What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-18 compared with 2020-03-02 · 519 added, 408 removed, 1134 unchanged (45% of the section changed)

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss )

Consolidated Statements of Equity

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We have audited the accompanying consolidated balance sheets of OPKO Health, Inc.

and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss , shareholders' equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and financial statement schedule included at Item 15(a)(1) (collectively referred to as the “consolidated financial statements”).

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss) , shareholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule included at Item 15(a)(1) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 2, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Goodwill for BioReference

Description of the Matter

At December 31, 2019, the Company’s goodwill was $671.9 million, and goodwill assigned to the BioReference reporting unit was $434.8 million.

As discussed in Note 2 to the consolidated financial statements, goodwill is tested at least annually for impairment.

To determine the estimated fair value of the BioReference reporting unit, management considers both market and income valuation approaches.

Auditing management’s annual impairment test of goodwill included in the BioReference reporting unit was complex and highly judgmental due to the significant assumptions used in the determination of guideline companies, market transactions and market multiples, as well as the discount rate, revenue growth rates and operating margins used to estimate future cash flows, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s annual goodwill impairment review process, including controls over management’s review of the significant assumptions in the BioReference analysis described above.

To test the estimated fair value of the BioReference reporting unit, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

Valuation of Goodwill for Rayaldee

Description of the Matter At December 31, 2020, the Company’s goodwill was $680.6 million, and goodwill assigned to the Rayaldee reporting unit was $93.4 million.

As discussed in Note 2 to the consolidated financial statements, goodwill is tested at least annually for impairment or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

To determine the estimated fair value of the Rayaldee reporting unit, management considers both market and income valuation approaches.

Auditing management’s annual impairment test of goodwill included in the Rayaldee reporting unit was complex and highly judgmental due to the significant assumptions used in the determination of guideline companies, market transactions and market multiples, as well as the discount rate and revenue growth rates used to estimate future cash flows, which are affected by expectations about future market or economic conditions.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s annual goodwill impairment review process, including controls over management’s review of the significant assumptions in the Rayaldee analysis described above.

To test the estimated fair value of the Rayaldee reporting unit, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analysis.

We compared the significant assumptions used by management to current industry and economic trends, changes to the Company’s business model and other relevant factors.

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We assessed the historical accuracy of management’s projected financial information and performed sensitivity analyses on significant assumptions to evaluate the changes in the fair value that would result from changes in the assumptions .

In addition, we reviewed the reconciliation of the fair value of the Company’s reporting units to the market capitalization of the Company.

Valuation of Goodwill and Intangible Assets for Biologics, CURNA, Transition Therapeutics and Diagnostics

Description of the Matter

At December 31, 2019, the Company’s goodwill was $671.9 million, indefinite lived in-process research and development assets (IPR&D) was $590.2 million, and the net carrying amount of other intangibles was $529.0 million.

Included in the Biologics reporting unit was $139.8 million and $590.2 million of goodwill and IPR&D, respectively.

As discussed in Note 2 to the consolidated financial statements, goodwill and indefinite lived IPR&D are tested at least annually for impairment, and finite lived intangible assets are tested for impairment when events or changes in circumstances indicate it is more likely than not that the carrying amount of such assets may not be recoverable.

To determine the estimated fair value of their reporting units and the intangible assets included within them, management considers both market and income valuation approaches.

As further discussed in Notes 2 and 5, in 2019 the Company recorded impairment of goodwill, indefinite lived IPR&D and other intangible assets of $26.2 million, $44.8 million and $20.7 million, respectively, related to the CURNA, Transition Therapeutics and Diagnostics reporting units.

Auditing management’s annual impairment tests for the goodwill and intangible assets in these reporting units was complex and highly judgmental due to the significant assumptions used in the determination of guideline companies, market transactions and market multiples, as well as the expected timing and amount of market revenue share and the discount rate used to estimate future cash flows, which are affected by expectations about future development of IPR&D, market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s annual goodwill and intangible asset impairment review process, including controls over management's review of the significant assumptions in the Biologics, CURNA, Transition Therapeutics and Diagnostics analyses described above.

To test the estimated fair value of the reporting units and the intangible assets included within them, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses.

We compared the significant assumptions used by management to current market and economic trends and other relevant factors.

We involved valuation specialists to assist with assessing the methodologies and evaluating certain significant assumptions, such as the determination of guideline companies, market transactions, market multiples and the discount rates.

We assessed the historical accuracy of management’s estimates and performed sensitivity analyses on significant assumptions to evaluate the changes in the fair value that would result from changes in the assumptions.

In addition, we reviewed the reconciliation of the fair value of the Company’s reporting units to the market capitalization of the Company.

Variable Consideration in Determining Revenue from Services

Description of the Matter

For the year ended December 31, 2019, the Company recorded revenue from services of $716.4 million.

As discussed in Note 14 to the consolidated financial statements, revenue from services includes amounts due under third-party and government payer programs, net of estimates of contractual discounts and other elements of variable consideration.

Description of the Matter For the year ended December 31, 2020, the Company recorded revenue from services of $1,262.2 million.

As discussed in Note 15 to the consolidated financial statements, revenue from services includes amounts due under third-party and government payer programs, net of estimates

for explicit and implicit price concessions and other elements of variable consideration.

The Company estimates variable consideration by evaluating, among other factors, recent collections experience as well as changes in reimbursement regulations, claims processing and coverage determinations.

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This resulted in significant auditor judgment in the performance of our procedures.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s variable consideration estimation process, including controls over management’s review of collections experience and the evaluation of factors that would affect the amount of variable consideration described above.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s variable consideration estimation process, including controls over management’s review of collections experience and the evaluation of factors that would affect the amount of variable consideration described above.

To test the estimate of variable consideration, we performed audit procedures that included, among others, assessing the methodology used and testing the underlying data used by the Company in its analysis.

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Miami, Florida

March 2, 2020

February 18, 2021

Report of Independent Registered Public Accounting Firm

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In our opinion, OPKO Health, Inc, and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2019 consolidated financial statements of the Company and our report dated March 2, 2020 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated February 18, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

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Miami, Florida

March 2, 2020

February 18, 2021

OPKO Health, Inc.

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In-process research and development 590,200 590,200

Goodwill 680,602 671,940

Investments 15,731 20,746

Operating lease right-of-use assets 37,735 39,380

Other assets 10,060 6,888

Total assets $ 2,473,063 $ 2,309,272

LIABILITIES AND EQUITY

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Current maturities of operating leases 9,028 12,038

Current portion of convertible notes

Current portion of lines of credit and notes payable 24,703 9,619

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Total liabilities 801,512 694,513

Common Stock - $0.01 par value, 1,000,000,000 and 750,000,000 shares authorized at December 31, 2019 and 2018, respectively;

Common Stock - $ 0.01 par value, 1,000,000,000 shares authorized at December 31, 2020 and 2019, respectively;

670,585,576 and 670,378,701 shares issued at December 31, 2020 and 2019, respectively

Treasury Stock, - 549,907 shares at December 31, 2020 and 2019, respectively

( 1,791 ) ( 1,791 )

Additional paid-in capital 3,152,694 3,142,993

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss ( 4,225 ) ( 22,070 )

Accumulated deficit ( 1,481,833 ) ( 1,511,077 )

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For the years ended December 31,

2020 2019 2018

Revenue from services $ 1,262,242 $ 716,434 $ 813,248

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Total costs and expenses 1,377,699 1,175,987 1,161,463

Operating loss

Operating income (loss) 57,714 ( 274,052 ) ( 171,197 )

Other income and (expense), net:

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Other income and (expense), net ( 9,031 ) ( 30,913 ) ( 6,072 )

Loss before income taxes and investment losses

Income (loss) before income taxes and investment losses 48,683 ( 304,965 ) ( 177,269 )

Income tax benefit (provision) ( 17,617 ) ( 7,060 ) 38,726

Net loss before investment losses

Net income (loss) before investment losses 31,066 ( 312,025 ) ( 138,543 )

Loss from investments in investees ( 480 ) ( 2,900 ) ( 14,497 )

Loss per share basic and diluted:

Loss per share

Net income (loss) $ 30,586 $ ( 314,925 ) $ ( 153,040 )

Income (loss) per share basic and diluted:

Income (loss) per share $ 0.05 $ ( 0.53 ) $ ( 0.27 )

Weighted average number of common shares

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and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

For the years ended December 31,

2020 2019 2018

Net income (loss) $ 30,586 $ ( 314,925 ) $ ( 153,040 )

Other comprehensive income (loss), net of tax:

Change in foreign currency translation and other comprehensive income (loss) 17,845 ( 1,939 ) ( 14,727 )

Change in unrealized gain (loss), net of tax

Reclassification adjustments due to adoption of ASU 2016-01 — — ( 4,876 )

Reclassification adjustments for losses included in net loss, net of tax

Comprehensive loss

Comprehensive income (loss) $ 48,431 $ ( 316,864 ) $ ( 172,643 )

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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(In thousands, except share and per share data)

For the years ended December 31, 2019 , 2018 , 2017 (continued)

Accumulated Other

For the years ended December 31, 2020, 2019, 2018

Common Stock Treasury Additional

Capital Accumulated Other

Comprehensive

Loss Accumulated

Deficit Total

Shares Dollars Shares Dollars

Balance at December 31, 2017 560,023,745 $ 5,600 ( 549,907 ) $ ( 1,791 ) $ 2,889,256 $ ( 528 ) $ ( 1,048,914 ) $ 1,843,623

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Exercise of Common Stock options and warrants 353,677 4 — — 1,170 — — 1,174

Reclassification of embedded

derivatives to equity

Issuance of Treasury Stock in

connection with OPKO Health

Europe’s Contingent

Consideration

Adoption of ASU 2016-01 — — — — — ( 4,876 ) 4,876 —

Private placement 26,504,298 265 — — 92,235 — — 92,500

Net loss — — — — — — ( 153,040 ) ( 153,040 )

Other comprehensive loss — — — — — ( 14,727 ) — ( 14,727 )

Balance at December 31, 2018 586,881,720 $ 5,869 ( 549,907 ) $ ( 1,791 ) $ 3,004,422 $ ( 20,131 ) $ ( 1,197,078 ) $ 1,791,291

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

OPKO Health, Inc.

and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)

For the years ended December 31, 2019 , 2018 , 2017 (continued)

Accumulated Other

Common Stock Treasury Additional

Capital Accumulated Other

Comprehensive

Loss Accumulated

Deficit Total

Shares Dollars Shares Dollars

Balance at December 31, 2018 586,881,720 $ 5,869 ( 549,907 ) $ ( 1,791 ) $ 3,004,422 $ ( 20,131 ) $ ( 1,197,078 ) $ 1,791,291

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Adoption of ASU 2018-07 — — — — ( 926 ) — 926 —

Private placement

2025 convertible notes including share lending agreement 29,250,000 293 — — 50,559 — — 50,852

Sale of common stock 54,227,749 542 — — 75,520 — — 76,062

Net loss — — — — — — ( 314,925 ) ( 314,925 )

Other comprehensive loss — — — — — ( 1,939 ) — ( 1,939 )

Balance at December 31, 2019 670,378,701 $ 6,704 ( 549,907 ) $ ( 1,791 ) $ 3,142,993 $ ( 22,070 ) $ ( 1,511,077 ) $ 1,614,759

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except share and per share data)

For the years ended December 31, 2019 , 2018 , 2017 (continued)

Accumulated Other

Common Stock Treasury Additional

Capital Accumulated Other

Comprehensive

Loss Accumulated

Deficit Total

Shares Dollars Shares Dollars

Balance at December 31, 2019 670,378,701 $ 6,704 ( 549,907 ) $ ( 1,791 ) $ 3,142,993 $ ( 22,070 ) $ ( 1,511,077 ) $ 1,614,759

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Exercise of Common Stock options and warrants 206,875 2 — — 754 — — 756

Adoption of ASU 2018-07

2025 convertible notes including share lending agreement

Sale of common stock

Adoption of ASC 326 — — — — — — ( 1,342 ) ( 1,342 )

Net income — — — — — — 30,586 30,586

Other comprehensive loss — — — — — 17,845 — 17,845

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For the years ended December 31,

2020 2019 2018

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Net income (loss) $ 30,586 $ ( 314,925 ) $ ( 153,040 )

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization 85,362 93,807 97,344

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Other current assets and prepaid expenses 20,504 ( 11,486 ) 2,276

Other assets ( 447 ) 409 ( 69 )

Accounts payable 37,159 15,636 ( 26,083 )

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Accrued expenses and other liabilities 81,828 764 1,715

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities 39,476 ( 172,522 ) ( 109,141 )

Cash flows from investing activities:

Investments in investees — ( 1,200 ) ( 1,000 )

Proceeds from sale of equity securities

Proceeds from sale of investments 15,110 — 1,516

Proceeds from the sale of property, plant and equipment 245 671 1,223

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Redemption of 2033 Senior Notes — ( 28,800 ) —

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities ( 35,076 ) 175,248 140,910

Effect of exchange rate changes on cash and cash equivalents 686 ( 477 ) ( 676 )

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Operating lease right-of-use assets due to adoption of ASU No.

2016-02 $ — $ 39,380 $ —

Operating lease liabilities due to adoption of ASU No.

2016-02 $ — $ 39,703 $ —

Non-cash financing:

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Common Stock options and warrants, surrendered in net exercise $ — $ 20 $ 806

Issuance of capital stock to acquire or contingent consideration settlement:

OPKO Health Europe

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

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(“BioReference”), one of the nation’s largest full service laboratories with a core genetic testing business and an almost 300 -person sales and marketing team focused on driving growth and leveraging new products, including the 4Kscore test.

Our pharmaceutical business features Rayaldee , an FDA-approved treatment for secondary hyperparathyroidism (“SHPT”) in adults with stage 3 or 4 chronic kidney disease (“CKD”) and vitamin D insufficiency (launched in November 2016);

OPK88004, a selective androgen receptor modulator which we are exploring for various potential indications;

and OPK88003, a once weekly oxyntomodulin for type 2 diabetes and obesity which is a clinically advanced drug candidate among the new class of GLP-1 glucagon receptor dual agonists (phase 2b).

Our pharmaceutical business also features hGH-CTP, a once-weekly human growth hormone that recently successfully completed a phase 3 trial and which is partnered with Pfizer Inc.

Our leading product in development is Somatrogon (hGH-CTP), a once-weekly human growth hormone for which we have partnered with Pfizer Inc.

(“Pfizer”) and successfully completed a phase 3 study in August 2019, and for which the FDA has accepted the initial BLA for filing and we have submitted a New Drug Application (an “NDA”) with the Ministry of Health, Labour and Welfare in Japan.

We are incorporated in Delaware, and our principal executive offices are located in leased offices in Miami, Florida.

Through BioReference, we provide laboratory testing services, primarily to customers in the larger metropolitan areas across New York, New Jersey, Maryland, Pennsylvania, Delaware, Washington, DC, Florida, California, Texas, Illinois and Massachusetts, as well as to customers in a number of other states.

Through BioReference, we provide laboratory testing services, primarily to customers in the larger metropolitan areas in New York, New Jersey, Florida, Texas, Maryland, California, Pennsylvania, Delaware, Washington, DC, Illinois and Massachusetts, as well as to customers in a number of other states.

We offer a comprehensive test menu of clinical diagnostics for blood, urine and tissue analysis.

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We own a specialty active pharmaceutical ingredients (“APIs”) manufacturer in Israel, which we expect will facilitate the development of our pipeline of molecules and compounds for our proprietary molecular diagnostic and therapeutic products.

Our research and development activities are primarily performed at facilities in Miramar, FL, Woburn, MA, Waterford, Ireland, Kiryat Gat, Israel, and Barcelona, Spain.

Our research and development activities are primarily performed at facilities in Woburn, MA, Waterford, Ireland, Kiryat Gat, Israel, and Barcelona, Spain.

Note 2 Impact of COVID-19

As the disease caused by SARS-CoV-2, a novel strain of coronavirus, COVID-19 continues to spread and severely impact the economy of the U.S.

and other countries around the world, we are committed to being a part of the coordinated public and private sector response to this unprecedented challenge.

In response to the COVID-19 pandemic, BioReference is accepting specimens from U.S.

healthcare providers, clinics and health and hospital systems for two types of COVID-19 testing, diagnostic molecular testing and serology antibody testing, which is intended to promote earlier diagnosis of the coronavirus, assess a patient’s immune response to the virus and aid in limiting the spread of infection.

We have put preparedness plans in place at our facilities to maintain continuity of operations, while also taking steps to keep our employees and customers healthy and safe.

In line with recommendations to reduce large gatherings and increase social distancing, we have, where practical, transitioned many office-based employees to a remote work environment.

Revenue from services for the year ended December 31, 2020 increased by $ 545.8 million as compared to 2019 due to COVID-19 testing volumes;

however we are unable to predict how long the demand will continue for our COVID-19 related testing, or whether pricing and reimbursement policies for testing will sustain, and accordingly, the sustainability of our COVID-19 testing volumes is uncertain.

Additionally, beginning in March 2020, BioReference experienced, and continues to experience, a decline in routine clinical and genomics testing volumes due to the COVID-19 pandemic.

Excluding COVID-19 test volumes, for the year ended December 31, 2020, volumes in our diagnostics segment declined 17 % as compared to volumes for the year ended December 31, 2019.

Additionally, sales of Rayaldee have not increased in accordance with its expected growth trajectory as a result of challenges in onboarding new patients due to the COVID-19 pandemic.

Federal, state and local governmental policies and initiatives designed to reduce the transmission of COVID-19 have resulted in, among other things, a significant reduction in physician office visits, the cancellation of elective medical procedures, customers closing or severely curtailing their operations (voluntarily or in response to government orders), and the adoption of work-from-home or shelter-in-place policies.

As stay at home orders and other restrictions have been lifted, we have seen our routine clinical and genomic testing volumes trending towards normalization with prior periods;

however should stay at home orders or other

restrictions be reenacted, we could see our routine testing levels decline.

We also continue to see a substantial need for COVID-19 testing by our existing clients and expect new clients as infection rates for the virus continue to increase across the country.

In March 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.

The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain payroll tax credits associated with the retention of employees.

We have received, or expect to receive a number of benefits under the CARES Act including, but not limited to:

• During the year ended December 31, 2020, we received approximately $ 14 million under The Centers for Medicare & Medicaid Services (CMS) Accelerated and Advance Payment Program, which provides accelerated payments to Medicare providers/suppliers working to provide treatment to patients and combat the COVID-19 pandemic, and such amounts advanced to us are loans which will be offset against future claims and must be repaid in 2021;

• We are eligible to defer depositing the employer’s share of Social Security taxes for payments due from March 27, 2020 through December 31, 2020, interest-free and penalty-free;

• We received approximately $ 16.2 million during the year ended December 31, 2020 from the funds that were distributed to healthcare providers for related expenses or lost revenues that are attributable to the COVID-19 pandemic;

Department of Health and Human Services (HHS), will provide claims reimbursement to healthcare providers generally at Medicare rates for testing uninsured patients;

• Clinical laboratories are provided a one-year reprieve from the reporting requirements under the Protecting Access to Medicare Act (“PAMA”) as well as a one-year delay of reimbursement rate reductions for clinical laboratory services provided under Medicare that were scheduled to take place in 2021.

In October 2020, the U.S.

Department of Health & Human Services issued new reporting requirements for the CARES Act funding.

Due to these new reporting requirements and various interpretations, there is a reasonable possibility that amounts recorded under CARES Act funding will change in future periods.

Note 3 Summary of Significant Accounting Policies

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Ultimately, potential changes in these assumptions may impact the estimated fair value of a reporting unit and result in an impairment if the fair value of such reporting unit is less than its carrying value.

Net intangible assets other than goodwill were $ 1.1 billion and $ 1.3 billion , including IPR&D of $ 590.2 million and $ 635.6 million , respectively, at December 31, 2019 and 2018 .

Net intangible assets other than goodwill were $ 1.1 billion, including IPR&D of $ 590.2 million, at both December 31, 2020 and 2019.

Intangible assets are highly vulnerable to impairment charges, particularly newly acquired assets for recently launched products and IPR&D.

Considering the high risk nature of research and development and the industry’s success rate of bringing developmental compounds to market, IPR&D impairment charges are likely to occur in future periods.

Considering the high risk nature of research and development and the industry’s success rate of bringing developmental compounds to market, IPR&D impairment charges may occur in future periods.

Estimating the fair value of IPR&D for potential impairment is highly sensitive to changes in projections and assumptions and changes in assumptions could potentially lead to impairment.

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If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Impairment charges for the year ended December 31, 2019 were $ 92.4 million and consist of a goodwill impairment charge of $26.2 million to write the carrying amount of the OPKO Diagnostics, CURNA and Transition Therapeutics reporting units down to their estimated fair value, an impairment charge of $44.8 million to write our IPR&D assets for OPK88003 and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair value, and an impairment charge of $ 20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair value as a result of our testing.

Impairment charges for the year ended December 31, 2019 were $ 92.4 million and consisted of a goodwill impairment charge of $ 26.2 million to write the carrying amount of the OPKO Diagnostics, CURNA and Transition Therapeutics reporting units down to their estimated fair value, an impairment charge of $ 44.8 million to write our IPR&D assets for OPK88003 and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair value, and an impairment charge of $ 20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair value as a result of our testing.

These impairment charges for the year ended December 31, 2019, resulted from liquidity constraints, longer than expected development timelines and changes in the competitive landscape, which resulted in changes to our estimates and assumptions of the expected future cash flows of the reporting units focused on the development of the Claros Analyzer, OPK88003 and CURNA’s platform technology.

We believe that our estimates and assumptions are reasonable and otherwise consistent with assumptions that marketplace participants would use in their estimates of fair value.

However, if future results are not consistent with our estimates and assumptions, then we may be exposed to an impairment charge, which could be material.

For the year ended December 31, 2019, the results of operations of our BioReference reporting unit were below management’s long-term forecast of expected cash flows for the year ending December 31, 2019 due to a change in reimbursement coverage for our 4Kscore test and other market factors.

Our 2019 impairment test of the BioReference reporting unit indicated an excess of estimated fair value over the carrying amount of approximately 11 % .

If we are unable to obtain appropriate reimbursement for our services and experience future declines in operating results versus forecast, then our estimates of the fair value of the BioReference reporting unit may decrease, and the resulting impairment could be significant.

We recorded a goodwill impairment charge of $ 11.7 million in Asset impairment charges in our Consolidated Statement of Operations for the year ended December 31, 2018 to write the carrying amount of the FineTech reporting unit down to its estimated fair value.

No goodwill impairment was recorded for the year ended December 31, 2017.

We recorded an impairment charge of $ 10.1 million in Asset impairment charges in our Consolidated Statement of Operations for the year ended December 31, 2018 to write our IPR&D assets for Alpharen and OPK88004 down to their estimated fair value as a result of our testing and we recorded an impairment charge of $ 13.2 million for the year ended December 31, 2017 to write our intangible asset for VARUBI™ down to its estimated fair value as a result of our testing.

We believe that our estimates and assumptions are reasonable and otherwise consistent with assumptions that marketplace participants would use in their estimates of fair value.

However, if future results are not consistent with our estimates and assumptions, including as a result of the COVID-19 global pandemic, then we may be exposed to an impairment charge, which could be material.

We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives, ranging from 3 to 20 years.

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Our debt under the credit agreement with JPMorgan Chase Bank, N.A.

approximates fair value due to the variable rate of interest.

approximates fair value due to the variable rate of interest applicable to such debt.

In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop the estimates.

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Property, plant and equipment.

Property, plant and equipment are recorded at cost.

Property, plant and equipment are recorded at cost or fair value if acquired in a business combination.

Depreciation is provided using the straight-line method over the estimated useful lives of the assets and includes amortization expense for assets capitalized under finance leases.

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net deferred tax assets.

Our tax accruals are analyzed periodically and adjustments are made as events occur to warrant such

Our tax accruals are analyzed periodically and adjustments are made as events occur to warrant such adjustment.

Valuation allowances on certain U.S.

deferred tax assets and non-U.S.

deferred tax assets are established, because

realization of these tax benefits through future taxable income does not meet the more-likely-than-not threshold.

deferred tax assets are established, because realization of these tax benefits through future taxable income does not meet the more-likely-than-not threshold.

On December 22, 2017, the Tax Act was enacted into law and the new legislation contains several key tax provisions, including a reduction of the corporate income tax rate from 35% to 21% effective January 1, 2018 and a one-time mandatory transition tax on accumulated foreign earnings, among others.

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deferred tax assets, the relative mix in earnings and losses in the U.S.

versus foreign tax jurisdictions, and the impact of certain discrete tax events and operating results in tax jurisdictions which do not result in a tax benefit.

versus foreign tax jurisdictions, and the impact of certain discrete tax events and operating results in tax jurisdictions that do not result in a tax benefit.

Included in Other long-term liabilities is an accrual of $ 2.9 million related to uncertain tax positions involving income recognition.

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In connection with an examination of a 2014 and 2015 tax return in a foreign jurisdiction, the taxing authority has issued an initial income tax assessment of approximately $ 66 million (including interest).

We are protesting it as we believe that the proposed adjustment is without technical merit.

We are protesting this assessment as we believe that it is without technical merit.

We expect to exhaust all administrative and judicial remedies necessary to resolve the matter, which could be a lengthy process.

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While we have receivables due from federal and state governmental agencies, we do not believe that such receivables represent a credit risk since the related healthcare programs are funded by federal and state governments, and payment is primarily dependent upon submitting appropriate documentation.

At December 31, 2019 and 2018 , receivable balances (net of

contractual adjustments) from Medicare and Medicaid were 6 % and 7 % , respectively, of our consolidated Accounts receivable, net.

At December 31, 2020 and 2019, receivable balances (net of explicit and implicit price concessions) from Medicare and Medicaid were 6 % and 6 %, respectively, of our consolidated Accounts receivable, net.

At December 31, 2020, receivable balances (net of explicit and implicit price concessions) due directly from states, cities and other municipalities, specifically related to our real-time reverse-transcription polymerase chain reaction (real-time RT-PCR) assay to detect COVID-19, were 6.3 % of our consolidated accounts receivable, net.

The portion of our accounts receivable due from individual patients comprises the largest portion of credit risk.

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Actual results could differ from those estimates.

The allowance for doubtful accounts was $ 1.9 million and $ 1.8 million at December 31, 2019 and 2018 , respectively.

The provision for bad debts for the years ended December 31, 2019 and 2018 was $ 0.5 million and $ 0.7 million , respectively.

The allowance for credit losses was $ 2.1 million and $ 1.9 million at December 31, 2020 and 2019, respectively.

The credit loss expense for the years ended December 31, 2020 and 2019 was $ 0.2 million and $ 0.5 million, respectively.

Equity-based compensation.

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For in-process research and development projects acquired in business combinations, the in-process research and development project is capitalized and evaluated for impairment until the development process has been completed.

Once the development process has been completed the asset will be amortized over its remaining useful life.

Once the development process has been completed the asset will be amortized over its remaining estimated useful life.

Segment reporting.

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dollar during the reporting periods.

Foreign currency transaction gains (losses) have been reflected as a component of Other income (expense), net within the Consolidated Statement of Operations and foreign currency translation gains (losses) have been included as a component of the Consolidated Statement of Comprehensive Loss.

During the years ended December 31, 2020, 2019 and 2018, we recorded $ 1.6 million, $ 0.4 million and $ 1.9 million, respectively of transaction gains (losses).

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We record these investments as equity method investments or as equity securities based on our percentage of ownership and whether we have significant influence over the operations of the investees.

For investments classified under the equity method of accounting, we record our proportionate share of their losses in Losses from investments in investees in our Consolidated Statement of Operations.

For investments classified under the equity method of accounting, we

record our proportionate share of their losses in Losses from investments in investees in our Consolidated Statement of Operations.

Refer to Note 5.

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Recently adopted accounting pronouncements .

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2016-02, “Leases (Topic 842),” which requires organizations that lease assets with lease terms of more than 12 months to recognize assets and liabilities for the rights and obligations created by those leases on their balance sheets.

ASU 2016-02, as amended and codified under Topic 842, requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases.

As required, we adopted Topic 842 on January 1, 2019 and used the modified retrospective approach for all lease arrangements at the beginning or the period of adoption.

Results for reporting periods beginning January 1, 2019 are presented under Topic 842, while prior period amounts were not adjusted and continue to be reported in accordance our historic accounting under ASC 840.

For leases that commenced before the effective date of Topic 842, we elected the use of permitted practical expedients and did not reassess the following:

(i) whether any expired or existing contracts contain leases;

(ii) the lease classification for any expired or existing leases;

and (iii) initial direct costs for any existing leases.

We also elected the policy of not recording leases on our Consolidated Balance Sheet when the leases have terms of 12 months or less, and we elected not to separate nonlease components from lease components and instead account for each separate lease component and the nonlease components associated with that lease component as a single lease component.

The adoption of Topic 842 resulted in the recognition of operating lease liabilities of approximately $ 33.7 million and operating lease right-to-use assets of approximately $ 33.3 million as of March 31, 2019, primarily related to operating leases for our diagnostic facilities, based on the present value of lease payments over the lease term.

There was no cumulative-effect adjustment to beginning Accumulated deficit on the Consolidated Balance Sheet.

The accounting for our finance leases remains substantially unchanged, as finance lease liabilities and their corresponding right-to-use assets were already recorded on the Consolidated Balance Sheet under the previous guidance.

The adoption of Topic 842 did not have a significant effect on our results of operations or cash flows.

Refer to Note 16 for additional disclosures required by Topic 842.

In February 2018, the FASB issued ASU No.

2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220)." This standard provides an option to reclassify stranded tax effects within accumulated other comprehensive loss to retained earnings due to the U.S.

federal corporate income tax rate change in the Tax Cuts and Jobs Act of 2017.

This standard is effective for interim and annual reporting periods beginning after December 15, 2018.

We adopted this standard effective January 1, 2019 with the election not to reclassify immaterial amounts of stranded tax effects from accumulated other comprehensive loss to retained earnings.

In June 2016, the FASB issued ASU No.

2018-07, “Compensation - Stock Compensation (Topic 718),” which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees.

The adoption of ASU 2018-07 on January 1, 2019, did not have a significant impact on our Consolidated Financial Statements.

Pending accounting pronouncements .

In June 2016, the FASB issued ASU No.

2016-13, “Financial Instruments - Credit Losses (Topic 326):

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The ASU is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted.

The adoption of ASU 2016-13 on January 1, 2020, did not have a significant impact on our Consolidated Financial Statements.

Pending accounting pronouncements .

In August 2020, the FASB issued ASU No.

2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40).” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

The ASU is effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted.

We are currently evaluating the impact of this new guidance on our Consolidated Financial Statements.

Note 3 Loss Per Share

Basic loss per share is computed by dividing our net loss by the weighted average number of shares of our common stock par value $ 0.01 per share (“Common Stock”) outstanding during the period.

Shares of Common Stock outstanding under the share lending arrangement entered into in conjunction with the 2025 Notes (as defined in Note 6) are excluded from the calculation of basic and diluted earnings per share because the borrower of the shares is required under the share lending

arrangement to refund any dividends paid on the shares lent.

Note 4 Income (loss) Per Share

Basic income (loss) per share is computed by dividing our net income (loss) by the weighted average number of shares of our common stock par value $ 0.01 per share (“Common Stock”) outstanding during the period.

Shares of Common Stock outstanding under the share lending arrangement entered into in conjunction with the 2025 Notes (as defined in Note 7) are excluded from the calculation of basic and diluted earnings per share because the borrower of the shares is required under the share lending arrangement to refund any dividends paid on the shares lent.

Refer to Note 7.

For diluted earnings per share, the dilutive impact of stock options and warrants is determined by applying the “treasury stock” method.

The dilutive impact of the 2033 Senior Notes, the 2023 Convertible Notes and the 2025 Notes (each, as defined herein and as discussed in Note 6) has been considered using the “if converted” method.

The dilutive impact of the 2033 Senior Notes, the 2023 Convertible Notes and the 2025 Notes (each, as defined and discussed in Note 7) has been considered using the “if converted” method.

For periods in which their effect would be antidilutive, no effect is given to outstanding options, warrants or the potentially dilutive shares issuable pursuant to the 2033 Senior Notes, the 2023 Convertible Notes and the 2025 Notes in the dilutive computation.

A total of 67,765,380 , 16,568,520 and 6,255,624 potential shares of Common Stock have been excluded from the calculation of diluted net loss per share for the years ended December 31, 2019 , 2018 and 2017, respectively, because their inclusion would be antidilutive.

A total of 70,029,480 , 67,765,380 and 16,568,520 potential shares of Common Stock have been excluded from the calculation of diluted net income (loss) per share for the years ended December 31, 2020, 2019 and 2018, respectively, because their inclusion would be antidilutive.

A full presentation of diluted earnings per share has not been provided because the required adjustments to the numerator and denominator resulted in diluted earnings per share equivalent to basic earnings per share.

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Note 5 Investments

The following table reflects the accounting method, carrying value and underlying equity in net assets of our unconsolidated investments as of December 31, 2019 :

(in thousands)

Investment type

Investment Carrying Value

Underlying Equity in Net Assets

The following table reflects the accounting method, carrying value and underlying equity in net assets of our unconsolidated investments as of December 31, 2020 and 2019:

(in thousands) As of December 31, 2020 As of December 31, 2019

Investment type Investment Carrying Value Underlying Equity in Net Assets Investment Carrying Value Underlying Equity in Net Assets

Equity method investments $ 426 $ 2,252 $ 826 $ 9,931

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(“Xenetic”) ( 3 %).

The total assets, liabilities, and net losses of our equity method investees as of and for the year ended December 31, 2019 were $ 191.5 million , $ 58.4 million , and $ 62.9 million , respectively.

We have determined that we or our related parties can significantly influence the operations of our equity method investees through our board representation and/or voting power.

The aggregate total assets, liabilities, and net losses of our equity method investees as of and for the year ended December 31, 2020 were $ 90.9 million, $ 28.4 million, and $ 75.4 million, respectively.

The aggregate total assets, liabilities, and net losses of our equity method investees as of and for the year ended December 31, 2019 was $ 191.5 million, $ 58.4 million, and $ 62.9 million, respectively.

We have determined that we and/or our related parties can significantly influence the control of our equity method investments through our board representation and/or voting power.

Accordingly, we account for our investment in these entities under the equity method and record our proportionate share of their respective losses in Loss from investments in investees in our Consolidated Statement of Operations.

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down to its fair value as of December 31, 2018.

The aggregate value of our equity method investments based on the quoted market price of their respective shares of common stock and the number of shares held by us as of December 31, 2019 was $ 6.0 million .

Equity securities

Our equity securities consist of investments in Phio Pharmaceuticals (“Phio”) (ownership 0.1 % ), VBI Vaccines Inc.

Investments in Equity securities

Our equity securities consist of investments in Phio Pharmaceuticals (“Phio”) ( 0.01 %), VBI Vaccines Inc.

(“VBI”) ( 1 %), ChromaDex Corporation ( 0.1 %), MabVax Therapeutics Holdings, Inc.

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Accordingly, we account for our investment in these entities as equity securities, and we record changes in the fair value of these investments in Other income (expense) each reporting period when they have readily determinable fair value.

Equity securities without a readily determinable fair value are adjusted to fair value when an observable price change can be identified.

Net gains and losses on our equity securities for the year ended December 31, 2019 are as follows:

Equity securities without a readily determinable fair value are adjusted to fair value when there is an observable price change.

Net gains and losses on our equity securities for the year ended December 31, 2020, 2019 and 2018 are as follows:

For the year ended December 31

(in thousands) 2020 2019 2018

Equity Securities:

For the year ended December 31, 2019

Net gains and losses recognized during the period on equity securities $ 10,376 $ ( 7,443 ) $ 2,752

Net gains and losses realized during the period on equity securities ( 10,324 ) — 113

Unrealized net gains recognized during the period on equity securities still held at the reporting date

Unrealized net gains and losses recognized during the period on equity securities still held at the reporting date $ 52 $ ( 7,443 ) $ 2,865

Sales of investments

Gains (losses) included in earnings from sales of our investments are recorded in Other income (expense), net in our Consolidated Statement of Operations.

We did not have significant sales activity during the years ended December 31, 2019 and 2018 .

Gains (losses) from sale of our investments for the year ended December 31, 2017 was $ 1.5 million .

The cost of securities sold is based on the specific identification method.

Warrants and options

In addition to our equity method investments and equity securities, we hold options to purchase 47 thousand additional shares of BioCardia, 31 thousand of which were vested as of December 31, 2019 , and 33 thousand , 0.7 million , 40 thousand and 22 thousand of warrants to purchase additional shares of COCP, InCellDx, Inc., Xenetic and Phio, respectively.

In addition to our equity method investments and equity securities, we hold options to purchase 47 thousand additional shares of BioCardia, all of which were vested as of December 31, 2020, and 33 thousand, 0.7 million, 40 thousand and 404 warrants to purchase additional shares of COCP, InCellDx, Inc., Xenetic and Phio, respectively.

We recorded the changes in the fair value of the options and warrants in Fair value changes of derivative instruments, net in our Consolidated Statement of Operations.

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Investments in variable interest entities

We have determined that we hold variable interests in Zebra Biologics, Inc.

We made this determination as a result of our assessment that Zebra does not have sufficient resources to carry out its principal activities without additional financial support.

We own 1,260,000 shares of Zebra Series A-2 Preferred Stock and 900,000 shares of Zebra restricted common stock (ownership 29 % at December 31, 2019 ).

We have determined that we hold variable interests in Detect Genomix, LLC (“Detect Genomix”) and Zebra Biologics, Inc.

We made this determination as a result of our assessment that they do not have sufficient resources to carry out their principal activities without additional financial support.

In August 2020, GeneDx, Inc., a subsidiary of BioReference, announced that it had entered into an agreement with Pediatrix Medical Group (“Pediatrix”), a provider of maternal-fetal, and pediatric medical and surgical subspecialty physician services, to offer genomic sequencing to support clinical diagnosis in neonatal intensive care units staffed by Pediatrix’s affiliated neonatologists.

The offering is planned to include whole exome and whole genome sequencing and genomic support services under the brand Detect Genomix.

Our initial capital investment in Detect Genomix was $ 245,000 for which we received a 49 % ownership interest in Detect Genomix.

We are required to make additional capital contributions to Detect Genomix in accordance with our percentage interests if Detect Genomix is unable to generate positive cash flow from operations or is unable to obtain alternative financing.

We have not made any other investments in or loans to Detect Genomix through December 31, 2020.

In order to determine the primary beneficiary of Detect Genomix, we evaluated our investment to identify if we had the power to direct the activities that most significantly impact the economic performance of Detect Genomix.

Based on the capital structure, governing documents and overall business operations of Detect Genomix, we determined that, while a VIE, we do not have the power to direct the activities that most significantly impact Detect Genomix’s economic performance.

We determined, however, that we can significantly influence control of Detect Genomix through our board representation and voting power.

Therefore, we have the ability to exercise significant influence over Detect Genomix’s operations and account for our investment in Detect Genomix under the equity method.

We own 1,260,000 shares of Zebra Series A-2 Preferred Stock and 900,000 shares of Zebra restricted common stock (ownership 29 % at December 31, 2020 and 2019).

Zebra is a privately held biotechnology company focused on the discovery and development of biosuperior antibody therapeutics and complex drugs.

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Based on the capital structure, governing documents and overall business operations of Zebra, we determined that, while a VIE, we do not have the power to direct the activities that most significantly impact Zebra’s economic performance and have no obligation to fund expected losses.

We did determine, however, that we can significantly influence the success of Zebra through our board representation and voting power.

We did determine, however, that we can significantly influence control of Zebra through our board representation and voting power.

Therefore, we have the ability to exercise significant influence over Zebra’s operations and account for our investment in Zebra under the equity method.

We recorded $ 8.8 million of expense in Selling, general and administrative expenses in our Consolidated Statement of Operations for the year ended December 31, 2017 to write certain Other current assets from our investees down to their estimated fair value.

Note 6 Composition of Certain Financial Statement Captions

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allowance for doubtful accounts ( 2,055 ) ( 1,934 )

$ 286,314 $ 134,617

Inventories, net

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inventory reserve ( 2,321 ) ( 2,537 )

$ 132,341 $ 53,434

Other current assets and prepaid expenses

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Prepaid insurance 3,803 3,486

Other 5,309 15,839

$ 32,313 $ 50,542

Property, plant and equipment, net:

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Automobiles and aircraft 10,537 10,029

Software 14,726 13,861

Building 21,848 18,462

Land 2,602 2,422

Construction in process 8,169 7,044

accumulated depreciation ( 164,769 ) ( 136,445 )

$ 140,554 $ 127,111

Intangible assets, net:

Customer relationships $ 448,751 $ 445,408

Technologies 296,623 296,246

Trade names 49,820 49,786

Covenants not to compete 16,334 16,318

Licenses 5,766 5,766

Product registrations 8,025 7,578

Other 6,513 6,094

accumulated amortization ( 356,830 ) ( 298,234 )

$ 475,002 $ 528,962

For the years ended December 31,

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Accrued expenses:

Contract liabilities

Inventory received but not invoiced $ 72,160 $ 13,751

Employee benefits 43,300 33,671

Contract liabilities 15,783 19,196

Commitments and contingencies 15,454 38,635

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Finance leases short-term 2,453 2,743

Milestone payment

Contingent consideration 1,188 2,375

Other 78,434 45,099

$ 240,869 $ 164,925

Other long-term liabilities:

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Mortgages and other debts payable 3,837 3,906

Our intangible assets and goodwill relate principally to our completed acquisitions of OPKO Renal, OPKO Biologics, EirGen and BioReference.

Other 25,328 25,224

$ 37,072 $ 87,804

Our intangible assets and goodwill relate principally to our completed acquisitions of OPKO Renal, OPKO Biologics, EirGen Pharma Limited (“EirGen”) and BioReference.

We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives.

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Our goodwill is not tax deductible for income tax purposes in any jurisdiction in which we operate.

The changes in value of the intangible assets and goodwill during the year ended December 31, 2020 are primarily due to foreign currency fluctuations between the Chilean Peso, the Euro and the Shekel against the U.S.

The changes in value of the intangible assets and goodwill during the year ended December 31, 2019 are primarily due to an impairment charge of $ 44.8 million to write our IPR&D assets for OPK88003 and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair value, a goodwill impairment charge of $ 26.2 million to write the carrying amount of the OPKO Diagnostics, CURNA and Transition Therapeutics reporting units down to their estimated fair value, and an impairment charge of $ 20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair value.

The changes in value of the intangible assets during the year ended December 31, 2018 are primarily due to an impairment charge of $ 10.1 million to write our IPR&D assets for Alpharen and OPK88004 down to their estimated fair value.

The value of our intangible assets and goodwill for the years ended December 31, 2019 and 2018 were also affected by foreign currency fluctuations between the Chilean Peso, the Euro and the Shekel against the U.S.

The changes in value of our intangible assets and goodwill for the years ended December 31, 2019 and 2018 were also affected by foreign currency fluctuations between the Chilean Peso, the Euro and the Shekel against the U.S.

The following table reflects the changes in the allowance for doubtful accounts, provision for inventory reserve and tax valuation allowance accounts:

(In thousands)

(In thousands) Beginning

balance Charged

expense Written-off Ending

Allowance for doubtful accounts $ ( 1,934 ) ( 232 ) 111 $ ( 2,055 )

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The following table summarizes the changes in Goodwill by reporting unit during the years ended December 31, 2020 and 2019.

(In thousands)

Balance at January 1

Goodwill impairment

Foreign exchange and other

Balance at December 31st

Balance at January 1

Goodwill impairment

Foreign exchange and other

Balance at December 31

(In thousands) Gross goodwill at January 1 Cumulative impairment at January 1 Goodwill impairment Foreign exchange and other Balance at December 31st Gross goodwill at January 1 Cumulative impairment at January 1 Goodwill impairment Foreign exchange and other Balance at December 31

Pharmaceuticals

CURNA $ 4,827 $ ( 4,827 ) $ — $ — $ — $ 4,827 $ — $ ( 4,827 ) $ — $ —

Rayaldee 85,605 — — 7,813 93,418 87,314 — — ( 1,709 ) 85,605

FineTech 11,698 ( 11,698 ) — — — 11,698 ( 11,698 ) — — —

OPKO Biologics 139,784 — — — 139,784 139,784 — — — 139,784

OPKO Chile 4,348 — — 157 4,505 4,614 — — ( 266 ) 4,348

OPKO Health Europe 7,394 — — 692 8,086 7,546 — — ( 152 ) 7,394

OPKO Mexico 100 ( 100 ) — — — 100 ( 100 ) — — —

Transition Therapeutics 3,421 ( 3,421 ) — — — 3,322 — ( 3,421 ) 99 —

BioReference 434,809 — — — 434,809 434,809 — — — 434,809

OPKO Diagnostics 17,977 ( 17,977 ) — — — 17,977 — ( 17,977 ) — —

$ 709,963 $ ( 38,023 ) $ — $ 8,662 $ 680,602 $ 711,991 $ ( 11,798 ) $ ( 26,225 ) $ ( 2,028 ) $ 671,940

As of December 31, 2020 and 2019, our debt consists of the following:

For the years ended December 31,

(In thousands) 2020 2019

2025 Notes $ 156,163 $ 148,140

2023 Convertible Notes 62,776 60,018

2033 Senior Notes 3,050 3,050

JP Morgan Chase 7,057 44,750

Chilean and Spanish lines of credit 15,897 7,327

Current portion of notes payable 1,749 2,292

Long term portion of notes payable 4,513 4,723

Total $ 251,205 $ 270,300

Balance sheet captions

Convertible Notes $ 221,989 $ 211,208

Current portion of lines of credit and notes payable 24,703 9,619

JP Morgan Chase and LT notes payable included in long-term liabilities 4,513 49,473

Total $ 251,205 $ 270,300

On February 25, 2020, we entered into a credit agreement with an affiliate of Dr.

Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $ 100 million.

Borrowings under the line of credit will bear interest at a rate of 11 % per annum and may be repaid and reborrowed at any time.

The credit agreement includes various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under line of credit.

The line of credit matures on February 25, 2025.

The line of credit also calls for a commitment fee equal to 0.25 % per annum of the unused portion of the line.

As of December 31, 2020, no funds were borrowed under the line of credit.

In February 2019, we issued $ 200.0 million aggregate principal amount of Senior Convertible Notes due 2025 (the “2025 Notes”) in an underwritten public offering.

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The conversion rate for the 2025 Notes is subject to adjustment in certain events, but will not be adjusted for any accrued and unpaid interest.

In addition, following certain corporate events that occur prior to the maturity date of the 2025 Notes or if we deliver a notice of redemption, in certain circumstances the indenture governing the 2025 Notes would require an increase in the conversion rate of the 2025 Notes for a holder who elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be.

In addition, following certain corporate events that occur prior to the maturity date of the 2025 Notes or if we deliver a notice of redemption, in certain circumstances the indenture governing the 2025 Notes requires an increase in the conversion rate of the 2025 Notes for a holder who elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be.

We may not redeem the 2025 Notes prior to February 15, 2022.

We may redeem for cash any or all of the notes, at our option, on or after February 15, 2022, if the last reported sale price of our Common Stock has been at least 130 % of the then current conversion price for the notes for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

No sinking fund is provided for the 2025 Notes.

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In conjunction with the issuance of the 2025 Notes, we agreed to loan up to 30,000,000 shares of our Common Stock to affiliates of the underwriter in order to assist investors in the 2025 Notes to hedge their position.

As of December 31, 2019 , a total of 29,250,000 shares were issued under the share lending arrangement.

As of December 31, 2020 and 2019, a total of 29,250,000 shares were issued under the share lending arrangement.

We will not receive any of the proceeds from the sale of the borrowed shares, but we received a one-time nominal fee of $ 0.3 million for the newly issued shares.

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The following table sets forth information related to the 2025 Notes which is included in our Consolidated Balance Sheet as of December 31, 2020:

(In thousands)

2025 Senior Notes

Debt Issuance Cost

(In thousands) 2025 Senior Notes Discount Debt Issuance Costs Total

Balance at December 31, 2019 $ 200,000 $ ( 46,774 ) $ ( 5,086 ) $ 148,140

Issuance of 4.50% convertible notes

Amortization of debt discount and debt issuance costs — 7,237 786 8,023

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The 2023 Convertible Notes contain customary events of default and representations and warranties of OPKO.

The issuance of the 2023 Convertible Notes and the issuance of the shares of Common Stock, if any, upon conversion thereof was not, and will not be, respectively, registered under the Securities Act, pursuant to the exemption provided by Section 4(a)(2) thereof, and we have not agreed to register the of Common Stock if or when such shares are issued.

Purchasers of the 2023 Convertible Notes include an affiliate of Dr.

Purchasers of the 2023 Convertible Notes included an affiliate of Dr.

Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Dr.

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The 2033 Senior Notes, which totaled $ 175.0 million in original principal amount, bear interest at the rate of 3.0 % per year, payable semiannually on February 1 and August 1 of each year.

The 2033 Senior Notes will mature on February 1, 2033 , unless earlier repurchased, redeemed or converted.

Upon a fundamental change as defined in the indenture, governing the 2033 Senior Notes, subject to certain exceptions, the holders may require us to repurchase all or any portion of their 2033 Senior Notes for cash at a repurchase price equal to 100 % of the principal amount of

the 2033 Senior Notes being repurchased, plus any accrued and unpaid interest to but not including the related fundamental change repurchase date.

The 2033 Senior Notes mature on February 1, 2033, unless earlier repurchased, redeemed or converted.

Notes being repurchased, plus any accrued and unpaid interest to but not including the related fundamental change repurchase date.

From 2013 to 2016, holders of the 2033 Senior Notes converted $ 143.2 million in aggregate principal amount into an aggregate of 21,539,873 shares of Common Stock.

On February 1, 2019, approximately $ 28.8 million aggregate principal amount of 2033 Senior Notes were tendered by holders pursuant to such holders’ option to require us to repurchase the 2033 Senior Notes as set forth in the indenture, following which repurchase only $ 3.0 million aggregate principal amount of the 2033 Senior Notes remained outstanding.

Holders of the remaining $ 3.0 million principal amount of the 2033 Senior Notes may require us to repurchase such notes for 100 % of their principal amount, plus accrued and unpaid interest, on February 1, 2023, on February 1, 2028, or following the occurrence of a fundamental change as defined in the indenture governing the 2033 Senior Notes.

On February 1, 2019, approximately $ 28.8 million aggregate principal amount of 2033 Senior Notes were tendered by holders pursuant to such holders’ option to require us to repurchase the 2033 Senior Notes as set forth in the indenture, governing the 2033 Senior Notes, following which repurchase only $ 3.0 million aggregate principal amount of the 2033 Senior Notes remained outstanding.

The terms of the 2033 Senior Notes, include, among others:

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In 2017, certain terms of the embedded derivatives expired pursuant to the original agreement and the embedded derivatives no longer met the criteria to be separated from the host contract and, as a result, the embedded derivatives were no longer required to be valued separate and apart from the 2033 Senior Notes and were reclassified to additional paid in capital.

In November 5, 2015, BioReference and certain of its subsidiaries entered into the Credit Agreement, as amended from time to time, with CB, as lender and administrative agent.

In November 2015, BioReference and certain of its subsidiaries entered into a credit agreement, as amended from time to time, with JPMorgan Chase Bank, N.A.

(“CB”), as lender and administrative agent, as amended (the “Credit Agreement”).

The Credit Agreement provides for a $ 75.0 million secured revolving credit facility and includes a $ 20.0 million sub-facility for swingline loans and a $ 20.0 million sub-facility for the issuance of letters of credit.

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Availability under the Credit Agreement is based on a borrowing base comprised of eligible accounts receivables of BioReference and certain of its subsidiaries, as specified therein.

As of December 31, 2019 , $ 6.2 million additional funds were available to be borrowed under the Credit Agreement.

As of December 31, 2020, $ 57.6 million remained available for borrowing under the Credit Agreement.

Principal under the Credit Agreement is due upon maturity on November 5, 2021.

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The Credit Agreement also calls for other customary fees and charges, including an unused commitment fee of 0.25 % of the lending commitments.

On March 17, 2017, BioReference and certain of its subsidiaries entered into Amendment No.

3 to Credit Agreement, which amended the Credit Agreement to permit BioReference and its subsidiaries to dividend cash to the Company in the form of an intercompany loan, in an aggregate amount not to exceed $ 55.0 million .

On August 7, 2017, BioReference and certain of its subsidiaries entered into Amendment No.

4 to Credit Agreement, which amended the Credit Agreement to permit BioReference and its subsidiaries to dividend cash to the Company in the form of an additional intercompany loan, in an aggregate amount not to exceed $ 35.0 million .

On November 8, 2017, BioReference and certain of its subsidiaries entered into Amendment No.

5 to Credit Agreement, which amended the Credit Agreement to, among other things, ease certain thresholds that require increased reporting by BioReference and reduce the pro forma availability condition for BioReference to make certain cash dividends to the Company.

On December 22, 2017, BioReference and certain of its subsidiaries entered into Amendment No.

6 to Credit Agreement, which amended the Credit Agreement to, among other things, permit BioReference and its subsidiaries to dividend cash to the Company in the form of intercompany loans, in an aggregate amount not to exceed $ 45.0 million .

The other terms of the Credit Agreement remain unchanged.

In February 2018, BioReference and certain of its subsidiaries entered into Amendment No.

7 to the Credit Agreement, which amended the Credit Agreement to permit BioReference and its subsidiaries to use cash on hand, up to a maximum amount set forth in the amendment, to meet the availability requirements that otherwise would trigger (i) covenants that would require BioReference to maintain a minimum fixed charge coverage ratio and provide certain increased reporting under the Credit Agreement and (ii) CB’s right, as agent for the lenders under the Credit Agreement, to exercise sole dominion over funds held in certain accounts of BioReference.

The other terms of the Credit Agreement remain unchanged.

On February 26, 2019, BioReference and certain of its subsidiaries entered into Amendment No.

8 to the Credit Agreement, which amended the Credit Agreement to add back certain cost savings resulting from work force reductions in the 2018 fiscal year to the calculation of EBITDA for purposes of complying with the minimum fixed charge coverage ratio covenant.

The other terms of the Credit Agreement remain unchanged.

On August 6, 2019, BioReference and certain of its subsidiaries entered into Amendment No.

9 to the Credit Agreement, which amended certain definitions in the Credit Agreement and further amended the Credit Agreement to provide that the fixed charge coverage ratio requirement set forth in the Credit Agreement would not be tested for the second quarter and would not be tested for the quarter ending September 30, 2019, subject, in the case of testing for the quarter ending September 30, 2019, to (i) there having been no event of default occurring and (ii) availability under the revolving facility exceeding 10 % of the total revolving commitment, subject to certain adjustments, for at least 30 consecutive days ending on September 30, 2019.

The other terms of the Credit Agreement remain unchanged.

On November 4, 2019, BioReference and certain of its subsidiaries entered into Amendment No.

10 to the Credit Agreement, which amended certain definitions in the Credit Agreement, extended the maturity date to 2021 and reduced the lenders’ aggregate commitment from $ 100 million to $ 75 million .

The other terms of the Credit Agreement remained unchanged.

On February 25, 2020, BioReference and certain of its subsidiaries entered into Amendment No.

11 to the Credit Agreement, which amended the Credit Agreement to provide that the fixed charge coverage ratio requirement set forth in the Credit Agreement would not be tested for the quarter ended December 31, 2019, with respect to availability calculated on January 29, 2020 and January 30, 2020, subject, in the case of testing for the quarter ended December 31, 2019, to (i) there having been no event of default occurring and (ii) availability under the revolving facility exceeding 10 % of the total revolving commitment, for at least 30 consecutive days for the period ended on December 31, 2019, excluding December 18, 2019.

The other terms of the Credit Agreement remain unchanged.

As of December 31, 2019 , $ 44.7 million outstanding under the Credit Agreement was included within Other long-term liabilities.

As of December 31, 2020 and 2019, $ 7.1 million and $ 44.7 million, respectively, was outstanding under the Credit Agreement.

The Credit Agreement contains customary covenants and restrictions, including, without limitation, covenants that require BioReference and its subsidiaries to maintain a minimum fixed charge coverage ratio if availability under the new credit facility falls below a specified amount and to comply with laws and restrictions on the ability of BioReference and its subsidiaries to incur additional indebtedness or to pay dividends and make certain other distributions to the Company, subject to certain exceptions as specified therein.

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The Credit Agreement also includes various customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding amounts under the Credit Agreement and execution upon the collateral securing obligations under the Credit Agreement.

Substantially all the assets of BioReference and its subsidiaries are restricted from sale, transfer, lease, disposal or distributions to the Company, subject to certain exceptions.

BioReference and its subsidiaries net assets as of December 31, 2019 were approximately $ 885.2 million , which includes goodwill of $ 434.8 million and intangible assets of $ 365.7 million .

In addition to the Credit Agreement with CB, we have lines of credit with eleven other financial institutions as of December 31, 2019 and 2018 in the U.S., Chile and Spain.

Substantially all the assets of BioReference and its subsidiaries are restricted from sale, transfer, lease, disposal or

distributions to the Company, subject to certain exceptions.

As of December 31, 2020, BioReference and its subsidiaries had net assets of approximately $ 1.0 billion, which included goodwill of $ 434.8 million and intangible assets of $ 329.5 million.

In addition to the Credit Agreement with CB, we had line of credit agreements with eleven other financial institutions as of December 31, 2020 and 2019 in the U.S., Chile and Spain.

These lines of credit are used primarily as a source of working capital for inventory purchases.

The following table summarizes the amounts outstanding under the BioReference, Chilean and Spanish lines of credit:

(Dollars in thousands)

Balance Outstanding

Interest rate on

borrowings at December 31, 2019

(Dollars in thousands) Balance Outstanding

Lender Interest rate on

borrowings at December 31, 2020 Credit line

capacity December 31,

2020 December 31,

JP Morgan Chase 3.75 % $ 75,000 $ 7,057 $ 44,750

Itau Bank 5.50 % 1,810 2,353 472

Bank of Chile 6.60 % 3,800 1,494 851

BICE Bank 5.50 % 2,500 1,166 1,429

BBVA Bank 5.50 % 3,250 — 11

Security Bank 5.50 % 262 262 588

Estado Bank 5.50 % 3,500 2,127 1,365

Santander Bank 5.50 % 4,500 3,025 1,943

Scotiabank 5.00 % 1,829 1,829 668

Corpbanca 5.00 % 3,641 3,641 —

Banco De Sabadell 1.75 % 613 — —

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Santander Bank 1.82 % 613 — —

Total $ 101,686 $ 22,954 $ 52,077

At December 31, 2020 and 2019, the weighted average interest rate on our lines of credit was approximately 4.9 % and 4.0 %, respectively.

At December 31, 2020 and 2019, we had notes payable and other debt (excluding the 2033 Senior Notes, the 2023 Convertible Notes, the 2025 Notes, the Credit Agreement and amounts outstanding under lines of credit described above) as follows:

(In thousands)

(In thousands) December 31,

2020 December 31,

Current portion of notes payable $ 1,749 $ 2,292

Other long-term liabilities 4,513 4,723

Total $ 6,262 $ 7,015

The notes and other debt mature at various dates ranging from 2021 through 2024 bearing variable interest rates from 0.7 % up to 3.8 %.

The weighted average interest rate on the notes and other debt at December 31, 2019 and 2018 , was 2.7 % and 2.1 % , respectively.

The weighted average interest rate on the notes and other debt was 2.9 % and 2.7 % on December 31, 2020 and 2019.

The notes are partially secured by our office space in Barcelona.

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In November 2019, pursuant to an option the Company granted the underwriters, we issued an additional 4,227,749 shares at $ 1.50 per share, less underwriting discounts and commissions, resulting in net proceeds of approximately $ 6 million.

The Company intends to use the net proceeds received from the Offering to fund research and development, to further develop and commercialize its portfolio of proprietary pharmaceutical and diagnostic products and for working capital, capital expenditures, acquisitions and other general corporate purposes.

Frost and Hsiao and Mr.

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For the year ended December 31, 2020, changes in Accumulated other comprehensive income (loss), net of tax, were as follows:

(In thousands)

(In thousands) Foreign

currency translation

Balance at December 31, 2019 $ ( 22,070 )

Other comprehensive income (loss) before reclassifications

Net other comprehensive income (loss)

Other comprehensive income 17,845

Balance at December 31, 2020 $ ( 4,225 )

For the year ended December 31, 2019 , changes in Accumulated other comprehensive income, net of tax, were as follows:

(In thousands)

(In thousands) Foreign

currency translation

gain (loss) in

Balance at December 31, 2018 $ ( 20,131 )

Other comprehensive income (loss) before reclassifications

Reclassification adjustment due to adoption of ASU 2016-01

Net other comprehensive income (loss)

Other comprehensive loss ( 1,939 )

Balance at December 31, 2019 $ ( 22,070 )

Note 10 Equity-Based Compensation

We maintain six equity-based incentive compensation plans, the 2016 Equity Incentive Plan, the Acuity Pharmaceuticals, Inc.

2003 Equity Incentive Plan, the 2007 Equity Incentive Plan, the 2000 Stock Option Plan, the Modigene Inc.

2005 Stock Incentive Plan and the Modigene Inc.

We maintain three equity-based incentive compensation plans, the 2016 Equity Incentive Plan, the 2007 Equity Incentive Plan, and the Modigene Inc.

2007 Equity Incentive Plan that provide for grants of stock options and restricted stock to our directors, officers, key employees and certain outside consultants.

Equity awards granted under our 2016 Equity Incentive Plan are exercisable for a period of up to 10 years from the date of grant.

Equity awards granted under our 2016 Equity Incentive Plan

are exercisable for a period of up to 10 years from the date of grant.

Equity awards granted under our 2007 Equity Incentive Plan are exercisable for a period of either 7 years or 10 years from the date of grant.

Equity awards granted under our 2000 Stock Option Plan, 2003 Equity Incentive Plan and the two Modigene Plans are exercisable for a period of up to 10 years from date of grant.

Equity awards granted under the Modigene Plan are exercisable for a period of up to 10 years from date of grant.

Vesting periods range from immediate to 5 years.

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We recorded equity-based compensation expense of $ 8.9 million, $ 13.4 million and $ 21.8 million for the years ended December 31, 2020, 2019, and 2018, respectively, all of which were reflected as operating expenses.

Of the $ 13.4 million of equity based compensation expense recorded in the year ended December 31, 2019 , $ 9.7 million was recorded as selling, general and administrative expenses, $ 2.0 million was recorded as research and development expenses and $ 1.6 million was recorded as a cost of revenue.

Of the $ 21.8 million of equity based compensation expense recorded in the year ended December 31, 2018 , $ 14.7 million was recorded as selling, general and administrative expense, $ 4.2 million was recorded as research and development expenses and $ 2.8 million was recorded as a cost of revenue.

Of the $ 28.3 million of equity based compensation expense recorded in the year ended December 31, 2017 , $ 21.2 million was recorded as selling, general and administrative expense, $ 5.1 million was recorded as research and development expenses and 2.0 million was recorded as cost of revenue.

Of the $ 8.9 million of equity based compensation expense recorded for the year ended December 31, 2020, $ 6.8 million was recorded as selling, general and administrative expenses, $ 1.8 million was recorded as research and development expenses and $ 0.3 million was recorded as a cost of revenue.

Of the $ 13.4 million of equity based compensation expense recorded for the year ended December 31, 2019, $ 9.7 million was recorded as selling, general and administrative expense, $ 2.0 million was recorded as research and development expenses and $ 1.6 million was recorded as a cost of revenue.

Of the $ 21.8 million of equity based compensation expense recorded for the year ended December 31, 2018, $ 14.7 million was recorded as selling, general and administrative expense, $ 4.2 million was recorded as research and development expenses and 2.8 million was recorded as cost of revenue.

As of December 31, 2020, there was $ 18.3 million of unrecognized compensation cost related to the stock options granted under our equity-based incentive compensation plans.

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We account for forfeitures as they occur and apply the following assumptions in our Black-Scholes-Merton Model option-pricing formula:

2020 Year Ended

2019 Year Ended

Expected term (in years) 4.0 - 10.0

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2.32 % - 3.09 %

1.32% - 2.41%

Expected volatility 56 % - 76 %

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We maintain incentive stock plans that provide for the grants of stock options to our directors, officers, employees and non-employee consultants.

As of December 31, 2019 , there were 22,304,368 shares of Common Stock reserved for issuance under our 2016 Equity Incentive Plan and our 2007 Equity Incentive Plan.

As of December 31, 2020, there were 20,879,993 shares of Common Stock reserved for issuance under our equity-based incentive plans.

We intend to issue new shares upon the exercise of stock options.

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Stock options granted under these plans to employees typically become exercisable over four years in equal annual installments after the date of grant, and stock options granted to non-employee directors become exercisable in full one-year after the grant date, subject to, in each case, continuous service with us during the applicable vesting period.

We assumed stock options to grant Common Stock as part of the mergers with Acuity Pharmaceuticals, Inc., Froptix, Inc., OPKO Biologics and BioReference, which reflected various vesting schedules, including monthly vesting to employees and non-employee consultants.

We assumed stock options to grant Common Stock as part of the mergers with Acuity Pharmaceuticals, Inc., Froptix, Inc., OPKO Biologics and

BioReference, which reflected various vesting schedules, including monthly vesting to employees and non-employee consultants.

A summary of option activity under our stock option plans as of December 31, 2020, and the changes during the year is presented below:

Options Number of

options Weighted

price Weighted

term (years) Aggregate

intrinsic value

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Outstanding at December 31, 2019 37,370,421 $ 8.01 6.00 $ —

Granted 9,362,500 $ 2.41

Exercised ( 206,875 ) $ 3.66

Forfeited ( 1,002,500 ) $ 4.22

Expired ( 6,935,625 ) $ 9.78

Outstanding at December 31, 2020 38,587,921 $ 6.45 6.78 $ 26,054

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(In thousands) 2020 2019 2018

Federal $ ( 234 ) $ — $ —

State 351 ( 89 ) 6,318

Foreign ( 2,094 ) ( 2,647 ) ( 2,738 )

( 1,977 ) ( 2,736 ) 3,580

Federal ( 254 ) 333 2,045

State 933 125 5,673

Foreign ( 16,319 ) ( 4,782 ) 27,428

( 15,640 ) ( 4,324 ) 35,146

Total, net $ ( 17,617 ) $ ( 7,060 ) $ 38,726

Deferred income tax assets and liabilities as of December 31, 2020 and 2019 are comprised of the following:

(In thousands)

December 31, 2019

December 31, 2018

(In thousands) December 31, 2020 December 31, 2019

Deferred income tax assets:

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Research and development expense 301 1,560

Tax credits 22,999 22,989

Stock options 26,683 30,640

Accruals 14,779 17,215

Equity investments 13,619 13,495

Bad debts 310 445

Lease liability 861 1,064

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Operating lease asset 9,842 10,204

Other 6,393 8,395

Deferred income tax assets 269,637 336,329

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Operating lease liability ( 9,842 ) ( 10,204 )

Fixed assets ( 2,736 ) ( 3,976 )

Other ( 2,082 ) ( 2,130 )

Deferred income tax liabilities ( 98,244 ) ( 259,191 )

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Net deferred income tax liabilities $ ( 131,933 ) $ ( 117,731 )

Net deferred income tax liability balance includes $ 986 thousand recorded to Other Assets on the Consolidated Balance Sheet.

Net deferred income tax liability balance includes $ 5.3 million recorded to Other Assets on the Consolidated Balance Sheet.

As of December 31, 2020, we have federal, state and foreign net operating loss carryforwards of approximately $ 538.7 million, $ 729.8 million and $ 78.6 million, respectively, that expire at various dates through 2040 unless indefinite in nature.

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We have determined a valuation allowance is required against all of our net deferred tax assets that we do not expect to be utilized by the reversing of deferred income tax liabilities.

In 2020 we completed the transfer of certain assets to an OPKO affiliate.

The transaction gave rise to a deferred tax asset of approximately $ 148.9 million.

Realizability of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the carryback and carryforward periods as permitted by tax law.

The Company evaluated the realizability of the deferred tax asset as required by ASC 740-10-30-18.

The Company has determined that the deferred tax asset is not more-likely-than-not to be realized as of December 31, 2020.

As a result, the Company has recorded a full valuation allowance against the deferred tax asset.

Under Section 382 of the Internal Revenue Code of 1986, as amended, certain significant changes in ownership may restrict the future utilization of our income tax loss carryforwards and income tax credit carryforwards in the U.S.

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As such, of the $ 538.7 million of federal net operating loss carryforwards, at least approximately $ 47.4 million may not be able to be utilized.

During 2020, we conducted a study to determine whether any ownership changes occurred from 2009 through 2020.

As a result, we have concluded that the annual utilization of our NOLs and tax credits is not subject to a limitation pursuant to Internal Revenue Code Section 382.

We file federal income tax returns in the U.S.

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federal income tax examinations by the Internal Revenue Service for years before 2017.

However, because we are carrying forward income tax attributes, such as net operating losses and tax credits from 2016 and earlier tax years, these attributes can still be audited when utilized on returns filed in the future.

However, because we are carrying forward income tax attributes, such as net operating losses and tax credits from those years, these attributes can still be audited when utilized on returns filed in the future.

Under the statute of limitations applicable to most state income tax laws, we are no longer subject to state income tax examinations by tax authorities for years before 2016 in states in which we have filed income tax returns.

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The Company currently estimates GILTI will be immaterial for the year ended December 31, 2020, although interpretive guidance continues to be issued and future guidance may impact this analysis.

The Company has not recorded any

deferred taxes for future GILTI inclusions as any future inclusions are expected to be treated as a period expense and offset by net operating loss carryforwards in the U.S.

The Company has not recorded any deferred taxes for future GILTI inclusions as any future inclusions are expected to be treated as a period expense and offset by net operating loss carryforwards in the U.S.

Unrecognized Tax Benefits

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As of December 31, 2019 and 2018, $( 13.2 ) million and $( 14.2 ) million of the unrecognized tax benefits, if recognized, would have affected our effective income tax rate.

We believe it is reasonably possible that approximately $ 0.5 million of unrecognized tax benefits may be recognized within the next twelve months, mainly due to anticipated statute of limitations lapses in various jurisdictions.

We believe it is reasonably possible that up to $ 1.5 million of unrecognized tax benefits may be recognized within the next twelve months, mainly due to an expected audit settlement.

The following summarizes the changes in our gross unrecognized income tax benefits.

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Unrecognized tax benefits at beginning of period $ 17,160 $ 17,513 $ 21,347

Gross increases – tax positions in prior period

Gross increases – tax positions in current period 441 884 8,384

Gross decreases – tax positions in prior period ( 244 ) ( 298 ) ( 7,597 )

Gross decreases – settlements with taxing authorities ( 2,770 ) — —

Lapse of Statute of Limitations ( 633 ) ( 939 ) ( 4,621 )

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For the years ended December 31,

2020 2019 2018

Federal statutory rate 21.0 % 21.0 % 21.0 %

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Unrecognized tax benefits ( 5.0 ) % — % ( 1.8 ) %

The following table reconciles our losses before income taxes between U.S.

Impairments — % ( 1.6 ) % — %

IPR&D benefit ( 309.6 ) % — % — %

Stock options excess tax benefit 10.6 % 0.4 % 0.5 %

Imputed interest 2.5 % 0.5 % 0.6 %

Other 3.2 % 0.1 % ( 0.8 ) %

Total 36.5 % ( 2.3 ) % 20.2 %

Certain operations in Israel have been granted "Beneficiary Enterprise" status by the Israeli Income Tax Authority, which makes us eligible for tax benefits under the Israeli Law for Encouragement of Capital Investments, 1959.

Under the terms of the Beneficiary Enterprise program, beneficiary income that is attributable to our operations in Kiryat Gat, Israel will be exempt from income tax through 2023.

This tax incentive has an immaterial impact on our earnings per share for the year ended December 31, 2020.

The following table reconciles our income (loss) before income taxes between U.S.

and foreign jurisdictions:

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Pre-tax income (loss):

$ 81,734 $ ( 236,544 ) $ ( 132,102 )

Foreign ( 33,531 ) ( 71,321 ) ( 59,664 )

Total $ 48,203 $ ( 307,865 ) $ ( 191,766 )

Prior to the enactment of the Tax Act, the Company regularly determined certain foreign earnings to be indefinitely reinvested outside the U.S.

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Note 12 Related Party Transactions

On October 29, 2019, we issued 50 million shares of our Common Stock at a price of $ 1.50 per share in the Offering, resulting in net proceeds to the Company of approximately $ 70 million , after deducting underwriting commissions and offering expenses.

In August 2020, we paid a $ 125,000 filing fee to the Federal Trade Commission (the “FTC”) in connection with filings made by us and Dr.

Jane Hsiao, our Vice Chairman and Chief Technical Officer, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) relating to her percentage equity ownership interest in OPKO and potential future purchases of our Common Stock.

In August 2020, Dr.

Phillip Frost, our Chairman and Chief Executive Officer, paid a filing fee of $ 280,000 to the FTC under the HSR Act in connection with filings made by us and Dr.

Frost, relating to his percentage equity ownership interest in OPKO and potential future purchases of our Common Stock.

We reimbursed Dr.

Frost for the HSR filing fee.

In August 2020, GeneDx, Inc., a subsidiary of BioReference, entered into an agreement with Mednax Services, Inc.

(“Mednax Services”), a subsidiary of MEDNAX, Inc., (“MEDNAX”) pursuant to which the parties formed a joint venture under the brand Detect Genomix.

GeneDx’s initial capital investment in Detect Genomix was $ 245,000 for which GeneDx received a 49 % ownership interest in Detect Genomix, and Mednax Services contributed $ 255,000 .

Adam Logal, the

Company’s CFO, is the chair and sits on the Board of Managers of the joint venture.

Mednax Services provides administrative services to the joint venture pursuant to an administrative services agreement.

GeneDx provides laboratory services to the joint venture.

Roger Medel, a director of the Company as of December 18, 2020, is the former Chief Executive Officer of MEDNAX and Mednax Services.

Medel continues to serve on the board of MEDNAX.

On February 25, 2020, we entered into a credit agreement with an affiliate of Dr.

Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $ 100 million.

Borrowings under the line of credit will bear interest at a rate of 11 % per annum and may be repaid and reborrowed at any time.

The credit agreement includes various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under this line of credit.

This line of credit matures on February 25, 2025.

This line of credit also calls for a commitment fee equal to 0.25 % per annum of the unused portion of the line.

As of December 31, 2020, no funds were borrowed under this line of credit.

On October 29, 2019, we issued 50 million shares of our Common Stock at a price of $ 1.50 per share in an underwritten public offering (the “Offering”), resulting in net proceeds to the Company of approximately $ 70 million, after deducting underwriting commissions and offering expenses.

In November 2019, pursuant to an option the Company granted the underwriters, we issued an additional 4,227,749 shares at the public offering price, less underwriting discounts and commissions, resulting in net proceeds to the Company of approximately $ 6 million.

Frost and Hsiao and Mr.

Steven Rubin, members of OPKO’s senior management purchased an aggregate of 2,415,000 shares of Common Stock in the Offering.

On March 1, 2019, OPKO Pharmaceuticals, LLC entered into an assignment agreement with Xenetic Biosciences, Inc., as amended from time to time (the “Assignment Agreement”), pursuant to which Xenetic acquired all of OPKO Pharmaceuticals’ right, title and interest in and to that certain Intellectual Property License Agreement (the “IP License Agreement”), entered into between The Scripps Research Institute and OPKO Pharmaceuticals, regarding certain patents for novel CAR T platform technology and through which the Institute granted an exclusive royalty-bearing license in exchange for royalties, subject to the terms of the IP License Agreement.

On March 1, 2019, OPKO Pharmaceuticals, LLC entered into an assignment agreement with Xenetic Biosciences, Inc., as amended from time to time (the “Assignment Agreement”), pursuant to which Xenetic acquired all of OPKO Pharmaceuticals’ right, title and interest in and to that certain Intellectual Property License Agreement (the “IP License Agreement”), entered into between The Scripps Research Institute and OPKO Pharmaceuticals, regarding certain patents for novel CAR T platform technology and through which the Scripps Research Institute granted an exclusive royalty-bearing license in exchange for royalties, subject to the terms of the IP License Agreement.

Under the Assignment Agreement and the IP License Agreement, Xenetic issued to OPKO Pharmaceuticals 164,062 shares of Xenetic common stock (the “OPKO Transaction Shares”).

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Adam Logal, our Senior Vice President and Chief Financial Officer, is a director of Xenetic.

In March 2019, we paid the $ 125,000 filing fee to the Federal Trade Commission (the “FTC”) in connection with filings made by us and Dr.

Jane Hsiao, our Vice Chairman and Chief Technical Officer, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) relating to her purchases of Common Stock.

In March 2019, we paid the $ 125,000 filing fee to the FTC in connection with filings made by us and Dr.

Jane Hsiao, our Vice Chairman and Chief Technical Officer, under the HSR Act relating to her purchases of Common Stock.

In February 2019, Dr.

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Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $ 60 million.

Borrowings under the line of credit bore interest at a rate of 10 % per annum and could have been repaid and reborrowed at any time.

The credit agreement included various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under line of credit.

The line of credit would have matured on November 8, 2023.

We repaid approximately $ 28.8 million that was borrowed in 2019 and terminated the line of credit on or around February 20, 2019.

Borrowings under this line of credit bore interest at a rate of 10 % per annum and could have been repaid and reborrowed at any time.

The credit agreement included various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under this line of credit.

This line of credit would have matured on November 8, 2023.

We repaid approximately $ 28.8 million that was borrowed in 2019 and terminated this line of credit on or around February 20, 2019.

In February 2018, we issued the 2023 Convertible Notes in the aggregate principal amount of $ 55.0 million.

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In February 2018, we invested an additional $ 1.0 million in COCP for a convertible note, which was converted into 538,544 shares of its common stock in May 2018.

In April 2017, we invested an additional $ 1.0 million in COCP for 138,889 shares of its common stock.

In November 2017, we invested an additional $ 3.0 million in Neovasc for 20,547 shares of its common stock, 20,547 Series A warrants, 20,547 Series B warrants and 8,221 Series C warrants, after adjusting for a 1-for-100 reverse stock split in 2018.

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In the first quarter of 2019, we exercised the Series C warrants for $ 1.2 million and exchanged the Series A warrants and received a total of 22,660 additional shares of Neovasc common stock.

In July 2017, we invested an additional $ 0.1 million in MabVax for 50,714 shares of common stock and in May 2017, we invested an additional $ 0.5 million in MabVax for 1,667 shares of Series L Preferred Stock and 107,607 shares of Series I Preferred Stock.

In November 2016, we entered into a Pledge Agreement with the Museum of Science, Inc.

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Pfenniger is the Vice Chairman of the Board of Trustees.

We lease office space from Frost Real Estate Holdings, LLC in Miami, Florida, where our principal executive offices are located.

We lease office space from Frost Real Estate Holdings, LLC (“Frost Holdings”) in Miami, Florida, where our principal executive offices are located.

Effective August 1, 2019, we entered into an amendment to our lease agreement with Frost Holdings.

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The discretionary company match for employee contributions to the Plan is 100 % up to the first 4 % of the participant’s earnings contributed to the Plan.

Effective January 1, 2017, employees of BioReference and its subsidiaries are eligible for participation in the Plan.

Our matching contributions to our plans, including predecessor plans for BioReference, were approximately $ 8.0 million, $ 8.3 million and $ 8.3 million for the years ended December 31, 2020, 2019, and 2018 respectively.

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As a result, as of December 31, 2020, we recorded $ 5.7 million as contingent consideration, with $ 1.2 million recorded within Accrued expenses and $ 4.5 million recorded within Other long-term liabilities in the accompanying Consolidated Balance Sheets.

In January 2021, the Company settled the ongoing litigation with Claros Diagnostics, Inc.

shareholders and, among other things, agreed to pay $ 1.2 million to the shareholders.

Refer to Note 6.

On June 3, 2019, BioReference reported that Retrieval-Masters Creditors Bureau, Inc.

d/b/a American Medical Collection Agency (“AMCA”), had notified BioReference about a data security incident involving AMCA (the “AMCA Incident”).

AMCA informed BioReference that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019.

AMCA advised that AMCA’s affected system may have included patient name, date of birth, address, phone, date of service, provider, and balance information, as well as credit card information, bank account information (but no passwords or security questions) and email addresses that were provided by the consumer to AMCA.

AMCA has advised BioReference that no Social Security Numbers were compromised, and BioReference provided no laboratory results or diagnostic information to AMCA.

BioReference has notified patients and provided notice to the Office of Civil Rights of the AMCA Incident.

To date, BioReference has been named in at least two class action lawsuits against AMCA and other defendants in connection with the AMCA Incident.

In addition, the Office of Inspector General and Office for Civil Rights (“OCR”) of the Department of Health and Human Services, as well as the attorney generals’ offices from certain states have contacted BioReference to request additional information relating to the AMCA Incident.

It is not possible at this time to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements, fines, penalties, or other resolution of these proceedings and investigations based on the stage of these proceedings and investigations, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues.

As previously disclosed, on September 7, 2018, the Securities and Exchange Commission (“SEC”) filed a lawsuit in the Southern District of New York (the “SEC Complaint”) against a number of individuals and entities (the “Defendants”), including the Company and its CEO and Chairman, Dr.

As previously disclosed, on September 7, 2018, the Securities and Exchange Commission (the “SEC”) filed a lawsuit in the Southern District of New York (the “SEC Complaint”) against a number of individuals and entities (the “Defendants”), including the Company and its CEO and Chairman, Dr.

Phillip Frost.

The SEC alleged, among other things, that the Company (i) aided and abetted an illegal “pump and dump” scheme perpetrated by a number of the Defendants, and (ii) failed to file required Schedules 13D or 13G with the SEC.

On December 27, 2018, the Company announced that the Company and Dr.

Frost entered into settlement agreements with the SEC, which upon approval of the court would resolve the SEC Complaint against each of them.

The settlement was approved by the court in January 2019.

Pursuant to the settlement, and without admitting or denying any of the allegations of the Complaint, the Company is enjoined from violating Section 13(d) of the Exchange Act and paid a $ 100,000 penalty.

The Company and Dr.

Frost entered into settlement agreements with the SEC that resolved the SEC Complaint against each of them.

The settlement agreements were approved by the court in January 2019.

Pursuant to the settlement, and without admitting or denying any of the allegations of the SEC Complaint, the Company is

enjoined from violating Section 13(d) of the Exchange Act and paid a $ 100,000 penalty.

Liability under Section 13(d) can be established without any showing of wrongful intent or negligence.

Following the SEC’s announcement of the SEC Complaint, we were named in several class action lawsuits, more than a dozen derivative suits, and other litigation relating to the allegations in the SEC Complaint among other matters.

The Company intends to vigorously defend itself against the claims.

For a more detailed discussion of pending matters, please see Part I, Item 3, “Legal Proceedings”.

In April 2017, the Civil Division of the United States Attorney’s Office for the Southern District of New York (the “SDNY”) informed BioReference that it believes that, from 2006 to the present, BioReference had, in violation of the False Claims Act, improperly billed Medicare and TRICARE (both are federal government healthcare programs) for clinical laboratory services provided to hospital inpatient beneficiaries at certain hospitals.

In April 2019, the SDNY also informed BioReference that it believes that BioReference provided physicians subsidies for electronic health record systems prior to 2012 that violated regulations adopted by HHS in 2006 which allowed laboratories to provide these donations under certain conditions.

BioReference is assessing the allegations made by the SDNY and continues to discuss the matter with the SDNY.

On June 26, 2020, The Amitim Funds, the lead plaintiff in the class action lawsuits, filed a Stipulation of Settlement in the Southern District of Florida of behalf of itself and the remainder of the class, which provides for the settlement of and release of the class action claims against the Company and Dr.

Frost for $ 16.5 million.

On September 4, 2020, an Order Preliminarily Approving Settlement was entered and a settlement hearing was held on December 15, 2020.

The settlement remains subject to certain terms and conditions including court approval.

Our insurance carriers have agreed to provide coverage for a significant portion of the currently contemplated settlement amounts in connection with the class action lawsuits.

The derivative suit was settled on November 2, 2020.

The settlement amount of $ 3.1 million was paid by the individual defendants’ insurance company.

In April 2017, the Civil Division of the United States Attorney’s Office for the Southern District of New York (the “SDNY”) informed BioReference that it believed that, from 2008 to 2012, BioReference had, in violation of the False Claims Act, improperly billed Medicare and TRICARE (both are federal government healthcare programs) for clinical laboratory services provided to hospital inpatient beneficiaries at certain hospitals.

In April 2019, the SDNY also informed BioReference that it believed that BioReference provided physicians subsidies for electronic health record systems prior to 2012 that violated regulations adopted by HHS in 2006 which allowed laboratories to provide these donations under certain conditions.

BioReference and the SDNY reached a settlement with respect to these matters and a final settlement and release, including BioReference’s payment of an approximately $ 11.5 million settlement amount, was approved on September 22, 2020.

The amount of related attorneys’ fees is currently being negotiated.

On June 3, 2019, BioReference reported that Retrieval-Masters Creditors Bureau, Inc.

d/b/a American Medical Collection Agency (“AMCA”), had notified BioReference about a data security incident involving AMCA (the “AMCA Incident”).

AMCA informed BioReference that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019.

AMCA advised BioReference that no Social Security Numbers were compromised, and BioReference provided no laboratory results or diagnostic information to AMCA.

BioReference notified patients and provided notice to the Office of Civil Rights of the AMCA Incident.

BioReference had been named in at least two class action lawsuits against AMCA and other defendants in connection with the AMCA Incident.

In April 2020, the class action lawsuits against BioReference were dismissed without prejudice.

The Office of Inspector General and Office for Civil Rights (“OCR”) of the Department of Health and Human Services, as well as the attorney generals’ offices from certain states have contacted BioReference to request additional information relating to the AMCA Incident.

On June 22, 2020 the OCR advised us it was closing its file regarding the AHCA matter and no further action is required of BioReference with respect to this matter.

The resolution with the OCR does not, however, foreclose continued inquiries from attorney generals’ offices from other states.

Accordingly, it is not possible at this time to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements, fines, penalties, or other resolution of these investigations based on the stage of these investigations, and the absence of specific allegations.

On October 11, 2019, GeneDx received a letter from the Centers for Medicare and Medicaid Services (“CMS”), notifying GeneDx of CMS’ determination to suspend Medicare payments to GeneDx, which suspension became effective on September 27, 2019 (the “CMS Letter”).

The CMS Letter specifically stated that the foregoing suspension may last for up to 180 days from the effective date and may be extended under certain circumstances.

CMS advised that it suspended payments due to possible overpayments to GeneDx in connection with reimbursement claims for genetic testing services based on a diagnosis of family history of cancer, which testing CMS has alleged is not covered by Medicare under the applicable provisions of the Social Security Act on the basis that such testing is not reasonable and necessary for the diagnosis or treatment of illness or injury.

On or around February 3, 2020, we were notified that CMS was lifting the payment suspension.

CMS noted, however, that the decision to lift the payment suspension should not be construed as a positive determination regarding our Medicare billing.

CMS also notified us of results of a payment audit concluding that the Company had been overpaid by Medicare for genetic testing services based on a diagnosis of a family history of cancer.

The Company is currently

evaluating the audit findings.

There can be no assurance that CMS and other governmental payor programs will not seek to recoup payments from us, suspend reimbursement or seek overpayment damages from GeneDx.

CMS lifted the suspension on February 3, 2020, and issued an extrapolated overpayment finding of approximately $ 576,332 , which GeneDx paid.

From time to time, we may receive inquiries, document requests, Civil Investigative Demands (“CIDs”) or subpoenas from the Department of Justice, OCR, CMS, various payors and fiscal intermediaries, and other state and federal regulators regarding investigations, audits and reviews.

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Settlements of suits involving the types of issues that we routinely confront may require monetary payments as well as corporate integrity agreements.

Additionally, qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits.

Additionally, qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply

with the False Claims Act’s requirements for filing such suits.

Also, from time to time, we may detect issues of non-compliance with federal healthcare laws pertaining to claims submission and reimbursement practices and/or financial relationships with physicians, among other things.

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Because of the high degree of judgment involved in establishing loss estimates, the ultimate outcome of such matters will differ from our estimates and such differences may be material to our business, financial condition, results of operations, and cash flows.

We expect to continue to incur substantial research and development expenses, including expenses related to the hiring of personnel and additional clinical trials.

We expect that selling, general and administrative expenses will also increase as we expand our sales, marketing and administrative staff and add infrastructure, particularly as it relates to Rayaldee.

We do not anticipate that we will generate substantial revenue from the sale of proprietary pharmaceutical products or certain of our diagnostic products for some time and we have generated only limited revenue from our pharmaceutical operations in Chile, Mexico, Israel, Spain, and Ireland, and from sale of the 4Kscore test.

If we acquire additional assets or companies, fail to generate expected cash flow from BioReference, accelerate our product development programs or initiate additional clinical trials, we will need additional funds.

If we are not able to secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions.

We have employment agreements with certain employees of BioReference which provide for compensation and certain other benefits and for severance payments under certain circumstances.

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Client payors include physicians, hospitals, employers, and other institutions for which services are performed on a wholesale basis, and are billed and recognized as revenue based on negotiated fee schedules.

Client payers also include cities, states and companies for which BioReference provides COVID-19 testing services.

Uninsured patients are billed based on established patient fee schedules or fees negotiated with physicians on behalf of their patients.

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Revenues consist of amounts billed net of discounts provided to uninsured patients in accordance with our policies and implicit price concessions.

Implicit price concessions represent differences between amounts billed and the estimated consideration that we expect to receive from patients, which considers historical collection experience and other factors including current market conditions.

Implicit price concessions represent differences between amounts billed and the estimated

consideration that we expect to receive from patients, which considers historical collection experience and other factors including current market conditions.

Adjustments to the estimated allowances, based on actual receipts from the patients, are recorded upon settlement.

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Actual amounts are adjusted in the period those adjustments become known.

For the years ended December 31, 2019 , 2018 and 2017, revenue reductions due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $ 24.8 million , $ 22.8 million and $ 66.0 million , respectively, were recognized.

For the year ended December 31, 2020, positive revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $ 0.3 million were recognized.

For the years ended December 31, 2019 and 2018, revenue reductions due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $ 24.8 million and $ 22.8 million, respectively, were recognized.

Third-party payors, including government programs, may decide to deny payment or recoup payments for testing they contend were improperly billed or not medically necessary, against their coverage determinations, or for which they believe they have otherwise overpaid (including as a result of their own error), and we may be required to refund payments already received.

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Client payors 637,645 158,527 148,070

Patients 50,666 20,810 21,332

Total $ 1,262,242 $ 716,434 $ 813,248

Revenue from products

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Allowances are recorded as a reduction of revenue at the time product revenues are recognized.

The actual amounts of consideration ultimately received may differ from our estimates.

amounts of consideration ultimately received may differ from our estimates.

If actual results in the future vary from our estimates, we will adjust these estimates, which would affect Revenue from products in the period such variances become known.

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We recognize revenue for shipments of Rayaldee at the time of delivery to customers after estimating Sales Deductions and product returns as elements of variable consideration utilizing historical information and market research projections.

For the years ended December 31, 2019 , and 2018 , we recognized $ 31.4 million and $ 20.3 million in net product revenue from sales of Rayaldee .

For the years ended December 31, 2020, 2019 and 2018, we recognized $ 36.8 million, $ 31.4 million and $ 20.3 million in net product revenue from sales of Rayaldee .

The following table presents an analysis of product sales allowances and accruals as contract liabilities for the years ended December 31, 2020, 2019 and 2018:

(In thousands)

Chargebacks, discounts, rebates and fees

(In thousands) Chargebacks, discounts, rebates and fees Governmental Returns Total

Balance at December 31, 2019 $ 3,194 $ 5,841 $ 2,751 $ 11,786

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Provision for Rayaldee sales allowances and accruals as a percentage of gross Rayaldee sales

(In thousands)

Chargebacks, discounts, rebates and fees

(In thousands) Chargebacks, discounts, rebates and fees Governmental Returns Total

Balance at December 31, 2018 $ 1,316 $ 2,090 $ 637 $ 4,043

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Provision for Rayaldee sales allowances and accruals as a percentage of gross Rayaldee sales

(In thousands) Chargebacks, discounts, rebates and fees Governmental Returns Total

Balance at December 31, 2017 $ 233 $ 348 $ 437 $ 1,018

Provision related to current period sales 5,704 10,061 680 16,445

Credits or payments made ( 4,621 ) ( 8,319 ) ( 480 ) ( 13,420 )

Balance at December 31, 2018 $ 1,316 $ 2,090 $ 637 $ 4,043

Total gross Rayaldee sales

Provision for Rayaldee sales allowances and accruals as a percentage of gross Rayaldee sales

Taxes collected from customers related to revenues from services and revenues from products are excluded from revenues.

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If we are entitled to reimbursement from our customers for specified research and development expenses, we account for them as separate performance obligations if distinct.

We also determine whether the research and development funding would result in revenues or an offset to research and development expenses in accordance

with provisions of gross or net revenue presentation.

We also determine whether the research and development funding would result in revenues or an offset to research and development expenses in accordance with provisions of gross or net revenue presentation.

The corresponding revenues or offset to research and development expenses are recognized as the related performance obligations are satisfied.

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We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations at the inception of the contract and revenue is recognized only if the option is exercised and products or services are subsequently delivered or when the rights expire.

If the promise is based on market terms and not considered a material right, the option is accounted for if and when exercised.

If the promise is based on market terms and not considered a material right, the option is

accounted for if and when exercised.

If we are entitled to additional payments when the licensee exercises these options, any additional payments are generally recorded in license or other revenues when the licensee obtains control of the goods, which is upon delivery.

For the years ended December 31, 2020, 2019 and 2018 we recorded $ 53.2 million, $ 73.3 million and $ 69.9 million of revenue from the transfer of intellectual property, respectively.

For the year ended December 31, 2019, revenue from the transfer of intellectual property included $ 66.8 million related to the Pfizer Transaction.

For the year ended December 31, 2020 and 2019, revenue from the transfer of intellectual property included $ 28.7 million and $ 66.8 million related to the Pfizer Transaction.

In addition, revenue from the transfer of intellectual property and other for the year ended December 31, 2020 included $ 16.2 million of grants received by BioReference under the CARES Act and a $ 3 million milestone payment triggered by the first marketing approval of Rayaldee in Europe.

For the year ended December 31, 2018, revenue from the transfer of intellectual property included $ 60.0 million related to the Pfizer Transaction and $ 2.0 million related to a milestone payment from our licensee, Vifor Fresenius Medical Care Renal Pharma Ltd (“VFMCRP”).

For the year ended December 31, 2017, revenue from the transfer of intellectual property included $ 61.2 million related to the Pfizer Transaction and $ 10.0 million related to a milestone payment from our licensee, TESARO.

Refer to Note 16.

Total contract liabilities included in Accrued expenses and Other long-term liabilities was $ 21.8 million and $ 91.1 million at December 31, 2019 and December 31, 2018 , respectively.

The contract liability balance at December 31, 2019 and 2018 relates primarily to the Pfizer Transaction.

Contract liabilities relate to cash consideration that OPKO receives in advance of satisfying the related performance obligations.

Changes in the contractual liabilities balance for the years ended December 31, 2020 are as follows:

(In thousands)

Balance at December 31, 2019 $ 21,767

Balance at December 31, 2020 16,378

Revenue recognized in the period from:

Amounts included in contracts liability at the beginning of the period 19,048

The contract liability balance at December 31, 2020 related primarily to accelerated payments received as part of the CARES Act.

Refer to Note 2.

Note 16 Strategic Alliances

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Vifor Fresenius Medical Care Renal Pharma Ltd

In May 2016, EirGen, our wholly-owned subsidiary, and Vifor Fresenius Medical Care Renal Pharma Ltd (“VFMCRP”), entered into a Development and License Agreement (the “VFMCRP Agreement”) for the development and commercialization of Rayaldee (the “Product”) worldwide, except for (i) the U.S., (ii) any country in Central America or South America (excluding Mexico), (iii) Russia, (iv) China, (v) Japan, (vi) Ukraine, (vii) Belorussia, (viii) Azerbaijan, (ix) Kazakhstan, and (x) Taiwan (the “VFMCRP Territory”).

In May 2016, EirGen and Vifor Fresenius Medical Care Renal Pharma Ltd (“VFMCRP”), entered into a Development and License Agreement (the “VFMCRP Agreement”) for the development and commercialization of Rayaldee (the “Product”) worldwide, except for (i) the U.S., (ii) any country in Central America or South America (excluding Mexico), (iii) Russia, (iv)

China, (v) Japan, (vi) Ukraine, (vii) Belorussia, (viii) Azerbaijan, (ix) Kazakhstan, and (x) Taiwan (the “VFMCRP Territory”).

The license to VFMCRP potentially covers all therapeutic and prophylactic uses of the Product in human patients (the “VFMCRP Field”), provided that initially the license is for the use of the Product for the treatment or prevention of SHPT related to patients with CKD and vitamin D insufficiency/deficiency (the “VFMCRP Initial Indication”).

Under the terms of the VFMCRP Agreement, EirGen granted to VFMCRP an exclusive license in the VFMCRP Territory in the VFMCRP Field to use certain EirGen patents and technology to make, have made, use, sell, offer for sale, and import Products and to develop, commercialize, have commercialized, and otherwise exploit the Product.

Effective May 5, 2020, we entered into an amendment to the VFMCRP Agreement (the “VFMCRP Amendment”), pursuant to which the parties agreed to exclude Mexico, South Korea, the Middle East and all of the countries of Africa from the VFMCRP Territory.

In addition, the parties agreed to certain amendments to the milestone structure and to reduce minimum royalties payable.

As revised, the Company has received a $ 3 million payment triggered by the first marketing approval of Rayaldee in Europe and is eligible to receive up to an additional $ 17 million in regulatory milestones and $ 210 million in milestone payments tied to launch, pricing and sales of Rayaldee , and tiered, double-digit royalties.

Under the terms of the VFMCRP Agreement, as amended, EirGen granted to VFMCRP an exclusive license in the VFMCRP Territory in the VFMCRP Field to use certain EirGen patents and technology to make, have made, use, sell, offer for sale, and import Products and to develop, commercialize, have commercialized, and otherwise exploit the Product.

EirGen received a non-refundable and non-creditable initial payment of $ 50 million, which was recognized in Revenue from the transfer of intellectual property and other in our Consolidated Statement of Operations in 2016.

EirGen also received a $ 2.0 million payment triggered by the approval of Rayaldee in Canada for the treatment of SHPT in adults with stage 3 or 4 CKD and vitamin D insufficiency in July 2018.

EirGen is also eligible to receive up to an additional $ 35 million in regulatory milestones (“Regulatory Milestones”) and $ 195 million in launch and sales-based milestones (“Sales Milestones”), and will receive tiered royalties on sales of the product at percentage rates that range from the mid-teens to the mid-twenties or a minimum royalty, whichever is greater, upon the commencement of sales of the Product within the VFMCRP Territory and in the VFMCRP Field.

EirGen also received a $ 2.0 million payment triggered by the approval of Rayaldee in Canada for the treatment of SHPT in adults with stage 3 or 4 CKD and vitamin D insufficiency in July 2018 and a $ 3 million payment triggered by the first marketing approval of Rayaldee in Europe.

EirGen is also eligible to receive up to an additional $ 17 million in Regulatory Milestones and $ 210 million in Sales Milestones tied to launch, pricing and sales of Rayaldee , and will receive tiered royalties on sales of the product at percentage rates that range from the mid-teens to the mid-twenties or a minimum royalty, whichever is greater, upon the commencement of sales of the Product within the VFMCRP Territory and in the VFMCRP Field.

We plan to share responsibility with VFMCRP for the conduct of trials specified within an agreed-upon development plan, with each company leading certain activities within the plan.

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We account for the Sales Milestones as royalties and Sales Milestones payments will be recognized as revenue in the period in which the associated milestone is achieved or sales occur, assuming all other revenue recognition criteria are met.

In December 2014, we entered into an exclusive worldwide agreement (the “Pfizer Agreement”) with Pfizer for the development and commercialization of our long-acting hGH-CTP (Somatrogon) for the treatment of growth hormone deficiency (“GHD”) in adults and children, as well as for the treatment of growth failure in children born small for gestational age (the “Pfizer Transaction”).

On October 21, 2019, we and Pfizer announced that the global Phase 3 trial evaluating Somatrogon (hGH-CTP) dosed once-weekly in prepubertal children with GHD met its primary endpoint of non-inferiority to daily Genotropin® (somatropin) for injection, as measured by annual height velocity at 12 months.

The Pfizer Transaction closed in January 2015.

Under the terms of the Pfizer Transaction, we received non-refundable and non-creditable upfront payments of $ 295.0 million and are eligible to receive up to an additional $ 275.0 million upon the

achievement of certain regulatory milestones.

Pfizer received the exclusive license to commercialize hGH-CTP worldwide.

In addition, we are eligible to receive initial tiered royalty payments associated with the commercialization of hGH-CTP for adult GHD with percentage rates ranging from the high teens to mid-twenties.

Upon the launch of hGH-CTP for pediatric GHD in certain major markets, the royalties will transition to regional, tiered gross profit sharing for both hGH-CTP and Pfizer’s Genotropin®.

In December 2014, we entered into an exclusive worldwide agreement (the “Pfizer Agreement”) with Pfizer for the development and commercialization of our long-acting Somatrogon (hGH-CTP) for the treatment of growth hormone deficiency (“GHD”) in adults and children, as well as for the treatment of growth failure in children born small for gestational age (the “Pfizer Transaction”).

In May 2020, we entered into an Amended and Restated Development and Commercialization License Agreement (the “Restated Agreement”) with Pfizer, effective January 1, 2020, pursuant to which the parties agreed, among other things, to share all costs for Manufacturing Activities, as defined in the Restated Agreement, for developing a licensed product for the three indications included in the Restated Agreement.

On October 21, 2019, we and Pfizer announced that the global phase 3 trial evaluating Somatrogon dosed once-weekly in prepubertal children with GHD met its primary endpoint of non-inferiority to daily Genotropin® (somatropin) for injection, as measured by annual height velocity at 12 months.

Under the terms of the Pfizer Transaction, as restated, we received non-refundable and non-creditable upfront payments of $ 295.0 million and are eligible to receive up to an additional $ 275.0 million upon the achievement of certain regulatory milestones.

Pfizer received the exclusive license to commercialize Somatrogon worldwide.

In addition, we are eligible to receive initial tiered royalty payments associated with the commercialization of Somatrogon for adult GHD with percentage rates ranging from the high teens to mid-twenties.

Upon the launch of Somatrogon for pediatric GHD in certain major markets, the royalties will transition to regional, tiered gross profit sharing for both Somatrogon and Pfizer’s Genotropin®.

The agreement with Pfizer will remain in effect until the last sale of the licensed product, unless earlier terminated as permitted under the Pfizer Agreement.

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If the Pfizer Agreement is terminated by us for Pfizer’s uncured material breach, or by Pfizer without cause, provision has been made for transition of product and product responsibilities to us for the terminated regions, as well as continued supply of product by Pfizer or transfer of supply to us in order to support the terminated regions.

We are recognizing the non-refundable $ 295.0 million upfront payments as revenue as the research and development services are completed and had contract liabilities related to the Pfizer Transactions of $ 16.3 million at December 31, 2019 , of which were classified in Accrued expenses.

We recognized the non-refundable $ 295.0 million upfront payments as revenue as the research and development services were completed and as of December 31, 2020, we had no contract liabilities related to the Pfizer Transaction.

The Pfizer Transaction includes milestone payments of $ 275.0 million upon the achievement of certain milestones.

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To date, no revenue has been recognized related to the achievement of the milestones.

In November 2009, we entered into an asset purchase agreement (the “NK-1 Agreement”) under which we acquired VARUBI™ (rolapitant) and other neurokinin-1 (“NK-1”) assets from Merck.

In December 2010, we entered into an exclusive license agreement with TESARO, Inc.

(“TESARO”), in which we out-licensed the development, manufacture, commercialization and distribution of our lead NK-1 candidate, VARUBI™ (the “TESARO License”).

Under the terms of the license, we received a $ 6.0 million upfront payment from TESARO and we received $ 30.0 million of milestone payments from TESARO upon achievement of certain regulatory and commercial sale milestones and we are eligible to receive additional commercial milestone payments of up to $ 85.0 million if specified levels of annual net sales are achieved.

The sales based milestone payments will be recognized as revenue in full in the period in which the associated sales occur.

During the years ended December 31, 2019 and 2018 , no revenue was recognized related to the achievement of the milestones under the TESARO License.

During year ended December 31, 2017, $ 10.0 million of revenue was recognized related to the achievement of the milestones under the TESARO License.

Under the TESARO License, TESARO was also obligated to pay us tiered royalties on annual net sales achieved in the U.S.

and Europe at percentage rates that range from the low double digits to the low twenties, and outside of the U.S.

and Europe at low double-digit percentage rates until the later of the date that all of the patent rights licensed from us and covering VARUBI™ expire, are invalidated or are not enforceable and 12 years from the first commercial sale of the product.

TESARO announced in 2018 that it has elected to suspend further distribution of Varubi IV.

In June 2018, TESARO assigned its rights and obligations under the agreement to TerSera Therapeutics LLC (“TerSera”) pursuant to an asset purchase agreement.

Under the asset purchase agreement, TerSera is responsible for VARUBI in the U.S.

and Canada and TESARO was permitted to continue to commercialize VARUBY® in Europe and the rest of the world though a sublicense with TerSera.

In September 2019, TESARO informed us and TerSera that it intends to stop selling VARUBY ® in the TESARO Territory and that it intends to withdraw its marketing authorization for VARUBY ® in Europe.

The term of the license with TerSera will remain in force until the expiration of the royalty term in each country, unless we terminate the license earlier for material breach of the license or bankruptcy.

TerSera has a right to terminate the license at any time during the term for any reason on three months’ written notice.

In April 2013, we entered into a series of concurrent transactions with Pharmsynthez, a Russian pharmaceutical company traded on the Moscow Stock Exchange pursuant to which we acquired an equity method investment in Pharmsynthez (ownership 9 %).

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We will receive from Pharmsynthez royalties on net sales of products incorporating the technologies in the Pharmsynthez Territories, as well as a percentage of any sublicense income from third parties for the technologies in the Pharmsynthez Territories.

Phio Pharmaceuticals Corp.

In March 2013, we completed the sale to RXi Pharmaceuticals Corporation (now known as Phio Pharmaceuticals Corp.) of substantially all of our assets in the field of RNA interference (the “RNAi Assets”) (collectively, the “Asset Purchase Agreement”).

Pursuant to the Asset Purchase Agreement, Phio will be required to pay us up to $ 50.0 million in milestone payments upon the successful development and commercialization of each drug developed by Phio, certain of its affiliates or any of its or their licensees or sublicensees utilizing patents included within the RNAi Assets (each, a “Qualified Drug”).

In addition, Phio will also be required to pay us royalties equal to:

(a) a mid single-digit percentage of “Net Sales” (as defined in the Asset Purchase Agreement) with respect to each Qualified Drug sold for an ophthalmologic use during the applicable “Royalty Period” (as defined in the Asset Purchase Agreement);

and (b) a low single-digit percentage of net sales with respect to each Qualified Drug sold for a non-ophthalmologic use during the applicable Royalty Period.

We have completed strategic deals with numerous institutions and commercial partners.

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Variable lease payment amounts that cannot be determined at the commencement of the lease are not included in the right-to-use assets or liabilities.

We elected the use of permitted practical expedients of not recording leases on our Consolidated Balance Sheet when the leases have terms of 12 months or less, and we elected not to separate nonlease components from lease components and instead account for each separate lease component and the nonlease components associated with that lease component as a single lease component.

The following table presents the lease balances within the Consolidated Balance Sheet as of December 31, 2020:

(in thousands)

Classification on the Balance Sheet

December 31, 2019

Operating lease assets

Operating lease right-of-use assets

Finance lease assets

Property, plant and equipment, net

Operating lease liabilities

Current maturities of operating leases

Accrued expenses

Current maturities of finance leases

Operating lease liabilities

Other long-term liabilities

Finance lease liabilities

(in thousands) Classification on the Balance Sheet December 31, 2020 December 31, 2019

Operating lease assets Operating lease right-of-use assets $ 37,735 $ 39,380

Finance lease assets Property, plant and equipment, net 5,258 6,789

Operating lease liabilities Current maturities of operating leases 9,028 12,038

Accrued expenses Current maturities of finance leases 2,453 2,743

Operating lease liabilities Operating lease liabilities 29,760 27,665

Other long-term liabilities Finance lease liabilities $ 2,805 $ 4,046

Weighted average remaining lease term

Operating leases

Finance leases

Operating leases 5.4 years 5.6 years

Finance leases 2.3 years 2.6 years

Weighted average discount rate

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The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on our Consolidated Balance Sheet as of December 31, 2020:

(in thousands)

(in thousands) Operating Finance

2021 $ 9,176 $ 2,527

2022 8,232 1,475

2023 6,940 860

2024 5,003 511

2025 3,145 72

Thereafter 14,768 —

Total undiscounted future minimum lease payments 47,264 5,445

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Expense under operating leases and finance leases was $ 17.8 million and $ 3.0 million, respectively, for the year ended December 31, 2020, and includes $ 3.0 million of variable lease costs.

Operating lease costs and finance lease costs are included within Operating loss in the Consolidated Statement of Operations.

Expense under operating leases and finance leases was $ 20.2 million and $ 3.1 million, respectively, for the year ended December 31, 2019, and includes $ 3.4 million of variable lease costs.Operating lease costs and finance lease costs are included within Operating loss in the Consolidated Statement of Operations.

Short-term lease costs were not material.

Supplemental cash flow information is as follows:

(in thousands)

For the year ended December 31, 2019

(in thousands) For the years ended December 31,

Operating cash out flows from operating leases $ 17,440 $ 20,712

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Financing cash out flows from finance leases 2,872 2,833

Total $ 20,508 $ 23,919

Note 18 Segments

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Pharmaceutical $ — $ — $ —

Diagnostics 1,262,242 716,434 813,248

Corporate — — —

$ 1,262,242 $ 716,434 $ 813,248

Revenue from products:

Pharmaceutical $ 119,952 $ 112,184 $ 107,112

Diagnostics — — —

Corporate — — —

$ 119,952 $ 112,184 $ 107,112

Revenue from transfer of intellectual property and other:

Pharmaceutical $ 36,979 $ 72,521 $ 69,906

Operating loss:

Diagnostics 16,240 — —

Corporate — 796 —

$ 53,219 $ 73,317 $ 69,906

Operating income (loss):

Pharmaceutical $ ( 43,519 ) $ ( 109,062 ) $ ( 82,641 )

Diagnostics 138,922 ( 123,359 ) ( 44,942 )

Corporate ( 37,689 ) ( 41,631 ) ( 43,614 )

$ 57,714 $ ( 274,052 ) $ ( 171,197 )

Depreciation and amortization:

Pharmaceutical $ 29,001 $ 30,073 $ 28,007

Diagnostics 56,361 63,675 69,246

Corporate — 59 91

$ 85,362 $ 93,807 $ 97,344

Loss from investment in investees:

Pharmaceutical $ ( 480 ) $ ( 2,900 ) $ ( 10,822 )

(In thousands)

Diagnostics — — ( 3,675 )

Corporate — — —

$ ( 480 ) $ ( 2,900 ) $ ( 14,497 )

$ 1,317,766 $ 751,099 $ 837,509

Ireland 43,920 81,170 78,102

Chile 44,153 33,642 41,216

Spain 16,932 18,747 18,195

Israel 4,251 8,769 9,479

Mexico 7,865 8,032 5,598

Other 526 476 167

$ 1,435,413 $ 901,935 $ 990,266

(In thousands) December 31,

2020 December 31,

Pharmaceutical $ 1,176,245 $ 1,174,639

Diagnostics 1,268,738 1,035,112

Corporate 28,080 99,521

$ 2,473,063 $ 2,309,272

Pharmaceutical $ 245,793 $ 237,131

Diagnostics 434,809 434,809

Corporate — —

$ 680,602 $ 671,940

No customer represented more than 10% of our total consolidated revenue during the years ended December 31, 2020, 2019 and 2018.

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and foreign jurisdictions:

(In thousands)

December 31, 2019

December 31, 2018

(In thousands) December 31, 2020 December 31, 2019

$ 73,564 $ 62,158

Foreign 66,990 64,953

Total $ 140,554 $ 127,111

Note 19 Fair Value Measurements

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We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

These tiers include:

These tiers are:

Level 1, defined as observable inputs such as quoted prices in active markets;

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Fair value measurements as of December 31, 2020

(In thousands)

(In thousands) Quoted

(Level 1) Significant

(Level 2) Significant

(Level 3) Total

Equity securities $ 14,136 $ — $ — $ 14,136

Common stock options/warrants — 74 — 74

Total assets $ 14,136 $ 74 $ — $ 14,210

Forward Contracts $ — $ 1,040 $ — 1,040

Contingent consideration:

— — 5,695 5,695

Total liabilities $ — $ 1,040 $ 5,695 $ 6,735

Fair value measurements as of December 31, 2019

(In thousands)

(In thousands) Quoted

(Level 1) Significant

(Level 2) Significant

(Level 3) Total

Equity securities $ 18,870 $ — $ — $ 18,870

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Forward contracts — 133 — 133

Total assets $ 18,870 $ 253 $ — $ 19,123

Contingent consideration:

$ — $ — $ 9,683 $ 9,683

Total liabilities $ — $ — $ 9,683 $ 9,683

The carrying amount and estimated fair value of our 2025 Notes, as well as the applicable fair value hierarchy tiers, are contained in the table below.

The fair value of the 2025 Notes is determined using quoted prices in active markets.

The fair value of the 2025 Notes is determined using inputs other than quoted prices in active markets that are directly observable.

December 31, 2020

(In thousands)

(In thousands) Carrying

Fair Value Level 1 Level 2 Level 3

2025 Notes $ 156,163 $ 254,000 $ — $ 254,000 $ —

There have been no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy.

As of December 31, 2019 and 2018 , the carrying value of our other significant financial instrument assets and liabilities approximates their fair value due to their short-term nature or variable rate of interest.

As of December 31, 2020 and 2019, the carrying value of our other financial instrument assets approximates their fair value due to their short-term nature or variable rate of interest.

The following tables reconcile the beginning and ending balances of our Level 3 assets and liabilities as of December 31, 2020 and 2019:

December 31, 2020

(In thousands)

(In thousands) Contingent

consideration

Balance at December 31, 2019 $ 9,683

Total losses (gains) for the period:

Total gains for the period:

Included in results of operations ( 3,989 )

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December 31, 2019

(In thousands)

(In thousands) Contingent

consideration

Balance at December 31, 2018 $ 24,537

Total losses (gains) for the period:

Total gains for the period:

Included in results of operations ( 14,854 )

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We use several discount rates depending on each type of contingent consideration related to OPKO Diagnostics, CURNA and OPKO Renal transactions.

If estimated future sales were to decrease by 10 % , the contingent consideration related to OPKO Renal, which accounts for the majority of the change in our contingent consideration liability, would decrease by $ 0.8 million .

As of December 31, 2020, of the $ 5.7 million of contingent consideration, $ 1.2 million is recorded in Accrued expenses and $ 4.5 million is recorded in Other long-term liabilities.

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The following table summarizes the fair values and the presentation of our derivative financial instruments in the Consolidated Balance Sheets:

(In thousands)

Balance Sheet Component

December 31, 2019

(In thousands) Balance Sheet Component December 31, 2020 December 31,

Derivative financial instruments:

Common stock options/warrants

Investments, net

Forward contracts

Unrealized gains on forward contracts are recorded in Other current assets and prepaid expenses.

Common stock options/warrants Investments, net $ 74 $ 120

Forward contracts Unrealized gains on forward contracts are recorded in Other current assets and prepaid expenses.

Unrealized (losses) on forward contracts are recorded in Accrued expenses.

$ ( 1,040 ) $ 133

We enter into foreign currency forward exchange contracts with respect to the risk of exposure to exchange rate differences arising from inventory purchases on letters of credit.

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Common stock options/warrants $ ( 46 ) $ ( 601 ) $ 2,643

2033 Senior Notes

Forward contracts $ 96 $ 775 $ 400

Total $ 50 $ 174 $ 3,043

Note 21 Selected Quarterly Financial Data (Unaudited)

For the 2020 Quarters Ended

(In thousands, except per share data)

(In thousands, except per share data) March 31 June 30 September 30 December 31

Total revenues $ 211,466 $ 301,207 $ 428,064 $ 494,676

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For the 2019 Quarters Ended

(In thousands, except per share data)

(In thousands, except per share data) March 31 June 30 September 30 December 31

Total revenues $ 222,451 $ 226,368 $ 228,772 $ 224,344

Total costs and expenses 297,769 273,628 267,783 336,807

Net income (loss)

Earnings (loss) per share, basic and diluted

Net loss ( 80,762 ) ( 59,806 ) ( 62,007 ) ( 112,350 )

Loss per share, basic and diluted $ ( 0.14 ) $ ( 0.10 ) $ ( 0.11 ) $ ( 0.18 )

Note 22 Subsequent Events

On February 25, 2020, we entered into a credit agreement with an affiliate of Dr.

Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $ 100 million .

Borrowings under the line of credit will bear interest at a rate of 11 % per annum and may be repaid and reborrowed at any time.

The credit agreement includes various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under line of credit.

The line of credit matures on February 25, 2025.

The line of credit also calls for a commitment fee equal to 0.25 % per annum of the unused portion of the line.

On February 25, 2020, BioReference and certain of its subsidiaries entered into Amendment No.

The other terms of the Credit Agreement remain unchanged.

We have reviewed all subsequent events and transactions that occurred after the date of our December 31, 2020 Consolidated Balance Sheet date, through the time of filing this Annual Report on Form 10-K.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data