Note 2 - Property and Equipment

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note 2.    Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation for Gamma Knife units and other equipment is determined using the straight-line method over the estimated useful lives of the assets, which for medical and office equipment is generally between three and ten years, and after accounting for salvage value on the equipment where indicated. Depreciation expense for the three and nine-month periods ended September 30, 2023 was $1,265,000 and $3,874,000 compared to $1,182,000 and $3,557,000 for the same periods in the prior year, respectively.  During the three-month period ended June 30, 2023, the Company increased its asset retirement obligation accrual and recorded a write-down of the related assets of $578,000. Accordingly, the Company’s loss on write down of impaired assets and associated removal costs during the three and nine-month periods ended September 30, 2023 was $0 and $578,000, respectively.  There were no similar write downs in the same periods in the prior year.

The Company determines salvage value based on the estimated fair value of the equipment at the end of its useful life. As of January 1, 2023, the Company reduced its estimated useful life and assigned salvage value for one of its international Gamma Knife units. The net effect of the change in estimate made January 1, 2023, for the three and nine-month periods ended September 30, 2023, was a decrease in net income of approximately $50,000 or $0.01 per diluted share and $151,000 or $0.02 per diluted share, respectively. This change in estimate will also impact future periods.

Depreciation for PBRT equipment is determined using the modified units of production method, which is a function of both time and usage of the equipment. This depreciation method allocates costs considering the projected volume of usage through the useful life of the PBRT unit, which has been estimated at 20 years. The estimated useful life of the PBRT unit is consistent with the estimated economic life of 20 years.

The following table summarizes property and equipment as of September 30, 2023 and December 31, 2022:

	September 30,			December 31,
	2023			2022
Medical equipment and facilities	$	73,884,000		$	73,709,000
Office equipment		300,000			422,000
Construction in progress		5,436,000			106,000
		79,620,000			74,237,000
Accumulated depreciation		(54,442,000	)		(50,770,000	)
Net property and equipment	$	25,178,000		$	23,467,000
Net property and equipment held outside of the United States	$	4,038,000		$	2,201,000