XML 21 R9.htm IDEA: XBRL DOCUMENT v3.21.2
REVENUES FROM CONTRACTS WITH CUSTOMERS
 6 Months Ended
Jun. 30, 2021
Revenue from Contract with Customer [Abstract]  
REVENUES FROM CONTRACTS WITH CUSTOMERS REVENUES FROM CONTRACTS WITH CUSTOMERS
Summary of Accounting Policies on Revenue Recognition
Revenue is recognized upon the transfer of control of promised products or services to the customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.
Performance Obligations
The Company's performance obligations consist mainly of transferring control of goods and services identified in the contracts, purchase orders, or invoices. The Company has no significant multi-element contracts with customers.
Significant Judgments
Usage-based royalties and licenses are estimated based on the provisions of contracts with customers and recognized in the same period that the royalty-based products are sold by the Company and the Company's strategic partners. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information, and expected sales trends. Differences between actual reported licensee sales and those that were estimated are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant.
The Company estimates returns, price concessions, and discount allowances using the expected value method based on historical trends and other known factors. Rebate allowances are estimated using the most likely method based on each customer contract.
The Company's return policy, as set forth in its product catalogs and sales invoices, requires review and authorization in advance prior to the return of product. Upon the authorization, a credit will be issued for the goods returned within a set amount of days from the shipment, which is generally ninety days.
The Company disregards the effects of a financing component if the Company expects, at contract inception, that the period between the transfer and customer payment for the goods or services will be one year or less. The Company has no significant revenues recognized on payments expected to be received more than one year after the transfer of control of products or services to customers.
Contract Asset and Liability
Revenues recognized from the Company's private label business that are not invoiced to the customers as a result of recognizing revenue over time are recorded as a contract asset included in the prepaid expenses and other current assets account in the consolidated balance sheet.
Other operating revenues may include fees received under service agreements. Non-refundable fees received under multiple-period service agreements are recognized as revenue as the Company satisfies the performance obligations to the other party. A portion of the transaction price allocated to the performance obligations to be satisfied in the future periods is recognized as contract liability.
The following table summarizes the changes in the contract asset and liability balances for the six months ended June 30, 2021:
Contract Asset
Contract asset, January 1, 2021$7,430 
Transferred to trade receivable of contract asset included in beginning of the year contract asset(7,430)
Contract asset, net of transferred to trade receivables on contracts during the period7,952 
Contract asset, June 30, 2021
$7,952 
Contract Liability
Contract liability, January 1, 2021$11,961 
Recognition of revenue included in beginning of year contract liability(2,838)
Contract liability, net of revenue recognized on contracts during the period3,102 
Foreign currency translation(125)
Contract liability, June 30, 2021
$12,100 
At June 30, 2021, the short-term portion of the contract liability of $5.9 million and the long-term portion of $6.2 million were included in accrued expenses and other current liabilities and other liabilities, respectively, in the consolidated balance sheet.
As of June 30, 2021, the Company is expected to recognize approximately 49% of unsatisfied (or partially unsatisfied) performance obligations as revenue within twelve months, with the remaining balance to be recognized thereafter.
Shipping and Handling Fees
The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in the cost of goods sold.
Product Warranties
Certain of the Company's medical devices, including monitoring systems and neurosurgical systems, are designed to operate over long periods of time. These products are sold with warranties which may extend for up to two years from the date of purchase. The warranties are not considered a separate performance obligation. The Company estimates its product warranties using the expected value method based on historical trends and other known factors. The Company includes them in accrued expenses and other current liabilities in the consolidated balance sheet.
Taxes Collected from Customers
The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer.
Disaggregated Revenue
The following table presents revenues disaggregated by the major sources of revenues for the three and six months ended June 30, 2021 and 2020 (dollar amounts in thousands):
Three Months Ended June 30, 2021Three Months Ended June 30, 2020Six Months Ended June 30, 2021Six Months Ended June 30, 2020
Neurosurgery$202,600 $141,430 $391,854 $326,373 
Instruments54,237 28,348 106,224 74,845 
Total Codman Specialty Surgical256,837 169,778 498,078 401,218 
Wound Reconstruction and Care(2)
102,616 56,291 191,314 128,558 
Extremity Orthopedics(1)
— 11,162 — 32,634 
Private Label30,539 21,434 60,671 50,579 
Total Tissue Technologies133,155 88,887 251,985 211,771 
Total revenue$389,992 $258,665 $750,063 $612,989 
(1) On January 4, 2021, the Company completed its previously announced sale of its Extremity Orthopedics business. In conjunction with the sale of this business, the Company rebranded the Orthopedics and Tissue Technologies segment as Tissue Technologies in the first quarter of 2021. See Note 2. Acquisitions and Divestitures, for details.
(2) See Note 2. Acquisitions and Divestitures, for details around the ACell Inc. Acquisition.
See Note 15, Segment and Geographical Information, for details of revenues based on the location of the customer.