Supplemental Financial Statement Information

9 Months Ended

Sep. 30, 2021

Balance Sheet Related Disclosures [Abstract]

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):


	September 30, 2021		December 31, 2020
Cash	$	37,765	$	39,552
Cash equivalents	119,765		4,207
Cash and cash equivalents	157,530		43,759
Restricted cash	3,354		3,354
Total cash, cash equivalents and restricted cash	$	160,884	$	47,113

As of September 30, 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 September 30, 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 Loss. There were no write-offs during any of the three or nine month periods ended September 30, 2021 and 2020.

We considered the impact of recent events and global economic conditions when evaluating the appropriate adjustments to our allowance for credit losses as of September 30, 2021. 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 nine months ended September 30, 2021 is summarized as follows (in thousands):



Beginning balance	$	2,026
Change in allowance	(207)
Ending balance	$	1,819

Our contract assets – commission receivable activities, net of credit loss allowances are summarized as follows (in thousands):


	Nine Months Ended September 30, 2021
	Medicare Segment		IFP/SMB Segment		Total
Beginning balance	$	739,637	$	52,768	$	792,405
Commission revenue from members approved during the period	235,974		16,495		252,469
Commission revenue from renewals of small business members during the period (1)	—		6,154		6,154
Net commission revenue from members approved in prior periods	(11,700)		29,143		17,443
Cash receipts	(276,825)		(34,485)		(311,310)
Net change in credit loss allowance	188		19		207
Ending balance	$	687,274	$	70,094	$	757,368


	Nine Months Ended September 30, 2020
	Medicare Segment		IFP/SMB Segment		Total
Beginning balance	$	550,922	$	38,300	$	589,222
Commission revenue from members approved during the period	205,330		14,170		219,500
Commission revenue from renewals of small business members during the period (1)	—		5,005		5,005
Net commission revenue from members approved in prior periods	8,966		20,515		29,481
Cash receipts	(201,256)		(35,957)		(237,213)
Net change in credit loss allowance	(1,536)		(114)		(1,650)
Ending balance	$	562,426	$	41,919	$	604,345

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(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 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 $3.8 million as of September 30, 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:


	September 30, 2021		December 31, 2020
Humana	27	%	21	%
UnitedHealthCare (1)	24	%	21	%
Aetna (1)	17	%	20	%
Centene (1)(2)	8	%	11	%

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(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 September 30, 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):


	September 30, 2021		December 31, 2020
Prepaid maintenance contracts	$	8,448	$	7,715
Prepaid licenses	3,302		—
Prepaid expenses	23,828		6,628
Prepaid insurance	672		1,672

Others	403		646
Prepaid expenses and other current assets	$	36,653	$	16,661