Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.19.2
Discontinued Operations
 6 Months Ended
Jun. 30, 2019
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
Discontinued Operations

As described in Note 1, the Company sold its BioPharma Business and Clinical Business in July 2019. In conjunction with the BioPharma Disposal, the Company repaid its debt to SVB and PFG. At June 30, 2019, we had borrowings of approximately $2.8 million on the ABL and the principal balance of the PFG Term Note was $6.0 million. The Company elected to allocate approximately $657,000 and $1,442,000 of interest expense from the Convertible Note and Advance from NovellusDx to discontinued operations during the three and six months ended June 30, 2019, respectively. No interest expense was allocated to discontinued operations for the three and six months ended June 30, 2018, as all debt outstanding during those periods was repaid as part of the BioPharma Disposal. Revenue and other significant accounting policies associated with the discontinued operations have not changed since the most recently filed audited financial statements as of and for the year ended December 31, 2018, except for the adoption of ASC 842 as described in Note 1.

Summarized results of our unaudited condensed consolidated discontinuing operations are as follows for the three and six months ended June 30, 2019 and 2018 (in thousands):

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenue
$
4,621

 
$
5,755

 
$
9,638

 
$
11,995

Cost of revenues
3,438

 
3,978

 
7,081

 
8,302

Gross profit
1,183

 
1,777

 
2,557

 
3,693

Operating expenses:
 
 
 
 
 
 
 
Research and development
429

 
657

 
875

 
1,323

General and administrative
1,937

 
3,955

 
3,339

 
7,295

Sales and marketing
585

 
955

 
1,501

 
2,320

Transaction costs
402

 
—

 
651

 
—

Total operating expenses
3,353

 
5,567

 
6,366

 
10,938

Loss from discontinuing operations
(2,170
)
 
(3,790
)
 
(3,809
)
 
(7,245
)
Other expense:
 
 
 
 
 
 
 
Interest expense
(1,063
)
 
(576
)
 
(2,173
)
 
(812
)
Total other expense
(1,063
)
 
(576
)
 
(2,173
)
 
(812
)
Net loss from discontinuing operations
$
(3,233
)
 
$
(4,366
)
 
$
(5,982
)
 
$
(8,057
)

Unaudited condensed consolidated carrying amounts of major classes of assets and liabilities from discontinued operations were as follows as of June 30, 2019 and December 31, 2018 (in thousands):

 
June 30, 2019
 
December 31, 2018
Current assets of discontinued operations:
 
 
 
Accounts receivable, net of allowance for doubtful accounts of $3,487 in 2019; $3,462 in 2018
$
6,150

 
$
6,261

Other current assets
1,422

 
1,652

Fixed assets, net of accumulated depreciation
3,090

 
3,559

Operating lease right-of-use assets
2,060

 
—

Patents and other intangible assets, net of accumulated amortization
644

 
655

Goodwill
11,294

 
11,294

Current assets of discontinued operations
$
24,660

 
$
23,421

 
 
 
 
Current liabilities of discontinued operations
 
 
 
Accounts payable and accrued expenses
$
10,154

 
$
9,967

Operating lease liabilities
2,109

 
—

Obligations under finance leases
502

 
666

Deferred revenue
1,053

 
1,337

Line of credit
2,847

 
2,621

Term note
6,000

 
6,000

Deferred rent payable and other
—

 
151

Current liabilities of discontinued operations
$
22,665

 
$
20,742