Note 4 - Connect

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Noncontrolling Interest Disclosure [Text Block]

(4)

Connect

Customer-Connect LLC was formed in

June

2013

to develop and commercialize the Connect programs. Connect programs provide healthcare organizations the technology to engage patients through real-time identification and management of individual patient needs, preferences, risks, and experiences.

  The platform ensures that organizations have access to a longitudinal view of the patient to more effectively manage patient engagement across the continuum of care. At inception, NRC Health had a

49%

ownership interest in Connect. NG Customer-Connect, LLC held a

25%

interest, and the remaining

26%

was held by Illuminate Health, LLC. Profits and losses were allocated under the hypothetical liquidation at book value approach.

In

July

2015,

the

Company acquired all of NG Customer-Connect, LLC’s interest in Connect and a portion of Illuminate Health LLC’s interest in Connect for combined consideration of

$2.8

million. As a result, as of

December

31,

2015,

the Company owned approximately

89%

of Connect and Illuminate Health, LLC owned

11%.

Under the amended operating agreement, NRC Health had the option to acquire additional equity units from Illuminate Health when new annual recurring contract value reached targeted levels. On

March

7,

2016,

the Company elected to exercise its

first

option to acquire

one

-

third

of the outstanding non-controlling interest for

$1.0

million. Subsequently, on

March

28,

2016,

NRC Health and Illuminate Health reached an agreement whereby NRC Health acquired the remaining interest held by Illuminate Health for

$1.0

million. Following these transactions, Customer-Connect LLC was a wholly owned subsidiary of NRC Health. All of Connect’s previous net income (losses) had been attributable to NRC Health. Since the Company previously consolidated Connect, the transactions to acquire additional ownership interests in Connect were accounted for as equity transactions, resulting in a reduction to additional paid-in capital of

$252,000

and

$2.8

million in

2016

and

2015,

respectively.

The acquisition of the remaining interest resulted in differences between the book and tax basis of Connect’s assets. As a result, the Company recorded deferred tax assets of

$1.7

million, with a corresponding increase to additional paid-in capital during

2016.

   On

June

30,

2016,

Customer-Connect LLC was dissolved.