Annual report pursuant to Section 13 and 15(d)

Composition of Certain Financial Statement Captions

v3.6.0.2
Composition of Certain Financial Statement Captions
12 Months Ended
Dec. 31, 2016
Compositions of Certain Financial Statement Captions [Abstract]  
Composition of Certain Financial Statement Captions
Composition of Certain Financial Statement Captions
 
For the years ended December 31,
(In thousands)
2016
 
2015
Accounts receivable, net
 
 
 
Accounts receivable
$
256,552

 
$
219,043

Less: allowance for doubtful accounts
(36,268
)
 
(25,168
)
 
$
220,284

 
$
193,875

Inventories, net
 
 
 
Consumable supplies
$
23,448

 
$
22,265

Finished products
16,143

 
13,404

Work in-process
3,896

 
1,215

Raw materials
4,686

 
3,848

Less: inventory reserve
(945
)
 
(1,051
)
 
$
47,228

 
$
39,681

Other current assets and prepaid expenses
 
 
 
Other receivables
$
13,021

 
$
11,946

Taxes recoverable
16,187

 
3,076

Prepaid supplies
6,952

 
8,773

Prepaid insurance
3,688

 
2,206

Other
7,508

 
903

 
$
47,356

 
$
26,904

Property, plant and equipment, net:
 
 
 
Machinery, medical and other equipment
$
100,100

 
$
89,936

Leasehold improvements
30,122

 
27,949

Furniture and fixtures
11,247

 
11,403

Automobiles and aircraft
13,342

 
10,271

Software
10,990

 
10,497

Building
5,696

 
5,965

Land
2,264

 
2,394

Construction in process
5,848

 
425

Less: accumulated depreciation
(56,778
)
 
(27,042
)
 
$
122,831

 
$
131,798

Intangible assets, net:
 
 
 
Customer relationships
$
443,560

 
$
449,972

Technologies
340,397

 
151,709

Trade names
50,442

 
50,416

Covenants not to compete
16,348

 
8,612

Licenses
23,506

 
23,432

Product registrations
7,641

 
7,512

Other
5,289

 
5,600

Less:  accumulated amortization
(123,207
)
 
(59,101
)
 
$
763,976

 
$
638,152

Accrued expenses:
 
 
 
Deferred revenue
$
73,434

 
$
70,246

Employee benefits
43,792

 
29,751

Taxes payable
4,430

 
7,605

Contingent consideration
259

 
22,164

 
For the years ended December 31,
(In thousands)
2016
 
2015
Clinical trials
5,935

 
2,505

Capital leases short-term
3,025

 
5,373

Milestone payment
4,865

 
5,000

Professional fees
4,035

 
1,506

Other
58,180

 
23,749

 
$
197,955

 
$
167,899

 
 
 
 
Other long-term liabilities:
 
 
 
Deferred revenue
$
89,016

 
$
162,634

Line of credit
38,809

 
72,107

Contingent consideration
44,817

 
32,258

Capital leases long-term
7,216

 
9,285

Mortgages and other debts payable
717

 
2,523

Other
21,908

 
13,663

 
$
202,483

 
$
292,470


The following table summarizes the fair values assigned to our major intangible asset classes upon each acquisition:
(In thousands)
Technologies
 
In-process research and development
 
Customer relationships
 
Product registrations
 
Covenants not to compete
 
Trade names
 
Other
 
Total identified intangible assets
 
Goodwill
Bio-Reference
$
100,600

 
$

 
$
389,800

 
$

 
$
7,750

 
$
47,100

 
$

 
$
545,250

 
$
401,821

CURNA

 
10,000

 

 

 

 

 
290

 
10,290

 
4,827

EirGen

 
560

 
34,155

 

 

 

 
3,919

 
38,634

 
83,373

FineTech
2,700

 

 
14,200

 

 
1,500

 
400

 

 
18,800

 
11,623

OPKO Biologics

 
590,200

 

 

 

 

 

 
590,200

 
139,784

OPKO
Chile

 

 
3,945

 
5,829

 

 
1,032

 

 
10,806

 
5,441

OPKO Diagnostics
44,400

 

 

 

 

 

 

 
44,400

 
17,977

OPKO Health Europe
3,017

 
1,459

 
436

 
2,930

 
187

 
349

 

 
8,378

 
8,062

OPKO Lab
1,370

 

 
3,860

 

 
6,900

 
1,830

 
70

 
14,030

 
29,629

OPKO Renal

 
191,530

 

 

 

 

 
210

 
191,740

 
2,411

Transition Therapeutics

 
41,000

 

 

 

 

 


41,000

 
3,453

Weighted average amortization period
8-12 years

 
Indefinite

 
6-20 years

 
9 years

 
5 years

 
4-5 years

 
3-10 years

 
 
 
Indefinite


All of the intangible assets and goodwill acquired relate to our acquisitions of principally OPKO Renal, OPKO Biologics, EirGen and Bio-Reference. We do not anticipate capitalizing the cost of product registration renewals, rather we expect to expense these costs, as incurred. Our goodwill is not tax deductible for income tax purposes in any jurisdiction we operate in.
We reclassified $187.6 million of IPR&D related to Rayaldee from In-process research and development to Intangible assets, net in our Consolidated Balance Sheet upon the FDA’s approval of Rayaldee in June 2016. In addition, we made certain purchase price allocation adjustments related to the Bio-Reference acquisition during the year ended December 31, 2016. Refer to Note 4. Other changes in value of the intangible assets and goodwill during 2016 are primarily due to foreign currency fluctuations between the Chilean and Mexican pesos, the Euro and the Shekel against the U.S. dollar. For the year ended December 31, 2015, the changes in value of the intangible assets and goodwill are primarily due to the acquisitions of Bio-Reference and EirGen and foreign currency fluctuations between the Chilean and Mexican pesos, the Euro and the Shekel against the U.S. dollar.
The following table reflects the changes in the allowance for doubtful accounts, provision for inventory reserve and tax valuation allowance accounts:
 
(In thousands)
Beginning
balance
 
Charged
to
expense
 
Written-off
 
Charged
to other
 
Ending
balance
2016
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
(25,168
)
 
(83,463
)
 
68,840

 
3,523

 
$
(36,268
)
Inventory reserve
$
(1,051
)
 
(20
)
 
296

 
(170
)
 
$
(945
)
Tax valuation allowance
$
(42,147
)
 
7,726

 

 
(20,994
)
 
$
(55,415
)
2015
 
 
 
 
 
 
 
 
 
Allowance for doubtful accounts
$
(1,906
)
 
(24,548
)
 
928

 
358

 
$
(25,168
)
Inventory reserve
$
(639
)
 
(926
)
 
435

 
79

 
$
(1,051
)
Tax valuation allowance
$
(131,931
)
 

 

 
89,784

 
$
(42,147
)

The following table summarizes the changes in Goodwill during the years ended December 31, 2016 and 2015.
 
2016
 
2015
(In thousands)
Balance at January 1st
 
Purchase accounting adjustments
 
Foreign exchange
 
Balance at December 31st
 
Balance at January 1
 
Purchase accounting adjustments
 
Foreign exchange
 
Balance at December 31
Pharmaceuticals
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURNA
$
4,827

 
$

 
$

 
$
4,827

 
$
4,827

 
$

 
$

 
$
4,827

EirGen
81,139

 

 
(2,781
)
 
78,358

 

 
83,373

 
(2,234
)
 
81,139

FineTech
11,698

 

 

 
11,698

 
11,698

 

 

 
11,698

OPKO Biologics
139,784

 

 

 
139,784

 
139,784

 

 

 
139,784

OPKO Chile
4,517

 

 
268

 
4,785

 
5,283

 

 
(766
)
 
4,517

OPKO Health Europe
7,191

 

 
(255
)
 
6,936

 
8,013

 

 
(822
)
 
7,191

OPKO Mexico

 

 

 

 
100

 

 
(100
)
 

OPKO Renal
2,069

 

 

 
2,069

 
2,069

 

 

 
2,069

SciVac

 

 

 

 
1,553

 

 
(1,553
)
 

Transition Therapeutics

 
3,453

 
(93
)
 
3,360

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diagnostics
 
 
 
 
 
 
 
 

 

 

 

Bio-Reference
441,158

 
(39,337
)
 

 
401,821

 

 
441,158

 

 
441,158

OPKO Diagnostics
17,977

 

 

 
17,977

 
17,977

 

 

 
17,977

OPKO Lab
32,988

 

 

 
32,988

 
32,988

 

 

 
32,988

 
$
743,348

 
$
(35,884
)
 
$
(2,861
)
 
$
704,603

 
$
224,292

 
$
524,531

 
$
(5,475
)
 
$
743,348