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Revenue recognition and accounts receivable | 9 Months Ended
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Sep. 30, 2021
Revenue Recognition And Accounts Receivable [Abstract] |
Revenue recognition and accounts receivable | 10. 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 September 30, |
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |  |  | Change |
Bone Growth Therapies |  | $ | 45,168 |  |  | $ | 47,066 |  |  |  | -4.0 | %
Spinal Implants |  |  | 28,151 |  |  |  | 25,505 |  |  |  | 10.4 | %
Biologics |  |  | 12,806 |  |  |  | 15,245 |  |  |  | -16.0 | %
Global Spine |  |  | 86,125 |  |  |  | 87,816 |  |  |  | -1.9 | %
Global Orthopedics |  |  | 26,303 |  |  |  | 23,169 |  |  |  | 13.5 | %
Net sales |  | $ | 112,428 |  |  | $ | 110,985 |  |  |  | 1.3 | %
|  | Nine Months Ended September 30, |
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |  |  | Change |
Bone Growth Therapies |  | $ | 137,821 |  |  | $ | 120,888 |  |  |  | 14.0 | %
Spinal Implants |  |  | 83,943 |  |  |  | 67,025 |  |  |  | 25.2 | %
Biologics |  |  | 41,351 |  |  |  | 40,319 |  |  |  | 2.6 | %
Global Spine |  |  | 263,115 |  |  |  | 228,232 |  |  |  | 15.3 | %
Global Orthopedics |  |  | 76,300 |  |  |  | 60,711 |  |  |  | 25.7 | %
Net sales |  | $ | 339,415 |  |  | $ | 288,943 |  |  |  | 17.5 | %
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 September 30, |  |  | Nine Months Ended September 30, |
(U.S. Dollars, in thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Product sales |  | $ | 100,004 |  |  | $ | 96,305 |  |  | $ | 299,214 |  |  | $ | 250,161 |
Marketing service fees |  |  | 12,424 |  |  |  | 14,680 |  |  |  | 40,201 |  |  |  | 38,782 |
Net sales |  | $ | 112,428 |  |  | $ | 110,985 |  |  | $ | 339,415 |  |  | $ | 288,943 |
Product sales primarily consist of the sale of bone growth therapies devices, motion preservation products, spine fixation 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 and nine months ended September 30, 2021 and 2020:
(U.S. Dollars, in thousands) |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Allowance for expected credit losses beginning balance |  | $ | 4,471 |  |  | $ | 6,364 |  |  | $ | 4,848 |  |  | $ | 3,987 |
Impact of adoption of ASU 2016-13 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,120 |
Current period provision (recovery) for expected credit losses |  |  | 590 |  |  |  | (619 | ) |  |  | 376 |  |  |  | 945 |
Write-offs charged against the allowance and other |  |  | (54 | ) |  |  | (309 | ) |  |  | (134 | ) |  |  | (647 | )
Effect of changes in foreign exchange rates |  |  | (79 | ) |  |  | 88 |  |  |  | (162 | ) |  |  | 119 |
Allowance for expected credit losses ending balance |  | $ | 4,928 |  |  | $ | 5,524 |  |  | $ | 4,928 |  |  | $ | 5,524 |
Contract Liabilities The Company’s contract liabilities largely relate to a prepayment of $13.9 million received in April 2020 from the CMS as part of the Accelerated and Advance Payment Program of the CARES Act. In October 2020, the President of the United States signed the “Continuing Appropriations Act, 2021 and Other Extensions Act,” which relaxed a number of the Medicare Accelerated and Advance Payment Programs recoupment terms for providers and suppliers that received funds from the program. Starting in April 2021, Medicare began to recoup 25% of Medicare payments otherwise owed to the provider or supplier for submitted claims. After 11 months, recoupment will increase to 50% for another 6 months. Thus, during these time periods, rather than receiving the full amount of payment for newly submitted claims, the Company’s outstanding accelerated / advance payment balance will be reduced by the recoupment amount until the full balance has been repaid. As of September 30, 2021, the balance of the contract liability associated with the Accelerated and Advance Payment Program of the CARES Act totaled $7.9 million. 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 and nine months ended September 30, 2021 and 2020:
(U.S. Dollars, in thousands) |  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Contract liability beginning balance |  | $ | 10,971 |  |  | $ | 13,851 |  |  | $ | 13,851 |  |  | $ | — |
Additions |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 13,851 |
Recoupment recognized in net sales |  |  | (3,071 | ) |  |  | — |  |  |  | (5,951 | ) |  |  | — |
Contract liability ending balance |  | $ | 7,900 |  |  | $ | 13,851 |  |  | $ | 7,900 |  |  | $ | 13,851 |
Other Contract Assets The Company’s contract assets, excluding trade 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 Orthofix 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 $1.7 million and $2.0 million as of September 30, 2021 and December 31, 2020, respectively.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 + Details
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