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, 2017		December 31, 2016
	(In thousands)
Equity Method:
Partner companies	$	107,646	$	154,219
Private equity funds	443		447
	108,089		154,666
Cost Method:
Partner companies	2,762		2,112
Private equity funds	1,334		1,550
	4,096		3,662
Advances to partner companies	22,506		25,142
	$	134,691	$	183,470

In August 2017, Good Start Genetics, Inc. was acquired by Invitae Corporation ("Invitae"). The Company received 414,237 shares of Invitae common stock in connection with the transaction, excluding 124,092 shares of Invitae common stock which will be held in escrow until August 2018. The Company recognized a net gain of $3.8 million on the transaction for the year ended December 31, 2017. The Invitae shares are classified as Trading securities and recorded at fair value on the Consolidated Balance Sheet at December 31, 2017. In February 2018, the Company sold 414,237 shares of Invitae common stock on the open market for proceeds of $2.6 million after transaction fees.

In March 2017, the Company sold its interest in partner company Nexxt, Inc., formerly Beyond.com, back to Nexxt, Inc. for $26.0 million. The Company received $15.5 million in cash and a three-year, $10.5 million note for the balance due, which accrues interest at a rate of 9.5% per annum. The receipt of the $15.5 million in cash resulted in a gain of $0.1 million which is included in Equity income (loss) in the Consolidated Statements of Operations for the nine months ended September 30, 2017. The $10.5 million note was fully reserved and has a carrying value of zero as of December 31, 2017. In February 2018, Nexxt,Inc. repaid the $10.5 million note in full. A gain will be recorded in the first quarter of 2018.

The Company recognized an impairment charge of $7.0 million related to Full Measure, Inc. which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2017. The impairment was based on the Company’s decision not to continue to provide additional capital in the absence of significant additional capital raised from new investors. The adjusted carrying value of the Company's interest in Full Measure was $0.0 million at December 31, 2017.

The Company recognized an impairment charge of $3.6 million related to Spongecell, Inc. which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2017. The adjusted carrying value of the Company's interest in Spongecell was $6.0 million at December 31, 2017. Subsequent to year end, Spongecell merged into Flashtalking, a privately-held company, and the Company received shares equal to approximately 10% of Flashtalking’s issued share capital at the time of the closing.

The Company recognized impairment charges totaling $5.2 million related to Pneuron, Inc. which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the year ended December 31, 2017. Pneuron has ceased business operations and the adjusted carrying value of the Company's interest in Pneuron is $0.0 million at December 31, 2017.

In April 2016, Putney, Inc. was acquired by Dechra Pharmaceuticals Plc. The Company received $58.6 million in initial cash proceeds and $0.6 million from escrow during 2017. The Company recognized gains of $55.6 million and $0.6 million on the transaction, which were included in Equity income (loss) in the Consolidated Statements of Operations for the years ended December 31, 2016 and 2017, respectively.

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 adjusted carrying value of the Company's interest in Aventura was $0.0 million at December 31, 2017.

The Company recognized a $0.4 million gain and a $2.4 million loss on impairment 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 years ended December 31, 2017 and 2016, respectively. The carrying value of our remaining participating interests in debt and equity securities associated with Penn Mezzanine was $0.0 million and $0.2 million as of December 31, 2017 and 2016, respectively.

The Company recognized a impairment charges of $1.7 million and $3.6 million related to AppFirst, Inc. which is reflected in Equity income (loss) in the Consolidated Statements of Operations for the years ended December 31, 2016 and 2015, respectively. Appfirst's assets were sold in 2016.

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 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.

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 recognized an impairment charge of $3.2 million related to InfoBionic, Inc. in 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 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.

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, 2017 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,
	2017			2016
	(In thousands)
Balance Sheets:
Current assets	$	251,986		$	229,756
Non-current assets	111,329			106,555
Total assets	$	363,315		$	336,311
Current liabilities	$	296,349		$	215,622
Non-current liabilities	70,042			110,315
Shareholders’ equity	(3,076		)	10,374
Total liabilities and shareholders’ equity	$	363,315		$	336,311
Number of partner companies	3			5



	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Results of Operations:
Revenue	$	251,936		$	278,129		$	301,132
Gross profit	$	183,139		$	200,811		$	208,883
Net loss	$	(27,030	)	$	(41,586	)	$	(46,558	)

Expansion Stage



	As of December 31,
	2017			2016
	(In thousands)
Balance Sheets:
Current assets	$	75,441		$	88,287
Non-current assets	20,833			18,874
Total assets	$	96,274		$	107,161
Current liabilities	$	75,610		$	48,522
Non-current liabilities	33,180			18,048
Shareholders’ equity	(12,516		)	40,591
Total liabilities and shareholders’ equity	$	96,274		$	107,161
Number of partner companies	11			11



	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Results of Operations:
Revenue	$	99,882		$	72,258		$	58,093
Gross profit	$	51,075		$	36,691		$	33,473
Net loss	$	(81,879	)	$	(75,037	)	$	(44,605	)

Initial Revenue Stage



	As of December 31,
	2017		2016
	(In thousands)
Balance Sheets:
Current assets	$	54,383	$	51,615
Non-current assets	2,545		3,797
Total assets	$	56,928	$	55,412
Current liabilities	$	36,479	$	21,569
Non-current liabilities	17,450		30,188
Shareholders’ equity	2,999		3,655
Total liabilities and shareholders’ equity	$	56,928	$	55,412
Number of partner companies	11		13



	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Results of Operations:
Revenue	$	26,262		$	20,415		$	9,980
Gross profit	$	17,084		$	14,969		$	7,689
Net loss	$	(78,212	)	$	(70,107	)	$	(47,221	)

As of December 31, 2017, 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 $77.5 million. Of this excess, $60.9 million was allocated to goodwill and $16.6 million was allocated to intangible assets.