Discontinued operations is a component of an entity that has either been disposed of or is deemed held-for-sale and, (i) the operations and cash flows of the component have been or will be eliminated from ongoing operations as a result of the disposal transaction, and (ii) the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

During 2020, the Company implemented a plan to divest its California operations, which included the entirety of its Medicaid line of business, via three separate transactions with different parties. In August 2020, the Company disposed of its Southern California operations for a gross sales price of $2.5 million and recognized a gain on sale of $1.3 million. In October 2020, the Company disposed of its Fresno, California operations for a gross sales price of $26.0 million and recognized a gain on sale of approximately $19.1 million. The Company retained the working capital of both disposal groups and therefore such working capital accounts are not presented as assets and liabilities related to discontinued operations in the consolidated balance sheets. In December 2020, the Company signed a definitive agreement to sell its remaining California operations for a gross sales price of $1.0 million. The sale closed in February 2021.

The Company’s decision to exit California and the Medicaid line of business represents a strategic shift that will have a major effect on its operations and financial results. As such, the Company’s California operations are reflected in the consolidated financial statements as discontinued operations. Net income (loss) from discontinued operations for the year ended December 31, 2020 includes $3.7 million of severance related to the sale of the Company’s California operations.

The results of discontinued operations are as follows (in thousands):


	Year Ended December 31,
	2022			2021			2020
Revenues:
Medical services revenue	$	511		$	6,408		$	155,108
Other operating revenue		14			36			188
Total revenues		525			6,444			155,296
Expenses:
Medical services expense		34			(865	)		84,189
Other medical expenses		—			2,739			57,546
General and administrative		—			5,919			30,341
Depreciation and amortization		—			126			568
Income (loss) from operations		491			(1,475	)		(17,348	)
Other income (expense), net		—			(1,851	)		(2,351	)
Gain (loss) on sales of assets, net		—			473			20,401
Interest expense		—			(137	)		(350	)
Income (loss) before income taxes and noncontrolling interests		491			(2,990	)		352
Income tax benefit (expense)		(26	)		1,687			2,804
Net income (loss) from discontinued operations attributable to common shares	$	465		$	(1,303	)	$	3,156

The following table provides significant non-cash operating items for discontinued operations that are included in the consolidated statements of cash flows (in thousands):


	Year Ended December 31,
	2021			2020
Non-cash operating activities from discontinued operations:
Depreciation and amortization	$	126		$	568
Stock-based compensation expense		—			217
Deferred income taxes and uncertain tax positions		(1,697	)		(2,809	)
Release of indemnification assets		1,705			3,475
Other non-cash items		—			(1,212	)

There were no non-cash operating activities from discontinued operations for the year ended December 31, 2022.

Indemnification assets have been established to offset certain pre-closing liabilities for which the prior owners of some of the Company’s California subsidiaries are obligated to indemnify the Company. The Company deems the amounts receivable under the indemnification agreements to be fully collectible should indemnification claims arise and, as such, a valuation allowance is not deemed necessary. During the years ended December 31, 2021 and 2020, the Company released $1.7 million, and $2.8 million, respectively, of indemnification assets in discontinued operations in the consolidated statements of operations as the corresponding pre-closing liabilities were released as a result of closing certain tax years (see below). No amounts were released during 2022.

As of December 31, 2022 and 2021, the Company has recorded a liability for unrecognized tax benefits of $1.6 million and $2.1 million, respectively, inclusive of accrued interest and penalties on unrecognized tax benefits. The liability, if reversed, would result in a tax benefit attributable to discontinued operations. During the year ended December 31, 2021, due to expiration of the 2016 U.S. federal statute of limitations, the Company reversed $5.6 million of tax liability, $1.1 million of accrued interest and $1.1 million of accrued penalties on unrecognized tax benefits and realized a tax benefit of $1.8 million attributable to discontinued operations.