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Supplemental Financial Statement Information | 3 Months Ended
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Mar. 31, 2021
Balance Sheet Related Disclosures [Abstract] |
Supplemental Financial Statement Information | Supplemental Financial Statement Information Cash, Cash Equivalents and Restricted Cash We consider all investments with an original maturity of 90 days or less from the date of purchase to be cash equivalents. Cash and cash equivalents are stated at fair value. We also invest in marketable securities that are measured and recorded at fair value. See Note 4 – Fair Value Measurements for further discussion about our marketable securities. Our cash, cash equivalent and restricted cash balances are summarized as follows (in thousands):
| March 31, 2021 |  | December 31, 2020
Cash | $ | 72,326 |  |  | $ | 39,552 |
Cash equivalents | 19,924 |  |  | 4,207 |
Cash and cash equivalents | 92,250 |  |  | 43,759 |
Restricted cash | 3,354 |  |  | 3,354 |
Total cash, cash equivalents and restricted cash | $ | 95,604 |  |  | $ | 47,113 |
As of March 31, 2021 and December 31, 2020, we had $3.4 million of restricted cash which was classified as a non-current asset on our Condensed Consolidated Balance Sheets. This amount collateralizes letters of credit related to certain lease commitments. Contract Assets and Accounts Receivable We do not require collateral or other security for our contract assets and accounts receivable. We believe the potential for collection issues with any of our customers was minimal as of March 31, 2021. We estimate an allowance for credit losses using relevant available information from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts. Specifically, for the purpose of measuring the probability of default parameters, we utilize Capital IQ’s, Standard & Poor’s and Moody’s analytics. Our estimates of loss given default are determined by using our historical collections data as well as historical information obtained through our research and review of other insurance related companies. Our estimated exposure at default is determined by applying these internal and external data sources to our commission receivable balances. As such, we apply an immediate reversion method and revert to historical loss information when computing our credit loss exposure. Credit loss expenses are assessed quarterly and included in general and administrative expense on our Condensed Consolidated Statement of Comprehensive Income (Loss). We considered the impact of recent events and global economic conditions when evaluating the appropriate adjustments to our allowance for credit losses as of March 31, 2021. Determining the extent of these adjustments in the three months ended March 31, 2021 was especially challenging because we do not have any historical loss information for a period of similar economic uncertainty. We also considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic. The change in the allowance for credit losses for the three months ended March 31, 2021 is summarized as follows (in thousands):
| Three Months Ended March 31, 2021 |  |
Beginning balance | $ | 2,026 |  |  |
Change in allowance | (78) |  |  |
Ending balance | $ | 1,948 |  |  |
Our contract assets – commission receivable activities, net of credit loss allowances are summarized as follows (in thousands):
| Three Months Ended March 31, 2021
| Medicare Segment |  | IFP/SMB Segment |  | Total |  |
Beginning balance | $ | 739,637 |  |  | $ | 52,768 |  |  | $ | 792,405 |  |  |
Commission revenue from members approved during the period | 114,678 |  |  | 6,395 |  |  | 121,073 |  |  |
Commission revenue from renewals of small business members during the period (1) | — |  |  | 2,687 |  |  | 2,687 |  |  |
Net commission revenue adjustments from members approved in prior period | 14 |  |  | 3,278 |  |  | 3,292 |  |  |
Cash receipts | (165,520) |  |  | (12,012) |  |  | (177,532) |  |  |
Net change in credit loss allowance | (72) |  |  | (6) |  |  | (78) |  |  |
Ending balance | $ | 688,737 |  |  | $ | 53,110 |  |  | $ | 741,847 |  |  |
| Three Months Ended March 31, 2020
| Medicare Segment |  | IFP/SMB Segment |  | Total
Beginning balance | $ | 550,922 |  |  | $ | 38,300 |  |  | $ | 589,222 |
Commission revenue from members approved during the period | 81,125 |  |  | 5,796 |  |  | 86,921 |
Commission revenue from renewals of small business members during the period (1) | — |  |  | 2,396 |  |  | 2,396 |
Net commission revenue adjustments from members approved in prior period | 8,979 |  |  | 1,373 |  |  | 10,352 |
Cash receipts | (112,731) |  |  | (13,811) |  |  | (126,542) |
Net change in credit loss allowance | (1,574) |  |  | (58) |  |  | (1,632) |
Ending balance | $ | 526,721 |  |  | $ | 33,996 |  |  | $ | 560,717 |
_____________ (1)Commission revenue from renewals of small business members during the period was previously included in net commission revenue from members approved in prior periods. However, starting in the first quarter of 2021, we enhanced our reporting by separately disclosing commission revenue from renewals of small business members during the period in a separate line item. Credit Risk Our financial instruments that are exposed to concentrations of credit risk principally consist of cash, cash equivalents, marketable securities, contract assets – commissions receivable, and accounts receivable. We invest our cash and cash equivalents with major banks and financial institutions and, at times, such investments are in excess of federally insured limits. We also have deposits with major banks in China that are denominated in both U.S. dollars and Chinese Yuan Renminbi and are not insured by the U.S. federal government. The deposits in China were $3.5 million as of March 31, 2021. See Note 4 – Fair Value Measurements for more information regarding our marketable securities. We do not require collateral or other security for either our contract assets or accounts receivable. Carriers that represented 10% or more of our total contract assets and accounts receivable balance are summarized as of the dates presented below:
| March 31, 2021 |  | December 31, 2020
UnitedHealthCare (1) | 21 | % |  | 21 | %
Humana | 21 | % |  | 21 | %
Aetna (1) | 20 | % |  | 20 | %
Centene (1)(2) | 12 | % |  | 11 | %
_____________ (1)Percentages include the carriers' subsidiaries. (2)Centene Corporation acquired WellCare Health Plans, Inc. in 2020, and the contract assets and accounts receivable of WellCare are included in the percentage calculation for March 31, 2021 and December 31, 2020. Prepaid Expenses and Other Current Assets – Our prepaid expenses and other current assets are summarized as of the periods presented as follows (in thousands):
| March 31, 2021 |  | December 31, 2020
Prepaid maintenance contracts | $ | 6,583 |  |  | $ | 7,715 |
Prepaid expenses | 4,095 |  |  | 6,628 |
Prepaid insurance | 1,031 |  |  | 1,672 |
Others | 616 |  |  | 646 |
Prepaid expenses and other current assets | $ | 12,325 |  |  | $ | 16,661 |

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