Assets and Liabilities Held for Sale and Discontinued Operations

6 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Assets and Liabilities Held for Sale and Discontinued Operations

4. Assets and Liabilities Held for Sale and Discontinued Operations

On January 3, 2023, DME Holdings along with the minority owners of HC LLC, entered into an agreement (the DME Purchase Agreement) with QHM Holdings, Inc., a subsidiary of Quipt Home Medical Corp. (Quipt), to sell 100% of the outstanding membership interests in HC LLC to Quipt (Sale of HC LLC). As of December 31, 2022, the Company concluded that the disposal group satisfied the criteria for presentation as held for sale and discontinued operations. See Note 14 - Subsequent Events.

The following table provides a reconciliation of the Company’s net income from discontinued operations presented in the condensed consolidated statements of operations:


	For the three months ended December 31,						For the six months ended December 31,
(in thousands)	2022			2021			2022			2021
Discontinued operations:
Durable medical equipment sales and services revenue	$	10,546		$	10,277		$	21,574		$	20,353
Durable medical equipment rental income		6,183			5,451			11,874			10,930
Net revenue	$	16,729			15,728			33,448			31,283

Cost of durable medical equipment sold and services		(4,314	)		(4,309	)		(8,654	)		(8,369	)
Cost of durable medical equipment rentals		(2,213	)		(1,734	)		(4,263	)		(3,584	)
Durable medical equipment other operating expenses		(8,548	)		(8,413	)		(17,519	)		(14,569	)
Depreciation and amortization		(396	)		(443	)		(783	)		(896	)
Transaction costs		(1,439	)		(127	)		(1,439	)		(224	)
Interest expense		(24	)		(69	)		(46	)		(138	)
Loss on distinguishment of debt		-			-			(23	)		-
Other income (expense), net		9			(14	)		10			2
(Loss) income before income taxes from discontinued operations		(196	)		619			731			3,505
Income tax benefit (expense)		231			12			268			(19	)
Net income from discontinued operations	$	35		$	631		$	999		$	3,486

The following table provides a reconciliation of the assets and liabilities held for sale presented in the condensed consolidated balance sheets as of December 31, 2022 and June 30, 2022:


(in thousands)	December 31, 2022		June 30, 2022
Cash and cash equivalents	$	820	$	1,314
Accounts receivable		5,531		5,867
Inventories		925		898
Prepaid and other current assets		265		385
Property and equipment, net		395		-
Equipment held for rental, net		7,724		-
Identifiable intangible assets, net		5,315		-
Goodwill		52,463		-
Right of use assets		3,029		-
Other assets		162		-
Current assets held for sale	$	76,629	$	8,464

Property and equipment, net	$	-	$	521
Equipment held for rental, net		-		7,504
Identifiable intangible assets, net		-		5,921
Goodwill		-		52,463
Right of use assets		-		2,989
Other assets		-		163
Non-current assets held for sale	$	-	$	69,561

Accounts payable	$	5,649	$	6,030
Accrued expenses and other liabilities		3,526		3,544
Deferred revenue		1,022		1,218
Current portion of lease liabilities		1,260		1,218
Current portion of equipment financing debt		4,365		2,993
Lease liabilities, net of current portion		1,911		-
Redeemable preferred stock of subsidiaries		314		-
Current liabilities held for sale	$	18,047	$	15,003

Lease liabilities, net of current portion	$	-	$	1,903
Redeemable preferred stock of subsidiaries		-		648
Non-current liabilities held for sale	$	-	$	2,551