10-Q 1 trhc-20220930x10q.htm 10-Q
0.580.232.450.8024350182234073912407566623230138001418500053550005890500018484000243501822340739124075666232301380.580.232.450.800001651561--12-312022Q3false001.070.502.451.681.650.734.902.48P14DP1YP0D258800001175600058963000392000004006500017111000117868000576840001.070.502.451.681.650.734.902.48P1Y0.0010001651561us-gaap:TreasuryStockCommonMember2022-01-012022-03-310001651561us-gaap:TreasuryStockCommonMember2021-07-012021-09-300001651561us-gaap:TreasuryStockCommonMember2021-04-012021-06-300001651561us-gaap:TreasuryStockCommonMember2022-09-300001651561us-gaap:RetainedEarningsMember2022-09-300001651561us-gaap:AdditionalPaidInCapitalMember2022-09-300001651561us-gaap:TreasuryStockCommonMember2022-06-300001651561us-gaap:RetainedEarningsMember2022-06-300001651561us-gaap:AdditionalPaidInCapitalMember2022-06-3000016515612022-06-300001651561us-gaap:TreasuryStockCommonMember2022-03-310001651561us-gaap:RetainedEarningsMember2022-03-310001651561us-gaap:AdditionalPaidInCapitalMember2022-03-3100016515612022-03-310001651561us-gaap:TreasuryStockCommonMember2021-12-310001651561us-gaap:RetainedEarningsMember2021-12-310001651561us-gaap:AdditionalPaidInCapitalMember2021-12-310001651561us-gaap:TreasuryStockCommonMember2021-09-300001651561us-gaap:RetainedEarningsMember2021-09-300001651561us-gaap:AdditionalPaidInCapitalMember2021-09-300001651561us-gaap:TreasuryStockCommonMember2021-06-300001651561us-gaap:RetainedEarningsMember2021-06-300001651561us-gaap:AdditionalPaidInCapitalMember2021-06-3000016515612021-06-300001651561us-gaap:TreasuryStockCommonMember2021-03-310001651561us-gaap:RetainedEarningsMember2021-03-310001651561us-gaap:AdditionalPaidInCapitalMember2021-03-3100016515612021-03-310001651561srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2020-12-310001651561srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2020-12-310001651561us-gaap:TreasuryStockCommonMember2020-12-310001651561us-gaap:RetainedEarningsMember2020-12-310001651561us-gaap:AdditionalPaidInCapitalMember2020-12-310001651561srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-12-310001651561us-gaap:CommonStockMember2022-09-300001651561us-gaap:CommonStockMember2022-06-300001651561us-gaap:CommonStockMember2022-03-310001651561us-gaap:CommonStockMember2021-12-310001651561us-gaap:CommonStockMember2021-09-300001651561us-gaap:CommonStockMember2021-06-300001651561us-gaap:CommonStockMember2021-03-310001651561us-gaap:CommonStockMember2020-12-310001651561trhc:EquityCompensationPlan2016Member2016-09-012016-09-300001651561trhc:EquityCompensationPlan2016Member2022-09-300001651561trhc:EquityCompensationPlan2016Member2022-02-252022-02-250001651561trhc:AwardDate27April2021Memberus-gaap:PerformanceSharesMember2022-01-012022-09-300001651561trhc:AwardDate29october2020Memberus-gaap:PerformanceSharesMember2021-04-302021-04-300001651561trhc:AwardDate29october2020Memberus-gaap:PerformanceSharesMember2021-12-312021-12-310001651561trhc:RestrictedStockPerformanceBasedRestrictedStockAndRestrictedStockUnitsMember2022-09-300001651561trhc:AwardDateAugust222022Member2022-09-300001651561trhc:RestrictedStockPerformanceBasedRestrictedStockAndRestrictedStockUnitsMember2021-12-310001651561trhc:AwardDateSecondQuarter2022Membertrhc:StockAwardMember2022-04-012022-06-300001651561trhc:AwardDateFirstQuarter2022Membertrhc:StockAwardMember2022-01-012022-03-310001651561trhc:AwardDateFirstQuarter2021Membertrhc:StockAwardMember2021-01-012021-03-310001651561trhc:AwardDate29october2020Memberus-gaap:PerformanceSharesMember2020-10-292020-10-290001651561trhc:RestrictedStockPerformanceBasedRestrictedStockAndRestrictedStockUnitsMember2022-01-012022-09-300001651561srt:MinimumMembertrhc:AwardDateAugust222022Memberus-gaap:PerformanceSharesMember2022-08-222022-08-220001651561srt:MaximumMembertrhc:AwardDateAugust222022Memberus-gaap:PerformanceSharesMember2022-08-222022-08-220001651561srt:MinimumMembertrhc:AwardDate27April2021Memberus-gaap:PerformanceSharesMember2021-04-272021-04-270001651561srt:MaximumMembertrhc:AwardDate27April2021Memberus-gaap:PerformanceSharesMember2021-04-272021-04-270001651561trhc:AwardDateAugust222022Memberus-gaap:PerformanceSharesMember2022-08-222022-08-220001651561srt:MinimumMembertrhc:RestrictedStockAndRestrictedStockUnitsMember2022-01-012022-09-300001651561srt:MaximumMembertrhc:RestrictedStockAndRestrictedStockUnitsMember2022-01-012022-09-300001651561trhc:AwardDate27April2021Memberus-gaap:PerformanceSharesMember2021-04-272021-04-270001651561trhc:PharmacyServicesAndPaceSolutionsServicesMember2022-07-012022-09-300001651561trhc:PharmacyServicesAndPaceSolutionsServicesMember2022-01-012022-09-300001651561trhc:PharmacyServicesAndPaceSolutionsServicesMember2021-07-012021-09-300001651561trhc:PharmacyServicesAndPaceSolutionsServicesMember2021-01-012021-09-300001651561us-gaap:ServiceMembertrhc:SharedServicesAndOtherMember2022-07-012022-09-300001651561us-gaap:ServiceMembertrhc:CareventionHealthcareMember2022-07-012022-09-300001651561us-gaap:ProductMembertrhc:CareventionHealthcareMember2022-07-012022-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:SharedServicesAndOtherMember2022-07-012022-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:MedwiseHealthcareMember2022-07-012022-09-300001651561trhc:PaceSolutionsMembertrhc:CareventionHealthcareMember2022-07-012022-09-300001651561trhc:PaceProductMembertrhc:CareventionHealthcareMember2022-07-012022-09-300001651561trhc:MedicationSafetyServicesMembertrhc:SharedServicesAndOtherMember2022-07-012022-09-300001651561trhc:MedicationSafetyServicesMembertrhc:MedwiseHealthcareMember2022-07-012022-09-300001651561trhc:SoftwareSubscriptionAndServicesMember2022-07-012022-09-300001651561trhc:SharedServicesAndOtherMember2022-07-012022-09-300001651561trhc:PaceSolutionsMember2022-07-012022-09-300001651561trhc:MedwiseHealthcareMember2022-07-012022-09-300001651561trhc:MedicationSafetyServicesMember2022-07-012022-09-300001651561trhc:CareventionHealthcareMember2022-07-012022-09-300001651561us-gaap:ServiceMembertrhc:SharedServicesAndOtherMember2022-01-012022-09-300001651561us-gaap:ServiceMembertrhc:CareventionHealthcareMember2022-01-012022-09-300001651561us-gaap:ProductMembertrhc:CareventionHealthcareMember2022-01-012022-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:SharedServicesAndOtherMember2022-01-012022-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:MedwiseHealthcareMember2022-01-012022-09-300001651561trhc:PaceSolutionsMembertrhc:CareventionHealthcareMember2022-01-012022-09-300001651561trhc:PaceProductMembertrhc:CareventionHealthcareMember2022-01-012022-09-300001651561trhc:MedicationSafetyServicesMembertrhc:SharedServicesAndOtherMember2022-01-012022-09-300001651561trhc:MedicationSafetyServicesMembertrhc:MedwiseHealthcareMember2022-01-012022-09-300001651561trhc:SoftwareSubscriptionAndServicesMember2022-01-012022-09-300001651561trhc:SharedServicesAndOtherMember2022-01-012022-09-300001651561trhc:PaceSolutionsMember2022-01-012022-09-300001651561trhc:MedwiseHealthcareMember2022-01-012022-09-300001651561trhc:MedicationSafetyServicesMember2022-01-012022-09-300001651561trhc:CareventionHealthcareMember2022-01-012022-09-300001651561us-gaap:ServiceMembertrhc:SharedServicesAndOtherMember2021-07-012021-09-300001651561us-gaap:ServiceMembertrhc:CareventionHealthcareMember2021-07-012021-09-300001651561us-gaap:ProductMembertrhc:CareventionHealthcareMember2021-07-012021-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:SharedServicesAndOtherMember2021-07-012021-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:MedwiseHealthcareMember2021-07-012021-09-300001651561trhc:PaceSolutionsMembertrhc:CareventionHealthcareMember2021-07-012021-09-300001651561trhc:PaceProductMembertrhc:CareventionHealthcareMember2021-07-012021-09-300001651561trhc:MedicationSafetyServicesMembertrhc:SharedServicesAndOtherMember2021-07-012021-09-300001651561trhc:MedicationSafetyServicesMembertrhc:MedwiseHealthcareMember2021-07-012021-09-300001651561trhc:SoftwareSubscriptionAndServicesMember2021-07-012021-09-300001651561trhc:SharedServicesAndOtherMember2021-07-012021-09-300001651561trhc:PaceSolutionsMember2021-07-012021-09-300001651561trhc:MedwiseHealthcareMember2021-07-012021-09-300001651561trhc:MedicationSafetyServicesMember2021-07-012021-09-300001651561trhc:CareventionHealthcareMember2021-07-012021-09-300001651561us-gaap:ServiceMembertrhc:SharedServicesAndOtherMember2021-01-012021-09-300001651561us-gaap:ServiceMembertrhc:CareventionHealthcareMember2021-01-012021-09-300001651561us-gaap:ProductMembertrhc:CareventionHealthcareMember2021-01-012021-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:SharedServicesAndOtherMember2021-01-012021-09-300001651561trhc:SoftwareSubscriptionAndServicesMembertrhc:MedwiseHealthcareMember2021-01-012021-09-300001651561trhc:PaceSolutionsMembertrhc:CareventionHealthcareMember2021-01-012021-09-300001651561trhc:PaceProductMembertrhc:CareventionHealthcareMember2021-01-012021-09-300001651561trhc:MedicationSafetyServicesMembertrhc:SharedServicesAndOtherMember2021-01-012021-09-300001651561trhc:MedicationSafetyServicesMembertrhc:MedwiseHealthcareMember2021-01-012021-09-300001651561trhc:SoftwareSubscriptionAndServicesMember2021-01-012021-09-300001651561trhc:SharedServicesAndOtherMember2021-01-012021-09-300001651561trhc:PaceSolutionsMember2021-01-012021-09-300001651561trhc:MedwiseHealthcareMember2021-01-012021-09-300001651561trhc:MedicationSafetyServicesMember2021-01-012021-09-300001651561trhc:CareventionHealthcareMember2021-01-012021-09-300001651561trhc:SeparationAgreementsMember2022-07-012022-09-300001651561trhc:ConsultantServicesAgreementsMember2022-07-012022-09-300001651561trhc:ConsultantServicesAgreementsMember2022-01-012022-09-300001651561trhc:CloudHostingServicesOneMember2021-11-300001651561trhc:EnterpriseSupportAndInformationTechnologyServicesProviderMember2021-11-010001651561trhc:CloudHostingAndSupportServicesProviderOneMember2021-10-310001651561trhc:CloudHostingAndSupportServicesProviderOneUnderJune2021AgreementMember2021-06-300001651561trhc:SeriesJuniorParticipatingPreferredStockMember2022-07-250001651561trhc:TransactionDataSystemsInc.Membertrhc:TransitionServicesAgreementMember2022-07-012022-09-300001651561trhc:TransactionDataSystemsInc.Membertrhc:TransitionServicesAgreementMember2022-01-012022-09-300001651561us-gaap:CallOptionMember2019-02-122019-02-120001651561us-gaap:RetainedEarningsMember2022-07-012022-09-300001651561us-gaap:RetainedEarningsMember2022-04-012022-06-300001651561us-gaap:RetainedEarningsMember2022-01-012022-03-310001651561us-gaap:RetainedEarningsMember2021-07-012021-09-300001651561us-gaap:RetainedEarningsMember2021-04-012021-06-300001651561us-gaap:RetainedEarningsMember2021-01-012021-03-310001651561us-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:PrescribewellnessBusinessMember2022-08-012022-08-010001651561us-gaap:TradeNamesMember2022-09-300001651561us-gaap:NoncompeteAgreementsMember2022-09-300001651561us-gaap:DevelopedTechnologyRightsMember2022-09-300001651561us-gaap:CustomerRelationshipsMember2022-09-300001651561trhc:DomainNameMember2022-09-300001651561us-gaap:TradeNamesMember2021-12-310001651561us-gaap:NoncompeteAgreementsMember2021-12-310001651561us-gaap:DevelopedTechnologyRightsMember2021-12-310001651561us-gaap:CustomerRelationshipsMember2021-12-310001651561trhc:DomainNameMember2021-12-310001651561trhc:LoanAndSecurityAgreement2020Member2022-08-012022-08-010001651561srt:MaximumMembertrhc:AwardDate27April2021Memberus-gaap:PerformanceSharesMember2022-09-300001651561us-gaap:EmployeeStockOptionMember2022-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2022-09-300001651561trhc:SeparationAgreementsMember2022-09-300001651561trhc:CooperationAgreementMember2022-09-300001651561us-gaap:SegmentDiscontinuedOperationsMembertrhc:PrescribewellnessBusinessMember2022-07-012022-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:PrescribewellnessBusinessMember2021-07-012021-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemeAndSinfonarxBusinessesMember2021-07-012021-09-300001651561trhc:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetExcludingComputerSoftwareDevelopmentCostMember2022-07-012022-09-300001651561trhc:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetExcludingComputerSoftwareDevelopmentCostMember2022-01-012022-09-300001651561trhc:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetExcludingComputerSoftwareDevelopmentCostMember2021-07-012021-09-300001651561trhc:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetExcludingComputerSoftwareDevelopmentCostMember2021-01-012021-09-300001651561trhc:LoanAndSecurityAgreement2020Member2022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMember2022-09-300001651561trhc:DebtConversionScenarioTwoMembertrhc:ConvertibleSeniorSubordinatedNotesMember2019-02-122019-02-120001651561trhc:DebtConversionScenarioOneMembertrhc:ConvertibleSeniorSubordinatedNotesMember2019-02-122019-02-120001651561trhc:ConvertibleSeniorSubordinatedNotesMember2019-02-122019-02-120001651561trhc:ConvertibleSeniorSubordinatedNotesRelatedPartyMember2022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesExcludingRelatedPartyMember2022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesExcludingRelatedPartyMember2021-12-310001651561trhc:LoanAndSecurityAgreement2020Memberus-gaap:LondonInterbankOfferedRateLIBORMember2020-12-182020-12-180001651561us-gaap:ServiceMember2022-07-012022-09-300001651561us-gaap:ProductMember2022-07-012022-09-300001651561us-gaap:ServiceMember2022-01-012022-09-300001651561us-gaap:ProductMember2022-01-012022-09-300001651561us-gaap:ServiceMember2021-07-012021-09-300001651561us-gaap:ProductMember2021-07-012021-09-300001651561us-gaap:ServiceMember2021-01-012021-09-300001651561us-gaap:ProductMember2021-01-012021-09-300001651561trhc:CustomerMembertrhc:ClientClaimsReceivableMemberus-gaap:CreditConcentrationRiskMember2021-12-312021-12-310001651561trhc:CustomerBMembertrhc:ClientClaimsReceivableMemberus-gaap:CreditConcentrationRiskMember2021-12-312021-12-310001651561trhc:PreferredSharePurchaseRightMembertrhc:SeriesJuniorParticipatingPreferredStockMember2022-07-250001651561trhc:PreferredSharePurchaseRightMember2022-07-250001651561trhc:ConvertibleNoteWarrantMember2019-02-1200016515612020-12-3100016515612021-09-300001651561us-gaap:FairValueInputsLevel3Member2022-09-300001651561srt:MaximumMemberus-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:PrescribewellnessBusinessMember2022-08-0100016515612022-08-010001651561us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001651561us-gaap:ConvertibleDebtMember2022-01-012022-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2022-01-012022-09-300001651561trhc:ConvertibleNoteWarrantMember2022-01-012022-09-300001651561us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001651561us-gaap:ConvertibleDebtMember2021-01-012021-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2021-01-012021-09-300001651561trhc:ConvertibleNoteWarrantMember2021-01-012021-09-300001651561trhc:LoanAndSecurityAgreement2020Member2022-07-012022-09-300001651561trhc:LoanAndSecurityAgreement2020Member2022-01-012022-09-300001651561trhc:LoanAndSecurityAgreement2020Member2021-07-012021-09-300001651561trhc:LoanAndSecurityAgreement2020Member2021-01-012021-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMember2022-07-012022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMember2022-01-012022-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMember2021-07-012021-09-300001651561trhc:ConvertibleSeniorSubordinatedNotesMember2021-01-012021-09-300001651561us-gaap:TreasuryStockCommonMember2022-07-012022-09-300001651561us-gaap:TradeNamesMember2022-01-012022-09-300001651561us-gaap:NoncompeteAgreementsMember2022-01-012022-09-300001651561us-gaap:DevelopedTechnologyRightsMember2022-01-012022-09-300001651561us-gaap:CustomerRelationshipsMember2022-01-012022-09-300001651561trhc:DomainNameMember2022-01-012022-09-300001651561us-gaap:TradeNamesMember2021-01-012021-12-310001651561us-gaap:NoncompeteAgreementsMember2021-01-012021-12-310001651561us-gaap:DevelopedTechnologyRightsMember2021-01-012021-12-310001651561us-gaap:CustomerRelationshipsMember2021-01-012021-12-310001651561trhc:DomainNameMember2021-01-012021-12-310001651561trhc:AccountsReceivableNetMembertrhc:PharmacyServicesAndPaceSolutionsServicesMember2022-09-300001651561trhc:AccountsReceivableNetMembertrhc:PharmacyServicesAndPaceSolutionsServicesMember2021-12-310001651561trhc:ThriftyDrugStoresInc.Member2022-09-300001651561trhc:ThriftyDrugStoresInc.Member2021-12-310001651561trhc:BusinessProcessSupportAndTechnologyServicesPartnerMembertrhc:AccruedExpensesAndOtherLiabilitiesCurrentAndNoncurrentMember2022-09-300001651561us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001651561us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000016515612022-04-012022-06-300001651561us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100016515612022-01-012022-03-310001651561us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001651561us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000016515612021-04-012021-06-300001651561us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100016515612021-01-012021-03-310001651561us-gaap:CommonStockMember2022-07-012022-09-300001651561us-gaap:TreasuryStockCommonMember2022-04-012022-06-300001651561us-gaap:CommonStockMember2022-04-012022-06-300001651561us-gaap:CommonStockMember2022-01-012022-03-310001651561us-gaap:CommonStockMember2021-07-012021-09-300001651561us-gaap:CommonStockMember2021-04-012021-06-300001651561us-gaap:TreasuryStockCommonMember2021-01-012021-03-310001651561us-gaap:CommonStockMember2021-01-012021-03-310001651561trhc:AwardDateThirdQuarter2022Membertrhc:StockAwardMember2022-07-012022-09-300001651561trhc:AwardDateAugust222022Memberus-gaap:PerformanceSharesMember2022-07-012022-09-300001651561us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001651561us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001651561us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001651561us-gaap:EmployeeStockOptionMember2022-07-012022-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2022-07-012022-09-300001651561trhc:DiscontinuedOperationIncomeLossFromDiscontinuedOperationDuringPhaseOutPeriodNetOfTaxMember2022-07-012022-09-300001651561trhc:CostOfServiceRevenueMember2022-07-012022-09-300001651561trhc:CostOfProductRevenueMember2022-07-012022-09-300001651561trhc:AwardDateThirdQuarter2022Membertrhc:StockAwardMember2022-01-012022-09-300001651561trhc:AwardDateSecondQuarter2022Membertrhc:StockAwardMember2022-01-012022-09-300001651561trhc:AwardDateFirstQuarter2022Membertrhc:StockAwardMember2022-01-012022-09-300001651561trhc:AwardDateAugust222022Memberus-gaap:PerformanceSharesMember2022-01-012022-09-300001651561us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300001651561us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001651561us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001651561us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2022-01-012022-09-300001651561trhc:DiscontinuedOperationIncomeLossFromDiscontinuedOperationDuringPhaseOutPeriodNetOfTaxMember2022-01-012022-09-300001651561trhc:CostOfServiceRevenueMember2022-01-012022-09-300001651561trhc:CostOfProductRevenueMember2022-01-012022-09-300001651561trhc:AwardDate29october2020Memberus-gaap:PerformanceSharesMember2021-07-012021-09-300001651561us-gaap:SellingAndMarketingExpenseMember2021-07-012021-09-300001651561us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001651561us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001651561us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2021-07-012021-09-300001651561trhc:DiscontinuedOperationIncomeLossFromDiscontinuedOperationDuringPhaseOutPeriodNetOfTaxMember2021-07-012021-09-300001651561trhc:CostOfServiceRevenueMember2021-07-012021-09-300001651561trhc:CostOfProductRevenueMember2021-07-012021-09-300001651561trhc:AwardDateFirstQuarter2021Membertrhc:StockAwardMember2021-01-012021-09-300001651561trhc:AwardDate29october2020Memberus-gaap:PerformanceSharesMember2021-01-012021-09-300001651561us-gaap:SellingAndMarketingExpenseMember2021-01-012021-09-300001651561us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001651561us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001651561us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001651561trhc:RestrictedStockAndRestrictedStockUnitsMember2021-01-012021-09-300001651561trhc:DiscontinuedOperationIncomeLossFromDiscontinuedOperationDuringPhaseOutPeriodNetOfTaxMember2021-01-012021-09-300001651561trhc:CostOfServiceRevenueMember2021-01-012021-09-300001651561trhc:CostOfProductRevenueMember2021-01-012021-09-300001651561us-gaap:EmployeeStockMember2022-09-300001651561trhc:AwardDateAugust222022Memberus-gaap:PerformanceSharesMember2022-09-300001651561trhc:AwardDate27April2021Memberus-gaap:PerformanceSharesMember2022-09-300001651561us-gaap:RestrictedStockUnitsRSUMember2022-09-300001651561trhc:EnterpriseSupportAndInformationTechnologyServicesProviderMember2022-09-300001651561trhc:CloudHostingServicesOneMember2022-09-300001651561trhc:CloudHostingAndSupportServicesProviderOneUnderJune2021AgreementMember2022-09-300001651561trhc:CloudHostingAndSupportServicesProviderOneMember2022-09-300001651561trhc:ThriftyDrugStoresInc.Member2019-03-292019-03-290001651561trhc:DataAggregationPartnerMember2020-01-012020-01-010001651561trhc:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetExcludingComputerSoftwareDevelopmentCostMember2022-09-300001651561trhc:PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetExcludingComputerSoftwareDevelopmentCostMember2021-12-310001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:PrescribewellnessBusinessMember2021-01-012021-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemeAndSinfonarxBusinessesMember2021-01-012021-09-300001651561trhc:NamedExecutiveOfficerMemberus-gaap:RestrictedStockMember2022-07-012022-09-300001651561trhc:NamedExecutiveOfficerMemberus-gaap:RestrictedStockMember2022-01-012022-09-300001651561trhc:SeparationAgreementsMember2022-09-132022-09-130001651561trhc:ConsultantServicesAgreementsMember2022-09-132022-09-130001651561trhc:LoanAndSecurityAgreement2020Member2020-12-180001651561trhc:LoanAndSecurityAgreement2020Member2020-12-182020-12-180001651561trhc:ConvertibleSeniorSubordinatedNotesMember2021-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:PrescribewellnessBusinessMember2022-01-012022-06-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemeAndSinfonarxBusinessesMember2022-07-012022-09-300001651561us-gaap:SegmentDiscontinuedOperationsMembertrhc:PrescribewellnessBusinessMember2022-01-012022-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemeAndSinfonarxBusinessesMember2022-01-012022-09-300001651561trhc:KarmadataInc.Memberus-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:KdAssetsMember2022-08-010001651561us-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:PrescribewellnessBusinessAndKdAssetsMember2022-08-010001651561us-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:PrescribewellnessBusinessMemberus-gaap:SubsequentEventMember2022-10-310001651561trhc:PrescribewellnessBusinessMemberus-gaap:SubsequentEventMember2022-10-310001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemeAndSinfonarxBusinessesMember2022-09-300001651561us-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:PrescribewellnessBusinessMember2022-08-010001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:PrescribewellnessBusinessMember2021-12-310001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemeAndSinfonarxBusinessesMember2021-12-310001651561trhc:DosemeAndSinfonarxBusinessesMember2022-01-012022-09-300001651561us-gaap:DiscontinuedOperationsDisposedOfBySaleMembertrhc:PrescribewellnessBusinessMember2022-01-012022-09-3000016515612021-02-122021-02-120001651561trhc:ConvertibleNoteWarrantMember2019-02-122019-02-120001651561trhc:DebtConversionScenarioTwoMembertrhc:ConvertibleSeniorSubordinatedNotesMember2019-02-120001651561trhc:ConvertibleSeniorSubordinatedNotesMember2019-02-120001651561srt:MinimumMember2022-01-012022-09-300001651561srt:MaximumMember2022-01-012022-09-300001651561trhc:CustomerMembertrhc:ClientClaimsReceivableMemberus-gaap:CreditConcentrationRiskMember2022-09-302022-09-300001651561trhc:CustomerMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2022-07-012022-09-300001651561trhc:CustomerMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2022-01-012022-09-300001651561trhc:ClientClaimsReceivableMemberus-gaap:CreditConcentrationRiskMember2021-12-312021-12-310001651561trhc:CustomerMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2021-07-012021-09-300001651561trhc:CustomerMemberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2021-01-012021-09-300001651561trhc:PreferredSharePurchaseRightMember2022-07-252022-07-250001651561us-gaap:OtherAssetsMember2022-09-300001651561trhc:PrepaidExpensesMember2022-09-300001651561us-gaap:OtherAssetsMember2021-12-310001651561trhc:PrepaidExpensesMember2021-12-310001651561trhc:BusinessProcessSupportAndTechnologyServicesPartnerMember2022-02-242022-02-240001651561trhc:BusinessProcessSupportAndTechnologyServicesPartnerMember2022-02-240001651561trhc:BusinessProcessSupportAndTechnologyServicesPartnerMember2022-07-012022-09-300001651561trhc:BusinessProcessSupportAndTechnologyServicesPartnerMember2022-01-012022-09-300001651561us-gaap:SegmentDiscontinuedOperationsMembertrhc:DosemerxSinfonarxAndPrescribewellnessBusinessesMember2022-07-012022-09-300001651561us-gaap:SegmentDiscontinuedOperationsMembertrhc:DosemerxSinfonarxAndPrescribewellnessBusinessesMember2022-01-012022-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemerxSinfonarxAndPrescribewellnessBusinessesMember2021-07-012021-09-300001651561us-gaap:DiscontinuedOperationsHeldforsaleMembertrhc:DosemerxSinfonarxAndPrescribewellnessBusinessesMember2021-01-012021-09-300001651561us-gaap:OperatingSegmentsMembertrhc:CareventionHealthcareMember2022-07-012022-09-300001651561us-gaap:CorporateNonSegmentMember2022-07-012022-09-300001651561us-gaap:OperatingSegmentsMembertrhc:CareventionHealthcareMember2022-01-012022-09-300001651561us-gaap:CorporateNonSegmentMember2022-01-012022-09-300001651561us-gaap:OperatingSegmentsMembertrhc:CareventionHealthcareMember2021-07-012021-09-300001651561us-gaap:CorporateNonSegmentMember2021-07-012021-09-300001651561us-gaap:OperatingSegmentsMembertrhc:CareventionHealthcareMember2021-01-012021-09-300001651561us-gaap:CorporateNonSegmentMember2021-01-012021-09-3000016515612022-07-012022-09-3000016515612021-07-012021-09-3000016515612021-01-012021-09-3000016515612022-09-3000016515612021-12-3100016515612022-10-1500016515612022-01-012022-09-30xbrli:sharesiso4217:USDtrhc:employeexbrli:puretrhc:customertrhc:itemiso4217:USDxbrli:sharestrhc:Dtrhc:segment

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-37888

Tabula Rasa HealthCare, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation)

46-5726437
(I.R.S. Employer Identification No.)

228 Strawbridge Drive, Suite 100
Moorestown, NJ 08057
(Address of Principal Executive Offices,
including Zip Code)

(866648 - 2767
(Registrant’s Telephone Number,
Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Stock, par value $0.0001 per share

TRHC

The Nasdaq Stock Market

Preferred Stock Purchase Rights

The Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  

Accelerated filer   

Non-accelerated filer   

Smaller reporting company   

Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

As of October 15, 2022, the Registrant had 27,124,287 shares of Common Stock outstanding.

TABULA RASA HEALTHCARE, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended September 30, 2022

TABLE OF CONTENTS

Page

Number

PART I

Financial Information

3

Item 1.

Financial Statements

3

Unaudited Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

3

Unaudited Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021

4

Unaudited Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2022 and 2021

5

Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

7

Notes to Unaudited Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

50

Item 4.

Controls and Procedures

50

PART II

Other Information

51

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

52

Item 3.

Defaults Upon Senior Securities

52

Item 4.

Mine Safety Disclosures

52

Item 5.

Other Information

52

Item 6.

Exhibits

53

Signatures

55

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

September 30, 

December 31, 

    

2022

    

2021

Assets

Current assets:

Cash

$

80,783

$

9,395

Restricted cash

7,389

6,038

Accounts receivable, net of allowance of $107 and $110, respectively

18,960

21,405

Inventories

5,735

5,444

Prepaid expenses

3,484

3,812

Client claims receivable

16,193

11,257

Other current assets

20,439

18,033

Current assets of discontinued operations

26,861

14,511

Total current assets

179,844

89,895

Contingent consideration receivable

7,000

Property and equipment, net

10,038

11,778

Operating lease right-of-use assets

14,069

16,323

Software development costs, net

32,606

29,254

Goodwill

115,323

115,323

Intangible assets, net

40,275

45,358

Other assets

4,691

3,929

Noncurrent assets of discontinued operations

187,558

Total assets

$

403,846

$

499,418

Liabilities and stockholders’ equity (deficit)

Current liabilities:

Current operating lease liabilities

$

3,195

$

3,275

Accounts payable

14,685

8,870

Client claims payable

9,537

8,398

Accrued expenses and other liabilities

59,507

40,997

Current liabilities of discontinued operations

11,132

12,380

Total current liabilities

98,056

73,920

Line of credit

29,500

Long-term debt, net of discount of $3,404 and $5,701, respectively

231,868

319,299

Long-term debt – related party, net of discount of $1,299 and $0, respectively

88,429

Noncurrent operating lease liabilities

13,223

15,792

Deferred income tax liability, net

889

1,402

Other long-term liabilities

3,032

176

Noncurrent liabilities of discontinued operations

3,573

Total liabilities

435,497

443,662

Commitments and contingencies (Note 15)

Stockholders’ equity (deficit):

Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021

Common stock, $0.0001 par value; 100,000,000 shares authorized, 27,967,305 and 26,036,236 shares issued and 27,081,443 and 25,666,434 shares outstanding at September 30, 2022 and December 31, 2021, respectively

3

3

Treasury stock, at cost; 885,862 and 369,802 shares at September 30, 2022 and December 31, 2021, respectively

(3,350)

(4,292)

Additional paid-in capital

349,911

320,392

Accumulated deficit

(378,215)

(260,347)

Total stockholders’ equity (deficit)

(31,651)

55,756

Total liabilities and stockholders’ equity (deficit)

$

403,846

$

499,418

See accompanying notes to unaudited consolidated financial statements.

3

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Revenue:

Product revenue

  

$

59,780

$

50,321

$

166,645

$

139,021

Service revenue

17,321

17,589

50,163

51,964

Total revenue

77,101

67,910

216,808

190,985

Cost of revenue, exclusive of depreciation and amortization shown below:

Product cost

46,221

38,518

129,157

104,939

Service cost

14,014

12,697

40,430

37,875

Total cost of revenue, exclusive of depreciation and amortization

60,235

51,215

169,587

142,814

Operating expenses:

Research and development

4,018

3,699

11,226

11,069

Sales and marketing

2,857

2,719

7,678

8,225

General and administrative

27,917

14,393

58,945

45,725

Long-lived asset impairment charge

4,062

Depreciation and amortization

5,723

5,328

16,954

15,109

Total operating expenses

40,515

26,139

98,865

80,128

Loss from operations

(23,649)

(9,444)

(51,644)

(31,957)

Other income (expense):

Interest expense, net

(2,717)

(2,230)

(7,430)

(6,959)

Other income

479

479

Total other expense, net

(2,238)

(2,230)

(6,951)

(6,959)

Loss from continuing operations before income taxes

(25,887)

(11,674)

(58,595)

(38,916)

Income tax (benefit) expense

(7)

82

368

284

Net loss from continuing operations

(25,880)

(11,756)

(58,963)

(39,200)

Net loss from discontinued operations, net of tax

(14,185)

(5,355)

(58,905)

(18,484)

Net loss

$

(40,065)

$

(17,111)

$

(117,868)

$

(57,684)

Net loss per share:

Net loss per share from continuing operations, basic and diluted

$

(1.07)

$

(0.50)

$

(2.45)

$

(1.68)

Net loss per share from discontinued operations, basic and diluted

(0.58)

(0.23)

(2.45)

(0.80)

Total net loss per share, basic and diluted

$

(1.65)

$

(0.73)

$

(4.90)

$

(2.48)

Weighted average common shares outstanding, basic and diluted

24,350,182

23,407,391

24,075,666

23,230,138

See accompanying notes to unaudited consolidated financial statements.

4

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands, except share amounts)

Stockholders' Equity (Deficit)

Nine Months Ended September 30, 2022

Common Stock

Treasury Stock

Additional

Accumulated

Stockholders'

    

Shares

    

Amount

Shares

    

Amount

    

Paid-in Capital

    

Deficit

    

Equity (Deficit)

Balance, January 1, 2022

26,036,236

$

3

(369,802)

$

(4,292)

$

320,392

$

(260,347)

$

55,756

Issuance of common stock awards

16,471

Issuance of restricted stock

297,434

Forfeitures of restricted shares

(138,882)

Exercise of stock options, net of shares withheld

11,646

60

60

Stock-based compensation expense

8,609

8,609

Net loss

(28,193)

(28,193)

Balance, March 31, 2022

26,361,787

3

(508,684)

(4,292)

329,061

(288,540)

36,232

Issuance of common stock awards

12,262

Issuance of restricted stock

424,540

Forfeitures of restricted shares

(30,542)

Exercise of stock options, net of shares withheld

927

(109)

3

3

Stock-based compensation expense

6,692

6,692

Net loss

(49,610)

(49,610)

Balance, June 30, 2022

26,799,516

3

(539,335)

(4,292)

335,756

(338,150)

(6,683)

Issuance of common stock awards

615,066

3,082

(3,082)

Issuance of restricted stock

1,167,532

Forfeitures of restricted shares

(507,299)

Exercise of stock options, net of shares withheld

257

1

1

Shares withheld for payment of employee taxes

(454,294)

(2,140)

(2,140)

Stock-based compensation expense

17,236

17,236

Net loss

(40,065)

(40,065)

Balance, September 30, 2022

27,967,305

$

3

(885,862)

$

(3,350)

$

349,911

$

(378,215)

$

(31,651)

See accompanying notes to unaudited consolidated financial statements.

5

Stockholders' Equity

Nine Months Ended September 30, 2021

Common Stock

Treasury Stock

Additional

Accumulated

Stockholders'

Shares

    

Amount

Shares

    

Amount

    

Paid-in Capital

    

Deficit

    

Equity

Balance, January 1, 2021

24,222,674

$

2

(217,778)

$

(4,018)

$

352,445

$

(179,900)

$

168,529

Cumulative effect of change in accounting policy

(74,850)

(1,392)

(76,242)

Issuance of common stock awards

1,416

Issuance of restricted stock

629,088

Forfeitures of restricted shares

(12,880)

Exercise of stock options, net of shares withheld

224,503

(6,218)

(274)

2,501

2,227

Stock-based compensation expense

8,602

8,602

Net loss

(19,492)

(19,492)

Balance, March 31, 2021

25,077,681

2

(236,876)

(4,292)

288,698

(200,784)

83,624

Issuance of restricted stock

120,598

Forfeitures of restricted shares

(22,913)

Exercise of stock options, net of shares withheld

84,396

885

885

Stock-based compensation expense

12,349

12,349

Net loss

(21,081)

(21,081)

Balance, June 30, 2021

25,282,675

2

(259,789)

(4,292)

301,932

(221,865)

75,777

Issuance of restricted stock

13,290

Forfeitures of restricted shares

(30,986)

Exercise of stock options, net of shares withheld

27,122

571

571

Stock-based compensation expense

8,011

8,011

Net loss

(17,111)

(17,111)

Balance, September 30, 2021

25,323,087

$

2

(290,775)

$

(4,292)

$

310,514

$

(238,976)

$

67,248

See accompanying notes to unaudited consolidated financial statements.

6

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended

September 30, 

    

2022

    

2021

Cash flows from operating activities:

Net loss

$

(117,868)

$

(57,684)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

24,285

35,343

Amortization of deferred financing costs and debt discount

1,972

1,714

Deferred taxes

(513)

337

Stock-based compensation

32,537

28,962

Acquisition-related contingent consideration paid

(67)

Impairment charges

46,355

Loss on divestiture of business

2,879

Other noncash items

(9)

9

Changes in operating assets and liabilities, net of effect of divestiture:

Accounts receivable, net

5,107

789

Inventories

(291)

(866)

Prepaid expenses and other current assets

(1,375)

(6,084)

Client claims receivables

(4,936)

(872)

Other assets

(1,357)

(2,604)

Accounts payable

5,074

1,587

Accrued expenses and other liabilities

13,534

2,138

Client claims payables

1,139

423

Other long-term liabilities

3,220

(108)

Net cash provided by operating activities

9,753

3,017

Cash flows from investing activities:

Purchases of property and equipment

(1,021)

(1,611)

Software development costs

(23,860)

(22,649)

Proceeds from divestiture of business (1)

118,561

Net cash provided by (used in) investing activities

93,680

(24,260)

Cash flows from financing activities:

Proceeds from exercise of stock options

64

3,683

Payments for employee taxes for shares withheld

(1,112)

Payments for debt financing costs

(350)

(8)

Borrowings on line of credit

27,700

17,500

Repayments of line of credit

(57,200)

Payment of acquisition-related notes payable

(13,000)

Payments of acquisition-related contingent consideration

(99)

Repayments of long-term debt and finance leases

(4)

Net cash (used in) provided by financing activities

(30,898)

8,072

Net increase (decrease) in cash and restricted cash

72,535

(13,171)

Cash and restricted cash, beginning of period

15,706

28,532

Cash and restricted cash, end of period (2)

$

88,241

$

15,361

Supplemental disclosure of cash flow information:

Purchases of property and equipment and software development included in accounts payable and accrued expenses

$

1,082

$

370

Cash paid for interest

$

7,204

$

8,169

Cash paid for taxes

$

137

$

44

Interest costs capitalized to software development costs

$

257

$

216

Employee taxes for shares withheld included in accrued expenses

$

1,028

$

Reconciliation of cash and restricted cash:

Cash

$

80,783

$

10,757

Restricted cash

7,389

4,014

Cash from discontinued operations

69

590

Total cash and restricted cash

$

88,241

$

15,361

(1)The cash proceeds received from divestiture of business do not include $1,477 of additional consideration subsequently received by the Company in October 2022 due to customary post-closing adjustments or $3,000 of transaction costs incurred as of the sale date and expected to be paid in the fourth quarter of 2022. See Note 3 for additional information.
(2)The cash flows related to discontinued operations have not been segregated. Accordingly, the unaudited consolidated statements of cash flows include the results of continuing and discontinued operations. As a result of the divestiture, the changes in operating assets and liabilities for the nine months ended September 30, 2022 exclude changes related to the divested business. See Note 3 for discussion of discontinued operations and divestiture of business.

See accompanying notes to unaudited consolidated financial statements.

7

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

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 healthcare professionals can minimize harm and reduce medication-related risks. The Company’s software and services help improve patient outcomes and lower 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”).

2.      Basis of Presentation, Summary of Significant Accounting Policies, and Recent Accounting Pronouncements

(a)Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals and adjustments) necessary to present fairly the Company’s interim consolidated financial position for the periods indicated. The interim results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on February 25, 2022 (the “2021 Form 10-K”).

Except as described below, there have been no material changes to the Company’s significant accounting policies described in the 2021 Form 10-K that have a material impact on the Company’s accompanying unaudited consolidated financial statements and related notes.

(b)Assets and Liabilities Held for Sale and Discontinued Operations

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.

Unless otherwise noted, amounts and disclosures throughout the notes to the unaudited consolidated financial statements relate to the Company’s continuing operations.

Additional details surrounding the Company’s assets and liabilities held for sale and discontinued operations are included in Note 3.

8

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

(c)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 September 30, 2022 and December 31, 2021, capitalized implementation costs of $882 and $747, respectively, were included in prepaid expenses, and $1,276 and $0, respectively, were included in other assets on the Company’s consolidated balance sheets. Accumulated amortization for these arrangements was $554 and $398 as of September 30, 2022 and December 31, 2021, respectively. Amortization expense for the three months ended September 30, 2022 and 2021, was $51 and $53, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021, was $156 and $155, respectively.

(d)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 September 30, 2022, the outstanding principal balance of the financing arrangement was $3,772 with an unamortized discount of $876, and 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 $53 and $89 for the three and nine months ended September 30, 2022, respectively.

(e)Concentrations of Credit Risk

The Company is subject to concentrations of credit risk related to cash, restricted cash, accounts receivable, and client claims receivable. While the Company maintains its cash 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 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 September 30, 2022 and December 31, 2021, no client represented more than 10% of net accounts receivable.

As of September 30, 2022 one client represented 21% of client claims receivable. As of December 31, 2021, two clients represented 13% and 11%, respectively, of client claims receivable.

9

Table of Contents

TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)