Significant Risks and Uncertainties Including Business and Credit Concentrations

9 Months Ended

Sep. 30, 2023

Significant Risks and Uncertainties Including Business and Credit Concentrations

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, accounts receivable, and investment securities.

Cash accounts in a financial institution may, at times, exceed the Federal Deposit Insurance Corporation coverage of $250 per account ownership category. The Company has not experienced losses on these accounts, and management believes the Company is not exposed to significant risks on such accounts.

The Company’s accounts receivable has implicit collection risk. The Company grants credit without collateral to their patients, most of whom are local residents and are insured under third-party payor agreements. The Company believes this risk is partially mitigated by the Company’s establishment of long-term agreements and relationships with third-party payors that provide the Company with insight into historic collectability and improve the collections process.

The Company's investment securities portfolio is managed by a third party vendor to provide a relatively stable source of investment income from excess liquidity while satisfactorily managing risk, including credit risk, reinvestment risk, liquidity risk, and interest rate risk.

Revenue Concentration Risk

The concentration of net revenue on a percentage basis for major payors for the three and nine months ended September 30, 2023 and 2022 are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Percentage of Patient Services Net Revenue:
Payor A	11	%	12	%	11	%	14	%
Payor B	14	%	15	%	14	%	16	%

The concentration of gross receivables on a percentage basis for major payors at September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
Percentage of Gross Receivables of Patient Revenue:
Payor B	10	%	13	%
Payor C	8	%	10	%

All of the Company’s revenue is generated from customers located in the United States.

Vendor Concentration Risk

The concentration of cost of sales on a percentage basis for major vendors for the three and nine months ended September 30, 2023 and 2022 are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Percentage of Cost of Sales:
Vendor A	100	%	97	%	100	%	69%
Vendor B	N/A		N/A		N/A		29%

The concentration of gross payables on a percentage basis for major payors at September 30, 2023 and December 31, 2022 are as follows:


	September 30, 2023		December 31, 2022
Percentage of Gross Payables:
Vendor A	48	%	66	%

Vendor B	12	%	N/A