Revenue recognition and accounts receivable

3 Months Ended

Mar. 31, 2022

Revenue Recognition And Accounts Receivable [Abstract]

Revenue recognition and accounts receivable

9. Revenue recognition and accounts receivable

Revenue Recognition

The Company has two reporting segments, which consist of Global Spine and Global Orthopedics. Within the Global Spine reporting segment there are three product categories: Bone Growth Therapies, Spinal Implants, and Biologics.

The table below presents net sales by major product category by reporting segment:

	Three Months Ended March 31,
(U.S. Dollars, in thousands)	2022		2021		Change
Bone Growth Therapies	$	41,948	$	42,947		-2.3	%
Spinal Implants		26,615		25,701		3.6	%
Biologics		14,092		13,692		2.9	%
Global Spine		82,655		82,340		0.4	%
Global Orthopedics		23,763		23,253		2.2	%
Net sales	$	106,418	$	105,593		0.8	%

Product Sales and Marketing Service Fees

The table below presents product sales and marketing service fees, which are both components of net sales:

	Three Months Ended March 31,
(U.S. Dollars, in thousands)	2022		2021
Product sales	$	92,608	$	92,263
Marketing service fees		13,810		13,330
Net sales	$	106,418	$	105,593

Product sales primarily consist of the sale of bone growth therapies devices, spinal implants products, and orthopedics products. Marketing service fees are received from MTF Biologics based on total sales of biologics tissues and relate solely to the Global Spine reporting segment.

Accounts receivable and related allowances

The following table provides a detail of changes in the Company’s allowance for expected credit losses for the three months ended March 31, 2022 and 2021 :

(U.S. Dollars, in thousands)	Three Months Ended March 31,
	2022			2021
Allowance for expected credit losses beginning balance	$	4,944		$	4,848
Current period provision (recovery) for expected credit losses		600			(182	)
Write-offs charged against the allowance and other		(104	)		(46	)
Effect of changes in foreign exchange rates		(51	)		(114	)
Allowance for expected credit losses ending balance	$	5,389		$	4,506

Contract Liabilities

The Company’s contract liabilities largely relate to a prepayment of $13.9 million received in April 2020 from the Centers for Medicare and Medicaid Service ("CMS") as part of the Accelerated and Advance Payment Program of the Coronavirus Aid, Relief, and Economic Security Act. The Company has classified the entire balance of this contract liability within other current liabilities based upon the Company’s estimates of when such funds will be recouped. The following table provides a detail of changes in the Company’s contract liability associated with the Accelerated and Advanced Payment Program for the three months ended March 31, 2022 and 2021:

(U.S. Dollars, in thousands)	Three Months Ended March 31,
	2022			2021
Contract liability beginning balance	$	4,791		$	13,851
Recoupment recognized in net sales		(3,395	)		—
Contract liability ending balance	$	1,396		$	13,851

Other Contract Assets

The Company’s contract assets, excluding accounts receivable (“Other Contract Assets”), largely consist of payments made to certain distributors to obtain contracts, gain access to customers in certain territories, and to provide the benefit of the exclusive distribution of the Company's products. Other Contract Assets are included in other long-term assets or other current assets, dependent upon the original term of the related agreement, and totaled $1.2 million and $1.4 million as of March 31, 2022 and December 31, 2021, respectively.