XML 37 R26.htm IDEA: XBRL DOCUMENT v3.20.2
Subsequent Events
9 Months Ended
Sep. 30, 2020
Subsequent Events [Abstract]  
Subsequent Events

17. Subsequent Events

 

On October 18, 2020, we entered into the Stock Purchase Agreement with Kainos.  Upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company will sell to Kainos all of the issued and outstanding capital stock of Nutrisystem, for a cash purchase price of $575.0 million, subject to customary adjustments.  The consummation of the transactions contemplated by the Purchase Agreement, which will result in the disposition of our Nutrition Business, is expected to occur in the fourth quarter of 2020.  The Nutrition Business is comprised of Nutrisystem’s legacy business and includes the Nutrisystem and South Beach Diet programs (see Notes 5 and 12).  

 

Because management did not have the authority to commit to a plan to sell the Nutrition Business at September 30, 2020, we concluded that the held for sale criteria was not met in the third quarter of 2020. Upon obtaining Board approval to sell the Nutrition Business on October 18, 2020, we met all of the criteria to classify the Nutrition Business as held for sale. We have concluded that the disposition of the Nutrition Business represents a strategic shift that will have a major effect on our operations and financial results.  Accordingly, we expect to report the Nutrition Business as discontinued operations for the fourth quarter of 2020 and beyond.

 

Based on the accepted purchase price of $575.0 million for the Nutrition Business in October 2020, we concluded that the fair value for the Nutrition business unit was below its carrying value as of September 30, 2020.  We performed an impairment assessment in accordance with the held and used model and determined that the fair value of all assets and liabilities allocated to the Nutrition segment exceeded their carrying amounts as of September 30, 2020, except for goodwill.  As a result, we recorded an impairment loss of $66.2 million for the third quarter of 2020 related to goodwill allocated to the Nutrition segment.