13. Deferred Revenue and Other Contract Liabilities, Current
Deferred revenue and other contract liabilities, current consist of the following: | | | | | | | | | | | |
| (in millions) | January 3,
2026 | | December 28,
2024 |
| Deferred revenue | $ | 61.5 | | | $ | 61.9 | |
| Accrued rebates and allowances | 26.0 | | | 23.0 | |
| Accrued customer reimbursements | 8.7 | | | 10.1 | |
| Total deferred revenue and other contract liabilities | 96.2 | | | 95.0 | |
| Less: Non-current portion of deferred revenue | (23.0) | | | (18.1) | |
| Deferred revenue and other contract liabilities, current | $ | 73.2 | | | $ | 76.9 | |
For the year ended December 30, 2023, total deferred revenue and other current contract liabilities were $77.3 million.
Deferred revenue relates to contracted amounts that have been invoiced to customers for which remaining performance obligations must be completed before the Company can recognize revenue. Generally, the Company records deferred revenue when revenue is to be recognized subsequent to invoicing.
Deferred revenue primarily relates to undelivered equipment, sensors and services under deferred equipment agreements, extended warranty agreements and maintenance agreements. Expected revenue from remaining contractual performance obligations (Unrecognized Contract Revenue) includes deferred revenue, as well as other amounts that will be invoiced and recognized as revenue in future periods when the Company completes its performance obligations. Unrecognized Contract Revenue excludes revenue allocable to monitoring-related equipment that is effectively leased to customers under deferred equipment agreements and other contractual obligations for which neither party has performed. The estimated timing of this revenue is based, in part, on management’s estimates and assumptions about when its performance obligations will be completed. As a result, the actual timing of this revenue in future periods may vary, possibly materially, due to factors such as healthcare facility spending trends, hospital inpatient census and seasonality. As of January 3, 2026, the Company had approximately $1,793.7 million of Unrecognized Contract Revenue related to executed contracts with an original duration of one year or more. The Company expects to recognize approximately $495.5 million of this amount as revenue within the next twelve months and the remaining balance thereafter.
Changes in deferred revenue for the years ended January 3, 2026 and December 28, 2024 were as follows: | | | | | | | | | | | |
| (in millions) | January 3,
2026 | | December 28,
2024 |
| Deferred revenue, beginning of the period | $ | 61.9 | | | $ | 48.5 | |
| | | |
| Revenue deferred during the period | 52.2 | | | 42.5 | |
| Recognition of revenue deferred in prior periods | (52.6) | | | (29.1) | |
| Deferred revenue, end of the period | $ | 61.5 | | | $ | 61.9 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.