Revenue Recognition and Accounts Receivables

3 Months Ended

Sep. 30, 2013

Receivables [Abstract]

Revenue Recognition and Accounts Receivables

Note 5. – Revenue Recognition and Accounts Receivables

The Company’s subsidiaries recognize 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 subsidiaries’ ability to collect outstanding receivables is critical to their results of operations and cash flows. Amounts the Company’s subsidiaries receive 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 subsidiaries’ established billing rates. Additionally, to provide for accounts receivable that could become uncollectible in the future an allowance for doubtful accounts is established to reduce the carrying value of such receivables to their estimated net realizable value. Accordingly, the revenues and accounts receivable reported in the accompanying unaudited condensed consolidated financial statements are recorded at the net amount expected to be received.

Revenues before provision for doubtful accounts by payor were as follows for the three months ended September 30, 2013 and 2012:

	Three Months Ended September 30,
	2013			2012
Healthcare Facilities Segment:
Medicare	$	9,157		$	8,505
Medicaid		3,966			4,151
Self-pay		5,291			5,934
Managed Care & Other Insurance		2,850			3,712
Other		94			88
Revenues before provision for doubtful accounts		21,358			22,390
Provision for doubtful accounts		(2,718	)		(3,482	)
Healthcare Facilities Segment Net Revenues		18,640			18,908
Specialty Pharmacy Segment Net Revenues		6,842			6,749
Other Revenues		96			33
Total Net Revenues	$	25,578		$	25,690

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 Operations and Comprehensive Loss.

Summary information for account receivable is as follows:

	September 30, 2013			June 30, 2013
Accounts receivable (net of contractual allowances)	$	18,748		$	20,117
Less allowance for doubtful accounts		(7,799	)		(7,761	)
Patient accounts receivable—net	$	10,949		$	12,356

The following is a summary of the activity in the allowance for doubtful accounts for the Healthcare Facilities Segment and the Specialty Pharmacy Segment for the three months ended September 30, 2013:

Three Months Ended September 30, 2013:	Healthcare Facilities			Specialty Pharmacy			Total
Balance at July 1, 2013	$	7,286		$	475		$	7,761
Additions recognized as a reduction to operating profit		2,718			53			2,771
Accounts written off, net of recoveries		(2,687	)		(46	)		(2,733	)
Balance at September 30, 2013	$	7,317		$	482		$	7,799

Net revenues included increases of $204 and $149 for the three months ended September 30, 2013 and 2012, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports.