5. Balance sheet components

Accounts receivable and allowance for bad debts, returns, and adjustments

Concentration of customers and vendors

The Company primarily sells its products to traditional home medical equipment providers, distributors, and resellers in the United States and in foreign countries on a credit basis. The Company also sells its products direct-to-consumers primarily on a prepayment basis. Medicare's service reimbursement programs represented more than 10% of the Company's total revenue for the three months ended March 31, 2024 and March 31, 2023. One customer represented more than 10% of the Company’s net accounts receivable balance with a net accounts receivable balance of $6,665 as of March 31, 2024, and two customers each represented more than 10% of the Company's net accounts receivable balance with net accounts receivable balances of $8,639 and $4,994, respectively, as of December 31, 2023.

The Company also rents products directly to consumers for insurance reimbursement, which resulted in a customer concentration relating to Medicare’s service reimbursement programs. Medicare’s service reimbursement programs accounted for 58.4% and 73.8% of rental revenue in the three months ended March 31, 2024 and 2023, respectively, and based on total revenue were 11.2% and 16.6% for the three months ended March 31, 2024 and 2023, respectively. Accounts receivable balances relating to Medicare’s service reimbursement programs (including held and unbilled, net of allowances) amounted to $1,427 or 3.5% of total net accounts receivable as of March 31, 2024 compared to $2,059 or 4.9% of total net accounts receivable as of December 31, 2023.

The Company currently purchases raw materials from a limited number of vendors, which resulted in a concentration of three major vendors. The three major vendors supply the Company with raw materials used to manufacture the Company’s products. For the three months ended March 31, 2024, the Company’s three major vendors accounted for 24.6%, 17.2%, and 10.0%, respectively, of total raw material purchases. For the three months ended March 31, 2023, the Company’s three major vendors accounted for 34.1%, 13.1%, and 7.3%, respectively, of total raw material purchases.

Inventories

Inventories are stated at the lower of cost and net realizable value, using the first-in, first-out (FIFO) method. The Company records adjustments to inventory for potentially excess, obsolete, slow-moving, or impaired items, and losses on firm purchase commitments as a component of cost of sales in our consolidated statements of comprehensive loss. The Company recorded noncurrent inventory related to inventories that are expected to be realized or consumed after one year of $1,377 and $1,225 as of March 31, 2024 and December 31, 2023, respectively. Noncurrent inventories are primarily related to raw materials purchased in bulk to support long-term expected repairs to reduce costs and are classified in other assets. During the three months ended March 31, 2024 and 2023, $331 and $1,013, respectively, of inventory was transferred to rental equipment and was considered a noncash transaction in the production and purchase of rental equipment on the consolidated statements of cash flows. Inventories that are considered current consist of the following:

Property and equipment

Repair and maintenance expense, which includes labor, parts, and freight, for rental equipment was $1,759 and $1,311 for the three months ended March 31, 2024 and 2023, respectively.

Long-lived assets

The Company accounts for the impairment and disposition of long-lived assets in accordance with Accounting Standards Codification (ASC) 360 — Property, Plant, and Equipment. In accordance with ASC 360, long-lived assets to be held are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. No impairments were recorded for the three months ended March 31, 2024 and March 31, 2023.

Goodwill and other identifiable intangible assets

Goodwill

Intangible assets

Current liabilities