Segments | Segments The Company's CODM assesses the operating performance of and allocates resources for several operating segments using Segment Adjusted EBITDA. Management believes this financial metric is a key indicator of operating results since it excludes noncash revenues and expenses that are not reflective of the underlying business performance of an individual enterprise. The Company defines Segment Adjusted EBITDA as net loss before (i) interest expense, (ii) income tax expense or benefit, (iii) depreciation and amortization, (iv) stock-based compensation expense, (v) adjustments for bonuses paid in equity awards, (vi) loss on impairment of goodwill and other noncurrent assets, (vii) equity in net loss of affiliates, and (viii) recognition of previously deferred revenue associated with upfront and milestone payments as well as cash outflows from capital expenditures and investments in affiliates. For the nine months ended September 30, 2020, the Company modified the current period definition of Segment Adjusted EBITDA to exclude adjustments recorded to reverse the difference of bonuses accrued as of December 31, 2019 compared to the value of equity awards granted, as the Company determined in March 2020 that those accrued bonuses would be paid through the grant of equity awards instead of cash. Segment Adjusted EBITDA for the three and nine months ended September 30, 2019 was not impacted by this change. Because the Company uses Segment Adjusted EBITDA as its primary measure of segment performance, it has included this measure in its discussion of segment operating results. The Company has also disclosed revenues from external customers and intersegment revenues for each reportable segment. Corporate expenses are not allocated to the segments and are managed at a consolidated level. The CODM does not use total assets by segment to evaluate segment performance or allocate resources, and accordingly, these amounts are not required to be disclosed. The Company's segment presentation excludes consideration of all of the businesses included in the Transactions (Note 3). For the three and nine months ended September 30, 2020, the Company's reportable segments were (i) PGEN Therapeutics, (ii) ActoBio, (iii) MBP Titan, (iv) Trans Ova, and (v) the Human Biotherapeutics division. These identified reportable segments met the quantitative thresholds to be reported separately for the nine months ended September 30, 2020. See Note 1 for a description of PGEN Therapeutics, ActoBio, MBP Titan, and Trans Ova. The Company's Human Biotherapeutics division is an operating division within Precigen which includes the Company's majority-owned subsidiary, Triple-Gene LLC, and its collaborations with Castle Creek (Note 5). The All Other category as reported below reflects Precigen's other operating segments that do not meet the quantitative thresholds to be reported separately. Information by reportable segment was as follows: Three Months Ended September 30, 2020 PGEN Therapeutics ActoBio MBP Titan Trans Ova Human Biotherapeutics All Other Total Revenues from external customers $ 164 $ 2,823 $ — $ 15,228 $ 2,394 $ 2,974 $ 23,583 Intersegment revenues 1,992 — — 55 — — 2,047 Total segment revenues $ 2,156 $ 2,823 $ — $ 15,283 $ 2,394 $ 2,974 $ 25,630 Segment Adjusted EBITDA $ (6,739) $ (1,602) $ (1,765) $ (1,606) $ (420) $ 1,654 $ (10,478) Three Months Ended September 30, 2019 PGEN Therapeutics ActoBio MBP Titan Trans Ova Human Biotherapeutics All Other Total Revenues from external customers $ 444 $ 231 $ 1,117 $ 13,981 $ 402 $ 2,124 $ 18,299 Intersegment revenues 2,313 6 — 257 — 72 2,648 Total segment revenues $ 2,757 $ 237 $ 1,117 $ 14,238 $ 402 $ 2,196 $ 20,947 Segment Adjusted EBITDA $ (5,953) $ (4,634) $ (9,024) $ (5,560) $ (142) $ (1,345) $ (26,658) Nine Months Ended September 30, 2020 PGEN Therapeutics ActoBio MBP Titan Trans Ova Human Biotherapeutics All Other Total Revenues from external customers $ 542 $ 3,053 $ — $ 55,858 $ 16,967 $ 7,371 $ 83,791 Intersegment revenues 5,707 (3) 7 254 — 281 6,246 Total segment revenues $ 6,249 $ 3,050 $ 7 $ 56,112 $ 16,967 $ 7,652 $ 90,037 Segment Adjusted EBITDA $ (19,356) $ (4,727) $ (15,728) $ 3,723 $ (2,253) $ 2,783 $ (35,558) Nine Months Ended September 30, 2019 PGEN Therapeutics ActoBio MBP Titan Trans Ova Human Biotherapeutics All Other Total Revenues from external customers $ 2,174 $ 813 $ 3,813 $ 53,307 $ 3,247 $ 10,219 $ 73,573 Intersegment revenues 7,090 501 2 1,204 — 145 8,942 Total segment revenues $ 9,264 $ 1,314 $ 3,815 $ 54,511 $ 3,247 $ 10,364 $ 82,515 Segment Adjusted EBITDA $ (20,789) $ (11,196) $ (26,238) $ (2,854) $ (719) $ (5,062) $ (66,858) The table below reconciles total segment revenues from reportable segments to total consolidated revenues: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Total segment revenues from reportable segments $ 22,656 $ 18,751 $ 82,385 $ 72,151 Other revenues, including from other operating segments 2,974 2,196 8,714 10,511 Elimination of intersegment revenues (2,047) (2,648) (7,254) (8,942) Total consolidated revenues $ 23,583 $ 18,299 $ 83,845 $ 73,720 The table below reconciles Segment Adjusted EBITDA for reportable segments to consolidated net loss from continuing operations before income taxes: Three Months Ended Nine Months Ended 2020 2019 2020 2019 Segment Adjusted EBITDA for reportable segments $ (12,132) $ (25,313) $ (38,341) $ (61,796) All Other Segment Adjusted EBITDA 1,654 (1,345) 2,783 (5,062) Remove cash paid for capital expenditures and investments in affiliates 984 4,869 5,604 12,536 Add recognition of previously deferred revenue associated with upfront and milestone payments 7,132 3,957 25,178 14,816 Other expenses: Interest expense (4,646) (4,466) (13,830) (13,124) Depreciation and amortization (4,108) (4,764) (13,701) (14,971) Impairment losses (920) (626) (22,961) (626) Stock-based compensation expense (4,600) (4,805) (15,215) (12,569) Adjustment related to bonuses paid in equity awards — — 2,833 — Equity in net loss of affiliates (523) (479) (1,125) (1,943) Other 4 35 16 35 Unallocated corporate costs (10,412) (13,028) (27,938) (42,476) Eliminations (1,991) (3,092) (6,237) (9,104) Consolidated net loss from continuing operations before income taxes $ (29,558) $ (49,057) $ (102,934) $ (134,284) As of September 30, 2020 and December 31, 2019, the Company had $5,954 and $6,724, respectively, of long-lived assets in foreign countries. The Company recognized revenues derived in foreign countries totaling $118 and $243 for the three months ended September 30, 2020 and 2019, respectively, and $481 and $1,008 for the nine months ended September 30, 2020 and 2019, respectively. |