Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets

3 Months Ended

Mar. 31, 2024

Credit Loss [Abstract]

Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets

Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets

The cumulative allowance for changes in expected future cash flows from financial royalty assets is presented net within the non-current portion of financial royalty assets on the condensed consolidated balance sheets and includes the following:

•the movement in the cumulative allowance related to changes in forecasted royalty payments expected to be received based on projected product sales for royalty bearing products which are estimated by sell-side equity research analysts’ consensus sales forecasts,

•the write-off of cumulative allowance at the end of a royalty asset’s life which only impacts the condensed consolidated balance sheets, and

•the movement in the cumulative allowance for current expected credit losses, primarily associated with new financial royalty assets with limited protective rights and changes in the underlying cash flow forecasts of financial royalty assets with limited protective rights.

The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses (in thousands):

	Activity for the Period
Balance at December 31, 2023(1)	$	(3,065,145)
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets	(635,801)
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets	51,532
Current period provision for credit losses, net	669
Balance at March 31, 2024	$	(3,648,745)

(1)Includes $137.7 million related to cumulative allowance for credit losses.