present the opportunity for both initial diagnosis and additional testing to monitor the conditions. These immune-regulated conditions also tend to be characterized by wide variation in presentation and progression and often require expensive therapies, making diagnostic tests that can better categorize patients and inform treatment pathways particularly useful and cost-effective. Lastly, the Company believes these conditions to be underserved as the industry lacks the appropriate techniques to prosecute the immune responses which are driving these conditions.

During the

three

month period ended

September 30, 2018,

the Company announced that it had entered into a definitive agreement to sell the Company’s U.S. Laboratory Services Business to Quest Diagnostics Incorporated (the “Transaction.”).

Discontinued

perations

The Company reports the results of operations of a business that either has been disposed of or is classified as held for sale, in accordance with Accounting Standards Codification, or ASC,

360,

Property, Plant, and Equipment

, in discontinued operations, as required by ASC

205,

Presentation of Financial Statements

. The Company presents such events as discontinued operations so long as the financial results can be clearly identified and the future operations and cash flows are completely eliminated from ongoing operations. The Company’s historical results for all periods presented are restated to account for businesses reported as discontinued operations in our Consolidated Financial Statements and these Notes. Unless otherwise specified, disclosures in our Consolidated Financial Statements and these Notes relate solely to our continuing operations.

As discussed in Note

14,

Discontinued

perations

, on

September 25, 2018,

the Company entered into an agreement to sell the Company’s U.S. laboratory services business to Quest Diagnostics Incorporated. The Transaction represents a strategic business shift having a major effect on the Company’s operations and financial results. Accordingly, the assets and liabilities of this business have been classified as held for sale and the related operations reported in discontinued operations in the condensed consolidated financial statements for all periods presented. The Transaction was consummated on

November 6, 2018.

Unaudited i

nterim

inancial

tatements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form

-Q and Article

of Regulation S-

Accordingly, they do

not

include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments, of a normal recurring nature, necessary for a fair statement of the financial position at

September 30, 2018,

the results of operations for the

three

and

nine

-month periods ended

September 30, 2018

and

2017,

and the cash flows for the

nine

-month periods ended

September 30, 2018

and

2017.

Interim results are

not

necessarily indicative of results for a full year.

The consolidated balance sheet presented as of

December 31, 2017,

has been derived from the audited consolidated financial statements as of that date. The consolidated financial statements and notes included in this report should be read in conjunction with the

2017

consolidated financial statements and notes included in the Company’s Annual Report on Form

-K, as filed with the Securities and Exchange Commission on

February 27, 2018,

or the Company’s

2017

Form

-K.

Cash, cash equivalents, and restricted cash

We maintain our available cash balances in cash, money market funds and repurchase agreements primarily invested in U.S. government and agency securities, and bank savings accounts in the United States, United Kingdom, Germany, Japan, China and South Korea.

Restricted cash is pledged as collateral for procurement cards issued by a U.S. commercial bank.

Cash, cash equivalents, and restricted cash consists of the following:

(in thousands)	September 30, 201 8		December 31, 201 7
Cash and cash equivalents	$	70,156	$	90,332
Restricted cash, non-current		200		200
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	70,356	$	90,532

evenues

The Company’s revenues include product and service revenues. Product revenue from diagnostic test kit sales and related accessories is recognized at a point in time based upon contractual rates. Service revenue from tests performed on samples sent by direct billing customers is recorded based upon contractually established billing rates and recognized upon delivery of test results to the customer. See Note

for disaggregation of revenue by type and geography.

As of

September 30, 2018,

accounts receivables related to products and services were

$7.1

million. For the

three

and

nine

months ended

September 30, 2018,

the Company had

material bad-debt expense and there were

material contract assets, contract liabilities or deferred contract costs recorded on the Condensed Consolidated Balance Sheet as of

September 30, 2018.

The Company generally expenses sales commissions when incurred because the amortization period would be less than

one

year.

For the

three

and

nine

months ended

September 30, 2018,

revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price), was

not

material.

Revenue expected to be recognized in any future year related to remaining performance obligations is

not

material.

The remainder of the significant accounting estimates and policies used in preparation of the condensed consolidated financial statements disclosed in Note

to the consolidated financial statements in the Company’s

2017

Form

-K remain unchanged.

Recently Adopted Accounting Pronouncements

May 2014,

the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU,

2014

09,

Revenue from Contracts with Customers

, or ASU

2014

09,

which converges the FASB and the International Accounting Standards Board standards on revenue recognition. Under ASU

2014

09,

a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, ASU

2014

requires certain additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard, including clarification on accounting for licenses of intellectual property, identifying performance obligations and other technical corrections. The Company adopted ASU

2014

January 1, 2018,

using the modified retrospective approach. The adoption of ASU

2014

did

not

have a material impact on the Company’s financial position, results of operations, equity or cash flows as of the adoption date or for the

nine

months ended

September 30, 2018.

The Company has included the disclosures required by ASU

2014

above and in Note

to the Condensed Consolidated Financial Statements.

August 2016,

the FASB issued ASU

2016

15,

Classification of Certain Cash Receipts and Cash Payments, or ASU

2016

15.

ASU

2016

is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted ASU

2016

retrospectively as of

January 1, 2018.

The adoption of ASU

2016

has

not

had a material impact on the Company’s statement of cash flows.

October 2016,

the FASB issued ASU

2016

16,

Income Taxes

, or ASU

2016

16.

The guidance requires companies to recognize the income tax effects of intercompany sales and transfers of assets, other than inventory, in the income statement as income tax expense (or benefit) in the period in which the transfer occurs. The Company adopted ASU

2016

retrospectively as of

January 1, 2018.

The adoption of ASU

2016

has

not

had a material impact on the Company’s financial position, results of operations or related disclosures.

November 2016,

the FASB issued ASU

2016

18,

Stat

ement of Cash Flows (Topic

230

Rest

ricted Cash

, or ASU

2016

18.

ASU

2016

requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The Company adopted ASU

2016

retrospectively as of

January 1, 2018.

The adoption of ASU

2016

has

not

had a material impact on the Company’s statement of cash flows.

January 2017,

the FASB issued ASU

2017

01,

Business Combinations

, or ASU

2017

01.

ASU

2017

clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company adopted ASU

2017

prospectively as of

January 1, 2018.

The adoption of ASU

2017

has

not

had a material impact on the Company’s financial position, results of operations or related disclosures.

May 2017,

the FASB issued ASU

2017

09,

Scope of Modification Accounting

, or ASU

2017

09.

ASU

2017

provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting of a share-based payment award. The guidance should be applied prospectively to an award modified on or after the adoption date. The Company adopted ASU

2017

prospectively as of

January 1, 2018.

The adoption of ASU

2017

has

not

had a material impact on the Company’s financial position, results of operations or related disclosures.

Recently

Issued

Accounting Pronouncements

February 2016,

the FASB issued ASU

2016

02,

Leases

, or ASU

2016

02.

ASU

2016

requires lessees to reflect all leases with terms longer than

months on their balance sheets. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The FASB has subsequently issued amendments to the guidance, including the addition of an optional transition method. The adoption of ASU

2016

will result in an increase to the Company’s consolidated balance sheets for right-of-use assets and lease liabilities, and the Company is currently evaluating the other effects of adoption of ASU

2016

on the Company’s consolidated financial statements. This evaluation process includes reviewing all forms of leases and performing a completeness assessment over the lease population. The Company will adopt ASU

2016

02,

effective as of

January 1, 2019

and will apply the alternative adoption approach at the adoption date and will recognize a cumulative-effect adjustment, if any, to the opening balance of retained earnings. The Company will take advantage of the transition package of practical expedients permitted within ASU

2016

02,

which among other things, will allow it to carryforward historical lease classifications. The Company will make an accounting policy election that will keep leases with an initial term of

months or less off of the balance sheet and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. The Company is in the process of evaluating the impact of this new guidance.

June 2018,

the FASB issued ASU

2018

07,

Improvements to Nonemployee Share-Based Payment Accounting

, or ASU

2018

07.

ASU

2018

simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. ASU

2018

will be effective for the Company for fiscal years beginning after

December 15, 2018,

including interim periods within that fiscal year. Early adoption is permitted. The Company is currently evaluating ASU

2018

07,

but does

not

expect its adoption to have a material impact on the Company’s financial position, results of operations or related disclosures.

June 2016,

the FASB issued ASU

2016

13,

Financial Instruments-Credit Losses

, or ASU

2016

13.

ASU

2016

requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Under current U.S. GAAP, a company only considered past events and current conditions in measuring an incurred loss. Under ASU

2016

13,

the information that a company must consider is broadened in developing an expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. The new guidance will be effective for the Company for annual and interim periods beginning after

December 15, 2019.

Early adoption is permitted for annual and interim periods beginning after

December 15, 2018.

The guidance is applied using a modified retrospective, or prospective approach, depending on a specific amendment. The Company is currently evaluating ASU

2016

and has

not

yet determined how it

may

impact its financial position, results of operations or related disclosures.

January 2017,

the FASB issued ASU

2017

04,

Intangibles – Goodwill and Other

, or ASU

2017

04.

ASU

2017

simplifies subsequent measurement of goodwill by eliminating Step

from the goodwill impairment test. The new guidance will be applied on a prospective basis. ASU

2017

will be effective for the Company for annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests. The Company is currently evaluating ASU

2017

04,

but does

not

expect its adoption to have a material impact on the Company’s financial position, results of operations or related disclosures.

Under the U.S. Jumpstart our Business Startups Act, or the JOBS Act, emerging growth companies that become public can delay adopting new or revised accounting standards until such time as those standards apply to private companies. The Company irrevocably elected

not

to avail itself of this exemption from new or revised accounting standards and, therefore, it is subject to the same new or revised accounting standards as public companies that are

not

emerging growth companies.