Revenue (Notes)

3 Months Ended

Mar. 31, 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. 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 selling price, and recognize revenue over the period the warranty service is provided. Our revenues are recorded at the net sales price, which includes an estimate for variable consideration related to rebates, chargebacks and product returns.

Revenue disaggregated

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

	Three months ended March 31,
Product line	2023		2022
Consumables	$	236,122	$	240,189
Infusion Systems	161,713		138,227
Vital Care	170,814		164,706
Total Revenues	$	568,649	$	543,122

For the three months ended March 31, 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 March 31,
Geography	2023		2022
United States	$	359,187	$	347,791
Europe, the Middle East and Africa	98,986		86,204
APAC	58,624		64,831
Other Foreign	51,852		44,296
Total Revenues	$	568,649	$	543,122

Contract balances

    The following table presents the changes in our contract balances for the three months ended March 31, 2023 and 2022 (in thousands):

	Contract Liabilities
Beginning balance, January 1, 2023	$	(45,866)
Equipment revenue recognized	5,976
Equipment revenue deferred due to implementation	(7,236)
Software revenue recognized	4,108
Software revenue deferred due to implementation	(5,362)
Government grant deferred revenue	(861)
Government grant recognized	218
Other deferred revenue	(403)
Other deferred revenue recognized	1,915
Ending balance, March 31, 2023	$	(47,511)
Beginning balance, January 1, 2022	$	(7,461)
Fair value of acquired deferred revenue	(51,245)
Equipment revenue recognized	5,574
Equipment revenue deferred due to implementation	(3,447)
Software revenue recognized	4,299
Software revenue deferred due to implementation	(4,777)
Government grant deferred revenue	(2,266)
Government grant recognized	171
Other deferred revenue	(767)
Other deferred revenue recognized	1,683
Ending balance, March 31, 2022	$	(58,236)

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 March 31, 2023, revenue from remaining performance obligations is as follows:

	Recognition Timing
(in millions)	< 12 Months		> 12 Months
Equipment revenue	$	(17,464)	$	(1,327)
Software revenue	(8,323)		(829)
Government grant revenue	(1,422)		(13,441)
Other revenue*	(3,711)		(994)
Total	$	(30,920)	$	(16,591)

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