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Liquidity
3 Months Ended
Mar. 31, 2014
Liquidity [Abstract]  
Liquidity
Liquidity

The Company's primary sources of liquidity are cash and cash equivalents and the 2013 Loan and Security Agreement. At March 31, 2014, the Company had $2.7 million in cash and cash equivalents, $6.7 million of working capital and no outstanding debt.

For the three month periods ended March 31, 2014 and 2013, the Company incurred losses from continuing operations of $2.6 million and $2.0 million, respectively. The Company’s net cash used in operating activities for the three months ended March 31, 2014 was $1.7 million. The Company has managed its liquidity through the sale of Portamedic and a series of cost reduction and accounts receivable collection initiatives.

Transition Initiatives

During the three month period ended March 31, 2014, the Company incurred $1.1 million of costs, which are recorded in selling, general and administrative expenses in the consolidated statement of operations, in connection with the relocation of its corporate headquarters to Olathe, Kansas, and contributed to the loss from continuing operations during the quarter. The Company relocated its headquarters to Olathe, Kansas during the first quarter of 2014, where the Health and Wellness facilities are located. As of March 31, 2014, the Basking Ridge, New Jersey real estate continued to be classified as assets held for sale. On May 13, 2014, the Company entered into an agreement for the sale of the Basking Ridge, New Jersey real estate.
 
Holdback Related to the Sale of Portamedic

On September 30, 2013, the Company completed the sale of Portamedic. Approximately $2.0 million (“Holdback Amount”) of the purchase price was held back by the acquirer as security for the Company’s obligations under the agreements between the Company and the acquirer. (Refer to Note 6). The Holdback Amount includes two components of $1.0 million each. During the first quarter of 2014, the Company received $0.7 million of the first Holdback Amount. The Company currently anticipates finalization and collection on the second Holdback Amount in the first quarter of 2015. The Company has recorded the remaining receivable related to the second Holdback Amount at the amount it believes will be collected. There cannot be any assurance that the remaining Holdback Amounts will be collected by the Company.

2013 Loan and Security Agreement
    
The Company maintains a three year 2013 Loan and Security Agreement, as amended, (collectively, the “2013 Loan and Security Agreement”), with Keltic Financial Partners II, LP (“Keltic Financial”) (refer to Note 9). Borrowings under the 2013 Loan and Security Agreement are to be used for working capital purposes and capital expenditures. The amount available for borrowing may be less than the $10 million under this facility at any given time due to the manner in which the maximum available amount is calculated.  The Company has an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables (as defined in the 2013 Loan and Security Agreement) up to $10 million under this facility.   Eligible Receivables do not include Heritage Labs receivables, certain Hooper Holmes Services receivables, and other receivables deemed ineligible by the lender. Eligible Receivables include only billed receivables and concentration limits such that borrowing capacity may be affected by the Company's billing and revenue cycles. As of March 31, 2014, the lender applied a discretionary reserve of $0.5 million. Available borrowing capacity, net of this discretionary reserve was $3.1 million based on Eligible Receivables as of March 31, 2014. As of March 31, 2014, there were no borrowings outstanding under the 2013 Loan and Security Agreement.

The Company is also working with Keltic Financial to modify the financial covenants of the 2013 Loan and Security Agreement in an effort to be more in-line with the Company's operations and strategy going forward. If the Company is not able to successfully execute favorable amendments to the existing credit facility, the Company's borrowing capacity may be limited.

The 2013 Loan and Security Agreement contains various covenants, including financial covenants which required the Company to achieve a minimum EBITDA amount (earnings before interest expense, income taxes, depreciation and amortization) beginning with the twelve months ending June 30, 2014 as the first measurement date. The lender recently waived the quarterly minimum EBITDA covenants for the fiscal period ended December 31, 2014. The Company continues to have limitations on the maximum amount of unfunded capital expenditures for each fiscal year.

Subsequent Events

On April 16, 2014 under the Alliance Agreement (refer to Note 1), CRL has agreed to pay $3.7 million in cash for certain assets of the Business, which such assets exclude, among others, all accounts receivable, and to assume specified liabilities related to the Business. The Company will retain certain aspects of its sample kit assembly operations centering around the Health and Wellness segment and all other supply chain fulfillment capabilities, which continue to support Health and Wellness operations and other customers.

On May 13, 2014 under the Purchase and Sale Agreement (refer to Note 1), MDMC has agreed to pay $3.05 million in cash for the Property.

These transactions will provide the Company with additional capital to invest as it focuses on growth supporting Health and Wellness operations.

Other Considerations

The Company's Health and Wellness business sells through wellness, disease management and insurance companies who ultimately have the relationship with the end customer. The Company's current services are aggregated with its partners' offerings to provide a total solution. As such, the Company's success is largely dependent on that of its partners.

Through the focus on the Health and Wellness sector, the Company believes it will be able to capitalize on the opportunities that exist in the Health and Wellness sector given the macro-economic focus on health care costs and improving the efficiency of health care delivery in the United States to grow revenue.
    
If the Company is not able to realize the benefits from the consolidation in Kansas and control the costs of transition, grow the Health and Wellness business as it seeks to streamline operations and improve efficiency through increased revenue and cost reduction initiatives, the Company may not have sufficient Eligible Receivables and the lender may increase reserves such that the Company may not be able to borrow under the 2013 Loan and Security Agreement. These and other factors could adversely affect liquidity and the Company's ability to generate cash flow in the future.

Based on the Company's anticipated level of future revenues and gross profits, anticipated cost reduction initiatives, cash proceeds in connection with the Alliance Agreement, the sale of the Basking Ridge, New Jersey real estate, and existing cash and cash equivalents and borrowing capacity, the Company believes it has sufficient funds to meet its cash needs to fund operation expenses and capital expenditures for the twelve months following March 31, 2014.