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Discontinued Operations | 6 Months Ended
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Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations On January 1, 2020, the Company and TS Biotechnology Holdings, LLC ("TS Biotechnology"), a related party and an entity managed by Third Security, entered into a Stock and Asset Purchase Agreement pursuant to which the Company agreed to sell a majority of the Company's bioengineering assets and operations to TS Biotechnology for $53,000 and certain contingent payment rights (the "TS Biotechnology Sale"). The TS Biotechnology Sale closed on January 31, 2020. The assets and operations sold in the TS Biotechnology Sale included the following wholly owned subsidiaries, as well as certain equity securities held in Oragenics, Inc. ("Oragenics") and SH Parent, Inc. that were directly related to the subsidiaries sold: •Intrexon Produce Holdings, Inc., the parent company of two companies focused on the development and sale of non-browning apples, Okanagan Specialty Fruits, Inc. and Fruit Orchard Holdings, Inc.; •Intrexon UK Holdings, Inc., the parent company of Oxitec Limited and its subsidiaries, which is a pioneering company in biological insect solutions; •ILH Holdings, Inc., a company focused on the production of certain fine chemicals focused primarily on microbial production of therapeutic compounds; and •Blue Marble AgBio LLC which was formed in January 2020 and included certain agriculture biotechnology assets and operations which were previously an operating division within Precigen. Additionally, on January 2, 2020, the Company sold its equity interest in EnviroFlight, LLC ("EnviroFlight"), a JV with Darling Ingredients, Inc. ("Darling"), and related intellectual property rights to Darling for $12,200 (the "EnviroFlight Sale"). Unless referenced separately, the TS Biotechnology Sale and the EnviroFlight Sale are collectively referred to as the "Transactions". The Transactions were approved by the Company's independent members of the board of directors in December 2019. The Transactions represented a strategic shift of the Company towards the Company becoming a primarily healthcare company advancing technologies and products that address complex healthcare challenges. The assets, liabilities, and operations related to the Transactions are reclassified and presented as discontinued operations in the accompanying condensed consolidated financial statements for all periods. Upon the closing of the TS Biotechnology Sale in January 2020, the cumulative foreign currency translation losses totaling $26,957 were released to earnings and included in loss from discontinued operations. See further discussion below. The carrying values of the major classes of assets and liabilities included in assets and liabilities held for sale for the Transactions as of December 31, 2019 are as follows:
| TS Biotechnology Sale |  | EnviroFlight Sale |  | Total
Assets |  |  |  |  |
Cash and cash equivalents | $ | 2,223 |  |  | $ | — |  |  | $ | 2,223 |
Other current assets | 9,698 |  |  | — |  |  | 9,698 |
Property, plant and equipment, net | 51,975 |  |  | — |  |  | 51,975 |
Intangible assets, net | 20,891 |  |  | 4,383 |  |  | 25,274 |
Investments in affiliates | — |  |  | 7,817 |  |  | 7,817 |
Right-of-use assets | 13,622 |  |  | — |  |  | 13,622 |
Other noncurrent assets | 212 |  |  | — |  |  | 212 |
Total assets held for sale | $ | 98,621 |  |  | $ | 12,200 |  |  | $ | 110,821 |
Liabilities |  |  |  |  |
Deferred revenue, current (1) | $ | 8,723 |  |  | $ | — |  |  | $ | 8,723 |
Operating lease liabilities, current | 2,459 |  |  | — |  |  | 2,459 |
Other current liabilities | 3,058 |  |  | 41 |  |  | 3,099 |
Deferred revenue, net of current portion (2) | 19,410 |  |  | — |  |  | 19,410 |
Operating lease liabilities, net of current portion | 12,623 |  |  | — |  |  | 12,623 |
Other long-term liabilities | 1,019 |  |  | — |  |  | 1,019 |
Total liabilities held for sale | $ | 47,292 |  |  | $ | 41 |  |  | $ | 47,333 |
(1)Includes deferred revenue, current, from related parties of $1,243. (2)Includes deferred revenue, net of current portion, from related parties of $6,836. The following table presents the financial results of discontinued operations for the six months ended June 30, 2020. There were no discontinued operations for the three months ended June 30, 2020.
| Six Months Ended June 30, 2020 |  |  |  |
| TS Biotechnology Sale |  | EnviroFlight Sale |  | Total
Revenues (1) | $ | 1,294 |  |  | $ | — |  |  | $ | 1,294 |
Operating expenses | 896 |  |  | — |  |  | 896 |
Operating income | 398 |  |  | — |  |  | 398 |
Gain on sale of discontinued operations | 633 |  |  | 39 |  |  | 672 |
Loss on release of cumulative foreign currency translation adjustment | (26,957) |  |  | — |  |  | (26,957) |
Other expense, net | (129) |  |  | — |  |  | (129) |
Equity in net loss of affiliates | — |  |  | (38) |  |  | (38) |
Income (loss) before income taxes | (26,055) |  |  | 1 |  |  | (26,054) |
Income tax expense | (2) |  |  | — |  |  | (2) |
Income (loss) from discontinued operations | $ | (26,057) |  |  | $ | 1 |  |  | $ | (26,056) |
(1)Includes revenues recognized from related parties of $436. The following tables present the financial results of discontinued operations for the three and six months ended June 30, 2019.
| Three Months Ended June 30, 2019 |  |  |  |
| TS Biotechnology Sale |  | EnviroFlight Sale |  | Total
Revenues (1) | $ | 3,150 |  |  | $ | — |  |  | $ | 3,150 |
Operating expenses | 9,069 |  |  | 117 |  |  | 9,186 |
Operating loss | (5,919) |  |  | (117) |  |  | (6,036) |
Other expense, net | (75) |  |  | — |  |  | (75) |
Equity in net loss of affiliates | — |  |  | (1,031) |  |  | (1,031) |
Loss before income taxes | (5,994) |  |  | (1,148) |  |  | (7,142) |
Income tax benefit | 516 |  |  | — |  |  | 516 |
Loss from discontinued operations | $ | (5,478) |  |  | $ | (1,148) |  |  | $ | (6,626) |
(1)Includes revenues recognized from related parties of $1,208.
| Six Months Ended June 30, 2019 |  |  |  |
| TS Biotechnology Sale |  | EnviroFlight Sale |  | Total
Revenues (1) | $ | 3,900 |  |  | $ | — |  |  | $ | 3,900 |
Operating expenses | 18,188 |  |  | 235 |  |  | 18,423 |
Operating loss | (14,288) |  |  | (235) |  |  | (14,523) |
Other expense, net | (497) |  |  | — |  |  | (497) |
Equity in net loss of affiliates | — |  |  | (1,923) |  |  | (1,923) |
Loss before income taxes | (14,785) |  |  | (2,158) |  |  | (16,943) |
Income tax benefit | 1,081 |  |  | — |  |  | 1,081 |
Loss from discontinued operations | $ | (13,704) |  |  | $ | (2,158) |  |  | $ | (15,862) |
(1)Includes revenues recognized from related parties of $230. The following table presents the significant non-cash items and purchases of property, plant and equipment for the discontinued operations that are included in the accompanying condensed consolidated statements of cash flows.
| Six Months Ended June 30, |  |
| 2020 |  | 2019
Adjustments to reconcile net loss to net cash used in operating activities |  |  |
Depreciation and amortization | $ | — |  |  | $ | 2,483 |
Unrealized and realized depreciation on equity securities and preferred stock, net | 106 |  |  | 507 |
Equity in net loss of EnviroFlight | 38 |  |  | 1,923 |
Stock-based compensation expense | (1,346) |  |  | 1,351 |
Deferred income taxes | — |  |  | (935) |
Gain on sale of discontinued operations | (672) |  |  | — |
Loss on release of cumulative foreign currency translation adjustment | 26,957 |  |  | — |
Cash flows from investing activities |  |  |
Purchases of property, plant and equipment | (382) |  |  | (18,275) |
Also see Note 13 below. Equity Method Investments The Company accounted for its investment in EnviroFlight using the equity method of accounting. Summarized financial data for EnviroFlight are shown in the following tables for the periods in which the Company held the equity method investment.
| December 31, |  |
| 2019 |  |
Current assets | $ | 703 |  |  |
Noncurrent assets | 30,549 |  |  |
Total assets | 31,252 |  |  |
Current liabilities | 2,352 |  |  |
Non-current liabilities | 88 |  |  |
Total liabilities | 2,440 |  |  |
Net assets | $ | 28,812 |  |  |
| Three Months Ended June 30, |  | Six Months Ended June 30, |  |
| 2019 |  | 2020 |  | 2019
Revenues | $ | 130 |  |  | $ | 16 |  |  | $ | 224 |
Operating expenses | 2,200 |  |  | 92 |  |  | 4,081 |
Operating loss | (2,070) |  |  | (76) |  |  | (3,857) |
Other, net | 8 |  |  | — |  |  | 12 |
Net loss | $ | (2,062) |  |  | $ | (76) |  |  | $ | (3,845) |
Where applicable, the notes to the accompanying condensed consolidated financial statements have been updated to reflect information pertaining to the Company's continuing operations. Out-of-Period Adjustment During the six months ended June 30, 2020, the Company recorded an out-of-period adjustment of $26,572 to loss from discontinued operations which relates to the effect of cumulative foreign translation losses associated with the entities sold in the TS Biotechnology Sale. This charge, which is entirely noncash, should have been recorded in the year ended December 31, 2019 as an additional impairment charge included in loss from discontinued operations. There was no impact to net loss from continuing operations, cash and short-term investments, cash flows, or Segment Adjusted EBITDA. The error also had no impact on the cash consideration received upon closing of the TS Biotechnology Sale nor the representations and warranties made by the Company in the transaction. The Company evaluated the effects of this out-of-period adjustment, both qualitatively and quantitatively, and concluded that this adjustment was not material to the Company's financial position or results of operations for the six months ended June 30, 2020 or the year ended December 31, 2019.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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