Tabula Rasa HealthCare, Inc. [TRHC] Filings

10-Q 1 trhc-20220331x10q.htm 10-Q

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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 March 31, 2022

☐ 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)	(866) 648 - 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

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 April 30, 2022, the Registrant had 25,849,263 shares of Common Stock outstanding.

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TABULA RASA HEALTHCARE, INC.

QUARTERLY REPORT ON FORM 10-Q

For the period ended March 31, 2022

TABLE OF CONTENTS

		Page
		Number

PART I	Financial Information	3
Item 1.	Financial Statements	3
	Unaudited Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	3
	Unaudited Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021	4
	Unaudited Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021	5
	Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40
PART II	Other Information	41
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	March 31,		December 31,
	2022		2021
Assets
Current assets:
Cash	$	14,449	$	9,395
Restricted cash		3,839		6,038
Accounts receivable, net of allowance of $103 and $110, respectively		22,439		21,405
Inventories		4,900		5,444
Prepaid expenses		3,643		3,812
Client claims receivable		12,936		11,257
Other current assets		23,987		18,033
Current assets of discontinued operations		202,927		14,511
Total current assets		289,120		89,895
Property and equipment, net		11,139		11,778
Operating lease right-of-use assets		15,299		16,323
Software development costs, net		27,710		29,254
Goodwill		115,323		115,323
Intangible assets, net		43,664		45,358
Other assets		4,548		3,929
Noncurrent assets of discontinued operations		—		187,558
Total assets	$	506,803	$	499,418

Liabilities and stockholders’ equity
Current liabilities:
Current operating lease liabilities	$	3,335	$	3,275
Accounts payable		9,537		8,870
Client claims payable		8,789		8,398
Accrued expenses and other liabilities		39,592		40,997
Current liabilities of discontinued operations		14,950		12,380
Total current liabilities		76,203		73,920
Line of credit		57,200		29,500
Long-term debt, net		319,630		319,299
Noncurrent operating lease liabilities		14,753		15,792
Deferred income tax liability, net		1,678		1,402
Other long-term liabilities		1,107		176
Noncurrent liabilities of discontinued operations		—		3,573
Total liabilities		470,571		443,662

Commitments and contingencies (Note 15)

Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2022 and December 31, 2021		—		—
Common stock, $0.0001 par value; 100,000,000 shares authorized, 26,361,787 and 26,036,236 shares issued and 25,853,103 and 25,666,434 shares outstanding at March 31, 2022 and December 31, 2021, respectively		3		3
Treasury stock, at cost; 508,684 and 369,802 shares at March 31, 2022 and December 31, 2021, respectively		(4,292)		(4,292)
Additional paid-in capital		329,061		320,392
Accumulated deficit		(288,540)		(260,347)
Total stockholders’ equity		36,232		55,756
Total liabilities and stockholders’ equity	$	506,803	$	499,418

See accompanying notes to unaudited consolidated financial statements.

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TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)


	Three Months Ended
	March 31,
	2022		2021
Revenue:
Product revenue	$	50,973	$	41,842
Service revenue		16,137		16,936
Total revenue		67,110		58,778
Cost of revenue, exclusive of depreciation and amortization shown below:
Product cost		39,552		31,357
Service cost		13,169		12,622
Total cost of revenue, exclusive of depreciation and amortization		52,721		43,979
Operating expenses:
Research and development		3,965		3,059
Sales and marketing		2,649		2,967
General and administrative		15,878		14,680
Long-lived asset impairment charge		4,062		—
Depreciation and amortization		5,742		4,801
Total operating expenses		32,296		25,507
Loss from operations		(17,907)		(10,708)
Interest expense, net		2,269		2,547
Loss from continuing operations before income taxes		(20,176)		(13,255)
Income tax expense		216		121
Net loss from continuing operations		(20,392)		(13,376)
Net loss from discontinued operations, net of tax (Note 3)		(7,801)		(6,116)
Net loss	$	(28,193)	$	(19,492)

Net loss per share:
Net loss per share from continuing operations, basic and diluted	$	(0.85)	$	(0.58)
Net loss per share from discontinued operations, basic and diluted		(0.33)		(0.27)
Total net loss per share, basic and diluted	$	(1.18)	$	(0.85)

Weighted average common shares outstanding, basic and diluted		23,865,801		23,010,531

See accompanying notes to unaudited consolidated financial statements.

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TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)


	Stockholders' Equity
	Three Months Ended March 31, 2022
	Common Stock			Treasury Stock			Additional		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity
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


	Stockholders' Equity
	Three Months Ended March 31, 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

See accompanying notes to unaudited consolidated financial statements.

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TABULA RASA HEALTHCARE, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Three Months Ended
	March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(28,193)	$	(19,492)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		13,073		11,625
Amortization of deferred financing costs and debt discount		468		635
Deferred taxes		276		174
Stock-based compensation		8,609		8,602
Acquisition-related contingent consideration paid		—		(67)
Impairment charges		4,902		—
Other noncash items		(95)		—

Changes in operating assets and liabilities:
Accounts receivable, net		(5,570)		3,151
Inventories		544		177
Prepaid expenses and other current assets		(7,131)		(1,247)
Client claims receivables		(1,679)		(924)
Other assets		(374)		(2,610)
Accounts payable		80		(4,448)
Accrued expenses and other liabilities		(2,274)		2,012
Client claims payables		391		(1,698)
Other long-term liabilities		1,238		32
Net cash used in operating activities		(15,735)		(4,078)

Cash flows from investing activities:
Purchases of property and equipment		(217)		(522)
Software development costs		(8,749)		(5,863)
Net cash used in investing activities		(8,966)		(6,385)

Cash flows from financing activities:
Proceeds from exercise of stock options		60		2,226
Payments for debt financing costs		(350)		—
Borrowings on line of credit		27,700		7,500
Payment of acquisition-related notes payable		—		(7,500)
Payments of acquisition-related contingent consideration		—		(99)
Repayments of long-term debt and finance leases		—		(3)
Net cash provided by financing activities		27,410		2,124

Net increase (decrease) in cash and restricted cash		2,709		(8,339)
Cash and restricted cash, beginning of period		15,706		28,532
Cash and restricted cash, end of period ⁽¹⁾	$	18,415	$	20,193

Supplemental disclosure of cash flow information:
Purchases of property and equipment and software development included in accounts payable and accrued expenses	$	—	$	116
Cash paid for interest	$	3,269	$	3,045
Cash paid for taxes	$	8	$	3
Interest costs capitalized to software development costs	$	87	$	57

Reconciliation of cash and restricted cash:
Cash	$	14,449	$	16,656
Restricted cash		3,839		3,294
Cash from discontinued operations		127		243
Total cash and restricted cash	$	18,415	$	20,193

(1)

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. See Note 3 for discussion of discontinued operations.

See accompanying notes to unaudited consolidated financial statements.

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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. The Company’s advanced proprietary technology, MedWise®, identifies causes of and risks for medication-related problems, including adverse drug events, 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, pharmacies, hospital sites, 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 months ended March 31, 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.

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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 March 31, 2022 and December 31, 2021, capitalized implementation costs of $814 and $747, respectively, were included in prepaid expenses, and $364 and $0, respectively, were included in other assets on the Company’s consolidated balance sheets. Accumulated amortization for these arrangements was $450 and $398 as of March 31, 2022 and December 31, 2021, respectively. Amortization expense for the three months ended March 31, 2022 and 2021, was $53 and $50, 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 is reflective of its estimated uncollateralized borrowing rate. As of March 31, 2022, the outstanding principal balance of the financing arrangement was $1,350 with an unamortized discount of $371, 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 $6 for the three months ended March 31, 2022.

(e)Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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 is currently evaluating the potential impact of the adoption of this standard on the Company’s consolidated financial statements.

3. 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. The Company considers the sales to be highly probable within one year.

The DoseMe, SinfoníaRx, and PrescribeWellness businesses comprise the majority of the Company’s MedWise HealthCare segment. The Company’s plan of sale represents 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 the requirements to be classified as held for sale and discontinued operations as of March 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.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

During the three months ended March 31, 2022, as a result of the Company’s intention to sell the aforementioned businesses, the Company prepared an impairment test on the related net assets held for sale. The Company concluded that the carrying value of the net assets held for sale for the DoseMe business did not exceed its fair value as determined using a market approach, less costs to sell. As a result, the Company recorded a goodwill impairment charge of $740 and an impairment charge on the net assets held for sale of $100 for the three months ended March 31, 2022. The Company determined that there was an excess of fair value over the carrying value of the net assets held for sale for the SinfoníaRx and PrescribeWellness businesses, and therefore no impairment charges were recorded related to these businesses.

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


	Three Months Ended
	March 31,
	2022		2021
Revenue	$	16,495	$	17,902
Cost of revenue, exclusive of depreciation and amortization		9,745		10,048
Operating expenses		13,593		13,892
Impairment charges		840		—
Loss from discontinued operations before income taxes		(7,683)		(6,038)
Income tax expense		118		78
Net loss from discontinued operations, net of tax	$	(7,801)	$	(6,116)

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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


	March 31,		December 31,
	2022		2021
Cash	$	127	$	273
Accounts receivable, net		17,182		12,646
Prepaid expenses and other assets		2,992		1,592
Property and equipment, net		1,664		—
Operating lease right-of-use assets		5,016		—
Software development costs, net		17,036		—
Goodwill		54,772		—
Intangible assets, net		104,138		—
Total current assets of discontinued operations	$	202,927	$	14,511

Property and equipment, net	$	—	$	1,897
Operating lease right-of-use assets		—		4,730
Software development costs, net		—		15,940
Goodwill		—		55,512
Intangible assets, net		—		109,292
Other assets		—		187
Total noncurrent assets of discontinued operations	$	—	$	187,558

Operating lease liabilities	$	5,145	$	1,413
Accounts payable		3,721		4,308
Accrued expenses and other liabilities		6,084		6,659
Total current liabilities of discontinued operations	$	14,950	$	12,380

Noncurrent operating lease liabilities	$	—	$	3,438
Other long-term liabilities		—		135
Total noncurrent liabilities of discontinued operations	$	—	$	3,573

The following table summarizes the significant operating non-cash items and investing activities of discontinued operations:


	Three Months Ended
	March 31,
	2022		2021
Depreciation and amortization	$	7,331	$	6,824
Impairment charges		840		—
Stock-based compensation		906		1,230
Purchases of property and equipment		(10)		(77)
Software development costs		(3,030)		(1,695)

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

4. Revenue

The Company generates the majority of its revenue from its CareVention HealthCare segment.

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. 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 HealthCare

PACE Product Revenue

The Company provides medication fulfillment pharmacy services to PACE organizations. 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 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.

PACE Solutions

The Company provides medication safety services and health plan management services to PACE organizations. 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”), 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.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

MedWise HealthCare

Medication Safety Services

The Company provides medication safety services, 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 software services 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

In the following table, revenue is disaggregated by operating segment. Substantially all of the Company’s revenue is recognized in the U.S.


	Three Months Ended
	March 31,
		2022		2021
CareVention HealthCare:
PACE product revenue	$	50,973	$	41,842
PACE solutions		15,335		13,919
	$	66,308	$	55,761
MedWise HealthCare:
Medication safety services	$	719	$	2,960
Software subscription and services		83		57
	$	802	$	3,017
Total revenue	$	67,110	$	58,778

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

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 March 31, 2022 and December 31, 2021.


	March 31,		December 31,
	2022		2021
Contract assets	$	21,208	$	12,695
Contract liabilities		3,586		2,191

Significant changes in the contract assets and the contract liabilities balances during the period are as follows:


	March 31,
	2022
Contract assets:
Contract assets, beginning of period	$	12,695
Decreases due to cash received		(429)
Changes to the contract assets at the beginning of the period as a result of changes in estimates		1,040
Changes during the year, net of reclassifications to receivables		7,902
Contract assets, end of period	$	21,208

Contract liabilities:
Contract liabilities, beginning of period	$	2,191
Revenue recognized that was included in the contract liabilities balance at the beginning of the period		(1,432)
Increases due to cash received, excluding amounts recognized as revenue during the year		2,827
Contract liabilities, end of period	$	3,586

During the three months ended March 31, 2021, the Company recognized $983 of revenue that was included in the December 31, 2020 contract liability balance of $1,982.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

5. 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.

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


	Three Months Ended
	March 31,
	2022		2021
Numerator (basic and diluted):
Net loss from continuing operations	$	(20,392)	$	(13,376)
Net loss from discontinued operations		(7,801)		(6,116)
Net loss	$	(28,193)	$	(19,492)
Denominator (basic and diluted):
Weighted average shares of common stock outstanding, basic and diluted		23,865,801		23,010,531

Net loss per share from continuing operations, basic and diluted	$	(0.85)	$	(0.58)
Net loss per share from discontinued operations, basic and diluted		(0.33)		(0.27)
Total net loss per share, basic and diluted	$	(1.18)	$	(0.85)

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


	Three Months Ended
	March 31,
	2022	2021
Stock options to purchase common stock	1,538,993	1,846,707
Unvested restricted stock and restricted stock units	1,938,780	1,651,806
Common stock warrants	4,646,393	4,646,393
Conversion of convertible senior subordinated notes	4,646,393	4,646,393
	12,770,559	12,791,299

For the three months ended March 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 period ended March 31, 2022, shares related to the performance stock units were excluded from the table above as the performance conditions were unmet as of March 31, 2022 (see Note 13).

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

6. Other Current Assets

As of March 31, 2022 and December 31, 2021, other current assets consisted of the following:


	March 31, 2022		December 31, 2021
Contract assets	$	21,208	$	12,695
Non-trade receivables		740		3,289
Other		2,039		2,049
Total other current assets	$	23,987	$	18,033

7. Property and Equipment

Accumulated depreciation was $18,084 and $17,427 as of March 31, 2022 and December 31, 2021, respectively. Depreciation expense on property and equipment for the three months ended March 31, 2022 and 2021 was $847 and $947, respectively.

8. Software Development Costs

The Company capitalizes certain costs incurred in connection with obtaining or developing its proprietary software platforms, which are used to support its product and service contracts. These costs include third-party contractors and payroll for employees directly involved with the software development, including external direct costs of material and services, and interest expense related to the borrowings attributable to software development. As of March 31, 2022 and December 31, 2021, capitalized software costs consisted of the following:


	March 31, 2022		December 31, 2021
Software development costs	$	40,622	$	49,481
Less: accumulated amortization		(12,912)		(20,227)
Software development costs, net	$	27,710	$	29,254

Capitalized software development costs included above not yet subject to amortization	$	8,480	$	5,328

Amortization expense for the three months ended March 31, 2022 and 2021 was $3,200 and $1,938, respectively.

During the first quarter of 2022, the Company became aware of changes in circumstances impacting the future functionality of certain capitalized software development costs and 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 and, as a result, the Company used an income approach to measure the fair value of the assets and recognized non-cash impairment charges of $4,062 for the period ended March 31, 2022.

9. Goodwill and Intangible Assets

The Company’s goodwill as of March 31, 2022 and December 31, 2021 was $115,323, which relates to the Company’s CareVention HealthCare segment.

During the first quarter of 2022, the Company experienced a sustained decline in the market price of its common stock and determined that an indicator of impairment was present. The Company performed a quantitative goodwill impairment assessment as of March 31, 2022, estimating the fair value of the Company’s reporting unit using a market approach. Based on the analysis performed, the Company determined that the estimated fair value of the Company’s reporting unit exceeded its carrying value, and, as a result, goodwill was not impaired as of March 31, 2022.

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TABULA RASA HEALTHCARE, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

Intangible assets consisted of the following as of March 31, 2022 and December 31, 2021:


	Weighted Average
	Amortization Period			Accumulated		Intangible
	(in years)	Gross Value		Amortization		Assets, net
March 31, 2022
Trade names	2.9	$	1,340	$	(896)	$	444
Client relationships	11.7		51,264		(12,174)		39,090
Non-competition agreements	5.0		1,640		(1,057)		583
Developed technology	6.2		14,720		(11,204)		3,516
Domain name	10.0		59		(28)		31
Total intangible assets		$	69,023	$	(25,359)	$	43,664


	Weighted Average
	Amortization Period			Accumulated		Intangible
	(in years)	Gross Value		Amortization		Assets, net
December 31, 2021
Trade names	2.9	$	1,340	$	(853)	$	487
Client relationships	11.7		51,264		(11,042)		40,222
Non-competition agreements	5.0		1,640		(975)		665
Developed technology	6.2		14,720		(10,768)

Tabula Rasa HealthCare, Inc. [TRHC] Filings
10-Q	[2022-05-09]
10-K	[2022-02-25]
10-Q	[2021-11-05]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-06]
10-Q	[2020-05-08]
10-K	[2020-03-02]
10-Q	[2019-11-08]
10-Q	[2019-08-09]
10-Q	[2019-05-10]
10-K	[2019-03-01]
10-Q	[2018-11-08]
10-Q	[2018-08-08]
10-Q	[2018-05-09]
10-K	[2018-03-14]
10-Q	[2017-11-09]
10-Q	[2017-08-08]
10-Q	[2017-05-02]
10-K	[2017-03-14]
10-Q	[2016-11-10]
S-1	[2016-01-04]