Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 01, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MEDICINES CO /DE | |
Entity Central Index Key | 1,113,481 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 72,166,926 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 436,715 | $ 541,835 |
Accounts receivable, net of allowances of approximately $3.2 million and $2.9 million at March 31, 2017 and December 31, 2016, respectively | 22,538 | 22,087 |
Inventory, net | 71,707 | 70,898 |
Prepaid expenses and other current assets | 15,356 | 19,133 |
Total current assets | 546,316 | 653,953 |
Fixed assets, net | 30,794 | 30,961 |
Indefinite-lived intangible assets, net | 253,620 | 253,620 |
Finite-lived intangible assets, net | 355,132 | 361,601 |
Goodwill | 255,629 | 255,629 |
Restricted cash | 5,037 | 5,032 |
Contingent purchase price from sale of businesses | 143,700 | 143,700 |
Other assets | 724 | 715 |
Total assets | 1,590,952 | 1,705,211 |
Current liabilities: | ||
Accounts payable | 17,529 | 28,450 |
Accrued expenses | 63,303 | 88,524 |
Current portion of contingent purchase price | 45,508 | 55,000 |
Convertible senior notes | 381,892 | 53,749 |
Deferred revenue | 18,641 | 18,902 |
Total current liabilities | 526,873 | 244,625 |
Contingent purchase price | 79,227 | 82,289 |
Convertible senior notes | 302,414 | 623,584 |
Deferred tax liabilities | 89,992 | 89,992 |
Other liabilities | 11,258 | 11,705 |
Total liabilities | 1,009,764 | 1,052,195 |
Equity component of currently redeemable convertible senior notes | 65,372 | 1,033 |
Stockholders’ equity: | ||
Preferred stock, $1.00 par value per share, 5,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value per share, 187,500,000 authorized; 74,306,937 issued and 72,113,955 outstanding at March 31, 2017 and 73,212,545 issued and 71,019,563 outstanding at December 31, 2016 | 74 | 73 |
Additional paid-in capital | 1,223,202 | 1,256,890 |
Treasury stock, at cost; 2,192,982 shares at March 31, 2017 and December 31, 2016 | (50,000) | (50,000) |
Accumulated deficit | (651,653) | (548,983) |
Accumulated other comprehensive loss | (5,807) | (5,479) |
Total The Medicines Company stockholders’ equity | 515,816 | 652,501 |
Non-controlling interest in joint venture | 0 | (518) |
Total stockholders’ equity | 515,816 | 651,983 |
Total liabilities and stockholders’ equity | 1,590,952 | 1,705,211 |
Product licenses, net | ||
Current assets: | ||
Finite-lived intangible assets, net | 26,214 | 26,987 |
Developed product rights, net | ||
Current assets: | ||
Finite-lived intangible assets, net | 328,918 | 334,614 |
In-process research & development | ||
Current assets: | ||
Indefinite-lived intangible assets, net | $ 253,620 | $ 253,620 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Allowances for accounts receivable | $ 3.2 | $ 2.9 |
Stockholders’ equity: | ||
Preferred stock, par value (USD per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 187,500,000 | 187,500,000 |
Common stock, shares, issued | 74,306,937 | 73,212,545 |
Common stock, shares outstanding | 72,113,955 | 71,019,563 |
Treasury stock, shares | 2,192,982 | 2,192,982 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Net product revenues | $ 13,845 | $ 31,375 |
Royalty revenues | 10,371 | 18,931 |
Total net revenues | 24,216 | 50,306 |
Operating expenses: | ||
Cost of product revenues | 13,553 | 18,797 |
Research and development | 38,427 | 33,491 |
Selling, general and administrative | 63,182 | 79,298 |
Total operating expenses | 115,162 | 131,586 |
Loss from operations | (90,946) | (81,280) |
Co-promotion and license income | 757 | 975 |
Interest expense | (12,422) | (9,746) |
Other loss | (9) | (262) |
Loss from continuing operations before income taxes | (102,620) | (90,313) |
Provision for income taxes | (50) | (46) |
Net loss from continuing operations | (102,670) | (90,359) |
Loss from discontinued operations, net of tax | 0 | (2,105) |
Net loss | (102,670) | (92,464) |
Net loss attributable to non-controlling interest | 0 | 16 |
Net (loss) income attributable to The Medicines Company | (102,670) | (92,448) |
Amounts attributable to The Medicines Company: | ||
Net loss from continuing operations | (102,670) | (90,343) |
Loss from discontinued operations, net of tax | 0 | (2,105) |
Net (loss) income attributable to The Medicines Company | $ (102,670) | $ (92,448) |
Basic loss per common share attributable to The Medicines Company: | ||
Loss from continuing operations (USD per share) | $ (1.44) | $ (1.31) |
Loss from discontinued operations (USD per share) | 0 | (0.03) |
Basic loss per share (USD per share) | (1.44) | (1.34) |
Diluted loss per common share attributable to The Medicines Company: | ||
Loss from continuing operations (USD per share) | (1.44) | (1.31) |
Loss from discontinued operations (USD per share) | 0 | (0.03) |
Diluted loss per share (USD per share) | $ (1.44) | $ (1.34) |
Weighted average number of common shares outstanding: | ||
Basic (shares) | 71,073 | 69,210 |
Diluted (shares) | 71,073 | 69,210 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (102,670) | $ (92,464) |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | (328) | 315 |
Amounts reclassified from accumulated other comprehensive income | 0 | (9,665) |
Other comprehensive income (loss) | (328) | (9,350) |
Comprehensive loss | (102,998) | (101,814) |
Less: comprehensive loss attributable to non-controlling interest | 0 | 16 |
Comprehensive loss attributable to The Medicines Company | $ (102,998) | $ (101,798) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (102,670) | $ (92,464) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 8,030 | 7,343 |
Amortization of debt discount | 6,973 | 6,300 |
Unrealized foreign currency transaction losses (gains), net | 352 | (573) |
Stock compensation expense | 6,643 | 6,940 |
Gain on sale of businesses | 0 | (1,004) |
Deferred tax benefit | 0 | (867) |
Changes in contingent consideration obligations | 8,512 | (1,372) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (400) | 9,580 |
Inventory, net | (790) | (2,347) |
Prepaid expenses and other current assets | 3,907 | 635 |
Accounts payable | (10,972) | (20,559) |
Accrued expenses | (21,395) | (31,181) |
Deferred revenue | (294) | 1,993 |
Payments on contingent purchase price | (12,343) | 0 |
Other liabilities | (5,155) | (804) |
Net cash used in operating activities | (119,602) | (118,380) |
Cash flows from investing activities: | ||
Purchases of fixed assets | (1,333) | 0 |
Proceeds from sale of businesses | 0 | 174,068 |
Change in restricted cash | (2) | (13) |
Net cash (used in) provided by investing activities | (1,335) | 174,055 |
Cash flows from financing activities: | ||
Proceeds from issuances of common stock, net | 24,694 | 5,104 |
Milestone payments | (8,723) | (2,773) |
Purchase of shares of non-controlling interest | (167) | 0 |
Net cash provided by financing activities | 15,804 | 2,331 |
Effect of exchange rate changes on cash | 13 | (983) |
(Decrease) increase in cash and cash equivalents | (105,120) | 57,023 |
Cash and cash equivalents at beginning of period | 541,835 | 373,173 |
Cash and cash equivalents at end of period | 436,715 | 430,196 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 11,611 | 5,000 |
Taxes paid | $ 0 | $ 24 |
Nature of Business
Nature of Business | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Nature of Business The Medicines Company (the Company) is a global biopharmaceutical company focused on saving lives, alleviating suffering and contributing to the economics of healthcare. The Company markets Angiomax ® (bivalirudin), Ionsys ® (fentanyl iontophoretic transdermal system), Minocin® (minocycline) for injection and Orbactiv ® (oritavancin). The Company also has a pipeline of products in development, including meropenem-vaborbactam (formerly known as carbavance), inclisiran (formerly known as PCSK9si) and MDCO-700 (formerly known as ABP-700). The Company has the right to develop, manufacture and commercialize inclisiran under its collaboration agreement with Alnylam Pharmaceuticals, Inc. (Alnylam). The Company believes that its products and products in development possess favorable attributes that competitive products do not provide, can satisfy unmet medical needs and offer, or, in the case of its products in development, have the potential to offer, improved performance to hospital businesses. On November 3, 2015, the Company announced that it was in the process of evaluating its operations with a goal of unlocking stockholder value. In particular, the Company stated its current intention was to explore strategies for optimizing the Company’s capital structure and liquidity position and to narrow the Company’s operational focus by strategically separating non-core businesses and products in order to generate non-dilutive cash and reduce associated cash burn and capital requirements. On February 1, 2016, the Company completed the sale of its hemostasis portfolio, consisting of PreveLeak (surgical sealant), Raplixa (fibrin sealant) and Recothrom Thrombin topical (Recombinant) (the Hemostasis Business), to wholly owned subsidiaries of Mallinckrodt plc (collectively, Mallinckrodt) pursuant to the purchase and sale agreement dated December 18, 2015 between the Company and Mallinckrodt. At completion of the sale, the Company received approximately $174.1 million in cash from Mallinckrodt, and may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa. The financial results of the Hemostasis Business were classified to discontinued operations for the three month period ended March 30, 2016 presented in the Company’s condensed consolidated financial statements. See Note 15 , “Discontinued Operations,” for further details. On June 21, 2016, the Company completed the sale of three non-core cardiovascular products, Cleviprex (clevidipine) injectable emulsion, Kengreal (cangrelor) and rights to Argatroban for Injection (collectively the Non-Core ACC Products) and related assets, to Chiesi USA, Inc. (Chiesi USA) and its parent company Chiesi Farmaceutici S.p.A. (Chiesi) pursuant to the purchase and sale agreement dated May 9, 2016 by and among the Company, Chiesi and Chiesi USA. At the completion of the sale, the Company received approximately $263.8 million in cash, which included the value of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal. As part of the transaction, the Company sublicensed to Chiesi all of its rights to Cleviprex and Kengreal under the Company’s license from AstraZeneca. Subsequent to the completion of the sale, these sublicenses from the Company to Chiesi were terminated, Chiesi purchased from AstraZeneca all or substantially all of AstraZeneca’s assets relating to Cleviprex and Kengreal, the parties released certain claims against one another, and the Company paid Chiesi $7.5 million . See Note 14 , “Dispositions,” for further details. Consistent with the Company’s intentions announced in November 2015, in January 2017 the Company announced that it intends to seek opportunities to partner or divest Ionsys and are exploring the potential for separating the Company’s infectious disease business. Specifically with respect to Ionsys, to date the Company has not identified an acceptable partnership or divestiture transaction and is continuing its commercialization efforts. However, if an acceptable transaction cannot be completed during the second quarter of 2017, the Company may elect to discontinue commercialization of the product. If the commercialization of Ionsys is discontinued, the Company estimates it will incur approximately $270 million to $280 million of pre-tax charges, of which $270 million are expected to relate to non-cash impairment charges and up to $10 million would relate to cash severance and other employee costs. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies The Company’s significant accounting policies are described in Note 2, “Significant Accounting Policies,” in the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the 2016 Form 10-K). Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting solely of normal recurring adjustments, considered necessary for a fair presentation of the Company’s financial position, results of operations, comprehensive loss , and cash flows for the periods presented. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company recorded net loss attributable to non-controlling interest in the Company’s condensed consolidated financial statements equal to the percentage of ownership interest retained in the respective operations by the non-controlling parties for the three months ended March 31, 2016 . The Company has no unconsolidated subsidiaries. The Company’s results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected from the Company for the entire fiscal year or any other quarter of the fiscal year ending December 31, 2017 . These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the 2016 Form 10-K. Convertible Senior Notes Due 2022 and Going Concern In January 2015, the Company issued, at par value, $400 million aggregate principal amount of 2.5% convertible senior notes due 2022 (the “2022 Notes”). As of April 1, 2017, the conditional conversion feature of the 2022 Notes was triggered as a result of the trading price of the Company’s common stock during the first quarter of 2017, and the holders are entitled to convert their 2022 Notes through June 30, 2017. As the Company is required to settle the aggregate principal amount of the 2022 Notes in cash, the liability component related to the 2022 Notes with a carrying amount of $327.4 million was classified as current and the equity component related to the 2022 Notes of $65.0 million was classified as mezzanine (temporary) equity on the accompanying condensed consolidated balance sheet at March 31, 2017. See Note 10, “Convertible Senior Notes” for further details. If substantially all of the 2022 Notes were converted by the holders, the Company believes that the existing cash and cash equivalents of approximately $436.7 million as of March 31, 2017 together with the cash flows it generates from product sales and other sources would not be sufficient to satisfy both this obligation, and the Company’s anticipated operating and other funding requirements for the next twelve months from May 5, 2017 (the date of filing this Form 10-Q). If substantially all of the 2022 Notes were converted by the holders, the Company would need to raise additional funds through asset sales, including asset sales of products or businesses that generate a material portion of the Company’s revenues, engage in other strategic transactions, sell additional equity or debt securities, or seek additional financing through other arrangements in order to both satisfy this obligation and meet the Company’s anticipated operating and other funding requirements for the next twelve months. There can be no assurances that public or private financings may be available in amounts or on terms acceptable to the Company, if at all. The Company’s ability to obtain additional debt financing might be limited by the terms of its convertible senior note agreements, market conditions, or otherwise. If the Company were unable to obtain additional financing or otherwise increase its cash resources, it might be required to delay, reduce the scope of, or eliminate one or more of its planned research, development or commercialization activities. There can be no assurances that other sources of financing would be available. Due to these uncertainties, there is substantial doubt about the Company’s ability to continue as a going concern. At present, the Company does not believe that a substantial portion of the 2022 Notes will be submitted by the holders thereof for conversion. The unaudited condensed consolidated financial statements as of March 31, 2017 have been prepared under the assumption that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of the uncertainty discussed above. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, expenses and accumulated other comprehensive loss that are reported in the condensed consolidated financial statements and accompanying disclosures. Actual results may be different. Contingencies The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company continually assesses litigation to determine if an unfavorable outcome would lead to a probable loss or reasonably possible loss which could be estimated. In accordance with the guidance of the Financial Accounting Standards Board (FASB) on accounting for contingencies, the Company accrues for all contingencies at the earliest date at which the Company deems it probable that a liability has been incurred and the amount of such liability can be reasonably estimated. If the estimate of a probable loss is a range and no amount within the range is more likely than another, the Company accrues the minimum of the range. In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the litigation, including an estimable range, if possible. Research and Development Research and development costs are expensed as incurred. Clinical study costs are accrued over the service periods specified in the contracts and adjusted as necessary based upon an ongoing review of the level of effort and costs actually incurred. Payments for a product license prior to regulatory approval of the product and payments for milestones achieved prior to regulatory approval of the product are expensed in the period incurred as research and development. Milestone payments made in connection with regulatory approvals are capitalized and amortized to cost of revenue over the remaining useful life of the asset. The Company performs research and development for U.S. government agencies under a cost-reimbursable contract in which the Company is reimbursed for direct costs incurred plus allowable indirect costs. The Company recognizes the reimbursements under research contracts when a contract has been executed, the contract price is fixed or determinable, delivery of services or products has occurred, and collection of the contract price is reasonably assured. The reimbursements are classified as an offset to research and development expenses. Payments received in advance of work performed are deferred. The Company recorded reductions of research and development expenses of $2.6 million and $6.3 million for the three months ended March 31, 2017 and 2016 , respectively, in the accompanying condensed consolidated statements of operations. Recent Accounting Pronouncements In May 2014, the FASB issued a comprehensive new revenue recognition Accounting Standards Update (ASU), “Revenue from Contracts with Customers (Topic 606)” (ASU No. 2014-09). ASU No. 2014-09 provides guidance to clarify the principles for recognizing revenue. This guidance includes the required steps to achieve the core principle that an entity should recognize revenue 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. In August 2015, the FASB deferred the effective date of the revenue recognition guidance to reporting periods beginning after December 15, 2017. Early adoption of the standard is permitted but not before the original effective date, which was for reporting periods beginning after December 15, 2016. The FASB has further amended guidance related to recording revenue on a gross versus a net basis and on identifying performance obligations and licensing. The FASB has also revised certain SEC guidance primarily related to ASC Topic 815, “Derivatives and Hedging,” and has issued additional improvements and practical expedients to the standard. The Company currently anticipates adopting the standard using the modified retrospective method. The Company is still in the process of completing its analysis on the impact this guidance will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (ASU No. 2016-02). ASU No. 2016-02 will require organizations that lease assets with lease terms of more than 12 months to recognize assets and liabilities for the rights and obligations created by those leases on their balance sheets. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 will be effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt this guidance when effective and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU No. 2016-09). This ASU makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation, and the financial statement presentation of excess tax benefits or deficiencies. ASU No. 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. On January 1, 2017, the Company adopted ASU No. 2016-09 and has elected to continue its determination of compensation costs recognized in each period based upon an estimate of expected future forfeitures. Upon the settlement of awards in the first quarter of 2017, the Company recorded excess tax benefits of $4.2 million but was unable to realize any benefit due to the establishment of a valuation allowance on its net operating loss carry forward deferred tax assets. The Company does not expect to be able to realize any benefit related to additional excess tax benefits recorded throughout 2017. There was no net impact on the Company’s opening accumulated deficit upon application of this guidance using the modified retrospective transition method as the total cumulative-effect adjustment for previously deferred excess tax benefits was offset by a related change in the valuation allowance. The other amended requirements of ASU No. 2016-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (ASU No. 2016-15). This guidance clarifies how certain cash receipts and payments should be presented in the statement of cash flows and is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not believe that this guidance will have an impact on the consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (ASU No. 2016-18). This amends the guidance in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. ASU 2016-18 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. Under the revised test, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for any interim or annual impairment tests for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. |
Stock Compensation Expense
Stock Compensation Expense | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Compensation Expense | Stock Compensation Expense The Company recorded stock compensation expense of approximately $6.6 million and $6.9 million for the three months ended March 31, 2017 and 2016 , respectively. As of March 31, 2017 , there was approximately $51.0 million of total unrecognized compensation costs related to non-vested share-based employee compensation arrangements granted under the Company’s equity compensation plans. The Company expects to recognize those costs over a weighted average period of 1.5 years. During the three months ended March 31, 2017 and 2016 , the Company issued a total of 1,098,739 and 409,220 , respectively, of shares of its common stock upon the exercise of stock options, grants of restricted stock, and purchases under the Company’s 2010 employee stock purchase plan (ESPP). Cash received from the exercise of stock options and purchases through the ESPP during the three months ended March 31, 2017 and 2016 was $24.7 million and $5.1 million , respectively, and is included within the financing activities section of the accompanying condensed consolidated statements of cash flows. |
Basic Loss Per Share
Basic Loss Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic Loss Per Share | Basic Loss Per Share Basic loss per share is computed by dividing consolidated net loss attributable to The Medicines Company by the weighted average number of shares of common stock outstanding during the period, excluding unvested restricted common shares. The potentially dilutive effect of the Company’s stock options, unvested restricted common stock, purchase warrants, and convertible senior notes due 2017 and 2022 on earnings per share is computed under the treasury stock method. In addition, the Company analyzes the potential dilutive effect of the convertible senior notes due 2023 on earnings per share under the “if converted” method, in which it is assumed that the outstanding security converts into common stock at the beginning of the period. For periods of net income when the effects are not anti-dilutive, diluted earnings per share is computed by dividing the net income attributable to The Medicines Company by the weighted average number of shares outstanding and the impact of all potential dilutive common shares, consisting primarily of stock options, unvested restricted common stock, shares issuable upon conversion of convertible senior notes due 2017, 2022 and 2023 and stock purchase warrants. For periods of net loss, diluted loss per share is calculated similar to basic loss per share as the effect of including all potentially dilutive common share equivalents is anti-dilutive. Due to the periods of net loss from continuing operations attributable to The Medicines Company, the calculation of diluted loss per share for the three months ended March 31, 2017 and 2016 excluded 15,344,008 and 2,897,451 , respectively, of potentially dilutive stock options, warrants, restricted common shares, and shares issuable upon conversion of the 2017, 2022 and 2023 Notes as their inclusion would have an anti-dilutive effect. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended March 31, 2017 and 2016 , the Company recorded a provision of $0.05 million for income taxes based upon its estimated federal, state and foreign (loss)/income for the year. The worldwide effective income tax rates for the Company for the three months ended March 31, 2017 and 2016 was (0.05)% . For the three months ended March 31, 2017 , the Company’s provision for income taxes is the result of state tax minimums and estimated taxes due by profitable foreign subsidiaries. The Company considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company placed significant weight on the fact that the Company expects to be in a cumulative net book loss for the three-year period ending December 31, 2017 in recording valuation allowances on substantial portions of its deferred tax assets as of March 31, 2017 . The Company will continue to evaluate its ability to realize its deferred tax assets on a periodic basis and will adjust such amounts in light of changing facts and circumstances including, but not limited to, future projections of taxable income, tax legislation, rulings by relevant tax authorities, the progress of ongoing tax audits and the regulatory approval of products currently under development. Any additional changes to the valuation allowance recorded on deferred tax assets in the future would impact the Company’s income taxes. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Mar. 31, 2017 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities at the date of purchase of three months or less to be cash equivalents. At March 31, 2017 and December 31, 2016 , the Company had cash and cash equivalents of $436.7 million and $541.8 million , respectively, which consisted of cash of $380.5 million and $485.7 million and money market funds with maturities of less than three months of $56.2 million and $56.1 million at March 31, 2017 and December 31, 2016 , respectively. Restricted Cash The Company had restricted cash of $5.0 million at March 31, 2017 and December 31, 2016 , respectively, which included $3.7 million and $1.0 million reserved for an outstanding letter of credit associated with foreign taxes and the Company’s lease for the office space in Parsippany, New Jersey, respectively, at both March 31, 2017 and December 31, 2016 , respectively. These funds are invested in certificates of deposit. The letter of credit for the Company’s lease for the office space in Parsippany, New Jersey permits draws by the landlord to cure defaults by the Company. In addition, as a result of the acquisition of Targanta Therapeutics Corporation (Targanta) in 2009, the Company had restricted cash of $0.1 million at both March 31, 2017 and December 31, 2016 , in the form of a guaranteed investment certificate collateralizing an available credit facility. The Company also had restricted cash of $0.2 million at March 31, 2017 and December 31, 2016 , respectively, related to certain foreign tender requirements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company applies a fair value framework in order to measure and disclose its financial assets and liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 asset consists of money market investments. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Fair values are determined by utilizing quoted prices for similar assets and liabilities in active markets or other market observable inputs such as interest rates and yield curves. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s Level 3 assets and liabilities consist of the contingent purchase prices associated with the Company’s dispositions and business combinations, respectively. The fair value of certain development or regulatory milestone based contingent purchase prices was determined in a discounted cash flow framework by probability weighting the future contractual payment with management's assessment of the likelihood of achieving these milestones and present valuing them using a risk-adjusted discount rate. Certain sales milestone based payments were determined in a discounted cash flow framework where risk-adjusted revenue scenarios were estimated using Monte Carlo simulation models to compute contractual payments which were present valued using a risk-adjusted discount rate. Financial assets measured at fair value on a nonrecurring basis As part of the purchase and sale agreement with Mallinckrodt, the Company may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa. In evaluating this information, considerable judgment is required to interpret the market data used to develop the assumptions and estimates. The Company utilized the “income method,” which applies a probability weighting that considers the estimated future net sales of each of the respective products to determine the probability that each sale milestone will be met. These projections were based on factors such as relevant market size, patent protection, historical pricing of similar products and expected industry trends. The Company anticipates payment from Mallinckrodt on these sales milestones between 2017 and 2022 with probabilities of achievement ranging from 15% to 85% . The Company also considers qualitative factors such as development of competing drugs, regulatory developments and other qualitative factors. The Company determined the year in which it believes each of the sales milestones will be achieved. The respective milestones were then discounted to the present value using a discount rate of 10% . Any changes to fair value will be recorded if and when the sales milestones are achieved or when the asset is impaired. The Company calculated the fair values of these contingent payments to be received from Mallinckrodt as $78.0 million , which are reflected as a contingent purchase price from sale of business on the condensed consolidated balance sheet at March 31, 2017 . The Company classified these contingent payments as Level 3 assets. The Company noted no indicators of impairment on the contingent payments to be received from Mallinckrodt. As part of the purchase and sale agreement with Chiesi USA and Chiesi, the Company may receive up to an additional $480.0 million in the aggregate from Chiesi following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal. In evaluating this information, considerable judgment is required to interpret the market data used to develop the assumptions and estimates. The Company utilized a risk adjusted revenue simulation model. In this simulation, the chances of achieving many different revenue levels are estimated and then adjusted to reflect the results of similar products and companies in the market to calculate the fair value of each milestone payment. The breadth of all possible revenue scenarios is captured in an estimate of revenue volatility - a measure that can be estimated from performance of similar companies in the market. The Company estimated revenue volatility as the delivered asset volatility observed in comparable companies’ historical performance, where the delivering asset was based on operational leverage of the Company. Under each of these possible scenarios, different amounts of the sales-based milestone payments are calculated, and the average of the payments across a range of possible scenarios is deemed to be the expected value of the earn-out payments. The Company compared the estimated revenue volatility to the delivered asset volatility to arrive at adjusted revenue volatilities between 30% and 41% . The Company then discounted the expected future value of the earn-out payments using a range of discount rates between 3.1% and 6.9% . The Company calculated the fair values of these contingent payments to be received from Chiesi as $65.7 million , which are reflected as a contingent purchase price from sale of business on the condensed consolidated balance sheet at March 31, 2017 . The Company classified these contingent payments as Level 3 assets. The Company noted no indicators of impairment on the contingent payments to be received from Chiesi. Financial assets and liabilities measured at fair value on a recurring basis Financial assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Except for the Company’s Level 2 liabilities which are discussed in Note 10 , “Convertible Senior Notes,” the following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016 , by level, within the fair value hierarchy: As of March 31, 2017 As of December 31, 2016 Assets and Liabilities Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of March 31, 2017 Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2016 (in thousands) Assets: Money market $ 56,198 $ — $ — $ 56,198 $ 56,097 $ — $ — $ 56,097 Total assets at fair value $ 56,198 $ — $ — $ 56,198 $ 56,097 $ — $ — $ 56,097 Liabilities: Contingent purchase price $ — $ — $ 124,735 $ 124,735 $ — $ — $ 137,289 $ 137,289 Total liabilities at fair value $ — $ — $ 124,735 $ 124,735 $ — $ — $ 137,289 $ 137,289 There were no transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy that occurred during the three months ended March 31, 2017 . Level 3 disclosures The Company measures contingent purchase price at fair value based on significant inputs not observable in the market, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The valuation of contingent purchase price uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. Changes in the fair value of contingent purchase price related to updated assumptions and estimates are recognized within selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. The contingent purchase price may change significantly as additional data is obtained, impacting the Company’s assumptions regarding probabilities of successful achievement of related milestones used to estimate the fair value of the liability. In evaluating this information, considerable judgment is required to interpret the market data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods. The following table provides quantitative information associated with the fair value measurements of the Company’s Level 3 liabilities: Fair Value as of Valuation Technique Unobservable Input Range (Weighted Average) (in thousands) Targanta: Contingent purchase price $ 6,012 Probability-adjusted discounted cash flow Probability of success 20% Period in which milestone is expected to be achieved 2021 Discount rate 11% Incline: Contingent purchase price $ 1,322 Probability-adjusted discounted cash flow Probabilities of successes 5% Period in which milestones are expected to be achieved 2019 Discount rate 18% Rempex: Contingent purchase price: Event-based milestones $ 80,300 Probability-adjusted discounted cash flow Probabilities of successes 18% - 95% (78%) Period in which milestones are expected to be achieved 2017 - 2024 Discount rate 4.8% - 8.0% Contingent purchase price: Sales-based milestones $ 22,400 Risk-adjusted revenue simulation Probabilities of successes 13% - 72% (61%) Period in which milestones are expected to be achieved 2018 - 2022 Discount rate 5.9% - 7.6% Annovation: Contingent purchase price $ 14,701 Probability-adjusted discounted cash flow Probabilities of successes 9% - 50% (33%) Period in which milestones are expected to be achieved 2018 - 2031 Discount rate 5.3% - 9.5% Fair Value as of Valuation Technique Unobservable Input Range (Weighted Average) (in thousands) Targanta: Contingent purchase price $ 5,857 Probability-adjusted discounted cash flow Probability of success 20% Period in which milestone is expected to be achieved 2021 Discount rate 11% Incline: Contingent purchase price $ 1,269 Probability-adjusted discounted cash flow Probabilities of successes 5% Period in which milestones are expected to be achieved 2019 Discount rate 18% Rempex: Contingent purchase price: Event-based milestones $ 95,800 Probability-adjusted discounted cash flow Probabilities of successes 18% - 95% (78%) Period in which milestones are expected to be achieved 2017 - 2024 Discount rate 5.2% - 8.5% Contingent purchase price: Sales-based milestones $ 20,300 Risk-adjusted revenue simulation Probabilities of successes 16% - 65% (56%) Period in which milestones are expected to be achieved 2018 - 2022 Discount rate 6.6% - 8.2% Annovation: Contingent purchase price $ 14,063 Probability-adjusted discounted cash flow Probabilities of successes 9% - 50% (34%) Period in which milestones are expected to be achieved 2018 - 2031 Discount rate 6.0% - 10.0% The fair value of the contingent purchase price represents the fair value of the Company’s liability for all potential payments under the Company’s acquisition agreements for Targanta, Incline Therapeutics, Inc. (Incline), Rempex Pharmaceuticals, Inc. (Rempex) and Annovation BioPharma, Inc. (Annovation). The significant unobservable inputs used in the fair value measurement of the Company’s contingent purchase prices are the probabilities of successful achievement of development, regulatory, and sales milestones that would trigger payments under the Targanta, Incline, Rempex and Annovation agreements, probabilities as to the periods in which the milestones are expected to be achieved and discount rates. Significant changes in any of the probabilities of success or periods in which milestones will be achieved would result in a significantly higher or lower fair value measurement. The changes in fair value of the Company’s Level 3 contingent purchase price during the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended 2017 2016 (in thousands) Balance at beginning of period $ 137,289 $ 123,757 Payments (21,066 ) (2,773 ) Fair value adjustments to contingent purchase prices included in net loss 8,512 (1,372 ) Balance at end of period $ 124,735 $ 119,612 For the three months ended March 31, 2017 and 2016 , changes in the carrying value of the contingent purchase price obligations resulted from changes in the fair value of the contingent consideration due to either the passage of time, changes in discount rates, changes in probabilities of success, or milestone payments. No other changes in valuation techniques or inputs occurred during the three months ended March 31, 2017 and 2016 . |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory The major classes of inventory were as follows: March 31, December 31, (in thousands) Raw materials $ 54,448 $ 56,962 Work-in-progress 13,159 12,033 Finished goods 4,100 1,903 Total $ 71,707 $ 70,898 The Company reviews inventory, including inventory purchase commitments, for slow moving or obsolete amounts based on expected product sales volume and provides reserves against the carrying amount of inventory as appropriate. If annual volume is less than expected, the Company may be required to make additional allowances for excess or obsolete inventory in the future. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill The following table sets forth the carrying amounts and accumulated amortization of the Company’s intangible assets: As of March 31, 2017 As of December 31, 2016 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization and Other Charges Net Carrying Amount Gross Carrying Amount Accumulated Amortization and Other Charges Net Carrying Amount (in thousands) Amortizable intangible assets: Product licenses (1) 13.0 $ 30,000 $ (3,786 ) $ 26,214 $ 30,000 $ (3,013 ) $ 26,987 Developed product rights (2) 16.3 370,560 (41,642 ) 328,918 370,560 (35,946 ) 334,614 Total amortizable intangible assets 16.1 400,560 (45,428 ) 355,132 400,560 (38,959 ) 361,601 Intangible assets not subject to amortization: In-process research and development — $ 253,620 $ — $ 253,620 $ 253,620 $ — $ 253,620 Total intangible assets not subject to amortization — 253,620 — 253,620 253,620 — 253,620 Total intangible assets $ 654,180 $ (45,428 ) $ 608,752 $ 654,180 $ (38,959 ) $ 615,221 _______________________________________ (1) The Company amortizes intangible assets related to the product licenses over their expected useful lives. (2) The Company amortizes intangible assets related to developed product rights over the remaining life of the patents. The Company recognized amortization expense of approximately $6.5 million and $6.3 million during the three months ended March 31, 2017 and 2016 , respectively, related to its intangible assets. The Company expects amortization expense related to its intangible assets to be approximately $19.4 million for the last nine months of 2017 . The Company expects annual amortization expense related to its intangible assets to be approximately $25.9 million , $25.9 million , $25.9 million , $24.9 million and $24.0 million for the years ending December 31, 2018 , 2019 , 2020 , 2021 and 2022 , respectively, with the balance of $209.1 million being amortized thereafter. The Company records amortization expense in cost of revenue in the accompanying condensed consolidated statements of operations. There were no changes in the carrying amount of goodwill for the three months ended March 31, 2017 . |
Convertible Senior Notes
Convertible Senior Notes | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes Convertible Senior Notes Due 2023 In June 2016, the Company issued, at par value, $402.5 million aggregate principal amount of 2.75% convertible senior notes due 2023 (the “2023 Notes”). The 2023 Notes bear cash interest at a rate of 2.75% per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2017. The 2023 Notes will mature on July 15, 2023. The net proceeds to the Company from the offering were $390.8 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by the Company. The 2023 Notes are governed by an indenture (the “2023 Notes Indenture”) with Wells Fargo Bank, National Association, a national banking association, as trustee (the “2023 Notes Trustee”). The 2023 Notes are senior unsecured obligations of the Company and will rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2023 Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness and other liabilities (including trade payables) incurred by the Company’s subsidiaries. Holders may convert their 2023 Notes at their option at any time prior to the close of business on the business day immediately preceding April 15, 2023 only under the following circumstances: • during any calendar quarter commencing on or after September 30, 2016 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five business day period after any five consecutive trading day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2023 Notes Indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; • during any period after the Company has issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or • upon the occurrence of specified corporate events. On or after April 15, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2023 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s option, based upon a daily conversion value calculated on a proportionate basis for each trading day in a 50 trading day observation period (as more fully described in the 2023 Notes Indenture). The conversion rate for the 2023 Notes was initially, and remains, 20.4198 shares of the Company’s common stock per $1,000 principal amount of the 2023 Notes, which is equivalent to an initial conversion price of approximately $48.97 per share of the Company’s common stock. The Company may not redeem the 2023 Notes prior to July 15, 2020. The Company may redeem for cash all or any portion of the 2023 Notes, at its option, on or after July 15, 2020 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during, any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the 2023 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No redemption date may be designated that falls on or after the 52 nd scheduled trading date prior to maturity. No sinking fund is provided for the 2023 Notes, which means that the Company is not required to redeem or retire the 2023 Notes periodically. If the Company undergoes a fundamental change (as defined in the 2023 Notes Indenture), subject to certain conditions, holders of the 2023 Notes may require the Company to repurchase for cash all or part of their 2023 Notes at a repurchase price equal to 100% of the principal amount of the 2023 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2023 Notes Indenture governing the 2023 Notes contains customary events of default with respect to the 2023 Notes, including that upon certain events of default (including the Company’s failure to make any payment of principal or interest on the 2023 Notes when due and payable) occurring and continuing, the 2023 Notes Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding 2023 Notes by notice to the Company and the 2023 Notes Trustee, may, and the 2023 Notes Trustee at the request of such holders (subject to the provisions of the 2023 Notes Indenture) shall, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2023 Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2023 Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately. In accounting for the issuance of the 2023 Notes, the Company separated the 2023 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2023 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense over the seven -year term of the 2023 Notes. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2023 Notes is $101.0 million and is recorded in additional paid-in capital on the accompanying condensed consolidated balance sheet. In accounting for the transaction costs related to the issuance of the 2023 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2023 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the seven -year term of the 2023 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. Additionally, the Company initially recorded a net deferred tax liability of $33.5 million in connection with the 2023 Notes. The 2023 Notes consist of the following: Liability component March 31, 2017 December 31, 2016 (in thousands) Principal $ 402,500 $ 402,500 Less: Debt discount, net (1) (100,086 ) (103,162 ) Net carrying amount $ 302,414 $ 299,338 _______________________________________ (1) Included in the accompanying condensed consolidated balance sheets within convertible senior notes (due 2023) and amortized to interest expense over the remaining life of the 2023 Notes using the effective interest rate method. The fair value of the 2023 Notes was approximately $485.9 million as of March 31, 2017 . The Company estimates the fair value of its 2023 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2023 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 7 , “Fair Value Measurements,” for definitions of hierarchy levels. As of March 31, 2017 , the remaining contractual life of the 2023 Notes is approximately 6.3 years. The following table sets forth total interest expense recognized related to the 2023 Notes: Three Months Ended March 31, 2017 2016 (in thousands) Contractual interest expense $ 2,759 $ — Amortization of debt discount 3,075 — Total $ 5,834 $ — Effective interest rate of the liability component 7.5 % — % Capped call transactions In June 2016, the Company entered into capped call transactions with certain counterparties of the 2023 Notes or their respective affiliates or other financial institutions. The Company used approximately $33.9 million of the net proceeds from the offering to pay the cost of the capped call transactions, which is included as a net reduction to additional paid-in capital on the accompanying condensed consolidated balance sheet. The capped call transactions are expected to reduce the potential dilution with respect to shares of the Company’s common stock upon any conversion of the 2023 Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted 2023 Notes, as the case may be, if the market price of the Company’s common stock is then greater than the strike price of the capped call transactions. Such reduction of potential dilution or offset of cash payments is subject to a cap based on the cap price of the capped call transactions. The cap price of the capped calls is currently $64.68 . For any conversions of the 2023 Notes prior to the close of business on the 52 nd scheduled trading day immediately preceding the stated maturity date of the 2023 Notes, including without limitation upon an acquisition of the Company or similar business combination, a corresponding portion of the capped calls will be terminated. Upon such termination, the portion of the capped calls being terminated will be settled at fair value (subject to certain limitations), as determined by the counterparties to the capped calls and no payments will be due from the Company to such counterparties. The capped calls expire on the earlier of (i) the last day on which any Convertible Securities remain outstanding and (ii) the second “Scheduled Trading Day” (as defined in the 2023 Notes Indenture) immediately preceding the “Maturity Date” (as defined in the 2023 Notes Indenture). Convertible Senior Notes Due 2022 The 2022 Notes bear cash interest at a rate of 2.5% per year, payable semi-annually on January 15 and July 15 of each year, beginning on July 15, 2015. The 2022 Notes will mature on January 15, 2022. The net proceeds to the Company from the offering were $387.2 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by the Company. The 2022 Notes are governed by an indenture (the “2022 Notes Indenture”) with Wells Fargo Bank, National Association, a national banking association, as trustee (the “2022 Notes Trustee”). The 2022 Notes are senior unsecured obligations of the Company and will rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 2022 Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness and other liabilities (including trade payables) incurred by the Company’s subsidiaries. Holders may convert their 2022 Notes at their option at any time prior to the close of business on the business day immediately preceding October 15, 2021 only under the following circumstances: • during any calendar quarter commencing on or after March 31, 2015 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; • during the five business day period after any five consecutive trading day period (the measurement period) in which the trading price (as defined in the 2022 Notes Indenture) per $1,000 principal amount of 2022 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; • during any period after the Company has issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or • upon the occurrence of specified corporate events. During the first quarter of 2017 , the conditional conversion feature of the 2022 Notes was triggered based on the trading price of the Company’s common stock during the first quarter of 2017, and the holders are currently entitled to convert the 2022 Notes through June 30, 2017. In any period when holders of the 2022 Notes are eligible to exercise their conversion option, the liability component related to the 2022 Notes is classified as current and the equity component related to 2022 Notes is classified as mezzanine (temporary) equity, as the Company is required to settle the aggregate principal amount of the notes in cash. If in any future period the conversion threshold requirements of the 2022 Notes are not met, then the liability component of the 2022 Notes will be classified as non-current and the difference between (1) the amount of cash deliverable upon conversion (i.e., par value of debt) and (2) the carrying value of the debt component will be reclassified from mezzanine equity to permanent equity, and will continue to be reported as permanent equity for any period in which the debt is not currently convertible. From April 1, 2017 through May 4, 2017, no holders of the 2022 Notes exercised their conversion option. On or after October 15, 2021, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their 2022 Notes at any time, regardless of the circumstances described above. Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2022 Notes to be converted and deliver shares of its common stock in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of 2022 Notes being converted, subject to a daily share cap. The conversion rate for the 2022 Notes was initially, and remains, 29.8806 shares of the Company’s common stock per $1,000 principal amount of the 2022 Notes, which is equivalent to an initial conversion price of approximately $33.47 per share of the Company’s common stock. The Company may not redeem the 2022 Notes prior to January 15, 2019. The Company may redeem for cash all or any portion of the 2022 Notes, at its option, on or after January 15, 2019 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the 2022 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2022 Notes, which means that the Company is not required to redeem or retire the 2022 Notes periodically. If the Company undergoes a “fundamental change” (as defined in the Indenture governing the 2022 Notes Indenture), subject to certain conditions, holders of the 2022 Notes may require the Company to repurchase for cash all or part of their 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2022 Notes Indenture contains customary events of default with respect to the 2022 Notes, including that upon certain events of default (including the Company’s failure to make any payment of principal or interest on the 2022 Notes when due and payable) occurring and continuing, the 2022 Notes Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding 2022 Notes by notice to the Company and the 2022 Notes Trustee, may, and the 2022 Notes Trustee at the request of such holders (subject to the provisions of the 2022 Notes Indenture) shall, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2022 Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2022 Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately. In accounting for the issuance of the 2022 Notes, the Company separated the 2022 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2022 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense over the seven -year term of the 2022 Notes. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component related to the 2022 Notes was $88.9 million and was recorded in additional paid-in capital on the accompanying condensed consolidated balance sheets. In accounting for the transaction costs related to the issuance of the 2022 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2022 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the seven -year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. Additionally, the Company initially recorded a net deferred tax liability of $31.8 million in connection with the 2022 Notes. The 2022 Notes consist of the following: Liability component March 31, 2017 December 31, 2016 (in thousands) Principal $ 400,000 $ 400,000 Less: Debt discount, net (1) (72,568 ) (75,754 ) Net carrying amount $ 327,432 $ 324,246 _______________________________________ (1) Included in the accompanying condensed consolidated balance sheets within convertible senior notes (due 2022) and amortized to interest expense over the remaining life of the 2022 Notes using the effective interest rate method. The fair value of the 2022 Notes was approximately $631.9 million as of March 31, 2017 . The Company estimates the fair value of its 2022 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2022 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 7 , “Fair Value Measurements,” for definitions of hierarchy levels. As of March 31, 2017 , the remaining contractual life of the 2022 Notes is approximately 4.8 years. The following table sets forth total interest expense recognized related to the 2022 Notes: Three Months Ended March 31, 2017 2016 (in thousands) Contractual interest expense $ 2,500 $ 2,500 Amortization of debt discount 3,187 2,974 Total $ 5,687 $ 5,474 Effective interest rate of the liability component 6.5 % 6.5 % Convertible Senior Notes Due 2017 In June 2012, the Company issued, at par value, $275.0 million aggregate principal amount of 1.375% convertible senior notes due June 1, 2017 (the “2017 Notes”). The 2017 Notes bear cash interest at a rate of 1.375% per year, payable semi-annually on June 1 and December 1 of each year, beginning on December 1, 2012. The 2017 Notes will mature on June 1, 2017. The net proceeds to the Company from the offering were $266.2 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by the Company. In June 2016, the Company used approximately $323.2 million of the net proceeds of the 2023 Notes to repurchase $220.0 million in aggregate principal amount of the 2017 Notes in privately negotiated transactions effected through the initial purchasers of the 2017 Notes. As part of the repurchase of the 2017 Notes, the Company settled a proportionate amount of outstanding bond hedges and warrants related to the 2017 Notes for a net cash receipt of $12.6 million . The Company recorded a loss of $5.4 million on the extinguishment of debt during the three months ended June 30, 2016 and accounted for the difference of $108.7 million between the consideration transferred to the holder and the fair value of the liability component of the 2017 Notes as a reduction of additional paid-in capital on the accompany condensed consolidated balance sheet. The 2017 Notes are governed by an indenture dated as of June 11, 2012 (the “2017 Notes Indenture”), between the Company, as issuer, and Wells Fargo Bank, National Association, a national banking association, as trustee (the “2017 Notes Trustee”). The 2017 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the incurrence of other indebtedness, or the issuance or repurchase of securities by the Company. The 2017 Notes are senior unsecured obligations of the Company and will rank senior in right of payment to the Company’s future indebtedness, if any, that is expressly subordinated in right of payment to the 2017 Notes and equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated. The 2017 Notes are effectively junior in right of payment to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness and are structurally junior to all existing and future indebtedness and other liabilities (including trade payables) incurred by the Company’s subsidiaries. On or after March 1, 2017, until the close of business on the second scheduled trading day immediately preceding the June 1, 2017 maturity date of the 2017 Notes, holders may convert their 2017 Notes at any time. Since the holders of the 2017 Notes are entitled to exercise their conversion option, the liability component related to these instruments is classified as current and the equity component related to these instruments is classified as mezzanine (temporary) equity, as the Company is required to settle the aggregate principal amount of the notes in cash. Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2017 Notes to be converted and deliver shares of the Company’s common stock in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2017 Notes being converted, subject to a daily share cap, as described in the 2017 Notes Indenture. Holders of 2017 Notes will not receive any additional cash payment or additional shares representing accrued and unpaid interest, if any, upon conversion of a 2017 Note, except in limited circumstances. Instead, accrued but unpaid interest will be deemed to be paid by the cash and shares, if any, of the Company’s common stock, together with any cash payment for any fractional share, paid or delivered, as the case may be, upon conversion of a 2017 Note. To the extent any 2017 Notes are not submitted for conversion prior to the close of business on the second scheduled trading day immediately preceding the maturity date of June 1, 2017, the holders will be entitled on the maturity date to receive an amount in cash equal to the principal amount of such notes plus accrued and unpaid interest to but excluding the maturity date. The conversion rate for the 2017 Notes was initially, and remains, 35.8038 shares of the Company’s common stock per $1,000 principal amount of the 2017 Notes, which is equivalent to an initial conversion price of $27.93 per share of the Company’s common stock. The conversion rate and the conversion price are subject to customary adjustments for certain events, including, but not limited to, the issuance of certain stock dividends on the Company’s common stock, the issuance of certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness, or assets, cash dividends and certain issuer tender or exchange offers, as described in the 2017 Notes Indenture. The Company may not redeem the 2017 Notes prior to maturity and is not required to redeem or retire the 2017 Notes periodically. However, upon the occurrence of a “fundamental change” (as defined in the 2017 Notes Indenture), subject to certain conditions, in lieu of converting their 2017 Notes, holders may require the Company to repurchase for cash all or part of their 2017 Notes at a repurchase price equal to 100% of the principal amount of the 2017 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2017 Notes Indenture contains customary events of default with respect to the 2017 Notes, including that upon certain events of default (including the Company’s failure to make any payment of principal or interest on the 2017 Notes when due and payable) occurring and continuing, the 2017 Notes Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding 2017 Notes by notice to the Company and the 2017 Notes Trustee, may, and the 2017 Notes Trustee at the request of such holders (subject to the provisions of the 2017 Notes Indenture) shall, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2017 Notes to be due and payable. In case of an event of default involving certain events of bankruptcy, insolvency or reorganization, involving the Company or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2017 Notes will automatically become due and payable. Upon a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately. In accounting for the issuance of the 2017 Notes, the Company separated the 2017 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2017 Notes as a whole. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense over the five -year term of the 2017 Notes. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. The equity component recorded at issuance related to the 2017 Notes was $54.2 million and was recorded in additional paid in capital. After the repurchase of $220.0 million in aggregate principal amount of the 2017 Notes, the equity component remaining in additional paid-in capital is $10.8 million . In accounting for the transaction costs related to the issuance of the 2017 Notes, the Company allocated the total costs incurred to the liability and equity components of the 2017 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five -year term of the 2017 Notes, and transaction costs attributable to the equity component are netted with the equity components in stockholders’ equity. Additionally, the Company initially recorded a deferred tax asset of $1.5 million in connection with the 2017 Notes. After the repurchase of $220.0 million in aggregate principal amount of the 2017 Notes, the deferred tax asset remaining is approximately $0.3 million . The 2017 Notes consist of the following: Liability component March 31, 2017 December 31, 2016 (in thousands) Principal $ 55,000 $ 55,000 Less: Debt discount, net (1) (540 ) (1,251 ) Net carrying amount $ 54,460 $ 53,749 _______________________________________ (1) Included in the accompanying condensed consolidated balance sheets within convertible senior notes (due 2017) and amortized to interest expense over the remaining life of the 2017 Notes using the effective interest rate method. The fair value of the 2017 Notes was approximately $96.7 million as of March 31, 2017 . The Company estimates the fair value of its 2017 Notes utilizing market quotations for debt that have quoted prices in active markets. Since the 2017 Notes do not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 measurements within the fair value hierarchy. See Note 7 , “Fair Value Measurements,” for definitions of hierarchy levels. As of March 31, 2017 , the remaining contractual life of the 2017 Notes is approximately 0.2 years. The following table sets forth total interest expense recognized related to the 2017 Notes: Three Months Ended March 31, 2017 2016 (in thousands) Contractual interest expense $ 189 $ 945 Amortization of debt discount 711 3,326 Total $ 900 $ 4,271 Effective interest rate of the liability component 6.02 % 6.02 % Note Hedges In June 2012, the Company paid an aggregate amount of $58.2 million for the 2017 Note Hedges, which was recorded as a reduction of additional paid-in-capital in stockholders’ equity. As part of the repurchase of $220.0 million in aggregate principal amount of the 2017 Notes, the Company settled the related hedges and received cash of approximately $100.5 million . The remaining 2017 Note Hedges cover approximately two million shares of the Company’s common stock, subject to anti-dilution adjustments substantially similar to those applicable to the 2017 Notes, have a strike price that corresponds to the initial conversion price of the 2017 Notes, and are exercisable upon conversion of the 2017 Notes. The 2017 Note Hedges will expire upon the maturity of the 2017 Notes. The 2017 Note Hedges are expected generally to reduce the potential dilution with respect to shares of the Company’s common stock upon conversion of the 2017 Notes in the event that the market price per share of the Company’s common stock, as measured under the terms of the 2017 Note Hedges, at the time of exercise is greater than the strike price of the 2017 Note Hedges. The 2017 Note Hedges are separate transactions entered into by the Company with the 2017 Hedge Counterparties and are not part of the terms of the 2017 Notes or the 2017 Warrants. Holders of the 2017 Notes and 2017 Warrants will not have any rights with respect to the 2017 Note Hedge |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The following tables provide a reconciliation of the components of accumulated other comprehensive loss , net of tax, attributable to The Medicines Company for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Foreign currency translation adjustment Unrealized (gain) loss on available for sale securities Total Foreign currency translation adjustment Unrealized (gain) loss on available for sale securities Total (in thousands) Balance at beginning of period $ (5,479 ) $ — $ (5,479 ) $ 3,924 $ 49 $ 3,973 Other comprehensive income before reclassifications (328 ) — (328 ) 315 — 315 Amounts reclassified from accumulated other comprehensive income (1) (2) — — — (9,616 ) (49 ) (9,665 ) Total other comprehensive (loss) income (328 ) — (328 ) (9,301 ) (49 ) (9,350 ) Balance at end of period $ (5,807 ) $ — $ (5,807 ) $ (5,377 ) $ — $ (5,377 ) _______________________________________ (1) Amounts were reclassified to other income in the accompanying condensed consolidated statements of operations. There is generally no tax impact related to foreign currency translation adjustments, as earnings are considered permanently reinvested. In addition, there were no material tax impacts related to unrealized gains or losses on available for sale securities in the periods presented. (2) See Note 15 , “Discontinued Operations,” for a discussion of this reclass of foreign currency translation adjustment. |
Segment and Geographic Informat
Segment and Geographic Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information The Company manages its business and operations as one segment and is focused on advancing the treatment of acute and intensive care patients through the delivery of innovative, cost-effective medicines to the worldwide hospital marketplace. The Company allocates resources and assesses financial performance on a consolidated basis. Revenues reported below are derived primarily from sales of Angiomax in the United States, including royalty revenue from Sandoz. The geographic segment information provided below is classified based on the major geographic regions in which the Company operates. Long-lived assets are comprised of the Company’s noncurrent assets. Three Months Ended March 31, 2017 2016 ($ in thousands) Net revenues: United States $ 22,156 91.5 % $ 46,436 92.3 % Europe 1,895 7.8 % 3,080 6.1 % Rest of world 165 0.7 % 790 1.6 % Total net revenues $ 24,216 100.0 % $ 50,306 100.0 % March 31, 2017 December 31, 2016 ($ in thousands) Long-lived assets: United States $ 1,041,116 99.7 % $ 1,047,098 99.6 % Europe 3,520 0.3 % 4,160 0.4 % Total long-lived assets $ 1,044,636 100.0 % $ 1,051,258 100.0 % |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company accrues for loss contingencies when available information indicates that it is probable that a liability has been incurred and the amount of such loss can be reasonably estimated. In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the litigation, including an estimable range, if possible. The Company is currently party to the legal proceedings described in Part II, Item 1, Legal Proceedings, of this Quarterly Report on Form 10-Q, which include patent litigation matters and litigation related to a license agreement. The Company has assessed such legal proceedings and does not believe that it is probable that a liability has been incurred or that the amount of any potential liability can be reasonably estimated. As a result, the Company did not record a loss contingency related to any of these legal proceedings. Particularly with respect to the litigation related to a license agreement, the Company is presently unable to predict the outcome of such lawsuit or to reasonably estimate the possible loss, or range of potential losses, if any, related to such lawsuit. While it is not possible to determine the outcome of the matters described in Part II, Item 1, Legal Proceedings, of this Quarterly Report on Form 10-Q, the Company believes that the resolution of all such matters could have a material adverse effect on its financial condition or results of operations. |
Dispositions
Dispositions | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Dispositions | Dispositions On June 21, 2016, the Company completed the sale of its Non-Core ACC Products pursuant to the purchase and sale agreement dated May 9, 2016 by and among the Company, Chiesi USA and Chiesi. At the completion of the sale, the Company received approximately $263.8 million in cash, which included the value of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal. The following table presents the consideration received, major classes of assets sold and the gain recognized on the sale of the Non-Core ACC Products: (in thousands) Sale price: Cash $ 263,807 Contingent purchase price from sale of business 65,700 Total sale price 329,507 Assets: Inventory 2,184 Intangibles 5,210 Goodwill 33,812 Total assets sold 41,206 Gain on sale of business $ 288,301 The Company recognized a gain on sale of business of approximately $288.3 million in the three months ended June 30, 2016 in continuing operations. Disposition related costs during 2016 of approximately $7.9 million for advisory, legal and regulatory fees incurred in connection with the sale of the Non-Core ACC Products were recorded in selling, general and administrative expenses. See Note 7, “Fair Value Measurements,” for further details on the contingent purchase price from sale of businesses. Discontinued Operations Sale of Hemostasis Business On February 1, 2016, the Company completed the sale of its Hemostasis Business to Mallinckrodt pursuant to the purchase and sale agreement dated December 18, 2015 between the Company and Mallinckrodt. At the completion of the sale, the Company received approximately $174.1 million in cash from Mallinckrodt, and may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa. Financial results of the Hemostasis Business are presented as “ Loss from discontinued operations, net of tax ” on the accompanying condensed consolidated statements of operations for the three months ended March 31, 2016 . The following table presents key financial results of the Hemostasis Business included in “ Loss from discontinued operations, net of tax ” for the three months ended March 31, 2016 : Three Months Ended March 31, 2016 Net product revenues $ 62 Operating expenses: Cost of product revenue 2,293 Research and development 146 Selling, general and administrative 693 Total operating expenses 3,132 Income (loss) from operations (3,070 ) Gain from sale of business 1,004 Other expense, net (39 ) Income (loss) from discontinued operations before income taxes (2,105 ) Benefit for income taxes — Loss from discontinued operations, net of tax $ (2,105 ) Cumulative translation adjustment (“CTA”) gains or losses of foreign subsidiaries related to divested businesses are reclassified into income once the liquidation of the respective foreign subsidiaries is substantially complete. At the completion of the sale of the Hemostasis Business, the Company reclassified $9.6 million , net of tax, of CTA gains from accumulated comprehensive loss to the Company’s results of discontinued operations. Of this amount, $8.4 million was included in the impairment loss recorded to reduce the Hemostasis Business disposal group’s carrying value to its estimated fair value, less costs to sell as of December 31, 2015 and $1.2 million was included in “Gain from sale of business” for the three months ended March 31, 2016 . |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Dispositions On June 21, 2016, the Company completed the sale of its Non-Core ACC Products pursuant to the purchase and sale agreement dated May 9, 2016 by and among the Company, Chiesi USA and Chiesi. At the completion of the sale, the Company received approximately $263.8 million in cash, which included the value of product inventory, and may receive up to an additional $480.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of each of Cleviprex and Kengreal. The following table presents the consideration received, major classes of assets sold and the gain recognized on the sale of the Non-Core ACC Products: (in thousands) Sale price: Cash $ 263,807 Contingent purchase price from sale of business 65,700 Total sale price 329,507 Assets: Inventory 2,184 Intangibles 5,210 Goodwill 33,812 Total assets sold 41,206 Gain on sale of business $ 288,301 The Company recognized a gain on sale of business of approximately $288.3 million in the three months ended June 30, 2016 in continuing operations. Disposition related costs during 2016 of approximately $7.9 million for advisory, legal and regulatory fees incurred in connection with the sale of the Non-Core ACC Products were recorded in selling, general and administrative expenses. See Note 7, “Fair Value Measurements,” for further details on the contingent purchase price from sale of businesses. Discontinued Operations Sale of Hemostasis Business On February 1, 2016, the Company completed the sale of its Hemostasis Business to Mallinckrodt pursuant to the purchase and sale agreement dated December 18, 2015 between the Company and Mallinckrodt. At the completion of the sale, the Company received approximately $174.1 million in cash from Mallinckrodt, and may receive up to an additional $235.0 million in the aggregate following the achievement of certain specified calendar year net sales milestones with respect to net sales of PreveLeak and Raplixa. Financial results of the Hemostasis Business are presented as “ Loss from discontinued operations, net of tax ” on the accompanying condensed consolidated statements of operations for the three months ended March 31, 2016 . The following table presents key financial results of the Hemostasis Business included in “ Loss from discontinued operations, net of tax ” for the three months ended March 31, 2016 : Three Months Ended March 31, 2016 Net product revenues $ 62 Operating expenses: Cost of product revenue 2,293 Research and development 146 Selling, general and administrative 693 Total operating expenses 3,132 Income (loss) from operations (3,070 ) Gain from sale of business 1,004 Other expense, net (39 ) Income (loss) from discontinued operations before income taxes (2,105 ) Benefit for income taxes — Loss from discontinued operations, net of tax $ (2,105 ) Cumulative translation adjustment (“CTA”) gains or losses of foreign subsidiaries related to divested businesses are reclassified into income once the liquidation of the respective foreign subsidiaries is substantially complete. At the completion of the sale of the Hemostasis Business, the Company reclassified $9.6 million , net of tax, of CTA gains from accumulated comprehensive loss to the Company’s results of discontinued operations. Of this amount, $8.4 million was included in the impairment loss recorded to reduce the Hemostasis Business disposal group’s carrying value to its estimated fair value, less costs to sell as of December 31, 2015 and $1.2 million was included in “Gain from sale of business” for the three months ended March 31, 2016 . |
Significant Accounting Polici22
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting solely of normal recurring adjustments, considered necessary for a fair presentation of the Company’s financial position, results of operations, comprehensive loss , and cash flows for the periods presented. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company recorded net loss attributable to non-controlling interest in the Company’s condensed consolidated financial statements equal to the percentage of ownership interest retained in the respective operations by the non-controlling parties for the three months ended March 31, 2016 . The Company has no unconsolidated subsidiaries. The Company’s results of operations for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected from the Company for the entire fiscal year or any other quarter of the fiscal year ending December 31, 2017 . These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the 2016 Form 10-K. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, expenses and accumulated other comprehensive loss that are reported in the condensed consolidated financial statements and accompanying disclosures. Actual results may be different. |
Contingencies | Contingencies The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company continually assesses litigation to determine if an unfavorable outcome would lead to a probable loss or reasonably possible loss which could be estimated. In accordance with the guidance of the Financial Accounting Standards Board (FASB) on accounting for contingencies, the Company accrues for all contingencies at the earliest date at which the Company deems it probable that a liability has been incurred and the amount of such liability can be reasonably estimated. If the estimate of a probable loss is a range and no amount within the range is more likely than another, the Company accrues the minimum of the range. In the cases where the Company believes that a reasonably possible loss exists, the Company discloses the facts and circumstances of the litigation, including an estimable range, if possible. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Clinical study costs are accrued over the service periods specified in the contracts and adjusted as necessary based upon an ongoing review of the level of effort and costs actually incurred. Payments for a product license prior to regulatory approval of the product and payments for milestones achieved prior to regulatory approval of the product are expensed in the period incurred as research and development. Milestone payments made in connection with regulatory approvals are capitalized and amortized to cost of revenue over the remaining useful life of the asset. The Company performs research and development for U.S. government agencies under a cost-reimbursable contract in which the Company is reimbursed for direct costs incurred plus allowable indirect costs. The Company recognizes the reimbursements under research contracts when a contract has been executed, the contract price is fixed or determinable, delivery of services or products has occurred, and collection of the contract price is reasonably assured. The reimbursements are classified as an offset to research and development expenses. Payments received in advance of work performed are deferred. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued a comprehensive new revenue recognition Accounting Standards Update (ASU), “Revenue from Contracts with Customers (Topic 606)” (ASU No. 2014-09). ASU No. 2014-09 provides guidance to clarify the principles for recognizing revenue. This guidance includes the required steps to achieve the core principle that an entity should recognize revenue 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. In August 2015, the FASB deferred the effective date of the revenue recognition guidance to reporting periods beginning after December 15, 2017. Early adoption of the standard is permitted but not before the original effective date, which was for reporting periods beginning after December 15, 2016. The FASB has further amended guidance related to recording revenue on a gross versus a net basis and on identifying performance obligations and licensing. The FASB has also revised certain SEC guidance primarily related to ASC Topic 815, “Derivatives and Hedging,” and has issued additional improvements and practical expedients to the standard. The Company currently anticipates adopting the standard using the modified retrospective method. The Company is still in the process of completing its analysis on the impact this guidance will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (ASU No. 2016-02). ASU No. 2016-02 will require organizations that lease assets with lease terms of more than 12 months to recognize assets and liabilities for the rights and obligations created by those leases on their balance sheets. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU No. 2016-02 will be effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company expects to adopt this guidance when effective and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU No. 2016-09). This ASU makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation, and the financial statement presentation of excess tax benefits or deficiencies. ASU No. 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. On January 1, 2017, the Company adopted ASU No. 2016-09 and has elected to continue its determination of compensation costs recognized in each period based upon an estimate of expected future forfeitures. Upon the settlement of awards in the first quarter of 2017, the Company recorded excess tax benefits of $4.2 million but was unable to realize any benefit due to the establishment of a valuation allowance on its net operating loss carry forward deferred tax assets. The Company does not expect to be able to realize any benefit related to additional excess tax benefits recorded throughout 2017. There was no net impact on the Company’s opening accumulated deficit upon application of this guidance using the modified retrospective transition method as the total cumulative-effect adjustment for previously deferred excess tax benefits was offset by a related change in the valuation allowance. The other amended requirements of ASU No. 2016-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (ASU No. 2016-15). This guidance clarifies how certain cash receipts and payments should be presented in the statement of cash flows and is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company does not believe that this guidance will have an impact on the consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (ASU No. 2016-18). This amends the guidance in ASC 230, including providing additional guidance related to transfers between cash and restricted cash and how entities present, in their statement of cash flows, the cash receipts and cash payments that directly affect the restricted cash accounts. ASU 2016-18 is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual reporting periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. Under the revised test, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for any interim or annual impairment tests for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. |
Earnings Per Share | Basic loss per share is computed by dividing consolidated net loss attributable to The Medicines Company by the weighted average number of shares of common stock outstanding during the period, excluding unvested restricted common shares. The potentially dilutive effect of the Company’s stock options, unvested restricted common stock, purchase warrants, and convertible senior notes due 2017 and 2022 on earnings per share is computed under the treasury stock method. In addition, the Company analyzes the potential dilutive effect of the convertible senior notes due 2023 on earnings per share under the “if converted” method, in which it is assumed that the outstanding security converts into common stock at the beginning of the period. For periods of net income when the effects are not anti-dilutive, diluted earnings per share is computed by dividing the net income attributable to The Medicines Company by the weighted average number of shares outstanding and the impact of all potential dilutive common shares, consisting primarily of stock options, unvested restricted common stock, shares issuable upon conversion of convertible senior notes due 2017, 2022 and 2023 and stock purchase warrants. For periods of net loss, diluted loss per share is calculated similar to basic loss per share as the effect of including all potentially dilutive common share equivalents is anti-dilutive. |
Fair Value Measurements | The Company applies a fair value framework in order to measure and disclose its financial assets and liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 asset consists of money market investments. Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Fair values are determined by utilizing quoted prices for similar assets and liabilities in active markets or other market observable inputs such as interest rates and yield curves. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s Level 3 assets and liabilities consist of the contingent purchase prices associated with the Company’s dispositions and business combinations, respectively. The fair value of certain development or regulatory milestone based contingent purchase prices was determined in a discounted cash flow framework by probability weighting the future contractual payment with management's assessment of the likelihood of achieving these milestones and present valuing them using a risk-adjusted discount rate. Certain sales milestone based payments were determined in a discounted cash flow framework where risk-adjusted revenue scenarios were estimated using Monte Carlo simulation models to compute contractual payments which were present valued using a risk-adjusted discount rate. |
Segments | The Company manages its business and operations as one segment and is focused on advancing the treatment of acute and intensive care patients through the delivery of innovative, cost-effective medicines to the worldwide hospital marketplace. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | Except for the Company’s Level 2 liabilities which are discussed in Note 10 , “Convertible Senior Notes,” the following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2017 and December 31, 2016 , by level, within the fair value hierarchy: As of March 31, 2017 As of December 31, 2016 Assets and Liabilities Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of March 31, 2017 Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2016 (in thousands) Assets: Money market $ 56,198 $ — $ — $ 56,198 $ 56,097 $ — $ — $ 56,097 Total assets at fair value $ 56,198 $ — $ — $ 56,198 $ 56,097 $ — $ — $ 56,097 Liabilities: Contingent purchase price $ — $ — $ 124,735 $ 124,735 $ — $ — $ 137,289 $ 137,289 Total liabilities at fair value $ — $ — $ 124,735 $ 124,735 $ — $ — $ 137,289 $ 137,289 |
Fair Value Inputs, Quantitative Information | The following table provides quantitative information associated with the fair value measurements of the Company’s Level 3 liabilities: Fair Value as of Valuation Technique Unobservable Input Range (Weighted Average) (in thousands) Targanta: Contingent purchase price $ 6,012 Probability-adjusted discounted cash flow Probability of success 20% Period in which milestone is expected to be achieved 2021 Discount rate 11% Incline: Contingent purchase price $ 1,322 Probability-adjusted discounted cash flow Probabilities of successes 5% Period in which milestones are expected to be achieved 2019 Discount rate 18% Rempex: Contingent purchase price: Event-based milestones $ 80,300 Probability-adjusted discounted cash flow Probabilities of successes 18% - 95% (78%) Period in which milestones are expected to be achieved 2017 - 2024 Discount rate 4.8% - 8.0% Contingent purchase price: Sales-based milestones $ 22,400 Risk-adjusted revenue simulation Probabilities of successes 13% - 72% (61%) Period in which milestones are expected to be achieved 2018 - 2022 Discount rate 5.9% - 7.6% Annovation: Contingent purchase price $ 14,701 Probability-adjusted discounted cash flow Probabilities of successes 9% - 50% (33%) Period in which milestones are expected to be achieved 2018 - 2031 Discount rate 5.3% - 9.5% Fair Value as of Valuation Technique Unobservable Input Range (Weighted Average) (in thousands) Targanta: Contingent purchase price $ 5,857 Probability-adjusted discounted cash flow Probability of success 20% Period in which milestone is expected to be achieved 2021 Discount rate 11% Incline: Contingent purchase price $ 1,269 Probability-adjusted discounted cash flow Probabilities of successes 5% Period in which milestones are expected to be achieved 2019 Discount rate 18% Rempex: Contingent purchase price: Event-based milestones $ 95,800 Probability-adjusted discounted cash flow Probabilities of successes 18% - 95% (78%) Period in which milestones are expected to be achieved 2017 - 2024 Discount rate 5.2% - 8.5% Contingent purchase price: Sales-based milestones $ 20,300 Risk-adjusted revenue simulation Probabilities of successes 16% - 65% (56%) Period in which milestones are expected to be achieved 2018 - 2022 Discount rate 6.6% - 8.2% Annovation: Contingent purchase price $ 14,063 Probability-adjusted discounted cash flow Probabilities of successes 9% - 50% (34%) Period in which milestones are expected to be achieved 2018 - 2031 Discount rate 6.0% - 10.0% |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The changes in fair value of the Company’s Level 3 contingent purchase price during the three months ended March 31, 2017 and 2016 were as follows: Three Months Ended 2017 2016 (in thousands) Balance at beginning of period $ 137,289 $ 123,757 Payments (21,066 ) (2,773 ) Fair value adjustments to contingent purchase prices included in net loss 8,512 (1,372 ) Balance at end of period $ 124,735 $ 119,612 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The major classes of inventory were as follows: March 31, December 31, (in thousands) Raw materials $ 54,448 $ 56,962 Work-in-progress 13,159 12,033 Finished goods 4,100 1,903 Total $ 71,707 $ 70,898 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets by Major Class | The following table sets forth the carrying amounts and accumulated amortization of the Company’s intangible assets: As of March 31, 2017 As of December 31, 2016 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization and Other Charges Net Carrying Amount Gross Carrying Amount Accumulated Amortization and Other Charges Net Carrying Amount (in thousands) Amortizable intangible assets: Product licenses (1) 13.0 $ 30,000 $ (3,786 ) $ 26,214 $ 30,000 $ (3,013 ) $ 26,987 Developed product rights (2) 16.3 370,560 (41,642 ) 328,918 370,560 (35,946 ) 334,614 Total amortizable intangible assets 16.1 400,560 (45,428 ) 355,132 400,560 (38,959 ) 361,601 Intangible assets not subject to amortization: In-process research and development — $ 253,620 $ — $ 253,620 $ 253,620 $ — $ 253,620 Total intangible assets not subject to amortization — 253,620 — 253,620 253,620 — 253,620 Total intangible assets $ 654,180 $ (45,428 ) $ 608,752 $ 654,180 $ (38,959 ) $ 615,221 _______________________________________ (1) The Company amortizes intangible assets related to the product licenses over their expected useful lives. (2) The Company amortizes intangible assets related to developed product rights over the remaining life of the patents. |
Schedule of Indefinite-lived Intangible Assets by Major Class | The following table sets forth the carrying amounts and accumulated amortization of the Company’s intangible assets: As of March 31, 2017 As of December 31, 2016 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization and Other Charges Net Carrying Amount Gross Carrying Amount Accumulated Amortization and Other Charges Net Carrying Amount (in thousands) Amortizable intangible assets: Product licenses (1) 13.0 $ 30,000 $ (3,786 ) $ 26,214 $ 30,000 $ (3,013 ) $ 26,987 Developed product rights (2) 16.3 370,560 (41,642 ) 328,918 370,560 (35,946 ) 334,614 Total amortizable intangible assets 16.1 400,560 (45,428 ) 355,132 400,560 (38,959 ) 361,601 Intangible assets not subject to amortization: In-process research and development — $ 253,620 $ — $ 253,620 $ 253,620 $ — $ 253,620 Total intangible assets not subject to amortization — 253,620 — 253,620 253,620 — 253,620 Total intangible assets $ 654,180 $ (45,428 ) $ 608,752 $ 654,180 $ (38,959 ) $ 615,221 _______________________________________ (1) The Company amortizes intangible assets related to the product licenses over their expected useful lives. (2) The Company amortizes intangible assets related to developed product rights over the remaining life of the patents. |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The 2022 Notes consist of the following: Liability component March 31, 2017 December 31, 2016 (in thousands) Principal $ 400,000 $ 400,000 Less: Debt discount, net (1) (72,568 ) (75,754 ) Net carrying amount $ 327,432 $ 324,246 _______________________________________ (1) Included in the accompanying condensed consolidated balance sheets within convertible senior notes (due 2022) and amortized to interest expense over the remaining life of the 2022 Notes using the effective interest rate method. The 2017 Notes consist of the following: Liability component March 31, 2017 December 31, 2016 (in thousands) Principal $ 55,000 $ 55,000 Less: Debt discount, net (1) (540 ) (1,251 ) Net carrying amount $ 54,460 $ 53,749 _______________________________________ (1) Included in the accompanying condensed consolidated balance sheets within convertible senior notes (due 2017) and amortized to interest expense over the remaining life of the 2017 Notes using the effective interest rate method. The 2023 Notes consist of the following: Liability component March 31, 2017 December 31, 2016 (in thousands) Principal $ 402,500 $ 402,500 Less: Debt discount, net (1) (100,086 ) (103,162 ) Net carrying amount $ 302,414 $ 299,338 _______________________________________ (1) Included in the accompanying condensed consolidated balance sheets within convertible senior notes (due 2023) and amortized to interest expense over the remaining life of the 2023 Notes using the effective interest rate method. |
Schedule of Interest Expense | The following table sets forth total interest expense recognized related to the 2017 Notes: Three Months Ended March 31, 2017 2016 (in thousands) Contractual interest expense $ 189 $ 945 Amortization of debt discount 711 3,326 Total $ 900 $ 4,271 Effective interest rate of the liability component 6.02 % 6.02 % The following table sets forth total interest expense recognized related to the 2023 Notes: Three Months Ended March 31, 2017 2016 (in thousands) Contractual interest expense $ 2,759 $ — Amortization of debt discount 3,075 — Total $ 5,834 $ — Effective interest rate of the liability component 7.5 % — % The following table sets forth total interest expense recognized related to the 2022 Notes: Three Months Ended March 31, 2017 2016 (in thousands) Contractual interest expense $ 2,500 $ 2,500 Amortization of debt discount 3,187 2,974 Total $ 5,687 $ 5,474 Effective interest rate of the liability component 6.5 % 6.5 % |
Accumulated Other Comprehensi27
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following tables provide a reconciliation of the components of accumulated other comprehensive loss , net of tax, attributable to The Medicines Company for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Foreign currency translation adjustment Unrealized (gain) loss on available for sale securities Total Foreign currency translation adjustment Unrealized (gain) loss on available for sale securities Total (in thousands) Balance at beginning of period $ (5,479 ) $ — $ (5,479 ) $ 3,924 $ 49 $ 3,973 Other comprehensive income before reclassifications (328 ) — (328 ) 315 — 315 Amounts reclassified from accumulated other comprehensive income (1) (2) — — — (9,616 ) (49 ) (9,665 ) Total other comprehensive (loss) income (328 ) — (328 ) (9,301 ) (49 ) (9,350 ) Balance at end of period $ (5,807 ) $ — $ (5,807 ) $ (5,377 ) $ — $ (5,377 ) _______________________________________ (1) Amounts were reclassified to other income in the accompanying condensed consolidated statements of operations. There is generally no tax impact related to foreign currency translation adjustments, as earnings are considered permanently reinvested. In addition, there were no material tax impacts related to unrealized gains or losses on available for sale securities in the periods presented. (2) See Note 15 , “Discontinued Operations,” for a discussion of this reclass of foreign currency translation adjustment. |
Segment and Geographic Inform28
Segment and Geographic Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Reconciliation of Revenue from Segments to Consolidated | The geographic segment information provided below is classified based on the major geographic regions in which the Company operates. Long-lived assets are comprised of the Company’s noncurrent assets. Three Months Ended March 31, 2017 2016 ($ in thousands) Net revenues: United States $ 22,156 91.5 % $ 46,436 92.3 % Europe 1,895 7.8 % 3,080 6.1 % Rest of world 165 0.7 % 790 1.6 % Total net revenues $ 24,216 100.0 % $ 50,306 100.0 % |
Reconciliation of Assets from Segment to Consolidated | March 31, 2017 December 31, 2016 ($ in thousands) Long-lived assets: United States $ 1,041,116 99.7 % $ 1,047,098 99.6 % Europe 3,520 0.3 % 4,160 0.4 % Total long-lived assets $ 1,044,636 100.0 % $ 1,051,258 100.0 % |
Dispositions (Tables)
Dispositions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Major Classes of Assets Sold and Gain Recognized | The following table presents the consideration received, major classes of assets sold and the gain recognized on the sale of the Non-Core ACC Products: (in thousands) Sale price: Cash $ 263,807 Contingent purchase price from sale of business 65,700 Total sale price 329,507 Assets: Inventory 2,184 Intangibles 5,210 Goodwill 33,812 Total assets sold 41,206 Gain on sale of business $ 288,301 The following table presents key financial results of the Hemostasis Business included in “ Loss from discontinued operations, net of tax ” for the three months ended March 31, 2016 : Three Months Ended March 31, 2016 Net product revenues $ 62 Operating expenses: Cost of product revenue 2,293 Research and development 146 Selling, general and administrative 693 Total operating expenses 3,132 Income (loss) from operations (3,070 ) Gain from sale of business 1,004 Other expense, net (39 ) Income (loss) from discontinued operations before income taxes (2,105 ) Benefit for income taxes — Loss from discontinued operations, net of tax $ (2,105 ) |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | The following table presents the consideration received, major classes of assets sold and the gain recognized on the sale of the Non-Core ACC Products: (in thousands) Sale price: Cash $ 263,807 Contingent purchase price from sale of business 65,700 Total sale price 329,507 Assets: Inventory 2,184 Intangibles 5,210 Goodwill 33,812 Total assets sold 41,206 Gain on sale of business $ 288,301 The following table presents key financial results of the Hemostasis Business included in “ Loss from discontinued operations, net of tax ” for the three months ended March 31, 2016 : Three Months Ended March 31, 2016 Net product revenues $ 62 Operating expenses: Cost of product revenue 2,293 Research and development 146 Selling, general and administrative 693 Total operating expenses 3,132 Income (loss) from operations (3,070 ) Gain from sale of business 1,004 Other expense, net (39 ) Income (loss) from discontinued operations before income taxes (2,105 ) Benefit for income taxes — Loss from discontinued operations, net of tax $ (2,105 ) |
Nature of Business (Details)
Nature of Business (Details) $ in Thousands | Jun. 21, 2016USD ($)product | Feb. 01, 2016USD ($) | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale of businesses | $ 0 | $ 174,068 | |||
Contingent purchase price from sale of businesses | 143,700 | $ 143,700 | |||
Impairment charges | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Expected restructuring charges | 270,000 | ||||
Cash severance and other employee costs | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Expected restructuring charges | 10,000 | ||||
Minimum | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Expected restructuring charges | 270,000 | ||||
Maximum | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Expected restructuring charges | 280,000 | ||||
Discontinued Operations, Disposed of by Sale | Hemostasis Business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale of businesses | $ 174,100 | ||||
Contingent purchase price from sale of businesses | $ 235,000 | 78,000 | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Non-Core ACC Products | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale of businesses | $ 263,807 | ||||
Contingent purchase price from sale of businesses | $ 480,000 | $ 65,700 | |||
Number of products sold | product | 3 | ||||
Payment for release of claims | $ 7,500 |
Significant Accounting Polici32
Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Jan. 31, 2015 | |
Debt Instrument [Line Items] | |||||
Cash and cash equivalents | $ 436,715,000 | $ 430,196,000 | $ 541,835,000 | $ 373,173,000 | |
Reimbursement revenue | 2,600,000 | $ 6,300,000 | |||
Convertible Senior Notes Due 2022 | Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal | 400,000,000 | 400,000,000 | $ 400,000,000 | ||
Interest rate | 2.50% | ||||
Carrying amount, liability component | 327,432,000 | $ 324,246,000 | |||
Carrying amount, equity component | 88,900,000 | ||||
Accounting Standards Update 2016-09 | |||||
Debt Instrument [Line Items] | |||||
Excess tax benefits related to share-based compensation | $ 4,200,000 |
Stock Compensation Expense (Det
Stock Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Recorded share-based compensation expense | $ 6,643 | $ 6,940 |
Total unrecognized compensation costs related to non-vested share-based compensation | $ 51,000 | |
Period for recognition | 1 year 6 months | |
Common stock issued during period for exercise of stock options, restricted stock grants, and purchases under ESPP (shares) | 1,098,739 | 409,220 |
Cash received from exercise of stock options and purchases through the ESPP | $ 24,700 | $ 5,100 |
Basic Loss Per Share (Narrative
Basic Loss Per Share (Narrative) (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares excluded from computation of diluted loss per share (shares) | 15,344,008 | 2,897,451 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ (50) | $ (46) |
Effective income tax rate | (0.05%) | (0.05%) |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Cash and Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 436,715 | $ 541,835 | $ 430,196 | $ 373,173 |
Cash | 380,500 | 485,700 | ||
Cash equivalents - money market funds | 56,200 | 56,100 | ||
Restricted cash | 5,037 | 5,032 | ||
Restricted cash, letter of credit - foreign taxes | 3,700 | 3,700 | ||
Restricted cash, letter of credit - lease agreement | 1,000 | 1,000 | ||
Restricted cash, guaranteed investment certificate for collateralizing an available credit facility | 100 | 100 | ||
Restricted cash, foreign tender requirements | $ 200 | $ 200 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Liabilities: | ||
Contingent purchase price | $ 79,227 | $ 82,289 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Money market | 56,198 | 56,097 |
Total assets at fair value | 56,198 | 56,097 |
Liabilities: | ||
Contingent purchase price | 124,735 | 137,289 |
Total liabilities at fair value | 124,735 | 137,289 |
Fair Value, Measurements, Recurring | Quoted Prices In Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Money market | 56,198 | 56,097 |
Total assets at fair value | 56,198 | 56,097 |
Liabilities: | ||
Contingent purchase price | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Money market | 0 | 0 |
Total assets at fair value | 0 | 0 |
Liabilities: | ||
Contingent purchase price | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Money market | 0 | 0 |
Total assets at fair value | 0 | 0 |
Liabilities: | ||
Contingent purchase price | 124,735 | 137,289 |
Total liabilities at fair value | $ 124,735 | $ 137,289 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Inputs, Quantitative Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Contingent purchase price | $ 79,227 | $ 82,289 | |
Targanta | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Contingent purchase price | $ 6,012 | $ 5,857 | |
Targanta | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 20.00% | 20.00% | |
Discount rate | 11.00% | 11.00% | |
Incline | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Contingent purchase price | $ 1,322 | $ 1,269 | |
Incline | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 5.00% | 5.00% | |
Discount rate | 18.00% | 18.00% | |
Rempex | Event-based milestones | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Contingent purchase price | $ 80,300 | $ 95,800 | |
Rempex | Event-based milestones | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 78.00% | 78.00% | |
Rempex | Event-based milestones | Minimum | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 18.00% | 18.00% | |
Discount rate | 4.80% | 5.20% | |
Rempex | Event-based milestones | Maximum | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 95.00% | 95.00% | |
Discount rate | 8.00% | 8.50% | |
Rempex | Sales-based Milestones | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Contingent purchase price | $ 22,400 | 20,300 | |
Rempex | Sales-based Milestones | Risk-adjusted revenue simulation | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 61.00% | 56.00% | |
Rempex | Sales-based Milestones | Minimum | Risk-adjusted revenue simulation | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 13.00% | 16.00% | |
Discount rate | 5.90% | 6.60% | |
Rempex | Sales-based Milestones | Maximum | Risk-adjusted revenue simulation | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 72.00% | 65.00% | |
Discount rate | 7.60% | 8.20% | |
Annovation | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Contingent purchase price | $ 14,701 | $ 14,063 | |
Annovation | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 33.00% | 34.00% | |
Annovation | Minimum | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 9.00% | 9.00% | |
Discount rate | 5.30% | 6.00% | |
Annovation | Maximum | Probability-adjusted discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |||
Probability of success | 50.00% | 50.00% | |
Discount rate | 9.50% | 10.00% |
Fair Value Measurements (Level
Fair Value Measurements (Level 3 Contingent Purchase Price) (Details) - Contingent Purchase Price Liability - Fair Value, Measurements, Recurring - Significant Unobservable Inputs (Level 3) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 137,289 | $ 123,757 |
Payments | (21,066) | (2,773) |
Fair value adjustments to contingent purchase prices included in net loss | 8,512 | (1,372) |
Balance at end of period | $ 124,735 | $ 119,612 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands | Jun. 21, 2016 | Feb. 01, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Contingent purchase price from sale of businesses | $ 143,700 | $ 143,700 | ||
Hemostasis Business | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Contingent purchase price from sale of businesses | $ 235,000 | 78,000 | ||
Discount rate | 10.00% | |||
Non-Core ACC Products | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Contingent purchase price from sale of businesses | $ 480,000 | $ 65,700 | ||
Minimum | Hemostasis Business | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Probability of achievement | 15.00% | |||
Minimum | Non-Core ACC Products | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenue volatility rate | 30.00% | |||
Discount rate | 3.10% | |||
Maximum | Hemostasis Business | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Probability of achievement | 85.00% | |||
Maximum | Non-Core ACC Products | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenue volatility rate | 41.00% | |||
Discount rate | 6.90% |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 54,448 | $ 56,962 |
Work-in-progress | 13,159 | 12,033 |
Finished goods | 4,100 | 1,903 |
Total | $ 71,707 | $ 70,898 |
Intangible Assets and Goodwil42
Intangible Assets and Goodwill (Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Intangible Assets and Goodwill [Line Items] | ||
Weighted Average Useful Life (years) | 16 years 1 month | |
Amortizable intangible assets, Gross Carrying Amount | $ 400,560 | $ 400,560 |
Amortizable intangible assets, Accumulated Amortization and Other Charges | (45,428) | (38,959) |
Amortizable intangible assets, Net Carrying Amount | 355,132 | 361,601 |
In-process research & development | 253,620 | 253,620 |
Intangible Assets, Gross Carrying Amount | 654,180 | 654,180 |
Intangible Assets, Net Carrying Amount | 608,752 | 615,221 |
In-process research & development | ||
Intangible Assets and Goodwill [Line Items] | ||
In-process research & development | $ 253,620 | 253,620 |
Product licenses, net | ||
Intangible Assets and Goodwill [Line Items] | ||
Weighted Average Useful Life (years) | 13 years | |
Amortizable intangible assets, Gross Carrying Amount | $ 30,000 | 30,000 |
Amortizable intangible assets, Accumulated Amortization and Other Charges | (3,786) | (3,013) |
Amortizable intangible assets, Net Carrying Amount | $ 26,214 | 26,987 |
Developed product rights, net | ||
Intangible Assets and Goodwill [Line Items] | ||
Weighted Average Useful Life (years) | 16 years 3 months 18 days | |
Amortizable intangible assets, Gross Carrying Amount | $ 370,560 | 370,560 |
Amortizable intangible assets, Accumulated Amortization and Other Charges | (41,642) | (35,946) |
Amortizable intangible assets, Net Carrying Amount | $ 328,918 | $ 334,614 |
Intangible Assets and Goodwil43
Intangible Assets and Goodwill (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 6.5 | $ 6.3 |
Future amortization expense, remainder of fiscal year | 19.4 | |
Future amortization expense, 2018 | 25.9 | |
Future amortization expense, 2019 | 25.9 | |
Future amortization expense, 2020 | 25.9 | |
Future amortization expense, 2021 | 24.9 | |
Future amortization expense, 2022 | 24 | |
Future amortization expense, thereafter | $ 209.1 |
Convertible Senior Notes (Due 2
Convertible Senior Notes (Due 2023) (Details) | Mar. 31, 2017USD ($)$ / shares | Jun. 30, 2016USD ($)d$ / shares | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) |
Interest expense | |||||
Amortization of debt discount | $ 6,973,000 | $ 6,300,000 | |||
Senior Notes | Convertible Senior Notes Due 2023 | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 402,500,000 | $ 402,500,000 | 402,500,000 | $ 402,500,000 | |
Interest rate | 2.75% | ||||
Proceeds from offering | $ 390,800,000 | ||||
Trading days | d | 20 | ||||
Redemption consecutive trading period | 30 days | ||||
Redemption stock price conversion threshold (greater than or equal to) | 130.00% | ||||
Consecutive measurement period | 5 days | ||||
Percent of trading price (less than) | 98.00% | ||||
Consecutive trading days | 50 days | ||||
Conversion ratio | 0.0204198 | ||||
Conversion price (USD per share) | $ / shares | $ 48.97 | ||||
Redemption trading period | 19 days | ||||
Percent of principal amount plus accrued and unpaid interest | 100.00% | ||||
Debt default principal amount percentage | 25.00% | ||||
Debt instrument, term | 7 years | ||||
Carrying amount, equity component | 101,000,000 | 101,000,000 | |||
Net deferred tax liabilities | $ 33,500,000 | ||||
Liability component | |||||
Principal | 402,500,000 | 402,500,000 | 402,500,000 | 402,500,000 | |
Less: Debt discount, net | (100,086,000) | (100,086,000) | (103,162,000) | ||
Net carrying amount | $ 302,414,000 | $ 302,414,000 | $ 299,338,000 | ||
Remaining contractual life | 6 years 3 months 15 days | ||||
Interest expense | |||||
Contractual interest expense | $ 2,759,000 | 0 | |||
Amortization of debt discount | 3,075,000 | 0 | |||
Total | $ 5,834,000 | $ 0 | |||
Effective interest rate of the liability component | 7.50% | 7.50% | 0.00% | ||
Senior Notes | Convertible Senior Notes Due 2023 | Call Option | |||||
Interest expense | |||||
Payment of cost of capped call transactions | $ 33,900,000 | ||||
Cap price (USD per share) | $ / shares | $ 64.68 | ||||
Significant Other Observable Inputs (Level 2) | Senior Notes | Convertible Senior Notes Due 2023 | |||||
Liability component | |||||
Fair value of Notes | $ 485,900,000 | $ 485,900,000 |
Convertible Senior Notes (Due45
Convertible Senior Notes (Due 2022) (Details) | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2015USD ($)d$ / shares | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Interest expense | ||||
Amortization of debt discount | $ 6,973,000 | $ 6,300,000 | ||
Senior Notes | Convertible Senior Notes Due 2022 | ||||
Debt Instrument [Line Items] | ||||
Principal | $ 400,000,000 | 400,000,000 | $ 400,000,000 | |
Interest rate | 2.50% | |||
Proceeds from offering | $ 387,200,000 | |||
Trading days | d | 20 | |||
Redemption consecutive trading period | 30 days | |||
Redemption stock price conversion threshold (greater than or equal to) | 130.00% | |||
Consecutive measurement period | 5 days | |||
Percent of trading price (less than) | 98.00% | |||
Conversion ratio | 0.0298806 | |||
Conversion price (USD per share) | $ / shares | $ 33.47 | |||
Redemption trading period | 19 days | |||
Percent of principal amount plus accrued and unpaid interest | 100.00% | |||
Debt default principal amount percentage | 25.00% | |||
Debt instrument, term | 7 years | |||
Carrying amount, equity component | 88,900,000 | |||
Net deferred tax liabilities | $ 31,800,000 | |||
Liability component | ||||
Principal | $ 400,000,000 | 400,000,000 | 400,000,000 | |
Less: Debt discount, net | (72,568,000) | (75,754,000) | ||
Net carrying amount | $ 327,432,000 | $ 324,246,000 | ||
Remaining contractual life | 4 years 9 months 18 days | |||
Interest expense | ||||
Contractual interest expense | $ 2,500,000 | 2,500,000 | ||
Amortization of debt discount | 3,187,000 | 2,974,000 | ||
Total | $ 5,687,000 | $ 5,474,000 | ||
Effective interest rate of the liability component | 6.50% | 6.50% | ||
Significant Other Observable Inputs (Level 2) | Senior Notes | Convertible Senior Notes Due 2022 | ||||
Liability component | ||||
Fair value of Notes | $ 631,900,000 |
Convertible Senior Notes (Due46
Convertible Senior Notes (Due 2017) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2012 | Mar. 31, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | |
Interest expense | ||||||
Amortization of debt discount | $ 6,973,000 | $ 6,300,000 | ||||
Senior Notes | Convertible Senior Notes Due 2017 | ||||||
Debt Instrument [Line Items] | ||||||
Principal | $ 275,000,000 | 55,000,000 | $ 55,000,000 | |||
Interest rate | 1.375% | |||||
Proceeds from offering | $ 266,200,000 | |||||
Debt, repurchase amount | $ 323,200,000 | |||||
Debt, aggregate principal amount repurchased | 220,000,000 | $ 220,000,000 | ||||
Cash receipt for settlement of outstanding bond hedges and warrants | 12,600,000 | |||||
Loss on extinguishment of debt | $ 5,400,000 | |||||
Reduction of additional paid-in capital for difference between consideration transferred and fair value of liability component | $ 108,700,000 | |||||
Conversion ratio | 0.0358038 | |||||
Conversion price (USD per share) | $ 27.93 | |||||
Percent of principal amount plus accrued and unpaid interest | 100.00% | |||||
Debt default principal amount percentage | 25.00% | |||||
Debt instrument, term | 5 years | |||||
Equity component recorded at issuance | $ 54,200,000 | |||||
Carrying amount, equity component | 10,800,000 | |||||
Deferred tax asset, hedging | 1,500,000 | 300,000 | ||||
Liability component | ||||||
Principal | $ 275,000,000 | 55,000,000 | 55,000,000 | |||
Less: Debt discount, net | (540,000) | (1,251,000) | ||||
Net carrying amount | $ 54,460,000 | $ 53,749,000 | ||||
Remaining contractual life | 2 months 1 day | |||||
Interest expense | ||||||
Contractual interest expense | $ 189,000 | 945,000 | ||||
Amortization of debt discount | 711,000 | 3,326,000 | ||||
Total | $ 900,000 | $ 4,271,000 | ||||
Effective interest rate of the liability component | 6.02% | 6.02% | ||||
Significant Other Observable Inputs (Level 2) | Senior Notes | Convertible Senior Notes Due 2017 | ||||||
Liability component | ||||||
Fair value of Notes | $ 96,700,000 |
Convertible Senior Notes (Note
Convertible Senior Notes (Note Hedges) (Details) - USD ($) shares in Millions, $ in Millions | 1 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2012 | |
Senior Notes | Convertible Senior Notes Due 2017 | ||
Debt Instrument [Line Items] | ||
Debt, aggregate principal amount repurchased | $ 220 | |
Proceeds from settlement of bond hedges related to convertible senior notes | $ 100.5 | |
Interest Rate Contract | ||
Debt Instrument [Line Items] | ||
Aggregate amount of hedge | $ 58.2 | |
Shares exercisable upon conversion | 2 |
Convertible Senior Notes (Warra
Convertible Senior Notes (Warrants) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2012 | |
2017 Warrants | ||
Debt Instrument [Line Items] | ||
Proceeds from sale of warrants | $ 38.4 | |
Settlement of warrants | $ 87.9 | |
Shares exercisable upon conversion | 2 | |
Exercise price of warrants (in dollars per share) | $ 34.20 | |
Senior Notes | Convertible Senior Notes Due 2017 | ||
Debt Instrument [Line Items] | ||
Debt, aggregate principal amount repurchased | $ 220 |
Accumulated Other Comprehensi49
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Accumulated Other Comprehensive Loss [Roll Forward] | ||
Balance at beginning of period | $ 651,983 | |
Other comprehensive income before reclassifications | (328) | $ 315 |
Amounts reclassified from accumulated other comprehensive income | 0 | (9,665) |
Other comprehensive income (loss) | (328) | (9,350) |
Balance at end of period | 515,816 | |
AOCI Including Portion Attributable to Noncontrolling Interest [Member] | ||
Accumulated Other Comprehensive Loss [Roll Forward] | ||
Balance at beginning of period | (5,479) | 3,973 |
Balance at end of period | (5,807) | (5,377) |
Foreign currency translation adjustment | ||
Accumulated Other Comprehensive Loss [Roll Forward] | ||
Balance at beginning of period | (5,479) | 3,924 |
Other comprehensive income before reclassifications | (328) | 315 |
Amounts reclassified from accumulated other comprehensive income | 0 | (9,616) |
Other comprehensive income (loss) | (328) | (9,301) |
Balance at end of period | (5,807) | (5,377) |
Unrealized (gain) loss on available for sale securities | ||
Accumulated Other Comprehensive Loss [Roll Forward] | ||
Balance at beginning of period | 0 | 49 |
Other comprehensive income before reclassifications | 0 | 0 |
Amounts reclassified from accumulated other comprehensive income | 0 | (49) |
Other comprehensive income (loss) | 0 | (49) |
Balance at end of period | $ 0 | $ 0 |
Segment and Geographic Inform50
Segment and Geographic Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017USD ($)segment | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Number of operating segments | segment | 1 | ||
Net revenue | $ 24,216 | $ 50,306 | |
Percentage of revenue by geographic segments | 100.00% | 100.00% | |
Long-lived assets | $ 1,044,636 | $ 1,051,258 | |
Percentage of long-lived assets by geographic segments | 100.00% | 100.00% | |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenue | $ 22,156 | $ 46,436 | |
Percentage of revenue by geographic segments | 91.50% | 92.30% | |
Long-lived assets | $ 1,041,116 | $ 1,047,098 | |
Percentage of long-lived assets by geographic segments | 99.70% | 99.60% | |
Europe | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenue | $ 1,895 | $ 3,080 | |
Percentage of revenue by geographic segments | 7.80% | 6.10% | |
Long-lived assets | $ 3,520 | $ 4,160 | |
Percentage of long-lived assets by geographic segments | 0.30% | 0.40% | |
Rest of world | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Net revenue | $ 165 | $ 790 | |
Percentage of revenue by geographic segments | 0.70% | 1.60% |
Dispositions (Major Classes of
Dispositions (Major Classes of Assets Sold and Gain Recognized) (Details) - USD ($) $ in Thousands | Jun. 21, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Sale price: | |||
Cash | $ 0 | $ 174,068 | |
Non-Core ACC Products | Disposal Group, Disposed of by Sale, Not Discontinued Operations | |||
Sale price: | |||
Cash | $ 263,807 | ||
Contingent purchase price from sale of business | 65,700 | ||
Total sale price | 329,507 | ||
Assets: | |||
Inventory | 2,184 | ||
Intangibles | 5,210 | ||
Goodwill | 33,812 | ||
Total assets held for sale/sold | 41,206 | ||
Gain on sale of business | $ 288,301 | $ 288,300 |
Dispositions (Narrative) (Detai
Dispositions (Narrative) (Details) - USD ($) $ in Thousands | Jun. 21, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from sale of businesses | $ 0 | $ 174,068 | ||
Potential contingent proceeds from sale | 143,700 | $ 143,700 | ||
Non-Core ACC Products | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Proceeds from sale of businesses | $ 263,807 | |||
Potential contingent proceeds from sale | 480,000 | 65,700 | ||
Gain on sale of assets | $ 288,301 | 288,300 | ||
Disposition related costs | $ 7,900 |
Discontinued Operations (Key Fi
Discontinued Operations (Key Financial Results and Assets and Liabilities Held for Sale) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||
Loss from discontinued operations, net of tax | $ 0 | $ (2,105) |
Hemostasis Business | Discontinued Operations, Disposed of by Sale | ||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | ||
Net product revenues | 62 | |
Cost of product revenue | 2,293 | |
Research and development | 146 | |
Selling, general and administrative | 693 | |
Total operating expenses | 3,132 | |
Income (loss) from operations | (3,070) | |
Gain from sale of business | 1,004 | |
Other expense, net | (39) | |
Income (loss) from discontinued operations before income taxes | (2,105) | |
Benefit for income taxes | 0 | |
Loss from discontinued operations, net of tax | $ (2,105) |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) - USD ($) $ in Thousands | Feb. 01, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale of businesses | $ 0 | $ 174,068 | |||
Contingent purchase price from sale of businesses | 143,700 | $ 143,700 | |||
Amounts reclassified from accumulated other comprehensive income | 0 | 9,665 | |||
Hemostasis Business | Discontinued Operations, Disposed of by Sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Proceeds from sale of businesses | $ 174,100 | ||||
Contingent purchase price from sale of businesses | 235,000 | 78,000 | |||
Foreign currency translation adjustment | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Amounts reclassified from accumulated other comprehensive income | 0 | $ 9,616 | |||
Foreign currency translation adjustment | Impairment charges | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Amounts reclassified from accumulated other comprehensive income | $ 8,400 | ||||
Foreign currency translation adjustment | Gain from sale of business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Amounts reclassified from accumulated other comprehensive income | $ 1,200 | ||||
Foreign currency translation adjustment | Hemostasis Business | Discontinued Operations, Disposed of by Sale | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Amounts reclassified from accumulated other comprehensive income | $ 9,600 |