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REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES
3 Months Ended
Mar. 31, 2023
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 ended March 31, 2023 and 2022, 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 March 31, 
   2023   2022  
         
Product revenue:          
Appliance sales to VIPs  $ 1,698 (1)  $ 1,863 (1)
Center revenue   74    186 
Total product revenue   1,772    2,049 
           
Service revenue          
VIP    1,294(2)   914 (2)
Billing intelligence services   214(3)   396 (3)
Management service revenue (includes MID)   27    24 
Myofunctional therapy services   217    220 
Sponsorship/seminar/other   333    41 
Total service revenue   2,085    1,595 
           
Total revenue  $3,857   $3,644 

 

(1) Appliance 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) VIP revenue disclosed above for the three months ended March 31, 2022, includes a cumulative adjustment from prior years of approximately $0.4 million decrease, and sales for the three months ended March 31, 2023 of approximately $1.3 million.
   
(3) BIS revenue from 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 three months ended March 31, 2022, includes a cumulative adjustment from prior years of approximately $0.1 million increase, and sales for the three months ended March 31, 2023 of approximately $0.2 million.

 

Changes in Contract Liabilities

 

The key components of changes in contract liabilities for the three months ended March 31, 2023 and 2022 are as follows (in thousands):

 

   March 31, 
   2023   2022 
         
Beginning balance, January 1  $3,038   $2,399 
           
New contracts, net of cancellations   1,255    1,183 
Revenue recognized   (1,396)   (1,421)
           
Ending balance, March 31  $2,897   $2,161 

 

Current portion of deferred revenue is approximately $2.6 million which is expected to be recognized over the next 12 months from the date of the period presented. Additionally, revenue from breakage on contract liabilities was approximately $0.2 million and $0.4 million for the three months ended March 31, 2023, and 2022, respectively.

 

 

Changes in Accounts Receivable

 

Our customers are billed based on fees agreed upon in each customer contract. Receivables from customers were $0.5 million at January 1, 2023 and $0.3 million at March 31, 2023. An allowance is maintained for accounts receivable which is generally based on a combination of factors, including the aging of the receivables, historical collection trends, and charge-offs. Adjustment to the allowance are recorded in bad debt expense under general and administrative expenses in the condensed consolidated statement of operations. A provision of $0.7 million was recorded in the first quarter of 2023.

 

Shipping Costs

 

Shipping costs for product deliveries to customers are expensed as incurred and totaled approximately $0.1 million for the three months ended March 31, 2023 and 2022, respectively. Shipping costs for product deliveries to customers are included in cost of goods sold in the accompanying condensed consolidated statement of operations.