Discontinued Operations

12 Months Ended

Dec. 31, 2023

Discontinued Operations [Abstract]

Discontinued Operations

2. Discontinued Operations

As discussed in Note 1, we changed our business in 2022 by licensing our products to receive royalties and future sales related milestone payments, after granting an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands in the United States and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma.

This plan represented a strategic shift having a major effect on our operations and financial results. Upon our conversion from a commercial pharmaceutical company to a licensing only company with the consummation of the Mayne Transaction, we classified all direct revenues, costs and expenses related to commercial operations, within income (loss) from discontinued operations, net of tax, in the consolidated statements of operations for all periods presented. We have not allocated any amounts for shared general and administrative operating support expense to discontinued operations. As required by the terms of the Financing Agreement, proceeds from the Mayne Transaction and the vitaCare Divestiture were used to fully repay our outstanding debt borrowings, and as a result interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax (as disclosed below).

Additionally, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in our consolidated balance sheet as of December 31, 2023 and 2022.

The total consideration from Mayne Pharma consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of $12.1 million for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended.

Our estimate of net working capital at closing was determined in accordance with the Transaction Agreement which establishes the process for the determination of final net working capital. The determination of final net working capital includes significant estimates which could change materially for a period of up to two years following the Closing Date.

The following table presents results of discontinued operations (in thousands):

	Years ended December 31,
	2023			2022
Product revenue, net	$	(833	)	$	80,749
Cost of goods sold		—			15,640
Gross profit (loss)		(833	)		65,109
Operating expenses:
Selling and marketing		—			75,208
General and administrative		481			11,301
Research and development		—			4,942
Restructuring charges		—			6,180
Total operating expenses		481			97,631
Loss from discontinued operations		(1,314	)		(32,522	)
Other income (expense):
Gain on sale of vitaCare		—			143,384
Gain on ANNOVERA sale		—			62,031
Loss on the extinguishment of debt		—			(8,380	)
Interest expense and other financing costs		—			(36,065	)
Expense for accretion of Series A Preferred Stock		—			(16,973	)
Loss on disposal of assets		(1,150	)		—
Other expense, net		(115	)		—
Total other income (expense), net		(1,265	)		143,997
Loss before from income taxes		(2,579	)		111,475
Benefit (provision) for income taxes		—			(552	)
Net income (loss) from discontinued operations	$	(2,579	)	$	110,923

The following table presents the carrying amounts of the classes of assets and liabilities of discontinued operations (in thousands):

	As of December 31,
	2023		2022
Assets:
Current assets:
Accounts receivable	$	344	$	—
Total assets		344		—
Current liabilities:
Accounts payable	$	—	$	12,243
Accrued expenses and other current liabilities		3,694		13,588
Total liabilities	$	3,694	$	25,831