Variable Interest Entities

3 Months Ended

Jun. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities

Variable Interest Entities

In providing telehealth services that include professional medical consultations, the Company maintains relationships with various affiliated professional medical corporations (“PMCs”). Additionally, with respect to its telehealth services involving the sale of prescription products, the Company maintains relationships with affiliated pharmacies (collectively, the “Affiliated Pharmacies”) to fill prescriptions that are ordered by the Company’s patients. On February 15, 2024, the Company acquired full ownership of the active Affiliated Pharmacies, and thereafter the Company ceased to treat the Affiliated Pharmacies as Variable Interest Entities (“VIEs”). The Company determined that the PMCs are, and prior to being acquired by the Company, the Affiliated Pharmacies were, VIEs, in each case due to the respective equity holders having nominal capital at risk and the Company having a variable interest in each of the PMCs and, prior to acquiring them, the Affiliated Pharmacies. Until February 15, 2024, the Company consolidated the PMCs and Affiliated Pharmacies under the VIE model since the Company had the power to direct activities that most significantly impact the VIEs’ economic performance and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIEs. Under the VIE model, the Company presents the results of operations and the financial position of the VIEs as part of the condensed consolidated financial statements of the Company. There was no impact to the Company’s condensed consolidated financial statements as a result of the Affiliated Pharmacies being acquired by the Company.

Furthermore, as a direct result of the financial support the Company provided to the VIEs (e.g., loans), the interests held by holders lacked economic substance and did not provide them with the ability to participate in the residual profits or losses generated by the VIEs. Therefore, all income and expenses recognized by the VIEs were allocated to the Company’s stockholders.

The aggregate carrying value of total assets and total liabilities included on the condensed consolidated balance sheets for the VIEs after elimination of intercompany transactions were not material as of June 30, 2024 and March 31, 2024. Total revenue included in the condensed consolidated statements of operations and comprehensive loss for the VIEs after elimination of intercompany transactions was $0.9 million and $9.0 million for the three months ended June 30, 2024 and 2023, respectively. The Company maintains the ability to control the VIEs, is entitled to substantially all of the economic benefits from the VIEs, and is obligated to absorb all expected losses of the VIEs.