Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

10. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company generated 83% and 78% and of its revenue from U.S. domestic sales for the three and nine months ended September 30, 2020, respectively. The remaining 17% and 22% of revenue was generated from non-U.S. sales for the three and nine months ended September 30, 2020, respectively. For the three and nine months ended September 30, 2019, 79% and 77% of revenue was from U.S. domestic sales, and the remaining 21% and 23% of revenue was generated from non-U.S. sales.

For the three and nine months ended September 30, 2020, the Company recognized 71% and 73% of its revenue over time as control of the services and goods transferred to the customer, and the remaining 29% and 27% at a point in time, when the customer obtained control of the promised goods. For the three and nine months ended September 30, 2019, the Company recognized 70% and 74% of its revenue over time, and the remaining 30% and 26% at a point in time.

In the second quarter of 2020, GHG received $7.4 million under the CARES Act as a general distribution from the Provider Relief Fund to provide relief for lost revenues and expenses incurred in connection with COVID-19. The healthcare revenues for the three and nine months ended September 30, 2020 includes $0.2 million and $5.7 million, respectively, for lost revenues related to COVID-19 (see Note 16).

Contract Assets. As of September 30, 2020, the Company recognized a contract asset of $7.4 million related to a contract at a Kaplan International business, which is included in Deferred Charges and Other Assets. The Company expects to recognize an additional $9.2 million related to this performance obligation over the next 2 years. As of December 31, 2019, the contract asset was $5.3 million.

Deferred Revenue. The Company records deferred revenue when cash payments are received or due in advance of the Company’s performance, including amounts which are refundable. The following table presents the change in the Company’s deferred revenue balance:

	As of
	September 30, 2020		December 31, 2019		%
(in thousands)					Change
Deferred revenue	$	332,168	$	359,048	(7)

In April 2020, GHG received $31.5 million under the expanded Medicare Accelerated and Advanced Payment Program modified by the CARES Act as a result of COVID-19. The amount is included in the current and noncurrent deferred revenue balances on the Condensed Consolidated Balance Sheet as of September 30, 2020. The Department of Health and Human Services will recoup this advance beginning 365 days after the payment was issued, and the deferred revenue will be reduced by a portion of the amount of revenue recognized for claims submitted for services provided after the recoupment period begins.

The majority of the change in the deferred revenue balance is related to the cyclical nature of services at the Kaplan international division and currency translation adjustments, partially offset by an increase at GHG. During the nine months ended September 30, 2020, the Company recognized $293.2 million related to the Company’s deferred revenue balance as of December 31, 2019.

Revenue allocated to remaining performance obligations represents deferred revenue amounts that will be recognized as revenue in future periods. As of September 30, 2020, Kaplan Test Preparation’s (KTP) deferred revenue balance related to certain medical and nursing qualifications with an original contract length greater than twelve months was $10.2 million. KTP expects to recognize 69% of this revenue over the next twelve months and the remainder thereafter.

Costs to Obtain a Contract. The following table presents changes in the Company’s costs to obtain a contract asset:

(in thousands)	Balance at Beginning of Period		Costs associated with new contracts		Less: Costs amortized during the period		Other		Balance at End of Period
2020	$	31,020	$	24,714	$	(39,168)	$	(862)	$	15,704

The majority of other activity is related to currency translation adjustments during the nine months ended September 30, 2020.