Revenue (Notes)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Revenue

Revenue Recognition

    As part of the integration of our acquisition of Smiths Medical, we have now migrated to our new business unit structure of Consumables, Infusion Systems and Vital Care. The vast majority of our sales of products within these business units are made on a stand-alone basis to hospitals and distributors. Our revenues are recorded at the net sales price, which includes an estimate for variable consideration related to rebates, chargebacks and product returns. Revenue is typically recognized upon transfer of control of the products, which we deem to be at point of shipment. However, for purposes of revenue recognition for our software licenses and renewals, we consider the control of these products to be transferred to a customer at a certain point in time; therefore, we recognize revenue at the start of the applicable license term.

    Payment is typically due in full within 30 days of delivery or the start of the contract term. Revenue is recorded in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We offer certain volume-based rebates to our distribution customers, which we record as variable consideration when calculating the transaction price. Rebates are offered on both a fixed and tiered/variable basis. In both cases, we use information available at the time and our historical experience with each customer to estimate the most likely rebate amount. We also provide chargebacks to distributors that sell to end customers at prices determined under a contract between us and the end customer. Chargebacks are the difference between the prices we charge our distribution customers and the contracted prices we have with the end customer which are processed as credits to our distribution customers. In estimating the expected value of chargeback amounts in order to determine the transaction price, we use information available at the time, including our historical experience.

    We also warranty products against defects and have a policy permitting the return of defective products, for which we accrue and expense at the time of sale using information available at that time and our historical experience. We also provide for extended service-type warranties, which we consider to be separate performance obligations. We allocate a portion of the transaction price to the extended service-type warranty based on its estimated relative stand-alone selling price, and recognize revenue over the period the warranty service is provided.

Revenue disaggregated

The following table represents our revenues disaggregated by product line (in thousands):

	Three months ended June 30,				Six months ended June 30,
Product line	2023		2022		2023		2022
Consumables	$	236,976	$	240,995	$	473,098	$	481,184
Infusion Systems	153,142		148,644		314,855		286,871
Vital Care	159,192		171,365		330,006		336,071
Total Revenues	$	549,310	$	561,004	$	1,117,959	$	1,104,126

For the three and six months ended June 30, 2023 and 2022, net sales to Medline made up approximately 15% of total revenues.

The following table represents our revenues disaggregated by geography (in thousands):

	Three months ended June 30,				Six months ended June 30,
Geography	2023		2022		2023		2022
United States	$	347,866	$	363,866	$	707,053	$	711,657
Europe, the Middle East and Africa	89,994		87,415		188,980		173,619
APAC	60,031		60,447		118,655		125,278
Other Foreign	51,419		49,276		103,271		93,572
Total Revenues	$	549,310	$	561,004	$	1,117,959	$	1,104,126

Contract balances

    The following table presents the changes in our contract balances for the six months ended June 30, 2023 and 2022 (in thousands):

	Contract Liabilities
Beginning balance, January 1, 2023	$	(45,866)
Equipment revenue recognized	16,793
Equipment revenue deferred	(16,625)
Software revenue recognized	9,041
Software revenue deferred	(8,875)
Government grant deferred income	(944)
Government grant recognized*	647
Other deferred revenue	(688)
Other deferred revenue recognized	3,514
Ending balance, June 30, 2023	$	(43,003)
Beginning balance, January 1, 2022	$	(7,461)
Fair value of acquired deferred revenue	(51,245)
Equipment revenue recognized	14,606
Equipment revenue deferred	(7,349)
Software revenue recognized	8,737
Software revenue deferred	(9,067)
Government grant deferred income	(2,972)
Government grant recognized*	232
Other deferred revenue	(1,005)
Other deferred revenue recognized	2,458
Ending balance, June 30, 2022	$	(53,066)

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*The government grant deferred income is amortized over the life of the related depreciable asset as a reduction to depreciation expense.

Our contract liabilities are included in accrued liabilities or other long-term liabilities in our condensed consolidated balance sheet based on the expected timing of payments.    

As of June 30, 2023, revenue from remaining performance obligations is as follows:

	Recognition Timing
(in millions)	< 12 Months		> 12 Months
Equipment deferred revenue	$	(15,605)	$	(790)
Software deferred revenue	(8,001)		(699)
Government grant deferred income*	(1,451)		(13,064)
Other deferred revenue**	(2,591)		(802)
Total	$	(27,648)	$	(15,355)

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*The government grant deferred income is amortized over the life of the related depreciable asset as a reduction to depreciation expense.

**Other deferred revenue includes pump development programs, purchased training and extended warranty.