Revenue Recognition

9 Months Ended

Sep. 30, 2021

Revenue From Contract With Customer [Abstract]

Revenue Recognition

4. Revenue Recognition

We account for revenue from contracts with customers in accordance with Accounting Standards Codification (“ASC”) Topic 606.  The unit of account in ASC Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC Topic 606 requires that a contract's transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when or as the performance obligation is satisfied.

We earn revenue from continuing operations primarily from three programs: SilverSneakers^® senior fitness, Prime Fitness^®, and WholeHealth Living^TM.  We provide the SilverSneakers senior fitness program to members of Medicare Advantage, Medicare Supplement, and group retiree plans through our contracts with such plans.  We offer Prime Fitness, a fitness facility access program, through contracts with commercial health plans, employers, and other sponsoring organizations that allow their members to individually purchase the program.  We sell our WholeHealth Living program primarily to health plans.

Except for Prime Fitness, our customer contracts generally have initial terms of approximately three years.  Some contracts allow the customer to terminate early and/or determine on an annual basis to which of their members they will offer our programs.  For Prime Fitness, our contracts with commercial health plans, employers, and other sponsoring organizations generally have initial terms of approximately three years, while individuals who purchase the Prime Fitness program through these organizations may cancel at any time (on a monthly basis) after an initial period of one to three months.  The significant majority of our customer contracts contain one performance obligation - to stand ready to provide access to our network of fitness locations and fitness programming - which is satisfied over time as services are rendered each month over the contract term. Unsatisfied performance obligations at the end of a particular month primarily relate to certain monthly memberships for our Prime Fitness program, which are recorded as deferred revenue on the consolidated balance sheet and recognized as revenue during the immediately subsequent month. There was no material revenue recognized during the three and nine months ended September 30, 2021 from performance obligations satisfied in a prior period. Deferred revenue was $3.7 million and $4.5 million at September 30, 2021 and December 31, 2020, respectively. Significant changes in the deferred revenue balance during the period are as follows:

	Three Months Ended September 30,			Nine Months Ended September 30,
(In thousands)	2021			2021
Revenue recognized that was included in deferred    revenue at the beginning of the period	$	(3,313	)	$	(4,369	)
Increases due to cash received from customers,    excluding amounts recognized as revenue during    the period	$	3,062		$	3,595

Our fees are variable month to month and are generally billed per member per month (“PMPM”) or billed based on a combination of PMPM and member visits to a network location.  We bill PMPM fees by multiplying the

contractually negotiated PMPM rate by the number of members eligible for or receiving our services during the month.  Due to the COVID-19 pandemic, the average monthly total participation levels of our members have fluctuated significantly since March 2020.  For the three and nine months ended September 30, 2021, total SilverSneakers visits and revenues were higher than the same periods in 2020 as the effects of the COVID-19 pandemic lessened compared to the prior year period. As a result, revenues from PMPM fees (which are not derived from visits) represented 44% and 59% of SilverSneakers revenue for the three months ended September 30, 2021 and 2020, respectively, and 48% and 53% of SilverSneakers revenue for the nine months ended September 30, 2021 and 2020, respectively. We bill for member visits approximately one month in arrears once actual member visits are known.  Payments from customers are typically due within 30 days of invoice date.  When material, we capitalize costs to obtain contracts with customers and amortize them over the expected recovery period. At September 30, 2021 and December 31, 2020, $0.5 million and $0.8 million, respectively, of such costs were capitalized. During the three and nine months ended September 30, 2021, amortization expense related to such capitalized costs was $0.2 million and $0.5 million, respectively. During the three and nine months ended September 30, 2020, amortization expense related to such capitalized costs was $0.1 million and $0.2 million, respectively.

Our customer contracts include variable consideration, which is allocated to each distinct month over the contract term based on eligible members and/or member visits each month.  The allocated consideration corresponds directly with the value to our customers of our services completed for the month.  Under the majority of our contracts, we recognize revenue each month using the practical expedient available under ASC 606-10-55-18, which provides that revenue is recognized in the amount for which we have the right to invoice. ASC 606-10-50-14(b) provides an optional exemption, which we have elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient.

Although we evaluate our financial performance and make resource allocation decisions based upon the results of our single operating and reportable segment, we believe the following information depicts how our revenues and cash flows from continuing operations are affected by economic factors.  

The following table sets forth revenue from continuing operations disaggregated by program.  Revenue from our SilverSneakers program is predominantly contracted with Medicare Advantage and Medicare Supplement plans.

(In thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
SilverSneakers	$	95,772	$	68,613	$	266,341	$	239,377
Prime Fitness		24,253		21,687		70,203		73,545
WholeHealth Living		6,206		5,040		17,555		14,835
Other (1)		58		141		345		9,339
	$	126,289	$	95,481	$	354,444	$	337,096

(1) For the nine months ended September 30, 2020, other revenue in the table above includes $6.8 million from a well-being program with a large employer and $2.2 million of revenue from home-delivered meals.

Sales and usage-based taxes are excluded from revenues.