Discontinued Operations, Sale of Clinical Labs Business

12 Months Ended

Jul. 31, 2024

Discontinued Operations, Sale of Clinical Labs Business [Abstract]

Discontinued operations, sale of Clinical Labs business

Note 2 - Discontinued operations, sale of Clinical Labs business

Prior to July 24, 2023, we operated a clinical laboratory, doing business as Enzo Clinical Labs, which provided reference, molecular and esoteric diagnostic medical testing services in the New York, New Jersey, and Connecticut medical communities. Effective July 24, 2023, we completed the sale of certain assets used in the operation of Enzo Clinical Labs and the assignment of certain clinical lab liabilities to Laboratory Corporation of America (“Labcorp”) for an aggregate purchase price of $113.25 million in cash, subject to customary closing adjustments. In accordance with the sale, we ceased our clinical services operations. As a consequence of the sale, for fiscal years 2024 and 2023, we have classified as discontinued operations all income and expenses attributable to the clinical services business, the gain from the sale of the clinical services assets, and the income tax expense attributed to the sale of the clinical services assets. Excluded from the sale of the clinical services assets were its cash and accounts receivable.

The gain on the sale of the Clinical Labs business and net proceeds were as follows:

Gross consideration from the sale of the Clinical Labs business	$	113,250
Closing and transaction costs		(9,941	)
Consideration from sale of the Clinical Labs business – net		103,309
Net book value of assets sold or abandoned		(19,818	)
Gain on sale of the Clinical Labs business before income taxes		83,491
Income tax expense		(860	)
Gain on the sale of the Clinical Labs business after income taxes	$	82,631

Net cash proceeds from sale:
Cash paid at closing, net of closing costs paid at closing	$	106,740
Proceeds due on sale of assets, cash held in escrow		(5,000	)
Net cash proceeds from sale	$	101,740

We incurred $9,941 in closing and transaction costs associated with the sale of the Clinical Labs business, which were comprised of (i) transaction fees and related closing costs of $7,238 and (ii) performance bonuses to certain employees associated with the sale of the business of $2,703. The compensation committee of our board of directors approved these compensation arrangements.

The following table sets forth the condensed operating results of the discontinued operations for the fiscal years ended July 31,

	2024			2023
Net revenues	$	—		$	30,087
Cost of revenues		—			36,947
Selling, general and administrative		3,723			23,270
Research and development		—			720
Legal and related expenses		—			250
Other expense (a)		12,928			6,221
Loss from discontinued operations		(16,651	)		(37,321	)
Gain on sale of business – before taxes		—			83,491
Income tax refund (expense) on gain		390			(860	)
(Loss) income from discontinued operations	$	(16,261	)	$	45,310

(a) Other expense includes a right-of-use asset impairment charge of $3,900 for the leased building formerly used by the discontinued operations. Other expense also includes legal settlements and accruals of $7,700 and $6,216 for fiscal 2024 and 2023, respectively. See Note 17 Contingencies.

The following table sets forth the condensed carrying amounts of major classes of assets and liabilities of the discontinued operations as of July 31,

	2024			2023
Carrying amounts of major current assets included as part of discontinued operations:
Trade receivables	$	—		$	1,675
Prepaid and other current		182			54
Total current assets		182			1,729
Carrying amounts of major current liabilities included as part of discontinued operations:
Accrued liabilities and trade payables		14,979			20,616
Operating lease liabilities and other		1,990			2,215
Total current liabilities		16,969			22,831
Current liabilities of discontinued operations, net		16,787			21,102
Carrying amount of major non-current assets included as part of discontinued operations:
Right-of-use assets	$	1,308		$	7,001
Other		75			62
Total non- current assets		1,383			7,063
Carrying amount of major non-current liabilities included as part of discontinued operations:
Operating lease liabilities and other		3,649			6,096
Non-current (liabilities) assets of discontinued operations, net	$	(2,266	)	$	967

During the fiscal year ended July 31, 2024, the cash used in operating activities and in investing activities of the discontinued operation was $14,972 and $0, respectively. During the fiscal year ended July 31, 2023, the cash used in operating activities of the discontinued operations was $19,000, and the cash provided by investing activities was $101,300.