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Acquisitions | 9 Months Ended
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Sep. 30, 2022
Acquisitions |
Acquisitions | 4. Acquisitions ​ On March 22, 2022, the Company closed the BDSI Acquisition pursuant to the Merger Agreement, with BDSI surviving the Merger as a wholly owned subsidiary of the Company. The BDSI Acquisition was completed to leverage the Company’s existing sales force and other operations to commercialize additional products that are typically marketed to similar physicians and to develop other synergies. The Company obtained control through the acquisition of shares in an all-cash transaction which closed on March 22, 2022. ​ The total consideration paid for the BDSI acquisition was approximately $669,431 consisting of the following (in thousands, except per share amounts): ​
​ | ​ | ​
Fair Value of Purchase Price Consideration | Amount
Fair value of purchase price consideration paid at closing: | ​ | ​
Cash consideration for all outstanding shares of BDSI's common and preferred stock (103,235,298 shares acquired at $5.60 per share) | $ | 578,118
Cash consideration paid to settle RSUs and in-the-money options | ​ | 28,309
Cash paid to settle BDSI debt | ​ | 63,004
Total purchase consideration | $ | 669,431
​ The Company has accounted for the BDSI Acquisition as a business combination and, accordingly, has included the assets acquired, liabilities assumed and results of operations in its financial statements following the Acquisition Date. ​ The preliminary purchase price allocation is based on estimates, assumptions, valuations and other studies which have not yet been finalized. Prior to the finalization of the purchase price allocation, if information becomes available that would indicate it is probable that unknown events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation and may change the carrying value of goodwill. The Company is finalizing its valuation of intangible assets, tangible assets, liabilities and tax analyses, and anticipates finalizing the purchase price allocation as the information necessary to complete the analysis is obtained, but no later than one year after the Acquisition Date. ​ The following tables set forth the preliminary allocation of the BDSI Acquisition purchase price to the estimated fair value of the net assets acquired at the Acquisition Date (in thousands): ​
​ | ​ | ​ | ​
​ | ​ | Amounts Recognized at the Acquisition Date
Assets Acquired | ​ | ​ | ​
Cash and cash equivalents | ​ | $ | 97,362
Accounts receivable | ​ | ​ | 55,495
Inventory | ​ | ​ | 77,382
Prepaid expenses and other current assets | ​ | ​ | 6,125
Property and equipment | ​ | ​ | 1,242
Operating lease assets | ​ | ​ | 481
Intangible assets | ​ | ​ | 435,000
Total assets | ​ | $ | 673,087
Liabilities Assumed | ​ | ​ | ​
Accounts payable | ​ | $ | 12
Accrued expenses | ​ | ​ | 18,115
Accrued rebates, returns and discounts | ​ | ​ | 56,261
Operating lease liabilities | ​ | ​ | 481
Deferred tax liabilities | ​ | ​ | 58,881
Total liabilities | ​ | $ | 133,750
Total identifiable net assets acquired | ​ | ​ | 539,337
Goodwill | ​ | ​ | 130,094
Total consideration transferred | ​ | $ | 669,431
​ The valuation of the acquired intangible assets is inherently subjective and relies on significant unobservable inputs. The Company used an income approach to value the $435,000 of intangible assets. The valuation for each of these intangible assets was based on estimated projections of expected cash flows to be generated by the assets, discounted to the present value at discount rates commensurate with risk. The Company is amortizing the identifiable intangible assets on a straight-line over their respective useful lives (refer to Note 9, Goodwill and Intangible Assets). In addition, the acquired inventory was recognized at its acquisition-date fair value, which resulted in an increase of $54,700 compared to its preacquisition book value. ​ The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill. This goodwill is primarily attributable to synergies of merging operations. The acquired goodwill is not deductible for tax purposes. ​ Total revenues attributable to BDSI from the Acquisition Date through September 30, 2022 were $94,110. However, earnings attributable to BDSI from the Acquisition Date through September 30, 2022 are not distinguishable due to the rapid integration of BDSI’s core operations into the Company. ​ Unaudited Pro Forma Summary of Operations ​ The following table shows the unaudited pro forma summary of operations for the three and nine months ended September 30, 2022 and 2021, as if the BDSI Acquisition had occurred on January 1, 2021. This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of January 1, 2021, and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
​ | 2022 | ​ | 2021 |  | 2022 | ​ | 2021
Total revenues | $ | 127,013 | ​ | $ | 119,934 | ​ | $ | 363,664 | ​ | $ | 373,055
Net (loss) income | $ | 12,603 | ​ | $ | (14,725) | ​ | $ | (6,347) | ​ | $ | 10,089
​ The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and BDSI. The summary pro forma financial information primarily reflects the following pro forma adjustments:
| ● | The Company’s acquisition related transaction costs of $14,718 were reflected as of January 1, 2021
| ● | Employee severance related expense of $8,008 was reflected as of January 1, 2021
| ● | Additional amortization expense from the acquired intangibles
| ● | Additional cost of product revenues related to the step-up basis in inventory to record inventory at fair value; and
| ● | Adjustments to the Company’s interest expense related to repayment of the 2020 Term Notes and entering into the 2022 Term Loan as defined in Note 11, Term Notes Payable.
​ In addition, all of the above adjustments were adjusted for the applicable tax impact. ​ Acquisition Related Expenses ​ During the three and nine months ended September 30, 2022, the Company incurred $463 and $31,209, respectively, of acquisition related expenses as a result of the BDSI Acquisition and the substantial majority were included in the Selling, general, and administrative expense in the condensed consolidated statements of operations. These costs include transaction costs, which primarily consisted of financial advisory, banking, legal, and regulatory fees, and other consulting fees, incurred to complete the acquisition, employee-related expenses (severance cost and benefits) for terminated employees after the acquisition, BDSI directors and officers insurance, and miscellaneous other acquisition expenses incurred. Additional charges related to severance or retention payments and payments of any remaining employee termination costs are not expected to be material. However, the Company expects to incur additional acquisition related expenses relating to consulting fees, contract termination costs, and other integration-related expenses during the remainder of 2022. ​ ​
​ | ​ | ​ | ​ | ​ | ​
​ | Three Months Ended September 30, 2022 | ​ | Nine Months Ended September 30, 2022
Transaction costs | $ | — | ​ | $ | 14,718
Employee-related expenses | ​ | — | ​ | ​ | 8,008
BDSI directors and officers insurance | ​ | — | ​ | ​ | 4,492
Other acquisition expenses | ​ | 463 | ​ | ​ | 3,991
Total acquisition related expenses | $ | 463 | ​ | $ | 31,209
​

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