Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
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 | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 26,768,498 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 544 | $ 884 |
Accounts receivable, net of allowance for doubtful accounts of $533 and $260 at March 31, 2018 and December 31, 2017, respectively | 8,910 | 16,762 |
Inventories | 819 | 1,004 |
Other current assets | 755 | 998 |
Total current assets | 11,028 | 19,648 |
Property, plant and equipment, net | 1,546 | 1,752 |
Intangible assets, net | 9,006 | 9,644 |
Goodwill | 8,759 | 8,759 |
Other assets | 744 | 397 |
Total assets | 31,083 | 40,200 |
Current liabilities: | ||
Accounts payable | 14,563 | 12,690 |
Accrued expenses | 9,221 | 9,255 |
Short-term debt | 13,979 | 19,314 |
Other current liabilities | 4,762 | 5,529 |
Total current liabilities | 42,525 | 46,788 |
Other long-term liabilities | 300 | 268 |
Commitments and contingencies | 0 | 0 |
Stockholders' deficit: | ||
Common stock, par value $0.04 per share; Authorized: 240,000,000 shares; Issued and Outstanding: 26,768,498 shares at March 31, 2018, and December 31, 2017 | 1,071 | 1,071 |
Additional paid-in capital | 177,406 | 177,397 |
Accumulated deficit | (190,219) | (185,324) |
Total stockholders' deficit | (11,742) | (6,856) |
Total liabilities and stockholders' deficit | $ 31,083 | $ 40,200 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 533 | $ 260 |
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) | 26,768,498 | 26,768,498 |
Common stock, shares outstanding (in shares) | 26,768,498 | 26,768,498 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenues | $ 11,335 | $ 7,601 |
Cost of operations | 8,667 | 5,909 |
Gross profit | 2,668 | 1,692 |
Selling, general and administrative expenses | 6,851 | 3,480 |
Transaction costs | 126 | 682 |
Operating loss from continuing operations | (4,309) | (2,470) |
Interest expense | 886 | 767 |
Other income | (1) | 0 |
Loss from continuing operations before income tax expense | (5,194) | (3,237) |
Income tax expense | 0 | 5 |
Loss from continuing operations | (5,194) | (3,242) |
Discontinued operations: | ||
Gain (loss) from discontinued operations | (35) | 113 |
Net loss | $ (5,229) | $ (3,129) |
Continuing operations | ||
Basic and Diluted (in dollars per share) | $ (0.20) | $ (0.30) |
Discontinued operations | ||
Basic and Diluted (in dollars per share) | 0 | 0.01 |
Net loss | ||
Basic and Diluted (in dollars per share) | $ (0.20) | $ (0.29) |
Basic and Diluted (in shares) | 26,768,498 | 10,814,398 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Deficit - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Adoption of ASU 2014-09 | $ 334 | $ 334 | ||
Beginning Balance (in shares) at Dec. 31, 2017 | 26,768,498 | |||
Beginning Balance at Dec. 31, 2017 | (6,856) | $ 1,071 | $ 177,397 | (185,324) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss | (5,229) | (5,229) | ||
Share-based compensation | 32 | 32 | ||
Issuance of common stock in connection with the Merger and LPC Equity Line | (23) | (23) | ||
Ending Balance (in shares) at Mar. 31, 2018 | 26,768,498 | |||
Ending Balance at Mar. 31, 2018 | $ (11,742) | $ 1,071 | $ 177,406 | $ (190,219) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (5,229) | $ (3,129) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 937 | 623 |
Other debt related costs included in interest expense | 320 | 548 |
Provision for bad debt expense | 167 | 13 |
Share-based compensation expense | 32 | 38 |
Expense for common stock issuance for payment of transaction costs for the LPC Equity Line | (23) | 0 |
Change in assets and liabilities: | ||
Accounts receivable | 7,684 | (1,553) |
Inventories | 186 | (28) |
Other assets | 280 | (27) |
Accounts payable, accrued expenses and other liabilities | 762 | 276 |
Net cash provided by (used in) operating activities | 5,116 | (3,239) |
Cash flows from investing activities: | ||
Capital expenditures | 0 | (89) |
Net cash used in investing activities | 0 | (89) |
Cash flows from financing activities: | ||
Borrowings under credit facility | 13,800 | 7,077 |
Payments under credit facility | (18,928) | (6,689) |
Principal payments on Term Loan | (250) | 0 |
Issuance of common stock and warrants, net of issuance costs | 0 | 1,300 |
Payments on capital lease obligations | (63) | 0 |
Debt issuance costs | (15) | 0 |
Net cash (used in) provided by financing activities | (5,456) | 1,688 |
Net decrease in cash and cash equivalents | (340) | (1,640) |
Cash and cash equivalents at beginning of period | 884 | 1,866 |
Cash and cash equivalents at end of period | 544 | 226 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Fixed assets vouchered but not paid | 94 | 46 |
Supplemental disclosure of cash paid during period for: | ||
Income taxes | 0 | 23 |
Interest | $ 538 | $ 241 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Hooper Holmes, Inc. and its subsidiaries (“Hooper Holmes” or the "Company”) provide on-site screening services and flu shots, laboratory testing, health risk assessment, and sample collection services to individuals as part of comprehensive health and wellbeing programs offered through organizations sponsoring such programs including corporate and government employers, health plans, hospital systems, health care management companies, wellbeing companies, brokers and consultants, disease management organizations, reward administrators, third party administrators, clinical research organizations and academic institutions. Through the Company's comprehensive health and wellbeing services, the Company also provides health coaching to support positive health risk migration, access to a wellbeing platform with individual and team challenges and rewards management, interoperability with third party digital health providers, data analytics, and reporting services. The Company contracts with health professionals to deliver these services nationwide, all of whom are trained and certified to deliver quality service. In addition, the Company leverages our national network of health professionals to support the delivery of other similar products and services. The Company’s Food and Drug Administration ("FDA") and International Organization for Standardization ("ISO") certified medical-kit facility provides services to global pharmaceutical companies, and supports the delivery of our products and services in a high-quality, secure manner. In 2017, the Company merged with Provant Health Solutions LLC ("PHS"), which offered a similar set of services as Hooper Holmes. The combined company provides a personalized, one-stop programming experience for customers, with proven outcomes powered by sophisticated data collection and management. This uniquely positions the Company to transform and capitalize on the large and growing health and wellbeing market. On January 23, 2018, the Company announced that it has re-branded to Hooper Holmes, Inc. d/b/a Provant Health. The Company operates under one reporting segment. The Company’s biometric screening services are subject to seasonality, with the third and fourth quarters typically being its strongest quarters due to increased demand for screening services from mid-August through late-November related to annual benefit renewal cycles as well as the seasonal delivery of flu shots. Engagement in the Company’s health and wellbeing service operations are more constant, though there are some variations due to the timing of the health coaching programs which are billed per participant and typically start shortly after the conclusion of onsite screening events. In addition to the Company’s screening and health and wellbeing services, the Company generates ancillary revenue through the assembly of medical kits for sale to third parties. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Hooper Holmes and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed 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 condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2017 Annual Report on Form 10-K, filed with the SEC on April 17, 2018, as amended by Amendment No. 1 on Form 10-K/A, which was filed with the SEC on May 1, 2018. Prior to 2015, the Company completed the sale of certain assets comprising its Portamedic, Heritage Labs, and Hooper Holmes Services businesses. The operating results of these businesses have been segregated and reported as discontinued operations for all periods presented in this Quarterly Report on Form 10-Q. On May 11, 2017, the Company closed the transactions (the “Merger”) contemplated by the Agreement and Plan of Merger dated March 7, 2017 (the "Merger Agreement") by and among the Company, Piper Merger Corp., PHS, and Wellness Holdings, LLC. PHS was the surviving entity in the Merger, as a result of which it became a wholly-owned subsidiary of the Company. See Note 3 to the condensed consolidated financial statements for further discussion. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions about future events. 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. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of receivable balances, property, plant and equipment, valuation of goodwill and other intangible assets, deferred tax assets, share based compensation expense and the assessment of contingencies, among others. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which the Company believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates will be reflected in the condensed consolidated financial statements in future periods. The results of operations for the three months ended March 31, 2018 and 2017 , 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. Adoption of new accounting standard Accounting Standards Update (“ASU”) 2014-09, “Revenue - Revenue from Contracts with Customers (Topic 606)” (“ASU-2014-09”), which with amendments is collectively known as ASC 606. On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) using the modified retrospective method. As a policy election, the new revenue standard was applied only to contracts that were not substantially completed as of the date of adoption. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of accumulated deficit. The prior period condensed consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. As a result of the adoption of ASU 2014-09, the Company has changes to its revenue recognition policy for revenue recognition. Revenue is recognized when control of the services or goods, through the performance obligation of the Company is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The Company accounts for revenue contracts with customers based on the following steps: • Identification of the contract, or contracts with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the Company satisfies a performance obligation Revenue is recognized for screening services when the screening is completed based on the either the actual number of participants screened or an estimated minimum depending on the terms of the contract. Revenue for wellness portal services are recognized on a per eligible member, per month basis, while revenue from wellness coaching services are recognized as services are performed or ratable over the delivery period. The ratable recognition is the result of a stand ready obligation under which we expect the customer to receive and consume the benefits throughout the period. This is a faithful depiction of the satisfaction of the performance obligation because we cannot reasonably estimate when they will request performance and therefore have determined that the straight-line method is the most appropriate measure of performance. Revenue for kit assembly is recorded upon completion of the kit as the Company only assembles components on behalf of the customer and does not take control of the raw materials or finished goods. For contracts with multiple performance obligations, the transaction price is allocated to each individual performance obligation based on the standalone selling price of that performance obligation. We use standalone transactions when available to value each performance obligation. If standalone transactions are not available, we will estimate the standalone selling price through a cost plus a reasonable margin analysis. Any discounts from standalone selling price are spread proportionally to each performance obligation. The Company has agreements with third parties for the procurement of rewards and gift cards for some customers who subsequently distribute these rewards and gift cards to their employees for engaging in certain health and wellness activities. The Company does not control the rewards and gift cards before they are transferred to the customer, the pricing is controlled by the third party and the Company does not generate any profit or loss for these activities as the service is only a “pass-though” cost, and therefore the Company has been classified as an agent with regards to these subcontracted services. These pass-through costs are not included in the transaction price and the Company will record the reimburse of these costs net of the amount it pays the third party. The Company recognizes contract assets, or unbilled receivables, related to the rights to consideration for services completed but not billed at the reporting date. Unbilled receivables are classified as receivables when the Company has the right to invoice the customer. Unbilled receivables were $3.0 million at March 31, 2018 . The unbilled receivables of $2.7 million outstanding at December 31, 2017 were subsequently billed prior the March 31, 2018 . The Company records contract liabilities when cash payments are received for due in advance of performance to deferred revenue. Deferred revenue primarily relates to the advance consideration received from the customer. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as long-term deferred revenue. Deferred revenue during the three months ended March 31, 2018 increased by $0.3 million resulting from $0.8 million of additional invoicing and was offset by revenue recognized of $1.2 million during the same period, of which $0.7 million was included in deferred revenue at the beginning of the period. As of March 31, 2018 , there is $1.8 million in total deferred revenue of which $0.1 million is long-term and will be recognized over a period exceeding 12 months. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an expected length of one year of less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed. The recognition of our revenues remains substantially unchanged under ASC 606 with the exception of upfront fees charged to our customers which had a material impact. Depending on the terms of the contract, the period over which the upfront fees will be recognized may differ from the current treatment. In addition to the revenue change for up-front fees, the Company expects a change to the direct and incremental costs to obtain contract with customers, such as sales commissions, as these costs will be deferred and recognized over the period of benefit rather than expensing them as incurred in the period that the commissions are earned by our employees. The change in deferred commission expense as a result of deferring incremental costs of obtaining a contract and the related offset of amortization were both immaterial during the three months ended March 31, 2018 . The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of the new revenue standard was as follows: (in thousands) Balance at December 31, 2017 Adjustments due to ASC 606 Balance at January 1, 2018 ASSETS Other current assets $ 998 $ 70 $ 1,068 Other assets 397 359 756 LIABILITIES AND STOCKHOLDERS' DEFICIT Other current liabilities 5,529 (42 ) 5,487 Other long-term liabilities 268 (53 ) 215 Accumulated deficit (185,324 ) (334 ) (184,990 ) In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations was as follows: March 31, 2018 (in thousands) As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) BALANCE SHEET ASSETS Other current assets $ 755 $ 683 $ 72 Other assets 744 385 359 LIABILITIES AND STOCKHOLDERS' DEFICIT Other current liabilities 4,762 4,633 129 Other long-term liabilities 300 247 53 Accumulated deficit (190,219 ) (189,885 ) 334 Three Months Ended March 31, 2018 (in thousands) As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) STATEMENT OF OPERATIONS Revenues $ 11,335 $ 11,422 $ (87 ) Selling, general and administrative expenses 6,851 6,849 2 Net loss (5,229 ) (5,144 ) (85 ) The following table disaggregates our revenue by major product line: (in thousands) Three Months Ended March 31, 2018 Screening revenues $ 7,345 Portal revenues 3,030 Coaching revenues 589 Other revenues 371 Total revenues $ 11,335 New Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, "Leases", which is intended to improve financial reporting about leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment", which is intended to simplify goodwill impairment testing by eliminating the second step of the analysis under which the implied fair value of goodwill is determined as if the reporting unit were being acquired in a business combination. The update instead requires entities to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which the carrying amount exceeds the reporting unit’s fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. The standard is effective, prospectively, for public companies in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted the guidance during the fourth fiscal quarter of 2017, prior to our annual testing of goodwill impairment. See Note 7 to the consolidated financial statements In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting", which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award's fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial position, results of operations or cash flows. |
Liquidity and Going Concern Ass
Liquidity and Going Concern Assessment | 3 Months Ended |
Mar. 31, 2018 | |
Liquidity [Abstract] | |
Liquidity and Going Concern Assessment | Liquidity and Going Concern Assessment The Company's primary sources of liquidity are cash and cash equivalents as well as availability under a Credit and Security Agreement (the "2016 Credit and Security Agreement") with CNH Finance Fund I, L.P., f/k/a SCM Specialty Finance Opportunities Fund, L.P. ("CNH"), as amended. If the Company needs to borrow in the future under its 2016 Credit and Security Agreement, as amended, which is solely at the lender's discretion, the amount available for borrowing may be less than the $15.0 million under this facility at any given time due to the manner in which the maximum available amount is calculated. The Company has an available borrowing base subject to reserves established at the lender's discretion of 85% of Eligible Receivables up to $15.0 million under this facility. At March 31, 2018 , the Company had $4.9 million of outstanding borrowings under the 2016 Credit and Security Agreement, with unused borrowing capacity of $0.2 million . In addition, the Company entered into an Amended and Restated Credit Agreement dated as of May 11, 2017 (the “A&R Credit Agreement”) with SWK Funding, LLC (“SWK”), as amended, which provides both a term loan of $8.5 million (the “Term Loan”) and a $2.0 million revolving credit facility (the “Seasonal Facility”) that the Company can use between June 1 and November 30, for both 2017 and 2018. In 2017, the A&R Credit Agreement with SWK increased the principal balance under the existing former Term Loan to $6.5 million and provided for an additional $2.0 million term loan (the “August 2017 Term Loan”). The debt agreements with CNH and SWK described above contain certain financial covenants, including various affirmative and negative covenants including minimum aggregate revenue, adjusted EBITDA, and consolidated unencumbered liquid assets requirements, which the Company was not in compliance with as of March 31, 2018 . On February 2, 2018 , the Company entered into a Third Amendment to the A&R Credit Agreement which extended the August 2017 Term Loan’s maturity date to April 30, 2018. The Company has repaid $250,000 of the principal balance thereon as part of this Third Amendment. Under this Third Amendment, there was a second payment of $250,000 due in March 2018, with the balance of the August 2017 Term Loan due April 30, 2018, neither of which was repaid in accordance with the amendment. On May 10, 2018 , the Company signed a Fourth Amendment to the A&R Credit Agreement (the "Fourth Amendment"), which provided a forbearance period that runs through June 1, 2018 with respect to the Company’s outstanding payment and covenant defaults under the A&R Credit Agreement. Under this agreement SWK has also agreed to lend an additional $1.5 million (the “May 2018 Term Loan”). On May 11, 2018, the Company entered into a Forbearance Agreement (the “Forbearance Agreement”) with CNH pursuant to which CNH agreed to forbear from enforcing its rights with respect to all outstanding covenant violations under the 2016 Credit and Security Agreement until June 1, 2018. Pursuant to both the Fourth Amendment and the Forbearance Agreement, the Company must use reasonable best efforts to identify potential acquirers or investors and to effectuate a transaction that results in a sale, merger, acquisition, or similar material investment in the Company as imminently as reasonably possible (the “Transaction”) and is required to engage an investment banker acceptable to SWK to advise and represent the Company with respect to the Transaction. On May 10, 2018 , the Company engaged Raymond James in fulfillment of the requirement to engage an acceptable investment banker. The Company has historically used availability under a revolving credit facility to fund operations due to a lag between the payment of certain operating expenses and the subsequent billing and collection of the associated revenue based on customer payment terms. To illustrate, in order to conduct successful screening services, the Company must expend cash to deliver the equipment and supplies required for the screening services. The Company must also expend cash to pay the health professionals and site management conducting the screening services. All of these expenditures are incurred in advance of the customer invoicing process and ultimate cash receipts for services performed. Given the seasonal nature of our operations, management expects to need a revolving credit facility in 2018 and beyond. Going Concern In accordance with ASC 205-40, the following information reflects the results of management’s assessment of its ability to continue as a going concern. Principal conditions or events that require management's consideration Following are conditions and events which require management's consideration: • The Company had a working capital deficit of $31.5 million with $0.5 million in cash and cash equivalents at March 31, 2018 . The Company had $13.6 million of payables at March 31, 2018 , that were past due-date terms. The Company continues to work with its vendors to facilitate revised payment terms; however, the Company has had certain vendors who have terminated services, threatened to terminate services, filed legal action or threatened to file legal action due to aged outstanding payables and in order to accelerate invoice payments. At March 31, 2018 , over 60% of the Company's outstanding payables were more than 90 days past due. If certain services were terminated and the Company was not able to find alternative sources of supply, it could have a material adverse impact on our business. • The Company’s net cash provided by operating activities during the three months ended March 31, 2018 , was $5.1 million . The Company’s current forecast does not indicate positive cash flow in 2018 , and our history of losses requires us to be cautious in our forecasting. The Company continues reviewing restructuring within our organization for additional cost savings and improved strategic market and customer services offerings. • The Company incurred a loss from continuing operations before income tax expense of $5.2 million for the three months ended March 31, 2018 . • The Company had $4.9 million of outstanding borrowings under the 2016 Credit and Security Agreement with CNH, with unused borrowing capacity of $0.2 million , as of March 31, 2018 . As of April 30, 2018 , the Company had $5.6 million of outstanding borrowings and $0.3 million of unused borrowing capacity. Any borrowings on the unused borrowing capacity are at the discretion of CNH. • The Company owed $8.3 million at March 31, 2018 , under the Term Loans with SWK, which was used to fund the Merger and working capital. In addition, the Company owed $1.9 million to Century Equity Partners. See Note 8 to the condensed consolidated financial statements for the Subordinated Promissory Note issued in connection with the Merger. • The maturity date of the August 2017 Term Loan, which comprised $1.8 million of the $8.3 million balance owed under the Term Loan with SWK, was extended to April 30, 2018. As required by the Third Amendment, which provided for the April 30, 2018 extension, and on February 1, 2018, the Company repaid $250,000 of the principal balance on the August 2017 Term Loan. The extension also required a second payment of $250,000 in March and the remaining balance due on April 30, 2018, neither of which was repaid. As a result of missing these payments, the Company was in default of that agreement. Due to the cross-default clause with CNH, the Company was also in default on its 2016 Credit and Security Agreement. On May 10, 2018 , the Company signed the Fourth Amendment, which provided a forbearance period that runs through June 1, 2018 with respect to the Company’s outstanding payment and covenant defaults under the A&R Credit Agreement. This Amendment includes new covenants with which the Company must comply. Under this Fourth Amendment, SWK has agreed to lend an additional $1.5 million (the “May 2018 Term Loan”). All principal and accrued interest on the May 2018 Term Loan and the August 2017 Term Loan will be due and payable on June 1, 2018. As a result of the cross-default, the Company also entered into the Forbearance Agreement through June 1, 2018 with CNH with respect to defaults under the 2016 Credit and Security Agreement. If the Company is unable to negotiate forbearance agreements beyond June 1, 2018, raise sufficient capital to repay the facilities, or replace the facilities with new debt facilities, the defaults could have a material adverse impact on our business. For additional information regarding the 2016 Credit and Security Agreement, the A&R Credit Agreement, and the related covenants, refer to Note 8 to the condensed consolidated financial statements. • The debt agreements with CNH and SWK described above contain certain financial covenants, including various affirmative and negative covenants including minimum aggregate revenue, adjusted EBITDA, and consolidated unencumbered liquid assets requirements, which the Company did not comply with as of March 31, 2018 but which are subject to the forbearance under the Fourth Amendment and the Forbearance Agreement. The Fourth Amendment with SWK contains additional covenants with which the Company must comply. • Pursuant to both the Fourth Amendment and the Forbearance Agreement, the Company must use reasonable best efforts to identify potential acquirers or investors and to effectuate a transaction that results in a sale, merger, acquisition, or similar material investment in the Company as imminently as reasonably possible (the “Transaction”) and is required to engage an investment banker acceptable to SWK to advise and represent the Company with respect to the Transaction. On May 10, 2018, the Company engaged Raymond James in fulfillment of the requirement to engage an acceptable investment banker. • There is an increased risk of losing key managerial and operational personnel as we seek to remedy our going concern and liquidity problems and pursue a Transaction with the assistance of our CRO and investment banker. • We have contractual obligations related to operating leases for our two locations in Olathe, KS, and East Greenwich, RI, capital leases obtained in the Merger and employment contracts which could adversely affect liquidity. Refer to Note 9 to the condensed consolidated financial statements. Management's plans The Company expects to continue to monitor its liquidity carefully, work to reduce this uncertainty, and address its cash needs through a combination of one or more of the following actions: • The Company appointed a Chief Restructuring Officer ("CRO"). The CRO’s principal duties in the immediate term are to establish a working capital plan, with the broader mandate to include developing and implementing plans to restructure the Company’s balance sheet, operating expense structure and overall strategies in an effort to resolve this going concern assessment. The plan, when finalized, may involve significant changes to the Company’s business model, including any or all of the following: divestitures of lines of business, reductions in staffing, changes to the type and pricing of the Company’s service offerings, and changes in the Company’s marketing and sales strategies and client mix. During the CRO’s tenure, our executive officers will report to the CRO. • The Company is undertaking efforts, including providing additional incentive-based compensation, to retain its key personnel as it seeks a Transaction to satisfy the requirements of the Fourth Amendment and the Forbearance Agreement. • Under the restructuring plan being developed by the CRO, the Company will consider all available options for strengthening our balance sheet through acquisitions and divestitures, capital-raising activities, and restructuring existing obligations. The Company has engaged Raymond James as its investment banker to advise and represent the Company as it seeks a Transaction to fulfill the requirements of the Fourth Amendment and the Forbearance Agreement. • The Company executed forbearance agreements with both of its secured lenders through June 1, 2018 and will continue to work with its lenders in securing a longer period forbearance agreement, although to date nothing has been formally agreed upon and the Company may be unable to complete such an extended forbearance agreement. • Pursuant to the Fourth Amendment SWK has agreed to lend an additional $1.5 million to the Company. The lender will provide the Company three advances under this agreement as long as the Company is in compliance with the additional covenants set forth in the Fourth Amendment. • On August 31, 2017, the Company entered into a purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) (the "LPC Equity Line"), pursuant to which the Company has the right to sell to LPC up to $10.0 million in shares of the Company’s common stock, $0.04 par value. Based on the market price of the Company’s stock at the time of this filing, the Company would be limited to selling LPC a dollar value of shares totaling approximately $1,750 per day. Subject to these limitations and satisfaction of the conditions set forth in the Registration Rights Agreement, the Company will have the right to require LPC to purchase shares to provide equity financing for our operations over a 36 -month period. • The Company has been able to obtain more favorable payment terms with some of its vendors and will continue to pursue revised terms, based on the new consolidated company model after the Merger. Hooper Holmes and PHS had several of the same vendors and have been able to work with them collectively to establish favorable terms going forward which should improve liquidity. • The Company will continue to aggressively seek new and return business from our existing customers and expand our presence in the health and wellness marketplace. The Company will also evaluate the overall profitability of our existing customer contracts and attempt to address underperforming business through price increases, cost savings or termination of services. • The Company will continue to analyze and implement further cost reduction initiatives and efficiency improvements (see Note 9 to the condensed consolidated financial statements). In March 2018 , the Company reorganized several departments which resulted in headcount reductions and additional savings. Management's assessment and conclusion Considering the Company's recent history of liquidity challenges, the Company has evaluated its plans described above to determine the likelihood that they will be effectively implemented and, if so, the likelihood that they will alleviate or mitigate the conditions and events that raise substantial doubt about the Company's ability to continue as a going concern. Successful implementation of these plans involves both the Company's efforts and factors that are outside its control, such as its ability to effectuate a Transaction, attract and retain new and existing customers and to negotiate suitable terms with vendors and financing sources. As a result, the Company can give no assurance that its plans will be effectively implemented in such a way that they will sufficiently alleviate or mitigate the conditions and events noted above, which results in substantial doubt about the Company's ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued. The condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. |
Merger
Merger | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Merger | Merger On May 11, 2017, the Company closed the Merger contemplated by the Merger Agreement by and among the Company, Piper Merger Corp., PHS, and Wellness Holdings, LLC. PHS was the surviving entity in the Merger, as a result of which it became a wholly-owned subsidiary of the Company. As Merger consideration, the Company issued 10,448,849 shares to the PHS equity holders (the “Former PHS Owners”). The Former PHS Owners now hold approximately 47% of the Company’s approximately 26.8 million outstanding shares of common stock as of March 31, 2018 . During the three months ended March 31, 2018 , there were no transaction costs associated with the Merger. During the three months ended March 31, 2017 , the Company recorded $0.6 million of transaction costs in connection with the Merger in the condensed consolidated statement of operations. The Company expects the Merger to increase the scale of the Company, improving gross margins due to combined revenues and combined operations which will produce operational synergies by reducing fixed costs, which is the basis for the Merger and comprises the resulting goodwill recorded. While the Company expects its financial condition to improve after the Merger, PHS has a history of operating losses as well, and the Company has incurred significant costs and additional debt for the transaction. In order to provide additional working capital for the consolidated Company after the Merger, the Company entered into the A&R Credit Agreement with SWK which increased the principal balance under the existing Term Loan from $3.7 million to $6.5 million and provided the $2.0 million Seasonal Facility. The Company also entered into the Third Amendment with CNH to expand the Company's revolving credit facility from $7.0 million to $10.0 million with an accordion to $15.0 million during high-volume months. See Note 8 to the condensed consolidated financial statements for further discussion of the debt and warrants issued in connection with the Merger. The Company allocated the purchase price to tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The allocation of the purchase price was based on management's estimates and assumptions at the time of acquisition. As of March 31, 2018 , the Company has made adjustments to certain accrued expenses, subordinated debt discount, and tax balances during the measurement period, resulting in a $1.6 million increase in goodwill. The allocation of purchase price is as follows: (in thousands) March 31, 2018 Cash $ 1,936 Accounts receivable 3,128 Inventory and other assets 1,209 Fixed assets 1,041 Technology 4,200 Customer relationships 3,400 Trade name/trademark 200 Non-compete agreements 10 Goodwill 8,126 Accounts payable (2,945 ) Accrued expenses and other liabilities (6,789 ) Line of credit (4,684 ) Capital leases (334 ) Deferred revenue (200 ) Subordinated promissory note (1,917 ) Subordinated promissory note, discount 411 Purchase Price $ 6,792 Intangible assets acquired include existing technologies including a customer-facing wellness portal, customer relationships, trade name/trademark, and an executive non-compete agreement. The fair value assessment of the acquired assets and liabilities utilized Level 3 inputs. The method used to determine the fair value of the intangible assets acquired and their estimated useful lives are as follows: Intangible Asset Fair Value Method Estimated Useful Life Portal (Technology) Income Approach, Relief from Royalty 6 years Customer relationships Income Approach, Multi-Period Excess Earnings 8 years Trade name/trademark Income Approach, Relief from Royalty 9 months Non-compete agreements Income Approach Lost Profits Method 1 year 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 months ended March 31, 2018 , related to the intangible assets acquired in the Merger, 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 $8.1 million was recorded in one reporting unit as the Company does not report segments, and is expected to be deductible for tax purposes. The condensed consolidated statement of operations for the three months ended March 31, 2018 , includes revenue of $5.4 million attributable to PHS since the Merger date of May 11, 2017. Disclosure of the earnings contribution from the PHS 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 months ended March 31, 2018 and 2017, as if the Merger had been completed on the first day of the Company's 2017 fiscal year. Three Months Ended March 31, (in thousands) 2018 2017 Pro forma revenues $ 11,335 $ 13,150 Pro forma loss from continuing operations $ (5,194 ) $ (5,807 ) 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, as they do not reflect the operational synergies expected to be achieved by reducing fixed costs by combining operations. Pro forma results for the three months ended March 31, 2017 , include immaterial pre-tax adjustments for net amortization of intangible assets and the addition of transaction costs of $1.2 million . |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share Basic loss per share equals net loss divided by the weighted average common shares outstanding during the period. Diluted loss per share equals net loss divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. The calculation of loss per common share on a basic and diluted basis was the same for the three months ended March 31, 2018 and 2017 , because the inclusion of dilutive common stock equivalents - the A&R Warrant ( 1,317,289 shares), the 10% Warrant ( 326,052 shares), the 2017 Private Offering Warrants ( 2,187,500 shares), and the August Warrant ( 450,000 shares) (all as defined in Note 8 to the condensed consolidated financial statements), would have been anti-dilutive for all periods presented. The Company has granted options to purchase shares of the Company's common stock through employee stock plans with the weighted average options outstanding as of March 31, 2018 and 2017 , of 2,627,027 and 399,058 , respectively, all of which were outstanding as of March 31, 2018 , but are anti-dilutive because the Company is in a net loss position. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
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. The 2008 Plan provides for the issuance of an aggregate of 333,333 shares. There were no options for the purchase of shares granted under the 2008 Plan during the three months ended March 31, 2018 , or the three months ended March 31, 2017 . As of March 31, 2018 , 114,141 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. The 2011 Plan provides for the issuance of an aggregate of 3,650,000 shares. During the three months ended March 31, 2018 , the Company granted 125,000 options, and during the three months ended March 31, 2017 , no options were granted for the purchase of shares under the 2011 Plan. During the three months ended March 31, 2018 and 2017 , the Company granted no stock awards under the 2011 Plan. As of March 31, 2018 , 442,893 shares remained available for grant under the 2011 Plan. Options under the 2008 and 2011 Plans are granted at fair value on the date of grant, are exercisable in accordance with various vesting schedules specified in the individual grant agreements, and have contractual lives of 10 years from the date of grant. The fair value of the stock options granted during the three months ended March 31, 2018 , was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended March 31, 2018 Expected life (years) 3.9 Expected volatility 89.9% Expected dividend yield —% Risk-free interest rate 2.4% Weighted average fair value of options granted during the period $0.29 The following table summarizes stock option activity for the three month period ended March 31, 2018 : 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, 2017 2,577,860 $ 1.17 Granted 125,000 0.65 Outstanding balance at March 31, 2018 2,702,860 $ 1.15 8.5 $0 Options exercisable at March 31, 2018 1,187,871 $ 1.68 8.6 $0 There were no options exercised during the three -month periods ended March 31, 2018 and 2017 . Options for the purchase of an aggregate of 24,971 shares of common stock vested during the three -month period ended March 31, 2018 , and the aggregate fair value at grant date of these options was $0.1 million . As of March 31, 2018 , there was approximately $0.4 million of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 3.4 years. The Company recorded $32 thousand and $38 thousand of share-based compensation expense in selling, general and administrative expenses for the three -month periods ended March 31, 2018 and 2017 , respectively. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Included in inventories at March 31, 2018 , and December 31, 2017 , are $0.5 million and $0.5 million , respectively, of finished goods and $0.3 million and $0.5 million , respectively, of components. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company recorded goodwill of $8.8 million as of March 31, 2018 , and December 31, 2017 . Intangible assets subject to amortization are amortized on a straight-line basis, with the estimated useful life for the wellness portal and customer relationships as 4 - 6 years and 8 years, respectively. Intangible assets are summarized in the table below: March 31, 2018 December 31, 2017 (in thousands) Gross Carrying Amount Accumulated Amortization Intangible Assets, net Gross Carrying Amount Accumulated Amortization Intangible Assets, net Portal $ 8,351 $ 3,690 $ 4,661 $ 8,351 $ 3,256 $ 5,095 Customer relationships $ 5,497 $ 1,153 4,344 $ 5,497 $ 981 4,516 Trade name/trademark 200 200 — 200 171 29 Non-compete agreements $ 10 $ 9 1 $ 10 $ 6 4 Total $ 14,058 $ 5,052 $ 9,006 $ 14,058 $ 4,414 $ 9,644 Amortization expense for the three -month periods ended March 31, 2018 and 2017 was $0.6 million and $0.3 million , respectively. Impairment Considerations The Company has both current period operating and cash flow losses along with a history of operating and cash flow losses as described in Note 2 - Liquidity and Going Concern Assessment. The process of an impairment test is to identify any potential impairment by comparing the carrying value of a reporting unit including goodwill and its fair value. The Company utilized an undiscounted cash flow methodology based on the projections for the asset group from 2018 through 2025 to test for recoverability. These projections included significant synergy cost savings resulting from the Merger as described in Note 3 - Merger. The carrying amount of an asset group is considered recoverable if the total undiscounted future cash flows from the asset group are greater than the carrying amount of the asset group. We evaluated only the future cash flows that are directly associated with and expected to arise as a direct result of the use of the asset group and its eventual disposition. These cash flow estimates excluded cash outflows for interest and were determined on a pre-tax basis. Based on our initial analysis it was determined that the undiscounted cash flows from the use and disposition of the asset group were greater than the carrying amount and therefore the asset group’s carrying amount is considered recoverable and therefore it not impaired. Due to the conditions faced by the Company described in Note 2 - Liquidity and Going Concern Assessment, we performed an alternate scenario where the Company is assumed to be unable to remain a going concern. Under this scenario, the undiscounted cash flows from the asset group were less than the carrying amount and the asset group would be considered impaired. As a result, the fair value of the asset group was determined as a next step of the impairment test and compared against its carrying amount to determine if an impairment loss exists. The fair value of the asset group was determined based on the guidance of ASC 820 - Fair Value Measurement. Under ASC 820, the fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The determination of the fair value based on market participant assumptions resulted in a fair value estimate that exceeded the carrying amount of the asset group resulting in no impairment. During the fourth fiscal quarter of 2017 , prior to our annual testing of goodwill , the Company adopted ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment", which requires entities to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which the carrying amount exceeds the reporting unit’s fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. As previously disclosed, the Company has a single reporting unit, inclusive of $8.8 million of goodwill. The Company used the equity premise in assigning assets and liabilities to a reporting unit to determine its carrying value, which resulted in a stockholders’ deficit balance of $6.9 million as of December 31, 2017 . The fair value of the Company is based on its market capitalization using outstanding shares and the closing stock price as of December 31, 2017 and March 31, 2018 , which resulted in positive fair value of over $11 million and $14 million , respectively. Therefore, the fair value of the reporting unit is greater than the carrying amount, and goodwill is no t considered to be impaired at March 31, 2018 . Subsequent to March 31, 2018 the market capitalization of the Company declined to approximately $2 million , however, the fair value is still greater than the carrying amount and therefore there was no impairment resulting from this decline of market capitalization. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following table summarizes the Company's outstanding debt: (in thousands) March 31, 2018 December 31, 2017 2016 Credit and Security Agreement $ 4,887 $ 10,015 Term Loans 8,250 8,500 Discount on Term Loans (555 ) (631 ) Unamortized debt issuance costs related to Term Loans (207 ) (220 ) Subordinated Promissory Note, net 1,559 1,543 Capital Leases 45 107 Total debt 13,979 19,314 Short-term portion (13,979 ) (19,314 ) Total long-term debt $ — $ — The following table summarizes the components of interest expense: Three Months Ended March 31, (in thousands) 2018 2017 Interest expense on Term Loans (effective interest rate at March 31, 2018 and 2017 was 28% and 15%, respectively) $ 349 $ 138 Interest expense on 2016 Credit and Security Agreement 173 81 Interest expense on Subordinated Promissory Note 39 — Interest expense on Capital Leases 5 — Accretion of termination fees (over term of Term Loan at rate of 8%) 111 41 Amortization of debt issuance costs 75 140 Amortization of debt discount associated with SWK Warrants #1 and #2 (defined below) 77 367 Amortization of Subordinated Promissory Note Discount 15 — Mark to market of SWK Warrant #2 (defined below) 42 — Total $ 886 $ 767 Credit Facilities As of March 31, 2018 , the Company had two primary credit facilities the 2016 Credit and Security Agreement with CNH and the A&R Credit Agreement with SWK. The 2016 Credit and Security Agreement provides us with a revolving credit facility, the proceeds of which are to be used for general working capital purposes and capital expenditures. The A&R Credit Agreement with SWK provides us with additional working capital with a $6.5 million term loan and two overdraft lines of $2.0 million each, one being the Seasonal Facility which is available to us throughout the year subject to certain conditions, and the second one, the 2017 August Term Loan, which was put in place in August 2017. 2016 Credit and Security Agreement On April 29, 2016, the Company entered into the 2016 Credit and Security Agreement with CNH, as amended. The 2016 Credit and Security Agreement provides the Company with a revolving credit facility, the proceeds of which are to be used for general working capital purposes and capital expenditures. The 2016 Credit and Security Agreement replaced the 2013 Loan and Security Agreement, eliminating the requirement of the Company to issue SWK Warrant #2 (as defined below) for the purchase of common stock valued at $1.25 million to SWK, the holder of the Company’s Credit Agreement. In connection with the Merger, the Company entered into the Third Amendment, which expanded the Company's revolving credit facility from $7.0 million to $10.0 million with an accordion to $15.0 million during high-volume months, at the discretion of CNH. The Company evaluated the application of ASC 470-50 and ASC 470-60 for the Third Amendment and concluded that the transaction should be accounted for as a debt modification. CNH makes cash advances to the Company in an aggregate principal amount outstanding at any one time not to exceed the maximum borrowing capacity, subject to certain loan balance limits based on the value of the Company’s eligible collateral (the “Revolving Loan Commitment Amount”). The 2016 Credit and Security Agreement has a term of three years , expiring on April 29, 2019. As of March 31, 2018 , the Company had $4.9 million of outstanding borrowings under the 2016 Credit and Security Agreement, with an unused borrowing capacity of $0.2 million . As of April 30, 2018 , the Company had $5.6 million of outstanding borrowings and $0.3 million of unused borrowing capacity. Any borrowings on the unused borrowing capacity are at the discretion of CNH. Immediately following the Merger, the Company paid off PHS's outstanding line of credit balance, noted in the purchase price allocation in Note 3 to the condensed consolidated financial statements, of $4.7 million . Borrowings under the 2016 Credit and Security Agreement bear interest at a fluctuating rate that when annualized is equal to the Prime Rate plus 4.5% , subject to increase in the event of a default. The Company paid CNH a $0.1 million facility fee, and monthly, CNH will receive an unused line fee equal to one-half of one percent ( 0.5% ) per annum of the difference derived by subtracting (i) the greater of (x) the average daily outstanding balance under the Revolving Facility during the preceding month and (y) the Minimum Balance, from (ii) the Revolving Loan Commitment Amount and also a collateral management fee equal to one-half of one percent ( 0.5% ) per annum of the Revolving Loan Commitment Amount. In connection with the Third Amendment, the Company paid fees of $0.1 million to CNH that were capitalized in Other Assets. As of March 31, 2018 , the remaining balance in debt issuance costs recorded in Other Assets on the condensed consolidated balance sheet was $0.2 million . Borrowings under the 2016 Credit and Security Agreement are secured by a security interest in all existing and after-acquired property of the Company, including, but not limited to, its receivables (which are subject to a lockbox account arrangement), inventory, and equipment. The Third Amendment revised the previous covenants, and contains customary representations and warranties and various affirmative and negative covenants including minimum aggregate revenue, adjusted EBITDA, and consolidated unencumbered liquid assets requirements. Noncompliance with these covenants constitutes an event of default. The covenants are summarized in the tables below and are on a pro forma basis as if the Merger with PHS happened as of April 1, 2017 : (in thousands) Minimum Aggregate Revenue (LTM) as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $69,000 $70,000 $71,000 $74,000 $75,000 Minimum Adjusted EBITDA as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $5,000 $5,200 $6,000 $8,000 $9,000 Minimum Consolidated Unencumbered Liquid Assets as of: The end of each fiscal quarter $1,000 The Company was not in compliance with the covenants as of March 31, 2018 , and was in default, which enables its lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral. Due to the covenant violations, the debt has been classified as short term on the condensed consolidated balance sheet as of March 31, 2018 . A&R Credit Agreement In order to fund the acquisition of Accountable Health Solutions in 2015, the Company entered into the Credit Agreement with SWK on April 17, 2015, as amended on February 25, 2016, March 28, 2016, August 15, 2016, and November 15, 2016. The Credit Agreement provided the Company with a $5.0 million Term Loan. In order to provide additional working capital for the consolidated Company after the Merger, the Company entered into the A&R Credit Agreement with SWK which increased the Term Loan balance from $3.7 million to $6.5 million on May 11, 2017. The A&R Credit Agreement provides the Company a principal repayment holiday until February 2019. Interest, fees, costs, and expenses are payable quarterly beginning in the third quarter of 2017. All mandatory payments of principal, interest, fees, costs, and expenses are determined by the revenue-based formula that has been in effect since the original Credit Agreement. Principal payments, once they begin, are capped at $0.5 million per quarter. The Company will be required to make the quarterly revenue-based payments in an amount equal to fifteen percent ( 15.0% ) of yearly aggregate revenue up to and including $20 million plus ten percent ( 10% ) of yearly aggregate revenue greater than $20 million less any revenue-based payments made in prior quarters in the same fiscal year. The Company evaluated the application of ASC 470-50 and ASC 470-60 for the A&R Credit Agreement and concluded that the revised terms did constitute a troubled debt restructuring ("TDR"), and thus has expensed all direct costs in the period in which they were incurred, discussed further below. The outstanding principal balance under the A&R Credit Agreement bears interest at an adjustable rate per annum equal to the LIBOR Rate (subject to a minimum amount of one percent ( 1.0% )) plus twelve-and-a-half percent ( 12.5% ) and is due and payable quarterly, in arrears, commencing in the third quarter of 2017. Upon the earlier of (a) the maturity date on May 11, 2021, 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 A&R Credit Agreement. The Company is recognizing the exit fee over the term of the Term Loan through an accretion accrual to interest expense using the effective interest method. In connection with the A&R Credit Agreement, the Company paid a $97,500 origination fee to SWK and $150,000 of legal fees, which per the TDR guidance noted above were recorded as transaction costs in 2017. The Company was also required to pay the $0.4 million exit fee from the original Credit Agreement to SWK at the time of the Merger. In addition, SWK is providing a $2.0 million seasonal revolving credit facility (the "Seasonal Facility"), which was guaranteed by the parent company of one of the Former PHS Owners, Century Focused Fund III, LP (“Century”). In exchange for Century’s guaranty of the Seasonal Facility pursuant to a Limited Guaranty Agreement dated May 11, 2017, among Century, SWK and the Company (the “Century Guaranty”), the Company issued to WH-HH Blocker, Inc., a subsidiary of Century (“WH-HH Blocker”), a Common Stock Purchase Warrant to purchase 326,052 shares of Common Stock, with a strike price of $0.6134 per share (the “10% Warrant”). If the guaranty is called, the Company would issue to WH-HH Blocker an additional Common Stock Purchase Warrant to purchase 2,934,468 shares of Common Stock, with a strike price of $0.6134 per share (the “90% Contingent Warrant”) (together with the 10% Warrant, the "Century Warrants"). The Century Warrants will be exercisable for seven years and will each have a strike price equal to the average trading price used to determine the number of shares subject to such warrant. The 10% Warrant will not be exercisable during the first year after closing of the Merger. The 10% Warrant was issued by the Company in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, and Rule 506 thereunder. Pursuant to a Credit Agreement Side Letter between the Company and Century executed on May 11, 2017 (the “Side Letter”), the Company is also obligated, if it fails to pay the amount outstanding under the Seasonal Facility by November 30 each year to SWK, regardless if the Century Guaranty is called by SWK, to pay interest to Century at an annual rate of 25% on the outstanding balance from November 30 until the outstanding balance under the Seasonal Facility is paid in full to SWK. As noted above, as the modification of the Term Loan was treated as a TDR, the Century Warrants issued as part of the TDR were treated similarly to the cash transaction costs discussed above and thus the fair value of the Century Warrants was recorded as transaction costs in the three-month period ended March 31, 2018. The Century Warrants are being accounted for as derivatives and thus will be re-measured at fair value at each reporting date with the change in fair value reflected in earnings. The Company valued the Century Warrants using the Black-Scholes pricing model, which utilizes Level 3 Inputs. The Company utilized volatility of 80.6% , a risk-free rate of 2.22% , dividend rate of zero , and term of 7 years, which is consistent with the exercise period of the Century Warrants. To fulfill a condition of the A&R Credit Agreement, the Company issued 4,375,000 shares of its common stock to various investors in a private offering for an aggregate purchase price of $3.4 million , net of issuance costs, between February 1, 2017 and May 11, 2017 (the "2017 Private Offering"). These shares were sold at a purchase price of $0.80 per share plus one-half warrant per share with a strike price of $1.35 per share. Warrants to purchase up to an additional 2,187,500 shares of common stock were issued (the "2017 Private Offering Warrants"). The 2017 Private Offering Warrants are exercisable for a period of four years from the date of issuance but are not exercisable during the first six months after closing of the 2017 Private Offering. In connection with the execution of the Credit Agreement in 2015, the Company issued SWK a warrant (the "SWK Warrant #1") to purchase 543,479 shares of the Company’s common stock. As part of the conditions in the Third Amendment to Credit Agreement and Limited Waiver and Forbearance (the “Third SWK Amendment”) dated August 15, 2016, the Company modified the exercise price of the SWK Warrant #1 to $1.30 per share, recording the change in fair value of the SWK Warrant #1 of $0.3 million in accumulated paid-in capital in the condensed consolidated balance sheet. 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. Further, pursuant to the Credit Agreement, if the 2013 Loan and Security Agreement was not repaid in full and terminated, and all liens securing the 2013 Loan and Security Agreement were not released, on or prior to April 30, 2016, as amended in the First Amendment to the Credit Agreement dated February 25, 2016, the Company agreed to issue an additional warrant (“SWK Warrant #2”) to SWK to purchase common stock valued at $1.25 million , with an exercise price of the closing price on April 30, 2016. In accordance with the relevant accounting guidance, SWK Warrant #2 was determined to be an embedded derivative. The fair value of both of the SWK warrants at the inception of the Credit Agreement of approximately $3.6 million was recorded as a debt discount, and has been amortized through interest expense over the term of the Credit Agreement using the effective interest method. In accordance with the relevant accounting guidance for a TDR, the debt discount is now being amortized through expense over the revised term of the A&R Credit Agreement. The Company valued both warrants using the Black-Scholes pricing model, which utilizes Level 3 Inputs. For SWK Warrant #1, the Company utilized 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. For the SWK Warrant #2, the Company utilized volatility of 80.0% , a risk-free rate of 2.1% , dividend rate of zero , and a term of 7 years, which is consistent with the exercise period of the warrant. The requirement of the Company to issue the SWK Warrant #2 was eliminated when the Company entered into the 2016 Credit and Security Agreement with CNH, which is discussed further above. In connection with the execution of the A&R Credit Agreement, the Company issued to SWK a Second Amended and Restated Closing Date Warrant (the “A&R Warrant”) to replace SWK Warrant #1 to purchase 543,479 shares of the Company’s common stock. The A&R 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 A&R Warrant will be exercisable for seven years, and upon exercise, the total number of shares of the Company’s common stock to be issued to SWK will be approximately 1.3 million at a strike price of $0.84 per share. The A&R Warrant is being issued by the Company in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 thereunder. As noted above, as the modification of the Term Loan was treated as a TDR, the A&R Warrant issued as part of the TDR was treated similarly to the cash transaction costs discussed above and thus the change in the fair value of SWK Warrant #1 and the A&R Warrant was recorded as a transaction cost at the time of the Merger. The Company valued the A&R Warrant using the Black-Scholes pricing model, which utilizes Level 3 Inputs. The Company utilized volatility of 80.6% , a risk-free rate of 2.22% , dividend rate of zero , and a term of 7 years, which is consistent with the exercise period of the A&R Warrant. On August 8, 2017, the Company entered into the First Amendment that provides for an additional $2.0 million term loan (the “August 2017 Term Loan”). The Company was originally required to repay the August 2017 Term Loan by February 1, 2018 but that date has been extended to June 1, 2018. In consideration for the First Amendment, the Company issued a new warrant (the “August Warrant” (together with SWK Warrant #1, SWK Warrant #2, and the A&R Warrant, the "SWK Warrants") for SWK to purchase up to 450,000 shares of the Company’s common stock for a strike price of $0.80 per share, paid a fee of $0.03 million , and will pay an exit fee of $0.14 million if the August 2017 Term Loan is repaid by November 30, 2017, or $0.28 million if it is repaid later. The warrant was considered equity classified, and as such, the Company allocated the proceeds from the August 2017 Term Loan to the warrant using the relative fair value method. The fair value of the August Warrant at the inception of the First Amendment of approximately $0.2 million was recorded as a debt discount, and will be amortized through interest expense over the term of the A&R Credit Agreement using the effective interest method. The Company valued the August Warrant using the Black-Scholes pricing model, which utilizes Level 3 Inputs. The Company utilized volatility of 79.3% , a risk-free rate of 2.1% , a dividend rate of zero , and a term of 7 years, which is consistent with the exercise period of the August Warrant. The warrant was being issued by the Company in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act and Rule 506 thereunder. The A&R Credit Agreement revised the previous covenants, and contains customary representations and warranties and various affirmative and negative covenants including minimum aggregate revenue, adjusted EBITDA, and consolidated unencumbered liquid assets requirements. Additional covenants have been subsequently adopted as disclosed in Note 13. Noncompliance with these covenants constitutes an event of default. The covenants are summarized in the tables below and are on a pro forma basis as if the Merger with PHS happened as of April 1, 2017: (in thousands) Minimum Aggregate Revenue (LTM) as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $69,000 $70,000 $71,000 $74,000 $75,000 Minimum Adjusted EBITDA as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $5,000 $5,200 $6,000 $8,000 $9,000 Minimum Consolidated Unencumbered Liquid Assets as of: The end of each fiscal quarter $1,000 The Company was not in compliance with the covenants under the A&R Credit Agreement as of March 31, 2018 , and on March 15, 2018, the Company did not make its $0.25 million payment; therefore, is in default. This enables the lenders to accelerate the repayment of all amounts outstanding and exercise remedies with respect to collateral, but subsequent to March 31, 2018 the lenders have agreed to forbear from enforcing these rights until June 1, 2018. Due to the covenant violations, the debt has been classified as short term on the condensed consolidated balance sheet as of March 31, 2018 . Borrowings under the A&R Credit Agreement are secured by a security interest in all existing and after our acquired property, including PHS, including, but not limited to, its receivables (which are subject to a lockbox account arrangement), inventory and equipment. The A&R 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 2016 Credit and Security Agreement and the Company fails to make payments to CNH when due or if CNH is entitled to accelerate the maturity of debt in response to a default situation under the 2016 Credit and Security Agreement, which may include violation of any financial covenants. Subordinated Promissory Note Century invested $2.5 million in PHS prior to the Merger in the form of subordinated, convertible debt bearing interest at 8.25% . Immediately prior to closing of the Merger, approximately $0.4 million of the balance of the note converted to equity in PHS. Subject to a net debt calculation in the Merger Agreement, which included a post-closing true-up, the remaining approximately $1.9 million remained outstanding as subordinated debt (not convertible anymore) of PHS to Century pursuant to the Subordinated Promissory Note dated May 11, 2017 (the “Subordinated Promissory Note”). As noted in Note 3 to the condensed consolidated financial statements, the Subordinated Promissory Note was part of the PHS purchase price allocation and is recorded in short-term liabilities on the condensed consolidated balance sheet as of March 31, 2018 . The unpaid principal balance of the Subordinated Promissory Note is due on May 11, 2022, or if earlier, the date on which the Term Loan to SWK and the 2016 Credit and Security Agreement with CNH is discharged, repaid, refinanced or otherwise satisfied (the "Maturity Date"). The Subordinated Promissory Note bears interest at annual rate of 8.25% . Interest shall accrue daily and be paid in full on the Maturity Date; provided that a minimum amount of interest equal to the “Tax Distribution” shall be paid on or before March 31 of each year. “Tax Distribution” means 40% of the accrued interest for the most recently completed calendar year. The Subordinated Promissory Note is subordinated to the Term Loan with SWK and the 2016 Credit and Security Agreement with CNH, pursuant to the terms outlined in the Subordinated Promissory Note. This debt is subject to acceleration in the event of default. This acceleration can be the result of the Company’s default with the CNH and SWK debt agreements if CNH or SWK were to accelerate the Company's obligations. Given the going concern described in Note 2 and the covenant violations on the CNH and SWK debt agreements described above, this debt has been classified as short term on the condensed consolidated balance sheet as of March 31, 2018 . Capital Leases As a result of the Merger with PHS, the Company acquired two leases accounted for as capital leases, which related to a phone system, which expired in October 2017, and a data center, which expires in June 2018. The underlying assets and accumulated depreciation are recorded in property, plant and equipment, with the corresponding liability of $0.1 million recorded in short-term debt in the condensed consolidated balance sheet as of March 31, 2018 . |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease obligations The Company currently has two major locations, our corporate office located in Olathe, KS, and our East Greenwich, RI, office. Both locations are under operating leases which expire in 2018 and 2019 , respectively. Through the acquisition of AHS in 2015, the Company acquired two leased properties in Des Moines, IA and Indianapolis, IN under operating leases which would have expired in 2018. The Company determined that neither lease was necessary for its operations, thus, in April 2017, settlement agreements for the remaining lease obligations were reached with both landlords. Additionally, the Company was obligated under a lease related to the discontinued Hooper Holmes Services operations center through 2018 and had ceased use of this facility, and on March 9, 2017, the parties to the lease reached a settlement agreement for the remaining lease obligation. The lease settlement liabilities for the three settled lease agreements of $0.2 million are accrued in other current liabilities in the accompanying condensed consolidated balance sheet as of March 31, 2018 . The Company also leases vehicles, copiers, and other miscellaneous office equipment. Many of our leases expire at various times through 2019 ; however, some extend beyond 2022 . Employment obligations The Company has employment agreements with certain executive employees that provide for payment of base salary for a defined period in the event their employment with us is terminated in certain circumstances, including following a change in control, as further defined in the agreements. The Company incurred certain severance and other costs related to its ongoing initiatives to increase the flexibility of its cost structure that were recorded in selling, general, and administrative expenses, and at March 31, 2018 , and December 31, 2017 , the Company recorded a $0.4 million and $0.6 million liability, respectively, related to these initiatives in other current liabilities in the accompanying condensed consolidated balance sheet. Loss contingencies The Company accrued $1.3 million related to a vendor arrangement acquired in the Merger. The arrangement had a minimum purchase commitment for which it was probable that the Company would not achieve. This amount has been recorded in Accruals as part of the purchase price allocation disclosed in Note 3. Legal contingencies and obligations The Company is, in the normal course of business, a party to various claims and other legal proceedings. In the opinion of management, the Company has legal defenses and/or insurance coverage (subject to deductibles) with respect to all of its pending legal actions. If management believes that a material loss not covered by insurance arising from these actions is probable and can reasonably be estimated, the Company may record the amount of the estimated loss or, if a loss cannot be estimated but the minimum liability may be estimated using a range and no point is more probable than another, the Company may record the minimum estimated liability. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Management believes that the ultimate outcome of all pending legal actions, individually and in the aggregate, will not have a material adverse effect on our financial position that is inconsistent with its loss reserves or on its overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes can occur that exceed any amounts reserved for such losses. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods. Prior to our merger with PHS, PHS settled a lawsuit filed in California state court in which a former employee claimed that PHS failed to follow specific requirements under California wage and hour laws and regulations. Under the settlement agreement, PHS agreed to pay the plaintiff approximately $0.8 million , a portion of which was covered by PHS's insurance, with final payment due by November 2018. The uninsured balance of $0.7 million has been accrued in other current liabilities in the condensed consolidated balance sheet as of March 31, 2018 . On September 30, 2016, a former employee filed a class action complaint against us in state court in California, alleging employment-related claims. The parties have agreed in principle to settle the case, subject to negotiation of a definitive settlement agreement. The Company has accrued $0.2 million in other current liabilities in the condensed consolidated balance sheet as of March 31, 2018 . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's income tax expense was not material for any period presented in the condensed consolidated statement of operations. No amounts were recorded for unrecognized tax benefits or for the payment of interest and penalties during the three -month periods ended March 31, 2018 and 2017 . No federal or state tax benefits were recorded relating to the current year loss. The Company continues to believe that a full valuation allowance is required on its net deferred tax assets, with the exception of deferred income tax on the liabilities of certain indefinite-lived intangibles. The tax years 2014 through 2017 may be subject to federal examination and assessment. Tax years from 2009 through 2013 remain open solely for purposes of federal and certain state examination of net operating loss ("NOL") and credit carryforwards. State income tax returns may be subject to examination for tax years 2013 through 2017, depending on state tax statute of limitations. As of December 31, 2017 , the Company had U.S. federal and state net operating loss carryforwards of $19.9 million and $19.3 million , respectively. There has been no significant change in these balances as of March 31, 2018 . The net operating loss carryforwards, if not utilized, will expire in the years 2018 through 2037. No tax benefit has been reported since a full valuation allowance offsets these tax attributes. However, limitations could apply upon the release of the valuation allowance. Since the Company had changes in ownership during 2015, continuing into 2016 and 2017, the Company has determined that additional limitations under IRC Section 382 of the Internal Revenue Code of 1986 apply to the future utilization of certain tax attributes including NOL carryforwards, other tax carryforwards, and certain built-in losses. Limitations on future net operating losses apply when a greater than 50% ownership change over a three -year period occurs under the rules of IRC Section 382. The Company has not had a formal study completed with respect to IRC Section 382; however, the Company did complete its own analysis and determined that there has been a greater than 50% change in ownership following the Merger on May 11, 2017. The allowance of future net operating losses is limited to the market capitalization value multiplied by the “long-term tax-exempt rate” as of May 2017, the month in which the ownership change took place. It is estimated that the Company will be limited to approximately $0.2 million of NOL per year, and due to expiring net operating loss provisions, the Company has estimated it will be unable to utilize approximately $ 173.1 million and $ 140.4 million of remaining federal and state net operating losses, respectively, in the future. The net operating loss carryforwards expiring prior to utilization as a result of the Section 382 limitations reduce the deferred tax assets, with a corresponding reduction of the valuation allowance. In addition to the Company’s existing net operating losses, the Company is confirming that the net operating losses of PHS are acquired as part of the Merger, satisfying the continuity of business requirements. PHS has an estimated $1.87 million and $1.86 million of federal and state net operating losses, respectively, as of the Merger date after applying the limitations of IRC Section 382. Preliminary calculations indicate the PHS losses will be limited to $ 0.09 million of NOL per year. Tax reform legislation commonly known as the Tax Cuts and Jobs Act (“Tax Act”) was signed into law on December 22, 2017, and included a shift to a flat federal corporate income tax rate of 21% effective in the first quarter of 2018 . The statutory rate was 35% for the period ending March 31, 2017 . The SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under Accounting Standards Codification 740 - Income Taxes ("ASC 740"). The Company completed a re-measurement of deferred income tax assets and liabilities as of December 31, 2017 and does not anticipate further adjustments to income tax expense as a result of the Tax Act. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company determines the fair value measurements used in our condensed 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 Term Loans and the Century 10% Warrant using Level 3 valuation techniques. The estimated fair value of the Term Loans was determined by discounting future projected cash flows using a discount rate commensurate with the risks involved and by using the Black-Scholes valuation model. The estimated fair value of the Century 10% Warrant was determined by using the Black-Scholes valuation model. March 31, 2018 December 31, 2017 (in thousands) Face Value Fair Value Carrying Amount Face Value Fair Value Carrying Amount Term Loans $ 8,250 $ 5,805 $ 7,488 $ 8,500 $ 6,013 $ 7,649 Century 10% Warrant $ 152 $ 131 $ 131 $ 152 $ 89 $ 89 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company completed its acquisition of PHS on May 11, 2017. As a result of the Merger, Century has a significant equity interest in the Company and representation on the Company’s board of directors. As previously disclosed in Note 8 - Debt, the Company has an outstanding Subordinated Promissory Note with Century. In March 2018, the Company entered into a letter agreement with Century related to payments for certain consulting agreements. Under this letter agreement, Century will pay advances due to the consultants on behalf of the Company. The Company will be required to repay the aggregate amount of the advances to Century no later than June 1, 2018. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company was not able to make its April 30, 2018, payment to SWK due under the A&R Credit Agreement; therefore, the Company is in default with SWK and, due to the cross-default clause with CNH, was also in default on the 2016 Credit and Security Agreement. In addition, the Company's Subordinated Promissory Note owed to Century is subject to acceleration in the event SWK or CNH were to accelerate the Company’s obligations under the A&R Credit Agreement and 2016 Credit and Security Agreement. Due to the covenant violations, events of default, and the substantial doubt about the Company's ability to continue as a going concern, all debt has been classified as short-term on the condensed consolidated balance sheet as of March 31, 2018 . On May 10, 2018 , the Company signed the Fourth Amendment under which SWK has agreed to lend an additional $1.5 million (the “May 2018 Term Loan”) and forbear the outstanding payment and covenant defaults through June 1, 2018. The Company is working with SWK to complete a second forbearance agreement and related additional term loan for the period of June 1, 2018 through August 30, 2018 subject to additional terms and conditions as to be determined in its final form. SWK has not agreed to such a second forbearance agreement or additional term loan, and the Company can give no assurance that such agreements will be reached. Under the Fourth Amendment, the lender will provide the Company three advances under this agreement.as long as the Company is in compliance with the additional covenants set forth in the Fourth Amendment. The additional covenants require the Company to provide weekly updates to the approved cash flow forecast, keep actual expenses within 15% of budgeted amounts and engage a financial advisor to assist with identifying potential acquirers or investors and to effectuate a transition that results in a merger, acquisition or similar material investment. The Company has engaged Raymond James as its investment banker to advise and represent the Company as it seeks a Transaction to fulfill this requirement. All principal and accrued interest on the May 2018 Term loan and the August 2017 Term Loan will be due and payable on June 1, 2018. As a result of the cross-default, the Company also entered into the Forbearance Agreement through June 1, 2018 with CNH with respect to defaults under the 2016 Credit and Security Agreement subject to the same covenants as set forth in the Fourth Amendment with SWK. The Forbearance Agreement provides for CNH to continue to allow the Company to use an additional working capital overadvance of $0.3 million . |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Hooper Holmes and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed 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 condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2017 Annual Report on Form 10-K, filed with the SEC on April 17, 2018, as amended by Amendment No. 1 on Form 10-K/A, which was filed with the SEC on May 1, 2018. Prior to 2015, the Company completed the sale of certain assets comprising its Portamedic, Heritage Labs, and Hooper Holmes Services businesses. The operating results of these businesses have been segregated and reported as discontinued operations for all periods presented in this Quarterly Report on Form 10-Q. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions about future events. 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. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the valuation of receivable balances, property, plant and equipment, valuation of goodwill and other intangible assets, deferred tax assets, share based compensation expense and the assessment of contingencies, among others. These estimates and assumptions are based on the Company’s best estimates and judgment. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which the Company believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates will be reflected in the condensed consolidated financial statements in future periods. |
Adoption of New Accounting Standard | Adoption of new accounting standard Accounting Standards Update (“ASU”) 2014-09, “Revenue - Revenue from Contracts with Customers (Topic 606)” (“ASU-2014-09”), which with amendments is collectively known as ASC 606. On January 1, 2018, the Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments (“new revenue standard”) using the modified retrospective method. As a policy election, the new revenue standard was applied only to contracts that were not substantially completed as of the date of adoption. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the January 1, 2018 opening balance of accumulated deficit. The prior period condensed consolidated financial statements have not been retrospectively adjusted and continue to be reported under the accounting standards in effect for those periods. As a result of the adoption of ASU 2014-09, the Company has changes to its revenue recognition policy for revenue recognition. Revenue is recognized when control of the services or goods, through the performance obligation of the Company is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for the performance obligations. The Company accounts for revenue contracts with customers based on the following steps: • Identification of the contract, or contracts with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the Company satisfies a performance obligation Revenue is recognized for screening services when the screening is completed based on the either the actual number of participants screened or an estimated minimum depending on the terms of the contract. Revenue for wellness portal services are recognized on a per eligible member, per month basis, while revenue from wellness coaching services are recognized as services are performed or ratable over the delivery period. The ratable recognition is the result of a stand ready obligation under which we expect the customer to receive and consume the benefits throughout the period. This is a faithful depiction of the satisfaction of the performance obligation because we cannot reasonably estimate when they will request performance and therefore have determined that the straight-line method is the most appropriate measure of performance. Revenue for kit assembly is recorded upon completion of the kit as the Company only assembles components on behalf of the customer and does not take control of the raw materials or finished goods. For contracts with multiple performance obligations, the transaction price is allocated to each individual performance obligation based on the standalone selling price of that performance obligation. We use standalone transactions when available to value each performance obligation. If standalone transactions are not available, we will estimate the standalone selling price through a cost plus a reasonable margin analysis. Any discounts from standalone selling price are spread proportionally to each performance obligation. The Company has agreements with third parties for the procurement of rewards and gift cards for some customers who subsequently distribute these rewards and gift cards to their employees for engaging in certain health and wellness activities. The Company does not control the rewards and gift cards before they are transferred to the customer, the pricing is controlled by the third party and the Company does not generate any profit or loss for these activities as the service is only a “pass-though” cost, and therefore the Company has been classified as an agent with regards to these subcontracted services. These pass-through costs are not included in the transaction price and the Company will record the reimburse of these costs net of the amount it pays the third party. The Company recognizes contract assets, or unbilled receivables, related to the rights to consideration for services completed but not billed at the reporting date. Unbilled receivables are classified as receivables when the Company has the right to invoice the customer. Unbilled receivables were $3.0 million at March 31, 2018 . The unbilled receivables of $2.7 million outstanding at December 31, 2017 were subsequently billed prior the March 31, 2018 . The Company records contract liabilities when cash payments are received for due in advance of performance to deferred revenue. Deferred revenue primarily relates to the advance consideration received from the customer. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as long-term deferred revenue. Deferred revenue during the three months ended March 31, 2018 increased by $0.3 million resulting from $0.8 million of additional invoicing and was offset by revenue recognized of $1.2 million during the same period, of which $0.7 million was included in deferred revenue at the beginning of the period. As of March 31, 2018 , there is $1.8 million in total deferred revenue of which $0.1 million is long-term and will be recognized over a period exceeding 12 months. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an expected length of one year of less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed. The recognition of our revenues remains substantially unchanged under ASC 606 with the exception of upfront fees charged to our customers which had a material impact. Depending on the terms of the contract, the period over which the upfront fees will be recognized may differ from the current treatment. In addition to the revenue change for up-front fees, the Company expects a change to the direct and incremental costs to obtain contract with customers, such as sales commissions, as these costs will be deferred and recognized over the period of benefit rather than expensing them as incurred in the period that the commissions are earned by our employees. The change in deferred commission expense as a result of deferring incremental costs of obtaining a contract and the related offset of amortization were both immaterial during the three months ended March 31, 2018 . |
New Accounting Pronouncements | New Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, "Leases", which is intended to improve financial reporting about leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on its consolidated financial position, results of operations or cash flows. In January 2017, the FASB issued ASU 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment", which is intended to simplify goodwill impairment testing by eliminating the second step of the analysis under which the implied fair value of goodwill is determined as if the reporting unit were being acquired in a business combination. The update instead requires entities to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for any amount by which the carrying amount exceeds the reporting unit’s fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. The standard is effective, prospectively, for public companies in fiscal years beginning after December 15, 2019, with early adoption permitted. The Company adopted the guidance during the fourth fiscal quarter of 2017, prior to our annual testing of goodwill impairment. See Note 7 to the consolidated financial statements In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting", which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. ASU 2017-09 will reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award's fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before and after the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial position, results of operations or cash flows. |
Loss Per Share | Loss Per Share Basic loss per share equals net loss divided by the weighted average common shares outstanding during the period. Diluted loss per share equals net loss divided by the sum of the weighted average common shares outstanding during the period plus dilutive common stock equivalents. |
Fair Value Measurements | Fair Value Measurements The Company determines the fair value measurements used in our condensed 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. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cumulative Changes on Consolidated Financials Statements | The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of the new revenue standard was as follows: (in thousands) Balance at December 31, 2017 Adjustments due to ASC 606 Balance at January 1, 2018 ASSETS Other current assets $ 998 $ 70 $ 1,068 Other assets 397 359 756 LIABILITIES AND STOCKHOLDERS' DEFICIT Other current liabilities 5,529 (42 ) 5,487 Other long-term liabilities 268 (53 ) 215 Accumulated deficit (185,324 ) (334 ) (184,990 ) In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations was as follows: March 31, 2018 (in thousands) As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) BALANCE SHEET ASSETS Other current assets $ 755 $ 683 $ 72 Other assets 744 385 359 LIABILITIES AND STOCKHOLDERS' DEFICIT Other current liabilities 4,762 4,633 129 Other long-term liabilities 300 247 53 Accumulated deficit (190,219 ) (189,885 ) 334 Three Months Ended March 31, 2018 (in thousands) As Reported Balances Without Adoption of ASC 606 Effect of Change Higher/(Lower) STATEMENT OF OPERATIONS Revenues $ 11,335 $ 11,422 $ (87 ) Selling, general and administrative expenses 6,851 6,849 2 Net loss (5,229 ) (5,144 ) (85 ) |
Schedule of Disaggregation of Revenue by Major Product Line | The following table disaggregates our revenue by major product line: (in thousands) Three Months Ended March 31, 2018 Screening revenues $ 7,345 Portal revenues 3,030 Coaching revenues 589 Other revenues 371 Total revenues $ 11,335 |
Merger (Tables)
Merger (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Preliminary Allocation of Purchase Price | The allocation of purchase price is as follows: (in thousands) March 31, 2018 Cash $ 1,936 Accounts receivable 3,128 Inventory and other assets 1,209 Fixed assets 1,041 Technology 4,200 Customer relationships 3,400 Trade name/trademark 200 Non-compete agreements 10 Goodwill 8,126 Accounts payable (2,945 ) Accrued expenses and other liabilities (6,789 ) Line of credit (4,684 ) Capital leases (334 ) Deferred revenue (200 ) Subordinated promissory note (1,917 ) Subordinated promissory note, discount 411 Purchase Price $ 6,792 |
Schedule of Methods Used to Determine Fair Value of Acquired Intangibles | The method used to determine the fair value of the intangible assets acquired and their estimated useful lives are as follows: Intangible Asset Fair Value Method Estimated Useful Life Portal (Technology) Income Approach, Relief from Royalty 6 years Customer relationships Income Approach, Multi-Period Excess Earnings 8 years Trade name/trademark Income Approach, Relief from Royalty 9 months Non-compete agreements Income Approach Lost Profits Method 1 year |
Schedule of Unaudited Pro Forma Results of Operations | The following table provides unaudited pro forma results of operations for the three months ended March 31, 2018 and 2017, as if the Merger had been completed on the first day of the Company's 2017 fiscal year. Three Months Ended March 31, (in thousands) 2018 2017 Pro forma revenues $ 11,335 $ 13,150 Pro forma loss from continuing operations $ (5,194 ) $ (5,807 ) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Valuation Assumptions for Stock Options Granted | The fair value of the stock options granted during the three months ended March 31, 2018 , was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: Three Months Ended March 31, 2018 Expected life (years) 3.9 Expected volatility 89.9% Expected dividend yield —% Risk-free interest rate 2.4% Weighted average fair value of options granted during the period $0.29 |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the three month period ended March 31, 2018 : 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, 2017 2,577,860 $ 1.17 Granted 125,000 0.65 Outstanding balance at March 31, 2018 2,702,860 $ 1.15 8.5 $0 Options exercisable at March 31, 2018 1,187,871 $ 1.68 8.6 $0 |
Goodwill and Other Intangible24
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets are summarized in the table below: March 31, 2018 December 31, 2017 (in thousands) Gross Carrying Amount Accumulated Amortization Intangible Assets, net Gross Carrying Amount Accumulated Amortization Intangible Assets, net Portal $ 8,351 $ 3,690 $ 4,661 $ 8,351 $ 3,256 $ 5,095 Customer relationships $ 5,497 $ 1,153 4,344 $ 5,497 $ 981 4,516 Trade name/trademark 200 200 — 200 171 29 Non-compete agreements $ 10 $ 9 1 $ 10 $ 6 4 Total $ 14,058 $ 5,052 $ 9,006 $ 14,058 $ 4,414 $ 9,644 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | he following table summarizes the Company's outstanding debt: (in thousands) March 31, 2018 December 31, 2017 2016 Credit and Security Agreement $ 4,887 $ 10,015 Term Loans 8,250 8,500 Discount on Term Loans (555 ) (631 ) Unamortized debt issuance costs related to Term Loans (207 ) (220 ) Subordinated Promissory Note, net 1,559 1,543 Capital Leases 45 107 Total debt 13,979 19,314 Short-term portion (13,979 ) (19,314 ) Total long-term debt $ — $ — |
Schedule of Components of Interest Expense | The following table summarizes the components of interest expense: Three Months Ended March 31, (in thousands) 2018 2017 Interest expense on Term Loans (effective interest rate at March 31, 2018 and 2017 was 28% and 15%, respectively) $ 349 $ 138 Interest expense on 2016 Credit and Security Agreement 173 81 Interest expense on Subordinated Promissory Note 39 — Interest expense on Capital Leases 5 — Accretion of termination fees (over term of Term Loan at rate of 8%) 111 41 Amortization of debt issuance costs 75 140 Amortization of debt discount associated with SWK Warrants #1 and #2 (defined below) 77 367 Amortization of Subordinated Promissory Note Discount 15 — Mark to market of SWK Warrant #2 (defined below) 42 — Total $ 886 $ 767 |
Schedule of Debt Covenant Compliance | The covenants are summarized in the tables below and are on a pro forma basis as if the Merger with PHS happened as of April 1, 2017: (in thousands) Minimum Aggregate Revenue (LTM) as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $69,000 $70,000 $71,000 $74,000 $75,000 Minimum Adjusted EBITDA as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $5,000 $5,200 $6,000 $8,000 $9,000 Minimum Consolidated Unencumbered Liquid Assets as of: The end of each fiscal quarter $1,000 The covenants are summarized in the tables below and are on a pro forma basis as if the Merger with PHS happened as of April 1, 2017 : (in thousands) Minimum Aggregate Revenue (LTM) as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $69,000 $70,000 $71,000 $74,000 $75,000 Minimum Adjusted EBITDA as of the end of: Months Ending Twelve Twelve Twelve Twelve Twelve Period Ended March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 each fiscal quarter $5,000 $5,200 $6,000 $8,000 $9,000 Minimum Consolidated Unencumbered Liquid Assets as of: The end of each fiscal quarter $1,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Term Loan and Century 10% Warrants | The Company estimated the fair value of the Term Loans and the Century 10% Warrant using Level 3 valuation techniques. The estimated fair value of the Term Loans was determined by discounting future projected cash flows using a discount rate commensurate with the risks involved and by using the Black-Scholes valuation model. The estimated fair value of the Century 10% Warrant was determined by using the Black-Scholes valuation model. March 31, 2018 December 31, 2017 (in thousands) Face Value Fair Value Carrying Amount Face Value Fair Value Carrying Amount Term Loans $ 8,250 $ 5,805 $ 7,488 $ 8,500 $ 6,013 $ 7,649 Century 10% Warrant $ 152 $ 131 $ 131 $ 152 $ 89 $ 89 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of reporting segments | segment | 1 | |
Unbilled receivables | $ 3 | $ 2.7 |
Increase in deferred revenue | (0.3) | |
Deferred revenue, additional invoicing | 0.8 | |
Deferred revenue recognized | 1.2 | |
Deferred revenue recognized that was included in the balance at the beginning of the period | 0.7 | |
Deferred revenue | 1.8 | |
Deferred revenue, long-term | $ 0.1 |
Basis of Presentation - Cumulat
Basis of Presentation - Cumulative Effect of Changes in Consolidated Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
ASSETS | ||||
Other current assets | $ 755 | $ 1,068 | $ 998 | |
Other assets | 744 | 756 | 397 | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||
Other current liabilities | 4,762 | 5,487 | 5,529 | |
Other long-term liabilities | 300 | 215 | 268 | |
Accumulated deficit | (190,219) | (184,990) | (185,324) | |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS: | ||||
Revenues | 11,335 | $ 7,601 | ||
Selling, general and administrative expenses | 6,851 | 3,480 | ||
Net loss | (5,229) | $ (3,129) | ||
Effect of Change Higher/(Lower) | ||||
ASSETS | ||||
Other current assets | 72 | |||
Other assets | 359 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||
Other current liabilities | 129 | |||
Other long-term liabilities | 53 | |||
Accumulated deficit | 334 | |||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS: | ||||
Revenues | (87) | |||
Selling, general and administrative expenses | 2 | |||
Net loss | (85) | |||
Accounting Standards Update 2014-09 | Balances Without Adoption of ASC 606 | ||||
ASSETS | ||||
Other current assets | 683 | |||
Other assets | 385 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||
Other current liabilities | 4,633 | |||
Other long-term liabilities | 247 | |||
Accumulated deficit | (189,885) | |||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS: | ||||
Revenues | 11,422 | |||
Selling, general and administrative expenses | 6,849 | |||
Net loss | $ (5,144) | |||
Balance at December 31, 2017 | ||||
ASSETS | ||||
Other current assets | 998 | |||
Other assets | 397 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||
Other current liabilities | 5,529 | |||
Other long-term liabilities | 268 | |||
Accumulated deficit | $ (185,324) | |||
Adjustments due to ASC 606 | Accounting Standards Update 2014-09 | ||||
ASSETS | ||||
Other current assets | 70 | |||
Other assets | 359 | |||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||
Other current liabilities | (42) | |||
Other long-term liabilities | (53) | |||
Accumulated deficit | $ (334) |
Basis of Presentation - Disaggr
Basis of Presentation - Disaggregation of Revenue by Product Line (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Total revenues | $ 11,335 |
Screening revenues | |
Disaggregation of Revenue [Line Items] | |
Total revenues | 7,345 |
Portal revenues | |
Disaggregation of Revenue [Line Items] | |
Total revenues | 3,030 |
Coaching revenues | |
Disaggregation of Revenue [Line Items] | |
Total revenues | 589 |
Other revenues | |
Disaggregation of Revenue [Line Items] | |
Total revenues | $ 371 |
Liquidity and Going Concern A30
Liquidity and Going Concern Assessment (Details) | Mar. 15, 2018USD ($) | Feb. 01, 2018USD ($) | Aug. 31, 2017USD ($)$ / shares | Apr. 30, 2018USD ($) | Mar. 31, 2018USD ($)operating_lease$ / shares | Mar. 31, 2018USD ($)operating_lease$ / shares | Mar. 31, 2017USD ($) | May 15, 2018USD ($) | May 10, 2018USD ($) | Dec. 31, 2017USD ($)$ / shares | Aug. 08, 2017USD ($) | May 12, 2017USD ($) | May 11, 2017USD ($) | May 10, 2017USD ($) | Dec. 31, 2016USD ($) | Nov. 15, 2016USD ($) |
Debt Instrument [Line Items] | ||||||||||||||||
Long-term debt | $ 13,979,000 | $ 13,979,000 | $ 19,314,000 | |||||||||||||
Issuance of common stock and warrants, net of issuance costs | 0 | $ 1,300,000 | ||||||||||||||
Working capital deficit | 31,500,000 | 31,500,000 | ||||||||||||||
Cash and cash equivalents | 544,000 | 544,000 | 226,000 | $ 884,000 | $ 1,866,000 | |||||||||||
Past due payables | $ 13,600,000 | $ 13,600,000 | ||||||||||||||
Past due percentage of outstanding payables | 60.00% | 60.00% | ||||||||||||||
Net cash provided by operating activities of continuing operations | $ 5,116,000 | (3,239,000) | ||||||||||||||
Loss from continuing operations before tax | $ 5,194,000 | $ 3,237,000 | ||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.04 | $ 0.04 | $ 0.04 | |||||||||||||
LPC | Purchase and Registration Rights Agreement | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Common stock, value of shares that Company has right to sell | $ 10,000,000 | |||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.04 | |||||||||||||||
Common stock, period during which Company has right to require counterparty to purchase shares reserved for issuance | 36 months | |||||||||||||||
LPC | Purchase and Registration Rights Agreement | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Common stock, maximum dollar value of shares to be issued per day | $ 1,750 | |||||||||||||||
Provant | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Subordinated promissory note | $ 1,917,000 | $ 1,917,000 | ||||||||||||||
Olathe, KS and East Greenwich, RI | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Number of properties under operating leases | operating_lease | 2 | 2 | ||||||||||||||
Line of Credit | 2017 August Term Loan | Provant | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000 | $ 2,000,000 | ||||||||||||||
Term Loans | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Deb face amount | 8,250,000 | 8,250,000 | $ 8,500,000 | |||||||||||||
Term Loans | Term Loans | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long-term debt | 8,250,000 | 8,250,000 | 8,500,000 | |||||||||||||
Debt unamortized discount | 555,000 | 555,000 | 631,000 | |||||||||||||
Line of credit facility, maximum borrowing capacity | $ 3,700,000 | |||||||||||||||
Debt balance in default | $ 250,000 | 250,000 | ||||||||||||||
Deb face amount | $ 5,000,000 | |||||||||||||||
Term Loans | Term Loans | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt balance in default | $ 250,000 | |||||||||||||||
Term Loans | Term Loans | SWK | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Outstanding borrowings under term loan | 8,300,000 | 8,300,000 | ||||||||||||||
Term Loans | Term Loans | Provant | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long-term debt | 6,500,000 | 6,500,000 | $ 6,500,000 | $ 8,500,000 | ||||||||||||
Line of credit facility, maximum borrowing capacity | 6,500,000 | |||||||||||||||
Term Loans | May 2018 Term Loan | SWK | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Deb face amount | $ 1,500,000 | |||||||||||||||
Term Loans | 2017 August Term Loan | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long-term debt | 1,800,000 | 1,800,000 | $ 2,000,000 | |||||||||||||
Repayments of debt | $ 250,000 | |||||||||||||||
Debt balance in default | 250,000 | |||||||||||||||
Term Loans | 2017 August Term Loan | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Debt balance in default | 250,000 | |||||||||||||||
Line of Credit | 2016 Credit and Security Agreement | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Borrowings outstanding | 4,900,000 | 4,900,000 | ||||||||||||||
Available borrowing capacity | 200,000 | 200,000 | ||||||||||||||
Long-term debt | 4,887,000 | 4,887,000 | 10,015,000 | |||||||||||||
Line of credit facility, maximum borrowing capacity | $ 7,000,000 | |||||||||||||||
Line of Credit | 2016 Credit and Security Agreement | Subsequent Event | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Borrowings outstanding | 5,600,000 | |||||||||||||||
Available borrowing capacity | $ 300,000 | |||||||||||||||
Line of Credit | 2016 Credit and Security Agreement | Provant | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, accordion feature | $ 15,000,000 | |||||||||||||||
Line of credit, percentage to calculate available borrowing base | 85.00% | |||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000 | |||||||||||||||
Line of Credit | Seasonal Facility | Guarantor Subsidiaries | Provant | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Line of credit facility, maximum borrowing capacity | 2,000,000 | 2,000,000 | $ 2,000,000 | |||||||||||||
Subordinated Debt | Promissory Note | ||||||||||||||||
Debt Instrument [Line Items] | ||||||||||||||||
Long-term debt | $ 1,559,000 | $ 1,559,000 | $ 1,543,000 |
Merger - Additional Information
Merger - Additional Information (Details) | May 11, 2017USD ($)unitshares | Mar. 31, 2018USD ($)shares | Mar. 31, 2017USD ($) | Mar. 31, 2018USD ($)shares | Dec. 31, 2017USD ($)shares | May 10, 2017USD ($) |
Business Acquisition [Line Items] | ||||||
Common stock, shares outstanding (in shares) | shares | 26,768,498 | 26,768,498 | 26,768,498 | |||
Merger related costs | $ 126,000 | $ 682,000 | ||||
Amortization of intangible assets | 600,000 | 300,000 | ||||
Goodwill | $ 8,759,000 | $ 8,759,000 | $ 8,759,000 | |||
Term Loans | Term Loans | ||||||
Business Acquisition [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 3,700,000 | |||||
Line of Credit | Revolving Credit Facilty | ||||||
Business Acquisition [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 7,000,000 | |||||
Provant | ||||||
Business Acquisition [Line Items] | ||||||
Shared issued in merger (in shares) | shares | 10,448,849 | |||||
Common stock, shares outstanding (in shares) | shares | 26,800,000 | 26,800,000 | ||||
Merger related costs | $ 0 | 600,000 | ||||
Increase in goodwill during measurement period | $ 1,600,000 | |||||
Amortization of intangible assets | 300,000 | |||||
Goodwill | $ 8,100,000 | 8,126,000 | $ 8,126,000 | |||
Number of reporting units tested for goodwill impairment | unit | 1 | |||||
Revenues attributable to Provant since the acquisition | 5,400,000 | |||||
Provant | Addition of Transaction Costs | ||||||
Business Acquisition [Line Items] | ||||||
Net income (loss) | $ (1,200,000) | |||||
Provant | Cost of operations | ||||||
Business Acquisition [Line Items] | ||||||
Amortization of intangible assets | 200,000 | |||||
Provant | Selling, general and administrative expenses | ||||||
Business Acquisition [Line Items] | ||||||
Amortization of intangible assets | $ 100,000 | |||||
Provant | Seasonal Facility | Line of Credit | ||||||
Business Acquisition [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000 | |||||
Provant | Term Loans | Term Loans | ||||||
Business Acquisition [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 6,500,000 | |||||
Provant | Line of Credit | Revolving Credit Facilty | ||||||
Business Acquisition [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | 10,000,000 | |||||
Line of credit facility, capacity available during high-volume months | $ 15,000,000 | |||||
Provant | Former Provant Ownwers | ||||||
Business Acquisition [Line Items] | ||||||
Ownership percentage by noncontrolling owners | 47.00% | 47.00% |
Merger - Purchase Price Allocat
Merger - Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | May 11, 2017 |
Business Acquisition [Line Items] | |||
Goodwill | $ 8,759 | $ 8,759 | |
Provant | |||
Business Acquisition [Line Items] | |||
Cash | 1,936 | ||
Accounts receivable | 3,128 | ||
Inventory and other assets | 1,209 | ||
Fixed assets | 1,041 | ||
Goodwill | 8,126 | $ 8,100 | |
Accounts payable | (2,945) | ||
Accrued expenses and other liabilities | (6,789) | ||
Line of credit | (4,684) | ||
Capital leases | (334) | ||
Deferred revenue | (200) | ||
Subordinated promissory note | (1,917) | ||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Debt Instrument, Unamortized Discount | 411 | ||
Purchase Price | 6,792 | ||
Provant | Technology | |||
Business Acquisition [Line Items] | |||
Intangible assets | 4,200 | ||
Provant | Customer relationships | |||
Business Acquisition [Line Items] | |||
Intangible assets | 3,400 | ||
Provant | Trade name/trademark | |||
Business Acquisition [Line Items] | |||
Intangible assets | 200 | ||
Provant | Non-compete agreements | |||
Business Acquisition [Line Items] | |||
Intangible assets | $ 10 |
Merger - Intangible Assets Acqu
Merger - Intangible Assets Acquired (Details) | May 11, 2017 | Mar. 31, 2018 |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life | 8 years | |
Provant | Level 3 | Portal (Technology) | Income Approach Valuation Technique | Relief From Royalty | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life | 6 years | |
Provant | Level 3 | Customer relationships | Income Approach Valuation Technique | Multi-Period Excess Earnings | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life | 8 years | |
Provant | Level 3 | Trade name/trademark | Income Approach Valuation Technique | Relief From Royalty | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life | 9 months | |
Provant | Level 3 | Non-compete agreements | Income Approach Valuation Technique | Loss Profit Method | ||
Business Acquisition [Line Items] | ||
Estimated Useful Life | 1 year |
Merger - Pro Forma Results of O
Merger - Pro Forma Results of Operations (Details) - Provant - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Business Acquisition [Line Items] | ||
Pro forma revenues | $ 11,335 | $ 13,150 |
Pro forma loss from continuing operations | $ (5,194) | $ (5,807) |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Weighted average options outstanding (in shares) | 2,702,860 | 2,577,860 | |
Weighted Average | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Weighted average options outstanding (in shares) | 2,627,027 | 399,058 | |
Provant | A&R Warrant | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1,317,289 | 1,317,289 | |
Provant | 10% Warrant | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 326,052 | 326,052 | |
Provant | 2017 Public Offering Warrant | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,187,500 | 2,187,500 | |
Provant | August Warrant | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 450,000 | 450,000 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | May 24, 2011 | May 29, 2008 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted (in shares) | 125,000 | |||
Options exercised (in shares) | 0 | 0 | ||
Options vested in period (in shares) | 24,971 | |||
Aggregate fair value of options vested in period | $ 100 | |||
Unrecognized compensation cost related to stock options | $ 400 | |||
Weighted average period for recognition of compensation cost | 3 years 4 months 24 days | |||
Selling, general and administrative expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 32 | $ 38 | ||
2008 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized under the plans (in shares) | 333,333 | |||
Options granted (in shares) | 0 | 0 | ||
Remaining shares available for grant under the plan (in shares) | 114,141 | |||
Contractual life of options | 10 years | |||
2011 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized under the plans (in shares) | 3,650,000 | |||
Options granted (in shares) | 125,000 | 0 | ||
Remaining shares available for grant under the plan (in shares) | 442,893 | |||
Contractual life of options | 10 years | |||
2011 Plan | Stock Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of stock awards granted (in shares) | 0 | 0 |
Share-Based Compensation - Stoc
Share-Based Compensation - Stock Options Fair Value Assumptions (Details) - Stock Options | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life (years) | 3 years 10 months 24 days |
Expected volatility | 89.90% |
Expected dividend yield | 0.00% |
Risk-free interest rate | 2.40% |
Weighted average fair value of options granted during the period (in dollars per share) | $ 0.29 |
Share-Based Compensation - St38
Share-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Number of Options | |
Outstanding balance at December 31, 2017 (in shares) | shares | 2,577,860 |
Options granted (in shares) | shares | 125,000 |
Outstanding balance at March 31, 2018 (in shares) | shares | 2,702,860 |
Weighted Average Exercise Price Per Option | |
Outstanding balance at December 31, 2017 (in dollars per share) | $ / shares | $ 1.17 |
Granted (in dollars per share) | $ / shares | 0.65 |
Outstanding balance at March 31, 2018 (in dollars per share) | $ / shares | $ 1.15 |
Additional Disclosures | |
Number of options exercisable at March 31, 2018 (in shares) | shares | 1,187,871 |
Weighted average exercise price of options exercisable at March 31, 2018 (in dollars per share) | $ / shares | $ 1.68 |
Weighted average remaining contractual life (years), outstanding at March 31, 2018 | 8 years 6 months |
Weighted average remaining contractual life (years), exercisable at March 31, 2018 | 8 years 7 months 6 days |
Aggregate intrinsic value, outstanding at March 31, 2018 | $ | $ 0 |
Aggregate intrinsic value, exercisable at March 31, 2018 | $ | $ 0 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 0.5 | $ 0.5 |
Components | $ 0.3 | $ 0.5 |
Goodwill and Other Intangible40
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) | Apr. 01, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 8,759,000 | $ 8,759,000 | ||
Amortization expense of intangibles | 600,000 | $ 300,000 | ||
Stockholders' deficit balance | (11,742,000) | (6,856,000) | ||
Fair value of market capitalization of the Company | 14,000,000 | $ 11,000,000 | ||
Goodwill impairment | $ 0 | |||
Subsequent Event | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Fair value of market capitalization of the Company | $ 2,000,000 | |||
Goodwill impairment | $ 0 | |||
Portal (Technology) | Minimum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life of intangible assets | 4 years | |||
Portal (Technology) | Maximum | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life of intangible assets | 6 years | |||
Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated useful life of intangible assets | 8 years |
Goodwill and Other Intangible41
Goodwill and Other Intangible Assets - Summary of Intangible Assets, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 14,058 | $ 14,058 |
Accumulated Amortization | 5,052 | 4,414 |
Intangible Assets, net | 9,006 | 9,644 |
Portal (Technology) | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 8,351 | 8,351 |
Accumulated Amortization | 3,690 | 3,256 |
Intangible Assets, net | 4,661 | 5,095 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 5,497 | 5,497 |
Accumulated Amortization | 1,153 | 981 |
Intangible Assets, net | 4,344 | 4,516 |
Trade name/trademark | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 200 | 200 |
Accumulated Amortization | 200 | 171 |
Intangible Assets, net | 0 | 29 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10 | 10 |
Accumulated Amortization | 9 | 6 |
Intangible Assets, net | $ 1 | $ 4 |
Debt - Summary of Outstanding B
Debt - Summary of Outstanding Borrowings (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 13,979 | $ 19,314 |
Capital Leases | 45 | 107 |
Short-term portion | (13,979) | (19,314) |
Total long-term debt | 0 | 0 |
Line of Credit | 2016 Credit and Security Agreement | ||
Debt Instrument [Line Items] | ||
Long-term debt | 4,887 | 10,015 |
Term Loans | Term Loans | ||
Debt Instrument [Line Items] | ||
Long-term debt | 8,250 | 8,500 |
Discount on Term Loans | (555) | (631) |
Unamortized debt issuance costs related to Term Loans | (207) | (220) |
Subordinated Debt | Subordinated Promissory Note, net | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 1,559 | $ 1,543 |
Debt - Summary of Components of
Debt - Summary of Components of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Debt Instrument [Line Items] | ||
Amortization of debt issuance costs | $ 75 | $ 140 |
Total | 886 | 767 |
Warrants 1 and 2 | ||
Debt Instrument [Line Items] | ||
Amortization of debt discount | 77 | 367 |
Warrant 2 | ||
Debt Instrument [Line Items] | ||
Mark to market of SWK Warrant 2 (defined below) | 42 | 0 |
Term Loans | Term Loans | ||
Debt Instrument [Line Items] | ||
Interest expense | 349 | 138 |
Accretion of termination fees (over term of Term Loan at rate of 8%) | $ 111 | $ 41 |
Effective interest rate percentage | 28.00% | 15.00% |
Accretion of termination fees percentage | 8.00% | 8.00% |
Line of Credit | 2016 Credit and Security Agreement | ||
Debt Instrument [Line Items] | ||
Interest expense | $ 173 | $ 81 |
Subordinated Debt | Promissory Note | ||
Debt Instrument [Line Items] | ||
Interest expense | 39 | 0 |
Amortization of debt discount | 15 | 0 |
Capital Leases | ||
Debt Instrument [Line Items] | ||
Interest expense | $ 5 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Details) | Mar. 15, 2018USD ($) | Aug. 08, 2017USD ($)$ / sharesshares | May 11, 2017USD ($)leaseguarantor$ / sharesshares | May 10, 2017USD ($) | Apr. 29, 2016USD ($) | Apr. 17, 2015USD ($)shares | Apr. 30, 2018USD ($) | Mar. 31, 2018USD ($)credit_facility | Mar. 31, 2018USD ($)credit_facility | May 24, 2017USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | May 12, 2017USD ($) | Nov. 15, 2016USD ($) | Aug. 15, 2016$ / shares |
Debt [Line Items] | ||||||||||||||
Number of primary credit facilities | credit_facility | 2 | 2 | ||||||||||||
Long-term debt | $ 13,979,000 | $ 13,979,000 | $ 19,314,000 | |||||||||||
Number of overdraft credit facilities | credit_facility | 2 | 2 | ||||||||||||
Value of stock issued | $ 23,000 | |||||||||||||
Capital Leases | $ 45,000 | 45,000 | 107,000 | |||||||||||
Short-term Debt | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Capital Leases | 100,000 | 100,000 | ||||||||||||
Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Business combinations, line of credit | 4,684,000 | 4,684,000 | ||||||||||||
Subordinated promissory note | 1,917,000 | 1,917,000 | ||||||||||||
Number of capital leases | lease | 2 | |||||||||||||
2017 Public Offering Warrant | Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Warrants strike price (in dollars per share) | $ / shares | $ 1.35 | |||||||||||||
Stocks issued (in shares) | shares | 4,375,000 | |||||||||||||
Value of stock issued | $ 3,400,000 | |||||||||||||
Sale of stock, price per share (in dollars per share) | $ / shares | $ 0.80 | |||||||||||||
Number of shares to be purchased under warrant (in shares) | shares | 2 | |||||||||||||
A&R Warrant | Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Warrants strike price (in dollars per share) | $ / shares | $ 0.84 | |||||||||||||
Stocks issued (in shares) | shares | 1,300,000 | |||||||||||||
2017 August Term Loan | Line of Credit | Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Line of credit facility, maximum borrowing capacity | 2,000,000 | 2,000,000 | ||||||||||||
Line of Credit | Seasonal Facility | Provant | Guarantor Subsidiaries | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Line of credit facility, maximum borrowing capacity | 2,000,000 | 2,000,000 | $ 2,000,000 | |||||||||||
Number of guarantors | guarantor | 1 | |||||||||||||
Interest payment amount as percentage of outstanding balance (as percent) | 25.00% | |||||||||||||
Line of Credit | Seasonal Facility | 10% Warrant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Option indexed to issue shares (in shares) | shares | 326,052 | |||||||||||||
Warrants strike price (in dollars per share) | $ / shares | $ 0.6134 | |||||||||||||
Line of Credit | Seasonal Facility | 90% Contingent Warrant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Option indexed to issue shares (in shares) | shares | 2,934,468 | |||||||||||||
Warrants strike price (in dollars per share) | $ / shares | $ 0.6134 | |||||||||||||
Exercisable period of warrants | 7 years | |||||||||||||
Line of Credit | Seasonal Facility | Century Warrants | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Expected term | 7 years | |||||||||||||
Volatility rate | 80.60% | |||||||||||||
Risk free interest rate | 2.22% | |||||||||||||
Dividend rate | 0.00% | |||||||||||||
Line of Credit | Seasonal Facility | 2017 Public Offering Warrant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Option indexed to issue shares (in shares) | shares | 2,187,500 | |||||||||||||
Exercisable period of warrants | 4 years | |||||||||||||
Line of Credit | Seasonal Facility | A&R Warrant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Volatility rate | 80.60% | |||||||||||||
Risk free interest rate | 2.22% | |||||||||||||
Dividend rate | 0.00% | |||||||||||||
Line of Credit | 2016 Credit and Security Agreement | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Long-term debt | 4,887,000 | 4,887,000 | 10,015,000 | |||||||||||
Line of credit facility, maximum borrowing capacity | $ 7,000,000 | |||||||||||||
Expected term | 3 years | |||||||||||||
Borrowings outstanding | 4,900,000 | 4,900,000 | ||||||||||||
Available borrowing capacity | 200,000 | 200,000 | ||||||||||||
Debt instrument, fee amount | $ 100,000 | |||||||||||||
Commitment fee, percentage (as percent) | 0.50% | |||||||||||||
Collateral fee (as percent) | 0.50% | |||||||||||||
Line of Credit | 2016 Credit and Security Agreement | Prime rate | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Spread on variable rate (as percent) | 4.50% | |||||||||||||
Line of Credit | 2016 Credit and Security Agreement | Other Assets | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Debt issuance costs, gross | $ 100,000 | |||||||||||||
Deferred issuance costs, net | 200,000 | 200,000 | ||||||||||||
Line of Credit | 2016 Credit and Security Agreement | Subsequent Event | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Borrowings outstanding | $ 5,600,000 | |||||||||||||
Available borrowing capacity | 300,000 | |||||||||||||
Line of Credit | 2016 Credit and Security Agreement | Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Line of credit facility, maximum borrowing capacity | $ 10,000,000 | |||||||||||||
Line of credit facility, capacity available during high-volume months | 15,000,000 | |||||||||||||
Line of Credit | Term Loans | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Cross-default provision on amount of debt outstanding | $ 250,000 | |||||||||||||
Term Loans | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Deb face amount | 8,250,000 | 8,250,000 | 8,500,000 | |||||||||||
Term Loans | 2017 August Term Loan | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Long-term debt | $ 2,000,000 | 1,800,000 | 1,800,000 | |||||||||||
Debt instrument, fee amount | 30,000 | |||||||||||||
Debt balance in default | 250,000 | |||||||||||||
Term Loans | 2017 August Term Loan | Payment by November 30, 2017 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Debt exit fees | 140,000 | |||||||||||||
Term Loans | 2017 August Term Loan | Payment after November 30, 2017 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Debt exit fees | $ 280,000 | |||||||||||||
Term Loans | 2017 August Term Loan | Subsequent Event | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Debt balance in default | 250,000 | |||||||||||||
Term Loans | 2017 August Term Loan | Warrant 1 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Expected term | 7 years | |||||||||||||
Term Loans | 2017 August Term Loan | August Warrant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 0.80 | |||||||||||||
Volatility rate | 79.30% | |||||||||||||
Risk free interest rate | 2.10% | |||||||||||||
Dividend rate | 0.00% | |||||||||||||
Fair value of warrants | $ 200,000 | |||||||||||||
Number of warrants to purchase shares issued (in shares) | shares | 450,000 | |||||||||||||
Term Loans | 2013 Loan and Security Agreement | Warrant 2 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Value of warrant to be issued is debt instrument is not paid | $ 1,250,000 | |||||||||||||
Term Loans | Term Loans | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Long-term debt | 8,250,000 | 8,250,000 | 8,500,000 | |||||||||||
Line of credit facility, maximum borrowing capacity | 3,700,000 | |||||||||||||
Debt instrument, fee amount | 97,500 | |||||||||||||
Deferred issuance costs, net | 207,000 | 207,000 | 220,000 | |||||||||||
Deb face amount | $ 5,000,000 | |||||||||||||
Maximum quarterly principal payment | $ 500,000 | |||||||||||||
Debt instrument, exit fee percentage | 8.00% | |||||||||||||
Legal fees | 150,000 | |||||||||||||
Debt exit fees | $ 400,000 | |||||||||||||
Term loan, fair value | 555,000 | 555,000 | 631,000 | |||||||||||
Debt balance in default | $ 250,000 | 250,000 | ||||||||||||
Term Loans | Term Loans | LIBOR | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Spread on variable rate (as percent) | 12.50% | |||||||||||||
Term Loans | Term Loans | Minimum | LIBOR | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Spread on variable rate (as percent) | 1.00% | |||||||||||||
Term Loans | Term Loans | Annual Aggregate Revenue up to and Including $20 million | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Quarterly revenue-based payments as a percent of annual aggregate revenue (as percent) | 15.00% | |||||||||||||
Term Loans | Term Loans | Annual Aggregate Revenue Greater greater than $20 million | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Quarterly revenue-based payments as a percent of annual aggregate revenue (as percent) | 10.00% | |||||||||||||
Annual aggregate revenue limit | $ 20,000,000 | 20,000,000 | ||||||||||||
Term Loans | Term Loans | Subsequent Event | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Debt balance in default | $ 250,000 | |||||||||||||
Term Loans | Term Loans | Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Long-term debt | $ 6,500,000 | 8,500,000 | 6,500,000 | 6,500,000 | ||||||||||
Line of credit facility, maximum borrowing capacity | $ 6,500,000 | |||||||||||||
Term Loans | Term Loans | Warrant 2 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Value of warrant to be issued is debt instrument is not paid | $ 1,250,000 | |||||||||||||
Expected term | 7 years | |||||||||||||
Volatility rate | 80.00% | |||||||||||||
Risk free interest rate | 2.10% | |||||||||||||
Dividend rate | 0.00% | |||||||||||||
Term Loans | Term Loans | Warrant 1 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Expected term | 7 years | |||||||||||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 1.30 | |||||||||||||
Volatility rate | 85.00% | |||||||||||||
Risk free interest rate | 1.40% | |||||||||||||
Dividend rate | 0.00% | |||||||||||||
Number of shares to be purchased under warrant (in shares) | shares | 543,479 | |||||||||||||
Term Loans | Term Loans | Warrant 1 | Additional Paid-in Capital | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Fair value of warrants | $ 300,000 | |||||||||||||
Term Loans | Term Loans | Warrants 1 and 2 | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Term loan, fair value | $ 3,600,000 | |||||||||||||
Term Loans | Term Loans | A&R Warrant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Expected term | 7 years | |||||||||||||
Exercisable period of warrants | 7 years | |||||||||||||
Convertible Subordinated Debt | Promissory Note | Century | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Long-term debt | $ 2,500,000 | |||||||||||||
Interest rate | 8.25% | |||||||||||||
Convertible Subordinated Debt | Promissory Note | Provant | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Amount converted to equity | $ 400,000 | |||||||||||||
Subordinated Debt | Promissory Note | ||||||||||||||
Debt [Line Items] | ||||||||||||||
Long-term debt | $ 1,559,000 | $ 1,559,000 | $ 1,543,000 | |||||||||||
Interest rate | 8.25% | |||||||||||||
Tax distribution interest accrual rate | 40.00% |
Debt - Debt Covenant Compliance
Debt - Debt Covenant Compliance (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Line of Credit | 2016 Credit and Security Agreement | |
Debt Instrument [Line Items] | |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended March 31, 2018 | $ 69,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended June 30, 2018 | 70,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended September 30, 2018 | 71,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended December 31, 2018 | 74,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended each fiscal quarter thereafter | 75,000 |
Line of Credit | Term Loans | |
Debt Instrument [Line Items] | |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended March 31, 2018 | 69,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended June 30, 2018 | 70,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended September 30, 2018 | 71,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended December 31, 2018 | 74,000 |
Minimum Aggregate Revenue (LTM) as of the of twelve months ended each fiscal quarter thereafter | 75,000 |
Term Loans | 2016 Credit and Security Agreement | |
Debt Instrument [Line Items] | |
Minimum Adjusted EBITDA as of the end of twelve months ended March 31, 2018 | 5,000 |
Minimum Adjusted EBITDA as of the end of twelve months ended June 30, 2018 | 5,200 |
Minimum Adjusted EBITDA as of the end of twelve months ended September 30, 2018 | 6,000 |
Minimum Adjusted EBITDA as of the end of twelve months ended December 31, 2018 | 8,000 |
Minimum Adjusted EBITDA as of the end of twelve months ended each fiscal quarter thereafter | 9,000 |
Minimum Consolidated Unencumbered Liquid Assets as of the end of each fiscal quarter thereafter | 1,000 |
Term Loans | Term Loans | |
Debt Instrument [Line Items] | |
Minimum Adjusted EBITDA as of the end of twelve months ended March 31, 2018 | 5,000 |
Minimum Adjusted EBITDA as of the end of twelve months ended June 30, 2018 | 5,200 |
Minimum Adjusted EBITDA as of the end of twelve months ended September 30, 2018 | 6,000 |
Minimum Adjusted EBITDA as of the end of twelve months ended December 31, 2018 | 8,000 |
Minimum Adjusted EBITDA as of the end of twelve months ended each fiscal quarter thereafter | 9,000 |
Minimum Consolidated Unencumbered Liquid Assets as of the end of each fiscal quarter thereafter | $ 1,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | May 10, 2017USD ($) | Mar. 31, 2018USD ($)operating_leasestates | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2015operating_lease |
Loss Contingencies [Line Items] | |||||
Number of operating leases settlements | states | 3 | ||||
Accrued lease settlement liability | $ 200 | ||||
Other current liabilities | 4,762 | $ 5,487 | $ 5,529 | ||
Provant | |||||
Loss Contingencies [Line Items] | |||||
Litigation settlement amount | $ 800 | ||||
Provant | |||||
Loss Contingencies [Line Items] | |||||
Accrued purchased commitment obligation related to vendor | 1,300 | ||||
Other Current Liabilities | Employment-related claim | |||||
Loss Contingencies [Line Items] | |||||
Loss contingency accrual | 200 | ||||
Other Current Liabilities | Provant | |||||
Loss Contingencies [Line Items] | |||||
Other current liabilities | 700 | ||||
Employee Severance | Other Current Liabilities | |||||
Loss Contingencies [Line Items] | |||||
Restructuring reserve | $ 400 | $ 600 | |||
Olathe, KS and East Greenwich, RI | |||||
Loss Contingencies [Line Items] | |||||
Number of properties under operating leases | operating_lease | 2 | ||||
Des Moines, IA and Indianapolis | |||||
Loss Contingencies [Line Items] | |||||
Number of properties under operating leases | operating_lease | 2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | May 11, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Unrecognized tax benefits | $ 0 | $ 0 | ||
Interest and penalty payments | 0 | 0 | ||
Current federal tax benefits | 0 | 0 | ||
Current state tax benefits | $ 0 | $ 0 | ||
Income Taxes [Line Items] | ||||
Ownership percentage, threshold for utilization of net operating losses carryforward | 50.00% | 50.00% | ||
Ownership percentage, period for utilization of net operating losses carryforwards | 3 years | |||
Deferred tax assets, operating loss carryforwards, annual limitation | $ 200,000 | |||
PHS | ||||
Income Taxes [Line Items] | ||||
Deferred tax assets, operating loss carryforwards, annual limitation | $ 90,000 | |||
Federal | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards, subject to expiration | $ 19,900,000 | |||
Federal | PHS | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | 1,870,000 | |||
Federal | Operating Loss Carryforwards | ||||
Income Taxes [Line Items] | ||||
Deferred tax assets valuation allowance | 173,100,000 | |||
State | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards, subject to expiration | $ 19,300,000 | |||
State | PHS | ||||
Income Taxes [Line Items] | ||||
Operating loss carryforwards | $ 1,860,000 | |||
State | Operating Loss Carryforwards | ||||
Income Taxes [Line Items] | ||||
Deferred tax assets valuation allowance | $ 140,400,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Warrant, Face Value | $ 152 | |
Century 10% Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Warrant, Face Value | $ 152 | |
Term Loans | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan, Face Value | 8,250 | 8,500 |
Carrying Amount | Century 10% Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Warrant, Fair value and Carrying Amount | 131 | 89 |
Carrying Amount | Term Loans | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan, Fair Value and Carrying Amount | 7,488 | 7,649 |
Level 3 | Fair Value | Century 10% Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Warrant, Fair value and Carrying Amount | 131 | 89 |
Level 3 | Fair Value | Term Loans | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term Loan, Fair Value and Carrying Amount | $ 5,805 | $ 6,013 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | May 10, 2018USD ($)advance | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Loan Payable | |||
Subsequent Event [Line Items] | |||
Deb face amount | $ 8,250 | $ 8,500 | |
Subsequent Event | Loan Payable | Working Capital Overadvance | CNH | |||
Subsequent Event [Line Items] | |||
Deb face amount | $ 300 | ||
Subsequent Event | Loan Payable | May 2018 Term Loan | SWK | |||
Subsequent Event [Line Items] | |||
Deb face amount | $ 1,500 | ||
Number of debt advances | advance | 3 | ||
Maximum percentage of actual over budgeted expenses | 15.00% |