Note 2 - Ownership Interests and Advances

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Investments in and Advances to Affiliates, Schedule of Investments [Text Block]

2. Ownership Interests and Advances

The following summarizes the carrying value of the Company’s ownership interests and advances. 

	September 30, 2021		December 31, 2020
	(Unaudited - In thousands)
Equity Method:
Companies	$	23,828	$	27,550
Private equity funds		117		271
		23,945		27,821
Other Method:
Companies, fair value		10,792		—
Companies, fair value measurement alternative		514		19,683
Private equity funds, fair value measurement alternative		258		268
		11,564		19,951
Advances to companies		775		2,626
	$	36,284	$	50,398

During the nine months ended September 30, 2021, Zipnosis, Inc. was acquired by another entity, Bright Health.  The Company received $3.5 million in cash proceeds, including escrows, and $15.3 million in preferred equity in the acquiror in connection with this transaction.  This ownership interest represented a security that did not have a readily determinable fair value.  Due to the inherent uncertainty of determining the fair value of ownership interests that do not have a readily determinable fair value, this estimated value  may differ significantly from the value that would have been reported had a ready market for the security existed, and it is reasonably possible that the difference could be material.  The Company recognized a $17.3 million gain on the sale, which is included in Equity income (loss), net in the Consolidated Statements of Operations.  The fair value of the ownership interest received as a result of the acquisition was estimated based on evaluating several valuation methods available, including the value at which independent third parties have recently invested, the valuation of comparable public companies, and the present value of our expected outcomes.  Assumptions considered within these methods include determining which public companies are comparable, projecting forward revenues, selecting an appropriate valuation multiple, discounts to apply for the lack of marketability or lack of comparability, other factors and the relative weight to apply to each valuation method available.  Due to the unobservable nature of some of these inputs, we have determined this initial estimate to be a Level 3 fair value measurement.  During the three months ended June 30, 2021, Bright Health completed an initial public offering that resulted in our ownership interest converting into approximately 1.3 million common shares.  Accordingly, the Bright Health common shares represent an ownership interest with a readily determinable fair value (Level 1), which will subsequently be measured at fair value with unrealized gains (losses) being reported as a component of Other income (loss), net.  As a result of these changes, the Company recognized an additional $7.4 million unrealized gain on Bright Health during the three months ended June 30, 2021.  The Company recognized an unrealized loss on Bright Health of $11.9 million during the three months ended September 30, 2021.  

During the three and nine months ended September 30, 2021, Flashtalking was acquired by another entity.  The Company received $44.8 million in cash proceeds and recorded a $32.3 million gain.  The Company may receive additional amounts of approximately $0.7 million over the next 24 months from the resolution of escrow contingencies.  

During the nine months ended September 30, 2021, WebLinc, Inc. was acquired by another entity.  The Company has received $3.6 million in cash proceeds to-date and may receive additional amounts over the next 15 months based on certain transactional performance activities, which could be partially offset by indemnifiable claims.  The Company has recognized a $0.1 million loss on the sale during the nine months ended September 30, 2021, which is included in Equity income (loss), as certain contingencies were resolved during the three months ended September 30, 2021.  To the extent additional amounts are collected as contingencies are resolved, those amounts will be recorded as gain on the sale and included within Equity income (loss).  QuanticMind was acquired during the first quarter by another entity, however there were no resultant proceeds to the Company.  There was no resulting gain or loss due to this equity method ownership interest being impaired during the prior year.

During the nine months ended September 30, 2021, the Company's ownership interest in T-REX Group, Inc., which was accounted for using the fair value measurement alternative, was acquired for $3.0 million in cash.  The Company recognized a $0.9 million gain, which is included in Other income (loss), net.  Hoopla was also acquired during the first quarter of 2021 by another entity, however there were no resultant proceeds to the Company.  There was no resulting gain or loss due to this Other method ownership interest being impaired during the prior year.

In April 2021, Velano Vascular was acquired by another entity.  The Company has received $3.5 million in cash proceeds and recorded a $1.9 million gain for the nine months ended September 30, 2021.  The Company  may receive additional amounts over the next 12 months from the resolution of escrow contingencies.

During the three and nine months ended September 30, 2021, the Company recorded an impairment of $2.5 million related to reduced expectations for certain Other ownership interests.

Summarized Financial Information

The following table summarizes the statement of operations data for the companies accounted for under the equity method for the three and nine months ended September 30, 2021 and 2020, respectively. These results have been compiled from the respective companies' financial statements, reflect certain historical adjustments, and are reported on a one quarter lag basis. Results of operations of the companies are excluded for periods prior to their acquisition, subsequent to their disposition and subsequent to the discontinuation of the equity method of accounting. Historical results are not adjusted when the Company exits, writes-off or discontinues the equity method of accounting. 

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(Unaudited - In thousands)
Results of Operations:
Revenue	$	35,447		$	39,388		$	106,097		$	119,270
Gross profit	$	23,023		$	23,244		$	69,124		$	73,395
Net loss	$	(25,390	)	$	(15,650	)	$	(77,092	)	$	(56,684	)