Segments and Geographic Information | (6) Segments and Geographic Information The Company and its subsidiaries currently operate in two segments: product and service. The product segment oversees the supply chain and manufacturing of Crinone, the Company’s sole commercialized product. The product segment included the royalty stream the Company received from Allergan for Crinone sales in the United States, which ceased with the November 2016 agreement with Allergan, as well as the development of new product candidates. The service segment includes product development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers, as well as the characterizing and developing of pharmaceutical product candidates for the Company’s internal programs and managing certain preclinical activities including manufacturing of the Company’s pipeline products. In September 2013, the Company acquired JPS, a U.K.-based provider of pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services to the pharmaceutical industry. The Company conducts its advanced formulation, analytical and consulting services through JPS. The Company has integrated its supply chain management for its sole commercialized product, Crinone, into those operations and have therefore sought to capture synergies by transferring all operational activities related to its historic business. The Company owns certain plant and equipment physically located at third party contractor facilities in the United Kingdom and Switzerland. The Company’s largest customer, Merck KGaA, utilizes a Switzerland-based subsidiary to acquire product from the Company, which it then sells throughout the world excluding the United States. Up until November 2016, the Company’s primary domestic customer, Allergan, Plc (“Allergan”), was responsible for the commercialization and sale of Crinone in the United States. In November 2016, the Company entered into an agreement with Allergan to monetize future royalty payments. Under the agreement, the Company received a one-time payment of $11.0 million representing all future royalty amounts payable. The following tables show selected information by geographic area (in thousands): Revenues: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 United States $ 3,230 $ 2,851 $ 7,245 $ 7,066 Switzerland 8,505 7,081 26,021 20,772 United Kingdom 751 981 2,788 3,474 Other countries 500 643 2,135 2,331 Total $ 12,986 $ 11,556 $ 38,189 $ 33,643 Total assets: September 30, 2017 December 31, 2016 United States $ 22,780 $ 21,423 Switzerland 3,358 4,673 United Kingdom 35,529 31,288 Other countries 88 187 Total $ 61,755 $ 57,571 Long-lived assets: September 30, 2017 December 31, 2016 United States $ 500 $ 663 Switzerland 438 369 United Kingdom 15,083 13,468 Other countries 2 2 Total $ 16,023 $ 14,502 Long-lived assets include fixed assets, intangibles and other assets. No other individual country represented greater than 10% of total revenues, total assets, or long-lived assets for any period presented. For the three and nine months ended September 30, 2017, Merck KGaA accounted for 100% of the product segment revenue. For the three and nine months ended September 30, 2016, Merck KGaA accounted for 86% and 87% of the product segment revenue, respectively. For the three and nine months ended September 30, 2016, Allergan accounted for 14% and 13% of the product segment revenue, respectively. At September 30, 2017 and December 31, 2016, Merck KGaA made up 100% of the product segment accounts receivable. For the three and nine months ended September 30, 2017 the same customer accounted for 46% and 31% of the service segment total revenue, respectively. No customers accounted for 10% or more of the service segment total revenue for the three and nine months ended September 30, 2016. At September 30, 2017, one customer accounted for 41% of total service segment accounts receivable, respectively. At December 31, 2016, two customers accounted for 18% and 13% of total service segment net accounts receivable. The following summarizes other information by segment for the three months ended September 30, 2017 (in thousands): Product Service Total Revenues Product revenues $ 8,389 $ — $ 8,389 Service revenues — 4,597 4,597 Total revenues $ 8,389 $ 4,597 $ 12,986 Cost of product revenues $ 5,160 $ — $ 5,160 Cost of service revenues — 2,559 2,559 Total cost of revenues $ 5,160 $ 2,559 $ 7,719 Gross profit $ 3,229 $ 2,038 $ 5,267 Total operating expenses 6,802 Total non-operating expense 80 Loss before income taxes $ (1,455 ) The following summarizes other information by segment for the three months ended September 30, 2016 (in thousands): Product Service Total Revenues Product revenues $ 7,057 $ — $ 7,057 Service revenues — 3,337 3,337 Royalties 1,162 — 1,162 Total revenues $ 8,219 $ 3,337 $ 11,556 Cost of product revenues $ 3,683 $ — $ 3,683 Cost of service revenues — 2,022 2,022 Total cost of revenues $ 3,683 $ 2,022 $ 5,705 Gross profit $ 4,536 $ 1,315 $ 5,851 Total operating expenses 5,674 Total non-operating income 66 Income before income taxes $ 243 The following summarizes other information by segment for the nine months ended September 30, 2017 (in thousands): Product Service Total Revenues Product revenues $ 25,684 $ — $ 25,684 Service revenues — 12,505 12,505 Total revenues $ 25,684 $ 12,505 $ 38,189 Cost of product revenues $ 14,776 $ — $ 14,776 Cost of service revenues $ — $ 7,149 $ 7,149 Total cost of revenues 14,776 7,149 21,925 Gross profit $ 10,908 $ 5,356 $ 16,264 Total operating expenses 19,610 Total non-operating expense 74 Loss before income taxes $ (3,272 ) The following summarizes other information by segment for the nine months ended September 30, 2016 (in thousands): Product Service Total Revenues Product revenues $ 20,716 $ — $ 20,716 Service revenues — 9,964 9,964 Royalties 2,963 — 2,963 Total revenues $ 23,679 $ 9,964 $ 33,643 Cost of product revenues $ 11,892 $ — $ 11,892 Cost of service revenues — 6,630 6,630 Total cost of revenues $ 11,892 $ 6,630 $ 18,522 Gross profit $ 11,787 $ 3,334 $ 15,121 Total operating expenses 18,959 Total non-operating income 222 Loss before income taxes $ (3,616 ) |