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Discontinued Operations and Disposal Groups | 6 Months Ended
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Jun. 30, 2025
Discontinued Operations and Disposal Groups [Abstract] |
Disposal Groups, Including Discontinued Operations, Disclosure | Assets Held For Sale and Disposal of Business Assets Held For Sale On November 12, 2024, we entered into a purchase agreement (the "Agreement") with Otsuka Pharmaceutical Factory America, Inc., a Delaware corporation ("OPF") to divest a controlling interest in our IV Solutions business. As of December 31, 2024, we concluded the initial criteria for classification as held for sale were met, and accordingly we presented the IV Solution's net assets as held for sale in our condensed consolidated balance sheet. The following table summarizes the carrying values of the assets and liabilities presented as held for sale in our condensed consolidated balance sheet as of December 31, 2024 (in thousands):
|  |  | As of
Assets: |  |  | December 31, 2024
Accounts receivable, net of allowance of $465 at December 31, 2024 |  |  | $ | 13,331 |
Inventories |  |  | 88,656 |
Prepaid expenses and other current assets |  |  | 4,140 |
Property, plant and equipment, net |  |  | 155,426 |
Other assets |  |  | 22,829 |
Total assets held for sale |  |  | $ | 284,382 |
Liabilities: |  |  |
Accounts payable |  |  | $ | 13,533 |
Accrued liabilities |  |  | 19,378 |
Total liabilities held for sale |  |  | $ | 32,911 |
Net assets held for sale |  |  | $ | 251,471 |
Disposal of IV Solutions Business On May 1, 2025, we sold to OPF a 60% ownership interest in Otsuka ICU Medical LLC (the "joint venture"), an entity we formed in 2025 and to which we contributed the net assets of our IV Solutions business. Upon the sale and as a result of a loss of control, we derecognized the net assets that comprised our IV Solutions business and recorded our retained 40% ownership interest at its estimated fair value as an equity method investment in the joint venture (see Note 11: Investment Securities). We have the ability to exercise significant influence over operating and financial policies of the joint venture, primarily through having two of the five seats on its Board of Directors. Preliminary cash proceeds from the sale, subject to conventional purchase price adjustments, were $209.5 million. We also are entitled to contingent consideration if the joint venture exceeds planned revenues or gross margin for the year ended December 31, 2026. Additionally, we have agreed to provide commercial, logistics, administrative, and other services, including continuing to provide certain manufacturing services for component parts for a period of up to five years from transaction close (see below table). Certain logistic and warehouse costs incurred on behalf of and reimbursed by the joint venture are pass-through expenses and net to zero within cost of goods sold in the condensed consolidated statement of operations. Other services are provided in exchange for fixed fee arrangements or reimbursement of our costs, depending on the respective terms of service negotiated. Fees charged for the services are recorded as reductions to the costs incurred to provide such services in the condensed consolidated statement of operations. Those services provided under fixed price arrangements were determined to be at less than fair value and, as such, we recognized an unfavorable contract liability of $20.2 million to account for the difference between the fair value of services to be provided and the estimated cost of providing such services over the five years from transaction close. The unfavorable contract liability is presented within other liabilities in our condensed consolidated balance sheet, with the current portion included in accrued liabilities. This liability is being released to our condensed consolidated statement of operations as reduction to the costs incurred to provide the respective services within selling, general and administrative expenses. For the three and six months ended June 30, 2025, we recognized $2.6 million in fixed and variable service fees related to reimbursed expenses under the various transition service agreements and $0.7 million related to the release of the unfavorable contract liability. The fees, reimbursements and release of unfavorable contract liability serve to reduce the same line items as their respective incurred expenses within cost of goods sold or selling, general, and administrative expenses in our condensed consolidated statement of operations. Fair value for our retained 40% ownership interest was determined using a market approach based on the proceeds received from OPF for its 60% controlling ownership interest. Fair value for services was estimated using a market approach based on observable margins for comparable services and the difference between the fair value of services and the estimated cost to provide the services through the term of the services agreement was discounted using our effective borrowing rate. The combined effect of the transaction was a gain of $41.8 million, comprising the sum of a $45.6 million gain from the disposal of a 60% ownership interest in the joint venture, a $16.4 million gain from the difference between the fair value of our retained 40% ownership interest in the joint venture and our carrying value of that same proportionate ownership interest, and a $20.2 million unfavorable contract liability recorded upon disposition. The gain is presented as a separate line item in our condensed consolidated statement of operations. No gain related to contingent consideration was recorded. We will record such gain, if any, if and when the measurement period has ended and we have concluded that a payment will be received. As part of the transaction, we provided OPF a call option to acquire our retained 40% ownership in the joint venture. Additionally, OPF provided us with a put option giving us the right to compel OPF to purchase our retained 40% ownership interest in the joint venture. The call and put options are exercisable at certain specified dates and for specified amounts based on certain historical financial metrics as set forth in the joint venture's Operating Agreement beginning five years after the closing. The call and put options were not recorded in our condensed consolidated financial statements since they do not meet the definition of a derivative specifically due to the absence of a net settlement feature. Related Party Transactions We account for our retained 40% interest in the joint venture as an equity method investment (see Note 11: Investment Securities), having the ability to exercise significant influence over operating and financial policies of the joint venture, primarily through having two of the five seats on its Board of Directors. Additionally, in connection with the closing of the transaction on May 1, 2025, we entered into certain agreements with OPF, which cover the governance of the joint venture and require us to provide certain commercial, logistics, manufacturing supply, administrative, and other services for a period of up to five years from transaction close. The following table presents condensed consolidated financial statement data resulting from transactions with the joint venture (in thousands):
| Three months ended June 30, |  | Six months ended June 30,
| 2025 |  |  |  | 2025 |  |
Condensed consolidated statement of operations: |  |  |  |  |  |  |
Manufacturing services agreement revenue | $ | 3,513 |  |  |  |  | $ | 3,513 |  |  |
Manufacturing services agreement cost of goods sold | $ | (3,101) |  |  |  |  | $ | (3,101) |  |  |
Service fees - Otsuka ICU Medical LLC (cost of goods sold) | $ | 117 |  |  |  |  | $ | 117 |  |  |
Service fees - Otsuka ICU Medical LLC (selling, general & administrative) | $ | 2,074 |  |  |  |  | $ | 2,074 |  |  |
Equity in earnings of unconsolidated affiliates | $ | 2,837 |  |  |  |  | $ | 2,837 |  |  |
The joint venture is a pass-through entity for income tax purposes and, as such, does not record income tax at the entity level. We record our equity in earnings of unconsolidated affiliates before any related income tax recognized as a separate line item in our condensed consolidated statements of operations. Income taxes on our share of the joint venture's earnings are included within provision for income taxes in our consolidated statements of operations. As of June 30, 2025, a $10.4 million related-party payable to the joint venture was included within accrued liabilities in our condensed consolidated balance sheet.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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