REVENUE FROM CONTRACTS WITH CUSTOMERS

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

We provide technology enabled solutions and advisory services to assist our clients with workflows across product developments, sales, member experience, clinical management, core operations and business intelligence and analytics. We generate our revenues through our two reporting segments: (i) Technology Enabled Solutions and (ii) Advisory Services.

Technology Enabled Solutions

We help health plans grow membership and revenue as well as operate more effectively and efficiently. We also assist our clients in managing the compliance and administrative requirements imposed under government sponsored health plans. Our technology solutions are primarily delivered through a web-based customizable application. This application is used to identify, track, and administer contractual services, or benefits provided under a client’s plan to its Medicare and Medicaid beneficiaries. We also provide analytics over healthcare data to capture and assess gaps in risk documentation, quality, clinical care, and compliance. With our technology enabled solutions, we offer the following services:

•Health Plan Management provides technology-enabled plan administration services for government-sponsored health plans. Our service encompasses eligibility and enrollment processing, member services, premium billing, payment processing, reconciliation and other related services. In addition, we provide technology enabled services to manage supplemental benefits provided to members through their Medicare Advantage plans. Our services include benefit design and administration, member eligibility and engagement, analytics and reporting.

•Software Services provide additional services to our clients for ad hoc enhancements on their existing software solutions.

•Data Analytics provide payment tools and data analytics to improve revenue accuracy and identify gaps in quality, clinical care and compliance. Increasingly we are combining these analytics capabilities with our Health Plan Management offerings.

•Supplemental Benefit Services include product fulfillment, as well as catalog development and product distribution.

Advisory Services

We provide Advisory Services that complement our technology enabled solutions, including sales and marketing strategies, provider network strategies, compliance, Star ratings, quality, clinical, pharmacy, analytics and risk adjustment.

Five-step approach

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for contracts that are within the scope of the standard, we perform the following five steps:

1) Identify the contract(s) with a customer

A contract with a customer exists when (i) we enter into an enforceable contract with the customer that defines each party’s rights regarding the goods or services to be transferred and identifies the payment terms related to these goods or services, (ii) the contract has commercial substance, and (iii) we determine that collection of substantially all consideration for goods or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. We apply judgment in determining the customer’s ability and intention to pay. Our customary business practice is to enter into legally enforceable written contracts with our customers. The majority of our contracts are governed by a master agreement between us and the customer, which sets forth the general terms and conditions of any individual contract between the parties, which is then supplemented by any of the following: software as a service agreement, statement of work, project task orders, or purchase orders. The supplement specifies the different goods and services, the associated prices, and any additional terms for an individual contract. Multiple contracts with a single counterparty entered into at the same time are evaluated to determine if the contracts should be combined and accounted for as a single contract. Typical payment terms are net 30 days.

2) Identify the performance obligations in the contract

Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the goods or services either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised goods or services, we must apply judgment to determine whether promised goods or services are capable of being distinct and are distinct in the context of the contract. If these criteria are not met the promised goods or services are accounted for as a combined performance obligation.

No customer can take possession of our software in the ordinary course of business, nor is it feasible for a customer to contract with a third party to host the software or for a customer to host the software. Therefore, our license arrangements are accounted for as service obligations, rather than the transfer of intellectual property.

The Company is generally acting as a principal in each arrangement and, thus, recognizes revenue on a gross basis.

3) Determine the transaction price

The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring goods or services to the customer. We assess the timing of transfer of goods and services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less, which is the case in most of our customer contracts. The primary purpose of our invoicing terms is not to receive or provide financing from or to customers. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration when it is required.

Typically, outside of our supplemental benefit products, we do not provide our customers with any right of return. We do not constrain the contract price as it is probable that there will not be a significant revenue reversal due to a return.

4) Allocate the transaction price to the performance obligations in the contract

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct goods or services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, we must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. We allocate the variable amount to one or more distinct performance obligations or to one or more distinct services that forms a part of a single performance obligation, when the payment terms of the variable amount relate solely to our efforts to satisfy that distinct performance obligation and it results in an allocation that is consistent with the overall allocation objective of ASC 606. Where variable revenue exists in connection with providing a series of substantially similar services to our customers, we do not estimate variable revenue at the inception of a contract but recognize revenue as services are provided which typically aligns with billing. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”) unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. We determine SSP based on the price at which the performance obligation is sold separately. If the SSP is not observable through past transactions, we estimate the SSP using an expected cost-plus-a-margin approach.

5) Recognize revenue when (or as) the entity satisfies a performance obligation

We satisfy performance obligations either over time or at a point in time depending on the nature of the underlying promise. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised good or service to a customer.

The following table summarizes the nature and pattern of revenue recognition for our most significant performance obligations:

Performance Obligation	Performance Obligation Description	Measure of Progress
Health Plan Management
Health Plan Support Services	We provide administration support services to government sponsored plans using our proprietary technology. Those administrative services include eligibility and enrollment processing, member services, premium billing, payment processing, reconciliation and other related services. The services are provided throughout the duration of the contract which can be annual or multi-year. The performance obligation falls under the series guidance.	Variable Fees recognized in the period to which it relates following the series allocation exception (i.e., the period we have the contractual right to the fee). Over time
Supplement Benefit Administration	We provide customized solutions using our proprietary technology to manage benefits provided to members through their Medicare Advantage plans, including benefit design and administration, member eligibility and engagement, end to end analytics and reporting. The service is provided throughout the agreed upon period. The performance obligation falls under the series guidance.	Variable Fees recognized in the period to which it relates following the series allocation exception (i.e., the period we have the contractual right to the fee). Over Time

Performance Obligation	Performance Obligation Description	Measure of Progress
Software Services
Software Solution	We provide our clients access to in house software solutions, which are generally marketed under annual and multi-year arrangements. The solution integrates with the client’s existing technology and the client has access to the software throughout the duration of the contract. The performance obligation falls under the series guidance.	Input method – fixed fees revenue is recognized ratably over the contract term based on time elapsed. Over Time
Development Services	We offer additional services to our clients for ad hoc enhancements on their existing software solutions. The service is typically agreed upon on a standalone basis and provided over a set period of time that is usually less than a year.	Input method – revenue is recognized proportionally over the service based on service hours or number of hours worked. Over Time
Data Analytics
Shared Savings Analytics	We provide shared savings solutions that is derived from an evaluation of healthcare data, delivering insights to optimize outcomes, improve financial performance, and ensure compliance. These contracts are multiyear arrangements.	Shared savings recognized on delivery of the report of potential cost savings. Point in Time
Data Validation	We offer an add-on administrational service where clients can opt to have their data inputted to government websites to recover identified savings. The length of the service provided is based on the number of members to be processed.	Output method – revenue is recognized proportionally over the service based on number of members’ data processed for potential cost savings. Over Time
Subscription Software Access	We provide a stand ready solution that gives our clients access to an analytical tool that harmonizes third party, health plan, and clinical datasets, and applies analytic models to inform strategic product, pricing, and market decisions. These multi-year contracts allow the client to access the technology at any time to view the reports. The performance obligation falls under the series guidance.	Input method – revenue is recognized as the number of runs are completed. Over Time
Access to a pre-determined number of data analytic assessments per year	We offer an alternative subscription service to have a predetermined number of data analytic assessment runs per year over a long-term contract. The contract specifies how many data analytic runs the client can access. The performance obligation falls under the series guidance.	Input method – revenue is recognized as the number of runs are completed. Over Time

Performance Obligation	Performance Obligation Description	Measure of Progress
Supplemental Benefit Services
Supplemental Benefit Product Sales	This solution is provided on an annual contract and ships supplemental benefit products to client members. This is an end to end service starting with the order processing to shipment of the product.	Recognized upon shipment to members. Point in Time
Catalog Sales	We offer production and delivery of product formulary to client members.	Recognized upon shipment to members. Point in Time
Advisory Services
Consulting Services	We provide advisory services to the healthcare industry in various strategic and operational areas. Each individual engagement is a distinct service with a short duration and can be offered on a fixed fee or a time and materials basis.	Input method – revenue is recognized proportionally over the service based on hours. Input method – for fixed fee arrangements a percentage of completion measure is used. Over Time

Accounting Policy Elections and Practical Expedients

We have elected to exclude from the measurement of the transaction price all taxes (e.g., sales, use, value-added) assessed by government authorities and collected from a customer. Therefore, revenue is recognized net of such taxes.

We contract with customers to deliver and ship tangible products within the normal course of business, such as supplemental benefit products. The control of the products transfers to the customer, in most cases, free on board (FOB) shipping point. We have elected to use the practical expedient allowed under ASC 606 to account for shipping and handling activities that occur after the customer has obtained control of a promised good as fulfillment costs rather than as an additional promised service and, therefore, we do not allocate a portion of the transaction price to a shipping service obligation. We record as revenue any amounts billed to customers for shipping and handling costs and record as cost of revenue the actual shipping costs incurred.

In accordance with ASC 606, if an entity 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, the entity may recognize revenue in the amount to which the entity has a right to invoice (“right-to-invoice” practical expedient). We have elected to utilize this expedient on supplemental benefit products shipped and advisory services that are not based on a fixed fee.

Our standard contract terms allow for the reimbursement by a customer for certain travel expenses necessary to provide on-site services to the customer. Such reimbursed travel expenses are reported on a gross basis. Since such reimbursed travel expenses do not represent a distinct good or service nor incremental value provided to a customer, a performance obligation is deemed not to exist. Where the “right-to-invoice” practical expedient is being applied to variable consideration any client pass-thru charges related to the consulting services performance obligations are also treated under the “right-to-invoice” practical expedient.

Disaggregation of revenue

The following tables present disaggregated revenue by reporting segment:

(in thousands)	For the Year Ended December 31, 2021
	Technology Enabled Solutions		Advisory Services		Total
Supplemental Benefit Services	$	160,021	$	—	$	160,021
Health Plan Management	93,150		—		93,150
Consulting Services	6,023		52,849		58,872
Software Services	13,766		128		13,894
Data Analytics	11,659		—		11,659
Total	$	284,619	$	52,977	$	337,596

(in thousands)	For the Year Ended December 31, 2020
	Technology Enabled Solutions		Advisory Services		Total
Supplemental Benefit Services	$	135,723	$	—	$	135,723
Health Plan Management	76,814		—		76,814
Consulting Services	4,754		41,578		46,332
Software Services	13,365		—		13,365
Data Analytics	10,680		—		10,680
Total	$	241,336	$	41,578	$	282,914

	Period from Inception to December 31, 2019 (Successor)
(in thousands)	Technology Enabled Solutions		Advisory Services		Total
Supplemental Benefit Services	$	29,262	$	—	$	29,262
Health Plan Management	25,571		—		25,571
Consulting Services	1,701		13,885		15,586
Software Services	5,384		—		5,384
Data Analytics	4,612		—		4,612
Total	$	66,530	$	13,885	$	80,415

	Period from January 1, 2019 to September 3, 2019 (Predecessor)
(in thousands)	Technology Enabled Solutions		Advisory Services		Total
Supplemental Benefit Services	$	48,293	$	—	$	48,293
Health Plan Management	45,245		—		45,245
Consulting Services	1,553		30,806		32,359
Software Services	6,366		—		6,366
Data Analytics	8,475		—		8,475
Total	$	109,932	$	30,806	$	140,738

The revenue recognition pattern, point in time or over time, is consistent within all revenue categories with the exception of Data Analytics which includes revenue recognized on both a point in time and over time basis. The amount of point in time revenue within Data Analytics was $4.9 million, $3.8 million, $2.5 million and $4.6 million during the year ended December 31, 2021, the year ended December 31, 2020, period from Inception to December 31, 2019 (Successor) and period from January 1, 2019 to September 3, 2019 (Predecessor), respectively.

Contract Balances

The timing of our revenue recognition, invoicing, and cash collections results in billed accounts receivable, unbilled receivables, and deferred revenue. Accounts receivable includes unbilled receivable balances of $7.0 million and $16.0 million as of December 31, 2021, and December 31, 2020, respectively.

Deferred revenue represents payments received from our customers in advance of recognition of revenue. Deferred revenue that will be recognized during the succeeding 12 months is recognized as current deferred revenue and the remaining portion is recognized as non-current deferred revenue within Other long-term liabilities. Revenue recognized during the years ended December 31, 2021 and 2020 that was included in the deferred revenue balance at the beginning of the period was $6.4 million and $7.4 million, respectively.

Assets Recognized from Costs to Obtain a Contract

Sales commission expenses that would not have occurred absent the customer contracts are considered incremental costs to obtain a contract. We have elected to take the practical expedient available to expense the incremental costs to obtain a contract as incurred when the expected benefit and amortization period is one year or less. Sales commission expenses are not material or have a period of benefit of one year or less and are therefore expensed as incurred in line with the practical expedient elected. All other costs to obtain a contract are not considered incremental and therefore are expensed as incurred.

Remaining Performance Obligations

Transaction price allocated to remaining performance obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes contract liabilities and non-cancelable amounts that will be invoiced and recognized as revenue in future periods.

The timing and amount of revenue recognition for our remaining performance obligations are influenced by several factors and therefore the amount of remaining obligations may not be a meaningful indicator of future results. Total RPO equaled $9.8 million as of December 31, 2021, of which we expect to recognize approximately $4.2 million over the next 12 months. The remaining $5.6 million is expected to be recognized in fiscal years 2023, 2024, 2025, 2026, and 2027 by $5.2 million, $0.4 million, and $2.0 thousand, for each of the remaining periods, respectively.

Amounts above only include estimated revenues associated with contracts with customers with fixed pricing with original expected duration of more than one year. This specifically relates to our software solution performance obligation. We have elected not to disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period for performance obligations with any of the following conditions: 1) the remaining performance obligation is part of a contract that has an original expected duration of one year or less; 2) the remaining performance obligation has variable consideration that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation when that performance obligation qualifies as a series; 3) the remaining performance obligation has variable consideration that is considered constrained; or 4) the unsatisfied performance obligation falls under the right to invoice practical expedient.