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Discontinued Operations
3 Months Ended
Sep. 30, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations

Note 3. – Discontinued Operations

All of the businesses discussed in the note below are reported as discontinued operations and the condensed consolidated financial statements for all prior periods have been adjusted to reflect this presentation.

Results for all of the businesses included in discontinued operations are presented in the following table:

 

     Three Months Ended  
     September 30,  
     2016      2015  

Net Revenues:

     

Chestatee Hospital

   $ 2,101       $ 3,888   

Other Sold Hospitals

     (234      100   
  

 

 

    

 

 

 
   $ 1,867       $ 3,988   
  

 

 

    

 

 

 

Earnings (loss) before income taxes:

     

Chestatee Hospital

   $ (64    $ (594

Other Sold Hospitals

     (238      (188

Life sciences and engineering

     (37      (36
  

 

 

    

 

 

 

Earnings (loss) before income taxes

     (339      (818

Gain on Sale:

     

Chestatee Hospital

     7,246         0   
  

 

 

    

 

 

 

Earnings (Loss) before income taxes

     7,246         (818
  

 

 

    

 

 

 

Income tax expense (benefit)

     2,634         283   
  

 

 

    

 

 

 

Earnings (Loss) from discontinued operations

   $ 4,273       $ (535
  

 

 

    

 

 

 

Chestatee Hospital—On August 19, 2016, the Company’s subsidiary Southern Health Corporation of Dahlonega, Inc. (“Chestatee”) sold substantially all of the assets and certain liabilities of Chestatee Regional Hospital in Dahlonega, Georgia through an asset purchase agreement for $15,000 subject to adjustment for the book value of certain assets and certain liabilities assumed at the sale date. The pre-tax gain on sale of $7,246 is subject to adjustment for various purchase price adjustments. Chestatee retained certain liabilities, including for employee related liabilities and certain Medicare and Medicaid liabilities, relating to the period it owned and operated the hospital. A portion of the net proceeds have been used for the payment of debt. The assets sold and liabilities assumed are shown as assets held for sale in our consolidated balances as of June 30, 2016.

 

Other Sold Hospitals – Subsidiaries of the Company have sold substantially all of the assets of three hospitals (“Other Sold Hospitals”) during the period July 2, 2012 to December 31, 2014. Certain assets and liabilities were retained in these sales and the results of the retained assets and liabilities are classified as discontinued operations in our condensed consolidated financial statements for the three month periods ended September 30, 2016 and 2015. The loss before income taxes of the Other Sold Hospitals results primarily from negative prior year Medicare and Medicare cost report settlements.

Life Sciences and Engineering Segment – SunLink retained a defined benefit retirement plan which covered substantially all of the employees of this segment when the segment was sold in fiscal 1998. Effective February 28, 1997, the plan was amended to freeze participant benefits and close the plan to new participants. Pension expense and related tax benefit or expense is reflected in the results of operations for this segment for the three months ended September 30, 2016 and 2015.

The components of pension expense for the three months ended September 30, 2016 and 2015, respectively, were as follows:

 

     Three Months Ended  
     September 30,  
     2016      2015  

Interest Cost

   $ 13       $ 16   

Expected return on assets

     (8      (8

Amortization of prior service cost

     32         28   
  

 

 

    

 

 

 

Net pension expense

   $ 37       $ 36   
  

 

 

    

 

 

 

SunLink contributed $35 to the plan in the three months ended September 30, 2016 and expects to contribute an additional $105 during the last three quarter of the fiscal year ending June 30, 2017.