Business Segment, Geographic, and Concentration Risk Information | 13. Business Segment, Geographic, and Concentration Risk Information The Company has three operating segments, which are organized based mainly on the nature of the business activities performed and regulatory environments in which they operate. The Company also considers the types of products from which the reportable segments derive their revenue (only applicable to two reportable segments). Each operating segment has a segment manager who is held accountable for operations and has discrete financial information that is regularly reviewed by the Company’s chief operating decision-maker. The Company’s operating segments are as follows: Oncology Innovation Platform —This operating segment performs research and development on certain of the Company’s proprietary drugs, from the preclinical development of its chemical compounds, to the execution and analysis of its several clinical trials. This segment focuses specifically on the oral absorption cancer drug platform, the Src Kinase inhibitors, and the transmucosal drug delivery system. This segment performs research in the United States, Taiwan, Hong Kong, and mainland China. Global Supply Chain Platform —This operating segment includes Athenex Pharma Solutions and Polymed. Athenex Pharma Solutions is a contract manufacturing company that provides small to mid-scale cGMP manufacturing of clinical and commercial products for pharmaceutical and biotech companies. Athenex Pharma Solutions also performs microbiological and analytical testing for raw material and formulated products and is expanding to manufacture and sell pharmaceutical products under 503B regulations set forth by the U.S. Food and Drug Administration (“FDA”). Polymed markets and sells API and medical devices in North America, Europe, and Asia from its locations in Texas and China. Polymed also develops new compounds, processing techniques, and manufactures API at Taihao, a cGMP facility in Chongqing, China. Currently, a majority of the Company’s revenue is generated by this segment. Commercial Platform —This operating segment includes Athenex Pharmaceutical Division, a newly-formed component that is focused on the manufacturing, distribution, and sales of generic pharmaceuticals. This segment provides services and products to external customers based mainly in the United States. The segments operate in North America and Asia. The Company’s Oncology Innovation Platform segment operates and holds long-lived assets located in the United States, Taiwan, Hong Kong, and mainland China. The Commercial Platform segment operates and holds long-lived assets located in the United States. The Global Supply Chain Platform segment operates and holds long-lived assets located in the United States and China. For geographic segment reporting, product sales have been attributed to countries based on the location of the customer. Segment information is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net (loss) income attributable to Athenex, Inc.: Oncology Innovation Platform $ (22,558 ) $ (17,989 ) $ (83,836 ) $ (40,441 ) Global Supply Chain Platform (1,564 ) (248 ) (4,693 ) (23 ) Commercial Platform 848 (6,385 ) (14,358 ) (7,197 ) Total consolidated net loss attributable to Athenex, Inc. $ (23,274 ) $ (24,622 ) $ (102,887 ) $ (47,661 ) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Total revenue: Oncology Innovation Platform $ 205 $ 123 $ 1,208 $ 669 Global Supply Chain Platform 8,601 7,767 19,407 19,371 Commercial Platform 7,378 - 9,274 - Total revenue for reportable segments 16,184 7,890 29,889 20,040 Intersegment revenue (2,190 ) (2,274 ) (6,719 ) (4,602 ) Total consolidated revenue $ 13,994 $ 5,616 $ 23,170 $ 15,438 Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Total revenue by product group: API sales $ 5,345 $ 4,051 $ 10,369 $ 11,740 Medical device sales 562 649 1,128 1,525 Contract manufacturing revenue 250 517 934 1,229 Commercial product sales 7,505 18 9,547 50 License fees and consulting revenue 60 75 756 241 Grant revenue 272 306 436 653 Total consolidated revenue $ 13,994 $ 5,616 $ 23,170 $ 15,438 Intersegment revenue is recorded by the selling segment when it is realized or realizable and all revenue recognition criteria are met. Upon consolidation, all intersegment revenue and related cost of sales are eliminated from the selling segment’s ledger. Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Total depreciation and amortization: Oncology Innovation Platform $ 130 $ 49 $ 342 $ 146 Global Supply Chain Platform 548 484 1,569 1,139 Commercial Platform 243 45 674 45 Total consolidated depreciation and amortization $ 921 $ 578 $ 2,585 $ 1,330 September 30, December 31, 2017 2016 Total assets: Oncology Innovation Platform $ 85,450 $ 53,022 Global Supply Chain Platform 47,864 48,560 Commercial Platform 15,444 4,308 Total consolidated assets $ 148,758 $ 105,890 Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Total revenue: United States $ 8,114 $ 1,060 $ 11,056 $ 2,575 India 3,015 2,156 5,275 5,364 Austria 964 1,514 2,682 4,698 China 1,038 521 1,767 1,627 Taiwan - - 500 - Other foreign countries 863 365 1,890 1,174 Total consolidated revenue $ 13,994 $ 5,616 $ 23,170 $ 15,438 September 30, December 31, 2017 2016 Total property and equipment, net: United States $ 4,609 $ 2,177 China 4,215 3,633 Total consolidated property and equipment, net $ 8,824 $ 5,810 Customer revenue and accounts receivable concentration amounted to the following for the identified periods. These customers relate to the Commercial Platform segment and the Global Supply Chain Platform segment. Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Percentage of total revenue by customer: Customer A 18 % 38 % 20 % 35 % Customer B 7 % 27 % 11 % 29 % Customer C 16 % - 11 % - Customer D 7 % - 7 % - September 30, December 31, 2017 2016 Percentage of total accounts receivable by customer: Customer A 25 % 50 % Customer B 8 % 9 % Customer C 11 % - |