Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue Recognition

NOTE 3. REVENUE RECOGNITION

The Company is operating a virtual behavioral healthcare business that connects individuals and licensed therapists, psychologists and psychiatrists with an online platform for one-on-one therapy delivered via messaging, audio and video. Individuals access the Company’s services through the Company’s website or mobile app. The Company generates revenues from the sale of monthly, quarterly, bi-annual and annual membership subscriptions to its therapy platform as well as supplementary a la carte offerings, payments from members and their respective insurance companies and annually contracted platform access fees from enterprise clients for the delivery of therapy services to their members or employees.

The Company provides these services directly to individuals through a subscription plan. The Company also contracts with health plans and other enterprises to provide its services to individuals who are qualified to receive access to the Company’s services through the Company’s commercial arrangements.

The following table presents the Company’s revenues disaggregated by revenue source:

	Three Months Ended March 31,
(in thousands)	2022		2021
Revenues from sales to unaffiliated customers:
Consumers	$	17,260	$	18,564
Commercial		12,890		8,593
Total	$	30,150	$	27,157

Accounts Receivable and Revenue Reserves

Revenue reserves are deducted from accounts receivable to present the net amount expected to be collected. As of March 31, 2022, revenue reserves mainly relate to allowances for accounts receivable balances from health insurance and EAP organizations. During the three months ended March 31, 2022, the Company recorded an increase in revenue reserves of $1.0 million. During the three months ended March 31, 2022, the Company also wrote-off $1.2 million of aged receivables that were previously fully reserved. As of March 31, 2022, the balance of receivables related to health insurance and EAP organizations was $6.0 million and the revenue reserves against these receivables was $4.7 million, of this amount $3.4 million relates to aged balances for periods prior to 2022.

Deferred Revenue

The Company records deferred revenue when cash payments are received in advance of the Company’s performance obligation to provide services. As of March 31, 2021, deferred revenue related mainly to the Company’s consumer subscription business. Deferred revenue as of March 31, 2022 was $6.0 million ($7.2 million as of December 31, 2021). The Company recognizes deferred revenues as revenues in the statement of operations once performance obligations have been performed and satisfied. The Company expects to satisfy the majority of its performance obligations associated with deferred revenue within one year or less.

Contract Costs

The Company elected to use the practical expedient to recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less.