Revenue Recognition and Accounts Receivables

3 Months Ended

Sep. 30, 2012

Revenue Recognition and Accounts Receivables

Note 6. – Revenue Recognition and Accounts Receivables

The Company recognizes revenues in the period in which services are performed. Accounts receivable primarily consist of amounts due from third-party payors and patients. The Company’s ability to collect outstanding receivables is critical to its results of operations and cash flows. Amounts the Company receives for treatment of patients covered by governmental programs such as Medicare and Medicaid and other third-party payors such as health maintenance organizations (“HMOs”), preferred provider organizations (“PPOs”) and other private insurers are generally less than the Company’s established billing rates. Additionally, to provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for doubtful accounts to reduce the carrying value of such receivables to their estimated net realizable value. Accordingly, the revenues and accounts receivable reported in the Company’s accompanying unaudited condensed consolidated financial statements are recorded at the net amount expected to be received.

The Company’s revenues before provision for doubtful accounts by payor were as follows for the three months ended September 30, 2012:

	Three Months Ended
	September 30,
	2012			2011
Healthcare Facilities Segment:
Medicare	$	9,375		$	8,817
Medicaid		2,839			2,863
Self-pay		3,677			3,497
Managed Care Insurance & Other		6,495			6,513
Other		37			111
Revenues before provision for doubtful accounts		22,423			21,801
Provision for doubtful accounts		(3,482	)		(3,379	)
Healthcare Facilities Segment Net Revenues		18,941			18,422
Specialty Pharmacy Segment Net Revenues		6,749			7,755
Total Net Revenues	$	25,690		$	26,177

The net revenues of the Specialty Pharmacy Segment are presented net of contractual adjustments. The provision for bad debts of the Specialty Pharmacy Segment is presented as a component of operating expenses in the Condensed Consolidated Statements of Loss and Comprehensive Loss.

Summary information for accounts receivable is as follows:

	September 30, 2012			June 30, 2012
Accounts receivable (net of contractual allowances)	$	24,532		$	22,349
Less allowance for doubtful accounts		(10,198	)		(9,121	)
Receivables - net	$	14,334		$	13,228

The following is a summary of the Company’s activity in the allowance for doubtful accounts for the Healthcare Facilities Segment and the Specialty Pharmacy Segment for the three months ended September 30, 2012:

	Healthcare			Specialty
	Facilities			Pharmacy			Total
Balance at July 1, 2012	$	8,714		$	407		$	9,121
Additions recognized as a reduction to revenues		3,482			80			3,562
Accounts written off, net of recoveries		(2,359	)		(126	)		(2,485	)
Balance at September 30, 2012	$	9,837		$	361		$	10,198

Net revenues included increases of $149 and $0 for the three months ended September 30, 2012 and 2011, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports.