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Discontinued Operations
 6 Months Ended
Jun. 30, 2020
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations Discontinued Operations
On February 1, 2018, the Company completed the sale of its customer contracts relating to our MDSS post-warranty service business to Philips pursuant to an Asset Purchase Agreement, dated as of December 22, 2017, for $8.0 million. The total cash proceeds were adjusted for deferred revenue liabilities assigned to Philips at the closing date, as well as $0.5 million of proceeds held in escrow, subject to claims for breaches of general representation and warranties, which was recorded in other current assets at the date of sale. All claims were settled as of December 31, 2018. Prior to the sale of the customer contracts, we received notification from Philips on September 28, 2017, that our distribution agreement to sell Philips imaging systems on a commission basis would be terminated, effective December 31, 2017. As a result, our product sales activities within our MDSS reportable segment were also discontinued effective in the first quarter of 2018.
For the six months ended June 30, 2019, Digirad recognized a $0.4 million gain for the remaining settlement of the warranty claims in regards to equipment sold to Philips.
The Company deemed the disposition of our MDSS reportable segment in the first quarter of 2018 to represent a strategic shift that will have a major effect on our operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, we have classified the results of our MDSS segment as discontinued operations in our condensed consolidated statement of operations for all periods presented.
The Company has allocated a portion of interest expense to discontinued operations since the proceeds received from the sale were required to be used to pay down outstanding borrowings under our previous revolving credit facility with Comerica Bank, a Texas banking association (“Comerica Bank”) under that certain Revolving Credit Agreement, dated June 21, 2017, by and between the Company and Comerica Bank (the “Comerica Credit Agreement”). The allocation was based on the ratio of proceeds received in the sale to total borrowings for the period. In addition, certain general and administrative costs related to corporate and shared service functions previously allocated to the MDSS reportable segment are not included in discontinued operations.

The following table presents financial results of the MDSS business (in thousands):

Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Total revenues$—  $—  $—  $—  
Total cost of revenues—  —  —  —  
Gross profit—  —  —  —  
Operating expenses:—  —  —  —  
    Marketing and sales—  —  —  —  
    General and administrative—  —  —  —  
    Amortization of intangible assets—  —  —  —  
    Gain on sale of discontinued operations—  (350) —  (350) 
        Total operating expenses—  (350) —  (350) 
Income from discontinued operations—  350  —  350  
Interest expense—  —  —  —  
Income from discontinuing operations before income taxes—  350  —  350  
Income tax expense—  (84) —  (84) 
Income from discontinuing operations$—  $266  $—  $266  

The following table presents supplemental cash flow information of discontinued operations (in thousands):

Six Months Ended June 30,
20202019
Operating activities:
    Depreciation$—  $—  
    Amortization of intangible assets$—  $—  
    Gain on sale of discontinued operations$—  $(350) 
    Stock-based compensation$—  $—  
Investing activities:
    Proceeds from the sale of discontinued operations$—  $—