Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

v3.21.2
Discontinued Operations
9 Months Ended
Sep. 30, 2021
Payables And Accruals [Abstract]  
Discontinued Operations

Note 3. Discontinued Operations

Consistent with the Company’s continued focus on the PAD market, the Company completed the sale of its Dermatology Business to Strata Skin Sciences, Inc. (“Strata”) on August 16, 2021 for cash proceeds of $3.7 million. The Company paid broker and legal fees of approximately $0.2 million related to the sale of the Dermatology Business. In addition, the Company issued a warrant to the broker to purchase 74,247 shares of common stock at an exercise price of $2.99 per share. The warrant is immediately exercisable and expires five years following the date of issuance. The warrant was valued at approximately $0.1 million on the grant date using the Black-Scholes option pricing model based on the following assumptions: expected volatility of 104.55%, risk-free interest rate of 0.32%, expected dividend yield of 0% and an expected term of 2.5 years.

The Dermatology Business was previously disclosed as a separate reportable segment of the Company. The sale of the Dermatology Business resulted in a gain of $3.5 million which is included as a component of income (loss) from discontinued operations in the condensed statements of operations for the three and nine months ended September 30, 2021.

Beginning in the third quarter of 2021, the Company has reported the results of the Dermatology Business in income (loss) from discontinued operations in the condensed statements of operations and excluded them from continuing operations for all periods presented. The assets and liabilities of the Dermatology Business are recorded as assets of discontinued operations and liabilities of discontinued operations, respectively, in the condensed balance sheets.

Certain overhead costs previously allocated to the Dermatology Business for segment reporting purposes did not qualify for classification within discontinued operations and have been reallocated to continuing operations for all periods presented.

The following table summarizes the carrying amounts of the assets and liabilities included as discontinued operations in the condensed balance sheet at December 31, 2020 (in thousands):

 

 

December 31,

 

 

 

 

2020

 

 

Assets of discontinued operations

 

 

 

 

 

Accounts receivable, net

 

$

214

 

 

Inventories

 

 

1,341

 

 

Prepaid expenses and other current assets

 

 

158

 

 

Property and equipment, net

 

 

684

 

 

Other long-term assets

 

 

78

 

 

Total assets of discontinued operations

 

$

2,475

 

 

 

 

 

 

 

 

Liabilities of discontinued operations

 

 

 

 

 

Accounts payable

 

$

100

 

 

Accrued expenses

 

 

201

 

 

Deferred revenue

 

 

2,487

 

 

Total liabilities of discontinued operations

 

$

2,788

 

 

 

The assets and liabilities of discontinued operations have been classified as current and long-term, as applicable, in the condensed balance sheet at December 31, 2020.

The following table summarizes the major classes of items constituting income (loss) from discontinued operations in the condensed statements of operations for each of the periods presented (in thousands):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

$

140

 

 

$

118

 

 

$

852

 

 

$

670

 

Service and other

 

 

349

 

 

 

729

 

 

 

1,748

 

 

 

2,259

 

Total net revenues

 

 

489

 

 

 

847

 

 

 

2,600

 

 

 

2,929

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

 

 

158

 

 

 

347

 

 

 

1,201

 

 

 

1,127

 

Service and other

 

 

238

 

 

 

504

 

 

 

1,089

 

 

 

1,296

 

Total cost of revenues

 

 

396

 

 

 

851

 

 

 

2,290

 

 

 

2,423

 

Gross income (loss)

 

 

93

 

 

 

(4

)

 

 

310

 

 

 

506

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Selling, general and administrative

 

 

330

 

 

 

236

 

 

 

1,110

 

 

 

958

 

   Research and development

 

 

134

 

 

 

21

 

 

 

388

 

 

 

47

 

Total operating expenses

 

 

464

 

 

 

257

 

 

 

1,498

 

 

 

1,005

 

Operating loss

 

 

(371

)

 

 

(261

)

 

 

(1,188

)

 

 

(499

)

Interest expense, net

 

 

(22

)

 

 

(3

)

 

 

(94

)

 

 

(24

)

Loss from discontinued operations

 

 

(393

)

 

 

(264

)

 

 

(1,282

)

 

 

(523

)

Gain on sale of the Dermatology Business

 

 

3,473

 

 

 

 

 

 

3,473

 

 

 

 

Income (loss) from discontinued operations

 

$

3,080

 

 

$

(264

)

 

$

2,191

 

 

$

(523

)

 

Depreciation expense for the Dermatology Business was $0.1 million for each of the three months ended September 30, 2021 and 2020 and $0.3 million for each of the nine months ended September 30, 2021 and 2020. There were no capital expenditures for the Dermatology Business during the nine months ended September 30, 2021 and 2020.

Stock-based compensation expense for the Dermatology Business was de minimis and approximately $14,000 for the three months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense was approximately $18,000 and $0.1 million for the nine months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense of approximately $4,000 and $30,000 was capitalized to inventory and property and equipment during the three months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense of approximately $0.1 million was capitalized to inventory and property and equipment during each of the nine months ended September 30, 2021 and 2020.