0001558370-23-003430 | 10-K | XBRL Viewer | Tabula Rasa Healthcare INC

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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2022	Feb. 28, 2023	Jun. 30, 2022
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-37888
Entity Registrant Name	Tabula Rasa HealthCare, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-5726437
Entity Address, Address Line One	228 Strawbridge Drive, Suite 100
Entity Address, City or Town	Moorestown
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08057
City Area Code	866
Local Phone Number	648-2767
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 49,483,939
Entity Common Stock, Shares Outstanding		26,870,660
Auditor Name	KPMG LLP
Auditor Location	Philadelphia, PA
Auditor Firm ID	185
Entity Central Index Key	0001651561
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2022
Amendment Flag	false
Common Stock
Title of 12(b) Security	Common Stock
Trading Symbol	TRHC
Security Exchange Name	NASDAQ
Preferred Stock Purchase Rights
Title of 12(b) Security	Preferred Stock Purchase Rights
No Trading Symbol Flag	true
Security Exchange Name	NASDAQ

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 70,017	$ 9,395
Restricted cash	12,372	6,038
Accounts receivable, net of allowance of $368 and $110, respectively	19,252	21,405
Inventories	6,566	5,444
Prepaid expenses	4,664	3,812
Client claims receivable	16,377	11,257
Other current assets	18,187	18,033
Current assets of discontinued operations	22,825	14,511
Total current assets	170,260	89,895
Property and equipment, net	9,158	11,778
Operating lease right-of-use assets	10,483	16,323
Software development costs, net	32,592	29,254
Goodwill	115,323	115,323
Intangible assets, net	38,326	45,358
Contingent consideration receivable	3,350
Other assets	4,657	3,929
Noncurrent assets of discontinued operations		187,558
Total assets	384,149	499,418
Current liabilities:
Current operating lease liabilities	2,708	3,275
Accounts payable	19,459	8,870
Client claims payable	10,781	8,398
Accrued expenses and other liabilities	55,745	40,997
Current liabilities of discontinued operations	13,389	12,380
Total current liabilities	102,082	73,920
Line of credit		29,500
Long-term debt, net of discount of $3,160 and $5,701, respectively	232,112	319,299
Long-term debt - related party, net of discount of $1,206 and $0, respectively	88,522
Noncurrent operating lease liabilities	12,786	15,792
Deferred income tax liability, net	1,380	1,402
Other long-term liabilities	4,298	176
Noncurrent liabilities of discontinued operations		3,573
Total liabilities	441,180	443,662
Commitments and contingencies (Note 19)
Stockholders' equity (deficit):
Common stock, $0.0001 par value; 100,000,000 shares authorized, 28,031,616 and 26,036,236 shares issued and 27,129,096 and 25,666,434 shares outstanding at December 31, 2022 and December 31, 2021, respectively	3	3
Treasury stock, at cost; 902,520 and 369,802 shares at December 31, 2022 and December 31, 2021, respectively	(3,391)	(4,292)
Additional paid-in capital	354,214	320,392
Accumulated deficit	(407,857)	(260,347)
Total stockholders' equity (deficit)	(57,031)	55,756
Total liabilities and stockholders' equity (deficit)	$ 384,149	$ 499,418

CONSOLIDATED BALANCE SHEETS (parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
CONSOLIDATED BALANCE SHEETS
Allowance for accounts receivable	$ 368	$ 110
Long-term debt, discount	3,160	5,701
Long-term debt - related party, discount	$ 1,206	$ 0
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	28,031,616	26,036,236
Common stock, shares outstanding	27,129,096	25,666,434
Treasury stock (in shares)	902,520	369,802

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Revenue:
Total revenue	$ 299,516	$ 259,882	$ 221,389
Cost of revenue, exclusive of depreciation and amortization shown below:
Total cost of revenue, exclusive of depreciation and amortization	232,603	193,378	160,618
Operating expenses:
Research and development	14,483	14,629	14,426
Sales and marketing	10,491	11,039	8,145
General and administrative	74,974	63,095	55,091
Change in fair value of acquisition-related contingent consideration expense			2,613
Change in fair value of contingent consideration receivable	3,650
Long-lived asset impairment charge	8,943		5,040
Depreciation and amortization	23,347	20,482	16,633
Total operating expenses	135,888	109,245	101,948
Loss from operations	(68,975)	(42,741)	(41,177)
Other income (expense):
Interest expense, net	(9,034)	(9,107)	(20,743)
Other income	1,064
Total other expense, net	(7,970)	(9,107)	(20,743)
Loss from continuing operations before income taxes	(76,945)	(51,848)	(61,920)
Income tax expense (benefit)	389	390	(5,409)
Net loss from continuing operations	(77,334)	(52,238)	(56,511)
Net loss from discontinued operations, net of tax	(70,176)	(26,817)	(24,455)
Net loss	$ (147,510)	$ (79,055)	$ (80,966)
Net loss per share:
Net loss per share from continuing operations, basic (in dollars per share)	$ (3.18)	$ (2.24)	$ (2.59)
Net loss per share from discontinued operations, basic (in dollars per share)	(2.89)	(1.15)	(1.12)
Total net loss per share, basic (in dollars per share)	(6.07)	(3.39)	(3.71)
Net loss per share from continuing operations, diluted (in dollars per share)	(3.18)	(2.24)	(2.59)
Net loss per share from discontinued operations, diluted (in dollars per share)	(2.89)	(1.15)	(1.12)
Total net loss per share, diluted (in dollars per share)	$ (6.07)	$ (3.39)	$ (3.71)
Weighted average common shares outstanding:
Weighted average common shares outstanding, basic (in shares)	24,293,483	23,290,660	21,815,388
Weighted average common shares outstanding, diluted (in shares)	24,293,483	23,290,660	21,815,388
Medication
Revenue:
Total revenue	$ 231,052	$ 189,591	$ 158,692
Cost of revenue, exclusive of depreciation and amortization shown below:
Total cost of revenue, exclusive of depreciation and amortization	178,527	143,700	116,463
Technology-enabled solutions
Revenue:
Total revenue	68,464	70,291	62,697
Cost of revenue, exclusive of depreciation and amortization shown below:
Total cost of revenue, exclusive of depreciation and amortization	$ 54,076	$ 49,678	$ 44,155

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Treasury Stock	Additional Paid-in Capital Cumulative Effect, Period of Adoption, Adjustment	Additional Paid-in Capital	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment	Accumulated Deficit	Cumulative Effect, Period of Adoption, Adjustment	Total
Balance at beginning of period at Dec. 31, 2019	$ 2	$ (3,865)		$ 288,345		$ (98,934)		$ 185,548
Balance at beginning of period (in shares) at Dec. 31, 2019	22,496,999
Balance at beginning of period, treasury stock (in shares) at Dec. 31, 2019		175,689
Increase (Decrease) in Stockholders' Equity
Issuance of common stock in connection with acquisition				23,589				23,589
Issuance of common stock in connection with acquisition (in shares)	555,555
Issuance of common stock awards (in shares)	14,386
Issuance of restricted stock (in shares)	578,261
Forfeitures of restricted shares (in shares)		51,391
Exercise of stock options, net of shares withheld		$ (153)		1,103				950
Exercise of stock options, net of shares withheld (in shares)	442,039	3,198
Share adjustment (in shares)		(12,500)
Issuance of common stock in connection with the settlement of acquisition-related contingent consideration				6,853				6,853
Issuance of common stock in connection with the settlement of acquisition-related contingent consideration (in shares)	135,434
Stock-based compensation expense				32,555				32,555
Net loss						(80,966)		(80,966)
Balance at end of period at Dec. 31, 2020	$ 2	$ (4,018)	$ (74,850)	352,445	$ (1,392)	(179,900)	$ (76,242)	168,529
Balance at end of period (in shares) at Dec. 31, 2020	24,222,674
Balance at end of period, treasury stock (in shares) at Dec. 31, 2020		217,778
Increase (Decrease) in Stockholders' Equity
Issuance of common stock awards (in shares)	1,416
Issuance of restricted stock	$ 1							1
Issuance of restricted stock (in shares)	1,446,376
Forfeitures of restricted shares (in shares)		145,684
Exercise of stock options, net of shares withheld		$ (274)		4,343				4,069
Exercise of stock options, net of shares withheld (in shares)	365,770	6,340
Stock-based compensation expense				38,454				38,454
Net loss						(79,055)		(79,055)
Balance at end of period at Dec. 31, 2021	$ 3	$ (4,292)		320,392		(260,347)		$ 55,756
Balance at end of period (in shares) at Dec. 31, 2021	26,036,236							26,036,236
Balance at end of period, treasury stock (in shares) at Dec. 31, 2021		369,802						369,802
Increase (Decrease) in Stockholders' Equity
Issuance of common stock awards		$ 3,082		(3,082)
Issuance of common stock awards (in shares)	28,733	(615,066)
Issuance of restricted stock (in shares)	1,945,277	(107,480)
Forfeitures of restricted shares (in shares)		791,537
Exercise of stock options, net of shares withheld				73				$ 73
Exercise of stock options, net of shares withheld (in shares)	14,732	109
Vesting of restricted stock units (in shares)	6,638
Shares withheld for payment of employee taxes		$ (2,181)						(2,181)
Shares withheld for payment of employee taxes (in shares)		463,618
Stock-based compensation expense				36,831				36,831
Net loss						(147,510)		(147,510)
Balance at end of period at Dec. 31, 2022	$ 3	$ (3,391)		$ 354,214		$ (407,857)		$ (57,031)
Balance at end of period (in shares) at Dec. 31, 2022	28,031,616							28,031,616
Balance at end of period, treasury stock (in shares) at Dec. 31, 2022		902,520						902,520

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net loss	$ (147,510)	$ (79,055)	$ (80,966)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	30,678	47,706	45,040
Amortization of deferred financing costs and debt discount	2,309	2,185	13,637
Deferred taxes	(22)	513	(5,302)
Stock-based compensation	36,831	38,454	32,555
Change in fair value of acquisition-related contingent consideration			2,613
Change in fair value of contingent consideration receivable	3,650
Acquisition-related contingent consideration paid		(67)	(2,593)
Impairment charges	56,828		5,040
Loss on divestiture of business	2,879
Other noncash items	70	39	(66)
Changes in operating assets and liabilities, net of effect of divestiture and acquisitions:
Accounts receivable, net	5,542	(1,526)	(2,448)
Inventories	(1,122)	(1,183)	(239)
Prepaid expenses and other current assets	(3,410)	(8,834)	4,859
Client claims receivables	(5,120)	2,697	(5,674)
Other assets	(1,315)	(2,057)	(494)
Accounts payable	8,697	1,982	2,149
Accrued expenses and other liabilities	12,211	14,294	(3,642)
Client claims payables	2,383	664	(249)
Other long-term liabilities	3,778	(360)	598
Net cash provided by operating activities	7,357	15,452	4,818
Cash flows from investing activities:
Purchases of property and equipment	(2,285)	(3,350)	(3,091)
Software development costs	(26,451)	(31,844)	(18,836)
Acquisitions of businesses, net of cash acquired			(6,807)
Proceeds from divestiture of business	120,038
Net cash provided by (used in) investing activities	91,302	(35,194)	(28,734)
Cash flows from financing activities:
Proceeds from exercise of stock options	73	4,072	3,943
Payments for employee taxes for shares withheld	(2,181)	(3)	(2,993)
Payments for debt financing costs	(350)	(8)	(1,226)
Borrowings on line of credit	27,700	29,500	10,000
Repayments of line of credit	(57,200)	(10,000)
Payment of acquisition-related notes payable		(16,542)
Payments of acquisition-related contingent consideration		(99)	(3,801)
Repayments of long-term debt and finance leases		(4)	(56)
Net cash (used in) provided by financing activities	(31,958)	6,916	5,867
Net increase (decrease) in cash, cash equivalents and restricted cash	66,701	(12,826)	(18,049)
Cash, cash equivalents and restricted cash, beginning of period	15,706	28,532	46,581
Cash, cash equivalents and restricted cash, end of period	82,407	15,706	28,532
Supplemental disclosure of cash flow information:
Purchases of property and equipment and software development included in accounts payable and accrued expenses	1,516	134	183
Purchases of property and equipment and software development through vendor financing arrangements	1,042
Cash paid for interest	7,204	8,678	5,808
Cash paid for taxes (income tax refund)	123	53	(24)
Interest costs capitalized to software development costs	$ 272	$ 322	257
Stock issued in connection with settlement of acquisition-related contingent consideration			6,853
Stock issued in connection with acquisitions			23,589
Fair value of promissory notes entered into in connection with acquisition			$ 16,355

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$ 70,017	$ 9,395	$ 22,531
Restricted cash	12,372	6,038	5,170
Cash from discontinued operations	18	273	831
Total cash, cash equivalents and restricted cash	$ 82,407	$ 15,706	$ 28,532

Nature of Business

12 Months Ended

Dec. 31, 2022

Nature of Business

Nature of Business

1. Nature of Business

Tabula Rasa HealthCare, Inc. (the “Company”) is a healthcare technology company advancing the safe use of medications by creating solutions designed to empower pharmacists, providers, and patients to optimize medication regimens, combating medication overload and reducing adverse drug events. The Company’s advanced proprietary technology solutions, including MedWise®, identify causes of and risks for medication-related problems so that healthcare professionals can minimize harm and reduce medication-related risks. The Company’s software and services help drive value-based care by improving patient outcomes and lowering healthcare costs through reduced hospitalizations, emergency department visits, and healthcare utilization. The Company serves a number of different organizations within the healthcare industry, including health plans and at-risk provider groups, the majority of which are organizations with Programs of All-Inclusive Care for the Elderly (“PACE”).

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding annual financial reporting. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

During the first quarter of 2022, the Company announced plans to evaluate non-core assets, refocus its corporate strategy, and increase stockholder value. As a result, the Company commenced plans to sell the SinfoníaRx, DoseMe, and PrescribeWellness businesses, which the Company acquired in September 2017, January 2019, and March 2019, respectively. The sales of the PrescribeWellness, DoseMe, and SinfoníaRx businesses were completed in August 2022, January 2023, and March 2023, respectively. These businesses comprised the majority of the Company’s MedWise HealthCare segment. The Company’s completed sales of the PrescribeWellness, DoseMe, and SinfoníaRx businesses represented a strategic business shift having a significant effect on the Company’s operations and financial results. As a result, the Company determined that these businesses met such requirements to be classified as held for sale and discontinued operations as of March 31, 2022, and the DoseMe and SinfoníaRx businesses continued to meet the requirements as of December 31, 2022. Accordingly, unless otherwise indicated, the accompanying consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue, and expenses related to these businesses as discontinued operations. Unless otherwise noted, amounts and disclosures throughout the notes to the consolidated financial statements relate to the Company’s continuing operations. See Note 6 for further information on the Company’s discontinued operations.

To provide improved description over the Company’s disaggregation of revenue, the Company retitled its revenue categories from product revenue and service revenue to medication revenue and technology-enabled solutions revenue, respectively, in the consolidated statements of operations and the notes to the consolidated financial statements. The change had no impact to the amounts previously reported in the consolidated statements of operations and the notes to the consolidated financial statements.

(b) Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates or assumptions.

On an ongoing basis, management evaluates its estimates and assumptions, including, but not limited to, those related to: (i) the fair value of assets acquired and liabilities assumed for business combinations, (ii) the recognition and

disclosure of contingent liabilities, (iii) the useful lives of long-lived assets, including definite-lived intangible assets, (iv) the evaluation of revenue recognition criteria, (v) the evaluation of contract assets and consideration payable to customers related to manufacturer rebates earned by the Company’s pharmacy benefit management solutions, (vi) the realizability of long-lived assets, including goodwill and intangible assets, (vii) the assumptions used to determine the fair value of right-of-use assets and liabilities for the Company’s leases, (viii) the assumptions used to determine the fair value of convertible debt instruments and related equity-classified conversion option, (ix) the fair value of contingent consideration receivable, and (x) the assumptions used to determine the fair value of held for sale businesses. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The Company has engaged and, in the future, may engage third-party valuation specialists to assist with estimates related to the valuation of assets and liabilities acquired. Such estimates often require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs. Actual results may differ from those estimates under different assumptions or circumstances.

A long-lived asset (or disposal group) is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable within a year. A long-lived asset (or disposal group) classified as held for sale is initially measured at the lower of its carrying amount or fair value less costs to sell. An impairment loss is recognized for any initial or subsequent write-down of the long-lived asset (or disposal group) to fair value less costs to sell. A gain or loss not previously recognized by the date of the sale of the long-lived asset (or disposal group) is recognized at the date of derecognition.

Long-lived assets (including those that are part of a disposal group) are not depreciated or amortized while they are classified as held for sale. Long-lived assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

Additional details surrounding the Company’s assets and liabilities held for sale and discontinued operations are included in Note 6.

(d) Revenue Recognition

The Company evaluates its contractual arrangements to determine the performance obligations and transaction prices. Revenue is allocated to each performance obligation and recognized when the related performance obligation is satisfied. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of revenue. See Note 3 for additional details about the Company’s revenue offerings.

(e) Cost of Medication Revenue (exclusive of depreciation and amortization)

Cost of medication revenue includes all costs directly related to the fulfillment and distribution of medications as part of the Company’s CareVention HealthCare offerings. These costs consist primarily of the purchase price of the medications that the Company dispenses, shipping and packaging, expenses associated with operating the Company’s medication fulfillment centers, including employment costs and stock-based compensation, and expenses related to the hosting of the Company’s technology platform. Cost of medication revenue also includes direct overhead expenses and allocated indirect overhead costs. The Company allocates indirect overhead costs among functions based on employee headcount.

(f) Cost of Technology-Enabled Solutions Revenue (exclusive of depreciation and amortization)

Cost of technology-enabled solutions revenue includes all costs directly related to servicing the Company’s CareVention HealthCare and MedWise HealthCare service contracts. These costs primarily consist of employment costs, including stock-based compensation, outside contractors, expenses related to supporting the Company’s software platforms, direct overhead expenses, and allocated indirect overhead costs. The Company allocates indirect overhead costs among functions based on employee headcount.

(g) Research and Development

Research and development expenses consist primarily of employment costs, including stock-based compensation expense, for employees engaged in scientific research, healthcare analytics, the design and development of new scientific algorithms, and the enhancement of the Company’s software and technology platforms. Research and development expenses also include costs for the design and development of new software and technology to support the Company’s service offerings, including fees paid to third-party consultants, costs related to quality assurance and testing, and other allocated facility-related overhead and expenses. Costs incurred in research and development are charged to expense as incurred.

(h) Stock-Based Compensation

The Company accounts for stock-based awards granted to employees and directors in accordance with ASC Topic 718, Compensation — Stock Compensation, which requires that compensation cost be recognized for awards based on the grant-date fair value of the award. That cost is recognized on a straight-line basis over the period during which an employee, director, or non-employee is required to provide service in exchange for the award — the requisite service period (“vesting period”). The Company classifies stock-based compensation expense in its statement of operations in the same manner in which the award recipient's payroll costs or the recipient’s service payments are classified.

The grant-date fair value of employee and non-employee director restricted stock awards and restricted stock units is determined using the Company’s closing stock price on the grant date. Restricted stock awards and restricted stock units generally vest over a one-to-four year period, and the unvested portion of these awards is forfeited if the employee or non-employee director leaves the Company before the vesting period is completed.

The grant-date fair value of performance stock units is determined based on the fair value of the Company’s closing stock price at grant date and the expected vesting units, taking into consideration the possibilities of all possible performance achievement levels. Stock-based compensation costs associated with these grants are recognized over the performance period. Performance stock units contain performance vesting conditions in addition to a service condition, and the vesting of performance stock units is dependent upon the degree to which the Company achieves its predetermined performance goals.

The grant-date fair value of employee and non-employee director stock option awards is determined using the Black-Scholes option-pricing model. The Company estimates its expected stock volatility based on the historical volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method. The expected term of the stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The option price per share cannot be less than the fair market value of a share on the date the option was granted, and in the case of incentive stock options granted to an employee owning more than 10% of the total combined voting power of all classes of stock of the Company, the option price shall not be less than 110% of the fair market value of Company stock on the date of grant. Stock option grants under the 2016 Plan (as defined below) generally expire ten years from the date of grant (other than incentive stock option grants to 10% shareholders, which have a five-year term)

90 days after termination, or one year after the date of death or termination due to disability. Stock options generally vest over a period of four years, with 25% of the options becoming exercisable on the one-year anniversary of the commencement date and the remaining shares vesting monthly thereafter for 36 months in equal installments of 2.08% per month.

(i) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount expected to be realized.

(j) Net Loss per Share

Basic and diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock of the Company outstanding during the period.

(k) Cash and Cash Equivalents

Cash consists of cash on deposit with banks. Cash equivalents consist of money market funds or highly liquid investments with a maturity of three months or less from the date of purchase.

(l) Restricted Cash

Cash and cash equivalents that are restricted as to withdrawal or use under certain contractual agreements are recorded in restricted cash on the Company’s consolidated balance sheets. As part of the Company’s third-party administration services under the CareVention HealthCare segment, the Company holds funds on behalf of its clients. These amounts are recorded as restricted cash with an offsetting liability recorded in accrued expenses and other liabilities on the Company’s consolidated balance sheets.

(m) Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management estimates the expected lifetime credit losses on the Company’s trade receivables and contract assets using a broad range of reasonable and supportable information, which includes consideration of historical losses and current market conditions on the Company’s clients. The Company reviews its allowance for doubtful accounts monthly. The allowance for doubtful accounts was $368 and $110 as of December 31, 2022 and 2021, respectively.

(n) Inventories

Inventories consist of prescription medications and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method.

(o) Client Claims Receivable and Client Claims Payable

In conjunction with providing pharmacy benefit management (“PBM”) solutions for its clients, the Company collects payments for claims from its clients and remits them to the pharmacies that fulfilled the claims. Client claims receivable represents amounts invoiced to the Company’s PBM solutions clients for the adjudicated claims of the

clients’ members. Client claims payable represents amounts owed to the pharmacies that filled the clients’ member claims.

(p) Cloud Computing Arrangements

Costs to implement cloud computing arrangements that are hosted by third-party vendors are capitalized when incurred during the application development phase. Capitalized implementation costs are amortized on a straight-line basis over the reasonably certain term of the hosting arrangement, beginning when the service is ready for its intended use. As of December 31, 2022 and 2021, capitalized implementation costs of $882 and $747, respectively, were included in prepaid expenses. As of December 31, 2022 $1,276 was included in other assets on the Company’s consolidated balance sheets. Accumulated amortization for these arrangements was $590 and $398 as of December 31, 2022 and 2021, respectively. Amortization expense for the years ended December 31, 2022, 2021, and 2020 was $192, $208, and $185, respectively.

(q) Vendor Financing Arrangements

On February 24, 2022, the Company expanded its existing relationship with a third-party service provider for business process outsourcing and technology services for its third-party administration services and electronic health records solutions. As a result, the third-party provider hired approximately 180 employees from the Company, hired to fill existing open positions, and will augment with additional resources to meet client demand. The agreement term is seven years and includes total estimated fees of $115,300.

The arrangement includes extended payment terms for cloud computing implementation costs, internally developed software support, and business process support. In order to determine the present value of the commitment, the Company used an imputed interest rate of 9.5%, which was reflective of its estimated uncollateralized borrowing rate at signing. As of December 31, 2022, the outstanding principal balance of the financing arrangement was $5,169 with an unamortized discount of $1,239, which was included in accrued expenses and other liabilities and other long-term liabilities on the Company’s consolidated balance sheet. Imputed interest expense from the arrangement was $166 for the year ended December 31, 2022.

On October 1, 2022, the Company entered into a purchase arrangement with a third-party software support and service provider to purchase software licenses for total fees of $1,065. The purchased software licenses were delivered to the Company on the purchase date. The arrangement allows the Company to pay the fees over 36 monthly installment payments. The Company used an imputed interest rate of 10.0%, which was reflective of its estimated collateralized borrowing rate on purchase date. As of December 31, 2022, the outstanding principal balance of the financing arrangement was $916 with an unamortized discount of $138, which was included in accrued expenses and other liabilities and other long-term liabilities on the Company’s consolidated balance sheet. Imputed interest expense from the arrangement was $1 for the year ended December 31, 2022.

(r) Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

ROU assets and liabilities are recognized at the lease commencement date based on the estimated net present value of lease payments over the lease term. As the rate implicit in the lease is not readily determinable for most leases, the Company uses its incremental borrowing rate in determining the net present value of lease payments. The Company estimates its incremental borrowing rate for each lease as of the measurement date with consideration of the risk-free rate for varying maturities corresponding to the remaining lease term, the risk premium attributed to the Company’s credit rating for a secured or collateralized instrument, and comparable borrowings of similarly rated companies.

Leases with an initial term of twelve months or less are not recorded on the balance sheet. The lease expense for short-term leases is recognized on a straight-line basis over the lease term. Many leases include options to renew, with the exercise of lease renewal options at the Company’s sole discretion. The lease terms that include options to renew the lease require such renewal to be included when it is reasonably certain that the Company will exercise such option. The depreciable life of finance lease assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

For leases where the Company will derive no economic benefit from leased space that it has vacated or where the Company has shortened the term of a lease when space is no longer needed, the Company will record an impairment or accelerated amortization of the ROU assets.

The Company’s lease agreements do not contain any residual value guarantees. The Company has elected to include both lease and nonlease components as a single lease component for its operating leases.

See Note 9 for further detail regarding the Company’s lease arrangements.

(s) Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Additions or improvements that increase the useful life of existing assets are capitalized, while expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets. The Company depreciates computer hardware and purchased software over a life of three years and office furniture and equipment over a life of five years. Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the lease term. Upon retirement or sale, the cost and related accumulated depreciation of assets disposed of are removed from the accounts, and any resulting gain or loss is included in the consolidated statements of operations.

(t) Software Development Costs, Net

Certain development costs of the Company’s internal-use software are capitalized in accordance with ASC Topic 350, Intangibles — Goodwill and Other (“ASC 350”), which outlines the stages of computer software development and specifies when capitalization of costs is required. The Company capitalizes certain costs incurred in connection with obtaining or developing the proprietary platforms that support the Company’s medication and technology-enabled service contracts. These costs include third-party contractors and payroll costs for employees directly involved with the software development. Projects that are determined to be in the development stage are capitalized. Subsequent additions, modifications, or upgrades to internal-use software are capitalized to the extent that they allow the software to perform tasks it previously did not perform. Capitalized software costs are amortized beginning when the software project is substantially complete and the asset is ready for its intended use. Capitalized internal-use software costs are amortized using the straight-line method over the remaining estimated useful life of the assets, which is generally three years. Costs incurred in the preliminary project stage and post-implementation stage, as well as maintenance and training costs, are expensed as incurred.

(u) Goodwill

Goodwill consists of the excess purchase price over fair value of net tangible and intangible assets acquired. Goodwill is not amortized, but instead tested for impairment at least annually. Goodwill is assessed for impairment on October 1 of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company evaluates goodwill in accordance with ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which requires the Company to perform its goodwill impairment assessment by comparing the fair value of its reporting units with their respective carrying values.

Prior to performing the quantitative assessment, the Company has the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Factors generally considered in the Company’s qualitative assessment that could trigger a quantitative

assessment include significant underperformance relative to expected operating trends, significant changes in the way assets are used, underutilization of the Company’s tangible assets, discontinuance of certain products by the Company or by the Company’s clients, changes in the competitive environment, and significant negative industry or economic trends. If the Company determines that it is more likely than not that the fair value of a reporting unit is below the carrying amount, a quantitative goodwill impairment test is required. In the quantitative assessment, the fair value of the reporting unit is determined using either a discounted cash flow method or a market approach. If the fair value of the reporting unit is greater than its carrying amount, then the carrying amount is deemed to be recoverable and no further action is required.

If the fair value of the reporting unit is less than its carrying amount, then an indication of goodwill impairment exists for the reporting unit and an impairment loss is recognized in the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is recorded on the Company’s consolidated statements of operations.

For its annual assessment for the year ended December 31, 2022, the Company performed a quantitative assessment of goodwill as of October 1, 2022 using a market approach, which estimates fair value based on a reconciliation of the Company’s market capitalization. Based on the analysis performed, the Company determined that the estimated fair value of the Company’s reporting units exceeded their carrying values, and as a result, goodwill was not impaired as of December 31, 2022.

During first and second quarter of 2022, Company experienced a sustained decline in the price of the Company’s common stock. As a result, the Company determined that an indicator of impairment was present and performed a quantitative goodwill impairment assessment as of March 31, 2022 and June 30, 2022, respectively, using a market approach, which estimates fair value based on a reconciliation of the Company’s market capitalization. Based on the analysis performed, the Company determined that the estimated fair value of the Company’s reporting units exceeded their carrying values, and as a result, goodwill was not impaired as of March 31, 2022 and June 30, 2022.

During fourth of quarter of 2021, the Company experienced a sustained decline in the price of the Company’s common stock. As a result, the Company determined that an indicator of impairment was present and performed a quantitative goodwill impairment assessment as of December 31, 2021 in addition to its annual assessment as of October 1, 2021. The fair value of the reporting units was estimated using a combination of a discounted cash flow method, or income approach, and market approaches, which estimate fair value based on a selection of appropriate peer group companies. The Company utilized forecasts of revenue and operating income, based on management’s estimates and long-term plans, as well as required estimates and judgments about working capital requirements, capital expenditures, income taxes, discount rates, terminal growth rates, long-term operating margins, and control premiums and valuation multiples appropriate for acquisitions in the industries in which the Company competes. Based on the analysis performed, the Company determined that the estimated fair value of the Company’s reporting units exceeded their carrying values, and as a result, goodwill was not impaired as of December 31, 2021.

For the year ended December 31, 2020, the Company performed a qualitative assessment of goodwill and determined that it was not more likely than not that the fair value of its reporting units was less than the carrying amount.

Accordingly, no impairment loss was recorded for the years ended December 31, 2022, 2021, or 2020. See Note 11 - Goodwill and Intangible Assets for additional information.

(v) Impairment of Long-Lived Assets, Including Other Intangible Assets

Long-lived assets consist of property and equipment, software development costs, and definite-lived intangible assets. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss may be recognized when estimated undiscounted future cash flows

expected to result from the use and disposition of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows or a combination of income and market approaches.

During the first quarter of 2022, the Company became aware of changes in circumstances impacting the future application of certain capitalized software development costs and determined that an indicator of impairment was present. The Company evaluated the recoverability of the related long-lived assets by comparing their carrying amount to the future net undiscounted cash flows expected to be generated by the assets to determine if the carrying value was not recoverable. The recoverability test indicated that certain capitalized software development costs were impaired. As a result, the Company recognized an impairment loss equal to $4,062 for the year ended December 31, 2022.

During the fourth quarter of 2021, the Company determined that an indicator of impairment was present as it related to definite-lived intangible assets obtained from the DoseMe acquisition in 2019, which are presented in current assets of discontinued operations as of December 31, 2022 and in noncurrent assets of discontinued operations as of December 31, 2021. The recoverability test indicated that the undiscounted cash flows of the asset group were less than its carrying value. Therefore, the estimated fair value of the DoseMe assets was determined based on a combination of a discounted cash flow method, or income approach, and market approaches, which estimate fair value based on a selection of appropriate peer group companies. The estimated fair value of the DoseMe assets exceeded its carrying value. As a result, no intangible asset impairment charges were recorded for the year ended December 31, 2021.

During the fourth quarter of 2020, the Company determined that an indicator of impairment was present as related to definite-lived intangible assets obtained from the Medliance acquisition in 2014. The recoverability test indicated that certain intangible assets were impaired, and the Company recorded an aggregate impairment charge of $5,040 for the year ended December 2020.

See Note 11 - Goodwill and Intangible Assets and Note 6 – Discontinued Operations for additional information.

(w) Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal fees and other expenses related to litigation are expensed as incurred and included in general and administrative expenses in the consolidated statements of operations.

(x) Shipping and Handling Costs

Shipping and handling costs are charged to cost of medication revenue when incurred. Shipping and handling costs totaled $13,613, $9,410, and $8,443 for the years ended December 31, 2022, 2021, and 2020, respectively.

(y) Advertising Costs

Advertising costs are charged to operations when the advertising first takes place. The Company incurred advertising costs of $90, $334 and $185 for the years ended December 31, 2022, 2021, and 2020, respectively, which are included in sales and marketing expense.

(z) Business Combinations

The costs of business combinations are allocated to the assets acquired and liabilities assumed, in each case based on estimates of their respective fair values at the acquisition dates, using the purchase method of accounting. Fair values of intangible assets are estimated by valuation models prepared by management and third-party specialists. The assets purchased and liabilities assumed have been reflected in the Company’s consolidated balance sheets, and the results are included in the consolidated statements of operations and consolidated statements of cash flows from the date of acquisition. Acquisition-related contingent consideration that is classified as a liability is measured at fair value at the acquisition date with changes in fair value after the acquisition date affecting earnings in the period of the estimated fair

value change. Acquisition-related transaction costs, including legal and accounting fees and other external costs directly related to the acquisition, are recognized separately from the acquisition and expensed as incurred in general and administrative expenses in the consolidated statements of operations. Unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates, or actual results.

(aa) Segment Reporting

The Company manages its business through two segments for the purposes of assessing performance and making operating decisions. The Company’s chief operating decision maker (“CODM”), the Interim Chief Executive Officer, allocates resources and assesses performance based upon financial information at the reportable segment level. All revenues are generated and all tangible assets are held in the U.S. See Note 23 for a discussion of the Company’s reportable segments.

(bb) Concentration of Credit Risk

The Company is subject to concentrations of credit risk related to cash, cash equivalents, restricted cash, accounts receivable, and client claims receivable. While the Company maintains its cash, cash equivalents and restricted cash with financial institutions with high credit ratings, it often maintains these deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any realized losses on cash, cash equivalents or restricted cash to date.

The Company’s medication fulfillment services clients are sponsors of the federal Medicare Part D plan (prescription drug coverage plan) and, therefore, subject to the payment regulations established by the Centers for Medicare & Medicaid Services (“CMS”). Under CMS guidelines, Medicare Part D sponsors are required to remit payment for claims within 14 calendar days of the date on which an electronically submitted claim is received and within 30 days of the date on which non-electronically-submitted claims are received. The Company extends credit to clients based upon such terms, as well as management’s evaluation of creditworthiness, and generally collateral is not required.

The Company’s clients also include health plans and other healthcare providers. Credit associated with these accounts is extended based upon management’s evaluation of creditworthiness and is monitored on an on-going basis.

As of December 31, 2022 and December 31, 2021, no client represented more than 10% of net accounts receivable.

As of December 31, 2022, one client represented 14% of client claims receivable. As of December 31, 2021, two clients represented 13% and 11%, respectively, of client claims receivable.

For the years ended December 31, 2022, 2021, and 2020, one client accounted for 15%, 16%, and 16% of total revenue, respectively.

(cc) Fair Value of Financial Instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities or other inputs that are observable or can be corroborated by observable markets.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

(dd) Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under ASC Topic 606 (Revenue from Contracts with Customers) in order to align the recognition of a contract liability with the definition of performance obligation. This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. ASU 2021-08 is effective for financial statements issued for fiscal years beginning after December 15, 2022; early adoption is permitted. The Company adopted ASU 2021-08 on January 1, 2023 and determined that it does not have a significant impact on the consolidated financial statements.

Revenue

12 Months Ended

Dec. 31, 2022

Revenue.

Revenue

3. Revenue

The Company generates revenue from its CareVention HealthCare and MedWise HealthCare segments. See Note 23 for additional discussion of the Company’s reportable segments.

Client contracts generally have a term of one to five years and generally renew at the end of the initial term. In most cases, clients may terminate their contracts with a notice period ranging from 0 to 180 days without cause, thereby limiting the term in which the Company has enforceable rights and obligations. Revenue is recognized in an amount that reflects the consideration that is expected in exchange for the goods or services provided. Generally, there are not significant differences between the timing of revenue recognition and billing. Consequently, the Company has determined that client contracts do not include a financing component.

The Company does not disclose the amount of variable consideration that the Company expects to recognize in future periods, as the variable consideration in the Company’s contracts is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation, and the terms of that variable consideration relate specifically to the Company’s efforts to transfer the distinct service, or to a specific outcome from transferring the distinct service. The Company’s contracts primarily include monthly fees associated with unspecified quantities of medications, members, claims, medication safety reviews, or user subscriptions that fluctuate throughout the contract. See below for a description of the Company’s revenues.

CareVention Revenue

Medication Revenue

The Company provides medication fulfillment pharmacy services to PACE organizations under the Company’s CareVention HealthCare segment. While the majority of medications are routinely filled in order to treat chronic conditions, the mix and quantity of medications can vary. Revenue from medication fulfillment services is generally billed monthly or weekly, depending on whether the PACE organization is contracted with a pharmacy benefit manager, and is recognized when medications are delivered and control has passed to the client. At the time of delivery, the Company has performed substantially all of its performance obligations under its client contracts. The Company does not experience a significant level of returns or reshipments.

Technology-Enabled Solutions Revenue

The Company provides medication safety services and health plan management services to PACE organizations under the Company’s CareVention HealthCare segment. These services primarily include medication reviews, risk adjustment services, third-party administration services, pharmacy benefit management (“PBM”) solutions, and electronic health records software. Revenue related to these services primarily consists of a fixed monthly fee assessed based on number of members served (“per member, per month” or “PMPM”), a fee for each claim adjudicated, and subscription fees. These fees are recognized when the Company satisfies its performance obligation to stand ready to provide PACE services, which occurs when the Company’s clients have access to the PACE services. The Company generally bills for PACE services on a monthly basis.

For client contracts for which the Company performs both medication fulfillment and PBM services, the Company recognizes revenue using the gross method at the contract price negotiated with its clients and when the Company has concluded it controls the prescription drug before it is transferred to the client plan members. The Company controls prescription drugs dispensed indirectly through its retail pharmacy network because it has separate contractual arrangements with those pharmacies, has discretion in setting the price for the transaction, and assumes primary responsibility for fulfilling the promise to provide prescription drugs to its client plan members while performing the related PBM services. These factors indicate that the Company is the principal and, as such, the Company recognizes the total prescription price contracted with clients in revenue.

MedWise HealthCare

Technology-Enabled Solutions Revenue

Value-Based Care Solutions

The Company provides medication safety services under the MedWise HealthCare segment, which include identification of high-risk individuals, medication regimen reviews, including patient and prescriber counseling, and targeted interventions to increase adherence and close gaps in care. Revenue related to these services primarily consists of per member per month fees and fees for each medication review and clinical assessment completed. Revenue is recognized when the Company satisfies its performance obligation to stand ready to provide medication safety services, which occurs when the Company’s clients have access to the medication safety services and when medication reviews and clinical assessments are completed. The Company generally bills for the medication reviews and clinical assessments when they are completed. The Company generally bills for the medication safety services on a monthly basis.

Software Subscription and Services

The Company provides software as a service (“SaaS”) solutions which allow for the identification of individuals with high medication-related risk and for optimizing medication therapy. Revenues related to these SaaS solutions primarily consist of monthly subscription fees and are recognized monthly as the Company meets its performance obligation to provide access to the software. Revenue for implementation and set-up services is generally recognized over the contract term as the software services are provided. The Company generally bills for the software services on a monthly basis.

Disaggregation of Revenue

Revenue is disaggregated by reportable segment in the following table:


	Year Ended
	December 31,
		2022		2021		2020
CareVention HealthCare:
Medication revenue	$	231,052	$	189,591	$	158,692
Technology-enabled solutions revenue		64,430		58,417		47,577
	$	295,482	$	248,008	$	206,269
MedWise HealthCare:
Technology-enabled solutions revenue
Value-based care solutions	$	3,077	$	11,617	$	14,926
Software subscription and services		957		257		194
	$	4,034	$	11,874	$	15,120
Total revenue	$	299,516	$	259,882	$	221,389

Contract balances

Assets and liabilities related to the Company’s contracts are reported on a contract-by-contract basis at the end of each reporting period. Contract balances consist of contract assets and contract liabilities. Contract assets are recorded when the right to consideration for services is conditional on something other than the passage of time. Contract assets relating to unbilled receivables are transferred to accounts receivable when the right to consideration becomes unconditional. Contract assets are classified as current or non-current based on the timing of the Company’s rights to the unconditional payments. Contract assets are generally classified as current and recorded within other current assets on the Company’s consolidated balance sheets.

Contract liabilities include advance customer payments and billings in excess of revenue recognized. The Company generally classifies contract liabilities in accrued expenses and other current liabilities and in other long-term liabilities on the Company’s consolidated balance sheets. The Company anticipates that it will satisfy most of its performance obligations associated with its contract liabilities within one year.

The following table provides information about the Company’s contract assets and contract liabilities from contracts with clients as of December 31, 2022 and 2021.


	December 31,		December 31,
	2022		2021
Contract assets	$	15,115	$	12,695
Contract liabilities		3,435		2,191

Significant changes in the contract assets and the contract liabilities balances during the years ended December 31, 2022 and 2021 are as follows:


	December 31,		December 31,
	2022		2021
Contract assets:
Contract assets, beginning of year	$	12,695	$	7,024
Decreases due to cash received		(12,447)		(8,889)
Changes to the contract assets at the beginning of the year as a result of changes in estimates		153		2,392
Changes during the year, net of reclassifications to receivables		14,714		12,168
Contract assets, end of year	$	15,115	$	12,695

Contract liabilities:
Contract liabilities, beginning of year	$	2,191	$	1,982
Revenue recognized that was included in the contract liabilities balance at the beginning of the year		(1,990)		(1,523)
Increases due to cash received, excluding amounts recognized as revenue during the year		3,234		1,732
Contract liabilities, end of year	$	3,435	$	2,191

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Net Loss per Share

12 Months Ended

Dec. 31, 2022

Net Loss per Share

Net Loss per Share

4. Net Loss per Share

The following table presents the calculation of basic and diluted net loss per share for the Company’s common stock:


	Year Ended
	December 31,
	2022		2021		2020
Numerator (basic and diluted):
Net loss from continuing operations	$	(77,334)	$	(52,238)	$	(56,511)
Net loss from discontinued operations		(70,176)		(26,817)		(24,455)
Net loss	$	(147,510)	$	(79,055)	$	(80,966)
Denominator (basic and diluted):
Weighted average shares of common stock outstanding, basic and diluted		24,293,483		23,290,660		21,815,388

Net loss per share from continuing operations, basic and diluted	$	(3.18)	$	(2.24)	$	(2.59)
Net loss per share from discontinued operations, basic and diluted		(2.89)		(1.15)		(1.12)
Total net loss per share, basic and diluted	$	(6.07)	$	(3.39)	$	(3.71)

The following potential common shares, presented based on amounts outstanding as of December 31, 2022, 2021, and 2020, were excluded from the calculation of diluted net loss per share for the years ended December 31, 2022, 2021, and 2020 because including them would have had an anti-dilutive effect:


	December 31,
	2022	2021	2020
Stock options to purchase common stock	1,177,805	1,604,226	2,096,556
Unvested restricted stock and restricted stock units	2,295,313	2,196,566	1,386,908
Common stock warrants	4,646,393	4,646,393	4,646,393
Conversion of convertible senior subordinated notes	4,646,393	4,646,393	—
	12,765,904	13,093,578	8,129,857

For the years ended December 31, 2022 and 2021, shares related to the conversion of the convertible senior subordinated notes were included in the table above under the if-converted method. For the year ended December 31, 2020, shares associated with the conversion of the convertible senior subordinated notes were excluded from the table above as the Company assumed the notes would be settled entirely or partly in cash.

For the years ended December 31, 2022 and 2021, shares related to the performance stock units were excluded from the table above as the performance conditions were unmet as of December 31, 2022 and 2021 (see Note 17).

Acquisitions

12 Months Ended

Dec. 31, 2022

Acquisitions

Acquisitions

5. Acquisitions

Personica Acquisition

On October 5, 2020, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with TRHC Group, Personica Holdings, Inc., a Wisconsin corporation, and other seller parties, whereby the Company completed the acquisition of all of the issued and outstanding membership interests of Personica, LLC, a Delaware limited liability company (“Personica”), and its subsidiaries, a provider of PBM solutions and pharmacy services, including 340B and Medicare Part D administration solutions to the PACE market. The purchase price consisted of (i) cash consideration of $10,000, which was subject to certain customary post-closing adjustments, (ii) the issuance of 555,555 shares of the Company’s common stock valued at $23,589, and (iii) the delivery of promissory notes (collectively, the “Notes”), with an aggregate principal of $17,000, of which the Company could set off amounts to the extent the Company was entitled to indemnification under the Purchase Agreement or in respect of adjustments to the purchase price. The Notes consisted of payments of (a) $7,500 in cash paid in January 2021, (b) $5,500 in cash paid in April 2021, and (c) $4,000 in cash paid in October 2021. The Company reduced the October 2021 payment by $458 for indemnification amounts under the Purchase Agreement. For presentation purposes, the Company offset the remaining balance on the Notes against related receivables established to compensate the Company for the expenses incurred.

In connection with the acquisition of Personica, the Company incurred direct acquisition and integration costs of $217 and $794 during the years ended December 31, 2021 and 2020, respectively, which were recorded in general and administrative expenses in the consolidated statement of operations.

The following table summarizes the Personica purchase price consideration based on the estimated acquisition-date fair value of the acquisition consideration:


Cash consideration at closing, including post-closing adjustments	$	10,292
Promissory notes at closing, at fair value		16,355
Stock consideration at closing		23,589
Total fair value of acquisition consideration	$	50,236

The following table summarizes the final allocation of the Personica purchase price based on the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.


Cash	$	3,407
Accounts receivable		945
Inventories		322
Client claims receivable		8,736
Prepaid expenses and other current assets		4,747
Property and equipment		665
Operating lease right-of-use assets		645
Other assets		15
Trade names		700
Client relationships		28,300
Non-competition agreements		290
Goodwill		20,075
Total assets acquired	$	68,847

Client claims payable		(8,022)
Accrued expenses and other liabilities		(9,645)
Trade accounts payable		(310)
Operating lease liabilities		(634)
Total purchase price	$	50,236

The purchase price was allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based on their acquisition-date estimated fair values. The identifiable intangible assets principally included trade names, client relationships, and non-competition agreements, all of which are subject to amortization on a straight-line basis and are being amortized over a weighted average life of 5.6, 12.0, and 5.0 years, respectively. The weighted average amortization period for acquired intangible assets as of the date of acquisition was 11.8 years.

The Company, with the assistance of a third-party appraiser, assessed the fair value of the assets of Personica and the promissory notes issued. The fair values of the trade names were estimated using the relief from royalty method, under which the Company derived the hypothetical royalty income from the projected revenues of Personica. The fair value of client relationships was estimated using a multi-period excess earnings method. To calculate fair value, the Company used cash flows discounted at a rate considered appropriate given the inherent risks associated with the client grouping. The fair value of the non-competition agreements was estimated using the discounted earnings method by estimating the potential loss of earnings absent the non-competition agreements, assuming the covenantor competes at different time periods during the life of the agreements. The fair values of the promissory notes were estimated using market interest rates for similar terms.

The useful lives of the intangible assets were estimated based on the expected future economic benefit of the assets and are being amortized over the estimated useful life in proportion to the economic benefits consumed using the straight-line method. The amortization of intangible assets is deductible for U.S. income tax purposes.

The Company believes the goodwill related to the acquisition was a result of providing the Company complementary service offerings that will enable the Company to leverage its services with existing and new clients. The goodwill is deductible for income tax purposes.

Revenue from Personica includes medication fulfillment pharmacy services to PACE organizations. Revenue for these services and the related costs are recognized when medications are delivered and control has passed to the client and are included in medication revenue and cost of medication revenue, respectively, in the Company’s consolidated statements of operations. For the year ended December 31, 2020, medication revenue of $1,804 was included in the Company’s consolidated statement of operations. Revenue from Personica is also comprised of monthly fees per adjudicated claim for PBM solutions. Revenue for these services and the related costs are recognized each month as performance obligations are satisfied and costs are incurred, and are included in technology-enabled solutions revenue and cost of technology-enabled solutions revenue, respectively, in the Company’s consolidated statements of operations. For the year ended December 31, 2020, technology-enabled solutions revenue of $1,738 from Personica was included in the Company’s consolidated statement of operations. Net loss of $5, which includes amortization of $625 associated with acquired intangible assets, from Personica was included in the Company’s consolidated statement of operations for the year ended December 31, 2020.

Pro forma (unaudited)

The unaudited pro forma results presented below include the results of the Personica acquisition as if it had been consummated as of January 1, 2019. The unaudited pro forma results include the amortization associated with acquired intangible assets, interest expense on the debt incurred to fund the acquisition, stock compensation expense related to equity awards granted to employees of the acquired company, and the estimated tax effect of adjustments to loss before income taxes. Material non-recurring charges, including direct acquisition costs, directly attributable to the transaction are excluded. In addition, the unaudited pro forma results do not include any expected benefits of the acquisition. Accordingly, the unaudited pro forma results are not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of January 1, 2019.


	Year Ended
	December 31,
	2020
Revenue	$	230,262
Net loss		(55,987)

Discontinued Operations

12 Months Ended

Dec. 31, 2022

Discontinued Operations

Discontinued Operations

6. Discontinued Operations

In February 2022, the Company announced plans to evaluate non-core assets, refocus its corporate strategy, and increase stockholder value, and the Company commenced a plan to sell the DoseMe business, which the Company acquired in January 2019. In March 2022, the Company completed its evaluation of additional divestiture opportunities and commenced plans to sell the SinfoníaRx and PrescribeWellness businesses, which were acquired in September 2017 and March 2019, respectively. As described below, the Company completed the sales of its unincorporated PrescribeWellness business division (the “PrescribeWellness Business”), DoseMe business division (the “DoseMe Business”), and SinfoníaRx business division (the “SinfoníaRx Business”) in August 2022, January 2023, and March 2023, respectively.

The PrescribeWellness, DoseMe, and SinfoníaRx businesses comprised the majority of the Company’s MedWise HealthCare segment. The Company’s completed sales of the PrescribeWellness Business, DoseMe Business, and SinfoníaRx Business represented a strategic business shift having a significant effect on the Company’s operations and financial results. As a result, the Company determined that these businesses met such requirements to be classified as held for sale and discontinued operations as of March 31, 2022, and the DoseMe and SinfoníaRx businesses continued to meet the requirements as of December 31, 2022. Accordingly, unless otherwise indicated, the accompanying consolidated financial statements have been recast for all periods presented to reflect the assets, liabilities, revenue, and expenses related to these businesses as discontinued operations.

Divestiture of Business

On August 1, 2022 (the “PW Sale Date”), the Company completed the sale of its PrescribeWellness Business, including the assets, properties, and rights that were primarily used or held for use in connection with the PrescribeWellness Business, as well as the KD Assets (as defined below) to Transaction Data Systems, Inc. (“TDS”). On the PW Sale Date, the Company also completed the acquisition of certain intellectual property from karmadata, Inc. (“KD”) that had historically been licensed to the Company, (the “KD Assets”). The KD Assets acquired were simultaneously transferred to TDS on the PW Sale Date. The purchase consideration included $125,000 in cash, subject to certain customary post-closing adjustments, of which $118,561 was paid directly to the Company and $5,900 was paid to KD on the PW Sale Date. In October 2022, TDS also paid the Company $1,477 for certain customary post-closing adjustments after the PW Sale Date. The Company is also entitled to receive up to $15,000 of contingent consideration based upon the PrescribeWellness Business’s achievement of certain performance-based metrics during the fiscal years ending December 31, 2023 and 2024. The contingent consideration had an estimated fair value of $7,000 on the PW Sale Date. See Note 18 for additional discussion on the fair value assessment of the contingent consideration receivable.

In connection with the sale of the PrescribeWellness Business, the Company entered into a transition services agreement (“TSA”) with TDS pursuant to which the Company is providing services, including, but not limited to, business support services for the PrescribeWellness business after the sale through January 2023. The Company recognized $1,064 of income related to the TSA for the year ended December 31, 2022, which is reported in other income in the Company’s consolidated statement of operations.

During the second quarter of 2022, as a result of the Company’s intention to sell the PrescribeWellness Business, the Company prepared an impairment test on the related net assets held for sale. Using a market approach to determine fair value, the Company concluded that the carrying value of the net assets held for sale for the PrescribeWellness Business did not exceed its fair value, less costs to sell. As a result, the Company recorded goodwill impairment charges of $12,145 and impairment charges of $8,500 on net assets held for sale, summarized in the results of the PrescribeWellness business presented below. On August 1, 2022, the Company recorded an additional $2,879 for the final loss on the sale of the PrescribeWellness Business, resulting in an aggregate loss of $11,379 on the net assets sold for the year ended December 31, 2022.

The following table summarizes the net assets sold as finally reported on the sale date of August 1, 2022, and as of December 31, 2021, classified as discontinued operations on the consolidated balance sheets as of December 31, 2021:


	August 1,		December 31,
	2022		2021
Accounts receivable, net	$	5,020	$	8,002
Prepaid expenses and other assets		1,751		1,038
Property and equipment, net		371		—
Operating lease right-of-use assets		1,252		—
Software development costs, net		14,536		—
Goodwill		35,314		—
Intangible assets, net		81,504		—
Impairment of carrying value		(8,500)		—
Total current assets of discontinued operations	$	131,248	$	9,040

Property and equipment, net	$	—	$	412
Operating lease right-of-use assets		—		1,434
Software development costs, net		—		11,474
Goodwill		—		47,459
Intangible assets, net		—		84,617
Other assets		—		64
Total noncurrent assets of discontinued operations	$	—	$	145,460

Operating lease liabilities	$	1,086	$	620
Accounts payable		491		913
Accrued expenses and other liabilities		2,754		3,529
Total current liabilities of discontinued operations	$	4,331	$	5,062

Noncurrent operating lease liabilities	$	—	$	830
Other long-term liabilities		—		135
Total noncurrent liabilities of discontinued operations	$	—	$	965

The following table summarizes the results of operations of the PrescribeWellness Business, which are included in loss from discontinued operations, net of tax in the consolidated statements of operations for the years ended December 31, 2022, 2021, and 2020:


	Year Ended
	December 31,
	2022		2021		2020
Revenue	$	19,306	$	38,304	$	35,311
Cost of revenue, exclusive of depreciation and amortization		7,747		13,295		13,615
Operating expenses		14,930		33,579		27,658
Impairment charges		20,645		—		—
Loss on disposal of business		2,879		—		—
Loss from discontinued operations before income taxes		(26,895)		(8,570)		(5,962)
Income tax (benefit) expense		(299)		169		172
Net loss from discontinued operations, net of tax	$	(26,596)	$	(8,739)	$	(6,134)

The following table summarizes the significant operating noncash items and investing activities of PrescribeWellness Business:


	Year Ended
	December 31,
	2022		2021		2020
Depreciation and amortization	$	4,551	$	16,374	$	14,815
Impairment charges		20,645		—		—
Stock-based compensation		1,697		2,977		1,370
Loss on disposal of business		2,879		—		—
Purchases of property and equipment		(22)		(128)		(200)
Software development costs		(4,443)		(8,169)		(5,479)

Held for Sale

As of December 31, 2022, the Company considered the sale of the DoseMe and SinfoníaRx businesses to be highly probable within one year. During the first quarter of 2023, the Company completed the sales of the DoseMe and SinfoníaRx businesses. See Note 24 for additional discussion on the sales of the DoseMe and SinfoníaRx businesses.

In 2022, as a result of the Company’s intention to sell the DoseMe and SinfoníaRx businesses, the Company prepared an impairment test on the related net assets held for sale. Using a market approach to determine fair value, the Company concluded that the carrying values of the net assets held for sale for the SinfoníaRx and DoseMe businesses did not exceed their fair values, less costs to sell. As a result, the Company recorded goodwill impairment charges of $6,127 and $21,113 of impairment charges on the net assets held for sale related to the DoseMe and SinfoníaRx businesses, respectively, for the year ended December 31, 2022.

During the fourth quarter of 2021, the Company determined that an indicator of impairment was present as it related to definite-lived intangible assets obtained from the DoseMe acquisition in 2019, which is recorded in the MedWise HealthCare segment. The recoverability test indicated that the undiscounted cash flows of the asset group were less than its carrying value. Therefore, the estimated fair value of the DoseMe assets was determined based on a combination of a discounted cash flow method, or income approach, and market approaches, which estimate fair value based on a selection of appropriate peer group companies. The estimated fair value of the DoseMe assets exceeded its carrying value. As a result, no intangible asset impairment charges were recorded for the year ended December 31, 2021.

The following table summarizes the results of operations of the DoseMe and SinfoníaRx businesses, which are included in loss from discontinued operations, net of tax in the consolidated statements of operations for the years ended December 31, 2022, 2021, and 2020:


	Year Ended
	December 31,
	2022		2021		2020
Revenue	$	27,898	$	33,074	$	40,519
Cost of revenue, exclusive of depreciation and amortization		27,153		26,683		30,579
Operating expenses		17,104		24,401		28,192
Impairment charges		27,240		—		—
Loss from discontinued operations before income taxes		(43,599)		(18,010)		(18,252)
Income tax (benefit) expense		(19)		68		69
Net loss from discontinued operations, net of tax	$	(43,580)	$	(18,078)	$	(18,321)

The following table summarizes the DoseMe and SinfoníaRx businesses’ current and noncurrent assets and liabilities classified as discontinued operations on the consolidated balance sheets as of December 31, 2022 and December 31, 2021:


	December 31,		December 31,
	2022		2021
Cash	$	18	$	273
Accounts receivable, net		4,237		4,644
Prepaid expenses and other assets		2,217		554
Property and equipment, net		1,350		—
Operating lease right-of-use assets		3,991		—
Software development costs, net		7,563		—
Goodwill		1,927		—
Intangible assets, net		22,635		—
Impairment of carrying value		(21,113)		—
Total current assets of discontinued operations	$	22,825	$	5,471

Property and equipment, net	$	—	$	1,485
Operating lease right-of-use assets		—		3,296
Software development costs, net		—		4,466
Goodwill		—		8,053
Intangible assets, net		—		24,675
Other assets		—		123
Total noncurrent assets of discontinued operations	$	—	$	42,098

Operating lease liabilities	$	3,525	$	793
Accounts payable		3,230		3,395
Accrued expenses and other liabilities		6,634		3,130
Total current liabilities of discontinued operations	$	13,389	$	7,318

Noncurrent operating lease liabilities	$	—	$	2,608
Total noncurrent liabilities of discontinued operations	$	—	$	2,608

The following table summarizes the DoseMe and SinfoníaRx businesses’ significant operating noncash items and investing activities of discontinued operations:


	Year Ended
	December 31,
	2022		2021		2020
Depreciation and amortization	$	2,780	$	10,850	$	13,592
Impairment charges		27,240		—		—
Stock-based compensation		2,756		3,286		3,534
Purchases of property and equipment