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 and nine months ended March 31, 2015 and 2014:


	Three Months Ended March 31,						Nine Months Ended March 31,
	2015			2014			2015			2014
Healthcare Facilities Segment:
Medicare	$	6,573		$	6,784		$	20,536		$	20,407
Medicaid		3,591			3,287			10,562			10,131
Self-pay		1,565			1,978			5,555			6,683
Managed Care & Other Insurance		3,911			3,855			12,425			12,427
Other		55			50			151			148

Revenues before provision for doubtful accounts		15,695			15,954			49,229			49,796
Provision for doubtful accounts		(1,845	)		(1,837	)		(6,060	)		(6,125	)

Healthcare Facilities Segment Net Revenues		13,850			14,117			43,169			43,671
Specialty Pharmacy Segment Net Revenues		9,307			10,217			25,191			26,385
Other Revenues		194			132			493			319

Total Net Revenues	$	23,351		$	24,466		$	68,853		$	70,375

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 accounts receivable is as follows:


	March 31, 2015			June 30, 2014
Accounts receivable (net of contractual allowances)	$	15,650		$	16,753
Less allowance for doubtful accounts		(5,632	)		(6,903	)

Patient accounts receivable - net	$	10,018		$	9,850

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, 2015:


Three Months Ended March 31, 2015:	Healthcare Facilities			Specialty Pharmacy			Total
Balance at January 1, 2015	$	7,055		$	224		$	7,279
Additions recognized as a reduction to earnings		1,554			65			1,619
Accounts written off, net of recoveries		(3,165	)		(101	)		(3,266	)

Balance at March 31, 2015	$	5,444		$	188		$	5,632


Nine Months Ended March 31, 2015:	Healthcare Facilities			Specialty Pharmacy			Total
Balance at July 1, 2014	$	6,649		$	254		$	6,903
Additions recognized as a reduction to earnings		7,805			145			7,950
Accounts written off, net of recoveries		(9,010	)		(211	)		(9,221	)

Balance at March 31, 2015	$	5,444		$	188		$	5,632


Three Months Ended March 31, 2014:	Healthcare Facilities			Specialty Pharmacy			Total
Balance at January 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 $10 and $105 for the three months ended March 31, 2015 and 2014, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports. Net revenues included net increase (decrease) of ($287) and $611 for the nine months ended March 31, 2015 and 2014, respectively, for the settlements and filings of prior year Medicare and Medicaid cost reports.