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4. FACILITY ACQUISITIONS AND ASSETS HELD FOR SALE
 3 Months Ended
Mar. 31, 2017
Business Combinations [Abstract]  
FACILITY ACQUISITIONS AND ASSETS HELD FOR SALE

Acquisitions

 

On January 13, 2017, we completed our acquisition of certain assets of Resolution Medical Imaging Corporation, consisting of two multi modality imaging centers located in Santa Monica, CA for total purchase consideration of $4.0 million including cash consideration of $2.1 million, the assumption of $1.6 million in equipment debt and a payoff of a small business administration loan of $241,000. We have made a preliminary fair value determination of the acquired assets and approximately $1.9 million of fixed assets, $31,000 of other assets, $100,000 covenant not to compete, and $1.9 million of goodwill were recorded. The purchase of Resolution was enacted to contribute its assets to a joint venture with Cedars Sinai Medical Corporation which was effective April 1, 2017. See Note 7, Subsequent Events for more information on the joint venture. The following table summarizes the major categories of assets classified as held for sale in the accompanying condensed consolidated balance sheets at March 31, 2017 (in thousands):

 

Property and equipment, net  $1,896 
Other assets   31 
Goodwill   1,901 
Intangible Assets   100 
Total assets held for sale  $3,928 
      
Notes payable   353 
Capital lease   1,220 
Total liabilities held for sale  $1,573 
Net Assets Held for Sale  $2,355 

 

On February 1, 2017, we completed our acquisition of certain assets of MRI Centers, Inc., consisting of one single-modality imaging center located in Torrance, CA providing MRI and sports medicine services, for cash consideration of $800,000 and the payoff of $81,000 in debt. We have made a fair value determination of the acquired assets and approximately $289,000 of fixed assets, $9,800 of other assets, $100,000 covenant not to compete and $401,000 of goodwill were recorded.

 

Sale of Healthcare Rhode Island:

 

On November 4, 2016, the Board of Directors resolved to sell the Company’s interest in five of its Rhode Island imaging centers operating under the name The Imaging Institute within the upcoming 12 months. The following table summarizes the major categories of assets classified as held for sale in the accompanying condensed consolidated balance sheets at March 31, 2017 (in thousands):

 

Property and equipment, net  $1,349 
Other assets   21 
Goodwill   1,126 
Total assets held for sale  $2,496 

 

As the sale of these assets does not represent a strategic shift that will have a major effect on the Company’s operations and financial results, it is not classified as a discontinued operation.

 

Formation of a joint venture:

 

On January 6, 2017, Image Medical Inc., a wholly owned subsidiary of RadNet, acquired a 49% economic interest ScriptSender, LLC, a partnership held by two individuals which provides secure data transmission services of medical information. Through a management agreement, RadNet provides management and accounting services and receives an agreed upon fee. Image Medical will contribute $3.0 million to the partnership for its 49% ownership stake over a three year period representing the maximum risk in the venture. As of March 31, 2017, the carrying amount of the investment is $2.8 million. We determined that ScriptSender, LLC is a Variable Interest Entity but we are not a primary beneficiary since RadNet does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance.