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FINANCING RECEIVABLES | 3 Months Ended
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Mar. 31, 2024
Receivables [Abstract] |
FINANCING RECEIVABLES | FINANCING RECEIVABLES Short-Term Payment Plans The Company provides fixed monthly payment arrangements ("short-term payment plans") over terms ranging from three to twelve months for certain add-on software installations. As a practical expedient, we do not adjust the amount of consideration recognized as revenue for the financing component as unearned income when we expect payment within one year or less. These receivables, included in the current portion of financing receivables, were comprised of the following at March 31, 2024 and December 31, 2023:
(In thousands) | March 31, 2024 |  | December 31, 2023
Short-term payment plans, gross | $ | 666 |  |  | $ | 788 |
Less: allowance for losses | (33) |  |  | (39) |
Short-term payment plans, net | $ | 633 |  |  | $ | 749 |
Long-Term Financing Arrangements Additionally, the Company provides financing for purchases of its information and patient care systems to certain healthcare providers under long-term financing arrangements expiring in various years through 2030. Under long-term financing arrangements, the transaction price is adjusted by a discount rate that reflects market conditions that would be used for a separate financing transaction between the Company and licensee at contract inception, and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement. As such, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component. As payments are received from the licensee, the Company recognizes a portion of the financing component as interest income, reported as other income in the condensed consolidated statements of income. These receivables typically have terms from two to seven years. The components of these receivables were as follows at March 31, 2024 and December 31, 2023:
(In thousands) | March 31, 2024 |  | December 31, 2023
Long-term financing arrangements, gross | $ | 4,660 |  |  | $ | 5,212 |
Less: allowance for expected credit losses | (350) |  |  | (377) |
Less: unearned income | (316) |  |  | (361) |
Long-term financing arrangements, net | $ | 3,994 |  |  | $ | 4,474 |
Future minimum payments to be received subsequent to March 31, 2024 are as follows:
(In thousands) |
Years Ending December 31, |
2024 | $ | 2,375 |
2025 | 1,938 |
2026 | 206 |
2027 | 69 |
2028 | 62 |
Thereafter | 10 |
Total minimum payments to be received | 4,660 |
Less: allowance for expected credit losses | (350) |
Less: unearned income | (316) |
Receivables, net | $ | 3,994 |
Credit Quality of Financing Receivables and Allowance for Expected Credit Losses The following table is a roll-forward of the allowance for expected credit losses for the three months ended March 31, 2024 and year ended December 31, 2023:
(In thousands) | Balance at Beginning of Period |  | Provision |  | Charge-offs |  | Recoveries |  | Sale of AHT |  | Balance at End of Period
March 31, 2024 | $ | 416 |  |  | $ | (31) |  |  | $ | — |  |  | $ | — |  |  | $ | (2) |  |  | $ | 383 |
December 31, 2023 | $ | 549 |  |  | $ | (133) |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 416 |
The Company’s financing receivables are comprised of a single portfolio segment, as the balances are all derived from short-term payment plan arrangements and long-term financing arrangements within our target market of community hospitals. The Company evaluates the credit quality of its financing receivables based on a combination of factors, including, but not limited to, customer collection experience, current and future economic conditions, the customer’s financial condition, and known risk characteristics impacting the respective customer base of community hospitals, the most notable of which relate to enacted and potential changes in Medicare and Medicaid reimbursement rates as community hospitals typically generate a significant portion of their revenues and related cash flows from beneficiaries of these programs. In addition to specific account identification, the Company utilizes historical collection experience to establish the allowance for expected credit losses. Financing receivables are written off only after the Company has exhausted all collection efforts. Customer payments are considered past due if a scheduled payment is not received within contractually agreed upon terms. To facilitate customer collection and credit monitoring efforts, financing receivable amounts are invoiced and reclassified to trade accounts receivable when they become due, with all invoiced amounts placed on nonaccrual status. As a result, all past due amounts related to the Company’s financing receivables are included in trade accounts receivable in the accompanying condensed consolidated balance sheets. The following is an analysis of the age of financing receivables amounts (excluding short-term payment plans) that have been reclassified to trade accounts receivable and were past due as of March 31, 2024 and December 31, 2023:
(In thousands) | 1 to 90 Days Past Due |  | 91 to 180 Days Past Due |  | 181 + Days Past Due |  | Total Past Due
March 31, 2024 | $ | 532 |  |  | $ | 275 |  |  | $ | 495 |  |  | $ | 1,302 |
December 31, 2023 | $ | 857 |  |  | $ | 231 |  |  | $ | 323 |  |  | $ | 1,411 |
From time to time, the Company may agree to alternative payment terms outside of the terms of the original financing receivable agreement due to customer difficulties in achieving the original terms. In general, such alternative payment arrangements do not result in a re-aging of the related receivables. Rather, payments pursuant to any alternative payment arrangements are applied to the already outstanding invoices beginning with the oldest outstanding invoices as the payments are received. Because amounts are reclassified to trade accounts receivable when they become due, there are no past due amounts included within financing receivables, current portion, net or financing receivables, net of current portion in the accompanying condensed consolidated balance sheets. The Company utilizes an aging of trade accounts receivable as the primary credit quality indicator for its financing receivables, which is facilitated by the reclassification of customer payment amounts to trade accounts receivable when they become due. The table below categorizes customer financing receivable balances (excluding short-term payment plans) based on the age of the oldest payment outstanding that has been reclassified to trade accounts receivable:
(In thousands) | March 31, 2024 |  | December 31, 2023
Stratification of uninvoiced client financing receivables based on aging of related trade accounts receivable: |  |  |
Uninvoiced client financing receivables related to trade accounts receivable that are 1 to 90 Days Past Due | $ | 984 |  |  | $ | 1,068 |
Uninvoiced client financing receivables related to trade accounts receivable that are 91 to 180 Days Past Due | 839 |  |  | 1,720 |
Uninvoiced client financing receivables related to trade accounts receivable that are 181 + Days Past Due | 1,348 |  |  | 965 |
Total uninvoiced client financing receivables balances of clients with a trade accounts receivable | $ | 3,171 |  |  | $ | 3,753 |
Total uninvoiced client financing receivables of clients with no related trade accounts receivable | 1,173 |  |  | 1,098 |
Total financing receivables with contractual maturities of one year or less | 666 |  |  | 788 |
Less: allowance for expected credit losses | (383) |  |  | (416) |
Total financing receivables | $ | 4,627 |  |  | $ | 5,223 |

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