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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents — The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
In April 2020, the Company received $11.7 million in Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) grant funds from the federal government, which was reflected in the second quarter 2020 as a cash inflow from financing activities within other financing cash flows in the unaudited condensed consolidated statements of cash flows. During the third quarter 2020, the Company returned the funds as unused to the federal government.
Prepaid expenses and other current assets — Included in prepaid expenses and other current assets are rebates receivable from pharmaceutical and medical supply manufacturers of $39.9 million and $35.2 million as of June 30, 2021 and December 31, 2020, respectively. There were no other items included in prepaid expenses and other current assets that comprised 5% or more of total current assets.
Equity Method Investments — The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other noncurrent assets in the accompanying condensed consolidated balance sheets. As of June 30, 2021 and December 31, 2020, the balance of the investments were $19.9 million and $17.0 million, respectively. The investments are increased to reflect the Company’s capital contributions and equity in earnings of the investees. The investments are decreased to reflect the Company’s equity in losses of the investees and for distributions received that are not in excess of the carrying amount of the investments. The Company’s proportionate share of earnings or losses of the investees are recorded in equity in earnings of joint ventures in the accompanying unaudited condensed consolidated statements of comprehensive income (loss). The Company’s proportionate share of earnings was $1.7 million and $2.9 million for the three and six months ended June 30, 2021. The Company’s proportionate share of earnings was $1.0 million and $1.6 million for the three and six months ended June 30, 2020. Distributions from the investees are treated as cash inflows from operating activities within other adjustments in the unaudited condensed consolidated statements of cash flows. During the three and six months ended June 30, 2021, the Company did not received any distributions from the investees. During the three and six months ended June 30, 2020, the Company received distributions from the investees of $0 and $0.5 million, respectively. See Footnote 16, Related-Party Transactions, for discussion of related-party transactions with these investees.
Immaterial Error Correction — During the three months ended June 30, 2021, the Company identified prior period misstatements related to the net revenue earned by category of payer for the periods ended September 30, 2020, December 31, 2020, March 31, 2021, and June 30, 2021. Certain individual payers were improperly classified as direct government and instead should have been classified as commercial payers. This error over-stated the Company’s government revenues and under-stated the Company’s commercial revenues in those periods. The Company assessed the materiality of these misstatements both quantitatively and qualitatively and determined the correction of these errors to be immaterial to the prior consolidated financial statements taken as a whole. As a result, the Company has corrected the misstatements as disclosed in the following tables:
Three Months ended September 30, 2020Nine Months ended September 30, 2020Three Months ended December 31, 2020Twelve Months ended December 31, 2020
Amount% of RevenueAmount% of RevenueAmount% of RevenueAmount% of Revenue
Commercial:
As Previously
Reported
$644,385 82.4 %$1,893,105 85.0 %$649,880 80.8 %$2,542,985 83.9 %
Adjustment34,3214.4 %34,3211.5 %40,8065.1 %75,1272.5 %
As Revised678,70686.8 %1,927,42686.5 %690,68685.9 %2,618,11286.4 %
Government:
As Previously Reported127,43516.3 %308,83013.9 %141,23717.6 %450,06714.8 %
Adjustment(34,321)(4.4)%(34,321)(1.5)%(40,806)(5.1)%(75,127)(2.5)%
As Revised93,11411.9 %274,50912.4 %100,43112.5 %374,94012.3 %
Three Months ended March 31, 2021Three Months ended June 30, 2021Six Months ended June 30, 2021
Amount% of RevenueAmount% of RevenueAmount% of Revenue
Commercial:
As Previously Reported$611,434 80.5 %$703,429 81.8 %$1,314,862 81.2 %
Adjustment37,0734.9 %43,2185.0 %80,2924.9 %
As Revised648,50785.4 %746,64786.8 %1,395,15486.1 %
Government:
As Previously Reported134,91417.8 %145,79916.9 %280,71417.3 %
Adjustment(37,073)(4.9)%(43,218)(5.0)%(80,292)(4.9)%
As Revised97,84112.9 %102,58111.9 %200,42212.4 %

There was no impact to the Company’s consolidated balance sheets, consolidated statements of comprehensive income (loss) or the consolidated statements of cash flows for any of these periods.

Concentrations of Business Risk — The Company generates revenue from managed care contracts and other agreements with commercial third-party payers. Revenue related to the Company’s largest payer was approximately 16% and 16% for the three and six months ended June 30, 2021. Revenue related to the Company’s largest payer was approximately 16% and 15% for the three and six months ended June 30, 2020, respectively. In December 2019, the Company renewed and expanded its multi-year contract with this payer. The contract renewal was effective in February 2020 for a two-year term and auto-renews annually thereafter unless notice is provided. There were no other managed care contracts that represent greater than 10% of revenue for the periods presented.
For the three and six months ended June 30, 2021, approximately 12% and 12%, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. For the three and six months ended June 30, 2020, approximately 12% and 12%, respectively, of the Company’s revenue was reimbursable through direct government healthcare programs, such as Medicare and Medicaid. As of June 30, 2021 and December 31, 2020, respectively, approximately 13% and 15%, respectively, of the Company’s accounts receivable was related to these programs. Governmental programs pay for services based on fee schedules and rates that are determined by the related governmental agency. Laws and regulations pertaining to government programs are complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change in the near term.

The Company does not require its patients nor other payers to carry collateral for any amounts owed for goods or services provided. Other than as discussed above, concentration of credit risk relating to trade accounts receivable is limited due to the Company’s diversity of patients and payers. Further, the Company generally does not provide charity care, however, Option Care Health offers a financial assistance program for patients that meet certain defined hardship criteria.
For the three and six months ended June 30, 2021, approximately 64% and 65%, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors. For the three and six months ended June 30, 2020, approximately 72% and 72%, respectively, of the Company’s pharmaceutical and medical supply purchases were from three vendors. Although there are a limited number of suppliers, the Company believes that other vendors could provide similar products on comparable terms. However, a change in suppliers could cause delays in service delivery and possible losses in revenue, which could adversely affect the Company’s financial condition or operating results. Although there remains some uncertainty regarding the COVID-19 pandemic, as of June 30, 2021 the Company has been able to maintain adequate levels of supplies and pharmaceuticals to support its operations.