Annual report pursuant to Section 13 and 15(d)

Discontinued Operations

v3.3.1.900
Discontinued Operations
 12 Months Ended
Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]
Discontinued Operations 
On December 22, 2015, the Company completed the Company's sale of substantially all of the assets, the goodwill and ongoing business comprising the Company’s Commercial Services segment, or the Commercial Services Business, to Publicis Healthcare Solutions, Inc., formerly known as Publicis Touchpoint Solutions, Inc., or the Buyer, pursuant to the Asset Purchase Agreement, dated as of October 30, 2015, by and between the Buyer and the Company, or the Asset Purchase Agreement, for an aggregate cash purchase price at the closing of approximately $28.5 million, or the Closing Purchase Price, subject to a post-closing working capital adjustment, and the assumption by the Buyer of certain specified liabilities. The Closing Purchase Price includes a $25.5 million cash payment, or the Base Cash Payment, and an estimated closing date working capital adjustment cash payment of $3 million. Under the Asset Purchase Agreement, the Company is also entitled to receive an earn-out payment in 2017 equal to one-third of the 2016 revenues generated by the Commercial Services Business under certain specified contracts and client relationships, less the amount of the Base Cash Payment. Based on the current projection, the Company did not record any receivable relating to such earn-out payment.
The Company used the net proceeds from the transactions contemplated by the Asset Purchase Agreement to pay the balance of the outstanding loan under the Credit Agreement and related fees, as described further in Note 21, Long-Term Debt. The Company intends to use the remaining net proceeds to fund its future business activities, including its molecular diagnostics business, and for general working capital purposes.
In connection with the closing of the transactions contemplated by the Asset Purchase Agreement, on December 22, 2015, the Company entered into a transition services agreement with the Buyer, pursuant to which the Company will provide certain services to the Buyer for up to six months following the closing, and a restrictive covenant agreement with the Buyer, pursuant to which, among other things, the Company will be prohibited from competing with the Commercial Services Business until December 31, 2020.
The Asset Purchase Agreement also requires the Company to change its name, and, as a result the Company changed its name from “PDI, Inc.” to “Interpace Diagnostics Group, Inc.”
A reconciliation of the gain on sale for the Company's Commercial Services business is as follows:
 
 
 
 
(in thousands)
 
Gain on Sale
 
Purchase price
 
$
25,467

 
Working capital adjustment
 
3,067

 
Total consideration
 
28,534

 
Assets and liabilities sold, net
 
(5,311
)
 
Transaction costs
 
(1,806
)
 
Gain on sale
 
$
21,417

*

* Does not include $0.2 million gain on sale of the Group DCA business in 2015
As a result of the sale, the gain on sale and all operations from Commercial Services have been classified as discontinued operations for all periods presented. On December 31, 2014, the Company classified Group DCA as held-for-sale and wrote the assets of the business down to their fair values as the assets have become impaired. In the first quarter of 2015, the Company recorded a gain on sale of its Group DCA business of $0.2 million. On December 29, 2011, the Company entered into an agreement to sell certain assets of its Pharmakon business unit to Informed Medical Communications, Inc. Informed in exchange for potential future royalty payments and an ownership interest in Informed. In the fourth quarter of 2012, the Company wrote-off all of the assets related to the sale of Pharmakon to Informed as it believes that these assets have become impaired. On July 19, 2010, the Board approved closing the TVG business unit. The Company notified employees and issued a press release announcing this decision on July 20, 2010. The Consolidated Statements of Comprehensive Loss reflect the presentation of Commercial Services, Group DCA, Pharmakon, and TVG as discontinued operations in all periods presented.

The table below presents the significant components of Commercial Services, Group DCA's, Pharmakon's and TVG’s results included in Loss from Discontinued Operations, Net of Tax in the consolidated statements of comprehensive loss for the years ended December 31, 2015 and 2014.

 
For the Years Ended December 31,
 
2015
 
2014
Revenue, net
$
134,850

 
$
121,874

 
 
 
 
Income (loss) from discontinued operations
10,341

 
(2,310
)
Gain (loss) on sale of assets
21,634

 
—

Income (loss) from discontinued operations, before tax
31,975

 
(2,310
)
Income tax expense
12,261

 
297

Income (loss) from discontinued operations, net of tax
$
19,714

 
$
(2,607
)



The assets and liabilities classified as discontinued operations relate to Commercial Services, Group DCA, Pharmakon, and TVG. As of December 31, 2015 and December 31, 2014, these assets and liabilities are in the accompanying balance sheets as follows:

 
For the Years Ended December 31,
 
2015
 
2014
 
CSO
 
DCA/TVG
 
Total
 
CSO
 
DCA/TVG
 
Total
Accounts receivable, net
$
3,296

 
$
—

 
$
3,296

 
$
4,669

 
$
—

 
$
4,669

Unbilled receivable, net
16

 
—

 
16

 
5,684

 
—

 
5,684

Other
2,062

 
—

 
2,062

 
1,818

 
—

 
1,818

Current assets from discontinued operations
5,374

 
—

 
5,374

 
12,171

 
—

 
12,171

Property and equipment, net
190

 
—

 
190

 
1,391

 
—

 
1,391

Other
—

 
150

 
150

 
—

 
2,058

 
2,058

Long-term assets from discontinued operations
190

 
150

 
340

 
1,391

 
2,058

 
3,449

      Total assets
$
5,564

 
$
150

 
$
5,714

 
$
13,562

 
$
2,058

 
$
15,620

 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
3,767

 
$
—

 
$
3,767

 
$
2,077

 
$
69

 
$
2,146

Unearned contract revenue
11

 
—

 
11

 
6,752

 
—

 
6,752

Accrued salary and bonus
3,036

 
—

 
3,036

 
5,580

 
547

 
6,127

Other
5,092

 
358

 
5,450

 
4,598

 
2,273

 
6,871

Current liabilities from discontinued operations
11,906

 
358

 
12,264

 
19,007

 
2,889

 
21,896

Other long-term liabilities
—

 
—

 
—

 
—

 
329

 
329

     Total liabilities
$
11,906

 
$
358

 
$
12,264

 
$
19,007

 
$
3,218

 
$
22,225