CONTRACT ASSETS AND LIABILITIES

12 Months Ended

Dec. 31, 2022

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Abstract]

CONTRACT ASSETS AND LIABILITIES

NOTE 13. CONTRACT ASSETS AND LIABILITIES

Our revenue consists almost entirely of sales of our products to customers, whereby we ship products to a customer pursuant to a purchase order. Revenue contracts such as these do not generally give rise to contract assets or contract liabilities because: (i) the underlying contracts generally have only a single performance obligation and (ii) we do not generally receive consideration until the performance obligation is fully satisfied. At December 31, 2022, the unfulfilled performance obligations for these types of contracts relate to ordered but undelivered products. We generally expect to fulfill the performance obligations and recognize revenue within one week of entering into the underlying contract. Based on the short-term initial contract duration, additional disclosure about the remaining performance obligations is not required.

Certain of our other income-generating contracts, including license and collaboration agreements, may result in contract assets and/or contract liabilities. For example, we may recognize contract liabilities upon receipt of certain upfront and milestone payments from customers when there are remaining performance obligations.

The following table shows the opening and closing balances of contract assets and contract liabilities from contracts with customers (dollars in thousands):

	December 31, 2022		December 31, 2021		$ Change		% Change
Contract assets (1)	$	8,193	$	13,005	$	(4,812)	(37)	%
Contract liabilities (2)	$	4,099	$	4,663	$	(564)	(12)	%

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(1)At December 31, 2022 and December 31, 2021, approximately $1.5 million and $2.8 million, respectively, of these contract asset amounts are classified as current and are included in Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets. The remaining amounts are classified as noncurrent and are included in Other assets. The net decrease in contract assets during the year ended December 31, 2022 primarily relates to: (i) reclassifications of certain amounts to receivables as a result of rights to consideration becoming unconditional and (ii) net changes in estimates with respect to amounts of consideration expected to be received from sales of certain intellectual property rights.

(2)At December 31, 2022 and December 31, 2021, approximately $0.6 million and $0.6 million, respectively, of these contract liability amounts are classified as current and are included in Accounts payable and accrued expenses in the Company’s Consolidated Balance Sheets. The remaining amounts are classified as noncurrent and are included in Other liabilities. During the year ended December 31, 2022, approximately $0.6 million of revenue was recognized that was included in the contract liability balance at December 31, 2021.

During the year ended December 31, 2022, we recognized revenue of $11.9 million relating to performance obligations satisfied, or partially satisfied, in prior periods. Such revenue generally relates to changes in estimates with respect to our variable consideration.