Revenue from Contract with Customer (Policies)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUES

The Company's revenues by segment payers/customer groups for the three and nine months ended September 30, 2020, and 2019, were as follows:


	For the Three Months Ended September 30, 2020
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other		Total
Payer/Customer
LCD
Clients	21	%	1	%	—	%	—	%	—	%	—	%	22	%
Patients	5	%	—	%	—	%	—	%	—	%	—	%	5	%
Medicare and Medicaid	7	%	—	%	—	%	—	%	—	%	—	%	7	%
Third-party	33	%	1	%	—	%	—	%	—	%	—	%	34	%
Total LCD revenues by payer	66	%	2	%	—	%	—	%	—	%	—	%	68	%

CDD
Biopharmaceutical and medical device companies	16	%	—	%	4	%	4	%	2	%	6	%	32	%

Total revenues	82	%	2	%	4	%	4	%	2	%	6	%	100	%


	For the Three Months Ended September 30, 2019
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other		Total
Payer/Customer
LCD
Clients	16	%	1	%	—	%	—	%	—	%	—	%	17	%
Patients	8	%	—	%	—	%	—	%	—	%	—	%	8	%
Medicare and Medicaid	8	%	—	%	—	%	—	%	—	%	—	%	8	%
Third-party	25	%	2	%	—	%	—	%	—	%	—	%	27	%
Total LCD revenues by payer	57	%	3	%	—	%	—	%	—	%	—	%	60	%

CDD
Biopharmaceutical and medical device companies	21	%	—	%	5	%	4	%	3	%	7	%	40	%

Total revenues	78	%	3	%	5	%	4	%	3	%	7	%	100	%


	For the Nine Months Ended September 30, 2020
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other		Total
Payer/Customer
LCD
Clients	19	%	1	%	—	%	—	%	—	%	—	%	20	%
Patients	6	%	—	%	—	%	—	%	—	%	—	%	6	%
Medicare and Medicaid	7	%	—	%	—	%	—	%	—	%	—	%	7	%
Third-party	29	%	1	%	—	%	—	%	—	%	—	%	30	%
Total LCD revenues by payer	61	%	2	%	—	%	—	%	—	%	—	%	63	%

CDD
Biopharmaceutical and medical device companies	18	%	—	%	5	%	4	%	3	%	7	%	37	%

Total revenues	79	%	2	%	5	%	4	%	3	%	7	%	100	%


	For the Nine Months Ended September 30, 2019
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other		Total
Payer/Customer
LCD
Clients	16	%	1	%	—	%	—	%	—	%	—	%	17	%
Patients	8	%	—	%	—	%	—	%	—	%	—	%	8	%
Medicare and Medicaid	8	%	—	%	—	%	—	%	—	%	—	%	8	%
Third-party	26	%	2	%	—	%	—	%	—	%	—	%	28	%
Total LCD revenues by payer	58	%	3	%	—	%	—	%	—	%	—	%	61	%

CDD
Biopharmaceutical and medical device companies	20	%	—	%	4	%	5	%	3	%	7	%	39	%

Total revenues	78	%	3	%	4	%	5	%	3	%	7	%	100	%

Contract costs

CDD incurs sales commissions in the process of obtaining contracts with customers, which are recoverable through the service fees in the contract. Sales commissions that are payable upon contract award are recognized as assets and amortized over the expected contract term, along with related payroll tax expense. The amortization of commission expense is based on the weighted average contract duration for all commissionable awards in the respective business in which the commission expense is paid, which approximates the period over which goods and services are transferred to the customer. The amortization period of sales commissions ranges from approximately 1 to 5 years, depending on the business. For businesses that enter into primarily short-term contracts, the Company applies the practical expedient, which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less. Amortization of assets from sales commissions is included in selling, general, and administrative expense.

CDD incurs costs to fulfill contracts with customers, which are recoverable through the service fees in the contract. Contract fulfillment costs include software implementation costs and setup costs for certain market access solutions. These costs are recognized as assets and amortized over the expected term of the contract to which the implementation relates, which is the period over which services are expected to be provided to the customer. This period typically ranges from 2 to 5 years. Amortization of deferred contract fulfillment costs is included in cost of goods sold.


	September 30, 2020		December 31, 2019
Sales commission assets	$	32.8	$	28.6
Deferred contract fulfillment costs	12.9		14.9
Total	$	45.7	$	43.5

Amortization related to sales commission assets and associated payroll taxes for the three months ended September 30, 2020, and 2019, was $6.0 and $5.8, respectively, and for the nine months ended September 30, 2020, and 2019, was $16.8 and $15.3, respectively. Amortization related to deferred contract fulfillment costs for the three months ended September 30, 2020,

and 2019, was $2.3 and $2.3, respectively, and was $7.6 and $6.1, respectively, for the nine months ended September 30, 2020, and 2019.

Receivables, Unbilled Services and Unearned Revenue

Unbilled services are comprised primarily of unbilled receivables, but also include contract assets. A contract asset is recorded when a right to payment has been earned for work performed, but billing and payment for that work is determined by certain contractual milestones, whereas unbilled receivables are billable upon the passage of time. While CDD attempts to negotiate terms that provide for billing and payment of services prior or in close proximity to the provision of services, this is not always possible and there are fluctuations in the level of unbilled services and unearned revenue from period to period. The following table provides information about receivables, unbilled services, and unearned revenue (contract liabilities) from contracts with customers for CDD.


	September 30, 2020		December 31, 2019
Receivables, which are included in accounts receivable	$	834.0	$	771.1
Unbilled services	609.8		483.7
Unearned revenue	492.9		449.2

Revenues recognized during the period, that were included in the unearned revenue balance at the beginning of the period for the nine months ended September 30, 2020, and September 30, 2019, were $237.2 and $232.8, respectively.

Credit Loss Rollforward

With the adoption of the current expected credit loss standard in 2020, the Company estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument. The rollforward for the allowance for credit losses for the nine months ended September 30, 2020, is as follows:


	For the Nine Months Ended September 30, 2020
	Accounts Receivable		Unbilled Services		Note and Other Receivables		Total
Allowance for credit losses as of December 31, 2019	$	19.0	$	2.3	$	—	$	21.3
Current expected credit losses opening balance impact on retained earnings	1.8		0.2		5.0		7.0
Plus, credit loss expense	10.0		3.9		0.7		14.6
Less, write offs	4.2		0.1		—		4.3
Ending allowance for credit losses	$	26.6	$	6.3	$	5.7	$	38.6

Notes and other receivables includes the $110.0 due 2022 from the Envigo transaction which is recorded in Other assets, net. During the three months ended September 30, 2020, the Company recorded an impairment for a note receivable related to an LCD investment of $0.7.

Performance Obligations Under Long-Term Contracts

Long-term contracts at the Company consist primarily of fully managed clinical studies within CDD. The amount of existing performance obligations under such long-term contracts unsatisfied as of September 30, 2020, was $4,795.0. The Company expects to recognize approximately 32% of the remaining performance obligations as of September 30, 2020, as revenue over the next 12 months, and the balance thereafter. The Company's long-term contracts generally range from 1 to 8 years.

Within CDD, revenues of $44.8 and $67.7 were recognized during the nine months ended September 30, 2020, and 2019, respectively, from performance obligations that were satisfied in previous periods. This revenue comes from adjustments related to changes in scope and estimates in full service clinical studies.