Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 03, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | scln | |
Entity Registrant Name | SCICLONE PHARMACEUTICALS INC | |
Entity Central Index Key | 880,771 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,191,854 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 157,328 | $ 134,395 |
Accounts receivable, net of allowances of $0 and $0 as of June 30, 2017 and December 31, 2016, respectively | 48,002 | 41,510 |
Inventories | 22,039 | 16,587 |
Prepaid expenses and other current assets | 3,639 | 3,241 |
Total current assets | 231,008 | 195,733 |
Property and equipment, net | 2,002 | 2,002 |
Investment in third party (Note 4) | 724 | 794 |
Goodwill | 31,592 | 30,838 |
Other assets | 12,285 | 12,531 |
Total assets | 277,611 | 241,898 |
Current liabilities: | ||
Accounts payable | 7,066 | 3,645 |
Accrued and other current liabilities | 20,561 | 22,796 |
Total current liabilities | 27,627 | 26,441 |
Other long-term liabilities | 117 | 92 |
Commitments and Contingencies (Note 10) | ||
Stockholders' equity: | ||
Preferred stock; $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding | ||
Common stock; $0.001 par value; 100,000,000 shares authorized; 52,191,854 and 51,236,952 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 52 | 51 |
Additional paid-in capital | 311,837 | 304,599 |
Accumulated other comprehensive loss | (902) | (1,520) |
Accumulated deficit | (61,120) | (87,765) |
Total stockholders' equity | 249,867 | 215,365 |
Total liabilities and stockholders' equity | $ 277,611 | $ 241,898 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 52,191,854 | 51,236,952 |
Common stock, shares outstanding | 52,191,854 | 51,236,952 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Product sales, net | $ 43,369 | $ 37,869 | $ 85,006 | $ 73,189 |
Promotion services | 1,151 | 1,122 | 2,406 | 2,301 |
Total net revenues | 44,520 | 38,991 | 87,412 | 75,490 |
Operating expenses: | ||||
Cost of product sales | 5,654 | 5,712 | 11,819 | 11,525 |
Sales and marketing | 15,435 | 14,432 | 28,200 | 26,784 |
Research and development | 2,828 | 4,765 | 5,323 | 6,232 |
General and administrative | 8,286 | 8,129 | 15,516 | 15,572 |
Total operating expenses | 32,203 | 33,038 | 60,858 | 60,113 |
Income from operations | 12,317 | 5,953 | 26,554 | 15,377 |
Non-operating income (expense): | ||||
Interest and investment income | 297 | 263 | 593 | 522 |
Other income (expense), net | 167 | (249) | 1,242 | (121) |
Income before provision (benefit) for income tax | 12,781 | 5,967 | 28,389 | 15,778 |
Provision (benefit) for income tax | 589 | (371) | 1,601 | 1,576 |
Net income | $ 12,192 | $ 6,338 | $ 26,788 | $ 14,202 |
Basic net income per share | $ 0.24 | $ 0.13 | $ 0.52 | $ 0.29 |
Diluted net income per share | $ 0.23 | $ 0.12 | $ 0.50 | $ 0.27 |
Weighted average shares used in computing net income per share: | ||||
Basic shares outstanding | 51,820 | 49,897 | 51,630 | 49,743 |
Diluted shares outstanding | 53,252 | 52,819 | 53,155 | 52,405 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Income [Abstract] | ||||
Net income | $ 12,192 | $ 6,338 | $ 26,788 | $ 14,202 |
Other comprehensive income (loss), net of income tax: | ||||
Foreign currency translation | 466 | (787) | 688 | (590) |
Unrealized loss on available-for-sale investment in common stock of third party | (229) | (70) | ||
Total other comprehensive income | 237 | (787) | 618 | (590) |
Total comprehensive income | $ 12,429 | $ 5,551 | $ 27,406 | $ 13,612 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities: | ||
Net income | $ 26,788,000 | $ 14,202,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Non-cash expense related to stock-based compensation | 3,853,000 | 2,469,000 |
Provision for expiring inventory | 34,000 | |
Depreciation and amortization | 514,000 | 493,000 |
Loss on disposal of fixed assets | 7,000 | 1,000 |
Deferred income taxes | 127,000 | |
Unrealized foreign exchange gain | (289,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (6,170,000) | 3,911,000 |
Inventories | (126,000) | 527,000 |
Prepaid expenses and other assets | (809,000) | 348,000 |
Accounts payable | (931,000) | (2,529,000) |
Accrued and other current liabilities | (2,522,000) | (346,000) |
Deferred revenue | (140,000) | |
Other long-term liabilities | 24,000 | 28,000 |
Net cash provided by operating activities | 20,339,000 | 19,125,000 |
Investing activities: | ||
Purchases of property and equipment | (674,000) | (54,000) |
Net cash used in investing activities | (674,000) | (54,000) |
Financing activities: | ||
(Payments of cost) proceeds from issuances of common stock, net | 3,183,000 | (2,888,000) |
Net cash provided by (used in) financing activities | 3,183,000 | (2,888,000) |
Effect of exchange rate changes on cash and cash equivalents | 85,000 | 23,000 |
Net increase in cash and cash equivalents | 22,933,000 | 16,206,000 |
Cash and cash equivalents, beginning of period | 134,395,000 | 101,403,000 |
Cash and cash equivalents, end of period | $ 157,328,000 | 117,609,000 |
Supplemental disclosure of non-cash operating activities: | ||
Release of restricted cash in escrow for SEC settlement | $ 12,826,000 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 1 — Basis of Presentation The accompanying unaudited condensed consolidated financial statements of SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”) have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) consistent with those applied in, and should be read in conjunction with, the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”). The Company prepared the unaudited condensed consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other information that are normally required by GAAP can be condensed or omitted. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The interim financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The unaudited condensed consolidated balance sheet data as of December 31, 2016 is derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make informe d estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ material ly from those estimates. Customer Concentration In China, pharmaceutical products are imported and distributed through a tiered method of distribution. For the Company’s proprietary product ZADAXIN, the Company manufactures its product using its U.S. and European contract manufacturers, and it generates its product sales revenue through sales of ZADAXIN products to Sinopharm Holding Lingyun Biopharmaceutical (Shanghai) Co. Limited (“Sinopharm”). Sinopharm acts as an importer, and also as the top “tier” of the distribution system (“Tier 1”) in China. The Company’s ZADAXIN sales occur when the importer purchases product from the Company, without any right of return except for replacement of product in the events of damaged product or quality control issues. As the Company bears risk of loss until delivery has occurred, revenue is not recognized until the shipment reaches its destination. After the Company’s sale of ZADAXIN to the importer, Sinopharm clears products through China import customs, sells directly to large hospitals and holds additional product it has purchased in inventory for sale to the next tier in the distribution system. The second-tier (“Tier 2”) distributors are responsible for the further sale and distribution of the products they purchase from the importer, either through sales of product directly to the retail level (hospitals and pharmacies), or to third-tier (“Tier 3”) local or regional distributors who, in turn, sell products to hospitals and pharmacies. The Company’s other product sales revenues result from the sale of the Company’s in-licensed products to importing agents and distributors. Promotion services revenues result from fees received for exclusively promoting products for certain pharmaceutical partners. These importing agents, distributors and partners are the Company’s customers. Sinopharm cont ributed 93% of the Company’s total net revenue for both the three month periods ended June 30 , 2017 and 2016, respectively, which revenues related to the Company’s China segment. Sinopharm contributed 92% of the Company’s tota l net revenue for both the six month periods ended June 30, 2017 and 2016, respectively, which revenues related to the Company’s China segment. There were no other customers that exceeded 10% of the Company’s total net revenue in the periods presented. Product sales o f $41.6 million or 93% and $36.5 million or 94% , for the three months ended June 30 , 2017 and 2016, respectively, related to consolidated sales of ZADAXIN. Of the $41.6 million in ZADAXIN revenues in the second quarter of 2017 , $3.3 million was attributed to revenues from sales generated in the first quarter of 2017 but recognized in the second quarter of 2017 for first quarter sales that were above the reference (baseline) tender price under a provision in the agreement with the Company’s China distributor to share, in part, in the burden of price reductions and the benefit of higher pricing in provinces with higher tender prices . In the second quarter of 2017, revenue was reduced by $0.8 million for sales in the second quarter that we estimate will be sold at prices below the reference tender price under a provision in the agreement with the Company’s China distributor . Product sales of $81.1 million or 92% and $70.1 million or 93% , for the six months ended June 30, 2017 and 2016, respectively, related to consolidate d sales of ZADAXIN. Of the $81.1 m illion in ZADAXIN revenues for the first half of 2017, $4.2 million was attributed to revenues from sales generated in the fourth quarter of 2016 and $3.3 million was attributed to revenues from sales generated in the first quarter that were both above the reference (baseline) tender price under a provision in the agreement with the Company’s China distributor to share, in part, in the burden of price reductions and the benefit of higher pricing in provinces with higher tender prices and which had no corresponding revenues in the same 2016 period . In the six months ended June 30, 2017, revenue was also reduced by $0.8 million for sales in the second quarter that we estimate will be sold at prices below the reference tender price under a provision in the agreement with the Company’s China distributor. As of June 30 , 2017, approximately $44.7 million, or 93% , of the Company's accounts receivable was attributable to one customer, Sinopharm, in China. The Company generally does not require collateral from its customers. The Company maintains reserves for potential credit losses and such actual losses may vary significantly from its estimates. Per the Company’s previous contractual arrangement with Sinopharm through December 31, 2015, and a renewed contractual arrangement with Sinopharm (the Company’s sole distributor for ZADAXIN in China) which took effect January 1, 2016, the Company’s sales of ZADAXIN to Sinopharm w e re denominated in U . S . dollars through June 30, 2016 . However, the e stablished importer price was adjusted quarterly based upon exchange rate fluctuations between the U . S . dollar and Chinese Yuan Renminbi (“RMB”) . Effective July 1, 2016, the Company’s sales of ZADAXIN to Sinopharm were and have continued to be denominated in RMB. A significant portion of the Company’s other revenues and expenses are also denominated in RMB and a significant portion of the Company’s assets and liabilities are denominated in RMB and all are exposed to foreign exchange risk. In the recent year , the RMB has experienced d evaluation. Such devaluation negatively affect s the U . S . dollar value of revenues while it positively affects the U.S. dollar value of China operating expenses . RMB is not freely convertible into foreign currencies. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at the exchange rates quoted by the People’s Bank of China. Remittances in currencies other than RMB by the Company in China require certain supporting documentation in order to process the remittance. Accounts Receivable Receivable Reserve. The Company records a receivable reserve based on a specific review of its overdue invoices. The Company’s estimate for a reserve is determined after considering its existing contractual payment terms, payment patterns of its customers and individual customer circumstances, the age of any outstanding receivables and its current customer relationships. Accounts receivable are written off at the point when they are considered uncollectible. As of June 30 , 2017 and December 31, 2016 , the Company determined no bad debt reserve was necessary. Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured. Product Revenue. The Company recognizes product revenue from selling manufactured ZADAXIN product at the time of delivery. Sales of ZADAXIN to Sinopharm are recognized upon arrival of a shipment to its destination, which marks the point when title and risk of loss to product are transferred. The Company also earns product revenue from purchasing medical products from pharmaceutical companies and selling them directly to importers or distributors. The Company recognizes revenue related to these products based on the “sell-in” method, when the medical products have been delivered to the importers or distributors. Payments by the importing agents and distributors are not contingent upon sale to the end user by the importing agents or distributors. Effective January 1, 2016, the Company’s new contractual arrangement with its China importer and distributor for ZADAXIN, Sinopharm, is resulting in the later recognition (relative to practices prevailing under the old contractual arrangement through December 31, 2015) of a portion of the Company’s revenue due from Sinopharm related to situations where the provincial tender price is greater relative to a reference (baseline) tender price. The tender price is the ultimate retail end price approved by provincial authorities. There is a price adjustment mechanism in the new contractual arrangement whereby Sinopharm is invoiced at a lower base price relative to that prevailing in the previous agreement. The lower base price (reduced by estimated price compensation payable to Sinopharm for situations where the provincial tender price is lower than the reference (baseline) tender price) is recorded as revenue at the time the sale is completed upon ar rival at destination. Recently, Guangdong and Fujian provinces have each announced maximum prices for ZADAXIN that are approximately six and four percent lower, respectively, than the reference (baseline) tender price. We expect these provincial decisions to affect the pricing of ZADAXIN in these provinces with respect to sales made pursuant to contracts dated on and after March 2017 for Guangdong and Fujian, and to affect pricing in other provinces, but the exact timing and consequences to our pricing, especially in other provinces, is uncertain. Sinopharm is invoiced for the portion of the price that results from situations where the provincial tender price is greater than the reference (baseline) tender price at a later time, and that portion of the price is recognized as revenue after the amount has been agreed to with them. It is expected that the price increment due to the Company related to sales in a quarter under the price adjustment mechanism for provinces with tender prices above the reference (baseline) tender price will continue to be recognized on a rolling one-to-two quarter delayed basis relative to the originating sales quarter. Promotion Services Revenue. The Company recognizes promotion services revenue after designated medical products are delivered to the distributors as specified in a promotion services contract, which marks the period when marketing and promotion services have been rendered and the revenue recognition criteria are met. Revenue Reserve. The Company generally maintains a revenue reserve for product returns based on estimates of the amount of product to be returned by its customers that are based on historical patterns, analysis of market demand and/or a percentage of sales based on industry trends, and management’s evaluation of specific factors that may increase the risk of product returns. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, the Company is expected to replace products that have expired or are deemed to be damaged or defective when delivered upon arrival at destination. The calculation of the revenue reserve requires estimates and involves a high degree of subjectivity and judgment. As a result of the uncertainties involved in estimating the revenue reserve, there is a possibility that materially different amounts could be reported under different conditions or using different assumptions. As of June 30 , 2017 and December 31, 2016, the Company’s revenue reserves were $0.3 million and $0.3 million , respectively . The Company evaluates the need for a returns reserve quarterly and adjusts it when events indicate that a change in estimate is appropriate. Changes in estimates could materially affect the Company’s results of operations or financial position. It is possible that the Company may need to adjust its estimates in future periods. Inventories Inventories consist of raw materials, work in progress and finished products. Inventories are valued at the lower of cost or net realizable value , with cost determined on a first-in, first-out basis, and include amounts related to materials, labor and overhead. The Company periodically reviews the inventory in order to iden tify excess and obsolete items . If obsolete or excess items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the impairment was first indicated. For the three mo nth periods ended June 30 , 2017 and 2016 , the Company did not record any write-downs related to inventory. Loans Receivable Loans receivable are due from a single third party (see Note 5 ). Loans are initially recorded, and continue to be carried, at unpaid principal balances under “other assets” on the unaudited condensed consolidated balance sheet s . Carried balances are subsequently adjusted for payments of principal or adjustments to the allowance for loan losses to account for any impairment. Interest income is recognized over the term of the loans and is calculated using the simple-interest method, as the loans do not have associated premium or discount. If the loans were to experience impairment, interest income would not be recognized unless the likelihood of further loss was remote. Although the measurement basis is unpaid principal (as adjusted for subsequent payments or impairment), not fair value, the loans receivable would qualify as Level 3 measurements under the fair value hierarchy (Note 2) due to the presence of significant unobservable inputs related to the counterparty, which is a private entity. Management considers impairment to exist when, based on current information or factors (such as payment history, value of collateral, and assessment of the counterparty’s current creditworthiness), it is probable that principal and interest payments will not be collected according to the contractual agreements. Management considers a loan payment delinquent when not received by the due date. As of June 30 , 2017 and December 31, 2016, management concluded the loans receivable were not impaired, and there was no allowance for loan losses. Net Income Per Share Basic net income per share has been computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common equivalent shares outstanding for the period. Diluted net income per share includes any dilutive impact from outstanding stock options, stock awards and the employee stock purchase plan using the treasury stock method. The following is a reconciliation of the numerator and denominators of the basic and diluted net income per share computations (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income $ 12,192 $ 6,338 $ 26,788 $ 14,202 Denominator: Weighted-average shares outstanding used to compute basic net income per share 51,820 49,897 51,630 49,743 Effect of dilutive securities 1,432 2,922 1,525 2,662 Weighted-average shares outstanding used to compute diluted net income per share 53,252 52,819 53,155 52,405 Basic net income per share $ 0.24 $ 0.13 $ 0.52 $ 0.29 Diluted net income per share $ 0.23 $ 0.12 $ 0.50 $ 0.27 For the three months ended June 30 , 2017 and 2016, outstanding stock options and awards for 3,411,268 and 120,270 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise or issuance of these options and awards calculated under the treasury stock method would have been anti-dilutive. In addition, for the three months ended June 30 , 2017 and 2016, outstanding stock options and awards for 375,000 and 312,500 shares, respective ly, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met and were not considered probable of being met. For the six months ended June 30 , 2017 and 2016, outstanding stock options and awards for 3,023,879 and 1,974,551 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise or issuance of these options and awards calculated under the treasury stock method would have been anti-dilutive. In addition, for the six months ended June 30 , 2017 and 2016, outstandi ng stock options and awards for 375,000 and 312,500 shares, respective ly, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met and were not considered probable of being met. Error Corrections The Company provided $1.2 million of additional income tax expense, and recorded a corresponding accrual in accrued and other current liabilities , during the three months ended March 31, 2016 to correct an error. The error correction reflected the recognition of a previously unrecognized liability for an uncertain tax position related to the potential non-deductibility, under PRC tax regulations, of certain marketing costs related to the Company’s China operations. The adjustment related to tax years 2013 to 2015 and reflected the estimated tax exposure for each year as well as accrued interest thereon; such tax and interest amounts were $0. 3 million, $0.5 million, and $0.4 million for the full years 2013, 2014, and 2015, respectively. The Company’s management evaluated the effects of the error on each prior annual and interim period, as well as the total error accumulated at the end of each respective prior period, and concluded under both approaches that the effects of the error were not material to previously issued annual or interim financial statements. The Company’s management also evaluated the total amount of the error correction in relation to actual results for full year 2016 and concluded the impact was not material to the 2016 financial statements. The total adjustment was recorded out-of-period in the first quarter of 2016. New Accounting Standards Updates Standards Recently Effective In November 2015, the FASB issued ASU 2015-17, " Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ”. This ASU amends existing guidance to require that deferred income tax liabilities and assets be classified as noncurrent in a classified balance sheet, and eliminates the prior guidance which required an entity to separate deferred tax liabilities and assets into a current amount and a noncurrent amount in a classified balance sheet. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted the new guidance with effect f rom January 1, 2017 and is apply ing the new guidance retrospectively. The impact of adopting this guidance is not material to the consolidated financial statements given the Company’s limited deferred tax amounts. In March 2016, the FASB issued ASU 2016-09, “ Comp ensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ,” which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements. The Company adopted this ASU as stipulated with effect from January 1, 2017. Of the various provisions included in the ASU, the only provision that at present is material to the Company’s financial statements is the provision providing alternatives to account for forfeitures of share-based awards using either estimated forfeitures (periodically adjusted for differences from actuals) or simply using actual forfeitures. The Company has changed its accounting policy upon the adoption of this updated standard to account for forfeitures on an actual basis. This change resulted in a cumulative-effect adjustment related to prior periods (Note 9) which was not material and is not expected to be material to the consolidated financial statements in future periods given the Company’s past and present experience with its grants of share-based awards and related pre-vesting forfeitures. Standards Effective in Future Periods In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, "Revenue from Contracts with Customers (Topic 606)" , which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for the Company’s fiscal year beginning January 1, 2018, which reflects a one year deferral approved by the FASB in July 2015, and will be adopted by the Company from January 1, 2018. The Company is currently undertaking an evaluation of its revenue contracts to determine what impact, if any, the adoption of ASU 2014-09 will have on its financial statements and related disclosures. The Company anticipates the impact of ASU 2014-09 will likely be limited to the timing of recognition of its variable consideration. This variable consideration arises from situations where the Company’s exclusive distributor in China is invoiced at a later time subsequent to the original sale for the portion of the price that results from situations where the provincial tender price is greater than the reference (baseline) tender price. Such amount is currently recognized as revenue after the amount has been agreed to with the distributor in a later quarter relative to the originating sales quarter. The timing of the recognition of such amounts is expected to be earlier (estimated at the time of the originating product sale) under the new guidance. The Company plans to finalize its assessment in the third quarter of 2017. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company has determined it will employ the full retrospective transition method. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Liabilities” . The amended guidance (i) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is currently required to be disclosed for financial instruments measured at fair value; (iii) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, or calendar 2018 for the Company. The amended guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company has evaluated the impact of adoption of this guidance on its consolidated financial statements and has concluded that the impact will be limited to a cumulative-effect adjustment for its investment in the common stock of a third-party which is currently classified as an available-for-sale equity investment, as well as prospective recognition of changes in the fair value of such investment, to the extent the Company continues to own the investment, as a component of net income. In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ”. Under the new guidance, lessees will be required to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on the balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is effective for the Company from calendar 2019 and from the first interim period of calendar 2019, with earlier application permitted. The Company is evaluating the impact of the adoption of this update on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ” This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The standard is effective for the Company from calendar 2020, with early adoption permitted for calendar 2019. The Company has yet to commence an evaluation of the impact of the adoption of this standard on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230)." Current GAAP is unclear or does not include specific guidance on how to classify certain transactions in the statement of cash flows. This ASU is intended to reduce diversity in practice in how eight particular transactions are classified in the statement of cash flows. ASU No. 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. Entities will be required to apply the guidance retrospectively. If it is impracticable to apply the guidance retrospectively for an issue, the amendments related to that issue would be applied prospectively. ASU 2016-15 is not expected to have a material impact on the Company's consolidated financial statements . In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment" (Topic 350), which removes the requirement to perform a “Step 2” hypothetical purchase price allocation to measure goodwill impairment if “Step 1” of the traditional two-step goodwill impairment model is failed. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value (the determination from “Step 1”), not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company for annual and interim periods beginning January 1, 2020, with early adoption permitted, and is to be applied prospectively. ASU 2017-04 will impact the Company’s goodwill balance to the extent such goodwill balance exists at the adoption date and to the extent that the fair value of the Company’s China reporting unit is less than its carrying value. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 2 — Fair Value Measurements 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. The three levels of input are: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, 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. 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 following tables represent the Company’s fair value hierarchy for its financial assets (cash equivalents and common stock investment ) measured at fair value on a recurring basis ( in thousands ): Fair Value Measurements as of June 30, 2017 Using Quoted Prices in Significant Active Markets Other Significant for Observable Unobservable Balance Identical Assets Inputs Inputs as of Description (Level 1) (Level 2) (Level 3) June 30, 2017 Money market funds $ 19,739 $ — $ — $ 19,739 Common stock investment in third party (Note 4) $ — $ 724 $ — $ 724 Total $ 19,739 $ 724 $ — $ 20,463 Fair Value Measurements as of December 31, 2016 Using Quoted Prices in Significant Active Markets Other Significant for Observable Unobservable Balance Identical Assets Inputs Inputs as of Description (Level 1) (Level 2) (Level 3) December 31, 2016 Money market funds $ 19,701 $ — $ — $ 19,701 Common stock investment in third party (Note 4) $ — $ 794 $ — $ 794 Total $ 19,701 $ 794 $ — $ 20,495 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2017 | |
Inventories [Abstract] | |
Inventories | Note 3 — Inventories Inventories consisted of the following (in thousands): June 30, December 31, 2017 2016 Raw materials $ 7,116 $ 5,304 Work in progress 444 498 Finished goods 14,479 10,785 $ 22,039 $ 16,587 A s of June 30 , 2017 and December 31, 2016, the Company had $4.0 million and $ 3.3 million , respectively, in inventory held at distributors related to non-ZADAXIN products. Raw materials increased $1.8 million from the purchase of an active pharmaceutical ingredient (API) for increased p roduction of safety stocks in anticipation of the renewal of the Import Drug License (“IDL”) for Z ADAXIN in the fourth quarter of 2017. Work in progress decreased by $53,000 due to timing of production. Finished goods increas ed by $3.7 million, primari ly due to forecasted increase s in Z ADAXIN sales volumes for the third quarter as well as buildup of safety stock of finished Z ADAXIN product in anticipat ion of the ZADAXIN IDL renewal. |
Investments in Third Party
Investments in Third Party | 6 Months Ended |
Jun. 30, 2017 | |
Investments in Third Party [Abstract] | |
Investments In Third Party | Note 4 — Investment in Third Party On September 9, 2016, the Company and Soligenix, Inc., a publicly-traded entity, entered into an exclusive license agreement (the “License Agreement”), including a common stock purchase agreement, pursuant to which Soligenix granted rights to the Company to develop, promote, market, distribute and sell an oral mucositis-targeted drug candidate (“SGX942”) in the People’s Republic of China, Hong Kong, Macau, Taiwan, South Korea, and Vietnam (the “Territory”). Under the terms of the License Agreement, the Company will be responsible for all aspects of development, product registration, and commercialization in the Territory, having access to data generated by Soligenix. In exchange for exclusive rights, beyond an upfront payment, the Company will pay to Soligenix royalties on net sales, and Soligenix will supply commercial drug product to the Company on a cost-plus basis, while maintaining worldwide manufacturing rights. This exclusive agreement builds on an existing collaboration between the two companies established in 2013, in which the Company provided its complete oral mucositis clinical and regulatory data library to Soligenix in exchange for certain, previously undisclosed, commercialization rights to the oral mucositis drug candidate in the Greater China market. As the Company obtained rights for Greater China (mainland China, Hong Kong, and Macau) in the earlier 2013 exchange, the September 2016 agreement in substance represented the acquisition of additional rights for Taiwan, South Korea, and Vietnam. As part of the License Agreement, the Company entered into a common stock purchase agreement with Soligenix pursuant to which the Company bought 3,529,412 shares of Soligenix common stock. These common shares are unregistered but the Company has demand registration rights and can compel a registration of the securities in a reasonably short time in the event the Company plans to sell the shares. The total cash consideration of $3,000,000 paid to Soligenix at the time of the transaction reflected the purchase price of the common stock and the consideration for expanded territorial rights in South Korea, Taiwan, and Vietnam. As of the transaction date, the common stock was recorded at an initial fair value of $2.7 million representing publicly quoted closing share prices from the OTCQB, the over-the-counter market on which Soligenix’s securities were listed at the time. The residual cash consideration of $0.3 million related to the expanded territorial rights was recorded as research and development expense in the third quarter of fiscal 2016. The Company is holding the Soligenix shares in the context of a business relationship, and as such has classified them as available-for-sale. The common stock investment is adjusted to fair value at each reporting date with unrealized gains (losses) reported as a component of other comprehensive income (loss). In October 2016, in connection with an up-listing of its stock from the OTCQB market to the NASDAQ Common Market, Soligenix declared a 1 for 10 reverse stock split, converting the Company’s ownership in Soligenix from 3,529,412 shares to 352,942 shares. As of June 30 , 2017, the fair value of the Soligenix common stock investment was $0.7 million and the unrealized holding loss on the investment was $2.0 million, which was recorded as a component of other comprehensive loss (net of tax, which is zero as the entity holding the security is in a zero-tax jurisdiction) . The Company considered whether the decline in fair value was an other than temporary impairment (OTTI), and determined that the decline in fair value was temporary after considering the volatility of the common stock, external research reports and market expectations, and other investee-specific facts and circumstances. In particular, the investee’s share price increased in the first quarter of 2017 by $159,000 , and decreased by $229,000 in the second quarter, with a cumulative net decrease of $70,000 in the first six months of 2017. |
Loans Receivable
Loans Receivable | 6 Months Ended |
Jun. 30, 2017 | |
Loans Receivable [Abstract] | |
Loans Receivable | Note 5 — Loans Receivable As part of the Company’s May 2013 license and supply agreement with Zensun (Shanghai) Science & Technology Co. Ltd (together with any successors or assigns, “Zensun”), the Company previously agreed to loan up to $12 million to Zensun. The entry into the license and supply agreement in the second quarter of 2013, pursuant to which the Company licensed the exclusive rights to promote, market, distribute, and sell Neucardin TM , a chronic heart failure product under development by Zensun (such rights licensed for the People’s Republic of China, Hong Kong and Macao) is more fully described in the Company’s Annual Report on Form 10-K for th e fiscal year ended December 31 , 2016 (the “2016 Form 10-K”) , Note 13. Pursuant to its agreement to loan funds, the Company loaned $12 million to Zensun. The extension of credit and funding to Zensun was accomplished through two of the Company's subsidiaries, SPIL China and SciClone Pharmaceuticals (China) Ltd. (“SciClone China”). With respect to lender SciClone China, Zensun can make RMB-denominated borrowings for up to RMB 1,550,000 using an entrustment mechanism with a bank as an intermediary. In the third quarter of 2014, SciClone China entered into an entrusted loan agreement for RMB 1,550,000 (approximately US$229,000 as of June 30 , 2017) with Zensun, using a major Chinese bank as the lending agent. SciClone China is the principal and ultimately bears the credit risk, not the bank. The loan bears interest at a fixed rate of 7.5% per annum and Zensun is subject to obligations of the borrower as specified in the loan agreements. The loan term is sixty-six months. All outstanding principal and interest balances must be repaid by the maturity date, with prepayments permitted without penalty upon prior notice. With respect to lender SPIL China, Zensun could request U.S. dollar denominated borrowings up to $11.75 million. As of June 30 , 2017, borrowings totaling $11.75 million had been requested by Zensun and paid by SPIL China with $4.5 million lent in the second half of 2014 and $7.25 million lent in the second quarter of 2015. These borrowings bear interest at a fixed rate of 7.5% per annum payable annually in arrears at each interest payment date as defined in the overall loan agreement. These borrowings were originally scheduled to mature on September 26, 2017 , with an option (granted at loan origination) electable by Zensun to extend for two additional years provided certain conditions are met. A s of June 30 , 2017, the borrower had notified the Company of its intent to exercise its option to extend the borrowings for two additional years, or to September 26, 2019 . A ll outstanding balances must be repaid by the maturity date, with prepayments permitted without penalty upon prior notice. The proceeds of the two separate but related loans are to be used for working capital and general corporate purposes by Zensun. To secure the loans, Zensun pledged its entire equity interest in its subsidiary, Shanghai Dongxin Biochemical Technology Co. Ltd. (whose assets include real property) to SPIL China. Management, on the basis of (i) a creditworthiness evaluation using recent Zensun financial information, (ii) consideration of evidence of the market value of the pledged security indicating such market value exceeded the outstanding loan principal, and (iii) consideration of Zensun’s compliance with the terms of the loans and timely payments of interest, concluded t hat t here were no i ndications of loan impairment as of June 30 , 2017 or December 31, 2016 . Accordingly, no allowance for losses was recorded. The two loans are included in “other assets” on the Company’s unaudited condensed consolidated balance sheet s as of June 30 , 2017 and December 31, 2016. Interest income on the loans amounted to $0.2 million and $0.2 million for the three months ended June 30 , 2017 and 2016, respectively, and is included in interest and investment income in the unaudited condensed consolidated statements of income. I nterest income on the loans amounted to $0.5 million and $0.5 million for t he six months ended June 30 , 2017 and 2016, respectively, and is included in interest and investment income in the unaudited condensed consolidated statements of income. |
Goodwill
Goodwill | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill [Abstract] | |
Goodwill | Note 6 — Goodwill The following table represents the changes in goodwill for the six months ended June 30 , 2017 ( in thousands ): Balance as of December 31, 2016 $ 30,838 Translation adjustments 754 Balance as of June 30, 2017 $ 31,592 |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2017 | |
Accrued and Other Current Liabilities [Abstract] | |
Accrued and Other Current Liabilities | Note 7 — Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following (in thousands): June 30, December 31, 2017 2016 Accrued sales and marketing expenses $ 6,932 $ 8,623 Accrued taxes, tax reserves and interest 6,157 5,335 Accrued compensation and benefits 3,044 5,140 Accrued professional fees 1,442 1,298 Accrued manufacturing costs 1,712 715 Other 1,275 1,685 $ 20,561 $ 22,796 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 8 — Accumulated Other Comprehensive Income (Loss) Changes in the composition of accumulated other comprehensive income (loss) f or the three and six months ended June 30 , 2017 and 2016 are as follows ( in thousands ): Balances as of April 1, 2017 $ (1,139) Other comprehensive loss — unrealized loss on available-for-sale investment in common stock of third party (229) Other comprehensive income — foreign currency translation 466 Balances as of June 30, 2017 $ (902) Balances as of April 1, 2016 $ 2,267 Other comprehensive loss — foreign currency translation (787) Balances as of June 30, 2016 $ 1,480 Balances as of January 1, 2017 $ (1,520) Other comprehensive loss — unrealized loss on available-for-sale investment in common stock of third party (70) Other comprehensive income — foreign currency translation 688 Balances as of June 30, 2017 $ (902) Balances as of January 1, 2016 $ 2,070 Other comprehensive loss — foreign currency translation (590) Balances as of June 30, 2016 $ 1,480 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | Note 9 — Stockholders’ Equity Stock-based Compensation The Company adopted ASU 2016-09, “Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements beginning January 1, 2017. Under the amended guidance, the Company has elected to account for forfeitures as they occur, instead of continuing to estimate forfeitures, as previously required. The new forfeiture guidance was adopted using a modified retrospective approach , resulting in t he Company recording a $133,000 cum ulative effect charge to accumulated deficit for the difference between the amount of compensation cost previously recorded and the amount that would have been recorded without assuming forfeitures. The following table summarizes the stock-based compensation expenses included in the unaudited condensed consolidated statements of income ( in thousands ): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Sales and marketing $ 326 $ 233 $ 602 $ 442 Research and development 149 56 249 108 General and administrative 1,707 887 3,002 1,919 $ 2,182 $ 1,176 $ 3,853 $ 2,469 Stock Options During the six months ended June 30, 2017, the Company granted options to purchase a total of 1,365,500 shares of common stock with a weighted-average grant-date fair value of $4.27 per share option granted, and options to purchase 809,341 shares of common stock were exercised; resulting in total cash proceeds of $3.4 million. As of June 30, 2017, there was approximately $10.7 million of unrecognized compensation expense related to non-vested stock options, which is expected to be recognized over a weighted-average remaining period of approximately 2.7 years. Restricted Stock Units (RSUs) and Restricted Performance Stock Units (PSUs) During the six months ended June 30 , 2017 , 77,000 RSUs and 150,000 PSUs were granted at a grant date fair value per share of $ 9.65 , and 165,000 RSUs vested. The PSUs will vest and be released on meeting performance goals within an established time frame. If the performance goals are not met within the established time frame, the PSUs will expire. The Company recognizes expense related to the PSUs over the period of time the Company determines that it is probable that the performance goals will be achieved. If it is subsequently determined that the performance goals are not probable of achievement, the expense related to the PSUs is reversed. As of June 30 , 2017, there was approximately $ 2.9 million of unr ecognized compensation cost related to non-vested RSUs, which is expected to be recognized over a weighted-average remaining period of approxima tely 1.4 ye ars. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 10 — Commitments and Contingencies Under agreements with certain of the Company’s pharmaceutical partners, the Company is committed to certain annual minimum product purchases where the contract is subject to termination if the annual minimum order is not met. As of June 30 , 2017 , the Company did not have any material unmet purchase obligations. Legal Matters NovaMed Shanghai , one of the Company’s China subsidiaries, was a party to a Distribution and Supply Agreement with MEDA Pharma GmbH & Co. KG (“MEDA”). Following the Company’s acquisition of NovaMed Shanghai, MEDA claimed it had a right to terminate the agreement under a change of control provision. NovaMed Shanghai does not believe that MEDA had a right of termination under the agreement. As of February 24, 2017, NovaMed Shanghai entered into a settlement agreement with MEDA to resolve all outstanding claims of each party under the Distribution and Supply Agreement, including as related to the China International Economic and Trade Arbitration Commission (“CIETAC”) arbitration in which NovaMed Shanghai had been claiming r emuneration of services and certain reimbursement amounts. Per the terms of the settlement agreement, MEDA paid NovaMed Shanghai $83,333 on March 7, 2017, NovaMed Shanghai withdrew its “Request for Second Arbitration” with CIETAC, and the CIETAC arbitral tribunal dismissed the arbitration case. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes [Abstract] | |
Income Taxes | Note 11 — Income Taxes The provision for income taxes for the three months ended June 30, 2017, was approximately $0.6 million compared with $0.4 million of income tax benefits for the three months ended June 30, 2016. In the three months ended June 30, 2017, we booked $1.1 million of additional tax expense representing expected deferred tax liabilities which arose as a consequence of a change in our position regarding reinvestment of certain offshore undistributed earnings of our foreign subsidiaries, which is further described in Note 11 – Income Taxes. Without this $1.1 million of additional tax expense, we would have approximately $0.5 million income tax benefit for the three months ended June 30, 2017 compared to $0.4 million income tax benefit for the three months ended June 30, 2016. The benefit for income taxes relate to a reduction in the Company’s liabilities for uncertain tax positions in China due to certain tax years becoming closed to assessment due to the statute of limitations. The provision for income taxes for the six months ended June 30, 2017, was approximately $1.6 million compared with $1.6 million for the six months ended June 30, 2016. In the six months ended June 30, 2017 we booked $1.1 million of additional tax expense representing expected deferred tax liabilities which arose as a consequence of a change in our position regarding reinvestment of certain offshore undistributed earnings of our foreign subsidiaries, which is further described in Note 11 – Income Taxes. In the six months ended June 30, 2016 we booked $1.2 million of additional income tax expense, and recorded a corresponding accrual in accrued and other current liabilities, to correct an error. The error correction reflected the recognition of a previously unrecognized liability for an uncertain tax position related to the potential non-deductibility, under PRC tax regulations, of certain marketing costs related to the Company’s China operations, which is described in further detail in Note 1, “Error Corrections.” The Company’s tax statutory tax rate in China was 25% in 2017 and 2016. The Company had previously concluded, up to the second quarter of 2017, that its offshore undistributed accumulated earnings as of December 31, 2016 of $249 million were indefinitely reinvested and had therefore provided no taxes thereon. The Company had also previously concluded, in conjunction with this assertion, that a portion of its earnings expected to be generated by foreign subsidiaries in 2017 would be repatriated to the parent company in order to address the parent company’s liquidity needs. The Company entered into a definitive merger agreement (subject to stockholder approval and other customary closing conditions) in the second quarter of 2017 with a consortium of buyers intending to acquire the Company in a “goin g-private” transaction ( announced via a Form 8- K filed with the SEC on June 8, 2017). The terms of the definitive merger agreement, among other provisions regarding the funding of the acquisition, provide that the Comp any may distribute funds from its foreign subsidiaries (Cayman Islands entities) to the United States par ent company in order to commit a portion of the merger funds necessary to effect the “going private” transact ion and repurchase common sh ares. As a result of this contractual provision, the Company concluded in Q2 that the likelihood of distribution of offshore undistributed earning s cast doubt upon the ability to indefinitely reinvest of fshore undistributed earnings. Accordingly, following consideration of amounts specified in the merger agreement and related agreements, it was concluded that $123 million of the unremitted earnings are no longer indefinitely reinvested as a result of expected distribution before the close of the announced merger in late 2017. The Company determined, after further analysis, that its parent company’s available tax net operating loss carryforwards , which had been fully reserved via valuation allowances, are available to eliminate tax liability associated with substantially all of the Federal taxable dividend income of $123 million that would arise f rom a planned remittance. After dete rmination of the amount, the Company recorded additional net tax expense of approximately $1.1 million as a discrete tax charge in the second quarter of 2017 for the full estimated US tax cost associated with t he expected remitt ance of such earnings. The net expense represent s the Federal deferred tax liability associat ed with the planned remittance, substantially offset by the reversal of the associated valuation allowance on the tax net operating loss carryfor wards expected to be utilized. No withholding taxes are anticipated for the planned remittance due to the jurisdictions in which the cash expected to be remitted is held. The Company evaluated its remaining offshore undistributed earnings of $12 6 million (after excluding the anticipated $123 million dividend distribution) and after further consideration of business needs in its foreign subsidiaries and the lack of further needs by its parent company concluded it has the intent and ability to indefi nitely reinvest the remainder. Accordingly, no deferred taxes have been provided for the remaining unremitted earnings; determination of the amount of such taxes on the remainder is not practicable given substantial complexity stemming from the various jurisdictions involved, tax attributes to be considered, time periods involved, and withholding taxes that may need to be considered. |
Segment Information and Geograp
Segment Information and Geographic Data | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information and Geographic Data [Abstract] | |
Segment Information and Geographic Data | Note 12 — Segment Information and Geographic Data The Company reports segment information based on the internal reporting used by management for evaluating segment performance based on management’s estimates of the appropriate allocation of resources to segments. T he Company operates and manages its business primarily on a geographic basis. Accordingly, the Company determined its operating segments and reporting units, which are generally based on the nature and location of its customers, to be 1) China, and 2) Rest of the World, including the U . S . and Hong Kong. The Company evaluates the performance of its operating segments based on revenues and operating income (loss). Revenues for geographic segments are generally based on the location of customers. Operating income (loss) for each segment includes revenues, related cost of sales and operating expenses directly attributable to the segment. Operating income (loss) for each segment excludes non-operating income and expense. Summary information by operating segment for the three and six month periods ended June 30, 2017 and 201 6 is as follows ( in thousands ): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Revenue: China $ 42,561 $ 37,257 $ 82,489 $ 72,127 Rest of the World (including the US and Hong Kong) 1,959 1,734 4,923 3,363 Total net revenues $ 44,520 $ 38,991 $ 87,412 $ 75,490 Income (loss) from operations: China $ 17,581 $ 13,314 $ 35,083 $ 26,654 Rest of the World (including the US and Hong Kong) (5,264) (7,361) (8,529) (11,277) Total income from operations $ 12,317 $ 5,953 $ 26,554 $ 15,377 Non-operating income (loss), net: China $ 446 $ 18 $ 1,799 $ 394 Rest of the World (including the US and Hong Kong) 18 (4) 36 7 Total non-operating income, net $ 464 $ 14 $ 1,835 $ 401 Income (loss) before provision for income tax: China $ 18,027 $ 13,332 $ 36,882 $ 27,048 Rest of the World (including the US and Hong Kong) (5,246) (7,365) (8,493) (11,270) Total income before provision for income tax $ 12,781 $ 5,967 $ 28,389 $ 15,778 Long-l ived assets by operating segment as of June 30 , 2017 and December 31, 2016 are as follows ( in thousands ): June 30, December 31, 2017 2016 China $ 45,096 $ 44,603 Rest of the World (including the US and Hong Kong) 1,507 1,562 $ 46,603 $ 46,165 |
Basis of Presentation (Policy)
Basis of Presentation (Policy) | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of SciClone Pharmaceuticals, Inc. (“SciClone” or the “Company”) have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) consistent with those applied in, and should be read in conjunction with, the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016 included in the Company’s Form 10-K as filed with the Securities and Exchange Commission (“SEC”). The Company prepared the unaudited condensed consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other information that are normally required by GAAP can be condensed or omitted. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The interim financial information reflects all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. The unaudited condensed consolidated balance sheet data as of December 31, 2016 is derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make informe d estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ material ly from those estimates. |
Customer Concentration | Customer Concentration In China, pharmaceutical products are imported and distributed through a tiered method of distribution. For the Company’s proprietary product ZADAXIN, the Company manufactures its product using its U.S. and European contract manufacturers, and it generates its product sales revenue through sales of ZADAXIN products to Sinopharm Holding Lingyun Biopharmaceutical (Shanghai) Co. Limited (“Sinopharm”). Sinopharm acts as an importer, and also as the top “tier” of the distribution system (“Tier 1”) in China. The Company’s ZADAXIN sales occur when the importer purchases product from the Company, without any right of return except for replacement of product in the events of damaged product or quality control issues. As the Company bears risk of loss until delivery has occurred, revenue is not recognized until the shipment reaches its destination. After the Company’s sale of ZADAXIN to the importer, Sinopharm clears products through China import customs, sells directly to large hospitals and holds additional product it has purchased in inventory for sale to the next tier in the distribution system. The second-tier (“Tier 2”) distributors are responsible for the further sale and distribution of the products they purchase from the importer, either through sales of product directly to the retail level (hospitals and pharmacies), or to third-tier (“Tier 3”) local or regional distributors who, in turn, sell products to hospitals and pharmacies. The Company’s other product sales revenues result from the sale of the Company’s in-licensed products to importing agents and distributors. Promotion services revenues result from fees received for exclusively promoting products for certain pharmaceutical partners. These importing agents, distributors and partners are the Company’s customers. Sinopharm cont ributed 93% of the Company’s total net revenue for both the three month periods ended June 30 , 2017 and 2016, respectively, which revenues related to the Company’s China segment. Sinopharm contributed 92% of the Company’s tota l net revenue for both the six month periods ended June 30, 2017 and 2016, respectively, which revenues related to the Company’s China segment. There were no other customers that exceeded 10% of the Company’s total net revenue in the periods presented. Product sales o f $41.6 million or 93% and $36.5 million or 94% , for the three months ended June 30 , 2017 and 2016, respectively, related to consolidated sales of ZADAXIN. Of the $41.6 million in ZADAXIN revenues in the second quarter of 2017 , $3.3 million was attributed to revenues from sales generated in the first quarter of 2017 but recognized in the second quarter of 2017 for first quarter sales that were above the reference (baseline) tender price under a provision in the agreement with the Company’s China distributor to share, in part, in the burden of price reductions and the benefit of higher pricing in provinces with higher tender prices . In the second quarter of 2017, revenue was reduced by $0.8 million for sales in the second quarter that we estimate will be sold at prices below the reference tender price under a provision in the agreement with the Company’s China distributor . Product sales of $81.1 million or 92% and $70.1 million or 93% , for the six months ended June 30, 2017 and 2016, respectively, related to consolidate d sales of ZADAXIN. Of the $81.1 m illion in ZADAXIN revenues for the first half of 2017, $4.2 million was attributed to revenues from sales generated in the fourth quarter of 2016 and $3.3 million was attributed to revenues from sales generated in the first quarter that were both above the reference (baseline) tender price under a provision in the agreement with the Company’s China distributor to share, in part, in the burden of price reductions and the benefit of higher pricing in provinces with higher tender prices and which had no corresponding revenues in the same 2016 period . In the six months ended June 30, 2017, revenue was also reduced by $0.8 million for sales in the second quarter that we estimate will be sold at prices below the reference tender price under a provision in the agreement with the Company’s China distributor. As of June 30 , 2017, approximately $44.7 million, or 93% , of the Company's accounts receivable was attributable to one customer, Sinopharm, in China. The Company generally does not require collateral from its customers. The Company maintains reserves for potential credit losses and such actual losses may vary significantly from its estimates. Per the Company’s previous contractual arrangement with Sinopharm through December 31, 2015, and a renewed contractual arrangement with Sinopharm (the Company’s sole distributor for ZADAXIN in China) which took effect January 1, 2016, the Company’s sales of ZADAXIN to Sinopharm w e re denominated in U . S . dollars through June 30, 2016 . However, the e stablished importer price was adjusted quarterly based upon exchange rate fluctuations between the U . S . dollar and Chinese Yuan Renminbi (“RMB”) . Effective July 1, 2016, the Company’s sales of ZADAXIN to Sinopharm were and have continued to be denominated in RMB. A significant portion of the Company’s other revenues and expenses are also denominated in RMB and a significant portion of the Company’s assets and liabilities are denominated in RMB and all are exposed to foreign exchange risk. In the recent year , the RMB has experienced d evaluation. Such devaluation negatively affect s the U . S . dollar value of revenues while it positively affects the U.S. dollar value of China operating expenses . RMB is not freely convertible into foreign currencies. In China, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at the exchange rates quoted by the People’s Bank of China. Remittances in currencies other than RMB by the Company in China require certain supporting documentation in order to process the remittance. |
Accounts Receivable | Accounts Receivable Receivable Reserve. The Company records a receivable reserve based on a specific review of its overdue invoices. The Company’s estimate for a reserve is determined after considering its existing contractual payment terms, payment patterns of its customers and individual customer circumstances, the age of any outstanding receivables and its current customer relationships. Accounts receivable are written off at the point when they are considered uncollectible. As of June 30 , 2017 and December 31, 2016 , the Company determined no bad debt reserve was necessary. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the price to the buyer is fixed or determinable and collectability is reasonably assured. Product Revenue. The Company recognizes product revenue from selling manufactured ZADAXIN product at the time of delivery. Sales of ZADAXIN to Sinopharm are recognized upon arrival of a shipment to its destination, which marks the point when title and risk of loss to product are transferred. The Company also earns product revenue from purchasing medical products from pharmaceutical companies and selling them directly to importers or distributors. The Company recognizes revenue related to these products based on the “sell-in” method, when the medical products have been delivered to the importers or distributors. Payments by the importing agents and distributors are not contingent upon sale to the end user by the importing agents or distributors. Effective January 1, 2016, the Company’s new contractual arrangement with its China importer and distributor for ZADAXIN, Sinopharm, is resulting in the later recognition (relative to practices prevailing under the old contractual arrangement through December 31, 2015) of a portion of the Company’s revenue due from Sinopharm related to situations where the provincial tender price is greater relative to a reference (baseline) tender price. The tender price is the ultimate retail end price approved by provincial authorities. There is a price adjustment mechanism in the new contractual arrangement whereby Sinopharm is invoiced at a lower base price relative to that prevailing in the previous agreement. The lower base price (reduced by estimated price compensation payable to Sinopharm for situations where the provincial tender price is lower than the reference (baseline) tender price) is recorded as revenue at the time the sale is completed upon ar rival at destination. Recently, Guangdong and Fujian provinces have each announced maximum prices for ZADAXIN that are approximately six and four percent lower, respectively, than the reference (baseline) tender price. We expect these provincial decisions to affect the pricing of ZADAXIN in these provinces with respect to sales made pursuant to contracts dated on and after March 2017 for Guangdong and Fujian, and to affect pricing in other provinces, but the exact timing and consequences to our pricing, especially in other provinces, is uncertain. Sinopharm is invoiced for the portion of the price that results from situations where the provincial tender price is greater than the reference (baseline) tender price at a later time, and that portion of the price is recognized as revenue after the amount has been agreed to with them. It is expected that the price increment due to the Company related to sales in a quarter under the price adjustment mechanism for provinces with tender prices above the reference (baseline) tender price will continue to be recognized on a rolling one-to-two quarter delayed basis relative to the originating sales quarter. Promotion Services Revenue. The Company recognizes promotion services revenue after designated medical products are delivered to the distributors as specified in a promotion services contract, which marks the period when marketing and promotion services have been rendered and the revenue recognition criteria are met. Revenue Reserve. The Company generally maintains a revenue reserve for product returns based on estimates of the amount of product to be returned by its customers that are based on historical patterns, analysis of market demand and/or a percentage of sales based on industry trends, and management’s evaluation of specific factors that may increase the risk of product returns. Importing agents or distributors do not have contractual rights of return except under limited terms regarding product quality. However, the Company is expected to replace products that have expired or are deemed to be damaged or defective when delivered upon arrival at destination. The calculation of the revenue reserve requires estimates and involves a high degree of subjectivity and judgment. As a result of the uncertainties involved in estimating the revenue reserve, there is a possibility that materially different amounts could be reported under different conditions or using different assumptions. As of June 30 , 2017 and December 31, 2016, the Company’s revenue reserves were $0.3 million and $0.3 million , respectively . The Company evaluates the need for a returns reserve quarterly and adjusts it when events indicate that a change in estimate is appropriate. Changes in estimates could materially affect the Company’s results of operations or financial position. It is possible that the Company may need to adjust its estimates in future periods. |
Inventories | Inventories Inventories consist of raw materials, work in progress and finished products. Inventories are valued at the lower of cost or net realizable value , with cost determined on a first-in, first-out basis, and include amounts related to materials, labor and overhead. The Company periodically reviews the inventory in order to iden tify excess and obsolete items . If obsolete or excess items are observed and there are no alternate uses for the inventory, the Company will record a write-down to net realizable value in the period that the impairment was first indicated. For the three mo nth periods ended June 30 , 2017 and 2016 , the Company did not record any write-downs related to inventory. |
Loans Receivable | Loans Receivable Loans receivable are due from a single third party (see Note 5 ). Loans are initially recorded, and continue to be carried, at unpaid principal balances under “other assets” on the unaudited condensed consolidated balance sheet s . Carried balances are subsequently adjusted for payments of principal or adjustments to the allowance for loan losses to account for any impairment. Interest income is recognized over the term of the loans and is calculated using the simple-interest method, as the loans do not have associated premium or discount. If the loans were to experience impairment, interest income would not be recognized unless the likelihood of further loss was remote. Although the measurement basis is unpaid principal (as adjusted for subsequent payments or impairment), not fair value, the loans receivable would qualify as Level 3 measurements under the fair value hierarchy (Note 2) due to the presence of significant unobservable inputs related to the counterparty, which is a private entity. Management considers impairment to exist when, based on current information or factors (such as payment history, value of collateral, and assessment of the counterparty’s current creditworthiness), it is probable that principal and interest payments will not be collected according to the contractual agreements. Management considers a loan payment delinquent when not received by the due date. As of June 30 , 2017 and December 31, 2016, management concluded the loans receivable were not impaired, and there was no allowance for loan losses. |
Net Income Per Share | Net Income Per Share Basic net income per share has been computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common equivalent shares outstanding for the period. Diluted net income per share includes any dilutive impact from outstanding stock options, stock awards and the employee stock purchase plan using the treasury stock method. The following is a reconciliation of the numerator and denominators of the basic and diluted net income per share computations (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income $ 12,192 $ 6,338 $ 26,788 $ 14,202 Denominator: Weighted-average shares outstanding used to compute basic net income per share 51,820 49,897 51,630 49,743 Effect of dilutive securities 1,432 2,922 1,525 2,662 Weighted-average shares outstanding used to compute diluted net income per share 53,252 52,819 53,155 52,405 Basic net income per share $ 0.24 $ 0.13 $ 0.52 $ 0.29 Diluted net income per share $ 0.23 $ 0.12 $ 0.50 $ 0.27 For the three months ended June 30 , 2017 and 2016, outstanding stock options and awards for 3,411,268 and 120,270 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise or issuance of these options and awards calculated under the treasury stock method would have been anti-dilutive. In addition, for the three months ended June 30 , 2017 and 2016, outstanding stock options and awards for 375,000 and 312,500 shares, respective ly, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met and were not considered probable of being met. For the six months ended June 30 , 2017 and 2016, outstanding stock options and awards for 3,023,879 and 1,974,551 shares, respectively, were excluded from the calculation of diluted net income per share because the effect from the assumed exercise or issuance of these options and awards calculated under the treasury stock method would have been anti-dilutive. In addition, for the six months ended June 30 , 2017 and 2016, outstandi ng stock options and awards for 375,000 and 312,500 shares, respective ly, subject to performance conditions were excluded from the calculation of diluted net income per share because the performance criteria had not been met and were not considered probable of being met. |
Error Corrections | Error Corrections The Company provided $1.2 million of additional income tax expense, and recorded a corresponding accrual in accrued and other current liabilities , during the three months ended March 31, 2016 to correct an error. The error correction reflected the recognition of a previously unrecognized liability for an uncertain tax position related to the potential non-deductibility, under PRC tax regulations, of certain marketing costs related to the Company’s China operations. The adjustment related to tax years 2013 to 2015 and reflected the estimated tax exposure for each year as well as accrued interest thereon; such tax and interest amounts were $0. 3 million, $0.5 million, and $0.4 million for the full years 2013, 2014, and 2015, respectively. The Company’s management evaluated the effects of the error on each prior annual and interim period, as well as the total error accumulated at the end of each respective prior period, and concluded under both approaches that the effects of the error were not material to previously issued annual or interim financial statements. The Company’s management also evaluated the total amount of the error correction in relation to actual results for full year 2016 and concluded the impact was not material to the 2016 financial statements. The total adjustment was recorded out-of-period in the first quarter of 2016. |
New Accounting Standards Updates | New Accounting Standards Updates Standards Recently Effective In November 2015, the FASB issued ASU 2015-17, " Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ”. This ASU amends existing guidance to require that deferred income tax liabilities and assets be classified as noncurrent in a classified balance sheet, and eliminates the prior guidance which required an entity to separate deferred tax liabilities and assets into a current amount and a noncurrent amount in a classified balance sheet. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted the new guidance with effect f rom January 1, 2017 and is apply ing the new guidance retrospectively. The impact of adopting this guidance is not material to the consolidated financial statements given the Company’s limited deferred tax amounts. In March 2016, the FASB issued ASU 2016-09, “ Comp ensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ,” which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements. The Company adopted this ASU as stipulated with effect from January 1, 2017. Of the various provisions included in the ASU, the only provision that at present is material to the Company’s financial statements is the provision providing alternatives to account for forfeitures of share-based awards using either estimated forfeitures (periodically adjusted for differences from actuals) or simply using actual forfeitures. The Company has changed its accounting policy upon the adoption of this updated standard to account for forfeitures on an actual basis. This change resulted in a cumulative-effect adjustment related to prior periods (Note 9) which was not material and is not expected to be material to the consolidated financial statements in future periods given the Company’s past and present experience with its grants of share-based awards and related pre-vesting forfeitures. Standards Effective in Future Periods In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, "Revenue from Contracts with Customers (Topic 606)" , which contains new accounting literature relating to how and when a company recognizes revenue. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for the Company’s fiscal year beginning January 1, 2018, which reflects a one year deferral approved by the FASB in July 2015, and will be adopted by the Company from January 1, 2018. The Company is currently undertaking an evaluation of its revenue contracts to determine what impact, if any, the adoption of ASU 2014-09 will have on its financial statements and related disclosures. The Company anticipates the impact of ASU 2014-09 will likely be limited to the timing of recognition of its variable consideration. This variable consideration arises from situations where the Company’s exclusive distributor in China is invoiced at a later time subsequent to the original sale for the portion of the price that results from situations where the provincial tender price is greater than the reference (baseline) tender price. Such amount is currently recognized as revenue after the amount has been agreed to with the distributor in a later quarter relative to the originating sales quarter. The timing of the recognition of such amounts is expected to be earlier (estimated at the time of the originating product sale) under the new guidance. The Company plans to finalize its assessment in the third quarter of 2017. The standard permits the use of either the full retrospective or modified retrospective transition method. The Company has determined it will employ the full retrospective transition method. In January 2016, the FASB issued ASU 2016-01, “Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Liabilities” . The amended guidance (i) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is currently required to be disclosed for financial instruments measured at fair value; (iii) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, or calendar 2018 for the Company. The amended guidance should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company has evaluated the impact of adoption of this guidance on its consolidated financial statements and has concluded that the impact will be limited to a cumulative-effect adjustment for its investment in the common stock of a third-party which is currently classified as an available-for-sale equity investment, as well as prospective recognition of changes in the fair value of such investment, to the extent the Company continues to own the investment, as a component of net income. In February 2016, the FASB issued ASU 2016-02, “ Leases (Topic 842) ”. Under the new guidance, lessees will be required to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on the balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. This update is effective for the Company from calendar 2019 and from the first interim period of calendar 2019, with earlier application permitted. The Company is evaluating the impact of the adoption of this update on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ” This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The standard is effective for the Company from calendar 2020, with early adoption permitted for calendar 2019. The Company has yet to commence an evaluation of the impact of the adoption of this standard on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments (Topic 230)." Current GAAP is unclear or does not include specific guidance on how to classify certain transactions in the statement of cash flows. This ASU is intended to reduce diversity in practice in how eight particular transactions are classified in the statement of cash flows. ASU No. 2016-15 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. Entities will be required to apply the guidance retrospectively. If it is impracticable to apply the guidance retrospectively for an issue, the amendments related to that issue would be applied prospectively. ASU 2016-15 is not expected to have a material impact on the Company's consolidated financial statements . In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment" (Topic 350), which removes the requirement to perform a “Step 2” hypothetical purchase price allocation to measure goodwill impairment if “Step 1” of the traditional two-step goodwill impairment model is failed. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value (the determination from “Step 1”), not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for the Company for annual and interim periods beginning January 1, 2020, with early adoption permitted, and is to be applied prospectively. ASU 2017-04 will impact the Company’s goodwill balance to the extent such goodwill balance exists at the adoption date and to the extent that the fair value of the Company’s China reporting unit is less than its carrying value. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Basis of Presentation [Abstract] | |
Reconciliation of the Numerator and Denominators of the Basic and Diluted Net Income Per Share Computations | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Numerator: Net income $ 12,192 $ 6,338 $ 26,788 $ 14,202 Denominator: Weighted-average shares outstanding used to compute basic net income per share 51,820 49,897 51,630 49,743 Effect of dilutive securities 1,432 2,922 1,525 2,662 Weighted-average shares outstanding used to compute diluted net income per share 53,252 52,819 53,155 52,405 Basic net income per share $ 0.24 $ 0.13 $ 0.52 $ 0.29 Diluted net income per share $ 0.23 $ 0.12 $ 0.50 $ 0.27 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Financial Assets and Liability Measured at Fair Value on a Recurring Basis | Fair Value Measurements as of June 30, 2017 Using Quoted Prices in Significant Active Markets Other Significant for Observable Unobservable Balance Identical Assets Inputs Inputs as of Description (Level 1) (Level 2) (Level 3) June 30, 2017 Money market funds $ 19,739 $ — $ — $ 19,739 Common stock investment in third party (Note 4) $ — $ 724 $ — $ 724 Total $ 19,739 $ 724 $ — $ 20,463 Fair Value Measurements as of December 31, 2016 Using Quoted Prices in Significant Active Markets Other Significant for Observable Unobservable Balance Identical Assets Inputs Inputs as of Description (Level 1) (Level 2) (Level 3) December 31, 2016 Money market funds $ 19,701 $ — $ — $ 19,701 Common stock investment in third party (Note 4) $ — $ 794 $ — $ 794 Total $ 19,701 $ 794 $ — $ 20,495 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Inventories [Abstract] | |
Schedule of Inventories | June 30, December 31, 2017 2016 Raw materials $ 7,116 $ 5,304 Work in progress 444 498 Finished goods 14,479 10,785 $ 22,039 $ 16,587 |
Goodwill (Tables)
Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Goodwill [Abstract] | |
Schedule of Change in Goodwill | Balance as of December 31, 2016 $ 30,838 Translation adjustments 754 Balance as of June 30, 2017 $ 31,592 |
Accrued and Other Current Lia24
Accrued and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accrued and Other Current Liabilities [Abstract] | |
Schedule of Accrued and Other Current Liabilities | June 30, December 31, 2017 2016 Accrued sales and marketing expenses $ 6,932 $ 8,623 Accrued taxes, tax reserves and interest 6,157 5,335 Accrued compensation and benefits 3,044 5,140 Accrued professional fees 1,442 1,298 Accrued manufacturing costs 1,712 715 Other 1,275 1,685 $ 20,561 $ 22,796 |
Accumulated Other Comprehensi25
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Schedule of Changes in the Composition of Accumulated Other Comprehensive Income (Loss) | Balances as of April 1, 2017 $ (1,139) Other comprehensive loss — unrealized loss on available-for-sale investment in common stock of third party (229) Other comprehensive income — foreign currency translation 466 Balances as of June 30, 2017 $ (902) Balances as of April 1, 2016 $ 2,267 Other comprehensive loss — foreign currency translation (787) Balances as of June 30, 2016 $ 1,480 Balances as of January 1, 2017 $ (1,520) Other comprehensive loss — unrealized loss on available-for-sale investment in common stock of third party (70) Other comprehensive income — foreign currency translation 688 Balances as of June 30, 2017 $ (902) Balances as of January 1, 2016 $ 2,070 Other comprehensive loss — foreign currency translation (590) Balances as of June 30, 2016 $ 1,480 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Stock-Based Compensation Expenses Included in the Condensed Consolidated Statements of Income | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Sales and marketing $ 326 $ 233 $ 602 $ 442 Research and development 149 56 249 108 General and administrative 1,707 887 3,002 1,919 $ 2,182 $ 1,176 $ 3,853 $ 2,469 |
Segment Information and Geogr27
Segment Information and Geographic Data (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information and Geographic Data [Abstract] | |
Summary Information by Operating Segment | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Revenue: China $ 42,561 $ 37,257 $ 82,489 $ 72,127 Rest of the World (including the US and Hong Kong) 1,959 1,734 4,923 3,363 Total net revenues $ 44,520 $ 38,991 $ 87,412 $ 75,490 Income (loss) from operations: China $ 17,581 $ 13,314 $ 35,083 $ 26,654 Rest of the World (including the US and Hong Kong) (5,264) (7,361) (8,529) (11,277) Total income from operations $ 12,317 $ 5,953 $ 26,554 $ 15,377 Non-operating income (loss), net: China $ 446 $ 18 $ 1,799 $ 394 Rest of the World (including the US and Hong Kong) 18 (4) 36 7 Total non-operating income, net $ 464 $ 14 $ 1,835 $ 401 Income (loss) before provision for income tax: China $ 18,027 $ 13,332 $ 36,882 $ 27,048 Rest of the World (including the US and Hong Kong) (5,246) (7,365) (8,493) (11,270) Total income before provision for income tax $ 12,781 $ 5,967 $ 28,389 $ 15,778 |
Long-Lived Assets by Operating Segment | June 30, December 31, 2017 2016 China $ 45,096 $ 44,603 Rest of the World (including the US and Hong Kong) 1,507 1,562 $ 46,603 $ 46,165 |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2017USD ($)shares | Dec. 31, 2016USD ($) | Jun. 30, 2016USD ($)shares | Mar. 31, 2016USD ($) | Jun. 30, 2017USD ($)customershares | Jun. 30, 2016USD ($)shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Product sales | $ 43,369,000 | $ 37,869,000 | $ 85,006,000 | $ 73,189,000 | ||||||
Receivable reserve | 0 | $ 0 | 0 | $ 0 | ||||||
Write-downs related to inventory | 0 | 0 | 34,000 | |||||||
Allowance for loan losses | 0 | 0 | 0 | 0 | ||||||
Product returns reserve amount | 300,000 | 300,000 | ||||||||
Income tax expense | 589,000 | $ (371,000) | 1,601,000 | $ 1,576,000 | ||||||
Accrued and other current liabilities | $ 20,561,000 | 22,796,000 | $ 20,561,000 | $ 22,796,000 | ||||||
Uncertain tax position | $ 400,000 | $ 500,000 | $ 300,000 | |||||||
Sinopharm [Member] | Sales Revenue, Net [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Concentration percentage | 93.00% | 93.00% | 92.00% | 92.00% | ||||||
Sinopharm [Member] | Accounts Receivable [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Concentration percentage | 93.00% | |||||||||
Accounts receivable gross | $ 44,700,000 | $ 44,700,000 | ||||||||
Number of customers | customer | 1 | |||||||||
ZADAXIN [Member] | Sales Revenue, Net [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Product sales | $ 41,600,000 | $ 4,200,000 | $ 36,500,000 | $ 81,100,000 | $ 70,100,000 | |||||
Concentration percentage | 93.00% | 94.00% | 92.00% | 93.00% | ||||||
Reduction to revenues for sales estimated to be sold below reference tender price | $ 800,000 | $ 800,000 | ||||||||
Restatement Adjustment [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Income tax expense | $ 1,200,000 | |||||||||
Accrued and other current liabilities | $ 1,200,000 | |||||||||
Sales Generated in Prior Period [Member] | ZADAXIN [Member] | Sales Revenue, Net [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Product sales | $ 3,300,000 | |||||||||
Stock Options And Awards [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Shares excluded from the calculation of diluted net income (loss) per share | shares | 3,411,268 | 120,270 | 3,023,879 | 1,974,551 | ||||||
Stock Options And Awards Subject To Performance Conditions [Member] | ||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Line Items] | ||||||||||
Shares excluded from the calculation of diluted net income (loss) per share | shares | 375,000 | 312,500 | 375,000 | 312,500 |
Basis of Presentation (Reconcil
Basis of Presentation (Reconciliation of the Numerator and Denominators of the Basic and Diluted Net Income Per Share Computations) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Basis of Presentation [Abstract] | ||||
Net income | $ 12,192 | $ 6,338 | $ 26,788 | $ 14,202 |
Weighted-average shares outstanding used to compute basic net income per share | 51,820 | 49,897 | 51,630 | 49,743 |
Effect of dilutive securities | 1,432 | 2,922 | 1,525 | 2,662 |
Weighted-average shares outstanding used to compute diluted net income per share | 53,252 | 52,819 | 53,155 | 52,405 |
Basic net income per share | $ 0.24 | $ 0.13 | $ 0.52 | $ 0.29 |
Diluted net income per share | $ 0.23 | $ 0.12 | $ 0.50 | $ 0.27 |
Fair Value Measurements (Financ
Fair Value Measurements (Financial Assets and Liability Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | $ 20,463 | $ 20,495 |
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | 19,739 | 19,701 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | 724 | 794 |
Money Market Funds [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | 19,739 | 19,701 |
Money Market Funds [Member] | Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | 19,739 | 19,701 |
Common Stock [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | 724 | 794 |
Common Stock [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, Fair Value | $ 724 | $ 794 |
Inventories (Narrative) (Detail
Inventories (Narrative) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Non-ZADAXIN [Member] | ||
Inventory [Line Items] | ||
Inventory held at distributors | $ 4,000,000 | $ 3,300,000 |
ZADAXIN [Member] | ||
Inventory [Line Items] | ||
Increase in raw materials | 1,800,000 | |
Decrease in work in progress | 53,000 | |
Increase in finished goods inventory | $ 3,700,000 |
Inventories (Schedule of Invent
Inventories (Schedule of Inventories) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Inventories [Abstract] | ||
Raw materials | $ 7,116 | $ 5,304 |
Work in progress | 444 | 498 |
Finished goods | 14,479 | 10,785 |
Total | $ 22,039 | $ 16,587 |
Investments in Third Party (Nar
Investments in Third Party (Narrative) (Details) | Sep. 09, 2016USD ($)shares | Oct. 31, 2016shares | Jun. 30, 2017USD ($) | Mar. 31, 2017 | Sep. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |||||||
Fair value of common stock | $ 724,000 | $ 724,000 | $ 794,000 | ||||
Increase (decrease) in investee share price | (229000.00%) | 159000.00% | (70000.00%) | ||||
Soligenix [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Shares purchased | shares | 3,529,412 | ||||||
Cash consideration | $ 3,000,000 | ||||||
Fair value of common stock | $ 2,700,000 | $ 700,000 | $ 700,000 | ||||
Research and development expense | $ 300,000 | ||||||
Reverse stock split conversion ratio | 0.10 | ||||||
Number of shares after reverse stock split | shares | 352,942 | ||||||
Unrealized gains (losses) on investment | $ (2,000,000) |
Loans Receivable (Narrative) (D
Loans Receivable (Narrative) (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
May 31, 2013USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017CNY (¥)loan | Jun. 30, 2017USD ($)loan | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($)loan | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014CNY (¥) | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Allowance for loan losses | $ 0 | $ 0 | ||||||||
Commitment agreement, number of loan agreements | loan | 2 | 2 | 2 | |||||||
Interest and investment income | $ 297,000 | $ 263,000 | $ 593,000 | $ 522,000 | ||||||
Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Collateralized loan amount, maximum | $ 12,000,000 | |||||||||
SPIL China [Member] | Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Collateralized loan amount, maximum | 11,750,000 | |||||||||
Loan receivable | $ 11,750,000 | $ 11,750,000 | ||||||||
Interest rate | 7.50% | 7.50% | ||||||||
Expiration date | Sep. 26, 2017 | Sep. 26, 2017 | ||||||||
Collateralized loan, option to extend, period | 2 years | 2 years | ||||||||
Collateralized loan, extension, period | 2 years | 2 years | ||||||||
Collateralized loan, extension, expiration | Sep. 26, 2019 | Sep. 26, 2019 | ||||||||
SciClone Pharmaceuticals (China) Ltd [Member] | Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Collateralized loan amount, maximum | ¥ | ¥ 1,550,000 | |||||||||
Loan receivable | $ 229,000 | $ 229,000 | ¥ 1,550,000 | |||||||
Interest rate | 7.50% | 7.50% | ||||||||
Term | 66 months | 66 months | ||||||||
SPIL China and SciClone Pharmaceuticals (China) Ltd [Member | Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Interest and investment income | $ 200,000 | $ 200,000 | $ 500,000 | $ 500,000 | ||||||
Loan One [Member] | Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Loan receivable | $ 12,000,000 | $ 12,000,000 | ||||||||
Loan One [Member] | SPIL China [Member] | Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Loan receivable | $ 4,500,000 | |||||||||
Loan Two [Member] | SPIL China [Member] | Zensun [Member] | ||||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||||
Loan receivable | $ 7,250,000 |
Goodwill (Schedule of Changes i
Goodwill (Schedule of Changes in Goodwill) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Goodwill [Abstract] | |
Balance as of December 31, 2016 | $ 30,838 |
Translation adjustments | 754 |
Balance as of June 30, 2017 | $ 31,592 |
Accrued and Other Current Lia36
Accrued and Other Current Liabilities (Schedule of Accrued and Other Current Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Accrued and Other Current Liabilities [Abstract] | ||
Accrued sales and marketing expenses | $ 6,932 | $ 8,623 |
Accrued taxes, tax reserves and interest | 6,157 | 5,335 |
Accrued compensation and benefits | 3,044 | 5,140 |
Accrued professional fees | 1,442 | 1,298 |
Accrued manufacturing costs | 1,712 | 715 |
Other | 1,275 | 1,685 |
Total | $ 20,561 | $ 22,796 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income (Loss) (Schedule of Changes in the Composition of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Abstract] | ||||
Beginning balance | $ (1,139) | $ 2,267 | $ (1,520) | $ 2,070 |
Other comprehensive loss — unrealized loss on available-for-sale investment in common stock of third party | (229) | (70) | ||
Other comprehensive income (loss) — foreign currency translation | 466 | (787) | 688 | (590) |
Ending balance | $ (902) | $ 1,480 | $ (902) | $ 1,480 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Jan. 01, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Accumulated deficit | $ (61,120,000) | $ (61,120,000) | $ (87,765,000) | |||
Stock-based compensation expenses recognized | 2,182,000 | $ 1,176,000 | 3,853,000 | $ 2,469,000 | ||
Accounting Standards Update 2016-09 [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Accumulated deficit | $ 133,000 | |||||
Stock Options [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation expense, net of forfeitures | 10,700,000 | $ 10,700,000 | ||||
Options granted, shares | 1,365,500 | |||||
Options granted, weighted-average grant date fair value per share | $ 4.27 | |||||
Options exercised, shares | 809,341 | |||||
Weighted average remaining contractual term | 2 years 8 months 12 days | |||||
Proceeds from options exercised | $ 3,400,000 | |||||
RSUs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Weighted average grant date fair value of options per share | $ 9.65 | |||||
Unrecognized compensation expense, net of forfeitures | $ 2,900,000 | $ 2,900,000 | ||||
Unrecognized compensation expense, weighted-average remaining period for recognition, in years | 1 year 4 months 24 days | |||||
Stock units granted, shares | 77,000 | |||||
RSUs vested, shares | 165,000 | |||||
PSUs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Weighted average grant date fair value of options per share | $ 9.65 | |||||
Stock units granted, shares | 150,000 |
Stockholders' Equity (Stock-Bas
Stockholders' Equity (Stock-Based Compensation Expenses Included in the Condensed Consolidated Statements of Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expenses recognized | $ 2,182 | $ 1,176 | $ 3,853 | $ 2,469 |
Sales And Marketing [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expenses recognized | 326 | 233 | 602 | 442 |
Research And Development [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expenses recognized | 149 | 56 | 249 | 108 |
General And Administrative [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expenses recognized | $ 1,707 | $ 887 | $ 3,002 | $ 1,919 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) | Mar. 07, 2017USD ($) |
NovaMed [Member] | |
Contingencies and Commitments [Line Items] | |
Settlement agreement receivable | $ 83,333 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2017 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Line Items] | ||||||
Provision (benefit) for income tax | $ 589 | $ (371) | $ 1,601 | $ 1,576 | ||
Increase (decrease) in tax expense | 1,100 | 1,100 | $ 1,200 | |||
Income tax benefit before additional tax expense | 500 | |||||
Undistributed earnings of foreign subsidiaries | 126,000 | 126,000 | $ 249,000 | |||
Undistributed earnings of foreign subsidiary no longer indefinitely reinvested | $ 123,000 | $ 123,000 | ||||
Restatement Adjustment [Member] | ||||||
Income Tax Disclosure [Line Items] | ||||||
Provision (benefit) for income tax | $ 1,200 | |||||
China [Member] | ||||||
Income Tax Disclosure [Line Items] | ||||||
Statutory income tax rate | 25.00% | 25.00% |
Segment Information and Geogr42
Segment Information and Geographic Data (Summary Information by Operating Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 44,520 | $ 38,991 | $ 87,412 | $ 75,490 |
Income (loss) from operations | 12,317 | 5,953 | 26,554 | 15,377 |
Non-operating income (loss), net | 464 | 14 | 1,835 | 401 |
Income (loss) before provision for income tax | 12,781 | 5,967 | 28,389 | 15,778 |
China [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 42,561 | 37,257 | 82,489 | 72,127 |
Income (loss) from operations | 17,581 | 13,314 | 35,083 | 26,654 |
Non-operating income (loss), net | 446 | 18 | 1,799 | 394 |
Income (loss) before provision for income tax | 18,027 | 13,332 | 36,882 | 27,048 |
Rest of the World (including the US and Hong Kong) [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 1,959 | 1,734 | 4,923 | 3,363 |
Income (loss) from operations | (5,264) | (7,361) | (8,529) | (11,277) |
Non-operating income (loss), net | 18 | (4) | 36 | 7 |
Income (loss) before provision for income tax | $ (5,246) | $ (7,365) | $ (8,493) | $ (11,270) |
Segment Information and Geogr43
Segment Information and Geographic Data (Long-Lived Assets by Operating Segment) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 46,603 | $ 46,165 |
China [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | 45,096 | 44,603 |
Rest of the World (including the US and Hong Kong) [Member] | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 1,507 | $ 1,562 |