REVENUE

We separate our goods and services among:


•	Point of Care laboratory products including instruments, consumables and services;


•	Point of Care imaging products including instruments, software and services;


•	Single use pharmaceuticals, vaccines and diagnostic tests primarily related to companion animals; and


•	Other vaccines and pharmaceuticals ("OVP").

The following table summarizes our Core Companion Animal ("CCA") revenue (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Point of Care laboratory revenue:	$	16,120	$	15,053	$	32,081	$	28,693
Consumables	13,208		11,524		25,524		22,344
Sales-type leases	1,493		1,793		3,234		3,331
Outright instrument sales	1,045		1,335		2,575		2,146
Other	374		401		748		872

Point of Care imaging revenue:	5,229		4,462		10,639		10,434
Outright instrument sales	4,405		3,566		8,951		8,705
Service revenue	558		544		1,120		1,099
Operating type leases and other	266		352		568		630

Other CCA revenue:	3,367		7,129		6,712		14,336
Other pharmaceuticals, vaccines and diagnostic tests	3,281		6,991		6,527		14,102
Research and development, license and royalty revenue	86		138		185		234

Total CCA revenue	$	24,716	$	26,644	$	49,432	$	53,463

Revenue from our OVP segment consists of revenue generated from contract manufacturing agreements and from other license, research and development revenue. The following table summarizes our OVP revenue (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Contract manufacturing	$	3,327	$	2,887	$	7,994	$	8,678
License, research and development	103		131		231		286
Total OVP revenue	$	3,430	$	3,018	$	8,225	$	8,964

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. Remaining performance obligations include noncancelable purchase orders, the non-lease portion of minimum purchase commitments under long-term supply arrangements, extended warranty, service and other long-term contracts. Remaining performance obligations do not include revenue from contracts with customers with an original term of one year or less, revenue from long-term supply arrangements with no minimum purchase requirements, revenue expected from purchases made in excess of the minimum purchase requirements, or revenue from instruments leased to customers. While the remaining performance obligation disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes leases and contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. Additionally, the Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations.

As of June 30, 2019, the aggregate amount of the transaction price allocated to remaining minimum performance obligations was approximately $89.5 million. As of June 30, 2019, the Company expects to recognize revenue as follows (in thousands):



Year Ending December 31,	Revenue
2019 (remaining)	$	12,289
2020	22,138
2021	18,315
2022	15,244
2023	11,848
Thereafter	9,641
	$	89,475

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and deferred revenue, and customer deposits and billings in excess of revenue recognized (contract liabilities) on the Condensed Consolidated Balance Sheets. In addition, the Company defers certain costs incurred to obtain contracts (contract costs).

Contract Receivables

Certain unbilled receivable balances related to long-term contracts for which we provide a free term to the customer where revenue has been recognized are recorded in other current and other non-current assets. We have no further performance obligations related to these receivable balances and the collection of these balances occurs over the term of the underlying contract. The balances as of June 30, 2019 were $1.0 million and $3.5 million for current and non-current assets, respectively, shown net of related unearned interest. The balances as of December 31, 2018 were $0.9 million and $3.3 million for current and non-current assets, respectively, shown net of related unearned interest.

Contract Liabilities

The Company receives cash payments from customers for licensing fees or other arrangements that extend for a specified term. These contract liabilities are classified as either current or long-term in the Condensed Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of June 30, 2019 and December 31, 2018, contract liabilities were $8.9 million and $9.6 million, respectively, and are included within "Current portion of deferred revenue, and other" and "Deferred revenue, net of current portion" in the accompanying Condensed Consolidated Balance Sheets. The decrease in the contract liability balance during the six-month period ended June 30, 2019 is approximately $1.5 million of revenue recognized during the period, offset by approximately $0.7 million of additional deferred sales in 2019.

Contract Costs

The Company capitalizes certain direct incremental costs incurred to obtain customer contracts, typically sales-related commissions, where the recognition period for the related revenue is greater than one year. Contract costs are classified as current or non-current, and are included in "Other current assets" and "Other non-current assets" in the Condensed Consolidated Balance Sheets based on the timing of when the Company expects to recognize the expense. Contract costs are generally amortized into selling and marketing expense with a certain percentage recognized immediately based upon placement of the instrument with the remainder recognized on a straight-line basis (which is consistent with the transfer of control for the related goods or services) over the average term of the underlying contracts, approximately 6 years. Management assesses these costs for impairment at least quarterly on a portfolio basis and as “triggering” events occur that indicate it is more-likely-than-not that an impairment exists. The balance of contract costs as of June 30, 2019 and December 31, 2018 was $2.6 million and $2.5 million, respectively. Amortization expense for the six-month period ended June 30, 2019 was approximately $0.5 million, offset by approximately $0.6 million of additional contract costs capitalized.

Contract liabilities are reported on the accompanying Condensed Consolidated Balance Sheets on a contract-by-contract basis whereas contract costs are calculated and reported on a portfolio basis.