Revenue Recognition

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Revenue is measured based on consideration specified in a contract with a customer, and presented net of any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a service to a customer, which is typically over the contact term. Estimates of variable consideration are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved.

Disaggregation of Revenue

In the following table, revenue is disaggregated by source of revenue:

	Three Months Ended March 31,
	2023		2022
Net operating fees	$	361.0	$	322.8
Incentive fees	23.6		30.2
Modular and other (1)	161.0		32.7
Net services revenue	$	545.6	$	385.7

(1) Modular and other revenue primarily consists of $125.8 million in service fees related to Cloudmed for the three months ended March 31, 2023, revenue integrity solutions, practice management (“PM”) services, physician advisory services (“PAS”), and software subscription revenue.

Contract Balances

The following table provides information about contract assets, net and contract liabilities from contracts with customers:

	March 31, 2023		December 31, 2022
Contract assets, net
Current	$	81.8	$	83.9
Non-current	37.3		32.0
Total contract assets, net	$	119.1	$	115.9
Contract liabilities
Current (1)	$	11.0	$	9.7
Non-current (2)	18.4		18.7
Total contract liabilities	$	29.4	$	28.4

(1) Current contract liabilities include $8.8 million and $7.6 million classified in the current portion of customer liabilities and $2.2 million and $2.1 million classified in the current portion of customer liabilities - related party as of March 31, 2023 and December 31, 2022, respectively.

(2) Non-current contract liabilities include $5.2 million and $5.0 million classified in the non-current portion of customer liabilities and $13.2 million and $13.7 million classified in the non-current portion of customer liabilities - related party as of March 31, 2023 and December 31, 2022, respectively.

The contract assets, net balance will increase or decrease based on the timing of invoices and recognition of revenue. Prior to the Cloudmed acquisition, the Company did not have significant contract assets. Significant changes in the carrying amount of contract assets, net for the three months ended March 31, 2023 were as follows:

	Contract Assets, net
Balance as of December 31, 2022	$	115.9
Revenue recognized	86.0
Amounts billed	(82.6)
Other (1)	(0.2)
Balance as of March 31, 2023	$	119.1

(1) Other primarily includes adjustments made during the period to the allowance for credit losses.

	Contract Liabilities
Balance as of December 31, 2022	$	(28.4)
Advanced billings - January 1, 2023 (1)	(91.3)
Advanced billings recognized	91.3
Additions	(3.9)
Revenue recognized	2.9
Balance as of March 31, 2023	$	(29.4)

(1) The Company records advanced billings to contract liabilities and accounts receivable on the first day of the respective service period, which are earned during the quarter.

Transaction Price Allocated to the Remaining Performance Obligation

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. The estimated revenue does not include amounts of variable consideration that are constrained.

	Net operating fees		Incentive fees
Remainder of 2023	$	90.0	$	33.0
2024	78.1		—
2025	45.7		—
2026	35.6		—
2027	31.2		—
2028	29.8		—
Thereafter	83.6		—
Total	$	394.0	$	33.0

The amounts presented in the table above include variable fee estimates of the Company’s physician groups revenue cycle management (“RCM”) services contracts, fixed fees, and forecasted incentive fees. Fixed fees are typically recognized ratably as the performance obligation is satisfied and forecasted incentive fees are measured cumulatively over the contractually defined performance period.

Estimates of revenue expected to be recognized in future periods exclude unexercised customer options to purchase services within the Company’s PAS contracts that do not represent material rights to the customer.

The Company does not disclose information about remaining performance obligations with an original expected duration of one year or less and has elected an exemption to the disclosure requirements related to estimate variable consideration and an exemption where the Company has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date.