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REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES
 9 Months Ended
Sep. 30, 2025
Revenue from Contract with Customer [Abstract]  
REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

NOTE 4 - REVENUE, CONTRACT ASSETS AND CONTRACT LIABILITIES

 

Net Revenue

 

For the three and nine months ended September 30, 2025 and 2024, the components of revenue from contracts with customers and the related timing of revenue recognition is set forth in the table below (in thousands):

 

   2025   2024   2025   2024 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
   2025   2024   2025   2024 
                 
Product revenue                    
Appliances   1,405    1,583    3,805    4,498 
Guides   790    375    2,088    1,110 
Total product revenue   2,195 (1)   1,958 (1)   5,893 (1)   5,608 (1)
                     
Service revenue                    
VIP   82 (2)   926 (2)   435 (2)   3,007 (2)
Billing intelligence services   184    206    556    644 
Sleep testing services   2,560    329    3,727    954 
Myofunctional therapy services   205    147    516    472 
Treatment centers   1,321    -    1,563    - 
Sponsorship/seminar/other   236    294    929    648 
Total service revenue   4,588    1,902    7,726    5,725 
                     
Total revenue  $6,783   $3,860   $13,619   $11,333 

 

(1) Product revenue from the sale of appliances, pediatric tooth positioners and Lifeline products is typically fixed at the inception of the contract and is recognized at the point in time when shipment of the related products occurs.
   
(2) Service revenue from the sale of VIP enrollments, billing services and therapy is typically fixed at the inception of the contract and is recognized ratably over time as the services are performed and the performance obligations completed.

 

 

Changes in Contract Liabilities

 

The key components of changes in contract liabilities related to our legacy model for the three and nine months ended September 30, 2025 and 2024 are as follows (in thousands):

  

   2025   2024 
         
Beginning balance, January 1  $993   $2,427 
New contracts, net of cancellations   23    1,466 
Revenue recognized   (422)   (962)
Ending balance, March 31  $594   $2,931 
           
New contracts, net of cancellations   189    411 
Revenue recognized   (298)   (1,195)
Ending balance, June 30  $485   $2,147 
           
New contracts, net of cancellations   327    275 
Revenue recognized   (274)   (931)
Ending balance, September 30  $538   $1,491 

 

The current portion of deferred revenue from our legacy VIP model is approximately $0.5 million, which is expected to be entirely recognized before December 31, 2026, following which there will be no deferred VIP revenue as discussed in Note 1. Additionally, revenue from breakage on contract liabilities was approximately $0 and $0.5 million for the three months ended September 30, 2025 and 2024, respectively, and approximately $0.1 and $1.5 million for the nine months ended September 30, 2025 and 2024, respectively.

 

Changes in Accounts Receivable

 

Our VIP customers (i.e., the dentists under our legacy model) are billed based on fees agreed upon in each customer contract. Receivables from customers were $0.4 million at December 31, 2024 and $2.1 million at September 30, 2025. 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. Adjustments to the allowance are recorded in bad debt expense under general and administrative expenses in the consolidated statement of operations. An allowance of $0.5 and $0.4 million existed as of September 30, 2025 and December 31, 2024.