Revenue Recognition

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue RecognitionRevenue 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 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net operating fees	$	308.5	$	253.7	$	879.8	$	822.4
Incentive fees	41.5		25.1		108.0		43.2
Other (1)	29.7		28.4		87.9		76.8
Net services revenue	$	379.7	$	307.2	$	1,075.7	$	942.4

(1) Other revenue primarily consists of physician advisory services (“PAS”), practice management services, and revenue related to Entri modular services.

Contract Balances

The following table provides information about contract liabilities from contracts with customers (in millions):

	September 30, 2021	December 31, 2020
Contract liabilities	29.4	28.6

Contract liabilities are included in other customer liabilities and contains related party amounts, including $2.3 million and $5.6 million of current customer liabilities and $15.9 million and $16.3 million of non-current customer liabilities as of September 30, 2021 and December 31, 2020, respectively. There were no contract assets as of September 30, 2021 and December 31, 2020.

A receivable is recognized in the period the Company provides services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are typically 30-60 days.

The Company recognized revenue of $99.7 million and $88.0 million during the nine months ended September 30, 2021 and 2020, which amounts were included in contract liabilities at the beginning of the respective periods. These revenue amounts include $88.1 million and $85.0 million for the nine months ended September 30, 2021 and 2020, respectively, related to advanced billings which become accounts receivable and contract liabilities on the first day of the respective service period.

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 (in millions). The estimated revenue does not include amounts of variable consideration that are constrained.

	Net operating fees		Incentive fees		Other
Remainder of 2021	$	35.8	$	21.4	$	0.7
2022	104.6		25.0		0.8
2023	81.3		—		—
2024	57.7		—		—
2025	34.3		—		—
2026	34.3		—		—
Thereafter	162.3		—		—
Total	$	510.3	$	46.4	$	1.5

The amounts presented in the table above include variable fee estimates for the non-cancellable term of the Company's physician groups RCM services contracts, fixed fees which are typically recognized ratably as the performance obligation is satisfied, and forecasted incentive fees which 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. Deferred Contract CostsCertain costs associated with the initial phases of customer contracts and the related transition of customer hospitals and physician groups are deferred. These fulfillment costs relate directly to the Company’s responsibilities under the corresponding customer contracts, generate or enhance resources of the Company that will be used in satisfying its performance obligations in the future, and are expected to be recovered through the margins realized. The following table summarizes the breakout of deferred contract costs (in millions):

	September 30, 2021		December 31, 2020
Prepaid expenses and other current assets	$	3.2	$	4.5
Other assets	22.8		19.6
Total deferred contract costs	$	26.0	$	24.1

The associated assets are amortized as services are transferred to the customer over the remaining life of the contracts. For the three and nine months ended September 30, 2021, total amortization was $0.9 million and $3.1 million, respectively, and there were no associated impairment losses. For the three and nine months ended September 30, 2020, total amortization was $1.3 million and $3.6 million, respectively and there were no associated impairment losses.