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REVENUES
 6 Months Ended
Jun. 30, 2021
Revenue from Contract with Customer [Abstract]  
REVENUES REVENUES
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in the contract. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Some of our contracts have multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Our global payment terms are typically between 30-90 days.
The majority of our performance obligations are satisfied at a point in time. This includes sales of our broad portfolio of essential healthcare products across our geographic segments including acute and chronic dialysis therapies; sterile IV solutions; infusion systems and devices; parenteral nutrition therapies; inhaled anesthetics; generic injectable pharmaceuticals; and surgical hemostat and sealant products. For a majority of these sales, our performance obligation is satisfied upon delivery to the customer. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation.
To a lesser extent, in all of our segments, we enter into other types of contracts including contract manufacturing arrangements, equipment leases, and certain subscription software and licensing arrangements. We recognize revenue for these arrangements over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services. Revenue is recognized over time when we are creating or enhancing an asset that the customer controls as the asset is created or enhanced or our performance does not create an asset with an alternative use and we have an enforceable right to payment for performance completed.
As of June 30, 2021, we had $8.7 billion of transaction price allocated to remaining performance obligations related to executed contracts with an original duration of one year or more, which are primarily included in the Americas segment. Some contracts in the United States included in this amount contain index-dependent price increases, which are not known at this time. We expect to recognize approximately 20% of this amount as revenue over the remainder of 2021, 30% in 2022, 25% in 2023, 15% in 2024 and 10% in 2025.
Significant Judgments
Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration primarily related to rebates and wholesaler chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are included in accrued expenses and other current liabilities and accounts receivable, net on the condensed consolidated balance sheets. Management's estimates take into consideration historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract using the expected value method. The amount of variable consideration included in the net sales price is limited to the amount for which it is probable that a significant reversal in revenue will not occur when the related uncertainty is resolved. Revenue recognized during the three and six months ended June 30, 2021 and 2020 related to performance obligations satisfied in prior periods was not material. Additionally, our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately and determining the allocation of the transaction price may require significant judgement.
Contract Balances
The timing of revenue recognition, billings and cash collections results in the recognition of trade accounts receivable, unbilled receivables, contract assets and customer advances and deposits (contract liabilities) on our condensed consolidated balance sheets. Net trade accounts receivable was $1.8 billion and $1.7 billion as of June 30, 2021 and December 31, 2020, respectively.
For contract manufacturing arrangements, revenue is primarily recognized throughout the production cycle, which typically lasts up to 90 days, resulting in the recognition of contract assets until the related services are completed and the customers are billed. Additionally, for arrangements containing a performance obligation to deliver software that can be used with medical devices, we recognize revenue upon delivery of the software, which results in the recognition of contract assets when customers are billed over time, generally over one to five years. For bundled contracts involving equipment delivered up-front and consumable medical products to be delivered over time, total contract revenue is allocated between the equipment and consumable medical products. In certain of those arrangements, a contract asset is created for the difference between the amount of equipment revenue recognized upon delivery and the amount of consideration initially receivable from the customer. In those arrangements, the contract asset becomes a trade account receivable as consumable medical products are provided and billed, generally over one to seven years.
The following table summarizes our contract assets:
(in millions)June 30,
2021		December 31,
2020
Contract manufacturing services$72 $47 
Software sales39 40 
Bundled equipment and consumable medical products contracts50 47 
Contract assets$161 $134 
The following table summarizes the classification of contract assets and contract liabilities as reported in the condensed consolidated balance sheets:
(in millions)June 30,
2021		December 31,
2020
Prepaid expenses and other current assets$98 $70 
Other non-current assets63 64 
Contract assets$161 $134 
Accrued expenses and other current liabilities$43 $32 
Other non-current liabilities44 34 
Contract liabilities$87 $66 
Contract liabilities are recognized when a customer pays consideration before we transfer goods or provide services. During the six months ended June 30, 2021 and 2020, the amount of revenue recognized that was included in contract liabilities as of December 31, 2020 and 2019 was not significant.
Disaggregation of Net Sales
Beginning in the first quarter of 2021, our product category net sales disclosures (previously referred to as global business units (GBUs)) separately present net sales from our BioPharma Solutions business, which was previously included within Other. Concurrent with that disaggregation of net sales from our BioPharma Solutions business, we have also allocated certain previously unallocated sales deductions from Other to various categories, primarily based on their respective net sales. Net sales for the three and six months ended June 30, 2020 have been recast to conform to the current period presentation.
The following tables disaggregate our net sales from contracts with customers by product category between the U.S. and international:
Three Months Ended June 30,
20212020
(in millions)U.S.InternationalTotalU.S.InternationalTotal
Renal Care 1
$217 $747 $964 $209 $710 $919 
Medication Delivery 2
444 253 697 394 211 605 
Pharmaceuticals 3
162 384 546 208 273 481 
Clinical Nutrition 4
84 153 237 75 141 216 
Advanced Surgery 5
144 112 256 94 74 168 
Acute Therapies 6
61 127 188 72 114 186 
BioPharma Solutions 7
65 118 183 54 62 116 
Other 8
21 6 27 21 6 27 
Total Baxter$1,198 $1,900 $3,098 $1,127 $1,591 $2,718 

Six Months Ended June 30,
20212020
(in millions)U.S.InternationalTotalU.S.InternationalTotal
Renal Care 1
$433 $1,453 $1,886 $413 $1,376 $1,789 
Medication Delivery 2
855 494 1,349 843 440 1,283 
Pharmaceuticals 3
362 736 1,098 428 569 997 
Clinical Nutrition 4
167 304 471 154 279 433 
Advanced Surgery 5
270 203 473 231 161 392 
Acute Therapies 6
142 253 395 132 210 342 
BioPharma Solutions 7
109 209 318 102 128 230 
Other 8
40 14 54 41 13 54 
Total Baxter$2,378 $3,666 $6,044 $2,344 $3,176 $5,520 

1Renal Care includes sales of our peritoneal dialysis (PD), hemodialysis (HD) and additional dialysis therapies and services.
2Medication Delivery includes sales of our intravenous (IV) therapies, infusion pumps, administration sets and drug reconstitution devices.
3Pharmaceuticals includes sales of our premixed and oncology drug platforms, inhaled anesthesia and critical care products and pharmacy compounding services.
4Clinical Nutrition includes sales of our parenteral nutrition (PN) therapies and related products.
5Advanced Surgery includes sales of our biological products and medical devices used in surgical procedures for hemostasis, tissue sealing and adhesion prevention.
6Acute Therapies includes sales of our continuous renal replacement therapies (CRRT) and other organ support therapies focused in the intensive care unit (ICU).
7BioPharma Solutions includes sales of contracted services we provide to various pharmaceutical and biopharmaceutical companies.
8Other includes sales of miscellaneous product and service offerings.
Lease Revenue
We lease medical equipment, such as renal dialysis equipment and infusion pumps, to customers, primarily in conjunction with arrangements to provide consumable medical products such as dialysis therapies, IV fluids and inhaled anesthetics. Certain of our equipment leases are classified as sales-type leases and the remainder are operating leases. The terms of the related contracts, including the proportion of fixed versus variable payments and any options to shorten or extend the lease term, vary by customer. We allocate revenue between equipment leases and medical products based on their standalone selling prices.
The components of lease revenue for the three and six months ended June 30, 2021 were:
(in millions)Three months ended June 30, 2021Six months ended June 30, 2021
Sales-type lease revenue$10 $16 
Operating lease revenue35 69 
Variable lease revenue15 32 
Total lease revenue$60 $117 
The components of lease revenue for the three and six months ended June 30, 2020 were:
(in millions)Three months ended June 30, 2020Six months ended June 30, 2020
Sales-type lease revenue$10 $16 
Operating lease revenue14 28 
Variable lease revenue20 38 
Total lease revenue$44 $82 
Our net investment in sales-type leases was $125 million as of June 30, 2021, of which $17 million originated in 2017 and prior, $33 million in 2018, $27 million in 2019, $35 million in 2020 and $13 million in 2021.