QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Large accelerated filer ☐
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Accelerated filer ☐
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Smaller reporting company
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(do not check if a smaller reporting company)
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Emerging Growth Company
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3 | ||
3 | ||
15 | ||
19 | ||
20
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21 | ||
21 | ||
21 | ||
21 | ||
22 | ||
22 | ||
22 | ||
23 |
March 31,
2022
(Unaudited)
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December 31,
2021
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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$
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Other current assets
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Total current assets
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Other assets:
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Due from related parties
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Investments in unconsolidated entities
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Goodwill | ||||||||
Total other assets
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Property and equipment:
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Operating lease right-of-use asset
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Total property and equipment
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TOTAL ASSETS
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$
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$
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LIABILITIES
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||||||||
Current liabilities:
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||||||||
Operating lease right-of-use liability - current portion
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$ |
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$ |
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Accounts payable and accrued expenses
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Income taxes payable
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Total current liabilities
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Operating lease right-of-use liability - net of current portion
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Guarantee liability
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Total liabilities
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EQUITY
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Common stock - par value $
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Additional paid-in capital
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Accumulated deficit
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(
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)
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(
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)
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U.S. NeuroSurgical Holdings Inc. stockholders’ equity
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Noncontrolling interests
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||||||||
Total equity
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TOTAL LIABILITIES AND EQUITY
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$
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$
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Three Months Ended
March 31,
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||||||||
2022
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2021
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(As Restated) |
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Revenue
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$
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$
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Costs and expenses:
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Patient expenses
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Selling, general and administrative
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Total
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Operating (loss) income
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(
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)
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Total other (expense) income | ||||||||
Interest expense
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(
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)
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Interest income - sales-type sublease
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Loss from investments in unconsolidated entities, net
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(
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)
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(
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)
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Total other expense
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( |
) | ( |
) | ||||
(Loss) income before income taxes
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(
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)
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Provision for income taxes
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Net (loss) income
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(
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)
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Net loss attributable to noncontrolling interests | ||||||||
Net (loss) income attributable to U.S. Neurosurgical Holdings, Inc. | $ | ( |
) | $ |
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Basic and diluted net (loss) income per share attributable to U.S. NeuroSurgical Holdings, Inc.
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$
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(
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)
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$
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Weighted average common shares outstanding, basic and diluted
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Three Months Ended
March 31,
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||||||||
2022
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2021
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(As Restated) |
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Cash flows from operating activities:
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||||||||
Net (loss) income
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$
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(
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)
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$
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|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
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Amortization of operating lease right-of-use asset
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Loss from investments in unconsolidated entities, net
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Distributed earnings from unconsolidated entities
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Deferred income taxes
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Changes in:
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Accounts receivable
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(
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)
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Income taxes receivable/payable
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(
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Other current assets
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||||||
Accounts payable and accrued expenses
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(
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)
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|||||
Operating lease right-of-use liability
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(
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)
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(
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)
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Net cash (used in) provided by operating activities
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(
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)
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Cash flows from investing activities:
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Advances to unconsolidated entities
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(
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)
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(
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)
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Captial contributions to unconsolidated entities
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(
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)
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Principal payments received under sales-type sublease
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Net cash (used in) provided by investing activities
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(
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)
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Cash flows from financing activities:
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||||||||
Repayment of finance lease obligations
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(
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)
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Net cash used in financing activities
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(
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)
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Net change in cash and cash equivalents
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(
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)
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Cash and cash equivalents - beginning of period
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Cash and cash equivalents - end of period
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$
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$
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Supplemental disclosures of cash flow information:
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Cash paid for:
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Interest
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$
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$
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Classification | March 31, 2022 |
March 31, 2021 |
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Assets | |||||||||
Long-term
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|||||||||
Operating lease assets
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Operating lease right-of-use asset
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$ |
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$ |
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Total leased assets
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$
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$
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Liabilities
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|||||||||
Current
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|||||||||
Operating lease liabilities
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Operating lease right-of-use liability - current portion
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$ |
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$ |
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Long-term
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Operating lease liabilities
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Operating lease right-of-use liability - net of current portion
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$ |
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$ |
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Total lease liabilities
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$
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$
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Lease Cost
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Operating lease cost
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Selling, general and administrative
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$
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$
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Finance lease cost
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|||||||||
Interest on lease liabilities
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Interest expense
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Sublease income
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Interest income - sales-type sublease
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Net lease expense
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$
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$
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Maturity of lease liabilities (as of March 31, 2022)
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Operating lease
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|||
2022
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2023
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Total
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$
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Less amount representing interest
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Present value of lease liabilities
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$
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Discount rate
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%
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Three Months Ended
March 31,
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2022
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2021
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Patient revenue
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$
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$
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Net (loss) income
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$
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(
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)
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$
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USNC’s equity in income (loss) of
NeuroPartners LLC and CGK
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$
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$
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(
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)
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March 31,
2022
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December 31,
2021
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|||||||
Current assets
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$
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$
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Noncurrent assets
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Total assets
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$
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$
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Current liabilities
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$
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$
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Noncurrent liabilities | |
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Equity
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Total liabilities and equity
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$
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$
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Three Months Ended
March 31, |
||||||||
2022
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2021
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|||||||
Rental Income
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$
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$
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Net income
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$
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$
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USNC’s equity in earnings of BOPRE
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$
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$
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March 31,
2022
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December 31,
2021
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|||||||
Current assets
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$
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$
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Noncurrent assets
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Total assets
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$
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$
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Current liabilities
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$
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$
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Noncurrent liabilities
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Equity
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||||||
Total liabilities and equity
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$
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$
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Three Months Ended
March 31,
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||||||||
2022
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2021
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|||||||
Patient revenue
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$
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$
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Net loss
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$
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(
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)
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$
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(
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)
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USNC’s equity in loss of MOP
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$
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(
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)
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$
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(
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)
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March 31,
2022
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December 31,
2021
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|||||||
Current assets
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$
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$
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||||
Noncurrent assets
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||||||
Total assets
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$
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$
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||||
Current liabilities
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$
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$
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Noncurrent liabilities
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||||||
Deficit
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(
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)
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(
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)
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Total liabilities and deficit
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$
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$
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Three Months Ended
March 31,
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||||||||
2022
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2021
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|||||||
Patient revenue
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$
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$
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Net (loss) income
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$
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(
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)
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$
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USNC’s equity in (loss) income of CBOP
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$
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(
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)
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$
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March 31,
2022
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December 31,
2021
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|||||||
Current assets
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$
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$
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Noncurrent assets
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Total assets
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$
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$
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Current liabilities
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$
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$
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Noncurrent liabilities
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||||||
Deficit
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(
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)
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(
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)
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Total liabilities and deficit
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$
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$
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As previously
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Restatement
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|||||||||||
Reported
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Impacts
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As Restated
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||||||||||
Income tax provision
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$
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$
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$
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||||||
Net income
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$
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$
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(
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)
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$
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|||||
Basic and diluted net income per share
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$
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|
$
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(
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)
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$
|
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Net income
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$
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|
$
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(
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)
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$
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|||||
Change in: Income taxes receivable/payable
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$
|
|
$
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$
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Item 2. |
Management Discussion and Analysis of Financial Condition and Results of Operations.
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk.
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Item 4. |
Controls and Procedures
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Item 1. |
Legal Proceedings
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3. |
Defaults Upon Senior Securities
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Item 4. |
Submission of Matters to a Vote of Security Holders
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Item 5. |
Other Information
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Item 6. |
Exhibits
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U.S. NeuroSurgical Holdings, Inc.
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(Registrant)
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Date: June 24, 2022
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By:
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/s/ Alan Gold
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Alan Gold
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Director, President and Chief Executive Officer
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and
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Principal Financial Officer of the Registrant
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1. |
I have reviewed this Report on Form 10-Q of U.S. NeuroSurgical Holdings, Inc.;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
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4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and
15d–15(f)) for the registrant and have:
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
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d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and;
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5. |
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report
financial information; and
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: June 24, 2022
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/s/ Alan Gold
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Alan Gold
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President & Chairman of the Board
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(Principal Executive Officer and Principal Financial Officer)
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(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of U.S. NeuroSurgical Holdings, Inc.
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/s/ Alan Gold
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Alan Gold
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President and Chief Executive Officer
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(Principal Executive Officer and Principal Financial Officer)
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Date: June 24, 2022
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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|
STOCKHOLDERS' EQUITY | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock, shares issued (in shares) | 7,792,185 | 7,792,185 |
Common stock, shares outstanding (in shares) | 7,792,185 | 7,792,185 |
Basis of Preparation |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Preparation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Preparation |
Note A - Basis of Preparation
The accompanying Condensed Consolidated Financial
Statements of U.S. NeuroSurgical Holdings, Inc. and Subsidiaries (the “Company”) as of March 31, 2021, and 2020, are unaudited. However, in the opinion of management, such statements include all adjustments necessary for a fair statement
of the information presented therein. The Consolidated Balance Sheet at December 31, 2021, has been derived from the audited Consolidated Financial Statements at that date appearing in the Company’s Annual Report on Form 10-K.
Pursuant to accounting requirements of the Securities
and Exchange Commission applicable to quarterly reports on Form 10-Q, the accompanying Condensed Consolidated Financial Statements and notes do not include all disclosures required by accounting principles generally accepted in the United
States of America for complete financial statements. Accordingly, these statements should be read in conjunction with the Company’s most recent annual Consolidated Financial Statements.
Consolidated results of operations for interim
periods are not necessarily indicative of those to be achieved for full fiscal years. The only change to the Company’s equity in the three months ended March 31, 2022, and 2021 was net (loss) income for the periods.
The Company applies the provisions of Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation to noncontrolling interests in consolidated financial statements. The guidance requires noncontrolling interests to be
reported as a component of equity separate from the parent’s equity and purchases and sales of equity interests, that do not result in a change in control, to be accounted for as equity transactions. In addition, net (loss) income
attributable to noncontrolling interests are to be included in net (loss) income and, upon a loss of control, the interest sold, as well as any interest retained, is to be recorded at fair value, with any gain or loss recognized in net
(loss) income.
The Company recognizes revenue in accordance with two different accounting
standards: 1) Topic 606 and 2) Accounting Standards Codification (“ASC”) Topic 842, Leases.
The Company primarily generated revenue, in 2021,
from a leasing arrangement with New York University, which is not within the scope of Revenue from Contracts with Customers (Topic 606), and from the sale of maintenance, under the same agreement, with a single performance obligation. The
NYU agreement ended in March 2021.
The tables below present financial information
associated with our leases.
|
Gamma Knife at NYU Medical Center |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Gamma Knife at NYU Medical Center [Abstract] | |
Gamma Knife at NYU Medical Center |
Note B – Gamma Knife at
NYU Medical Center
U.S. NeuroSurgical, Inc. (“USN”), a wholly-owned subsidiary of U.S. NeuroSurgical Holdings, Inc., opened a New York gamma knife treatment center in July 1997 on the campus of New York University (“NYU”) Medical Center. The Company’s
contract with NYU, its only customer, ended in March 2021. Upon termination of the NYU contract, the Company recognized a gain of $100,000
relating to previously accrued expenses. This gain was included as a reduction in selling, general and administrative expense in the quarter ended March 31, 2021. The Company is actively seeking new business ventures and believes that its cash
reserves, which are in excess of $1.6 million at March 31, 2022, will allow the Company the opportunity do so. Such plans include
possible new operations or extensions of its activities in Florida and California, where it has established working relationships with physician groups, hospitals and other organizations. In addition to these activities, the Company has been
exploring possible combinations with other existing businesses that would create a larger operating entity that would better justify the expenses involved in continuing as an independent publicly traded company.
|
The Southern California Regional Gamma Knife Center |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Southern California Regional Gamma Knife Center [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Southern California Regional Gamma Knife Center |
Note C – The Southern California Regional Gamma
Knife Center
During 2007, the Company, through a noncontrolling
interest in joint ventures, managed the formation of the Southern California Regional Gamma Knife Center at San Antonio Regional Hospital (“SARH”) in Upland, California. Corona Gamma Knife, LLC (“CGK”) is party to a 14-year agreement with SARH to renovate space in the hospital and install and operate a Leksell PERFEXION gamma knife. CGK leases the gamma
knife from NeuroPartners LLC, which holds the gamma knife equipment. In addition to returns on its ownership interests, USNC expects to receive fees for management services relating to the facility.
USNC is a 20% owner of NeuroPartners LLC and owns 39% of CGK.
USNC was a 20% guarantor on NeuroPartners LLC’s seven-year lease
with respect to the gamma knife equipment and certain leasehold improvements at SARH. In February 2016, NeuroPartners LLC negotiated a new five-year
lease to fund the reloading of cobalt and related construction services. The new lease of $1,663,000 included a balance of $668,000 from the prior lease obligations. This new lease was payable over 60 months. The first payment of $31,000 was paid in April 2016 and
the final payment was paid in March 2021, removing USNC’s guarantee obligation.
Construction of the SARH gamma knife center was
completed in December 2008 and the first patient was treated in January 2009. The project has been funded principally by outside investors. While the Company, through its joint ventures, has led the effort in organizing the business and
overseeing the development and operation of the SARH center, its investment to date in the SARH center has been minimal.
At March 31, 2022 and December 31, 2021, the
Company’s recorded investment (loss) of NeuroPartners LLC and CGK was $0 and ($10,000), respectively. For the three months ended March 31, 2022, the Company’s equity in income of NeuroPartners LLC and CGK was $10,000 and compared to equity in loss of ($2,000)
for the three months ended March 31, 2021. At March 31, 2022, and December 31, 2021, amounts due from related parties was $19,000
and $6,000, respectively.
The following tables present the aggregation of
summarized financial information of NeuroPartners LLC and CGK:
NeuroPartners LLC and CGK Condensed Combined Income
Statement Information
NeuroPartners LLC and CGK Condensed Combined Balance
Sheet Information
|
Florida Oncology Partners |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Florida Oncology Partners [Abstract] | |
Florida Oncology Partners |
Note D – Florida Oncology Partners
During 2010, through the formation of a joint venture, in which it has a
noncontrolling interest, the Company expanded its market strategy to include opportunities to develop cancer centers featuring radiation therapy. In 2010, the Company formed FOP in partnership with local physicians and other investors.
USNC owned a 24% interest in the venture. FOP abandoned its operations on June 28, 2019, due to continued losses at the site
and lack of success in good faith efforts to renegotiate the agreement after several months of discussion. Due to the circumstances, FOP derecognized the associated assets and liabilities and calculated a contingent liability equal to
the net liabilities derecognized. On November 24, 2021, the third-party owner filed a Voluntary Motion to Dismiss their lawsuit against FOP, and on December 11, 2021, it was accepted and recorded by the court. There can be no guarantee
the third-party owner will not reinstitute any future claims against FOP.
The Company’s recorded investment in FOP prior to
dissolution had been reduced to zero due to losses incurred in prior years. No equity in earnings had been recorded by the Company due to FOP’s deficit equity.
On September 21, 2021, FOP filed Articles of Dissolution with the Florida
Department of State that were recorded on September 22, 2021. FOP is fully dissolved.
|
Boca Oncology Partners |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Boca Oncology Partners [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Boca Oncology Partners |
Note E – Boca Oncology Partners
During the quarter ended June 30, 2011, the Company,
through the formation of a joint venture, in which it had a noncontrolling interest, participated in the formation of Boca Oncology Partners, LLC (“BOP”), for the purpose of owning and operating a cancer center in Boca Raton, Florida. In
June 2011, Boca Oncology Partners RE, LLC (“BOPRE”,) an affiliated entity, purchased a 20% interest in Boca West IMP, owner of
a medical office building in West Boca, Florida in which BOP operates. BOP occupies 6,000 square feet of the 32,000 square foot building. The Company invested $225,000 initially and had a 22.5% interest in BOP and BOPRE. In February 2014, the Company
and other members sold their interests in BOP.
In June 2012, BOPRE purchased an additional 3.75% of Boca West IMP from another investor bringing its total interest to 23.75%. BOPRE accounts for this investment under the cost method since it does not exercise significant influence over Boca West, IMP.
During the years ended December 31, 2018 and 2017,
several investors relinquished part of their ownership interest in BOPRE, and those interests were distributed among the remaining investors in relationship to their percentages owned. During 2021 and 2022 additional members relinquished
its ownership to USNC. As a result, the Company now holds a 24.36% ownership interest in BOPRE, which it accounts for
under the equity method. The Company’s recorded investment in BOPRE is $145,000 and $151,000 at March 31, 2022 and December 31, 2021, respectively.
The following tables present the summarized financial
information of BOPRE:
BOPRE Condensed
Income Statement Information
BOPRE Condensed Balance Sheet Information
|
Medical Oncology Partners |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medical Oncology Partners [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medical Oncology Partners |
Note F - Medical Oncology Partners
In April 2015, MOP, was formed in partnership with
local physicians and other investors. MOP was established to acquire a 100% equity interest in UOMA. USNC was not a member of
MOP at the time of formation as it was not able to participate due to the fact that USNC was not a physician. Nevertheless, USNC wished to eventually obtain an equity interest in MOP and loaned Dr. Jaime Lozano, the principal investor in
MOP and a co-investor in FOP, $173,000. Dr. Lozano used these funds, along with an equal amount of his own funds (a total of $345,000), to purchase a 76.67%
interest in MOP. Other investors paid a further $105,000 for the remaining equity in MOP. MOP used the $450,000 of financing to acquire a 100%
equity interest in UOMA. An application was filed for a waiver to allow USNC to hold an equity interest notwithstanding the physician requirement and on December 22, 2016, USNC was cleared to become a part owner of MOP. Dr. Lozano agreed
to exchange half of his membership interest to USNC in settlement of the note to USNC. USNC and Dr. Lozano also agreed to share equally in providing a 5% equity interest in MOP to an additional investor as a consulting fee for services rendered in the administration of MOP and UOMA. At December 22, 2016, USNC owned 35.83% of MOP with an initial carrying value of $161,000.
The Company recorded its share of losses of $12,000 for the period from December 22, 2016 to December 31, 2016, against its
investment which resulted in a reduction of its equity investment to $149,000.
Due to increasing costs, continued net losses since
April 2015, and reliance on related party and other debt for operating cash flows, the fair value of UOMA is less than its carrying amount. The Company tested its investment for impairment at December 31, 2016 and determined that the
investment was impaired, and an impairment loss was recorded against the entire equity balance in MOP, as well as loans from USN and USNC to MOP and UOMA. For the three months ended March 31, 2022 and 2021, the Company’s equity in loss of
MOP was $39,000 and $60,000,
respectively, but was not recorded due to prior losses.
During the three months ended March 31, 2022 and
2021, the Company advanced $99,600 and $141,000, all of which has been fully impaired. These allowances and write offs were recorded as losses from investments in unconsolidated entities.
Due to loans made to MOP and UOMA, MOP and UOMA are
considered to be variable interest entities of the Company. However, as the Company is not deemed to be the primary beneficiary of MOP or UOMA, since it does not have the power to direct the operating activities that most significantly
affect MOP’s or UOMA’s economic performance, the entities are not consolidated, but certain disclosures are provided herein.
The following table presents the summarized financial
information of MOP:
MOP Condensed Consolidated Income Statement
Information
MOP Condensed Consolidated Balance Sheet Information
|
CB Oncology Partners |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CB Oncology Partners [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CB Oncology Partners |
Note G - CB Oncology Partners
CBOP was organized September 1, 2017, to acquire the
rights of the new center from FOP. USNC originally had a 24% equity interest in CBOP. Beginning in October of 2017, CBOP
began paying the remainder of the costs associated with opening the center. The medical center opened and treated its first patient in January of 2018.
Effective November 15, 2019, FOP transferred to, and
CBOP assumed, a loan with BB&T bank, that it had entered into in order to finance the purchase of equipment and build out of the new center, as well as the associated property and equipment. In addition, CBOP and BB&T agreed to
reduce the monthly loan repayments for the next nine months, and to extend the term of the loan from November 2024 to July 2025. In July 2020 CBOP and BB&T further agreed to reduce the monthly payments for the life of the loan and
extended the loan to July of 2027.
In June 2020, CBOP made a $500,000 capital call to its members. UNSC converted previously-made advances totaling $121,000 into equity in CBOP to meet its capital requirement, and other members contributed $212,000 in cash. The remaining capital contributions are not expected to be met and, accordingly, the Company’s equity interest in CBOP increased to 28.58% in June 2020.
Amounts due from CBOP at March 31, 2022, total $2,208,000 of outstanding principal, less $1,289,000
of allowances, for a net receivable of $919,000 all of which is included in due from related parties on the accompanying
Condensed Consolidated Balance Sheets. Amounts due from CBOP at December 31, 2021, total $2,174,000 of outstanding principal,
less $1,251,000 of allowances, for a net receivable of $923,000 all of which is included in due from related parties on the accompanying Condensed Consolidated Balance Sheets. These balances accrue interest at 6% per annum. Interest earned by the Company from the amounts owed by CBOP totaled $29,000 and $31,000 for the three months ended March 31,
2022 and 2021, respectively. At March 31, 2022 and December 31, 2021, total accrued interest was $427,000 and $398,000, respectively, all of which has been fully reserved for. The Company recorded increases in the allowance as a component of loss from
investments in unconsolidated entities and as a deduction in interest income for interest earned.
Due to loans made to CBOP, CBOP is considered to be a
variable interest entity of the Company. However, as the Company is not deemed to be the primary beneficiary of CBOP, since it does not have the power to direct the operating activities that most significantly affect CBOP’s economic
performance, the entity is not consolidated, but certain disclosures are provided herein.
The following table presents the summarized financial
information of CBOP:
CBOP Condensed Income Statement Information
CBOP Condensed Balance Sheet Information
|
Elite Health |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Elite Health [Abstract] | |
Elite Health |
Note H – Elite Health
Effective October 1, 2021, U.S. NeuroSurgical, Inc. (“USN”), acquired all of the outstanding shares of capital stock of Elite Health Plan, Inc., a California corporation (“Elite
Health”.) The transaction with Elite Health was structured as an investment by Elite Health shareholders in USN, and as such did not have an immediate effect on the percentage ownership of the shareholders of the Company. However, the Company’s
interest in USN, which currently holds substantially all of the interest in the Company’s businesses and operations, was effectively diluted by 15%
as a result of the issuance of the new USN shares to the former holders of Elite Health. In addition, pursuant to the terms of this transaction, the former shareholders of Elite Health may request that the Company take steps that would
give such holders access to the public trading market. If this is requested by the Elite Health holders, it could be accomplished at the Company’s election through an exchange of such holders’ shares in USN for common stock of the Company.
Elite Health is a private company with a limited operating history. It was formed in 2017 with the purpose of establishing a managed care organization that will operate as a
Medicare Advantage plan for seniors. It is expected that Elite Health will operate in California, initially San Bernadino, Riverside, and Orange Counties, with the objective of addressing the growing number of Medicare eligible seniors in those
markets.
Elite Health is in
the process of applying for a Knox Keene license to operate a Medicare Advantage plan in California and has taken preliminary steps toward identifying a network of providers who are well-versed in the healthcare needs of seniors in the communities
in which they practice. If Elite Health is successful in obtaining the license, establishing Elite Health as an operating entity will require significant investment not currently available to the Company. The Company is currently exploring
opportunities to provide the necessary funding to proceed with activities required to launch Elite Health.
|
Income Taxes |
3 Months Ended |
---|---|
Mar. 31, 2022 | |
Income Taxes [Abstract] | |
Income Taxes |
Note I – Income Taxes
The Company’s income tax rate, which includes federal
and state income taxes, was approximately 1%, for the three months ended March 31, 2022, and 2021. The Company recorded a
tax provision of $2,000 and $252,000
(restated) for the three months ended March 31, 2022, and 2021, respectively.
|
Restatement of Previously Issued Financial Statements |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restatement of Previously Issued Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restatement of Previously Issued Financial Statements |
Note J - Restatement of Previously Issued Financial Statements
During the quarter ended March 31, 2022, the Company determined that in March 2021, pursuant to an agreement with New York University ("NYU"),
ownership of all of the gamma knife equipment at the NYU Medical Center transferred from the Company to NYU, resulting in the recognition of a gain on the sale and transfer of the gamma knife property on the Company's December 31, 2021 income tax
returns. The Company previously received insurance proceeds with the Gamma Knife facility, which was destroyed as a result of flooding from Hurricane Sandy. For tax purposes, the resulting gain becomes taxable when the replacement property is sold
or disposed of, which occurred in 2021. As a result, the Company recorded this tax liability and restated its consolidated financial statements as of and for the year ended December 31, 2021 and each of the quarters during the year ended December
31, 2021 on Form 10-K/A for the year ended December 31, 2021.
The restatement tables below present a reconciliation from the previously reported to the restated values as of and for the three months ended March
31, 2020. The values as previously reported were derived from the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed on May 17, 2021.
CONDENSED CONSOLIDATD STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
For the Three Months Ended March 31, 2020
|
Basis of Preparation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Preparation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information Associated with our Leases |
The tables below present financial information
associated with our leases.
|
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Maturity of Lease Liabilities |
|
The Southern California Regional Gamma Knife Center (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Neuro Partners LLC and CGK [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment Summarized Financial Information |
The following tables present the aggregation of
summarized financial information of NeuroPartners LLC and CGK:
NeuroPartners LLC and CGK Condensed Combined Income
Statement Information
NeuroPartners LLC and CGK Condensed Combined Balance
Sheet Information
|
Boca Oncology Partners (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Boca Oncology Partners RE, LLC ("BOPRE") [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment Summarized Financial Information |
The following tables present the summarized financial
information of BOPRE:
BOPRE Condensed
Income Statement Information
BOPRE Condensed Balance Sheet Information
|
Medical Oncology Partners (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Medical Oncology Partners LLC [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment Summarized Financial Information |
The following table presents the summarized financial
information of MOP:
MOP Condensed Consolidated Income Statement
Information
MOP Condensed Consolidated Balance Sheet Information
|
CB Oncology Partners (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CB Oncology Partners LLC [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment Summarized Financial Information |
The following table presents the summarized financial
information of CBOP:
CBOP Condensed Income Statement Information
CBOP Condensed Balance Sheet Information
|
Restatement of Previously Issued Financial Statements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restatement of Previously Issued Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation from the Previously Reported to the Restated Values |
The restatement tables below present a reconciliation from the previously reported to the restated values as of and for the three months ended March
31, 2020. The values as previously reported were derived from the Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed on May 17, 2021.
CONDENSED CONSOLIDATD STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2020
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
For the Three Months Ended March 31, 2020
|
Gamma Knife at NYU Medical Center (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Dec. 31, 2021 |
|
Gamma Knives at NYU Medical Center [Abstract] | ||
Cash reserves | $ 1,658,000 | $ 2,178,000 |
NYU [Member] | ||
Gamma Knives at NYU Medical Center [Abstract] | ||
Gain on termination of contract | 100,000 | |
NYU [Member] | Minimum [Member] | ||
Gamma Knives at NYU Medical Center [Abstract] | ||
Cash reserves | $ 1,600,000 |
Florida Oncology Partners (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
Florida Oncology Partners [Abstract] | |||
Recorded distribution | $ 11,000 | $ 0 | |
Investments in unconsolidated entities | 146,000 | $ 141,000 | |
FOP [Member] | |||
Florida Oncology Partners [Abstract] | |||
Recorded distribution | 0 | ||
Investments in unconsolidated entities | $ 0 | ||
FOP [Member] | USNC [Member] | |||
Florida Oncology Partners [Abstract] | |||
Ownership percentage | 24.00% |
Elite Health (Details) |
Oct. 01, 2021 |
---|---|
Elite Health Plan, Inc. [Member] | |
Elite Health [Abstract] | |
Equity consideration, percentage of outstanding shares | 15.00% |
Income Taxes (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Income Taxes [Abstract] | |||
Federal and state income taxes, rate | 1.00% | 1.00% | |
Tax provision | $ 2,000 | $ 252,000 | $ 252,000 |
Restatement of Previously Issued Financial Statements, Condensed Consolidated Statements of Operations (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2020 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | |||
Income tax provision | $ 2,000 | $ 252,000 | $ 252,000 |
Net income | $ (495,000) | $ 292,000 | $ 292,000 |
Basic net income per share (in dollars per share) | $ (0.05) | $ 0.04 | $ 0.04 |
Diluted net income per share (in dollars per share) | $ (0.05) | $ 0.04 | $ 0.04 |
As Previously Reported [Member] | |||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | |||
Income tax provision | $ 5,000 | ||
Net income | $ 539,000 | ||
Basic net income per share (in dollars per share) | $ 0.07 | ||
Diluted net income per share (in dollars per share) | $ 0.07 | ||
Restatement Impacts [Member] | |||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | |||
Income tax provision | $ 247,000 | ||
Net income | $ (247,000) | ||
Basic net income per share (in dollars per share) | $ (0.03) | ||
Diluted net income per share (in dollars per share) | $ (0.03) |
Restatement of Previously Issued Financial Statements, Condensed Consolidated Statements of Cash Flows (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2020 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | |||
Net income | $ (495,000) | $ 292,000 | $ 292,000 |
Change in: Income taxes receivable/payable | $ (11,000) | $ 252,000 | 252,000 |
As Previously Reported [Member] | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | |||
Net income | 539,000 | ||
Change in: Income taxes receivable/payable | 5,000 | ||
Restatement Impacts [Member] | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | |||
Net income | (247,000) | ||
Change in: Income taxes receivable/payable | $ 247,000 |
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