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Note 11 - Revenue
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]

11.

Revenue

 

The Company receives payments from its customers based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. As of September 30, 2020, deferred revenue was immaterial.

 

The Company has agreements with DePuy Synthes Mitek Sports Medicine, a division of DePuy Orthopaedics, Inc. (“Mitek”) that include the grant of certain licenses, performance of development services, and supply of product. Revenues from the agreements with Mitek represent 48% and 52% of total Company revenues for the three- and nine-month periods ended September 30, 2020, respectively. Revenues from the agreements with Mitek represented 71% and 70% of total Company revenues for the three- and nine-month periods ended September 30, 2019, respectively. The Company has agreements with other customers that may include the delivery of a license and supply of product.

 

Revenue Recognition Associated with Acquired Businesses:

 

Pursuant to ASC 606, the Company recognizes revenue from Arthrosurface and Parcus Medical product sales when a customer obtains control of promised goods. The amount of revenue that is recorded reflects the consideration that is expected to be received in exchange for those goods.

 

Arthrosurface and Parcus Medical products are sold through two principal channels: (i) direct to hospitals and surgery centers, referred to as direct channel accounts and (ii) through stocking distributors.

 

In direct channel accounts, inventory is generally consigned to sales agents so that products are available when needed for surgical procedures. No revenue is recognized upon the placement of inventory into consignment, as the Company retains the ability to control the inventory. Revenue is recognized as of the date of surgical implantation of the product.

 

With sales to stocking distributors revenue is generally recognized when control of Arthrosurface and Parcus Medical product passes to the customer, which is typically upon shipment of the product. It is our accounting policy to account for shipping and handling activities as a fulfillment cost rather than as an additional promised service.

 

The payment terms with respect to sales through both channels are consistent with prevailing practice in the respective markets in which the Company does business. Payment terms align with the one-year guidance for the practical expedient, which allows the Company to forgo adjustment of the contractual payment amount of consideration for the effects of a significant financing component.            

 

Product and Total Revenue

 

Historically, the Company categorized its product offerings into four product families: Orthobiologics, Dermal, Surgical, and Other, which included its ophthalmic and veterinary products. As a result of the Company’s acquisitions of Parcus Medical and Arthrosurface during the first quarter of 2020, the Company now divides the product portfolio into three product families: Joint Pain Management, Orthopedic Joint Preservation and Restoration, and Other. Anika’s consolidated financial statements include results of operations for Parcus Medical from the January 24, 2020 acquisition date and Arthrosurface from the February 3, 2020 acquisition date.

 

Product revenue by product family was as follows:

 

  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
  

2020

  

2019

  

2020

  

2019

 
                 

Joint Pain Management

 $18,439  $27,581  $66,168  $77,063 

Orthopedic Joint Preservation and Restoration

  11,715   544   26,233   1,510 

Other

  1,540   1,490   5,368   6,172 
  $31,694  $29,615  $97,769  $84,745 

 

Total revenue by geographic location was as follows:

 

  

Three Months Ended September 30,

 
  

2020

  

2019

 
  

Total

  

Percentage of

  

Total

  

Percentage of

 
  

Revenue

  

Revenue

  

Revenue

  

Revenue

 

Geographic Location:

                

United States

 $26,409   84% $23,512   79%

Europe

  2,954   9%  3,943   13%

Other

  2,331   7%  2,242   8%

Total

 $31,694   100% $29,697   100%

 

  

Nine Months Ended September 30,

 
  

2020

  

2019

 
  

Total

  

Percentage of

  

Total

  

Percentage of

 
  

Revenue

  

Revenue

  

Revenue

  

Revenue

 

Geographic Location:

                

United States

 $77,848   80% $66,538   78%

Europe

  11,140   11%  11,396   14%

Other

  8,781   9%  6,904   8%

Total

 $97,769   100% $84,838   100%