Correction to Previously Issued Unaudited Interim Condensed Consolidated Financial Statements

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Correction to Previously Issued Unaudited Interim Condensed Consolidated Financial Statements

1.Correction to Previously Issued Unaudited Interim Condensed Consolidated Financial Statements

Subsequent to the issuance of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, management determined adjustments were needed to correct the presentation of certain errors in the Company’s previously reported unaudited condensed consolidated financial statements as of and for the three and nine-months ended September 30, 2017. Accordingly, the accompanying Condensed Consolidated Statement of Operations of the Company for the three and nine-months ended September 30, 2017, and the related notes hereto, have been revised to correct these errors (the “Revision”). A summary of the correction of these errors, and their impact on the accompanying Condensed Consolidated Statement of Operations for the three and nine-months ended September 30, 2017 are, as follows:

(1) The Company pays wholesalers certain fees associated with the sale of the Company's product. The payment of these fees had been historically classified by the Company as cost of revenues and accrued expenses prior to the adoption of ASC 606, Revenue from Contracts with Customers. As disclosed in Note 4, the Company adopted ASC 606 on January 1, 2018 using the modified retrospective method, at which time the Company began classifying the payment of wholesaler fees as a reduction of revenue and accounts receivable. Upon further analysis, however, management determined that these fees should have always been classified as a reduction of revenue and accounts receivable, rather than as costs of revenues and accrued expenses, because the services provided by the Company’s wholesalers cannot generally be provided by third parties and the underlying fees are not specifically identifiable from other services. As a result, the accompanying Condensed Consolidated Statement of Operations for the three and nine-months ended September 30, 2017 has been revised to correct the presentation of wholesaler fees as a reduction of revenue rather than as cost of revenues. The correction of this error resulted in a reduction of revenue of approximately $1.5 million and $5.7 million, respectively, for the three and nine-month periods ended September 30, 2017. In addition, the correction of this error resulted in a reduction in accounts receivable and decrease in accrued expenses of approximately $6.1 million, respectively, as of September 30, 2017 and $7.0 million, respectively, as of December 31, 2017.

(2) Prior to the adoption of ASC 606, the Company classified Medicaid, Medicare and other rebates (the "Rebates") as a reduction of accounts receivable, whereas subsequent to adoption of ASC 606 the Company began classifying the Rebates as accrued expenses. Upon further analysis, management determined that the Rebates should have always been classified as accrued expenses because their terms require cash settlement and are payable to third parties that are other than the Company's customer. The correction of this error resulted in an increase in accounts receivable and increase in accrued expenses of $2.3 million, respectively, as of September 30, 2017 and $1.6 million, respectively, as of December 31, 2017.

The following tables summarize the effects of the Revision on the Company's unaudited interim condensed consolidated financial statements as of and for the three and nine-months ended September 30, 2017 (in thousands):

	Condensed Consolidated Statements of Operations
	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
	As Previously				As Previously
	Reported	Adjustment		As Revised	Reported	Adjustment		As Revised
Revenue, net	12,851	1,511	(1)	11,340	51,150	5,715	(1)	45,435
Cost of revenues	10,313	1,511	(1)	8,802	29,641	5,715	(1)	23,926
Total costs and expenses	20,890	1,511	(1)	19,379	58,004	5,715	(1)	52,289

	Condensed Consolidated Balance Sheet				Condensed Consolidated Balance Sheet
	September 30, 2017				December 31, 2017
	As Previously				As Previously
	Reported	Adjustment		As Revised	Reported	Adjustment		As Revised
Accounts receivable, net	25,026	3,800	(1),(2)	21,226	18,143	5,401	(1),(2)	12,742
Total current assets	79,846	3,800	(1),(2)	76,046	64,532	5,401	(1),(2)	59,131
Total assets	194,466	3,800	(1),(2)	190,666	189,986	5,401	(1),(2)	184,585
Accrued expenses	16,372	3,800	(1),(2)	12,572	13,502	5,401	(1),(2)	8,101
Total current liabilities	25,237	3,800	(1),(2)	21,437	24,097	5,401	(1),(2)	18,696
Total liabilities	143,939	3,800	(1),(2)	140,139	145,233	5,401	(1),(2)	139,832
Total liabilities and stockholders' equity	194,466	3,800	(1),(2)	190,666	189,986	5,401	(1),(2)	184,585

	Condensed Consolidated Statement of Cash Flows
	Nine Months Ended September 30, 2017
	As Previously
	Reported	Adjustment		As Revised
Cash flows from operating activities
Accounts receivable	(4,960)	(2,469)	(1),(2)	(2,491)
Accounts payable and accrued expenses	4,006	2,469	(1),(2)	1,537