REVENUE

On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers using the modified retrospective approach applied to those contracts that were not completed as of that date. The Company did not record a cumulative catch-up adjustment, as the timing and measurement of revenue for the Company’s customers is similar to its prior revenue recognition model.

ASC 606 requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to in exchange for those goods or services. ASC 606 requires application of a five-step model to determine when to recognize revenue and at what amount. The revenue standard applies to all contracts with customers and revenues are to be recognized when control of the promised goods or services is transferred to the Company’s patients in an amount that reflects consideration expected to be received in exchange for those goods or services.

Adoption of the standard impacted the Company’s results as follows (in thousands):



	Prior to ASC 606 Adoption			Adjustments for ASC 606			Subsequent to ASC 606 Adoption
	As of September 30, 2019
Condensed Consolidated Balance Sheets
Accounts receivable, net	$	336,303		$	—		$	336,303

	Nine Months Ended September 30, 2019
Condensed Consolidated Statement of Comprehensive Income (Loss)
Net revenue	$	1,644,903		$	(55,265	)	$	1,589,638
Provision for doubtful accounts	(55,265		)	55,265			—
Operating loss	(14,600		)	—			(14,600		)
Condensed Consolidated Statements of Cash Flows
Changes in operating cash flows:
Accounts receivable, net	71,029			—			71,029

	As of December 31, 2018
Condensed Consolidated Balance Sheets
Accounts receivable, net	$	310,169		$	—		$	310,169

	Nine Months Ended September 30, 2018
Condensed Consolidated Statement of Comprehensive Income (Loss)
Net revenue	$	1,479,058		$	(44,997	)	$	1,434,061
Provision for doubtful accounts	(44,997		)	44,997			—
Operating Income	24,721			—			24,721
Condensed Consolidated Statements of Cash Flows
Changes in operating cash flows:
Accounts receivable, net	(32,483		)	—			(32,483		)

Net revenue is reported at the net realizable value amount that reflects the consideration the Company expects to receive in exchange for providing services. Revenues are from government payers, commercial payers, and patients for goods and services provided and are based on a gross price based on payer contracts, fee schedules, or other arrangements less any implicit price concessions.

Due to the nature of the health care industry and the reimbursement environment in which the Company operates, certain estimates are required to record revenue and accounts receivable at their net realizable values at the time goods or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available.

The Company assesses the expected consideration to be received at the time of patient acceptance based on the verification of the patient’s insurance coverage, historical information with the patient, similar patients, or the payer. Performance obligations are determined based on the nature of the services provided by the Company. The majority of the Company’s performance obligations are to provide infusion services to deliver medicine, nutrients, or fluids directly into the body.

The Company provides a variety of therapies to patients. For infusion-related therapies, the Company frequently provides multiple deliverables of pharmaceutical drugs and related nursing services. After applying the criteria from ASC 606, the Company concluded that multiple performance obligations exist in its contracts with its customers. Revenue is allocated to each performance obligation based on relative standalone price, determined based on reimbursement rates established in the third-party payer contracts. Pharmaceutical drug revenue is recognized at the time the pharmaceutical drug is delivered to the patient, and nursing revenue is recognized on the date of service.

The Company's outstanding performance obligations relate to contracts with a duration of less than one year. Therefore, the Company has elected to apply the practical expedient provided by ASC 606 and is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. Any unsatisfied or partially unsatisfied performance obligations at the end of a reporting period are generally completed prior to the patient being discharged.

The following table sets forth the net revenue earned by category of payer for the three and nine months ended September 30, 2019 and 2018 (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Commercial payers	$	525,927	$	428,873	$	1,373,481	$	1,256,109
Government payers	80,280		56,511		194,875		160,939
Patients	9,673		8,544		21,282		17,013
Net revenue	$	615,880	$	493,928	$	1,589,638	$	1,434,061