OPKO HEALTH, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Reports of Independent Registered Certified Public Accounting Firm (PCAOB ID No. 42 ) 87 Consolidated Balance Sheets 91 Consolidated Statements of Operations 92 Consolidated Statements of Comprehensive Income (Loss ) 93 Consolidated Statements of Equity 94 Consolidated Statements of Cash Flows 95 Notes to Consolidated Financial Statements 96 86 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of OPKO Health, Inc. and subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of OPKO Health, Inc. and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule included at Item 15(a)(1) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 1, 2022 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 87 Valuation of Goodwill and IPR&D for Rayaldee and Biologics Description of the Matter At December 31, 2021, the Company’s goodwill was $520.6 million, and indefinite lived in-process research and development assets (IPR&D) was $590.2 million. Included in the Rayaldee reporting unit was $86.6 million of goodwill. Included in the Biologics reporting unit was $139.8 million and $590.2 million of goodwill and IPR&D, respectively. As discussed in Note 3 to the consolidated financial statements, goodwill and indefinite lived IPR&D are tested at least annually for impairment or when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. To determine the estimated fair value of their reporting units and their intangible assets included within them, management considers both market and income valuation approaches. Auditing management’s annual impairment tests for the goodwill and intangible assets in these reporting units was complex and highly judgmental due to the significant assumptions used in the determination of guideline companies, market transactions and market multiples, as well as the expected timing and amount of market revenue share and the discount rate used to estimate future cash flows, which are affected by expectations about future development of IPR&D, market, or economic conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s annual goodwill and intangible assets impairment review process, including controls over management’s review of the significant assumptions in the Rayaldee and Biologics analysis described above. To test the estimated fair value of the reporting units and the intangible assets included within them, we performed audit procedures that included, among others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current market and economic trends and other relevant factors. We involved valuation specialists to assist with assessing the methodologies and evaluating certain significant assumptions, such as the determination of guideline companies, market transactions, market multiples and the discount rates. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses on significant assumptions to evaluate the changes in the fair value that would result from changes in the assumptions. Variable Consideration in Determining Revenue from Services Description of the Matter For the year ended December 31, 2021, the Company recorded revenue from services of $1,607.1 million. As discussed in Note 15 to the consolidated financial statements, revenue from services includes amounts due under third-party and government payer programs, net of estimates for explicit and implicit price concessions and other elements of variable consideration. The Company estimates variable consideration by evaluating, among other factors, recent collections experience as well as changes in reimbursement regulations, claims processing and coverage determinations. Auditing revenue from services is complex and highly judgmental due to the estimation required to measure the variable consideration. In particular, management applies judgment in evaluating whether changes in reimbursement regulations, claims processing and coverage determinations affect the estimate of the revenue management expects to be entitled to collect. This resulted in significant auditor judgment in the performance of our procedures. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s variable consideration estimation process, including controls over management’s review of collections experience and the evaluation of factors that would affect the amount of variable consideration described above. To test the estimate of variable consideration, we performed audit procedures that included, among others, assessing the methodology used and testing the underlying data used by the Company in its analysis. We compared the collection rates used by management to historical collection trends and evaluated whether changes in the regulatory environment or the Company’s business model, customer base, mix of services and other factors would affect the estimate of variable consideration. We assessed the historical accuracy of management’s estimate and performed sensitivity analyses to evaluate the changes in variable consideration that would result from changes in the expected collection rates used and the corresponding effect on revenue from services. 88 /s/ Ernst & Young LLP We have served as the Company’s auditor since 2007. Miami, Florida March 1, 2022 89 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of OPKO Health, Inc. and subsidiaries Opinion on Internal Control over Financial Reporting We have audited OPKO Health, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, OPKO Health, Inc, and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2021 consolidated financial statements of the Company and our report dated March 1, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Miami, Florida March 1, 2022 90 OPKO Health, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 134,710 $ 72,211 Accounts receivable, net 259,637 286,314 Inventory, net 86,502 132,341 Other current assets and prepaid expenses 27,170 32,313 Assets held for sale 314,994 — Total current assets 823,013 523,179 Property, plant and equipment, net 79,727 140,554 Intangible assets, net 321,683 475,002 In-process research and development 590,200 590,200 Goodwill 520,601 680,602 Investments 10,729 15,731 Operating lease right-of-use assets 44,228 37,735 Other assets 9,534 10,060 Total assets $ 2,399,715 $ 2,473,063 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 82,040 $ 100,883 Accrued expenses 193,493 240,869 Current maturities of operating leases 11,624 9,028 Liabilities associated with assets held for sale 28,156 — Current portion of lines of credit and notes payable 14,695 24,703 Total current liabilities 330,008 375,483 Operating lease liabilities 33,097 29,760 Convertible notes 187,935 221,989 Deferred tax liabilities 148,487 137,208 Other long-term liabilities, principally contract liabilities, contingent consideration and lines of credit 15,062 37,072 Total long-term liabilities 384,581 426,029 Total liabilities 714,589 801,512 Equity: Common Stock - $ 0.01 par value, 1,000,000,000 shares authorized at December 31, 2021 and 2020, respectively; 690,082,283 and 670,585,576 shares issued at December 31, 2021 and 2020, respectively 6,901 6,706 Treasury Stock, - 8,655,082 and 549,907 shares at December 31, 2021 and 2020, respectively ( 1,791 ) ( 1,791 ) Additional paid-in capital 3,222,487 3,152,694 Accumulated other comprehensive loss ( 30,495 ) ( 4,225 ) Accumulated deficit ( 1,511,976 ) ( 1,481,833 ) Total shareholders’ equity 1,685,126 1,671,551 Total liabilities and equity $ 2,399,715 $ 2,473,063 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 91 OPKO Health, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) For the years ended December 31, 2021 2020 2019 Revenues: Revenue from services $ 1,607,106 $ 1,262,242 $ 716,434 Revenue from products 141,770 119,952 112,184 Revenue from transfer of intellectual property and other 25,842 53,219 73,317 Total revenues 1,774,718 1,435,413 901,935 Costs and expenses: Cost of service revenue 1,102,172 823,899 511,206 Cost of product revenue 91,022 70,509 61,278 Selling, general and administrative 468,857 355,573 343,305 Research and development 76,850 75,316 117,870 Contingent consideration ( 1,703 ) ( 3,989 ) ( 14,854 ) Amortization of intangible assets 50,278 56,391 64,783 Asset impairment charges — — 92,399 Gain on sale of assets ( 31,508 ) — — Total costs and expenses 1,755,968 1,377,699 1,175,987 Operating income (loss) 18,750 57,714 ( 274,052 ) Other income and (expense), net: Interest income 28 152 1,710 Interest expense ( 18,880 ) ( 21,934 ) ( 21,516 ) Fair value changes of derivative instruments, net 846 50 174 Other income (expense), net ( 14,770 ) 12,701 ( 11,281 ) Other income and (expense), net ( 32,776 ) ( 9,031 ) ( 30,913 ) Income (loss) before income taxes and investment losses ( 14,026 ) 48,683 ( 304,965 ) Income tax provision ( 15,489 ) ( 17,617 ) ( 7,060 ) Net income (loss) before investment losses ( 29,515 ) 31,066 ( 312,025 ) Loss from investments in investees ( 629 ) ( 480 ) ( 2,900 ) Net income (loss) $ ( 30,143 ) $ 30,586 $ ( 314,925 ) Income (loss) per share basic and diluted: Income (loss) per share $ ( 0.05 ) $ 0.05 $ ( 0.53 ) Weighted average number of common shares outstanding, basic and diluted 648,077,716 640,655,290 595,454,394 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 92 OPKO Health, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) For the years ended December 31, 2021 2020 2019 Net income (loss) $ ( 30,143 ) $ 30,586 $ ( 314,925 ) Other comprehensive income (loss), net of tax: Change in foreign currency translation and other comprehensive income (loss) ( 26,270 ) 17,845 ( 1,939 ) Comprehensive income (loss) $ ( 56,413 ) $ 48,431 $ ( 316,864 ) The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 93 OPKO Health, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF EQUITY (In thousands, except share and per share data) For the years ended December 31, 2021, 2020, 2019 Common Stock Treasury Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shares Dollars Shares Dollars Balance at December 31, 2018 586,881,720 $ 5,869 ( 549,907 ) $ ( 1,791 ) $ 3,004,422 $ ( 20,131 ) $ ( 1,197,078 ) $ 1,791,291 Equity-based compensation expense — — — — 13,421 — — 13,421 Exercise of common stock options and warrants 19,232 — — — ( 3 ) — — ( 3 ) Adoption of ASU 2018-07 — — — — ( 926 ) — 926 — 2025 convertible notes including share lending agreement 29,250,000 293 — — 50,559 — — 50,852 Sale of common stock 54,227,749 542 — — 75,520 — — 76,062 Net loss — — — — — — ( 314,925 ) ( 314,925 ) Other comprehensive loss — — — — — ( 1,939 ) — ( 1,939 ) Balance at December 31, 2019 670,378,701 $ 6,704 ( 549,907 ) $ ( 1,791 ) $ 3,142,993 $ ( 22,070 ) $ ( 1,511,077 ) $ 1,614,759 Common Stock Treasury Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shares Dollars Shares Dollars Balance at December 31, 2019 670,378,701 $ 6,704 ( 549,907 ) $ ( 1,791 ) $ 3,142,993 $ ( 22,070 ) $ ( 1,511,077 ) $ 1,614,759 Equity-based compensation expense — — — — 8,947 — — 8,947 Exercise of common stock options and warrants 206,875 2 — — 754 — — 756 Adoption of ASC 326 — — — — — — ( 1,342 ) ( 1,342 ) Net income — — — — — — 30,586 30,586 Other comprehensive income — — — — — 17,845 — 17,845 Balance at December 31, 2020 670,585,576 $ 6,706 ( 549,907 ) $ ( 1,791 ) $ 3,152,694 $ ( 4,225 ) $ ( 1,481,833 ) $ 1,671,551 Common Stock Treasury Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Shares Dollars Shares Dollars Balance at December 31, 2020 670,585,576 $ 6,706 ( 549,907 ) $ ( 1,791 ) $ 3,152,694 $ ( 4,225 ) $ ( 1,481,833 ) $ 1,671,551 Equity-based compensation expense — — — — 13,632 — — 13,632 Exercise of common stock options and warrants 445,437 5 — — 1,076 — — 1,081 Conversion of 2025 convertible notes 19,051,270 190 ( 8,105,175 ) — 55,085 — — 55,275 Net loss — — — — — — ( 30,143 ) ( 30,143 ) Other comprehensive loss — — — — — ( 26,270 ) — ( 26,270 ) Balance at December 31, 2021 690,082,283 $ 6,901 ( 8,655,082 ) $ ( 1,791 ) $ 3,222,487 $ ( 30,495 ) $ ( 1,511,976 ) $ 1,685,126 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 94 Table of Contents OPKO Health, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) For the years ended December 31, 2021 2020 2019 Cash flows from operating activities: Net income (loss) $ ( 30,143 ) $ 30,586 $ ( 314,925 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 78,716 85,362 93,807 Non-cash interest 9,389 9,994 8,731 Amortization of deferred financing costs 785 847 995 Losses from investments in investees 629 480 2,900 Equity-based compensation – employees and non-employees 13,632 8,947 13,421 Asset impairment charges — — 92,399 Non-cash revenue from the transfer of intellectual property ( 3,801 ) — — Realized loss (gain) on disposal of fixed assets and sales of equity securities ( 33,922 ) ( 10,681 ) 739 Loss on conversion of the 2025 Notes 11,111 — — Change in fair value of equity securities and derivative instruments 3,967 ( 101 ) 8,748 Change in fair value of contingent consideration ( 1,703 ) ( 3,989 ) ( 14,854 ) Deferred income tax provision 10,159 15,640 4,324 Changes in assets and liabilities, net of the effects of acquisitions: Accounts receivable, net 5,232 ( 150,437 ) 7,376 Inventory, net 30,684 ( 77,642 ) ( 12,133 ) Other current assets and prepaid expenses 1,478 20,504 ( 11,486 ) Other assets 260 ( 447 ) 409 Accounts payable ( 10,847 ) 37,159 15,636 Foreign currency measurement 2,345 ( 3,185 ) ( 71 ) Contract liabilities ( 15,911 ) ( 5,389 ) ( 69,302 ) Accrued expenses and other liabilities ( 33,723 ) 81,828 764 Net cash provided by (used in) operating activities 38,337 39,476 ( 172,522 ) Cash flows from investing activities: Investments in investees ( 2,000 ) — ( 1,200 ) Proceeds from sale of investments 8,079 15,110 — Acquisition of businesses, net of cash acquired ( 4,000 ) — — Proceeds from the sale of property, plant and equipment 66,026 245 671 Capital expenditures ( 32,156 ) ( 33,682 ) ( 12,741 ) Net cash provided by (used in) investing activities 35,949 ( 18,327 ) ( 13,270 ) Cash flows from financing activities: Issuance of common stock — — 76,062 Issuance of 2023 Convertible Notes, including to related parties — — 200,293 Debt issuance costs ( 188 ) — ( 7,762 ) Proceeds from the exercise of common stock options and warrants 1,080 756 ( 3 ) Borrowings on lines of credit 1,684,713 1,107,866 294,780 Repayments of lines of credit ( 1,695,956 ) ( 1,143,698 ) ( 359,322 ) Redemption of 2033 Senior Notes — — ( 28,800 ) Net cash (used in) provided by financing activities ( 10,351 ) ( 35,076 ) 175,248 Effect of exchange rate changes on cash and cash equivalents ( 1,436 ) 686 ( 477 ) Net increase (decrease) in cash and cash equivalents 62,499 ( 13,241 ) ( 11,021 ) Cash and cash equivalents at beginning of period 72,211 85,452 96,473 Cash and cash equivalents at end of period $ 134,710 $ 72,211 $ 85,452 SUPPLEMENTAL INFORMATION: Interest paid $ 8,515 $ 10,908 $ 11,873 Income taxes paid, net of refunds $ 5,969 $ ( 903 ) $ 2,667 Operating lease right-of-use assets due to adoption of ASU No. 2016-02 $ — $ — $ 39,380 Operating lease liabilities due to adoption of ASU No. 2016-02 $ — $ — $ 39,703 Operating lease right-of-use assets obtained in exchange for lease obligations $ 6,493 $ — $ — Non-cash financing: Shares issued upon the conversion of: Common Stock options and warrants, surrendered in net exercise $ — $ — $ 20 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 95 OPKO Health, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 Business and Organization We are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medical markets. Our diagnostics business includes BioReference Laboratories, Inc. (“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 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. Through BioReference, we provide laboratory testing services, primarily to customers in the larger metropolitan areas in New York, New Jersey, Florida, Texas, Maryland, California, Pennsylvania, Delaware, Washington, DC, Illinois and Massachusetts, as well as to customers in a number of other states. We offer a comprehensive test menu of clinical diagnostics for blood, urine and tissue analysis. This includes hematology, clinical chemistry, immunoassay, infectious diseases, serology, hormones, and toxicology assays, as well as Pap smear, anatomic pathology (biopsies) and other types of tissue analysis. We market our laboratory testing services directly to physicians, geneticists, hospitals, clinics, correctional and other health facilities. We operate established pharmaceutical platforms in Ireland, Chile, Spain, and Mexico, which are generating revenue and from which we expect to generate positive cash flow and facilitate future market entry for our products currently in development. In addition, we have a development and commercial supply pharmaceutical company and a global supply chain operation and holding company in Ireland. We own a specialty active pharmaceutical ingredients (“APIs”) manufacturer in Israel, which we expect will facilitate the development of our pipeline of molecules and compounds for our proprietary molecular diagnostic and therapeutic products. Our research and development activities are primarily performed at facilities in Woburn, MA, Waterford, Ireland, Kiryat Gat, Israel, and Barcelona, Spain. On January 18, 2022, Sema4 Holdings Corp. (“Sema4”) and OPKO announced they had signed an Agreement and Plan of Merger and Reorganization (the “GeneDx Merger Agreement”) with Sema4 Holdings Corp., a Delaware corporation (“Sema4”), pursuant to which Sema4 has agreed to acquire OPKO’s wholly owned subsidiary, GeneDx, Inc. (“GeneDx”), subject to 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 plus 80.0 million shares in Sema4, with up to an additional $ 150 million revenue-based milestones over the next two years (which will be payable in cash or Sema4 shares at Sema4’s discretion). Based on the closing stock price of Sema4 as of January 14, 2022, the total upfront consideration represents 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. 96 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. We recognized a gain on the sale of the facility in the third quarter of 2021 of $ 31.5 million. Note 2 Impact of COVID-19 As the disease caused by SARS-CoV-2, a novel strain of coronavirus, COVID-19 continues to spread and severely impact the 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 as the COVID-19 pandemic continues. 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 numerous customer verticals, 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. 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. In addition, in the second half of 2021, overall demand for COVID-19 testing has declined, and accordingly, the sustainability of our COVID-19 testing volumes is uncertain. 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 and genomic 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 % 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. In March 2020, in response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property, and the creation of certain payroll tax credits associated with the retention of employees. We have received, or expect to receive a number of benefits under the CARES Act including, but not limited to: • During the year ended December 31, 2020, we received approximately $ 14 million under The Centers for Medicare & Medicaid Services (CMS) Accelerated and Advance Payment Program, which provides accelerated payments to Medicare providers/suppliers working to provide treatment to patients and combat the COVID-19 pandemic, and the amounts advanced are loans which will be offset against future claims and were repaid in 2021. These loans are initially recorded as contract liabilities included in Accrued expenses and are 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 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; • U.S. Department of Health and Human Services (HHS), will provide claims reimbursement to healthcare providers generally at Medicare rates for testing uninsured patients; and 97 • 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. 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 rightsize 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, with properties targeted to the disease processes caused by serious viral infections. Note 3 Summary of Significant Accounting Policies Basis of presentation. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. and with the instructions to Form 10-K and of Regulation S-X. Principles of consolidation. The accompanying Consolidated Financial Statements include the accounts of OPKO Health, Inc. and of our wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Use of estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from these estimates. Cash and cash equivalents. Cash and cash equivalents include short-term, interest-bearing instruments with original maturities of 90 days or less at the date of purchase. We also consider all highly liquid investments with original maturities at the date of purchase of 90 days or less as cash equivalents. These investments include money markets, bank deposits, certificates of deposit and U.S. treasury securities. Inventories. Inventories are valued at the lower of cost and net realizable value. Cost is determined by the first-in, first-out method. 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 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. Pre-launch inventories. We may accumulate commercial quantities of certain product candidates prior to the date we anticipate that such products will receive final FDA approval. The accumulation of such pre-launch inventories exposes us to the risk that such products may not be approved for marketing by the FDA on a timely basis, or ever; however, we may accumulate pre-launch inventories depending on the commercial value of the applicable product launch opportunity. In accordance with our policy, we expense this pre-launch inventory. Goodwill and intangible assets. Goodwill represents the difference between the purchase price and the estimated fair value of the net assets acquired accounted for by the acquisition method of accounting. Refer to Note 6. Goodwill, in-process research and development (“IPR&D”) and other intangible assets acquired in business combinations, licensing and other transactions at December 31, 2021 and 2020, was $ 1.4 billion and $ 1.7 billion, respectively. Assets acquired and liabilities assumed in business combinations, licensing and other transactions are generally recognized at the date of acquisition at their respective fair values. Any excess of the purchase price over the estimated fair values of the net assets acquired is recognized as goodwill. At acquisition, we generally determine the fair value of intangible assets, including IPR&D, using the “income method.” 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. 98 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. We perform sensitivity analyses around our assumptions in order to assess the reasonableness of the assumptions and the results of our testing. 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 at December 31, 2021 and 2020, other than goodwill were $ 911.9 million and $ 1.1 billion, respectively, including IPR&D of $ 590.2 million. Intangible assets are highly vulnerable to impairment charges, particularly newly acquired assets for recently launched products and IPR&D. Considering the high risk nature of research and development and the industry’s success rate of bringing developmental compounds to market, IPR&D impairment charges may occur in future periods. Estimating the fair value of IPR&D for potential impairment is highly sensitive to changes in projections and assumptions and changes in assumptions could potentially lead to impairment. Upon obtaining regulatory approval, IPR&D assets are then accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life. If the project is abandoned, the IPR&D asset is charged to expense. Finite lived intangible assets are tested for impairment when events or changes in circumstances indicate it is more likely than not that the carrying amount of such assets may not be recoverable. The testing includes a comparison of the carrying amount of the asset to its estimated undiscounted future cash flows expected to be generated by the asset. 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. No impairment charges were recognized for the year ended December 31. 2021 and December 31, 2020. Impairment charges for the year ended December 31, 2019 were $ 92.4 million and consisted of a goodwill impairment charge of $ 26.2 million to write the carrying amount of the OPKO Diagnostics, CURNA and Transition Therapeutics reporting units down to their estimated fair value, an impairment charge of $ 44.8 million to write our IPR&D assets for OPK88003 and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair value, and an impairment charge of $ 20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair value as a result of our testing. These impairment charges for the year ended December 31, 2019, resulted from liquidity constraints, longer than expected development timelines and changes in the competitive landscape, which resulted in changes to our estimates and assumptions of the expected future cash flows of the reporting units focused on the development of the Claros Analyzer, OPK88003 and CURNA’s platform technology. We believe that our estimates and assumptions 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 $ 50.3 million, $ 56.4 million and $ 64.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. Amortization expense from operations for our intangible assets is expected to be $ 38.1 million, $ 37.0 million, $ 36.8 million, $ 35.5 million and $ 34.2 million for the years ended December 31, 2022, 2023, 2024, 2025 and 2026, respectively. Fair value measurements . The carrying amounts of our cash and cash equivalents, accounts receivable, accounts payable and short-term debt approximate their fair value due to the short-term maturities of these instruments. Investments that are considered equity securities as of December 31, 2021 and 2020 are predominately carried at fair value. Our debt under the credit agreement with JPMorgan Chase Bank, N.A. approximates fair value due to the variable rate of interest applicable to such debt. 99 In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop the estimates. The use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts. Accordingly, the estimates of fair value presented herein may not be indicative of the amounts that could be realized in a current market exchange. Refer to Note 19. Contingent consideration . Each period we revalue the contingent consideration obligations associated with certain prior acquisitions to their fair value and record increases in the fair value as contingent consideration expense and decreases in the fair value as a reduction in contingent consideration expense. Changes in contingent consideration result from changes in the assumptions regarding probabilities of successful achievement of related milestones, the estimated timing in which the milestones are achieved and the discount rate used to estimate the fair value of the liability. Contingent consideration may change significantly as our development programs progress, revenue estimates evolve and additional data is obtained, impacting our assumptions. The assumptions used in estimating fair value require significant judgment. The use of different assumptions and judgments could result in a materially different estimate of fair value which may have a material impact on our results from operations and financial position. Derivative financial instruments. We record derivative financial instruments on our Consolidated Balance Sheet at their fair value and recognize the changes in the fair value in our Consolidated Statement of Operations when they occur, the only exception being derivatives that qualify as hedges. For the derivative instrument to qualify as a hedge, we are required to meet strict hedge effectiveness and contemporaneous documentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over the life of the hedge. At December 31, 2021 and 2020, our foreign currency forward contracts held to economically hedge inventory purchases did not meet the documentation requirements to be designated as hedges. Accordingly, we recognize all changes in the fair values of our derivatives instruments, net, in our Consolidated Statement of Operations. Refer to Note 20. Property, plant and equipment. Property, plant and equipment are recorded at cost or fair value if acquired in a business combination. Depreciation is provided using the straight-line method over the estimated useful lives of the assets and includes amortization expense for assets capitalized under finance leases. The estimated useful lives by asset class are as follows: software - 3 years, machinery, medical and other equipment - 5 - 8 years, furniture and fixtures - 5 - 12 years, leasehold improvements - the lesser of their useful life or the lease term, buildings and improvements - 10 - 40 years, and automobiles - 3 - 5 years. Expenditures for repairs and maintenance are charged to expense as incurred. Depreciation expense was $ 28.4 million, $ 29.0 million and $ 29.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Assets held under finance leases are included within Property, plant and equipment, net in our Consolidated Balance Sheets and are amortized over the shorter of their useful lives or the expected term of their related leases. Impairment of long-lived assets. Long-lived assets, such as property and equipment and assets held for sale, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated 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. Income taxes. Income taxes are accounted for under the asset-and-liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. We periodically evaluate the realizability of our net deferred tax assets. Our tax accruals are analyzed periodically and adjustments are made as events occur to warrant such adjustment. Valuation allowances on certain U.S. deferred tax assets and non-U.S. deferred tax assets are established, because realization of these tax benefits through future taxable income does not meet the more-likely-than-not threshold. We operate in various countries and tax jurisdictions globally. For the year ended December 31, 2021, the tax rate differed from the U.S. federal statutory rate of 21% primarily due to the valuation allowance against certain U.S. and non-U.S. deferred tax assets, the relative mix in earnings and losses in the U.S. versus foreign tax jurisdictions, and the impact of certain discrete tax events and operating results in tax jurisdictions that do not result in a tax benefit. Included in Other long-term liabilities is an accrual of $ 3.2 million related to uncertain tax positions involving income recognition. We recognize that local tax law is inherently complex and the local taxing authorities may not agree with certain tax positions taken. In connection with an examination of a 2014 and 2015 tax return in a foreign jurisdiction, the taxing authority has issued an initial income tax assessment of approximately $ 66 million (including interest). We are protesting this 100 assessment as we believe that it is without technical merit. We expect to exhaust all administrative and judicial remedies necessary to resolve the matter, which could be a lengthy process. There can be no assurance that this matter will be resolved in our favor, and an adverse outcome, or any future tax examinations involving similar assertions, could have a material effect on our financial condition, results of operations and cash flows. Revenue recognition . We recognize revenue when a customer obtains control of promised goods or services in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“Topic 606”). The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods or services. We apply the following five-step model in order to determine this amount: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we review the contract to determine which performance obligations we must deliver and which of these performance obligations are distinct. We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. For a complete discussion of accounting for Revenues from services, Revenues from products and Revenue from transfer of intellectual property and other , refer to Note 15. Concentration of credit risk and allowance for credit losses . Financial instruments that potentially subject us to concentrations of credit risk consist primarily of accounts receivable. Substantially all of our accounts receivable are with either companies in the healthcare industry or patients. However, credit risk is limited due to the number of our clients as well as their dispersion across many different geographic regions. While we have receivables due from federal and state governmental agencies, we do not believe that such receivables represent a credit risk because the related healthcare programs are funded by federal and state governments, and payment is primarily dependent upon submitting appropriate documentation. At December 31, 2021 and 2020, receivable balances (net of explicit and implicit price concessions) from Medicare and Medicaid were 8 % and 6 %, respectively, of our consolidated Accounts receivable, net. At December 31, 2021 and 2020, receivable balances (net of explicit and implicit price concessions) due directly from states, cities and other municipalities, specifically related to our real-time reverse-transcription polymerase chain reaction (real-time RT-PCR) assay to detect COVID-19, were 4.1 % and 6.3 % of our consolidated accounts receivable, net. The portion of our accounts receivable due from individual patients comprises the largest portion of credit risk. At December 31, 2021 and 2020, receivables due from patients represent approximately 1.7 % and 0.7 %, respectively, of our consolidated Accounts receivable, net. We assess the collectability of accounts receivable balances by considering factors such as historical collection experience, customer credit worthiness, the age of accounts receivable balances, regulatory changes and current economic conditions and trends that may affect a customer’s ability to pay. Actual results could differ from those estimates. 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, 2021, 2020 and 2019 was $ 0.4 million, $ 0.2 million and $ 0.5 million, respectively. 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 Statement 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. During the years ended December 31, 2021, 2020 and 2019, we recorded $ 13.6 million, $ 8.9 million and $ 13.4 million, respectively, of equity-based compensation expense. Research and development expenses. Research and development expenses include external and internal expenses. 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. Research and development employee-related expenses include salaries, benefits and equity-based compensation expense. Other internal research and development expenses are incurred to support overall research and development activities and include expenses related to general overhead and facilities. We expense these costs in the period in which they are incurred. We estimate our liabilities for research and development expenses in order to match the recognition of expenses to the period in which the actual services are received. As such, accrued liabilities related to third party research and development activities are recognized based upon our estimate of services received and degree of completion of the services in accordance with the specific third party contract. 101 Research and development expense includes costs for in-process research and development projects acquired in asset acquisitions which have not reached technological feasibility and which have no alternative future use. For in-process research and development projects acquired in business combinations, the in-process research and development project is capitalized and evaluated for impairment until the development process has been completed. Once the development process has been completed the asset will be amortized over its remaining estimated useful life. Segment reporting. Our chief operating decision-maker (“CODM”) is Phillip Frost, M.D., our Chairman and Chief Executive Officer. Our CODM reviews our operating results and operating plans and makes resource allocation decisions on a Company-wide or aggregate basis. We manage our operations in two reportable segments, pharmaceutical and diagnostics. The pharmaceutical segment consists of our pharmaceutical operations in Chile, Mexico, Ireland, Israel and Spain, Rayaldee product sales and our pharmaceutical research and development. The diagnostics segment primarily consists of clinical and genomics laboratory operations through BioReference and point-of-care operations. There are no significant inter-segment sales. We evaluate the performance of each segment based on operating profit or loss. There is no inter-segment allocation of interest expense or income taxes. Refer to Note 18. Shipping and handling costs. We do not charge customers for shipping and handling costs. Shipping and handling costs are classified as Cost of revenues in the Consolidated Statement of Operations. Foreign currency translation . The financial statements of certain of our foreign operations are measured using the local currency as the functional currency. The local currency assets and liabilities are generally translated at the rate of exchange to the U.S. dollar on the balance sheet date and the local currency revenues and expenses are translated at average rates of exchange to the U.S. dollar during the reporting periods. Foreign currency transaction gains (losses) have been reflected as a component of Other income (expense), net within the Consolidated Statement of Operations and foreign currency translation gains (losses) have been included as a component of the Consolidated Statement of Comprehensive Income (Loss). During the years ended December 31, 2021, 2020 and 2019, we recorded $( 1.4 ) million, $ 1.6 million and $ 0.4 million, respectively of transaction gains (losses). Variable interest entities. The consolidation of a variable interest entity (“VIE”) is required when an enterprise has a controlling financial interest. A controlling financial interest in a VIE will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE. Refer to Note 5. Investments. We have made strategic investments in development stage and emerging companies. We record these investments as equity method investments or as equity securities based on our percentage of ownership and whether we have significant influence over the operations of the investees. For investments classified under the equity method of accounting, we record our proportionate share of their losses in Losses from investments in investees in our Consolidated Statement of Operations. Refer to Note 5. For investments classified as equity securities, we record changes in their fair value as Other income (expense) in our Consolidated Statement of Operations based on their closing price per share at the end of each reporting period, unless the equity security does not have a readily determinable fair value. Refer to Note 5. Pending accounting pronouncements . In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40).” ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. The ASU is effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact of this new guidance on our Consolidated Financial Statements. Note 4 Income (loss) Per Share Basic income (loss) per share is computed by dividing our net income (loss) by the weighted average number of shares of our common stock par value $ 0.01 per share (“Common Stock”) outstanding during the period. Shares of Common Stock outstanding under the share lending arrangement entered into in conjunction with the 2025 Notes (as defined in Note 7) are excluded from the calculation of basic and diluted earnings per share because the borrower of the shares is required under the share lending arrangement to refund any dividends paid on the shares lent. Refer to Note 7. For diluted earnings per share, the dilutive impact of stock options and warrants is determined by applying the “treasury stock” method. The dilutive impact of the 2033 Senior Notes, the 2023 Convertible Notes and the 2025 Notes (each, as defined and discussed in Note 7) has been considered using the “if converted” method. For periods in which their effect would be antidilutive, no effect is given to Common Stock issuable under outstanding options or warrants or the potentially dilutive shares issuable pursuant to the 2033 Senior Notes, the 2023 Convertible Notes and the 2025 Notes in the dilutive computation. 102 A total of 62,204,391 , 70,029,480 and 67,765,380 potential shares of Common Stock have been excluded from the calculation of diluted net income (loss) per share for the years ended December 31, 2021, 2020 and 2019, respectively, because their inclusion would be antidilutive. A full presentation of diluted earnings per share has not been provided because the required adjustments to the numerator and denominator resulted in diluted earnings per share equivalent to basic earnings per share. During the year ended December 31, 2021, 445,437 Common Stock options to purchase shares of our Common Stock were exercised, resulting in the issuance of 445,437 shares of Common Stock. Of the 445,437 Common Stock options exercised, 0 shares of Common Stock were surrendered in lieu of a cash payment via the net exercise feature of the agreements. During the year ended December 31, 2020, 206,875 Common Stock options to purchase shares of our Common Stock were exercised, resulting in the issuance of 206,875 shares of Common Stock. Of the 206,875 Common Stock options exercised, 0 shares of Common Stock were surrendered in lieu of a cash payment via the net exercise feature of the agreements. During the year ended December 31, 2019, 24,877 Common Stock options to purchase shares of our Common Stock were exercised, resulting in the issuance of 19,232 shares of Common Stock. Of the 24,877 Common Stock options exercised, 5,645 shares of Common Stock were surrendered in lieu of a cash payment via the net exercise feature of the agreements . 103 Note 5 Investments Investments The following table reflects the accounting method, carrying value and underlying equity in net assets of our unconsolidated investments as of December 31, 2021 and 2020: (in thousands) As of December 31, 2021 As of December 31, 2020 Investment type Investment Carrying Value Underlying Equity in Net Assets Investment Carrying Value Underlying Equity in Net Assets Equity method investments $ 263 $ 3,577 $ 426 $ 2,252 Variable interest entity, equity method 816 3,043 1,060 9 Equity securities 4,226 14,136 Equity securities with no readily determinable fair value 5,408 35 Warrants and options 16 74 Total carrying value of investments $ 10,729 $ 15,731 Equity method investments Our equity method investments consist of investments in Pharmsynthez (ownership 9 %), Cocrystal Pharma, Inc. (“COCP”) ( 3 %), Non-Invasive Monitoring Systems, Inc. (“NIMS”) ( 1 %), Neovasc Inc. (“Neovasc”) ( 1 %), InCellDx, Inc. (“InCellDx”) ( 29 %), BioCardia, Inc. (“BioCardia”) ( 1 %), and Xenetic Biosciences, Inc. (“Xenetic”) ( 1 %). The aggregate amount of assets, liabilities, and net losses of our equity method investees as of and for the year ended December 31, 2021 were $ 223.6 million, $ 37.9 million, and $ 69.4 million, respectively. The aggregate total assets, liabilities, and net losses of our equity method investees as of and for the year ended December 31, 2020 was $ 90.9 million, $ 28.4 million, and $ 75.4 million, respectively. We have determined that we and/or our related parties can significantly influence control of our equity method investments through our board representation and/or voting power. Accordingly, we account for our investment in these entities under the equity method and record our proportionate share of their losses in Loss from investments in investees in our Consolidated Statement of Operations. The aggregate value of our equity method investments based on the quoted market price of their respective shares of common stock and the number of shares held by us as of December 31, 2021 and 2020 was $ 4.5 million and 7.5 million, respectively. Investments in Equity securities Our equity securities consist of investments in Phio Pharmaceuticals (“Phio”) (ownership 0.01 %), VBI Vaccines Inc. (“VBI”) ( 1 %), ChromaDex Corporation (“ChromaDex”) ( 0.1 %), Eloxx Pharmaceuticals, Inc. (“Eloxx”) ( 2 %), CAMP4 Therapeutics Corporation (“CAMP4”) ( 4.58 %), and HealthSnap, Inc. ( 6.46 %). We have determined that our ownership, along with that of our related parties, does not provide us with significant influence over the operations of these investments. Accordingly, we account for our investment in these entities as equity securities, and we record changes in the fair value of these investments in Other income (expense) each reporting period when they have readily determinable fair value. Equity securities without a readily determinable fair value are adjusted to fair value when there is an observable price change. Net gains and losses on our equity securities for the year ended December 31, 2021, 2020 and 2019 are as follows: For the year ended December 31 (in thousands) 2021 2020 2019 Equity Securities: Net gains and (losses) recognized during the period on equity securities $ ( 1,832 ) $ 10,376 $ ( 7,443 ) Less: Net gains realized during the period on equity securities ( 2,981 ) ( 10,324 ) — Unrealized net gains and losses recognized during the period on equity securities still held at the reporting date $ ( 4,813 ) $ 52 $ ( 7,443 ) Sales of investments Gains (losses) included in earnings from sales of our investments are recorded in Other income (expense), net in our Consolidated Statement of Operations. The cost of securities sold is based on the specific identification method. 104 Warrants and options In addition to our equity method investments and equity securities, we hold options to purchase 47 thousand additional shares of BioCardia, all of which were vested as of December 31, 2021 and 2020, and 33 thousand, 0.7 million to purchase additional shares of COCP and InCellDx, Inc., respectively. We recorded the changes in the fair value of the options and warrants in Fair value changes of derivative instruments, net in our Consolidated Statement of Operations. We also recorded the fair value of the options and warrants in Investments, net in our Consolidated Balance Sheet. See further discussion of the Company’s options and warrants in Note 19 and Note 20. Investments in variable interest entities We have determined that we hold variable interests in LeaderMed Health Group Limited (“LeaderMed”), Detect Genomix, LLC (“Detect Genomix”) and Zebra Biologics, Inc. (“Zebra”). We made this determination as a result of our assessment that they do not have sufficient resources to carry out their principal activities without additional financial support. 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 have granted 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 4,703 shares 47 % ownership interest in the joint venture. In addition, we received an upfront payment of $ 1.0 million and will be reimbursed for clinical trial material and technical support we provide the joint venture. In order to determine the primary beneficiary of the joint venture, we evaluated our investment and our related parties’ investment, as well as our investment combined with the related parties’ investment to identify if we had the power to direct the activities that most significantly impact the economic performance of the joint venture. Based on the capital structure, governing documents and overall business operations of the joint venture, we determined that, while a VIE, we do not have the power to direct the activities that most significantly impact the joint venture’s economic performance and do not have an obligation to fund expected losses. We did determine, that we can significantly influence control of the joint venture through our board representation and voting power. Therefore, we have the ability to exercise significant influence over the joint venture’s operations and account for our investment in the joint venture under the equity method. In August 2020, GeneDx, Inc., a subsidiary of BioReference, announced that it had entered into an agreement with Pediatrix Medical Group (“Pediatrix”), a provider of maternal-fetal, and pediatric medical and surgical subspecialty physician services, to offer genomic sequencing to support clinical diagnosis in neonatal intensive care units staffed by Pediatrix’s affiliated neonatologists. The offering is planned to include whole exome and whole genome sequencing and genomic support services under the brand Detect Genomix. Our initial capital investment in Detect Genomix was $ 245,000 for which we received a 49 % ownership interest in Detect Genomix. We are required to make additional capital contributions to Detect Genomix in accordance with our percentage interests if Detect Genomix is unable to generate positive cash flow from operations or is unable to obtain alternative financing. We have not made any other investments in or loans to Detect Genomix through December 31, 2021. In January 2022, the Detect Genomix agreement was terminated. In order to determine the primary beneficiary of Detect Genomix, we evaluated our investment to identify if we had the power to direct the activities that most significantly impact the economic performance of Detect Genomix. Based on the capital structure, governing documents and overall business operations of Detect Genomix, we determined that, while a VIE, we do not have the power to direct the activities that most significantly impact Detect Genomix’s economic performance. We determined, however, that we can significantly influence control of Detect Genomix through our board representation and voting power. Therefore, we have the ability to exercise significant influence over Detect Genomix’s operations and account for our investment in Detect Genomix under the equity method. The joint venture was dissolved in January 2022. We own 1,260,000 shares of Zebra Series A-2 Preferred Stock and 900,000 shares of Zebra restricted common stock (ownership 29 % at December 31, 2021 and 2020). Zebra is a privately held biotechnology company focused on the discovery and development of biosuperior antibody therapeutics and complex drugs. Dr. Richard Lerner, M.D., a former member of our Board of Directors, was a founder of Zebra. Dr. Frost serves as a member of Zebra’s Board of Directors. In order to determine the primary beneficiary of Zebra, we evaluated our investment and our related parties’ investment, as well as our investment combined with the related parties’ investment to identify if we had the power to direct the activities that most significantly impact the economic performance of Zebra. Based on the capital structure, governing documents and 105 overall business operations of Zebra, we determined that, while a VIE, we do not have the power to direct the activities that most significantly impact Zebra’s economic performance and have no obligation to fund expected losses. We did determine, however, that we can significantly influence control of Zebra through our board representation and voting power. Therefore, we have the ability to exercise significant influence over Zebra’s operations and account for our investment in Zebra under the equity method. 106 Note 6 Composition of Certain Financial Statement Captions For the years ended December 31, (In thousands) 2021 2020 Accounts receivable, net Accounts receivable $ 261,476 $ 288,369 Less: allowance for doubtful accounts ( 1,839 ) ( 2,055 ) $ 259,637 $ 286,314 Inventories, net Consumable supplies $ 39,447 $ 86,779 Finished products 44,107 36,831 Work in-process 1,615 5,268 Raw materials 6,112 5,784 Less: inventory reserve ( 4,779 ) ( 2,321 ) $ 86,502 $ 132,341 Other current assets and prepaid expenses Prepaid supplies $ 10,641 $ 7,259 Prepaid insurance 4,383 3,803 Taxes recoverable 5,598 13,440 Other receivables 353 2,502 Other 6,195 5,309 $ 27,170 $ 32,313 Property, plant and equipment, net: Machinery, medical and other equipment $ 127,633 $ 193,152 Leasehold improvements 27,478 40,742 Furniture and fixtures 11,638 13,547 Automobiles and aircraft 12,602 10,537 Software 14,507 14,726 Building 10,661 21,848 Land 2,421 2,602 Construction in process 6,113 8,169 Less: accumulated depreciation ( 133,326 ) ( 164,769 ) $ 79,727 $ 140,554 Intangible assets, net: Customer relationships $ 314,823 $ 448,751 Technologies 246,101 296,623 Trade names 49,770 49,820 Covenants not to compete 12,920 16,334 Licenses 5,766 5,766 Product registrations 6,995 8,025 Other 6,128 6,513 Less: accumulated amortization ( 320,820 ) ( 356,830 ) $ 321,683 $ 475,002 107 For the years ended December 31, (In thousands) 2021 2020 Accrued expenses: Inventory received but not invoiced $ 40,446 $ 72,160 Employee benefits 45,939 43,300 Commitments and contingencies 27,819 15,454 Clinical trials 4,867 7,112 Finance leases short-term 2,257 2,453 Professional fees 2,121 4,985 Contingent consideration 487 1,188 Contract liabilities 258 15,783 Other 69,299 78,434 $ 193,493 $ 240,869 Other long-term liabilities: Finance leases long-term $ 2,924 $ 2,805 Contingent consideration 2,350 4,507 Mortgages and other debts payable 2,224 3,837 Contract liabilities 208 595 Other 7,356 25,328 $ 15,062 $ 37,072 Our intangible assets and goodwill relate principally to our completed acquisitions of OPKO Renal, OPKO Biologics, EirGen and BioReference. We amortize intangible assets with definite lives on a straight-line basis over their estimated useful lives. The estimated useful lives by asset class are as follows: technologies - 7 - 17 years, customer relationships - 7 - 20 years, product registrations - 7 - 10 years, covenants not to compete - 5 years, trade names - 5 - 10 years, other 9 - 13 years. We do not anticipate capitalizing the cost of product registration renewals, rather we expect to expense these costs, as incurred. Our goodwill is not tax deductible for income tax purposes in any jurisdiction in which we operate. As of December 31, 2021, GeneDx met the held-for-sale accounting criteria and the related assets and liabilities are recognized at the lower of carrying value or fair value less costs to sell in the consolidated balance sheet. In addition, at December 31, 2021, Assets held for sale includes $ 151.8 million of goodwill related to GeneDx. The changes in value of the intangible assets and goodwill during the year ended December 31, 2020, are primarily due to foreign currency fluctuations between the Chilean Peso, the Euro and the Shekel against the U.S. dollar. The changes in value of the intangible assets and goodwill during the year ended December 31, 2019 are primarily due to an impairment charge of $ 44.8 million to write our IPR&D assets for OPK88003 and CURNA’s platform technology for oligonucleotide therapeutics down to their estimated fair value, a goodwill impairment charge of $ 26.2 million to write the carrying amount of the OPKO Diagnostics, CURNA and Transition Therapeutics reporting units down to their estimated fair value, and an impairment charge of $ 20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair value. The following table reflects the changes in the allowance for doubtful accounts, provision for inventory reserve and tax valuation allowance accounts: (In thousands) Beginning balance Charged to expense Written-off Charged to other Ending balance 2021 Allowance for doubtful accounts $ ( 2,055 ) ( 369 ) 585 — $ ( 1,839 ) Inventory reserve $ ( 2,321 ) ( 6,461 ) 4,003 — $ ( 4,779 ) Tax valuation allowance $ ( 303,326 ) 34,496 — 8,433 $ ( 260,397 ) 2020 Allowance for doubtful accounts $ ( 1,934 ) ( 232 ) 111 — $ ( 2,055 ) Inventory reserve $ ( 2,537 ) ( 4,387 ) 4,603 — $ ( 2,321 ) Tax valuation allowance $ ( 193,256 ) ( 110,070 ) — — $ ( 303,326 ) 108 The following table summarizes the changes in Goodwill by reporting unit during the years ended December 31, 2021 and 2020. 2021 2020 (In thousands) Gross goodwill at January 1 Cumulative impairment at January 1 Goodwill impairment Foreign exchange and other Balance at December 31st Gross goodwill at January 1 Cumulative impairment at January 1 Goodwill impairment Foreign exchange and other Balance at December 31st Pharmaceuticals CURNA $ 4,827 $ ( 4,827 ) $ — $ — $ — $ 4,827 $ ( 4,827 ) $ — $ — $ — Rayaldee 93,418 — — ( 6,865 ) 86,554 85,605 — — 7,813 93,418 FineTech 11,698 ( 11,698 ) — — — 11,698 ( 11,698 ) — — — OPKO Biologics 139,784 — — — 139,784 139,784 — — — 139,784 OPKO Chile 4,505 — — ( 745 ) 3,760 4,348 — — 157 4,505 OPKO Health Europe 8,086 — — ( 608 ) 7,478 7,394 — — 692 8,086 OPKO Mexico 100 ( 100 ) — — — 100 ( 100 ) — — — Transition Therapeutics 3,421 ( 3,421 ) — — — 3,421 ( 3,421 ) — — — Diagnostics BioReference 434,809 — — ( 151,784 ) 283,025 434,809 — — — 434,809 OPKO Diagnostics 17,977 ( 17,977 ) — — — 17,977 ( 17,977 ) — — — $ 718,625 $ ( 38,023 ) $ — $ ( 160,002 ) $ 520,601 $ 709,963 $ ( 38,023 ) $ — $ 8,662 $ 680,602 Foreign exchange and other amounts for the year ended December 31, 2021 includes amounts related to GeneDx which is included as Assets held for sale at December 31, 2021. 109 Note 7 Debt As of December 31, 2021 and 2020, our debt consists of the following: (In thousands) As of December 31, 2021 As of December 31, 2020 2025 Notes $ 119,360 $ 156,163 2023 Convertible Notes 65,525 62,776 2033 Senior Notes 3,050 3,050 JP Morgan Chase — 7,057 Chilean and Spanish lines of credit 13,672 15,897 Current portion of notes payable 1,022 1,749 Long term portion of notes payable 2,642 4,513 Total $ 205,272 $ 251,205 Balance sheet captions Convertible Notes $ 187,935 $ 221,989 Current portion of lines of credit and notes payable 14,695 24,703 LT notes payable included in long-term liabilities 2,642 4,513 Total $ 205,272 $ 251,205 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. The line of credit 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 and we terminated this line of credit in June 2021. In February 2019, we issued $ 200.0 million aggregate principal amount of Senior Convertible Notes due 2025 (the “2025 Notes”) in an underwritten public offering. The 2025 Notes bear interest at a rate of 4.50 % per year, payable semiannually in arrears on February 15 and August 15 of each year. The 2025 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 ended 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 conditions. 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 initial and 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 certain events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date of the 2025 Notes or if we deliver a notice of redemption, in certain circumstances the indenture governing the 2025 Notes requires an increase in the conversion rate of the 2025 Notes for a holder who elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be. We may not redeem the 2025 Notes prior to February 15, 2022. We may redeem for cash any or all of the notes, at our option, on or after February 15, 2022, if the last reported sale price of our Common Stock has been at least 130 % of the then current conversion price for the notes for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately 110 preceding the date on which we provide notice of redemption at a redemption price equal to 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes. If we undergo a fundamental change, as defined in the indenture governing the 2025 Notes, prior to the maturity date of the 2025 Notes, holders may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100 % of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2025 Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to any of our existing and future liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries. 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”). We recorded an $ 11.1 million non-cash loss related to the Exchange. In conjunction with the issuance of the 2025 Notes, we agreed to loan up to 30,000,000 shares of our Common Stock to affiliates of the underwriter in order to assist investors in the 2025 Notes to hedge their position. Following consummation of the Exchange, the number of outstanding borrowed shares of Common Stock was reduced by 8,105,175 shares. As of December 31, 2021 and 2020, a total of 21,144,825 and 29,250,000 shares were issued under the share lending arrangement, respectively. We will not receive any of the proceeds from the sale of the borrowed shares, but we received a one-time nominal fee of $ 0.3 million for the newly issued shares. Shares of our Common Stock outstanding under the share lending arrangement are excluded from the calculation of basic and diluted earnings per share. See Note 4. As required by ASC 470-20, “Debt with Conversion and Other Options,” we calculated the equity component of the 2025 Notes, taking into account both the fair value of the conversion option and the fair value of the share lending arrangement. The equity component was valued at $ 52.6 million at issue date and this amount was recorded as Additional paid-in capital, which resulted in a discount on the 2025 Notes. The discount is being amortized to Interest expense over the term of the 2025 Notes, which results in an effective interest rate on the 2025 Notes of 11.2 %. The following table sets forth information related to the 2025 Notes which is included in our Consolidated Balance Sheet as of December 31, 2021: (In thousands) 2025 Senior Notes Discount Debt Issuance Costs Total Balance at December 31, 2020 $ 200,000 $ ( 39,537 ) $ ( 4,300 ) $ 156,163 Amortization of debt discount and debt issuance costs — 6,639 723 7,362 Conversion ( 55,420 ) 10,151 1,104 ( 44,165 ) Balance at December 31, 2021 $ 144,580 $ ( 22,747 ) $ ( 2,473 ) $ 119,360 In February 2018, we issued a series of 5 % Convertible Promissory Notes (the “2023 Convertible Notes”) in the aggregate principal amount of $ 55.0 million. The 2023 Convertible Notes mature 5 years from the date of issuance. Each holder of a 2023 Convertible Note has the option, from time to time, to convert all or any portion of the outstanding principal balance of such 2023 Convertible Note, together with accrued and unpaid interest thereon, into shares of our Common Stock at a conversion price of $ 5.00 per share of Common Stock. We may redeem all or any part of the then issued and outstanding 2023 Convertible Notes, together with accrued and unpaid interest thereon, pro rata among the holders, upon no fewer than 30 days, and no more than 60 days, notice to the holders. The 2023 Convertible Notes contain customary events of default and representations and warranties of OPKO. Purchasers of the 2023 Convertible Notes included an affiliate of Dr. Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Dr. Jane H. Hsiao, Ph.D., MBA, our Vice-Chairman and Chief Technical Officer. In January 2013, we entered into note purchase agreements with respect to the issuance and sale of our 3.0 % Senior Notes due 2033 (the “2033 Senior Notes”) in a private placement exempt from registration under the Securities Act. We issued the 2033 Senior Notes on January 30, 2013. The 2033 Senior Notes, which totaled $ 175.0 million in original principal amount, bear interest at the rate of 3.0 % per year, payable semiannually on February 1 and August 1 of each year. The 2033 Senior Notes mature on February 1, 2033, unless earlier repurchased, redeemed or converted. Upon a fundamental change as defined in the indenture, governing the 2033 Senior Notes, subject to certain exceptions, the holders may require us to repurchase all or 111 any portion of their 2033 Senior Notes for cash at a repurchase price equal to 100 % of the principal amount of the 2033 Senior Notes being repurchased, plus any accrued and unpaid interest to but not including the related fundamental change repurchase date. From 2013 to 2016, holders of the 2033 Senior Notes converted $ 143.2 million in aggregate principal amount into an aggregate of 21,539,873 shares of Common Stock. On February 1, 2019, approximately $ 28.8 million aggregate principal amount of 2033 Senior Notes were tendered by holders pursuant to such holders’ option to require us to repurchase the 2033 Senior Notes as set forth in the indenture, governing the 2033 Senior Notes, 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 described above. The terms of the 2033 Senior Notes, include, among others: (i) rights to convert the notes into shares of our Common Stock, including upon a fundamental change; and (ii) a coupon make-whole payment in the event of a conversion by the holders of the 2033 Senior Notes on or after February 1, 2017 but prior to February 1, 2019. We determined that these specific terms were embedded derivatives. Embedded derivatives are required to be separated from the host contract, the 2033 Senior Notes, and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. We concluded that the embedded derivatives within the 2033 Senior Notes met these criteria and, as such, were valued separate and apart from the 2033 Senior Notes and recorded at fair value each reporting period. For accounting and financial reporting purposes, we combined these embedded derivatives and valued them together as one unit of accounting. In 2017, certain terms of the embedded derivatives expired pursuant to the original agreement and the embedded derivatives no longer met the criteria to be separated from the host contract and, as a result, the embedded derivatives were no longer required to be valued separate and apart from the 2033 Senior Notes and were reclassified to additional paid in capital. In November 2015, BioReference and certain of its subsidiaries entered into a credit agreement with JPMorgan Chase Bank, N.A. (“CB”), as lender and administrative agent, as amended (the “Credit Agreement”). The Credit Agreement provides for a $ 75.0 million secured revolving credit facility and includes a $ 20.0 million sub-facility for swingline loans and a $ 20.0 million sub-facility for the issuance of letters of credit. On August 30, 2021, the Credit Agreement was amended and restated (the “A&R Credit Agreement”). The A&R Credit Agreement is guaranteed by all of BioReference’s domestic subsidiaries. The A&R 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 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 Credit Agreement. Principal under the Credit Agreement is due upon maturity on August 30, 2024. At BioReference’s option, borrowings under the A&R Credit Agreement (other than swingline loans) bear interest at (i) the CB floating rate (defined as the higher of (a) the prime rate and (b) the LIBOR rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) for an interest period of one month plus 2.50 %) plus an applicable margin of 0.75 % or (ii) the LIBOR rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) plus an applicable margin of 1.75 %. Swingline loans will bear interest at the CB floating rate plus the applicable margin. The A&R Credit Agreement also calls for other customary fees and charges, including an unused commitment fee of 0.375 % if the average quarterly availability is 50% or more of the revolving commitment, or 0.25 % if the average quarterly availability is less than or equal to 50% of the revolving commitments. As of December 31, 2021 and 2020, no amount and $ 7.1 million, respectively, was outstanding under the A&R Credit Agreement. The A&R Credit Agreement contains customary covenants and restrictions, including, without limitation, covenants that require BioReference and its subsidiaries to maintain a minimum fixed charge coverage ratio if availability under the new credit facility falls below a specified amount and to comply with laws and restrictions on the ability of BioReference and its subsidiaries to incur additional indebtedness or to pay dividends and make certain other distributions to the Company, subject to certain exceptions as specified therein. Failure to comply with these covenants would constitute an event of default under the A&R Credit Agreement, notwithstanding the ability of BioReference to meet its debt service obligations. The A&R Credit Agreement also includes various customary remedies for the lenders following an event of default, including the acceleration of 112 repayment of outstanding amounts under the A&R Credit Agreement and execution upon the collateral securing obligations under the A&R Credit Agreement. Substantially all the assets of BioReference and its subsidiaries are restricted from sale, transfer, lease, disposal or distributions to the Company, subject to certain exceptions. As of December 31, 2021, BioReference and its subsidiaries had net assets of approximately $ 1,103.6 million, which included goodwill of $ 283.0 million and intangible assets of $ 204.4 million. In addition to the A&R Credit Agreement with CB, we had line of credit agreements with eleven other financial institutions as of December 31, 2021 and 2020 in the U.S., Chile and Spain. These lines of credit are used primarily as a source of working capital for inventory purchases. The following table summarizes the amounts outstanding under the BioReference, Chilean and Spanish lines of credit: (Dollars in thousands) Balance Outstanding Lender Interest rate on borrowings at December 31, 2021 Credit line capacity December 31, 2021 December 31, 2020 JP Morgan Chase 3.25 % $ 75,000 $ — $ 7,057 Itau Bank 5.50 % 1,900 1,603 2,353 Bank of Chile 6.60 % 2,275 1,048 1,494 BICE Bank 5.50 % 2,500 850 1,166 Security Bank 5.50 % 1,400 1,111 262 Estado Bank 5.50 % 4,700 2,540 2,127 Santander Bank 5.50 % 4,500 503 3,025 Scotiabank 5.50 % 4,500 567 1,829 BCI Bank 5.00 % 2,515 2,515 — Corpbanca 5.00 % 2,935 2,935 3,641 Banco De Sabadell 1.75 % 567 — — Banco Bilbao Vizcaya 1.82 % 567 — — Total $ 103,359 $ 13,672 $ 22,954 At December 31, 2021 and 2020, the weighted average interest rate on our lines of credit was approximately 5.4 % and 4.9 %, respectively. At December 31, 2021 and 2020, we had notes payable and other debt (excluding the 2033 Senior Notes, the 2023 Convertible Notes, the 2025 Notes, the Credit Agreement and amounts outstanding under lines of credit described above) as follows: (In thousands) December 31, 2021 December 31, 2020 Current portion of notes payable $ 1,022 $ 1,749 Other long-term liabilities 2,642 4,513 Total $ 3,664 $ 6,262 The notes and other debt mature at various dates ranging from 2022 through 2026 bearing variable interest rates from 0.7 % up to 3.8 %. The weighted average interest rate on the notes and other debt was 1.5 % and 2.9 % on December 31, 2021 and 2020. The notes are partially secured by our office space in Barcelona. Note 8 Shareholders’ Equity Our authorized capital stock consists of 1,000,000,000 shares of Common Stock, par value $ 0.01 per share, and 10,000,000 shares of Preferred Stock, par value $ 0.01 per share. Sales of Common Stock On October 29, 2019, we issued 50 million shares of our Common Stock at a price of $ 1.50 per share in an underwritten public offering (the “2019 Stock Offering”), resulting in net proceeds to the Company of approximately $ 70 million, after deducting underwriting commissions and offering expenses. In November 2019, pursuant to an option the Company granted the underwriters, we issued an additional 4,227,749 shares at $ 1.50 per share, less underwriting discounts and commissions, 113 resulting in net proceeds of approximately $ 6 million. Drs. Frost and Hsiao and Mr. Steven Rubin, members of OPKO’s senior management purchased an aggregate of 2,415,000 shares in the 2019 Stock Offering. Common Stock Subject to the rights of the holders of any shares of Preferred Stock currently outstanding or which may be issued in the future, the holders of the Common Stock are entitled to receive dividends from our funds legally available when, as and if declared by our Board of Directors, and are entitled to share ratably in all of our assets available for distribution to holders of Common Stock upon the liquidation, dissolution or winding-up of our affairs subject to the liquidation preference, if any, of any then outstanding shares of Preferred Stock. Holders of our Common Stock do not have any preemptive, subscription, redemption or conversion rights. Holders of our Common Stock are entitled to one vote per share on all matters which they are entitled to vote upon at meetings of stockholders or upon actions taken by written consent pursuant to Delaware corporate law. The holders of our Common Stock do not have cumulative voting rights, which means that the holders of a plurality of the outstanding shares can elect all of our directors. All of the shares of our Common Stock currently issued and outstanding are fully-paid and nonassessable. No dividends have been paid to holders of our Common Stock since our incorporation, and no cash dividends are anticipated to be declared or paid on our Common Stock in the reasonably foreseeable future. Preferred Stock Under our certificate of incorporation, our Board of Directors has the authority, without further action by stockholders, to designate up to 10 million shares of Preferred Stock in one or more series and to fix or alter, from time to time, the designations, powers and rights of each series of Preferred Stock and the qualifications, limitations or restrictions of any series of Preferred Stock, including dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and the liquidation preference of any wholly issued series of Preferred Stock, any or all of which may be greater than the rights of the Common Stock, and to establish the number of shares constituting any such series. Of the authorized Preferred Stock, 4,000,000 shares, 500,000 shares and 2,000,000 shares were designated Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, respectively. As of December 31, 2021 and 2020, there were no shares of Series A Preferred Stock, Series C Preferred Stock or Series D Preferred Stock issued or outstanding. Note 9 Accumulated Other Comprehensive Income (Loss) For the year ended December 31, 2021, changes in Accumulated other comprehensive income (loss), net of tax, were as follows: (In thousands) Foreign currency translation Balance at December 31, 2020 $ ( 4,225 ) Other comprehensive loss ( 26,270 ) Balance at December 31, 2021 $ ( 30,495 ) For the year ended December 31, 2020, changes in Accumulated other comprehensive income, net of tax, were as follows: (In thousands) Foreign currency translation Balance at December 31, 2019 $ ( 22,070 ) Other comprehensive income 17,845 Balance at December 31, 2020 $ ( 4,225 ) Note 10 Equity-Based Compensation We maintain three equity-based incentive compensation plans, the 2016 Equity Incentive Plan, the 2007 Equity Incentive Plan, and the Modigene Inc. 2007 Equity Incentive Plan that provide for grants of stock options and restricted stock to our directors, officers, key employees and certain outside consultants. Equity awards granted under our 2016 Equity Incentive Plan are exercisable for a period of up to 10 years from the date of grant. Equity awards granted under our 2007 Equity Incentive Plan are exercisable for a period of either 7 years or 10 years from the date of grant. Equity awards granted under the 114 Modigene Plan are exercisable for a period of up to 10 years from date of grant. Vesting periods range from immediate to 5 years. We classify the cash flows resulting from the tax benefit that arises when the tax deductions exceed the compensation cost recognized for those equity awards (excess tax benefits) as cash flows from operations. There were no excess tax benefits for the years ended December 31, 2021, 2020, and 2019. Valuation and Expense Information We recorded equity-based compensation expense of $ 13.6 million, $ 8.9 million and $ 13.4 million for the years ended December 31, 2021, 2020, and 2019, respectively, all of which were reflected as operating expenses. Of the $ 13.6 million of equity based compensation expense recorded for the year ended December 31, 2021, $ 10.4 million was recorded as selling, general and administrative expenses, $ 1.9 million was recorded as research and development expenses and $ 1.3 million was recorded as a cost of revenue. Of the $ 8.9 million of equity based compensation expense recorded for the year ended December 31, 2020, $ 6.8 million was recorded as selling, general and administrative expense, $ 1.8 million was recorded as research and development expenses and $ 0.3 million was recorded as a cost of revenue. Of the $ 13.4 million of equity based compensation expense recorded for the year ended December 31, 2019, $ 9.7 million was recorded as selling, general and administrative expense, $ 2.0 million was recorded as research and development expenses and $ 1.6 million was recorded as cost of revenue. As of December 31, 2021, there was $ 33.3 million of unrecognized compensation cost related to the stock options granted under our equity-based incentive compensation plans. Such cost is expected to be recognized over a weighted-average period of approximately 1.82 years. Stock Options We estimate the fair value of each stock option on the date of grant using the Black-Scholes-Merton Model option-pricing formula and amortize the fair value to expense over the stock option’s vesting period using the straight-line attribution approach. We account for forfeitures as they occur and apply the following assumptions in our Black-Scholes-Merton Model option-pricing formula: Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019 Expected term (in years) 3.75 - 10.0 4.0 - 10.0 3.0 - 10.0 Risk-free interest rate 0.34 % - 1.34 % 0.16 % - 1.41 % 1.35 % - 2.63 % Expected volatility 58 % - 78.94 % 56 % - 76 % 54 % - 63 % Expected dividend yield 0 % 0 % 0 % Expected Term: For the expected term of options grants, we used an estimate of the expected option life based on historical experience. Risk-Free Interest Rate: The risk-free interest rate is based on the rates paid on securities issued by the U.S. Treasury with a term approximating the expected life of the option. Expected Volatility: The expected volatility for stock options was based on the historical volatility of our Common Stock. Expected Dividend Yield: We do not intend to pay dividends on Common Stock for the foreseeable future. Accordingly, we used a dividend yield of zero in the assumptions. We maintain incentive stock plans that provide for the grants of stock options to our directors, officers, employees and non-employee consultants. As of December 31, 2021, there were 11,555,335 shares of Common Stock reserved for issuance under our equity-based incentive plans. We intend to issue new shares upon the exercise of stock options. Stock options granted under these plans have been granted at an option price equal to the closing market value of the stock on the date of the grant. Stock options granted under these plans to employees typically become exercisable over four years in equal annual installments after the date of grant, and stock options granted to non-employee directors become exercisable in full one-year after the grant date, subject to, in each case, continuous service with us during the applicable vesting period. We assumed stock options to grant Common Stock as part of the mergers with Acuity Pharmaceuticals, Inc., Froptix, Inc., OPKO Biologics and BioReference, which reflected various vesting schedules, including monthly vesting to employees and non-employee consultants. 115 A summary of option activity under our stock option plans as of December 31, 2021, and the changes during the year is presented below: Options Number of options Weighted average exercise price Weighted average remaining contractual term (years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2020 38,587,921 $ 6.45 6.78 $ 26,054 Granted 12,736,376 $ 4.36 Exercised ( 445,437 ) $ 2.43 Forfeited ( 2,592,195 ) $ 3.53 Expired ( 819,523 ) $ 8.98 Outstanding at December 31, 2021 47,467,142 $ 6.04 6.58 $ 42,807 Vested and expected to vest at December 31, 2021 47,467,142 $ 6.04 6.58 $ 42,807 Exercisable at December 31, 2021 26,466,365 $ 8.00 4.91 $ 16,725 The total intrinsic value of stock options exercised for the years ended December 31, 2021, 2020, and 2019 was $ 0.8 million, $ 0.4 million and $ 0.1 million, respectively. The weighted average grant date fair value of stock options granted for the years ended December 31, 2021, 2020, and 2019 was $ 2.68 , $ 1.39 , and $ 1.15 , respectively. The total fair value of stock options vested during the years ended December 31, 2021, 2020, and 2019 was $ 8.1 million, $ 10.6 million and $ 18.6 million, respectively. Note 11 Income Taxes We operate and are required to file tax returns in the U.S. and various foreign jurisdictions. The benefit (provision) for incomes taxes consists of the following: For the years ended December 31, (In thousands) 2021 2020 2019 Current Federal $ — $ ( 234 ) $ — State ( 2,536 ) 351 ( 89 ) Foreign ( 2,794 ) ( 2,094 ) ( 2,647 ) ( 5,330 ) ( 1,977 ) ( 2,736 ) Deferred Federal ( 10,901 ) ( 254 ) 333 State 1,280 933 125 Foreign ( 538 ) ( 16,319 ) ( 4,782 ) ( 10,159 ) ( 15,640 ) ( 4,324 ) Total, net $ ( 15,489 ) $ ( 17,617 ) $ ( 7,060 ) Deferred income tax assets and liabilities as of December 31, 2021 and 2020 are comprised of the following: 116 (In thousands) December 31, 2021 December 31, 2020 Deferred income tax assets: Federal net operating loss $ 76,646 $ 90,032 State net operating loss 56,583 54,074 Foreign net operating loss 17,106 17,452 Research and development expense 290 301 Tax credits 22,938 22,999 Stock options 30,324 26,683 Accruals 10,692 14,779 Equity investments 15,735 13,619 Bad debts 265 310 Lease liability 1,091 861 Foreign credits 9,829 9,819 Available-for-sale securities 2,582 2,473 Operating lease asset 14,554 9,842 Other 6,493 6,393 Deferred income tax assets 265,128 269,637 Deferred income tax liabilities: Intangible assets ( 80,230 ) ( 73,122 ) Convertible debt ( 6,286 ) ( 10,462 ) Operating lease liability ( 14,554 ) ( 9,842 ) Investment in subsidiaries ( 42,140 ) — Fixed assets ( 2,592 ) ( 2,736 ) Other ( 1,638 ) ( 2,082 ) Deferred income tax liabilities ( 147,440 ) ( 98,244 ) Net deferred income tax assets (liabilities) 117,688 171,393 Valuation allowance ( 260,397 ) ( 303,326 ) Net deferred income tax liabilities $ ( 142,709 ) $ ( 131,933 ) Note: Net deferred income tax liability balance includes $ 4.3 million recorded to Other Assets and $ 1.5 million recorded to Assets Held for Sale on the Consolidated Balance Sheet. As of December 31, 2021, we have federal, state and foreign net operating loss carryforwards of approximately $ 470.2 million, $ 774.1 million and $ 86.8 million, respectively, that expire at various dates through 2041 unless indefinite in nature. As of December 31, 2021, we have research and development tax credit carryforwards of approximately $ 22.9 million that expire in varying amounts through 2041. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. We have determined a valuation allowance is required against all of our net deferred tax assets that we do not expect to be utilized by the reversing of deferred income tax liabilities. In 2020 we completed the transfer of certain assets to an OPKO affiliate. The transaction gave rise to a deferred tax asset of approximately $ 148.9 million. Realizability of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the carryback and carryforward periods as permitted by tax law. The Company evaluated the realizability of the deferred tax asset as required by ASC 740-10-30-18. The Company has determined that the deferred tax asset is not more-likely-than-not to be realized as of December 31, 2020. As a result, the Company has recorded a full valuation allowance against the deferred tax asset. Under Section 382 of the Internal Revenue Code of 1986, as amended, certain significant changes in ownership may restrict the future utilization of our income tax loss carryforwards and income tax credit carryforwards in the U.S. The annual limitation is equal to the value of our stock immediately before the ownership change, multiplied by the long-term tax-exempt rate (i.e., the highest of the adjusted federal long-term rates in effect for any month in the three-calendar-month period ending with the calendar month in which the change date occurs). This limitation may be increased under the IRC Section 338 117 Approach (IRS approved methodology for determining recognized Built-In Gain). As a result, federal net operating losses and tax credits may expire before we are able to fully utilize them. During 2008, we conducted a study to determine the impact of the various ownership changes that occurred during 2007 and 2008. As a result, we have concluded that the annual utilization of our net operating loss carryforwards (“NOLs”) and tax credits is subject to a limitation pursuant to Internal Revenue Code Section 382. Under the tax law, such NOLs and tax credits are subject to expiration from 15 to 20 years after they were generated. As a result of the annual limitation that may be imposed on such tax attributes and the statutory expiration period, some of these tax attributes may expire prior to our being able to use them. There is no current impact on these financial statements as a result of the annual limitation. This study did not conclude whether OPKO’s predecessor, eXegenics, pre-merger NOLs were limited under Section 382. As such, of the $ 470.2 million of federal net operating loss carryforwards, at least approximately $ 41.0 million may not be able to be utilized. During 2020, we conducted a study to determine whether any ownership changes occurred from 2009 through 2020. In 2021, the study has been updated and we have concluded that the annual utilization of our NOLs and tax credits is not subject to a limitation pursuant to Internal Revenue Code Section 382. We file federal income tax returns in the U.S. and various foreign jurisdictions, as well as with various U.S. states and the Ontario and Nova Scotia provinces in Canada. We are subject to routine tax audits in all jurisdictions for which we file tax returns. Tax audits by their very nature are often complex and can require several years to complete. It is reasonably possible that some audits will close within the next twelve months, which we do not believe would result in a material change to our accrued uncertain tax positions. U.S. Federal: Under the tax statute of limitations applicable to the Internal Revenue Code, we are no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for years before 2018. However, because we are carrying forward income tax attributes, such as net operating losses and tax credits from those years, these attributes can still be audited when utilized on returns filed in the future. State: Under the statute of limitations applicable to most state income tax laws, we are no longer subject to state income tax examinations by tax authorities for years before 2017 in states in which we have filed income tax returns. Certain states may take the position that we are subject to income tax in such states even though we have not filed income tax returns in such states and, depending on the varying state income tax statutes and administrative practices, the statute of limitations in such states may extend to years before 2017. Foreign: Under the statute of limitations applicable to our foreign operations, we are generally no longer subject to tax examination for years before 2016 in jurisdictions where we have filed income tax returns. Tax Cuts and Jobs Act On December 22, 2017, the 2017 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 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’s GILTI inclusion is immaterial for the year ended December 31, 2021. The Company has not recorded any deferred taxes for future GILTI inclusions as any future inclusions are expected to be treated as a period expense and offset by net operating loss carryforwards in the U.S. 118 Unrecognized Tax Benefits As of December 31, 2021, 2020, and 2019, the total amount of gross unrecognized tax benefits was approximately $ 11.5 million, $ 14.0 million, and $ 17.2 million, respectively. As of December 31, 2021, the total amount of unrecognized tax benefits that, if recognized, would affect our effective income tax rate was $( 7.9 ) million. We account for any applicable interest and penalties on uncertain tax positions as a component of income tax expense and we recognized $ 0.2 million and $( 0.1 ) million of interest expense for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2020 and 2019, $( 10.0 ) million and $( 13.2 ) million of the unrecognized tax benefits, if recognized, would have affected our effective income tax rate. We believe it is reasonably possible that up to $ 3.2 million of unrecognized tax benefits may be recognized within the next twelve months, mainly due to an expected audit settlement. The following summarizes the changes in our gross unrecognized income tax benefits. For the years ended December 31, (In thousands) 2021 2020 2019 Unrecognized tax benefits at beginning of period $ 13,954 $ 17,160 $ 17,513 Gross increases – tax positions in current period 166 441 884 Gross decreases – tax positions in prior period ( 575 ) ( 244 ) ( 298 ) Gross decreases – settlements with taxing authorities ( 1,952 ) ( 2,770 ) — Lapse of Statute of Limitations ( 96 ) ( 633 ) ( 939 ) Unrecognized tax benefits at end of period $ 11,497 $ 13,954 $ 17,160 Other Income Tax Disclosures The significant elements contributing to the difference between the federal statutory tax rate and the effective tax rate are as follows: For the years ended December 31, 2021 2020 2019 Federal statutory rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit ( 7.9 ) % 17.4 % 2.8 % Foreign income tax 21.6 % 53.7 % ( 6.6 ) % Income Tax Refunds 6.1 % ( 0.6 ) % — % Research and development tax credits 2.3 % ( 1.0 ) % 0.3 % Valuation allowance 235.4 % 227.7 % ( 17.9 ) % Rate change effect ( 40.5 ) % 11.4 % 0.4 % Non-deductible items ( 67.0 ) % 5.2 % ( 1.7 ) % Unrecognized tax benefits 11.3 % ( 5.0 ) % — % Impairments — % — % ( 1.6 ) % IPR&D benefit — % ( 309.6 ) % — % Stock options excess tax benefit ( 3.8 ) % 10.6 % 0.4 % Imputed interest ( 6.3 ) % 2.5 % 0.5 % Investment in subsidiaries ( 287.6 ) % — % — % Other 9.7 % 3.2 % 0.1 % Total ( 105.7 ) % 36.5 % ( 2.3 ) % 119 Certain operations in Israel have been granted "Beneficiary Enterprise" status by the Israeli Income Tax Authority, which makes us eligible for tax benefits under the Israeli Law for Encouragement of Capital Investments, 1959. Under the terms of the Beneficiary Enterprise program, beneficiary income that is attributable to our operations in Kiryat Gat, Israel will be exempt from income tax through 2023. The impact of the tax holiday on a per share basis for the year ended December 31, 2021 was a benefit of $ 0.02 per share. The following table reconciles our income (loss) before income taxes between U.S. and foreign jurisdictions: For the years ended December 31, (In thousands) 2021 2020 2019 Pre-tax income (loss): U.S. $ ( 2,965 ) $ 81,734 $ ( 236,544 ) Foreign ( 11,690 ) ( 33,531 ) ( 71,321 ) Total $ ( 14,655 ) $ 48,203 $ ( 307,865 ) In 2021, we revised our position regarding unrepatriated foreign earnings to a partially reinvested assertion. We assert that all foreign earnings will be indefinitely reinvested, with the exception of certain foreign investments in which earnings and cash generation are in excess of local needs. With the passage of the Tax Act, dividends of earnings from non-U.S. operations are generally no longer subject to U.S. income tax. We continue to analyze and adjust the estimated impact of the non-U.S. income and withholding tax liabilities based on the source of these earnings, as well as the expected means through which those earnings may be taxed. We have accrued a withholding tax estimate of $ 1.8 million related to earnings that are not deemed to be permanently reinvested. Note 12 Related Party Transactions In August 2020, we paid a $ 125,000 filing fee to the Federal Trade Commission (the “FTC”) in connection with filings made by us and Dr. Jane Hsiao, our Vice Chairman and Chief Technical Officer, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) relating to her percentage equity ownership interest in OPKO and potential future purchases of our Common Stock. In August 2020, Dr. Phillip Frost, our Chairman and Chief Executive Officer, paid a filing fee of $ 280,000 to the FTC under the HSR Act in connection with filings made by us and Dr. Frost, relating to his percentage equity ownership interest in OPKO and potential future purchases of our Common Stock. We reimbursed Dr. Frost for the HSR filing fee. In August 2020, GeneDx entered into an agreement with Mednax Services, Inc. (“Mednax Services”), a subsidiary of MEDNAX, Inc., (“MEDNAX”) pursuant to which the parties formed a joint venture under the brand Detect Genomix. GeneDx’s initial capital investment in Detect Genomix was $ 245,000 for which GeneDx received a 49 % ownership interest in Detect Genomix, and Mednax Services contributed $ 255,000 in exchange for a 51 % ownership interest in Detect Genomix. Adam Logal, the Company’s CFO, was the chair and sat on the Board of Managers of the joint venture. Mednax Services provided administrative services to the joint venture pursuant to an administrative services agreement. GeneDx provided laboratory services to the joint venture. Dr. Roger Medel, a director of the Company, is the former Chief Executive Officer of MEDNAX and Mednax Services. Dr. Medel continues to serve on the board of MEDNAX. The joint venture was dissolved in January 2022. 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. This line of credit called for a commitment fee equal to 0.25 % per annum of the unused portion of the line. We terminated this line of credit in June 2021 and as of December 31, 2021, no amount was outstanding thereunder. On October 29, 2019, we issued 50 million shares of our Common Stock at a price of $ 1.50 per share in the 2019 Stock Offering, resulting in net proceeds to the Company of approximately $ 70 million, after deducting underwriting commissions and offering expenses. In November 2019, pursuant to an option the Company granted the underwriters, we issued an additional 4,227,749 shares at the public offering price, less underwriting discounts and commissions, resulting in net proceeds to the Company of approximately $ 6 million. Drs. Frost and Hsiao and Mr. Steven Rubin, members of OPKO’s senior management purchased an aggregate of 2,415,000 shares of Common Stock in the 2019 Stock Offering. On March 1, 2019, OPKO Pharmaceuticals, LLC entered into an assignment agreement with Xenetic Biosciences, Inc., as amended from time to time (the “Assignment Agreement”), pursuant to which Xenetic acquired all of OPKO Pharmaceuticals’ right, title and interest in and to that certain Intellectual Property License Agreement (the “IP License Agreement”), entered into between The Scripps Research Institute and OPKO Pharmaceuticals, regarding certain patents for novel CAR T platform 120 technology and through which the Scripps Research Institute granted an exclusive royalty-bearing license in exchange for royalties, subject to the terms of the IP License Agreement. Under the Assignment Agreement and the IP License Agreement, Xenetic issued to OPKO Pharmaceuticals 164,062 shares of Xenetic common stock (the “OPKO Transaction Shares”). In connection with the Assignment Agreement, OPKO Pharmaceuticals entered into a voting agreement pursuant to which OPKO Pharmaceuticals agreed, among other things, to vote its shares in Xenetic in favor of the transactions contemplated by the Assignment Agreement, and a lock-up agreement with Xenetic which restricts OPKO Pharmaceuticals’ sale or transfer of any of the OPKO Transaction Shares as provided therein and as otherwise required by law. The Assignment Agreement and the obligations thereunder took effect on July 19, 2019, after Xenetic satisfied certain closing conditions, including obtaining stockholder approval and securing certain financing. The Company owns approximately 9 % of Pharmsynthez, and Pharmsynthez is Xenetic’s largest and controlling stockholder. Dr. Richard Lerner, a director of the Company until his death on December 2, 2021, was a co-inventor of Xenetic’s technology and received 31,240 shares of Xenetic upon the closing of the Xenetic transactions described above. Adam Logal, our Senior Vice President and Chief Financial Officer, is a director of Xenetic. In March 2019, we paid the $ 125,000 filing fee to the FTC in connection with filings made by us and Dr. Jane Hsiao, our Vice Chairman and Chief Technical Officer, under the HSR Act relating to her purchases of Common Stock. In February 2019, Dr. Phillip Frost, our Chairman and Chief Executive Officer, paid a filing fee of $ 280,000 to the FTC under the HSR Act in connection with filings made by us and Dr. Frost, relating to his purchases of Common Stock. We reimbursed Dr. Frost for the HSR filing fee. On November 8, 2018, 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 $ 60 million. Borrowings under this line of credit bore interest at a rate of 10 % per annum and could have been repaid and reborrowed at any time. The credit agreement included various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under this line of credit. This line of credit would have matured on November 8, 2023. We repaid approximately $ 28.8 million that was borrowed in 2019 and terminated this line of credit on or around February 20, 2019. We hold investments in Zebra (ownership 29 %), Neovasc ( 1 %), ChromaDex Corporation ( 0.1 %), COCP ( 3 %), NIMS ( 1 %), Eloxx ( 2 %), BioCardia ( 1 %) and LeaderMed Health Group Limited ( 47 %). These investments were considered related party transactions as a result of our executive management’s ownership interests and/or board representation in these entities. See further discussion of our investments in Note 5. In the first quarter of 2019, we exercised Neovasc’s Series C warrants for $ 1.2 million and exchanged the Series A warrants and received a total of 22,660 additional shares of Neovasc common stock. In November 2016, we entered into a Pledge Agreement with the Museum of Science, Inc. and the Museum of Science Endowment Fund, Inc. pursuant to which we contributed an aggregate of $ 1.0 million over a four-year period for constructing, equipping and the general operation of the Frost Science Museum. Dr. Frost and Mr. Richard Pfenniger serve on the Board of Trustees of the Frost Science Museum and Mr. Pfenniger is the Vice Chairman of the Board of Trustees. We lease office space from Frost Real Estate Holdings, LLC (“Frost Holdings”) in Miami, Florida, where our principal executive offices are located. Effective August 1, 2019, we entered into an amendment to our lease agreement with Frost Holdings. The lease, as amended, is for approximately 29,500 square feet of space. The lease provides for payments of approximately $ 89 thousand per month in the first year increasing annually to $ 101 thousand per month in the fifth year, plus applicable sales tax. The rent is inclusive of operating expenses, property taxes and parking. BioReference purchases and uses certain products acquired from InCellDx, a company in which we hold a 29 % minority interest. We reimburse Dr. Frost for Company-related use by Dr. Frost and our other executives of an airplane owned by a company that is beneficially owned by Dr. Frost. We reimburse Dr. Frost for out-of-pocket operating costs for the use of the airplane by Dr. Frost or Company executives for Company-related business. We do not reimburse Dr. Frost for personal use of the airplane by Dr. Frost or any other executive. For the years ended December 31, 2021, 2020, and 2019, we recognized approximately $ 105 thousand, $ 156 thousand, and $ 328 thousand, respectively, for Company-related travel by Dr. Frost and other OPKO executives. 121 Note 13 Employee Benefit Plans Effective January 1, 2007, the OPKO Health Savings and Retirement Plan (the “Plan”) permits employees to contribute up to 100 % of qualified pre-tax annual compensation up to annual statutory limitations. The discretionary company match for employee contributions to the Plan is 100 % up to the first 4 % of the participant’s earnings contributed to the Plan. Our matching contributions to our plans, including predecessor plans for BioReference, were approximately $ 9.6 million, $ 8.3 million and $ 8 million for the years ended December 31, 2021, 2020, and 2019 respectively. Note 14 Commitments and Contingencies 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. As a result, as of December 31, 2021, we recorded $ 2.8 million as contingent consideration, with $ 0.5 million recorded within Accrued expenses and $ 2.3 million recorded within Other long-term liabilities in the accompanying Consolidated Balance Sheets. Refer to Note 6. On March 1, 2019, the Company received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice, Washington, DC. The CID sets forth document requests and interrogatories in connection with allegations that the Company and certain of its affiliates violated the False Claims Act and/or the Anti-Kickback Statute. On January 13, 2022, the Federal Government notified the U.S.D.C., Middle District Florida, Jacksonville Division, that it is declining to intervene in the matter but retains the right, via the Attorney General, to consent to any proposed dismals of the action by the Court. On February 9, 2022, the States of Florida, Georgia, and Commonwealth of Massachusetts notified the U.S.D.C., Middle District Florida, Jacksonville Division, that they are declining to intervene in the matter. Notwithstanding the above declinations, on February 17, 2022, the Company was served with the Relator’s Summons and Complaint (“Complaint”), which had been previously sealed. The complaint alleges violations of the False Claims Act, the California Fraud Preventions Act, the Florida False Claims Act, the Massachusetts False Claims Act, the Georgia False Medicaid Claims Act, and illegal kickbacks. The Company is reviewing and assessing the allegations made in the Complaint and, at this point, has not determined whether there is any merit to these claims nor can it determine the extent of any potential liability. While management cannot predict the outcome of these matters at this time, the ultimate outcome could be material to our business, financial condition, results of operations, and cash flows. As previously reported, BioReference receives and is routinely required to respond to Civil Investigative Demands (“CID”) in the ordinary course of business. On November 26, 2019, BioReference received a CID from the U.S. Department of Justice (“DOJ”). The CID states that DOJ is investigating whether BioReference paid unlawful remuneration to health care practitioners in violation of the Anti-Kickback Statute or Stark law and thus submitted or caused to be submitted false claims to government health care programs in violation of the False Claims Act. The time period covered by DOJ’s requests is January 1, 2011 through November 26, 2019. BioReference has fully cooperated with the DOJ by submitting the requested information and making current employees available for interviews, and DOJ recently made a presentation to BioReference regarding its position. The parties have reached verbal agreement on the settlement amount, which is anticipated to be approximately $ 10 million, excluding attorney fees. On April 8, 2019, MabVax Therapeutics Holdings, Inc. filed a lawsuit in the Superior Court of California, County of San Diego against a number of individuals and entities, including the Company, Dr. Frost, Steven Rubin, the Company’s Executive Vice President-Administration, and an entity affiliated with Dr. Frost, based on the allegations raised in the SEC Complaint. The lawsuit seeks an award for actual and punitive damages, pre- and post-judgment interest; that the defendants be required to make full disclosure and accounting of their interests and transactions in plaintiff’s securities; costs of the suit, and reasonable attorney’s fees; and such other legal and equitable relief as the Court may deem proper under the circumstances. On January 31, 2022, plaintiffs entered into a confidential mutual release and settlement agreement with the Company, Dr. Frost, Frost Gamma Investment Trust, and Steve Rubin (the “Settlement Agreement”). The Settlement Agreement is subject to the approval of United States Bankruptcy Court for the District of Delaware. On April 5, 2019, former shareholders of Claros Diagnostics, Inc. filed a complaint in the Chancery Court of Delaware against the Company, alleging among other things, that the Company breached the Agreement and Plan of Merger dated October 13, 2011 by and among the Company, Claros Merger Subsidiary, LLC and Claros Diagnostics, Inc. (the “Claros Merger Agreement”): (i) by failing to make a milestone payment of $ 2.375 million (payable in OPKO Common Stock) upon obtaining FDA approval of the Claros PSA test; and (ii) by repudiating its obligations to make additional future milestone payments as required under the Claros Merger Agreement. In January 2021, the Company and the shareholder representative entered into a settlement agreement providing, among other things, that the Company pay the shareholders $ 1.2 million, which the Company has paid in full. In April 2017, the Civil Division of the United States Attorney’s Office for the Southern District of New York (the “SDNY”) informed BioReference that it believed that, from 2008 to 2012, BioReference had, in violation of the False Claims Act, improperly billed Medicare and TRICARE (both are federal government healthcare programs) for clinical laboratory 122 services provided to hospital inpatient beneficiaries at certain hospitals. In April 2019, the SDNY also informed BioReference that it believed that BioReference provided physicians subsidies for electronic health record systems prior to 2012 that violated regulations adopted by HHS in 2006 which allowed laboratories to provide these donations under certain conditions. BioReference and the SDNY reached a settlement with respect to these matters and a final settlement and release, including BioReference’s payment of an approximately $ 11.5 million settlement amount, was approved on September 22, 2020. The amount of related attorneys’ fees is currently being negotiated. From time to time, we may receive inquiries, document requests, CIDs or subpoenas from the Department of Justice, OCR, CMS, various payors and fiscal intermediaries, and other state and federal regulators regarding investigations, audits and reviews. In addition to the matters discussed in this note, we are currently responding to CIDs, subpoenas, payor audits, and document requests for various matters relating to our laboratory operations. Some pending or threatened proceedings against us may involve potentially substantial amounts as well as the possibility of civil, criminal, or administrative fines, penalties, or other sanctions, which could be material. Settlements of suits involving the types of issues that we routinely confront may require monetary payments as well as corporate integrity agreements. Additionally, qui tam or “whistleblower” actions initiated under the civil False Claims Act may be pending but placed under seal by the court to comply with the False Claims Act’s requirements for filing such suits. Also, from time to time, we may detect issues of non-compliance with federal healthcare laws pertaining to claims submission and reimbursement practices and/or financial relationships with physicians, among other things. We may avail ourselves of various mechanisms to address these issues, including participation in voluntary disclosure protocols. Participating in voluntary disclosure protocols can have the potential for significant settlement obligations or even enforcement action. The Company generally has cooperated, and intends to continue to cooperate, with appropriate regulatory authorities as and when investigations, audits and inquiries arise. We are a party to other litigation in the ordinary course of business. While we cannot predict the ultimate outcome of legal matters, we accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. It’s reasonably possible the ultimate liability could exceed amounts currently estimated and we review established accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. Because of the high degree of judgment involved in establishing loss estimates, the ultimate outcome of such matters will differ from our estimates and such differences may be material to our business, financial condition, results of operations, and cash flows. At December 31, 2021, we were committed to make future purchases for inventory and other items in 2021 that occur in the ordinary course of business under various purchase arrangements with fixed purchase provisions aggregating approximately $ 255.1 million. Note 15 Revenue Recognition We generate revenues from services, products and intellectual property as follows: Revenue from services Revenue for laboratory services is recognized at the time test results are reported, which approximates when services are provided and the performance obligations are satisfied. Services are provided to patients covered by various third-party payor programs including various managed care organizations, as well as the Medicare and Medicaid programs. Billings for services are included in revenue net of allowances for contractual discounts, allowances for differences between the amounts billed and estimated program payment amounts, and implicit price concessions provided to uninsured patients which are all elements of variable consideration. The following are descriptions of our payors for laboratory services: Healthcare Insurers. Reimbursements from healthcare insurers are based on negotiated fee-for-service schedules. Revenues consist of amounts billed, net of contractual allowances for differences between amounts billed and the estimated consideration we expect to receive from such payors, which considers historical denial and collection experience and the terms of our contractual arrangements. Adjustments to the allowances, based on actual receipts from the third-party payors, are recorded upon settlement. Government Payors. Reimbursements from government payors are based on fee-for-service schedules set by governmental authorities, including traditional Medicare and Medicaid. Revenues consist of amounts billed, net of contractual allowances for differences between amounts billed and the estimated consideration we expect to receive from such payors, 123 which considers historical denial and collection experience and the terms of our contractual arrangements. Adjustments to the allowances, based on actual receipts from the government payors, are recorded upon settlement. Client Payors. Client payors include physicians, hospitals, employers, and other institutions for which services are performed on a wholesale basis, and are billed and recognized as revenue based on negotiated fee schedules. Client payers also include cities, states and companies for which BioReference provides COVID-19 testing services. Patients. Uninsured patients are billed based on established patient fee schedules or fees negotiated with physicians on behalf of their patients. Insured patients (including amounts for coinsurance and deductible responsibilities) are billed based on fees negotiated with healthcare insurers. Collection of billings from patients is subject to credit risk and ability of the patients to pay. Revenues consist of amounts billed net of discounts provided to uninsured patients in accordance with our policies and implicit price concessions. Implicit price concessions represent differences between amounts billed and the estimated consideration that we expect to receive from patients, which considers historical collection experience and other factors including current market conditions. Adjustments to the estimated allowances, based on actual receipts from the patients, are recorded upon settlement. The complexities and ambiguities of billing, reimbursement regulations and claims processing, as well as considerations unique to Medicare and Medicaid programs, require us to estimate the potential for retroactive adjustments as an element of variable consideration in the recognition of revenue in the period the related services are rendered. Actual amounts are adjusted in the period those adjustments become known. 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 years 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. Our revenues may be subject to retroactive adjustment as a result of these factors among others, including without limitation, differing interpretations of billing and coding guidance and changes by government agencies and payors in interpretations, requirements, and “conditions of participation” in various programs. We have processed requests for recoupment from third-party payors in the ordinary course of our business, and it is likely that we will continue to do so in the future. If a third-party payer denies payment for testing or recoups money from us in a later period, reimbursement for our testing could decline. As an integral part of our billing compliance program, we periodically assess our billing and coding practices, respond to payor audits on a routine basis, and investigate reported failures or suspected failures to comply with federal and state healthcare reimbursement requirements, as well as overpayment claims which may arise from time to time without fault on the part of the Company. 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 appropriate corrective action. Settlements with third-party payors for retroactive adjustments due to audits, reviews or investigations are also 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. 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. 124 The composition of Revenue from services by payor for the years ended December 31, 2021, 2020 and 2019 is as follows: For the years ended December 31, (In thousands) 2021 2020 2019 Healthcare insurers $ 520,244 $ 483,643 $ 421,386 Government payors 222,242 90,288 115,711 Client payors 843,405 637,645 158,527 Patients 21,215 50,666 20,810 Total $ 1,607,106 $ 1,262,242 $ 716,434 Revenue from products We recognize revenue from product sales when a customer obtains control of promised goods or services. The amount of revenue that is recorded reflects the consideration that we expect to receive in exchange for those goods or services. Our estimates for sales returns and allowances are based upon the historical patterns of product returns and allowances taken, matched against the sales from which they originated, and our evaluation of specific factors that may increase or decrease the risk of product returns. Product revenues are recorded net of estimated rebates, chargebacks, discounts, co-pay assistance and other deductions (collectively, “Sales Deductions”) as well as estimated product returns which are all elements of variable consideration. Allowances are recorded as a reduction of revenue at the time product revenues are recognized. The actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect Revenue from products in the period such variances become known. Rayaldee is distributed in the U.S. principally through the retail pharmacy channel, which initiates with the largest wholesalers in the U.S. (collectively, “ Rayaldee Customers”). In addition to distribution agreements with Rayaldee Customers, we have entered into arrangements with many healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of Rayaldee . We recognize revenue for shipments of Rayaldee at the time of delivery to customers after estimating Sales Deductions and product returns as elements of variable consideration utilizing historical information and market research projections. For the years ended December 31, 2021, 2020 and 2019, we recognized $ 27.0 million, $ 36.8 million and $ 31.4 million in net product revenue from sales of Rayaldee . The following table presents an analysis of product sales allowances and accruals as contract liabilities for the years ended December 31, 2021, 2020 and 2019: (In thousands) Chargebacks, discounts, rebates and fees Governmental Returns Total Balance at December 31, 2020 $ 2,332 $ 5,812 $ 3,593 $ 11,737 Provision related to current period sales 14,426 21,553 1,286 37,265 Credits or payments made ( 14,744 ) ( 21,866 ) ( 2,240 ) ( 38,850 ) Balance at December 31, 2021 $ 2,014 $ 5,499 $ 2,639 $ 10,152 Total gross Rayaldee sales $ 64,301 Provision for Rayaldee sales allowances and accruals as a percentage of gross Rayaldee sales 58 % 125 (In thousands) Chargebacks, discounts, rebates and fees Governmental Returns Total Balance at December 31, 2019 $ 3,194 $ 5,841 $ 2,751 $ 11,786 Provision related to current period sales 17,604 32,721 2,066 52,391 Credits or payments made ( 18,466 ) ( 32,750 ) ( 1,224 ) ( 52,440 ) Balance at December 31, 2020 $ 2,332 $ 5,812 $ 3,593 $ 11,737 Total gross Rayaldee sales $ 88,187 Provision for Rayaldee sales allowances and accruals as a percentage of gross Rayaldee sales 58 % (In thousands) Chargebacks, discounts, rebates and fees Governmental Returns Total Balance at December 31, 2018 $ 1,316 $ 2,090 $ 637 $ 4,043 Provision related to current period sales 13,723 25,106 3,699 42,528 Credits or payments made ( 11,845 ) ( 21,355 ) ( 1,585 ) ( 34,785 ) Balance at December 31, 2019 $ 3,194 $ 5,841 $ 2,751 $ 11,786 Total gross Rayaldee sales $ 73,965 Provision for Rayaldee sales allowances and accruals as a percentage of gross Rayaldee sales 57 % Taxes collected from customers related to revenues from services and revenues from products are excluded from revenues. Revenue from intellectual property We recognize revenues from the transfer of intellectual property generated through license, development, collaboration and/or commercialization agreements. The terms of these agreements typically include payment to us for one or more of the following: non-refundable, up-front license fees; development and commercialization milestone payments; funding of research and/or development activities; and royalties on sales of licensed products. Revenue is recognized upon satisfaction of a performance obligation by transferring control of a good or service to the customer. 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. 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. When determining if variable consideration should be constrained, we consider whether there are factors outside of our control that could result in a significant reversal of revenue. In making these assessments, we consider the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required. Upfront License Fees: If a license to our intellectual property is determined to be functional intellectual property distinct from the other performance obligations identified in the arrangement, we recognize revenue from nonrefundable, upfront license fees based on the relative value prescribed to the license compared to the total value of the arrangement. The revenue is recognized when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are not distinct from other obligations identified in the arrangement, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time. If the combined performance obligation is satisfied over time, we apply an appropriate method of measuring progress for purposes of recognizing revenue from nonrefundable, upfront license fees. We evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. 126 Development and Regulatory Milestone Payments: Depending on facts and circumstances, we may conclude that it is appropriate to include the milestone in the estimated transaction price or that it is appropriate to fully constrain the milestone. A milestone payment is included in the transaction price in the reporting period that we conclude that it is probable that recording revenue in the period will not result in a significant reversal in amounts recognized in future periods. We may record revenues from certain milestones in a reporting period before the milestone is achieved if we conclude that achievement of the milestone is probable and that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods. We record a corresponding contract asset when this conclusion is reached. Milestone payments that have been fully constrained are not included in the transaction price to date. These milestones remain fully constrained until we conclude that achievement of the milestone is probable and that recognition of revenue related to the milestone will not result in a significant reversal in amounts recognized in future periods. We re-evaluate the probability of achievement of such development milestones and any related constraint each reporting period. We adjust our estimate of the overall transaction price, including the amount of revenue recorded, if necessary. Research and Development Activities: If we are entitled to reimbursement from our customers for specified research and development expenses, we account for them as separate performance obligations if distinct. We also determine whether the research and development funding would result in revenues or an offset to research and development expenses in accordance with provisions of gross or net revenue presentation. The corresponding revenues or offset to research and development expenses are recognized as the related performance obligations are satisfied. Sales-based Milestone and Royalty Payments: 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. Other Potential Products and Services: Arrangements may include an option for license rights, future supply of drug substance or drug product for either clinical development or commercial supply at the licensee’s election. We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations at the inception of the contract and revenue is recognized only if the option is exercised and products or services are subsequently delivered or when the rights expire. If the promise is based on market terms and not considered a material right, the option is accounted for if and when exercised. If we are entitled to additional payments when the licensee exercises these options, any additional payments are generally recorded in license or other revenues when the licensee obtains control of the goods, which is upon delivery. For the years ended December 31, 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, 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), $ 4.9 million related to the CAMP4 Agreement (as defined below) and a $ 5.0 million non-refundable upfront payment received under the Nicoya Agreement (as defined below). 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. Contract liabilities relate to cash consideration that OPKO receives in advance of satisfying the related performance obligations. Changes in the contractual liabilities balance for the year ended December 31, 2021 are as follows: (In thousands) Balance at December 31, 2020 $ 16,378 Balance at December 31, 2021 466 Revenue recognized in the period from: Amounts included in contracts liability at the beginning of the period $ 15,911 The contract liability balance at December 31, 2021 related primarily to accelerated payments received as part of the CARES Act. Refer to Note 2. Note 16 Strategic Alliances 127 LeaderMed 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 have granted 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 we provide the joint venture. For the year ended December 31, 2021, we recognized the upfront payment of $ 1 million as revenue from transfer of intellectual property and other. LeaderMed has agreed to be responsible for funding the joint venture’s operations, development and commercialization efforts and, together with its syndicate partners, initially invested $ 11 million in exchange for a 53 % ownership interest. We retain full rights to oxyntomodulin and Factor VIIa-CTP in all other geographies. CAMP4 Therapeutics On July 6, 2021, we entered into an exclusive license agreement (the “CAMP4 Agreement”) with CAMP4, 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 molecule for the treatment of Dravet syndrome, together with any derivative or modification thereof (the “Licensed Compound”) and any pharmaceutical product that comprises or contains the Licensed Compound, alone or in combination with one or more other active ingredients (“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 Series A Prime Preferred Stock (“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 equity consideration of up to 5,782,299 shares of Preferred Stock in connection with Dravet syndrome products and up to 1,082,248 shares of Preferred Stock in connection with non-Dravet syndrome products. In connection with our acquisition of CURNA, we agreed to pay future consideration to the sellers upon the achievement of certain events. 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. For the three months ended September 30, 2021, we recognized the fair value of the upfront payments of cash and shares of Preferred Stock totaling $ 4.9 million in revenue from transfer of intellectual property and other. Unless earlier terminated, the CAMP4 Agreement will remain in effect on a Licensed Product-by-Licensed Product and country by-country basis until such time as the royalty term expires for a Licensed Product in a country, and expires in its entirety upon the expiration of the royalty term for the last 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 Agreement after a specified notice period. NICOYA Macau Limited On June 18, 2021, EirGen, our wholly owned subsidiary, and NICOYA Macau Limited (“Nicoya”), a Macau corporation and an affiliate of NICOYA Therapeutics, 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. by OPKO under the tradename Rayaldee . The license grant to Nicoya covers the therapeutic and preventative use of the Nicoya Product for SHPT in non-dialysis and hemodialysis chronic kidney disease patients (the “Nicoya Field”). EirGen has 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 predetermined milestone and (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 128 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. Nicoya will, at its sole cost and expense, be responsible for performing all development activities necessary to obtain all regulatory approvals for the Nicoya Product in the Nicoya Territory and for all commercial activities pertaining to the Nicoya Product in the Nicoya Territory. Unless earlier terminated, the Nicoya Agreement will remain in effect until such time as all royalty payment terms and extended payment terms have expired, and Nicoya shall have no further payment obligations to EirGen under the terms of the Nicoya Agreement. Nicoya’s royalty obligations expire on the later of (i) expiration of the last to expire valid patent claim covering the Nicoya Product sold in the Nicoya Territory, (ii) expiration of all regulatory and data exclusivity applicable to the Nicoya Product in the Nicoya Territory, and (iii) on a product-by-product basis, ten ( 10 ) years after such Nicoya Product’s first commercial sale in the Nicoya Territory. In addition to termination rights for material breach and bankruptcy, Nicoya is permitted to terminate the Nicoya Agreement after a specified notice period. Vifor Fresenius Medical Care Renal Pharma Ltd In May 2016, EirGen and Vifor Fresenius Medical Care Renal Pharma Ltd (“VFMCRP”), entered into a Development and License Agreement (the “VFMCRP Agreement”) for the development and commercialization of Rayaldee (the “Product”) worldwide, except for (i) the U.S., (ii) any country in Central America or South America (excluding Mexico), (iii) Russia, (iv) China, (v) Japan, (vi) Ukraine, (vii) Belorussia, (viii) Azerbaijan, (ix) Kazakhstan, and (x) Taiwan (the “VFMCRP Territory”). The license to VFMCRP potentially covers all therapeutic and prophylactic uses of the Product in human patients (the “VFMCRP Field”), provided that initially the license is for the use of the Product for the treatment or prevention of SHPT related to patients with CKD and vitamin D insufficiency/deficiency (the “VFMCRP Initial Indication”). 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 an amendment to the VFMCRP Agreement pursuant to which the parties agreed to exclude Mexico, South Korea, the Middle East and all of the countries of Africa from the VFMCRP Territory. In addition, the parties agreed to certain amendments to the milestone structure and to reduce minimum royalties payable. As revised, the Company has received a $ 3 million payment triggered by the first marketing approval of Rayaldee in Europe and is eligible to receive up to an additional $ 17 million in regulatory milestones and $ 210 million in milestone payments tied to launch, pricing and sales of Rayaldee , and tiered, double-digit royalties. We plan to share responsibility with VFMCRP for the conduct of trials specified within an agreed-upon development plan, with each company leading certain activities within the plan. EirGen will lead the manufacturing activities within and outside the VFMCRP Territory and the commercialization activities outside the VFMCRP Territory and outside the VFMCRP Field in the VFMCRP Territory and VFMCRP will lead the commercialization activities in the VFMCRP Territory and the VFMCRP Field. For the initial development plan, the companies have agreed to certain cost sharing arrangements. VFMCRP will be responsible for all other development costs that VFMCRP considers necessary to develop the Product for the use of the Product for the VFMCRP Initial Indication in the VFMCRP Territory in the VFMCRP Field except as otherwise provided in the VFMCRP Agreement. The first of the clinical studies provided for in the development activities commenced in September 2018. In connection with the VFMCRP Agreement, the parties entered into a letter agreement pursuant to which EirGen granted to VFMCRP an exclusive option (the “Option”) to acquire an exclusive license under certain EirGen patents and technology to use, import, offer for sale, sell, distribute and commercialize the Product in the U.S. solely for the treatment of SHPT in dialysis patients with 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 of sales-based milestones upon the achievement of certain milestones and would be obligated to pay royalties at percentage rates that range from the mid-teens to the mid-twenties on sales of the Product in the U.S. for the Dialysis Indication. To date, VFMCRP has not exercised its option. Payments received for Regulatory Milestones and Sales Milestones are non-refundable. The Regulatory Milestones are payable if and when VFMCRP obtains approval from certain regulatory authorities and will be recognized as revenue in the period in which the associated milestone is achieved, assuming all other revenue recognition criteria are met. We account for the Sales Milestones as royalties and Sales Milestones payments will be recognized as revenue in the period in which the associated milestone is achieved or sales occur, assuming all other revenue recognition criteria are met. 129 Pfizer Inc. In December 2014, we entered into an exclusive worldwide agreement (the “Pfizer Agreement”) with Pfizer for the development and commercialization of our long-acting Somatrogon (hGH-CTP) for the treatment of growth hormone deficiency (“GHD”) in adults and children, as well as for the treatment of growth failure in children born small for gestational age (the “Pfizer Transaction”). In 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 May 2020, we entered into an Amended and Restated Development and Commercialization License Agreement (the “Restated Pfizer Agreement”) with Pfizer, effective January 1, 2020, pursuant to which the parties agreed, among other things, to share all costs for Manufacturing Activities, as defined in the Restated Pfizer Agreement, for developing a licensed product for the three indications included in the Restated Pfizer Agreement. On October 21, 2019, we and Pfizer announced that the global phase 3 trial evaluating Somatrogon dosed once-weekly in prepubertal children with GHD met its primary endpoint of non-inferiority to daily Genotropin® (somatropin) for injection, as measured by annual height velocity at 12 months. Under the terms of the Pfizer Transaction, as restated, we received non-refundable and non-creditable upfront payments of $ 295.0 million and are eligible to receive up to an additional $ 275.0 million upon the achievement of certain regulatory milestones. Pfizer received the exclusive license to commercialize Somatrogon worldwide. In addition, we are eligible to receive initial tiered royalty payments associated with the commercialization of Somatrogon for adult GHD with percentage rates ranging from the high teens to mid-twenties. Upon the launch of Somatrogon for pediatric GHD in certain major markets, the royalties will transition to regional, tiered gross profit sharing for both Somatrogon and Pfizer’s Genotropin®. The agreement with Pfizer will remain in effect until the last sale of the licensed product, unless earlier terminated as permitted under the Pfizer Agreement. In addition to termination rights for material breach and bankruptcy, Pfizer is permitted to terminate the Pfizer Agreement in its entirety, or with respect to one or more world regions, without cause after a specified notice period. If the Pfizer Agreement is terminated by us for Pfizer’s uncured material breach, or by Pfizer without cause, provision has been made for transition of product and product responsibilities to us for the terminated regions, as well as continued supply of product by Pfizer or transfer of supply to us in order to support the terminated regions. We recognized the non-refundable $ 295.0 million upfront payments as revenue as the research and development services were completed and as of December 31, 2021 and 2020, we had no contract liabilities related to the Pfizer Transaction. The Pfizer Transaction includes milestone payments of $ 275.0 million upon the achievement of certain milestones. The milestones range from $ 20.0 million to $ 90.0 million each and are based on achievement of regulatory approval in the U.S. and regulatory approval and price approval in other major markets. The milestone payments will be recognized as revenue in the period in which the associated milestone is achieved, assuming all other revenue recognition criteria are met. To date, no revenue has been recognized related to the achievement of the milestones. Other We have completed strategic deals with numerous institutions and commercial partners. In connection with these agreements, upon the achievement of certain milestones we are obligated to make certain payments and have royalty obligations upon sales of products developed under the license agreements. At this time, we are unable to estimate the timing and amounts of payments as the obligations are based on future development of the licensed products. Note 17 Leases We have operating leases for office space, laboratory operations, research and development facilities, manufacturing locations, warehouses and certain equipment. We determine if a contract contains a lease at inception or modification of a contract. Our leases generally do not provide an implicit interest rate, and we therefore use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis 130 over the term of the lease within a particular currency environment. We used the incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. Many of our leases contain rental escalation, renewal options and/or termination options that are factored into our determination of lease payments as appropriate. Variable lease payment amounts that cannot be determined at the commencement of the lease are not included in the right-to-use assets or liabilities. We elected the use of permitted practical expedients of not recording leases on our Consolidated Balance Sheet when the leases have terms of 12 months or less, and we elected not to separate nonlease components from lease components and instead account for each separate lease component and the nonlease components associated with that lease component as a single lease component. The following table presents the lease balances within the Consolidated Balance Sheet as of December 31, 2021 and 2020: (in thousands) Classification on the Balance Sheet December 31, 2021 December 31, 2020 Assets Operating lease assets Operating lease right-of-use assets $ 44,228 $ 37,735 Finance lease assets Property, plant and equipment, net 5,181 5,258 Liabilities Current Operating lease liabilities Current maturities of operating leases 11,624 9,028 Accrued expenses Current maturities of finance leases 2,257 2,453 Long-term Operating lease liabilities Operating lease liabilities 33,097 29,760 Other long-term liabilities Finance lease liabilities $ 2,924 $ 2,805 Weighted average remaining lease term Operating leases 7.2 years 5.4 years Finance leases 2.4 years 2.3 years Weighted average discount rate Operating leases 4.6 % 5.8 % Finance leases 4.8 % 3.6 % The following table reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on our Consolidated Balance Sheet as of December 31, 2021: (in thousands) Operating Finance 2022 $ 11,527 $ 2,228 2023 10,436 1,572 2024 7,965 1,037 2025 5,815 511 2026 5,397 81 Thereafter 24,625 — Total undiscounted future minimum lease payments 65,765 5,429 Less: Difference between lease payments and discounted lease liabilities 11,107 248 Total lease liabilities $ 54,658 $ 5,181 Expense under operating leases and finance leases was $ 18.0 million and $ 2.3 million, respectively, for the year ended December 31, 2021, which includes $ 2.5 million of variable lease costs. Expense under operating leases and finance leases was $ 17.8 million and $ 3.0 million, respectively, for the year ended December 31, 2020, and includes $ 3.0 million of variable lease 131 costs. Expense under operating leases and finance leases was $ 20.2 million and $ 3.1 million, respectively, for the year ended December 31, 2019, and includes $ 3.4 million of variable lease costs. Operating lease costs and finance lease costs are included within Operating loss in the Consolidated Statement of Operations. Short-term lease costs were not material. Supplemental cash flow information is as follows: (in thousands) For the years ended December 31, 2021 2020 Operating cash out flows from operating leases $ 16,625 $ 17,440 Operating cash out flows from finance leases 120 196 Financing cash out flows from finance leases 2,009 2,872 Total $ 18,754 $ 20,508 Note 18 Segments We manage our operations in two reportable segments, pharmaceuticals and diagnostics. The pharmaceuticals segment consists of our pharmaceutical operations in Chile, Mexico, Ireland, Israel and Spain, Rayaldee product sales and our pharmaceutical research and development. The diagnostics segment primarily consists of our clinical laboratory operations through BioReference and 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. There is no inter-segment allocation of interest expense and income taxes. Information regarding our operations and assets for our operating segments and the unallocated corporate operations as well as geographic information are as follows: 132 For the years ended December 31, (In thousands) 2021 2020 2019 Revenue from services: Pharmaceutical $ — $ — $ — Diagnostics 1,607,106 1,262,242 716,434 Corporate — — — $ 1,607,106 $ 1,262,242 $ 716,434 Revenue from products: Pharmaceutical $ 141,770 $ 119,952 $ 112,184 Diagnostics — — — Corporate — — — $ 141,770 $ 119,952 $ 112,184 Revenue from transfer of intellectual property and other: Pharmaceutical $ 25,842 $ 36,979 $ 72,521 Diagnostics — 16,240 — Corporate — — 796 $ 25,842 $ 53,219 $ 73,317 Operating income (loss): Pharmaceutical $ ( 19,051 ) $ ( 43,519 ) $ ( 109,062 ) Diagnostics 98,067 138,922 ( 123,359 ) Corporate ( 60,266 ) ( 37,689 ) ( 41,631 ) $ 18,750 $ 57,714 $ ( 274,052 ) Depreciation and amortization: Pharmaceutical $ 26,427 $ 29,001 $ 30,073 Diagnostics 52,289 56,361 63,675 Corporate — — 59 $ 78,716 $ 85,362 $ 93,807 Loss from investment in investees: Pharmaceutical $ ( 629 ) $ ( 480 ) $ ( 2,900 ) Diagnostics — — — Corporate — — — $ ( 629 ) $ ( 480 ) $ ( 2,900 ) Revenues: U.S. $ 1,640,354 $ 1,317,766 $ 751,099 Ireland 32,809 43,920 81,170 Chile 63,798 44,153 33,642 Spain 22,682 16,932 18,747 Israel 3,563 4,251 8,769 Mexico 11,005 7,865 8,032 Other 507 526 476 $ 1,774,718 $ 1,435,413 $ 901,935 133 (In thousands) December 31, 2021 December 31, 2020 Assets: Pharmaceutical $ 1,114,460 $ 1,176,245 Diagnostics 1,238,583 1,268,738 Corporate 46,672 28,080 $ 2,399,715 $ 2,473,063 Goodwill: Pharmaceutical $ 237,576 $ 245,793 Diagnostics 283,025 434,809 Corporate — — $ 520,601 $ 680,602 No customer represented more than 10% of our total consolidated revenue during the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021 and 2020, no customer represented more than 10% of our accounts receivable balance. The following table reconciles our Property, plant and equipment, net between U.S. and foreign jurisdictions: (In thousands) December 31, 2021 December 31, 2020 PP&E: U.S. $ 50,559 $ 73,564 Foreign 29,168 66,990 Total $ 79,727 $ 140,554 Note 19 Fair Value Measurements We record fair values at an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. As of December 31, 2021, we have equity securities (refer to Note 5), forward foreign currency exchange contracts for inventory purchases (refer to Note 20) and contingent consideration related to the acquisitions of CURNA, OPKO Diagnostics and OPKO Renal that are required to be measured at fair value on a recurring basis. In addition, in connection with our investment and our consulting agreement with BioCardia, we record the related BioCardia options at fair value as well as the warrants from COCP, InCellDx, Inc., Xenetic and Phio. 134 Our financial assets and liabilities measured at fair value on a recurring basis are as follows: Fair value measurements as of December 31, 2021 (In thousands) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Assets: Equity securities $ 4,226 $ — $ — $ 4,226 Common stock options/warrants — 16 — 16 Forward contracts — 122 — 122 Total assets $ 4,226 $ 138 $ — $ 4,364 Liabilities: Contingent consideration: — — 2,837 2,837 Total liabilities $ — $ — $ 2,837 $ 2,837 Fair value measurements as of December 31, 2020 (In thousands) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total Assets: Equity securities $ 14,136 $ — $ — $ 14,136 Common stock options/warrants — 74 — 74 Total assets $ 14,136 $ 74 $ — $ 14,210 Liabilities: Forward contracts $ — $ 1,040 $ — $ 1,040 Contingent consideration: $ — $ — $ 5,695 $ 5,695 Total liabilities $ — $ 1,040 $ 5,695 $ 6,735 The carrying amount and estimated fair value of our 2025 Notes, as well as the applicable fair value hierarchy tiers, are contained in the table below. The fair value of the 2025 Notes is determined using inputs other than quoted prices in active markets that are directly observable. December 31, 2021 (In thousands) Carrying Value Total Fair Value Level 1 Level 2 Level 3 2025 Notes $ 119,360 $ 199,815 $ — $ 199,815 $ — There have been no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy. As of December 31, 2021 and 2020, the carrying value of our other financial instrument assets approximates their fair value due to their short-term nature or variable rate of interest. 135 The following tables reconcile the beginning and ending balances of our Level 3 assets and liabilities as of December 31, 2021 and 2020: December 31, 2021 (In thousands) Contingent consideration Balance at December 31, 2020 $ 5,695 Change in fair value: Included in results of operations ( 1,703 ) Foreign currency impact 7 Payments ( 1,162 ) Balance at December 31, 2021 $ 2,837 December 31, 2020 (In thousands) Contingent consideration Balance at December 31, 2019 $ 9,684 Change in fair value Included in results of operations ( 3,989 ) Balance at December 31, 2020 $ 5,695 The estimated fair values of our financial instruments have been determined by using available market information and what we believe to be appropriate valuation methodologies. We use the following methods and assumptions in estimating fair value: Contingent consideration – We estimate the fair value of the contingent consideration utilizing a discounted cash flow model for the expected payments based on estimated timing and expected revenues. We use several discount rates depending on each type of contingent consideration related to OPKO Diagnostics, CURNA and OPKO Renal transactions. As of December 31, 2021, of the $ 2.8 million of contingent consideration, $ 0.5 million is recorded in Accrued expenses and $ 2.3 million is recorded in Other long-term liabilities. As of December 31, 2020, of the $ 5.7 million of contingent consideration, $ 1.2 million is recorded in Accrued expenses and $ 4.5 million is recorded in Other long-term liabilities. As a result of our execution of the CAMP4 Agreement (as defined in Note 16), we will have to pay a percentage of any payments received under the CAMP4 Agreement to the former CURNA stockholders. Note 20 Derivative Contracts The following table summarizes the fair values and the presentation of our derivative financial instruments in the Consolidated Balance Sheets: (In thousands) Balance Sheet Component December 31, 2021 December 31, 2020 Derivative financial instruments: Common stock options/warrants Investments, net $ 16 $ 74 Forward contracts Unrealized gains on forward contracts are recorded in Other current assets and prepaid expenses. Unrealized (losses) on forward contracts are recorded in Accrued expenses. $ 122 $ ( 1,040 ) We enter into foreign currency forward exchange contracts with respect to the risk of exposure to exchange rate differences arising from inventory purchases on letters of credit. Under these forward contracts, for any rate above or below the fixed rate, we receive or pay the difference between the spot rate and the fixed rate for the given amount at the settlement date. 136 To qualify the derivative instrument as a hedge, we are required to meet strict hedge effectiveness and contemporaneous documentation requirements at the initiation of the hedge and assess the hedge effectiveness on an ongoing basis over the life of the hedge. At December 31, 2021 and 2020, our derivative financial instruments do not meet the documentation requirements to be designated as hedges. Accordingly, we recognize the changes in Fair value of derivative instruments, net in our Consolidated Statement of Operations. The following table summarizes the losses and gains recorded for the years ended December 31, 2021, 2020 and 2019: For the years ended December 31, (In thousands) 2021 2020 2019 Derivative gain (loss): Common stock options/warrants $ ( 58 ) $ ( 46 ) $ ( 601 ) Forward contracts $ 904 $ 96 $ 775 Total $ 846 $ 50 $ 174 Note 21 Selected Quarterly Financial Data (Unaudited) For the 2021 Quarters Ended (In thousands, except per share data) March 31 June 30 September 30 December 31 Total revenues $ 545,165 $ 442,408 $ 385,813 $ 401,332 Total costs and expenses 506,728 436,837 347,987 464,416 Net income (loss) 31,078 ( 16,186 ) 28,739 ( 73,774 ) Earnings (loss) per share, basic and diluted $ 0.05 $ ( 0.03 ) $ 0.04 $ ( 0.11 ) For the 2020 Quarters Ended (In thousands, except per share data) March 31 June 30 September 30 December 31 Total revenues $ 211,466 $ 301,207 $ 428,064 $ 494,676 Total costs and expenses 252,228 274,028 406,125 445,318 Net income (loss) ( 59,132 ) 33,703 23,717 32,298 Earnings (loss) per share, basic and diluted $ ( 0.09 ) $ 0.05 $ 0.04 $ 0.05 Note 22 Subsequent Events In February 2022, the European Commission approved the next-generation long-acting recombinant human growth hormone NGENLA (Somatrogon), a once-weekly injection 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, Pfizer, Inc. and OPKO announced that the FDA issued a Complete Response Letter for the BLA for Somatrogon. Somatrogon is an investigational once-weekly long-acting recombinant human growth hormone for the treatment of GHD in pediatric patients. Pfizer is evaluating the FDA’s comments and will work with the agency to determine an appropriate path forward. In January 2022, Pfizer, Inc. and OPKO announced that the long-acting growth hormone injection, NGENLA® (Somatrogon) Inj. 24 mg Pens and 60 mg Pens, has been approved by the Ministry of Health, Labour and Welfare in Japan for the treatment of GHD in pediatric patients. Somatrogon has also been approved in the Canada and Japan under the brand name NGENLA. In January 2022, Sema4 and OPKO announced they have signed GeneDx Merger Agreement, pursuant to which Sema4 has agreed to acquire GeneDx, a leader in genomic testing and analysis, from OPKO, subject to satisfaction of customary closing conditions. The GeneDx Transaction is expected to close in the second quarter of 2022. Under the terms of the 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. Additionally, Sema4 agreed to pay OPKO up to an additional $ 150 million revenue-based milestones over the next two years ( which may be paid in Sema4 Common Stock, cash or a combination thereof in Sema4’s discretion, subject to GeneDx 137 achieving certain revenue targets ). Based on the closing stock price of Sema4 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, the assets and liabilities of GeneDx are reflected in the consolidated balance sheet as held for sale. We have reviewed all subsequent events and transactions that occurred after the date of our December 31, 2021 Consolidated Balance Sheet date, through the time of filing this Annual Report on Form 10-K. 138 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.