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Software Development Costs
9 Months Ended
Sep. 30, 2022
Software Development Costs  
Software Development Costs

8.       Software Development Costs

The Company capitalizes certain costs incurred in connection with obtaining or developing its proprietary software platforms, which support its product and service contracts. These costs include third-party contractors and payroll for employees directly involved with the software development, including external direct costs of material and services, and interest expense related to the borrowings attributable to software development. As of September 30, 2022 and December 31, 2021, capitalized software costs consisted of the following:

September 30, 2022

    

December 31, 2021

Software development costs

$

51,305

$

49,481

Less: accumulated amortization

(18,699)

(20,227)

Software development costs, net

$

32,606

$

29,254

Capitalized software development costs included above not yet subject to amortization

$

4,505

$

5,328

Amortization expense for the three months ended September 30, 2022 and 2021 was $3,224 and $2,579, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021 was $9,005 and $6,682, respectively.

During the first quarter of 2022, the Company became aware of changes in circumstances impacting the future functionality of certain capitalized software development costs in the MedWise HealthCare segment and evaluated the recoverability of the related long-lived assets by comparing their carrying amount to the future net undiscounted cash flows expected to be generated by the assets to determine if the carrying value was not recoverable. The recoverability test indicated that certain capitalized software development costs were impaired and, as a result, the Company used an income approach to measure the fair value of the assets and recognized non-cash impairment charges of $4,062 for the nine months ended September 30, 2022. There were no identified circumstances that would impact the future functionality of capitalized software development costs during the three months ended September 30, 2022.