Note 5 – Property and Equipment

Property and equipment at December 31, 2018 and 2017 consisted of the following:

On January 13, 2017, the Company completed an asset purchase agreement to acquire certain assets related to the Big South Fork Medical Center, based in Oneida, Tennessee (the “Oneida Assets”). Big South Fork Medical Center is classified as a Critical Access Hospital (rural). The Company acquired the Oneida Assets out of bankruptcy for a purchase price of $1.0 million, and the purchase price has been recorded as property and equipment. The Company opened the hospital on August 8, 2017.

On January 31, 2018, the Company entered into a purchase agreement to acquire certain assets and liabilities related to Jamestown Regional Medical Center. The purchase was completed on June 1, 2018. The Company has valued the net assets acquired at approximately $8.2 million, of which $7.1 million was recorded as property and equipment. The purchase is more fully discussed in Notes 1 and 6.

Property and equipment are depreciated on a straight-line basis over their respective lives. The building is being depreciated over 39 years, leasehold improvements were depreciated over the life of the lease(s) and the remaining equipment is being depreciated over lives ranging from three to seven years. Depreciation expense on property and equipment was $1.2 million and $1.7 million for the years ended December 31, 2018 and 2017, respectively. Management periodically reviews the valuation of long-lived assets, including property and equipment, for potential impairment. Management did not recognize any impairment of these assets during the years ended December 31, 2018 and 2017.