What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-01 compared with 2021-02-18 · 285 added, 244 removed, 516 unchanged (51% of the section changed)

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Our diagnostics business includes BioReference Laboratories, Inc.

(“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.

(“BioReference”), one of the nation’s largest full service laboratories with an almost 250-person sales and marketing team to drive growth and leverage new products.

Our pharmaceutical business features Rayaldee , a U.S.

Food and Drug Administration (“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) and a pipeline of products in various stages of development.

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

We have submitted the initial Biologics License Application (“BLA”) with FDA for approval of Somatrogon in the U.S.

as well as a New Drug Application with the Ministry of Health, Labour and Welfare in Japan.

Food and Drug Administration (“FDA”) approved treatment for secondary hyperparathyroidism (“SHPT”) in adults with stage 3 or 4 chronic kidney disease (“CKD”) and vitamin D insufficiency and a pipeline of products in various stages of development.

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.

Regulatory applications for Somatrogon have been submitted to several countries around the world for review.

In February 2022, the European Commission granted marketing authorization in the European Union for Somatrogon under the brand name NGENLA® to treat children and adolescents from as young as 3 years of age with growth disturbance due to insufficient secretion of growth hormone.

In January 2022, the Ministry of Health, Labour and Welfare in Japan approved NGENLA® (Somatrogon) for the long-term treatment of pediatric patients who have growth failure due to an inadequate secretion of endogenous growth hormone.

In October 2021, Health Canada approved NGENLA® for the long-term treatment of pediatric patients who have growth hormone deficiency, and Australia’s Therapeutic Goods Administration approved NGENLA® for the long-term treatment of pediatric patients with growth disturbance due to insufficient secretion of growth hormone.

We also submitted the initial Biologics License Application (“BLA”) with the FDA for approval of Somatrogon (hGH-CTP) in the United States and Pfizer received a Complete Response Letter in January 2022.

Pfizer and OPKO are evaluating the FDA’s comments and will work with the agency to determine the best path forward for Somatrogon (hGH-CTP) in the United States.

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

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RECENT DEVELOPMENTS

In January 2021, we announced that the FDA had accepted for filing the initial BLA for Somatrogon, a long-acting human growth hormone that is intended to be administered once-weekly for the treatment of pediatric patients with growth hormone deficiency (“GHD”).

The target Prescription Drug User Fee Act (PDUFA) action date for decision by the FDA is in October 2021.

In December, 2020, we announced the appointment of Roger Medel, M.D.

as an independent member of our Board of Directors, effective December 18, 2020.

With this appointment, we have 11 Directors, including seven independent Directors.

In early 2022, each of the European Commission and the Ministry of Health, Labour and Welfare in Japan approved the next-generation long-acting recombinant human growth hormone NGENLA (Somatrogon), a once-weekly injection to treat

pediatric growth hormone deficiency in Europe and Japan, respectively.

Further, Canada and Australia approved NGENLA in October and November of 2021, respectively.

In January 2022, the FDA issued a Complete Response Letter for the BLA for Somatrogon.

Pfizer and OPKO are evaluating the FDA’s comments and will work with the agency to determine the best path forward for Somatrogon (hGH-CTP) in the United States.

In January 2022, Sema4 Holdings Corp.

(“Sema4”) and OPKO announced they had signed a definitive agreement (the “GeneDx Merger Agreement”) pursuant to which Sema4 has agreed to acquire OPKO’s wholly owned subsidiary, GeneDx, Inc.

(“GeneDx”), a leader in genomic testing and analysis, subject to the satisfaction of customary closing conditions (the “GeneDx Transaction”).

The GeneDx Transaction is expected to close in the second quarter of 2022.

Under the terms of the GeneDx Merger Agreement, Sema4 has agreed to acquire GeneDx for an upfront payment of $150 million in cash together with 80.0 million shares of Sema4’s Class A common stock, par value $0.0001 per share (“Sema4 Common Stock”), subject to a customary purchase price adjustment mechanism providing for a normalized level of working capital and that GeneDx be free of debt at closing of the GeneDx Transaction.

Additionally, Sema4 agreed to pay OPKO up to an additional $150.0 million, which may be paid in Sema4 Common Stock, cash or a combination thereof in Sema4’s discretion, subject to GeneDx achieving certain revenue targets for the fiscal years ending December 31, 2022 and 2023.

Based on the closing stock price of Sema4 Common Stock as of January 14, 2022, the total upfront consideration is approximately $473 million, and the total aggregate consideration including potential milestones is approximately $623 million.

As of December 31, 2021, GeneDx met the held-for-sale accounting criteria and the related assets and liabilities are classified as held for sale in the consolidated balance sheet.

Depending upon the value Sema4 shares upon closing of the transaction, an impairment charge may be incurred.

GeneDx was included in our diagnostics segment as of December 31, 2021.

In December 2021, we announced preliminary topline results from our Phase 2 trial with Rayaldee to treat mild-to-moderate COVID-19 which indicate that vitamin D repletion therapy can accelerate recovery from COVID-19.

In December 2021, we announced that the FDA approved our 4Kscore test for use in men age 45 and older who have not had a prior prostate biopsy or are biopsy negative and have an age-specific abnormal total PSA and/or abnormal digital rectal exam.

RESULTS OF OPERATIONS

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.

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

economy and economies of other countries around the world, we continue to be a part of the coordinated public and private sector response to this unprecedented challenge.

There continues to be a high level of uncertainty relating to how the pandemic will evolve, how governments and consumers will react, progress on the distribution of vaccines and whether the pandemic will have a longer-term effect on the healthcare industry and patient habits.

In response to the COVID-19 pandemic, BioReference is providing COVID-19 solutions, including diagnostic molecular testing and serology antibody testing, to meet the testing needs of its customers, including physicians, health systems, long-term care facilities, governments, schools, employers, professional sports teams and entertainment venues, as well as the general public through relationships with retail pharmacy chains.

Revenue from services for the year ended December 31, 2021 increased by $344.9 million as compared to 2020 due to COVID-19 testing volumes.

however we are unable to predict how long 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.

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 be sustained.

In addition, in the second half of 2021, overall demand for COVID-19 testing declined.

Additionally, beginning in March 2020, BioReference experienced a decline in testing volumes due to the COVID-19 pandemic;

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

Should stay at home orders or other restrictions be reenacted, we could see our routine testing levels decline.

Excluding COVID-19 test volumes, for the year ended December 31, 2021, genomic and routine clinical test volume increased 26.4% and 6.9%, respective, as compared to volumes for the year ended December 31, 2020.

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.

curtailing their operations (voluntarily or in response to government orders), and the adoption of work-from-home or shelter-in-place policies.

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

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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;

• 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 the amounts advanced are loans which will be offset against future claims and were repaid in 2021.

These loans were initially recorded as contract liabilities included in Accrued expenses and were reduced as the amounts are recouped by CMS;

• 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;

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

We recognized the $16.2 million grant in other revenues for the year ended December 31, 2020;

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.

• Clinical laboratories are provided a one-year reprieve from the reporting requirements under 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.

Since the pandemic began in the U.S., we have invested in testing capabilities and infrastructure to meet demand for our molecular and antibody testing for COVID-19.

In 2021, we kicked off company-wide lab operations specimen acquisition, logistics, procurement, customer service, cost reduction initiatives to right size our cost structure to match the declining COVID testing volumes and to drive efficiency gains in our core clinical lines of business.

Three vaccines for COVID-19 have received approval or emergency authorization and have had increasingly widespread acceptance.

However, we believe that, based on our experience with the pandemic, the high medical need for efficient and widespread testing for COVID-19 will extend beyond the current phase of the pandemic.

Our belief is supported by the unprecedented healthcare and economic impact of the pandemic thus far, the uneven and incomplete rollout of vaccines and the fact that significant portions of the U.S.

population may never be vaccinated, and the continued likelihood of surges of COVID-19 including from new strains of SARS-CoV-2 with uncertain susceptibility to the current vaccines.

We believe that these factors have greatly magnified the need for more effective therapeutics, and the need for efficient and widespread testing.

For The Years Ended December 31, 2021 and December 31, 2020

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Amortization of intangible assets 50,278 56,391 (6,113) (11) %

Asset impairment charges — 92,399 (92,399) (100) %

Gain on sale of assets (31,508) — (31,508) (100) %

Total costs and expenses 1,755,968 1,377,699 378,269 27 %

Income (loss) from operations 18,750 57,714 (38,964) (68) %

We manage our operations in two reportable segments, pharmaceuticals and diagnostics.

The pharmaceuticals segment consists of our pharmaceutical operations in Latin America, Ireland, Israel and Spain, Rayaldee product sales and our pharmaceutical research and development.

The diagnostics segment primarily consists of our clinical and genetic laboratory operations through BioReference and GeneDx as well as our point-of-care operations.

There are no significant inter-segment sales.

We evaluate the performance of each segment based on operating profit or loss.

The following presents the financial measures that management considers to be the most significant indicators of the Company's performance.

For the years ended December 31,

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Amortization of intangible assets 30,579 36,208 (5,629) (16) %

Asset impairment charges — 38,697 (38,697) (100) %

Total costs and expenses 1,509,039 1,139,560 369,479 32 %

Income (loss) from operations 138,922 (123,359) 262,281 (213) %

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

BioReference performed 0.8 million serology antibody tests and 10.1 million diagnostic molecular tests for COVID-19 during the year ended December 31, 2020, which represented 57% of total testing volume.

Revenue attributable to tests for COVID-19 was partially offset by the negative impacts of:

• A reduction in clinical test volumes and genomic test volumes at BioReference resulted in decreased revenues of $99.5 million and $15.6 million, respectively, as compared to the year ended December 31, 2019.

The decline in routine clinical and genomic testing volume reflects negative impacts from the COVID-19 pandemic, principally from referring physician office closures and stay-at-home guidance throughout states in which we predominately operate.

• A reduction in clinical test and genomic test reimbursement at BioReference of $10.2 million and $27.6 million, respectively, as compared to the year ended December 31, 2019.

The lower reimbursement within our clinical business was primarily the result of the negative impact of the PAMA price reduction that went into effect January 1, 2020 combined with an overall shift in our test mix that was partially offset by increased reimbursement of our 4KScore test.

The lower reimbursement within our genomic business resulted from an increase in denial rates and changes to payor policy and procedural requirements.

Income from operations 98,067 138,922 (40,855) (29) %

Revenue from services for the year ended December 31, 2021 increased by approximately $344.9 million compared to the year ended December 31, 2020, due to an improvement in clinical test reimbursement, and an increase in clinical test volume and genomic test volume of $38.1 million, $33.5 million and $25.1 million, respectively.

This was partially offset by the negative impact of a reduction in genomic test reimbursement of $5.6 million.

BioReference also recognized an increase in revenue for the year ended December 31, 2021 compared to the year ended December 31, 2020 due to an increase in COVID-19 testing volume and improvement in COVID-19 test reimbursement of $97.0 million and $141.4 million, respectively.

BioReference performed 11.9 million diagnostic molecular tests for COVID-19 and 0.7 million serology antibody tests during the year ended December 31, 2021, which represented 58.5% of total test volume for that period.

In comparison, during the year ended December 31, 2020, BioReference performed 10.2 million molecular tests for COVID-19 and 0.8 million serology antibody tests.

Estimated collection amounts are subject to the complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, and require us to consider the potential for retroactive adjustments when estimating variable consideration in the recognition of revenue in the period the related services are rendered.

Revenue from services for the year ended December 31, 2020 included $12.1 million related to the successful appeal of previously denied claims for the 4Kscore test.

In addition, the year ended December 31, 2020 included positive revenue adjustments recognized due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $0.3 million, and for the year ended December 31, 2019, revenue reductions of $24.8 million were recognized due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods.

Revenue from services for the year ended December 31, 2020 included $12.1 million related to

the successful appeal of previously denied claims for the 4Kscore test.

In addition, the years ended December 31, 2021 and 2020 included positive revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $40.4 million and $0.3 million, respectively, were recognized.

The composition of revenue from services by payor for the years ended December 31, 2021 and 2020 was as follows:

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Total $ 1,607,106 $ 1,262,242

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

Revenue from the transfer of intellectual property and other for the year ended December 31, 2020 are the result of grants received under the CARES Act totaling $16.2 million.

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

Revenue from transfer of intellectual property and other for the year ended December 31, 2020 are the result of grants received under the CARES Act totaling $16.2 million.

Cost of revenue .

Cost of revenue for the year ended December 31, 2021 increased $278.2 million compared to the year ended December 31, 2020.

Cost of revenue increased primarily due to labor and material costs for COVID-19 testing and the significant volume of tests performed during the year ended December 31, 2020, partially offset by a decline in non-COVID testing volumes and to cost reduction initiatives leading to a 12.4% improvement in cost per patient encounter, inclusive of all volumes.

Cost of revenue increased primarily due to labor and material costs for COVID-19 testing and the significant volume of tests performed during the year ended December 31, 2021.

Cost of revenue for the year ended December 31, 2021 also increased due to changes in the product mix of items sold during the period, which was partially offset by a $5.5 million sales and use tax credit received during the year ended December 31, 2021.

Selling, general and administrative expenses .

Selling, general and administrative expenses for the years ended December 31, 2021 and 2020 were $357.6 million and $266.5 million, respectively.

Selling, general and administrative expenses in our diagnostics segment increased primarily due to higher variable billing and compensation costs of $23.2 million from an increase in volume and collections during the year ended December 31, 2020 and $3.0 million in marketing costs and other administrative and marketing costs directly associated the COVID-19 PCR testing volumes.

In comparison, the December 31, 2019 period included $12.6 million of expense related to the Department of Justice settlement.

As a percentage of net revenue SG&A for the diagnostic segment decreased to 21% from 34%, for the years ended December 31, 2020 and 2019, respectively as a result of per requisition efficiencies and expense management during this recent period of rapid volume growth.

Selling, general and administrative expenses for the diagnostics segment for the years ended December 31, 2020 and 2019 included equity-based compensation expense of $2.1 million and $2.2 million, respectively.

Selling, general and administrative expenses in our diagnostics segment increased primarily due to higher variable billing and compensation costs which resulted from an increase in volume and collections during the year ended December 31, 2021, and in marketing costs and other administrative costs directly associated with COVID-19 testing volumes.

Selling, general and administrative expenses for the year ended December 31, 2021 also include $6.2 million of expense incurred in connection with certain legal matters and $40.0 million in administrative, IT, and marketing costs associated with our investment in the launch of Scarlet Health.

Research and development expenses .

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Total research and development expenses $ 18,652 $ 15,003

Research and development for the diagnostic segment relates to the development of testing services for our clinical and genomics testing at BioReference and the development of the Claros Analyzer, a diagnostic instrument system to provide rapid, high performance blood test results in the point-of-care setting.

The increase in research and development expenses for the year ended December 31, 2020 resulted primarily from an increased research and development expenses related to the development of clinical and genomics testing services.

The increase in research and development expenses for the year ended December 31, 2021 resulted primarily from increased research and development expenses related to the development of clinical and genomics testing services.

Contingent consideration .

Contingent consideration for the years ended December 31, 2020 and 2019 was $(2.1) million of expense and $8.4 million reversal of expense, respectively.

Contingent consideration for the years ended December 31, 2020 and 2019 was attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Diagnostics in both periods, and potential amounts payable to former stockholders of OPKO Diagnostics in connection therewith, pursuant to our acquisition agreement in October 2011.

Contingent consideration for the years ended December 31, 2021 and 2020 was $0 thousand and $2.1 million reversal of expense, respectively.

Contingent consideration for the year ended December 31, 2020 was attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Diagnostics, and potential amounts payable to former stockholders of OPKO Diagnostics in connection therewith, pursuant to our acquisition agreement in October 2011.

Amortization of intangible assets .

Amortization of intangible assets was $36.2 million and $42.4 million, respectively, for the years ended December 31, 2020 and 2019.

Amortization of intangible assets was $30.6 million and $36.2 million, for the years ended December 31, 2021 and 2020, respectively.

Amortization expense reflects the amortization of acquired intangible assets with defined useful lives.

Asset impairment charges .

Asset impairment charges were $38.7 million for the year ended December 31, 2019.

Asset impairment charges for the year ended December 31, 2019 is primarily related to a goodwill impairment charge of $18.0 million to write the carrying amount of the OPKO Diagnostics reporting unit down to its 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 asset 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 associated with the Claros Analyzer.

We believe that our estimates and assumptions in testing goodwill and other intangible assets are consistent with assumptions that marketplace participants would use in their estimates.

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

Amortization expense declined during the year ended December 31, 2021 due to acquired intangible assets becoming fully amortized.

Pharmaceuticals

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Amortization of intangible assets 19,699 20,183 (484) (2) %

Asset impairment charges — 53,702 (53,702) (100) %

Gain on sale of asset (31,508) — (31,508) (100) %

Total costs and expenses 186,663 200,450 (13,787) (7) %

Loss from operations (19,051) (43,519) 24,468 (56) %

The increase in revenue from products for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily attributable to an increase in sales at OPKO Chile and an increase in sales of Rayaldee .

The increase in revenue from products for the year ended December 31, 2021 compared to the year ended December 31, 2020 was primarily attributable to an increase in sales at most of our international operating companies.

Sales of Rayaldee were $27.0 million for the year ended December 31, 2021, as compared to $36.8 million for 2020.

Sales of Rayaldee have been negatively impacted as a result of challenges in onboarding new patients due to the COVID-19 pandemic.

Revenue from transfer of intellectual property for the years ended December 31, 2021 and 2020 principally reflected $10.8 million and $28.7 million, respectively, of revenue related to the Pfizer Transaction.

Revenue from transfer of intellectual property and other for the year ended December 31, 2021 also included a $5.0 million non-refundable upfront payment we received under the Nicoya Agreement (as defined below) and receipt of a $4.9 million payment under the CAMP4 Agreement.

Revenue from transfer of intellectual property for the year ended December 31, 2020 also included a $3.0 million milestone payment triggered by the first marketing approval of Rayaldee in Europe.

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Cost of revenue for the year ended December 31, 2021 increased $20.5 million compared to the year ended December 31, 2020.

Cost of product revenue increased primarily due to an increase in sales at OPKO Chile and changes in product mix during the year ended December 31, 2020.

Cost of product revenue increased primarily due to an increase in inventory and material costs at most of our international operating companies, which was due to the increase in sales at our international operating companies and to a $3.8 million inventory reserve recognized for Rayaldee inventory for the year ended December 31, 2021.

This was partially offset by a decrease in sales of Rayaldee for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Selling, general and administrative expenses .

Selling, general and administrative expenses for the years ended December 31, 2021 and 2020 were $49.4 million and $50.5 million, respectively.

The decrease in selling, general and administrative expenses was primarily due to decreased expenses at our pharmaceutical subsidiaries and a decrease in equity-based compensation expense.

Selling, general and administrative expenses for the year ended December 31, 2021 was consistent with selling, general and administrative expenses for the year ended December 31, 2020.

Selling, general and administrative expenses for the pharmaceutical segment for the years ended December 31, 2021 and 2020 included equity-based compensation expense of $1.3 million and $1.0 million, respectively.

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Total research and development expenses $ 59,741 $ 61,149

The decrease in research and development expenses for the year ended December 31, 2020 was primarily due to a decrease in research and development expenses related to Somatrogon, a once-weekly human growth hormone injection for which we have partnered with Pfizer and successfully completed a phase 3 study in August 2019.

Research and development expenses for the year ended December 31, 2021 was consistent with research and development expenses for the year ended December 31, 2020.

Research and development expenses for the year ended December 31, 2021 were primarily due to expenses related to Somatrogon, a once-weekly human growth hormone injection for which we have partnered with Pfizer.

Ongoing expenses for the Somatrogon program support open label extension studies that will continue until the market launch of Somatrogon in certain countries, as well as the preparation of applications for marketing approvals.

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Contingent consideration for the years ended December 31, 2021 and 2020 was $1.7 million and $1.9 million reversal of expense, respectively.

Contingent consideration for the years ended December 31, 2020 and 2019 was primarily attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Renal, and potential amounts payable to former stockholders of OPKO Renal in connection therewith, pursuant to our acquisition agreement in March 2013.

Contingent consideration for the year ended December 31, 2021 was primarily attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Renal and OPKO CURNA, and potential amounts payable to former stockholders of OPKO Renal and OPKO CURNA in

connection therewith, pursuant to our acquisition agreements in March 2013 and January 2011, respectively.

Contingent consideration for the year ended December 31, 2020 was primarily attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Renal, and potential amounts payable to former stockholders of OPKO Renal.

Amortization of intangible assets .

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Amortization expense reflects the amortization of acquired intangible assets with defined useful lives.

Our indefinite lived IPR&D assets will not be amortized until the underlying development programs are completed.

Upon obtaining regulatory approval by the U.S.

FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life.

Asset impairment charges .

Asset impairment charges were $53.7 million for the year ended December 31, 2019.

Asset impairment charges for the year ended December 31, 2019 were primarily related to an impairment charge of $44.8 million to write our IPR&D assets for OPK88003 (oxyntomodulin) and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair values, and a goodwill impairment charge of $8.2 million to write the carrying amount of the CURNA and Transition Therapeutics reporting units down to their estimated fair values.

The Asset 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 associated with OPK88003 and CURNA’s platform technology.

We believe that our estimates and assumptions in testing goodwill and other intangible assets, including IPR&D, for impairment are consistent with assumptions that marketplace participants would use in their estimates.

If we are unable to successfully develop Somatrogon, or changes in projections and assumptions negatively impact our forecast of net cash flows, we may be exposed to a material impairment charge related to the IPR&D for Somatrogon.

Our indefinite lived in-process research and development (“IPR&D”) assets will not be amortized until the underlying development programs are completed.

Upon obtaining regulatory approval by the FDA, the IPR&D assets will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life.

Gain on sale of assets .

Gain on sale of assets for the year ended December 31, 2021 was $31.5 million, which resulted from an agreement between EirGen, our wholly owned subsidiary, and Horizon Therapeutics plc, to sell one of EirGen’s facilities in Waterford, Ireland for $65 million in cash less certain assumed and accrued liabilities relating to transferred employees.

The facility housed EirGen’s sterile-fill-finish business and was no longer a core component of our ongoing operations and business strategy.

For the years ended December 31,

(In thousands) 2021 2020 Change % Change

Revenue from transfer of intellectual property and other $ — $ 796 (796) (100) %

Total revenues — 796 (796) (100) %

Costs and expenses:

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Operating loss for our unallocated corporate operations for the years ended December 31, 2021 and 2020 was $60.3 million and $37.7 million, respectively, and principally reflects general and administrative expenses incurred in connection with our corporate operations.

The decrease in operating loss for the year ended December 31, 2020 was primarily attributable to a decrease in legal fees incurred for the year ended December 31, 2020, as compared to the year ended December 31, 2019.

The increase in operating loss for the year ended December 31, 2021 was primarily attributable to an increase in legal fees incurred for the year ended December 31, 2021, compared to the year ended December 31, 2020.

Interest income .

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Interest expense for the years ended December 31, 2021 and 2020 was $18.9 million and $21.9 million, respectively.

Interest expense was principally related to interest incurred on our Senior Convertible Notes due 2025 (the “2025 Notes”), our 5% Convertible Promissory Notes (the “2023 Convertible Notes”), our 3.0% Senior Notes due 2033 (the “2033 Senior Notes”), and BioReference’s outstanding debt under its credit facility.

Fair value changes of derivative instruments, net .

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Other income (expense), net .

Other income (expense), net for the years ended December 31, 2020 and 2019, was $12.7 million of income and $11.3 million of expense, respectively.

Other income (expense), net for the years ended December 31, 2021 and 2020, was $14.8 million of expense and $12.7 million of income, respectively.

Other expense for the years ended December 31, 2021 primarily consisted of a $11.1 million non-cash loss related to the exchange of $55.4 million of the outstanding 2025 Notes for 19,051,270 shares of our Common Stock and net unrealized losses recognized during the period on our investments in our equity securities.

Other income for the year ended December 31, 2020 primarily consisted of realized and unrealized gains recognized during the period on our investment in VBI Vaccines Inc.

(“VBI”), offset by net unrealized losses recognized during the period on our investment in Eloxx Pharmaceuticals, Inc.

Other expense for the year ended December 31, 2019 primarily consisted of net unrealized losses recognized during the period on Eloxx and VBI.

Income tax provision .

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For The Years Ended December 31, 2020 and December 31, 2019

Our consolidated loss from operations for the years ended December 31, 2019 and 2018 is as follows:

Our consolidated income (loss) from operations for the years ended December 31, 2020 and 2019 is as follows:

For the years ended December 31,

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Total costs and expenses 1,377,699 1,175,987 201,712 17 %

Loss from operations (274,052) (171,197) (102,855) 60 %

Income (loss) from operations 57,714 (274,052) 331,766 (121) %

We manage our operations in two reportable segments, pharmaceuticals and diagnostics.

The pharmaceuticals segment consists of our pharmaceutical operations in Latin America, Ireland, Israel and Spain, Rayaldee product sales and our pharmaceutical research and development.

The diagnostics segment primarily consists of our clinical and genetic laboratory operations through BioReference and GeneDx as well as our point-of-care operations.

There are no significant inter-segment sales.

We evaluate the performance of each segment based on operating profit or loss.

The following presents the financial measures that management considers to be the most significant indicators of the Company's performance.

For the years ended December 31,

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Revenue from services $ 1,262,242 $ 716,434 545,808 76 %

Revenue from transfer of intellectual property and other 16,240 — 16,240 100 %

Total revenues 1,278,482 716,434 562,048 78 %

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Total costs and expenses 1,139,560 839,793 299,767 36 %

Loss from operations (123,359) (44,942) (78,417) 174 %

Revenue from services for the year ended December 31, 2019 decreased approximately $96.8 million compared to the year ended December 31, 2018.

Revenue from services for the year ended December 31, 2019 was negatively affected by $49.2 million of decreased reimbursement for our clinical testing and by $21.2 million from our genomics testing, as a result of an increase in denial rates and changes to payor pricing, policy and procedural requirements, the impact of PAMA, and a decline in 4Kscore revenue due to the non-coverage decision issued by Novitas, which became effective on March 21, 2019.

Subsequent to the effective date of the non-coverage determination, in November 2019, Novitas issued its final LCD for Medicare payments for the 4Kscore test, effective December 30, 2019.

Under the final LCD, Medicare will reimburse the test for patients who meet defined criteria.

Revenue from services for the year ended December 31, 2019 was also negatively affected by $13.8 million as a result of a reduction in clinical test volumes, which was offset by higher genomics testing volume of $13.0 million.

Income (loss) from operations 138,922 (123,359) 262,281 (213) %

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

Revenue attributable to tests for COVID-19 was partially offset by the negative impacts of:

• A reduction in clinical test and genomic test reimbursement at BioReference of $10.2 million and $27.6 million, respectively, as compared to the year ended December 31, 2019.

The lower reimbursement within our genomic business resulted from an increase in denial rates and changes to payor policy and procedural requirements.

For the years ended December 31, 2019 and 2018, we recognized 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.

We may have an obligation to reimburse Medicare, Medicaid, and third-party payors for overpayments regardless of fault.

We have periodically identified and reported overpayments, reimbursed payors for overpayments and taken what we believe to be appropriate corrective action.

Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing services.

These settlements are estimated based on the terms of the payment agreement with the payor, correspondence from the payor and our historical settlement activity, including an assessment of the probability a significant reversal of cumulative revenue recognized will occur when the uncertainty is subsequently resolved.

Estimated settlements are adjusted in future periods as adjustments become known (that is, new information becomes available), or as years are settled or are no longer subject to such audits, reviews, and investigations.

For the years ended December 31, 2019 and 2018, Revenue from services was reduced by approximately $2.6 million and $8.1 million, respectively, related to claims of overpayment.

The composition of Revenue from services by payor for the years ended December 31, 2019 and 2018 is as follows:

Revenue from services for the year ended December 31, 2020 included $12.1 million related to the successful appeal of previously denied claims for the 4Kscore test.

The composition of Revenue from services by payor for the years ended December 31, 2020 and 2019 was as follows:

For the years ended December 31,

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Healthcare insurers $ 483,643 $ 421,386

Government payors 115,711 150,851

Client payors 158,527 148,070

Government payers 90,288 115,711

Client payers 637,645 158,527

Patients 50,666 20,810

Total $ 1,262,242 $ 716,434

Costs of revenue .

Costs of revenue for the year ended December 31, 2019 decreased $35.4 million compared to 2018.

Cost of service revenue decreased in 2019 primarily due to cost reduction initiatives resulting in per patient encounter efficiency gains at BioReference.

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

Revenue from transfer of intellectual property and other for the year ended December 31, 2020 are the result of grants received under the CARES Act totaling $16.2 million.

Cost of revenue .

Cost of revenue for the year ended December 31, 2020 increased $313.1 million compared to the year ended December 31, 2019.

Selling, general and administrative expenses .

Selling, general and administrative expenses for the years ended December 31, 2020 and 2019 were $266.5 million and $242.0 million, respectively.

The decrease in selling, general and administrative expenses was primarily due to decreased expenses at BioReference due to enacting cost reduction initiatives, which were partially offset by $12.6 million of expenses incurred in connection with certain legal matters.

Selling, general and administrative expenses for the years ended December 31, 2019 and 2018 included equity-based compensation expense of $2.2 million and $2.8 million, respectively.

In comparison, the December 31, 2019 period included $12.6 million of expense related to the Department of Justice settlement.

Research and development expenses .

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Research and development expenses for the year ended December 31, 2019 were consistent with research and development expenses for the year ended December 31, 2018.

Contingent consideration .

Contingent consideration for the years ended December 31, 2019 and 2018 was $8.4 million and $1.9 million reversal of expense, respectively.

Contingent consideration for the years ended December 31, 2019 and 2018 was attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Diagnostics in

both periods, and potential amounts payable to former stockholders of OPKO Diagnostics in connection therewith, pursuant to our acquisition agreement in October 2011.

Contingent consideration for the years ended December 31, 2020 and 2019 was $(2.1) million of expense and $8.4 million reversal of expense, respectively.

Amortization of intangible assets .

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We believe that our estimates and assumptions in testing goodwill and other intangible assets are consistent with assumptions that marketplace participants would use in their estimates.

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

Pharmaceuticals

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Loss from operations (43,519) (109,062) 65,543 (60) %

The increase in Revenue from products for 2019 as compared to 2018 was primarily attributable to an increase in sales of Rayaldee of $31.4 million for the year ended December 31, 2019, compared to $20.3 million for the year ended December 31, 2018, which was partially offset by a decrease in revenue at OPKO Chile.

The increase in Revenue from transfer of intellectual property was primarily attributable to an increase in revenue related to the Pfizer Transaction of $66.8 million for the year ended December 31, 2019, as compared to $60.0 million for the year ended December 31, 2018, which was partially offset by $2.0 million of revenue from a milestone payment from our licensee VFMCRP in 2018.

Costs of revenue .

Cost of revenue increased primarily due to an increase in sales of Rayaldee in 2019 and changes in the product mix of items sold during the period.

Sales of Rayaldee were $36.8 million for the year ended December 31, 2020, as compared to $31.4 million for 2019.

Revenue from transfer of intellectual property and other for the years ended December 31, 2020 and 2019 principally reflected $28.7 million and $66.8 million, respectively, of revenue related to the Pfizer Transaction.

Revenue from transfer of intellectual property and other for the year ended December 31, 2020 also included a $3 million milestone payment triggered by the first marketing approval of Rayaldee in Europe.

Cost of revenue .

Cost of revenue for the year ended December 31, 2020 increased $8.7 million compared to the year ended December 31, 2019.

Cost of product revenue increased primarily due to an increase in sales at OPKO Chile and changes in product mix during the year ended December 31, 2020.

Selling, general and administrative expenses .

Selling, general and administrative expenses for the years ended December 31, 2020 and 2019 were $50.5 million and $57.6 million, respectively.

The decrease in selling, general and administrative expenses was primarily due to a decrease in equity-based compensation expense.

Selling, general and administrative expenses for the years ended December 31, 2019 and 2018 included equity-based compensation expense of $2.0 million and $4.4 million, respectively.

The decrease in selling, general and administrative expenses was primarily due to decreased expenses at our pharmaceutical subsidiaries and a decrease in equity-based compensation expense.

Selling, general and administrative expenses for the pharmaceutical segment for the years ended December 31, 2020 and 2019 included equity-based compensation expense of $1.0 million and $2.0 million, respectively.

Research and development expenses .

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Research and development expenses include external and internal expenses, partially offset by third-party grants and funding arising from collaboration agreements.

External expenses include

clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs.

We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and PMAs for diagnostics tests, if any.

External expenses include clinical and non-clinical activities performed by contract research organizations, lab services, purchases of drug and diagnostic product materials and manufacturing development costs.

We track external research and development expenses by individual program for phase 3 clinical trials for drug approval and premarket approval for diagnostics tests, if any.

Internal expenses include employee-related expenses such as salaries, benefits and equity-based compensation expense.

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The following table summarizes the components of our research and development expenses:

For the years ended December 31,

Research and Development Expenses For the years ended December 31,

External expenses:

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Total research and development expenses $ 61,149 $ 104,659

The decrease in research and development expenses for the year ended December 31, 2019 was primarily due to a decrease in research and development expenses related to OPK88004, a selective androgen receptor modulator which we are exploring for various potential applications.

In addition, for the years ended December 31, 2019 and 2018, we recorded, as an offset to research and development expenses, $3.7 million and $5.2 million, respectively, related to research and development tax credits recognized in Ireland.

Research and development expenses for the years ended December 31, 2019 and 2018 included equity-based compensation expenses of $2.1 million and $3.5 million, respectively.

We expect our research and development expenses to increase as we continue to expand our research and development of potential future products.

Research and development expenses for the pharmaceutical segment for the years ended December 31, 2020 and 2019 included equity-based compensation expense of $1.6 million and $2.1 million, respectively.

Contingent consideration .

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Asset impairment charges .

Asset impairment charges were $53.7 million and $21.8 million, respectively, for the years ended December 31, 2019 and 2018.

Asset impairment charges for the year ended December 31, 2019 is primarily related to an impairment charge of $44.8 million to write our IPR&D assets for OPK88003 (oxyntomodulin) and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair values, and a goodwill impairment charge of $8.2 million to write the carrying amount of the CURNA and Transition Therapeutics reporting units down to their estimated fair values.

Asset impairment charges were $53.7 million for the year ended December 31, 2019.

Asset impairment charges for the year ended December 31, 2018 is related to an impairment charge of $10.1 million to write our IPR&D assets for Alpharen and OPK88004 down to their estimated fair values and a goodwill impairment charge of $11.7 million to write the carrying amount of the FineTech reporting unit down to its estimated fair value.

However, if actual results are not consistent with our estimates and assumptions, including as a result of the COVID-19 global pandemic, we may

be exposed to an impairment charge that could be material.

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Operating loss for our unallocated corporate operations for the years ended December 31, 2020 and 2019 was $37.7 million and $41.6 million, respectively, and principally reflects general and administrative expenses incurred in connection with our corporate operations.

Interest income .

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Interest expense for the years ended December 31, 2020 and 2019 was $21.9 million and $21.5 million, respectively.

Interest expense was principally related to interest incurred on the 2025 Notes, the 2023 Convertible Notes, the 2033 Senior Notes, and BioReference’s outstanding debt under its credit facility.

The increase in interest expense for the year ended December 31, 2019 was primarily due to interest incurred on the 2025 Notes and 2023 Convertible Notes.

Fair value changes of derivative instruments, net .

Fair value changes of derivative instruments, net for the years ended December 31, 2019 and 2018, were $0.2 million and $3.0 million of income, respectively.

Derivative income for the year ended December 31, 2018 principally related to the change in fair value of warrants to purchase additional shares of Neovasc.

Other income and (expense), net.

Other income and (expense), net for the years ended December 31, 2019 and 2018, was $11.3 million of expense and $1.5 million of income, respectively.

Other expense for the year ended December 31, 2019 primarily consisted of net unrealized losses recognized during the period on our investments in Eloxx Pharmaceuticals, Inc.

and VBI Vaccines Inc.

Other income for the year ended December 31, 2018 primarily consisted of net unrealized gains recognized during the period on equity securities.

Income tax benefit (provision) .

Our income tax benefit (provision) for the years ended December 31, 2019 and 2018 was $(7.1) million, and $38.7 million, respectively.

For the year ended December 31, 2019, our effective tax rate differed from the U.S.

Fair value changes of derivative instruments, net for the years ended December 31, 2020 and 2019, was $50 thousand and $174 thousand of income, respectively.

Derivative income for the year ended December 31, 2020, was principally related to the change in fair value on foreign currency forward exchange contracts at OPKO Chile.

Other income (expense), net .

Other income (expense), net for the years ended December 31, 2020 and 2019, was $12.7 million of income and $11.3 million of expense, respectively.

Other income for the year ended December 31, 2020 primarily consisted of realized and unrealized gains recognized during the period on our investment in VBI Vaccines Inc.

(“VBI”), offset by net unrealized losses recognized during the period on our investment in Eloxx Pharmaceuticals, Inc.

Other expense for the year ended December 31, 2019 primarily consisted of net unrealized losses recognized during the period on Eloxx and VBI.

Income tax provision .

Our income tax provision for the years ended December 31, 2020 and 2019 was $17.6 million and $7.1 million, respectively, and reflects results using our expected effective tax rate.

For the year ended December 31, 2020, the tax rate differed from the U.S.

federal statutory rate of 21% primarily due to the relative mix in earnings and losses in the U.S.

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

The income tax benefit for the year ended December 31, 2018 included benefits related to discrete events which did not recur during 2019.

Loss from investments in investees .

We have made investments in other early stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as a shareholder or member.

We have made investments in certain early stage companies that we perceive to have valuable proprietary technology and significant potential to create value for us as a shareholder or member.

We account for these investments under the equity method of accounting, resulting in the recording of our proportionate share of their losses until our share of their loss exceeds our investment.

Until the investees’ technologies are commercialized, if ever, we anticipate they will report a net loss.

Until the investees’ technologies are commercialized, if ever, we anticipate they will report net losses.

Loss from investments in investees was $0.5 million and $2.9 million for the years ended December 31, 2020 and 2019, respectively.

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At December 31, 2021, we had cash and cash equivalents of approximately $134.7 million.

Cash provided by operations of $39.5 million for year ended December 31, 2020 principally reflects cash generated by our diagnostics segment due to the positive impact of COVID-19 testing volumes, which was partially offset by general and administrative expenses related to our corporate operations and research and development activities.

Cash used in investing activities for the year ended December 31, 2020 primarily reflects capital expenditures of $33.7 million, which was partially offset by proceeds from sales of equity securities of $15.1 million.

Cash provided by operations of $38.3 million for year ended December 31, 2021 principally reflects cash generated by our diagnostics segment due to the

positive impact of COVID-19 testing volumes, which was partially offset by general and administrative expenses related to our corporate operations and research and development activities.

Cash provided by investing activities for the year ended December 31, 2021 primarily reflects $66.0 million from the sale of property, plant and equipment, which was partially offset by capital expenditures of $32.2 million.

Cash used in financing activities of $10.4 million primarily reflects net repayments on our lines of credit.

We have not generated sustained positive cash flow sufficient to offset our operating and other expenses, and our primary sources of cash have been from the public and private placement of equity, the issuance of the 2033 Senior Notes, 2023 Convertible Notes and 2025 Notes and credit facilities available to us.

However, as a result of the significant increase in testing volumes resulting from the COVID-19 pandemic, and if our routine clinical and genomic testing volumes continue to trend towards normalization with prior periods, we anticipate generating positive cash flow from operations.

We are unable to predict how long the demand will continue for our COVID-19 related testing, whether pricing and reimbursement policies for testing will sustain, or whether further restrictions will be placed on elective procedures or if stay at home orders will be reinstated and accordingly, the sustainability of the cash flow is uncertain.

We have historically not generated sustained positive cash flow sufficient to offset our operating and other expenses, and our primary sources of cash have been from the public and private placement of equity, the issuance of the 2033 Senior Notes, 2023 Convertible Notes and 2025 Notes and credit facilities available to us.

However, as a result of the significant increase in testing volumes resulting from the COVID-19 pandemic, we have generated positive cash flow from operations;

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 cash flows from operations.

Overall demand for COVID-19 testing has recently declined, and accordingly, the sustainability of our COVID-19 testing volumes is uncertain.

In January 2022, we and Sema4 announced the execution of the GeneDx Merger Agreement, pursuant to which Sema4 has agreed to acquire our wholly owned subsidiary, GeneDx, Inc.

The GeneDx Transaction is expected to close in the second quarter of 2022.

Under the terms of the GeneDx Merger Agreement, Sema4 has agreed to acquire GeneDx for an upfront payment of $150 million in cash, together with 80.0 million shares of Sema4 Common Stock, subject to a customary purchase price adjustment mechanism providing for a normalized level of working capital and that GeneDx be free of debt at closing of the GeneDx Transaction.

As of December 31, 2021, GeneDx met the held-for-sale accounting criteria and the related assets and liabilities are classified as held for sale in the consolidated balance sheet.

Depending upon the value Sema4 shares upon closing of the transaction, an impairment charge may be incurred.

GeneDx was included in our diagnostics segment as of December 31, 2021.

In June 2021, EirGen Pharma Limited (“EirGen”), our wholly owned subsidiary, entered into a definitive agreement to sell one of its facilities in Waterford, Ireland to Horizon Therapeutics plc for $65 million in cash less certain assumed and accrued liabilities relating to transferred employees.

The facility, which was formerly included in our pharmaceutical segment, housed EirGen’s sterile-fill-finish business and was no longer a core component of our ongoing operations and business strategy.

The transaction closed in the third quarter of 2021.

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 this line of credit 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.

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, 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 of Common Stock at $1.50 per share, resulting in proceeds of approximately $6 million after deducting underwriting commissions.

Borrowings under this line of credit incurred interest at a rate of 11% per annum and could be repaid and reborrowed at any time.

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

No funds were borrowed under this line of credit.

We terminated this line of credit in June 2021.

In February 2019, we issued $200.0 million aggregate principal amount of the 2025 Notes in an underwritten public offering.

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The notes mature on February 15, 2025, unless earlier repurchased, redeemed or converted.

Holders may convert their 2025 Notes into shares of Common Stock at their option at any time prior to the close of business on the business day immediately preceding November 15, 2024 only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2019 (and only during such calendar quarter), if the last reported sale price of our Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Common Stock and the conversion rate on each such trading day;

(3) if we call any or all of the 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date;

or (4) upon the occurrence of specified corporate events set forth in the indenture governing the 2025 Notes.

On or after November 15, 2024, until the close of business on the business day immediately preceding the maturity date, holders of the 2025 Notes may convert their notes at any time, regardless of the foregoing circumstances.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Common Stock, or a combination of cash and shares of our Common Stock, at our election.

The current conversion rate for the 2025 Notes is 236.7424 shares of Common Stock per $1,000 principal amount of 2025 Notes (equivalent to a conversion price of approximately $4.22 per share of Common Stock).

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

On February 1, 2019, holders of our 2033 Senior Notes tendered to us approximately $28.8 million aggregate principal amount of such notes 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.

As of December 31, 2020, the total commitments under our Credit Agreement (as defined below) with CB and our lines of credit with financial institutions in Chile and Spain were $87.7 million, of which $23.0 million was drawn as of December 31, 2020.

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 May 2021, we entered into exchange agreements with certain holders of the 2025 Notes pursuant to which the holders exchanged $55.4 million in aggregate principal amount of the outstanding 2025 Notes for 19,051,270 shares of our Common Stock (the “Exchange”).

Upon consummation of the Exchange, we paid the holders of the exchanged notes an aggregate of approximately $0.6 million in accrued and unpaid interest on the exchanged notes.

We recorded an $11.1 million non-cash loss related to the Exchange.

As of December 31, 2021, the total commitments under our A&R Credit Agreement (as defined below) with CB and our lines of credit with financial institutions in Chile and Spain were $90.2 million, of which $13.7 million was drawn as of December 31, 2021.

At December 31, 2021, the weighted average interest rate on these lines of credit was approximately 5.4%.

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There is no assurance that these lines of credit or other funding sources will be available to us on acceptable terms, or at all, in the future.

In November 2015, BioReference and certain of its subsidiaries entered into a credit agreement with 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.

The Credit Agreement matures on November 5, 2021 and is guaranteed by all of BioReference’s domestic subsidiaries.

The Credit Agreement is also secured by substantially all assets of BioReference and its domestic subsidiaries, as well as a non-recourse pledge by us of our equity interest in BioReference.

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

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

In November 2015, BioReference and certain of its subsidiaries entered into the Credit Agreement with CB, as lender, which was amended and restated on August 30, 2021 (the “A&R Credit Agreement”).

The A&R 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.

The A&R Credit Agreement matures on August 30, 2024 and is guaranteed by all of BioReference’s domestic subsidiaries, subject to certain exceptions.

The A&R Credit Agreement is also secured by substantially all assets of BioReference and its domestic subsidiaries, subject to certain exceptions, as well as a non-recourse pledge by us of our equity interest in BioReference.

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

As of December 31, 2021, $64.8 million remained available for borrowing under the A&R Credit Agreement.

In February 2018, in a transaction exempt from registration under the Securities Act, we issued the 2023 Convertible Notes in the aggregate principal amount of $55.0 million maturing in February 2023.

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

On October 12, 2017, EirGen, our wholly-owned subsidiary, and JT entered into the JT Agreement granting JT the exclusive rights for the development and commercialization of Rayaldee in Japan.

The license grant to JT covers the therapeutic and preventative use of Rayaldee for (i) SHPT in non-dialysis and dialysis patients with CKD, (ii) rickets, and (iii) osteomalacia, as well as such additional indications as may be added to the scope of the license subject to the terms of the JT Agreement.

In connection with the transaction, OPKO received an initial upfront payment of $6 million, and OPKO received another $6 million upon the initiation of OPKO’s phase 2 study for Rayaldee in dialysis patients in the U.S.

in September 2018.

OPKO is also eligible to receive up to an additional aggregate amount of $31 million upon the achievement of certain regulatory and development milestones by JT for Rayaldee in the JT Territory, and $75 million upon the achievement of certain sales based milestones by JT in the JT Territory.

OPKO will also receive tiered, double digit royalty payments at rates ranging from low double digits to mid-teens on sales of Rayaldee within the JT Territory.

JT will, at its sole cost and expense, be responsible for performing all development activities necessary to obtain all regulatory approvals for Rayaldee in Japan and for all commercial activities pertaining to Rayaldee in Japan.

In May 2016, EirGen, our wholly-owned subsidiary, partnered with VFMCRP through the VFMCRP Agreement for the development and commercialization of Rayaldee in the VFMCRP Territory.

In December 2021, we announced preliminary topline results from our Phase 2 trial with Rayaldee to treat mild-to-moderate COVID-19.

This study builds on increasing medical evidence that vitamin D repletion therapy can mitigate the severity of upper respiratory tract infections and accelerate recovery from COVID-19.

One primary efficacy endpoint was reaching the targeted serum 25D level.

By Day 7, mean serum 25D levels increased with Rayaldee treatment to 82 ng/mL (p<0.001) and remained elevated for the duration of the trial, with 88% of subjects attaining the targeted level.

In contrast, mean 25D declined slightly with placebo treatment.

On September 14, 2021, we and LeaderMed Health Group Limited (“LeaderMed”), a pharmaceutical development company with operations based in Asia, announced the formation of a joint venture to develop, manufacture and commercialize two of OPKO’s clinical stage, long-acting drug products in Greater China and eight other Asian territories.

Under the terms of the agreements, we will grant the joint venture exclusive rights to develop, manufacture and commercialize (a) OPK88003, an oxyntomodulin analog being developed for the treatment of obesity and diabetes, and (b) Factor VIIa-CTP, a novel long-acting coagulation factor being developed to treat hemophilia, in exchange for a 47% ownership interest in the joint venture.

In addition, we received an upfront payment of $1 million and will be reimbursed for clinical trial material and technical support it provides the joint venture.

LeaderMed will be responsible for funding the joint venture’s operations, development and commercialization efforts and will, with its syndicate partners, initially invest $11 million in exchange for a 53% ownership interest.

We retain full rights to oxyntomodulin and Factor VIIa-CTP in all other geographies.

On August 16, 2021, BioReference announced the acquisition of Ariosa Diagnostics, Inc.

(“Ariosa”), the U.S.

Ariosa centralized laboratory prenatal testing business from Roche Molecular Systems Inc.

Ariosa's non invasive prenatal screening (NIPS) test, the Harmony Prenatal Test, is one of the most widely studied tests utilized in prenatal screening.

The test has been performed in over 1.5 million patients.

BioReference currently offers, ClariTest™ Core, which utilizes the same core technology as the Harmony Prenatal Test.

The acquisition of Ariosa will complement our current NIPS offering.

On July 6, 2021, we entered into the CAMP4 Agreement, pursuant to which we granted to CAMP4 an exclusive license to develop, manufacture, commercialize or improve therapeutics utilizing the AntagoNAT technology, an oligonucleotide

platform developed under OPKO CURNA, which includes the CAMP4 Licensed Compound and the CAMP4 Licensed Product, worldwide.

The CAMP4 Agreement grant covers human pharmaceutical, prophylactic, and therapeutic and certain diagnostic uses.

We received an initial upfront payment of $1.5 million and 3,373,008 shares of CAMP4’s Preferred Stock, which equates to approximately 9% of the outstanding shares of CAMP4, and we are eligible to receive up to $3.5 million in development milestone payments for Dravet syndrome products, and $4 million for non-Dravet syndrome products, as well as sales milestones of up to $90 million for Dravet syndrome products and up to $90 million for non-Dravet syndrome products.

We may also receive double digit royalty payments on the net sales of royalty bearing products, subject to adjustment.

In addition, upon achievement of certain development milestones, we will be eligible to receive additional equity consideration of up to 5,782,299 shares of CAMP4 Preferred Stock in connection with Dravet syndrome products and up to 1,082,248 shares of CAMP4 Preferred Stock in connection with non-Dravet syndrome products.

Unless earlier terminated, the CAMP4 Agreement will remain in effect on a CAMP4 Licensed Product-by-Licensed Product and country by-country basis until such time as the royalty term expires for a CAMP4 Licensed Product in a country, and expires in its entirety upon the expiration of the royalty term for the last CAMP4 Licensed Product in the last country.

CAMP4’s royalty obligations expire on the later of (i) the expiration, invalidation or abandonment date of the last patent right in connection with the royalty bearing product, or (ii) ten (10) years after a royalty bearing product’s first commercial sale in a country.

In addition to termination rights for material breach and bankruptcy, CAMP4 is permitted to terminate the CAMP4 Agreement after a specified notice period.

On June 18, 2021, EirGen and Nicoya entered into a Development and License Agreement (the “Nicoya Agreement”) granting Nicoya the exclusive rights for the development and commercialization of extended release calcifediol (the “ Nicoya Product”) in Greater China, which includes mainland China, Hong Kong, Macau, and Taiwan (collectively, the “Nicoya Territory”).

Extended release calcifediol is marketed in the U.S.

under the tradename Rayaldee by OPKO.

The license grant to Nicoya covers the therapeutic and preventative use of the Product for SHPT in non-dialysis (“ND”) and hemodialysis chronic kidney disease patients (the “Nicoya Field”).

EirGen received an initial upfront payment of $5 million and is eligible to receive an additional $5 million upon the first to occur of (A) a certain predetermined milestone, or (B) the first anniversary of the effective date.

EirGen is also eligible to receive up to an additional aggregate amount of $115 million upon the achievement of certain development, regulatory and sales-based milestones by Nicoya for the Nicoya Product in the Nicoya Territory.

EirGen will also receive tiered, double digit royalty payments at rates in the low double digits on net product sales within the Nicoya Territory and in the Nicoya Field.

In May 2016, EirGen partnered with VFMCRP through the VFMCRP Agreement for the development and commercialization of Rayaldee in the VFMCRP Territory.

The license to VFMCRP potentially covers all therapeutic and prophylactic uses of the product in human patients, 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 (“VFMCRP Initial Indication”).

Effective May 23, 2021, we entered into an amendment to the VFMCRP Agreement, pursuant to which the parties thereto agreed to include Japan as part of the VFMCRP Territory.

Effective May 5, 2020, we entered into 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.

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VFMCRP will be responsible for all other development costs that VFMCRP considers necessary to develop the product for the VFMCRP Initial Indication in the VFMCRP Territory except as otherwise provided in the VFMCRP Agreement.

EirGen also granted to VFMCRP an option to acquire an exclusive license to use, import, offer for sale, sell, distribute and commercialize the product in the U.S.

for treatment of SHPT in dialysis patients

with stage 5 CKD and vitamin D insufficiency (the “Dialysis Indication”).

EirGen also granted to VFMCRP an option (the “Option”) to acquire an exclusive license to use, import, offer for sale, sell, distribute and commercialize the product in the U.S.

for treatment of SHPT in dialysis patients with stage 5 CKD and vitamin D insufficiency (the “Dialysis Indication”).

Upon exercise of the Option, VFMCRP will reimburse EirGen for all of the development costs incurred by EirGen with respect to the product for the Dialysis Indication in the U.S.

VFMCRP would also pay EirGen up to an additional aggregate amount of $555 million upon the achievement of certain milestones and would be obligated to pay 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 commencement of sales of the product.

In June 2020, we announced that the Japan phase 3 clinical trial met its primary and secondary objectives, and demonstrated that the efficacy and safety of Somatrogon administered weekly was comparable to GENOTROPIN® for injection administered once-daily as measured by annual height velocity after 12 months of treatment in treatment-naïve Japanese pre-pubertal children with GHD.

In October 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.

range from the mid-teens to the mid-twenties or a minimum royalty, whichever is greater, upon commencement of sales of the product.

In early 2022, the European Commission and Ministry of Health, Labour and Welfare in Japan approved the next-generation long-acting recombinant human growth hormone NGENLA (Somatrogon), a once-weekly injection to treat pediatric growth hormone deficiency.

Further, Canada and Australia approved NGENLA in October and November of 2021, respectively.

In January 2022, the FDA issued a Complete Response Letter for the BLA for Somatrogon.

Pfizer and OPKO are evaluating the FDA’s comments and will work with the agency to determine the best path forward for Somatrogon (hGH-CTP) in the United States.

In 2014, Pfizer and OPKO entered into a worldwide agreement for the development and commercialization of our long-acting Somatrogon for the treatment of GHD in adults and children, as well as for the treatment of growth failure in children born small for gestational age.

In May 2020, we entered into a Restated Agreement with Pfizer which was effective as of January 1, 2020, pursuant to which the parties agreed 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 Agreement.

In May 2020, we entered into the Restated Pfizer Agreement which was effective as of January 1, 2020, pursuant to which the parties agreed to share all costs for Manufacturing Activities, as defined in the Restated Pfizer Agreement, for developing a licensed product for the three indications included in the Restated Pfizer Agreement.

Under the terms of the agreements with Pfizer, we received non-refundable and non-creditable upfront payments of $295 million in 2015 and are eligible to receive up to an additional $275 million upon the achievement of certain regulatory milestones.

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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®.

In January 2021, we announced that the FDA has accepted for filing the initial BLA for Somatrogon for the treatment of pediatric patients with GHD.

The target PDUFA action date for decision by the FDA is in October 2021.

In January 2021 we also announced the submission of a New Drug Application to the Ministry of Health, Labour, and Welfare in Japan for Somatrogon for the treatment of pediatric patients with GHD.

During the first quarter of 2021, regulatory submissions in the major global markets for Somatrogan have been accepted including, the U.S., European Medicines Agency, and Ministry of Health, Labour, and Welfare in Japan for Somatrogon for the treatment of pediatric patients with GHD.

Further, Canada and Australia approved NGENLA in October and November of 2021, respectively.

In January 2022, the FDA issued a Complete Response Letter for the BLA for Somatrogon.

Pfizer and OPKO are evaluating the FDA’s comments and will work with the agency to determine the best path forward for Somatrogon (hGH-CTP) in the United States.

In connection with our acquisitions of CURNA, OPKO Diagnostics and OPKO Renal, we agreed to pay future consideration to the sellers upon the achievement of certain events, including up to an additional $19.1 million in shares of our Common Stock to the former stockholders of OPKO Diagnostics upon and subject to the achievement of certain milestones;

and up to an additional $125.0 million in either shares of our Common Stock or cash, at our option subject to the achievement of certain milestones, to the former shareholders of OPKO Renal.

As a result of our execution of the CAMP4 Agreement, we will have to pay a percentage of any payments received under the CAMP4 Agreement to the former CURNA stockholders.

We believe that the cash and cash equivalents on hand at December 31, 2021, cash from operations and the amounts available to be borrowed under our lines of credit are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months.

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If we acquire additional assets or companies, accelerate our product development programs or initiate additional clinical trials, we will need additional funds.

Our future cash requirements, and the timing of those requirements, will depend on a number of factors, including the impact of the COVID-19 pandemic on our business, the approval and success of our products in development, particularly our long acting Somatrogon for which we have submitted for approval in the U.S.

and Japan and expect to submit for approval in the Europe shortly, the commercial success of Rayaldee , including the launch of Rayaldee by Vifor expected later in 2021, BioReference’s financial performance, possible acquisitions, the continued progress of research and development of our product candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing, our success in developing markets for our product candidates and results of government investigations, payor claims, and legal proceedings that may arise, including, without limitation class action and derivative litigation to which we are subject, and our ability to obtain insurance coverage for such claims.

We have not generated sustained positive cash flow and 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 or reduce our marketing or sales efforts or cease operations.

Additionally, the rapid development and fluidity of the COVID-19 pandemic makes it very difficult to predict its ultimate impact on our business, results of operations and liquidity.

The pandemic presents a significant uncertainty that could materially and adversely affect our results of operations, financial condition and cash flows, including due to a continued negative impact on non-COVID-related diagnostics testing services provided by BioReference in our diagnostics segment, notwithstanding that our results of operations have been positively impacted by our provision of COVID-19 testing services.

Further, deteriorating economic conditions globally have resulted in a challenging capital raising environment, which could materially limit our access to capital, whether through the issuance and sale of our common stock, debt securities or otherwise, as well as through bank facilities and lines of credit.

Events resulting from the effects of COVID-19 could negatively impact our ability to comply with certain covenants in the Credit Agreement or require that we pursue alternative financing.

Our future cash requirements, and the timing of those requirements, will depend on a number of factors, including the evolving impact of the COVID-19 pandemic on our business, the approval and success of our products in development, particularly our long acting Somatrogon for which we have received approval in Europe, Japan, Australia and Canada, submitted for approval in the U.S.

and received a Complete Response Letter in January 2022, the approval and success of Somatrogon outside the United States, including in Europe, Japan, Australia and Canada, the commercial success of Rayaldee , including from the recent launch of Rayaldee by Vifor and in other territories expected in 2022, BioReference’s financial performance, possible acquisitions and dispositions, the continued progress of research and development of our product candidates, the timing and outcome of clinical trials and regulatory approvals, the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing patent claims and other intellectual property rights, the status of competitive products, the availability of financing, our success in developing markets for our product candidates and results of government investigations, payor claims, and legal proceedings that may arise, including, without limitation class action and derivative litigation to which we are subject, and our ability to obtain insurance coverage for such claims.

We have historically not

generated sustained positive cash flow and 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 or reduce our marketing or sales efforts or cease operations.

Additionally, the rapid development and fluidity of the COVID-19 pandemic and new variants of the virus makes it very difficult to predict its ultimate impact on our business, results of operations and liquidity.

The pandemic presents a significant uncertainty that could materially and adversely affect our results of operations, financial condition and cash flows, including a negative impact on non-COVID-related diagnostics testing services provided by BioReference in our diagnostics segment, notwithstanding that our results of operations have been positively impacted by our provision of COVID-19 testing services.

Further, deteriorating economic conditions globally as a result of the COVID-19 pandemic have in the past resulted, and may in the future result in a challenging capital raising environment, which could materially limit our access to capital, whether through the issuance and sale of our Common Stock, debt securities or otherwise, as well as through bank facilities and lines of credit.

Events resulting from the effects of COVID-19 or new variants of the virus could negatively impact our ability to comply with certain covenants in the A&R Credit Agreement or require that we pursue alternative financing.

We can provide no assurance that any such alternative financing, if required, could be obtained on acceptable terms or at all.

The combination of potential disruptions to our business resulting from COVID-19 together with and volatile credit and capital markets could adversely impact our future liquidity, which could have an adverse effect on our business and results of operations.

We will continue to monitor and assess the impact COVID-19 may have on our business and financial results.

We will continue to monitor and assess the impact COVID-19 and new variants of the virus may have on our business and financial results.

The following table provides information as of December 31, 2021, with respect to the amounts and timing of our known contractual obligation payments due by period.

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Capital leases 2,102 1,499 1,002 499 79 — 5,181

Convertible Notes — — 58,050 — 156,163 — 214,213

2033 Senior Notes, 2025 and 2023 Convertible Notes — 68,576 — 119,360 — — 187,935

Deferred payments 2,478 — — — — — 2,478

Mortgages and other debts payable 1,230 970 883 512 277 — 3,872

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Subsequent to acquisition, goodwill and indefinite lived intangible assets are tested at least annually as of October 1 for impairment, or when events or changes in circumstances indicate it is more likely than not that the carrying amount of such assets may not be recoverable.

Our annual assessment may consist of a qualitative or quantitative analysis to determine

whether it is more likely than not that its fair value exceeds the carrying value.

Our annual assessment may consist of a qualitative or quantitative analysis to determine whether it is more likely than not that its fair value exceeds the carrying value.

When performing qualitative analysis, the factors we consider include our share price, our financial performance compared to budgets, long-term financial plans, the timing and cost of development plans, macroeconomic, industry and market conditions as well as the excess of fair value over the carrying value of net assets from the annual impairment test previously performed.

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Goodwill was $520.6 million and $680.6 million, respectively, at December 31, 2021 and 2020.

In addition, at December 31, 2021, Assets held for sale includes $151.8 million of goodwill related to GeneDx.

Estimating the fair value of a reporting unit for goodwill impairment is highly sensitive to changes in projections and assumptions and changes in assumptions could potentially lead to impairment.

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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, including IPR&D of $590.2 million, at both December 31, 2020 and 2019.

Net intangible assets other than goodwill were $911.9 million and $1.1 billion, including IPR&D of $590.2 million, at December 31, 2021 and December 31, 2020.

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

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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.

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.

No impairment charges were recognized for the year ended December 31.

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.

We also 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.

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.

and December 31, 2020.

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 in testing goodwill and other intangible assets, including IPR&D, for

impairment 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 additional impairment charges, which could be material.

Our 2021 impairment test of the OPKO Biologics reporting unit, including IPR&D related to Somatrogon, indicated an excess of estimated fair value over the carrying amount of approximately 19%.

We submitted the initial BLA with the FDA for approval of Somatrogon (hGH-CTP) in the United States and Pfizer received a Complete Response Letter in January 2022.

Pfizer and OPKO are evaluating the FDA’s comments and will work with the agency to determine the best path forward for Somatrogon in the United States.

If we are unable to successfully commercialize Somatrogon in the U.S., or changes in projections and assumptions negatively impact our forecast of net cash flows, we may be exposed to a material impairment charge related to the IPR&D for Somatrogon.

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

We use the straight-line method of amortization as there is no reliably determinable pattern in which the economic benefits of our intangible assets are consumed or otherwise used up.

Amortization expense was $56.4 million and $64.8 million for the years ended December 31, 2020 and 2019, respectively.

Amortization expense was $50.3 million, $56.4 million and $64.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Revenue recognition .

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

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

For the years ended December 31, 2021, and December 31, 2020, positive revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $40.4 million and $0.3 million were recognized, respectively.

For the year ended December 31, 2019, revenue reductions due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $24.8 million 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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As of December 31, 2021 and 2020, we have liabilities of approximately $5.0 million and $14.9 million within Accrued expenses and Other long-term liabilities related to reimbursements for payor overpayments.

Revenue from products.

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For research, development and/or commercialization agreements that result in revenues, we identify all material performance obligations, which may include a license to intellectual property and know-how, and research and development activities.

In order to determine the transaction price, in addition to any upfront payment, we estimate the amount of variable

consideration at the outset of the contract either utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract.

In order to determine the transaction price, in addition to any upfront payment, we estimate the amount of variable consideration at the outset of the contract either utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract.

We constrain (reduce) our estimates of variable consideration such that it is probable that a significant reversal of previously recognized revenue will not occur throughout the life of the contract.

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Our customers may be required to pay us sales-based milestone payments or royalties on future sales of commercial products.

We recognize revenues related to sales-based milestone and royalty payments upon the later to occur of (i) achievement of the customer’s underlying sales or (ii) satisfaction of any performance obligation(s) related to these sales, in each case assuming the license to our intellectual property is deemed to be the predominant item to which the sales-based milestones and/or royalties relate.

We recognize revenues related to sales-based milestone and royalty payments upon the later to occur of (i) achievement of the customer’s underlying sales or (ii) satisfaction of any performance

obligation(s) related to these sales, in each case assuming the license to our intellectual property is deemed to be the predominant item to which the sales-based milestones and/or royalties relate.

Other Potential Products and Services:

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For the years ended December 31, 2021, 2020 and 2019 we recorded $25.8 million, $53.2 million and $73.3 million of revenue from the transfer of intellectual property and other, respectively.

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

For the year ended December 31, 2021, revenue from transfer of intellectual property and other principally reflects $10.8 million of revenue related to the Pfizer Transaction, $1.0 million related to the LeaderMed joint venture (as defined below), a $4.9 million payment received under the CAMP4 Agreement (as defined below) and a $5.0 million non-refundable upfront payment received under the Nicoya Agreement.

For the years ended December 31, 2020, and 2019 revenue from transfer of intellectual property and other principally reflects $28.7 million and $66.8 million of revenue 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”).

Refer to Note 16.

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

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The allowance for credit losses was $1.8 million and $2.1 million at December 31, 2021 and 2020, respectively.

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

The credit loss expense for the years ended December 31, 2021, 2020 and 2019 was $0.4 million, $0.2 million and $0.5 million, respectively.

Income taxes.

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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 2017 Tax Cuts and Jobs Act (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.

We were required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring our U.S.

deferred tax assets and liabilities, as well as reassessing the net realizability of our deferred tax assets and liabilities.

Effective January 1, 2018, the Tax Act provides for a new global intangible low-taxed income (“GILTI”) provision.

Under the GILTI provision, certain foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets are included in U.S.

taxable income.

The Company currently estimates GILTI will be immaterial for the years ended December 31, 2020, 2019 and 2018, 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 offset by net operating loss carryforwards in the U.S.

Equity-based compensation.

We measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

That cost is recognized in the Consolidated Statements of Operations over the

period during which an employee is required to provide service in exchange for the award.

That cost is recognized in the Consolidated Statements of Operations over the period during which an employee is required to provide service in exchange for the award.

We record excess tax benefits, realized from the exercise of stock options, as cash flows from operations.

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We consider such factors as the amount of inventory on hand, estimated time required to sell such inventories, remaining shelf-life, and current market conditions to determine whether inventories are stated at the lower of cost and net realizable value.

Inventories at our diagnostics segment consist primarily of purchased laboratory supplies, which is used in our testing laboratories.

Inventory obsolescence for the years ended December 31, 2020 and 2019 was $4.4 million and $2.3 million, respectively.

Inventories at our diagnostics segment consist primarily of purchased laboratory supplies, which are used in our testing laboratories.

Inventory obsolescence expense for the years ended December 31, 2021, 2020 and 2019 was $6.5 million, $4.4 million and $2.3 million, respectively.

Contingent consideration.

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RECENT ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting pronouncements .

In June 2016, the FASB issued ASU No.

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

Measurement of Credit Losses on Financial Instruments,” which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables.

This may result in the earlier recognition of allowances for losses.

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 .

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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 7. Management’s Discussion and Analysis