| Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
| Sep. 30, 2018 | Dec. 31, 2017 |
| The Company and Business Activities | The Company and Business Activities The Company was founded in California in May 1997 and effected a reincorporation to Delaware in July 2013. The Company is an early stage molecular oncology diagnostics company that develops and commercializes proprietary circulating tumor cell, or CTC, and circulating tumor DNA, or ctDNA, assays utilizing a standard blood sample, or liquid biopsy. The Company’s current and planned assays are intended to provide information to aid healthcare providers to identify specific oncogenic alterations that may qualify a subset of cancer patients for targeted therapy at diagnosis, progression or for monitoring in order to identify specific resistance mechanisms. Sometimes traditional procedures, such as surgical tissue biopsies, result in tumor tissue that is insufficient and/or unable to provide the molecular subtype information necessary for clinical decisions. The Company’s assays, performed on blood, have the potential to provide more contemporaneous information on the characteristics of a patient’s disease when compared with tissue biopsy and radiographic imaging. Additionally, commencing in October 2017, the Company’s pathology partnership program, branded as Empower TC TM The Company operates a clinical laboratory that is CLIA-certified (under the Clinical Laboratory Improvement Amendment of 1988) and CAP-accredited (by the College of American Pathologists), and manufactures cell enrichment and extraction microfluidic channels, related equipment and certain reagents to perform the Company’s diagnostic assays in a facility located in San Diego, California. CLIA certification and accreditation are required before any clinical laboratory may perform testing on human specimens for the purpose of obtaining information for the diagnosis, prevention, treatment of disease, or assessment of health. The assays the Company offers are classified as laboratory developed tests under the CLIA regulations. | The Company and Business Activities
The Company was founded in California in May 1997 and is an early
stage molecular oncology diagnostics company that develops and
commercializes proprietary circulating tumor cell, or CTC, and
circulating tumor DNA, or ctDNA, assays utilizing a standard blood
sample, or liquid biopsy. The Company’s current and planned
assays are intended to provide information to aid healthcare
providers to identify specific oncogenic alterations that may
qualify a subset of cancer patients for targeted therapy at
diagnosis, progression or for monitoring in order to identify
specific resistance mechanisms. Sometimes traditional procedures,
such as surgical tissue biopsies, result in tumor tissue that is
insufficient and/or unable to provide the molecular subtype
information necessary for clinical decisions. The Company’s
assays, performed on blood, have the potential to provide more
contemporaneous information on the characteristics of a
patient’s disease when compared with tissue biopsy and
radiographic imaging. Additionally, commencing in October 2017, the
Company’s pathology partnership program, Empower TC, provides
the unique ability for pathologists to participate in the
interpretation of liquid biopsy results and is available to
pathology practices and hospital systems throughout the United
States. Further, the Company’s proprietary blood collection
tubes, which allow for the intact transport of liquid biopsy
samples for research use only from regions around the world, are
anticipated to be sold to laboratory supply distributors commencing
in 2018.
The Company operates a clinical laboratory that is CLIA-certified
(under the Clinical Laboratory Improvement Amendment of 1988) and
CAP-accredited (by the College of American Pathologists), and
manufactures cell enrichment and extraction microfluidic channels,
related equipment and certain reagents to perform the
Company’s diagnostic assays in a facility located in San
Diego, California. CLIA certification and accreditation are
required before any clinical laboratory may perform testing on
human specimens for the purpose of obtaining information for the
diagnosis, prevention, treatment of disease, or assessment of
health. The assays the Company offers are classified as laboratory
developed tests under the CLIA regulations.
In July 2013, the Company effected a reincorporation to Delaware by
merging itself with and into Biocept, Inc., a Delaware corporation,
which had been formed to be and was a wholly-owned subsidiary of
the Company since July 23, 2013. |
| Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements and notes are prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and on the basis that the Company will continue as a going concern (see Note 2). The accompanying unaudited condensed financial statements and notes do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. The unaudited condensed financial statements included in this Form 10-Q have been prepared in accordance with the U.S. Securities and Exchange Commission, or SEC, instructions for Quarterly Reports on Form 10-Q. Accordingly, the condensed financial statements are unaudited and do not contain all the information required by GAAP to be included in a full set of financial statements. The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for a complete set of financial statements. The audited financial statements for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission, or SEC, with our Annual Report on Form 10-K on March 28, 2018 include a summary of our significant accounting policies and should be read in conjunction with this Form 10-Q. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in this Form 10-Q. All such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results of operations for the entire year. On July 6, 2018, the Company’s stockholders approved, and the Company filed, an amendment to the Company’s Certificate of Amendment of Certificate of Incorporation to effect a one-for-thirty reverse stock split of the Company’s outstanding common stock. As such, all references to share and per share amounts in these unaudited condensed financial statements and accompanying notes have been retroactively restated to reflect the one-for-thirty reverse stock split, except for the authorized number of shares of the Company’s common stock of 150,000,000 shares Certain prior period balances have been reclassified to conform to the current period presentation. | Basis of Presentation
The accompanying financial statements and notes are prepared in
accordance with accounting principles generally accepted in the
United States of America, or U.S. GAAP, and are prepared on the
basis that the Company will continue as a going concern (see Note
2). The accompanying financial statements and notes do not include
any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
On September 27, 2016, the Company’s stockholders
approved, and the Company filed, an amendment to the
Company’s amended and restated certificate of incorporation
to effect a one-for-three reverse stock split of the
Company’s outstanding common stock, and to increase the
authorized number of shares of the Company’s common stock
from 40,000,000 to 150,000,000 shares. The one-for-three reverse
stock split was effected on September 29, 2016. As such, all
references to share and per share amounts in these financial
statements and accompanying notes have been retroactively restated
to reflect the one-for-three reverse stock split, except for the
authorized number of shares of the Company’s common stock of
150,000,000 shares, which was not affected by the one-for-three
reverse stock split. |
| Going Concern | | Going Concern
The Company assesses and determines its ability to continue as a
going concern in accordance with the provisions of ASC Topic
205-40, Presentation of Financial Statements-Going Concern, which
requires the Company to evaluate whether there are conditions or
events that raise substantial doubt about its ability to continue
as a going concern within one year after the date that its annual
and interim financial statements are issued (see Note 2). Certain
additional financial statement disclosures are required if such
conditions or events are identified. If and when an entity’s
liquidation becomes imminent, financial statements should be
prepared under the liquidation basis of accounting. Determining the
extent, if any, to which conditions or events raise substantial
doubt about the Company’s ability to continue as a going
concern, or the extent to which mitigating plans sufficiently
alleviate any such substantial doubt, as well as whether or not
liquidation is imminent, requires significant judgment by
management. |
| Use of Estimates | | Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. On an ongoing basis, management evaluates these estimates
and judgments, including those related to accounts receivable,
inventories, long-lived assets, income taxes, revenues, stock-based
compensation, and the determination of the Company’s ability
to continue as a going concern. The Company bases its estimates on
various assumptions that it believes are reasonable under the
circumstances. Actual results may differ from these estimates under
different assumptions or conditions. |
| Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable The Company's commercial revenues are generated from diagnostic services provided to patient’s physicians and billed to third-party insurance payers such as managed care organizations, Medicare and Medicaid and patients for any deductibles, coinsurance or copayments that may be due. Through December 31, 2017, the Company recognized revenue in accordance with the provisions of Accounting Standards Codification, or ASC, 954-605, Health Care Entities—Revenue Recognition, which required that four basic criteria must be met prior to recognition of revenue: (1) persuasive evidence of an arrangement existed; (2) delivery had occurred and title and the risks and rewards of ownership had been transferred to the client or services had been rendered; (3) the price was fixed or determinable; and (4) collectability was reasonably assured. Commencing on March 31, 2017, the Company recognized commercial revenue related to billings for assays delivered and billed to Medicare and other third-party payers on an accrual basis when amounts that will ultimately be realized can be estimated upon delivery, whereby prior to March 31, 2017, the Company recognized revenues for its commercial diagnostic services on a cash basis as collected because the amounts ultimately expected to be received could not be estimated upon delivery due to insufficient collection history experience. Commencing on January 1, 2018, the Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers, or ASC 606, which requires that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the provisions of ASC 606 using the modified retrospective application method applied to all contracts, which did not impact amounts previously reported by the Company, nor did it require a cumulative effect adjustment upon adoption, as the Company’s method of recognizing revenue under ASC 606 was analogous to the method utilized immediately prior to adoption. Accordingly, there is no need for the Company to disclose the amount by which each financial statement line item was affected as a result of applying the new standard and an explanation of significant changes. Contracts For its commercial revenues, while the Company markets directly to physicians, its customer is the patient. Patients do not enter into direct agreements with the Company that commit either them to pay any portion of the cost of the tests if they have not met their annual deductible limit under their insurance policy, if any, or if their insurance otherwise declines to reimburse the Company. Accordingly, the Company establishes a contract with a commercial patient in accordance with other customary business practices, as follows:
•
Approval of a contract is established via the order and accession, which are submitted by the patient’s physician.
•
The Company is obligated to perform its diagnostic services upon receipt of a sample from a physician, and the patient and/or applicable payer are obligated to reimburse the Company for services rendered based on the patient’s insurance benefits.
•
Payment terms are a function of a patient’s existing insurance benefits, including the impact of coverage decisions with CMS and applicable reimbursement contracts established between the Company and payers, unless the patient is a self-pay patient, whereby the Company bills the patient directly after the services are provided.
•
On ce the Company delivers a patient’s assay result to the ordering physician, the contract with a patient has commercial substance, as the Company is legally able to collect payment and bill an insurer and/or patient, regardless of payer contract status or patient insurance benefit status.
•
Consideration associated with commercial revenues is considered variable and constrained until fully adjudicated, with net revenues recorded to the extent that it is probable that a significant reversal will not occur. The Company’s development services revenues are supported by contractual agreements and generated from assay development services provided to entities, as well as certain other diagnostic services provided to physicians, and revenues are recognized upon delivery of the performance obligations in the contract. Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service, or a bundle of goods or services, to the customer. For its commercial and development services revenues, the Company’s contracts have a single performance obligation, which is satisfied upon rendering of services, which culminates in the delivery of a patient’s assay result(s) to the ordering physician or entity. The duration of time between accession receipt and delivery of a valid assay result to the ordering physician or entity is typically less than two weeks. Accordingly, the Company elected the practical expedient and therefore, does not disclose the value of unsatisfied performance obligations. Transaction Price The transaction price is the amount of consideration that the Company expects to collect in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties, such as sales taxes. The consideration expected from a contract with a customer may include fixed amounts, variable amounts, or both. The Company’s gross commercial revenues billed, and corresponding gross accounts receivable, are subject to estimated deductions for such allowances and reserves to arrive at reported net revenues, which relate to differences between amounts billed and corresponding amounts estimated to be subsequently collected and is deemed to be variable although the variability is not explicitly stated in any contract. Rather, the implied variability is due to several factors, such as the payment history or lack thereof for third-party payers, reimbursement rate changes for contracted and non-contracted payers, any patient co-payments, deductibles or compliance incentives, the existence of secondary payers and claim denials. The Company estimates the The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. Revenue is recognized up to the amount of variable consideration that is not subject to a significant reversal until additional information is obtained or the uncertainty associated with the additional payments or refunds is subsequently resolved. Differences between original estimates and subsequent revisions, including final settlements, represent changes in the estimate of variable consideration and are included in the period in which such revisions are made. The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more consideration than it originally estimated for a contract with a customer, it will account for the change as an increase in the estimate of the transaction price in the period identified as an increase to revenue. Similarly, if the Company subsequently determines that the amount it expects to collect from a customer is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price as a decrease to revenue, provided that such downward adjustment does not result in a significant reversal of cumulative revenue recognized. Revenue recognized from changes in transaction prices was not significant during the three and nine months ended September 30, 2018. Allocate Transaction Price For the Company’s commercial revenues, the entire transaction price is allocated to the single performance obligation contained in a contract with a customer. For the Company’s development services revenues, the contracted transaction price is allocated to each single performance obligation contained in a contract with a customer as performed. Point-in-time Recognition The Company’s single performance obligation is satisfied at a point in time, and that point in time is defined as the date a patient’s successful assay result is delivered to the patient’s ordering physician or entity. The Company considers this date to be the time at which the patient obtains control of the promised diagnostic assay service. Contract Balances The timing of revenue recognition, billings and cash collections results in accounts receivable recorded in the Company’s condensed balance sheets. Generally, billing occurs subsequent to delivery of a patient’s test result to the ordering physician or entity, resulting in an account receivable. Practical Expedients The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, the Company expects the collection cycle to be one year or less. The Company expenses sales commissions when incurred because the amortization period is one year or less, which are recorded within sales and marketing expenses. The Company incurs certain other costs that are incurred regardless of whether a contract is obtained. Such costs are primarily related to legal services and patient communications. These costs are expensed as incurred and recorded within general and administrative expenses. Disaggregation of Revenue and Concentration of Risk The composition of the Company’s net revenues recognized during the three and nine months ended September 30, 2017 and 2018, disaggregated by source and nature, are as follows:
For the three months ended September 30,
For the nine months ended September 30,
2017
2018
2017
2018
Net revenues from contracted payers*
$
422,136
$
325,097
$
1,655,287
$
1,019,857
Net revenues from non-contracted payers
621,881
373,018
2,206,414
1,211,309
Development services revenues
67,394
63,476
211,736
159,606
Total net revenues
$
1,111,411
$
761,591
$
4,073,437
$
2,390,772
*Includes Medicare and Medicare Advantage, as reimbursement amounts are fixed and miscellaneous income from CEE-Sure blood collection tubes.
For the three months ended September 30,
For the nine months ended September 30,
2017
2018
2017
2018
Net commercial revenues recognized upon delivery
$
941,783
$
698,115
$
2,703,424
$
2,231,166
Development services revenues recognized upon delivery
67,394
63,476
211,736
159,606
Commercial revenues recognized upon cash collection
102,234
—
1,158,277
—
Total net revenues
$
1,111,411
$
761,591
$
4,073,437
$
2,390,772
The amount of nonrecurring net revenue recorded during the three and nine months ended September 30, 2017, had the Company commenced recognizing revenue for commercial diagnostic services upon delivery on or prior to December 31, 2016 instead of on March 31, 2017, was $102,000 and $839,000, respectively, and the corresponding decrease in net loss per common share was $0.10 and $0.97, respectively. The incremental net revenue and decrease in loss from operations as a result of recognizing revenue on an accrual basis commencing on March 31, 2017, or the total amount of net revenue recorded in excess of the amount of commercial cash collections, was $125,000 and $1,158,000 during the three and nine months ended September 30, 2017, respectively, and the corresponding decrease in net loss per common share was $0.13 and $1.35, respectively. For the nine months ended September 30, 2018 all revenues were recognized on an accrual basis. | Revenue Recognition and Accounts Receivable
The Company’s commercial revenues are generated from
diagnostic services provided as delivered to physicians and billed
to third-party insurance payers such as managed care organizations,
Medicare and Medicaid and patients for any deductibles, coinsurance
or copayments that may be due. Through December 31, 2017, the
Company recognized revenue in accordance with the provision of
Accounting Standards Codification, or ASC, 954-605, Health Care
Entities-Revenue Recognition, which required that four basic
criteria must be met prior to recognition of revenue:
(1) persuasive evidence of an arrangement existed;
(2) delivery had occurred and title and the risks and rewards
of ownership had been transferred to the client or services had
been rendered; (3) the price was fixed or determinable; and
(4) collectability was reasonably assured. Commencing on
March 31, 2017, the Company recognizes commercial revenue
related to billings for assays delivered and billed to Medicare and
other third-party payers on an accrual basis when amounts that will
ultimately be realized can be estimated upon delivery, whereby
prior to March 31, 2017, the Company recognized revenues for
its commercial diagnostic services on a cash basis as collected
because the amounts ultimately expected to be received could not be
estimated upon delivery due to insufficient collection history
experience. Commencing on January 1, 2018, the Company
recognizes revenue in accordance with ASC 606, Revenue from
Contracts with Customers, which requires that an entity recognize
revenue when it transfers promised goods or services to customers
in an amount that reflects the consideration to which the entity
expects to be entitled to in exchange for those goods or
services.
The Company bills third-party payers on a fee-for-service basis at
the Company’s list price and third-party commercial revenue
is recorded net of contractual discounts, payer-specific allowances
and other reserves. The Company’s development services
revenues are supported by contractual agreements and generated from
assay development services provided to entities, as well as certain
other diagnostic services provided to physicians. Diagnostic
services are completed upon the delivery of assay results to the
prescribing physician, at which time the Company bills for the
service and revenue is recognized.
The Company’s gross commercial revenues billed, and
corresponding gross accounts receivable are subject to estimated
deductions for such allowances and reserves to arrive at reported
net revenues, which relate to differences between amounts billed
and corresponding amounts estimated to be subsequently collected.
These third-party payer discounts and sales allowances are
estimated based on a number of assumptions and factors, including
historical payment trends, seasonality associated with the annual
reset of patient deductible limits on January 1 of each year,
and current and estimated future payments. Specifically, the
Company maintains four such reserves: the reserve for contractual
discounts, the reserve for aged non-patient receivables, the
reserve for estimated patient receivables, and the reserve for
other payer-specific sales allowances. The reserve for contractual
discounts relates to discounts to gross amounts billed to Medicare
and contracted third-party payers to arrive at the deemed
“allowed expense” amount covered by that payer. The
Company’s contracted third-party commercial sales are
recorded using an actual or contracted fee schedule at the time of
delivery, while estimated fee schedules are maintained for each
non-contracted payer separately as part of other payer-specific
sales allowances. Contractual discounts are recorded at the
transaction level at the time of delivery based on a fee schedule
that is maintained for each contracted third-party payer. The
Company periodically adjusts fee schedules for both contracted and
non-contracted third-party payers based upon historical payment
trends. The reserve for aged non-patient receivables reduces gross
amounts billed to non-contracted third-party payers for amounts
estimated to be collected according to the age of the outstanding
balance. The reserve for estimated patient receivables reduces
gross amounts billed to third-party payers for amounts estimated to
be collected directly from individual patients, such as copayments,
deductibles, or amounts otherwise designated as patient
responsibility. The reserve for other payer-specific sales
allowances relates to the amounts billed to non-contracted
third-party payers that are estimated to not be covered by that
specific payer’s coverage policies, as well as estimated
necessary adjustments to gross amounts billed based on historical
collection experience for a particular third-party payer unrelated
to the age of outstanding balances. Collection periods for billings
on commercial revenues range from less than 30 days to several
months, depending on the contracted or non-contracted nature of the
payer, among other things.
The estimates of amounts that will ultimately be realized from
commercial diagnostic services for non-contracted payers require
significant judgment by management. Patients do not enter into
direct agreements with the Company that commit them to pay any
portion of the cost of the tests in the event that they have not
met their annual deductible limit under their insurance policy, if
any, or if their insurance otherwise declines to reimburse the
Company. Adjustments to the estimated payment amounts are recorded
at the time of final collection and settlement of each transaction
as an adjustment to commercial revenue. Consideration associated
with non-contracted commercial revenues is considered variable and
constrained until fully adjudicated, with net revenues recorded to
the extent that it is probable that a significant reversal will not
occur. The estimation process used to determine third-party payer
discounts and sales allowance has been applied on a consistent
basis since March 31, 2017, and no significant subsequent
adjustments have been necessary to increase or decrease these
discounts and allowances as a result of changes in underlying
estimates.
The composition of the Company’s gross and net revenues
recognized during the years ended December 31, 2016 and 2017
is as follows:
For the year ended December 31,
2016 2017
Commercial revenues recognized upon delivery $
— $ 15,685,069
Development services revenues recognized upon delivery 240,056 272,350
Commercial revenues recognized upon cash collection 2,983,040 1,225,976
Total gross revenues 3,223,096 17,183,395
Provisions for contractual discounts
— (5,805,787 )
Provisions for aged non-patient receivables
— (735,709 )
Provisions for estimated patient receivables
— (169,479 )
Provisions for other payer-specific sales allowances
— (5,403,757 )
Net revenues $ 3,223,096 $ 5,068,663
During the year ended December 31, 2017, the Company recorded
approximately $843,000 in nonrecurring net revenue as a result of
recognizing revenue on an accrual basis commencing on
March 31, 2017 associated with cases delivered on or prior to
December 31, 2016, representing a corresponding decrease in
net loss per common share of $0.90. The incremental net revenue as
a result of recognizing revenue on an accrual basis commencing on
March 31, 2017, or the total amount of net revenue recorded in
excess of the amount of commercial cash collections, was
approximately $1,139,000 during the year ended December 31,
2017, representing a corresponding decrease in net loss per common
share of $1.20.
A summary of activity in the Company’s gross and net accounts
receivable balances, as well as corresponding reserves, during the
year ended December 31, 2017 is as follows:
Balance
at Amounts
Settlements Balance
at
December 31,
Recognized Upon
December 31,
2016 Upon Delivery Adjudication 2017
Accounts receivable, gross $ 128,969 $ 15,957,419 $ (9,149,325 ) $ 6,937,063
Reserve for contractual discounts
— (5,805,787 ) 3,830,938 (1,974,849 )
Reserve for aged non-patient receivables
— (735,709 ) 283,621 (452,088 )
Reserve for estimated patient receivables
— (169,479 ) 81,359 (88,120 )
Reserve for other payer-specific sales allowances
— (5,403,757 ) 2,175,177 (3,228,580 )
Accounts receivable, net $ 128,969 $ 3,842,687 $ (2,778,230 ) $ 1,193,426 |
| Cash | | Cash
The Company places its cash with reputable financial institutions
that are insured by the Federal Deposit Insurance Corporation, or
FDIC. At times, deposits held may exceed the amount of insurance
provided by the FDIC. The Company has not experienced any losses in
its cash and believes they are not exposed to any significant
credit risk. |
| Fair Value Measurement | | Fair Value Measurement
The Company uses a three-tier fair value hierarchy to prioritize
the inputs used in the Company’s fair value measurements.
These tiers include: Level 1, defined as observable inputs such as
quoted prices in active markets for identical assets; Level 2,
defined as inputs other than quoted prices in active markets that
are either directly or indirectly observable; and Level 3, defined
as unobservable inputs in which little or no market data exists,
therefore requiring an entity to develop its own assumptions. The
Company believes the carrying amount of cash, accounts receivable,
accounts payable and accrued expenses approximate their estimated
fair values due to the short-term maturities of these financial
instruments. See Note 5 for further details about the inputs and
assumptions used to determine fair value measurements. |
| Concentration of Risk | Concentrations of credit risk with respect to revenues are primarily limited to geographies to which the Company provides a significant volume of its services, and to specific third-party payers of the Company’s services such as Medicare, insurance companies, and other third-party payers. The Company’s client base consists of many geographically dispersed clients diversified across various customer types. The Company's third-party payers that represent more than 10% of total net revenues in any period presented, as well as their related net revenue amount as a percentage of total net revenues, during the three and nine months ended September 30, 2017 and 2018 were as follows:
For the three months ended September 30,
For the nine months ended September 30,
2017
2018
2017
2018
Medicare and Medicare Advantage
45
%
40
%
41
%
39
%
Blue Cross Blue Shield
16
%
9
%
17
%
14
%
United Healthcare
14
%
6
%
12
%
15
% The Company's third-party payers that represent more than 10% of total net accounts receivable, and their related net accounts receivable balance as a percentage of total net accounts receivable, at December 31, 2017 and September 30, 2018 were as follows:
December 31, 2017
September 30, 2018
Blue Cross Blue Shield
27
%
22
%
Medicare and Medicare Advantage
21
%
18
%
United Healthcare
15
%
11
% | Concentration of Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of temporary cash
investments.
Concentrations of credit risk with respect to revenues are
primarily limited to geographies to which the Company provides a
significant volume of its services, and to specific third-party
payers of the Company’s services such as Medicare, insurance
companies, and other third-party payers. The Company’s client
base consists of a large number of geographically dispersed clients
diversified across various customer types.
The Company’s third-party payers that represent more than 10%
of total net revenues in any period presented, as well as their
related net revenue amount as a percentage of total net revenues,
during the years ended December 31, 2016 and 2017 were as
follows:
For the year ended December 31,
2016 2017
Medicare and Medicare Advantage 40 % 39 %
Blue Cross Blue Shield 11 % 19 %
United Healthcare 19 % 12 %
The Company’s third-party payers that represent more than 10%
of total net accounts receivable, and their related net accounts
receivable balance as a percentage of total net accounts
receivable, at December 31, 2017 were as follows:
Blue Cross Blue Shield 27 %
Medicare and Medicare Advantage 21 %
United Healthcare 15 %
The Company operates in one reportable business segment and
historically has derived most revenues only from within the United
States.
Certain components used in the Company’s current or planned
products are currently sourced from one supplier, for which
alternative suppliers exist but the Company has not validated the
product(s) of such alternative supplier(s), and substitutes for
these components may not be obtained easily or may require
substantial design or manufacturing modifications. |
| Inventories | | Inventories
Inventories are valued at the lower of cost or net realizable
value. Cost is determined by the average cost method. The Company
records adjustments to its inventory for estimated obsolescence or
diminution in net realizable value equal to the difference between
the cost of the inventory and the estimated net realizable value.
At the point of loss recognition, a new cost basis for that
inventory is established, and subsequent changes in facts and
circumstances do not result in the restoration or increase in that
newly established cost basis. In addition, the Company records a
liability for firm, non-cancelable, and unconditional purchase
commitments with contract manufacturers and suppliers for
quantities in excess of the Company’s future demand forecasts
consistent with its valuation of excess and obsolete inventory. |
| Fixed Assets | | Fixed Assets
Fixed assets consist of machinery and equipment, furniture and
fixtures, computer equipment and software, leasehold improvements,
financed equipment and construction in-process. Fixed assets are
stated at cost less accumulated depreciation and amortization.
Additions, improvements, and major renewals are capitalized.
Maintenance, repairs, and minor renewals are expensed as incurred.
Depreciation and amortization are recorded using the straight-line
method over the estimated useful lives of the assets, which range
from three to seven years. Leasehold improvements are amortized
over the life of the lease or the asset, whichever is shorter.
Depreciation and amortization expense for the years ended
December 31, 2016 and 2017 was approximately $322,000 and
$576,000, respectively.
Upon sale or disposal of fixed assets, the accounts are relieved of
the cost and the related accumulated depreciation or amortization
with any gain or loss recorded to the statement of operations and
comprehensive loss.
Fixed assets are reviewed for impairment whenever changes in
circumstances indicate that the carrying amount of an asset may not
be recoverable. These computations utilize judgments and
assumptions inherent in the estimates of future cash flows to
determine recoverability of these assets. If the assumptions about
these assets were to change as a result of events or circumstances,
the Company may be required to record an impairment loss. |
| Stock-based Compensation | | Stock-based Compensation
The Company measures and recognizes compensation expense for all
stock-based awards made to employees and directors based on their
grant date fair values. The Company estimates the fair value of
stock option awards on the date of grant using the Black-Scholes
option pricing model, while the fair value of restricted stock unit
awards, or RSUs, is determined by the Company’s stock price
on the date of grant. The value of the portion of the award that is
ultimately expected to vest is recognized as expense over the
requisite service periods using the straight-line method. Upon
adoption of Accounting Standards Update 2016-09,
Compensation—Stock Compensation on January 1, 2017, the
Company estimates forfeitures at the time of grant and revises
these estimates in subsequent periods if actual forfeitures differ
from those estimates (see Note 10).
The Company determines the fair value of the stock-based
compensation awards granted as either the fair value of the
consideration received, or the fair value of the equity instruments
issued, whichever is more reliably measurable. All issuances of
equity instruments issued to non-employees as consideration for
goods or services received by the Company are accounted for based
on the fair value of the equity instruments issued. These awards
are recorded in expense and additional paid-in capital in
shareholders’ equity over the applicable service periods
based on the fair value of the options at the end of each
period.
Calculating the fair value of stock-based awards requires the input
of highly subjective assumptions into the Black-Scholes valuation
model. Stock-based compensation expense is calculated using the
Company’s best estimates, which involves inherent
uncertainties, and the application of management’s judgment.
Significant estimates include the expected life of the stock
option, stock price volatility, risk-free interest rate and
forfeiture rate. |
| Research and Development | | Research and Development
Research and development costs are expensed as incurred. The
amounts expensed in the years ended December 31, 2016 and 2017
were approximately $2,713,000 and $3,365,000, respectively, which
includes salaries of research and development personnel. |
| Income Taxes | | Income Taxes
The Company provides for income taxes utilizing the liability
method. Under the liability method, current income tax expense or
benefit is the amount of income taxes expected to be payable or
refundable for the current year. A deferred income tax asset or
liability is computed for the expected future impact of differences
between the financial reporting and tax bases of assets and
liabilities and for the expected future tax benefit to be derived
from tax credits. Tax rate changes are reflected in the computation
of the income tax provision during the period such changes are
enacted.
Deferred tax assets are reduced by a valuation allowance when, in
management’s opinion, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The
Company considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning
strategies in making this assessment. The Company’s valuation
allowance is based on available evidence, including its current
year operating loss, evaluation of positive and negative evidence
with respect to certain specific deferred tax assets including
evaluation sources of future taxable income to support the
realization of the deferred tax assets. The Company has established
a full valuation allowance on the deferred tax assets as of
December 31, 2016 and 2017, and therefore has not recognized
any income tax benefit or expense in the periods presented.
A tax benefit from uncertain tax positions may be recognized by the
Company when it is more-likely-than-not that the position will be
sustained upon examination, including resolutions of any related
appeals or litigation processes, based on the technical merits of
the position. Income tax positions must meet a more-likely-than-not
recognition threshold to be recognized.
The Company recognizes interest and/or penalties related to income
tax matters in income tax expense. There is no accrual for interest
or penalties for income taxes on the balance sheets at
December 31, 2016 and 2017, and the Company has not recognized
interest and/or penalties in the statements of operations and
comprehensive loss for the years ended December 31, 2016 and
2017. |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, and as subsequently updated and amended from time to time, the Financial Accounting Standards Board, or FASB, issued authoritative guidance that requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted the new standard for the fiscal year beginning January 1, 2018 using the modified retrospective application method, which did not have a material impact on its financial statements or disclosures. In January 2016, the FASB issued authoritative guidance requiring, among other things, that certain equity investments be measured at fair value with changes in fair value recognized in net income, that financial assets and financial liabilities be presented separately by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements, that the prior requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet be eliminated, and that a reporting organization is to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company adopted this guidance for the fiscal year beginning on January 1, 2018, which did not have a material impact on its financial statements or disclosures. In February 2016, the FASB issued authoritative guidance requiring, among other things, that entities recognize the assets and liabilities arising from leases on the balance sheet under revised criteria, while the classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria in the previous leases guidance. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company anticipates that the adoption of this guidance will materially affect its statement of financial position and will require changes to its processes. The Company expects to adopt this guidance for the reporting period beginning on January 1, 2019 and has not yet made a decision on the method of adoption with respect to the optional practical expedients. In August 2016, the FASB issued authoritative guidance clarifying the classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, on a retrospective transition method to each period presented. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In January 2017, the FASB issued authoritative guidance clarifying the definition of a business when evaluating transactions involving acquisitions or disposals of assets or businesses. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance for the reporting period beginning January 1, 2018, which did not have a material impact on its financial statements or disclosures. In July 2017, the FASB issued authoritative guidance changing the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features, whereby a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock, and also clarifying existing disclosure requirements for equity-classified instruments. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company early adopted this guidance for the fiscal year beginning on January 1, 2018, which did not have a material impact on its financial statements or disclosures upon adoption, but did result in equity classification for the warrants issued on January 30, 2018, whereby liability classification may have occurred in the absence of the adoption of this guidance due to the existence of a down round feature associated with the exercise price of the warrants, which would have resulted in material impacts to the Company’s financial statements and disclosures. In August 2017, the FASB issued authoritative guidance that expands and refines hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early application is permitted. The Company currently intends to adopt this guidance for the fiscal year beginning on January 1, 2019 and does not anticipate that the adoption of this guidance will have a material impact on its financial statements or disclosures because the Company does not currently hold any financial instruments accounted for as a hedging activity. In February 2018, the FASB issued authoritative guidance allowing a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from a tax bill, “H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” or the Tax Cuts and Jobs Act, enacted on December 22, 2017. These amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act. However, because these amendments only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This guidance also requires certain disclosures about stranded tax effects. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company currently intends to adopt this guidance for the fiscal year beginning on January 1, 2019 and does not anticipate that the adoption of this guidance will have a material impact on its financial statements or disclosures because the Company does not currently maintain any stranded tax effects in accumulated other comprehensive income. In February 2018, the FASB issued authoritative guidance concerning certain fair value option liabilities, equity securities without a readily determinable fair value, and certain equity investments. This guidance is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018. Public entities with fiscal years beginning between December 15, 2017 and June 15, 2018 are not required to adopt these amendments until the interim period beginning after June 15, 2018. The Company adopted this guidance for the interim period beginning on July 1, 2018, which did not have a material impact on its financial statements or disclosures because the Company did not hold any fair value option liabilities, equity securities without a readily determinable fair value, or equity investments. | Recent Accounting Pronouncements
In May 2014, and as subsequently updated and amended from time to
time, the Financial Accounting Standards Board, or FASB, issued
authoritative guidance that requires entities to recognize revenue
when it transfers promised goods or services to customers in an
amount that reflects the consideration to which the entity expects
to be entitled to in exchange for those goods or services. This
guidance is effective for annual reporting periods beginning after
December 15, 2017, including interim periods within that
reporting period, and may be applied retrospectively to each prior
period presented or retrospectively with the cumulative effect
recognized as of the date of adoption. Earlier application is
permitted only as of annual reporting periods beginning after
December 15, 2016, including interim periods within that
reporting period. The Company adopted the new standard for the
fiscal year beginning January 1, 2018 using the modified
retrospective application method. The Company has substantially
completed its assessment of the new standard and the Company
believes that there will not be a material impact on its financial
statements or disclosures.
In July 2015, the FASB issued authoritative guidance requiring
entities that do not measure inventory using the retail inventory
method or on a last-in, first-out basis to record inventory at the
lower of cost and net realizable value. Net realizable value is the
estimated selling prices in the ordinary course of business, less
reasonably predictable costs of completion, disposal, and
transportation. This guidance is effective on a prospective basis
for fiscal years beginning after December 15, 2016, including
interim periods within those fiscal years. The Company adopted this
guidance for the reporting period beginning January 1, 2017,
which did not have a material impact on its financial statements or
disclosures.
In January 2016, the FASB issued authoritative guidance requiring,
among other things, that certain equity investments be measured at
fair value with changes in fair value recognized in net income,
that financial assets and financial liabilities be presented
separately by measurement category and form of financial asset on
the balance sheet or the accompanying notes to the financial
statements, that the prior requirement to disclose the method(s)
and significant assumptions used to estimate the fair value that is
required to be disclosed for financial instruments measured at
amortized cost on the balance sheet be eliminated, and that a
reporting organization is to present separately in other
comprehensive income the portion of the total change in the fair
value of a liability resulting from a change in the
instrument-specific credit risk when the organization has elected
to measure the liability at fair value in accordance with the fair
value option for financial instruments. This guidance is effective
for fiscal years, and interim periods within those years, beginning
after December 15, 2017. Early adoption of the
instrument-specific credit risk amendment is permitted. The Company
adopted this guidance for the fiscal year beginning on
January 1, 2018, which did not have a material impact on its
financial statements or disclosures.
In February 2016, the FASB issued authoritative guidance requiring,
among other things, that entities recognize the assets and
liabilities arising from leases on the balance sheet under revised
criteria, while the classification criteria for distinguishing
between finance leases and operating leases are substantially
similar to the classification criteria in the previous leases
guidance. In transition, lessees and lessors are required to
recognize and measure leases at the beginning of the earliest
period presented using a modified retrospective approach. This
guidance is effective for fiscal years beginning after
December 15, 2018, including interim periods within those
fiscal years. Early adoption is permitted. The Company anticipates
that the adoption of this guidance will materially affect its
statement of financial position and will require changes to its
processes. The Company expects to adopt this guidance for the
reporting period beginning on January 1, 2019 and has not yet
made any decision on the method of adoption with respect to the
optional practical expedients but expects to during 2018.
In March 2016, the FASB issued authoritative guidance clarifying
that a change in the counterparty to a derivative instrument that
has been designated as the hedging instrument does not necessarily
require de-designation of that hedging relationship, provided that
all other applicable hedge accounting criteria continue to be met.
This guidance is effective on either a prospective basis or
modified retrospective basis for fiscal years beginning after
December 15, 2016, and interim periods within those fiscal
years. The Company adopted this guidance for the reporting period
beginning January 1, 2017, which did not have a material
impact on its financial statements or disclosures.
In March 2016, the FASB issued authoritative guidance requiring
entities to assess whether contingent call (put) options that can
accelerate the payment of principal on debt instruments are clearly
and closely related to their debt hosts, and clarifies what steps
are required when assessing whether the economic characteristics
and risks of call (put) options are clearly and closely related to
the economic characteristics and risks of their debt hosts. This
guidance is effective on a modified retrospective basis for fiscal
years beginning after December 15, 2016, and interim periods
within those fiscal years. Early adoption is permitted. The Company
adopted this guidance for the reporting period beginning
January 1, 2017, which did not have a material impact on its
financial statements or disclosures.
In March 2016, the FASB issued authoritative guidance simplifying
the accounting for stock compensation. This guidance, among other
things, amends existing accounting and classification requirements
primarily around income taxes, forfeitures, and cash payments
associated with share-based payment awards to employees. This
guidance is effective for fiscal years beginning after
December 15, 2016, including interim periods within those
fiscal years. Early adoption is permitted. The Company adopted this
guidance for the reporting period beginning January 1, 2017,
which did not have a material impact on its financial statements or
disclosures.
In August 2016, the FASB issued authoritative guidance clarifying
the classification of certain cash receipts and cash payments in
the statement of cash flows. This guidance is effective for fiscal
years beginning after December 15, 2017, including interim
periods within those fiscal years, on a retrospective transition
method to each period presented. Early adoption is permitted. The
Company adopted this guidance for the reporting period beginning
January 1, 2018, which did not have a material impact on its
financial statements or disclosures.
In January 2017, the FASB issued authoritative guidance clarifying
the definition of a business when evaluating transactions involving
acquisitions or disposals of assets or businesses. This guidance is
effective for fiscal years beginning after December 15, 2017,
including interim periods within those fiscal years. Certain
applications of this guidance are permitted for early adoption. The
Company adopted this guidance for the reporting period beginning
January 1, 2018, which did not have a material impact on its
financial statements or disclosures.
In January 2017, the FASB issued authoritative guidance eliminating
the “Step 2” requirement for an entity to determine the
fair value of its assets and liabilities for goodwill impairment
testing in the same manner that would be required for those assumed
in a business combination. Instead, the amended guidance allows an
entity to perform goodwill impairment testing by comparing the fair
value of a reporting unit with its carrying amount. This guidance
is effective for any goodwill impairment tests in fiscal years
beginning after December 15, 2019, including interim periods
within those fiscal years. Early adoption is permitted. The Company
currently intends to adopt this guidance for the fiscal year
beginning January 1, 2020, and does not anticipate that the
adoption of this guidance will have a material impact on its
financial statements or disclosures because the Company does not
currently have any recorded goodwill.
In February 2017, the FASB issued authoritative guidance clarifying
the definition of the term “in substance nonfinancial
asset” when accounting for transfers of financial and
nonfinancial assets, and other matters concerning the transfer,
sale and partial sale of nonfinancial assets to both consolidated
entities and non-consolidated counterparties. This guidance is
effective for fiscal years beginning after December 15, 2017,
including interim periods within that reporting period. Early
adoption is permitted. The Company adopted this guidance for the
reporting period beginning January 1, 2018, which did not have
a material impact on its financial statements or disclosures.
In March 2017, the FASB issued authoritative guidance shortening
the amortization period to the earliest call date for certain
purchased callable debt securities held at a premium. This guidance
is effective for fiscal years beginning after December 15,
2018, including interim periods within those fiscal years. Early
adoption is permitted. The Company currently intends to adopt this
guidance for the fiscal year beginning on January 1, 2019 and
does not anticipate that the adoption of this guidance will have a
material impact on its financial statements or disclosures because
the Company does not currently hold any callable debt
securities.
In May 2017, the FASB issued authoritative guidance clarifying what
modifications to a share-based payment award may be considered
substantive, and therefore requiring the application of
modification accounting. This guidance is effective for fiscal
years beginning after December 15, 2017, including interim
periods within those fiscal years. Early adoption is permitted. The
Company adopted this guidance for the reporting period beginning
January 1, 2018, which did not have a material impact on its
financial statements or disclosures.
In July 2017, the FASB issued authoritative guidance changing the
classification analysis of certain equity-linked financial
instruments (or embedded features) with down round features,
whereby a down round feature no longer precludes equity
classification when assessing whether the instrument is indexed to
an entity’s own stock, and also clarifying existing
disclosure requirements for equity-classified instruments. This
guidance is effective for fiscal years beginning after
December 15, 2019, and interim periods within fiscal years
beginning after December 15, 2020. Early adoption is
permitted. The Company early adopted this guidance for the fiscal
year beginning on January 1, 2018, which did not have a
material impact on its financial statements or disclosures upon
adoption, but did result in equity classification for the warrants
issued on January 30, 2018, whereby liability classification
may have occurred in the absence of the adoption of this guidance
due to the existence of a down round feature associated with the
exercise price of the warrants, which would have resulted in
material impacts to the Company’s financial statements and
disclosures.
In August 2017, the FASB issued authoritative guidance that expands
and refines hedge accounting for both nonfinancial and financial
risk components and align the recognition and presentation of the
effects of the hedging instrument and the hedged item in the
financial statements. This guidance is effective for fiscal years
beginning after December 15, 2018, and interim periods within
those fiscal years. Early application is permitted. The Company
currently intends to adopt this guidance for the fiscal year
beginning on January 1, 2019 and does not anticipate that the
adoption of this guidance will have a material impact on its
financial statements or disclosures because the Company does not
currently hold any financial instruments accounted for as a hedging
activity.
In February 2018, the FASB issued authoritative guidance allowing a
reclassification from accumulated other comprehensive income to
retained earnings for stranded tax effects resulting from a tax
bill, “H.R.1, An Act to Provide for Reconciliation Pursuant
to Titles II and V of the Concurrent Resolution on the Budget for
Fiscal Year 2018,” or the Tax Cuts and Jobs Act, enacted on
December 22, 2017. These amendments eliminate the stranded tax
effects resulting from the Tax Cuts and Jobs Act. However, because
these amendments only relate to the reclassification of the income
tax effects of the Tax Cuts and Jobs Act, the underlying guidance
that requires that the effect of a change in tax laws or rates be
included in income from continuing operations is not affected. This
guidance also requires certain disclosures about stranded tax
effects. This guidance is effective for fiscal years beginning
after December 15, 2018, and interim periods within those
fiscal years. Early adoption is permitted. The Company currently
intends to adopt this guidance for the fiscal year beginning on
January 1, 2019 and does not anticipate that the adoption of
this guidance will have a material impact on its financial
statements or disclosures because the Company does not currently
maintain any stranded tax effects in accumulated other
comprehensive income. |
| Stock Options [Member] | | |
| Fair Value Measurement | | The fair value of stock options is determined on the date of grant
using the Black-Scholes valuation model. For non-performance
awards, such value is recognized as expense over the requisite
service period, net of estimated forfeitures, using the
straight-line method. The amount and timing of compensation expense
recognized for performance awards is based on management’s
estimate of the most likely outcome and when the achievement of the
performance objectives is probable. The determination of the fair
value of stock options is affected by the Company’s stock
price, as well as assumptions regarding a number of complex and
subjective variables. The volatility assumption is based on a
combination of the historical volatility of the Company’s
common stock and the volatilities of similar companies over a
period of time equal to the expected term of the stock options. The
volatilities of similar companies are used in conjunction with the
Company’s historical volatility because of the lack of
sufficient relevant history for the Company’s common stock
equal to the expected term. The expected term of employee stock
options represents the weighted-average period the stock options
are expected to remain outstanding. The expected term assumption is
estimated based primarily on the options’ vesting terms and
remaining contractual life and employees’ expected exercise
and post-vesting employment termination behavior. The risk-free
interest rate assumption is based upon observed interest rates on
the grant date appropriate for the term of the employee stock
options. The dividend yield assumption is based on the expectation
of no future dividend payouts by the Company. |
| Restricted Stock [Member] | | |
| Fair Value Measurement | | The fair value of RSUs awarded under either plan is determined by
the closing price of the Company’s common stock on the date
of grant. For non-performance RSUs, such value is recognized as
expense over the requisite service period, net of estimated
forfeitures, using the straight-line method. The amount and timing
of compensation expense recognized for RSUs is based on
management’s estimate of the most likely outcome and when the
achievement of the performance objectives is probable. |
