Quarterly report pursuant to Section 13 or 15(d)

Revenue

v3.22.2.2
Revenue
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Revenue Revenue
The Company’s medical device segment (EksoHealth) revenue is primarily generated through the sale and subscription of the EksoNR, the sale of support and maintenance contracts (Ekso Care), and the sale of accessories for the EksoNR. In 2021, the Company moved to a customer subscription sales model and away from a rental sales model. Under the rental sales model, the Company offered customers a short-term rental arrangement of its products to help bridge to a capital purchase since customers typically have challenges in obtaining approvals for capital expenditures. Subscription sales arrangements, however, bypass the customer capital purchase process, are intended to renew annually, and provide a long-term revenue stream.
 
Revenue from medical device product sales is recognized at the point in time when control of the product transfers to the customer. Transfer of control generally occurs upon shipment from the Company’s facility for sales of the EksoNR, software and accessories. Ekso Care support and maintenance contracts extend coverage beyond the Company’s standard warranty agreements. The separately priced Ekso Care contracts range from 12 to 48 months. The Company receives payment at the
inception of the contract and recognizes revenue evenly over the term of the contracts. Revenue from medical device subscriptions is recognized evenly over the initial contract term, typically over 12 to 24 months.

The Company’s industrial device segment (EksoWorks) revenue is generated through the sale of the upper body exoskeletons (EksoVest and the EVO) and the support arm (EksoZeroG). Revenue from industrial device sales is recognized at the point in time when control of the product transfers to the customer. Transfer of control generally occurs upon shipment from the Company’s facility.

At the end of the second quarter of 2022, the Company ceased commercialization of the EksoZeroG support arm and related products and accessories. The Company may continue to sell parts and accessories to existing EksoZeroG customers to deplete its current stock of EksoZeroG inventories, however, the Company does not expect any future revenues derived from the sale of the EksoZeroG product line to have a material contribution to EksoWorks segment revenues. Refer to Note 13 Commitment and Contingencies for further information regarding commitments and obligations related to the EksoZeroG product line.
 
Deferred Revenue
 
For the sale of its products, the Company recognizes revenue upon the transfer of control of products to its customers, typically upon shipment from its facilities. For the subscription of its products, the Company generally recognizes revenue over the subscription term commencing upon the completion of customer training. For service agreements, the Company generally invoices customers at the beginning of the coverage period and records revenue related to the billed amounts over time, equivalent to the coverage period of the maintenance and support contract.

Deferred revenue is comprised mainly of unearned revenue related to service agreement contracts (Ekso Care), but also includes other offerings for which the Company has been paid in advance and earns revenue when the Company transfers control of the product or service.
 
Deferred revenue consisted of the following:
September 30, 2022 December 31, 2021
Deferred extended maintenance and support $ 2,056  $ 2,349 
Deferred royalties —  280 
Customer advances 35  66 
Total deferred revenues 2,091  2,695 
Less current portion (1,059) (1,220)
Deferred revenues, non-current $ 1,032  $ 1,475 
 
Deferred revenue activity consisted of the following for the nine months ended September 30, 2022:
Beginning balance $ 2,695 
Deferral of revenue 1,014 
Recognition of deferred revenue (1,618)
Ending balance $ 2,091 
 
As of September 30, 2022, the Company’s deferred revenue was $2,091. The Company expects to recognize approximately $375 of the deferred revenue during the remainder of 2022, $897 in 2023, and $819 thereafter.

In addition to deferred revenue, the Company has a non-cancellable backlog of $2,527 related to its contracts for subscription units with its customers. These subscription contracts typically have 12 to 24 month terms, and subscription income is recognized on a straight-line basis over the term of the contract.
In the nine months ended September 30, 2022, the Company recognized revenue of $280 related to a $300 upfront royalty payment associated with a license and distribution agreement that expired. The unrecognized royalty balance of $280 was included in deferred revenue as of December 31, 2021.
 
As of September 30, 2022 and December 31, 2021, total accounts receivable, net of allowance for doubtful accounts, were $3,536 and $4,824, respectively, and are included in accounts receivable, net and other assets on the Company’s condensed consolidated balance sheets.
 
The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days.
 
Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major source for the three months ended September 30, 2022:
  EksoHealth EksoWorks Total
Device revenue $ 2,338  $ 72  $ 2,410 
Service and support 484  —  484 
Subscriptions 237  14  251 
Parts and other 165  19  184 
  $ 3,224  $ 105  $ 3,329 
 
The following table disaggregates the Company’s revenue by major source for the nine months ended September 30, 2022:
  EksoHealth EksoWorks Total
Device revenue $ 5,670  $ 544  $ 6,214 
Service and support 1,440  —  1,440 
Subscriptions 678  134  812 
Parts and other 438  350  788 
Collaborative arrangements 107  —  107 
  $ 8,333  $ 1,028  $ 9,361 

The following table disaggregates the Company’s revenue by major source for the three months ended September 30, 2021:
  EksoHealth EksoWorks Total
Device revenue $ 1,791  $ 240  $ 2,031 
Service and support 477  —  477 
Rentals and subscriptions 173  66  239 
Parts and other 233  27  260 
Collaborative arrangements 42  —  42 
  $ 2,716  $ 333  $ 3,049 
The following table disaggregates the Company’s revenue by major source for the nine months ended September 30, 2021:
  EksoHealth EksoWorks Total
Device revenue $ 3,900  $ 625  $ 4,525 
Service and support 1,412  —  1,412 
Rentals and subscriptions 510  188  698 
Parts and other 427  51  478 
Collaborative arrangements 57  —  57 
  $ 6,306  $ 864  $ 7,170