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Revenue recognition | 12 Months Ended
--- | ---
Dec. 31, 2022
Revenue from Contract with Customer [Abstract] |
Revenue recognition | Revenue recognition The Company operates in two business segments (see Note 17, "Segment information"). The Company's revenues disaggregated by the major sources were as follows:
| Year Ended December 31,
2022 |  | 2021 |  | 2020
USG |  | Non-USG |  | Total |  | USG |  | Non-USG |  | Total |  | USG |  | Non-USG |  | Total
| (As Restated) |  | (As Revised) |  | (As Revised)
Product sales | $ | 445.4 |  |  | $ | 520.8 |  |  | $ | 966.2 |  |  | $ | 530.0 |  |  | $ | 493.9 |  |  | $ | 1,023.9 |  |  | $ | 626.0 |  |  | $ | 363.8 |  |  | $ | 989.8 |
CDMO: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Services | — |  |  | 105.0 |  |  | 105.0 |  |  | — |  |  | 310.3 |  |  | 310.3 |  |  | — |  |  | 194.1 |  |  | 194.1 |
Leases | — |  |  | 4.9 |  |  | 4.9 |  |  | 243.1 |  |  | 62.1 |  |  | 305.2 |  |  | 247.8 |  |  | 30.5 |  |  | 278.3 |
Total CDMO | — |  |  | 109.9 |  |  | 109.9 |  |  | 243.1 |  |  | 372.4 |  |  | 615.5 |  |  | 247.8 |  |  | 224.6 |  |  | 472.4 |
Contracts and grants | 37.2 |  |  | 4.2 |  |  | 41.4 |  |  | 130.2 |  |  | 4.0 |  |  | 134.2 |  |  | 109.2 |  |  | 5.9 |  |  | 115.1 |
Total revenues | $ | 482.6 |  |  | $ | 634.9 |  |  | $ | 1,117.5 |  |  | $ | 903.3 |  |  | $ | 870.3 |  |  | $ | 1,773.6 |  |  | $ | 983.0 |  |  | $ | 594.3 |  |  | $ | 1,577.3 |
For the years ended December 31, 2022, 2021 and 2020, the Company's product sales from Anthrax Vaccines, Nasal Naloxone products, TEMBEXA, ACAM2000 and Other products as a percentage of total product sales were as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
% of product sales: |  |  |  |  |
Anthrax vaccines | 28 | % |  | 25 | % |  | 38 | %
Nasal naloxone products | 39 | % |  | 43 | % |  | 31 | %
TEMBEXA | 12 | % |  | — | % |  | — | %
ACAM2000 | 7 | % |  | 20 | % |  | 20 | %
Other products | 14 | % |  | 12 | % |  | 11 | %
For the year ended December 31, 2022 there were two customers in excess of 10% of total revenues. The USG accounted for 43% of total revenues and the second customer accounted for 10% of total revenues. Both customer's revenue is attributable to the Products segment. For the years ended 2021 and 2020, aside from sales to the USG, there were no sales to an individual customer in excess of 10% of total revenues. For the years ended December 31, 2022, 2021, and 2020, the Company’s revenues from customers within the United States comprised 79%, 92% and 93%, respectively, of total revenues. Termination of manufacturing services agreement with Janssen Pharmaceuticals, Inc. On July 2, 2020, the Company, through its wholly-owned subsidiary, Emergent Manufacturing Operations Baltimore, LLC, entered into the Agreement with Janssen, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, for large-scale drug substance manufacturing of Johnson & Johnson’s investigational SARS-CoV-2 vaccine, Ad26.COV2-S, recombinant based on the AdVac technology (the “Product”). On June 6, 2022, the Company provided to Janssen a notice (the “Notice”) of material breach of the Agreement for, among other things, failure by Janssen (i) to provide the Company the requisite forecasts of the required quantity of Product to be purchased by Janssen under the Agreement and (ii) to confirm Janssen’s intent to not purchase the requisite minimum quantity of the Product pursuant to the Agreement and instead, wind-down the Agreement ahead of fulfilling these minimum requirements. Later on June 6, 2022, the Company received from Janssen a purported written notice of termination (the “Janssen Notice”) of the Agreement for asserted material breaches of the Agreement by the Company, including alleged failure by the Company to perform its obligations in compliance with current good manufacturing practices ("cGMP") or other applicable laws and regulations and alleged failure by the Company to supply Janssen with the Product. Janssen alleged that the Company’s breaches were not curable and that, therefore, termination of the Agreement would be effective as of July 6, 2022. The Company disputes Janssen's assertions and allegations, including Janssen's ability to effect termination pursuant to the Janssen Notice. The Company and Janssen disagree on the monetary amounts that are due to the Company as a result of termination by any means. The Company believes the amounts due to the Company include, but are not limited to, compensation for services provided, reimbursement for raw materials purchased and non-cancelable orders, and fees for early termination. Janssen has alleged that no additional amount is due to the Company and that the Company should pay Janssen an unspecified amount as a result of the Company's alleged failure to perform under the Agreement. The Company has not recorded any contingent liabilities related to Janssen's allegations as the Company believes they are without merit and intends to vigorously defend the Company's position during the dispute resolution process through arbitration. During the year ended December 31, 2022, there were no impacts on previously recognized revenue or depreciation related to the conclusion of the Agreement. As of December 31, 2022, the Company has no billed or unbilled net accounts receivable related to the Agreement. Because the arbitration process may extend longer than one year, the Company reclassified $127.7 million from "Inventories, net" and $25.0 million from "Prepaid expenses and other current assets" to "Other assets" in the fourth quarter resulting in $152.7 million in long-term assets related to the Janssen Agreement on the consolidated balance sheet as of December 31, 2022. These assets include termination penalties, certain inventory related items and raw materials inventory representing materials purchased for the Agreement which Janssen has not reimbursed. The Company evaluated the net realizable value of the inventory as of December 31, 2022, concluding that because the Agreement specifies the Company is entitled to, among other things, reimbursement of raw materials and non-cancelable orders in the event of a contract termination for any reason, the Company is entitled to payment from Janssen for these raw materials. Additionally, the Company has $6.2 million of non-cancelable orders as of December 31, 2022 which have not been received and Janssen has not reimbursed. BARDA Centers of Innovation and Advanced Development and Manufacturing Agreement In 2020, the Company announced the issuance of a task order under its existing CIADM agreement with BARDA for COVID-19 vaccine development and manufacturing (the "BARDA COVID-19 Development Public Private Partnership"). The BARDA COVID-19 Development Public Private Partnership is considered a lease and is accounted for under ASC 842. The initial task order had a contract value of up to $628.2 million and included the reservation of manufacturing capacity and accelerated expansion of fill/finish capacity valued at $542.7 million and $85.5 million, respectively. Subsequently, the task order was expanded to include incremental capital activities which increased the value to $650.8 million. On November 1, 2021, the Compa ny and BARDA mutually agreed to the completion of the Company's CIADM contract and associated task orders, including the BARDA COVID-19 Development Public Private Partnership. The Company did not recognize lease revenues under this arrangement during the year ended December 31, 2022. Total revenues associated with the base arrangement were $71.3 million and $15.8 million during the years ended December 31, 2021 and December 31, 2020, respectively, and are reflected as a component of contracts and grants revenue on the consolidated statements of operations. Revenues associated with the BARDA COVID-19 Development Public-Private Partnership were $243.1 million and $247.8 million during the years ended December 31, 2021 and December 31, 2020, respectively, and are recorded as CDMO leases on the consolidated statements of operations. CDMO Operating Leases Certain multi-year CDMO service arrangements with non-USG customers include operating leases whereby the customer has the right to direct the use of and obtain substantially all of the economic benefits of specific manufacturing suites operated by the Company. The associated revenue is recognized on a straight-line basis over the term of the lease. The remaining term on the Company's operating lease components approximates 2.6 years. The Company utilizes a cost-plus model to determine the stand-alone selling price of the lease component to allocate contract consideration between the lease and non-lease components. During the year ended December 31, 2022, the Company's non-USG lease revenues were $4.9 million, which is included within CDMO leases in the consolidated statement of operations. Excluding future amounts related to the Agreement as discussed above, the Company estimates future operating lease revenues to be $5.1 million in 2023, $0.9 million in 2024, $0.9 million in 2025, and $2.7 million in years beyond 2025. Transaction price allocated to remaining performance obligations As of December 31, 2022, the Company expects future revenues of approximately $378.2 million associated with all arrangements entered into by the Company. The Company expects to recognize a majority of the $378.2 million of unsatisfied performance obligations within the next 24 months. The amount and timing of revenue recognition for unsatisfied performance obligations can change. The future revenues associat ed with unsatisfied performance obligations exclude the value of unexercised option periods in the Company’s revenue arrangements. Often the timing of manufacturing activities changes based on customer needs and resource availability. Government funding appropriations can impact the timing of product deliveries. The success of the Company's development activities that receive development funding support from the USG under development contracts can also impact the timing of revenue recognition. Contract assets The Company considers accounts receivable and deferred costs associated with revenue generating contracts, which are not included in inventory or property, plant and equipment and the Company does not currently have a contractual right to bill, to be contract assets. As of December 31, 2022 and December 31, 2021, the Company had $34.8 million and $21.5 million, respectively, of contract assets recorded within accounts receivable, net on the consolidated balance sheets. Contract liabilities When performance obligations are not transferred to a customer at the end of a reporting period, cash received associated with the amount allocated to those performance obligations is reflected as contract liabilities on the consolidated balance sheets and is deferred until control of these performance obligations is transferred to the customer. The following table presents the roll forward of the contract liabilities:
| Contract Liabilities
Balance at December 31, 2020 (As Revised) | $ | 100.1 |
Deferral of revenue | 279.7 |
Revenue recognized | (363.4) |
Balance at December 31, 2021 (As Revised) | $ | 16.4 |
Deferral of revenue | 38.9 |
Revenue recognized | (23.6) |
Balance at December 31, 2022 (As Restated) | $ | 31.7 |
As of December 31, 2022 and 2021, the current portion of contract liabilities was $26.4 million and $11.7 million, respectively, and was included in other current liabilities on the balance sheet. Accounts Receivable and Allowance for Expected Credit Losses Accounts receivable including unbilled accounts receivable contract assets consist of the following:
| December 31,
| 2022 |  | 2021
| (As Restated) |  | (As Revised)
Accounts receivable: |  |  |
Billed | $ | 102.7 |  |  | $ | 230.5 |
Unbilled | 57.2 |  |  | 51.6 |
Allowance for expected credit losses | (0.7) |  |  | (3.2) |
Accounts receivable, net | $ | 159.2 |  |  | $ | 278.9 |

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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 https://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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&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 https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045 + Details
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