Reliq Health Technologies Inc V.RHT

Revenue Recognition

[theinvestor22]

There seems to be some confusion here as to when revenue is recognized by Reliq.  Some folks still equate revenue recognition in the financial statements with collections from clients.  These are not the same thing.

Once Reliq has performed a service for which it expects payment under a contract, that's when the revenue is recognized.  It seems that Reliq doesn't expect payment until a patient is compliant with Medicare/Medicaid requirements , so there could be some period of time after onboarding where no revenue is being generated.  Having said that, once a billable service has been provided to a client who is expected to pay, that's the moment of revenue recognition.

Since Reliq's clients don't pay at the moment of revenue recognition, the unpaid amount owed by clients leads to accounts receivable.  When a payment is received from a client, no revenue is generated, but the accounts receivable balance is reduced.  Delays in receiving payments affect the company's cash flow, so a company can have a good quarter as far as revenue and income go, but it might be accompanied by poor cash flow.  Later on, when clients pay bills, that same company can have a decent revenue quarter with great cash flow.

In terms of cash burn (or negative cash flow), Reliq had numerous quarters where collections from clients were minimal.  For several of those quarters, Reliq stated that they gave generous payment terms to clients during covid.  Whether or not you agree with that, the auditor did accept that argument as a legitimate reason as to why the accounts receivable balance was growing and collections were lagging.  Lately, Reliq has begun collecting on those older accounts receivable and Reliq has stated that receivables older than one year have been collected.  One can imagine that Reliq's clients should be able to pay their bills at this time for numerous reasons that have been discussed here before, but can be rehashed if anyone is interested.  Regarless, accounts receivable and collections are something to be watched.

I hope this helps.

[RealityBitesHar]

YOU NAILED IT. Lisa has explained the 2-3 month delay in recognizing when revenue starts!

[qwerty22]

Has becoming "compliant" been explained anywhere in detail? If a patient never becomes compliant then they never start generating revenue even though their revenue is already recognized. Has Lisa ever confirmed that every patient that gets on-boarded eventually becomes compliant? I understand compliant means data collection and delivery to the doc. In some (many? most?) patients that

[qwerty22]

https://www.aha.org/aha-center-health-innovation-market-scan/2021-09-14-studies-find-remote-monitoring-advanced-care Something closer to home. Remote Patient Monitoring compliance rates. 80% for ONE DAY 61-72% for a care plan.

[qwerty22]

https://mhealth.jmir.org/2019/2/e13259 RPM for heart failure patients. Average adherence rate 73%. Adherence rate first month 80%. Adherence rate after one year 63%. For me this describes normal human behaviour when engaging with healthcare systems. We need to know what sort of engagement rate Reliq's t3ch has.

[lscfa]

Patient compliance is not the whole story. Every time a patient has an acute episode virtual care is interrupted and reimbursement is halted..... And -- CMS or centers for Medicare and Medicaid rules for virtual care preventative programs like the one supported by iUGO Care, clinicians are not authorized to provide and to bill for virtual preventative care services for the given month for

[qwerty22]

So theinvestor22, let's say 75% of patients become compliant (just a random number). How would they handle the revenue recognized from the 25% of patients that don't become compliant? It will never get collect, presumably they would need to subtract it at a later date. You would actually expect them to have a compliance rate in mind, even if it's a poorly constrained number. Maybe they

[theinvestor22]

Ok, so here's what Reliq has said about the issue of compliance, with some interpretation from me. From the perspective of monitoring a patient, compliance is when a patient is providing sufficient data on their condition(s) in a given month to meet Medicare/Medicaid's minimum standards for payment.  Reliq, of course, will issue gentle reminders to patients in order to get them up to

[teeswater]

Great explanation and thank u!, So, investors are expecting RHT to collect 2 mil a mth as per 2 mil run rate but in reality it should be about 70ish% of that (compliance) and then even lower for FQ4 because Covid was still very rampant at that time. Is this right?

[aaaaaargh]

Reliq has claimed that they have much higher compliance than other studies/companies have shown.   I22 points out that they have claimed over 90%.   Also, rampant covid wave early in the year started in Dec 2021 and leveled off a few months later  in reliqs q3 (and was the excuse for financials in THAT quarter.)  Covid hasn't left us alone for years of course, and

[teeswater]

One third of our work force was off work in May with Covid albeit they had mild, if any symptoms, but were still not to come to work for a week, so Covid could still be a factor, I doubt Reliq has 90% compliance, as I don't think they have enough of a history with many patients onboarded to come up with such a figure, but ya...they said that.

[aaaaaargh]

Your antecodole  workforce evidence  is a very small sample size vs the country in which reliq operates with actual data.  https://www.google.com/search?q=usa+covid+cases+chart+2022&oq=usa+covid+cases+chart+2022&aqs=chrome..69i57j0i22i30l2j0i390l2.17258j0j4&sourceid=chrome&ie=UTF-8  . I also said that covid would still be a factor, just not like earlier in the

[FanofRHT]

theinvestor22 - Several excellent posts well explaining Reliq's very complicated business in terms of billing and collecting payment for services rendered. Thank you for sharing your well researched data it's much appreciated by me and I'm sure many others on this BB.

[qwerty22]

Cheers, I'd agree 75% would be great and I mostly believe they are taking these things into account. The only issue is Lisa in the last webinar seemed to suggest revenue was recognized at on-boarding rather than at compliance, at seems a little problematic.