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Discontinued Operations
 3 Months Ended
Mar. 31, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
On May 4, 2023, we entered into a Stock Purchase and Contribution Agreement (the “Purchase Agreement”), by and among the Company, Digirad Health Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Digirad Health”), TTG Imaging Solutions, LLC, a Pennsylvania limited liability company (“TTG”), and TTG’s parent, Insignia TTG Parent LLC, a Delaware limited liability company (the “Parent”). Pursuant to the Purchase Agreement, (i) TTG purchased 85% of the issued and outstanding shares of Digirad Health, on the terms and subject to the conditions set forth therein and (ii) the Company contributed to Parent 15% of the issued and outstanding shares of stock of Digirad Health (the “Contributed Shares”) in exchange for New Units (as defined in the Purchase Agreement) of Parent (the “TTG Transaction”). The total aggregate consideration payable to the Company for the TTG Transaction was $40 million, comprised of $19.7 million ($27 million less payoff of debt to Webster Bank (see Note 8. “Debt”) and transaction costs) in cash, a $7 million promissory note (see Note 5. “Supplemental Balance Sheet Information”), and $6 million of New Units in the Parent (see Note 5. “Supplementary Balance Sheet Information”). The Company completed the sale of Digirad Health simultaneously with entering into the Purchase Agreement.
We deemed the disposition of Digirad Health, which operated our Healthcare business unit, to represent a strategic shift that will have a major effect on our operations and financial results. As of the date of these financial statements, the results of operations of the Healthcare business unit represent “discontinued operations” in accordance with GAAP (ASC 205-20-45-1B). As such, the assets and liabilities, as well as the earnings, of the discontinued operation are presented separately in the unaudited condensed consolidated financial statements for all periods presented. Unless otherwise noted, discussion within the notes to the unaudited condensed consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to continuing operations.
Our variable interest entity (“VIE”), for which we are not the primary beneficiary, was disposed of as part of the sale of our Healthcare division. This VIE was in a small private company that is primarily involved in research related to new heart imaging technologies.
The following table presents financial results of our Healthcare division for the three months ended March 31, 2024 and 2023 (in thousands).
Three Months Ended March 31,
20242023
Total revenues$— $13,359 
Total cost of revenues— 10,032 
Gross profit— 3,327 
Operating expenses:
Selling, general and administrative— 2,748 
Total operating expenses— 2,748 
Income (loss) from discontinued operations— 579 
Other (expense) income, net— 8 
Interest expense, net— (168)
Income (loss) from discontinued operations before income taxes— 419 
Income tax benefit (provision)— — 
Income (loss) from discontinued operations$— $419 
The following table presents the significant operating, investing and financing activities from discontinued operations for the three months ended March 31, 2024 and 2023 (in thousands):
Three Months Ended March 31,
20242023
Operating activities
Net income (loss) from discontinued operations$— $419 
Depreciation— 272 
Non-cash lease expense— 273 
Write-off of borrowing costs— 10 
Share-based compensation— 1 
(Gain) Loss on disposal of assets
— 219 
Provision for bad debt— 11 
Deferred income taxes— (176)
Accounts receivable— 396 
Inventory— (252)
Other assets— 119 
Accounts payable— 649 
Accrued compensation— 574 
Deferred revenue— (135)
Operating lease liabilities— (289)
Other liabilities— (904)
Net cash provided by (used in) operating activities
— 1,187 
Net cash provided by (used in) investing activities— (107)
Net cash provided by (used in) financing activities— (709)
Net increase (decrease) in cash and cash equivalents and restricted cash$— $371 
Following is the reconciliation of purchase price (including a working capital adjustment) to the total gain recognized in income from discontinued operations from the second quarter of 2023 through March 31, 2024 (in thousands):
Proceeds of the disposition, net of transaction costs and indebtedness payoff
$32,756 
Assets of the businesses(24,071)
Liabilities of the businesses18,069 
Pre-tax gain on the disposition$26,754