Discontinued Operations and Assets and Liabilities Held For Sale

6 Months Ended

Jun. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

NOTE 3. DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE

American Medical Systems

On February 24, 2015, the Company’s Board of Directors (Board of Directors) approved a plan to sell the Company’s American Medical Systems Holdings, Inc. (AMS) business. The AMS business included the Men’s Health and Prostate Health businesses, which were sold to Boston Scientific Corporation on August 3, 2015, as well as the Women’s Health business (Astora). On February 24, 2016, the Company’s Board of Directors resolved to wind-down the remaining Astora business as it did not align with the Company’s strategic direction and to reduce Astora’s exposure to the mesh-related product liability. Astora ceased business operations on March 31, 2016.

The operating results of this business are reported as Discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for all periods presented.

The following table provides the operating results of AMS Discontinued operations, net of tax for the three and six months ended June 30, 2017 and 2016 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Revenue	$	179		$	863		$	179		$	29,714
Litigation-related and other contingencies, net	$	775,474		$	—		$	775,684		$	2,450
Asset impairment charges	$	—		$	149		$	—		$	21,328
Loss from discontinued operations before income taxes	$	(791,588	)	$	(22,492	)	$	(804,485	)	$	(91,324	)
Income tax benefit	$	(91,090	)	$	23,724		$	(95,582	)	$	—
Discontinued operations, net of tax	$	(700,498	)	$	(46,216	)	$	(708,903	)	$	(91,324	)

Amounts reported in the table above as Litigation-related and other contingencies, net primarily relate to charges for vaginal-mesh-related matters, which are further described in Note 11. Commitments and Contingencies.

The cash flows from discontinued operating activities related to AMS included the impact of net losses of $708.9 million and $91.3 million for the six months ended June 30, 2017 and 2016, respectively, and the impact of cash activity related to vaginal mesh cases, which is further described in Note 11. Commitments and Contingencies. Net cash used in discontinued investing activities related to AMS consisted of purchases of property, plant and equipment of $0.1 million for the six months ended June 30, 2016, with no comparable amount during the six months ended June 30, 2017. There was no depreciation or amortization during the three and six months ended June 30, 2017 or 2016 related to AMS.

Astora Restructuring

The Astora wind-down process included a restructuring initiative implemented during the three months ended March 31, 2016, which included a reduction of the Astora workforce consisting of approximately 250 employees.

The Company did not incur any pre-tax charges during the three and six months ended June 30, 2017 as a result of the Astora restructuring initiative. The Company incurred expenses of $6.0 million and $66.6 million during the three and six months ended June 30, 2016, consisting of employee separation and other benefit-related costs, asset impairment charges, contract termination charges and other general restructuring costs. The Company anticipates there will be no significant additional pre-tax restructuring expenses related to this initiative. The majority of these actions were completed as of September 30, 2016 and substantially all cash payments were made by June 30, 2017. These restructuring costs are included in Discontinued operations in the Condensed Consolidated Statements of Operations.

A summary of expenses related to the Astora restructuring initiative is included below for the three and six months ended June 30, 2016 (in thousands):

	Three Months Ended June 30, 2016			Six Months Ended June, 2016
Employee separation, retention and other benefit-related costs	$	5,317		$	21,466
Asset impairment charges	149			21,328
Contract termination-related items	(424		)	9,800
Other wind down costs	909			14,030
Total	$	5,951		$	66,624

The liability related to the Astora restructuring initiative is included in Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets. Changes to this liability during the six months ended June 30, 2017 were as follows (in thousands):

	Employee Separation and Other Benefit-Related Costs			Contract Termination Charges			Total
Liability balance as of January 1, 2017	$	3,855		$	1,661		$	5,516
Cash distributions	(3,175		)	(952		)	(4,127		)
Liability balance as of June 30, 2017	$	680		$	709		$	1,389

Litha

During the fourth quarter of 2016, the Company initiated a process to sell its Litha Healthcare Group Limited and related Sub-Sahara African business assets (Litha) and, on February 27, 2017, the Company entered into a definitive agreement to sell Litha to Acino Pharma AG. The sale closed on July 3, 2017. At closing, the Company received approximately $97 million in cash, after giving effect to initial cash and net working capital purchase price adjustments, and may receive up to an additional $11 million in contingent consideration. The assets and liabilities of Litha are classified as held for sale in the Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016. Litha is part of the Company’s International Pharmaceuticals segment.

The following table provides the components of Assets and Liabilities held for sale of Litha as of June 30, 2017 and December 31, 2016 (in thousands):

	June 30, 2017		December 31, 2016
Current assets	$	59,221	$	50,167
Property, plant and equipment	3,617		3,527
Other intangibles, net	21,893		29,950
Other assets	14,877		11,343
Assets held for sale	$	99,608	$	94,987
Current liabilities	26,059		18,642
Other liabilities	4,375		5,696
Liabilities held for sale	$	30,434	$	24,338

Litha does not meet the requirements for treatment as a discontinued operation.

Somar

During the first quarter of 2017, the Company announced that it was assessing strategic alternatives for its Somar business. On June 30, 2017, the Company entered into a definitive agreement to sell Grupo Farmacéutico Somar, S.A.P.I. de C.V., together with its subsidiaries (Somar), to AI Global Investments (Netherlands) PCC Limited (AI Global) acting for and on behalf of the Soar Cell. AI Global will pay an aggregate purchase price of approximately $124 million in cash, subject to certain cash, debt and working capital adjustments. The transaction is expected to close in the second half of 2017, pending customary regulatory approvals and satisfaction of other customary closing conditions. The assets and liabilities of Somar are classified as held for sale in the Condensed Consolidated Balance Sheets as of June 30, 2017. Somar is part of the Company’s International Pharmaceuticals segment.

The following table provides the components of Assets and Liabilities held for sale of Somar as of June 30, 2017 (in thousands):

	June 30, 2017
Current assets	$	63,780
Property, plant and equipment	2,347
Other assets	455
Assets held for sale	$	66,582
Current liabilities	13,933
Liabilities held for sale	$	13,933

Somar does not meet the requirements for treatment as a discontinued operation.