Investments in Unconsolidated Entities

12 Months Ended

Dec. 31, 2022

Investments in Unconsolidated Entities [Abstract]

Investments in Unconsolidated Entities

Note C - Investments in Unconsolidated Entities

[1] 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 on April 1, 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 December 31, 2022 and 2021, the Company’s recorded investment (loss) of NeuroPartners LLC and CGK was $0 and $(10,000), respectively.  During the years ended December 31, 2022, and 2021, the Company’s equity in loss of NeuroPartners LLC and CGK was $133,000 and $36,000, respectively.  At December 31, 2022 and 2021, amounts due from these related parties was $7,000 and $6,000, respectively.

The following tables present the aggregation of summarized combined financial information of NeuroPartners LLC and CGK:

Neuro Partners LLC and CGK Combined Condensed Income Statement Information

	Years Ended
	December 31,
	2022			2021
Patient revenue	$	356,000		$	606,000
Net (loss) income	$	(252,000	)	$	(9,000	)
USNC’s equity in (loss) income of Neuro Partners LLC and CGK	$	(133,000	)	$	(36,000	)

Neuro Partners LLC and CGK Combined Condensed Balance Sheet Information

	December 31,
	2022			2021
Current assets	$	375,000		$	299,000
Noncurrent assets		42,000			294,000
Total assets	$	417,000		$	593,000
Current liabilities	$	632,000		$	564,000
Noncurrent liabilities		-			-
Equity		(215,000	)		29,000
Total liabilities and equity	$	417,000		$	593,000

[2] Florida Oncology Partners

During 2010, through the formation of a joint venture, in which it had 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 of operations and lack of success in good faith efforts to renegotiate an agreement with the party from whom FOP leased a facility and equipment, 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 lessor filed a Voluntary Motion to Dismiss its lawsuit against FOP, and on December 11, 2021, it was accepted and recorded by the court. There can be no guarantee the lessor 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 now fully dissolved.

[3] 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, 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 their ownership to USNC. As a result, the Company now holds a 23.10% ownership interest in BOPRE, which it accounts for under the equity method. The Company’s recorded investment in BOPRE is $157,000 and $152,000 at December 31, 2022 and 2021, respectively.

The following tables present the summarized financial information of BOPRE:

BOPRE Condensed Income Statement Information

	Years Ended December 31,
	2022		2021
Rental Income	$	-	$	-
Net income	$	60,000	$	85,000
USNC’s equity in income in BOPRE	$	14,000	$	17,000

BOPRE Condensed Balance Sheet Information

	December 31,
	2022		2021
Current assets	$	123,000	$	112,000
Noncurrent assets		757,000		757,000
Total assets	$	880,000	$	869,000
Current liabilities	$	-	$	-
Noncurrent liabilities		-		-
Equity		880,000		869,000
Total liabilities and equity	$	880,000	$	869,000

[4] 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 it’s 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. During the year ended December 31, 2021, the Company’s equity in loss of MOP was $231,000 but was not recorded due to prior losses.

On December 31, 2022 MOP/UOMA sold their assets to One Care Oncology Partners, LLC for $2,060,000. USN Corona netted approximately $1.3 million from the proceeds for management fees to date. Because the 31st occurred on a Saturday, the funds were not received until January 3, 2023. Some funds were held in escrow until post-closing adjustments were made.

The following table presents the summarized financial information of MOP:

MOP Condensed Consolidated Income Statement Information

	Years Ended December 31,
	2022		2021
Patient revenue	$	-	$	2,417,000
Net income	$	1,547,000	$	(646,000	)
USNC’s equity in loss in MOP	$	-	$	(231,000	)

MOP Condensed Consolidated Balance Sheet Information

	December 31,
	2022			2021
Current assets	$	-		$	201,000
Noncurrent assets		-			384,000
Total assets	$	-		$	585,000
Current liabilities	$	1,075,000		$	3,109,000
Noncurrent liabilities		-			92,000
Deficit		(1,075,000	)		(2,616,000	)
Total liabilities and deficit	$	-		$	585,000

[5] 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. CBOP had no assets at the end of 2017. 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 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.

During the second quarter of 2022 the Company wrote off all amounts due and accrued interest thereon, from CB resulting in a $919,000 loss. During the remainder of the year ended December 31, 2022, the Company advanced an additional $163,000, less $156,000 of allowances, for a net receivable of $6,000. These allowances and write offs were recorded as losses from investments in unconsolidated entities. 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 Consolidated Balance Sheets. The Company records increases in the allowance, when applicable, as a component of loss from investments in unconsolidated entities and as a deduction in interest income for interest earned. For the years ended December 31, 2022 and 2021, the Company’s equity in loss of CBOP was $191,000 and $91,000, respectively, but was not recorded due to prior losses.

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

	Years Ended December 31,
	2022			2021
Patient revenue	$	1,929,000		$	2,042,000
Net loss	$	(667,000	)	$	(319,000	)
USNC’s equity in loss  of CBOP	$	(191,000	)	$	(91,000	)

CBOP Condensed Balance Sheet Information

	December 31,
	2022			2021
Current assets	$	405,000		$	400,000
Noncurrent assets		3,056,000			3,667,000
Total assets	$	3,461,000		$	4,067,000
Current liabilities	$	975,000		$	3,472,000
Noncurrent liabilities		5,680,000			3,121,000
Deficit		(3,194,000	)		(2,526,000	)
Total liabilities and deficit	$	3,461,000		$	4,067,000