Revenue (Notes)

12 Months Ended

Dec. 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 renamed our business units and reorganized the products thereunder and, as of January 1, 2023, our business unit structure is composed of Consumables, Infusion Systems and Vital Care. All prior periods herein have been retrospectively conformed to the current presentation. The vast majority of our sales of these 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. 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 include variable consideration in net sales only to the extent that a significant reversal in revenue is not probable when the uncertainty is resolved. Our variable consideration includes distributor chargebacks, product returns and end customer rebates with distributor chargebacks representing the majority and subject to the greatest judgment, (see Note 1: Basis of Presentation and Significant Accounting Policies).

We also offer certain volume-based rebates to both our distribution and end customers, which is recorded 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, including current contractual requirements, our historical experience with each customer and forecasted customer purchasing patterns, to estimate the most likely rebate amount. We also warrant products against defects and have a policy permitting the return of defective products. 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. See Note 1. Basis of Presentation and Significant Accounting Policies for further discussion.

Arrangements with Multiple Performance Obligations

We also enter into arrangements which include multiple performance obligations, (see Note 1: Basis of Presentation and Summary of Significant Accounting Policies). The most significant judgments related to these arrangements include:

•Identifying the various performance obligations of these arrangements.

•Estimating the relative standalone selling price of each performance obligation, typically using a directly observable method or calculated on a cost plus margin basis method.

Revenue disaggregated

The following table represents our revenues disaggregated by product line (in thousands) and our disaggregated product line revenue as a percentage of total revenue:

	Year ended December 31,
	2023				2022				2021
Product line	Revenue		% of Revenue		Revenue		% of Revenue		Revenue		% of Revenue
Consumables	$	969,129	43	%	$	974,993	43	%	$	555,189	42	%
Infusion Systems	629,043		28	%	617,435		27	%	352,321		27	%
Vital Care	660,954		29	%	687,569		30	%	408,798		31	%
Total Revenues	$	2,259,126	100	%	$	2,279,997	100	%	$	1,316,308	100	%

We report revenue on a "where sold" basis, which reflects the revenue within the country or region in which the ultimate sale is made to our external customer.    

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

	Year ended December 31,
Geography	2023		2022		2021
United States	$	1,440,017	$	1,460,069	$	941,809
Europe, the Middle East and Africa	373,571		367,411		147,488
Asia-Pacific	241,699		257,208		85,692
Other Foreign	203,839		195,309		141,319
Total Revenues	$	2,259,126	$	2,279,997	$	1,316,308

Domestic sales accounted for 64%, 64% and 72% of total revenue in 2023, 2022 and 2021, respectively. International sales accounted for 36%, 36% and 28% of total revenue in 2023, 2022 and 2021, respectively.

Contract balances

Our contract balances (deferred revenue) are recorded in accrued liabilities and other long-term liabilities in our consolidated balance sheet (see Note 10: Accrued Liabilities and Other Long-term Liabilities). The following table presents the changes in our contract balances for the years ended December 31, 2023 and 2022, (in thousands):

	Contract Liabilities
Beginning balance, January 1, 2022	$	(7,461)
Fair value of acquired deferred revenue	(51,245)
Equipment revenue recognized	32,252
Equipment revenue deferred due to implementation	(20,332)
Software revenue recognized	16,277
Software revenue deferred due to implementation	(17,557)
Government grant deferred revenue	(3,729)
Government grant recognized	1,514
Other deferred revenue	(1,500)
Other deferred revenue recognized	5,915
Ending balance, December 31, 2022	(45,866)
Equipment revenue recognized	34,121
Equipment revenue deferred due to implementation	(35,868)
Software revenue recognized	18,526
Software revenue deferred due to implementation	(19,947)
Government grant deferred revenue	(944)
Government grant recognized	3,684
Other deferred revenue	(1,924)
Other deferred revenue recognized	6,041
Ending balance, December 31, 2023	$	(42,177)

During 2023, we recognized $29.8 million in revenue that was included in the opening contract balances as of December 31, 2022

As of December 31, 2023, revenue from remaining performance obligations is as follows (in thousands):

	Recognition Timing
	<12 Months		> 12 Months
Equipment revenue	$	(17,749)	$	(24)
Software revenue	(10,062)		(763)
Government grant revenue(1)	(2,064)		(9,415)
Other deferred revenue(2)	(1,717)		(383)
Total	$	(31,592)	$	(10,585)

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

(2)    Other deferred revenue includes pump development programs, purchased training and extended warranty.

Costs to Obtain a Contract with a Customer

As part of the cost to obtain a contract, we may pay incremental commissions to sales employees upon entering into a sales contract. Under ASC Topic 606, we have elected to expense these costs as incurred as the period of benefit is less than one year.

Practical expedients and exemptions

In addition to the practical expedient applied to sales commissions, under ASC Topic 606, we elected to apply the practical expedient for shipping and handling costs incurred after the customer has obtained control of a good. We will continue to treat these costs as a fulfillment cost rather than as an additional promised service.