Disposal and Discontinued Operations

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Disposal and Discontinued Operations

Disposal and Discontinued Operations

Cross Country Education

On July 21, 2015, the Company's Board of Directors approved an agreement to sell the Company's education seminars business, CCE, which provided in-person seminars to healthcare professionals and was non-core to the Company’s business. The Company used the net proceeds from the transaction to finance, in part, the Mediscan acquisition in the fourth quarter of 2015. See Note 3 - Acquisitions. Since the disposal of the education seminars business does not represent a strategic shift that will have a major effect on the Company’s operations and financial results, it has not been reflected as discontinued operations.

On July 27, 2015, the Company entered into an Agreement and Plan of Merger to sell its wholly-owned subsidiary, CCE, to a

third party (Buyer), and on August 31, 2015, the Company completed the sale. The purchase price was $8.0 million, of which the Company received $7.5 million in cash and $0.5 million which is held in escrow for a period of 12 months following the closing to provide partial security to the Buyer in the event of any breach of the representations, warranties and covenants of the Company. The Company recorded the $0.5 million indemnity escrow funds as an escrow receivable as of December 31, 2015.

The purchase price also included an earnout of up to $0.5 million related to the performance of CCE for the year ended 2015, which was treated as contingent consideration. The Company assigned no fair value to this earnout as of December 31, 2015 as the performance-based milestones were not met. See Note 10 - Fair Value Measurements. The original escrow amount was released to the Buyer in the first quarter of 2016.

The operating results of CCE were included in the Other Human Capital Management Services segment. See Note 17 - Segment Data for further information.

The Company has agreed that for a period of five years from the closing date, it will not engage in the business of providing education seminars as such business is presently conducted by CCE, or solicit customers of CCE for purposes of diverting their

business from CCE.

The Company recognized a pre-tax loss of $2.2 million related to the sale of the business, which is included in income (loss) from operations in its consolidated statements of operations for the year ended December 31, 2015. In addition, the Company recorded a tax benefit of $3.5 million from the reversal of valuation allowances associated with this business, resulting in an after tax gain on the sale of CCE of $1.3 million.

Clinical Trial Services

On February 15, 2013, the Company completed the sale of its clinical trial services business to a third party (Buyer) for an aggregate $52.0 million in cash, subject to certain adjustments. At closing, the total amount paid was reduced by approximately $0.1 million for the amount the Targeted Net Working Capital exceeded the Estimated Net Working Capital. During the fourth quarter of 2013, the Company paid an additional $0.2 million to the Buyer to finalize the Net Working Capital adjustment, pursuant to the assets purchase agreement.

The agreement included a provision for an earnout of up to $3.8 million related to certain performance-based milestones. The maximum earnout amount of $3.8 million was deposited in escrow by Buyer as security for the earnout payment, if any. The $3.8 million earnout related to certain performance-based milestones was treated as contingent consideration and the Company assigned no fair value to this earnout as of December 31, 2013 based on the information available to the Company. See Note 10 - Fair Value Measurements. The performance-based milestones were not earned, and as a result $1.5 million of the original escrow was released to the Buyer in the second quarter of 2013 and $2.3 million was released in July 2014.

Of the $52.0 million purchase price paid at closing, $3.8 million was also placed in escrow for a period of 18 months following the closing to provide partial security to the Buyer in the event of any breach of the representations, warranties and covenants of the Company. The total escrow amount was released to the Company in August 2014 and reported as additional proceeds from the sale in the investing activities on its consolidated statements of cash flows.

As a result of the disposal, the underlying operations and cash flows of the Clinical Trial Services business have been eliminated from the Company’s continuing operations and the Company no longer has the ability to influence the operating and/or financial policies of the disposal group. The historical financial results of operations, except for disclosures related to cash flows, have been presented as discontinued operations for the year ended December 31, 2013.

The following table presents the revenues and the components of discontinued operations, net of tax:

	Year Ended December 31, 2013
Revenue	$	7,939
Income from discontinued operations before gain on sale and income taxes	434
Gain on sale of discontinued operations	3,969
Income tax expense	(2,122		)
Income from discontinued operations, net of income taxes	$	2,281