New York | 22-1659359 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
560 N. Rogers Road | |
Olathe, KS | 66062 |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered |
Common Stock ($.04 par value per share) | NYSE MKT |
Large Accelerated Filer o | Accelerated Filer o | Non-Accelerated Filer o | Smaller Reporting Company x |
Table of Contents | ||
PART I | ||
Item 4 | Mine Safety Disclosures | |
PART II | ||
PART III | ||
PART IV | ||
PART 1 |
ITEM 1 | Business |
• | end-to-end biometric screening management; |
• | scheduling of individual and group screenings and organizing health and wellness events; |
• | provision and fulfillment of needed supplies (e.g., examination kits, blood pressure cuffs, stadiometers, scales, centrifuges) at screening events; |
• | ScreeningProTM tablet technology that streamlines the screening experience for participants eliminating the need to fill out paper forms; |
• | performing screenings (e.g., height, weight, body mass index, the taking of a person’s hip, waist and neck measurements, as well as his or her pulse and blood pressure) and blood draws via venipuncture or fingerstick, all of which are performed by our health professionals; |
• | coordination of lab testing of blood specimens and other fluids; |
• | providing onsite participant wellness coaching; |
• | expanded onsite health consultation services via Wellness Support NowSM program with ability to promote other wellness program initiatives during those meaningful face-to-face teachable moments; |
• | data processing and transmission; and |
• | analytics to identify critical values of lab tests and notification services to individuals and customers to better manage risk. |
• | Biometric screening services; |
• | wellness portals; |
• | wellness assessments; |
• | incentive management services; |
• | year-round education, seminars and activity challenges; |
• | telephonic health coaching for lifestyle and health risk improvement; |
• | data analytics and reporting services; |
• | communication and engagement services; and |
• | wellness program advisory services. |
• | perform screening services for any group size, in any zip code, with consistently high service quality, regardless of location, and tailoring our service deliverables to meet our customer’s needs; |
• | manage the end-to-end screening event process including planning, scheduling, recruitment, training, and reporting through our proprietary Event Management SystemSM platform, creating a turnkey solution for our customers; |
• | leverage the screening events to educate and promote other wellness services to participants; |
• | build highly flexible, customizable wellness portals for clients that desire the ability to build their programs and incentive designs “made to order”; |
• | deliver an engaging, personalized wellness portal experience for participants (branded and tailored for each client); and |
• | deliver effective health coaching for participants via our in-house health coaches, all who have a minimum four year degree in a health-related field and are experts in inspiring and driving behavior change. |
ITEM 1A | Risk Factors |
• | require us to dedicate a greater percentage of our cash flow from operations to payments on our debt, thereby reducing the availability of cash flow to fund capital expenditures, pursue other investments, and use for general corporate purposes; |
• | increase our vulnerability to adverse economic and industry conditions, including increases in interest rates on our borrowings that bear interest at variable rates or when such indebtedness is being refinanced; |
• | limit our ability to obtain additional financing; and |
• | limit our flexibility in planning for, or reacting to, changes in or challenges related to our business and industry, creating competitive disadvantages compared to other competitors with lower debt levels and borrowing costs. |
• | diversion of management attention from operations; |
• | ability to retain the clients of the acquired business; |
• | the lingering effects of poor client relations or service performance by the acquired business, which also may taint our existing businesses; |
• | the inability to retain the desirable management, key personnel and other employees of the acquired business; |
• | ability to fully realize the desired synergies, efficiencies and economies of scale; |
• | ability to establish, implement or police the acquired business's adherence to our existing standards, controls, procedures and policies; |
• | exposure to client, employee and other legal claims for activities of the acquired business prior to acquisition; |
• | difficulty in managing geographically separated organizations, systems and facilities; |
• | accounting, regulatory or compliance issues that could arise, including internal control over financial reporting; and |
• | unforeseen obstacles and costs in the integration process. |
ITEM 1B | Unresolved Staff Comments |
ITEM 2 | Properties |
ITEM 3 | Legal Proceedings |
ITEM 4 | Mine Safety Disclosures |
ITEM 5 | Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
2015 | 2014 | |||||||
Quarter | High | Low | High | Low | ||||
First | $0.63 | $0.44 | $0.70 | $0.50 | ||||
Second | $0.52 | $0.19 | $0.75 | $0.58 | ||||
Third | $0.28 | $0.11 | $0.80 | $0.56 | ||||
Fourth | $0.23 | $0.06 | $0.63 | $0.49 |
ITEM 6 | Selected Financial Data |
(in thousands except for share data and footnotes) | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Statement of operations data: | (Unaudited) | |||||||||||||||||||
Revenues | $ | 32,115 | $ | 28,524 | $ | 24,171 | $ | 22,136 | $ | 19,220 | ||||||||||
Operating loss from continuing operations | (8,539 | ) | (a) | (5,651 | ) | (b) | (12,181 | ) | (c) | (9,734 | ) | (d) | (10,500 | ) | ||||||
Interest expense, net | (1,796 | ) | — | (81 | ) | 16 | 44 | |||||||||||||
Loss from continuing operations | (10,354 | ) | (5,913 | ) | (12,680 | ) | (9,774 | ) | (10,531 | ) | ||||||||||
(Loss) income from discontinued operations | (520 | ) | (2,562 | ) | 1,405 | (7,824 | ) | 7,007 | (e) | |||||||||||
Net loss | (10,874 | ) | (8,475 | ) | (11,275 | ) | (17,598 | ) | (3,524 | ) | ||||||||||
Basic and diluted (loss) income per share: | ||||||||||||||||||||
Continuing operations | $ | (0.14 | ) | $ | (0.08 | ) | $ | (0.18 | ) | $ | (0.14 | ) | $ | (0.15 | ) | |||||
Discontinued operations | — | (0.04 | ) | 0.02 | (0.11 | ) | 0.10 | |||||||||||||
Net loss | $ | (0.14 | ) | $ | (0.12 | ) | $ | (0.16 | ) | $ | (0.25 | ) | $ | (0.05 | ) | |||||
Cash dividends per share | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Weighted average shares: | ||||||||||||||||||||
Basic | 76,048,156 | 70,684,452 | 69,965,814 | 69,743,897 | 69,628,135 | |||||||||||||||
Diluted | 76,048,156 | 70,684,452 | 69,965,814 | 69,743,897 | 69,628,135 | |||||||||||||||
Balance sheet data (as of December 31): | (Unaudited) | |||||||||||||||||||
Working capital | $ | (7,520 | ) | $ | 2,887 | $ | 9,387 | (f) | $ | 19,205 | (g) | $ | 28,323 | (g) | ||||||
Total assets | $ | 17,846 | $ | 13,139 | $ | 21,646 | $ | 36,418 | $ | 53,281 | ||||||||||
Stockholders’ equity | $ | 217 | $ | 5,357 | $ | 13,300 | $ | 23,861 | $ | 40,749 |
(b) | Includes restructuring charges of $0.1 million and gain on sale of real estate of $1.8 million. |
(c) | Includes impairment charges of $0.2 million and restructuring charges of $0.8 million. |
(d) | Includes restructuring charges of $0.5 million. |
(e) | Includes a reduction of cost of operations totaling $0.5 million relating to a refund received from a supplier pertaining to improperly charged sales tax on purchased materials. |
(f) | Includes assets held for sale of $2.3 million as of December 31, 2013. |
(g) | Includes assets and liabilities of the discontinued Portamedic, Heritage Labs and Hooper Holmes Services operations. |
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Revenues | $ | 32,115 | $ | 28,524 | $ | 24,171 | |||||
Cost of operations | 25,590 | 21,737 | 17,767 | ||||||||
Gross profit | $ | 6,525 | $ | 6,787 | $ | 6,404 | |||||
Selling, general and administrative expense | 14,037 | 14,138 | 17,571 | ||||||||
Transaction costs | 1,027 | — | — | ||||||||
(Gain) on sale of real estate | — | (1,846 | ) | — | |||||||
Impairment and restructuring | — | 146 | 1,014 | ||||||||
Interest expense, net | 1,796 | — | 81 | ||||||||
Other expense, net | — | 239 | 399 | ||||||||
Income tax expense | 19 | 23 | 19 | ||||||||
Loss from continuing operations | $ | (10,354 | ) | $ | (5,913 | ) | $ | (12,680 | ) | ||
Loss from discontinued operations, net of tax | (520 | ) | (3,301 | ) | (2,025 | ) | |||||
Gain on sale of subsidiaries, net of adjustments | — | 739 | 3,430 | ||||||||
Net loss | $ | (10,874 | ) | $ | (8,475 | ) | $ | (11,275 | ) |
(in thousands) | 2015 | 2014 | 2013 | ||||||||
Net loss | $ | (10,874 | ) | $ | (8,475 | ) | $ | (11,275 | ) | ||
Plus: | |||||||||||
Interest expense, net | 623 | — | 81 | ||||||||
Amortization of deferred financing fees | 385 | 343 | 298 | ||||||||
Accretion of debt discount on warrants | 780 | — | — | ||||||||
Accretion of termination fees | 88 | — | — | ||||||||
Mark to market of the additional warrant feature | (80 | ) | — | — | |||||||
Income tax expense | 19 | 23 | 19 | ||||||||
Depreciation and amortization | 2,211 | 1,220 | 2,200 | ||||||||
EBITDA | (6,848 | ) | (6,889 | ) | (8,677 | ) | |||||
Share-based compensation expense | 440 | 503 | 643 | ||||||||
Transaction costs | 1,027 | — | — | ||||||||
Impairment | — | — | 212 | ||||||||
Gain on sale of real estate | — | (1,846 | ) | — | |||||||
Restructuring charges | — | 146 | 802 | ||||||||
Transition costs | 701 | 1,885 | — | ||||||||
Gain on sale of subsidiaries, net of adjustments | — | (889 | ) | (3,430 | ) | ||||||
Close-out cost of 2013 Portamedic sale | 168 | 150 | — | ||||||||
Adjusted EBITDA | (4,512 | ) | (6,940 | ) | (10,450 | ) |
• | the number of health screenings completed; |
• | the number of enrollments in health coaching services; |
• | the number of subscribers to the wellness portal services; |
• | the quality scores of our Health Professionals; |
• | the aggregate of travel expenditures incurred by our Health Professionals; and |
• | budget to actual performance for the Health and Wellness operations. |
For the years ended December 31, | Increase | |||||||||||||||||
(in thousands) | 2015 | 2014 | 2013 | 2015 vs. 2014 | 2014 vs. 2013 | |||||||||||||
Revenue | $ | 32,115 | $ | 28,524 | $ | 24,171 | 12.6 | % | 18.0 | % |
For the years ended December 31, | Increase | ||||||||||||||
2015 | 2014 | 2013 | 2015 vs. 2014 | 2014 vs. 2013 | |||||||||||
Number of Screenings | 515,000 | 474,000 | 416,000 | 8.6 | % | 13.9 | % |
For the Years Ended December 31, | |||||||||||||||||||||
(in thousands) | 2015 | % of Revenue | 2014 | % of Revenue | 2013 | % of Revenue | |||||||||||||||
Cost of Operations | $ | 25,590 | 79.7 | % | $ | 21,737 | 76.2 | % | $ | 17,767 | 73.5 | % |
For the years ended December 31, | Decrease (Increase) | |||||||||||||||||||
(in thousands) | 2015 | 2014 | 2013 | 2015 vs. 2014 | 2014 vs. 2013 | |||||||||||||||
Total | $ | 14,037 | $ | 14,138 | $ | 17,571 | $ | 101 | $ | 3,433 |
• | On January 25, 2016, we completed a rights offering to current shareholders, in which we raised $3.5 million that is being used to fund working capital. Refer to Note 17 to the consolidated financial statements for additional discussion regarding the rights offering; |
• | On March 28, 2016, we received $1,200,000 in additional equity by issuing 10,000,000 shares of our common stock, $0.04 par value, to 200 NNH, LLC, which will be used to fund working capital. Refer to Note 17 to the consolidated financial statements for additional discussion regarding the additional equity raised; |
• | On March 28, 2016, we renegotiated our financial covenants in the 2013 Loan and Security Agreement and the Credit Agreement to requirements based on our forecast models; |
• | We will continue to implement further cost actions and efficiency improvements; |
• | We will continue to aggressively seek new and return business from our existing customers and expand our presence in the Health and Wellness marketplace; |
• | We may sell additional equity or pursue other capital market transactions; and |
• | We expect to continue to carefully manage receipts and disbursements, including amounts and timing, focusing on reducing days receivables outstanding and managing days payables outstanding. |
• | a net loss of $10.9 million, offset by non-cash charges of $3.4 million in depreciation and amortization expense, amortization of debt discount, and amortization of deferred financing fees; and $0.4 million in share-based compensation expense; |
• | capital expenditures of $0.8 million; and |
• | an increase in accounts receivable of $1.5 million. |
• | a decrease in accounts receivable of $5.1 million, primarily due to the collection of accounts receivable from the discontinued Heritage Labs and Hooper Holmes services customers partially offset by higher current year Health and Wellness screening volumes and related revenue during the year; and |
• | a decrease in accounts payable, accrued expenses, and other long-term liabilities of $0.5 million. |
• | a decrease in accounts receivable of $9.0 million, primarily due to reduced revenues during the fourth quarter of 2013 compared to the fourth quarter of 2012 following the sale of Portamedic; and |
• | a decrease in accounts payable, accrued expenses, and other long-term liabilities of $4.3 million. |
Payments Due by Period | ||||||||||||||||||||
(In thousands) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
2013 Loan and Security Agreement | $ | 3,278 | $ | 3,278 | $ | — | $ | — | $ | — | ||||||||||
Term Loan | $ | 5,000 | $ | 5,000 | $ | — | $ | — | $ | — | ||||||||||
Operating Lease Obligations | $ | 4,967 | $ | 1,847 | $ | 3,120 | $ | — | $ | — | ||||||||||
Employment Contracts | $ | 1,171 | $ | 1,171 | — | — | — | |||||||||||||
Total | $ | 14,416 | $ | 11,296 | $ | 3,120 | $ | — | $ | — |
ITEM 7A | Quantitative and Qualitative Disclosures About Market Risk |
ITEM 8 | Financial Statements and Supplementary Data |
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | |
Consolidated Financial Statements: | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets – December 31, 2015 and 2014 | |
Consolidated Statements of Operations – Years ended December 31, 2015, 2014 and 2013 | |
Consolidated Statements of Stockholders’ Equity – Years ended December 31, 2015, 2014 and 2013 | |
Consolidated Statements of Cash Flows – Years ended December 31, 2015, 2014 and 2013 | |
Notes to Consolidated Financial Statements | |
Quarterly Financial Data (Unaudited) |
December 31, 2015 | December 31, 2014 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 2,035 | $ | 5,201 | ||||
Accounts receivable, net of allowance for doubtful accounts of $112 and $87 at December 31, 2015 and 2014, respectively | 5,565 | 3,178 | ||||||
Inventories | 567 | 897 | ||||||
Other current assets | 331 | 202 | ||||||
Total current assets | 8,498 | 9,478 | ||||||
Property, plant and equipment, net | 2,771 | 3,054 | ||||||
Intangible assets | 5,331 | — | ||||||
Goodwill | 633 | — | ||||||
Other assets | 613 | 607 | ||||||
Total assets | $ | 17,846 | $ | 13,139 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 5,339 | $ | 2,508 | ||||
Accrued expenses | 5,186 | 4,083 | ||||||
Short-term debt | 5,493 | — | ||||||
Total current liabilities | 16,018 | 6,591 | ||||||
Other long-term liabilities | 1,611 | 1,191 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Stockholders’ Equity: | ||||||||
Common stock, par value $.04 per share; Authorized 240,000,000 shares; Issued: 78,025,998 shares and 70,875,998 shares at December 31, 2015 and 2014, respectively. Outstanding: 78,016,603 shares and 70,866,603 shares at December 31, 2015 and 2014, respectively | 3,121 | 2,835 | ||||||
Additional paid-in capital | 156,195 | 150,747 | ||||||
Accumulated deficit | (159,028 | ) | (148,154 | ) | ||||
288 | 5,428 | |||||||
Less: Treasury stock, at cost; 9,395 shares as of December 31, 2015 and 2014 | (71 | ) | (71 | ) | ||||
Total stockholders' equity | 217 | 5,357 | ||||||
Total liabilities and stockholders' equity | $ | 17,846 | $ | 13,139 | ||||
See accompanying notes to consolidated financial statements. |
Years ended December 31, | ||||||||||||
2015 | 2014 | 2013 | ||||||||||
Revenues | $ | 32,115 | $ | 28,524 | $ | 24,171 | ||||||
Cost of operations | 25,590 | 21,737 | 17,767 | |||||||||
Gross profit | 6,525 | 6,787 | 6,404 | |||||||||
Selling, general and administrative expenses | 14,037 | 14,138 | 17,571 | |||||||||
Transaction costs | 1,027 | — | — | |||||||||
Gain on sale of real estate | — | (1,846 | ) | — | ||||||||
Impairment | — | — | 212 | |||||||||
Restructuring charges | — | 146 | 802 | |||||||||
Operating loss from continuing operations | (8,539 | ) | (5,651 | ) | (12,181 | ) | ||||||
Other (expense) income: | ||||||||||||
Interest expense, net | (1,796 | ) | — | (81 | ) | |||||||
Other expense, net | — | (239 | ) | (399 | ) | |||||||
(1,796 | ) | (239 | ) | (480 | ) | |||||||
Loss from continuing operations before income taxes | (10,335 | ) | (5,890 | ) | (12,661 | ) | ||||||
Income tax expense | 19 | 23 | 19 | |||||||||
Loss from continuing operations | (10,354 | ) | (5,913 | ) | (12,680 | ) | ||||||
Discontinued operations: | ||||||||||||
Loss from discontinued operations, net of tax | (520 | ) | (3,301 | ) | (2,025 | ) | ||||||
Gain on sale of subsidiaries, net of adjustments | — | 739 | 3,430 | |||||||||
Income (loss) from discontinued operations | $ | (520 | ) | $ | (2,562 | ) | $ | 1,405 | ||||
Net loss | $ | (10,874 | ) | $ | (8,475 | ) | $ | (11,275 | ) | |||
Basic and diluted (loss) earnings per share: | ||||||||||||
Continuing operations | ||||||||||||
Basic | $ | (0.14 | ) | $ | (0.08 | ) | $ | (0.18 | ) | |||
Diluted | $ | (0.14 | ) | $ | (0.08 | ) | $ | (0.18 | ) | |||
Discontinued operations | ||||||||||||
Basic | $ | — | $ | (0.04 | ) | $ | 0.02 | |||||
Diluted | $ | — | $ | (0.04 | ) | $ | 0.02 | |||||
Net loss | ||||||||||||
Basic | $ | (0.14 | ) | $ | (0.12 | ) | $ | (0.16 | ) | |||
Diluted | $ | (0.14 | ) | $ | (0.12 | ) | $ | (0.16 | ) | |||
Weighted average number of shares: | ||||||||||||
Basic | 76,048,156 | 70,684,452 | 69,965,814 | |||||||||
Diluted | 76,048,156 | 70,684,452 | 69,965,814 |
Common Stock | Treasury Stock | |||||||||||||||||||||||||
Number of Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Number of Shares | Amount | Total Stockholders' Equity | ||||||||||||||||||||
Balance, December 31, 2012 | 69,844,782 | $ | 2,794 | $ | 149,542 | $ | (128,404 | ) | (9,395 | ) | $ | (71 | ) | $ | 23,861 | |||||||||||
Net loss | (11,275 | ) | (11,275 | ) | ||||||||||||||||||||||
Exercise of share-based awards | 182,930 | 7 | 64 | 71 | ||||||||||||||||||||||
Share-based compensation | 354,832 | 14 | 629 | 643 | ||||||||||||||||||||||
Balance, December 31, 2013 | 70,382,544 | 2,815 | 150,235 | (139,679 | ) | (9,395 | ) | (71 | ) | 13,300 | ||||||||||||||||
Net loss | (8,475 | ) | (8,475 | ) | ||||||||||||||||||||||
Exercise of share-based awards | 57,300 | 2 | 27 | 29 | ||||||||||||||||||||||
Share-based compensation | 436,154 | 18 | 485 | 503 | ||||||||||||||||||||||
Balance, December 31, 2014 | 70,875,998 | 2,835 | 150,747 | (148,154 | ) | (9,395 | ) | (71 | ) | 5,357 | ||||||||||||||||
Net loss | (10,874 | ) | (10,874 | ) | ||||||||||||||||||||||
Exercise of share-based awards | 50,000 | 2 | 21 | 23 | ||||||||||||||||||||||
Share-based compensation | 600,000 | 24 | 416 | 440 | ||||||||||||||||||||||
Issuance of common stock | 6,500,000 | 260 | 2,740 | 3,000 | ||||||||||||||||||||||
Issuance of warrant | 2,656 | 2,656 | ||||||||||||||||||||||||
Amortization of deferred financing related to warrant | (385 | ) | (385 | ) | ||||||||||||||||||||||
Balance, December 31, 2015 | 78,025,998 | $ | 3,121 | $ | 156,195 | $ | (159,028 | ) | (9,395 | ) | (71 | ) | $ | 217 |
Years ended December 31, | |||||||||||
2015 | 2014 | 2013 | |||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | (10,874 | ) | $ | (8,475 | ) | $ | (11,275 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Gain on sale of real estate, net | — | (1,846 | ) | — | |||||||
Gain on sale of subsidiaries, net of adjustments | — | (739 | ) | (3,430 | ) | ||||||
Depreciation and amortization | 2,211 | 1,220 | 2,200 | ||||||||
Amortization of debt discount | 780 | — | — | ||||||||
Amortization of deferred financing fees | 385 | 343 | 298 | ||||||||
Provision for bad debt expense | 61 | 85 | (380 | ) | |||||||
Share-based compensation expense | 440 | 503 | 643 | ||||||||
Impairment of long-lived assets, loss on disposal of fixed assets and other | — | 181 | 416 | ||||||||
Change in assets and liabilities: | |||||||||||
Accounts receivable | (1,530 | ) | 5,135 | 9,000 | |||||||
Inventories | 215 | (300 | ) | (62 | ) | ||||||
Other assets | (459 | ) | 1,005 | (184 | ) | ||||||
Accounts payable, accrued expenses and other liabilities | 2,474 | (542 | ) | (4,255 | ) | ||||||
Net cash used in operating activities | (6,297 | ) | (3,430 | ) | (7,029 | ) | |||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (793 | ) | (1,409 | ) | (1,550 | ) | |||||
Acquisition of Accountable Health Solutions | (4,000 | ) | — | — | |||||||
Proceeds from sale of real estate, net of closing costs | — | 2,544 | — | ||||||||
Proceeds from the sale of Heritage Labs and Hooper Holmes Services | — | 3,539 | — | ||||||||
Cost paid to sell Heritage Labs and Hooper Holmes Services | — | (777 | ) | — | |||||||
Proceeds from the sale of Portamedic | — | 743 | 6,053 | ||||||||
Costs paid to sell Portamedic | — | — | (781 | ) | |||||||
Net cash (used in) provided by investing activities | (4,793 | ) | 4,640 | 3,722 | |||||||
Cash flows from financing activities: | |||||||||||
Borrowings under credit facility | 19,190 | — | 50,827 | ||||||||
Payments under credit facility | (15,912 | ) | — | (50,827 | ) | ||||||
Proceeds from issuance of Term Loan | 5,000 | — | — | ||||||||
Debt financing fees | (377 | ) | — | (999 | ) | ||||||
Proceeds related to the exercise of stock options | 23 | 29 | 71 | ||||||||
Payments on capital lease obligations | — | (8 | ) | (114 | ) | ||||||
Net cash provided by (used in) financing activities | 7,924 | 21 | (1,042 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (3,166 | ) | 1,231 | (4,349 | ) | ||||||
Cash and cash equivalents at beginning of year | 5,201 | 3,970 | 8,319 | ||||||||
Cash and cash equivalents at end of year | $ | 2,035 | $ | 5,201 | $ | 3,970 | |||||
Supplemental disclosure of non-cash investing activities: | |||||||||||
Fixed assets vouchered but not paid | $ | 97 | $ | 163 | $ | 153 | |||||
Debt financing fees vouchered but not paid | $ | 500 | $ | — | $ | — | |||||
Proceeds from sale of Portamedic not received, net of costs not paid | $ | — | $ | — | $ | 1,525 | |||||
Supplemental disclosure of non-cash financing activities: | |||||||||||
Issuance of common stock in connection with the Acquisition | 3,000 | — | — | ||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 516 | $ | — | $ | 82 | |||||
Income taxes | $ | 41 | $ | 53 | $ | 62 |
(a) | Description of the Business |
(b) | Principles of Consolidation |
(c) | Cash and Cash Equivalents |
(d) | Accounts Receivable |
(e) | Inventories |
(f) | Property, Plant and Equipment |
(g) | Long-Lived Assets |
(h) | Goodwill |
(i) | Deferred Rent |
(j) | Revenue Recognition |
(k) | Share-Based Compensation |
(l) | Income Taxes |
(m) | (Loss) Earnings per Common Share |
(n) | Use of Estimates |
(o) | Concentration of Credit Risk |
(p) | New Accounting Pronouncements |
• | On January 25, 2016, the Company completed a rights offering to current shareholders, in which it raised $3.5 million that is being used to fund working capital. Refer to Note 17 to the consolidated financial statements for additional discussion regarding the rights offering; |
• | On March 28, 2016, the Company received $1,200,000 in additional equity by issuing 10,000,000 shares of its common stock, $0.04 par value, to 200 NNH, LLC, which will be used to fund working capital. Refer to Note 17 to the consolidated financial statements for additional discussion regarding the additional equity raised; |
• | On March 28, 2016, the Company renegotiated its financial covenants in the 2013 Loan and Security Agreement and the Credit Agreement to requirements based on its forecast models; |
• | The Company will continue to implement further cost actions and efficiency improvements; |
• | The Company will continue to aggressively seek new and return business from its existing customers and expand its presence in the Health and Wellness marketplace; |
• | The Company may sell additional equity or pursue other capital market transactions; and |
• | The Company expects to continue to carefully manage receipts and disbursements, including amounts and timing, focusing on reducing days receivables outstanding and managing days payables outstanding. |
(in thousands) | ||||
Credit Agreement | $ | 5,000 | ||
Cash consideration | (4,000 | ) | ||
Net proceeds from Credit Agreement | 1,000 | |||
Term Loan | 5,000 | |||
Debt discount associated with Warrant | (2,656 | ) | ||
Derivative liability with additional warrant feature | (908 | ) | ||
Net debt recorded with Acquisition | 1,436 | |||
Common Stock (6,500,000 shares at $0.04 par) | 260 | |||
Additional paid-in capital: issuance of shares | 2,740 | |||
Additional paid-in capital: fair value of Warrant | 2,656 | |||
Net increase to APIC with Acquisition | $ | 5,396 |
(in thousands) | ||||
Accounts receivable, net of allowance of $2 | $ | 918 | ||
Inventory and other current assets | 117 | |||
Fixed assets | 123 | |||
Customer portal (existing technologies) | 4,151 | |||
Customer relationships | 2,097 | |||
Goodwill | 633 | |||
Accounts payable and accrued expenses | (743 | ) | ||
Deferred revenue | (296 | ) | ||
Purchase Price | $ | 7,000 |
December 31, | ||||||||
(in thousands) | 2015 | 2014 | ||||||
Pro forma revenues | $ | 34,996 | $ | 44,087 | ||||
Pro forma net loss from continuing operations | $ | (10,847 | ) | $ | (12,372 | ) |
2015 | 2014 | 2013 | |||||||
Expected life (years) | 4.9 | 5.3 | 5.4 | ||||||
Expected volatility | 68.9 | % | 82.9 | % | 89.6 | % | |||
Expected dividend yield | — | — | — | ||||||
Risk-free interest rate | 1.7 | % | 1.8 | % | 1.5 | % | |||
Weighted average fair value of options granted during the year | $0.18 | $0.39 | $0.34 |
Weighted | ||||||||||
Weighted Average | Average Remaining | Aggregate Intrinsic | ||||||||
Number of Shares | Exercise Price Per Share | Contractual Life (years) | Value (in thousands) | |||||||
Outstanding at December 31, 2014 | 3,652,200 | $0.67 | ||||||||
Granted | 2,050,000 | $0.32 | ||||||||
Exercised | (50,000 | ) | 0.45 | |||||||
Forfeited and Expired | (1,253,500 | ) | $0.94 | |||||||
Outstanding at December 31, 2015 | 4,398,700 | $0.43 | 8.3 | $0 | ||||||
Exercisable at December 31, 2015 | 1,905,721 | $0.53 | 7.4 | $0 |
(in thousands) | 2015 | 2014 | 2013 | ||||||
Revenues | |||||||||
Heritage Labs | $ | 177 | $ | 4,393 | $ | 10,367 | |||
Hooper Holmes Services | — | 7,289 | 14,622 | ||||||
Total revenue | 177 | 11,682 | 24,989 | ||||||
Cost of Sales | |||||||||
Heritage Labs | 73 | 3,576 | 7,221 | ||||||
Hooper Holmes Services | — | 6,254 | 12,629 | ||||||
Total cost of sales | 73 | 9,830 | 19,850 | ||||||
Selling, General & Administrative Expenses | |||||||||
Heritage Labs | (3 | ) | 379 | 604 | |||||
Hooper Holmes Services | (134 | ) | 1,625 | 2,110 | |||||
Tail coverage insurance expense | — | 1,390 | — | ||||||
Total selling, general & administrative expenses | (137 | ) | 3,394 | 2,714 | |||||
Income (Loss) from Discontinued Operations | |||||||||
Heritage Labs | 107 | 438 | 2,542 | ||||||
Hooper Holmes Services | 134 | (590 | ) | (117 | ) | ||||
Tail coverage insurance expense | — | (1,390 | ) | — | |||||
Total income (loss) from discontinued operations | 241 | (1,542 | ) | 2,425 | |||||
Reconciliation to statement of operations: | |||||||||
Portamedic discontinued operations and other (see below) | (761 | ) | (1,759 | ) | (4,450 | ) | |||
Gain on sale of subsidiaries, net of adjustments | — | 739 | 3,430 | ||||||
(Loss) income from discontinued operations | $ | (520 | ) | $ | (2,562 | ) | $ | 1,405 | |
(In thousands) | December 31, 2013 | Adjustments | Payments | December 31, 2014 | |||||||||||
Severance | $ | 531 | $ | 202 | $ | (733 | ) | $ | — | ||||||
Facility closure obligation | 415 | 1,097 | (438 | ) | 1,074 | ||||||||||
Total | 946 | 1,299 | (1,171 | ) | 1,074 | ||||||||||
December 31, 2014 | Adjustments | Payments | December 31, 2015 | ||||||||||||
Facility closure obligation | 1,074 | (15 | ) | (402 | ) | 657 |
Estimated | ||||||||||
December 31, | Useful Life | |||||||||
2015 | 2014 | In Years | ||||||||
Building and leasehold improvements | $ | 1,386 | $ | 1,386 | 3 – 45 | |||||
Furniture, fixtures and equipment | 4,040 | 3,586 | 2 – 10 | |||||||
Software | 3,001 | 2,443 | 1 – 7 | |||||||
8,427 | 7,415 | |||||||||
Less: accumulated depreciation and amortization | 5,656 | 4,361 | ||||||||
Total | $ | 2,771 | $ | 3,054 |
(in thousands) | |||
2015 | |||
Beginning balance at January 1, | $ | — | |
Goodwill recorded in connection with Acquisition | 633 | ||
Ending balance at December 31, | 633 |
(in thousands) | December 31, 2015 | ||||||
Gross Carrying Amount | Accumulated Amortization | ||||||
Portal | $ | 4,151 | $ | 732 | |||
Customer relationships | 2,097 | 185 | |||||
Total | $ | 6,248 | $ | 917 | |||
Intangible assets, net | $ | 5,331 |
(in thousands) | ||||
Year ending December 31, | ||||
2016 | $ | 1,300 | ||
2017 | 1,300 | |||
2018 | 1,300 | |||
2019 | 565 | |||
2020 | 262 |
December 31, | ||||||||
(in thousands) | 2015 | 2014 | ||||||
Accrued wages | $ | 712 | $ | 371 | ||||
Reserve for unclaimed property | 1,035 | 984 | ||||||
Restructure reserves | 443 | 502 | ||||||
Legal accrual | 300 | — | ||||||
Deferred revenue | 1,031 | 332 | ||||||
Tail coverage insurance | — | 810 | ||||||
Other accrued expenses | 1,665 | 1,084 | ||||||
$ | 5,186 | $ | 4,083 |
(in thousands) | December 31, 2015 | |||
2013 Loan and Security Agreement | 3,278 | |||
Term Loan | 5,000 | |||
Discount on Term Loan | (2,785 | ) | ||
Total debt | 5,493 | |||
Short term portion | (5,493 | ) | ||
Total long-term debt, net of discount | $ | — |
(in thousands) | |||
December 31, 2015 | |||
Interest expense on Term Loan (interest at LIBOR, plus 14%) | 529 | ||
Interest expense on 2013 Loan and Security Agreement | 94 | ||
Accretion of termination fees (over term of Term Loan at rate of 8%) | 88 | ||
Amortization of deferred financing costs | 385 | ||
Accretion of debt discount associated with Warrant | 581 | ||
Accretion of discount associated with additional warrant feature | 199 | ||
Mark to market of the additional warrant feature | (80 | ) | |
Total | 1,796 |
(in thousands) | ||||
Year ending December 31, | Operating Leases | |||
2016 | $ | 1,847 | ||
2017 | 1,773 | |||
2018 | 1,347 | |||
2019 | — | |||
2020 | — | |||
Thereafter | — | |||
Total minimum lease payments | $ | 4,967 | ||
Estimated sublease payments (not included in minimum lease payments) | $ | (1,018 | ) | |
$ | 3,949 |
2015 | 2014 | 2013 | ||||||||||
Federal - current | $ | — | $ | — | $ | — | ||||||
State and local - current | 12 | 23 | 19 | |||||||||
Federal - deferred | $ | 6 | $ | — | $ | — | ||||||
State and local - deferred | $ | 1 | $ | — | $ | — | ||||||
Total income tax expense | 19 | 23 | 19 |
2015 | 2014 | 2013 | |||||||
Computed "expected" income tax benefit | (35 | )% | (35 | )% | (35 | )% | |||
Reduction (increase) in income tax benefit and increase (reduction) in income tax expense resulting from: | |||||||||
State tax, net of federal benefit | — | — | — | ||||||
Change in federal valuation allowance | 35 | 35 | 35 | ||||||
Other | — | — | — | ||||||
Effective income tax rate | — | % | — | % | — | % |
2015 | 2014 | |||||||
Deferred tax assets: | ||||||||
Receivable allowance | $ | 43 | $ | 34 | ||||
Goodwill | — | 347 | ||||||
Accumulated depreciation | 214 | — | ||||||
Restructuring accrual | 376 | 45 | ||||||
Intangible assets | 484 | 219 | ||||||
Compensation expense | 417 | 690 | ||||||
Federal net operating loss carryforward | 58,532 | 55,865 | ||||||
State net operating loss carryforward | 6,040 | 6,502 | ||||||
Accrued expenses | 344 | 17 | ||||||
Deferred rent | 102 | 102 | ||||||
Deferred revenue | 343 | — | ||||||
Other | 43 | 18 | ||||||
Gross deferred tax assets | $ | 66,938 | $ | 63,839 | ||||
Valuation allowance | (66,929 | ) | (63,817 | ) | ||||
$ | 9 | $ | 22 | |||||
Deferred tax liabilities: | ||||||||
Impairment and accumulated depreciation | — | (22 | ) | |||||
Interest | (9 | ) | — | |||||
Goodwill | (7 | ) | — | |||||
Gross deferred tax liabilities | (16 | ) | (22 | ) | ||||
Net deferred tax assets | $ | (7 | ) | $ | — |
• | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. |
• | Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
• | Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
December 31, 2015 | ||||||||||||
(in thousands) | Face Value | Fair Value | Carrying Amount | |||||||||
Term Loan | $ | 5,000 | $ | 3,837 | $ | 2,215 | ||||||
Derivative liability | 1,250 | $ | 828 | 828 |
December 31, 2015 | Additional Equity Raised | Pro Forma including Additional Equity | |||||||
(in thousands) | |||||||||
Cash | $ | 2,035 | $ | 4,712 | $ | 6,747 | |||
Stockholder's equity: | |||||||||
Common stock, par value $.04 per share; Authorized: 240,000,000 shares; Issued: 78,025,998 shares; Outstanding: 78,016,603 shares, at December 31, 2015: 117,052,837 issued and 117,043,442 outstanding shares, as adjusted | 3,121 | 1,961 | 5,082 | ||||||
Additional paid-in capital | 156,195 | 2,751 | 158,946 | ||||||
Accumulated deficit | (159,028 | ) | — | (159,028 | ) | ||||
Less: Treasury stock, at cost; 9,395 shares at December 31, 2015 | (71 | ) | — | (71 | ) | ||||
Total stockholders’ equity | $ | 217 | $ | 4,712 | $ | 4,929 |
2015 Quarters | ||||||||||||
First | Second | Third | Fourth | |||||||||
Revenues | $ | 5,681 | $ | 7,662 | $ | 9,272 | $ | 9,499 | ||||
Gross profit | 732 | 1,693 | 2,129 | 1,971 | ||||||||
Loss from continuing operations | (2,103 | ) | (3,342 | ) | (2,061 | ) | (2,848 | ) | ||||
(Loss) income from discontinued operations | (4 | ) | (21 | ) | (57 | ) | (438 | ) | ||||
Net loss | (2,107 | ) | (3,363 | ) | (2,118 | ) | (3,286 | ) | ||||
Basic (loss) earnings per share (a) | ||||||||||||
Loss from continuing operations | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.04 | ) |
(Loss) income from discontinued operations | — | — | — | (0.01 | ) | |||||||
Net loss | (0.03 | ) | (0.05 | ) | (0.03 | ) | (0.04 | ) | ||||
Diluted (loss) earnings per share (a) | ||||||||||||
Loss from continuing operations | $ | (0.03 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.04 | ) |
(Loss) income from discontinued operations | — | — | — | (0.01 | ) | |||||||
Net loss | (0.03 | ) | (0.05 | ) | (0.03 | ) | (0.04 | ) | ||||
2014 Quarters | ||||||||||||
First | Second | Third | Fourth | |||||||||
Revenues | $ | 7,299 | $ | 6,679 | $ | 7,875 | $ | 6,671 | ||||
Gross profit | 1,656 | 2,150 | 1,854 | 1,127 | ||||||||
Loss from continuing operations | (2,851 | ) | (1,911 | ) | 77 | (1,229 | ) | |||||
Income (loss) from discontinued operations | 166 | (902 | ) | (1,385 | ) | (440 | ) | |||||
Net loss | (2,685 | ) | (2,813 | ) | (1,308 | ) | (1,669 | ) | ||||
Basic (loss) income per share (a) | ||||||||||||
Loss from continuing operations | $ | (0.04 | ) | $ | (0.03 | ) | $ | — | $ | (0.02 | ) | |
(Loss) income from discontinued operations | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | |||||
Net loss | (0.04 | ) | (0.04 | ) | (0.02 | ) | (0.02 | ) | ||||
Diluted (loss) income per share (a) | ||||||||||||
Loss from continuing operations | $ | (0.04 | ) | $ | (0.03 | ) | $ | — | $ | (0.02 | ) | |
(Loss) income from discontinued operations | — | (0.01 | ) | (0.02 | ) | (0.01 | ) | |||||
Net loss | (0.04 | ) | (0.04 | ) | (0.02 | ) | (0.02 | ) | ||||
ITEM 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
ITEM 9A | Controls and Procedures |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements. |
ITEM 9B | Other Information |
ITEM 10 | Directors, Executive Officers and Corporate Governance |
ITEM 11 | Executive Compensation |
ITEM 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
ITEM 13 | Certain Relationships and Related Transactions, and Director Independence |
ITEM 14 | Principal Accountant Fees and Services |
ITEM 15 | Exhibits and Financial Statement Schedules |
(a) | (1) The following financial statements and independent auditors’ report are included in this Report. |
(b) | EXHIBIT INDEX |
Exhibit Number | Item | ||
2.1 | Strategic Alliance Agreement dated April 16, 2014 by and among Hooper Holmes, Inc., Heritage Labs International, LLC (“HLI”), Mid-America Agency Services, Incorporated and Clinical Reference Laboratory, Inc (1) | ||
2.2 | Amendment Number 1 to the Strategic Alliance Agreement dated August 31, 2014 by and among Hooper Holmes, Inc., Heritage Labs International, LLC, Mid-America Agency Services, Incorporated and Clinical Reference Laboratory, Inc (2) | ||
2.3 | Asset Purchase Agreement dated April 17, 2015 by and among Hooper Holmes, Inc., Jefferson Acquisition, LLC, Hooper Wellness, LLC, Accountable Health Solutions, Inc., and Accountable Health, Inc. (3) | ||
3.1 | Amended and Restated Certificate of Incorporation of Hooper Holmes, Inc. (4) | ||
3.2 | Restated Bylaws of Hooper Holmes, Inc. (5) | ||
4.1 | Warrant dated April 17, 2015, issued by Hooper Holmes, Inc. to SWK Funding LLC. (6) | ||
10.1 | Form of Indemnification Agreement (7) | ||
10.2 | Hooper Holmes, Inc. 1997 Stock Option Plan (8)* | ||
10.3 | Hooper Holmes, Inc. 1997 Director Option Plan (9)* | ||
10.4 | Hooper Holmes, Inc. 1999 Stock Option Plan (10)* | ||
10.5 | Hooper Holmes, Inc. 2002 Stock Option Plan (11)* | ||
10.6 | Hooper Holmes, Inc. 2004 Employee Stock Purchase Plan (12)* | ||
10.7 | Hooper Holmes, Inc. 2007 Non-Employee Director Restricted Stock Plan (13)* | ||
10.8 | Hooper Holmes, Inc. 2008 Omnibus Employee Incentive Plan (14)* | ||
10.9 | Hooper Holmes, Inc. 2011 Omnibus Employee Incentive Plan (15)* | ||
10.10 | Amended and Restated Hooper Holmes, Inc. 2011 Omnibus Incentive Plan (16) | ||
10.11 | Form of Executive Change-in-Control Agreement by and between Hooper Holmes, Inc. and Executive Officers of the Company (17)* | ||
10.12 | Employment Agreement by and between Hooper Holmes, Inc. and Henry E. Dubois (18)* | ||
10.13 | Employment Agreement by and between Hooper Holmes, Inc. and Steven R. Balthazor* | ||
10.14 | Loan and Security Agreement between Hooper Holmes, Inc. and Keltic Financial Partners II, LP dated February 28, 2013 (19) | ||
10.15 | Unconditional and Continuing Guaranty, dated February 28, 2013, between Keltic Financial Partners II, LP and Heritage Labs International, LLC, a Kansas limited liability company, Hooper Distribution Services, LLC, a New Jersey limited liability company, Hooper Information Services, Inc., a New Jersey corporation, Mid-America Agency Services, Incorporated, a Nebraska corporation, and TEG Enterprises, Inc., a Nebraska corporation (20) | ||
10.16 | Pledge Agreement between Hooper Holmes, Inc. and Keltic Financial Partners II, LP dated February 28, 2013 (21) | ||
10.17 | Pledge Agreement between Mid-America Agency Services, Incorporated, a Nebraska corporation, and Keltic Financial Partners II, LP dated February 28, 2013 (22) | ||
10.18 | First Amendment dated March 28, 2013, to Loan and Security Agreement dated February 28, 2013, between Keltic Financial Partners II, LP and Hooper Holmes, Inc. (23) | ||
10.19 | Mortgage and Security Agreement by Hooper Holmes, Inc. in favor of Keltic Financial Partners II, LP, dated March 28, 2013 (24) | ||
10.20 | Second Amendment dated July 9, 2014, to Loan and Security Agreement dated February 28, 2013, between Keltic Financial Partners II, LP and Hooper Holmes, Inc. (25) | ||
10.21 | Consent and Third Amendment dated April 17, 2015, to Loan and Security Agreement dated February 28, 2013, between Keltic Financial Partners II, LP and Hooper Holmes, Inc. (26) | ||
10.22 | Consent and Fourth Amendment dated August 10, 2015, to Loan and Security Agreement dated February 28, 2013, between ACF, as assignee of Keltic Financial Partners II, LP and Hooper Holmes, Inc. (27) | ||
10.23 | General Security Agreement dated April 17, 2015, executed by Jefferson Acquisition, LLC, Hooper Wellness, LLC, Hooper Distribution Services, LLC, Hooper Information Services, Inc., Hooper Kit Services LLC, Mid-America Agency Services, Inc., and TEG Enterprises, Inc., in favor of ACF FinCo I LP (28) |
10.24 | Joinder Agreement and First Amendment to Pledge Agreement dated April 17, 2015, by and among Jefferson Acquisition, LLC, Hooper Wellness, LLC and ACF FinCo I LP, as assignee of Keltic Financial Partners II, LP. (29) | ||
10.25 | Joinder Agreement and First Amendment to Pledge Agreement by and among Hooper Holmes, Inc., Hooper Wellness, LLC and ACF FinCo I LP, as assignee of Keltic Financial Partners II, LP. (30) | ||
10.26 | Credit Agreement dated April 17, 2015, by and among Hooper Holmes, Inc., SWK Funding LLC and the Lenders party thereto from time to time. (31) | ||
10.27 | First Amendment dated February 25, 2016, to Credit Agreement dated April 17, 2015, by and between Hooper Holmes, Inc. and SWK Funding LLC. (32) | ||
10.28 | Guarantee and Collateral Agreement dated April 17, 2015, by and among SWK Funding LLC, Hooper Holmes, Inc. and its subsidiaries. (33) | ||
10.29 | Intercreditor Agreement dated April 17, 2015, by and among SWK Funding LLC and the Lenders party to the Credit Agreement in favor of ACF FincCo I LP, as assignee of Keltic Financial Partners II, LP. (34) | ||
10.30 | Asset Purchase Agreement dated August 15, 2013, by and between Piston Acquisition, Inc. and Hooper Holmes, Inc. (35) | ||
10.31 | First Amendment to Asset Purchase Agreement and Agreement dated September 30, 2013, by and between Hooper Holmes, Inc. and Piston Acquisition, Inc. (36) | ||
10.32 | Limited Guaranty dated August 15, 2013, by Gary Gelman, in favor of Hooper Holmes, Inc. (37) | ||
10.33 | Agreement dated as of August 15, 2013, by and between Hooper Holmes, Inc. and Piston Acquisition, Inc. (38) | ||
10.34 | Limited Laboratory and Administrative Services Agreement dated April 16, 2014 by and between Hooper Holmes, Inc. and Clinical Reference Laboratory, Inc. (39)*** | ||
10.35 | Amendment Number 1 to the Limited Laboratory and Administrative Services Agreement dated August 31, 2014 by and between Hooper Holmes, Inc. and Clinical Reference Laboratory, Inc. (40) | ||
10.36 | Purchase and Sale Agreement dated May 13, 2014 by and between Hooper Holmes, Inc. and McElroy Deutsch Mulvaney & Carpenter, LLP (41) | ||
10.37 | First Amendment to the Purchase and Sale Agreement by and between Hooper Holmes, Inc. and McElroy Deutsch Mulvaney & Carpenter, LLP dated June 13, 2014 (42) | ||
10.38 | Second Amendment to the Purchase and Sale Agreement by and between Hooper Holmes, Inc. and McElroy Deutsch Mulvaney & Carpenter, LLP dated July 1, 2014 (43) | ||
10.39 | Third Amendment to the Purchase and Sale Agreement by and between Hooper Holmes, Inc. and McElroy Deutsch Mulvaney & Carpenter, LLP dated July 7, 2014 (44) | ||
10.40 | Fourth Amendment to the Purchase and Sale Agreement by and between Hooper Holmes, Inc. and McElroy Deutsch Mulvaney & Carpenter, LLP dated July 11, 2014 (45) | ||
10.41 | Fifth Amendment to the Purchase and Sale Agreement by and between Hooper Holmes, Inc. and McElroy Deutsch Mulvaney & Carpenter, LLP dated July 18, 2014 (46) | ||
10.42 | Waiver and Fifth Amendment dated November 10, 2015, to Loan and Security Agreement dated February 28, 2013, between ACF, as assignee of Keltic Financial Partners II, LP and Hooper Holmes, Inc. (47) | ||
10.43 | Stock Purchase Agreement dated March 28, 2016, between Hooper Holmes, Inc. and 200 NNH, LLC | ||
10.44 | Second Amendment dated March 28, 2016, to Credit Agreement dated April 17, 2015, by and between Hooper Holmes, Inc. and SWK Funding LLC | ||
10.45 | Waiver and Sixth Amendment dated March 28, 2016, to Loan and Security Agreement dated February 28, 2013, between ACF, as assignee of Keltic Financial Partners II, LP and Hooper Holmes, Inc. | ||
14 | Hooper Holmes, Inc. Code of Conduct and Ethics (48) | ||
21 | Subsidiaries of Hooper Holmes, Inc. | ||
23 | Consent of KPMG LLP | ||
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended | ||
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as amended | ||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | ||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | ||
101.INS | XBRL Instance Document** | ||
101.SCH | XBRL Taxonomy Extension Schema Document** | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document** |
101.DEF | XBRL Taxonomy Extension Label Linkbase Document** | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document** | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document** |
(1 | ) | Incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014. | |
(2 | ) | Incorporated by reference to Exhibit 2.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014. | |
(3 | ) | Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(4 | ) | Incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K dated June 2, 2010. | |
(5 | ) | Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K dated February 17, 2011. | |
(6 | ) | Incorporated by reference to Exhibit 10.2(d) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(7 | ) | Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated June 17, 2014. | |
(8 | ) | Incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997. | |
(9 | ) | Incorporated by reference to Exhibit 10.11 of Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1997. | |
(10 | ) | Incorporated by reference to Exhibit 10.13 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. | |
(11 | ) | Incorporated by reference to Attachment to the Company's Proxy Statement for the Annual Meeting of Shareholders held on May 21, 2002. | |
(12 | ) | Incorporated by reference to Annex B to the Company's Proxy Statement for the Annual Meeting of Shareholders held on May 29, 2013. | |
(13 | ) | Incorporated by reference to Exhibit 10.15 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007. | |
(14 | ) | Incorporated by reference to Annex A to the Company's Proxy Statement for the Annual Meeting of Shareholders held on May 29, 2008. | |
(15 | ) | Incorporated by reference to Annex A to the Company's Proxy Statement for the Annual Meeting of Shareholders held on May 24, 2011. | |
(16 | ) | Incorporated by reference to Annex A to the Company’s Proxy Statement for the Annual Meeting of Shareholders held on June 11, 2014. | |
(17 | ) | Incorporated by reference to Exhibit 10.11 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. | |
(18 | ) | Incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. | |
(19 | ) | Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated March 6, 2013. | |
(20 | ) | Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K dated March 6, 2013. | |
(21 | ) | Incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K dated March 6, 2013. |
(22 | ) | Incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K dated March 6, 2013. | |
(23 | ) | Incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K dated March 29, 2013. | |
(24 | ) | Incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K dated March 29, 2013. | |
(25 | ) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated July 10, 2014. | |
(26 | ) | Incorporated by reference to Exhibit 10.1(a) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(27 | ) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated August 13, 2015. | |
(28 | ) | Incorporated by reference to Exhibit 10.1(b) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(29 | ) | Incorporated by reference to Exhibit 10.1(c) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(30 | ) | Incorporated by reference to Exhibit 10.1(d) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(31 | ) | Incorporated by reference to Exhibit 10.2(a) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(32 | ) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated March 2, 2016. | |
(33 | ) | Incorporated by reference to Exhibit 10.2(b) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(34 | ) | Incorporated by reference to Exhibit 10.2(c) of the Company’s Current Report on Form 8-K dated April 21, 2015. | |
(35 | ) | Incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. | |
(36 | ) | Incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. | |
(37 | ) | Incorporated by reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. | |
(38 | ) | Incorporated by reference to Exhibit 10.4 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013. | |
(39 | ) | Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended March 31, 2014 | |
(40 | ) | Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014. | |
(41 | ) | Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014. | |
(42 | ) | Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014. | |
(43 | ) | Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014. | |
(44 | ) | Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014. | |
(45 | ) | Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014. | |
(46 | ) | Incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2014. | |
(47 | ) | Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 13, 2015. | |
(48 | ) | Incorporated by reference to Exhibit 14 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. |
Description | Balance at Beginning of Period | Additions Charged to Revenues and Expenses (1) | Deductions (2) | Balance at End of Period | ||||||||||||
Year ended December 31, 2015 | ||||||||||||||||
Reserves and allowances | ||||||||||||||||
Accounts receivable allowance | $ | 87 | $ | 74 | $ | (49 | ) | $ | 112 | |||||||
Year ended December 31, 2014 | ||||||||||||||||
Reserves and allowances | ||||||||||||||||
Accounts receivable allowance | $ | 153 | $ | 85 | $ | (151 | ) | $ | 87 | |||||||
Year ended December 31, 2013 | ||||||||||||||||
Reserves and allowances | ||||||||||||||||
Accounts receivable allowance | $ | 662 | $ | 1,576 | $ | (2,085 | ) | $ | 153 |
(1) | Includes $0 million, $0 million and $1.6 million in 2015, 2014 and 2013, respectively, charged as a reduction to revenues. |
(2) | Represents accounts receivable write-offs, net of recoveries and reserve reductions credited to revenue. |
HOOPER HOLMES, INC. | |||
(Registrant) | |||
March 30, 2016 | By: | /s/ Henry E. Dubois | |
Henry E. Dubois | |||
Chief Executive Officer |
Signature | Title | Date | ||
/s/ Henry E. Dubois | Chief Executive Officer; | March 30, 2016 | ||
Henry E. Dubois | Director | |||
/s/ Ronald V. Aprahamian | March 30, 2016 | |||
Ronald V. Aprahamian | Director | |||
/s/ Mark Emkjer | March 30, 2016 | |||
Mark Emkjer | Director | |||
/s/ Larry Ferguson | March 30, 2016 | |||
Larry Ferguson | Director | |||
/s/ Charles M. Gillman | March 30, 2016 | |||
Charles M. Gillman | Director | |||
/s/ Gus D. Halas | March 30, 2016 | |||
Gus D. Halas | Director | |||
/s/ Thomas A. Watford | March 30, 2016 | |||
Thomas A. Watford | Director | |||
/s/ Steven R. Balthazor | Chief Financial and | March 30, 2016 | ||
Steven R. Balthazor | Accounting Officer | |||
• | Executive’s conviction of or plea of nolo contendere to a felony; |
• | any act of fraud, theft, embezzlement, or gross negligence by Executive, |
• | material dishonesty or misconduct in performance of Executive’s duties to the Company; |
• | a material breach by Executive of any of the terms or provisions of this Agreement; or |
• | Executive’s failure to perform (other than as a result of Executive’s Disability) or substantial neglect in the performance of Executive’s duties and responsibilities to the Company. |
• | a material diminution in Executive's Base Salary, or unless the diminution is a result of a Company-wide diminution in the annual bonus opportunity, target incentive awards and/or benefits of all similarly situated employees as Executive, a material diminution in the amount of Executive's annual bonus opportunity, target incentive award and/or benefits, including health, retirement and fringe; |
• | a material failure by the Company to comply with the material provisions of this Agreement (provided that an isolated, insubstantial or inadvertent action or omission that is not in bad faith and is remedied by the Company promptly after receipt of notice thereof given by Executive shall not constitute Good Reason); |
(a) | Any person (other than (i) the Company or any subsidiary of the Company, (ii) a corporation or other entity owned, directly or indirectly, by the shareholders of the Company as of the Effective Date in substantially the same proportions as their ownership of the Company, or (iii) an employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company), becomes the beneficial owner, directly or indirectly, of securities of the Company, representing fifty-one percent (51%) or more of the combined voting power of the Company’s then outstanding securities; provided, however, that no crossing of such 51% threshold shall be a “Change in Control” if it is caused (A) solely as a result of an acquisition by the Company of its voting securities; or (B) solely as a result of an acquisition of the Company’s voting securities directly from the Company, in either case |
(b) | A merger, consolidation, reorganization or share exchange, or sale of all or substantially all of the assets, of the Company, unless, immediately following such transaction, all of the following shall apply: (A) all or substantially all of the beneficial owners of the Company immediately prior to such transaction will beneficially own in substantially the same proportions, directly or indirectly, more than 51% of the combined voting power of the then outstanding voting securities of the corporation or other entity resulting from such transaction (including, without limitation, a corporation or other entity which, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets, either directly or through one or more subsidiaries) (the “Successor Entity”), (B) no person will be the beneficial owner, directly or indirectly, of 51% or more of the combined voting power of the then outstanding voting securities of the Successor Entity, and (C) at least a majority of the members of the board of directors of the Successor Entity will be Incumbent Directors. |
(c) | All terms used in this Section 3.5 shall be interpreted in a manner consistent with the ‘34 Act. |
(A) | the Sarbanes-Oxley Act of 2002, 18 U.S.C. §1514A; |
(B) | Section 1981 of the Civil Rights Act of 1866, as amended, 42 U.S.C. §§1981; |
(C) | Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§2000e, et seq. (the “Civil Rights Act”); |
(D) | the Americans with Disabilities Act of 1990, 43 U.S.C. §12101 et seq. (the “Americans with Disabilities Act”); |
(E) | the Equal Pay Act of 1993; |
(F) | the Fair Labor Standards Act, except as prohibited by law; |
(G) | the Older Workers Benefit Protection Act of 1990 (the “OWBPA”); |
(H) | the Age Discrimination in Employment Act of 1967, 29 U.S.C. §626 et seq. (the “ADEA”); |
(I) | the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. (the “Family and Medical Leave Act”), except as prohibited by law; |
(J) | the Worker Adjustment and Retraining Notification Act, as amended; |
(K) | Executive Order 11,141 (age discrimination); |
(L) | Executive Order 11,246 (race, color, religion, sex and national origin discrimination); |
(M) | the National Labor Relation Act; |
(N) | the Occupational Safety and Health Act, as amended; |
(O) | the Immigration Reform and Control Act, as amended; |
(P) | the Vietnam Era Veterans Readjustment Assistance Act; |
(Q) | Sections 503-504 of the Rehabilitation Act of 1973 (handicap rehabilitation); |
(R) | the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (other than such rights as are mandated or vested by law); |
(S) | the Kansas Act Against Discrimination, K.S.A., 44-1001 et seq.; |
(T) | the Kansas Age Discrimination in Employment Act, K.S.A. 44-1111 et seq.; |
(U) | Kansas Wage Payment Act, K.S.A. 44-313 et seq. and K.S.A. 44-12-01 et seq.; |
(V) | any other federal, state or local fair employment, civil or human rights, wage and hour laws and wage payment laws, and any and all other federal, state, local or other governmental statutes, laws, ordinances, regulations and orders, under common law, and under any Company policy, procedure, bylaw or rule. |
WA 7935889.6 |
2 | WA 7935889.6 |
3 | WA 7935889.6 |
4 | WA 7935889.6 |
5 | WA 7935889.6 |
6 | WA 7935889.6 |
7 | WA 7935889.6 |
8 | WA 7935889.6 |
9 | WA 7935889.6 |
10 | WA 7935889.6 |
Minimum LTM Aggregate Revenue (in millions of Dollars) as of the end of: | |||||
Q1 2016 | Q2 2016 | Q3 2016 | Q4 2016 | Q1 2017 and each Fiscal Quarter thereafter | |
$33 | $34 | $37 | $40 | $45 |
Minimum EBITDA as of the end of: | |||
Three (3) consecutive month period ending Q1 2016 | Six (6) consecutive month period ending Q2 2016 | Nine (9) consecutive month period ending Q3 2016 | Twelve (12) consecutive month period ending Q4 2016 |
($1,600,000) | ($2,000,000) | ($1,100,000) | $800,000 |
Minimum EBITDA as of the end of: | ||
Twelve (12) consecutive month period ending Q1 2017 | Twelve (12) consecutive month period ending Q2 2017 | Twelve (12) consecutive month period ending Q3 2017 and thereafter |
$500,000 | $900,000 | $2,500,000 |
By: | /s/ Henry E. Dubois Henry E. Dubois President |
Subsidiary Name | State of Incorporation | Business Name |
Hooper Kit Services, LLC | Kansas | Hooper Kit Services, LLC |
Hooper Distribution Services, LLC | New Jersey | Hooper Distribution Services, LLC |
Hooper Information Services, Inc. | New Jersey | Hooper Information Services, Inc. |
Mid-America Agency Services, Inc. | Nebraska | Mid-America Agency Services, Inc. |
TEG Enterprises, Inc. | Nebraska | TEG Enterprises, Inc. |
Hooper Wellness, LLC | Kansas | Hooper Wellness, LLC |
Accountable Health Solutions, LLC | Kansas | Accountable Health Solutions/AHS |
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Feb. 29, 2016 |
Jun. 30, 2015 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | HOOPER HOLMES INC | ||
Entity Central Index Key | 0000741815 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Public Float | $ 13.7 | ||
Entity Common Stock, Shares Outstanding | 117,043,442 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 112 | $ 87 |
Common stock, par value (usd per share) | $ 0.04 | $ 0.04 |
Common stock, shares authorized (shares) | 240,000,000 | 240,000,000 |
Common stock, shares issued (shares) | 78,025,998 | 70,875,998 |
Common stock, shares outstanding (shares) | 78,016,603 | 70,866,603 |
Treasury stock (shares) | 9,395 | 9,395 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies
Hooper Holmes, Inc. and its subsidiaries (“Hooper Holmes” or the "Company”) provides on-site screenings, laboratory testing, risk assessment, and sample collection services to individuals as part of comprehensive health and wellness programs offered through corporate and government employers. The acquisition of Accountable Health Services, Inc ("AHS") allows Hooper Holmes to also deliver telephonic health coaching, wellness portals, and data analytics and reporting services. Hooper Holmes is engaged by the organizations sponsoring such programs, including health and care management companies, broker and wellness companies, disease management organizations, reward administrators, third party administrators, clinical research organizations, and health plans. Hooper Holmes provides these services through a national network of health professionals. The Company's business is subject to some seasonality, with the second quarter sales typically dropping below other quarters and the third and fourth quarter sales typically the strongest quarters due to increased demand for screenings from mid-August through November related to annual benefit renewal cycles. On September 30, 2013, the Company completed the sale of certain assets comprising its Portamedic service line. The Portamedic service line is accounted for as a discontinued operation in this Form 10-K. During 2014, the Company sold certain assets comprising the Heritage Labs and Hooper Holmes Services businesses. The operating results of these businesses are also segregated and reported as discontinued operations in this Form 10-K. Acquisition of Accountable Health Solutions, Inc. On April 17, 2015, the Company entered into and consummated an Asset Purchase Agreement (the "Purchase Agreement") among the Company and certain of its subsidiaries, Accountable Health Solutions, Inc. (the "Seller" or "AHS") and Accountable Health, Inc. ("Shareholder"). Pursuant to the Purchase Agreement, the Company has acquired the assets and certain liabilities representing the health and wellness business of the Seller for approximately $7.0 million - $4.0 million in cash and up to 6,500,000 shares of the Company’s common stock, $0.04 par value, with a value of $3.0 million, which was subject to a working capital adjustment as described in the Purchase Agreement (the "Acquisition"). Refer to Note 3 for additional discussion regarding the Acquisition. In connection with the Acquisition, the Company entered into and consummated a Consent and Third Amendment to the Loan and Security Agreement (the "Third Amendment") to the Loan and Security Agreement (as amended, the "2013 Loan and Security Agreement") with ACF FinCo I LP ("ACF" or the "Senior Lender"), the assignee of Keltic Financial Partners II, LP ("Ares"). The 2013 Loan and Security Agreement provides a revolving credit facility which is secured and repaid as set forth therein. The Senior Lender consented to the Acquisition, the maximum borrowing capacity under the 2013 Loan and Security Agreement was reduced from $10 million to $7 million (subject to increase to up to$12 million in certain circumstances, subject to the Senior Lender’s consent, as provided in the 2013 Loan and Security Agreement) and the expiration was extended through February 28, 2019. The Company paid an amendment fee of $0.1 million in connection with the Third Amendment. In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement (the "Credit Agreement") with SWK Funding LLC as the agent ("Agent") on April 17, 2015, and the lenders (including SWK Funding LLC) party thereto from time to time (the "Lenders"). The Credit Agreement provides the Company with a $5.0 million term loan (the "Term Loan") (refer to Note 3 and Note 10).
The consolidated financial statements include the accounts of Hooper Holmes, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
The Company considers highly liquid investments with original maturities at the date of purchase of less than 90 days to be cash equivalents.
Trade accounts receivable are recorded at the invoiced amount. Customer contracts state that we can charge interest but historically the Company has not. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Allowances for uncollectible accounts are estimated based on the Company's periodic review of accounts receivable historical losses and current receivables aging. Account balances are charged off to the allowance after all means of collections have been exhausted and potential for recovery is considered remote. Customer billing adjustments are recorded against revenue whereas adjustments for bad debts are recorded within selling, general and administrative expenses. The Company does not have any off-balance sheet credit exposure related to its customers.
Inventories, which consist of finished goods and component inventory, are stated at the lower of average cost or market. Included in inventories at December 31, 2015 and 2014 are $0.4 million and $0.7 million, respectively, of finished goods and $0.3 million and $0.2 million, respectively, of components.
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the assets’ estimated useful lives. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvement or the remaining lease term. The cost of maintenance and repairs is charged to operations as incurred. Internal use software and website development costs are capitalized and included in property, plant and equipment in the consolidated balance sheet. These assets are depreciated over the estimated useful life of the asset using the straight-line method. Subsequent modifications or upgrades to internal use software are capitalized only to the extent that additional functionality is provided.
Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Some of the key assumptions utilized in determining future projected cash flows include estimated growth rates, expected future sales, and estimated costs. Based on the Company's recent financial performance, management determined a review of impairment of long-lived assets was necessary as of December 31, 2015. The analysis indicated no impairment charge for long-lived assets was required at December 31, 2015. There was also no impairment charges recorded in continuing operations during the year ended December 31, 2014. During the year ended December 31, 2013, the Company recorded impairment charges in continuing operations of $0.2 million related to the write-off of software which was no longer expected to be utilized. The Company recorded an impairment charge of long-lived assets related to discontinued operations of $0.04 million and $0.1 million for the years ended December 2014 and 2013, respectively.
Goodwill is accounted for under the provisions of ASC 350, Intangibles – Goodwill and Other. All goodwill is assigned to one reporting unit, where it is subject to an annual impairment assessment, or more frequently if circumstances indicate that impairment is likely. Any one event or a combination of events such as change in the business climate, a negative change in relationships with significant customers and changes to strategic decisions, including decisions to expand made in response to economic or competitive conditions could require an interim assessment prior to the next required annual assessment. The Company assessed its goodwill for impairment as of December 31, 2015, and concluded that goodwill was not impaired. The assessment consisted of a quantitative analysis in accordance with Accounting Standards Update ("ASU") 2011-08, Testing for Goodwill Impairment, in which the fair value of our reporting unit exceeded the carrying amount. Goodwill was $0.6 million as of December 31, 2015.
The Company accounts for scheduled rent increases contained in its leases on a straight-line basis over the term of the lease. As of December 31, 2015 and 2014, the Company has recorded $0.2 million and $0.2 million, respectively, related to deferred rent in the consolidated balance sheet.
Revenue is recognized for screening services when the screening is completed and the results are delivered to our customers. Revenue for portal services are recognized on a per eligible member, per month basis, while revenue from coaching services are recognized as services are performed. Revenue for kit assembly is recorded upon shipment to the customers. In all cases, there must be evidence of an agreement with the customer, the sales price must be fixed or determinable, delivery of services must have occurred, and the ability to collect must be reasonably assured. Sales tax collected from customers and remitted to governmental authorities is accounted for on a net basis and therefore is excluded from revenues in the consolidated statements of operations.
The Company recognizes all share-based compensation to employees, directors, and consultants, including grants of stock options and restricted stock, in the financial statements as compensation cost based on their fair value on the date of grant, in accordance with ASC 718, Compensation-Stock Compensation. This compensation cost is recognized over the vesting period on a straight-line basis for the fair value of awards expected to vest. Refer to Note 4 for a detailed discussion of share-based payments.
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the tax authorities. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense.
Basic (loss) earnings per share equals net (loss) income divided by the weighted average common shares outstanding during the period. Diluted (loss) earnings per share equals net (loss) income divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. The calculation of (loss) earnings per common share on a basic and diluted basis was the same for the three years ended December 31, 2015, because the inclusion of dilutive common stock equivalents would have been anti-dilutive for all periods presented. Options to purchase 4,398,700, 3,652,200, and 4,150,550 shares of the Company's common stock through employee stock plans were outstanding as of December 31, 2015, 2014 and 2013, respectively, and a warrant to purchase 8,152,174 shares issued to SWK was outstanding as of December 31, 2015, but are anti-dilutive because the Company is in a net loss position.
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of receivable balances, property, plant and equipment, deferred tax assets, share based compensation expense and the assessment of contingencies, among others. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which the Company believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates will be reflected in the consolidated financial statements in future periods.
The Company’s accounts receivable are due primarily from healthcare management and wellness companies. As of December 31, 2015, there were two customer balances that each accounted for more than 10% of the total consolidated accounts receivable. The accounts receivable balance for these two customers represented approximately 34% of total consolidated accounts receivable as of December 31, 2015. As of December 31, 2014, there were two customer balances that each accounted for more than 10% of the total consolidated accounts receivable and represented approximately 39% of total consolidated accounts receivable. For the year ended December 31, 2015, there were two Health and Wellness customers that exceeded 10% of revenue from continuing operations and represented more than 30% of the consolidated revenue. For the years ended December 31, 2014 and 2013, there were three Health and Wellness customers that exceeded 10% of revenue from continuing operations and represented more than 50% of the consolidated revenue. The Company has agreements with each of its Health and Wellness customers, although these agreements do not provide for specific minimum level of purchase.
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with early adoption permitted as of the original effective date or first quarter of 2017. The Company is currently evaluating the effect that ASU 2014-09 will have on the consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs", which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. The Company has unamortized debt issuance costs of $0.3 million that is included in Other Assets as of December 31, 2015, and will be reclassified as an offset to Debt in the first quarter of 2016. ASU 2015-03 is effective for the Company in the first quarter of 2016, with early adoption permitted, and retrospective application required. In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments", which eliminates the requirement to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. An acquirer now must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments amounts are determined. ASU 2015-16 is effective for the Company in the first quarter of 2016, with early adoption permitted. We elected to early adopt the provisions of this new standard for the year ended December 31, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes", which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. We elected to early adopt the provisions of this new standard for the year ended December 31, 2015, on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases", which is intended to improve financial reporting about leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial position, results of operations or cash flows. |
Liquidity |
12 Months Ended | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 | |||||||||||||||||||||||||||||
Liquidity [Abstract] | |||||||||||||||||||||||||||||
Liquidity | Liquidity The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The uncertainty regarding the Company's ability to generate sufficient cash flows and liquidity to fund operations raises substantial doubt about its ability to continue as a going concern (which contemplates the realization of assets and discharge of liabilities in the normal course of business for the foreseeable future). These financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company expects to continue to monitor its liquidity carefully, work to reduce this uncertainty, and address its cash needs through a combination of one or more of the following actions:
The Company’s primary sources of liquidity are cash and cash equivalents as well as availability under the 2013 Loan and Security Agreement (refer to Note 10). At December 31, 2015, the Company had $2.0 million of cash and cash equivalents and had $3.3 million outstanding under the 2013 Loan and Security Agreement with available borrowing capacity of $0.4 million. As discussed in Note 3, the Company entered into the Credit Agreement on April 17, 2015, for a $5.0 million term loan, which provided funding for the cash component of the Acquisition. After the $4.0 million payment for the Acquisition, the origination fee and related legal costs, the Company received approximately $0.8 million in net proceeds from the Term Loan. The Company incurred a loss from continuing operations of $10.4 million for the year ended December 31, 2015. The Company's net cash used in operating activities during the year ended December 31, 2015 was $6.3 million. The Company has managed its liquidity through the addition of the Term Loan and the availability under the 2013 Loan and Security Agreement and a series of cost reduction initiatives. The Company has historically used availability under the 2013 Loan and Security Agreement to fund operations. The Company experiences a timing difference between the operating expenses and cash collection of the associated revenue based on Health and Wellness customer payment terms. To conduct successful screenings, the Company must expend cash to deliver equipment and supplies required for the screenings as well as pay its health professionals and site management, which is in advance of the customer invoicing process and ultimate cash receipts for services performed. 2013 Loan and Security Agreement The Company maintains the 2013 Loan and Security Agreement, as amended on March 28, 2013, July 9, 2014, April 17, 2015, August 10, 2015, November 10, 2015, and March 28, 2016, with the Senior Lender. Borrowings under the 2013 Loan and Security Agreement are to be used for working capital purposes and capital expenditures. The amount available for borrowing may be less than the $7 million under this facility at any given time due to the manner in which the maximum available amount is calculated. The Company has an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables up to $7 million under this facility. Eligible Receivables do not include certain receivables deemed ineligible by the Senior Lender pursuant to the Second Amendment to the Loan and Security Agreement ("the Second Amendment"). On August 10, 2015, the Company entered into and consummated a Fourth Amendment to the Loan and Security Agreement (the "Fourth Amendment") which added the AHS receivables to the borrowing base. As of December 31, 2015, there were $3.3 million borrowings outstanding under the 2013 Loan and Security Agreement with available borrowing capacity of $0.4 million. Average available borrowing capacity for the month of March 2016 was $0.4 million, and we had $2.4 million of cash and cash equivalents as of March 28, 2016. The 2013 Loan and Security Agreement and the Third Amendment contain various covenants, including financial covenants which require the Company to achieve a minimum EBITDA amount (earnings before interest expense, income taxes, depreciation, and amortization). The Third Amendment contained minimum EBITDA covenants of positive $0.8 million for the twelve month period ended December 31, 2015, which the Company did not comply with. On March 28, 2016, the Company obtained a Waiver and Sixth Amendment to the Loan and Security Agreement (the "Sixth Amendment") in which the lender modified the covenants to waive the minimum EBITDA covenant for the twelve months ended December 31, 2015, and replaced it with minimum EBITDA covenants of negative $1.6 million for the three months ending March 31, 2016, negative $2.0 million for the six months ending June 30, 2016, negative $1.1 million for the nine months ending September 30, 2016, and $0.8 million for the twelve months ending December 31, 2016, and each twelve consecutive calendar month period ending on the last day of each fiscal quarter thereafter. In addition, the Company must obtain new equity contributions in an aggregate amount of not less than $4.0 million between November 10, 2015, and June 30, 2016, which condition has been satisfied by its completion of the rights offering earlier this year and the private offering to the investor described above. If the Company is unable to comply with financial covenants in 2016 and in the event that the Company was unable to modify the covenants, find new or additional lenders, or raise additional equity, it would be considered in default, which would then enable the lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, which would have a material adverse impact on the Company's business. Additionally, the Company continues to have limitations on the maximum amount of capital expenditures for each fiscal year. 2015 Credit Agreement In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement on April 17, 2015, with SWK Funding LLC ("SWK"). The Credit Agreement provides the Company with a $5.0 million Term Loan. The proceeds of the Term Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement for the Acquisition described in Note 3 and general corporate purposes. The Term Loan is due and payable on April 17, 2018. The Company is also required to make quarterly revenue-based payments in an amount equal to eight and one-half percent (8.5%) of yearly aggregate revenue up to and including $20 million, seven percent (7%) of yearly aggregate revenue greater than $20 million up to and including $30 million, and five percent (5%) of yearly aggregate revenue greater than $30 million. The revenue-based payment will be applied to fees and interest and any excess to the principal of the Term Loan. Revenue-based payments commence in February 2016, and the maximum aggregate revenue-based principal payment is capped at $600,000 per quarter. The Company made its first principal payment of $0.5 million, on February 16, 2016, in addition to $0.2 million of interest expense, for a total payment of $0.7 million. The outstanding principal balance under the Credit Agreement bears interest at an adjustable rate per annum equal to the LIBOR Rate (subject to a minimum amount of one percent (1.0%)) plus fourteen percent (14.0%) and is due and payable quarterly, commencing on August 14, 2015. Upon the earlier of (a) the maturity date of April 17, 2018, or (b) full repayment of the Term Loan, whether by acceleration or otherwise, the Company is required to pay an exit fee equal to eight percent (8%) of the aggregate principal amount of all term loans advanced under the Credit Agreement. The Company is recognizing the exit fee over the term of the Term Loan through an accretion accrual to interest expense using the effective interest method. On February 25, 2016, the Company entered into a First Amendment to Credit Agreement (“First Amendment”) with SWK. The First Amendment modifies the Credit Agreement dated April 17, 2015, to extend the date the Company has to issue the additional warrant to SWK to purchase common stock valued at $1.25 million from February 28, 2016, to April 30, 2016, if the 2013 Loan and Security Agreement is not repaid in full and terminated and all liens securing the 2013 Loan and Security Agreement are not released. The First Amendment also modifies the exercise price of the warrant from one cent over the closing price on February 28, 2016, and replaced it with the closing price of our stock on April 30, 2016. Refer to Note 3 for additional discussion regarding the warrants. The First Amendment also required the Company to issue 454,545 shares of its common stock, $0.04 par value, with a value of $50,000 to SWK effective February 29, 2016. The Credit Agreement also contains certain financial covenants including minimum aggregate revenue, EBITDA, and consolidated unencumbered liquid assets requirements. The Credit Agreement contains a minimum aggregate revenue covenant of $34 million for the twelve month period ended December 31, 2015, which the Company did not comply with. On March 28, 2016, the Company obtained a Second Amendment to the Credit Agreement (the "Second Amendment") in which the lender removed the minimum aggregate revenue requirement for the twelve months ended December 31, 2015, and replaced it with minimum aggregate revenue covenants of $33.0 million for the twelve months ending March 31, 2016, $34.0 million for the twelve months ending June 30, 2016, $37.0 million for the twelve months ending September 30, 2016, $40.0 million for the twelve months ending December 31, 2016, and $45.0 million for the twelve months ending each fiscal quarter thereafter. The Second Amendment also modified the minimum EBITDA covenants for 2016 and replaced them with minimum EBITDA covenants of negative $1.6 million for the three months ending March 31, 2016, negative $2.0 million for the six months ending June 30, 2016, negative $1.1 million for the nine months ending September 30, 2016, $0.8 million for the twelve months ending December 31, 2016, $0.5 million for the twelve months ending March 31, 2017, $0.9 million for the twelve months ending June 30, 2017, and $2.5 million for the twelve months ending September 30, 2017. In addition,the Company must obtain new equity contributions in an aggregate amount of not less than $0.5 million between March 23, 2016 and June 30, 2016, which requirement the Company has satisfied through the private offering to the investor described above. The Second Amendment also required the Company to issue shares of its common stock, $0.04 par value, with a value of $100,000 to SWK within five business days of the transaction. If the Company is unable to comply with financial covenants in 2016 and in the event that the Company was unable to modify the covenants, find new or additional lenders, or raise additional equity, it would be considered in default, which would then enable the lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, which would have a material adverse impact on the Company's business. The Credit Agreement contains a cross-default provision that can be triggered if the Company has more than $0.25 million in debt outstanding under the 2013 Loan and Security Agreement and the Company fails to make payments to the Senior Lender when due or if the Senior Lender is entitled to accelerate the maturity of debt in response to a default situation under the 2013 Loan and Security Agreement, which may include violation of any financial covenants. Other Considerations The Health and Wellness business sells services directly to end customers and also through wellness, disease management, benefit brokers, and insurance companies (referred to as channel partners) who ultimately have the relationship with the end customer. Sales to direct customers offer the full suite of products and services while our screenings are often aggregated with other offerings from its channel partners to provide a total solution to the end-user. As such, the Company's success is largely dependent on that of its partners. The Acquisition of AHS required the Company to enter into the Credit Agreement with the Lenders. In association with the Acquisition, we also incurred transaction expenses and legal and professional fees. During the year ended December 31, 2015, we incurred $0.8 million in legal and professional fees associated with the Acquisition. Additionally, the Acquisition provides new offerings including the wellness portal and telephonic coaching, along with new staff, new systems, and new customers. During the year ended December 31, 2015, the Company incurred $0.7 million of costs in connection with integrating the Acquisition, which are recorded in selling, general and administrative expenses. Costs incurred during 2015 primarily relate to transition services purchased from the Seller and the ongoing transition of information technology infrastructure. The integration of AHS will continue into early 2016, and the Company will continue to incur certain transition costs associated with integrating the two companies, which could adversely affect liquidity. In addition, we have contractual obligations related to operating leases and employment contracts which could adversely affect liquidity. The Company’s ability to satisfy its liquidity needs and meet future covenants is dependent on growing revenues, improving profitability, and raising additional equity as noted above. These profitability improvements primarily include the successful integration of AHS and expansion of the Company’s presence in the Health and Wellness marketplace. The Company must increase screening, telephonic health coaching, and wellness portal volumes in order to cover its fixed cost structure and improve gross profits. These improvements may be outside of management’s control. The integration of AHS and marketplace expansion may require additional costs to grow and operate the newly integrated entity, which the Company must recover through expanded revenues. If the Company is unable to increase volumes or control integration or operating costs, liquidity may adversely be affected. The Company had $3.3 million borrowings outstanding under the 2013 Loan and Security Agreement as of December 31, 2015. Given the seasonal nature of the Company's operations, which are largely dependent on second half volumes, management expects to continue using the 2013 Loan and Security Agreement in 2016 and beyond. Given the Company's performance during 2015, the Company reported EBITDA and aggregate revenue for the year ended December 31, 2015, that was below the current covenants outlined in the 2013 Loan and Security Agreement and the Credit Agreement. As noted above, the lenders recently waived and removed the minimum EBITDA and aggregate revenue covenants for December 31, 2015, and reduced the covenants for 2016 and 2017. There can be no assurance that cash flows from operations, combined with any additional borrowings available to the Company, will be obtainable in an amount sufficient to enable the Company to repay its indebtedness, or to fund other liquidity needs. Obtaining a waiver and modifying the financial covenants depends on matters that are outside of management’s control and there can be no assurance that management will be successful in these regards. If the Company is unable to comply with financial covenants in 2016 and in the event that the Company were unable to modify the covenants, find new or additional lenders, or raise additional equity, the Company would be considered in default, which would then enable the lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, which would have a material adverse impact on the Company's business. |
Acquisition Acquistion |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition The Company entered into and consummated the Purchase Agreement on April 17, 2015, among the Company and certain of its subsidiaries, Accountable Health Solutions, Inc. (the "Seller" or "AHS") and Accountable Health, Inc. ("Shareholder"). Pursuant to the Purchase Agreement, the Company has acquired the assets and certain liabilities representing the health and wellness business of the Seller for approximately $7.0 million - $4.0 million in cash and up to 6,500,000 shares of the Company’s common stock, $0.04 par value, with a value of $3.0 million, which was subject to a working capital adjustment as described in the Purchase Agreement (the "Acquisition"). At the closing of the Purchase Agreement, the Company issued and delivered 5,576,087 shares of Common Stock to the Shareholder and issued and held back 326,087 shares of Common Stock for the working capital adjustment, which were subsequently released on October 9, 2015, and 597,826 shares of Common Stock for indemnification purposes. No additional shares will be issued under the terms of the Purchase Agreement. The shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, which provides an exemption for private offerings of securities. During the year ended December 31, 2015, the Company recorded transaction costs of $0.8 million in connection with the Acquisition in the consolidated statement of operations. The acquisition provides significant growth opportunities for the Health and Wellness operations. It has expanded the Company's capabilities allowing us to deliver telephonic health coaching, wellness portals, and data analytics and reporting services. These factors, combined with the synergies and economies of scale expected from combining the operations of the two companies, are the basis for acquisition and comprise the resulting goodwill recorded. In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement (the "Credit Agreement") with SWK Funding LLC as the agent ("Agent") on April 17, 2015, and the lenders (including SWK Funding LLC) party thereto from time to time (the "Lenders"). The Credit Agreement provides the Company with a $5.0 million term loan (the "Term Loan"). The proceeds of the Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement and the Acquisition described above and general corporate purposes. The Company paid the Agent an origination fee of $0.1 million. The Loan is due and payable on April 17, 2018. In addition, on April 17, 2015, in connection with the execution of the Credit Agreement, the Company issued the Agent a warrant (the "Warrant") to purchase 8,152,174 shares of the Company’s common stock. The Warrant is exercisable after October 17, 2015, and up to and including April 17, 2022, at an exercise price of $0.46 per share. The Warrant is exercisable on a cashless basis. The exercise price of the Warrant is subject to customary adjustment provisions for stock splits, stock dividends, recapitalizations and the like. The Warrant grants the holder certain piggyback registration rights. The Warrant was considered equity classified, and as such, the Company allocated the proceeds from the Term Loan to the Warrant using the Relative Fair Value Method. The fair value of the Warrant of $2.7 million was recorded as debt discount, which is being recognized as interest expense over the term of the Credit Agreement using the effective interest method. The Company valued the Warrant using the Black-Scholes pricing model using volatility of 85.0%, a risk-free rate of 1.4%, dividend rate of zero and term of 7 years, which is consistent with the exercise period of the Warrant and is a Level 3 valuation technique. Further, pursuant to the Credit Agreement, if the 2013 Loan and Security Agreement is not repaid in full and terminated, and all liens securing the 2013 Loan and Security Agreement are not released, on or prior to April 30, 2016, as amended per below, the Company has agreed to issue an additional warrant to the Agent to purchase common stock valued at $1.25 million, with an exercise price of the closing price on April 30, 2016, as amended per below. The additional warrant will become exercisable six months after issuance, remain exercisable for 7 years and have customary anti-dilution protection similar to the Warrants. The Company considered whether the issuance of this additional warrant was a “credit sensitive payment”, as the issuance of the additional warrant is contingent upon the repayment of debt (the 2013 Loan and Security Agreement). However, as the repayment date specified in the Term Loan is prior to the maturity date of the 2013 Loan and Security Agreement and therefore this is an incentive feature, rather than a reflection of the Company’s creditworthiness, the Company did not think it was appropriate to consider this feature credit related. Therefore, the feature is not clearly and closely related to the debt host. The Company determined that the additional warrant feature does not contain an explicit limit on the number of warrants to be delivered for settlement. As the Company is required to deliver a number of additional warrants that will satisfy the fixed monetary amount of $1.25 million, the number of warrants (and underlying shares) to be delivered cannot be determined. Therefore, the additional warrant feature is considered an embedded derivative. On February 25, 2016, the Company entered into a First Amendment to Credit Agreement (“First Amendment”) with the Agent. The First Amendment modifies the 2015 Credit Agreement, to extend the date the Company has to issue the additional warrant to the Agent from February 28, 2016, to April 30, 2016, if the 2013 Loan and Security Agreement is not repaid in full and terminated and all liens securing the 2013 Loan and Security Agreement are not released. The First Amendment also modifies the exercise price of the warrant from one cent over the closing price on February 28, 2016, and replaced it with the closing price of the Company's stock on April 30, 2016. The First Amendment also required the Company to issue 454,545 shares of our common stock, $0.04 par value, with a value of $50,000 to SWK effective February 29, 2016. As the issuance of the additional warrant is contingent, the evaluation of the likelihood of the occurrence of the contingency was considered in determining the fair value of the embedded derivative. As the Company does believe that the contingency (i.e. not repaying in full and terminating the 2013 Loan and Security Agreement by April 30, 2016) is likely to occur, the value of the embedded derivative was recognized on the financial statements. Consequently, the value of the Term Loan was reduced by the fair value of the additional warrant. The Company determined the value of the additional warrant was $0.9 million as of the Acquisition date. The fair value as of December 31, 2015, was $0.8 million, with the gain recorded in Interest Expense. The Company valued the additional warrant using the Black-Scholes pricing model using volatility of 80.0%, a risk-free rate of 2.1%, dividend rate of zero and term of 7 years, which is consistent with the exercise period of the additional warrant. The value of the embedded derivative will continue to be evaluated every reporting period through April 30, 2016. The following table summarizes the net impact to cash for the proceeds of the Credit Agreement, debt assumed (Term Loan less the fair value of the Warrant and derivative liability), issuance of common shares, the impact to additional paid-in capital for the issuance of shares and fair value of the Warrant, derivative liability and transaction costs, as of the origination date:
The Acquisition was treated as a purchase in accordance with Accounting Standards Codification (ASC) 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the transaction. The allocation of purchase price is based on management’s judgment after evaluating several factors, including a valuation assessment. The allocation of purchase price is preliminary and subject to changes as additional information becomes available. The Company is still evaluating the valuation of intangible assets related to the acquisition. The allocation of purchase price is as follows:
Intangible assets acquired include existing technology in the form of a customer-facing wellness portal and customer relationships. The fair value of the customer relationships acquired was determined using the excess earnings method under the income approach for customer relationships; and the fair value of the wellness portal software was determined using the replacement cost method. The estimated useful life for the wellness portal and customer relationships is 4 years and 8 years, respectively. Amortization is recorded on a straight-line basis over the estimated useful life of the asset. The Company recorded amortization expense of $0.9 million during the year ended December 31, 2015, related to the intangible assets acquired in the Acquisition, of which $0.7 million is recorded as a component of cost of operations and $0.2 million is recorded as a component of selling, general and administrative expenses. The goodwill of $0.6 million was recorded in one reporting unit, the Health and Wellness operations, and is deductible for tax purposes. The consolidated statement of operations for the year ended December 31, 2015, includes revenue of $9.6 million attributable to AHS since the acquisition date of April 17, 2015. Disclosure of the earnings contribution from the AHS business is not practicable, as the Company has already integrated operations in many areas. The following table provides unaudited pro forma results of operations for the years ended December 31, 2015 and 2014, as if the acquisition had been completed on the first day of our 2014 fiscal year.
These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the Company been a combined company during the periods presented, nor are they indicative of the consolidated results of operations in future periods. The pro forma results for the years ended December 31, 2015 and 2014 include pre-tax adjustments for amortization of intangible assets of $0.3 million and $1.3 million, respectively, and acquisition costs of $0.8 million. |
Share-Based Compensation |
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Share-Based Compensation | Share-Based Compensation Employee Stock-Based Compensation Plan — On May 29, 2008, the Company's shareholders approved the 2008 Omnibus Employee Incentive Plan (the “2008 Plan”) providing for the grant of stock options, stock appreciation rights, non-vested stock and performance shares. The 2008 Plan provides for the issuance of an aggregate of 5,000,000 shares. During the three years ended December 31, 2015, options for the purchase of 1,350,000, 359,700 and 325,000, respectively, shares were granted under the 2008 Plan. During the years ended December 31, 2015 and 2014, no shares of restricted stock were granted. During the year ended December 31, 2013, 205,532 shares of restricted stock were granted, which vest immediately but cannot be sold for one year from date of grant, to the Company's Chief Executive Officer as settlement for a discretionary bonus of $0.1 million. As of December 31, 2015, 2,265,318 shares remain available for grant under the 2008 Plan. On May 24, 2011, the Company's shareholders approved the 2011 Omnibus Employee Incentive Plan (as subsequently amended and restated, the "2011 Plan") providing for the grant of stock options and non-vested stock awards. The 2011 Plan provides for the issuance of an aggregate of 3,500,000 shares. On June 11, 2014, the Company's shareholders approved an amendment and restatement of the 2011 Plan to rename the 2011 Plan as the Hooper Holmes, Inc. 2011 Omnibus Incentive Plan and also to include non-employee directors and consultants as eligible participants. The 2011 Plan is to remain in effect until the earlier of (i) the 10th anniversary of the plan's original effective date of May 24, 2011, or (ii) the date all shares of stock available for issuance have been issued. During the years ended December 31, 2015 and 2014, the Company granted a total of 600,000 and 400,000, respectively, stock awards to non-employee members of the Board of Directors that immediately vested. During the three years ended December 31, 2015, 2014 and 2013, options for the purchase of 700,000, 300,000 and 2,000,000 shares, respectively, were granted under the 2011 Plan. As of December 31, 2015, 15,120 shares remain available for grant under the 2011 Plan. Effective December 31, 2015, the Company amended certain 2014 and 2015 employee award agreements to specify that any exercise of options under the agreement would be satisfied by an issuance of shares authorized under the 2008 Plan rather than the 2011 Plan. The award agreements were not amended in any other respect, and the options granted thereunder have not been amended in any respect and remain subject to their original exercise prices and vesting schedules. Options under the 2008 and 2011 Plans are granted at fair value on the date of grant, are exercisable in accordance with a vesting schedule specified in the grant agreement, and have contractual lives of 10 years from the date of grant. Options to purchase 2,000,000 and 750,000, shares, respectively, of the Company's stock granted to the Chief Executive Officer of the Company in September 2013 and to certain executives in October 2015, vest 25% upon receipt of the grant and 25% on the first, second, and third anniversaries of the grant. Options to purchase 250,000 shares of the Company's stock granted to certain executives of the Company in the 3rd quarter of 2015 vest 25% quarterly for one year. All other options vest one-third on each of the first, second and third anniversaries of the grant. The fair value of each stock option granted during the year was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
The expected life of options granted is derived from the Company’s historical experience and represents the period of time that options granted are expected to be outstanding. Expected volatility is based on the Company’s historical volatility. The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of the grant. The following table summarizes stock option activity for the year ended December 31, 2015:
For the year ended December 31, 2015, 50,000 stock options valued with a weighted average exercise price of $0.45 were exercised under the 2008 Plan. No stock options were exercised during the year end December 31, 2015 under the 2011 Plan. For the year ended December 31, 2014, 57,300 stock options valued with a weighted average exercise price of $0.52 were exercised under the 2008 Plan. No stock options were exercised during the year ended December 31, 2014 under the 2011 Plan. For the year ended December 31, 2013, 173,050 and 9,880 stock options valued with a weighted average exercise price of $0.38 and $0.65, respectively, were exercised under the 2008 Plan and 2011 Plan, respectively. Options for the purchase of 843,121, 770,600 and 1,498,850 shares of common stock vested during the years ended December 31, 2015, 2014 and 2013, respectively, and the aggregate fair value at grant date of these options was $0.3 million, $0.3 million and $0.7 million, respectively. As of December 31, 2015, there was approximately $0.4 million of unrecognized compensation cost related to stock options which is expected to be recognized over a weighted average period of 1.6 years. Employee Stock Purchase Plan - The Company's 2004 Employee Stock Purchase Plan (the "2004 Plan") provides for the granting of purchase rights for up to 2,000,000 shares of the Company's stock to eligible employees of the Company. Under the 2004 Plan, purchase rights for approximately 233,000 shares were granted in the February 2013 offering period with an aggregate fair value of $0.03 million, based on the Black-Scholes option pricing model. The February 2013 offering period concluded in March 2014 and, in accordance with the 2004 Plan's automatic termination provision, there were 36,154 shares issued. The February 2012 offering period concluded in March 2013 and, in accordance with the 2004 Plan's automatic termination provision, no shares were issued. Other Stock Awards — On May 30, 2007, the Company’s shareholders approved the Hooper Holmes, Inc. 2007 Non-Employee Director Restricted Stock Plan (the “2007 Plan”), which provides for the automatic grant, on an annual basis for 10 years, of shares of the Company’s stock to the Company's non-employee directors. The total number of shares that may be awarded under the 2007 Plan is 600,000. There were no shares awarded under the 2007 Plan for the years ended December 31, 2015 and 2014. For the year ended December 31, 2013, shares awarded under the 2007 Plan totaled 30,000. The fair value of these stock awards was based on the grant date market value and totaled $0.02 million. The Company recorded $0.4 million, $0.5 million and $0.6 million of share-based compensation expense in selling, general and administrative expenses for each of the years ended December 31, 2015, 2014 and 2013, respectively, related to stock options, non-vested stock, restricted stock awards and the 2004 Plan. In connection with the resignation of former executive officers, the Company reclassified previously recorded share-based compensation expense totaling $0.2 million during the year ended December 31, 2013. The reclassifications were recorded in restructuring charges (See Note 5). There were no reclassifications during 2015 or 2014. |
Discontinued Operations |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Discontinued Operations Sale of Assets - Heritage Labs and Hooper Holmes Services On August 31, 2014, the Company completed the sale of certain assets comprising the Company’s Heritage Labs and Hooper Holmes Services business units (the "Business") to CRL pursuant to the terms of the Alliance Agreement. The purchase price, after inventory-related price adjustments, was $3.5 million. The net book value of assets sold was approximately $1.0 million, consisting primarily of inventory of $0.3 million and certain property, plant and equipment of $0.7 million. After incurring $0.8 million in transaction costs associated with the sale to CRL, the Company recorded a gain on sale of $1.7 million during the year ended December 31, 2014, which is recorded as a component of discontinued operations. The assets sold to CRL are recorded in assets held for sale in the consolidated balance sheet as of December 31, 2013, and included inventory of $0.8 million and property, plant and equipment of $0.8 million. The Company has retained certain aspects of its sample kit assembly operations (relating to the Health and Wellness segment) as well as certain other third party kit assembly and all other supply chain fulfillment capabilities, which continue to support Health and Wellness operations and other customers. The Company decided to sell the Business as the transaction provided the Company with additional capital to invest in the growing Health and Wellness operation. The assets sold to CRL qualified as assets held for sale in April 2014. The sale of Heritage Labs and Hooper Holmes Services to CRL represents a strategic shift in the Company's ongoing operations. Accordingly, the operating results of Heritage Labs and Hooper Holmes Services are segregated and reported as discontinued operations in the accompanying consolidated statements of operations for all periods presented. The Company also entered into the Limited Laboratory and Administrative Services Agreement (the "LLASA"), as amended, with CRL pursuant to which, among other things, CRL is the Company’s exclusive provider, subject to certain exceptions, of laboratory testing and reporting services and provides administrative services in support of the Company’s Health and Wellness operations. The Company is a member of CRL’s preferred provider network for wellness programs during the term of the LLASA. The LLASA was effective as of August 31, 2014, upon the closing of the transaction contemplated by the Alliance Agreement and will continue for five years from such date and auto-renew for an additional five year renewal period unless sooner terminated by either party in accordance with the LLASA. CRL will be providing services to the Health and Wellness operations based on an arms' length pricing structure, and the Company will have not have the ability to exercise influence over the operations of either the Heritage Labs or the Hooper Holmes Services businesses. Sale of Portamedic The Company decided to sell its under-performing Portamedic service line and shift its focus towards the growth of its remaining health care segments. On September 30, 2013, the Company completed the sale of certain assets comprising the Portamedic service line to Piston Acquisition, Inc., a subsidiary of American Para Professional Systems, Inc. (“Piston”). Pursuant to the terms of the Asset Purchase Agreement, the Company sold assets associated with the Portamedic service line to Piston, including, among other things, fixed assets, inventory and intellectual property, and Piston assumed certain specified liabilities. The adjusted purchase price (the "Purchase Price") was approximately $8.1 million in cash, adjusted from $8.4 million at announcement due to changes in working capital. Approximately $2.0 million of the Purchase Price was held back (the "Holdback Amount") by Piston as security for the obligations under the Asset Purchase Agreement and certain other agreements between the Company and Piston. During the year ended December 31, 2013, the Company received $6.1 million of cash proceeds and incurred $1.0 million of financial advisory, legal and accounting fees in connection with the sale. The Holdback Amount includes two components. The first holdback was $1.0 million, subject to adjustments, and was released in the first quarter of 2014 when final closing adjustments for inventory and other current assets were determined and paid (the "Closeout Date"). During the year ended December 31, 2014, the Company received $0.7 million as payment for the first Holdback Amount, after the closing adjustments. As a result, the amount remaining related to the first Holdback Amount was written off during the year ended December 31, 2014, as a charge to gain on sale of subsidiary in the consolidated statement of operations. On January 28, 2015, the Company entered into a Settlement Agreement and Release, by and among the Company, Farmers New World Life Insurance Company and Portamedic, Inc., relating to a claim made by Farmers against each of Portamedic and the Company challenging the validity of charges for services billed to Farmers by certain examiners engaged by Portamedic and the Company dating back to 2010. Under the terms of the Asset Purchase Agreement, the Company agreed to indemnify Piston in connection with the subject matter of the claim. The Company agreed to deduct a total of $400,000 from the second Holdback Amount in exchange for a full release of obligation in connection with the matter and has reduced the remaining Holdback Amounts for the settlement of this claim. Subsequently, the remaining Holdback Amounts were settled as part of the transition service agreement between the parties. In addition, as part of the transition service agreement, the Company settled all receivables due from Piston in 2015 for $0.23 million, resulting in a loss in discontinued operations of $0.1 million. Following the sale of Heritage Labs and Hooper Holmes Services in the third quarter of 2014, the Company reverted to one reporting segment, Health and Wellness. The continuing operations and the Heritage Labs, Hooper Holmes Services, and Portamedic discontinued segments had customers and suppliers in common. The continuing and discontinued operations also shared certain selling, general and administrative services. As a result, the Company does not have reliable information for the historical impact of Portamedic, Heritage Labs, and Hooper Holmes Services on our cash flows for the years ended December 31, 2013 and 2012, as well as certain statement of operations information for the Portamedic segment for the years ended December 31, 2013 and 2012. The operating results of Portamedic, which are reported as a component of discontinued operations in the consolidated statements of operations, include expenses of $0.3 million for a contingent liability for the year ended December 31, 2015. There was no significant activity in discontinued operations for Portamedic in 2014. Revenue of $66.5 million and income taxes relating to the operations of Portamedic was less than $0.1 million for Portamedic for the year ended December 31, 2013. The following table summarizes the major classes of line items constituting the pretax results of operations of Heritage Labs and Hooper Holmes Services for the years ended December 31, 2015, 2014 and 2013, which are reported as a component of discontinued operations in the consolidated statement of operations. 2015 discussion or include in table There was no income tax recorded in discontinued operations for Heritage Labs and Hooper Holmes Services for any period presented.
Operating cash flow from discontinued operations for the Heritage Labs and Hooper Holmes Services segments for the year ended December 31, 2014, was approximately $1.3 million. Changes in working capital for the Heritage Labs and Hooper Holmes Services segments for the year ended December 31, 2014, were approximately $1.2 million. The Company recorded non-cash operating charges for depreciation and bad debt expense of $0.2 million and a non-cash operating charge of $1.0 million for the remaining operating lease payments associated with the discontinued Hooper Holmes Services operations (refer to Note 11). Other than the sale of the discontinued Heritage Labs and Hooper Holmes Services operations to CRL, there was no significant investing or financing activities from discontinued operations for the year ended December 31, 2014. The determination of operating cash flow from discontinued operations for the year ended December 31, 2014, includes a degree of management judgment and estimates. The Company has not allocated any general corporate overhead to discontinued operations. Included in discontinued operations for the year ended December 31, 2014, was expense of $1.4 million related to retroactive tail coverage insurance policies for the discontinued operations of Portamedic, Heritage Labs, and Hooper Holmes Services. The tail coverage represents retroactive insurance policies for claims associated with these businesses incurred prior to the sale of the discontinued operations and were purchased by the Company during the year ended December 31, 2014. The Company made payments of $0.6 million during the year ended December 31, 2014, for the tail coverage insurance policies and had $0.8 million in the consolidated balance sheet as of December 31, 2014, for the remaining payments that were paid in 2015. The Company also leases a facility used for the discontinued Hooper Holmes Services operations center through 2018. During the year ended December 31, 2014, the Company recorded charges of $1.0 million representing the fair value of the remaining contractual obligations under the lease reduced by an estimate of sublease income. In connection with the 2008 sale of the Claims Evaluation Division ("CED"), the Company was released as the primary obligor for certain lease obligations acquired but remains secondarily liable in the event the buyer defaults through the lease term which expired in July 2015. During the years ended December 31, 2014 and 2013, the Company reduced liabilities related to CED by $0.06 million, $0.08 million, respectively. The corresponding gains were reported in the consolidated statement of operations in discontinued operations for the years ended December 31, 2014 and 2013. The Company has no remaining obligation recorded in the consolidated balance sheet related to the leases as of December 31, 2015. |
Restructuring Charges |
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Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges | Restructuring Charges At December 31, 2015, there was a $0.7 million liability related to Portamedic branch closure costs, which is recorded in accrued expenses and other long-term liabilities in the accompanying consolidated balance sheet. Charges recorded during the year ended December 31, 2015, were recorded as a component of discontinued operations. The Company revised its estimate of future sub-lease income based on a current period amendment with one of its tenants which resulted in a reduction of the facility closure obligation as of December 31, 2015. The following table provides a summary of the activity in the restructure accrual for the year ended December 31, 2015 and 2014:
Restructuring Charges During the year ended December 31, 2015, the Company recorded restructuring adjustments of $0.02 million in discontinued operations. The Company recorded a reduction to discontinued operations of $0.12 million for the remaining operating lease payments associated with the Hooper Holmes Services operations. In addition, branch closure costs of $0.1 million related to the discontinued Portamedic operations were recorded to discontinued operations during the year ended December 31, 2015. As of December 31, 2015, there was $0.4 million recorded in accrued expenses and $0.3 million recorded in other long-term liabilities, related to branch closure obligations. The total branch closure obligation as of December 31, 2015, was $0.7 million, of which $0.6 million relates to Hooper Holmes Services and $0.1 million relates to Portamedic. During the year ended December 31, 2014, the Company recorded restructuring charges of $1.3 million, of which $0.1 million was recorded in continuing operations and $1.2 million was recorded in discontinued operations. The Company recorded severance charges of $0.1 million in continuing operations during the year ended December 31, 2014, for employee severance associated with the relocation of the corporate headquarters. The Company recorded a charge to discontinued operations of $1.0 million for the remaining operating lease payments associated with the Hooper Holmes Services operations. In addition, branch closure costs of $0.1 million related to the discontinued Portamedic operations as well as employee severance of $0.1 million were recorded to discontinued operations during the year ended December 31, 2014. As of December 31, 2014, there was $0.5 million recorded in accrued expenses and $0.6 million recorded in other long-term liabilities, related to branch closure obligations. The total branch closure obligation as of December 31, 2014 was $1.1 million, of which $1.0 million relates to Hooper Holmes Services and $0.1 million relates to Portamedic. During the year ended December 31, 2013, the Company recorded restructuring charges of $1.9 million, of which $0.8 million was recorded in continuing operations and $1.1 million was recorded in discontinued operations. Restructuring charges in continuing operations consist of severance related to the resignation of former executives and other employee severance. Restructuring changes in discontinued operations include lease closure costs as well as severance. |
Property, Plant and Equipment |
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Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment, at cost, consists of the following:
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Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill consisted of the following:
Intangible assets subject to amortization are amortized on a straight-line basis and are summarized in the table below. Intangible assets were recorded in connection with the Acquisition during 2015.
Amortization expense for 2015 was $0.9 million. Estimated aggregate amortization expense for each of the next five years is as follows:
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Accrued Expenses |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following:
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Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt The Company maintains the 2013 Loan and Security Agreement for working capital purposes and capital expenditures. The Company also entered into the Credit Agreement with SWK Funding LLC in connection with the Acquisition. The following table summarizes the Company's outstanding borrowings:
2013 Loan and Security Agreement The Company maintains the 2013 Loan and Security Agreement, as amended on March 28, 2013, July 9, 2014, April 17, 2015, August 10, 2015, and November 10, 2015, with the Senior Lender. Borrowings under the 2013 Loan and Security Agreement are to be used for working capital purposes and capital expenditures. The amount available for borrowing may be less than the $7 million under this facility at any given time due to the manner in which the maximum available amount is calculated. The Company has an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables up to $7 million under this facility. Eligible Receivables do not include certain receivables deemed ineligible by the Senior Lender pursuant to the Second Amendment to the Loan and Security Agreement ("the Second Amendment"). On August 10, 2015, the Company entered into and consummated a Fourth Amendment to the Loan and Security Agreement (the "Fourth Amendment") which added the AHS receivables to the borrowing base. As of December 31, 2015, there were $3.3 million borrowings outstanding under the 2013 Loan and Security Agreement with available borrowing capacity of $0.4 million. Average available borrowing capacity for the month of March 2016 was $0.4 million, and we had $2.4 million of cash and cash equivalents as of March 28, 2016. The 2013 Loan and Security Agreement and the Third Amendment contain various covenants, including financial covenants which require the Company to achieve a minimum EBITDA amount. The Third Amendment contained minimum EBITDA covenants of positive $0.8 million for the twelve month period ended December 31, 2015, which the Company did not comply with. On March 28, 2016, the Company obtained a Waiver and Sixth Amendment to the Loan and Security Agreement (the "Sixth Amendment") in which the lender modified the covenants to waive the minimum EBITDA covenant for the twelve months ended December 31, 2015, and replaced the covenants going forward. Refer to Note 2 for the modified covenant requirements. If the Company is unable to comply with financial covenants in 2016 and in the event that the Company was unable to modify the covenants, find new or additional lenders, or raise additional equity, it would be considered in default, which would then enable the lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, which would have a material adverse impact on the Company's business. Additionally, the Company continues to have limitations on the maximum amount of capital expenditures for each fiscal year. Interest on revolving credit loans is calculated based on the greatest of (i) the annualized prime rate plus 2.75%, (ii) the 90 day LIBOR rate plus 5.25%, and (iii) 6% per annum. The interest rate on the 2013 Loan and Security Agreement was 6.00% as of December 31, 2015. The Company is obligated to pay, on a monthly basis in arrears, an annual facility fee equal to 1% of the revolving credit limit. In connection with the 2013 Loan and Security Agreement, the Company incurred a commitment fee of $0.1 million and other debt issue costs totaling $0.9 million during the year ended December 31, 2013. During the years ended December 31, 2015 and 2014, in connection with the 2013 Loan and Security Agreement, the Company incurred $0.1 million and $0.2 million, respectively, in facility fees. As of December 31, 2015, the remaining balance in deferred financing costs recorded on the consolidated balance sheet was $0.3 million. The revolving credit loans are payable in full, together with all accrued interest and fees, on February 28, 2019. The 2013 Loan and Security Agreement provides for the prepayment of the entire outstanding balance of the revolving credit loans. The Company would be required to pay an early termination fee equal to 3% if the termination occurs prior to February 28, 2017; 2% if the termination occurs prior to February 28, 2018; and 1% if the termination occurs after February 28, 2018, but prior to February 28, 2019. The failure of the Company or any subsidiary guarantor to comply with any of the covenants or the breach of any of its or their representations and warranties, contained in the 2013 Loan and Security Agreement, constitutes an event of default under the agreement. In addition, the 2013 Loan and Security Agreement provides that "Events of Default" include the occurrence or failure of any event or condition that, in the Senior Lender's sole judgment, could have a material adverse effect (i) on the business, operations, assets, management, liabilities or condition of the Company, (ii) in the value, collectability or salability of the collateral, or (iii) on the ability of the Company and its subsidiary guarantors to perform under the 2013 Loan and Security Agreement. 2015 Credit Agreement In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement with SWK Funding LLC ("SWK") on April 17, 2015. The Credit Agreement provides the Company with a $5.0 million Term Loan. The proceeds of the Term Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement and the Acquisition described in Note 3 and general corporate purposes. The Company paid SWK an origination fee of $0.1 million. The Term Loan is due and payable on April 17, 2018. The Company is also required to make quarterly revenue-based payments in an amount equal to eight and one-half percent (8.5%) of yearly aggregate revenue up to and including $20 million, seven percent (7%) of yearly aggregate revenue greater than $20 million up to and including $30 million, and five percent (5%) of yearly aggregate revenue greater than $30 million. The revenue-based payment will be applied to fees and interest, and any excess to the principal of the Term Loan. Revenue-based payments commence in February 2016, and the maximum aggregate revenue-based principal payment is capped at $600,000 per quarter. The Company made its first principal payment of $0.5 million, on February 16, 2016, in addition to $0.2 million of interest expense, for a total payment of $0.7 million. As of December 31, 2015, the remaining balance in deferred financing costs recorded on the consolidated balance sheet was $0.2 million. The outstanding principal balance under the Credit Agreement bears interest at an adjustable rate per annum equal to the LIBOR Rate (subject to a minimum amount of one percent (1.0%)) plus fourteen percent (14.0%) and is due and payable quarterly, in arrears, commencing on August 14, 2015. Upon the earlier of (a) the maturity date on April 17, 2018, or (b) full repayment of the Term Loan, whether by acceleration or otherwise, the Company is required to pay an exit fee equal to eight percent (8%) of the aggregate principal amount of all term loans advanced under the Credit Agreement. The Company is recognizing the exit fee over the term of the Term Loan through an accretion accrual to interest expense using the effective interest method. There was no significant interest expense for the years ended 2014 and 2013. The following table summarizes the components of interest expense for the year ended December 31, 2015:
On February 25, 2016, the Company entered into a First Amendment to Credit Agreement (“First Amendment”) with SWK. The First Amendment modifies the Credit Agreement dated April 17, 2015, to extend the date the Company has to issue the additional warrant to SWK to purchase common stock valued at $1.25 million from February 28, 2016, to April 30, 2016, if the 2013 Loan and Security Agreement is not repaid in full and terminated and all liens securing the 2013 Loan and Security Agreement are not released. The First Amendment also modifies the exercise price of the warrant from one cent over the closing price on February 28, 2016, and replaced it with the closing price of our stock on April 30, 2016. Refer to Note 3 for additional discussion regarding the warrants. The First Amendment also required the Company to issue 454,545 shares of its common stock, $0.04 par value, with a value of $50,000 to SWK effective February 29, 2016. The Credit Agreement also contains certain financial covenants including minimum aggregate revenue, EBITDA, and consolidated unencumbered liquid assets requirements. The Credit Agreement contains a minimum aggregate revenue covenant of $34 million for the twelve month period ended December 31, 2015, which the Company did not comply with. On March 28, 2016, the Company obtained a Second Amendment to the Credit Agreement (the "Second Amendment") in which the lender removed the minimum aggregate revenue requirement for the twelve months ended December 31, 2015, and replaced the covenants going forward. Refer to Note 2 for the modified covenant requirements. The Second Amendment also required the Company to issue shares of its common stock, $0.04 par value, with a value of $100,000 to SWK within five business days of the transaction. If the Company is unable to comply with financial covenants in 2016 and in the event that the Company was unable to modify the covenants, find new or additional lenders, or raise additional equity, it would be considered in default, which would then enable the lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, which would have a material adverse impact on the Company's business. As security for payment and other obligations under the 2013 Loan and Security Agreement, the Senior Lender holds a security interest in all of the Company's, and its subsidiary guarantors', existing and after-acquired property, including receivables (which are subject to a lockbox account arrangement), inventory and equipment. Additionally, SWK Funding, LLC holds a security interest for final and indefeasible payment. The security interest held by SWK Funding, LLC is in substantially all of the Company's assets and the Company's subsidiaries. The aforementioned security interest is collectively referred to herein as the "collateral". Refer to Note 3 regarding additional discussion of the Warrant and additional warrant feature issued to SWK in connection with the Acquisition. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies The Company leases its corporate headquarters in Olathe, Kansas, which includes the Health and Wellness operations center, under an operating lease which expires in 2018. The Company leases its AHS operations centers in Des Moines, Iowa and Indianapolis, IN, under operating leases which expire in 2018. The Company also leases copiers and other miscellaneous equipment. These leases expire at various times through 2017. The Company is obligated under a lease related to the discontinued Hooper Holmes Services operations center through 2018 and has ceased use of this facility. The Company is still the primary lessee under operating leases for eight Portamedic branch offices and has recorded a facility closure obligation related to the above mentioned leases for future rent payments not utilized for continuing operations and such related costs are recorded in the reporting for discontinued operations. The Company has recorded a branch closure obligation of $0.7 million and $1.1 million as of December 31, 2015 and 2014, respectively related to all of the above mentioned leases. The table below presents future minimum lease payments for operating leases (with initial or remaining terms in excess of one year) as of December 31, 2015, and includes leases from both continuing and discontinued operations, as described above.
Rental expense under operating leases of continuing operations totaled $1.1 million, $0.8 million and $0.8 million in 2015, 2014 and 2013, respectively. The Company has employment agreements with certain executive employees that provide for payment of base salary for a one year period in the event their employment with the Company is terminated in certain circumstances, including following a change in control, as further defined in the agreements. In the past, some federal and state agencies have claimed that the Company improperly classified its health professionals as independent contractors for purposes of federal and state unemployment and/or worker's compensation tax laws and that the Company was therefore liable for taxes in arrears, or for penalties for failure to comply with their interpretation of the laws. There are no assurances that the Company will not be subject to similar claims in the future. |
Litigation |
12 Months Ended |
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Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation The Company, in the normal course of business, is a party to various claims and other legal proceedings. In the opinion of management, the Company has substantial legal defenses and/or insurance coverage (subject to deductibles) with respect to all of its pending legal actions. If management believes that a material loss not covered by insurance arising from these actions is probable and can reasonably be estimated, the Company may record the amount of the estimated loss or, if a loss cannot be estimated but the minimum liability may be estimated using a range and no point is more probable than another, the Company may record the minimum estimated liability. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Management believes that the ultimate outcome of all pending legal actions, individually and in the aggregate, will not have a material adverse effect on the Company's financial position that is inconsistent with its loss reserves or on its overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes can occur that exceed any amounts reserved for such losses. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods. On May 24, 2012, a complaint was filed against the Company in the United States District Court for the District of New Jersey alleging, among other things, that the Company failed to pay overtime compensation to a purported class of certain independent contractor examiners who, the complaint alleges, should be treated as employees for purposes of federal law. The complaint seeks award of an unspecified amount of allegedly unpaid overtime wages to certain examiners. The Company filed an answer denying the substantive allegations therein. On August 1, 2014, the Magistrate Judge issued a Report and Recommendation to conditionally certify the class of all contract examiners from August 16, 2010, to the present. On August 29, 2014, the Company submitted its objections to the Report and Recommendation of the Magistrate Judge. The Magistrate has suspended ruling concerning those objections while the parties pursue the possibility of a settlement If the case is not settled, and if the Magistrate's decision stands, notice will be sent to contractors who performed work for the Company within the requisite time period noted above. The claim is not covered by insurance, and the Company is incurring legal costs to defend the litigation which are recorded in discontinued operations. This matter relates to the former Portamedic service line for which the Company retained liability. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The components of the income tax provision are as follows:
The following reconciles the “statutory” federal income tax rate to the effective income tax rate:
The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows:
The Company has significant deferred tax assets attributable to tax deductible intangibles and federal and state net operating loss carryforwards, which may reduce taxable income in future periods. Based on the cumulative tax and operating losses, the lack of taxes in the carryback period, and the uncertainty surrounding the extent or timing of future taxable income, the Company believes it is not more likely than not that it will realize the tax benefits of its deferred tax assets. Accordingly, the Company continues to record a full valuation allowance on its net deferred tax assets as of December 31, 2015 and 2014, with the exception of deferred income tax on the liabilities of certain indefinite-lived intangibles. There was no current federal tax expense recorded in the years ended December 31, 2015, 2014 and 2013. The current state tax expense recorded for the years ended December 31, 2015, 2014 and 2013 reflects a state tax liability to one state. Deferred tax expense is recorded as of December 31, 2015. There was no deferred tax expense recorded for years ended December 31, 2014 and December 31, 2013. The tax years 2012 through 2015 may be subject to federal examination and assessment. Tax years from 2007 through 2011 remain open solely for purposes of federal and certain state examination of net operating loss and credit carryforwards. State income tax returns may be subject to examination for tax years 2011 through 2015, depending on state tax statute of limitations. As of December 31, 2015, the Company had U.S. federal and state net operating loss carryforwards of approximately $167.2 million and $149.8 million, respectively. The net operating loss carryforwards, if not utilized, will expire in the years 2016 through 2035. Since the Company had changes in ownership during 2015, additional limitations under IRC Section 382 of the Internal Revenue Code of 1986 may apply to the future utilization of certain tax attributes including net operating loss (“NOL”) carryforwards, other tax carryforwards, and certain built-in losses. The Company has not yet completed its analysis of any impact of these ownership changes. No tax benefit has been reported since a full valuation allowance offsets these tax attributes. However, limitations could apply even if the valuation allowance was released. |
Capital Stock |
12 Months Ended |
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Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Capital Stock | Capital Stock The 2013 Loan and Security Agreement prohibits the Company from repurchasing or retiring shares of its common stock and paying dividends (see Note 10). The Company did not repurchase any shares of its common stock in 2015, 2014 and 2013. |
401(k) Savings and Retirement Plan |
12 Months Ended |
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Dec. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
401(k) Savings and Retirement Plan | 401(k) Savings and Retirement Plan The Company’s 401(k) Savings and Retirement Plan (the “401(k) Plan”) is available to all employees with at least one year of employment service, who have worked at least 1,000 hours in a service year and who are at least 21 years of age. There were no Company contributions related to the 401(k) Plan during the years ended December 31, 2015, 2014 and 2013. The Company’s common stock is not an investment option to employees participating in the 401(k) Plan. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company determines the fair value measurements used in our consolidated financial statements based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
The Company estimated the fair value of the derivative liability and the term loan using the Black-Scholes valuation model, which is a Level 3 valuation technique.
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Subsequent Events |
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Subsequent Events | Subsequent Events Rights Offering On November 12, 2015, the Company filed a registration statement on Form S-1 with the SEC, which disclosed the Company’s intention to commence a rights offering of the Company’s common stock. The Company made the rights offering by distributing subscription rights to shareholders owning Company common stock on the record date. The record date for the offering was December 24, 2015, with an expiration date of January 25, 2016. The Registration Statement under the Securities Act of 1933, as amended, to which the rights offering related was declared effective on December 18, 2015. Each subscription right entitled a shareholder to purchase shares of the Company’s common stock in the offering on a pro rata basis and included an oversubscription right to allow a shareholder that had exercised all of its basic subscription rights to purchase, again on a pro rata basis, any shares subject to the offering but not subscribed for by the shareholders under their basic subscription rights. The Company raised $3.5 million through the rights offering and issued 39,026,839 shares at a price of $.09 per share. Additional Equity Contributions On March 28, 2016, the Company received $1,200,000 in additional equity by issuing 10,000,000 shares of its common stock, $0.04 par value, to 200 NNH, LLC, (the "Investor") a new private investor, which will be used to fund working capital. Pursuant to the Stock Purchase Agreement, there is a lock-up period of 18 months, during which time the Investor cannot sell the shares acquired. The Investor also has the right to send a representative to meetings of the Company's Board of Directors as a non-voting observer for so long as the Investor owns at least 5% of the Company's outstanding shares. The following table provides unaudited pro forma results to show the effect of the additional equity raised on Cash and Stockholder's equity:
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Quarterly Financial Data (Unaudited) |
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Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data (Unaudited) | Quarterly Financial Data (Unaudited) (dollars in thousands, except per share data)
a) Due to rounding, the sum of the quarters may not equal the full year. |
Valuation and Qualifying Accounts |
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Valuation and Qualifying Accounts | Schedule II Hooper Holmes, Inc Valuation and Qualifying Accounts For the Three Years Ended December 31, 2015 (In thousands)
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Hooper Holmes, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. |
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Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments with original maturities at the date of purchase of less than 90 days to be cash equivalents. |
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Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the invoiced amount. Customer contracts state that we can charge interest but historically the Company has not. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Allowances for uncollectible accounts are estimated based on the Company's periodic review of accounts receivable historical losses and current receivables aging. Account balances are charged off to the allowance after all means of collections have been exhausted and potential for recovery is considered remote. Customer billing adjustments are recorded against revenue whereas adjustments for bad debts are recorded within selling, general and administrative expenses. The Company does not have any off-balance sheet credit exposure related to its customers. |
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Inventories | Inventories Inventories, which consist of finished goods and component inventory, are stated at the lower of average cost or market. |
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Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the assets’ estimated useful lives. Leasehold improvements are amortized over the shorter of the estimated useful life of the improvement or the remaining lease term. The cost of maintenance and repairs is charged to operations as incurred. Internal use software and website development costs are capitalized and included in property, plant and equipment in the consolidated balance sheet. These assets are depreciated over the estimated useful life of the asset using the straight-line method. Subsequent modifications or upgrades to internal use software are capitalized only to the extent that additional functionality is provided. |
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Long-Lived Assets | Long-Lived Assets Long-lived assets are reviewed for impairment when events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Some of the key assumptions utilized in determining future projected cash flows include estimated growth rates, expected future sales, and estimated costs. |
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Goodwill | Goodwill Goodwill is accounted for under the provisions of ASC 350, Intangibles – Goodwill and Other. All goodwill is assigned to one reporting unit, where it is subject to an annual impairment assessment, or more frequently if circumstances indicate that impairment is likely. Any one event or a combination of events such as change in the business climate, a negative change in relationships with significant customers and changes to strategic decisions, including decisions to expand made in response to economic or competitive conditions could require an interim assessment prior to the next required annual assessment. The Company assessed its goodwill for impairment as of December 31, 2015, and concluded that goodwill was not impaired. The assessment consisted of a quantitative analysis in accordance with Accounting Standards Update ("ASU") 2011-08, Testing for Goodwill Impairment, in which the fair value of our reporting unit exceeded the carrying amount. |
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Deferred Rent | Deferred Rent The Company accounts for scheduled rent increases contained in its leases on a straight-line basis over the term of the lease. |
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Revenue Recognition | Revenue Recognition Revenue is recognized for screening services when the screening is completed and the results are delivered to our customers. Revenue for portal services are recognized on a per eligible member, per month basis, while revenue from coaching services are recognized as services are performed. Revenue for kit assembly is recorded upon shipment to the customers. In all cases, there must be evidence of an agreement with the customer, the sales price must be fixed or determinable, delivery of services must have occurred, and the ability to collect must be reasonably assured. Sales tax collected from customers and remitted to governmental authorities is accounted for on a net basis and therefore is excluded from revenues in the consolidated statements of operations. |
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Share-Based Compensation | Share-Based Compensation The Company recognizes all share-based compensation to employees, directors, and consultants, including grants of stock options and restricted stock, in the financial statements as compensation cost based on their fair value on the date of grant, in accordance with ASC 718, Compensation-Stock Compensation. This compensation cost is recognized over the vesting period on a straight-line basis for the fair value of awards expected to vest. Refer to Note 4 for a detailed discussion of share-based payments. |
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Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. |
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Income Tax Uncertainties | The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the tax authorities. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense. |
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(Loss) Earnings per Common Share | (Loss) Earnings per Common Share Basic (loss) earnings per share equals net (loss) income divided by the weighted average common shares outstanding during the period. Diluted (loss) earnings per share equals net (loss) income divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. |
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Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of receivable balances, property, plant and equipment, deferred tax assets, share based compensation expense and the assessment of contingencies, among others. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which the Company believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates will be reflected in the consolidated financial statements in future periods. |
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New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with early adoption permitted as of the original effective date or first quarter of 2017. The Company is currently evaluating the effect that ASU 2014-09 will have on the consolidated financial statements and related disclosures. In April 2015, the FASB issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs", which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. The Company has unamortized debt issuance costs of $0.3 million that is included in Other Assets as of December 31, 2015, and will be reclassified as an offset to Debt in the first quarter of 2016. ASU 2015-03 is effective for the Company in the first quarter of 2016, with early adoption permitted, and retrospective application required. In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments", which eliminates the requirement to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated. An acquirer now must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustments amounts are determined. ASU 2015-16 is effective for the Company in the first quarter of 2016, with early adoption permitted. We elected to early adopt the provisions of this new standard for the year ended December 31, 2015. The adoption of this standard did not have a material impact on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes", which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. We elected to early adopt the provisions of this new standard for the year ended December 31, 2015, on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases", which is intended to improve financial reporting about leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial position, results of operations or cash flows. |
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Fair Value Measurements | Fair Value Measurements The Company determines the fair value measurements used in our consolidated financial statements based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
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Acquisition (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Impact Due to Acquisition | The following table summarizes the net impact to cash for the proceeds of the Credit Agreement, debt assumed (Term Loan less the fair value of the Warrant and derivative liability), issuance of common shares, the impact to additional paid-in capital for the issuance of shares and fair value of the Warrant, derivative liability and transaction costs, as of the origination date:
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Preliminary Allocation of Purchase Price | The allocation of purchase price is as follows:
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Business Acquisition, Pro Forma Information | The following table provides unaudited pro forma results of operations for the years ended December 31, 2015 and 2014, as if the acquisition had been completed on the first day of our 2014 fiscal year.
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Share-Based Compensation (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of each stock option granted during the year was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
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Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes stock option activity for the year ended December 31, 2015:
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Discontinued Operations (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | The following table summarizes the major classes of line items constituting the pretax results of operations of Heritage Labs and Hooper Holmes Services for the years ended December 31, 2015, 2014 and 2013, which are reported as a component of discontinued operations in the consolidated statement of operations. 2015 discussion or include in table There was no income tax recorded in discontinued operations for Heritage Labs and Hooper Holmes Services for any period presented.
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Restructuring Charges (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs | The following table provides a summary of the activity in the restructure accrual for the year ended December 31, 2015 and 2014:
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Property, Plant and Equipment (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, plant and equipment, at cost, consists of the following:
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Goodwill and Other Intangible Assets (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | Goodwill consisted of the following:
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Schedule of Finite-Lived Intangible Assets | Intangible assets subject to amortization are amortized on a straight-line basis and are summarized in the table below. Intangible assets were recorded in connection with the Acquisition during 2015.
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Schedule of Estimated Aggregate Amortization Expense | Estimated aggregate amortization expense for each of the next five years is as follows:
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Accrued Expenses (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses | Accrued expenses consisted of the following:
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Borrowings | The following table summarizes the Company's outstanding borrowings:
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Schedule of Components of Interest Expense | The following table summarizes the components of interest expense for the year ended December 31, 2015:
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Future Payments for Operating Leases | The table below presents future minimum lease payments for operating leases (with initial or remaining terms in excess of one year) as of December 31, 2015, and includes leases from both continuing and discontinued operations, as described above.
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense | The components of the income tax provision are as follows:
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Schedule of Effective Income Tax Rate Reconciliation | The following reconciles the “statutory” federal income tax rate to the effective income tax rate:
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Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of derivative liability | The Company estimated the fair value of the derivative liability and the term loan using the Black-Scholes valuation model, which is a Level 3 valuation technique.
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Subsequent Events (Tables) |
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Subsequent Events [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the effect of the rights offering on Cash and Stockholder's equity | The following table provides unaudited pro forma results to show the effect of the additional equity raised on Cash and Stockholder's equity:
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Quarterly Financial Data (Unaudited) (Tables) |
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Quarterly Financial Data [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Data (Unaudited) |
a) Due to rounding, the sum of the quarters may not equal the full year. |
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Accounting Policies [Abstract] | ||
Inventory, finished goods | $ 0.4 | $ 0.7 |
Inventory, components | $ 0.3 | $ 0.2 |
Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) |
12 Months Ended | ||
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Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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Property, Plant and Equipment [Line Items] | |||
Impairment charge of long-lived assets related to continuing operations | $ 0 | $ 0 | $ 212,000 |
mpairment charge of long-lived assets related to discontinued operations | $ 40,000 | 100,000 | |
Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Impairment charge of long-lived assets related to continuing operations | $ 200,000 |
Summary of Significant Accounting Policies - Goodwill (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounting Policies [Abstract] | ||
Goodwill | $ 633 | $ 0 |
Summary of Significant Accounting Policies - Deferred Rent (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounting Policies [Abstract] | ||
Deferred rent | $ 0.2 | $ 0.2 |
Summary of Significant Accounting Policies - (Loss) Earnings per Common Share (Details) - shares |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
Accounting Policies [Abstract] | |||
Outstanding options (shares) | 4,398,700 | 3,652,200 | 4,150,550 |
Number of shares called by each warrant (shares) | 8,152,174 |
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Customer Concentration Risk [Member] - customer |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Number of major customers | 2 | 2 | |
Concentration risk, percentage | 34.00% | 39.00% | |
Revenue [Member] | Health & Wellness [Member] | |||
Concentration Risk [Line Items] | |||
Number of major customers | 2 | 3 | 3 |
Concentration risk, percentage | 30.00% | 50.00% | 50.00% |
Acquisition - Preliminary purchase price allocation (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Apr. 17, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 633 | $ 0 | |
Accountable Health Solutions, Inc Asset Purchase Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Accounts receivable, net of allowance of $2 | $ 918 | ||
Inventory and other current assets | 117 | ||
Fixed assets | 123 | ||
Goodwill | 633 | ||
Accounts payable and accrued expenses | (743) | ||
Deferred revenue | (296) | ||
Purchase Price | 7,000 | ||
Accounts receivable, allowance | 2 | ||
Portal [Member] | Accountable Health Solutions, Inc Asset Purchase Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | 4,151 | ||
Customer Relationships [Member] | Accountable Health Solutions, Inc Asset Purchase Agreement [Member] | |||
Business Acquisition [Line Items] | |||
Finite-lived intangible assets | $ 2,097 |
Acquisition - Pro forma results of operations (Details) - Accountable Health Solutions, Inc Asset Purchase Agreement [Member] - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Business Acquisition [Line Items] | ||
Pro forma revenues | $ 34,996 | $ 44,087 |
Pro forma net loss from continuing operations | $ (10,847) | $ (12,372) |
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 8,427 | $ 7,415 | |
Less: accumulated depreciation and amortization | 5,656 | 4,361 | |
Property, plant and equipment, net | 2,771 | 3,054 | |
State and local - current | 12 | 23 | $ 19 |
Income tax expense | 19 | 23 | $ 19 |
Building and leasehold improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 1,386 | 1,386 | |
Furniture, fixtures and equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 4,040 | 3,586 | |
Software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 3,001 | $ 2,443 |
Property, Plant and Equipment - Summary of Asset Lives (Details) |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Building and leasehold improvements [Member] | Minimum [Member] | |
Estimated useful life | 3 years |
Building and leasehold improvements [Member] | Maximum [Member] | |
Estimated useful life | 45 years |
Furniture, fixtures and equipment [Member] | Minimum [Member] | |
Estimated useful life | 2 years |
Furniture, fixtures and equipment [Member] | Maximum [Member] | |
Estimated useful life | 10 years |
Software [Member] | Minimum [Member] | |
Estimated useful life | 1 year |
Software [Member] | Maximum [Member] | |
Estimated useful life | 7 years |
Goodwill and Other Intangible Assets - Goodwill (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance at January 1, | $ 0 |
Goodwill recorded in connection with Acquisition | 633 |
Ending balance at December 31, | $ 633 |
Goodwill and Other Intangible Assets - Intangible Assets (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Assets, Gross Carrying Amount | $ 6,248 |
Finite-Lived Intangible Assets, Accumulated Amortization | 917 |
Finite-Lived Intangible Assets, Net | 5,331 |
Portal [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Assets, Gross Carrying Amount | 4,151 |
Finite-Lived Intangible Assets, Accumulated Amortization | 732 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-Lived Intangible Assets, Gross Carrying Amount | 2,097 |
Finite-Lived Intangible Assets, Accumulated Amortization | $ 185 |
Goodwill and Other Intangible Assets - Amortization Expense (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
2016 | $ 1,300 |
2017 | 1,300 |
2018 | 1,300 |
2019 | 565 |
2020 | $ 262 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued wages | $ 712 | $ 371 |
Reserve for unclaimed property | 1,035 | 984 |
Restructure reserves | 443 | 502 |
Legal accrual | 300 | 0 |
Deferred revenue | 1,031 | 332 |
Tail coverage insurance | 0 | 810 |
Other accrued expenses | 1,665 | 1,084 |
Accrued Expenses | $ 5,186 | $ 4,083 |
Long-Term Debt - Schedule of Outstanding Borrowings (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Debt Instrument [Line Items] | ||
Total debt | $ 5,493 | |
Discount on Term Loan | (2,785) | |
Short term portion | (5,493) | $ 0 |
Total long-term debt, net of discount | 0 | |
Line of Credit [Member] | 2013 Loan and Security Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | 3,278 | |
Term Loan [Member] | 2015 Credit Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Total debt | $ 5,000 |
Long-Term Debt - Components of interest expense (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Apr. 17, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs | $ 385 | $ 343 | $ 298 | |
Accretion of debt discount associated with Warrant | 581 | |||
Accretion of discount associated with additional warrant feature | 199 | |||
Mark to market of the additional warrant feature | (80) | |||
Total interest expense | 1,796 | |||
Term Loan [Member] | 2015 Credit Agreement [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense on debt | 529 | |||
Accretion of termination fees (over term of Term Loan at rate of 8%) | 88 | |||
Exit fee (percent) | 8.00% | |||
Term Loan [Member] | 2015 Credit Agreement [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||
Debt Instrument [Line Items] | ||||
Spread on variable rate (percent) | 14.00% | |||
Line of Credit [Member] | 2013 Loan and Security Agreement [Member] | ||||
Debt Instrument [Line Items] | ||||
Interest expense on debt | $ 94 |
Commitments and Contingencies (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
branch_office
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Commitments and Contingencies Disclosure [Abstract] | |||
Number of offices under which the company is the primary lessee | branch_office | 8 | ||
Branch closure obligation | $ 657 | $ 1,074 | |
Rental expense | $ 1,100 | $ 800 | $ 800 |
Employment agreements, contract term | 1 year |
Commitments and Contingencies - Schedule of minimum lease payments (Details) $ in Thousands |
Dec. 31, 2015
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2016 | $ 1,847 |
2017 | 1,773 |
2018 | 1,347 |
2019 | 0 |
2020 | 0 |
Thereafter | 0 |
Total minimum lease payments | 4,967 |
Estimated sublease payments (not included in minimum lease payments) | (1,018) |
Total minimum lease payments, net of estimated sublease income | $ 3,949 |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Federal - current | $ 0 | $ 0 | $ 0 |
State and local - current | 12 | 23 | 19 |
Federal - deferred | 6 | 0 | 0 |
State and local - deferred | 1 | 0 | 0 |
Income tax provision | $ 19 | $ 23 | $ 19 |
Income Taxes - Income tax rate reconciliation (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Tax Disclosure [Abstract] | |||
Computed expected income tax benefit | (35.00%) | (35.00%) | (35.00%) |
Reduction (increase) in income tax benefit and increase (reduction) in income tax expense resulting from: | |||
State tax, net of federal benefit | 0.00% | 0.00% | 0.00% |
Change in federal valuation allowance | 35.00% | 35.00% | 35.00% |
Other | 0.00% | 0.00% | 0.00% |
Effective income tax rate | 0.00% | 0.00% | 0.00% |
Income Taxes - Net deferred tax assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred tax assets: | ||
Receivable allowance | $ 43 | $ 34 |
Goodwill | 0 | 347 |
Accumulated depreciation | 214 | 0 |
Restructuring accrual | 376 | 45 |
Intangible assets | 484 | 219 |
Compensation expense | 417 | 690 |
Federal net operating loss carryforward | 58,532 | 55,865 |
State net operating loss carryforward | 6,040 | 6,502 |
Accrued expenses | 344 | 17 |
Deferred rent | 102 | 102 |
Deferred revenue | 343 | 0 |
Other | 43 | 18 |
Gross deferred tax assets | 66,938 | 63,839 |
Valuation allowance | (66,929) | (63,817) |
Deferred tax assets, net of valuation allowance | 9 | 22 |
Deferred tax liabilities: | ||
Impairment and accumulated depreciation | 0 | (22) |
Interest | (9) | 0 |
Goodwill | (7) | 0 |
Gross deferred tax liabilities | (16) | (22) |
Net deferred tax assets | $ (7) | $ 0 |
Income Taxes - Narrative Information (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
state
|
Dec. 31, 2014
USD ($)
state
|
Dec. 31, 2013
USD ($)
state
|
|
Federal tax expense | $ 0 | $ 0 | $ 0 |
Number of states with state tax liability | state | 1 | 1 | 1 |
Deferred federal income tax expense | $ 6 | $ 0 | $ 0 |
Deferred state income tax expense | 1 | $ 0 | $ 0 |
U.S. Federal [Member] | |||
Net operating loss carryforwards | 167,200 | ||
State [Member] | |||
Net operating loss carryforwards | $ 149,800 |
Capital Stock (Details) - shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Stockholders' Equity Note [Abstract] | |||
Stock repurchased (shares) | 0 | 0 | 0 |
401(k) Savings and Retirement Plan (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
hours
|
Dec. 31, 2014
USD ($)
|
Dec. 31, 2013
USD ($)
|
|
Compensation and Retirement Disclosure [Abstract] | |||
401(k) eligibility, minimum employment service | 1 year | ||
401(k) eligibility, minimum hours | hours | 1,000 | ||
401(k) eligibility, minimum age | 21 years | ||
Company contributions | $ | $ 0 | $ 0 | $ 0 |
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions |
Mar. 28, 2016 |
Jan. 25, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Subsequent Event [Line Items] | ||||
Common stock, par value (in usd per share) | $ 0.04 | $ 0.04 | ||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Proceeds from rights offering of common stock | $ 1.2 | $ 3.5 | ||
Issuance of common stock (shares) | 10,000,000 | 39,026,839 | ||
Price per share of shares issued (in usd per share) | $ 0.09 | |||
Common stock, par value (in usd per share) | $ 0.04 | |||
Stock purchase agreement, lock-up period | 18 months | |||
Stock purchase agreement, minimum required ownership percentage of shares (as a percent) | 5.00% |
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Financial Data [Abstract] | |||||||||||
Revenues | $ 9,499 | $ 9,272 | $ 7,662 | $ 5,681 | $ 6,671 | $ 7,875 | $ 6,679 | $ 7,299 | $ 32,115 | $ 28,524 | $ 24,171 |
Gross profit | 1,971 | 2,129 | 1,693 | 732 | 1,127 | 1,854 | 2,150 | 1,656 | 6,525 | 6,787 | 6,404 |
Loss from continuing operations | (2,848) | (2,061) | (3,342) | (2,103) | (1,229) | 77 | (1,911) | (2,851) | (10,354) | (5,913) | (12,680) |
Income (loss) from discontinued operations | (438) | (57) | (21) | (4) | (440) | (1,385) | (902) | 166 | (520) | (2,562) | 1,405 |
Net loss | $ (3,286) | $ (2,118) | $ (3,363) | $ (2,107) | $ (1,669) | $ (1,308) | $ (2,813) | $ (2,685) | $ (10,874) | $ (8,475) | $ (11,275) |
Basic (loss) earnings/income per share: Loss from continuing operations (usd per share) | $ (0.04) | $ (0.03) | $ (0.05) | $ (0.03) | $ (0.02) | $ 0.00 | $ (0.03) | $ (0.04) | $ (0.14) | $ (0.08) | $ (0.18) |
Basic (loss) earnings/income per share: (Loss) income from discontinued operations (usd per share) | (0.01) | 0.00 | 0.00 | 0.00 | (0.01) | (0.02) | (0.01) | 0.00 | 0.00 | (0.04) | 0.02 |
Net loss, basic (usd per share) | (0.04) | (0.03) | (0.05) | (0.03) | (0.02) | (0.02) | (0.04) | (0.04) | (0.14) | (0.12) | (0.16) |
Diluted (loss) earnings/income per share: Loss from continuing operations (usd per share) | (0.04) | (0.03) | (0.05) | (0.03) | (0.02) | 0.00 | (0.03) | (0.04) | (0.14) | (0.08) | (0.18) |
Diluted (loss) earnings/income per share: (Loss) income from discontinued operations (usd per share) | (0.01) | 0.00 | 0.00 | 0.00 | (0.01) | (0.02) | (0.01) | 0.00 | 0.00 | (0.04) | 0.02 |
Net loss, diluted (usd per share) | $ (0.04) | $ (0.03) | $ (0.05) | $ (0.03) | $ (0.02) | $ (0.02) | $ (0.04) | $ (0.04) | $ (0.14) | $ (0.12) | $ (0.16) |
Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | $ 87 | $ 153 | $ 662 |
Additions Charged to Revenues and Expenses | 74 | 85 | 1,576 |
Deductions | (49) | (151) | (2,085) |
Balance at End of Period | 112 | 87 | 153 |
Reduction to revenues | $ 0 | $ 0 | $ 1,600 |
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