Quarterly report pursuant to Section 13 or 15(d)

Revenue

v3.22.1
Revenue
 3 Months Ended
Mar. 31, 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, associated software (SmartAssist and VariableAssist), the sale and subscription of the EksoUE, the sale of accessories, and the sale of support and maintenance contracts (Ekso Care). 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 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.
 
Contract Balances
 
Timing of revenue recognition may differ from the timing of invoicing to customers and receipt of payment. For the sale of its products, the Company generally recognizes revenue at a point in time through the ship-and-bill performance obligations. 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 extended support and maintenance 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:
March 31, 2022 December 31, 2021
Deferred extended maintenance and support $ 2,124  $ 2,349 
Deferred royalties —  280 
Deferred device and advances 73  66 
Total deferred revenues 2,197  2,695 
Less current portion (1,115) (1,220)
Deferred revenues, non-current $ 1,082  $ 1,475 
 
Deferred revenue activity consisted of the following for the three months ended March 31, 2022:
Beginning balance $ 2,695 
Deferral of revenue 196 
Recognition of deferred revenue (694)
Ending balance $ 2,197 
 
As of March 31, 2022, the Company’s deferred revenue was $2,197. The Company expects to recognize approximately $902 of the deferred revenue during the remainder of 2022, $681 in 2023, and $614 thereafter.

In addition to deferred revenue, the Company has a non-cancellable backlog of $1,524 related to its contracts for subscription units with its customers. These subscription contracts typically have 12-month terms and subscription income is recognized on a straight-line basis over the lease term.

In the three months ended March 31, 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 March 31, 2022 and December 31, 2021, total accounts receivable, net of allowance for doubtful accounts, were $3,486 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 March 31, 2022:
  EksoHealth EksoWorks Total
Device revenue $ 963  $ 309  $ 1,272 
Service and support 467  —  467 
Subscriptions 216  69  285 
Parts and other 156  308  464 
Collaborative arrangements 79  —  79 
  $ 1,881  $ 686  $ 2,567 

The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2021:
  EksoHealth EksoWorks Total
Device revenue $ 1,019  $ 98  $ 1,117 
Service and support 488  —  488 
Rentals and subscriptions 152  70  222 
Parts and other 54  15  69 
Collaborative arrangements 14  —  14 
  $ 1,727  $ 183  $ 1,910