XML 131 R20.htm IDEA: XBRL DOCUMENT v3.24.3
Revenue recognition
 9 Months Ended
Sep. 30, 2024
Revenue from Contract with Customer [Abstract]  
Revenue recognition Revenue recognition
The Company generates the majority of its revenues through product sales to customers. The Company also generates revenues through its Bioservices offerings and suite reservations for and to third parties and contracts and grants revenue. The Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services by analyzing the following five steps: (1) identify the contract with (a) customer(s); (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
In the third quarter of 2023, the Company launched over-the-counter (“OTC”) NARCAN®, which was approved by the FDA as an over-the-counter emergency treatment of opioid overdose, broadening the Company’s customer base and sales channels to retail pharmacies and digital commerce websites. The Company's Nasal Naloxone Products are now sold commercially over-the-counter at retail pharmacies and digital commerce websites as well as through physician-directed or standing order prescriptions at retail pharmacies, health departments, local law enforcement agencies, community-based organizations, substance abuse centers and other federal agencies.
The Company's OTC NARCAN® customer contracts are fixed price contracts. The Company invoices and records revenue when the pharmacies and wholesalers receive product from the third-party logistics warehouse used by the Company, which is the point at which control is transferred to the customer. Revenues for OTC NARCAN® are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Estimates of variable consideration include allowance for returns, specialty distributor fees, wholesaler fees and prompt payment discounts. OTC NARCAN® may also be sold on consignment through third-party online retailers where revenues are recognized at the point in time when sold to the end customer. The Company pays these third-party online retailers selling commissions and fulfillment fees which are recorded as SG&A expenses and Cost of Commercial Product sales, respectively, in the Condensed Consolidated Statement of Operations. Revenues from OTC NARCAN® are recognized to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with such variable consideration is subsequently resolved. The Company considers several factors in the estimation process for the allowance for returns of OTC NARCAN®, including inventory levels within the distribution channel, product shelf life and historical return activity, including activity for product sold for which the return period has passed, as well as other relevant factors. Because returned product cannot be resold, there is no corresponding asset for product returns.
The Company's revenues disaggregated by operating segment and major sources for the three and nine months ended September 30, 2024 and 2023 were as follows:
Three Months Ended September 30, 2024Three Months Ended September 30, 2023
USGNon-USG TotalUSGNon-USG Total
Commercial Product sales$— $95.3 $95.3 $0.3 $141.8 $142.1 
MCM Product sales161.8 12.4 174.2 102.7 5.0 107.7 
Bioservices:
Services— 13.9 13.9 — 13.2 13.2 
Leases— 0.4 0.4 — 1.0 1.0 
Total Bioservices$— $14.3 $14.3 $— $14.2 $14.2 
Contracts and grants9.7 0.3 10.0 5.1 1.4 6.5 
Total revenues$171.5 $122.3 $293.8 $108.1 $162.4 $270.5 
Nine Months Ended September 30, 2024Nine Months Ended September 30, 2023
USGNon-USG TotalUSGNon-USG Total
Commercial Product sales$0.4 $333.4 $333.8 $0.6 $385.6 $386.2 
MCM Product sales319.7 73.3 393.0 279.0 30.2 309.2 
Bioservices:
Services (1)
— 96.7 96.7 — 52.2 52.2 
Leases— 0.8 0.8 — 5.5 5.5 
Total Bioservices$— $97.5 $97.5 $— $57.7 $57.7 
Contracts and grants23.7 0.9 24.6 14.6 5.0 19.6 
Total revenues$343.8 $505.1 $848.9 $294.2 $478.5 $772.7 
(1) Bioservices Services revenues for the nine months ended September 30, 2024 include $50.0 million attributable to the Settlement Agreement with Janssen related to the 2022 termination of the Janssen Agreement. The revenue is related to raw materials purchased for the Janssen Agreement which Janssen had not reimbursed. See Note 15, “Litigation” for additional information related to the accounting treatment and settlement of the arbitration with Janssen.
Bioservices operating leases
Certain multi-year Bioservices 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 2.1 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 three and nine months ended September 30, 2024, the Company's non-USG lease revenues were $0.4 million and $0.8 million, respectively, which is included within Bioservices “Leases” on the Condensed Consolidated Statement of Operations. The Company estimates future operating lease revenues to be $0.6 million in the remainder of 2024, $2.2 million in 2025, $1.7 million in 2026, $0.9 million in 2027, $0.9 million in 2028 and no lease revenue thereafter.
Transaction price allocated to remaining performance obligations
As of September 30, 2024, the Company has future contract value on unsatisfied performance obligations of approximately $322.4 million associated with all arrangements entered into by the Company. The Company expects to recognize $281.6 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 associated 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 that the Company does not currently have a contractual right to bill, to be contract assets. As of September 30, 2024 and December 31, 2023, the Company had $7.0 million and $21.9 million, respectively, of contract assets recorded within “Accounts receivable, net” on the Condensed 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 amounts allocated to those performance obligations is reflected as contract liabilities on the Condensed 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 liability balances:
Contract Liabilities
Balance at December 31, 2023$29.9 
Balance at September 30, 2024$10.7 
Revenue recognized in the period from amounts included in contract liability at the beginning of the period:$25.8 
As of September 30, 2024 and December 31, 2023, the current portion of contract liabilities was $7.3 million and $27.2 million, respectively, and was included in “Other current liabilities” on the Condensed Consolidated Balance Sheets.
Accounts receivable and allowance for expected credit losses
Accounts receivable, including unbilled accounts receivable contract assets, consist of the following:
September 30, 2024December 31, 2023
Accounts receivable:
Billed$102.6 $141.8 
Unbilled19.2 51.4 
Allowance for expected credit losses(0.5)(2.2)
Accounts receivable, net$121.3 $191.0 
We maintain an allowance for expected credit losses, which represents the estimated aggregate amount of credit risk arising from the inability or unwillingness of specific customers to pay our fees or disputes that may affect our ability to fully collect our billed accounts receivable. We estimate the current-period provision for expected credit losses on a specific identification basis and we consider factors such as the age of the receivables balance, knowledge of the specific customers' circumstances and historical collection experience for similar customers. Accounts receivable, net of the allowance for expected credit losses, represents the amount we expect to collect. Our actual experience may vary from our estimates. At each reporting date, we adjust the allowance for expected credit losses to reflect our current estimate.