Disposal of Business

12 Months Ended

Dec. 31, 2021

Disposal of Business

Disposal of Business

12.    Disposal of Business

Sale of Evercord

In September 2019, the Company sold the Evercord business that provides cord blood and cord tissue processing and storage services for total estimated consideration of $15.4 million, including $9.7 million in cash, $1.0 million of cash deposited in a third-party escrow account recorded in short-term other receivables, and $4.7 million of additional consideration. The additional consideration is primarily related to the accounts receivable transferred to the buyer. The cash held in escrow serve as security for the indemnification obligations of the Company and eligible for release 12 months after the closing date. The assets relating to the Evercord services transferred to the buyer had a net book value of $6.2 million as of the sale date, and consisted of accounts receivables and equipment.  The obligations and liabilities relating to the Evercord services transferred to the buyer consisted of deferred revenues of $5.2 million. The sale of the Evercord business did not meet criteria to be reported as a discontinued operation, because it did not represent a strategic shift with a major effect on the Company’s operations and financial results. The Company recognized a gain of $14.4 million on the sale, which was included in Loss from operations in the Consolidated Statements of Operations and Comprehensive Loss.

The following table summarizes the computation of the gain realized from the disposal of business:

	December 31,
	2019
	(in thousands)
Proceeds on disposal:	$	15,377
Assets sold:
Accounts receivable, net		5,782
Equipment and inventory		419
Total assets sold	$	6,201
Liabilities assumed by purchaser:
Deferred revenues		5,212
Net assets and liabilities sold	$	989
Net gain realized on disposal	$	14,388

In connection with the sale of the Evercord business, the Company recorded impairment expense on the retained assets previously used in this business of $1.7 million in selling, general, and administrative expenses in the consolidated statement of operations and comprehensive loss. This expense is comprised of $1.2 million from the impairment of leasehold improvements, $0.1 million from the impairment of capitalized software held for internal use, and $0.4 million of right-of-use asset from the storage facility lease. In addition, the Company expects to incur $0.4 million of exit or disposal activity—$0.1 million of involuntary employee termination benefits were incurred in the third quarter of 2019, recorded in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss, and $0.3 million of early contract termination fee from biological sample processing and storage provider to be incurred in the next fiscal year.