Contract Assets

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2022, contract asset adjustments attributable to profit share revenue forecast were $1.7 million and $7.1 million, respectively, as compared to contract asset adjustments of $7.5 million and $24.4 million, during the three and nine months ended September 30, 2021, respectively.

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

	Contract Assets
	Profit Share		TPA Fees		Program Fees		Total
	(in thousands)
Ending balance as of June 30, 2022	$	98,672	$	1,437	$	6,639	$	106,748
Increase due to new business generation	24,853		2,293		21,845		48,991
Change in estimates of revenue from performance obligations satisfied in previous periods	1,670		—		—		1,670
Receivables transferred from contract assets upon billing the lending institutions	—		—		(20,830)		(20,830)
Payments received from insurance carriers	(34,446)		(2,200)		—		(36,646)
Provision for expected credit losses	8		—		(1)		7
Ending balance as of September 30, 2022	$	90,757	$	1,530	$	7,653	$	99,940

 

	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 due to new business generation	76,855		6,478		62,302		145,635
Change in estimates of revenue from performance obligations satisfied in previous periods	7,135		—		—		7,135
Receivables transferred from contract assets upon billing the lending institutions	—		—		(60,808)		(60,808)
Payments received from insurance carriers	(98,773)		(6,265)		—		(105,038)
Provision for expected credit losses	54		1		5		60
Ending balance as of September 30, 2022	$	90,757	$	1,530	$	7,653	$	99,940

As of September 30, 2022 and December 31, 2021, the portion of the contract assets’ balance estimated to be received within one year consisted of $65.6 million and $70.5 million, respectively, and the portion estimated to be received beyond one year consisted of $34.4 million and $42.4 million, respectively.

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.