Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

The Company recorded goodwill of $8.8 million as of March 31, 2018, and December 31, 2017.

Intangible assets subject to amortization are amortized on a straight-line basis, with the estimated useful life for the wellness portal and customer relationships as 4 - 6 years and 8 years, respectively. Intangible assets are summarized in the table below:



	March 31, 2018						December 31, 2017
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Intangible Assets, net		Gross Carrying Amount		Accumulated Amortization		Intangible Assets, net
Portal	$	8,351	$	3,690	$	4,661	$	8,351	$	3,256	$	5,095
Customer relationships	$	5,497	$	1,153	4,344		$	5,497	$	981	4,516
Trade name/trademark	200		200		—		200		171		29
Non-compete agreements	$	10	$	9	1		$	10	$	6	4
Total	$	14,058	$	5,052	$	9,006	$	14,058	$	4,414	$	9,644

Amortization expense for the three-month periods ended March 31, 2018 and 2017 was $0.6 million and $0.3 million, respectively.

Impairment Considerations

The Company has both current period operating and cash flow losses along with a history of operating and cash flow losses as described in Note 2 - Liquidity and Going Concern Assessment. The process of an impairment test is to identify any potential impairment by comparing the carrying value of a reporting unit including goodwill and its fair value. The Company utilized an undiscounted cash flow methodology based on the projections for the asset group from 2018 through 2025 to test for recoverability. These projections included significant synergy cost savings resulting from the Merger as described in Note 3 - Merger. The carrying amount of an asset group is considered recoverable if the total undiscounted future cash flows from the asset group are greater than the carrying amount of the asset group. We evaluated only the future cash flows that are directly associated with and expected to arise as a direct result of the use of the asset group and its eventual disposition. These cash flow estimates excluded cash outflows for interest and were determined on a pre-tax basis. Based on our initial analysis it was determined that the undiscounted cash flows from the use and disposition of the asset group were greater than the carrying amount and therefore the asset group’s carrying amount is considered recoverable and therefore it not impaired.

Due to the conditions faced by the Company described in Note 2 - Liquidity and Going Concern Assessment, we performed an alternate scenario where the Company is assumed to be unable to remain a going concern. Under this scenario, the undiscounted cash flows from the asset group were less than the carrying amount and the asset group would be considered impaired. As a result, the fair value of the asset group was determined as a next step of the impairment test and compared against its carrying amount to determine if an impairment loss exists. The fair value of the asset group was determined based on the guidance of ASC 820 - Fair Value Measurement. Under ASC 820, the fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The determination of the fair value based on market participant assumptions resulted in a fair value estimate that exceeded the carrying amount of the asset group resulting in no impairment.

During the fourth fiscal quarter of 2017, prior to our annual testing of goodwill , the Company adopted ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment", which requires entities to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which the carrying amount exceeds the reporting unit’s fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. As previously disclosed, the Company has a single reporting unit, inclusive of $8.8 million of goodwill. The Company used the equity premise in assigning assets and liabilities to a reporting unit to determine its carrying value, which resulted in a stockholders’ deficit balance of $6.9 million as of December 31, 2017. The fair value of the Company is based on its market capitalization using outstanding shares and the closing stock price as of December 31, 2017 and March 31, 2018, which resulted in positive fair value of over $11 million and $14 million, respectively. Therefore, the fair value of the reporting unit is greater than the carrying amount, and goodwill is not considered to be impaired at March 31, 2018. Subsequent to March 31, 2018 the market capitalization of the Company declined to approximately $2 million, however, the fair value is still greater than the carrying amount and therefore there was no impairment resulting from this decline of market capitalization.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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