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Liquidity
6 Months Ended
Jun. 30, 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 June 30, 2014, the Company had $3.1 million in cash and cash equivalents, $6.0 million of working capital and no outstanding debt.

For the three and six month periods ended June 30, 2014, the Company incurred losses from continuing operations of $1.9 million and $4.8 million, respectively. The Company’s net cash used in operating activities for the six month period ended June 30, 2014 was $1.2 million. The Company has managed its liquidity through a series of cost reduction and accounts receivable collection initiatives along with access to the 2013 Loan and Security Agreement.

Transition Initiatives

During the three and six month periods ended June 30, 2014, the Company incurred $0.4 million and $1.5 million, respectively, 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 2014 periods presented. The Company relocated its headquarters to Olathe, Kansas during the first quarter of 2014, where the Health and Wellness facilities are located. Costs incurred during the second quarter of 2014 relate to expenses associated with maintaining the Basking Ridge, New Jersey real estate and ongoing transition of information technology infrastructure.

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 Heritage Labs and Hooper Holmes Services, 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 relating to the Health and Wellness segment and all other supply chain fulfillment capabilities, which continue to support Health and Wellness operations and other customers.

As of June 30, 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 property for an aggregate purchase price of $3.05 million. On July 18, 2014, the Company and MDMC entered into an amendment to the Purchase and Sale Agreement that provides for the Company to deposit into an escrow account at closing an aggregate of $0.3 million of the purchase price to satisfy amounts paid by MDMC in connection with certain repairs and other expenses identified in the course of the property inspection. The sale closed on August 7, 2014 resulting in cash proceeds of $2.54 million, which is net of customary closing costs and broker fees (refer to Note 1).

These initiatives and transactions will provide the Company with additional capital to invest as it focuses on growth supporting Health and Wellness operations.
 
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, however there cannot be any assurance that the remaining Holdback Amounts will be collected by the Company.

2013 Loan and Security Agreement
    
The Company maintains the 2013 Loan and Security Agreement with ACF, the assignee of 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. As of June 30, 2014, the lender applied a discretionary reserve of $0.5 million. Available borrowing capacity, net of this discretionary reserve was $2.8 million based on Eligible Receivables as of June 30, 2014. As of June 30, 2014, there were no borrowings outstanding under the 2013 Loan and Security Agreement.

The Company and ACF entered into an amendment to the 2013 Loan and Security Agreement on July 9, 2014 (refer to Note 1) to modify the financial covenants in an effort to better align such covenants with the Company's operations and strategy going forward. In addition, Eligible Receivables was amended to include up to fifty percent of Unbilled Eligible Receivables (as defined in the 2013 Loan and Security Agreement), which results in an increase in the Company's borrowing capacity. The 2013 Loan and Security Agreement contains various covenants, including financial covenants which require the Company to achieve a minimum EBITDA amount (earnings before interest expense, income taxes, depreciation and amortization) beginning with the twelve months ending March 31, 2015 as the first measurement date. The Company continues to have limitations on the maximum amount of unfunded capital expenditures for each fiscal year.

Other Considerations

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

The Company's ability to generate cash flow in the future is dependent on realizing the benefits from the consolidation in Kansas and growing the Health and Wellness business as it seeks to streamline operations and improve efficiency through increased revenue and cost reduction initiatives. These and other factors could adversely affect liquidity.

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 June 30, 2014.