Revenues

9 Months Ended

Sep. 30, 2019

Revenue Recognition

The Company earns revenues from sales of its medication and supply dispensing automation systems, along with consumables and related services, which are sold in the healthcare industry, its principal market. The Company’s customer arrangements typically include one or more of the following performance obligations:

Products. Software-enabled equipment that manages and regulates the storage and dispensing of pharmaceuticals, consumable blister cards and packaging equipment and other medical supplies.

Software. Additional software applications that enable incremental functionality of the Company’s equipment or services.

Installation. Installation of equipment as integrated systems at customer sites.

Post-installation technical support. Phone support, on-site service, parts, and access to unspecified software updates and enhancements, if and when available.

Professional services. Other customer services, such as training and consulting.

A portion of the Company’s sales are made to customers who are members of Group Purchasing Organizations (“GPOs”). GPOs are often owned fully or in part by the Company’s customers, and the Company pays fees to the GPO on completed contracts. The Company considers these fees consideration paid to customers and records them as reductions to revenue. Fees to GPOs were $2.8 million and $2.2 million for the three months ended September 30, 2019 and 2018, respectively, and $7.6 million and $6.2 million for the nine months ended September 30, 2019 and 2018, respectively.

Disaggregation of Revenues

The following table summarizes the Company’s product revenues disaggregated by revenue type for the three and nine months ended September 30, 2019 and 2018:



	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	(In thousands)
Hardware and software	$	144,305	$	125,733	$	399,548	$	345,215
Consumables	19,875		19,848		60,378		58,956
Other	4,308		4,128		12,551		10,833
Total product revenues	$	168,488	$	149,709	$	472,477	$	415,004

The following table summarizes the Company’s revenues disaggregated by geographic region, which is determined based on customer location, for the three and nine months ended September 30, 2019 and 2018:



	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
	(In thousands)
United States	$	206,709	$	180,635	$	582,540	$	502,481
Rest of world ⁽¹⁾	22,096		23,632		66,195		73,078
Total revenues	$	228,805	$	204,267	$	648,735	$	575,559

_________________________________________________


⁽¹⁾	No individual country represented more than 10% of the respective totals.

Contract Assets and Contract Liabilities

The following table reflects the Company’s contract assets and contract liabilities:



	September 30, 2019		December 31, 2018
	(In thousands)
Short-term unbilled receivables - included in accounts receivable and unbilled receivables	$	15,524	$	9,191
Long-term unbilled receivables - included in other long-term assets	12,794		16,481
Total contract assets	$	28,318	$	25,672

Short-term deferred revenues, net	$	88,205	$	81,835
Long-term deferred revenues	7,979		10,582
Total contract liabilities	$	96,184	$	92,417

The portion of the transaction price allocated to the Company’s unsatisfied performance obligations for which invoicing has occurred is recorded as deferred revenues.

Short-term deferred revenues of $88.2 million and $81.8 million include deferred revenues from product sales and service contracts, net of deferred cost of sales, of $14.3 million and $11.1 million as of September 30, 2019 and December 31, 2018, respectively. The short-term deferred revenues from product sales relate to delivered and invoiced products, pending installation and acceptance, expected to occur within the next twelve months. During the three and nine months ended September 30, 2019, the Company recognized revenues of $4.8 million and $69.8 million that were included in the corresponding gross short-term deferred revenues balance of $92.9 million as of December 31, 2018.

Long-term deferred revenues include deferred revenues from service contracts of $8.0 million and $10.6 million as of September 30, 2019 and December 31, 2018, respectively. Remaining performance obligations primarily relate to maintenance contracts and are recognized ratably over the remaining term of the contract, generally not more than five years.

Significant Customers

There were no customers that accounted for more than 10% of the Company’s total revenues for the three and nine months ended September 30, 2019 and 2018. Also, there were no customers that accounted for more than 10% of the Company’s accounts receivable as of September 30, 2019 and December 31, 2018.