Quarterly report pursuant to Section 13 or 15(d)

Notes Receivable, Net

Notes Receivable, Net
9 Months Ended
Sep. 30, 2022
Notes Receivable, Net.  
Notes Receivable, Net

Note 13: Notes Receivable, Net

The Company entered into five Promissory Notes (the “Notes”) with three family medical practices (the “Practices”) to fund their working capital needs. The Company simultaneously entered into separate Provider Agreements with each Practice related to four of these five Notes. Each Provider Agreement establishes a preferred, predetermined reimbursement rate for services rendered to the Company’s members and requires that Practice to furnish healthcare services to the Company’s members. The Provider Agreements mature in concert with each practice’s loan. In accordance with each of these four Notes, so long as the corresponding Provider Agreement is in effect on the maturity date of each Note and has not been terminated by the borrower for any reason, the Company will forgive the entire principal, plus accrued interest due on the date of maturity. Likewise, if the Company terminates the Provider Agreement prior to maturity without cause, all principal plus accrued interest due from the borrower will be forgiven. Upon early termination of the Provider Agreement by borrower, all principal and accrued interest will become immediately payable and due the Company. Related to potential forgiveness, the Company records a valuation allowance on a straight-line basis following the early termination date through the date of maturity, due to the probable likelihood of forgiveness of the Notes at maturity, with a full valuation allowance set at the time of maturity.

At September 30, 2022 and December 31, 2021, the Company has recorded notes receivable of $4,526,522 (including $963,060 current portion) and $3,590,715 including accrued interest receivable of $1,040,729 and $885,243, and net of valuation allowances of $709,547 and $526,808, respectively. The Notes carry maturity dates ranging from December 31, 2021 through December 31, 2028 with interest rates ranging from 5.0% to 10.0%. The short-term components of these Notes as of September 30, 2022 and December 31, 2021, is included in Other Receivables in the Company’s condensed consolidated balance sheets.