Revenue

12 Months Ended

Jan. 02, 2022

Revenue From Contract With Customer [Abstract]

Revenue

(4) Revenue

Product Revenue

The Company recognizes revenue when obligations under the terms of a contract with a customer are satisfied; this occurs with the transfer of control of the Company’s goods or services. The Company considers revenue to be earned when all of the following criteria are met: the Company has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or consideration the Company expects to receive for transferring the goods or providing services, is determinable; and the Company has transferred control of the promised items to the customer. A promise in a contract to transfer a distinct good or service to the customer is identified as a performance obligation. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The Company generates revenue primarily from the sale of in-vitro diagnostics instruments, assays, reagents and other consumables, accessories and service contracts. The Company generally recognizes revenue when the customer obtains control of the products, which occurs at a point in time. For instruments, the Company generally recognizes revenue upon installation and customer acceptance. The Company has determined that the installation services do not constitute a separate performance obligation. For assays, reagents and other consumables, the Company recognizes revenue upon shipment or delivery based on the contractual shipping terms of a contract. Service revenue is generally recognized over time using a time-based model, which is consistent with the pattern in which the Company provides the services.

The Company also generates revenues from a limited number of contract manufacturing arrangements. The Company recognizes revenues related to certain of these arrangements over time as the products are manufactured and the Company’s performance obligations have been satisfied under the terms of the contract because the Company has an enforceable right to payment and the products have no alternative use. The Company generally uses the cost-to-cost approach to measure the extent of progress towards completion of the performance obligation for these arrangements because it believes it best depicts the transfer of assets to the customer. Under the cost-to-cost approach, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues are recorded proportionally as costs are incurred. Historically, adjustments made as a result of changes in the estimate of total costs to complete the performance obligation have been immaterial to the financial statements.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company may also enter into transactions that involve multiple performance obligations, such as the sale of products and related services. In accounting for these transactions, the Company allocates the consideration to the deliverables by use of the relative standalone selling price method.

A portion of the Company’s product revenue includes revenue earned under reagent rental programs which provide customers the right to use instruments at no separate cost to the customer in consideration for a multi-year agreement to purchase reagents, assays and consumables. For these arrangements, the contract consideration is allocated between the lease component related to the instruments and the non-lease component related to the reagents, assays and consumables based on the relative standalone prices for each component. The cost of the instrument is capitalized within property, plant and equipment, and is charged to cost of product revenue on a straight-line basis over the term of the minimum purchase agreement. Revenue related to the lease component is recognized over the lease term. Revenue earned under sales-type leases is recognized at the beginning of the lease, as well as a lease receivable and unearned interest associated with the lease. Revenue related to the non-lease component is recognized when control has transferred for the reagents, assays and consumables. Costs related to product sales are recognized at time of delivery. Cost of revenues excludes intangibles amortization expense.

The Company recognizes product revenues at the net sales price, which includes estimates of variable consideration related to rebates and volume discounts. Rights of return are generally not included in the Company’s arrangements with customers. Management’s estimates of rebates and discounts are determined using the expected value method and take into consideration historical experience, contractual and statutory requirements, and other relevant information such as forecasted activity. These reserves reflect the Company’s best estimate of the amount of consideration to which it is entitled. The amount of variable consideration included in the net sales price is limited to the amount that is probable not to result in a significant future reversal of cumulative revenue under the contract.

Contract balances

Timing of revenue recognition may differ from timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (“contract asset”). Contract assets are included within other current assets or other assets in the Company’s consolidated balance sheet and are transferred to accounts receivable when the right to payment becomes unconditional. The balance of contract assets in the consolidated balance sheets were as follows:

	January 2, 2022		January 3, 2021
Other current assets	$	47.2	$	40.4
Other assets		1.0		2.4
Total Contract assets	$	48.1	$	42.8

The contract asset balance consists of the following components:

• A customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $12.4 million as of January 2, 2022, of which $11.5 million was recorded within Other current assets and $1.0 million was recorded within Other assets. The balance of this contract asset was $15.1 million as of January 3, 2021, of which $12.7 million was recorded within Other current assets and $2.4 million was recorded within Other assets.

• Contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents, however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract, which allows the Company to record the related revenue. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $35.7 million and $24.3 million as of January 2, 2022 and January 3, 2021, respectively.

• One of the Company’s contract manufacturing agreements where revenue is recognized as the products are manufactured. The balance of the contract asset related to this arrangement was immaterial as of January 2, 2022 and $3.4 million as of January 3, 2021.

The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts. Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts. No credit losses related to contract assets were recognized during the fiscal years ended January 2, 2022 and January 3, 2021.

The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). The Company’s contract liabilities consist of deferred revenue primarily related to customer service contracts. The Company classifies deferred revenue as current or noncurrent based on the timing of the transfer of control or performance of the service. The balance of the Company’s current deferred revenue was $34.5 million and $35.5 million as of January 2, 2022 and January 3, 2021, respectively. The Company has one arrangement with a customer that is expected to be recognized beyond one year. The balance of the deferred revenue included in long term liabilities was $5.6 million and $6.6 million as of January 2, 2022 and January 3, 2021, respectively, and was included in Other liabilities in the consolidated balance sheet. The amount of deferred revenue as of January 3, 2021 that was recorded in revenue during the fiscal year ended January 2, 2022 was $33.0 million. The amount of deferred revenue as of December 29, 2019 that was recorded in revenue during the fiscal year ended January 3, 2021 was $35.1 million. The amount of deferred revenue as of December 30, 2018 that was recorded in revenue during the fiscal year ended December 29, 2019 was $25.8 million.

Disaggregation of revenue

The Company generates revenue in the following lines of business:

•Clinical Laboratories—Focused on (i) clinical chemistry, which is the measurement of target chemicals in bodily fluids for the evaluation of health and the clinical management of patients, (ii) immunoassay instruments, which test the measurement of proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health, and (iii) testing to detect and monitor disease progression across a broad spectrum of therapeutic areas.

•Transfusion Medicine—Focused on (i) immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions, and (ii) donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the U.S.

•Other Product—Other product revenue includes revenues primarily from contract manufacturing.

The Company has entered into collaboration and license agreements pursuant to which the Company derives collaboration and royalty revenues. During the fiscal year ended January 2, 2022, the Company received an award of $8.5 million in connection with an arbitration proceeding related to one of its collaboration agreements, which was recorded in Net revenue.

During the fiscal year ended January 3, 2021, the Company entered into two agreements with BARDA, a division of the U.S. Department of Health and Human Services, for two awards of up to $13.6 million to develop and submit Emergency Use Authorizations and 510(k) applications to the U.S. Food and Drug Administration for its COVID-19 antigen and antibody tests. An additional award was granted to the Company on April 16, 2021 for an amount up to $3.6 million to submit a 510(k) application for its COVID-19 antigen test. During the fiscal years ended January 2, 2022 and January 3, 2021, the Company recognized $9.6 million and $5.8 million, respectively, of grant revenue related to these grants based upon project milestones completed to date.

The following table summarizes net revenue by line of business for the fiscal years ended January 2, 2022, January 3, 2021 and December 29, 2019:

	Fiscal Year Ended
	January 2, 2022		January 3, 2021		December 29, 2019
Clinical Laboratories	$	1,340.9	$	1,148.3	$	1,142.3
Transfusion Medicine		664.3		580.6		598.0
Other Product		6.2		8.5		37.3
Collaborations and other revenue		31.4		28.8		23.9
Net Revenue	$	2,042.8	$	1,766.2	$	1,801.5

The following table summarizes changes to the rebate reserves balances for the fiscal years ended January 2, 2022, January 3, 2021 and December 29, 2019:

	Balance at beginning of fiscal year		Additions		Deductions(a)			Balance at end of fiscal year
Rebate reserves
Fiscal year ended January 2, 2022	$	42.4		267.6		(251.1	)	$	58.9
Fiscal year ended January 3, 2021	$	32.1		222.4		(212.1	)	$	42.4
Fiscal year ended December 29, 2019	$	30.6		207.0		(205.5	)	$	32.1

(a) Primarily reflects payments of customer rebates.