Note 4. Discontinued Operations and Divestitures Discontinued Operations Sale of Connected Care Business On January 13, 2020, the Company entered into an asset purchase agreement (the “Purchase Agreement”) with Masimo Corporation (“Masimo”), VCCB Holdings, Inc., a wholly owned subsidiary of Masimo (collectively with Masimo, the “Purchaser”), and, solely with respect to certain provisions of the Purchase Agreement, NantWorks, LLC, an affiliate of the Company. Pursuant to the Purchase Agreement, the Company agreed to sell to the Purchaser certain of its assets related to its Connected Care business, including the products known as DCX (formerly DeviceConX), VCX (formerly VitalsConX), HBox and Shuttle Cable (collectively, the “Connected Care Business”). On February 3, 2020, the Company completed the sale of the Connected Care Business for $47,250 of cash consideration in exchange for assets primarily related to the Connected Care Business (as defined under the terms of the Purchase Agreement). The cash consideration is subject to adjustment based upon the final amount of working capital as of the closing date. The sale of the Connected Care Business qualified as a discontinued operation because it comprised operations and cash flows that could be distinguished, operationally and for financial reporting purposes, from the rest of the Company. The disposal of the Connected Care Business, which represented the Company's medical device interoperability solutions, represented a strategic shift in the Company’s operations as the sale enables the Company to focus on clinical decision support, payer engagement, and molecular analysis. The total gain on sale of the Connected Care Business consisted of the following: Cash received as consideration $ 47,250 Less: Costs to sell (849) Less: Carrying value of net assets sold (14,190) Gain on sale of the Connected Care Business $ 32,211 The operating results of the Company's discontinued operation are as follows: Year Ended December 31, 2020 Major classes of line items constituting pretax income of discontinued operations Net revenue $ 1,165 Cost of revenue (467) Selling, general and administrative (532) Research and development (601) Other expense, net (5) Pretax loss from discontinued operations related to major classes of pretax loss (440) Pretax gain on sale of the Connected Care Business 32,211 Total pretax income from discontinued operations 31,771 Benefit from income taxes (262) Total income from discontinued operations, net of tax $ 32,033 NantHealth, Inc. Notes to Consolidated Financial Statements (Dollars in thousands, except per share amounts) - 112 -
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