DEI Document
DEI Document - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 31, 2015 | |
DEI [Abstract] | ||
Entity Registrant Name | HOOPER HOLMES INC | |
Entity Central Index Key | 741,815 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 77,499,937 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 1,242 | $ 5,201 |
Accounts receivable, net of allowance for doubtful accounts of $86 and $87 at June 30, 2015 and December 31, 2014, respectively | 5,698 | 3,178 |
Inventories | 771 | 897 |
Other current assets | 212 | 202 |
Total current assets | 7,923 | 9,478 |
Property, plant and equipment | 8,045 | 7,415 |
Less: Accumulated depreciation and amortization | 4,973 | 4,361 |
Property, plant and equipment, net | 3,072 | 3,054 |
Intangible assets | 5,818 | 0 |
Goodwill | 766 | 0 |
Other assets | 721 | 607 |
Total assets | 18,300 | 13,139 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Accounts payable | 2,679 | 2,508 |
Accrued expenses | 5,804 | 4,083 |
Short-term debt | 2,049 | 0 |
Total current liabilities | 10,532 | 6,591 |
Long-term debt, net of discount | 480 | 0 |
Other long-term liabilities | 1,914 | 1,191 |
Commitments and contingencies | 0 | 0 |
Stockholders' equity: | ||
Common stock, par value $.04 per share; Authorized: 240,000,000 shares; Issued: 77,467,665 shares at June 30, 2015 and 70,875,998 shares at December 31, 2014; Outstanding: 77,458,270 shares at June 30, 2015 and 70,866,603 shares at December 31, 2014. | 3,099 | 2,835 |
Additional paid-in capital | 155,969 | 150,747 |
Accumulated deficit | (153,623) | (148,154) |
Stockholders' equity | 5,445 | 5,428 |
Less: Treasury stock, at cost; 9,395 shares at June 30, 2015 and December 31, 2014 | (71) | (71) |
Total stockholders' equity | 5,374 | 5,357 |
Total liabilities and stockholders' equity | $ 18,300 | $ 13,139 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 86 | $ 87 |
Common stock, par value (in dollars per share) | $ 0.04 | $ 0.04 |
Common stock, shares authorized (in shares) | 240,000,000 | 240,000,000 |
Common stock, shares issued (in shares) | 77,467,665 | 70,875,998 |
Common stock, shares outstanding (in shares) | 77,458,270 | 70,866,603 |
Treasury stock (in shares) | 9,395 | 9,395 |
Consolidated Statements of Oper
Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenues | $ 7,662 | $ 6,679 | $ 13,343 | $ 13,977 |
Cost of operations | 5,969 | 4,529 | 10,918 | 10,171 |
Gross profit | 1,693 | 2,150 | 2,425 | 3,806 |
Selling, general and administrative expenses | 3,811 | 4,038 | 6,471 | 8,499 |
Transaction costs | 593 | 0 | 679 | 0 |
Operating loss from continuing operations | (2,711) | (1,888) | (4,725) | (4,693) |
Interest expense, net | (626) | (50) | (709) | (95) |
Loss from continuing operations before taxes | (3,337) | (1,938) | (5,434) | (4,788) |
Income tax expense | 5 | 5 | 10 | 10 |
Loss from continuing operations | (3,342) | (1,943) | (5,444) | (4,798) |
Discontinued operations: | ||||
Loss on sale of subsidiaries, net of adjustments | 0 | 0 | 0 | (150) |
Income (loss) from discontinued operations, net of tax | (21) | (870) | (25) | (550) |
Income (loss) from discontinued operations | (21) | (870) | (25) | (700) |
Net loss | $ (3,363) | $ (2,813) | $ (5,469) | $ (5,498) |
Continuing operations | ||||
Basic (in dollars per share) | $ (0.04) | $ (0.03) | $ (0.07) | $ (0.07) |
Diluted (in dollars per share) | (0.04) | (0.03) | (0.07) | (0.07) |
Discontinued operations | ||||
Basic (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
Diluted (in dollars per share) | 0 | (0.01) | 0 | (0.01) |
Net loss | ||||
Basic (in dollars per share) | (0.04) | (0.04) | (0.07) | (0.08) |
Diluted (in dollars per share) | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.08) |
Weighted average number of shares - Basic (in shares) | 77,441,786 | 70,586,942 | 74,172,358 | 70,499,282 |
Weighted average number of shares - Diluted (in shares) | 77,441,786 | 70,586,942 | 74,172,358 | 70,499,282 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (5,469) | $ (5,498) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Adjustment to gain on sale of Portamedic | 0 | 150 |
Depreciation and amortization | 873 | 652 |
Amortization of debt discount | 244 | 0 |
Amortization of deferred financing fees | 280 | 177 |
Provision for bad debt expense | 26 | 62 |
Share-based compensation expense | 193 | 373 |
Loss on disposal of fixed assets and other | 0 | 35 |
Change in assets and liabilities: | ||
Accounts receivable | (1,667) | 1,819 |
Inventories | 247 | 22 |
Other assets | (340) | 47 |
Accounts payable, accrued expenses and other liabilities | 514 | 982 |
Net cash used in operating activities | (5,099) | (1,179) |
Cash flows from investing activities: | ||
Capital expenditures | (355) | (423) |
Acquisition of Accountable Health Solutions | (4,000) | 0 |
Proceeds from the sale of Portamedic | 0 | 743 |
Net cash (used in) provided by investing activities | (4,355) | 320 |
Cash flows from financing activities: | ||
Borrowings under credit facility | 1,000 | 0 |
Payments under credit facility | (151) | 0 |
Proceeds from issuance of Term Loan | 5,000 | 0 |
Payments on capital lease obligations | 0 | (2) |
Proceeds related to the exercise of stock options | 23 | 28 |
Debt financing fees | (377) | 0 |
Net cash provided by financing activities | 5,495 | 26 |
Net decrease in cash and cash equivalents | (3,959) | (833) |
Cash and cash equivalents at beginning of period | 5,201 | 3,970 |
Cash and cash equivalents at end of period | 1,242 | 3,137 |
Supplemental disclosure of non-cash investing activities: | ||
Fixed assets vouchered but not paid | 76 | 67 |
Debt financing fees vouchered but not paid | 500 | 0 |
Supplemental disclosure of non-cash financing activities: | ||
Issuance of common stock in connection with the Acquisition | 3,000 | 0 |
Supplemental disclosure of cash paid during period for: | ||
Income taxes | $ 0 | $ 0 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Hooper Holmes, Inc. ("Hooper Holmes" or the "Company") provides on-site health screenings, laboratory testing, risk assessment and sample collection services to individuals as part of comprehensive health and wellness programs offered through corporate and government employers. The Company has expanded its capabilities with the acquisition of Accountable Health Services, Inc. allowing it to also deliver telephonic health coaching, wellness portals, and data analytics and reporting services. Hooper Holmes is engaged by the organizations sponsoring such programs, including health and care management companies, broker and wellness companies, disease management organizations, reward administrators, third party administrators, clinical research organizations and health plans. Hooper Holmes provides these services through a national network of health professionals. The Company's business is subject to some seasonality, with the second quarter sales typically dropping below the other quarters and the third and fourth quarter sales typically the strongest quarters due to increased demand for biometric screenings from mid-August through November related to annual benefit renewal cycles. The unaudited interim consolidated financial statements of the Company have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2014 Annual Report on Form 10-K, filed with the SEC on March 31, 2015. Financial statements prepared in accordance with U.S. GAAP require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and other disclosures. The financial information included herein is unaudited; however, such information reflects all adjustments that are, in the opinion of the Company's management, necessary for a fair statement of results for the interim periods presented. The results of operations for the three and six month periods ended June 30, 2015 and 2014 are not necessarily indicative of the results to be expected for any other interim period or the full year. See “Management's Discussion and Analysis of Financial Condition and Results of Operations” for additional information. On September 30, 2013, the Company completed the sale of certain assets comprising its Portamedic service line. The Portamedic service line is accounted for as a discontinued operation in this Quarterly Report on Form 10-Q (the "Report"). During 2014, the Company sold certain assets comprising the Heritage Labs and Hooper Holmes Services businesses. The operating results of these businesses are also segregated and reported as discontinued operations in this Report. Acquisition of Accountable Health Solutions, Inc. On April 17, 2015, the Company entered into and consummated an Asset Purchase Agreement (the "Purchase Agreement") among the Company and certain of its subsidiaries, Accountable Health Solutions, Inc. (the "Seller" or "AHS") and Accountable Health, Inc. ("Shareholder"). Pursuant to the Purchase Agreement, the Company has acquired the assets and certain liabilities representing the health and wellness business of the Seller for approximately $7.0 million - $4.0 million in cash and 6,500,000 shares of the Company’s common stock, $0.04 par value, with a value of $3.0 million , subject to a working capital adjustment as described in the Purchase Agreement (the "Acquisition"). Refer to Note 3 for additional discussion regarding the Acquisition. In connection with the Acquisition, the Company entered into and consummated a Consent and Third Amendment to the Loan and Security Agreement (the "Third Amendment") to the Loan and Security Agreement (as amended, the "2013 Loan and Security Agreement") with ACF FinCo I LP ("ACF" or the "Senior Lender"), the assignee of Keltic Financial Partners II, LP ("Keltic Financial"). The 2013 Loan and Security Agreement provides a revolving credit facility which is secured and repaid as set forth therein. The Senior Lender consented to the Acquisition, the maximum borrowing capacity under the 2013 Loan and Security Agreement was reduced from $10 million to $7 million (subject to increase to up to $12 million in certain circumstances, subject to the Senior Lender’s consent, as provided in the 2013 Loan and Security Agreement) and the expiration was extended through February 28, 2019. The Third Amendment also revises the covenants with respect to the Company’s EBITDA. The Company paid an amendment fee of $0.1 million in connection with the Third Amendment. In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement (the "Credit Agreement") with SWK Funding LLC as the agent ("Agent") on April 17, 2015, and the lenders (including SWK Funding LLC) party thereto from time to time (the "Lenders"). The Credit Agreement provides the Company with a $5.0 million term loan (the "Term Loan") (refer to Note 3 and Note 9). New Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs", which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. The Company has unamortized debt issuance costs of $0.6 million existing as of June 30, 2015 . ASU 2015-03 is effective for the Company in the first quarter of 2016, with early adoption permitted, and retrospective application required. The Company is currently evaluating the effect that ASU 2015-03 will have on the consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with early adoption permitted as of the original effective date or first quarter of 2017. The Company is currently evaluating the effect that ASU 2014-09 will have on the consolidated financial statements and related disclosures. |
Liquidity
Liquidity | 6 Months Ended |
Jun. 30, 2015 | |
Liquidity [Abstract] | |
Liquidity | Liquidity The Company's primary sources of liquidity are cash and cash equivalents as well as availability under the 2013 Loan and Security Agreement (refer to Note 9). At June 30, 2015 , the Company had $1.2 million in cash and cash equivalents and had $0.8 million outstanding under the 2013 Loan and Security Agreement. As discussed in Note 3, the Company entered into the Credit Agreement on April 17, 2015, for a $5.0 million term loan, which provided funding for the cash component of the Acquisition. After the $4.0 million payment for the Acquisition, the origination fee and related legal costs, the Company received approximately $0.8 million in net proceeds from the Term Loan. The Company incurred a loss from continuing operations of $3.3 million and $5.4 million , respectively, during the three and six month periods ended June 30, 2015 . The Company’s net cash used in operating activities for the six month period ended June 30, 2015 , was $5.1 million . The Company has managed its liquidity through the addition of the Term Loan and the availability under the 2013 Loan and Security Agreement and a series of cost reduction and accounts receivable collection initiatives. The Company has historically used availability under the 2013 Loan and Security Agreement to fund operations. The Company experiences a timing difference between the operating expenses and cash collection of the associated revenue based on Health and Wellness customer payment terms. To conduct successful screenings, the Company must expend cash to deliver equipment and supplies required for the screenings as well as pay its health professionals and site management, which is in advance of the customer invoicing process and ultimate cash receipts for services performed. 2013 Loan and Security Agreement The Company maintains the 2013 Loan and Security Agreement (refer to Note 9). Borrowings under the 2013 Loan and Security Agreement are used for working capital purposes and capital expenditures. The amount available for borrowing is less than the $7 million under this facility at any given time due to the manner in which the maximum available amount is calculated. The Company had an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables (as defined in the 2013 Loan and Security Agreement) up to $7 million under this facility. Eligible Receivables do not include certain receivables deemed ineligible by the Senior Lender. As of June 30, 2015 , receivables related to the acquired AHS operations were not part of the Eligible Receivables. On August 10, 2015, the Company amended the 2013 Loan and Security Agreement to add the AHS receivables to the borrowing base. AHS receivables were $0.9 million as of June 30, 2015 . As of June 30, 2015 , the Senior Lender applied a discretionary reserve of $0.5 million . Available borrowing capacity, net of this discretionary reserve and current amounts outstanding, was $0.6 million as of July 28, 2015. As of June 30, 2015 , the Company had $0.8 million borrowings outstanding under the 2013 Loan and Security Agreement. The 2013 Loan and Security Agreement and the Third Amendment contain various covenants, including financial covenants which require the Company to achieve a minimum EBITDA (earnings before interest expense, income taxes, depreciation and amortization) amount. The Third Amendment contains minimum EBITDA covenants of negative $3.0 million for the twelve month period ending September 30, 2015; positive $0.8 million for the twelve month period ending December 31, 2015; positive $1.85 million for the twelve month period ending March 31, 2016; and positive $2.7 million for the twelve month period ending June 30, 2016. The Company continues to have limitations on the maximum amount of capital expenditures for each fiscal year. The Company is in compliance with the covenants under the 2013 Loan and Security Agreement as of June 30, 2015 . 2015 Credit Agreement In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement on April 17, 2015, with SWK Funding LLC. The Credit Agreement provides the Company with a $5.0 million Term Loan. The proceeds of the Term Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement for the Acquisition described in Note 3 and general corporate purposes. The Term Loan is due and payable on April 17, 2018. The Company is also required to make quarterly revenue-based payments in an amount equal to eight and one-half percent ( 8.5% ) of yearly aggregate revenue up to and including $20 million , seven percent ( 7% ) of yearly aggregate revenue greater than $20 million up to and including $30 million , and five percent ( 5% ) of yearly aggregate revenue greater than $30 million . The revenue-based payment will be applied to fees and interest and any excess to the principal of the Term Loan. Revenue-based payments commence in February 2016, and the maximum aggregate revenue-based principal payment is capped at $600,000 per quarter. The outstanding principal balance under the Credit Agreement will bear interest at an adjustable rate per annum equal to the LIBOR Rate (subject to a minimum amount of one percent ( 1.0% )) plus fourteen percent ( 14.0% ) and will be due and payable quarterly, commencing on August 14, 2015. Upon the earlier of (a) the maturity date of April 17, 2018, or (b) full repayment of the Term Loan, whether by acceleration or otherwise, the Company is required to pay an exit fee equal to eight percent ( 8% ) of the aggregate principal amount of all term loans advanced under the Credit Agreement. The Company is recognizing the exit fee over the term of the Term Loan through an accretion accrual to interest expense. The Credit Agreement also contains certain financial covenants including certain minimum aggregate revenue and EBITDA requirements and requirements regarding consolidated unencumbered liquid assets. The Credit Agreement contains a minimum aggregate revenue covenant of $27.5 million for the twelve month period ending September 30, 2015, $34 million for the twelve month period ending December 31, 2015, $38 million for the twelve month period ending March 31, 2016 and $40 million for the twelve month period ending June 30, 2016. The Credit Agreement also contains a minimum EBITDA covenant of one dollar for the twelve month period ending March 31, 2016, and $1.0 million for the twelve month period ending June 30, 2016, with subsequent quarterly measurement dates and EBITDA requirements through the term of the Credit Agreement. The Credit Agreement contains a cross-default provision that can be triggered if the Company has more than $0.25 million in debt outstanding under the 2013 Loan and Security Agreement and the Company fails to make payments to the Senior Lender when due or if the Senior Lender is entitled to accelerate the maturity of debt in response to a default situation under the 2013 Loan and Security Agreement, which may include violation of any financial covenants. Other Considerations The Company's Health and Wellness business sells through wellness, disease management, benefit brokers and insurance companies (referred to as channel partners) who ultimately have the relationship with the end customer. The Company's current services are often aggregated with other offerings from its channel partners to provide a total solution to the end-user. As such, the Company's success is largely dependent on that of its partners. The Company’s acquisition of AHS required the Company to enter into the Credit Agreement with the Lenders. In association with the Acquisition, the Company also incurred transaction expenses and legal and professional fees. During the six month period ended June 30, 2015 , the Company incurred $0.7 million in legal and professional fees associated with the Acquisition recorded in the consolidated statement of operations. Additionally, the Acquisition provides new product and service capabilities. Associated with these expanded capabilities are new staff, new systems and new customers. During each of the three and six month periods ended June 30, 2015 , the Company incurred $0.3 million of costs in connection with integrating the Acquisition, which are recorded in selling, general and administrative expenses. Costs incurred during the second quarter of 2015 primarily relate to transition services purchased from the Seller and the ongoing transition of information technology infrastructure. The integration of AHS will continue into the second half of 2015, and the Company will continue to incur certain transition costs associated with integrating the two companies, which could adversely affect liquidity. During 2014, the Company transitioned out of the life insurance industry to focus on the Health and Wellness business. As a part of the transition, the Company reduced its corporate fixed cost structure by evaluating head count, professional fees and other expenses. The Company continues to focus its attention on a long-term Health and Wellness strategy and believes it has the necessary assets to make the most of its immediate opportunities, while positioning the Company for long-term growth. In order for the Company to maintain compliance with the minimum EBITDA covenants over the term of its credit facilities, it must achieve operating results which reflect significant improvements over the first and second quarter 2015 results, including the successful integration of the Acquisition. The Company’s ability to satisfy its liquidity needs and meet future covenants is dependent on growing revenues and significantly improving profitability. These profitability improvements primarily include the successful integration of AHS and expansion of the Company’s presence in the Health and Wellness marketplace. The Company must increase biometric screening volumes in order to cover its fixed cost structure and improve gross profits. These improvements may be outside of management’s control. The integration of AHS and marketplace expansion may require additional costs to grow and operate the newly integrated entity, which the Company must recover through expanded revenues. If the Company is unable to increase volumes or control integration or operating costs, liquidity may adversely be affected. The Company had $0.8 million borrowings outstanding under the 2013 Loan and Security Agreement as of June 30, 2015 . Given the seasonal nature of the Company's operations, which are largely dependent on second half volumes, management expects to continue using the revolver in 2015. Given the Company’s performance in the first half of 2015, the Company may report EBITDA for the twelve-month period ended September 30, 2015 that is below the current covenant outlined in the 2013 Loan and Security Agreement. If that were to happen, the Company would not comply with the EBITDA covenants as currently outlined and would then be required to seek a waiver for the covenant or find new or additional sources of financing. Obtaining a waiver and finding additional lenders depends on matters that are outside of management’s control and there can be no assurance that management will be successful in that regard. In the event that the Company fails to comply with any 2013 Loan and Security Agreement covenant or any 2015 Credit Agreement covenant and if the Company is unable to negotiate a covenant waiver or find new or additional lenders, the Company would be considered in default, which would then enable applicable lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, which would have a material adverse impact on the Company’s business. |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition The Company entered into and consummated the Purchase Agreement on April 17, 2015 among the Company and certain of its subsidiaries, Accountable Health Solutions, Inc. (the "Seller" or "AHS") and Accountable Health, Inc. ("Shareholder"). Pursuant to the Purchase Agreement, the Company has acquired the assets and certain liabilities representing the health and wellness business of the Seller for approximately $7.0 million - $4.0 million in cash and up to 6,500,000 shares of the Company’s common stock, $0.04 par value, with a value of $3.0 million , subject to a working capital adjustment as described in the Purchase Agreement (the "Acquisition"). At the closing of the Purchase Agreement, the Company issued and delivered 5,576,087 shares of Common Stock to the Shareholder at closing and issued and held back 326,087 shares of Common Stock for the working capital adjustment, and 597,826 shares of Common Stock for indemnification purposes. No additional shares will be issued under the terms of the Purchase Agreement. The shares were issued pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, which provides an exemption for private offerings of securities. During the six month period ended June 30, 2015 , the Company recorded transaction costs of $0.7 million in connection with the Acquisition in the consolidated statement of operations. The acquisition provides significant growth opportunities for the Health and Wellness operations. It has expanded the Company's capabilities allowing us to deliver telephonic health coaching, wellness portals, and data analytics and reporting services. These factors, combined with the synergies and economies of scale expected from combining the operations of the two companies, are the basis for acquisition and comprise the resulting goodwill recorded. In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement (the "Credit Agreement") with SWK Funding LLC as the agent ("Agent") on April 17, 2015, and the lenders (including SWK Funding LLC) party thereto from time to time (the "Lenders"). The Credit Agreement provides the Company with a $5.0 million term loan (the "Term Loan"). The proceeds of the Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement and the Acquisition described above and general corporate purposes. The Company paid SWK Funding LLC an origination fee of $0.1 million . The Loan is due and payable on April 17, 2018. The Credit Agreement also contains certain financial covenants, including certain minimum aggregate revenue and EBITDA requirements and requirements regarding consolidated unencumbered liquid assets. In addition, on April 17, 2015, in connection with the execution of the Credit Agreement, the Company issued SWK Funding, LLC a warrant (the "Warrant") to purchase 8,152,174 shares of the Company’s common stock. The Warrant is exercisable after October 17, 2015, and up to and including April 17, 2022, at an exercise price of $0.46 per share. The Warrant is exercisable on a cashless basis. The exercise price of the Warrant is subject to customary adjustment provisions for stock splits, stock dividends, recapitalizations and the like. The Warrant grants the holder certain piggyback registration rights. The Warrant was considered equity classified, and as such, the Company allocated the proceeds from the Term Loan to the Warrant using the Relative Fair Value Method. The fair value of the Warrant of $2.7 million was recorded as debt discount, which is being recognized as interest expense over the term of the Credit Agreement. The Company valued the Warrant using the Black-Scholes pricing model using volatility of 85.0% , a risk-free rate of 1.4% , dividend rate of zero and term of 7 years , which is consistent with the exercise period of the Warrant and is a Level 3 valuation technique. Further, pursuant to the Credit Agreement, if the 2013 Loan and Security Agreement is not repaid in full and terminated, and all liens securing the 2013 Loan and Security Agreement are not released, on or prior to February 28, 2016, the Company has agreed to issue an additional warrant to SWK Funding LLC to purchase common stock valued at $1.25 million , with an exercise price of one cent over the closing price on February 28, 2016. The additional warrant will become exercisable six months after issuance, remain exercisable for 7 years and have customary anti-dilution protection similar to the Warrants. The Company considered whether the issuance of this additional warrant was a “credit sensitive payment”, as the issuance of the additional warrant is contingent upon the repayment of debt (the 2013 Loan and Security Agreement). However, as the repayment date specified in the Term Loan is prior to the maturity date of the 2013 Loan and Security Agreement and therefore this is an incentive feature, rather than a reflection of the Company’s creditworthiness, the Company did not think it was appropriate to consider this feature credit related. Therefore, the feature is not clearly and closely related to the debt host. The Company determined that the additional warrant feature does not contain an explicit limit on the number of warrants to be delivered for settlement. As the Company is required to deliver a number of additional warrants that will satisfy the fixed monetary amount of $1.25 million , the number of warrants (and underlying shares) to be delivered cannot be determined. Therefore, the additional warrant feature is considered an embedded derivative. As the issuance of the additional warrant is contingent, the evaluation of the likelihood of the occurrence of the contingency was considered in determining the fair value of the embedded derivative. As the Company does believe that the contingency (i.e. not repaying in full and terminating the 2013 Loan and Security Agreement by February 28, 2016) is likely to occur, the value of the embedded derivative was be recognized on the financial statements. Consequently, the value of the Term Loan was reduced by the fair value of additional warrant. The Company determined the value of the additional warrant was $0.9 million as of the Acquisition date, which approximates its value as of June 30, 2015 . The Company valued the additional warrant using the Black-Scholes pricing model using volatility of 85.0% , a risk-free rate of 1.4% , dividend rate of zero and term of 7 years , which is consistent with the exercise period of the additional warrant. The value of the embedded derivative will continue to be evaluated every reporting period. The following table summarizes the net impact to cash for the proceeds of the Credit Agreement, debt assumed (Term Loan less the fair value of the Warrant and derivative liability), issuance of common shares, the impact to additional paid-in capital for the issuance of shares and fair value of the Warrant, derivative liability and transaction costs: (in thousands) Credit Agreement $ 5,000 Cash consideration (4,000 ) Net proceeds from Credit Agreement $ 1,000 Term Loan $ 5,000 Debt discount associated with Warrant (2,656 ) Derivative liability with additional warrant feature (908 ) Net debt recorded with Acquisition $ 1,436 Common Stock (6,500,000 shares at $0.04 par) $ 260 Additional paid-in capital: issuance of shares $ 2,740 Additional paid-in capital: fair value of Warrant 2,656 Net increase to APIC with Acquisition $ 5,396 The Acquisition was treated as a purchase in accordance with Accounting Standards Codification (ASC) 805, Business Combinations , which requires allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed in the transaction. The allocation of purchase price is based on management’s judgment after evaluating several factors, including a preliminary valuation assessment. The allocation of purchase price is preliminary and subject to changes, which could be significant, as the valuation of tangible and intangible assets are finalized, working capital adjustments are finalized, and additional information becomes available. The Company is also still evaluating the fair value of the deferred revenue recorded in connection with the Acquisition. The preliminary allocation of purchase price is as follows: (in thousands) Accounts receivable, net of allowance of $16 $ 877 Inventory and other current assets 193 Fixed assets $ 275 Customer portal (existing technologies) 1,930 Customer relationships $ 4,151 Goodwill 766 Accounts payable and accrued expenses $ (750 ) Deferred revenue (442 ) Preliminary Purchase Price $ 7,000 Intangible assets acquired include existing technology in the form of a customer-facing wellness portal and customer relationships. The fair value of the customer relationships acquired was determined using excess earnings method under the income approach for customer relationships; and the fair value of the wellness portal software was determined using the replacement cost method. The estimated useful life for the wellness portal and customer relationships is expected to be 4 years and 8 years , respectively. Amortization is expected to be recorded on a straight-line basis over the estimated useful life of the asset. The Company recorded amortization expense of $0.3 million during the three month period ended June 30, 2015 , related to the intangible assets acquired in the Acquisition, of which $0.2 million is recorded as a component of cost of operations and $0.1 million is recorded as a component of selling, general and administrative expenses. The goodwill of $0.8 million was recorded in one reporting unit, the Health and Wellness operations, as the Company does not report segments, and is expected to be deductible for tax purposes. The consolidated statement of operations for the three and six month periods ended June 30, 2015 , includes revenue of $2.7 million attributable to AHS since the acquisition date of April 17, 2015. Disclosure of the earnings contribution from the AHS business is not practicable, as the Company has already integrated operations in many areas. The following table provides unaudited pro forma results of operations for the three and six month periods ended June 30, 2015 and 2014 as if the acquisition had been completed on the first day of our 2014 fiscal year. (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Pro forma revenues $ 7,662 $ 10,596 $ 15,750 $ 21,788 Pro forma net loss from continuing operations $ (2,749 ) $ (2,903 ) $ (5,856 ) $ (7,015 ) These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. They are not the results that would have been realized had the Company been a combined company during the periods presented, nor are they indicative of the consolidated results of operations in future periods. The pro forma results for the six month period ended June 30, 2015 , include pre-tax adjustments for amortization of intangible assets of $0.3 million , and the elimination of acquisition costs of $0.6 million and $0.7 million , respectively. Pro forma results for the three and six month periods ended June 30, 2014 , include pre-tax adjustments for amortization of intangible assets of $0.3 million and $0.6 million , respectively. |
(Loss) Earnings Per Share
(Loss) Earnings Per Share | 6 Months Ended |
Jun. 30, 2015 | |
Earnings Per Share [Abstract] | |
(Loss) Earnings Per Share | ( Loss) Earnings Per Share Basic (loss) earnings per share equals net (loss) income divided by the weighted average common shares outstanding during the period. Diluted (loss) earnings per share equals net (loss) income divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. The calculation of earnings (loss) per common share on a basic and diluted basis was the same for the three and six month periods ended June 30, 2015 and 2014 , because the inclusion of dilutive common stock equivalents and the Warrant issued in connection with the Acquisition would have been anti-dilutive for all periods presented. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-Based Compensation Employee Share-Based Compensation Plans - On May 29, 2008, the Company's shareholders approved the 2008 Omnibus Employee Incentive Plan (the "2008 Plan") providing for the grant of stock options, stock appreciation rights, non-vested stock and performance shares. For the three and six month periods ended June 30, 2015 , the Company granted 10,000 and 600,000 options, respectively, for the purchase of shares under the 2008 Plan. As of June 30, 2015 , approximately 3,216,200 shares remain available for grant under the 2008 Plan. On May 24, 2011, the Company's shareholders approved the 2011 Omnibus Employee Incentive Plan, as subsequently amended and restated, (the "2011 Plan") providing for the grant of stock options and non-vested stock awards. There were 450,000 options for the purchase of shares granted under the 2011 Plan during the three month period ended June 30, 2015 . During the three and six month periods ended June 30, 2014 , the Company granted 300,000 options to purchase shares under the 2011 Plan. During the six month periods ended June 30, 2015 and June 30, 2014 , the Company also granted a total of 41,667 and 400,000 of stock awards to non-employee members of the Board of Directors that immediately vested. As of June 30, 2015 , approximately 800,000 shares remain available for grant under the 2011 Plan. The fair value of the stock options granted during the three and six month periods ended June 30, 2015 , was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended June 30, Six Months Ended June 30, 2015 2015 Expected life (years) 5.04 5.04 Expected volatility 64.1% 64.1% Expected dividend yield —% —% Risk-free interest rate 1.4% 1.4% Weighted average fair value of options granted during the period $0.25 $0.26 The following table summarizes stock option activity for the six month period ended June 30, 2015 : Number of Options Weighted Average Exercise Price Per Option Weighted Average remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding balance at December 31, 2014 3,652,200 0.67 Granted 1,050,000 0.47 Exercised (50,000 ) 0.45 Expired (413,000 ) 1.44 Forfeited (3,000 ) 0.67 Outstanding balance at June 30, 2015 4,236,200 0.55 8.32 $0 Options exercisable at June 30, 2015 1,637,291 $ 0.64 7.47 $0 The aggregate intrinsic value disclosed in the table above represents the difference between the Company's closing stock price on the last trading day of the quarter ended June 30, 2015 , and the exercise price, multiplied by the number of in-the-money stock options. There were 50,000 options with a weighted average exercise price of $ 0.45 exercised during the six month period ended June 30, 2015 . During the three and six month periods ended June 30, 2014 , an aggregate of 16,500 and 54,000 stock options valued with a weighted average exercise price of $ 0.65 and $0.51 , respectively, were exercised. Options for the purchase of an aggregate of 94,941 shares of common stock vested during the six month period ended June 30, 2015 , and the aggregate fair value at grant date of these options was $0.04 million . As of June 30, 2015 , there was approximately $0.5 million of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 1.88 years. The Company recorded $0.1 million and $ 0.2 million , respectively, of share-based compensation expense in selling, general and administrative expenses for the three and six month periods ended June 30, 2015 . The Company recorded $0.3 million and $0.4 million , respectively, of share-based compensation expense in selling, general and administrative expenses for the three and six month periods ended June 30, 2014 . |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations On September 30, 2013, the Company completed the sale of certain assets comprising its Portamedic service line. The Portamedic service line is accounted for as a discontinued operation in this Report. During 2014, the Company sold certain assets comprising the Heritage Labs and Hooper Holmes Services business to Clinical Reference Laboratory, Inc. ("CRL"). The assets sold to CRL qualified as assets held for sale in April 2014. The operating results of these businesses are also segregated and reported as discontinued operations in this Report. Following the sale of the Portamedic service line, the Company reassessed its segment reporting. Beginning in the fourth quarter of 2013, the Company began reporting financial results in three segments: Health and Wellness (health risk assessments including biometric screenings), Heritage Labs (laboratory testing) and Hooper Holmes Services (health information services). Following the sale of Heritage Labs and Hooper Holmes Services in the third quarter of 2014, the Company reverted to one reporting segment, Health and Wellness. The continuing operations and the Heritage Labs, Hooper Holmes Services and Portamedic discontinued segments had customers and suppliers in common. The continuing and discontinued operations also shared certain selling, general and administrative services. As a result, the Company does not have reliable information for the historical impact of Heritage Labs and Hooper Holmes Services on our cash flows for the three and six month periods ended June 30, 2014 . The following table summarizes the major classes of line items constituting the pretax results of operations of Heritage Labs and Hooper Holmes Services for the three and six month periods ended June 30, 2014 , which are reported as a component of discontinued operations in the consolidated statement of operations. There was no significant activity in discontinued operations during the three and six month periods ended June 30, 2015 . There was no income tax recorded in discontinued operations for Heritage Labs and Hooper Holmes Services for any period presented. Three Months Ended Six Months Ended (in thousands) June 30, 2014 June 30, 2014 Revenues Heritage Labs $ 1,405 $ 3,717 Hooper Holmes Services $ 2,607 $ 5,595 Total revenue $ 4,012 $ 9,312 Cost of Sales Heritage Labs $ 1,222 $ 2,982 Hooper Holmes Services $ 2,296 $ 4,878 Total cost of sales $ 3,518 $ 7,860 Selling, General & Administrative Expenses Heritage Labs $ 50 $ 251 Hooper Holmes Services $ 1,215 $ 1,682 Total selling, general & administrative expenses $ 1,265 $ 1,933 (Loss) income from Discontinued Operations Heritage Labs $ 133 $ 484 Hooper Holmes Services $ (904 ) $ (965 ) Total (loss) from discontinued operations $ (771 ) $ (481 ) Reconciliation to statement of operations: Portamedic discontinued operations and other $ (99 ) $ (69 ) Loss on sale of subsidiaries, net of adjustments $ — $ (150 ) Loss from discontinued operations $ (870 ) $ (700 ) Operating cash flow from discontinued operations during the six month period ended June 30, 2014 , was $0.7 million . Changes in working capital from discontinued operations during the six month period ended June 30, 2014 , was $0.4 million . The Company recorded non-cash operating charges for depreciation and bad debt expense of $0.2 million and a non-cash operating charge of $0.6 million for the remaining operating lease payments associated with the discontinued Hooper Holmes Services operations. There were no other significant investing or financing activities from discontinued operations during the six month period ended June 30, 2014 . The determination of operating cash flow from discontinued operations for the six month period ended June 30, 2014 , includes a degree of management judgment and estimates. The Company has not allocated any general corporate overhead to discontinued operations. The Company has receivables recorded that are due from the buyer of its Portamedic service line in connection with a transition service agreement between the parties. While the ultimate collectability of the receivables is uncertain, the Company believes that it has valid and equitable grounds for recovery of such amounts and that collection of recorded amounts is probable. There cannot be any assurance that any remaining amounts due will be collected by the Company. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Included in inventories at June 30, 2015 , and December 31, 2014 , are $0.4 million and $0.7 million , respectively, of finished goods and $0.4 million and $0.2 million , respectively, of components. |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring Charges [Abstract] | |
Restructuring Charges | Restructuring Charges At June 30, 2015 , there was a total of $0.9 million primarily related to restructuring charges associated with a discontinued Hooper Holmes Services facility as well as for Portamedic branch closure costs, both of which are recorded in accrued expenses and other long-term liabilities in the accompanying consolidated balance sheet. Charges recorded during the three and six month periods ended June 30, 2015 , were recorded as a component of discontinued operations. The following table provides a summary of the activity in the restructure accrual for the six month period ended June 30, 2015 : As of As of (In thousands) December 31, 2014 Charges Payments June 30, 2015 Facility closure obligation $ 1,074 $ 21 $ (189 ) $ 906 Total $ 1,074 $ 21 $ (189 ) $ 906 |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt The Company maintains the 2013 Loan and Security Agreement for working capital purposes and capital expenditures. The Company also entered into the Credit Agreement with SWK Funding LLC in connection with the Acquisition. The following table summarizes the Company's outstanding borrowings: (in thousands) June 30, 2015 2013 Loan and Security Agreement $ 849 Term Loan 5,000 Discount on Term Loan (3,320 ) Total debt 2,529 Short term portion (2,049 ) Total long-term debt, net of discount $ 480 2013 Loan and Security Agreement The Company maintains the 2013 Loan and Security Agreement, as amended, with the Senior Lender, the assignee of Keltic Financial. Borrowings under the 2013 Loan and Security Agreement are to be used for working capital purposes and capital expenditures. The amount available for borrowing is less than the $7 million under this facility at any given time due to the manner in which the maximum available amount is calculated. The Company had an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables up to $7 million under this facility. As discussed in Note 2, the maximum borrowing capacity on the 2013 Loan and Security Agreement was reduced from $10 million to $7 million in connection with the Acquisition on April 17, 2015, (subject to increase to up to $12 million in certain circumstances, subject to the Senior Lender’s consent, as provided in the 2013 Loan and Security Agreement). Eligible Receivables do not include certain other receivables deemed ineligible by the Senior Lender. As of June 30, 2015 , the Senior Lender applied a discretionary reserve of $0.5 million . Available borrowing capacity, net of this discretionary reserve and current amounts outstanding, was $0.6 million as of July 28, 2015. As of June 30, 2015 , the Company had $0.8 million borrowings outstanding under the 2013 Loan and Security Agreement. The 2013 Loan and Security Agreement and the Third Amendment contain various covenants, including financial covenants which require the Company to achieve a minimum EBITDA amount beginning with the twelve month period ended September 30, 2015. Refer to Note 2 regarding additional discussion of financial covenants. The Company continues to have limitations on the maximum amount of capital expenditures for each fiscal year. The Company is in compliance with the covenants under the 2013 Loan and Security Agreement as of June 30, 2015 . Interest on revolving credit loans is calculated based on the greater of (i) the annualized prime rate plus 2.75% , (ii) the 90 day LIBOR rate plus 5.25% , and (iii) 6% per annum. The interest rate on the 2013 Loan and Security Agreement was 6% as of June 30, 2015 . The Company is obligated to pay, on a monthly basis in arrears, an annual facility fee equal to 1% of the revolving credit limit. During the three month periods ended June 30, 2015 and 2014 , the Company incurred facility fees of $0.04 million and $0.05 million , respectively. During the six month periods ended June 30, 2015 and 2014 , the Company incurred facility fees of $0.08 million and $0.09 million , respectively. The revolving credit loans are payable in full, together with all accrued interest and fees, on February 28, 2019. The 2013 Loan and Security Agreement provides for the prepayment of the entire outstanding balance of the revolving credit loans. The Company would be required to pay an early termination fee equal to 3% if the termination occurs prior to February 28, 2017; 2% if the termination occurs prior to February 28, 2018; and 1% if the termination occurs after February 28, 2018, but prior to February 28, 2019. 2015 Credit Agreement In order to fund the Acquisition, the Company entered into and consummated a Credit Agreement with SWK Funding LLC on April 17, 2015. The Credit Agreement provides the Company with a $5.0 million Term Loan. The proceeds of the Term Loan were used to pay certain fees and expenses related to the negotiation and consummation of the Purchase Agreement and the Acquisition described in Note 3 and general corporate purposes. The Company paid SWK Funding LLC an origination fee of $0.1 million . The Term Loan is due and payable on April 17, 2018. The Company is also required to make quarterly revenue-based payments in an amount equal to eight and one-half percent ( 8.5% ) of yearly aggregate revenue up to and including $20 million , seven percent ( 7% ) of yearly aggregate revenue greater than $20 million up to and including $30 million , and five percent ( 5% ) of yearly aggregate revenue greater than $30 million . The revenue-based payment will be applied to fees and interest, and any excess to the principal of the Term Loan. Revenue-based payments commence in February 2016, and the maximum aggregate revenue-based principal payment is capped at $600,000 per quarter. The outstanding principal balance under the Credit Agreement will bear interest at an adjustable rate per annum equal to the LIBOR Rate (subject to a minimum amount of one percent ( 1.0% )) plus fourteen percent ( 14.0% ) and will be due and payable quarterly, in arrears, commencing on August 14, 2015. Upon the earlier of (a) the maturity date on April 17, 2018 or (b) full repayment of the Term Loan, whether by acceleration or otherwise, the Company is required to pay an exit fee equal to eight percent ( 8% ) of the aggregate principal amount of all term loans advanced under the Credit Agreement. The Company is recognizing the exit fee over the term of the Term Loan through an accretion accrual to interest expense. The following table summarizes the components of interest expense for the six month period ended June 30, 2015 : (in thousands) Six Months Ended June 30, 2015 Interest expense Term Loan (interest at LIBOR, plus 14%) $ 154 Accretion of termination fees (over term of Term Loan at rate of 8%) 27 Amortization of deferred financing costs 280 Accretion of debt discount associated with Warrant 182 Accretion of discount associated with additional warrant feature 62 Other interest expense 4 Total $ 709 The Credit Agreement also contains certain financial covenants, including certain minimum aggregate revenue and EBITDA requirements and requirements regarding consolidated unencumbered liquid assets. Refer to Note 2 regarding additional discussion of financial covenants. As security for payment and other obligations under the 2013 Loan and Security Agreement, the Senior Lender holds a security interest in all of the Company's, and its subsidiary guarantors', existing and after-acquired property, including receivables (which are subject to a lockbox account arrangement), inventory and equipment. Additionally, SWK Funding, LLC holds a security interest for final and indefeasible payment. The security interest held by SWK Funding, LLC is in substantially all of the Company's assets and the Company's subsidiaries. The aforementioned security interest is collectively referred to herein as the "collateral". Refer to Note 2 regarding additional discussion of the Warrant and additional warrant feature issued to SWK in connection with the Acquisition. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company leases its corporate headquarters in Olathe, Kansas, which includes the Health and Wellness operations center, under an operating lease which expires in 2018. The Company leases its AHS operations centers in Des Moines, Iowa and Indianapolis, IN, under operating leases which expire in 2018. The Company also leases copiers and other miscellaneous equipment. These leases expire at various times through 2017. The Company is obligated under a lease related to the discontinued Hooper Holmes Services operations center through 2018 and has ceased use of this facility. The Company is still the primary lessee under operating leases for 5 Portamedic branch offices, which are subleased by the acquirer of the former Portamedic business. The acquirer is obligated to pay 100% of the rent and other executory costs for these 5 offices in the form of a contractual obligation for the remaining lease term. If the Company is unable to assign these leases to the acquirer of the former Portamedic business, the Company will let the leases expire with no intent of renewal. In addition, the Company is still the primary lessee under 5 operating leases related to former Portamedic offices not utilized for continuing operations and such related costs are recorded in the reporting for discontinued operations. The Company had recorded a facility closure obligation of $0.9 million as of June 30, 2015 , related to the above mentioned leases. The Company has employment agreements with certain executive employees that provide for payment of base salary for a one year period in the event their employment with the Company is terminated in certain circumstances, including following a change in control, as further defined in the agreements. In the past, some federal and state agencies have claimed that the Company improperly classified its health professionals as independent contractors for purposes of federal and state unemployment and/or worker's compensation tax laws and that the Company was therefore liable for taxes in arrears or for penalties for failure to comply with their interpretation of the laws. There are no assurances that the Company will not be subject to similar claims in the future. |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | Litigation On May 24, 2012, a complaint was filed against the Company in the United States District Court for the District of New Jersey alleging, among other things, that the Company failed to pay overtime compensation to a purported class of certain independent contractor examiners who, the complaint alleges, should be treated as employees for purposes of federal law. The complaint seeks an award of an unspecified amount of allegedly unpaid overtime wages to certain examiners. The Company filed an answer denying the substantive allegations therein. As of the date of this filing, the Company’s Motion to Reconsider an earlier Report and Recommendation conditionally certifying the class of all contract examiners from August 16, 2010, to the present is on hold while the parties pursue the possibility of conducting a mediation. If the case is not resolved in mediation and if the Magistrate's decision stands, notice will be sent to contractors who performed work for the Company within this time period. The claim is not covered by insurance, and the Company is incurring legal costs to defend the litigation which are recorded in continuing operations. This matter relates to the former Portamedic service line for which the Company retained liability. The Company has determined that losses related to the remaining complaint are not estimable or probable. The Company is a party to a number of other legal actions arising in the ordinary course of its business. In the opinion of management, the Company has substantial legal defenses and/or insurance coverage with respect to all of its pending legal actions. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company recorded tax expense of less than $0.01 million for each of the three and six month periods ended June 30, 2015 and 2014 , respectively, reflecting a state tax liability to one state. No amounts were recorded for unrecognized tax benefits or for the payment of interest and penalties during the three and six month periods ended June 30, 2015 and 2014 . No federal or state tax benefits were recorded relating to the current year loss, as the Company continues to believe that a full valuation allowance is required on its net deferred tax assets. The tax years 2011 through 2014 may be subject to federal examination and assessment. Tax years from 2006 through 2010 remain open solely for purposes of federal and certain state examination of net operating loss and credit carryforwards. State income tax returns may be subject to examination for tax years 2010 through 2014, depending on state tax statute of limitations. As of December 31, 2014 , the Company has U.S. federal and state net operating loss carryforwards of $159.6 million and $143.9 million , respectively. There has been no significant change in these balances as of June 30, 2015 . The net operating loss carryforwards, if not utilized, will expire in the years 2015 through 2034 . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company determines the fair value measurements used in our consolidated financial statements based upon the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. • Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. • Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company estimated the fair value of the derivative liability using the Black-Scholes valuation model, which is a Level 3 valuation technique. June 30, 2015 (in thousands) Face Value Fair Value Carrying Amount Term Loan $ 5,000 $ 1,436 $ 1,680 Derivative liability 1,250 $ 908 908 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The unaudited interim consolidated financial statements of the Company have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2014 Annual Report on Form 10-K, filed with the SEC on March 31, 2015. Financial statements prepared in accordance with U.S. GAAP require management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and other disclosures. The financial information included herein is unaudited; however, such information reflects all adjustments that are, in the opinion of the Company's management, necessary for a fair statement of results for the interim periods presented. The results of operations for the three and six month periods ended June 30, 2015 and 2014 are not necessarily indicative of the results to be expected for any other interim period or the full year. See “Management's Discussion and Analysis of Financial Condition and Results of Operations” for additional information. |
Discontinued Operations | On September 30, 2013, the Company completed the sale of certain assets comprising its Portamedic service line. The Portamedic service line is accounted for as a discontinued operation in this Quarterly Report on Form 10-Q (the "Report"). During 2014, the Company sold certain assets comprising the Heritage Labs and Hooper Holmes Services businesses. The operating results of these businesses are also segregated and reported as discontinued operations in this Report. |
New Accounting Pronouncements | New Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs", which requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying value of the debt liability. The Company has unamortized debt issuance costs of $0.6 million existing as of June 30, 2015 . ASU 2015-03 is effective for the Company in the first quarter of 2016, with early adoption permitted, and retrospective application required. The Company is currently evaluating the effect that ASU 2015-03 will have on the consolidated financial statements and related disclosures. In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers", which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with early adoption permitted as of the original effective date or first quarter of 2017. The Company is currently evaluating the effect that ASU 2014-09 will have on the consolidated financial statements and related disclosures. |
Acquisition (Tables)
Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Summary of Net Impact Due to Acquisition | The following table summarizes the net impact to cash for the proceeds of the Credit Agreement, debt assumed (Term Loan less the fair value of the Warrant and derivative liability), issuance of common shares, the impact to additional paid-in capital for the issuance of shares and fair value of the Warrant, derivative liability and transaction costs: (in thousands) Credit Agreement $ 5,000 Cash consideration (4,000 ) Net proceeds from Credit Agreement $ 1,000 Term Loan $ 5,000 Debt discount associated with Warrant (2,656 ) Derivative liability with additional warrant feature (908 ) Net debt recorded with Acquisition $ 1,436 Common Stock (6,500,000 shares at $0.04 par) $ 260 Additional paid-in capital: issuance of shares $ 2,740 Additional paid-in capital: fair value of Warrant 2,656 Net increase to APIC with Acquisition $ 5,396 |
Preliminary Allocation of Purchase Price | The preliminary allocation of purchase price is as follows: (in thousands) Accounts receivable, net of allowance of $16 $ 877 Inventory and other current assets 193 Fixed assets $ 275 Customer portal (existing technologies) 1,930 Customer relationships $ 4,151 Goodwill 766 Accounts payable and accrued expenses $ (750 ) Deferred revenue (442 ) Preliminary Purchase Price $ 7,000 |
Business Acquisition, Pro Forma Information | The following table provides unaudited pro forma results of operations for the three and six month periods ended June 30, 2015 and 2014 as if the acquisition had been completed on the first day of our 2014 fiscal year. (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Pro forma revenues $ 7,662 $ 10,596 $ 15,750 $ 21,788 Pro forma net loss from continuing operations $ (2,749 ) $ (2,903 ) $ (5,856 ) $ (7,015 ) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Valuation Assumptions | The fair value of the stock options granted during the three and six month periods ended June 30, 2015 , was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended June 30, Six Months Ended June 30, 2015 2015 Expected life (years) 5.04 5.04 Expected volatility 64.1% 64.1% Expected dividend yield —% —% Risk-free interest rate 1.4% 1.4% Weighted average fair value of options granted during the period $0.25 $0.26 |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the six month period ended June 30, 2015 : Number of Options Weighted Average Exercise Price Per Option Weighted Average remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Outstanding balance at December 31, 2014 3,652,200 0.67 Granted 1,050,000 0.47 Exercised (50,000 ) 0.45 Expired (413,000 ) 1.44 Forfeited (3,000 ) 0.67 Outstanding balance at June 30, 2015 4,236,200 0.55 8.32 $0 Options exercisable at June 30, 2015 1,637,291 $ 0.64 7.47 $0 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The following table summarizes the major classes of line items constituting the pretax results of operations of Heritage Labs and Hooper Holmes Services for the three and six month periods ended June 30, 2014 , which are reported as a component of discontinued operations in the consolidated statement of operations. There was no significant activity in discontinued operations during the three and six month periods ended June 30, 2015 . There was no income tax recorded in discontinued operations for Heritage Labs and Hooper Holmes Services for any period presented. Three Months Ended Six Months Ended (in thousands) June 30, 2014 June 30, 2014 Revenues Heritage Labs $ 1,405 $ 3,717 Hooper Holmes Services $ 2,607 $ 5,595 Total revenue $ 4,012 $ 9,312 Cost of Sales Heritage Labs $ 1,222 $ 2,982 Hooper Holmes Services $ 2,296 $ 4,878 Total cost of sales $ 3,518 $ 7,860 Selling, General & Administrative Expenses Heritage Labs $ 50 $ 251 Hooper Holmes Services $ 1,215 $ 1,682 Total selling, general & administrative expenses $ 1,265 $ 1,933 (Loss) income from Discontinued Operations Heritage Labs $ 133 $ 484 Hooper Holmes Services $ (904 ) $ (965 ) Total (loss) from discontinued operations $ (771 ) $ (481 ) Reconciliation to statement of operations: Portamedic discontinued operations and other $ (99 ) $ (69 ) Loss on sale of subsidiaries, net of adjustments $ — $ (150 ) Loss from discontinued operations $ (870 ) $ (700 ) |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restructuring Charges [Abstract] | |
Restructuring and Related Costs | The following table provides a summary of the activity in the restructure accrual for the six month period ended June 30, 2015 : As of As of (In thousands) December 31, 2014 Charges Payments June 30, 2015 Facility closure obligation $ 1,074 $ 21 $ (189 ) $ 906 Total $ 1,074 $ 21 $ (189 ) $ 906 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | The following table summarizes the Company's outstanding borrowings: (in thousands) June 30, 2015 2013 Loan and Security Agreement $ 849 Term Loan 5,000 Discount on Term Loan (3,320 ) Total debt 2,529 Short term portion (2,049 ) Total long-term debt, net of discount $ 480 |
Summary of Components of Interest Expense | The following table summarizes the components of interest expense for the six month period ended June 30, 2015 : (in thousands) Six Months Ended June 30, 2015 Interest expense Term Loan (interest at LIBOR, plus 14%) $ 154 Accretion of termination fees (over term of Term Loan at rate of 8%) 27 Amortization of deferred financing costs 280 Accretion of debt discount associated with Warrant 182 Accretion of discount associated with additional warrant feature 62 Other interest expense 4 Total $ 709 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value | The Company estimated the fair value of the derivative liability using the Black-Scholes valuation model, which is a Level 3 valuation technique. June 30, 2015 (in thousands) Face Value Fair Value Carrying Amount Term Loan $ 5,000 $ 1,436 $ 1,680 Derivative liability 1,250 $ 908 908 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) | Apr. 17, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Apr. 16, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||||
Acquisition, cash paid | $ 4,000,000 | $ 0 | |||
Common stock, par value (in dollars per share) | $ 0.04 | $ 0.04 | |||
Unamortized debt issuance costs | $ 600,000 | ||||
Acquisition [Member] | |||||
Business Acquisition [Line Items] | |||||
Acquisition, purchase price | $ 7,000,000 | ||||
Acquisition, cash paid | $ 4,000,000 | ||||
Acquisition, shares paid | 6,500,000 | ||||
Common stock, par value (in dollars per share) | $ 0.04 | ||||
Value of common stock issued in acquisition | $ 3,000,000 | ||||
2013 Loan and Security Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Maximum borrowing capacity | 7,000,000 | 7,000,000 | $ 10,000,000 | ||
Potential maximum borrowing capacity | 12,000,000 | ||||
Amendment fee | 100,000 | ||||
Loans Payable [Member] | |||||
Business Acquisition [Line Items] | |||||
Term Loan | $ 5,000,000 | ||||
Loans Payable [Member] | Credit Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Term Loan | $ 5,000,000 |
Liquidity (Details)
Liquidity (Details) - USD ($) | Apr. 17, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jul. 28, 2015 | Apr. 16, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | |||||||||
Cash and cash equivalents | $ 1,242,000 | $ 3,137,000 | $ 1,242,000 | $ 3,137,000 | $ 5,201,000 | $ 3,970,000 | |||
Acquisition, cash paid | 4,000,000 | 0 | |||||||
Loss from continuing operations | (3,342,000) | (1,943,000) | (5,444,000) | (4,798,000) | |||||
Net cash used in operating activities of continuing operations | 5,099,000 | 1,179,000 | |||||||
Transaction costs | 593,000 | $ 0 | 679,000 | $ 0 | |||||
2013 Loan and Security Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Borrowings outstanding | (800,000) | (800,000) | |||||||
Maximum borrowing capacity | $ 7,000,000 | $ 7,000,000 | $ 7,000,000 | $ 10,000,000 | |||||
Loan maximum defined, based on eligible receivables | 85.00% | 85.00% | |||||||
Loan maximum defined, based on eligible receivables, reserve | $ 500,000 | $ 500,000 | |||||||
Debt covenant, minimum EBITDA amount for twelve month period ending September 30, 2015 | (3,000,000) | ||||||||
Debt covenant, minimum EBITDA amount for twelve month period ending December 31, 2015 | 800,000 | ||||||||
Debt covenant, minimum EBITDA amount for twelve month period ending March 31, 2016 | 1,850,000 | ||||||||
Debt covenant, minimum EBITDA amount for twelve month period ending June 30, 2016 | 2,700,000 | ||||||||
Acquisition [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Acquisition, cash paid | 4,000,000 | ||||||||
AHS receivables | 877,000 | 900,000 | 900,000 | ||||||
Transaction costs | 700,000 | ||||||||
Loans Payable [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Term Loan | 5,000,000 | 5,000,000 | |||||||
Loans Payable [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Term Loan | 5,000,000 | ||||||||
Net proceeds from loan | 800,000 | ||||||||
Debt covenant, minimum EBITDA amount for twelve month period ending September 30, 2015 | 1 | ||||||||
Debt covenant, minimum EBITDA amount for twelve month period ending December 31, 2015 | 1,000,000 | ||||||||
Maximum aggregate revenue-based payment | $ 600,000 | ||||||||
Variable rate floor, percent | 1.00% | ||||||||
Exit fee as a percent of aggregate principal | 8.00% | ||||||||
Debt covenant, minimum aggregate revenue for twelve month period ending September 30, 2015 | $ 27,500,000 | ||||||||
Debt covenant, minimum aggregate revenue for twelve month period ending December 31, 2015 | 34,000,000 | ||||||||
Debt covenant, minimum aggregate revenue for twelve month period ending March 31, 2016 | 38,000,000 | ||||||||
Debt Instrument, Covenant, Minimum Aggregate Revenue, Period Four | 40,000,000 | ||||||||
Debt covenant, maximum debt outstanding | $ 250,000 | ||||||||
Loans Payable [Member] | LIBOR [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Spread on variable rate | 14.00% | ||||||||
Annual Aggregate Revenue Up To And Including $20 million [Member] | Loans Payable [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percent of aggregate revenue for quarterly payments | 8.50% | ||||||||
Annual aggregate revenue limit | $ 20,000,000 | ||||||||
Annual Aggregate Revenue Greater Than $20 Million Up To And Including $30 Million [Member] | Loans Payable [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percent of aggregate revenue for quarterly payments | 7.00% | ||||||||
Annual Aggregate Revenue Greater Than $20 Million Up To And Including $30 Million [Member] | Minimum [Member] | Loans Payable [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Annual aggregate revenue limit | $ 20,000,000 | ||||||||
Annual Aggregate Revenue Greater Than $20 Million Up To And Including $30 Million [Member] | Maximum [Member] | Loans Payable [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Annual aggregate revenue limit | $ 30,000,000 | ||||||||
Annual Aggregate Revenue Greater Than $30 million [Member] | Loans Payable [Member] | Credit Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Percent of aggregate revenue for quarterly payments | 5.00% | ||||||||
Annual aggregate revenue limit | $ 30,000,000 | ||||||||
Selling, General and Administrative Expenses [Member] | Acquisition [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Integration costs | $ 300,000 | $ 300,000 | |||||||
Subsequent Event [Member] | 2013 Loan and Security Agreement [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Additional borrowing availability under Loan and Security Agreement | $ (600,000) |
Acquisition Additional Informat
Acquisition Additional Information (Details) - USD ($) | Apr. 17, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||||||
Acquisition, cash paid | $ 4,000,000 | $ 0 | ||||
Common stock, par value (in dollars per share) | $ 0.04 | $ 0.04 | $ 0.04 | |||
Transaction costs | $ 593,000 | $ 0 | $ 679,000 | 0 | ||
Discount on Term Loan | (3,320,000) | (3,320,000) | $ 0 | |||
Goodwill | 766,000 | 766,000 | $ 0 | |||
Warrant One [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of shares to be purchased under warrant | 8,152,174 | |||||
Exercise price (usd per share) | $ 0.46 | |||||
Discount on Term Loan | $ (2,656,000) | |||||
Warrant One [Member] | Warrants Not Settleable in Cash [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Fair value assumptions, volatility rate | 85.00% | |||||
Fair value assumptions, risk-free rate | 1.40% | |||||
Fair value assumptions, dividend rate | 0.00% | |||||
Fair value assumptions, expected term | 7 years | |||||
Contingently Issuable Warrant [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Value of warrant to be issued is debt instrument is not paid by February 28, 2016 | $ 1,250,000 | |||||
Amount per share over closing price on February 28, 2016 (usd per share) | $ 0.01 | |||||
Period after issuance for warrant to be exercisable | 6 months | |||||
Warrant, exercisable period | 7 years | |||||
Derivative liability | $ (908,000) | |||||
Contingently Issuable Warrant [Member] | Derivative Financial Instruments, Liabilities [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Fair value assumptions, volatility rate | 85.00% | |||||
Fair value assumptions, risk-free rate | 1.40% | |||||
Fair value assumptions, dividend rate | 0.00% | |||||
Fair value assumptions, expected term | 7 years | |||||
Loans Payable [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Term Loan | 5,000,000 | 5,000,000 | ||||
Credit Agreement [Member] | Loans Payable [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Term Loan | $ 5,000,000 | |||||
Origination fee | 100,000 | |||||
Acquisition [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition, purchase price | 7,000,000 | |||||
Acquisition, cash paid | $ 4,000,000 | |||||
Acquisition, shares paid | 6,500,000 | |||||
Common stock, par value (in dollars per share) | $ 0.04 | |||||
Value of common stock issued in acquisition | $ 3,000,000 | |||||
Acquisition, shares delivered at closing | 5,576,087 | |||||
Acquisition, shares held back for working capital adjustment | 326,087 | |||||
Acquisition, shares held back for indemnification | 597,826 | |||||
Transaction costs | 700,000 | |||||
Amortization of intangible assets | 300,000 | |||||
Goodwill | $ 766,000 | |||||
Revenues attributable to AHS since the acquisition | 2,700,000 | 2,700,000 | ||||
Acquisition [Member] | Acquisition-related Costs [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Pro forma amortization of intangible assets | 600,000 | 700,000 | ||||
Acquisition [Member] | Amortization of Intangible Assets [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Pro forma amortization of intangible assets | $ 300,000 | $ 300,000 | $ 600,000 | |||
Acquisition [Member] | Cost of Operations [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amortization of intangible assets | 200,000 | |||||
Acquisition [Member] | Selling, General and Administrative Expenses [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Amortization of intangible assets | $ 100,000 | |||||
Acquisition [Member] | Customer portal (existing technologies) [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 4 years | |||||
Acquisition [Member] | Customer Relationships [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 8 years |
Acquisition Summary of net impa
Acquisition Summary of net impact due to acquisition (Details) - USD ($) | Apr. 17, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||||
Acquisition of Accountable Health Solutions | $ (4,000,000) | $ 0 | ||
Debt discount associated with Warrant | $ 3,320,000 | $ 0 | ||
Common stock, par value (in dollars per share) | $ 0.04 | $ 0.04 | ||
Acquisition [Member] | ||||
Business Acquisition [Line Items] | ||||
Acquisition of Accountable Health Solutions | $ (4,000,000) | |||
Common Stock (6,500,000 shares at $0.04 par) | 3,000,000 | |||
Additional paid-in capital: issuance of shares | 2,740,000 | |||
Additional paid-in capital: fair value of Warrant | 2,656,000 | |||
Net increase to APIC with Acquisition | $ 5,396,000 | |||
Acquisition, shares paid | 6,500,000 | |||
Common stock, par value (in dollars per share) | $ 0.04 | |||
Acquisition [Member] | Common Stock [Member] | ||||
Business Acquisition [Line Items] | ||||
Common Stock (6,500,000 shares at $0.04 par) | $ 260,000 | |||
Loans Payable [Member] | ||||
Business Acquisition [Line Items] | ||||
Term Loan | $ 5,000,000 | |||
Loans Payable [Member] | Credit Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Term Loan | 5,000,000 | |||
Net proceeds from Credit Agreement | $ 1,000,000 | |||
Debt instrument, fair value disclosure | $ 1,436,000 |
Acquisition Preliminary purchas
Acquisition Preliminary purchase price allocation (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Apr. 17, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | |||
Goodwill | $ 766 | $ 0 | |
Acquisition [Member] | |||
Business Acquisition [Line Items] | |||
Accounts receivable, net of allowance of $16 | $ 900 | $ 877 | |
Inventory and other current assets | 193 | ||
Fixed assets | 275 | ||
Goodwill | 766 | ||
Accounts payable and accrued expenses | (750) | ||
Deferred revenue | (442) | ||
Preliminary Purchase Price | 7,000 | ||
Allowance for doubtful accounts receivables | 16 | ||
Customer portal (existing technologies) [Member] | Acquisition [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets | 1,930 | ||
Customer relationships [Member] | Acquisition [Member] | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 4,151 |
Acquisition Pro forma results o
Acquisition Pro forma results of operations (Details) - Acquisition [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Business Acquisition [Line Items] | ||||
Pro forma revenues | $ 7,662 | $ 10,596 | $ 15,750 | $ 21,788 |
Pro forma net loss from continuing operations | $ (2,749) | $ (2,903) | $ (5,856) | $ (7,015) |
Share-Based Compensation Employ
Share-Based Compensation Employee Share-Based Compensation Plans (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Options granted (in shares) | 1,050,000 | |||
2008 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Options granted (in shares) | 10,000 | 600,000 | ||
Remaining shares available for grant under the plan (in shares) | 3,216,200 | 3,216,200 | ||
2011 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Options granted (in shares) | 450,000 | 300,000 | 300,000 | |
Stock awards granted | 41,667 | |||
Amended and Restated 2011 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Remaining shares available for grant under the plan (in shares) | 800,000 | 800,000 | ||
Non-employee Member of Board of Directors [Member] | 2011 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Stock awards granted | 400,000 |
Share-Based Compensation Stock
Share-Based Compensation Stock Option Valuation Assumptions (Details) - Jun. 30, 2015 - $ / shares | Total | Total |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected life (years) | 5 years 15 days | 5 years 15 days |
Expected volatility | 64.10% | 64.10% |
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.40% | 1.40% |
Weighted average fair value of options granted during the period (in dollars per share) | $ 0.25 | $ 0.26 |
Share-Based Compensation Option
Share-Based Compensation Option Roll-Forward (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stock Option Activity [Roll Forward] | |||
Outstanding balance (options) at December 31, 2014 | 3,652,200 | ||
Options granted (in shares) | 1,050,000 | ||
Exercised (options) | (16,500) | (50,000) | (54,000) |
Expired (options) | (413,000) | ||
Forfeited (options) | (3,000) | ||
Outstanding balance (options) at June 30, 2015 | 4,236,200 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding balance (weighted average exercise price) at December 31, 2014 | $ 0.67 | ||
Granted (weighted average exercise price) | 0.47 | ||
Exercised (weighted averaged exercise price) | $ 0.65 | 0.45 | $ 0.51 |
Expired (weighted average exercise price) | 1.44 | ||
Forfeited (weighted average exercise price) | 0.67 | ||
Outstanding balance (weighted average exercise price) at June 30, 2015 | $ 0.55 | ||
Weighted Average Remaining Contractual Life, options outstanding | 8 years 117 days | ||
Aggregate Intrinsic Value (in thousands), options outstanding | $ 0 | ||
Number of options exercisable at June 30, 2015 | 1,637,291 | ||
Weighted average exercise price of options exercisable at June 30, 2015 | $ 0.64 | ||
Weighted Average Remaining Contractual Life, options exercisable | 7 years 172 days | ||
Aggregate Intrinsic Value (in thousands), options exercisable | $ 0 |
Share-Based Compensation Award
Share-Based Compensation Award Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Exercised (options) | 16,500 | 50,000 | 54,000 | |
Exercised (weighted averaged exercise price) | $ 0.65 | $ 0.45 | $ 0.51 | |
Options vested in period | 94,941 | |||
Aggregate fair value of options vested in period | $ 40 | |||
Share-based compensation expense | $ 100 | $ 300 | 200 | $ 400 |
Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award | ||||
Unrecognized compensation cost related to stock options | $ 500 | $ 500 | ||
Weighted average period for recognition of compensation cost | 1 year 321 days |
Discontinued Operations Operati
Discontinued Operations Operation Assets of Heritage Labs and Hooper Holmes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss on sale of subsidiaries, net of adjustments | $ 0 | $ 0 | $ 0 | $ (150) |
Income (loss) from discontinued operations | $ (21) | (870) | $ (25) | (700) |
Discontinued Operations, Disposed of by Sale [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 4,012 | 9,312 | ||
Cost of Sales | 3,518 | 7,860 | ||
Selling, General & Administrative Expenses | 1,265 | 1,933 | ||
(Loss) income from Discontinued Operations | (771) | (481) | ||
Loss on sale of subsidiaries, net of adjustments | 0 | (150) | ||
Income (loss) from discontinued operations | (870) | (700) | ||
Discontinued Operations, Disposed of by Sale [Member] | Heritage Labs [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 1,405 | 3,717 | ||
Cost of Sales | 1,222 | 2,982 | ||
Selling, General & Administrative Expenses | 50 | 251 | ||
(Loss) income from Discontinued Operations | 133 | 484 | ||
Discontinued Operations, Disposed of by Sale [Member] | Hooper Holmes Services [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 2,607 | 5,595 | ||
Cost of Sales | 2,296 | 4,878 | ||
Selling, General & Administrative Expenses | 1,215 | 1,682 | ||
(Loss) income from Discontinued Operations | (904) | (965) | ||
Discontinued Operations, Disposed of by Sale [Member] | Portamedic Service Line [Member] | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
(Loss) income from Discontinued Operations | $ (99) | $ (69) |
Discontinued Operations Narrati
Discontinued Operations Narrative (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015USD ($)segment | Jun. 30, 2014segment | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of Reportable Segments | segment | 1 | 3 |
Heritage Labs And Hooper Holmes Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Operating cash flow from discontinued operations | $ 0.7 | |
Changes in working capital from discontinued operations | 0.4 | |
Hooper Holmes Services [Member] | Discontinued Operations, Disposed of by Sale [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Non-cash operating activities | 0.2 | |
Non-cash operating charge for remaining operating lease payments | $ 0.6 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 0.4 | $ 0.7 |
Components | $ 0.4 | $ 0.2 |
Restructuring Charges (Details)
Restructuring Charges (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | $ 1,074 |
Restructuring charges | 21 |
Payments | (189) |
Restructuring reserve, ending balance | 906 |
Facility Closing [Member] | |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve, beginning balance | 1,074 |
Restructuring charges | 21 |
Payments | (189) |
Restructuring reserve, ending balance | $ 906 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Apr. 17, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jul. 28, 2015 | Apr. 16, 2015 | Dec. 31, 2014 |
Loan and Security Agreements [Line Items] | ||||||||
Discount on Term Loan | $ (3,320,000) | $ (3,320,000) | $ 0 | |||||
Total debt | 2,529,000 | 2,529,000 | 0 | |||||
Short term portion | (2,049,000) | (2,049,000) | 0 | |||||
Total long-term debt, net of discount | 480,000 | 480,000 | 0 | |||||
Interest expense Term Loan (interest at LIBOR, plus 14%) | 154,000 | |||||||
Accretion of termination fees (over term of Term Loan at rate of 8%) | 27,000 | |||||||
Amortization of deferred financing costs | 280,000 | $ 177,000 | ||||||
Accretion of debt discount associated with Warrant | 182,000 | |||||||
Accretion of discount associated with additional warrant feature | 62,000 | |||||||
Other interest expense | 4,000 | |||||||
Total interest expense | 709,000 | |||||||
Prior to February 28, 2017 [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Credit facility - early termination fee | 3.00% | |||||||
Prior to February 28, 2018 [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Credit facility - early termination fee | 2.00% | |||||||
February 28, 2018 - February 28, 2019 [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Credit facility - early termination fee | 1.00% | |||||||
2013 Loan and Security Agreement [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Maximum borrowing capacity | $ 7,000,000 | $ 7,000,000 | $ 7,000,000 | $ 10,000,000 | ||||
Loan maximum defined, based on eligible receivables | 85.00% | 85.00% | ||||||
Potential maximum borrowing capacity | 12,000,000 | |||||||
Loan maximum defined, based on eligible receivables, reserve | $ 500,000 | $ 500,000 | ||||||
Interest rate, stated percentage | 6.00% | 6.00% | ||||||
Effective interest rate | 6.00% | 6.00% | ||||||
Commitment fee as percent of revolving credit limit | 1.00% | |||||||
Commitment fee | $ 40,000 | $ 50,000 | $ 80,000 | $ 90,000 | ||||
2013 Loan and Security Agreement [Member] | Prime rate [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Spread on variable rate | 2.75% | |||||||
2013 Loan and Security Agreement [Member] | LIBOR 90 day rate [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Spread on variable rate | 5.25% | |||||||
Line of Credit [Member] | 2013 Loan and Security Agreement [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Total debt | 849,000 | $ 849,000 | 0 | |||||
Loans Payable [Member] | Credit Agreement [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Total debt | $ 5,000,000 | $ 5,000,000 | $ 0 | |||||
Origination fee | 100,000 | |||||||
Maximum aggregate revenue-based payment | $ 600,000 | |||||||
Variable rate floor, percent | 1.00% | |||||||
Exit fee as a percent of aggregate principal | 8.00% | |||||||
Loans Payable [Member] | Credit Agreement [Member] | LIBOR [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Spread on variable rate | 14.00% | |||||||
Loans Payable [Member] | Credit Agreement [Member] | Annual Aggregate Revenue Up To And Including $20 million [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Percent of aggregate revenue for quarterly payments | 8.50% | |||||||
Annual aggregate revenue limit | $ 20,000,000 | |||||||
Loans Payable [Member] | Credit Agreement [Member] | Annual Aggregate Revenue Greater Than $20 Million Up To And Including $30 Million [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Percent of aggregate revenue for quarterly payments | 7.00% | |||||||
Loans Payable [Member] | Credit Agreement [Member] | Annual Aggregate Revenue Greater Than $30 million [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Percent of aggregate revenue for quarterly payments | 5.00% | |||||||
Annual aggregate revenue limit | $ 30,000,000 | |||||||
Minimum [Member] | Loans Payable [Member] | Credit Agreement [Member] | Annual Aggregate Revenue Greater Than $20 Million Up To And Including $30 Million [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Annual aggregate revenue limit | 20,000,000 | |||||||
Maximum [Member] | Loans Payable [Member] | Credit Agreement [Member] | Annual Aggregate Revenue Greater Than $20 Million Up To And Including $30 Million [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Annual aggregate revenue limit | $ 30,000,000 | |||||||
Subsequent Event [Member] | 2013 Loan and Security Agreement [Member] | ||||||||
Loan and Security Agreements [Line Items] | ||||||||
Additional borrowing availability under Loan and Security Agreement | $ 600,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015USD ($)operating_leasebranch_office | Dec. 31, 2014USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Restructuring reserve | $ | $ 906 | $ 1,074 |
Employment agreements, contract term | 1 year | |
Portamedic Service Line [Member] | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of offices | 5 | |
Number of operating leases | operating_lease | 5 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($)state | Jun. 30, 2014USD ($)state | Jun. 30, 2015USD ($)state | Jun. 30, 2014USD ($)state | Dec. 31, 2014USD ($) | |
Number Of States Owed A Tax Liability | state | 1 | 1 | 1 | 1 | |
Income tax expense | $ 5 | $ 5 | $ 10 | $ 10 | |
Interest and penalty payments | $ 0 | $ 0 | $ 0 | $ 0 | |
Internal Revenue Service (IRS) [Member] | |||||
Operating loss carryforwards, subject to expiration | $ 159,600 | ||||
State and Local Jurisdiction [Member] | |||||
Operating loss carryforwards, subject to expiration | $ 143,900 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | Jun. 30, 2015USD ($) |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative liability - Face Value | $ 1,250 |
Loans Payable [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Term Loan - Face Value | 5,000 |
Fair Value [Member] | Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative liability | 908 |
Fair Value [Member] | Fair Value, Inputs, Level 3 [Member] | Loans Payable [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Term Loan, Fair Value | 1,436 |
Carrying Amount [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Derivative liability | 908 |
Carrying Amount [Member] | Loans Payable [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Term Loan, Carrying Amount | $ 1,680 |