|
Acquisition (Notes)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Sep. 30, 2014
|
|||||||||||||||||||||||||||||||||||||
| Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
On August 13, 2014, the Company, through its wholly-owned subsidiary Interpace Diagnostics, LLC (Interpace or IDx), consummated an agreement to acquire certain fully developed thyroid and pancreas cancer diagnostic tests, other tests in development for thyroid cancer, associated intellectual property and a biobank with more than 5,000 patient tissue samples (collectively the Acquired Property) from Asuragen, Inc. (Asuragen) pursuant to an asset purchase agreement (the Agreement). The Company paid $8.0 million at closing and will be obligated to pay an additional $0.5 million to Asuragen upon the successful completion by Asuragen of certain integral transition service obligations set forth in a transition services agreement, entered into concurrently with the Agreement. The Company also entered into two license agreements with Asuragen relating to the Company’s ability to sell the fully developed thyroid and pancreas cancer diagnostic tests and other tests in development for thyroid cancer. In addition, the Company will be obligated to make a milestone payment of $0.5 million to Asuragen upon the earlier of the launch of a pancreas product or February 13, 2016, and to pay royalties of 5.0% on the future net sales of the pancreas diagnostics product line for a period of ten years following a qualifying sale, 3.5% on the future net sales of the thyroid diagnostics product line through August 13, 2024 and 1.5% on the future net sales of certain other thyroid diagnostics products for a period of ten years following a qualifying sale, collectively the contingent consideration.
The acquisition has been accounted for as a business combination, subject to the provisions of Accounting Standards Codification 805-10-50 (ASC 805-10-50), and been treated as an asset acquisition for tax purposes. In connection with the transaction, the Company has preliminarily recorded $13.0 million of finite lived intangible assets having a weighted-average amortization period of 7.9 years. See Note 5, Goodwill and Other Intangible Assets, for additional information.
The Company determined a preliminary acquisition date fair value of the contingent consideration (inclusive of the aforementioned milestone payment and royalties on future net sales) of $4.5 million. The royalty portion of the contingent consideration is based on a probability-weighted income approach derived from estimated future revenues. The fair value measurement is based on significant subjective assumptions and inputs not observable in the market and thus represents a Level 3 fair value measurement. Future revisions to these assumptions could materially change the estimate of the fair value of the contingent consideration and therefore materially affect the Company’s future financial results. See Note 7, Fair Value Measurements, for further information. There was no change in the fair value of the contingent consideration during the quarter ended September 30, 2014. Going forward, the Company will estimate the change in the fair value of the contingent consideration as of each reporting period and recognize the change in fair value in the statement of comprehensive income (loss). The reconciliation of consideration given for the Acquired Property to the preliminary allocation of the purchase price for the assets and liabilities acquired based on their relative fair values is as follows:
The preliminary allocation of the purchase price was based upon a valuation for which the estimates and assumptions are subject to change within the measurement period (up to one year from the acquisition date). The final allocation price could differ materially from the preliminary allocation. Any subsequent changes to the purchase price allocation that result in material changes to the Company’s consolidated financial results will be adjusted accordingly.
The unaudited pro forma consolidated statements of operations reflecting the Company’s acquisition of the Acquired Property for the year ended three and nine months ended September 30, 2014 and 2013 are not provided as that presentation would require forward-looking information in order to meaningfully present the effects of the acquisition.
On August 21, 2014, the Company, through its wholly-owned Interpace subsidiary, acquired 100% of the outstanding stock of JS Genetics, Inc. (JS Genetics), a CLIA certified and CAP accredited molecular diagnostics lab located in New Haven, Connecticut. The Company paid $0.5 million at closing and assumed liabilities of approximately $0.1 million. The acquisition has initially been accounted for as an asset acquisition, subject to the provisions of Accounting Standards Codification 805-50-25 and been treated as such for tax purposes. In connection with the transaction, the Company has preliminarily recorded $0.6 million of finite lived intangible assets having an amortization period of approximately 2.3 years. See Note 5, Goodwill and Other Intangible Assets, for additional information.
|
||||||||||||||||||||||||||||||||||||