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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-03-01 · 220 added, 334 removed, 467 unchanged (54% of the section changed)

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You can identify forward-looking statements by the fact that these statements do not relate to historical or current matters.

Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made.

Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results and otherwise reflect our views related thereto only as of the date they are made.

Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements.

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We intend that all forward-looking statements be subject to the safe harbor provisions of PSLRA.

These forward-looking statements reflect our views only as of the date they are made.

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 diagnostics business includes BioReference Health, LLC (“BioReference”), one of the nation’s largest full service laboratories with a 180-person sales and marketing team to drive growth and leverage new products, and we offer our 4Kscore prostate cancer test through BioReference.

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.

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 Somatrogon (hGH-CTP), a once-weekly human growth hormone injection for which we completed a successful phase 3 study in August 2019 and is partnered with Pfizer Inc.

Regulatory applications for Somatrogon (hGH-CTP) have been submitted to the applicable regulatory bodies for review in several countries around the world.

In February 2022, the European Commission granted marketing authorization in the European Union for Somatrogon (hGH-CTP) 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 and has been granted pricing approval in Germany.

NGENLA® has also been approved in Japan, Canada, and Australia.

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.

Pfizer and OPKO have evaluated the FDA’s comments and will work with the agency to determine an appropriate path forward for the advancement of Somatrogon (hGH-CTP).

In May 2022, we acquired ModeX Therapeutics, Inc.

(“ModeX”), a biotechnology company focused on developing innovative multi-specific immune therapies for cancer and infectious diseases candidates.

ModeX has a robust early-stage pipeline with assets in key areas of immuno-oncology and infectious diseases, and we intend to further expand our pharmaceutical product pipeline through ModeX’s portfolio of development candidates.

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.

This includes hematology, clinical chemistry, immunoassay, infectious disease, serology, hormones, and toxicology assays, as well as Pap smear, anatomic pathology (biopsies) and other types of tissue analysis, as well as testing for COVID-19.

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.

We operate established pharmaceutical platforms in Ireland, Chile, Spain, Mexico, and the U.S.,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 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.

RECENT DEVELOPMENTS

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

pediatric growth hormone deficiency in Europe and Japan, respectively.

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

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

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

In January 2022, Sema4 Holdings Corp.

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

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

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

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

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

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

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

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

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

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

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

We own a 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.

RESULTS OF OPERATIONS

Impact of COVID-19

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

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

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

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

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

We are unable to predict how long the demand will continue for our COVID-19 related testing, or whether pricing and reimbursement policies for testing will be sustained.

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

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

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

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

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

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

Federal, state and local governmental policies and initiatives designed to reduce the transmission of COVID-19 have resulted in, among other things, a significant reduction in physician office visits, the cancellation of elective medical procedures, customers closing or severely

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We continue to be a part of the coordinated public and private sector response to the COVID-19 pandemic.

There continues to be a high level of uncertainty relating to the pandemic’s continuing evolution, including how governments and consumers will react to new developments and whether the pandemic will have a longer-term effect on the healthcare industry and patient habits.

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

However, the decline of COVID-19 infection rates and the normalization of living with COVID-19 following the increase in accessibility to COVID-19 vaccines and antiviral treatments has led to a decline in testing volumes, which has adversely affected our results of operations.

Throughout the pandemic, we have managed our company-wide lab operations specimen acquisition, logistics, procurement, customer service, and initiatives to manage our cost structure to match the ever changing COVID-19 testing volumes and to identify and capitalize on efficiencies in our core clinical lines of business.

While BioReference benefitted from significant COVID-19 testing volumes in 2020 and 2021, demand declined in 2022 and we expect COVID-19 test demand to continue to decline in 2023 as compared to 2022.

Revenue from services for the year ended December 31, 2022 decreased by $851.5 million as compared to 2021 due to a decline in COVID-19 testing volumes.

Excluding COVID-19 test volumes, for the year ended December 31, 2022, routine clinical test volume decreased 2.0% as compared to volumes for the year ended December 31, 2021.

Foreign Currency Exchange Rates

For the years ended December 31, 2022, 2021, and 2020, approximately 21.6%, 7.4%, and 5.7% of revenue was denominated in currencies other than the U.S.

Dollar (USD).

Our financial statements are reported in USD and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into USD for purposes of reporting the consolidated financial results.

During the years ended December 31, 2022 and 2021, the most significant currency exchange rate exposures were to the Euro and Chilean Peso.

Gross accumulated currency translation adjustments recorded as a separate component of shareholders’ equity were $39.9 million and $27.1 million at December 31, 2022 and 2021, respectively.

We are subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cash settlement of transactions.

We limit foreign currency transaction risk through hedge transactions with foreign currency forward contracts.

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.

At December 31, 2022, we had 194 open foreign exchange forward contracts relating to inventory purchases on letters of credit with various amounts maturing monthly through January 2023 with a notional value totaling approximately $11.9 million.

At December 31, 2021, we had 33 open foreign exchange forward contracts relating to inventory purchases on letters of credit with various amounts maturing monthly through January 2022 with a notional value totaling approximately $2.6 million.

For The Years Ended December 31, 2022 and 2021

Our consolidated income (loss) from operations for the years ended December 31, 2022 and 2021 is as follows:

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Revenue from services $ 755,630 $ 1,607,106 (851,476) (53) %

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

Total revenues 755,630 1,607,106 (851,476) (53) %

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Research and development 12,024 18,652 (6,628) (36) %

Contingent consideration — (2,066) 2,066 (100) %

Amortization of intangible assets 23,870 30,579 (6,709) (22) %

Gain on sale of assets (18,559) — (18,559) (100) %

Total costs and expenses 929,282 1,509,039 (579,757) (38) %

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

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

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

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

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

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

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

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

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

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

Income (loss) from operations (173,652) 98,067 (271,719) (277) %

Revenue from services for the year ended December 31, 2022 decreased by approximately $851.5 million compared to the year ended December 31, 2021.

The decrease in revenue for the year ended December 31, 2022 primarily reflected reflects lower demand for COVID-19 testing and lower COVID-19 reimbursement of $650.3 million and $55.1 million, respectively.

BioReference performed 3.1 million molecular tests for COVID-19 and 325 thousand serology antibody tests during the year ended December 31, 2022, which represented 28.7% of total testing volume for that period.

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

The reduction in reimbursement reflected an increase in utilization of antigen point of care diagnostic tests as well as a change in the mix of customers which have varying contract prices depending on the level of services we provide.

For the year ended December 31, 2022, clinical test volume decreased $25.8 million compared to the year ended December 31, 2021.

In addition, clinical test reimbursement decreased $54.0 million year over year as a result of the change in the mix of tests ordered.

Furthermore, as a result of our sale of GeneDx (as defined below) in 2022, genomic test revenues decreased by $63.9 million for the year ended December 31, 2022, as compared to the prior year.

related services are rendered.

For the year ended December 31, 2022, negative revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $21.5 million were recognized, primarily due to lower COVID-19 test reimbursement estimates.

For the year ended December 31, 2021, positive revenue adjustments due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $40.4 million were recognized, primarily due to an increase in COVID-19 test reimbursement estimates.

The composition of revenue from services by payor for the years ended December 31, 2022 and 2021 was as follows:

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

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

Cost of revenue .

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

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

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

Cost of revenue for the year ended December 31, 2022 decreased $474.6 million compared to the year ended December 31, 2021.

Cost of revenue decreased primarily due to a decline in the volume of COVID-19 tests performed during the year ended December 31, 2022 compared to the year ended December 31, 2021.

Cost of revenue for the year ended December 31, 2022 also decreased due to a decline in the number of genomic tests performed during the period as a result of changes in the test mix during the period.

Cost of revenue for the year ended December 31, 2022, included $6.1 million in severance costs resulting from reductions in our workforce.

Selling, general and administrative expenses .

Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were $284.4 million and $357.6 million, respectively.

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

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

Selling, general and administrative expenses in our diagnostics segment decreased primarily due to our sale of the GeneDx.

BioReference has and continues to implement significant cost-reduction initiatives and scaled back digital health investments as it looks to return to profitability following the buildup and then decline of COVID related testing.

Selling, general and administrative expenses for the year ended December 31, 2021 includes $6.2 million of expense incurred in connection with certain legal matters.

Research and development expenses .

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External expenses:

PMA studies $ — $ 218

Research and development employee-related expenses 8,691 13,266

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Total research and development expenses $ 12,024 $ 18,652

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

Contingent consideration .

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

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

The decrease in research and development expenses for the year ended December 31, 2022 primarily related to the development of more efficient clinical testing services at BioReference and as a result of the GeneDx Transaction.

Amortization of intangible assets .

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

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

Amortization expense declined during the year ended December 31, 2022 as a result of the GeneDx Transaction and due to acquired intangible assets becoming fully amortized.

Gain on sale of assets .

Gain on sale of assets for the year ended December 31, 2022, was $18.6 million due to the sale of GeneDx Transaction.

Pharmaceuticals

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Loss from operations (12,961) (19,051) 6,090 32 %

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

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

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

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

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

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

Revenue from products for the years ended December 31, 2022 and 2021 was $142.8 million and $141.8 million, respectively.

The increase in revenue from products for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily attributable to an increase in sales in our international operating companies offset by foreign exchange fluctuations.

Revenue from sales of Rayaldee for the years ended December 31, 2022 and 2021, was $27.3 million and $27.0 million, respectively.

During the year ended December 31, 2022, we began to receive royalty payments from sales of Rayaldee from VFMCRP pursuant to the VFMCRP Agreement, and we expect these payments to increase as VFMCRP launches Rayaldee in additional territories throughout Europe.

Revenue from transfer of intellectual property for the year ended December 31, 2022 reflects $85.0 million of regulatory milestone payments from Pfizer due from the commencement of sales from NGENLA (Somatrogon) in Europe and Japan, as well as royalty payments and gross profit share for both NGENLA (Somatrogon) and Pfizer’s Genotropin® (somatropin), $3.0 million related to a sales milestone pursuant to the VFMCRP Agreement, and $2.5 million from Nicoya tied to the first anniversary of the effective date of the Nicoya Agreement.

For the years ended December 31, 2022, and December 31, 2021, revenue from transfer of intellectual property and other includes $9.3 million and $10.8 million, respectively, of revenue related to the Pfizer Transaction.

For the year ended December 31, 2021, revenue from transfer of intellectual property and other also included $1.0 million related to the LeaderMed joint venture , $4.9 million related to the CAMP4 Agreement and a $5.0 million non-refundable upfront payment received under the Nicoya Agreement.

Cost of revenue .

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

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

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

Cost of revenue for the year ended December 31, 2022 decreased $2.6 million compared to the year ended December 31, 2021 primarily due to a $3.8 million inventory reserve charge for Rayaldee recognized for the year ended December 31, 2021 and changes in the product mix during these annual periods, which were partially offset by the negative impact of foreign exchange fluctuations at our international operating companies.

Selling, general and administrative expenses .

Selling, general and administrative expenses for the years ended December 31, 2022 and 2021 were $49.2 million and $49.4 million, respectively.

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

The decrease in selling, general and administrative expenses was primarily due to a decrease in legal expenses and selling expenses related to Rayaldee .

Selling, general and administrative expenses for the pharmaceutical segment for the years ended December 31, 2022 and 2021 included equity-based compensation expense of $1.2 million and $1.3 million, respectively.

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Manufacturing expense for biological products $ 10,038 $ 9,718

Phase III studies 9,877 10,513

Phase 3 studies 9,611 9,877

Post-marketing studies 35 70

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Total research and development expenses $ 61,275 $ 59,741

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

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

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

Research and development expenses for the pharmaceutical segment for the years ended December 31, 2021 and 2020 included equity-based compensation expense of $1.3 million and $1.6 million, respectively.

The increase in research and development expenses for the year ended December 31, 2022 was primarily due to research expenses at ModeX Therapeutics, partially offset by lower expenses related to Somatrogon (hGH-CTP) due to the closure of the open-label extension studies in countries with marketing authorization, lower expenditure on the Rayaldee COVID-19 study due to the study’s completion, and lower spending as a result of the sale of one of EirGen’s facilities in Waterford, Ireland to Horizon Therapeutics in 2021 discussed below.

Research and development expenses for the pharmaceutical segment for the years ended December 31, 2022 and 2021 included equity-based compensation expenses of $2.6 million and $1.3 million, respectively.

Contingent consideration .

Contingent consideration for the years ended December 31, 2022 and 2021 was $1.3 million and $1.7 million reversal of expense, respectively.

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

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

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

Contingent consideration for the years ended December 31, 2022 and 2021, was primarily attributable to changes in assumptions regarding the timing of achievement of future milestones for OPKO Renal, and potential amounts payable to former stockholders of OPKO Renal in connection therewith, pursuant to our acquisition agreement in March 2013.

Amortization of intangible assets .

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

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

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

During the year ended December 31, 2022, we reclassified $590.2 million of IPR&D related to Somatrogon (hGH-CTP) from IPR&D in our Consolidated Balance Sheet upon the approval of NGENLA (Somatrogon) in Europe and Japan, which was the primary reason for the increase in amortization of intangible assets compared to the year ended December 31, 2021.

The assets will be amortized on a straight-line basis over their estimated useful life of approximately 12 years.

Gain on sale of assets .

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Operating loss for our unallocated corporate operations for the years ended December 31, 2022 and 2021 was $39.6 million and $60.3 million, respectively, and principally reflects general and administrative expenses incurred in connection with our corporate operations.

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

The decrease in operating loss for our unallocated corporate operations for the year ended December 31, 2022 was driven by decreases in legal and professional fees incurred partially offset by an increase in equity based compensation.

Interest income .

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Interest expense for the years ended December 31, 2022 and 2021 was $12.1 million and $18.9 million, respectively.

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

Interest expense was principally related to interest incurred on the 2025 Notes, the 2023 Convertible Notes, the 2033 Senior Notes (each as defined below), as well as on BioReference’s outstanding debt under the Credit Agreement.

The decrease in interest expense was primarily due to the impact of the adoption of ASU 2020-06 on the 2025 Notes.

Due to the adoption of ASU 2020-06, interest expense decreased for the year ended December 31, 2022 compared to the prior year period due to the elimination of the discount created by recognizing a component of convertible debt in equity.

Refer to Note 7 of the Notes to Consolidated Financial Statements contained in Part II, Item 8 of this Annual Report on Form 10-K

Fair value changes of derivative instruments, net .

Fair value changes of derivative instruments, net for the years ended December 31, 2021 and 2020, was $846 thousand and $50 thousand of income, respectively.

Derivative income for the year ended December 31, 2021, was principally related to the change in fair value on foreign currency forward exchange contracts at OPKO Chile.

Fair value changes of derivative instruments, net for the years ended December 31, 2022 and 2021, was $649 thousand and $846 thousand of reversal of expense, respectively, which were principally related to the change in fair value on foreign currency forward exchange contracts at OPKO Chile.

Other income (expense), net .

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

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

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

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

Income tax provision .

Our income tax provision for the years ended December 31, 2021 and 2020 was $15.5 million and $17.6 million, respectively, and reflects results using our expected effective tax rate.

Other income (expense), net for the years ended December 31, 2022 and 2021, was $155.8 million and $14.8 million of expense, respectively.

Other income (expense), net for the year ended December 31, 2022, includes $150.9 million of expense due to the decrease in the fair value of our investment in GeneDx Holdings.

Other income (expense), net for the year ended December 31, 2021 primarily consisted of a $11.1 million non-cash loss related to the exchange of $55.4 million of the outstanding 2025 Notes and net unrealized losses recognized during the period on our investments in our equity securities.

Income tax benefit (provision) .

Our income tax benefit (provision) for the years ended December 31, 2022 and 2021 was $63.5 million and $(15.5) million, respectively, and reflects results using our expected effective tax rate.

For the year ended December 31, 2022, the tax rate differed from the U.S.

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

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

federal statutory rate of 21% primarily due to a $22.5 million discrete benefit resulting from reduced tax rates applicable to foreign deferred tax liabilities, the impact from the IPR&D tax basis difference on deferred attribute realization as a result of the acquisition of ModeX, as well as the relative mix of earnings and losses in the U.S.

versus foreign tax jurisdictions, and operating results in tax jurisdictions which do not result in a tax benefit compared to year ended December 31, 2021.

Loss from investments in investees .

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Loss from investments in investees was $0.4 million and $0.6 million for the years ended December 31, 2022 and 2021, respectively.

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

For The Years Ended December 31, 2021 and 2020

Our consolidated income (loss) from operations for the years ended December 31, 2021 and 2020 is as follows:

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

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

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

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

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

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

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

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

There are no significant inter-segment sales.

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

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

For the years ended December 31,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Selling, general and administrative expenses .

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

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

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

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

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

Research and development expenses .

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

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

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

Contingent consideration .

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

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

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

Amortization of intangible assets .

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

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

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

Asset impairment charges .

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

Asset impairment charges for the year ended December 31, 2019 is primarily related to a goodwill impairment charge of $18.0 million to write the carrying amount of the OPKO Diagnostics reporting unit down to its estimated fair value, and an impairment charge of $20.7 million to write our intangible asset for the Claros Analyzer down to its estimated fair value.

The asset impairment charges for the year ended December 31, 2019, resulted from liquidity constraints, longer than expected development timelines and changes in the competitive landscape, which resulted in changes to our estimates and assumptions of the expected future cash flows associated with the Claros Analyzer.

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

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

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

Pharmaceuticals

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

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

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

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

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

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

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

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

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

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

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

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

Cost of revenue .

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

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

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

Selling, general and administrative expenses .

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

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

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

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

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Manufacturing expense for biological products $ 9,718 $ 5,326

Phase III studies 10,513 16,869

Phase 3 studies 9,877 10,513

Post-marketing studies 70 1,270

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

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

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

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

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

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

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

Amortization of intangible assets .

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

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

Upon obtaining regulatory approval by the U.S.

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

Asset impairment charges .

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

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

The Asset impairment charges for the year ended December 31, 2019, resulted from liquidity constraints, longer than expected development timelines and changes in the competitive landscape, which resulted in changes to our estimates and assumptions of the expected future cash flows associated with OPK88003 and CURNA’s platform technology.

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

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

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

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

Gain on sale of assets .

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

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

For the years ended December 31,

(In thousands) 2021 2020 Change % Change

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

Total revenues — 796 (796) (100) %

Costs and expenses:

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

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

Interest income .

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

Fair value changes of derivative instruments, net .

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Other income (expense), net .

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

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

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

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

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

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

Income tax provision .

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At December 31, 2022, we had cash and cash equivalents of approximately $153.2 million.

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

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

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

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

Cash used in operations of $95.2 million for year ended December 31, 2022 principally reflected general and administrative expenses related to our corporate operations and research and development activities.

Cash provided by investing activities for the year ended December 31, 2022 primarily reflected proceeds of $115.4 million from the sale of GeneDx, which was partially offset by capital expenditures of $24.6 million.

Cash provided by financing activities of $23.0 million primarily reflected net borrowings on our lines of credit.

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

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

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

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

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

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

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

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

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

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

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

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

The transaction closed in the third quarter of 2021.

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

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

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

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

No funds were borrowed under this line of credit.

We terminated this line of credit in June 2021.

On May 9, 2022, the Company entered into an Agreement and Plan of Merger (the “ModeX Merger Agreement”), in accordance with which we acquired ModeX, which became a wholly owned subsidiary of the Company on that date.

The Company paid the entirety of the $300.0 million purchase price in shares of Common Stock (the “Consideration Shares”) to the former stockholders of ModeX.

The Consideration Shares were valued at $219.4 million, based on the closing price per share of our Common Stock of $2.44 as reported by NASDAQ on the closing date, which reflected the deduction from the purchase price of the value of certain equity awards issued by the Company to ModeX employees in an aggregate amount equal to $12.4 million on the closing date.

Included in the total fair value of consideration transferred of $221.7 million were $2.3 million of fully vested equity awards.

The Company deposited 10% of the Consideration Shares in a twelve-month escrow for purposes of satisfying the potential indemnity obligations of the sellers under the ModeX Merger Agreement.

On April 29, 2022, the Company completed the GeneDx Transaction.

GeneDx Holdings paid to the Company aggregate consideration of $150 million in cash (before deduction of transaction expenses and other customary purchase price adjustments), together with the Closing Shares.

Additionally, subject to GeneDx achieving certain revenue targets for the fiscal

years ending December 31, 2022 and 2023, we are eligible to receive an earnout payment in cash or stock (at GeneDx Holdings’ discretion) equal to a maximum of 30.9 million shares of GeneDx Holdings’ Class A common stock if paid in stock.

Based on the closing stock price of GeneDx Holdings as of April 29, 2022, the total upfront consideration represented approximately $322 million, and the total aggregate consideration including the potential Milestone Consideration is approximately $447 million.

We recognized a gain of $18.6 million on the GeneDx Transaction for the year ended December 31, 2022.

In April 2022, Pfizer notified OPKO that NGENLA (Somatrogon), a once-weekly injection to treat pediatric growth hormone deficiency, has received pricing approval in Germany and Japan.

NGENLA was granted marketing authorization by the Ministry of Health, Labour and Welfare in Japan and by the European Commission in January and February of 2022, respectively.

With the achievement of these milestones, we received $85.0 million in milestone payments during the year ended December 31, 2022 under the Restated Pfizer Agreement.

In February 2019, we issued $200.0 million aggregate principal amount of 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 notes mature on February 15, 2025, unless earlier repurchased, redeemed or converted.

These 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, subject to the satisfaction of certain conditions.

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

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

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

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

As of December 31, 2022, an aggregate principal amount of $142.1 million of the 2025 Notes was outstanding.

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

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, par value $0.01 per share, 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 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.

As of December 31, 2022, the total commitments under our amended and restated credit agreement, dated August 30, 2021 (as amended, the “Credit Agreement”) with JPMorgan Chase Bank, N.A.

(“CB”) and our lines of credit with financial institutions in Chile and Spain were $63.2 million, of which $31.8 million was drawn as of December 31, 2022.

At December 31, 2022, the weighted average interest rate on these lines of credit was approximately 5.5%.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(“Ariosa”), the U.S.

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

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

The test has been performed in over 1.5 million patients.

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

The acquisition of Ariosa will complement our current NIPS offering.

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

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

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

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

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

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

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

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

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

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

Extended release calcifediol is marketed in the U.S.

under the tradename Rayaldee by OPKO.

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

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

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

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

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

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

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

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

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

We have received non-refundable and non-creditable payments of $55 million to date and are eligible to receive up to an additional $227 million pursuant to the terms of the VFMCRP Amendment upon the achievement of certain regulatory and sales-based milestones tied to sales and reimbursement levels.

In addition, we are eligible to receive tiered royalties on sales of the product at percentage rates that range from the mid-teens to the mid-twenties or a minimum royalty, whichever is greater, upon commencement of sales of the product.

As part of the arrangement, the companies will share responsibility for the conduct of trials specified within an agreed-upon development plan, with each company leading certain activities within the plan.

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 VFMCRP Initial Indication in the VFMCRP Territory except as otherwise provided in the VFMCRP Agreement.

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

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

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

VFMCRP would also pay EirGen up to an additional aggregate amount of $555 million upon the achievement of certain milestones and would be obligated to pay royalties on sales of the product at percentage rates that

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

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

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

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

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

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

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

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

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®.

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

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

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

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

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

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

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

Availability under the 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, 2022, $16.8 million remained available for borrowing under the Credit Agreement.

In connection with our agreements with Pfizer, VFMCRP, Nicoya and CAMP4, we are eligible to receive various milestone payments and royalty considerations.

Under the terms of the Restated Pfizer Agreement, we are eligible to receive up to an additional $275.0 million upon the achievement of certain regulatory milestones, including $85 million which we received

during the second quarter of 2022.

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

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

Under the terms of the VFMCRP Agreement, we are entitled to receive up to an additional $17 million in regulatory milestones and $207 million in milestone payments tied to launch, pricing and sales of Rayaldee , including a $3.0 million milestone payment we recognized during the year ended December 31, 2022 following the first sale of Rayaldee in Europe.

In addition, we are eligible to receive tiered, double-digit royalty payments.

Under the terms of the Nicoya Agreement, we received an initial upfront payment of $5 million and are eligible to receive an aggregate of $5 million tied to the first anniversary of the effective date of the Nicoya Agreement, of which we have received $2.5 million.

Furthermore, we are eligible to receive the additional $2.5 million upon the earlier of (i) Nicoya’s submission of the investigational new drug application to the Center for Drug Evaluation (“CDE”) of China, of which we received in February 2023.

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

We 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.

Under the terms of the CAMP4 Agreement, we received an initial upfront payment of $1.5 million 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.

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

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

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

We believe that the cash and cash equivalents on hand at December 31, 2022, and the amounts available to be borrowed under our lines of credit are sufficient to meet our anticipated cash requirements for operations and debt service beyond the next 12 months.

We based this estimate on assumptions that may prove to be wrong or are subject to change, and we may be required to use our available cash resources sooner than we currently expect.

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

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

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

We have historically not

generated sustained positive cash flow and if we are not able to secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions or reduce our marketing or sales efforts or cease operations.

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

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

We have historically not generated sustained positive cash flow and if we are not able to secure additional funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or possible acquisitions or reduce our marketing or sales efforts or cease operations.

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

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

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

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

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

The pandemic presents a significant uncertainty that could materially and adversely affect our results of operations, financial condition and cash flows.

For example, testing needs for COVID-19 decreased significantly as a result of declining infection rates and the normalization of living with COVID-19 following the increase in accessibility to COVID-19 vaccines and antiviral treatments, which negatively impacted our COVID-19-related diagnostics testing services provided by BioReference and our results of operations, which had been positively affected by COVID-19 during 2020 and 2021.

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

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2033 Senior Notes, 2025 and 2023 Convertible Notes 3,050 — 210,371 — — — 213,421

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

Mortgages and other debts payable 1,921 1,716 1,382 1,174 928 4,091 11,212

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The preparation of financial statements in conformity with accounting principles generally accepted in the U.S.

(“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.

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.

Goodwill and intangible assets.

Goodwill and other intangible assets, including IPR&D, acquired in business combinations, licensing and other transactions at December 31, 2021 and 2020, was $1.4 billion and $1.7 billion, respectively.

Goodwill, IPR&D and other intangible assets acquired in business combinations, licensing and other transactions was $1.6 billion and $1.4 billion at December 31, 2022 and 2021, 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.

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the assessment of the asset’s life cycle and the competitive trends impacting the asset, including consideration of any Company specific technical, legal, regulatory, or economic barriers to entry.

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.

Goodwill was $595.9 million and $520.6 million at December 31, 2022 and 2021, respectively.

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

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

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

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

Net intangible assets other than goodwill were $1.0 billion and $1.1 billion at December 31, 2022 and 2021, respectively, including IPR&D of $195.0 million and $590.2 million at December 31, 2022 and 2021, respectively.

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

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

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

and December 31, 2020.

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

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

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.

No impairment charges were recognized for the years ended December 31 2022, 2021, and 2020.

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.

Based on the current financial performance of our diagnostic segment, if future results are not consistent with our estimates and assumptions, then we may be exposed to impairment charges, which could be material.

In our pharmaceutical segment, Pfizer 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 have evaluated the FDA’s comments and will work with the agency to determine the best path forward for Somatrogon (hGH-CTP) in the United States.

If we are unable to get approval for Somatrogon (hGH-CTP) in the United States, then we may be exposed to impairment charges, which could be material.

In the first quarter of 2022, we reclassified $590.2 million of IPR&D related to Somatrogon (hGH-CTP) from IPR&D in our Consolidated Balance Sheet upon the approval of NGENLA (Somatrogon) in Europe and Japan.

The assets are being amortized on a straight-line basis over their estimated useful life of approximately 12 years.

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.

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 $87.8 million, $50.3 million and $56.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

Client payors also

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

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

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

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

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

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

For the year ended December 31, 2022, negative revenue adjustments

due to changes in estimates of implicit price concessions for performance obligations satisfied in prior periods of $21.5 million million were recognized.

For the years ended December 31, 2021 and 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.

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

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If a third-party payor 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.

part of the Company.

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

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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.

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.

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

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

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

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

Other Potential Products and Services:

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For the years ended December 31, 2022, 2021 and 2020 we recorded $105.7 million, $25.8 million and $53.2 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), a $4.9 million payment received under the CAMP4 Agreement (as defined below) and a $5.0 million non-refundable upfront payment received under the Nicoya Agreement.

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

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

For the year ended December 31, 2022, revenue from transfer of intellectual property and other principally reflects $85.0 million regulatory milestone payments from Pfizer based on the commencement of sales from NGENLA (Somatrogon) in Europe and Japan, as well as royalty payments and gross profit share for both NGENLA (Somatrogon) and Pfizer’s Genotropin®, $3.0 million related to a sales milestone pursuant to the VFMCRP Agreement, and $2.5 million from Nicoya tied to the first anniversary of the effective date of the agreement.

For the years ended December 31, 2022, and December 31, 2021, revenue from transfer of intellectual property and other principally reflects $9.3 million and $10.8 million, respectively, of revenue related to the Pfizer Transaction.

Furthermore, For the year ended December 31, 2021, revenue from transfer of intellectual property and other principally includes $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 year ended December 31, 2020, revenue from transfer of intellectual property and other principally reflects $28.7 million of revenue related to the Pfizer Transaction (as defined in Note 16), $16.2 million of grants received by BioReference under the Coronavirus Aid, Relief, and Economic Security (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.

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Amounts included in contracts liability at the beginning of the period $ 328

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

Concentration of credit risk and allowance for doubtful accounts .

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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 since the related healthcare programs are funded by federal and state governments, and payment is primarily dependent upon submitting appropriate documentation.

While we have receivables due from federal and state governmental agencies, such receivables are not a credit risk because federal and state governments fund the related healthcare programs.

Payment is primarily dependent upon submitting appropriate documentation.

At December 31, 2022 and 2021, receivable balances (net of explicit and implicit price concessions) from Medicare and Medicaid were 14% and 8%, respectively, of our consolidated Accounts receivable, net.

At December 31, 2021, 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% of our consolidated accounts receivable, net.

At December 31, 2021, 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 are 4.1% of our consolidated accounts receivable, net.

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

27 unchanged sentences

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.

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.

3 unchanged sentences

RECENT ACCOUNTING PRONOUNCEMENTS

Pending accounting pronouncements .

Recently adopted 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.

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 simplifies 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.

As required, we adopted ASU 2020-06 on January 1, 2022 and used the modified retrospective approach for all convertible debt instruments at the beginning of the period of adoptions.

Results for reporting periods beginning January 1, 2022 are presented under ASU 2020-06, while prior period amounts were not adjusted and continue to be reported in accordance with historic accounting guidance.

Under the modified approach, entities applied the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings.

ASU 2020-06 eliminates the cash conversion and beneficial conversion feature models in ASC 470-20 that require an issuer of certain convertible debt and preferred stock to separately account for embedded conversion features as a component of equity.

The adoption of ASU 2020-06 at January 1, 2022 resulted in an increase of the 2025 Convertible notes of $21.6 million, a reduction of the Accumulated deficit of $17.5 million and a reduction of Additional paid-in capital of $39.1 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis