Revenue (Notes)

9 Months Ended

Sep. 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 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 September 30,				Nine months ended September 30,
Product line	2023		2022		2023		2022
Consumables	242,010		251,572		715,108		732,756
Infusion Systems	148,981		161,555		463,836		448,426
Vital Care	162,320		184,730		492,326		520,801
Total Revenues	$	553,311	$	597,857	$	1,671,270	$	1,701,983

For the three and nine months ended September 30, 2023, net sales to Medline made up approximately 18% and 16% of total revenues, respectively. For the three and nine months ended September 30, 2022, net sales to Medline made up approximately 16% and 15% of total revenues, respectively.

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

	Three months ended September 30,				Nine months ended September 30,
Geography	2023		2022		2023		2022
United States	$	355,984	$	376,691	$	1,063,037	$	1,088,348
Europe, the Middle East and Africa	88,014		101,869		276,994		275,488
APAC	59,064		66,569		177,719		191,847
Other Foreign	50,249		52,728		153,520		146,300
Total Revenues	$	553,311	$	597,857	$	1,671,270	$	1,701,983

Contract Balances

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

	Contract Liabilities
Beginning balance, January 1, 2023	$	(45,866)
Equipment revenue recognized	24,872
Equipment revenue deferred	(25,620)
Software revenue recognized	13,546
Software revenue deferred	(12,797)
Government grant deferred income*	(944)
Government grant recognized	3,164
Other deferred revenue	(1,674)
Other deferred revenue recognized	4,748
Ending balance, September 30, 2023	$	(40,571)
Beginning balance, January 1, 2022	$	(7,461)
Fair value of acquired deferred revenue	(51,245)
Equipment revenue recognized	22,757
Equipment revenue deferred	(13,420)
Software revenue recognized	12,761
Software revenue deferred	(12,978)
Government grant deferred income*	(3,434)
Government grant recognized	178
Other deferred revenue	(1,285)
Other deferred revenue recognized	3,488
Ending balance, September 30, 2022	$	(50,639)

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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 revenue recognition.    

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

	Recognition Timing
(in millions)	< 12 Months		> 12 Months
Equipment deferred revenue	$	(16,448)	$	(12)
Software deferred revenue	(8,261)		(707)
Government grant deferred income*	(1,451)		(10,548)
Other deferred revenue**	(2,575)		(569)
Total	$	(28,735)	$	(11,836)

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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.