Note 3 - Investments in Related Parties

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Equity Method Investments and Joint Ventures Disclosure [Text Block]

3. Investments in Related Parties

The following table summarizes the Company’s investment in HC Realty as of September 30, 2024 and  December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 (dollar amounts in thousands):

											Loss recorded in the Consolidated
	Ownership %						Carrying Value				Statements of Operations (b)
											For the Three						For the Nine
											Months Ended						Months Ended
											September 30,						September 30,
	September 30,			December 31,			September 30,		December 31,
	2024			2023			2024		2023		2024			2023			2024			2023
HC Series B Stock (a)		27.9	%		26.3	%	$	10,250	$	10,250	$	-		$	-		$	-		$	-
HC Common Stock		0.1	%		1.1	%		28		301		(2	)		(145	)		(273	)		(189	)
Total		28.0	%		27.4	%	$	10,278	$	10,551	$	(2	)	$	(145	)	$	(273	)	$	(189	)

(a) Represents investments in shares of HC Series B Stock with a basis of $10.25 million. Each share of HC Series B Stock has voting rights on an as converted basis and can be converted into shares of HC Common Stock at a conversion ratio equal to $10.00 per share divided by the lesser of $9.10 per share or the fair market value per share of HC Common Stock, subject to adjustment upon the occurrence of certain events.

(b) Loss from these investments is included in “Income (loss) from investments in related parties, net” in the Unaudited Consolidated Statements of Operations. Since HC Realty is a REIT and not a taxable entity, the loss is not reported net of taxes.

The Company’s investment in HC Common Stock is accounted for under the equity method of accounting as the Company has concluded it has a significant influence over the investee. The HC Series B Stock is not deemed to be in-substance common stock and is accounted for under the cost adjusted for market observable events less impairment method. Both investments in HC Common Stock and HC Series B Stock are evaluated quarterly for impairment. During the three and nine months ended September 30, 2024 and 2023, the Company did not recognize any impairments of HC Series B Stock. During the three and nine months ended September 30, 2024, the Company recognized an impairment of HC Common Stock of $0 and $241,000, respectively. There were no impairments of HC Common Stock recognized during the three and nine months ended September 30, 2023.

As a result of the Company’s holding in HC Realty, the Company includes the following summarized income statement information of HC Realty for the three and nine months ended September 30, 2024 and 2023 (in thousands):

	Three Months						Nine Months
	Ended						Ended
	September 30,			September 30,			September 30,			September 30,
	2024			2023			2024			2023
Total revenue	$	5,365		$	5,378		$	15,977		$	15,545
Total expense		10,490			8,993			28,139			25,032
Net loss	$	(5,125	)	$	(3,615	)	$	(12,162	)	$	(9,487	)

The Company’s other investments in related parties totaled $306,000 and $283,000 as of September 30, 2024 and December 31, 2023, respectively, and included investments in limited liability companies and corporations. These investments do not meet the criteria for accounting under the equity method and are accounted for under the cost adjusted for market observable events less impairment method. As of September 30, 2024, the Company had total receivables from the related parties of $12,000 and payables of $37,000. As of December 31, 2023, the Company had total receivables and payables from these related parties of $27,000 and $73,000, respectively. During the three- and nine-month periods ended September 30, 2024, the Company received $75,000 and $275,000 of distributions from other investments in related parties, respectively, which are included in “Income (loss) from investments in related parties, net” in the Unaudited Consolidated Statements of Operations. During the three- and nine-month periods ended September 30, 2023, the Company received $46,000 of distributions from other investments in related parties.