Ownership Interests in and Advances to Partner Companies

The following summarizes the carrying value of the Company’s ownership interests in and advances to partner companies.



	December 31, 2016		December 31, 2015
	(In thousands)
Equity Method:
Partner companies	$	154,219	$	150,898
Private equity funds	447		942
	154,666		151,840
Cost Method:
Partner companies	2,112		5,024
Private equity funds	1,550		1,966
	3,662		6,990
Advances to partner companies	25,142		12,771
	$	183,470	$	171,601

In April 2016, Putney, Inc. was acquired by Dechra Pharmaceuticals Plc. The Company received $58.6 million in cash proceeds in connection with the transaction, excluding $0.6 million which will be held in escrow until April 2017. The Company recognized a gain of $55.6 million on the transaction, which was included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2016.

The Company recognized an impairment charge of $3.6 million related to Aventura, Inc. which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2016. The impairment was based on the decision of the Company and other shareholders of Aventura not to continue to fund Aventura's operations. The adjusted carrying value of the Company's interest in Aventura was $0.0 million at December 31, 2016.

The Company recognized an impairment charge of $2.4 million related to its Penn Mezzanine debt and equity participations which is reflected in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2016. The amount of the impairment was determined based on the difference between the carrying value of the Company's debt and equity participations and their estimated fair values. The Company has no remaining Penn Mezzanine debt participations and the adjusted carrying value of the Company's remaining Penn Mezzanine equity participation was $0.2 million at December 31, 2016.

The Company recognized an impairment charge of $1.7 million related to AppFirst, Inc. which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2016. The impairment was due to the shutdown of AppFirst's operations and the sale of its assets. The amount of the impairment was determined based on the difference between the carrying value of the Company's holdings in AppFirst and the proceeds received by the Company on the sale of AppFirst's assets in June 2016. The Company also recognized an impairment charge of $3.6 million related to AppFirst in the fourth quarter of 2015 which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2015. The impairment was due to lack of revenue growth.

In June 2016, the Company sold its ownership interests in Bridgevine, Inc. The Company received cash proceeds of $5.0 million and recognized a gain of $0.4 million on the transaction which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2016.

In April 2015, DriveFactor, Inc. was acquired by CCC Information Services, Inc. The Company received $9.1 million in initial cash proceeds in connection with the transaction. The Company recognized a gain of $6.1 million on the transaction, which is included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2015. In April 2016, the Company received an additional $1.1 million which was released from escrow resulting in a gain of $1.1 million which is included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2016.

In April 2016, the Company received $3.3 million associated with the achievement of the final performance milestone related to the December 2013 sale of ThingWorx, Inc. to PTC, Inc., resulting in a gain of $3.3 million which is included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2016. In January 2016, the Company received $4.1 million which was released from escrow resulting in a gain of $4.1 million which is included in Equity income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2015. In July 2015, the Company received $3.3 million associated with the achievement of performance milestones, resulting in a gain of $3.3 million which is included in Equity income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2015.

In July 2015, Quantia, Inc. was acquired by Physicians Interactive. The Company received $7.8 million in initial cash proceeds in connection with the transaction. In July 2016, the Company received an additional $0.6 million which was released from escrow resulting in a gain of $0.6 million which is included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2016. The Company also recognized an impairment charge of $2.9 million related to Quantia in the second quarter of 2015 which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2015. The impairment was based on the difference between the Company's carrying value in Quantia and the initial net proceeds received in July 2015.

In July 2015, the Company received $1.7 million in connection with the expiration of the escrow period related to the January 2014 sale of Alverix, Inc. to Becton, Dickinson and Company, resulting in a gain of $1.7 million which is included in Equity income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2015. The Company received $15.7 million in initial cash proceeds in connection with the transaction resulting in a gain of $15.7 million, which is included in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2014.

In July and March 2015, the Company received an aggregate $2.9 million in connection with the expiration of the escrow period related to the February 2014 sale of Crescendo Bioscience, Inc. to Myriad Genetics, Inc., resulting in a gain of $2.9 million which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2015. The Company received $38.4 million in initial cash proceeds in connection with the transaction resulting in a gain of $27.4 million, which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2014.

The Company recognized an impairment charge of $3.2 million related to InfoBionic, Inc. in the second quarter of 2015 which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2015. The impairment was due to discontinuation of InfoBionic's first-generation product. The amount of the impairment was determined based on the value at which InfoBionic raised additional equity financing in July 2015 from the Company and other existing capital providers.

The Company recognized an impairment charge of $2.3 million related to Dabo Health, Inc. in the first quarter of 2015 which is reflected in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2015. The impairment was based on the decision of the Company and other shareholders not to continue to fund Dabo Health's operations.

In April 2014, the Company sold its ownership interests in Sotera Wireless, Inc. The Company received $4.2 million in cash proceeds in connection with the transaction and recognized a gain of $1.5 million, which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2014.

In February 2014, NuPathe was acquired by Teva Pharmaceutical Industries Ltd. for $3.65 per share in cash. The Company received initial net cash proceeds of $23.1 million as a result of the transaction. The Company recognized a gain of $3.0 million, which is included in Other income (loss), net in the Consolidated Statements of Operations for the year ended December 31, 2014.

Summarized Financial Information for Partner Companies

The Company categorizes its partner companies into four stages based upon revenue generation—Development Stage, Initial Revenue Stage, Expansion Stage and, High Traction Stage. The Development Stage is made up of those companies that are pre-revenue businesses. The Company currently has no partner companies in the Development Stage. The Initial Revenue Stage is made up of businesses that have revenues of $5 million or less. The Expansion Stage is made up of companies that have revenue in the range of $5 million to $20 million. The High Traction Stage is made up of companies that have revenue in excess of $20 million per year. See Note 14 to the Consolidated Financial Statements for a listing of partner companies in which the Company held an ownership interest as of December 31, 2016 and their respective revenue stages.

The following summarized financial information by revenue stage for partner companies accounted for under the equity method for the periods presented has been compiled from respective partner company financial statements, reflect certain historical adjustments, and are reported on a one quarter lag. Results of operations of the partner companies are excluded for periods prior to their acquisition and subsequent to their disposition. Historical results are not adjusted when the Company exits or writes-off a partner company.

High Traction Stage



	As of December 31,
	2016		2015
	(In thousands)
Balance Sheets:
Current assets	$	229,756	$	213,884
Non-current assets	106,555		89,987
Total assets	$	336,311	$	303,871
Current liabilities	$	215,622	$	192,025
Non-current liabilities	110,315		74,208
Shareholders’ equity	10,374		37,638
Total liabilities and shareholders’ equity	$	336,311	$	303,871
Number of partner companies	5		6



	Year Ended December 31,
	2016			2015			2014
	(In thousands)
Results of Operations:
Revenue	$	272,216		$	301,132		$	249,157
Gross profit	$	200,811		$	208,883		$	164,514
Net loss	$	(40,815	)	$	(46,558	)	$	(55,394	)

Expansion Stage



	As of December 31,
	2016		2015
	(In thousands)
Balance Sheets:
Current assets	$	66,204	$	84,041
Non-current assets	17,756		16,762
Total assets	$	83,960	$	100,803
Current liabilities	$	40,660	$	40,268
Non-current liabilities	14,851		27,449
Shareholders’ equity	28,449		33,086
Total liabilities and shareholders’ equity	$	83,960	$	100,803
Number of partner companies	7		7



	Year Ended December 31,
	2016			2015			2014
	(In thousands)
Results of Operations:
Revenue	$	61,293		$	53,002		$	39,391
Gross profit	$	34,682		$	30,928		$	26,158
Net loss	$	(52,111	)	$	(34,064	)	$	(30,012	)

Initial Revenue Stage



	As of December 31,
	2016		2015
	(In thousands)
Balance Sheets:
Current assets	$	73,698	$	59,738
Non-current assets	4,915		2,705
Total assets	$	78,613	$	62,443
Current liabilities	$	29,431	$	21,399
Non-current liabilities	33,385		9,172
Shareholders’ equity	15,797		31,872
Total liabilities and shareholders’ equity	$	78,613	$	62,443
Number of partner companies	17		15



	Year Ended December 31,
	2016			2015			2014
	(In thousands)
Results of Operations:
Revenue	$	31,172		$	15,071		$	9,661
Gross profit	$	18,777		$	10,234		$	6,008
Net loss	$	(93,440	)	$	(57,762	)	$	(23,588	)

As of December 31, 2016, the Company’s carrying value in equity method partner companies, in the aggregate, exceeded the Company’s share of the net assets of such companies by approximately $119.0 million. Of this excess, $98.2 million was allocated to goodwill and $20.8 million was allocated to intangible assets.