XML 19 R10.htm IDEA: XBRL DOCUMENT v3.23.3
REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]    
REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

NOTE 3 - REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

 

Net Revenue

 

For the three months and nine months ended September 30, 2023 and 2022, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

 

   Three Months Ended September 30,   Nine Months Ended September 30, 
   2023   2022   2023   2022 
                 
Product revenue:                    
Appliance sales to VIPs  $1,423(1)  $1,909(1)  $4,641(1)  $5,846(1)
Center revenue   43    105    142    511 
Total product revenue   1,466    2,014    4,783    6,357 
                     
Service revenue                    
VIP   980    1,553    3,184    3,603(2)
Billing intelligence services   218(3)   265(3)   651(3)   937(3)
Sleep testing services   308    132    882    342 
Myofunctional therapy services   228    190    666    667 
Sponsorship/seminar/other   101    92    387    168 
Total service revenue   1,835    2,232    5,770    5,717 
                     
Total revenue  $3,301   $4,246   $10,553   $12,074 

 

(1) Appliance revenue from the sale of products is typically fixed at inception of the contract and is recognized at the point in time when shipment of the related products occurs.
   
(2) VIP revenue disclosed above for the nine months ended September 30, 2022, includes a cumulative adjustment from prior years of approximately $0.4 million decrease.
   
(3) BIS revenue from subscription contracts is typically fixed at inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed. Revenue disclosed above for nine months ended September 30, 2022, includes a cumulative adjustment from prior years of approximately $0.1 million increase.

 

Changes in Contract Liabilities

 

The key components of changes in contract liabilities for the three months and nine months ended September 30, 2023 and 2022 are as follows (in thousands):

 

   September 30, 
   2023   2022 
               
Beginning balance, January 1  $3,038   $2,399 
           
New contracts, net of cancellations   1,255    1,183 
Revenue recognized   (1,396)   (1,421)
           
Ending balance, March 31  $2,897   $2,161 
           
New contracts, net of cancellations   794    1,556 
Revenue recognized   (1,068)   (1,320)
           
Ending balance, June 30  $2,623   $2,397 
           
New contracts, net of cancellations   1,046    1,950 
Revenue recognized   (1,056)   (1,766)
           
Ending balance, September 30  $2,613   $2,581 

 

Current portion of deferred revenue is approximately $2.4 million, which is expected to be recognized over the next 12 months from the date of the period presented. Additionally, revenue from breakage on contract liabilities was approximately $0.3 and $0.9 million for the three months ended September 30, 2023 and 2022, and $0.4 and $1.1 million for the nine months ended September 30, 2023 and 2022.

 

 

Changes in Accounts Receivable

 

Our customers are billed based on fees agreed upon in each customer contract. Receivables from customers were $0.2 million at September 30, 2023 and $0.5 million at December 31, 2022. An allowance is maintained for accounts receivable which is generally based on a combination of factors, including the aging of the receivables, historical collection trends, and charge-offs. Adjustment to the allowance are recorded in bad debt expense under general and administrative expenses in the condensed consolidated statement of operations. An allowance of $0.3 and $0.7 million existed as of September 30, 2023 and 2022.

 

Shipping Costs

 

Shipping costs for product deliveries to customers are expensed as incurred and totaled approximately $0.1 million for the three months ended September 30, 2023 and 2022, and approximately $0.2 million for the nine months ended September 30, 2023 and 2022, respectively. Shipping costs for product deliveries to customers are included in cost of goods sold in the accompanying condensed consolidated statement of operations.

 

NOTE 3 - REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

 

Net Revenue

 

For the years ended December 31, 2022 and 2021, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

 

   Year Ended December 31, 
   2022   2021 
         
Product revenue:          
Appliance sales to VIPs  $7,820   $6,040(1)
Center revenue   561    480 
Total product revenue   8,381    6,520 
           
Service revenue          
VIP    4,838    8,517(3)
Billing intelligence services   1,170    905(2)
Management service revenue (includes MID)   63    313 
Myofunctional therapy services   927    341 
Sponsorship/seminar/other   645    289 
Total service revenue   7,643    10,365 
           
Total revenue  $16,024   $16,885 

 

(1) Revenue from the sale of products is typically fixed at inception of the contract and is recognized at the point in time when shipment of the related products occurs.

 

 

(2) Revenue from maintenance and subscription contracts is typically fixed at inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed. Revenue disclosed above for year ended December 31, 2022, includes a cumulative adjustment from prior years of approximately $0.1 million increase.
(3) Revenue disclosed above for the year ended December 31, 2022, includes a cumulative adjustment from prior years of approximately $0.4 million decrease.

 

Changes in Contract Liabilities

 

The key components of changes in contract liabilities for the years ended December 31, 2022 and 2021 are as follows (in thousands):

  

   December 31 
   2022   2021 
         
Beginning balance, January 1  $2,399   $2,938 
           
New contracts, net of cancellations   6,567    7,978 
Revenue recognized   (5,928)   (8,517)
           
Ending balance, December 31  $3,038   $2,399 

 

Current portion of deferred revenue is approximately $2.9 million which is expected to be recognized over the next 12 months from the date of the period presented.

 

Shipping Costs

 

Shipping costs for product deliveries to customers are expensed as incurred and totaled approximately $0.1 million and $0.4 million for the years ended December 31, 2022 and 2021, respectively. Shipping costs for product deliveries to customers are included in cost of goods sold in the accompanying consolidated statement of operations.