17.Revenue, Net

Medical market revenue recognition- Customer orders from the medical market consist of a specified number of assembled and customized parts that the customer further integrates into their production process to produce market ready products. Customer orders do not include additional follow-on goods or services. Each order is for a series of distinct units that comprise a single performance obligation.

With the exception of prompt payment discounts, the transaction price for medical market products is the invoiced amount. Variable consideration in the form of refunds, credits, rebates, price concessions, pricing incentives or other items impacting transaction price are not present.

All of the Company’s products manufactured for the medical market are designed to each customer’s specifications, do not have an alternative use and cannot be sold or redirected by the Company to others. The Company considers contractual arrangements, laws and legal precedent in determining enforceable right. The Company has an enforceable right to payment for any finished or in-process units, including a reasonable margin, if the customer terminates the contract for reasons other than the Company’s failure to perform as promised within our medical diabetes market and a select customer within our other medical market. For contractual arrangements in which an enforceable right exists, control of these units is deemed to transfer to the customer over time during the manufacturing process, using the same measure of progress toward satisfying the promise to deliver the units to the customer. Consequently, the transaction price is recognized as revenue over time for contractual arrangements with an enforceable right, based on actual costs incurred in the manufacturing process to date relative to total expected costs to produce all ordered units. The transaction price for contractual arrangements without an enforceable right to payment for any finished or in-process units including a reasonable margin is recognized as revenue at a point in time.

Medical market products are invoiced when shipped and paid within normal commercial terms. The Company records a contract asset for revenue recognized over time in the production process for customized products that have not been shipped or invoiced to the customer.

The following tables set forth, for the periods indicated, timing of revenue recognition by market:


Timing of revenue recognition for the three months ended March 31, 2020:
		Products and services transferred at point in time		Products and services transferred over time		Total
Medical:
Diabetes	$	-	$	13,530	$	13,530
Other Medical (a)		1,820		1,008		2,828
Hearing Health:
Value Based DTEC		1,173		-		1,173
Value Based ITEC		744		-		744
Legacy OEM		1,964		-		1,964
Professional Audio Communications:		1,264		-		1,264
Total Revenue, net	$	6,965	$	14,538	$	21,503
(a) During the quarter ended March 31, 2020, we recorded a cumulative adjustment of $1.2 million to reduce revenue within our other medical market to correct an error related to prior periods as a result of our determination that a portion of our sales being recognized over time needed to be recognized at a point in time. The adjustment included a reduction of the related cost of goods sold of $0.8 million and related impacts to reduce the contract asset and an increase to inventory. The adjustment was not material to our Consolidated Financial Statements for any quarterly or annual period.

Timing of revenue recognition for the three months ended March 31, 2019:

		Products and services transferred at point in time		Products and services transferred over time		Total
Medical:
Diabetes	$	-	$	17,164	$	17,164
Other Medical		-		3,629		3,629
Hearing Health:
Value Based DTEC		1,630		-		1,630
Value Based ITEC		2,577		-		2,577
Legacy OEM		2,803		-		2,803
Professional Audio Communications:		1,767		-		1,767
Total Revenue, net	$	8,777	$	20,793	$	29,570