Revenue Recognition and Accounts Receivables

9 Months Ended

Mar. 31, 2014

Receivables [Abstract]

Revenue Recognition and Accounts Receivables

Note 6. – 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 and nine months ended March 31, 2014 and 2013:

	Three Months Ended March 31,						Nine Months Ended March 31,
	2014			2013			2014			2013
Healthcare Facilities Segment:
Medicare	$	8,572		$	9,225		$	25,781		$	25,680
Medicaid		3,997			4,140			12,281			12,759
Self-pay		2,606			3,014			8,517			9,207
Managed Care & Other Insurance		4,623			5,014			14,916			17,077
Other		93			273			300			472
Revenues before provision for doubtful accounts		19,891			21,666			61,795			65,195
Provision for doubtful accounts		(2,521	)		(2,806	)		(8,138	)		(8,823	)
Healthcare Facilities Segment Net Revenues		17,370			18,860			53,657			56,372
Specialty Pharmacy Segment Net Revenues		10,217			10,416			26,385			26,405
Other Revenues		131			(36	)		318			3
Total Net Revenues	$	27,718		$	29,240		$	80,360		$	82,780

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:

	March 31, 2014			June 30, 2013
Accounts receivable (net of contractual allowances)	$	18,549		$	20,117
Less allowance for doubtful accounts		(7,244	)		(7,761	)
Patient accounts receivable - net	$	11,305		$	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 and nine months ended March 31, 2014:

Three Months Ended March 31, 2014:	Healthcare Facilities			Specialty Pharmacy			Total
Balance at Janaury 1, 2014	$	6,760		$	479		$	7,239
Additions recognized as a reduction to revenues		2,521			75			2,596
Accounts written off, net of recoveries		(2,552	)		(39	)		(2,591	)
Balance at March 31, 2014	$	6,729		$	515		$	7,244

Nine Months Ended March 31, 2014:	Healthcare Facilities			Specialty Pharmacy			Total
Balance at July 1, 2013	$	7,286		$	475		$	7,761
Additions recognized as a reduction to revenues		8,138			170			8,308
Accounts written off, net of recoveries		(8,695	)		(130	)		(8,825	)
Balance at March 31, 2014	$	6,729		$	515		$	7,244

Net revenues included increases of $456 and $176 for the nine months ended March 31, 2014 and 2013, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports.