Revenue

3 Months Ended

Mar. 31, 2020

Revenue

Revenue

3.     Revenue

The Company generates revenue from its CareVention HealthCare and MedWise HealthCare segments. See Note 16 for additional discussion of the Company’s reportable segments.

Client contracts generally have a term of one to five years and, in some cases, automatically renew at the end of the initial term. In most cases, clients may terminate their contracts with a notice period ranging from 0 to 180 days without cause, thereby limiting the term in which the Company has enforceable rights and obligations. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the goods or services. There are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that client contracts do not include a financing component.

CareVention HealthCare

PACE Product Revenue

The Company provides medication fulfillment pharmacy services to Programs of All-Inclusive Care for the Elderly (“PACE”), and while the majority of medications are routinely filled in order to treat chronic conditions, the mix and quantity of medications can vary. Revenue from medication fulfillment services is generally billed monthly and recognized when medications are delivered and control has passed to the client. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments.

PACE Solutions

The Company provides medication safety services and health plan management services to PACE organizations, which include risk adjustment services, third party administration services, and electronic health records software. Revenue related to these services primarily consists of a fixed monthly fee assessed based on number of members served (“per member per month”) and subscription fees, which are recognized when the Company satisfies its performance obligation to stand ready to provide PACE services, which occurs when the Company’s clients have access to the PACE services. The Company generally bills for PACE services on a monthly basis.

MedWise HealthCare

Medication Safety Services

The Company provides medication safety services, which include identification of high-risk individuals, medication regimen reviews including patient and prescriber counseling, and targeted interventions to increase adherence. Revenue related to these services primarily consists of per member per month fees and fees for each medication review and assessment completed. Revenue is recognized when the Company satisfies its performance obligation to stand ready to provide medication safety services, which occurs when the Company’s clients have access to the medication safety service and when medication reviews and assessments are completed. The Company generally bills for the medication safety services on a monthly basis.

Software Subscription

The Company provides software as a service (“SaaS”) solutions, which allow for the identification of individuals with high medication-related risk, for patient communication and engagement, for documentation of clinical interventions, for optimizing medication therapy, for targeting adherence improvement, and for precision dosing. Revenues related to these software services primarily consists of monthly subscription fees and are recognized monthly as the Company meets its performance obligation to provide access to the software. The Company generally bills for the software services on a monthly basis.

Disaggregation of Revenue

In the following table, revenue is disaggregated by reportable segment. Substantially all of the Company’s revenue is recognized in the United States (“U.S.”) and substantially all of the Company’s assets are located in the U.S.

	Three Months Ended
	March 31,
		2020		2019
CareVention HealthCare:
PACE product revenue	$	37,087	$	30,982
PACE solutions		11,571		11,174
	$	48,658	$	42,156
MedWise HealthCare:
Medication safety services	$	14,320	$	15,351
Software subscription		9,849		3,452
	$	24,169	$	18,803
Total revenue	$	72,827	$	60,959

Contract Balances

Assets and liabilities related to the Company’s contracts are reported on a contract-by-contract basis at the end of each reporting period. Contract balances consist of contract assets and contract liabilities. Contract assets are recorded when the right to consideration for services is conditional on something other than the passage of time. Contract assets relating to unbilled receivables are transferred to accounts receivable when the right to consideration becomes unconditional. Contract assets are classified as current or non-current based on the timing of the Company’s rights to the unconditional payments. Contract assets are generally classified as current and recorded within other current assets on the Company’s consolidated balance sheets.

Contract liabilities include advance customer payments and billings in excess of revenue recognized. The Company anticipates that it will satisfy most of its performance obligations associated with its contract liabilities within a year and therefore generally classifies contract liabilities in accrued expenses and other current liabilities on the Company’s consolidated balance sheets.

The following table provides information about the Company’s contract assets and contract liabilities from contracts with clients as of March 31, 2020 and December 31, 2019.

	March 31,		December 31,
	2020		2019
Contract assets	$	3,526	$	6,165
Contract liabilities		7,141		4,930

Significant changes in the contract assets and the contract liabilities balances during the period are as follows:

	March 31,
	2020
Contract assets:
Contract assets, beginning of period	$	6,165
Decreases due to cash received		(3,016)
Changes to the contract assets at the beginning of the period as a result of changes in estimates		159
Increases, net of reclassifications to receivables		218
Contract assets, end of period	$	3,526
Contract liabilities:
Contract liabilities, beginning of period	$	4,930
Revenue recognized that was included in the contract liabilities balance at the beginning of the period		(2,618)
Increases due to cash received, excluding amounts recognized as revenue during the period		4,829
Contract liabilities, end of period	$	7,141

During the three months ended March 31, 2019, the Company recognized $1,160 of revenue that was included in the December 31, 2018 contract liability balance of $1,733.