REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

NOTE 3 – REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

Net Revenue

For the three months and six months ended June 30, 2022 and 2021, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

	Three Months Ended  June 30,					Six Months Ended  June 30,
	2022			2021		2022			2021
Product revenue:
Appliance sales to VIPs	$	2,074	(1)	$	1,619	$	3,937	(1)	$	2,914	(1)
Center revenue		219			118		405			210
Total product revenue		2,293			1,737		4,342			3,124
Service revenue
VIP		1,161			2,351		2,052	(3)		4,104
Billing intelligence services		252	(2)		218		672	(2)		421	(2)
Management service revenue (includes MID)		40			74		64			133
Sponsorship/seminar/other		438			117		698			163
Total service revenue		1,891			2,760		3,486			4,821
Total revenue	$	4,184		$	4,497	$	7,828		$	7,945

(1)	Revenue from the sale of products is typically fixed at inception of the contract and is recognized at the point in time when shipment of the related products occurs.
(2)	Revenue from maintenance and subscription contracts is typically fixed at inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed. Revenue disclosed above for the six months ended June 30, 2022, includes a cumulative adjustment from prior years of approximately $0.1 million increase.
(3)	Revenue disclosed above for the six months ended June 30, 2022, includes a cumulative adjustment from prior years of approximately $0.4 million decrease.

Changes in Contract Liabilities

The key components of changes in contract liabilities for the three months and six months ended June 30, 2022 and 2021 are as follows (in thousands):

	2022			2021
Beginning balance, January 1	$	2,399		$	2,938
New contracts, net of cancellations		1,183			1,617
Revenue recognized		(1,421	)		(1,753	)
Ending balance, March 31	$	2,161		$	2,802
New contracts, net of cancellations		1,556			3,664
Revenue recognized		(1,320	)		(2,351	)
Ending balance, June 30	$	2,397		$	4,115

Current portion of deferred revenue is approximately $2.1 million which is expected to be recognized over the next 12 months from the date of the period presented.

Shipping Costs

Shipping costs for product deliveries to customers are expensed as incurred and totaled approximately $0.1 million for the three months and six months ended June 30, 2022 and 2021, respectively. Shipping costs for product deliveries to customers are included in cost of goods sold in the accompanying unaudited consolidated statement of operations.