19.

Discontinued operations

As previously disclosed, on

September 25, 2018,

Oxford Immunotec Global PLC (the “Company”), entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with Quest Diagnostics Incorporated, a Delaware corporation (“Quest”), Oxford Immunotec Limited, a limited company incorporated in England and Wales and a wholly owned subsidiary of the Company (“Oxford 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

$32.3

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

$2.3

million as described in Note

10.

Loans payable

As contemplated in the Purchase Agreement, Oxford Immunotec USA, Inc., a Delaware corporation and a newly formed wholly owned subsidiary of Oxford 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,

or 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.

The U.S. Laboratory Services Business at the time of the sale had a carrying value of

$27.9

million. We recorded a gain of

$146.0

million, which amount is included in income (loss) from discontinued operations before income taxes in our consolidated statement of operations for the year ended

December 31, 2018.

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, or TSA, that will continue, unless otherwise terminated, until each service included in the TSA has been completed, (ii) a technology license agreement that will remain in effect until the date of expiration or lapse of the last to expire or lapse Blood Stability Patent and (iii) a long-term supply agreement, or 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. The Supply Agreement will last for a period of

seven

years after the effective date, unless a party to the Supply Agreement terminates it early, as provided for in the Supply Agreement. In addition, the parties entered into a strategic collaboration agreement to drive continued growth of T.SPOT.TB testing in the U.S. that will remain in effect until the expiration or termination of the Supply Agreement.

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 year ended

December 31, 2018,

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

$8.0

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

Transaction expenses of

$3.3

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

December 31, 2018.

The following table presents the results of discontinued operations for the year ended

December 31, 2018:


(in thousands)	Year Ended December 31, 2018
Major classes of line items constituting income from discontinued operations before income taxes:
Service revenue	$	53,325
Cost of service revenue		34,662
Gross profit		18,663
Research and development		5,751
Sales and marketing		7,592
General and administrative		3,593
Income from discontinued operations before income taxes		1,727
Gain on disposition		145,982
Income tax expense		(39,435	)
Income from discontinued operations	$	108,274

The only charge in

2019

occurred during the

third

quarter, when the Company recorded a charge in discontinued operations of

$469,000

that resulted from adjustments on the remaining proceeds due from the Transaction.

During the

fourth

quarter of

2019,

the Company received a payment of

$4.1

million related to funds placed in escrow at the closing of the Transaction. Other receivables includes an additional escrow receivable of

$4.5

million due in

2020.