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Note 7 - Discontinued Operations - Sale of OMIDRIA

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note 7—Discontinued Operations - Sale of OMIDRIA

On December 23, 2021, we closed the sale of OMIDRIA and related assets, which is reported as discontinued operations in our consolidated statements of operations and comprehensive income. Upon closing, we received an up-front cash payment from Rayner of $126.0 million, and we retained the outstanding receivables and liabilities related to OMIDRIA as of the closing date.

The year ended December 31, 2021, included a gain on the sale of OMIDRIA comprised as follows (in thousands):

Cash proceeds		$	125,993
OMIDRIA contract royalty asset			184,570
Gain on sale of OMIDRIA, gross			310,563
Transaction and closing costs			(1,972	)
RSUs granted to transferred employees			(1,419	)
Prepaid assets and inventory at cost			(1,524	)
Gain on sale of OMIDRIA		$	305,648

In December 2022, the achievement of the Milestone Event triggered a $200.0 million Milestone Payment from Rayner which we received in February 2023. The Milestone Event also resulted in a reduction in the U.S. royalty rate from 50% to 30% on OMIDRIA net sales.

The results of operations for OMIDRIA are recorded as income from discontinued operations for all periods presented in the consolidated statements of operations and comprehensive income (loss).

		*Year Ended December 31,*
		*2023*				*2022*				*2021*
		(In thousands)
Product sales, net		$	—			$	—			$	110,735
Costs and expenses			—				—				30,631
Gross margin			—				—				80,104
Gain on sale of OMIDRIA			—				—				305,648
Milestone income			—				200,000				—
Interest on OMIDRIA contract royalty asset			15,315				18,634				—
Remeasurement adjustments			41,167				14,457				—
Other income			1,087				307				1,035
Income before income tax			57,569				233,398				386,787
Income tax expense ⁽¹⁾			(462	)			(3,952	)			(1,006	)
Net income from discontinued operations, net of tax		$	57,107			$	229,446			$	385,781

(1) For further discussion of income tax expense refer to “Note 13 – Income Taxes”.

The following schedule is a rollforward of the OMIDRIA contract royalty asset (in thousands):

Balance at December 31, 2021		$	184,570
Royalties earned			(65,439	)
Interest on OMIDRIA contract royalty asset			18,634
Remeasurement adjustments			14,457
Balance at December 31, 2022			152,222
Royalties earned			(40,595	)
Interest on OMIDRIA contract royalty asset			15,315
Remeasurement adjustments			41,167
Balance at December 31, 2023		$	168,109

Cash flow from discontinued operations is as follows:

		*Year Ended December 31,*
		*2023*				*2022*				*2021*
		(In thousands)
Net cash provided by discontinued operations from operating activities		$	241,317			$	78,082			$	55,380
Net cash provided by discontinued operations from investing activities		$	—			$	—			$	125,993