SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Mar. 31, 2022

Revenue Recognition: The components of revenues by solution which reflect a disaggregation of revenue by contract type are as follows (in thousands):


	Three-Months Ended March 31,
	2022		% Total		2021		% Total
REVENUES BY SOLUTION:
Mailbacks	$	9,476	53.9	%	$	20,893	75.9	%
Route-based pickup services	4,044		23.0	%	3,597		13.1	%
Unused medications	2,098		12.0	%	2,078		7.5	%
Third party treatment services	180		1.0	%	76		0.3	%
Other (1)	1,781		10.1	%	884		3.2	%
Total revenues	$	17,579	100.0	%	$	27,528	100.0	%

	Nine-Months Ended March 31,
	2022		% Total		2021		% Total
REVENUES BY SOLUTION:
Mailbacks	28,294		56.2	%	$	37,507	64.9	%
Route-based pickup services	10,794		21.4	%	10,244		17.8	%
Unused medications	6,592		13.1	%	6,152		10.7	%
Third party treatment services	265		0.5	%	390		0.7	%
Other (1)	4,427		8.8	%	3,397		5.9	%
Total revenues	$	50,372	100.0	%	$	57,690	100.0	%

(1)The Company’s other products include IV poles, accessories, containers, asset return boxes and other miscellaneous items with single performance obligations.

Vendor Managed Inventory ("VMI") - The VMI program includes terms that meet the “bill and hold” criteria and as such are recognized when the order is placed, title has transferred, there are no acceptance provisions and amounts are segregated in the Company’s warehouse for the customer. During the three and nine months ended March 31, 2022, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $1.1 million and $2.9 million, respectively. During the three and nine months ended March 31, 2021, the Company recorded billings from inventory builds that are held in VMI under these service agreements of $0.3 million and $3.8 million, respectively. As of March 31, 2022 and June 30, 2021, $4.4 million and $3.7 million, respectively, of solutions sold through that date were held in VMI pending fulfillment or shipment to patients of pharmaceutical manufacturers who offer these solutions to patients in an ongoing patient support program.

The contract asset is related to VMI service agreements within the maibacks contract type category when the revenue recognition exceeds the amount of consideration the Company was entitled to at the point in time of satisfying the performance obligation associated with the sale of the compliance and container system. The contract liability is related to the mailbacks and unused medications contract type categories in which cash consideration exceeds the transaction price allocated to completed performance obligations. The amount recognized during the nine months ended March 31, 2022 and 2021 related to contract liabilities recorded as of June 30, 2021 and 2020 were $6.4 million and $2.4 million, respectively.

Income Taxes: Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. No such allowance was deemed necessary based on the Company's assessment of the recoverability of its deferred tax assets.

Accounts Receivable: Accounts receivable consist primarily of amounts due to the Company from normal business activities. Accounts receivable balances are determined to be delinquent when the amount is past due based on the contractual terms with the customer. The Company maintains an allowance for doubtful accounts to reflect the likelihood of not collecting certain accounts receivable based on past collection history and specific risks identified among uncollected accounts. Accounts receivable are charged to the allowance for doubtful accounts when the Company determines that the receivable will not be collected and/or when the account has been referred to a third party collection agency. The Company has a history of minimal uncollectible accounts.