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Discontinued Operations | 9 Months Ended
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Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | 2. Discontinued Operations As discussed in Note 1, we changed our business in 2022 by licensing our products to receive royalties and future sales related milestone payments, after granting an exclusive license to commercialize our IMVEXXY, BIJUVA, and prescription prenatal vitamin products sold under the BocaGreenMD and vitaMedMD brands in the United States and assigning our exclusive license to commercialize ANNOVERA to Mayne Pharma. This plan represented a strategic shift having a major effect on our operations and financial results. Upon our conversion from a commercial pharmaceutical company to a licensing only company with the consummation of the Mayne Transaction, we classified all direct revenues, costs and expenses related to commercial operations, within income (loss) from discontinued operations, net of tax, in the condensed consolidated statements of comprehensive income for all periods presented. We have not allocated any amounts for shared general and administrative operating support expense to discontinued operations. As required by the terms of the Financing Agreement, proceeds from the Mayne Transaction and the VitaCare Divestiture were used to fully repay our outstanding debt borrowings, and as a result interest expense and amortization of deferred financing costs as well as expense for accretion of Series A Preferred Stock and loss on extinguishment of debt are included within income (loss) from discontinued operations, net of tax (as disclosed below). Additionally, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022. The total consideration from Mayne Pharma consisted of (i) a cash payment of $140.0 million at closing, (ii) a cash payment of $12.1 million for the acquisition of net working capital subject to certain adjustments, (iii) a cash payment of approximately $1.0 million for prepaid royalties in connection with the Mayne License Agreement Amendment and (iv) the right to receive the contingent consideration set forth in the Mayne License Agreement, as amended. Our estimate of net working capital at closing was determined in accordance with the Transaction Agreement which establishes the process for the determination of final net working capital. The determination of net working capital includes significant estimates which could change materially for a period of up to two years following the Closing Date. On March 29, 2023, we received Mayne Pharma’s closing net working capital calculation which differed significantly from our estimate of closing net working capital. We believe that our estimate of net working capital is reasonable and intend to resolve this matter through the process outlined in the Transaction Agreement. During the three months ended September 30, 2023, we revised certain estimates pertaining to contracts we were a party to when we were an operating company. These included an incremental accrual of approximately $2 million for net working capital adjustments related to the Transaction Agreement . The following table presents results of discontinued operations (in thousands):
|  | Three months ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Product revenue, net |  | $ | (833 | ) |  | $ | 20,562 |  |  | $ | (833 | ) |  | $ | 67,413 |
Cost of goods sold |  |  | — |  |  |  | 3,434 |  |  |  | — |  |  |  | 11,991 |
Gross profit |  |  | (833 | ) |  |  | 17,128 |  |  |  | (833 | ) |  |  | 55,422 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Selling and marketing |  |  | — |  |  |  | 19,129 |  |  |  | — |  |  |  | 61,703 |
General and administrative |  |  | (39 | ) |  |  | 3,107 |  |  |  | 296 |  |  |  | 8,157 |
Research and development |  |  | — |  |  |  | 1,112 |  |  |  | — |  |  |  | 4,092 |
Depreciation & amortization |  |  | — |  |  |  | 8 |  |  |  | — |  |  |  | 36 |
Total operating expenses |  |  | (39 | ) |  |  | 23,356 |  |  |  | 296 |  |  |  | 73,988 |
Operating loss from discontinued operations |  |  | (794 | ) |  |  | (6,228 | ) |  |  | (1,129 | ) |  |  | (18,566 | )
Other income (expense), net |  |  | (1,150 | ) |  |  | (8,106 | ) |  |  | (2,108 | ) |  |  | 100,240 |
Total other income (expense), net |  |  | (1,150 | ) |  |  | (8,106 | ) |  |  | (2,108 | ) |  |  | 100,240 |
Net income (loss) from discontinued operations |  | $ | (1,944 | ) |  | $ | (14,334 | ) |  | $ | (3,237 | ) |  | $ | 81,674 |
The following table presents the carrying amounts of the classes of assets and liabilities of discontinued operations as of September 30, 2023 and December 31, 2022 (in thousands):
|  | September 30, 2023 |  |  | December 31, 2022 |
Liabilities: |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable |  | $ | 113 |  |  | $ | 12,243 |
Accrued expenses and other current liabilities |  |  | 6,775 |  |  |  | 13,588 |
Total current liabilities |  | $ | 6,888 |  |  | $ | 25,831 |

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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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