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Note 10 - Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Text Block]

Note 10 - Goodwill and Intangible Assets

Annual impairment test

During the third quarter of 2024, we completed our annual review of goodwill for potential impairment using a quantitative assessment for all of our reporting units. The fair value of each reporting unit was estimated using a weighting of a discounted cash flow model and prices of comparable businesses. As a result of this review, we concluded that the carrying value of our MRI reporting unit exceeded its estimated fair value resulting in an impairment charge of approximately $4.8 million. The goodwill impairment was primarily attributable to industry and market conditions effecting the overall financial performance of the reporting unit. These industry and market conditions were deemed a triggering event that led us to also review the fair value of certain indefinite-lived intangible assets related to the MRI reporting unit. As a result of this review we concluded the carrying value of the trade name related to MRI exceeded its estimated fair value resulting in an impairment charge of approximately $1.2 million. The related impairment was primarily attributable to industry and market conditions effecting the overall financial performance of the reporting unit. The balance for the trade name related to MRI was approximately $2.2 million and $940 thousand at December 31, 2023 and September 30, 2024, respectively.

The combined impairment charge of approximately $6.0 million is reflected in the line item, "Goodwill and intangible asset impairment charge," in our Consolidated Statements of Operations for the three and nine months ended September 30, 2024.

The table below reflects our goodwill and changes in the carrying value:

(in thousands)
Goodwill balance at December 31, 2023	$	5,870
Impairment charge during 2024		(4,795	)
Goodwill balance at September 30, 2024	$	1,075

Goodwill before impairment	$	5,870
Accumulated impairment charge		(4,795	)
Goodwill balance at September 30, 2024	$	1,075

Intangible Assets

The following table reflects our finite-lived and indefinite-lived intangible assets:

		*September 30, 2024*							*December 31, 2023*
(in thousands except useful life)	*Estimated useful life*		*Gross*		*Accumulated amortization and impairment*			*Net*		*Gross*		*Accumulated amortization*			*Net*
Finite-lived intangible assets:
Franchise agreements	15 years	$	25,556	$	(5,393	)	$	20,163	$	25,556	$	(4,116	)	$	21,440
Purchased software	7 years		3,200		(1,371	)		1,829		3,200		(1,029	)		2,171
Internally developed software	5 years		3,021		(847	)		2,174		2,683		(498	)		2,185
Total finite-lived intangible assets			31,777		(7,611	)		24,166		31,439		(5,643	)		25,796
Indefinite-lived intangible assets:
Domain name	Indefinite		2,226		-			2,226		2,226		-			2,226
Trade name	Indefinite		3,580		(1,240	)		2,340		3,580		-			3,580
Total intangible assets		$	37,583	$	(8,851	)	$	28,732	$	37,245	$	(5,643	)	$	31,602

Amortization expense related to intangible assets totaled approximately $656 thousand and $655 thousand for the three months ended September 30, 2024 and September 30, 2023, respectively, and $2.0 million for the nine months ended September 30, 2024 and September 30, 2023.