Contract Assets

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Contract Assets

Contract Assets

Changes in the Company’s contract assets primarily result from the timing difference between the satisfaction of its performance obligation and the customer’s payment. The Company fulfills its obligation under a contract with a customer by transferring services in exchange for consideration from the customer. The Company recognizes contract assets when it transfers services to a customer, recognizes profit share revenue, program fee revenue and claims administration services revenue (“TPA fees”) for amounts not yet billed, and the right to consideration is conditional on something other than the passage of time. Accounts receivable are recorded when the customer has been billed or the right to consideration is unconditional.

For performance obligations satisfied in previous periods, the Company evaluates and updates its profit share revenue forecast on a quarterly basis and adjusts contract assets accordingly. During the three months ended March 31, 2022 and 2021, contract asset adjustments attributable to profit share revenue forecast adjustments were $2.6 million and $5.1 million, respectively.

Contract assets balances for the periods indicated below were as follows:

 

	Contract Assets
	Profit Share		TPA Fees		Program Fees		Total
	(in thousands)
Ending balance as of December 31, 2021	$	105,486	$	1,316	$	6,154	$	112,956
Increase of contract assets due to new business generation	25,669		2,030		19,726		47,425
Adjustment of contract assets due to estimation of revenue from performance obligations satisfied in previous periods	2,641		—		—		2,641
Receivables transferred from contract assets upon billing the lending institutions	—		—		(19,800)		(19,800)
Payments received from insurance carriers	(33,831)		(1,987)		—		(35,818)
Provision for expected credit losses	43		1		4		48
Ending balance as of March 31, 2022	$	100,008	$	1,360	$	6,084	$	107,452

As of March 31, 2022 and December 31, 2021, the Company’s contract assets consisted of $58.3 million and $70.5 million, respectively, as the portion estimated to be received within one year and $49.2 million and $42.4 million, respectively, as the non-current portion to be received beyond one year.

Contract Costs

The fulfillment costs associated with the Company’s contracts with customers do not meet the criteria for capitalization and therefore are expensed as incurred.