neo-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35756

NEOGENOMICS, INC.

(Exact name of registrant as specified in its charter)

Nevada

74-2897368

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

12701 Commonwealth Drive,

Suite 9,

Fort Myers,

Florida

33913

(Address of principal executive offices)

(Zip Code)

(239) 768-0600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock ($0.001 par value)

NEO

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes S No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No S

As of July 28, 2020, the registrant had 110,430,630 shares of Common Stock, par value $0.001 per share outstanding.

TABLE OF CONTENTS


PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)						5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						29
Item 3. Quantitative and Qualitative Disclosures About Market Risk						41
Item 4. Controls and Procedures						41
PART II OTHER INFORMATION
Item 1. Legal Proceedings						42
Item 1A. Risk Factors						42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						43
Item 3. Defaults Upon Senior Securities						44
Item 4. Mine Safety Disclosures						44
Item 5. Other Information						44
Item 6. Exhibits						45
SIGNATURES						46

FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-Q contains “forward-looking statements” and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act”, and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, changing reimbursement levels from government payers and private insurers, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2020.

Forward-looking statements include, but are not limited to, statements about:

•Our ability to respond to rapid scientific change;

•The risk of liability in conducting clinical trials and the sufficiency of our insurance to cover such claims;

•Our ability to implement our business strategy;

•The expected reimbursement levels from governmental payers and private insurers and proposed changes to those levels;

•The application, to our business and the services we provide, of existing laws, rules and regulations, including without limitation, Medicare laws, anti-kickback laws, Health Insurance Portability and Accountability Act of 1996 regulations, state medical privacy laws, international privacy laws, federal and state false claims laws and corporate practice of medicine laws;

•Regulatory developments in the United States including downward pressure on health care reimbursement;

•Our ability to maintain our license under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”);

•Food and Drug Administration, or FDA regulation of Laboratory Developed Tests (“LDTs”);

•Failure to timely or accurately bill for our services;

•Our ability to expand our operations and increase our market share;

•Our ability to expand our service offerings by adding new testing capabilities;

•Our ability to meet our future capital requirements;

•Our ability to manage our indebtedness;

•Our expectations regarding the conversion of our outstanding 1.25% Convertible Senior Notes due May 2025 (the “Convertible Notes”) in the aggregate principal amount of $201.3 million and our ability to make debt service payments under the Convertible Notes if such Convertible Notes are not converted;

•Our ability to protect our intellectual property from infringement;

•The anticipated impact to our business operations, customer demand and supply chain due to the recent global pandemic of a novel strain of the coronavirus (“COVID-19”);

•Our ability to integrate future acquisitions and costs related to such acquisitions;

•The effects of seasonality on our business;

•Our ability to maintain service levels and compete with other diagnostic laboratories;

•Our ability to hire and retain sufficient managerial, sales, clinical and other personnel to meet our needs;

•Our ability to successfully scale our business, including expanding our facilities, our backup systems and infrastructure;

•Our handling, storage and disposal of biological and hazardous materials;

•The accuracy of our estimates regarding reimbursement, expenses, future revenues and capital requirements;

•Our ability to manage expenses and risks associated with international operations, including anti-corruption and trade sanction laws and other regulations, and economic, political, legal and other operational risks associated with foreign jurisdictions;

•Our ability to have sufficient cash to pay our obligations under our 1.25% Convertible Senior Notes due May 2025; and

•The dilutive impact of the conversion of our 1.25% Convertible Senior Notes due May 2025.

Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NEOGENOMICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)


	June 30, 2020 (unaudited)		December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	$	295,281	$	173,016

Accounts receivable, net	87,766		94,242
Inventories	21,627		14,405
Prepaid assets	8,300		6,327
Other current assets	6,026		2,748
Total current assets	419,000		290,738
Property and equipment (net of accumulated depreciation of $80,143 and $68,809, respectively)	83,969		64,188
Operating lease right-of-use assets	47,554		26,492

Intangible assets, net	125,821		126,640
Goodwill	210,833		198,601
Restricted cash, non-current	36,030		—
Prepaid lease asset	6,084		—
Investment in non-consolidated affiliate	13,137		—
Other assets	3,057		2,847
Total assets	$	945,485	$	709,506
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	19,198	$	19,568
Accrued compensation	22,065		21,365
Accrued expenses and other liabilities	7,913		7,548
Short-term portion of financing obligations	4,458		5,432
Short-term portion of operating leases	4,496		3,381

Short-term portion of term loan	—		5,000
Pharma contract liability	3,570		1,610
Total current liabilities	61,700		63,904
Long-term liabilities
Convertible senior notes, net	164,544		—
Long-term portion of financing obligations	1,911		3,199
Long-term portion of operating leases	44,524		24,034

Long-term portion of term loan, net	—		91,829
Other long-term liabilities	3,155		3,566
Deferred income tax liability, net	15,422		15,566
Total long-term liabilities	229,556		138,194
Total liabilities	291,256		202,098
Stockholders' equity
Common stock, $0.001 par value, (250,000,000 shares authorized; 110,396,844 and 104,781,236 shares issued and outstanding, respectively)	110		105
Additional paid-in capital	679,235		520,278
Accumulated other comprehensive loss	43		(1,618)
Accumulated deficit	(25,159)		(11,357)
Total stockholders’ equity	654,229		507,408
Total liabilities and stockholders' equity	$	945,485	$	709,506

See the accompanying notes to the unaudited consolidated financial statements.

NEOGENOMICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
NET REVENUE:
Clinical Services	$	73,884	$	88,982	$	166,866	$	175,192
Pharma Services	13,093		12,731		26,141		22,098
Total revenue	86,977		101,713		193,007		197,290

COST OF REVENUE	58,971		52,747		118,632		101,209

GROSS PROFIT	28,006		48,966		74,375		96,081
Operating expenses:
General and administrative	34,613		29,577		70,957		61,719
Research and development	2,105		2,587		4,165		3,796
Sales and marketing	10,195		12,324		23,453		23,540
Total operating expenses	46,913		44,488		98,575		89,055
(LOSS) INCOME FROM OPERATIONS	(18,907)		4,478		(24,200)		7,026
Interest expense, net	1,548		1,304		2,367		3,130
Other (income) expense, net	(7,405)		(10)		(7,628)		5,159
Loss on extinguishment of debt	1,400		1,018		1,400		1,018
Loss on termination of cash flow hedge	3,506		—		3,506		—
(Loss) income before taxes	(17,956)		2,166		(23,845)		(2,281)
Income tax (benefit) expense	(11,132)		175		(10,043)		(1,848)
NET (LOSS) INCOME	$	(6,824)	$	1,991	$	(13,802)	$	(433)

NET (LOSS) INCOME PER SHARE
Basic	$	(0.06)	$	0.02	$	(0.13)	$	0.00
Diluted	$	(0.06)	$	0.02	$	(0.13)	$	0.00

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	107,887		98,297		106,209		96,734
Diluted	107,887		102,336		106,209		96,734

See the accompanying notes to the unaudited consolidated financial statements.

NEOGENOMICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
NET (LOSS) INCOME	$	(6,824)	$	1,991	$	(13,802)	$	(433)

OTHER COMPREHENSIVE (LOSS) INCOME:

Gain (loss) on effective cash flow hedges	38		(1,027)		(1,000)		(1,584)
Cash flow hedge termination reclassified to earnings	2,661		—		2,661		—
Total other comprehensive income (loss), net of tax	2,699		(1,027)		1,661		(1,584)
COMPREHENSIVE (LOSS) INCOME	$	(4,125)	$	964	$	(12,141)	$	(2,017)

See the accompanying notes to the unaudited consolidated financial statements.

NEOGENOMICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in thousands, except share amounts)


	Common Stock					Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance, December 31, 2019	104,781,236	$	105	$	520,278	$	(1,618)	$	(11,357)	$	507,408
Common stock issuance ESPP Plan	34,330	—		796		—		—		796
Stock issuance fees and expenses	—	—		(15)		—		—		(15)

Loss on effective cash flow hedge	—	—		—		(1,038)		—		(1,038)
Issuance of restricted stock, net of forfeitures	76,618	—		(212)		—		—		(212)


Issuance of common stock for stock options	503,873	—		2,897		—		—		2,897
ESPP expense	—	—		194		—		—		194
Stock-based compensation expense - options and restricted stock	—	—		1,991		—		—		1,991
Net loss	—	—		—		—		(6,978)		(6,978)
Balance, March 31, 2020	105,396,057	$	105	$	525,929	$	(2,656)	$	(18,335)	$	505,043
Common stock issuance ESPP Plan	41,058	—		928		—		—		928
Stock issuance fees and expenses	—	—		(317)		—		—		(317)

Gain on effective cash flow hedge	—	—		—		38		—		38
Cash flow hedge termination reclassified to earnings	—	—		—		2,661		—		2,661
Issuance of restricted stock, net of forfeitures	24,786	—		(824)		—		—		(824)

Issuance of common stock - public offering, net of underwriting discounts	4,751,500	5		127,288		—		—		127,293
Issuance of common stock for stock options	183,443	—		2,014		—		—		2,014
ESPP expense	—	—		211		—		—		211
Stock-based compensation expense - options and restricted stock	—	—		2,424		—		—		2,424
Equity component of convertible note issuance	—	—		30,912		—		—		30,912
Tax liability related to convertible note issuance	—	—		(9,330)		—		—		(9,330)
Net loss	—	—		—		—		(6,824)		(6,824)
Balance, June 30, 2020	110,396,844	$	110	$	679,235	$	43	$	(25,159)	$	654,229

See the accompanying notes to the unaudited consolidated financial statements.

NEOGENOMICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited, in thousands, except share amounts)


	Common Stock					Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount
Balance, December 31, 2018	94,465,440	$	94	$	340,291	$	(579)	$	(19,363)	$	320,443
Common stock issuance ESPP Plan	36,032	—		419		—		—		419
Stock issuance fees and expenses	—	—		(66)		—		—		(66)
Loss on effective cash flow hedge	—	—		—		(557)		—		(557)
Issuance of restricted stock, net of forfeitures	182,502	—		—		—		—		—
Issuance of common stock for stock options	619,536	1		3,893		—		—		3,894
ESPP expense	—	—		119		—		—		119
Stock based compensation expense - options and restricted stock	—	—		2,020		—		—		2,020
Net loss	—	—		—		—		(2,424)		(2,424)
Balance, March 31, 2019	95,303,510	$	95	$	346,676	$	(1,136)	$	(21,787)	$	323,848
Common stock issuance ESPP Plan	37,255	—		653		—		—		653
Stock issuance fees and expenses	—	—		(211)		—		—		(211)
Loss on effective cash flow hedge	—	—		—		(1,027)		—		(1,027)
Issuance of restricted stock, net of forfeitures	(633)	—		—		—		—		—
Working capital adjustment related to acquisition	(99,524)	—		(1,977)		—		—		(1,977)
Issuance of common stock - public offering	8,050,000	8		160,766		—		—		160,774
Issuance of common stock for stock options	543,604	1		3,369		—		—		3,370
ESPP expense	—	—		162		—		—		162
Stock based compensation expense - options and restricted stock	—	—		2,151		—		—		2,151
Net income	—	—		—		—		1,991		1,991
Balance, June 30, 2019	103,834,212	$	104	$	511,589	$	(2,163)	$	(19,796)	$	489,734

See the accompanying notes to the unaudited consolidated financial statements.

NEOGENOMICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(13,802)	$	(433)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	12,177		10,352
Loss on disposal of assets	263		404
Loss on debt extinguishment	1,400		1,018
Loss on termination of cash flow hedge	3,506		—
Amortization of intangibles	4,919		5,102
Amortization of debt issue costs	112		250
Amortization of convertible debt discount	864		—
Non-cash stock-based compensation	4,821		4,452
Non-cash operating lease expense	4,113		2,218

Changes in assets and liabilities, net
Accounts receivable, net	6,498		(13,178)
Inventories	(6,688)		(83)
Prepaid and other assets	(5,282)		(383)
Prepaid lease asset	(6,084)		—
Other current assets	(693)		(1,897)
Accounts payable, accrued and other liabilities	(11,175)		(6,446)
Net cash (used in) provided by operating activities	(5,051)		1,376
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(9,734)		(6,637)
Business acquisition	(37,000)		—
Acquisition working capital adjustment	—		399
Investment in non-consolidated affiliate	(13,137)		—
Net cash used in investing activities	(59,871)		(6,238)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of revolving credit facility	—		(5,000)
Repayment of equipment financing obligations	(3,059)		(3,644)
Proceeds from term loan	—		100,000
Repayment of term loan	(97,540)		(96,750)
Cash flow hedge termination	(3,317)		—
Payments of debt issuance costs	—		(954)
Issuance of common stock, net	5,469		8,061

Proceeds from issuance of convertible debt, net of issuance costs	194,376		—

Proceeds from equity offering, net of issuance costs	127,288		160,774
Net cash provided by financing activities	223,217		162,487

Net change in cash, cash equivalents and restricted cash	158,295		157,625
Cash, cash equivalents and restricted cash, beginning of period	173,016		9,811
Cash, cash equivalents and restricted cash, end of period	$	331,311	$	167,436

See the accompanying notes to the unaudited consolidated financial statements.


	Six Months Ended June 30,
	2020		2019
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets:
Cash and cash equivalents	$	295,281	$	167,436

Restricted cash, non-current	36,030		—
Total cash, cash equivalents and restricted cash	$	331,311	$	167,436

Supplemental disclosure of cash flow information:
Interest paid	$	1,562	$	3,178
Income taxes paid, net	$	89	$	235
Supplemental disclosure of non-cash investing and financing information:
Working capital adjustment related to acquisition	$	—	$	1,977
Equipment acquired under financing obligations	$	428	$	2,702
Property and equipment included in accounts payable	$	2,487	$	970

See the accompanying notes to the unaudited consolidated financial statements.

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Nature of the Business, Basis of Presentation and Significant Accounting Policies

Nature of the Business

NeoGenomics, Inc., a Nevada corporation, and its subsidiaries (the “Parent”, “Company”, or “NeoGenomics”), operates as a certified, high complexity clinical laboratory in accordance with the federal government’s Clinical Laboratory Improvement Act, as amended (“CLIA”), and is dedicated to the delivery of clinical diagnostic services to pathologists, oncologists, urologists, hospitals, and other laboratories as well as providing clinical trial services to pharmaceutical firms.

Basis of Presentation

The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements.

Unaudited Interim Financial Information

Certain information and footnote disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes have been condensed or omitted in these accompanying interim consolidated financial statements and footnotes. Accordingly, the accompanying interim consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2019.

The results of operations presented in this quarterly report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein.

Principles of Consolidation

The Company reports its activities in two operating segments; the Clinical Services Segment and the Pharma Services Segment. These reportable segments deliver testing services to hospitals, pathologists, oncologists, clinicians, pharmaceutical firms and researchers and represents 100% of the Company’s consolidated assets, net revenues and net income for each period presented. For further financial information about these segments see Note 14. Segment Information, in the accompanying notes to the consolidated financial statements.

The Company determines whether investments in affiliates are a Variable Interest Entity (“VIE”) at the start of each new venture and when a reconsideration event has occurred. A reporting entity must consolidate a VIE if that reporting entity has a variable interest (or combination of variable interests) and is determined to be the primary beneficiary. The primary beneficiary has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The Company accounts for its investments that are under 20% of the total equity outstanding and for which the Company does not have significant influence by applying the cost method. Investments that are under 20% of the total equity outstanding and for which the entity does have significant influence are accounted for using the equity method unless a scope exception is applicable. Investments in which the Company holds a non-controlling interest and are between 20-50% equity are accounted for using the equity method. For any investments in which the Company holds over 50% of the outstanding stock, or for investments in which the Company controls the investee, the Company consolidates those entities into their consolidated financial statements.

COVID-19 Pandemic

In December 2019, a novel strain of coronavirus (“COVID-19”) was identified and the disease has since spread across the world, including the United States. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The outbreak of the pandemic is materially adversely affecting the Company’s employees, patients, communities and business operations, as well as the U.S. economy and financial markets. The full extent to which the COVID-19 outbreak will impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and the actions to contain it or treat its impact and the economic impact on local, regional, national and international markets. As the COVID-19 pandemic continues, the Company’s results of operations, financial condition and cash flows are likely to continue to be materially adversely affected, particularly if the pandemic persists for a significant amount of time.

Coronavirus Aid, Relief, and Economic Security Act

NEOGENOMICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Federal government passed legislation and the President of the United States signed into law on March 27, 2020, known as the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). On April 10, 2020, the U.S Department of Health & Human Services (“HHS”) announced that Medicare-enrolled providers would receive a portion of a direct deposit disbursement totaling $50 billion. The $50 billion is part of a $100 billion Public Health and Emergency Fund created by the CARES Act and payments made are intended to reimburse healthcare providers for health care related expenses or lost revenues attributable to COVID-19 and are not required to be repaid provided that recipients attest to and comply with certain terms and conditions, including limitations on balance billing for COVID-19 patients. In the absence of specific guidance to account for government grants under GAAP, the Company accounts for such grants in accordance with international accounting standards for government grants. Such amounts are recognized when there is reasonable assurance that the Company will (1) comply with the conditions associated with the grant and (2) receive the grant.

For the three and six month periods ended June 30, 2020, the Company recognized $7.9 million in grant income related to the CARES Act. CARES Act grant income is classified in “Other (income) expense, net”, on the Consolidated Statements of Operations. There was no grant income recognized for the three-month and six-month periods ended June 30, 2019.

Additionally, the CARES Act permits the deferral of payment of the employer portion of social security taxes between March 27, 2020 and December 31, 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. As of June 30, 2020, the accrued deferred social security taxes related to the CARES Act were $2.1 million. This amount was recorded in “Other long-term liabilities” on the Consolidated Balance Sheets. There were no such amounts recorded on the Consolidated Balance Sheets as of December 31, 2019.

Note 2. Recently Adopted and Issued Accounting Guidance

Recently Adopted Accounting Guidance

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (“Topic 230”