Destruction of Gamma Knife at NYU Medical Center; Planning for Replacement and Restoration

6 Months Ended

Jun. 30, 2013

Destruction of Gamma Knife at NYU Medical Center; Planning for Replacement and Restoration [Abstract]

Destruction of Gamma Knife at NYU Medical Center; Planning for Replacement and Restoration

Note B – Destruction of Gamma Knife at NYU Medical Center; Planning for Replacement and Restoration

USN opened its New York gamma knife treatment center in July 1997 on the campus of New York University (“NYU”) Medical Center.  The Company installed a new Leksell gamma knife, the PERFEXION model, at the NYU Medical Center in March 2009 in replacement of the older gamma knife equipment.  In connection with this upgrade, the Company modified its arrangement with NYU to extend the term for 12 years from March 2009.

In October 2012, the Company’s facility at NYU was totally destroyed as a result of flooding from Hurricane Sandy. The gamma knife had to be removed to prevent any cobalt leakage that might occur due to rusting of the equipment. The emergency removal cost was $525,000. The Company paid a lease settlement of the outstanding principal balance only and received from insurance coverage $930,000 above the lease principal payments and emergency removal costs.

The Company is in the process of finalizing arrangements with NYU regarding the restoration of the gamma knife center and the Company’s long term contract with NYU.  Initial steps are being taken to prepare space for the center in the Tisch Hospital of NYU Langone Medical Center where the replacement Leksell PERFECTION gamma knife will be located.  It is currently estimated that the center will be open and treating patients by March 2014.

It is currently expected that the term of the agreement with NYU will remain the same, terminating at the end of March 2021.  The Company has obtained a commitment for lease financing in the amount of $4.6 million for the purchase of the replacement equipment as well as the cost of the construction required at the relocated site.