Discontinued Operations

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On September 30, 2013, the Company completed the sale of certain assets comprising its Portamedic service line to Piston. Pursuant to the terms of the Asset Purchase Agreement, the Company sold assets associated with its Portamedic service line, including, among other things, fixed assets and intellectual property, to Piston, and Piston assumed certain specified liabilities (the “Portamedic Disposition”). The adjusted purchase price (the "Purchase Price") was approximately $8.1 million in cash, adjusted from $8.4 million at announcement due to changes in working capital, of which $2.0 million (the “Holdback Amount”) was held back by Piston as security for the Company’s obligations and agreements.

The Holdback Amount will be released as follows: within three business days after the date on which final closing adjustments for inventory and other current assets are determined and (the “Closeout Date”) (and after giving effect to any deductions from the Holdback Amount prior to such date), Piston will pay to the Company all amounts, if any, in excess of $1.0 million and the remaining $1.0 million of the Holdback Amount, less any deductions with respect to indemnification claims and any amounts in respect of any indemnification claims then in dispute, will be paid to the Company on the first anniversary of the Closeout Date. There cannot be any assurance that the Holdback Amount will be collected by the Company in full however, management currently expects to realize the amount in full and has recorded receivables in other current assets and other assets totaling $2.0 million.

The Company decided to sell its underperforming Portamedic service line and shift its focus towards the growth of its remaining health care service lines. In connection with the sale of Portamedic, the Company received $6.1 million of cash proceeds and incurred $0.9 million of financial advisory, legal and accounting fees, as of September 30, 2013. The Portamedic sale provides the Company with capital to invest in its Health and Wellness and Heritage Lab service lines. In addition, the Company retains the Portamedic accounts receivable and accounts payable, giving the Company over $9.4 million of working capital at September 30, 2013 to utilize in supporting wellness programs, clinical research and government studies.

The following summarizes the operating results of Portamedic and the gain on sale of Portamedic which are reported in discontinued operations in the accompanying consolidated statements of operations:

	Three Months Ended						Nine Months Ended
	September 30						September 30
(in thousands)	2013			2012			2013			2012
Revenues	$	19,173		$	21,371		$	62,437		$	72,077
Loss from operations before income taxes	$	(1,958	)	$	(997	)	$	(4,709	)	$	(5,446	)
Gain on sale of Portamedic and subsidiary	$	3,543		$	—		$	3,618		65

Income taxes, which comprise margin tax expenses, relating to the operations of Portamedic were less than $0.1 million for each period

presented and there were no income taxes on the gain of the sale due to the availability of net operating loss carry forwards with a

full valuation allowance.

The assets and liabilities of Portamedic are presented separately under the captions “Assets held for sale” and “Liabilities held for sale,” respectively, in the accompanying consolidated balance sheet as of December 31, 2012 and consist of the following:

(in thousands)	December 31, 2012
Assets held for sale:
Inventories	941
Other current assets	400
Property, plant and equipment, net	2,080
Other assets	225
Total assets	$	3,646
Liabilities held for sale:
Deferred rent	104
Capital leases	116
Total liabilities	$	220

In June 2008, the Company sold substantially all of the assets and liabilities of its Claims Evaluation Division ("CED") operating segment. In connection with the sale of the CED, the Company released as the primary obligor for certain lease obligations acquired but remain secondarily liable in the event the buyer defaults. In September 2013, the Company reduced the reserve for this liability by $0.1 million and reported the corresponding gain in discontinued operations. At September 30, 2013, the Company maintained a liability of $0.1 million for this lease obligation. The guarantee is provided for the term of the lease, which expires in July 2015. As of September 30, 2013, the maximum potential amount of future payments under the guarantee is $0.1 million.