Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 10, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SWK Holdings Corporation | |
Entity Central Index Key | 1,089,907 | |
Document Type | 10-Q | |
Trading Symbol | SWKH | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well-known Seasoned Issuer | No | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Common Stock, Shares Outstanding | 13,059,137 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and cash equivalents | $ 21,451 | $ 30,557 |
Accounts receivable | 1,579 | 1,637 |
Finance receivables, net | 165,843 | 151,995 |
Marketable investments | 1,713 | 1,856 |
Deferred tax asset | 21,771 | 22,725 |
Warrant assets | 1,519 | 987 |
Other assets | 314 | 126 |
Total assets | 214,190 | 209,883 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable and accrued liabilities | 2,450 | 1,840 |
Warrant liability | 65 | 91 |
Total liabilities | 2,515 | 1,931 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | ||
Common stock, $0.001 par value; 250,000,000 shares authorized; 13,059,190 and 13,053,422 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 13 | 13 |
Additional paid-in capital | 4,433,668 | 4,433,589 |
Accumulated deficit | (4,222,006) | (4,225,863) |
Accumulated other comprehensive loss | 213 | |
Total SWK Holdings Corporation stockholders' equity | 211,675 | 207,952 |
Non-controlling interests in consolidated entities | ||
Total stockholders' equity | 211,675 | 207,952 |
Total liabilities and stockholders' equity | $ 214,190 | $ 209,883 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 13,059,190 | 13,053,422 |
Common stock, outstanding | 13,059,190 | 13,053,422 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | ||
Finance receivable interest income, including fees | $ 6,817 | $ 4,656 |
Income related to investments in unconsolidated entities | 10,204 | |
Other | 5 | 4 |
Revenues | 6,822 | 14,864 |
Costs and expenses: | ||
Provision for loan credit losses | 1,179 | |
General and administrative | 1,221 | 661 |
Total costs and expenses | 2,400 | 661 |
Other income (expense), net | ||
Unrealized net gain (loss) on derivatives | 300 | (472) |
Unrealized net loss on equity securities | (124) | |
Gain on sale of marketable securities | 243 | |
Income before provision for income taxes | 4,598 | 13,974 |
Provision for income taxes | 954 | 3,706 |
Consolidated net income | 3,644 | 10,268 |
Net income attributable to non-controlling interests | 5,032 | |
Net income (loss) attributable to SWK Holdings Corporation Stockholders | $ 3,644 | $ 5,236 |
Net income (loss) per share attributable to SWK Holdings Corporation Stockholders | ||
Basic (in dollars per share) | $ 0.28 | $ 0.40 |
Diluted (in dollars per share) | $ 0.28 | $ 0.40 |
Weighted Average Shares | ||
Basic (in shares) | 13,053,000 | 13,144,000 |
Diluted (in shares) | 13,057,000 | 13,147,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Consolidated net income (loss) | $ 3,644 | $ 10,268 |
Other comprehensive income, net of tax: | ||
Change in fair value of securities | 1,820 | |
Total other comprehensive income | 1,820 | |
Comprehensive income | 3,644 | 12,088 |
Comprehensive income attributable to non-controlling interests | 5,032 | |
Comprehensive income attributable to SWK Holdings Corporation Stockholders | $ 3,644 | $ 7,056 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Consolidated net income (loss) | $ 3,644 | $ 10,268 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Income from investments in unconsolidated entities | (10,204) | |
Provision for loan credit losses | 1,179 | |
Deferred income tax | 954 | 3,706 |
Change in fair value of warrants | (300) | 472 |
Gain on sale of equity securities | 124 | |
Gain on sale of marketable securities | (243) | |
Loan discount amortization and fee accretion | (837) | (568) |
Interest paid-in-kind | (47) | (383) |
Stock-based compensation | 79 | 78 |
Interest income in excess of cash collected | (70) | |
Other | 4 | 4 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 58 | (88) |
Other assets | (189) | (112) |
Accounts payable and other liabilities | 610 | 48 |
Net cash provided by operating activities | 5,209 | 2,978 |
Cash flows from investing activities: | ||
Cash distributions from investments in unconsolidated entity | 17,189 | |
Proceeds from sale of available-for-sale marketable securities | 345 | |
Investment in finance receivables | (29,250) | (3,638) |
Repayment of finance receivables | 14,918 | 225 |
Marketable investment principal payment | 19 | 24 |
Other | (2) | (3) |
Net cash provided by (used in) investing activities | (14,315) | 14,142 |
Cash flows from financing activities: | ||
Distribution to non-controlling interests | (8,788) | |
Net cash used in financing activities | (8,788) | |
Net (decrease) increase in cash and cash equivalents | (9,106) | 8,332 |
Cash and cash equivalents at beginning of period | 30,557 | 32,182 |
Cash and cash equivalents at end of period | $ 21,451 | $ 40,514 |
SWK Holdings Corporation and Su
SWK Holdings Corporation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
SWK Holdings Corporation and Summary of Significant Accounting Policies | Note 1. SWK Holdings Corporation and Summary of Significant Accounting Policies Nature of Operations SWK Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, the Company commenced its strategy of building a specialty finance and asset management business. The Company’s strategy is to be a leading healthcare capital provider by offering sophisticated, customized financing solutions to a broad range of life science companies, institutions and inventors. The Company is primarily focused on monetizing cash flow streams derived from commercial-stage products and related intellectual property through royalty purchases and financings, as well as through the creation of synthetic revenue interests in commercialized products. The Company has been deploying its assets to earn interest, fees, and other income pursuant to this strategy, and the Company continues to identify and review financing and similar opportunities on an ongoing basis. In addition, through the Company’s wholly-owned subsidiary, SWK Advisors LLC, the Company provides non-discretionary investment advisory services to institutional clients in separately managed accounts to similarly invest in life science finance. SWK Advisors LLC is registered as an investment advisor with the Texas State Securities Board. The Company intends to fund transactions through its own working capital, as well as by building its asset management business by raising additional third-party capital to be invested alongside the Company’s capital. The Company fills a niche that it believes is underserved in the sub-$50 million transaction size. Since many of its competitors that provide longer term, non-traditional debt and/or royalty-related financing options have much greater financial resources than the Company, they tend to not focus on transaction sizes below $50 million as it is generally inefficient for them to do so. In addition, the Company does not believe that a sufficient number of other companies offer similar types of long-term financing options to fill the demand of the sub-$50 million market. As such, the Company believes it faces less competition from such investors in transactions that are less than $50 million. The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset. However, at this time, under current law, we do not anticipate that our life science business strategy will generate sufficient income to permit us to utilize all of our NOLs prior to their respective expiration dates. As such, it is possible that we might pursue additional strategies that we believe might result in our ability to utilize more of our NOLs. As of May 10, 2018, the Company and its partners have executed transactions with 28 different parties under its specialty finance strategy, funding an aggregate $405 million in various financial products across the life science sector. The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property. The Company is headquartered in Dallas, Texas. Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts and transactions. The Company owns interests in various partnerships and limited liability companies, or LLCs. The Company consolidates its investments in these partnerships or LLCs, where the Company, as the general partner or managing member, exercises effective control, even though the Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company. The Company has reviewed each of the underlying agreements to determine if it has effective control. If circumstances change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting. Although this would change individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or total stockholders’ equity attributable to the Company. Unaudited Interim Financial Information The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2018. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 29, 2018. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition, stock-based compensation, impairment of financing receivables and long-lived assets, valuation of warrants, income taxes and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. The Company’s estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable. The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions. Market conditions, such as illiquid credit markets, volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Recent Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 was further amended in February 2018 by ASU 2018-03, “Technical Corrections and Improvements to Financial instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” and in March 2018 by ASU 2018-04, “Investments - Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117” and SEC Release No. 33-9273 (SEC Update) to clarify certain guidance for the recognition, measurement, presentation and disclosure of financial assets and financial liabilities. This guidance changes how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however, the exception requires the entity to consider relevant transactions that can be reasonably known to identify any observable price changes that would impact the fair value. Under prior GAAP, changes in fair value of available-for-sale equity securities were recorded in other comprehensive income. The Company adopted ASU 2016-01 as of January 1, 2018. As of that date, the Company reclassified the accumulated net unrealized appreciation related to our investments in equity securities as of December 31, 2017 (approximately $0.2 million) from accumulated other comprehensive income to retained earnings and does not expect the adoption of ASU 2016-01 to have a material impact on the Company’s future reported net earnings. Between May 2014 and May 2016, the FASB issued three ASUs changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”): (i) ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”) and (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years, and interim periods within, beginning after December 15, 2017. All subsequent ASUs related to ASU 2014-09, including ASU 2016-08 and ASU 2016-12, assumed the deferred effective date enforced by ASU 2015-14. A reporting entity may apply the amendments in the Revenue ASUs using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. The Revenue ASUs became effective for the Company on January 1, 2018. The Company has been evaluating the new guidance and believes the Revenue ASUs will not have a material impact on its consolidated financial statements upon adoption since the primary source of revenue for the Company is generated through financing arrangements, which are excluded from the Revenue ASUs. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The new standard adds an impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of losses. The ASU describes the impairment allowance as a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses relating to available-for-sale debt securities should be measured in a manner similar to current GAAP; however, the amendments in this update require that credit losses be presented as an allowance rather than as a write-down, which will allow an entity the ability to record reversals of credit losses in current period net income. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). A prospective transition approach is required for debt securities for which an other-than-temporary impairment has been recognized before the effective date. The Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses on its portfolio under the new CECL model. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230)” (“ASU 2016-15”), which amends ASC 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The FASB issued this guidance with the intent of reducing diversity in practice with respect to classification of eight types of cash receipts and payments: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero coupon bonds, (3) contingent consideration payments after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies and bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows and application of the predominance principle. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2017-09”), to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting required by Topic 718. The amendments in this update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 and should be applied prospectively to an award modified on or after the adoption date. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have a material impact on the Company’s consolidated financial statements. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); and Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, and (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.” This guidance addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the new guidance to determine the impact on its consolidated financial statements upon adoption in fiscal 2019. |
Net Income per Share
Net Income per Share | 3 Months Ended |
Mar. 31, 2018 | |
Net Income Per Share | |
Net Income per Share | Note 2. Net Income per Share Basic net income per share is computed using the weighted-average number of outstanding shares of common stock. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock, and when dilutive, shares of common stock issuable upon exercise of options and warrants deemed outstanding using the treasury stock method. The following table shows the computation of basic and diluted income per share for the following periods (in thousands, except per share amounts): Three Months Ended March 31, 2018 2017 Numerator: Net income attributable to SWK Holdings Corporation stockholders $ 3,644 $ 5,236 Denominator: Weighted-average shares outstanding 13,053 13,144 Effect of dilutive securities 4 3 Weighted-average diluted shares 13,057 13,147 Basic income per share attributable to SWK Holdings Corporation stockholders $ 0.28 $ 0.40 Diluted income per share attributable to SWK Holdings Corporation stockholders $ 0.28 $ 0.40 For the three months ended March 31, 2018 and 2017, outstanding stock options and warrants to purchase shares of common stock in an aggregate of approximately 286,000 and 399,000, respectively, have been excluded from the calculation of diluted income per share as all such securities were anti-dilutive. |
Finance Receivables
Finance Receivables | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Finance Receivables | Note 3. Finance Receivables, Net Finance receivables are reported at their determined principal balances net of any unearned income, cumulative charge-offs and unamortized deferred fees and costs. Unearned income and deferred fees and costs are amortized to interest income based on all cash flows expected using the effective interest method. The carrying value of finance receivables are as follows (in thousands): March 31, December 31, Portfolio 2018 2017 Term loans $ 147,715 $ 118,533 Royalty purchases 20,966 35,121 Total before allowance for credit losses 168,681 153,654 Allowance for credit losses (2,838 ) (1,659 ) Total carrying value $ 165,843 $ 151,995 Credit Quality of Finance Receivables The Company originates finance receivables to companies primarily in the life sciences sector. This concentration of credit exposes the Company to a higher degree of risk associated with this sector. On a quarterly basis, the Company evaluates the carrying value of each finance receivable for impairment. A term loan is considered to be impaired when, based on current information and events, it is determined that the Company will not be able to collect the amounts due according to the loan contract, including scheduled interest payments. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. The Company would generally place term loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain and they are 90 days past due for interest or principal, unless the term loan is both well-secured and in the process of collection. When placed on nonaccrual, the Company would reverse any accrued unpaid interest receivable against interest income and amortization of any net deferred fees is suspended. Generally, the Company would return a term loan to accrual status when all delinquent interest and principal become current under the terms of the credit agreement and collectability of remaining principal and interest is no longer doubtful. In certain circumstances, the Company may place a finance receivable on nonaccrual status but conclude it is not impaired. The Company may retain independent third-party valuations on such nonaccrual positions to support impairment decisions. Receivables associated with royalty stream purchases would be considered to be impaired when it is probable that the Company will be unable to collect the book value of the remaining investment based upon adverse changes in the estimated underlying royalty stream. When the Company identifies a finance receivable as impaired, it measures the impairment based on the present value of expected future cash flows, discounted at the receivable’s effective interest rate, or the estimated fair value of the collateral, less estimated costs to sell. If it is determined that the value of an impaired receivable is less than the recorded investment, the Company would recognize impairment with a charge to the allowance for credit losses. When the value of the impaired receivable is calculated by discounting expected cash flows, interest income would be recognized using the receivable’s effective interest rate over the remaining life of the receivable. The Company individually develops the allowance for credit losses for any identified impaired loans. In developing the allowance for credit losses, the Company considers, among other things, the following credit quality indicators: § business characteristics and financial conditions of obligors; § current economic conditions and trends; § actual charge-off experience; § current delinquency levels; § value of underlying collateral and guarantees; § regulatory environment; and § any other relevant factors predicting investment recovery. The following table presents nonaccrual and performing finance receivables by portfolio segment, net of credit loss allowance (in thousands): March 31, 2018 December 31, 2017 Nonaccrual Performing Total Nonaccrual Performing Total Term loans $ 18,919 $ 128,796 $ 147,715 $ 11,402 $ 107,131 $ 118,533 Royalty purchases, net of credit loss allowance — 18,128 18,128 — 33,462 33,462 Total carrying value $ 18,919 146,924 $ 165,843 $ 11,402 $ 140,593 $ 151,995 As of March 31, 2018, the Company had three term loans associated with three portfolio companies in nonaccrual status with a carrying value, net of credit loss allowance, of $18.9 million. As of December 31, 2017, the Company had two term loans associated with two portfolio companies in nonaccrual status with a carrying value, net of credit loss allowance, of $11.4 million. The Company collected $0.6 million on one nonaccrual loan during the three months ended March 31, 2018. No cash on nonaccrual loans was collected during the year ended December 31, 2017. Of the three nonaccrual term loans as of March 31, 2018, only one loan is deemed to be impaired. (Please see ABT Molecular Imaging, Inc., B&D Dental Corporation, and Hooper Holmes, Inc. Term Loans ABT Molecular Imaging, Inc. (“ABT”) On October 10, 2014, the Company entered into a credit agreement pursuant to which the Company provided ABT a second lien term loan in the principal amount of $10.0 million. The loan matures on October 8, 2021. The synthetic royalty payment due to the Company on December 15, 2015 was blocked by ABT’s first lien lender pursuant to the terms of the intercreditor agreement by and between the Company and the first lien lender as a result of a forbearance agreement entered into between ABT and the first lien lender. Under the terms of the forbearance agreement, the first lien lender deferred principal payments until maturity of the first lien in March 2016 and ABT raised additional equity capital. In February 2016, ABT violated the terms of the forbearance agreement with the first lien lender. In order to control the workout of the default under the first lien loan and prevent the equity sponsors from taking control of the first lien term loan, the Company purchased from an unrelated party the first lien term loan at par for a purchase price of $0.7 million. Since then the equity sponsors funded cash shortfalls into the second quarter of 2016. The Company continues to work with ABT’s equity sponsors to resolve the existing defaults. ABT is currently evaluating strategic options. Since 2016, the Company has entered into additional amendments to the first lien term loan to provide for an additional $8.3 million of liquidity under the first lien credit agreement. The Company recorded an impairment loss of $7.6 million as of December 31, 2017. The collateral for the loan has been individually reviewed, and the Company believes that its current collateral position is greater than the recorded investment in the loan as of March 31, 2018. The Company considered several factors in this determination, including an independent third-party valuation and developments in ABT’s business and industry. B&D Dental Corporation (“B&D”) On December 10, 2013, the Company entered into a five-year credit agreement to provide B&D a senior secured term loan with a principal amount of $6.0 million funded upon close, net of an arrangement fee of $60,000. Subsequently, the terms of the loan have been amended, and the Company has funded additional amounts to B&D. As of March 31, 2018, the total amount funded was $8.1 million. B&D is currently evaluating strategic options. B&D is currently in default under the terms of the credit agreement, and as a result, the Company classified the loan to nonaccrual status as of September 30, 2015. During the first and fourth quarters of 2016, the Company executed two additional amendments to the loan to advance an additional $0.5 million in order to directly pay critical vendors and protect the value of the collateral. The Company believes its collateral position is greater than the unpaid balance; thus, accrued interest has not been reversed nor has an allowance been recorded as of March 31, 2018. The Company considered several factors in this determination, including an independent third-party valuation and developments in B&D’s business and industry. Hooper Holmes, Inc. (“Hooper”) On May 12, 2017, the Company provided a $6.5 million term loan to Hooper to support its merger with Provant Health Solutions, LLC. On August 8, 2017, the Company provided an additional $2.0 million term loan with terms similar to the original term loan. The $2.0 million August term loan was scheduled to mature on February 1, 2018. In late January, Hooper informed the Company of tight liquidity and that it would be strained if it repaid the full $2.0 million; thus, the Company agreed to extend the maturity for twelve weeks to April 30, 2018 in exchange for a partial repayment of $0.3 million on February 1, 2018 and an additional $0.3 million on March 15, 2018. However, in mid- March, Hooper informed the Company that it would be unable to repay the $0.3 million that was due on March 15, 2018. The Company is currently working with Hooper on strategic options, including requiring Hooper to retain financial advisors to evaluate strategic options. The Company has placed Hooper on nonaccrual but believes its collateral position is greater than the unpaid balance; thus, an allowance has not been recorded as of March 31, 2018. Royalty Purchases Cambia® On July 31, 2014, the Company purchased a 25 percent royalty on sales of Cambia® from royalty holder, APR Applied Pharma Research S.A. (“APR”), for $4.0 million. On December 2, 2015, the Company purchased a second 25 percent royalty on sales of Cambia® for $4.5 million. In the U.S., Cambia® is marketed by DepoMed, Inc. (“DepoMed”) while the product is marketed by Aralez Pharmaceuticals, Inc. As disclosed by DepoMed, Cambia® prescription trends decelerated in 2017, and while they have begun to stabilize, they are not growing in line with the Company’s original forecast. During the three months ended March 31, 2018, the Company reduced its expectations for future royalty receipts and recognized an allowance for credit loss on the royalty purchase of $1.2 million. |
Marketable Investments
Marketable Investments | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Investments | Note 4. Marketable Investments Investments in marketable investments at March 31, 2018 and December 31, 2017 consist of the following (in thousands): March 31, 2018 December 31, 2017 Corporate debt securities $ 581 $ 600 Equity securities 1,132 1,256 Total $ 1,713 $ 1,856 The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale debt securities as of March 31, 2018 and December 31, 2017, are as follows (in thousands): March 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Fair Value Corporate debt securities $ 581 $ — $ — $ 581 Total $ 581 $ — $ — $ 581 December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Fair Value Corporate debt securities $ 600 $ — $ — $ 600 Total $ 600 $ — $ — $ 600 The following table presents the proceeds from sales of equity securities, realized gain on sale of equity securities, and unrealized net loss on equity securities as prescribed by ASC 321, “Investment - Equity Securities.” ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” was adopted on January 1, 2018, at which time a cumulative effect adjustment of $213,000 was recorded to reclassify the amount of accumulated unrealized gains related to equity securities from accumulated other comprehensive income to retained earnings. (in thousands) Three Months Ended March 31, 2018 2017 Proceeds from sale of equity securities $ — $ — Realized gain on sale of equity securities — 243 Unrealized net loss on equity securities reflected in the Consolidated Statement of Operations (124 ) — Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, as of March 31, 2018 and December 31, 2017 were as follows (in thousands): March 31, 2018 Less than Twelve Months Twelve Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Equity securities — — 41 (72 ) 41 (72 ) Total $ — $ — $ 41 $ (72 ) $ 41 $ (72 ) December 31, 2017 Less than Twelve Months Twelve Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Equity securities — — 33 (117 ) 33 (117 ) Total $ — $ — $ 33 $ (117 ) $ 33 $ (117 ) Equity Securities The Company’s equity securities include 661,076 shares of Cancer Genetics common stock and 77,922 shares of Hooper common stock. During the three months ended March 31, 2017, the Company sold 75,000 shares of Cancer Genetics common stock, which resulted in a realized gain of $0.2 million. As of March 31, 2018, the Cancer Genetics and Hooper equity securities are reflected at fair value of $1.1 million and $41,000 respectively. Debt Securities On July 9, 2013, the Company entered into a note purchase agreement to purchase, at par, $3.0 million of a total of $100.0 million aggregate principal amount of senior secured notes due in November 2026. The agreement allows the first interest payment date to include paid-in-kind notes for any cash shortfall, of which the Company received $0.1 million on November 15, 2013. The notes are secured only by certain royalty and milestone payments associated with the sales of pharmaceutical products. The senior secured notes have been placed on non-accrual status as of June 30, 2016. Total cash collected during the three months ended March 31, 2018 was $19,500, which was credited to the notes’ carrying value. As of March 31, 2018, the notes are reflected at their estimated fair value of $0.6 million. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Variable Interest Entities | Note 5. Variable Interest Entities The Company consolidates the activities of VIEs of which it is the primary beneficiary. The primary beneficiary of a VIE is the variable interest holder possessing a controlling financial interest through (i) its power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) its obligation to absorb losses or its right to receive benefits from the VIE that could potentially be significant to the VIE. In order to determine whether the Company owns a variable interest in a VIE, the Company performs qualitative analysis of the entity’s design, organizational structure, primary decision makers and relevant agreements. Consolidated VIE SWK HP Holdings LP (“SWK HP”) was formed in December 2012 to acquire a limited partnership interest in Holmdel Pharmaceuticals LP (“Holmdel”). Holmdel acquired the U.S. marketing authorization rights to a beta blocker pharmaceutical product indicated for the treatment of hypertension for a total purchase price of $13.0 million. The Company, through its wholly owned subsidiary SWK Holdings GP LLC (“SWK Holdings GP”), acquired a direct general partnership interest in SWK HP, which in turn acquired a limited partnership interest in Holmdel. The total investment in SWK HP of $13.0 million included $6.0 million provided by SWK Holdings GP and $7.0 million provided by non-controlling interests. Subject to customary limited partner protections afforded the investors by the terms of the limited partnership agreement, the Company maintained voting and managerial control of SWK HP and therefore included it in its consolidated financial statements. SWK HP had significant influence over the decisions made by Holmdel. SWK HP received quarterly distributions of cash flow generated by InnoPran XL according to a tiered scale that was subject to certain cash on cash returns received by SWK HP. SWK HP achieved the 2x cash on cash return threshold with the November 2016 distribution as such its economic ownership in Holmdel approximated 49 percent. On February 23, 2017, Holmdel sold the U.S. marketing authorization rights to InnoPran XL to ANI Pharmaceuticals, Inc. SWK Holdings GP received net proceeds from the transaction of approximately $8.0 million. The approximate $8.0 million of proceeds includes a 5 percent incentive fee earned from SWK HP, and SWK Holdings GP’s share of the sale proceeds. As part of the transaction, SWK HP and all involved parties executed mutual releases and terminations of all license and supply agreements. SWK Holdings GP received an additional distribution regarding InnoPran XL sales covering the period from January 1, 2017 through the date of sale and has not received any further material distributions. Unconsolidated VIE For the three months ended March 31, 2018, the Company did not recognize any income related to this entity accounted for under the equity method, nor did the Company receive any cash distributions. For the three months ended March 31, 2017, the Company recognized $10.2 million of equity method gains, of which $5.0 million was attributable to the non-controlling interest in SWK HP. In addition, SWK HP received cash distributions totaling $17.2 million during the three months ended March 31, 2017, of which $8.8 million was subsequently paid to holders of the non-controlling interests in SWK HP. There has been no change in the carrying amount of the Company’s investment in Holmdel since December 31, 2017. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 6. Related Party Transactions On September 6, 2013, in connection with entering into a credit facility, the Company issued warrants to an affiliate of a stockholder, Carlson Capital, L.P. (the “Stockholder”), for 100,000 shares of the Company’s common stock at a strike price of $13.88 per share. The warrants have a price anti-dilution mechanism that was triggered by the price that shares were sold by the Company in a rights offering in 2014, and as a result, the strike price of the warrants was reduced to $13.48 per share. Due to certain provisions within the warrant agreement, the warrants meet the definition of a derivative and do not qualify for a scope exception, as it is not considered indexed to the Company’s stock. As such, the warrants are reflected as a warrant liability in the consolidated balance sheets. The Company recorded a nominal gain for the three months ended March 31, 2018. The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions: March 31, 2018 December 31, 2017 Dividend rate — — Risk-free rate 2.3 % 2.0 % Expected life (years) 2.4 2.7 Expected volatility 19.4 % 21.9 % The changes on the value of the warrant liability during the three months ended March 31, 2018 were as follows (in thousands): Fair value – December 31, 2017 $ 91 Issuances — Changes in fair value (26 ) Fair value – March 31, 2018 $ 65 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Note 7. Stockholders’ Equity Stock Compensation Plans During the three months ended March 31, 2018 and 2017, the Board approved compensation for Board services by granting 5,768 and 5,928 shares, respectively, of common stock as compensation for the non-employee directors. During both the three months ended March 31, 2018 and 2017, the Company recorded approximately $62,000 in Board compensation expense. The aggregate stock-based compensation expense, including the quarterly Board grants, recognized by the Company for both of the three months ended March 31, 2018 and 2017 was $0.1 million. Non-controlling Interests As discussed in Note 5, SWK HP had a limited partnership interest in Holmdel. There has been no change to the carrying amount of the non-controlling interest since December 31, 2017. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 8. Fair Value Measurements The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels. Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in inactive markets. Level 3 Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources. Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels during the three months ended March 31, 2018. The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments, other than investment in affiliates. Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized. Cash and cash equivalents The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values. Equity Securities Certain common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices). Finance Receivables The fair values of finance receivables are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the finance receivables. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. These receivables are classified as Level 3. Finance receivables are not measured at fair value on a recurring basis, but estimates of fair value are reflected below. Marketable Investments and Warrants Marketable Investments If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities would be classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets or broker quotes utilizing observable inputs, and accordingly these securities would be classified as Level 2. If market prices are not available and there are no observable inputs, then fair value would be estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker quotes. Such securities would be classified as Level 3, if the valuation models and broker quotes are based on inputs that are unobservable in the market. If fair value is based on broker quotes, the Company checks the validity of received prices based on comparison to prices of other similar assets and market data such as relevant bench mark indices. Available-for-sale securities are measured at fair value on a recurring basis, while securities with no readily available fair market value are not, but estimates of fair value are reflected below. Derivative securities For exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, would be classified as Level 1. For non-exchange traded derivatives, fair value is based on option pricing models and are classified as Level 3. The following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2018 (in thousands): Total Carrying Value in Consolidated Balance Sheet Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Warrant assets $ 1,519 $ — $ — $ 1,519 Marketable investments 1,713 1,132 — 581 Financial Liabilities: Warrant liability $ 65 $ — $ — $ 65 The following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 (in thousands): Total Carrying Value in Consolidated Balance Sheet Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Warrant assets $ 987 $ — $ — $ 987 Marketable investments 1,856 1,256 — 600 Financial Liabilities: Warrant liability $ 91 $ — $ — $ 91 The changes on the value of the warrant assets during the three months ended March 31, 2018 were as follows (in thousands): Fair value – December 31, 2017 $ 987 Issued 258 Canceled — Change in fair value 274 Fair value – March 31, 2018 $ 1,519 The Company holds warrants issued to the Company in conjunction with certain term loan investments. These warrants meet the definition of a derivative and are included in the unaudited condensed consolidated balance sheets. The fair values for warrants outstanding, which do not have a readily determinable value, are measured using the Black-Scholes option pricing model. The following ranges of assumptions were used in the models to determine fair value: March 31, December 31, 2018 2017 Dividend rate range — — Risk-free rate range 2.3% to 2.7% 2.0% to 2.3% Expected life (years) range 2.4 to 7.0 2.6 to 6.6 Expected volatility range 55.6% to 94.9% 72.5% to 95.7% The following table presents the financial assets measured at fair value on a nonrecurring basis as of March 31, 2018 and December 31, 2017 (in thousands): Total Carrying Value in Consolidated Balance Sheet Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) March 31, 2018 Impaired loans $ 12,574 $ — $ — $ 12,574 December 31, 2017 Impaired loans $ 6,087 $ — $ — $ 6,087 There were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2018 and December 31, 2017. The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments, other than investment in unconsolidated entity. As of March 31, 2018 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 21,451 $ 21,451 $ 21,451 $ — $ — Finance receivables 165,843 165,843 — — 165,843 Marketable investments 1,713 1,713 1,132 — 581 Warrant assets 1,519 1,519 — — 1,519 Financial Liabilities Warrant liability $ 65 $ 65 $ — $ — $ 65 As of December 31, 2017 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 30,557 $ 30,557 $ 30,557 $ — $ — Finance receivables 151,995 151,995 — — 151,995 Marketable investments 1,856 1,856 1,256 — 600 Warrant assets 987 987 — — 987 Financial Liabilities Warrant liability $ 91 $ 91 $ — $ — $ 91 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9. Subsequent Events OraMetrix, Inc. On May 1, 2018, OraMetrix, Inc. retired its credit facility with SWK Funding LLC, a wholly-owned subsidiary of the Company (“SWK Funding”), in conjunction with its sale to Dentsply Sirona Inc. SWK Funding received an aggregate of approximately $9.2 million at pay-off, including payment of accrued interest and exit fees. |
SWK Holdings Corporation and 16
SWK Holdings Corporation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations SWK Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, the Company commenced its strategy of building a specialty finance and asset management business. The Company’s strategy is to be a leading healthcare capital provider by offering sophisticated, customized financing solutions to a broad range of life science companies, institutions and inventors. The Company is primarily focused on monetizing cash flow streams derived from commercial-stage products and related intellectual property through royalty purchases and financings, as well as through the creation of synthetic revenue interests in commercialized products. The Company has been deploying its assets to earn interest, fees, and other income pursuant to this strategy, and the Company continues to identify and review financing and similar opportunities on an ongoing basis. In addition, through the Company’s wholly-owned subsidiary, SWK Advisors LLC, the Company provides non-discretionary investment advisory services to institutional clients in separately managed accounts to similarly invest in life science finance. SWK Advisors LLC is registered as an investment advisor with the Texas State Securities Board. The Company intends to fund transactions through its own working capital, as well as by building its asset management business by raising additional third-party capital to be invested alongside the Company’s capital. The Company fills a niche that it believes is underserved in the sub-$50 million transaction size. Since many of its competitors that provide longer term, non-traditional debt and/or royalty-related financing options have much greater financial resources than the Company, they tend to not focus on transaction sizes below $50 million as it is generally inefficient for them to do so. In addition, the Company does not believe that a sufficient number of other companies offer similar types of long-term financing options to fill the demand of the sub-$50 million market. As such, the Company believes it faces less competition from such investors in transactions that are less than $50 million. The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset. However, at this time, under current law, we do not anticipate that our life science business strategy will generate sufficient income to permit us to utilize all of our NOLs prior to their respective expiration dates. As such, it is possible that we might pursue additional strategies that we believe might result in our ability to utilize more of our NOLs. As of May 10, 2018, the Company and its partners have executed transactions with 28 different parties under its specialty finance strategy, funding an aggregate $405 million in various financial products across the life science sector. The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property. The Company is headquartered in Dallas, Texas. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts and transactions. The Company owns interests in various partnerships and limited liability companies, or LLCs. The Company consolidates its investments in these partnerships or LLCs, where the Company, as the general partner or managing member, exercises effective control, even though the Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company. The Company has reviewed each of the underlying agreements to determine if it has effective control. If circumstances change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting. Although this would change individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or total stockholders’ equity attributable to the Company. |
Unaudited Interim Financial Information | Unaudited Interim Financial Information The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, 2018. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 29, 2018. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition, stock-based compensation, impairment of financing receivables and long-lived assets, valuation of warrants, income taxes and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. The Company’s estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable. The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions. Market conditions, such as illiquid credit markets, volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 was further amended in February 2018 by ASU 2018-03, “Technical Corrections and Improvements to Financial instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” and in March 2018 by ASU 2018-04, “Investments - Debt Securities (Topic 320) and Regulated Operations (Topic 980): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117” and SEC Release No. 33-9273 (SEC Update) to clarify certain guidance for the recognition, measurement, presentation and disclosure of financial assets and financial liabilities. This guidance changes how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability exception will be available for equity investments that do not have readily determinable fair values; however, the exception requires the entity to consider relevant transactions that can be reasonably known to identify any observable price changes that would impact the fair value. Under prior GAAP, changes in fair value of available-for-sale equity securities were recorded in other comprehensive income. The Company adopted ASU 2016-01 as of January 1, 2018. As of that date, the Company reclassified the accumulated net unrealized appreciation related to our investments in equity securities as of December 31, 2017 (approximately $0.2 million) from accumulated other comprehensive income to retained earnings and does not expect the adoption of ASU 2016-01 to have a material impact on the Company’s future reported net earnings. Between May 2014 and May 2016, the FASB issued three ASUs changing the requirements for recognizing and reporting revenue (together, herein referred to as the “Revenue ASUs”): (i) ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), (ii) ASU No. 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”) and (iii) ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). ASU 2014-09 provides guidance for revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2016-08 is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. ASU 2016-12 provides practical expedients and improvements on the previously narrow scope of ASU 2014-09. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of ASU 2014-09 by one year to fiscal years, and interim periods within, beginning after December 15, 2017. All subsequent ASUs related to ASU 2014-09, including ASU 2016-08 and ASU 2016-12, assumed the deferred effective date enforced by ASU 2015-14. A reporting entity may apply the amendments in the Revenue ASUs using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or full retrospective approach. The Revenue ASUs became effective for the Company on January 1, 2018. The Company has been evaluating the new guidance and believes the Revenue ASUs will not have a material impact on its consolidated financial statements upon adoption since the primary source of revenue for the Company is generated through financing arrangements, which are excluded from the Revenue ASUs. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326).” The new standard adds an impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of losses. The ASU describes the impairment allowance as a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses relating to available-for-sale debt securities should be measured in a manner similar to current GAAP; however, the amendments in this update require that credit losses be presented as an allowance rather than as a write-down, which will allow an entity the ability to record reversals of credit losses in current period net income. The amendments in this update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. An entity will apply the amendments in this update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). A prospective transition approach is required for debt securities for which an other-than-temporary impairment has been recognized before the effective date. The Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses on its portfolio under the new CECL model. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230)” (“ASU 2016-15”), which amends ASC 230 to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The FASB issued this guidance with the intent of reducing diversity in practice with respect to classification of eight types of cash receipts and payments: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero coupon bonds, (3) contingent consideration payments after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlement of corporate-owned life insurance policies and bank-owned life insurance policies, (6) distributions received from equity method investees, (7) beneficial interests in securitization transactions, and (8) separately identifiable cash flows and application of the predominance principle. The Company adopted ASU 2016-15 on January 1, 2018. The adoption of ASU 2016-15 did not have a material impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718)” (“ASU 2017-09”), to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting required by Topic 718. The amendments in this update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 and should be applied prospectively to an award modified on or after the adoption date. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have a material impact on the Company’s consolidated financial statements. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); and Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, and (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.” This guidance addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the new guidance to determine the impact on its consolidated financial statements upon adoption in fiscal 2019. |
Net Income per Share (Tables)
Net Income per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Net Income Per Share Tables | |
Schedule of earnings per share, basic and diluted | The following table shows the computation of basic and diluted income per share for the following periods (in thousands, except per share amounts): Three Months Ended March 31, 2018 2017 Numerator: Net income attributable to SWK Holdings Corporation stockholders $ 3,644 $ 5,236 Denominator: Weighted-average shares outstanding 13,053 13,144 Effect of dilutive securities 4 3 Weighted-average diluted shares 13,057 13,147 Basic income per share attributable to SWK Holdings Corporation stockholders $ 0.28 $ 0.40 Diluted income per share attributable to SWK Holdings Corporation stockholders $ 0.28 $ 0.40 |
Finance Receivables (Tables)
Finance Receivables (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Schedule of carrying value of finance receivables | The carrying value of finance receivables are as follows (in thousands): March 31, December 31, Portfolio 2018 2017 Term loans $ 147,715 $ 118,533 Royalty purchases 20,966 35,121 Total before allowance for credit losses 168,681 153,654 Allowance for credit losses (2,838 ) (1,659 ) Total carrying value $ 165,843 $ 151,995 |
Schedule of total unfunded loan commitments | The following table presents nonaccrual and performing finance receivables by portfolio segment, net of credit loss allowance (in thousands): March 31, 2018 December 31, 2017 Nonaccrual Performing Total Nonaccrual Performing Total Term loans $ 18,919 $ 128,796 $ 147,715 $ 11,402 $ 107,131 $ 118,533 Royalty purchases, net of credit loss allowance — 18,128 18,128 — 33,462 33,462 Total carrying value $ 18,919 146,924 $ 165,843 $ 11,402 $ 140,593 $ 151,995 |
Marketable Investments (Tables)
Marketable Investments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of marketable investments | Investments in marketable investments at March 31, 2018 and December 31, 2017 consist of the following (in thousands): March 31, 2018 December 31, 2017 Corporate debt securities $ 581 $ 600 Equity securities 1,132 1,256 Total $ 1,713 $ 1,856 |
Schedule of available-for-sale securities reconciliation | The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale debt securities as of March 31, 2018 and December 31, 2017, are as follows (in thousands): March 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Fair Value Corporate debt securities $ 581 $ — $ — $ 581 Total $ 581 $ — $ — $ 581 December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Loss Fair Value Corporate debt securities $ 600 $ — $ — $ 600 Total $ 600 $ — $ — $ 600 |
Schedule of Proceeds from sales, gross unrealized gains and gross unrealized losses for available-for-sale securities | The following table presents the proceeds from sales, gross unrealized gains and gross unrealized losses for available-for-sale securities that were sold during the following periods (in thousands) Three Months Ended March 31, 2018 2017 Proceeds from sale of equity securities $ — $ — Realized gain on sale of equity securities — 243 Unrealized net loss on equity securities reflected in the Consolidated Statement of Operations (124 ) — |
Schedule of securities in a continuous unrealized loss position aggregated by investment category and length of time | Securities with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, were as follows (in thousands): March 31, 2018 Less than Twelve Months Twelve Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Equity securities — — 41 (72 ) 41 (72 ) Total $ — $ — $ 41 $ (72 ) $ 41 $ (72 ) December 31, 2017 Less than Twelve Months Twelve Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Equity securities — — 33 (117 ) 33 (117 ) Total $ — $ — $ 33 $ (117 ) $ 33 $ (117 ) |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of assumptions used | The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions: March 31, 2018 December 31, 2017 Dividend rate — — Risk-free rate 2.3 % 2.0 % Expected life (years) 2.4 2.7 Expected volatility 19.4 % 21.9 % |
Schedule of value of the warrant liability | The changes on the value of the warrant liability during the three months ended March 31, 2018 were as follows (in thousands): Fair value – December 31, 2017 $ 91 Issuances — Changes in fair value (26 ) Fair value – March 31, 2018 $ 65 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value assets measured on recurring basis | The following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2018 (in thousands): Total Carrying Value in Consolidated Balance Sheet Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Warrant assets $ 1,519 $ — $ — $ 1,519 Marketable investments 1,713 1,132 — 581 Financial Liabilities: Warrant liability $ 65 $ — $ — $ 65 The following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 (in thousands): Total Carrying Value in Consolidated Balance Sheet Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Financial Assets: Warrant assets $ 987 $ — $ — $ 987 Marketable investments 1,856 1,256 — 600 Financial Liabilities: Warrant liability $ 91 $ — $ — $ 91 |
Schedule of fair value assets measured on recurring basis unobservable input reconciliation | The changes on the value of the warrant assets during the three months ended March 31, 2018 were as follows (in thousands): Fair value – December 31, 2017 $ 987 Issued 258 Canceled — Change in fair value 274 Fair value – March 31, 2018 $ 1,519 |
Schedule of weighted average assumptions | The Company holds warrants issued to the Company in conjunction with certain term loan investments. These warrants meet the definition of a derivative and are included in the unaudited condensed consolidated balance sheets. The fair values for warrants outstanding, which do not have a readily determinable value, are measured using the Black-Scholes option pricing model. The following ranges of assumptions were used in the models to determine fair value: March 31, December 31, 2018 2017 Dividend rate range — — Risk-free rate range 2.3% to 2.7% 2.0% to 2.3% Expected life (years) range 2.4 to 7.0 2.6 to 6.6 Expected volatility range 55.6% to 94.9% 72.5% to 95.7% |
Schedule of fair value assets and liabilities measured on nonrecurring basis | The following table presents the financial assets measured at fair value on a nonrecurring basis as of March 31, 2018 and December 31, 2017 (in thousands): Total Carrying Value in Consolidated Balance Sheet Quoted prices in active markets for identical assets or liabilities (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) March 31, 2018 Impaired loans $ 12,574 $ — $ — $ 12,574 December 31, 2017 Impaired loans $ 6,087 $ — $ — $ 6,087 There were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2018 and December 31, 2017. |
Schedule of fair value by balance sheet grouping | The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments, other than investment in unconsolidated entity. As of March 31, 2018 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 21,451 $ 21,451 $ 21,451 $ — $ — Finance receivables 165,843 165,843 — — 165,843 Marketable investments 1,713 1,713 1,132 — 581 Warrant assets 1,519 1,519 — — 1,519 Financial Liabilities Warrant liability $ 65 $ 65 $ — $ — $ 65 As of December 31, 2017 (in thousands): Carry Value Fair Value Level 1 Level 2 Level 3 Financial Assets Cash and cash equivalents $ 30,557 $ 30,557 $ 30,557 $ — $ — Finance receivables 151,995 151,995 — — 151,995 Marketable investments 1,856 1,856 1,256 — 600 Warrant assets 987 987 — — 987 Financial Liabilities Warrant liability $ 91 $ 91 $ — $ — $ 91 |
Net Income per Share (Details)
Net Income per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator: | ||
Net income (loss) attributable to SWK Holdings Corporation Stockholders | $ 3,644 | $ 5,236 |
Denominator: | ||
Weighted-average shares outstanding | 13,053,000 | 13,144,000 |
Effect of dilutive securities | 4,000 | 3,000 |
Weighted-average diluted shares | 13,057,000 | 13,147,000 |
Basic income (loss) per share attributable to SWK Holdings Corporation Stockholders | $ 0.28 | $ 0.40 |
Diluted income (loss) per share attributable to SWK Holdings Corporation Stockholders | $ 0.28 | $ 0.40 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in Shares) | 286,000 | 399,000 |
Finance Receivables (Details)
Finance Receivables (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Portfolio | ||
Total before allowance for credit losses | $ 168,681 | $ 153,654 |
Allowance for credit losses | (2,838) | (1,659) |
Total carrying value | 165,843 | 151,995 |
Life Science Term Loans [Member] | ||
Portfolio | ||
Total before allowance for credit losses | 147,715 | 118,533 |
Total carrying value | 147,715 | 118,533 |
Life Science Royalty Purchases [Member] | ||
Portfolio | ||
Total before allowance for credit losses | 20,966 | 35,121 |
Total carrying value | $ 18,128 | $ 33,462 |
Finance Receivables (Details 2)
Finance Receivables (Details 2) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Nonaccrual | $ 18,919 | $ 11,402 |
Performing | 146,924 | 140,593 |
Total | 165,843 | 151,995 |
Life Science Term Loans [Member] | ||
Nonaccrual | 18,919 | 11,402 |
Performing | 128,796 | 107,131 |
Total | 147,715 | 118,533 |
Life Science Royalty Purchases [Member] | ||
Nonaccrual | ||
Performing | 18,128 | 33,462 |
Total | $ 18,128 | $ 33,462 |
Finance Receivables (Details Na
Finance Receivables (Details Narrative) - USD ($) $ in Thousands | Jan. 31, 2018 | Dec. 02, 2017 | Aug. 08, 2017 | Jul. 31, 2017 | Oct. 10, 2014 | Dec. 10, 2013 | Feb. 28, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | May 12, 2017 |
Face amount | $ 18,900 | $ 11,400 | |||||||||
Number of shares outstanding | 0 | 0 | |||||||||
B&D Dental [Member] | |||||||||||
Face amount | $ 6,000 | $ 8,100 | |||||||||
Credit agreement term | 5 years | ||||||||||
Arrangement fee | $ 60 | ||||||||||
Advance loan to collateral | $ 500 | ||||||||||
Hooper Holmes, Inc. (Hooper) | |||||||||||
Face amount | $ 6,500 | ||||||||||
Additional term loan | $ 200 | ||||||||||
Debt instrument maturity date | Apr. 30, 2018 | Feb. 1, 2018 | |||||||||
ABT Molecular Imaging, Inc [Member] | |||||||||||
Impairment loss | $ 7,600 | ||||||||||
ABT Molecular Imaging, Inc [Member] | Second Lien Loan [Member] | |||||||||||
Face amount | $ 10,000 | ||||||||||
Debt instrument maturity date | Oct. 8, 2021 | ||||||||||
ABT Molecular Imaging, Inc [Member] | First Lien Loan [Member] | |||||||||||
Face amount | $ 8,300 | ||||||||||
Payments to aquire loans receivable | $ 700 | ||||||||||
Cambia [Member] | |||||||||||
Acquisation percentage | 25.00% | 25.00% | |||||||||
Payments to acquire business gross | $ 4,500 | $ 4,000 | |||||||||
Allowance for credit loss | $ 1,200 |
Marketable Investments (Details
Marketable Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||
Corporate debt securities | $ 581 | $ 600 |
Equity securities | 1,132 | 1,256 |
Total | $ 1,713 | $ 1,856 |
Marketable Investments (Detai27
Marketable Investments (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Available for Sale Securities: | |||
Amortized Cost | $ 581 | $ 600 | |
Gross Unrealized Gains | |||
Gross Unrealized Loss | (87) | ||
Fair Value | 581 | 600 | |
Gain on sale of marketable securities | 243 | ||
Unrealized net loss on equity securities | (124) | ||
Corporate Debt Securities [Member] | |||
Available for Sale Securities: | |||
Amortized Cost | 581 | 600 | |
Gross Unrealized Gains | |||
Gross Unrealized Loss | |||
Fair Value | $ 581 | $ 600 |
Marketable Investments (Detai28
Marketable Investments (Details 3) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Available For Sale Securities | ||
Less than 12 Months, Fair Value | ||
Less than 12 Months, Unrealized Losses | ||
Greater than 12 Months, Fair Value | 41 | 33 |
Greater than 12 Months, Unrealized Losses | (72) | (117) |
Total, Fair Value | 41 | 33 |
Total, Unrealized Losses | (72) | (117) |
Equity Securities [Member] | ||
Available For Sale Securities | ||
Less than 12 Months, Fair Value | ||
Less than 12 Months, Unrealized Losses | ||
Greater than 12 Months, Fair Value | 41 | 33 |
Greater than 12 Months, Unrealized Losses | (72) | (117) |
Total, Fair Value | 41 | 33 |
Total, Unrealized Losses | $ (72) | $ (117) |
Marketable Investments (Detai29
Marketable Investments (Details Narrative) - USD ($) $ in Thousands | Nov. 15, 2013 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Jul. 09, 2013 |
Number of common shares | 13,059,190 | 13,053,422 | |||
Gain on sale of marketable securities | $ 243 | ||||
Fair Value | 581 | $ 600 | |||
Senior notes | 581 | $ 600 | |||
Paid-in-kind interest | $ 47 | $ 383 | |||
Cancer Genetics, Inc [Member] | |||||
Number of common shares | 661,076 | ||||
Number of common shares sold | 75,000 | ||||
Gain on sale of marketable securities | $ 200 | ||||
Fair Value | $ 1,100 | ||||
Hooper Holmes [Member] | |||||
Number of common shares | 77,922 | ||||
Fair Value | $ 41 | ||||
Agreement To Purchase Senior Secured Notes [Member] | |||||
Senior notes | $ 3,000 | ||||
Paid-in-kind interest | $ 100 | ||||
Tribute [Member] | Agreement To Purchase Senior Secured Notes [Member] | |||||
Senior notes | $ 100,000 |
Variable Interest Entities (Det
Variable Interest Entities (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Dec. 31, 2012 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income (loss) from equity method investments | $ 10,204 | ||
Proceeds from equity method investment, dividends or distributions | 17,189 | ||
Payments to noncontrolling interests | 8,788 | ||
Non-controlling Interests in Consolidated Entities [Member] | |||
Investments in advance to affiliates, subsidiaries, associates, and joint ventures | $ 7,000 | ||
SWKHP Holdings [Member] | |||
Income (loss) from equity method investments | $ 5,000 | ||
Holmdel Pharmaceuticals LP [Member] | |||
Payments to acquire intangible assets | 13,000 | ||
SWKHP Holdings LP [Member] | |||
Investments in advance to affiliates, subsidiaries, associates, and joint ventures | 13,000 | ||
SWKHP Holdings GP [Member] | |||
Investments in advance to affiliates, subsidiaries, associates, and joint ventures | $ 6,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Dividend rate | 0.00% | 0.00% |
Loan Credit Agreement [Member] | ||
Dividend rate | 0.00% | 0.00% |
Risk-free rate | 2.30% | 2.00% |
Expected life (years) | 2 years 4 months 24 days | 2 years 8 months 12 days |
Expected volatility | 19.40% | 21.90% |
Related Party Transactions (D32
Related Party Transactions (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Fair value at beginning | $ 91 |
Fair value at ending | 65 |
Warrant Liability [Member] | |
Fair value at beginning | 91 |
Issuances | |
Changes in fair value | (26) |
Fair value at ending | $ 65 |
Related Party Transactions (D33
Related Party Transactions (Details Narartive) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Sep. 06, 2013 | |
Warrants and rights outstanding | $ 65 | $ 91 | |
Delayed Draw [Member] | |||
Number of securities called by warrants or rights (in shares) | 100,000 | ||
Exercise price of warrants or rights (in dollars per Share) | $ 13.88 | ||
Reduction in strike price | $ 13.48 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Stockholders' Equity Note [Abstract] | ||
Compensation for non-employee directors (in shares) | 5,768 | 5,928 |
Allocated share-based compensation | $ 62 | $ 62 |
Value of compensation for non-employee directors | $ 100 | $ 100 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Financial Assets: | ||
Warrant assets | $ 1,519 | $ 987 |
Marketable investments | 581 | 600 |
Financial Liabilities: | ||
Warrant liability | 65 | 91 |
Tribute Warrant [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Financial Assets: | ||
Marketable investments | 1,132 | 1,256 |
Tribute Warrant [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Financial Assets: | ||
Warrant assets | 1,519 | 987 |
Marketable investments | 581 | 600 |
Financial Liabilities: | ||
Warrant liability | 65 | 91 |
Warrant Liability [Member] | ||
Financial Liabilities: | ||
Warrant liability | 65 | 91 |
Marketable Securities [Member] | Tribute Warrant [Member] | ||
Financial Assets: | ||
Warrant assets | 1,519 | 987 |
Marketable investments | 1,713 | 1,856 |
Financial Liabilities: | ||
Warrant liability | $ 65 | $ 91 |
Fair Value Measurements (Deta36
Fair Value Measurements (Details 2) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Fair value - December 31, 2017 | $ 987 |
Fair value - March 31, 2018 | 1,519 |
Tribute Warrant [Member] | |
Fair value - December 31, 2017 | 987 |
Issuances | 258 |
Canceled | |
Change in fair value | 274 |
Fair value - March 31, 2018 | $ 1,519 |
Fair Value Measurements (Deta37
Fair Value Measurements (Details 3) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Dividend rate range | 0.00% | 0.00% |
Minimum [Member] | ||
Risk-free rate range | 2.30% | 2.00% |
Expected life (years) range | 2 years 4 months 24 days | 2 years 7 months 6 days |
Expected volatility range | 55.60% | 72.50% |
Maximum [Member] | ||
Risk-free rate range | 2.70% | 2.30% |
Expected life (years) range | 7 years | 6 years 7 months 6 days |
Expected volatility range | 94.90% | 95.70% |
Fair Value Measurements (Deta38
Fair Value Measurements (Details 4) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Financial Assets: | ||
Impaired loans | $ 1,519 | $ 987 |
Fair Value, Inputs, Level 3 [Member] | ||
Financial Assets: | ||
Impaired loans | 1,519 | 987 |
Tribute Warrant [Member] | ||
Financial Assets: | ||
Impaired loans | 1,519 | 987 |
Tribute Warrant [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Financial Assets: | ||
Impaired loans | 12,574 | 6,087 |
Marketable Securities [Member] | Tribute Warrant [Member] | ||
Financial Assets: | ||
Impaired loans | $ 12,574 | $ 6,087 |
Fair Value Measurements (Deta39
Fair Value Measurements (Details 5) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Financial Assets | ||||
Cash and cash equivalents | $ 21,451 | $ 30,557 | $ 40,514 | $ 32,182 |
Cash and cash equivalents at fair value | 21,451 | 30,557 | ||
Finance receivables | 165,843 | 151,995 | ||
Finance receivables at fair value | 165,843 | 151,995 | ||
Marketable investments | 1,713 | 1,856 | ||
Marketable investments at fair value | 1,713 | 1,856 | ||
Warrant assets | 1,519 | 987 | ||
Warrant assets at fair value | 1,519 | 987 | ||
Financial Liabilities | ||||
Warrant liability | 65 | 91 | ||
Gross liability at fair value | 65 | 91 | ||
Fair Value, Inputs, Level 1 [Member] | ||||
Financial Assets | ||||
Cash and cash equivalents at fair value | 21,451 | 30,557 | ||
Marketable investments at fair value | 1,132 | 1,256 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Financial Assets | ||||
Cash and cash equivalents | ||||
Finance receivables at fair value | 165,843 | 151,995 | ||
Marketable investments at fair value | 581 | 600 | ||
Warrant assets at fair value | 1,519 | 987 | ||
Financial Liabilities | ||||
Gross liability at fair value | $ 65 | $ 91 |