We have three reporting segments: Sales Services; Marketing Services;also developed a cancer diagnostic assay which is designed to evaluate patients with Barrett’s esophagus, a common upper gastrointestinal condition that can progress into esophageal cancer. We have on the market in a limited way , this assay that also utilizes our PathFinder platform. We estimate that the total market is approximately $2 billion annually based on the current size of the patient population and Product Commercialization Services (PC Services).anticipated reimbursement rates. We also have on the market in a limited way, an assay also utilizing our PathFinder platform. We are planning to expand our approach to the Barrett’s market by potentially soft launching in 2016 an early assessment Barrett’s assay.

We conduct our research and development activities at our CLIA-certified New Haven laboratory and CLIA-certified, CAP-accredited laboratory in Pittsburgh. Our research and development efforts currently focus on behalfproviding data and clinical trials and analyses necessary to support our existing products on the market. Additionally our research and development activities provide product line extension of one customer.  The sales team is customizedour existing products as well as new product opportunities utilizing our proprietary platforms.

We will also focus our research and development efforts on enhancing existing molecular diagnostic tests as new research becomes available. We may enter collaborative relationships with research and academic institutions for the development of additional or enhanced molecular diagnostic tests to meetfurther increase the customer’s specificationsdepth and breadth of our molecular diagnostic test offerings. Where appropriate, we may also enter into licensing agreements with respectour collaborative partners to sales representative profile, physician targeting, product training, incentive compensation plans, integration with the customer’s in-house sales force, call reporting platform and data integration.  Without adding permanent personnel,both license intellectual property for use in our customers receive high quality, industry-standard sales teams comparable to their internal sales force.molecular diagnostic test panels as well as licensing such intellectual property out, as appropriate.

We also communicate to payors, integrated delivery systems and hospital systems about our protection. Some of our contracts also include exclusivity provisions limiting our abilitymolecular diagnostic tests' value through highly trained professionals who are experienced in reimbursement and business to promote competing products during the contract service period unless consent has been provided by the customer,business selling and may also require the personnel we utilizethrough face to be dedicated exclusively to promoting the customer’s product for the term of the contract.

In August 2011, Interpace BioPharma announced a twoPatents, trademarks and one-half year fee-for-service arrangement with a pharmaceutical company. This contract includes standard representationsother proprietary rights are important to us. We generate our own intellectual property and warranties, as well as mutual confidentialityhold numerous patents and indemnification obligations forpatent applications covering our protection,existing and is terminable by the customer without cause upon 180 days prior written notice after the first anniversaryfuture products and technologies. As of the contract effective date. This contract includes incentive payments that can be earned if our promotional activities generate results that meet or exceed agreed-upon performance targets. In addition, this contract provides for certain reimbursable out-of-pocket expenses such as travel, mealsDecember 31, 2015, we owned 2 issued patents in Australia and entertainmentJapan and product sample distribution costs, for which we are reimbursed at cost by our customer.

We also rely on a combination of trade secrets and proprietary processes to protect our intellectual property. We enter into non-disclosure agreements with certain vendors and suppliers to attempt to ensure the contractconfidentiality of our intellectual property. We also enter into non-disclosure agreements with our customers. In addition, we require that all our employees sign confidentiality, non-compete and intellectual property assignment agreements.

During our 2012 annual impairment tests of goodwill and indefinite-lived intangible assets and our reviewOn January 7, 2016, we were notified by NASDAQ that we were no longer in compliance with the minimum bid price requirements of the recoverability of finite-lived intangible assets,stock exchange and that we identified potential impairment and subsequently determined that these Group DCA business unit assets were impaired and recognized an impairment charge of $22.8 million. See Note 7, Goodwill and Other Intangible Assets,have until July 5, 2015 to our consolidated financial statements included inregain compliance with this Annual Report on Form 10-K for further information.requirement or face delisting. We are currently considering available options to regain compliance.

We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP).  The preparation of financial statements and related disclosures in conformity with GAAP requires management to make judgments, estimates and assumptions at a specific point in time that affect the amounts reported in our consolidated financial statements and disclosed in the accompanying notes.  These assumptions and estimates are inherently uncertain.  Outlined below are accounting policies, which are important to our financial position and results of operations, and require our management to

We recognize revenue from services rendered when the following four revenue recognition criteria are met:  persuasive evidence of an arrangement exists; services have been rendered; the selling price is fixed or determinable; and collectability is reasonably assured. Our contracts containing multiple deliverables are accounted for in accordance with Accounting Standards Codification 605-25, Revenue Recognition: Multiple Element Arrangements.

Until a straight-line basis overcontract has been negotiated with a commercial insurance carrier or governmental program, the contract periodservices may or as the physician details are performed. A portion of revenues earned under certain contracts may be risk-based. The risk-based metrics may be based on activity metrics such as call activity, turnover, or other agreed upon measures, or on contractually defined percentages of prescriptions written.  Revenue from risk-based metrics is recognized in the period which the metrics have been attained and when we are reasonably assured that payment will be made. Many of our product detailing contracts also allow for additional periodic incentive fees to be earned if certain activities have occurred or client specific sales performance benchmarks have been attained. Revenue from incentive fees is recognized in the period earned when the performance benchmarks have been attained and when we are reasonably assured that payment will be made.  Many contracts also stipulate penalties if agreed upon performance benchmarks have not been met.  Revenue is recognized net of any potential penalties until the performance criteria relating to the penalties have been achieved.  Commission based revenue is recognized when performance is completed. 

We maintain continuing relationships with our Sales Services customersPersuasive evidence of an arrangement exists and delivery is deemed to have occurred upon completion, review, and release of the test results at which may lead to multiple ongoing contracts between us and one customer. In situations where we enter into multiple contracts with one customer at or near the same time we evaluatewill bill the various factors involved in negotiatingthird-party payor or hospital. The assessment of the arrangements in order to determine iffixed or determinable nature of the contracts were negotiated as a package and should be accountedfees charged for as a single agreement.

Cost of services consists primarily of the costs associated with executing product detailing programs, performance based contracts or other sales and marketing services identified in the contract and includes personnel costsoperating our laboratories and other direct costs as well as the initial direct costs associated with staffing a product detailing program.directly related to our tests. Personnel costs, which constitute the largest portion of cost of services, include all labor related costs, such as salaries, bonuses, fringe benefits and payroll taxes for the sales representatives, sales managers and professional staff that are directly responsible for executing a particular program.laboratory personnel. Other direct costs include, but are not limited to, facility rental fees, travel expenses, samplelaboratory supplies, certain consulting expenses, and other promotional expenses.

We allocate the cost of acquired companies to the identifiable tangible and intangible assets acquired and liabilities assumed, with the remaining amount classified as goodwill.  Since the entities we have acquired do not have significant tangible assets, a significant portion of the purchase price has been allocated to intangible assets and goodwill.  The identification and valuation of these intangible assets and the determination of the estimated useful lives at the time of acquisition, as well as the completion of impairment tests require significant management judgments and estimates.  These estimates are made based on, among other factors, reviews of projected future operating results and business plans, economic projections, anticipated highest and best use of future cash flows and the market participant cost of capital.  The use of alternative estimates and assumptions could increase or decrease the estimated fair value of goodwill and other intangible assets, and potentially result in a different impact to our results of operations.  Further, changes in business strategy and/or market conditions may significantly impact these judgments and thereby impact the fair value of these assets, which could result in an impairment of the goodwill or intangible assets.

We test goodwill and indefinite-lived intangible asset for impairment at least annually (as of December 31) and whenever events or circumstances change that indicate impairment may have occurred.  A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others: a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business

 

We test goodwill for impairment at the business (reporting) unit level,level.  The Company has one reporting unit, which is one level below our operating segments.  The goodwill has been assignedgoodwill. Prior to the sale of the Commercial Services business in December 2015, the Company had two reporting units, Commercial Services and Interpace Diagnostics. Effective December 31, 2015, the Company has one reporting unit and segment: the Company's molecular diagnostics business. The Company's current reporting segment structure is reflective of the way the Company's management views the business, makes operating decisions and assesses performance.

Step 1 of the Company's goodwill impairment test compares the fair value of a reporting unit to which the value relates.  One of our five reporting units, Group DCA, hasits carrying amount, including goodwill. We tested goodwill by estimatingIf the fair value of the reporting unit using a Discounted Cash Flow (DCF) model. The key assumptions used in the DCF model to determine the highest and best use of estimated future cash flows include revenue growth rates and profit margins based on internal forecasts, terminal value and an estimate of a market participant’s weighted-average cost of capital used to discount future cash flows to their present value. While we use available information to prepare estimates and to perform impairment evaluations, actual results could differ significantly from these estimates or related projections, resulting in impairment related to recordedis greater than its carrying amount, goodwill balances.  

We account for business combinations by applying the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets transferred, liabilities incurred, equity instruments issued, and costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured separately at their fair value as of the acquisition date. The excess of the cost of the acquisition over our interest in the fair value of the identifiable net assets acquired is recorded as goodwill.

The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of products and forecasted life cycle and cash flows over that period. Although we believe that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ materially from the forecasted amounts. See Note 5, Acquisitions included in this Annual Report on Form 10-K for further information.

In the normal course of business, we are subject to various contingencies. Contingencies are recorded in the consolidated financial statements when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated, or otherwise disclosed, in accordance with Accounting Standards CodificationASC 450, Contingencies. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In the event we determine that a loss is not probable, but is reasonably possible, and it becomes possible to develop what we believe to be a reasonable range of possible loss, then we will include disclosures related to such matter as appropriate and in compliance with ASC 450. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, we will, when applicable, adjust the accrual in the period the determination is made, disclose an estimate of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made. We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the resolution of these claims. These estimates are developed in consultation with outside counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. Predicting the outcome of claims and litigation, and estimating related costs and exposures, involves substantial uncertainties that could cause actual costs to vary materially from estimates.

Income taxes are based on income for financial reporting purposes calculated using our expected annual effective rate and reflect a current tax liability or asset for the estimated taxes payable or recoverable on the current year tax return and expected annual changes in deferred taxes.  Any interest or penalties on income tax are recognized as a component of income tax expense.

We account for income taxes using the asset and liability method.  This method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax bases and financial reporting bases of our assets and liabilities based on enacted tax laws and rates.  Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is established, when necessary, to reduce the deferred income tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized.

We operate in multiple tax jurisdictions and provide taxes in each jurisdiction where we conduct business and are subject to taxation.  The breadth of our operations and the complexity of the various tax laws require assessments of uncertainties and judgments in estimating the ultimate taxes we will pay.  The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of proposed assessments arising from federal and state audits.  We have established estimated liabilities for uncertain federal and state income tax positions. Uncertain tax positions are recognized in the financial statements when it is more likely than not (i.e.,(for example, a likelihood of more than fifty percent) that a position taken or expected to be taken in a tax return would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured as the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. We adjust our accruals for unrecognized tax benefits