REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

3. REVENUE RECOGNITION

Disaggregation of Revenue

The Company disaggregates revenue from contracts with customers by product type. The Company believes that these categories aggregate the payor types by nature, amount, timing and uncertainty of its revenue streams. The following table summarizes the Company’s disaggregated revenues:

		Three Months Ended September 30,				Nine Months Ended September 30,
	Pattern of Recognition	2022		2021		2022		2021
Device	Point in time	$	1,945	$	200	$	4,305	$	521
Service	Over time		403		171		1,085		539
Total revenue		$	2,348	$	371	$	5,390	$	1,060

Contract Balances

Contract balances represent amounts presented in the condensed combined and consolidated balance sheets when either the Company has transferred goods or services to the customer, or the customer has paid consideration to the Company under the contract. These contract balances include trade accounts receivable and deferred revenue. Deferred revenue represents consideration received from customers at the beginning of the subscription period for services that are transferred to the customer over the respective subscription period. The accounts receivable balances represent amounts billed to customers for goods and services where the Company has an unconditional right to payment of the amount billed.

The following table provides information about receivables and deferred revenue from contracts with customers:

	September 30, 2022		December 31, 2021
Accounts receivable, net	$	2,702	$	553
Unbilled receivables		1,475		91
Deferred revenue		1,449		730
Long term deferred revenue		889		510

The Company recognizes a receivable when it has an unconditional right to payment, and payment terms range from 20 days to 6 months based on the terms agreed upon with the respective customer.

For the three and nine months ended September 30, 2022, revenue is recognized for sales of hardware devices where control of the product transfers to the customer, which is typically upon shipment of goods.

The amount of revenue recognized during the three and nine months ended September 30, 2022 that was included in the deferred revenue balance at the beginning of the period was $118 and $501, respectively.

The amount of revenue recognized during the three and nine months ended September 30, 2021 that was included in the deferred revenue balance at the beginning of the period was $43 and $157, respectively.

Revenue from leasing arrangements is not subject to the revenue standard for contracts with customers and remains separately accounted for under existing lease accounting guidance. The Company records operating lease rental revenue as service revenue on a straight-line basis over the lease term. The Company records revenue from the sale of equipment under sales-type leases as product revenue in an amount equal to the present value of minimum lease payments at the inception of the lease. Sales-type leases also produce financing income, which is included in device

sales in the condensed combined and consolidated statements of operations and comprehensive loss and is recognized at effective rates of return over the lease term.

Costs of Obtaining or Fulfilling Contracts

The Company incurs incremental costs of obtaining contracts with customers. Incremental costs of obtaining contracts, which include commissions paid as a result of obtaining contracts with customers, are capitalized to the extent that the Company expects to recover such costs. Capitalized costs are amortized in a pattern that is consistent with the Company’s transfer to the customer of the related goods and services. Such costs are recorded in Other long term assets and were $251 and $158 as of September 30, 2022 and December 31, 2021, respectively.

Transaction price allocated to remaining performance obligations

As of September 30, 2022 and December 31, 2021, the Company had remaining performance obligations amounting to $5,101 and $2,800, respectively. The Company expects to recognize approximately 9% of its remaining performance obligations as revenue in fiscal year 2022, and an additional 91% in fiscal year 2023 and thereafter.