Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Summary of Significant Accounting Policies

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Note 3 - Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2016
Notes to Financial Statements  
Basis of Presentation and Significant Accounting Policies [Text Block]
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Accounting Estimates
 
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Management's estimates are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed to be reasonable under the circumstances.  Significant estimates include best estimate of selling price in multiple element arrangements, valuation allowances related to deferred income taxes, self-insurance loss accruals, allowances for doubtful accounts and notes, income tax accruals, acquisition accounting, asset impairments and facilities realignment accruals.  The Company periodically reviews these matters and reflects changes in estimates as appropriate.  Actual results could materially differ from those estimates.
 
Reclassifications
 
The Commercial Services business in the period ended March 31, 2015 has been reclassified to discontinued operations to conform to the current period presentation.
 
Receivables and Allowance for Doubtful Accounts
 
The Company’s accounts receivable are generated using its proprietary tests. The Company’s services are fulfilled upon completion of the test, review and release of the test results. In conjunction with fulfilling these services, the Company bills the third-party payor or hospital. The Company recognizes accounts receivable related to billings for Medicare, Medicare Advantage, and hospitals on an accrual basis, net of contractual adjustment, when collectability is reasonably assured. Contractual adjustments represent the difference between the list prices and the reimbursement rate set by Medicare and Medicare Advantage, or the amounts billed to hospitals. The Company records an Allowance for Doubtful accounts for PancraGen® hospital roster billings based on the collection history of this payor. Since Medicare and Medicare Advantage have fixed reimbursement rates, there is no Allowance for Doubtful Accounts associated with these payors.
 
The Company provides services to commercial insurance carriers or governmental programs that do not have a contract in place for its proprietary tests which may or may not be covered by these entities existing reimbursement policies. In addition, the Company does not enter into direct agreements with patients that commit them to pay any portion of the cost of the tests in the event that their commercial insurance carrier or governmental program does not pay the Company for its services. In the absence of an agreement with the patient, or other clearly enforceable legal right to demand payment from commercial insurance carriers or governmental agencies, no accounts receivable is recognized. The Company does not record an Allowance for Doubtful Accounts for the commercial insurance or governmental programs since the revenue is recorded mainly on a cash basis. There was approximately a $0.9 million allowance for doubtful accounts as of March 31, 2016.
 
 
Other Current Assets
 
Other current assets consisted of the following as of March 31, 2016 and December 31, 2015:
 
   
March 31, 2016
   
December 31, 2015
 
Indemnification assets
  $ 1,375     $ 875  
Letters of credit
    344       360  
Other receivables
    960       1,048  
Prepaid expenses
    243       180  
Other
    102       106  
    $ 3,024     $ 2,569  
 
 
Other Intangible Assets
 
The Company allocates the cost of acquired companies to the identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount classified as goodwill, if any. Since the entities the Company has acquired do not have significant tangible assets, a significant portion of the purchase price has been allocated to intangible assets and goodwill. The identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition, as well as the completion of impairment tests, require significant management judgments and estimates. These estimates are made based on, among other factors, consultations with an accredited independent valuation consultant, reviews of projected future operating results and business plans, economic projections, anticipated highest and best use of future cash flows and the market participant cost of capital. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of other intangible assets, and potentially result in a different impact to the Company's results of operations. Further, changes in business strategy and/or market conditions may significantly impact these judgments thereby impacting the fair value of these assets, which could result in an impairment of the intangible assets.
 
Discontinued Operations
 
The Company accounts for business dispositions and its businesses held for sale in accordance with ASC 205-20, Discontinued Operations. ASC 205-20 requires the results of operations of business dispositions to be segregated from continuing operations and reflected as discontinued operations in current and prior periods. See Note 11,
Discontinued Operations
for further information.
 
Basic and Diluted Net Loss per Share
 
A reconciliation of the number of shares of common stock used in the calculation of basic and diluted loss per share for the three-month periods ended March 31, 2016 and 2015 is as follows:
 
   
Three Months Ended
 
   
March 31,
 
   
2016
   
2015
 
Basic weighted average number 
of common shares
    17,762       15,037  
Potential dilutive effect of stock-based awards
    -       -  
Diluted weighted average number
of common shares
    17,762       15,037  
 
The following outstanding stock-based awards were excluded from the computation of the effect of dilutive securities on loss per share for the following periods because they would have been anti-dilutive:
 
 
   
March 31,
 
   
2016
   
2015
 
Options
    -       25  
Stock-settled stock appreciation rights (SARs)
    1,027       1,066  
Restricted stock and restricted stock units (RSUs)
    1,317       1,632  
Performance contingent SARs
    -       188  
      2,344       2,911