Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 29, 2019 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity File Number | 001-35092 | |
Entity Registrant Name | EXACT SCIENCES CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 02-0478229 | |
Entity Address, Address Line One | 441 Charmany Drive | |
Entity Address, City or Town | Madison | |
Entity Address, State or Province | WI | |
Entity Address, Postal Zip Code | 53719 | |
City Area Code | 608 | |
Local Phone Number | 535-8815 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | EXAS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current 1 | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001124140 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 129,485,303 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 205,058 | $ 160,430 |
Marketable securities | 1,034,364 | 963,752 |
Accounts receivable, net | 63,903 | 45,329 |
Inventory, net | 47,781 | 39,148 |
Prepaid expenses and other current assets | 23,690 | 19,408 |
Total current assets | 1,374,796 | 1,228,067 |
Long-term Assets: | ||
Property, plant and equipment, net | 335,499 | 245,259 |
Goodwill and intangibles, net | 45,046 | 46,281 |
Other long-term assets, net | 26,602 | 4,415 |
Total assets | 1,781,943 | 1,524,022 |
Current Liabilities: | ||
Accounts payable | 19,896 | 28,141 |
Accrued liabilities | 151,009 | 100,644 |
Accrued interest | 2,870 | 4,172 |
Convertible notes, net, current portion | 311,598 | |
Debt, current portion | 415 | 8 |
Other short-term liabilities | 6,675 | 3,204 |
Total current liabilities | 492,463 | 136,169 |
Long-term convertible notes, net, less current portion | 469,595 | 664,749 |
Long-term debt, less current portion | 24,429 | 24,494 |
Other long-term liabilities | 29,924 | 17,669 |
Total liabilities | 1,016,411 | 843,081 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.01 par value Authorized-5,000,000 shares issued and outstanding-no shares at June 30, 2019 and December 31, 2018 | ||
Common stock, $0.01 par value Authorized-200,000,000 shares issued and outstanding-129,361,048 and 123,192,540 shares at June 30, 2019 and December 31, 2018 | 1,295 | 1,232 |
Additional paid-in capital | 1,919,719 | 1,716,894 |
Accumulated other comprehensive income (loss) | 1,760 | (1,422) |
Accumulated deficit | (1,157,242) | (1,035,763) |
Total stockholders' equity | 765,532 | 680,941 |
Total liabilities and stockholders' equity | $ 1,781,943 | $ 1,524,022 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, Issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 200,000,000 | 200,000,000 |
Common stock, Issued shares | 129,361,048 | 123,192,540 |
Common stock, outstanding shares | 129,361,048 | 123,192,540 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 199,870,000 | $ 102,894,000 | $ 361,913,000 | $ 193,190,000 |
Cost of sales | 51,563,000 | 26,888,000 | 94,815,000 | 49,802,000 |
Gross margin | 148,307,000 | 76,006,000 | 267,098,000 | 143,388,000 |
Operating expenses: | ||||
Research and development | 30,203,000 | 14,712,000 | 62,219,000 | 29,647,000 |
General and administrative | 63,734,000 | 39,565,000 | 127,764,000 | 75,132,000 |
Sales and marketing | 88,190,000 | 54,431,000 | 179,129,000 | 107,839,000 |
Total operating expenses | 182,127,000 | 108,708,000 | 369,112,000 | 212,618,000 |
Loss from operations | (33,820,000) | (32,702,000) | (102,014,000) | (69,230,000) |
Other income (expense) | ||||
Investment income | 7,669,000 | 4,917,000 | 14,324,000 | 8,590,000 |
Interest expense | (12,712,000) | (8,603,000) | (34,702,000) | (15,113,000) |
Total other expense | (5,043,000) | (3,686,000) | (20,378,000) | (6,523,000) |
Net loss before tax | (38,863,000) | (36,388,000) | (122,392,000) | (75,753,000) |
Income tax benefit (expense) | 443,000 | 1,000 | 913,000 | (58,000) |
Net loss | $ (38,420,000) | $ (36,387,000) | $ (121,479,000) | $ (75,811,000) |
Net loss per share-basic and diluted (in dollars per share) | $ (0.30) | $ (0.30) | $ (0.95) | $ (0.62) |
Weighted average common shares outstanding-basic and diluted (in shares) | 129,182 | 122,129 | 127,723 | 121,578 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Net loss | $ (38,420) | $ (36,387) | $ (121,479) | $ (75,811) |
Other comprehensive loss, before tax: | ||||
Unrealized gain (loss) on available-for-sale investments | 1,952 | 476 | 4,128 | (1,130) |
Foreign currency translation gain | (82) | (18) | 38 | 2 |
Comprehensive loss, before tax | (36,550) | (35,929) | (117,313) | (76,939) |
Income tax expense related to items of other comprehensive loss | (464) | (984) | ||
Comprehensive loss, net of tax | $ (37,014) | $ (35,929) | $ (118,297) | $ (76,939) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders Equity - USD ($) $ in Thousands | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 1,205 | $ 1,380,577 | $ (750) | $ (860,614) | $ 520,418 |
Balance (in shares) at Dec. 31, 2017 | 120,497,426 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity component of convertible notes, net of issuance costs | 189,456 | 189,456 | |||
Exercise of common stock options | $ 4 | 1,387 | 1,391 | ||
Exercise of common stock options (in shares) | 420,129 | ||||
Issuance of common stock to fund the Company's 401(k) match | $ 1 | 4,299 | 4,300 | ||
Issuance of common stock to fund the Company's 401(k) match (in shares) | 86,828 | ||||
Compensation expense related to issuance of stock options and restricted stock awards | $ 9 | 12,454 | 12,463 | ||
Compensation expense related to issuance of stock options and restricted stock awards (in shares) | 862,376 | ||||
Net loss | (39,424) | (39,424) | |||
Accumulated other comprehensive loss | (1,586) | (1,586) | |||
Balance at Mar. 31, 2018 | $ 1,219 | 1,588,173 | (2,336) | (900,038) | 687,018 |
Balance (in shares) at Mar. 31, 2018 | 121,866,759 | ||||
Balance at Dec. 31, 2017 | $ 1,205 | 1,380,577 | (750) | (860,614) | 520,418 |
Balance (in shares) at Dec. 31, 2017 | 120,497,426 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (75,811) | ||||
Accumulated other comprehensive loss | (1,128) | ||||
Balance at Jun. 30, 2018 | $ 1,226 | 1,681,465 | (1,878) | (936,425) | 744,388 |
Balance (in shares) at Jun. 30, 2018 | 122,604,714 | ||||
Balance at Mar. 31, 2018 | $ 1,219 | 1,588,173 | (2,336) | (900,038) | 687,018 |
Balance (in shares) at Mar. 31, 2018 | 121,866,759 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity component of convertible notes, net of issuance costs | 70,788 | 70,788 | |||
Exercise of common stock options | $ 3 | 4,250 | 4,253 | ||
Exercise of common stock options (in shares) | 365,566 | ||||
Issuance of common stock to fund the Company's 401(k) match | 3 | 3 | |||
Issuance of common stock to fund the Company's 401(k) match (in shares) | 54 | ||||
Compensation expense related to issuance of stock options and restricted stock awards | $ 1 | 15,592 | 15,593 | ||
Compensation expense related to issuance of stock options and restricted stock awards (in shares) | 87,322 | ||||
Purchase of employee stock purchase plan shares | $ 3 | 2,659 | 2,662 | ||
Purchase of employee stock purchase plan shares (in shares) | 285,013 | ||||
Net loss | (36,387) | (36,387) | |||
Accumulated other comprehensive loss | 458 | 458 | |||
Balance at Jun. 30, 2018 | $ 1,226 | 1,681,465 | (1,878) | (936,425) | 744,388 |
Balance (in shares) at Jun. 30, 2018 | 122,604,714 | ||||
Balance at Dec. 31, 2018 | $ 1,232 | 1,716,894 | (1,422) | (1,035,763) | $ 680,941 |
Balance (in shares) at Dec. 31, 2018 | 123,192,540 | 123,192,540 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Equity component of convertible notes, net of issuance costs | 268,390 | $ 268,390 | |||
Shares issued to settle convertible notes | $ 22 | 182,413 | 182,435 | ||
Shares issued to settle convertible notes (in shares) | 2,158,991 | ||||
Settlement of convertible notes | (300,768) | (300,768) | |||
Exercise of common stock options | $ 2 | 3,648 | 3,650 | ||
Exercise of common stock options (in shares) | 235,278 | ||||
Issuance of common stock to fund the Company's 401(k) match | $ 1 | 7,408 | 7,409 | ||
Issuance of common stock to fund the Company's 401(k) match (in shares) | 86,532 | ||||
Compensation expense related to issuance of stock options and restricted stock awards | $ 35 | 16,131 | 16,166 | ||
Compensation expense related to issuance of stock options and restricted stock awards (in shares) | 3,410,481 | ||||
Net loss | (83,059) | (83,059) | |||
Accumulated other comprehensive loss | 1,776 | 1,776 | |||
Balance at Mar. 31, 2019 | $ 1,292 | 1,894,116 | 354 | (1,118,822) | 776,940 |
Balance (in shares) at Mar. 31, 2019 | 129,083,822 | ||||
Balance at Dec. 31, 2018 | $ 1,232 | 1,716,894 | (1,422) | (1,035,763) | $ 680,941 |
Balance (in shares) at Dec. 31, 2018 | 123,192,540 | 123,192,540 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Shares issued to settle convertible notes | $ 182,435 | ||||
Shares issued to settle convertible notes (in shares) | 2,158,991 | ||||
Net loss | $ (121,479) | ||||
Balance at Jun. 30, 2019 | $ 1,295 | 1,919,719 | 1,760 | (1,157,242) | $ 765,532 |
Balance (in shares) at Jun. 30, 2019 | 129,361,048 | 129,361,048 | |||
Balance at Mar. 31, 2019 | $ 1,292 | 1,894,116 | 354 | (1,118,822) | $ 776,940 |
Balance (in shares) at Mar. 31, 2019 | 129,083,822 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity component of convertible notes, net of issuance costs | (22) | (22) | |||
Exercise of common stock options | $ 1 | 1,347 | 1,348 | ||
Exercise of common stock options (in shares) | 78,793 | ||||
Compensation expense related to issuance of stock options and restricted stock awards | $ 1 | 20,142 | 20,143 | ||
Compensation expense related to issuance of stock options and restricted stock awards (in shares) | 104,845 | ||||
Purchase of employee stock purchase plan shares | $ 1 | 4,136 | 4,137 | ||
Purchase of employee stock purchase plan shares (in shares) | 93,588 | ||||
Net loss | (38,420) | (38,420) | |||
Accumulated other comprehensive loss | 1,406 | 1,406 | |||
Balance at Jun. 30, 2019 | $ 1,295 | $ 1,919,719 | $ 1,760 | $ (1,157,242) | $ 765,532 |
Balance (in shares) at Jun. 30, 2019 | 129,361,048 | 129,361,048 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (121,479) | $ (75,811) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization of property, plant and equipment | 13,399 | 8,808 |
Loss on disposal of property, plant and equipment | 211 | 96 |
Deferred tax benefit | (984) | |
Stock-based compensation | 36,309 | 28,056 |
Loss on settlement of convertible notes | 10,558 | |
Non-cash lease expense | 1,762 | |
Amortization of liabilities | 18,483 | 10,655 |
Amortization of premium on short-term investments | (2,580) | (1,392) |
Amortization of intangible assets | 1,615 | 1,228 |
Changes in assets and liabilities: | ||
Accrued interest | (1,302) | 4,154 |
Accounts receivable, net | (18,574) | (9,849) |
Inventory, net | (8,633) | (9,382) |
Prepaid expenses and other current assets | (4,282) | (6,410) |
Accounts payable | (8,245) | (5,143) |
Accrued liabilities | 33,487 | (9,798) |
Other short-term liabilities | 84 | 69 |
Other long-term liabilities | 16,980 | 683 |
Other long-term assets | (24,055) | |
Net cash used in operating activities | (57,246) | (64,036) |
Cash flows from investing activities: | ||
Purchases of marketable securities | (511,587) | (894,856) |
Maturities of marketable securities | 447,674 | 245,842 |
Purchases of property, plant and equipment | (79,448) | (44,364) |
Internally developed software | (380) | (131) |
Net cash used in investing activities | (143,741) | (693,509) |
Cash flows from financing activities: | ||
Proceeds from issuance of convertible notes, net | 729,479 | 896,425 |
Proceeds from exercise of common stock options | 4,998 | 5,645 |
Proceeds in connection with the Company's employee stock purchase plan | 4,137 | 2,661 |
Payments on settlement of convertible notes | (493,356) | |
Payments of deferred financing costs | (24) | |
Proceeds from construction loan | 319 | 1,097 |
Payments on mortgage payable | (90) | |
Net cash provided by financing activities | 245,577 | 905,714 |
Effects of exchange rate changes on cash and cash equivalents | 38 | 2 |
Net increase in cash and cash equivalents | 44,628 | 148,171 |
Cash and cash equivalents, beginning of period | 160,430 | 77,491 |
Cash and cash equivalents, end of period | 205,058 | 225,662 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Property, plant and equipment acquired but not paid | 24,402 | 25,021 |
Unrealized gain (loss) on available-for-sale investments, before tax | 4,128 | (1,130) |
Issuance of 86,532 and 86,882 shares of common stock to fund the Company's 401(k) matching contribution for 2018 and 2017, respectively | 7,409 | 4,303 |
Issuance of 2,158,991 shares of common stock upon settlement of convertible notes | 182,435 | |
Retirement of equity component of convertible notes settled | (300,768) | |
Interest paid | $ 5,388 | $ 97 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Parenthetical) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Issuance of shares of common stock to fund the Company's 401(k) matching contribution | 86,532 | 86,882 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2019 | |
ORGANIZATION AND BASIS OF PRESENTATION | (1) ORGANIZATION AND BASIS OF PRESENTATION Organization Exact Sciences Corporation (together with its subsidiaries, “Exact,” or the “Company”) was incorporated in February 1995. Exact is a molecular diagnostics company currently focused on the early detection and prevention of some of the deadliest forms of cancer. The Company has developed an accurate, non-invasive, patient-friendly screening test called Cologuard® for the early detection of colorectal cancer and pre-cancer and is currently working on the development of additional tests for other types of cancer, with the goal of becoming a leader in cancer screening and diagnostics. Basis of Presentation The accompanying condensed consolidated financial statements, which include the accounts of Exact Sciences Corporation and those of its wholly owned subsidiaries and variable interest entities, are unaudited and have been prepared on a basis substantially consistent with the Company’s audited financial statements and notes as of and for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K (the “2018 Form 10-K”). These condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the results of operations have been included. The results of the Company’s operations for any interim period are not necessarily indicative of the results of the Company’s operations for any other interim period or for a full fiscal year. The statements should be read in conjunction with the audited financial statements and related notes included in the 2018 Form 10-K. Management has evaluated subsequent events for disclosure or recognition in the accompanying financial statements up to the filing of this report. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1 The accompanying condensed consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and variable interest entities. See Note 7 for the discussion of financing arrangements involving certain entities that are variable interest entities that are included in the Company’s condensed consolidated financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries. Use of Estimates The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers cash on hand, demand deposits in bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at June 30, 2019 or December 31, 2018. Investments Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight-line method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income. At June 30, 2019 and December 31, 2018, the Company’s marketable securities were comprised of fixed income investments, and all were deemed available-for-sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate, in order to support its current operations (including those with a contractual term greater than The Company periodically reviews investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, the Company’s intent not to sell the security, and whether it is more likely than not that the Company will have to sell the security before recovery of its cost basis. For the six months ended June 30, 2019, no investments were identified with other-than-temporary declines in value. Available-for-sale securities at June 30, 2019 consisted of the following: June 30, 2019 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income (Loss) (1) Income (Loss) (1) Value Marketable securities Corporate bonds $ 447,169 $ 1,368 $ (6) $ 448,531 Asset backed securities 291,973 899 (18) 292,854 U.S. government agency securities 219,811 362 — 220,173 Commercial paper 16,899 — (1) 16,898 Certificates of deposit 55,781 128 (1) 55,908 Total available-for-sale securities $ 1,031,633 $ 2,757 $ (26) $ 1,034,364 (1) Gains and losses in accumulated other comprehensive income (loss) are reported before tax impact. Available-for-sale securities at December 31, 2018 consisted of the following: December 31, 2018 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income (Loss) (1) Income (Loss) (1) Value Corporate bonds $ 392,973 $ 33 $ (719) $ 392,287 Asset backed securities 277,537 30 (568) 276,999 U.S. government agency securities 250,606 43 (178) 250,471 Commercial paper 12,158 — (7) 12,151 Certificates of deposit 31,875 — (31) 31,844 Total available-for-sale securities $ 965,149 $ 106 $ (1,503) $ 963,752 (1) Gains and losses in accumulated other comprehensive income (loss) are reported before tax impact. Changes in Accumulated Other Comprehensive Income (Loss) The amount recognized in accumulated other comprehensive income (loss) (“AOCI”) for the six months ended June 30, 2019 were as follows: Foreign Unrealized Accumulated Currency Gain (Loss) Other Translation on Marketable Comprehensive (In thousands) Adjustments Securities Income (Loss) Balance at December 31, 2018 $ (25) $ (1,397) $ (1,422) Other comprehensive income (loss) before reclassifications 38 3,784 3,822 Amounts reclassified from accumulated other comprehensive loss — 344 344 Net current period change in accumulated other comprehensive loss, before tax 38 4,128 4,166 Income tax expense related to items of other comprehensive income — (984) (984) Balance at June 30, 2019 $ 13 $ 1,747 $ 1,760 The amounts recognized in AOCI for the six months ended June 30, 2018 were as follows: Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive (In thousands) Adjustment on Securities Income (Loss) Balance at December 31, 2017 $ (61) $ (689) $ (750) Other comprehensive loss before reclassifications 2 (1,244) (1,242) Amounts reclassified from accumulated other comprehensive loss — 114 114 Net current period change in accumulated other comprehensive loss 2 (1,130) (1,128) Balance at June 30, 2018 $ (59) $ (1,819) $ (1,878) Amounts reclassified from AOCI for the six months ended June 30, 2019 and 2018 were as follows: Affected Line Item in the Six Months Ended June 30, Details about AOCI Components (In thousands) Statements of Operations 2019 2018 Change in value of available-for-sale investments Sales and maturities of available-for-sale investments Investment income $ 344 $ 114 Total reclassifications $ 344 $ 114 Property, Plant and Equipment Property and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Land is stated at cost and does not depreciate. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of property and equipment are as follows: Estimated June 30, December 31, (In thousands) Useful Life 2019 2018 Property, plant and equipment Land (1) $ 4,466 $ 4,466 Leasehold and building improvements (2) 59,796 38,895 Land improvements 15 years 1,766 1,530 Buildings 30 years 18,086 7,928 Computer equipment and computer software 3 years 38,225 36,969 Laboratory equipment 3 - 10 years 66,347 37,518 Furniture and fixtures 3 years 11,267 8,353 Assets under construction (3) 206,120 167,462 Property, plant and equipment, at cost 406,073 303,121 Accumulated depreciation (70,574) (57,862) Property, plant and equipment, net $ 335,499 $ 245,259 (1) Not depreciated. (2) Lesser of remaining lease term, building life, or useful life. (3) Not depreciated until placed into service. Depreciation expense for the six months ended June 30, 2019 and 2018 was $13.4 million and $8.8 million, respectively. At June 30, 2019, the Company had $206.1 million of assets under construction which consisted of $25.9 million related to laboratory equipment, $166.4 million related to leasehold and building improvements, and $13.8 million related to computer equipment and computer software projects. Depreciation will begin on these assets once they are placed into service. The Company expects to incur an additional $8.3 million to complete the laboratory equipment, $96.5 million to complete the building projects, and $3.3 million to complete the computer equipment and computer software projects. These projects are expected to be completed throughout 2019, 2020 and 2021. The Company assesses its long-lived assets, consisting primarily of property, plant and equipment, for impairment when material events and changes in circumstances indicate that the carrying value may not be recoverable. There were no impairment losses for the periods ended June 30, 2019 and December 31, 2018. Software Capitalization Policy Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs incurred during the application development stage that meet the criteria for capitalization are capitalized and amortized, when the software is ready for its intended use, using the straight-line basis over the estimated useful life of the software. Patent Costs, Intangible Assets and Goodwill Goodwill and Intangible assets consisted of the following: June 30, December 31, (In thousands) 2019 2018 Finite-lived intangible assets Finite-lived intangible assets $ 33,171 $ 33,058 Less: Accumulated amortization (5,722) (4,107) Finite-lived intangible assets, net 27,449 28,951 Internally developed technology in process 318 51 Total finite-lived intangible assets, net 27,767 29,002 Goodwill 17,279 17,279 Goodwill and intangible assets, net $ 45,046 $ 46,281 Finite-Lived Intangible Assets The following table summarizes the net-book-value and estimated remaining life of the Company’s finite-lived intangible assets as of June 30, 2019: Weighted Net Balance at Average June 30, Remaining (In thousands) 2019 Life (Years) Trade name $ 665 14.3 Customer relationships 2,566 14.3 Patents 17,846 9.2 Acquired developed technology 5,836 13.3 Internally developed technology 536 2.4 Total $ 27,449 As of June 30, 2019, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows: (In thousands) 2019 $ 1,614 2020 3,231 2021 3,129 2022 2,967 2023 2,953 Thereafter 13,555 $ 27,449 The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairment losses for periods ended June 30, 2019 and December 31, 2018. Patent costs, which have historically consisted of related legal fees, are capitalized as incurred, only if the Company determines that there is some probable future economic benefit derived from the patent costs incurred. A capitalized patent is amortized over its estimated useful life, beginning when such patent is approved. Capitalized patent costs are expensed upon disapproval, upon a decision by the Company to no longer pursue the patent or when the related intellectual property is either sold or deemed to be no longer of value to the Company. Other than the transactions discussed below, the Company determined that all patent costs incurred during the six months ended June 30, 2019 and 2018 should be expensed and not capitalized as the future economic benefit derived from the patent costs incurred cannot be determined. Under a technology license and royalty agreement entered into with MDx Health (“MDx”), dated July 26, 2010 (as subsequently amended, the “MDx License Agreement”), the Company was required to pay MDx milestone-based royalties on sales of products or services covered by the licensed intellectual property. Once the achievement of a milestone occurred or was considered probable, an intangible asset and corresponding liability was reported in goodwill and intangible assets and accrued liabilities, respectively. The liability was relieved once the milestone was achieved and payment made. The intangible asset is being amortized over the estimated ten-years useful life of the licensed intellectual property through 2024, and such amortization is reported in cost of sales. Payment for all remaining milestones under the MDx License Agreement was made as part of the Royalty Buy-Out Agreement described below. Effective April 2017, the Company and MDx entered into a royalty buy-out agreement (“Royalty Buy-Out Agreement”), which terminated the MDx License Agreement. Pursuant to the Royalty Buy-Out Agreement, the Company paid MDx a one-time fee of million in exchange for an assignment of certain patents covered by the MDx License Agreement and the elimination of all ongoing royalties and other payments by the Company to MDx under the MDx License Agreement. Also included in the Royalty Buy-Out Agreement is a mutual release of liabilities, which includes all amounts previously accrued under the MDx License Agreement. Concurrently with entering into the Royalty Buy-Out Agreement, the Company entered into a patent purchase agreement (“Patent Purchase Agreement”) with MDx under which it paid MDx an additional As of June 30, 2019, and December 31, 2018, an intangible asset of $7.0 million and $7.7 million, respectively, related to historical milestone payments made under the MDx License Agreement and intangible assets acquired as part of the Royalty Buy-Out Agreement and Patent Purchase Agreement is reported in net goodwill and intangible assets on the Company’s condensed consolidated financial statements. Amortization expense was $0.3 million and $0.3 million for the three months ended June 30, 2019 and 2018, respectively. Amortization expense was $0.7 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively. In December 2017, the Company entered into an asset purchase agreement (the “Armune Purchase Agreement”) with Armune BioScience, Inc. (“Armune”), pursuant to which the Company acquired intellectual property and certain other assets underlying Armune’s APIFINY®, APIFINY® PRO and APIFINY® ACTIVE SURVEILLANCE prostate cancer diagnostic tests. The Company has utilized the Armune assets in its research and development program. The total consideration was comprised of an up-front cash payment of $12.0 million and $17.5 million in contingent payment obligations that will become payable upon the Company’s achievement of development and commercial milestones using the acquired intellectual property. The satisfaction of these milestones is subject to many risks and is therefore uncertain. The Company will not record the contingent consideration until it is probable that the milestones will be met. There is no other consideration due to Armune beyond the milestone payments and the Company is not subject to future royalty obligations should a product be developed and commercialized. In connection with the Armune Purchase Agreement, Armune terminated a license agreement pursuant to which it licensed certain patent rights and know-how from the Regents of the University of Michigan (“University of Michigan”), and the Company entered into a license agreement with the University of Michigan with respect to such patent rights and know-how, as well as certain additional intellectual property rights. Pursuant to the Company’s agreement with the University of Michigan, it is required to pay the University of Michigan a low single-digit royalty on its net sales of products using the licensed intellectual property. The Company accounted for the transaction as an asset acquisition under GAAP. The asset is comprised of a portfolio of biomarkers, related technology and know-how, which is a group of complementary assets concentrated in a single identifiable asset. The transaction costs directly related to the asset acquisition were added to the asset in accordance with GAAP. As such, the collective asset value from the acquisition resulted in an intangible asset of $12.2 million. The intellectual property asset, which includes related transaction costs, is being amortized on a straight-line basis over the period the Company expects to be benefited, which is in line with the legal life of the patents acquired. The Company capitalized these costs as there is a reasonable expectation that the assets acquired will be used in an alternative manner in the future, that is not contingent on future development subsequent to acquisition, and the Company anticipates there to be economic benefit from these alternative uses. For the three and six months ended June 30, 2019, the Company recorded amortization expense of $0.2 million and $0.5 million, respectively. For the three and six months ended June 30, 2018, the Company recorded amortization expense of $0.2 million and $0.5 million, respectively. At June 30, 2019 and December 31, 2018, the net balance of $10.8 million and $11.3 million, respectively, is reported in net goodwill and intangible assets in the Company’s condensed consolidated balance sheet. In August 2017, the Company acquired all of the equity interests of Sampleminded, Inc. (“Sampleminded”). As a result of the acquisition, the Company recorded an intangible asset of $1.0 million, which was comprised of developed technology acquired of $0.9 million, customer relationships of $0.1 million, and non-compete agreements of $32,000. The intangible assets acquired are being amortized over the remaining useful life, which was determined to be eight years for developed technology acquired, three years for customer relationships, and five years for non-compete agreements. For the three months ended June 30, 2019 and 2018, the Company recorded amortization expense of $36,000 and $36,000, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded amortization expense of $0.1 million and $0.1 million, respectively. At June 30, 2019 and December 31, 2018, the net balance of $0.7 million and $0.8 million, respectively, is reported in net intangible assets in the Company’s condensed consolidated balance sheets. As more fully described in the 2018 Form 10-K, in October 2018, the Company completed a full acquisition of Biomatrica, Inc. (“Biomatrica”, and the “Biomatrica Acquisition”). As a result of the Biomatrica Acquisition, the Company recorded an intangible asset of $8.8 million which was comprised of acquired developed technology of $5.4 million, customer relationships of $2.7 million, and trade names of $0.7 million. The intangible assets acquired are being amortized over the remaining useful life, which was determined to be fifteen years for the acquired developed technology, fifteen years for the customer relationships, and fifteen years for the trade names. For the three and six months ended June 30, 2019, the Company recorded amortization expense of $0.1 million and $0.3 million, respectively. At June 30, 2019 and December 31, 2018, the net balance of $8.4 million and $8.7 million, respectively, is reported in net goodwill and intangible assets in the Company’s condensed consolidated balance sheets. Goodwill In 2018, the Company recognized goodwill of $15.3 million from the acquisition of Biomatrica. Goodwill is reported in net goodwill and intangible assets in the Company’s condensed consolidated balance sheet. The Company evaluates goodwill impairment on an annual basis, or more frequently should an event or change in circumstance occur that indicates the carrying amount is in excess of the fair value. There were no impairment losses for the periods ended June 30, 2019 and December 31, 2018. Net Loss Per Share Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share is the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive as a result of the Company’s losses. The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period: June 30, (In thousands) 2019 2018 Shares issuable upon exercise of stock options 2,387 2,918 Shares issuable upon the release of restricted stock awards 4,123 6,312 Shares issuable upon conversion of convertible notes 12,197 12,044 18,707 21,274 Revenue Recognition The Company’s revenue is primarily generated by screening services using its Cologuard test, and the service is completed upon delivery of a patient’s test result to the ordering physician. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), which it adopted on January 1, 2018, using the modified retrospective method, which it elected to apply to all contracts. Application of the modified retrospective method 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. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company recognizes revenue from its Cologuard test in accordance with that core principle, and key aspects considered by the Company include the following: Contracts The Company’s customer is the patient. However, the Company does not enter into a formal reimbursement contract with a patient, as formal reimbursement contracts, including a national coverage determination for Cologuard by the Centers for Medicare and Medicaid Services (“CMS”), are established with payers. Accordingly, the Company establishes a contract with a patient in accordance with other customary business practices. ● Approval of a contract is established via the order submitted by the patient’s physician and the return of a sample by the patient. ● The Company is obligated to perform its laboratory services upon receipt of a sample from a patient, 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 requires payment from the patient prior to the Company shipping a collection kit to the patient. ● Once the Company delivers a patient’s test 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 and depending on payer contract status or patient insurance benefit status. ● The Company’s consideration is deemed to be variable, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. 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. 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 Cologuard test result to the ordering physician. The duration of time between sample receipt and delivery of a valid test result to the ordering physician is typically less than two weeks. Accordingly, the Company elects the practical expedient and therefore, the Company 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 (for example, some sales taxes). The consideration expected from a contract with a customer may include fixed amounts, variable amounts, or both. The consideration derived from the Company’s contracts is deemed to be variable, though the variability is not explicitly stated in any contract. Rather, the implied variability is due to several factors, such as the amount of contractual adjustments, any patient co-payments, deductibles or patient compliance incentives, the existence of secondary payers and claim denials. The Company estimates the amount of variable consideration using the expected value method, which represents the sum of probability-weighted amounts in a range of possible consideration amounts. When estimating the amount of variable consideration, the Company considers several factors, such as historical collections experience, patient insurance eligibility and payer reimbursement contracts. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue 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. Revenue recognized from changes in transaction prices was 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 patient, it will account for the change as an increase in the estimate of the transaction price (i.e., an upward revenue adjustment) in the period identified. Similarly, if the Company subsequently determines that the amount it expects to collect from a patient is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price (i.e., a downward revenue adjustment), provided that such downward adjustment does not result in a significant reversal of cumulative revenue recognized. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of a patient’s Cologuard test result to the ordering physician, with recognition, generally occurring at the date of cash receipt. Allocate transaction price The transaction price is allocated entirely to the performance obligation contained within the contract with a patient. 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 test result is delivered to the patient’s ordering physician. The Company considers this date to be the time at which the patient obtains control of the promised Cologuard test service. Disaggregation of Revenue The following table presents the Company’s revenues disaggregated by revenue source for the three and six months ended June 30, 2019 and 2018, respectively: Three Months Ended June 30, (In thousands) 2019 2018 Medicare Parts B & C $ 103,569 $ 59,706 Commercial 88,818 39,589 Other 7,483 3,599 Total $ 199,870 $ 102,894 Six Months Ended June 30, (In thousands) 2019 2018 Medicare Parts B & C $ 186,486 $ 112,181 Commercial 162,169 74,423 Other 13,258 6,586 Total $ 361,913 $ 193,190 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets. Generally, billing occurs subsequent to delivery of a patient’s test result to the ordering physician, resulting in an account receivable. However, the Company sometimes receives advance payment from a patient, particularly a self-pay patient, before a Cologuard test result is completed, resulting in deferred revenue. The deferred revenue balance is relieved upon delivery of the applicable patient’s test result to the ordering physician. Changes in accounts receivable and deferred revenue were not materially impacted by any other factors. Deferred revenue balances are reported in other short-term liabilities in the Company’s condensed consolidated balance sheets and were $0.7 million and $0.5 million as of June 30, 2019 and December 31, 2018, respectively. Revenue recognized for the three months ended June 30, 2019 and 2018, which was included in the deferred revenue balance at the beginning of each period was $0.2 million and $0.1 million, respectively. Revenue recognized for the six months ended June 30, 2019 and 2018, which was included in the deferred revenue balance at the beginning of each period was $0.3 million and $0.1 million, respectively. 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 would have been one year or less. These costs are recorded within sales and marketing expenses in the Company’s condensed consolidated statements of operations. 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 (e.g. compliance reminder letters). These costs are expensed as incurred and recorded within general and administrative expenses in the Company’s condensed consolidated statements of operations. Inventory Inventory is stated at the lower of cost or market value (net realizable value). The Com |
MAYO LICENSE AGREEMENT
MAYO LICENSE AGREEMENT | 6 Months Ended |
Jun. 30, 2019 | |
MAYO LICENSE AGREEMENT | (3) MAYO LICENSE AGREEMENT Overview As more fully described in the 2018 Form 10-K, in June 2009 the Company entered into a license agreement with Mayo Foundation for Medical Education and Research (“Mayo”). The Company’s license agreement with Mayo was amended and restated in February 2015 and further amended in January 2016, October 2017, and January 2019. Under the license agreement, Mayo granted the Company an exclusive, worldwide license to certain Mayo patents and patent applications, as well as a non-exclusive, worldwide license with regard to certain Mayo know-how. The scope of the license, as amended, covers any screening, surveillance or diagnostic test or tool for use in connection with any type of cancer, pre-cancer, disease or condition. Pursuant to the Company’s agreement with Mayo, the Company is required to pay Mayo a low-single-digit royalty on the Company’s net sales of products using the licensed Mayo intellectual property, with minimum annual royalty fees of $25,000 each year through 2033, the year the last patent expires. The January 2016 amendment to the Mayo license agreement established various low-single-digit royalty rates on net sales of current and future products and clarified how net sales will be calculated. As part of the October 2017 amendment, the royalty rate on the Company’s net sales of Cologuard increased and, if in the future, improvements are made to the Cologuard product, the royalty rate may further increase, but pursuant to the terms of the January 2016 and October 2017 amendment, the rate remains a low-single-digit percentage of net sales. In addition to royalties, the Company is required to pay Mayo cash of $0.2 million, $0.8 million and $2.0 million upon each product using the licensed Mayo intellectual property reaching $5.0 million, $20.0 million and $50.0 million in cumulative net sales, respectively. As part of the February 2015 amendment and restatement of the license agreement, the Company agreed to pay Mayo an additional $5.0 million, payable in five annual installments, through 2019. The Company paid Mayo the annual installment of $1.0 million in the first quarter of each of 2015, 2016, 2018, and 2019. The Company paid Mayo the 2017 installment in December 2016. The Company records the $1.0 million installments to prepaid expenses and other current assets and amortizes each installment over a twelve-month period commencing on February 1 of each year. For the three and six months ended June 30, 2019 and 2018 the Company has recorded $0.3 million and $0.5 million in amortization of the installments, respectively. In addition, the Company is paying Mayo for research and development efforts. As part of the Company’s research collaboration with Mayo, the Company incurred charges of $1.1 million and $2.6 million for the three and six months ended June 30, 2019. The Company made payments of $1.8 million and $2.9 million for the three and six months ended June 30, 2019. The Company recorded an estimated liability of $1.6 million for research and development efforts as of June 30, 2019. The Company incurred charges of $1.4 million and $2.6 million for the three and six months ended June 30, 2018. The Company made payments of $0.8 million and $2.6 million for the three and six months ended June 30, 2018. The Company recorded an estimated liability of $1.8 million for research and development efforts as of June 30, 2018. |
PFIZER PROMOTION AGREEMENT
PFIZER PROMOTION AGREEMENT | 6 Months Ended |
Jun. 30, 2019 | |
PFIZER PROMOTION AGREEMENT | (4) PFIZER PROMOTION AGREEMENT In August 2018, the Company entered into a Promotion Agreement (“Promotion Agreement”) with Pfizer Inc. (“Pfizer”). Under the terms of the Promotion Agreement, Pfizer will promote Cologuard and provide certain sales, marketing, analytical and other commercial operations support services. The Company and Pfizer committed in the Promotion Agreement to invest specified amounts in the advertising and promotion of Cologuard. The Company agreed to pay Pfizer for promotion, sales and marketing costs incurred on behalf of the Company. The Company incurred charges of $16.6 million and $33.9 million for promotion, sales and marketing services performed by Pfizer on behalf of the Company during the three and six months ended June 30, 2019. The Company recorded a liability of $16.6 million and $0.5 million for promotion, sales and marketing services performed by Pfizer on behalf of the Company in accrued liabilities in the Company’s condensed consolidated balance sheets as of June 30, 2019 and December 31, 2018, respectively. These costs are recorded in sales and marketing in the Company’s condensed consolidated statements of operations. The Company also agreed to pay Pfizer a service fee based on incremental gross profits over specified baselines during the term and royalties for Cologuard related revenues for a specified period after the expiration or termination of the Promotion Agreement. The initial term of the Promotion Agreement runs through December 31, 2021. The Company incurred charges of $19.4 million and $38.6 million for this service fee during the three and six months ended June 30, 2019. These costs are recorded in sales and marketing in the Company’s condensed consolidated statements of operations. The Company recorded a liability of $43.4 million and $4.8 million for the service fee earned by Pfizer as of June 30, 2019 and December 31, 2018, respectively, in accrued liabilities in the Company’s condensed consolidated balance sheets. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2019 | |
STOCK-BASED COMPENSATION | (5) STOCK-BASED COMPENSATION Stock-Based Compensation Plans The Company maintains the 2019 Omnibus Long-Term Incentive Plan, the 2010 Omnibus Long-Term Incentive Plan (As Amended and Restated Effective July 27, 2017), the 2010 Employee Stock Purchase Plan, the 2015 Inducement Award Plan, the 2016 Inducement Award Plan and the 2000 Stock Option and Incentive Plan (collectively, the “Stock Plans”). At the Company’s 2019 Annual Stockholders Meeting held July 25, 2019, the Company’s stockholders approved the Company’s 2019 Omnibus Long-Term Incentive Plan. Stock-Based Compensation Expense The Company records stock-based compensation expense in connection with the amortization of restricted stock and restricted stock unit awards (“RSUs”), stock purchase rights granted under the Company’s employee stock purchase plan and stock options granted to employees, non-employee consultants and non-employee directors. The Company recorded $20.1 million and $36.3 million in stock-based compensation expense during the three and six months ended June 30, 2019. The Company recorded $15.6 million and $28.1 million in stock-based compensation expense during the three and six months ended June 30, 2018. In connection with the April 2018 transition of the Company’s former Chief Operating Officer, the Company accelerated the vesting of 69,950 shares under his previously unvested stock options and 54,350 shares under his previously unvested restricted stock units whereby such unvested stock options and unvested restricted stock units vested on December 31, 2018. It was determined that the continuing service to be provided by the Company’s Chief Operating Officer to the Company through December 31, 2018 was substantive and, as a result, the Company recognized the additional non-cash stock-based compensation expense for the modified awards evenly over the transition term of April 25, 2018 through December 31, 2018. During the transition period in 2018, the Company recorded $3.9 million of non-cash stock-based compensation expense for the modified awards. In February 2019, the Company issued performance-based equity awards to certain employees which vest upon the achievement of certain performance goals, including financial performance targets and operational milestones. Determining the appropriate amount to expense based on the anticipated achievement of the stated goals requires judgment, including forecasting future financial results. The estimate of the timing of the expense recognition is revised periodically based on the probability of achieving the goals and adjustments are made as appropriate. The cumulative impact of any revision is reflected in the period of the change. If the financial performance targets or operational milestones are not achieved, the award does not vest, so no compensation cost is recognized and any previously recognized stock-based compensation expense is reversed. Determining Fair Value Valuation and Recognition – The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of each market measure-based award is estimated on the date of grant using a Monte Carlo simulation pricing model. The fair value of service-based awards for each restricted stock unit award is determined on the date of grant using the closing stock price on that day. The estimated fair value of these awards is recognized to expense using the straight-line method over the vesting period. The Black-Scholes and Monte Carlo pricing models utilize the following assumptions: Expected Term – Expected life of an option award is the average length of time over which the Company expects employees will exercise their options, which is based on historical experience with similar grants. Expected life of a market measure-based award is based on the applicable performance period. Expected Volatility - Expected volatility is based on the Company’s historical stock volatility data over the expected term of the awards. Risk-Free Interest Rate - The Company bases the risk-free interest rate used in the Black-Scholes and Monte Carlo valuation models on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent expected term. Forfeitures - The Company records the effects of actual forfeitures at the time they occur. The fair value of each option and market measure-based award is based on the assumptions in the following table: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Option Plan Shares Risk-free interest rates (1) (1) 2.54% - 2.59% 2.73% - 2.79% Expected term (in years) (1) (1) 6.28 5.45 - 6.44 Expected volatility (1) (1) 64.95% - 65.00% 61.82% - 66.17% Dividend yield (1) (1) 0 % 0 % Weighted average fair value per share of options granted during the period (1) (1) $ 57.11 $ 24.55 ESPP Shares Risk-free interest rates 2.31% - 2.44% 2.05% - 2.50% 2.31% - 2.44% 2.05% - 2.50% Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 55.0% - 57.6% 51.7% - 65.4% 55.0% - 57.6% 51.7% - 65.4% Dividend yield 0 % 0 % 0 % 0 % Weighted average fair value per share of stock purchase rights granted during the period $ 35.91 $ 18.68 $ 35.91 $ 18.68 Stock Option, Restricted Stock, and Restricted Stock Unit Activity A summary of stock option activity under the Stock Plans during the six months ended June 30, 2019 is as follows: Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (Years) Value(1) (Aggregate intrinsic value in thousands) Outstanding, January 1, 2019 2,531,561 $ 17.86 6.3 Granted 186,044 92.61 Exercised (314,071) 15.91 Forfeited (16,548) 32.35 Outstanding, June 30, 2019 2,386,986 $ 23.84 6.6 $ 224,845 Exercisable, June 30, 2019 1,431,015 $ 14.35 5.6 $ 148,385 (1) The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices that were lower than the $118.04 market price of the Company’s common stock at June 28, 2019. The total intrinsic value of options exercised during the six months ended June 30, 2019 and 2018 was $22.6 million and $36.3 million, respectively. As of June 30, 2019, there was $198.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all Stock Plans. Total unrecognized compensation cost will be adjusted for future forfeitures. The Company expects to recognize that cost over a weighted average period of 3.0 years. A summary of restricted stock and restricted stock unit activity under the Stock Plans during the six months ended June 30, 2019 is as follows: Weighted Restricted Average Grant Shares and RSUs Date Fair Value Outstanding, January 1, 2019 6,246,174 $ 23.16 Granted 1,513,290 91.36 Released (3,506,123) 11.52 Forfeited (130,125) 54.17 Outstanding, June 30, 2019 4,123,216 $ 57.49 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2019 | |
FAIR VALUE MEASUREMENTS | (6) FAIR VALUE MEASUREMENTS The Financial Accounting Standards Board (“FASB”) has issued authoritative guidance that requires fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under that standard, fair value measurements are separately disclosed by level within the fair value hierarchy. The fair value hierarchy establishes and prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three levels of the fair value hierarchy established are as follows: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3 Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available. Fixed-income securities are valued using a third-party pricing agency. The valuation is based on observable inputs including pricing for similar assets and other observable market factors. There has been no material pricing change from period to period. The estimated fair value of the Company’s long-term debt represents a Level 2 measurement. When determining the estimated fair value of the Company’s long-term debt, the Company used market-based risk measurements, such as credit risk. The fair value of contingent consideration related to the Biomatrica Acquisition was categorized as a Level 3 liability, as the measurement amount is based primarily on significant inputs not observable in the market. The Company assesses the fair value of expected contingent consideration and the corresponding liability each annual reporting period using the Monte Carlo Method, which is consistent with the initial measurement of the expected Biomatrica Acquisition earn-out liability. This fair value measurement is considered a Level 3 measurement because the Company estimates projections during the earn-out period utilizing various potential pay-out scenarios. Probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the earn out itself, the related projections, and the overall business. The contingent earn-out liability is classified as a component of other long-term liabilities in the Company’s condensed consolidated balance sheet. There were no changes in the fair value assessed between the acquisition date and June 30, 2019, however, there was an earn-out payment made during that time resulting in a decrease in the liability at June 30, 2019. The following table presents the Company’s fair value measurements as of June 30, 2019 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair Value Measurement at June 30, 2019 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs (In thousands) June 30, 2019 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ 125,471 $ 125,471 $ — $ — U.S. government agency securities 61,357 — 61,357 — Commercial paper 18,230 — 18,230 — Available-for-sale Marketable securities Corporate bonds 448,531 — 448,531 — Asset backed securities 292,854 — 292,854 — U.S. government agency securities 220,173 — 220,173 — Certificates of deposit 55,908 — 55,908 — Commercial paper 16,898 — 16,898 — Other long-term assets Deferred compensation plan assets 230 — 230 — Contingent consideration (2,942) — — (2,942) Total $ 1,236,710 $ 125,471 $ 1,114,181 $ (2,942) The following table presents the Company’s fair value measurements as of December 31, 2018 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair Value Measurement at December 31, 2018 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs (In thousands) December 31, 2018 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ 86,375 $ 86,375 $ — $ — U.S. government agency securities 49,985 — 49,985 — Commercial paper 24,070 — 24,070 — Available-for-sale Marketable securities Corporate bonds 392,287 — 392,287 — Asset backed securities 276,999 — 276,999 — U.S. government agency securities 250,471 — 250,471 — Certificates of deposit 31,844 — 31,844 — Commercial paper 12,151 — 12,151 — Contingent consideration (3,060) — — (3,060) Total $ 1,121,122 $ 86,375 $ 1,037,807 $ (3,060) The Company monitors investments for other-than-temporary impairment. It was determined that unrealized gains and losses as of June 30, 2019 and December 31, 2018 are temporary in nature because the change in market value for those securities has resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers. So long as the Company holds these securities to maturity, it is unlikely to experience gains or losses. In the event that the Company disposes of these securities before maturity, it is expected that realized gains or losses, if any, will be immaterial. The following table summarizes the gross unrealized losses and fair values of investments in an unrealized loss position as of June 30, 2019, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: June 30, 2019 Less than 12 months 12 months or greater Total (In thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Marketable securities Corporate bonds $ 27,195 $ (3) $ 2,500 $ (3) $ 29,695 $ (6) U.S. government agency securities — — — — — — Asset backed securities 16,774 (3) 32,660 (15) 49,434 (18) Certificates of deposit 5,004 (1) — — 5,004 (1) Commercial paper 16,898 (1) — — 16,898 (1) Total $ 65,871 $ (8) $ 35,160 $ (18) $ 101,031 $ (26) The following table summarizes contractual underlying maturities of the Company’s available-for-sale investments at June 30, 2019: Due one year or less Due after one year through four years (In thousands) Cost Fair Value Cost Fair Value Marketable securities Corporate bonds $ 208,610 208,852 238,559 239,679 U.S. government agency securities 164,809 165,153 55,002 55,020 Asset backed securities 77,717 77,862 214,256 214,992 Certificates of deposit 46,856 46,928 8,925 8,980 Commercial paper 16,899 16,898 — — Total $ 514,891 $ 515,693 $ 516,742 $ 518,671 Fair Value of Long-Term Debt and Convertible Notes The Company measures the fair value of its convertible notes and long-term debt for disclosure purposes. The following table summarizes the Company’s outstanding convertible notes and long-term debt as of June 30, 2019 and December 31, 2018: June 30, 2019 December 31, 2018 (In thousands) Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value 2027 Convertible notes (2) $ 469,595 $ 916,158 $ — $ — 2025 Convertible notes (2) 311,598 696,337 664,749 956,196 Construction loan (3) 24,844 24,844 24,502 24,502 (1) The carrying amounts presented are net of debt discounts and debt issuance costs (see Note 8 and Note 11 of the condensed consolidated financial statements for further information). (2) The fair values are based on observable market prices for this debt, which is traded in active markets and therefore is classified as a Level 2 fair value measurement. (3) The carrying amount of the construction loan approximates fair value due to the short-term nature of this instrument. The construction loan is privately held with no public market for this debt and therefore is classified as a Level 3 fair value measurement. |
NEW MARKET TAX CREDIT
NEW MARKET TAX CREDIT | 6 Months Ended |
Jun. 30, 2019 | |
NEW MARKET TAX CREDIT | (7) NEW MARKET TAX CREDIT As more fully described in the 2018 Form 10-K, during the fourth quarter of 2014, the Company received approximately $2.4 million in net proceeds from financing agreements related to working capital and capital improvements at one of its Madison, Wisconsin facilities. This financing arrangement was structured with an unrelated third-party financial institution, an investment fund, and its majority owned community development entity in connection with the Company’s participation in transactions qualified under the federal New Markets Tax Credit (“NMTC”) program, pursuant to Section 45D of the Internal Revenue Code of 1986, as amended. The $2.4 million was recorded in other long-term liabilities on the Company’s condensed consolidated balance sheets. The benefit of this net $2.4 million contribution will be recognized as a decrease in expenses, included in cost of sales, as the Company amortizes the contribution liability over the seven-year compliance period as it is being earned through the Company’s on-going compliance with the conditions of the NMTC program. The Company has recorded $0.1 million and $0.2 million as a decrease of expenses for the three and six months ended June 30, 2019. At June 30, 2019, the remaining balance of $0.8 million is included in other long-term liabilities in the Company’s condensed consolidated balance sheets. The Company recorded $0.1 million and $0.2 million as a decrease of expenses for the three and six months ended June 30, 2018. At June 30, 2018, the remaining balance of $1.2 million was included in other long-term liabilities in the Company’s condensed consolidated balance sheets. The Company incurred approximately $0.2 million of debt issuance costs related to the above transactions, which are recorded as a direct deduction from the liability. The debt issuance costs are being amortized over the life of the agreements. |
LONG-TERM DEBT
LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2019 | |
LONG-TERM DEBT | (8) LONG-TERM DEBT Building Purchase Mortgage During June 2015, the Company entered into a $5.1 million credit agreement with a third-party financial institution to finance the purchase of a research and development building located in Madison, Wisconsin. The credit agreement was collateralized by the acquired building. In September 2018, the Company entered into a Purchase and Sale Agreement with a third-party to sell its research and development building. The Company also simultaneously entered into a Master Lease Agreement with the third-party to lease the facility back. The sale-leaseback arrangement is recorded under the financing method of accounting as the Company has continuing involvement in planned expansions of the building and construction of the adjacent corporate headquarters building. Under the financing method, the Company does not recognize the proceeds received from the third party as a sale of the building. The facility remains in property, plant and equipment on the Company’s condensed consolidated balance sheet, and the consideration of $6.8 million received in the sale is recorded as a financing obligation in other long-term liabilities on the Company’s condensed consolidated balance sheet as of June 30, 2019. A portion of the proceeds received from the sale were used to repay the mortgage on the building, and as of September 2018, the $4.5 million outstanding balance of the mortgage had been fully repaid in connection with the termination of the credit agreement. The remaining proceeds were utilized to fund the initial construction of the Company’s corporate headquarters discussed in more detail in Note 9. Prior to the repayment in September 2018, borrowings under the credit agreement bore interest at 4.15 percent. The Company made interest-only payments on the outstanding principal balance for the period between July 12, 2015 and September 12, 2015. The credit agreement required the Company to make, beginning on October 12, 2015 and continuing through May 12, 2019, monthly principal and interest payments of $31,000, and a final principal and interest payment of $4.4 million would have been due on the maturity date of June 12, 2019. Additionally, the Company previously recorded $0.1 million in deferred financing costs, which were recorded as a direct deduction from the mortgage liability. The issuance costs were being amortized through June 12, 2019. The Company recorded $4,000 and $9,000 in amortization of mortgage issuance costs for the three and six months ended June 30, 2018. As a result of the sale of the research and development building, the outstanding balance of the mortgage issuance costs was written down to $0 during the third quarter of 2018. As such there is no outstanding balance as of June 30, 2019. Revolving Loan Agreement During December 2017, the Company entered into a revolving loan agreement (the “Revolving Loan Agreement”) with Fifth Third Bank (formerly MB Financial Bank, N.A.). The Revolving Loan Agreement provides the Company with a 24-month secured revolving credit facility of up to $15.0 million (the “Revolver”). The Revolver is collateralized by the Company’s accounts receivable and inventory. The Revolver is available for general working capital purposes and all other lawful corporate purposes, provided that the Company may not use the Revolver to purchase or carry margin stock. Borrowings under the Revolving Loan Agreement accrue interest at one of the following per annum rates, as elected by the Company (i) the sum of the 1-month LIBOR rate plus 2.00 percent, (ii) the sum of the 3-month LIBOR rate plus 2.00 percent, or (iii) the Fifth Third Reference Rate minus 0.5 percent. Loans under the Revolving Loan Agreement may be prepaid at any time without penalty. The Revolver’s maturity date is December 10, 2019. The Company has agreed in the Revolving Loan Agreement to various financial covenants including minimum liquidity and minimum tangible net worth. As of June 30, 2019, the Company is in compliance with all covenants. As of June 30, 2019, the Company has not drawn funds from, nor are any amounts outstanding under, the Revolving Loan Agreement. Construction Loan Agreement During December 2017, the Company entered into a loan agreement with Fifth Third Bank (formerly MB Financial Bank, N.A.) (the “Construction Loan Agreement”), which provides the Company with a non-revolving construction loan (the “Construction Loan”) of $25.6 million. The Company is using the Construction Loan proceeds to finance the construction of an additional clinical laboratory and related facilities in Madison, Wisconsin. The Construction Loan is collateralized by the additional clinical laboratory and related facilities. Pursuant to the Construction Loan Agreement, funds drawn will bear interest at a rate equal to the sum of the 1-month LIBOR rate plus 2.25 percent. Regular monthly payments are interest-only for the first 24 months, with further payments based on a 20-year amortization schedule. Amounts borrowed pursuant to the Construction Loan Agreement may be prepaid at any time without penalty. The maturity date of the Construction Loan Agreement is December 10, 2022. In November 2017, Fifth Third Bank, on behalf of the Company, issued an Irrevocable Standby Letter of Credit in the amount of $0.6 million in favor of the City of Madison, Wisconsin (the “City Letter of Credit”). The City Letter of Credit is deemed to have been issued pursuant to the Construction Loan Agreement. The amount of the City Letter of Credit will reduce, dollar for dollar, the amount available for borrowing under the Construction Loan Agreement. As a condition to Fifth Third’s initial advance of loan proceeds under the Construction Loan Agreement, the Company was required to first invest at least $16.4 million of its own cash into the construction project. The Company fulfilled its required initial investment and made its first draw on the Construction Loan in June 2018. In accordance with the Construction Loan Agreement, the Company will make monthly interest-only payments through November 2019. The Company has made interest-only payments of $0.2 million during the three and six months ended June 30, 2019. Starting in December 2019, the Company will make monthly payments towards the outstanding principal balance due plus accrued interest. As of June 30, 2019, the Company has drawn $25.0 million from the Construction Loan, including $0.7 million of interest incurred, which is accrued for as an interest reserve and represents a portion of the $25.0 million loan balance as of June 30, 2019. The Company capitalized the $0.7 million to the construction project. As of December 31, 2018, the Company had drawn $24.7 million from the Construction Loan. Additionally, the Company has recorded deferred financing costs of $0.2 million related to the Construction Loan. These deferred financing costs are recorded as a reduction to long-term debt in the Company’s condensed consolidated balance sheets. The deferred financing costs are being amortized through December 10, 2022. The Company has recorded $11,000 and $23,000 in amortization of deferred financing costs related to the Construction Loan for the three and six months ended June 30, 2019. The Company recorded $11,000 and $23,000 in amortization of deferred financing costs for the three and six months ended June 30, 2018. The Company has agreed in the Construction Loan Agreement to various financial covenants including minimum liquidity and minimum tangible net worth. As of June 30, 2019, the Company is in compliance with all covenants. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | (9) COMMITMENTS AND CONTINGENCIES The Company acts as lessee under all its lease agreements, which includes operating leases for corporate offices, lab space, warehouse space, vehicles and certain lab and office equipment. As of June 30, 2019, the Company is not a party to any finance leases. The leases have remaining lease terms of 1 year to 6 years, some of which include options to extend the lease for up to 10 years, and some of which include options to terminate the lease within 1 year. The Company includes any renewal or termination option in its lease payment calculations if it is reasonably certain to exercise the option. “Reasonably certain” is assessed internally based on economic, industry, company, strategic and contractual factors. The components of lease expense for the three and six months ended June 30, 2019 were as follows: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2019 2019 Operating lease cost (cost resulting from lease payments) $ 1,306 $ 2,392 Short-term lease cost 42 103 $ 1,348 $ 2,495 Certain vehicle leases include variable lease payments that depend on an index or rate. Those lease payments are initially measured using the index or rate at the lease commencement date. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the U.S. Treasury rate and an indicative Moody’s rating for operating leases. The Company’s weighted average discount rate and weighted average lease term remaining on lease liabilities is approximately 7.82% and 5.96 years, respectively. The Company had operating cash outflows from operating leases of $1.3 million and $2.4 million related to leases for the three and six months ended June 30, 2019. As of June 30, 2019, the Company’s right-of-use assets are $21.7 million, which are reported in other long-term assets in the Company’s condensed consolidated balance sheet. As of June 30, 2019, the Company has outstanding lease obligations of $20.6 million, of which $3.7 million is reported in other short-term liabilities and $16.9 million is reported in long-term obligations in the Company’s condensed consolidated balance sheet. The Company has taken advantage of certain practical expedients offered to registrants at adoption of ASC 842. The Company does not apply the recognition requirements of ASC 842 to short-term leases and sub leases. Instead, those lease payments are recognized in profit or loss on a straight-line basis over the lease term. Further, as a practical expedient, all lease contracts are accounted for as one single lease component, as opposed to separating lease and non-lease components to allocate the consideration within a single lease contract. Maturities of operating lease liabilities as of June 30, 2019 were as follows: (In thousands) 2019 $ 5,075 2020 4,585 2021 3,910 2022 3,768 2023 3,779 Thereafter 7,156 Total minimum lease payments 28,273 Imputed interest (7,688) Total $ 20,585 The Company evaluates whether it is the accounting owner of leased assets during the construction period when it is involved in the construction of the leased asset. Due to the funding provided by the Company for costs related to the construction of its new headquarters, as of December 31, 2018, the Company was considered, for accounting purposes only, the owner of the construction project in accordance with build-to-suit accounting under the accounting guidance that was superseded by ASC 842 on January 1, 2019. As of December 31, 2018, the Company had contributed $2.7 million towards the project. All project construction costs paid by the landlord were accounted for as assets under construction. As of December 31, 2018, the landlord funded $3.9 million towards construction costs related to this project, of which $2.1 million was included as a financing obligation and recorded in other long-term liabilities and $1.8 million was included as a financing obligation and recorded in accrued expenses in the Company’s condensed consolidated balance sheets. Upon transition to ASC 842 on January 1, 2019, the Company is no longer considered to be the owner of the construction project under build-to-suit accounting. As such, the amounts funded by the landlord, previously recognized as an asset under construction and corresponding financing obligation, have been de-recognized. The Company’s new headquarters building is expected to be completed in 2020. Upon completion, the Company will lease the building for an initial term of 15 years with an option to extend for an additional 10 years. Construction of the building is the responsibility of the landlord; however, the Company has funded $4.5 million towards construction costs as of June 30, 2019. This contribution is accounted for as prepaid rent and will be included in the beginning right-of-use asset balance of the leased building. The Company can also receive up to $5.5 million as a tenant improvement allowance. The reimbursement will be accounted for as prepaid rent and will decrease the beginning right-of-use asset balance of the leased building. As of June 30, 2019, the Company earned $1.1 million of the available tenant improvement allowance. The Company anticipates an additional $32.2 million to be recognized at lease commencement for the right-of-use asset and lease liability, respectively. |
WISCONSIN ECONOMIC DEVELOPMENT
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDITS | 6 Months Ended |
Jun. 30, 2019 | |
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDITS | (10) WISCONSIN ECONOMIC DEVELOPMENT TAX CREDITS During the first quarter of 2015, the Company entered into an agreement with the Wisconsin Economic Development Corporation (“WEDC”) to earn $9.0 million in refundable tax credits if the Company expends $26.3 million in capital investments and establishes and maintains 758 full-time positions over a seven-year period. The tax credits earned are first applied against the tax liability otherwise due, and if there is no such liability present, the claim for tax credits will be reimbursed in cash to the Company. The maximum amount of the refundable tax credit to be earned for each year is fixed, and the Company earns the credits by meeting certain capital investment and job creation thresholds over the The Company records the earned tax credits as job creation and capital investments occur. The amount of tax credits earned is recorded as a liability and amortized as a reduction of operating expenses over the expected period of benefit. The tax credits earned from capital investment are recognized as an offset to depreciation expense over the expected life of the acquired capital assets. The tax credits earned related to job creation are recognized as an offset to operational expenses over the life of the agreement, as the Company is required to maintain the minimum level of full-time positions through the seven-year period. As of June 30, 2019, the Company has earned $9.0 million of tax credits and has received payment of $4.3 million from the WEDC. The unpaid portion is $4.7 million, of which $1.6 million is reported in prepaid expenses and other current assets and $3.1 million is reported in other long-term assets, reflecting when collection of the refundable tax credits is expected to occur. As of June 30, 2019, the Company also has recorded a $2.4 million liability in other short-term liabilities and a $1.0 million liability in other long-term liabilities, reflecting when the expected benefit of the tax credit amortization will reduce future operating expenses. During the three and six months ended June 30, 2019, the Company amortized $0.6 million and $1.2 million, respectively, of the tax credits earned as a reduction of operating expenses. During the three and six months ended June 30, 2018, the Company amortized $0.4 million and $1.0 million, respectively, of the tax credits earned as a reduction of operating expenses. |
CONVERTIBLE NOTES
CONVERTIBLE NOTES | 6 Months Ended |
Jun. 30, 2019 | |
CONVERTIBLE NOTES | (11) CONVERTIBLE NOTES Convertible note obligations included in the condensed consolidated balance sheets consisted of the following: (In thousands) Coupon Interest Rate Effective Interest Rate Fair Value of Liability Component at Issuance (1) June 30, 2019 December 31, 2018 2027 Convertible notes 0.375% 6.3% $ 472,501 $ 747,500 $ — 2025 Convertible notes 1.000% 6.0% 299,188 415,104 908,500 Total Convertible notes 1,162,604 908,500 Less: Debt discount (2) (363,603) (227,403) Less: Debt issuance costs (3) (17,808) (16,348) Net convertible debt including current maturities 781,193 664,749 Less: Current maturities (4) (311,598) — Net long-term convertible debt $ 469,595 $ 664,749 (1) As each of the convertible instruments may be settled in cash upon conversion, for accounting purposes, they were bifurcated into a liability component and an equity component, which are both initially recorded at fair value. The amount allocated to the equity component is the difference between the principal value of the instrument and the fair value of the liability component at issuance. The resulting debt discount is being amortized to interest expense at the respective effective interest rate over the contractual term of the debt. In March 2019 a portion of the 2025 Convertible Notes were extinguished. The fair value of the liability component at issuance reflected above represents the liability value at issuance for the applicable portion of the 2025 Notes which remain outstanding at June 30, 2019. The fair value of the liability component of the 2025 Notes at December 31, 2018 was $654.8 million with the equity component being $269.7 million including a $14.2 million premium. (2) The unamortized discount consists of the following: (In thousands) June 30, 2019 December 31, 2018 2027 Convertible notes $ 266,952 $ — 2025 Convertible notes 96,651 227,403 Total unamortized discount $ 363,603 $ 227,403 (3) Debt issuance costs consists of the following: (In thousands) June 30, 2019 December 31, 2018 2027 Convertible notes $ 10,954 $ — 2025 Convertible notes 6,854 16,348 Total debt issuance costs $ 17,808 $ 16,348 (4) As of June 30, 2019, the 2025 Convertible Notes were convertible and included within convertible notes, net, current portion on the condensed consolidated balance sheet. As of December 31, 2018, the 2025 Convertible Notes were not convertible and included within long-term convertible notes, net on the condensed consolidated balance sheet. Issuances and Settlements In January 2018, the Company issued and sold $690.0 million in aggregate principal amount of 1.0% Convertible Notes (the “January 2018 Notes”) with a maturity date of January 15, 2025 (the “Maturity Date”). The January 2018 Notes accrue interest at a fixed rate of 1.0% per year, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2018. The net proceeds from the issuance of the January 2018 Notes were approximately $671.1 million, after deducting underwriting discounts and commissions and the offering expenses payable by the Company. In June 2018, the Company issued and sold an additional $218.5 million in aggregate principal amount of 1.0% Convertible Notes (the “June 2018 Notes”). The June 2018 Notes were issued under the same indenture pursuant to which the Company previously issued the January 2018 Notes (the “Indenture”). The January 2018 Notes and the June 2018 Notes (collectively, the “2025 Notes”) have identical terms and will be treated as a single series of securities. The net proceeds from the issuance of the June 2018 Notes were approximately $225.3 million, after deducting underwriting discounts and commissions and the offering expenses payable by the Company. In March 2019, the Company issued and sold $747.5 million in aggregate principal amount of 0.375% Convertible Notes (the “2027 Notes” and, collectively with the 2025 Notes, the “Notes”) with a maturity date of March 15, 2027 (the “Maturity Date”). The 2027 Notes accrue interest at a fixed rate of 0.375% per year, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. The net proceeds from the issuance of the 2027 Notes were approximately $729.5 million, after deducting underwriting discounts and commissions and the offering expenses payable by the Company. The Company utilized a portion of the proceeds from the issuance of the 2027 Notes to settle a portion of the 2025 Notes in privately negotiated transactions. In March 2019, the Company used cash of $494.0 million and an aggregate of 2.2 million shares of the Company’s common stock valued at $182.4 million for total consideration of $676.5 million to settle $493.4 million of the 2025 Notes, of which $375.1 million was allocated to the liability component, $300.8 million was allocated to the equity component, and $0.6 million was used to pay off interest accrued on the 2025 Notes. The consideration transferred was allocated to the liability and equity components of the 2025 Notes using the equivalent rate that reflected the borrowing rate for a similar non-convertible debt instrument immediately prior to settlement. The transaction resulted in a loss on settlement of convertible notes of Summary of Conversion Features Until the six-months immediately preceding the maturity date of the applicable series of Notes, each series of Notes is convertible only upon the occurrence of certain events and during certain periods, as set forth in the Indenture. The Notes will be convertible into cash, shares of the Company’s common stock (plus, if applicable, cash in lieu of any fractional share), or a combination of cash and shares of the Company’s common stock, at the Company’s election. On or after the date that is six-months immediately preceding the maturity date of the applicable series of Notes until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert such Notes at any time. It is the Company’s intent and policy to settle all conversions through combination settlement. The initial conversion rate is 13.2569 and 8.9554 shares of common stock per $1,000 principal amount for the 2025 Notes and 2027 Notes, respectively, which is equivalent to an initial conversion price of approximately $75.43 and $111.66 per share of the Company’s common stock for the 2025 Notes and 2027 Notes, respectively. The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, holders of the Notes who convert their Notes in connection with a “make-whole fundamental change” (as defined in the Indenture), will, under certain circumstances, be entitled to an increase in the conversion rate. If the Company undergoes a “fundamental change” (as defined in the Indenture), holders of the Notes may require the Company to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest. As of June 30, 2019, the 2027 Notes were not convertible. The holders of the 2025 Notes have the right to convert their debentures between July 1, 2019 and September 30, 2019, because the closing price of the Company’s common stock exceeded the Conversion Price by 130% for at least 20 trading days (whether or not consecutive) in the period of the 30 consecutive trading days ending on June 30, 2019. Based on the closing price of our common stock of $118.04 on June 28, 2019, the if-converted values on our 2025 Notes and 2027 Notes exceed the principal amount by $234.5 million and $42.7 million, respectively. Ranking of Convertible Notes The Notes are the Company’s senior unsecured obligations and (i) rank senior in right of payment to all of its future indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to all of the Company’s future liabilities that are not so subordinated, unsecured indebtedness; (ii) are effectively junior to all of our existing and future secured indebtedness and other secured obligations, to the extent of the value of the assets securing that indebtedness and other secured obligations; and (iii) are structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries. The 2025 Notes are classified as current on the Company’s condensed consolidated balance sheets at June 30, 2019, while the 2027 Notes are classified on the Company’s condensed consolidated balance sheets at June 30, 2019 as long-term. The future convertibility and resulting balance sheet classification of the Notes will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the Notes have the election to convert the Notes at any time during the prescribed measurement period, the Notes would then be considered a current obligation and classified as such. The Company allocated the total transaction costs of approximately $18.8 million related to the issuance of the January 2018 Notes to the liability and equity components of the January 2018 Notes based on their relative values, with $13.6 million being allocated to the liability component of the January 2018 Notes. Transaction costs attributable to the liability component are amortized to interest expense over the seven-year term of the January 2018 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The Company allocated the total transaction costs of approximately $7.4 million related to the issuance of the June 2018 Notes to the liability and equity components of the June 2018 Notes based on their relative values, with $5.1 million being allocated to the liability component of the June 2018 Notes. Transaction costs attributable to the liability component are amortized to interest expense over the remaining six-and-a-half-year term of the June 2018 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The Company allocated the total transaction costs of approximately $18.0 million related to the issuance of the 2027 Notes to the liability and equity components of the 2027 Notes based on their relative values, with $11.4 million being allocated to the liability component of the 2027 Notes. Transaction costs attributable to the liability component are amortized to interest expense over the eight-year term of the 2027 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity. The Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. Interest expense includes the following: Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2019 2018 2019 2018 Debt issuance costs amortization $ 645 $ 517 $ 1,330 $ 920 Debt discount amortization 10,075 6,171 18,468 10,822 Loss on settlement of convertible notes — — 10,558 — Coupon interest expense 1,739 1,866 3,846 3,271 Total interest expense on convertible notes 12,459 8,554 34,202 15,013 Other interest expense 253 49 500 100 Total interest expense $ 12,712 $ 8,603 $ 34,702 $ 15,113 The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 7.71 years and 5.55 years for the 2027 Notes and 2025 Notes, respectively. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2019 | |
INCOME TAXES | (12) INCOME TAXES The Company recorded an income tax benefit of $0.4 million and $0.9 million for the three and six months ended June 30, 2019 and an income tax benefit of $1,000 and income tax expense of $0.1 million for the three and six months ended June 30, 2018 in continuing operations. The Company’s income tax benefit recorded during the three and six months ended June 30, 2019, is primarily related to the intraperiod tax allocation rules that require the Company to allocate the provision for income taxes between continuing operations and other categories of earnings. The Company continues to maintain a full valuation allowance against its deferred tax assets based on management’s determination that it is more likely than not the benefit will not be realized. |
RELATED PARTY TRANSACTION
RELATED PARTY TRANSACTION | 6 Months Ended |
Jun. 30, 2019 | |
RELATED PARTY TRANSACTION | (13) RELATED PARTY TRANSACTION In May 2017, the Company entered into a professional services agreement for recruiting and related services with a firm whose principal is a non-employee director. The Company did not incur charges or make any payments during the three and six months ended June 30, 2019. The Company incurred charges of $0.1 million and $0.2 million for the three and six months ended June 30, 2018. The Company made payments of $20,000 and $0.1 million for the three and six months ended June 30, 2018. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS | (14) RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the Financial Accounting Standards Board issued ASU No. 2016-02, Leases (Topic 842) and subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 , (collectively, “Update 2016-02”). Update 2016-02 requires recognition of right-of-use assets and lease liabilities on the balance sheet, including those leases classified as operating leases under previous GAAP. Update 2016-02 provides an option of recognizing a cumulative-effect adjustment to the opening balance of retained earnings upon adoption. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted Update 2016-02 on January 1, 2019 using the modified retrospective method of adoption. As a result of the adoption, the Company recorded an opening right-of-use asset balance of $20.6 million, which is included in other long-term assets in the Company’s condensed consolidated financial statements. The Company also recorded an opening lease liability of $20.1 million, of which $3.0 million was classified in other short-term liabilities and $17.1 million was classified in long-term obligations in the Company’s condensed consolidated financial statements. See Note 9 for more detail. In June 2018, the Financial Accounting Standards Board issued ASU No. 2018-07 (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting, (“Update 2018-07”). Update 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements to Topic 718 to nonemployee awards except for certain exemptions specified in the amendment. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that fiscal year. The Company adopted this guidance on January 1, 2019, and it did not have an impact on the Company’s condensed consolidated financial statements. In July 2018, the Financial Accounting Standards Board issued ASU 2018-09, Codification Improvements , (“Update 2018-09”). Update 2018-09 provided various minor codification updates and improvements to address comments that the FASB had received regarding unclear or vague accounting guidance. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that fiscal year. The Company adopted this guidance on January 1, 2019, and it did not have an impact on the Company’s condensed consolidated financial statements. In August 2018, the Financial Accounting Standards Board issued ASU 2018-13, Fair Value Measurement (Topic 820); Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , (“Update 2018-13”). Update 2018-13 provided an update to the disclosure requirements for fair value measurements under the scope of ASC 820. The guidance is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of the guidance on its condensed consolidated financial statements. In August 2018, the Financial Accounting Standards Board issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software , (“Update 2018-15”). Update 2018-15 provided guidance for evaluating the accounting for fees paid by a customer in a cloud computing arrangement that is a service contract. The guidance is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of the guidance on its condensed consolidated financial statements. In November 2018, the Financial Accounting Standards Board issued ASU 2018-18, Collaborative Arrangements (Topic 808) , (“Update 2018-18”). Update 2018-18 provided additional guidance regarding the interaction between Topic 808 on Collaborative Arrangements and Topic 606 on Revenue Recognition. The guidance is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of the guidance on its condensed consolidated financial statements. In April 2019, the Financial Accounting Standards Board issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, (“Update 2019-04”). Update 2019-04 provides clarity regarding measurement of securities without readily determinable fair values. The guidance is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of the guidance on its condensed consolidated financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2019 | |
SUBSEQUENT EVENTS | (15) SUBSEQUENT EVENTS On July 28, 2019, the Company entered into a definitive agreement and plan of merger (the “Merger Agreement”) with Genomic Health, Inc. (“Genomic Health”), pursuant to which, among other things, one of our wholly owned subsidiaries will be merged with and into Genomic Health, with Genomic Health surviving as a wholly owned subsidiary of the Company (the “Merger”), in a cash and stock transaction valued at approximately $2.8 billion. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, which has been unanimously approved by the boards of directors of Genomic Health and the Company, at the effective time of the Merger each share of Genomic Health common stock issued and outstanding immediately prior to the effective time of the Merger (except for certain excluded shares as otherwise provided in the Merger Agreement) will be converted into the right to receive (a) $27.50 in cash, without interest, and (b) a number of shares of Exact Sciences common stock equal to (i) 0.36854 , if the average of the volume-weighted prices per share of Exact Sciences common stock on the Nasdaq Stock Market for each of the fifteen consecutive trading days ending immediately prior to the closing date (the “measurement price”) is equal to or greater than $120.75 , (ii) an amount equal to the quotient obtained by dividing $44.50 by the measurement price if the measurement price is greater than $98.79 but less than $120.75 , and (iii) .45043 , if the measurement price is equal or less than $98.79 , less any applicable withholding taxes. The Company currently expects the Merger to close by the end of 2019, subject to customary closing conditions and regulatory approvals, including the approval of stockholders of Genomic Health. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Principles of Consolidation | 1 The accompanying condensed consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and variable interest entities. See Note 7 for the discussion of financing arrangements involving certain entities that are variable interest entities that are included in the Company’s condensed consolidated financial statements. All significant intercompany transactions and balances have been eliminated in consolidation. References to “Exact”, “we”, “us”, “our”, or the “Company” refer to Exact Sciences Corporation and its wholly owned subsidiaries. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash on hand, demand deposits in bank, money market funds, and all highly liquid investments with an original maturity of 90 days or less to be cash and cash equivalents. The Company had no restricted cash at June 30, 2019 or December 31, 2018. |
Investments | Investments Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Debt securities carried at amortized cost are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Marketable equity securities and debt securities not classified as held-to-maturity are classified as available-for-sale. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive income. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity computed under the straight-line method. Such amortization is included in investment income. Realized gains and losses and declines in value judged to be other-than-temporary on available-for-sale securities are included in investment income. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in investment income. At June 30, 2019 and December 31, 2018, the Company’s marketable securities were comprised of fixed income investments, and all were deemed available-for-sale. The objectives of the Company’s investment strategy are to provide liquidity and safety of principal while striving to achieve the highest rate of return consistent with these two objectives. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. Investments in which the Company has the ability and intent, if necessary, to liquidate, in order to support its current operations (including those with a contractual term greater than The Company periodically reviews investments in unrealized loss positions for other-than-temporary impairments. This evaluation includes, but is not limited to, significant quantitative and qualitative assessments and estimates regarding credit ratings, collateralized support, the length of time and significance of a security’s loss position, the Company’s intent not to sell the security, and whether it is more likely than not that the Company will have to sell the security before recovery of its cost basis. For the six months ended June 30, 2019, no investments were identified with other-than-temporary declines in value. Available-for-sale securities at June 30, 2019 consisted of the following: June 30, 2019 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income (Loss) (1) Income (Loss) (1) Value Marketable securities Corporate bonds $ 447,169 $ 1,368 $ (6) $ 448,531 Asset backed securities 291,973 899 (18) 292,854 U.S. government agency securities 219,811 362 — 220,173 Commercial paper 16,899 — (1) 16,898 Certificates of deposit 55,781 128 (1) 55,908 Total available-for-sale securities $ 1,031,633 $ 2,757 $ (26) $ 1,034,364 (1) Gains and losses in accumulated other comprehensive income (loss) are reported before tax impact. Available-for-sale securities at December 31, 2018 consisted of the following: December 31, 2018 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income (Loss) (1) Income (Loss) (1) Value Corporate bonds $ 392,973 $ 33 $ (719) $ 392,287 Asset backed securities 277,537 30 (568) 276,999 U.S. government agency securities 250,606 43 (178) 250,471 Commercial paper 12,158 — (7) 12,151 Certificates of deposit 31,875 — (31) 31,844 Total available-for-sale securities $ 965,149 $ 106 $ (1,503) $ 963,752 (1) Gains and losses in accumulated other comprehensive income (loss) are reported before tax impact. |
Changes in Accumulated Other Comprehensive Income (Loss) | Changes in Accumulated Other Comprehensive Income (Loss) The amount recognized in accumulated other comprehensive income (loss) (“AOCI”) for the six months ended June 30, 2019 were as follows: Foreign Unrealized Accumulated Currency Gain (Loss) Other Translation on Marketable Comprehensive (In thousands) Adjustments Securities Income (Loss) Balance at December 31, 2018 $ (25) $ (1,397) $ (1,422) Other comprehensive income (loss) before reclassifications 38 3,784 3,822 Amounts reclassified from accumulated other comprehensive loss — 344 344 Net current period change in accumulated other comprehensive loss, before tax 38 4,128 4,166 Income tax expense related to items of other comprehensive income — (984) (984) Balance at June 30, 2019 $ 13 $ 1,747 $ 1,760 The amounts recognized in AOCI for the six months ended June 30, 2018 were as follows: Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive (In thousands) Adjustment on Securities Income (Loss) Balance at December 31, 2017 $ (61) $ (689) $ (750) Other comprehensive loss before reclassifications 2 (1,244) (1,242) Amounts reclassified from accumulated other comprehensive loss — 114 114 Net current period change in accumulated other comprehensive loss 2 (1,130) (1,128) Balance at June 30, 2018 $ (59) $ (1,819) $ (1,878) Amounts reclassified from AOCI for the six months ended June 30, 2019 and 2018 were as follows: Affected Line Item in the Six Months Ended June 30, Details about AOCI Components (In thousands) Statements of Operations 2019 2018 Change in value of available-for-sale investments Sales and maturities of available-for-sale investments Investment income $ 344 $ 114 Total reclassifications $ 344 $ 114 |
Property, Plant and Equipment | Property, Plant and Equipment Property and equipment are stated at cost and depreciated using the straight-line method over the assets’ estimated useful lives. Land is stated at cost and does not depreciate. Maintenance and repairs are expensed when incurred; additions and improvements are capitalized. The estimated useful lives of property and equipment are as follows: Estimated June 30, December 31, (In thousands) Useful Life 2019 2018 Property, plant and equipment Land (1) $ 4,466 $ 4,466 Leasehold and building improvements (2) 59,796 38,895 Land improvements 15 years 1,766 1,530 Buildings 30 years 18,086 7,928 Computer equipment and computer software 3 years 38,225 36,969 Laboratory equipment 3 - 10 years 66,347 37,518 Furniture and fixtures 3 years 11,267 8,353 Assets under construction (3) 206,120 167,462 Property, plant and equipment, at cost 406,073 303,121 Accumulated depreciation (70,574) (57,862) Property, plant and equipment, net $ 335,499 $ 245,259 (1) Not depreciated. (2) Lesser of remaining lease term, building life, or useful life. (3) Not depreciated until placed into service. Depreciation expense for the six months ended June 30, 2019 and 2018 was $13.4 million and $8.8 million, respectively. At June 30, 2019, the Company had $206.1 million of assets under construction which consisted of $25.9 million related to laboratory equipment, $166.4 million related to leasehold and building improvements, and $13.8 million related to computer equipment and computer software projects. Depreciation will begin on these assets once they are placed into service. The Company expects to incur an additional $8.3 million to complete the laboratory equipment, $96.5 million to complete the building projects, and $3.3 million to complete the computer equipment and computer software projects. These projects are expected to be completed throughout 2019, 2020 and 2021. The Company assesses its long-lived assets, consisting primarily of property, plant and equipment, for impairment when material events and changes in circumstances indicate that the carrying value may not be recoverable. There were no impairment losses for the periods ended June 30, 2019 and December 31, 2018. |
Software Capitalization Policy | Software Capitalization Policy Software development costs related to internal use software are incurred in three stages of development: the preliminary project stage, the application development stage, and the post-implementation stage. Costs incurred during the preliminary project and post-implementation stages are expensed as incurred. Costs incurred during the application development stage that meet the criteria for capitalization are capitalized and amortized, when the software is ready for its intended use, using the straight-line basis over the estimated useful life of the software. |
Patent Costs, Intangible Assets and Goodwill | Patent Costs, Intangible Assets and Goodwill Goodwill and Intangible assets consisted of the following: June 30, December 31, (In thousands) 2019 2018 Finite-lived intangible assets Finite-lived intangible assets $ 33,171 $ 33,058 Less: Accumulated amortization (5,722) (4,107) Finite-lived intangible assets, net 27,449 28,951 Internally developed technology in process 318 51 Total finite-lived intangible assets, net 27,767 29,002 Goodwill 17,279 17,279 Goodwill and intangible assets, net $ 45,046 $ 46,281 Finite-Lived Intangible Assets The following table summarizes the net-book-value and estimated remaining life of the Company’s finite-lived intangible assets as of June 30, 2019: Weighted Net Balance at Average June 30, Remaining (In thousands) 2019 Life (Years) Trade name $ 665 14.3 Customer relationships 2,566 14.3 Patents 17,846 9.2 Acquired developed technology 5,836 13.3 Internally developed technology 536 2.4 Total $ 27,449 As of June 30, 2019, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows: (In thousands) 2019 $ 1,614 2020 3,231 2021 3,129 2022 2,967 2023 2,953 Thereafter 13,555 $ 27,449 The Company reviews long-lived assets and identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairment losses for periods ended June 30, 2019 and December 31, 2018. Patent costs, which have historically consisted of related legal fees, are capitalized as incurred, only if the Company determines that there is some probable future economic benefit derived from the patent costs incurred. A capitalized patent is amortized over its estimated useful life, beginning when such patent is approved. Capitalized patent costs are expensed upon disapproval, upon a decision by the Company to no longer pursue the patent or when the related intellectual property is either sold or deemed to be no longer of value to the Company. Other than the transactions discussed below, the Company determined that all patent costs incurred during the six months ended June 30, 2019 and 2018 should be expensed and not capitalized as the future economic benefit derived from the patent costs incurred cannot be determined. Under a technology license and royalty agreement entered into with MDx Health (“MDx”), dated July 26, 2010 (as subsequently amended, the “MDx License Agreement”), the Company was required to pay MDx milestone-based royalties on sales of products or services covered by the licensed intellectual property. Once the achievement of a milestone occurred or was considered probable, an intangible asset and corresponding liability was reported in goodwill and intangible assets and accrued liabilities, respectively. The liability was relieved once the milestone was achieved and payment made. The intangible asset is being amortized over the estimated ten-years useful life of the licensed intellectual property through 2024, and such amortization is reported in cost of sales. Payment for all remaining milestones under the MDx License Agreement was made as part of the Royalty Buy-Out Agreement described below. Effective April 2017, the Company and MDx entered into a royalty buy-out agreement (“Royalty Buy-Out Agreement”), which terminated the MDx License Agreement. Pursuant to the Royalty Buy-Out Agreement, the Company paid MDx a one-time fee of million in exchange for an assignment of certain patents covered by the MDx License Agreement and the elimination of all ongoing royalties and other payments by the Company to MDx under the MDx License Agreement. Also included in the Royalty Buy-Out Agreement is a mutual release of liabilities, which includes all amounts previously accrued under the MDx License Agreement. Concurrently with entering into the Royalty Buy-Out Agreement, the Company entered into a patent purchase agreement (“Patent Purchase Agreement”) with MDx under which it paid MDx an additional As of June 30, 2019, and December 31, 2018, an intangible asset of $7.0 million and $7.7 million, respectively, related to historical milestone payments made under the MDx License Agreement and intangible assets acquired as part of the Royalty Buy-Out Agreement and Patent Purchase Agreement is reported in net goodwill and intangible assets on the Company’s condensed consolidated financial statements. Amortization expense was $0.3 million and $0.3 million for the three months ended June 30, 2019 and 2018, respectively. Amortization expense was $0.7 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively. In December 2017, the Company entered into an asset purchase agreement (the “Armune Purchase Agreement”) with Armune BioScience, Inc. (“Armune”), pursuant to which the Company acquired intellectual property and certain other assets underlying Armune’s APIFINY®, APIFINY® PRO and APIFINY® ACTIVE SURVEILLANCE prostate cancer diagnostic tests. The Company has utilized the Armune assets in its research and development program. The total consideration was comprised of an up-front cash payment of $12.0 million and $17.5 million in contingent payment obligations that will become payable upon the Company’s achievement of development and commercial milestones using the acquired intellectual property. The satisfaction of these milestones is subject to many risks and is therefore uncertain. The Company will not record the contingent consideration until it is probable that the milestones will be met. There is no other consideration due to Armune beyond the milestone payments and the Company is not subject to future royalty obligations should a product be developed and commercialized. In connection with the Armune Purchase Agreement, Armune terminated a license agreement pursuant to which it licensed certain patent rights and know-how from the Regents of the University of Michigan (“University of Michigan”), and the Company entered into a license agreement with the University of Michigan with respect to such patent rights and know-how, as well as certain additional intellectual property rights. Pursuant to the Company’s agreement with the University of Michigan, it is required to pay the University of Michigan a low single-digit royalty on its net sales of products using the licensed intellectual property. The Company accounted for the transaction as an asset acquisition under GAAP. The asset is comprised of a portfolio of biomarkers, related technology and know-how, which is a group of complementary assets concentrated in a single identifiable asset. The transaction costs directly related to the asset acquisition were added to the asset in accordance with GAAP. As such, the collective asset value from the acquisition resulted in an intangible asset of $12.2 million. The intellectual property asset, which includes related transaction costs, is being amortized on a straight-line basis over the period the Company expects to be benefited, which is in line with the legal life of the patents acquired. The Company capitalized these costs as there is a reasonable expectation that the assets acquired will be used in an alternative manner in the future, that is not contingent on future development subsequent to acquisition, and the Company anticipates there to be economic benefit from these alternative uses. For the three and six months ended June 30, 2019, the Company recorded amortization expense of $0.2 million and $0.5 million, respectively. For the three and six months ended June 30, 2018, the Company recorded amortization expense of $0.2 million and $0.5 million, respectively. At June 30, 2019 and December 31, 2018, the net balance of $10.8 million and $11.3 million, respectively, is reported in net goodwill and intangible assets in the Company’s condensed consolidated balance sheet. In August 2017, the Company acquired all of the equity interests of Sampleminded, Inc. (“Sampleminded”). As a result of the acquisition, the Company recorded an intangible asset of $1.0 million, which was comprised of developed technology acquired of $0.9 million, customer relationships of $0.1 million, and non-compete agreements of $32,000. The intangible assets acquired are being amortized over the remaining useful life, which was determined to be eight years for developed technology acquired, three years for customer relationships, and five years for non-compete agreements. For the three months ended June 30, 2019 and 2018, the Company recorded amortization expense of $36,000 and $36,000, respectively. For the six months ended June 30, 2019 and 2018, the Company recorded amortization expense of $0.1 million and $0.1 million, respectively. At June 30, 2019 and December 31, 2018, the net balance of $0.7 million and $0.8 million, respectively, is reported in net intangible assets in the Company’s condensed consolidated balance sheets. As more fully described in the 2018 Form 10-K, in October 2018, the Company completed a full acquisition of Biomatrica, Inc. (“Biomatrica”, and the “Biomatrica Acquisition”). As a result of the Biomatrica Acquisition, the Company recorded an intangible asset of $8.8 million which was comprised of acquired developed technology of $5.4 million, customer relationships of $2.7 million, and trade names of $0.7 million. The intangible assets acquired are being amortized over the remaining useful life, which was determined to be fifteen years for the acquired developed technology, fifteen years for the customer relationships, and fifteen years for the trade names. For the three and six months ended June 30, 2019, the Company recorded amortization expense of $0.1 million and $0.3 million, respectively. At June 30, 2019 and December 31, 2018, the net balance of $8.4 million and $8.7 million, respectively, is reported in net goodwill and intangible assets in the Company’s condensed consolidated balance sheets. Goodwill In 2018, the Company recognized goodwill of $15.3 million from the acquisition of Biomatrica. Goodwill is reported in net goodwill and intangible assets in the Company’s condensed consolidated balance sheet. The Company evaluates goodwill impairment on an annual basis, or more frequently should an event or change in circumstance occur that indicates the carrying amount is in excess of the fair value. There were no impairment losses for the periods ended June 30, 2019 and December 31, 2018. |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share is the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive as a result of the Company’s losses. The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses for each period: June 30, (In thousands) 2019 2018 Shares issuable upon exercise of stock options 2,387 2,918 Shares issuable upon the release of restricted stock awards 4,123 6,312 Shares issuable upon conversion of convertible notes 12,197 12,044 18,707 21,274 |
Revenue Recognition | Revenue Recognition The Company’s revenue is primarily generated by screening services using its Cologuard test, and the service is completed upon delivery of a patient’s test result to the ordering physician. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), which it adopted on January 1, 2018, using the modified retrospective method, which it elected to apply to all contracts. Application of the modified retrospective method 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. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company recognizes revenue from its Cologuard test in accordance with that core principle, and key aspects considered by the Company include the following: Contracts The Company’s customer is the patient. However, the Company does not enter into a formal reimbursement contract with a patient, as formal reimbursement contracts, including a national coverage determination for Cologuard by the Centers for Medicare and Medicaid Services (“CMS”), are established with payers. Accordingly, the Company establishes a contract with a patient in accordance with other customary business practices. ● Approval of a contract is established via the order submitted by the patient’s physician and the return of a sample by the patient. ● The Company is obligated to perform its laboratory services upon receipt of a sample from a patient, 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 requires payment from the patient prior to the Company shipping a collection kit to the patient. ● Once the Company delivers a patient’s test 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 and depending on payer contract status or patient insurance benefit status. ● The Company’s consideration is deemed to be variable, and the Company considers collection of such consideration to be probable to the extent that it is unconstrained. 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. 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 Cologuard test result to the ordering physician. The duration of time between sample receipt and delivery of a valid test result to the ordering physician is typically less than two weeks. Accordingly, the Company elects the practical expedient and therefore, the Company 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 (for example, some sales taxes). The consideration expected from a contract with a customer may include fixed amounts, variable amounts, or both. The consideration derived from the Company’s contracts is deemed to be variable, though the variability is not explicitly stated in any contract. Rather, the implied variability is due to several factors, such as the amount of contractual adjustments, any patient co-payments, deductibles or patient compliance incentives, the existence of secondary payers and claim denials. The Company estimates the amount of variable consideration using the expected value method, which represents the sum of probability-weighted amounts in a range of possible consideration amounts. When estimating the amount of variable consideration, the Company considers several factors, such as historical collections experience, patient insurance eligibility and payer reimbursement contracts. The Company limits the amount of variable consideration included in the transaction price to the unconstrained portion of such consideration. In other words, the Company recognizes revenue 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. Revenue recognized from changes in transaction prices was 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 patient, it will account for the change as an increase in the estimate of the transaction price (i.e., an upward revenue adjustment) in the period identified. Similarly, if the Company subsequently determines that the amount it expects to collect from a patient is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price (i.e., a downward revenue adjustment), provided that such downward adjustment does not result in a significant reversal of cumulative revenue recognized. When the Company does not have significant historical experience or that experience has limited predictive value, the constraint over estimates of variable consideration may result in no revenue being recognized upon delivery of a patient’s Cologuard test result to the ordering physician, with recognition, generally occurring at the date of cash receipt. Allocate transaction price The transaction price is allocated entirely to the performance obligation contained within the contract with a patient. 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 test result is delivered to the patient’s ordering physician. The Company considers this date to be the time at which the patient obtains control of the promised Cologuard test service. Disaggregation of Revenue The following table presents the Company’s revenues disaggregated by revenue source for the three and six months ended June 30, 2019 and 2018, respectively: Three Months Ended June 30, (In thousands) 2019 2018 Medicare Parts B & C $ 103,569 $ 59,706 Commercial 88,818 39,589 Other 7,483 3,599 Total $ 199,870 $ 102,894 Six Months Ended June 30, (In thousands) 2019 2018 Medicare Parts B & C $ 186,486 $ 112,181 Commercial 162,169 74,423 Other 13,258 6,586 Total $ 361,913 $ 193,190 Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable and deferred revenue on the condensed consolidated balance sheets. Generally, billing occurs subsequent to delivery of a patient’s test result to the ordering physician, resulting in an account receivable. However, the Company sometimes receives advance payment from a patient, particularly a self-pay patient, before a Cologuard test result is completed, resulting in deferred revenue. The deferred revenue balance is relieved upon delivery of the applicable patient’s test result to the ordering physician. Changes in accounts receivable and deferred revenue were not materially impacted by any other factors. Deferred revenue balances are reported in other short-term liabilities in the Company’s condensed consolidated balance sheets and were $0.7 million and $0.5 million as of June 30, 2019 and December 31, 2018, respectively. Revenue recognized for the three months ended June 30, 2019 and 2018, which was included in the deferred revenue balance at the beginning of each period was $0.2 million and $0.1 million, respectively. Revenue recognized for the six months ended June 30, 2019 and 2018, which was included in the deferred revenue balance at the beginning of each period was $0.3 million and $0.1 million, respectively. 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 would have been one year or less. These costs are recorded within sales and marketing expenses in the Company’s condensed consolidated statements of operations. 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 (e.g. compliance reminder letters). These costs are expensed as incurred and recorded within general and administrative expenses in the Company’s condensed consolidated statements of operations. |
Inventory | Inventory Inventory is stated at the lower of cost or market value (net realizable value). The Company determines the cost of inventory using the first-in, first out method (“FIFO”). The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated net realizable value and records a charge to cost of sales for such inventory, as appropriate. In addition, the materials used in performing Cologuard tests are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, the Company records a charge to cost of sales to write down such unmarketable inventory to its estimated net realizable value. Direct and indirect manufacturing costs incurred during process validation and for other research and development activities, which are not permitted to be sold, have been expensed to research and development in the Company’s condensed consolidated statements of operations. Inventory consisted of the following: June 30, December 31, (In thousands) 2019 2018 Raw materials $ 15,473 $ 12,761 Semi-finished and finished goods 32,308 26,387 Total inventory $ 47,781 $ 39,148 |
Foreign Currency Translation | Foreign Currency Translation For the Company’s international subsidiaries, the local currency is the functional currency. Assets and liabilities of these subsidiaries are translated into United States dollars at the period-end exchange rate or historical rates, as appropriate. Condensed consolidated statements of operations are translated at average exchange rates for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the Company’s condensed consolidated balance sheet as a component of accumulated other comprehensive loss in total Exact Sciences Corporation’s stockholders’ equity. Transaction gains and losses are included in the Company’s condensed consolidated statement of operations. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation in the Company’s condensed consolidated financial statements and accompanying notes to the Company’s condensed consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of available-for-sale securities | Available-for-sale securities at June 30, 2019 consisted of the following: June 30, 2019 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income (Loss) (1) Income (Loss) (1) Value Marketable securities Corporate bonds $ 447,169 $ 1,368 $ (6) $ 448,531 Asset backed securities 291,973 899 (18) 292,854 U.S. government agency securities 219,811 362 — 220,173 Commercial paper 16,899 — (1) 16,898 Certificates of deposit 55,781 128 (1) 55,908 Total available-for-sale securities $ 1,031,633 $ 2,757 $ (26) $ 1,034,364 (1) Gains and losses in accumulated other comprehensive income (loss) are reported before tax impact. Available-for-sale securities at December 31, 2018 consisted of the following: December 31, 2018 Gains in Accumulated Losses in Accumulated Other Comprehensive Other Comprehensive Estimated Fair (In thousands) Amortized Cost Income (Loss) (1) Income (Loss) (1) Value Corporate bonds $ 392,973 $ 33 $ (719) $ 392,287 Asset backed securities 277,537 30 (568) 276,999 U.S. government agency securities 250,606 43 (178) 250,471 Commercial paper 12,158 — (7) 12,151 Certificates of deposit 31,875 — (31) 31,844 Total available-for-sale securities $ 965,149 $ 106 $ (1,503) $ 963,752 |
Schedule of amounts recognized in accumulated other comprehensive income (loss) (AOCI) | The amount recognized in accumulated other comprehensive income (loss) (“AOCI”) for the six months ended June 30, 2019 were as follows: Foreign Unrealized Accumulated Currency Gain (Loss) Other Translation on Marketable Comprehensive (In thousands) Adjustments Securities Income (Loss) Balance at December 31, 2018 $ (25) $ (1,397) $ (1,422) Other comprehensive income (loss) before reclassifications 38 3,784 3,822 Amounts reclassified from accumulated other comprehensive loss — 344 344 Net current period change in accumulated other comprehensive loss, before tax 38 4,128 4,166 Income tax expense related to items of other comprehensive income — (984) (984) Balance at June 30, 2019 $ 13 $ 1,747 $ 1,760 The amounts recognized in AOCI for the six months ended June 30, 2018 were as follows: Accumulated Cumulative Unrealized Other Translation Gain (Loss) Comprehensive (In thousands) Adjustment on Securities Income (Loss) Balance at December 31, 2017 $ (61) $ (689) $ (750) Other comprehensive loss before reclassifications 2 (1,244) (1,242) Amounts reclassified from accumulated other comprehensive loss — 114 114 Net current period change in accumulated other comprehensive loss 2 (1,130) (1,128) Balance at June 30, 2018 $ (59) $ (1,819) $ (1,878) |
Schedule of amounts reclassified from accumulated other comprehensive income (loss) | Amounts reclassified from AOCI for the six months ended June 30, 2019 and 2018 were as follows: Affected Line Item in the Six Months Ended June 30, Details about AOCI Components (In thousands) Statements of Operations 2019 2018 Change in value of available-for-sale investments Sales and maturities of available-for-sale investments Investment income $ 344 $ 114 Total reclassifications $ 344 $ 114 |
Schedule of Property, plant and equipment, net | Estimated June 30, December 31, (In thousands) Useful Life 2019 2018 Property, plant and equipment Land (1) $ 4,466 $ 4,466 Leasehold and building improvements (2) 59,796 38,895 Land improvements 15 years 1,766 1,530 Buildings 30 years 18,086 7,928 Computer equipment and computer software 3 years 38,225 36,969 Laboratory equipment 3 - 10 years 66,347 37,518 Furniture and fixtures 3 years 11,267 8,353 Assets under construction (3) 206,120 167,462 Property, plant and equipment, at cost 406,073 303,121 Accumulated depreciation (70,574) (57,862) Property, plant and equipment, net $ 335,499 $ 245,259 (1) Not depreciated. (2) Lesser of remaining lease term, building life, or useful life. (3) Not depreciated until placed into service. |
Schedule of Goodwill and Intangible assets | June 30, December 31, (In thousands) 2019 2018 Finite-lived intangible assets Finite-lived intangible assets $ 33,171 $ 33,058 Less: Accumulated amortization (5,722) (4,107) Finite-lived intangible assets, net 27,449 28,951 Internally developed technology in process 318 51 Total finite-lived intangible assets, net 27,767 29,002 Goodwill 17,279 17,279 Goodwill and intangible assets, net $ 45,046 $ 46,281 |
Schedule of net-book value and estimated remaining life and finite lived intangible assets | Weighted Net Balance at Average June 30, Remaining (In thousands) 2019 Life (Years) Trade name $ 665 14.3 Customer relationships 2,566 14.3 Patents 17,846 9.2 Acquired developed technology 5,836 13.3 Internally developed technology 536 2.4 Total $ 27,449 As of June 30, 2019, the estimated future amortization expense associated with the Company’s finite-lived intangible assets for each of the five succeeding fiscal years is as follows: (In thousands) 2019 $ 1,614 2020 3,231 2021 3,129 2022 2,967 2023 2,953 Thereafter 13,555 $ 27,449 |
Schedule of estimated future amortization expense, intangible assets | Weighted Net Balance at Average June 30, Remaining (In thousands) 2019 Life (Years) Trade name $ 665 14.3 Customer relationships 2,566 14.3 Patents 17,846 9.2 Acquired developed technology 5,836 13.3 Internally developed technology 536 2.4 Total $ 27,449 |
Schedule of potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | June 30, (In thousands) 2019 2018 Shares issuable upon exercise of stock options 2,387 2,918 Shares issuable upon the release of restricted stock awards 4,123 6,312 Shares issuable upon conversion of convertible notes 12,197 12,044 18,707 21,274 |
Schedule of disaggregation of revenue | Three Months Ended June 30, (In thousands) 2019 2018 Medicare Parts B & C $ 103,569 $ 59,706 Commercial 88,818 39,589 Other 7,483 3,599 Total $ 199,870 $ 102,894 Six Months Ended June 30, (In thousands) 2019 2018 Medicare Parts B & C $ 186,486 $ 112,181 Commercial 162,169 74,423 Other 13,258 6,586 Total $ 361,913 $ 193,190 |
Schedule of inventory | Inventory consisted of the following: June 30, December 31, (In thousands) 2019 2018 Raw materials $ 15,473 $ 12,761 Semi-finished and finished goods 32,308 26,387 Total inventory $ 47,781 $ 39,148 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stock-based compensation | |
Schedule of valuation assumptions | Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Option Plan Shares Risk-free interest rates (1) (1) 2.54% - 2.59% 2.73% - 2.79% Expected term (in years) (1) (1) 6.28 5.45 - 6.44 Expected volatility (1) (1) 64.95% - 65.00% 61.82% - 66.17% Dividend yield (1) (1) 0 % 0 % Weighted average fair value per share of options granted during the period (1) (1) $ 57.11 $ 24.55 ESPP Shares Risk-free interest rates 2.31% - 2.44% 2.05% - 2.50% 2.31% - 2.44% 2.05% - 2.50% Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 55.0% - 57.6% 51.7% - 65.4% 55.0% - 57.6% 51.7% - 65.4% Dividend yield 0 % 0 % 0 % 0 % Weighted average fair value per share of stock purchase rights granted during the period $ 35.91 $ 18.68 $ 35.91 $ 18.68 |
Summary of stock option activity under the Stock Plans | Weighted Weighted Average Average Remaining Aggregate Exercise Contractual Intrinsic Options Shares Price Term (Years) Value(1) (Aggregate intrinsic value in thousands) Outstanding, January 1, 2019 2,531,561 $ 17.86 6.3 Granted 186,044 92.61 Exercised (314,071) 15.91 Forfeited (16,548) 32.35 Outstanding, June 30, 2019 2,386,986 $ 23.84 6.6 $ 224,845 Exercisable, June 30, 2019 1,431,015 $ 14.35 5.6 $ 148,385 (1) The aggregate intrinsic value of options outstanding, exercisable and vested and expected to vest is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices that were lower than the $118.04 market price of the Company’s common stock at June 28, 2019. The total intrinsic value of options exercised during the six months ended June 30, 2019 and 2018 was $22.6 million and $36.3 million, respectively. |
Summary of restricted stock and restricted stock unit activity under the Stock Plans | Weighted Restricted Average Grant Shares and RSUs Date Fair Value Outstanding, January 1, 2019 6,246,174 $ 23.16 Granted 1,513,290 91.36 Released (3,506,123) 11.52 Forfeited (130,125) 54.17 Outstanding, June 30, 2019 4,123,216 $ 57.49 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Schedule of fair value measurements along with the level within the fair value hierarchy in which the fair value measurements fall | Fair Value Measurement at June 30, 2019 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs (In thousands) June 30, 2019 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ 125,471 $ 125,471 $ — $ — U.S. government agency securities 61,357 — 61,357 — Commercial paper 18,230 — 18,230 — Available-for-sale Marketable securities Corporate bonds 448,531 — 448,531 — Asset backed securities 292,854 — 292,854 — U.S. government agency securities 220,173 — 220,173 — Certificates of deposit 55,908 — 55,908 — Commercial paper 16,898 — 16,898 — Other long-term assets Deferred compensation plan assets 230 — 230 — Contingent consideration (2,942) — — (2,942) Total $ 1,236,710 $ 125,471 $ 1,114,181 $ (2,942) The following table presents the Company’s fair value measurements as of December 31, 2018 along with the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair Value Measurement at December 31, 2018 Using: Quoted Prices Significant in Active Other Significant Markets for Observable Unobservable Fair Value at Identical Assets Inputs Inputs (In thousands) December 31, 2018 (Level 1) (Level 2) (Level 3) Cash and cash equivalents Cash and money market $ 86,375 $ 86,375 $ — $ — U.S. government agency securities 49,985 — 49,985 — Commercial paper 24,070 — 24,070 — Available-for-sale Marketable securities Corporate bonds 392,287 — 392,287 — Asset backed securities 276,999 — 276,999 — U.S. government agency securities 250,471 — 250,471 — Certificates of deposit 31,844 — 31,844 — Commercial paper 12,151 — 12,151 — Contingent consideration (3,060) — — (3,060) Total $ 1,121,122 $ 86,375 $ 1,037,807 $ (3,060) |
Schedule of gross unrealized losses and fair values of investments in an unrealized loss position | June 30, 2019 Less than 12 months 12 months or greater Total (In thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Marketable securities Corporate bonds $ 27,195 $ (3) $ 2,500 $ (3) $ 29,695 $ (6) U.S. government agency securities — — — — — — Asset backed securities 16,774 (3) 32,660 (15) 49,434 (18) Certificates of deposit 5,004 (1) — — 5,004 (1) Commercial paper 16,898 (1) — — 16,898 (1) Total $ 65,871 $ (8) $ 35,160 $ (18) $ 101,031 $ (26) |
Schedule of contractual maturities of available-for-sale investments | Due one year or less Due after one year through four years (In thousands) Cost Fair Value Cost Fair Value Marketable securities Corporate bonds $ 208,610 208,852 238,559 239,679 U.S. government agency securities 164,809 165,153 55,002 55,020 Asset backed securities 77,717 77,862 214,256 214,992 Certificates of deposit 46,856 46,928 8,925 8,980 Commercial paper 16,899 16,898 — — Total $ 514,891 $ 515,693 $ 516,742 $ 518,671 |
Schedule of fair value of long-term debt and convertible notes | June 30, 2019 December 31, 2018 (In thousands) Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value 2027 Convertible notes (2) $ 469,595 $ 916,158 $ — $ — 2025 Convertible notes (2) 311,598 696,337 664,749 956,196 Construction loan (3) 24,844 24,844 24,502 24,502 (1) The carrying amounts presented are net of debt discounts and debt issuance costs (see Note 8 and Note 11 of the condensed consolidated financial statements for further information). (2) The fair values are based on observable market prices for this debt, which is traded in active markets and therefore is classified as a Level 2 fair value measurement. (3) The carrying amount of the construction loan approximates fair value due to the short-term nature of this instrument. The construction loan is privately held with no public market for this debt and therefore is classified as a Level 3 fair value measurement. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of components of lease expense | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2019 2019 Operating lease cost (cost resulting from lease payments) $ 1,306 $ 2,392 Short-term lease cost 42 103 $ 1,348 $ 2,495 |
Summary of maturities of operating lease liabilities | Maturities of operating lease liabilities as of June 30, 2019 were as follows: (In thousands) 2019 $ 5,075 2020 4,585 2021 3,910 2022 3,768 2023 3,779 Thereafter 7,156 Total minimum lease payments 28,273 Imputed interest (7,688) Total $ 20,585 |
CONVERTIBLE NOTES (Tables)
CONVERTIBLE NOTES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
CONVERTIBLE NOTES. | |
Schedule of Convertible note obligations included in the condensed consolidated balance sheets | (In thousands) Coupon Interest Rate Effective Interest Rate Fair Value of Liability Component at Issuance (1) June 30, 2019 December 31, 2018 2027 Convertible notes 0.375% 6.3% $ 472,501 $ 747,500 $ — 2025 Convertible notes 1.000% 6.0% 299,188 415,104 908,500 Total Convertible notes 1,162,604 908,500 Less: Debt discount (2) (363,603) (227,403) Less: Debt issuance costs (3) (17,808) (16,348) Net convertible debt including current maturities 781,193 664,749 Less: Current maturities (4) (311,598) — Net long-term convertible debt $ 469,595 $ 664,749 (1) As each of the convertible instruments may be settled in cash upon conversion, for accounting purposes, they were bifurcated into a liability component and an equity component, which are both initially recorded at fair value. The amount allocated to the equity component is the difference between the principal value of the instrument and the fair value of the liability component at issuance. The resulting debt discount is being amortized to interest expense at the respective effective interest rate over the contractual term of the debt. In March 2019 a portion of the 2025 Convertible Notes were extinguished. The fair value of the liability component at issuance reflected above represents the liability value at issuance for the applicable portion of the 2025 Notes which remain outstanding at June 30, 2019. The fair value of the liability component of the 2025 Notes at December 31, 2018 was $654.8 million with the equity component being $269.7 million including a $14.2 million premium. (2) The unamortized discount consists of the following: (In thousands) June 30, 2019 December 31, 2018 2027 Convertible notes $ 266,952 $ — 2025 Convertible notes 96,651 227,403 Total unamortized discount $ 363,603 $ 227,403 (3) Debt issuance costs consists of the following: (In thousands) June 30, 2019 December 31, 2018 2027 Convertible notes $ 10,954 $ — 2025 Convertible notes 6,854 16,348 Total debt issuance costs $ 17,808 $ 16,348 (4) As of June 30, 2019, the 2025 Convertible Notes were convertible and included within convertible notes, net, current portion on the condensed consolidated balance sheet. As of December 31, 2018, the 2025 Convertible Notes were not convertible and included within long-term convertible notes, net on the condensed consolidated balance sheet. |
Schedule of interest expense | Three Months Ended Six Months Ended June 30, June 30, (In thousands) 2019 2018 2019 2018 Debt issuance costs amortization $ 645 $ 517 $ 1,330 $ 920 Debt discount amortization 10,075 6,171 18,468 10,822 Loss on settlement of convertible notes — — 10,558 — Coupon interest expense 1,739 1,866 3,846 3,271 Total interest expense on convertible notes 12,459 8,554 34,202 15,013 Other interest expense 253 49 500 100 Total interest expense $ 12,712 $ 8,603 $ 34,702 $ 15,113 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Cash and Cash equivalents | ||
Restricted cash | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Marketable Securities (Details) | 6 Months Ended | ||
Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Available-for-sale securities | |||
Number of objectives of the entity's investment strategy | item | 2 | ||
Realized gains | $ 300,000 | $ 100,000 | |
Other than temporary declines in value | $ 0 | ||
Minimum contractual term of certain current investments which can be liquidated | 1 year | ||
Amortized Cost | $ 1,031,633,000 | $ 965,149,000 | |
Gains in Accumulated Other Comprehensive Income (Loss) | 2,757,000 | 106,000 | |
Losses in Accumulated Other Comprehensive Income (Loss) | (26,000) | (1,503,000) | |
Estimated Fair Value | 1,034,364,000 | 963,752,000 | |
Corporate bonds | |||
Available-for-sale securities | |||
Amortized Cost | 447,169,000 | 392,973,000 | |
Gains in Accumulated Other Comprehensive Income (Loss) | 1,368,000 | 33,000 | |
Losses in Accumulated Other Comprehensive Income (Loss) | (6,000) | (719,000) | |
Estimated Fair Value | 448,531,000 | 392,287,000 | |
Asset backed securities | |||
Available-for-sale securities | |||
Amortized Cost | 291,973,000 | 277,537,000 | |
Gains in Accumulated Other Comprehensive Income (Loss) | 899,000 | 30,000 | |
Losses in Accumulated Other Comprehensive Income (Loss) | (18,000) | (568,000) | |
Estimated Fair Value | 292,854,000 | 276,999,000 | |
U.S. government agency securities | |||
Available-for-sale securities | |||
Amortized Cost | 219,811,000 | 250,606,000 | |
Gains in Accumulated Other Comprehensive Income (Loss) | 362,000 | 43,000 | |
Losses in Accumulated Other Comprehensive Income (Loss) | (178,000) | ||
Estimated Fair Value | 220,173,000 | 250,471,000 | |
Commercial paper. | |||
Available-for-sale securities | |||
Amortized Cost | 16,899,000 | 12,158,000 | |
Losses in Accumulated Other Comprehensive Income (Loss) | (1,000) | (7,000) | |
Estimated Fair Value | 16,898,000 | 12,151,000 | |
Certificates of deposit | |||
Available-for-sale securities | |||
Amortized Cost | 55,781,000 | 31,875,000 | |
Gains in Accumulated Other Comprehensive Income (Loss) | 128,000 | ||
Losses in Accumulated Other Comprehensive Income (Loss) | (1,000) | (31,000) | |
Estimated Fair Value | $ 55,908,000 | $ 31,844,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Changes in Accumulated Other Comprehensive Income (Loss) | ||||||
Beginning Balance | $ (1,422) | $ (750) | $ (1,422) | $ (750) | ||
Other comprehensive income (loss) before reclassifications | 3,822 | (1,242) | ||||
Amounts reclassified from accumulated other comprehensive loss | 344 | 114 | ||||
Net current period change in accumulated other comprehensive loss, before tax | 4,166 | |||||
Income tax expense related to items of other comprehensive income | (984) | |||||
Net current period change in accumulated other comprehensive income (loss) | $ 1,406 | 1,776 | $ 458 | (1,586) | (1,128) | |
Ending Balance | 1,760 | (1,878) | 1,760 | (1,878) | ||
Foreign Currency Translation Adjustment | ||||||
Changes in Accumulated Other Comprehensive Income (Loss) | ||||||
Beginning Balance | (25) | (61) | (25) | (61) | ||
Other comprehensive income (loss) before reclassifications | 38 | 2 | ||||
Net current period change in accumulated other comprehensive loss, before tax | 38 | |||||
Net current period change in accumulated other comprehensive income (loss) | 2 | |||||
Ending Balance | 13 | (59) | 13 | (59) | ||
Unrealized Gain (Loss) on Marketable Securities | ||||||
Changes in Accumulated Other Comprehensive Income (Loss) | ||||||
Beginning Balance | $ (1,397) | $ (689) | (1,397) | (689) | ||
Other comprehensive income (loss) before reclassifications | 3,784 | (1,244) | ||||
Amounts reclassified from accumulated other comprehensive loss | 344 | 114 | ||||
Net current period change in accumulated other comprehensive loss, before tax | 4,128 | |||||
Income tax expense related to items of other comprehensive income | (984) | |||||
Net current period change in accumulated other comprehensive income (loss) | (1,130) | |||||
Ending Balance | $ 1,747 | $ (1,819) | $ 1,747 | $ (1,819) |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Details About AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Details about AOCI Components | ||||
Investment income | $ 7,669 | $ 4,917 | $ 14,324 | $ 8,590 |
Reclassification Out Of Accumulated Other Comprehensive Income | ||||
Details about AOCI Components | ||||
Investment income | 344 | 114 | ||
Unrealized Gain (Loss) on Marketable Securities | Reclassification Out Of Accumulated Other Comprehensive Income | ||||
Details about AOCI Components | ||||
Investment income | $ 344 | $ 114 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment, Patent Costs, Intangible Assets and Goodwill (Details) | Oct. 02, 2018USD ($) | Dec. 15, 2017USD ($) | Aug. 01, 2017USD ($) | Apr. 25, 2017USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | $ 406,073,000 | $ 406,073,000 | $ 303,121,000 | ||||||
Accumulated depreciation | (70,574,000) | (70,574,000) | (57,862,000) | ||||||
Property, plant and equipment, net | 335,499,000 | 335,499,000 | 245,259,000 | ||||||
Assets under construction | $ 206,100,000 | 206,100,000 | |||||||
Impairment of long-lived assets | $ 0 | 0 | |||||||
Software Capitalization Policy | |||||||||
Software development stages | item | 3 | 3 | |||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets | $ 33,171,000 | $ 33,171,000 | 33,058,000 | ||||||
Less: Accumulated amortization | (5,722,000) | (5,722,000) | (4,107,000) | ||||||
Finite-lived intangible assets, net | 27,449,000 | 27,449,000 | 28,951,000 | ||||||
Total Finite-lived intangible assets, net | 27,767,000 | 27,767,000 | 29,002,000 | ||||||
Goodwill | 17,279,000 | 17,279,000 | 17,279,000 | ||||||
Goodwill and intangible assets, net | 45,046,000 | 45,046,000 | 46,281,000 | ||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 27,449,000 | 27,449,000 | 28,951,000 | ||||||
Amortization expense over remaining useful life | |||||||||
2019 | 1,614,000 | 1,614,000 | |||||||
2020 | 3,231,000 | 3,231,000 | |||||||
2021 | 3,129,000 | 3,129,000 | |||||||
2022 | 2,967,000 | 2,967,000 | |||||||
2023 | 2,953,000 | 2,953,000 | |||||||
Thereafter | 13,555,000 | 13,555,000 | |||||||
Finite-lived intangible assets, net | 27,449,000 | 27,449,000 | 28,951,000 | ||||||
Amortization of intangible assets | 1,615,000 | $ 1,228,000 | |||||||
Depreciation expense | 13,400,000 | 8,800,000 | |||||||
Impairment losses | 0 | 0 | |||||||
Recognized Goodwill | |||||||||
Goodwill | 17,279,000 | 17,279,000 | 17,279,000 | ||||||
Impairment | 0 | 0 | |||||||
Sampleminded Inc | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 700,000 | 700,000 | 800,000 | ||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 700,000 | 700,000 | 800,000 | ||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 700,000 | 700,000 | 800,000 | ||||||
Amortization of intangible assets | 36,000 | $ 36,000 | 100,000 | 100,000 | |||||
Identifiable intangible assets | $ 1,000,000 | ||||||||
Biomatrica, Inc | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets | $ 8,800,000 | ||||||||
Finite-lived intangible assets, net | 8,400,000 | 8,400,000 | 8,700,000 | ||||||
Goodwill | 15,300,000 | ||||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 8,400,000 | 8,400,000 | 8,700,000 | ||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 8,400,000 | 8,400,000 | 8,700,000 | ||||||
Amortization of intangible assets | 100,000 | 300,000 | |||||||
Recognized Goodwill | |||||||||
Goodwill | 15,300,000 | ||||||||
Trade name | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 665,000 | 665,000 | |||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 665,000 | $ 665,000 | |||||||
Weighted Average Remaining Life (Years) | 14 years 3 months 18 days | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 665,000 | $ 665,000 | |||||||
Trade name | Biomatrica, Inc | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 700,000 | ||||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 700,000 | ||||||||
Weighted Average Remaining Life (Years) | 15 years | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 700,000 | ||||||||
Customer Relationships | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 2,566,000 | $ 2,566,000 | |||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 2,566,000 | $ 2,566,000 | |||||||
Weighted Average Remaining Life (Years) | 14 years 3 months 18 days | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 2,566,000 | $ 2,566,000 | |||||||
Customer Relationships | Sampleminded Inc | |||||||||
Property, plant and equipment | |||||||||
Estimated Useful Life | 3 years | ||||||||
Amortization expense over remaining useful life | |||||||||
Identifiable intangible assets | $ 100,000 | ||||||||
Customer Relationships | Biomatrica, Inc | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 2,700,000 | ||||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 2,700,000 | ||||||||
Weighted Average Remaining Life (Years) | 15 years | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 2,700,000 | ||||||||
Patents | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 17,846,000 | $ 17,846,000 | |||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 17,846,000 | $ 17,846,000 | |||||||
Weighted Average Remaining Life (Years) | 9 years 2 months 12 days | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 17,846,000 | $ 17,846,000 | |||||||
Acquired developed technology | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 5,400,000 | 5,836,000 | 5,836,000 | ||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 5,400,000 | 5,836,000 | $ 5,836,000 | ||||||
Weighted Average Remaining Life (Years) | 13 years 3 months 18 days | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | $ 5,400,000 | 5,836,000 | $ 5,836,000 | ||||||
Acquired developed technology | Sampleminded Inc | |||||||||
Property, plant and equipment | |||||||||
Estimated Useful Life | 8 years | ||||||||
Amortization expense over remaining useful life | |||||||||
Identifiable intangible assets | $ 900,000 | ||||||||
Acquired developed technology | Biomatrica, Inc | |||||||||
Finite-Lived Intangible Assets | |||||||||
Weighted Average Remaining Life (Years) | 15 years | ||||||||
Internally developed technology | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 536,000 | 536,000 | |||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 536,000 | $ 536,000 | |||||||
Weighted Average Remaining Life (Years) | 2 years 4 months 24 days | ||||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 536,000 | $ 536,000 | |||||||
Licensed intellectual property and patents | |||||||||
Amortization expense over remaining useful life | |||||||||
Intangible asset, estimated useful life | 10 years | ||||||||
Noncompete Agreements | Sampleminded Inc | |||||||||
Property, plant and equipment | |||||||||
Estimated Useful Life | 5 years | ||||||||
Amortization expense over remaining useful life | |||||||||
Identifiable intangible assets | $ 32,000 | ||||||||
Armune | Licensed intellectual property and patents | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 10,800,000 | $ 10,800,000 | 11,300,000 | ||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 10,800,000 | 10,800,000 | 11,300,000 | ||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 10,800,000 | 10,800,000 | 11,300,000 | ||||||
Amortization of intangible assets | 200,000 | 200,000 | 500,000 | 500,000 | |||||
Asset Purchase Agreement | Armune | Licensed intellectual property and patents | |||||||||
Amortization expense over remaining useful life | |||||||||
Purchases of intangible assets | $ 12,000,000 | ||||||||
Contingent payment obligations | 17,500,000 | ||||||||
Intangible asset acquired | $ 12,200,000 | ||||||||
MDx Health | |||||||||
Amortization expense over remaining useful life | |||||||||
Liabilities relieved were related to historical milestones and accrued royalties | $ 6,600,000 | ||||||||
MDx Health | Patents | |||||||||
Amortization expense over remaining useful life | |||||||||
Amount paid in exchange for intangible assets | 15,000,000 | ||||||||
MDx Health | Royalty Buy-Out Agreement | Patents | |||||||||
Amortization expense over remaining useful life | |||||||||
Amount paid in exchange for intangible assets | 8,000,000 | ||||||||
MDx Health | Royalty Buy-Out Agreement | Licensed intellectual property and patents | |||||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 7,000,000 | 7,000,000 | 7,700,000 | ||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 7,000,000 | 7,000,000 | 7,700,000 | ||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | 7,000,000 | 7,000,000 | 7,700,000 | ||||||
Amortization of intangible assets | 300,000 | $ 300,000 | 700,000 | $ 700,000 | |||||
MDx Health | Patent Purchase Agreement | Patents | |||||||||
Amortization expense over remaining useful life | |||||||||
Amount paid in exchange for intangible assets | $ 7,000,000 | ||||||||
Land | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 4,466,000 | 4,466,000 | 4,466,000 | ||||||
Leasehold and building improvements | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 59,796,000 | 59,796,000 | 38,895,000 | ||||||
Assets under construction | 166,400,000 | 166,400,000 | |||||||
Expected cost to complete project | 96,500,000 | 96,500,000 | |||||||
Land improvements | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 1,766,000 | $ 1,766,000 | $ 1,530,000 | ||||||
Estimated Useful Life | 15 years | 15 years | |||||||
Buildings | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 18,086,000 | $ 18,086,000 | $ 7,928,000 | ||||||
Estimated Useful Life | 30 years | 30 years | |||||||
Computer equipment and computer software | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 38,225,000 | $ 38,225,000 | $ 36,969,000 | ||||||
Estimated Useful Life | 3 years | 3 years | |||||||
Assets under construction | 13,800,000 | $ 13,800,000 | |||||||
Expected cost to complete project | 3,300,000 | 3,300,000 | |||||||
Laboratory equipment | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 66,347,000 | 66,347,000 | $ 37,518,000 | ||||||
Assets under construction | 25,900,000 | 25,900,000 | |||||||
Expected cost to complete project | 8,300,000 | $ 8,300,000 | |||||||
Laboratory equipment | Minimum | |||||||||
Property, plant and equipment | |||||||||
Estimated Useful Life | 3 years | 3 years | |||||||
Laboratory equipment | Maximum | |||||||||
Property, plant and equipment | |||||||||
Estimated Useful Life | 10 years | 10 years | |||||||
Furniture and fixtures | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 11,267,000 | $ 11,267,000 | $ 8,353,000 | ||||||
Estimated Useful Life | 3 years | 3 years | |||||||
Assets under construction | |||||||||
Property, plant and equipment | |||||||||
Property, plant and equipment, at cost | 206,120,000 | $ 206,120,000 | $ 167,462,000 | ||||||
Goodwill and Intangible assets | |||||||||
Finite-lived intangible assets, net | 318,000 | 318,000 | 51,000 | ||||||
Finite-Lived Intangible Assets | |||||||||
Intangibles, net | 318,000 | 318,000 | 51,000 | ||||||
Amortization expense over remaining useful life | |||||||||
Finite-lived intangible assets, net | $ 318,000 | $ 318,000 | $ 51,000 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Net Loss Per Share (Details) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 18,707 | 21,274 |
Option Plan Shares | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 2,387 | 2,918 |
Restricted Stock | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 4,123 | 6,312 |
Convertible Notes | ||
Common shares not included in the computation of diluted net loss per share | ||
Potentially issuable common shares not included in the computation of diluted net loss per share because they would have an anti-dilutive effect | 12,197 | 12,044 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Inventory (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||||
Revenue recognized | $ 199,870 | $ 102,894 | $ 361,913 | $ 193,190 | |
Contract Balances | |||||
Deferred revenue balances, included in other short-term liabilities | 700 | 700 | $ 500 | ||
Revenue recognized, previously included in deferred revenue | 200 | 100 | $ 300 | 100 | |
Practical Expedients | |||||
Company expects the collection cycle | true | ||||
Amortization period | true | ||||
Inventory | |||||
Raw materials | 15,473 | $ 15,473 | 12,761 | ||
Semi-finished and finished goods | 32,308 | 32,308 | 26,387 | ||
Total inventory | 47,781 | 47,781 | $ 39,148 | ||
Variable consideration | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue recognized from changes in transaction prices | 1,800 | 3,400 | 3,400 | 11,900 | |
Medicare Parts B & C | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue recognized | 103,569 | 59,706 | 186,486 | 112,181 | |
Commercial | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue recognized | 88,818 | 39,589 | 162,169 | 74,423 | |
Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue recognized | $ 7,483 | $ 3,599 | $ 13,258 | $ 6,586 |
MAYO LICENSE AGREEMENT (Details
MAYO LICENSE AGREEMENT (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Oct. 31, 2017USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Feb. 28, 2015USD ($)installment | |
Other Payments | ||||||||||
Charges incurred as part of the research collaboration | $ 30,203,000 | $ 14,712,000 | $ 62,219,000 | $ 29,647,000 | ||||||
Licensing Agreements | Mayo | ||||||||||
Other Payments | ||||||||||
Charges incurred as part of the research collaboration | 1,100,000 | 1,400,000 | 2,600,000 | 2,600,000 | ||||||
Payments for research and development efforts | 1,800,000 | 800,000 | 2,900,000 | 2,600,000 | ||||||
Estimated liability for research and development efforts | 1,600,000 | 1,800,000 | $ 1,600,000 | 1,800,000 | ||||||
Amendments | ||||||||||
License fees payable in five annual installments | $ 5,000,000 | |||||||||
License fee payments | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | ||||||
Number of annual installments in which license fees are payable | installment | 5 | |||||||||
Number of periods each installment is amortized over | 12 months | |||||||||
Amortization of installments | $ 300,000 | $ 500,000 | $ 300,000 | $ 500,000 | ||||||
Licensing Agreements | Mayo | Sales Milestone Range One | ||||||||||
Warrants | ||||||||||
Amount agreed to be paid upon reaching the specified amount of net sales | $ 200,000 | |||||||||
Net sales of a licensed product | 5,000,000 | |||||||||
Licensing Agreements | Mayo | Sales Milestone Range Two | ||||||||||
Warrants | ||||||||||
Amount agreed to be paid upon reaching the specified amount of net sales | 800,000 | |||||||||
Net sales of a licensed product | 20,000,000 | |||||||||
Licensing Agreements | Mayo | Sales Milestone Range Three | ||||||||||
Warrants | ||||||||||
Amount agreed to be paid upon reaching the specified amount of net sales | 2,000,000 | |||||||||
Net sales of a licensed product | $ 50,000,000 | |||||||||
Licensing Agreements | Mayo | Minimum | ||||||||||
Warrants | ||||||||||
Royalty payments | $ 25,000 |
PFIZER PROMOTION AGREEMENT (Det
PFIZER PROMOTION AGREEMENT (Details) - Pfizer Inc - Cologuard promotion agreement - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||
Charges for promotion, sales and marketing | $ 16.6 | $ 33.9 | |
Liability for promotion, sales and marketing services | 16.6 | 16.6 | $ 0.5 |
Service fee based on incremental gross profits over specified baselines and royalties | 19.4 | 38.6 | |
Liability for promotion fee | $ 43.4 | $ 43.4 | $ 4.8 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-based compensation expense | ||||
Stock-based compensation expense | $ 20.1 | $ 15.6 | $ 36.3 | $ 28.1 |
STOCK-BASED COMPENSATION - Modi
STOCK-BASED COMPENSATION - Modified Vesting of Shares (Details) - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2018 | |
Stock-based compensation | ||||
Stock-based compensation | $ 36,309 | $ 28,056 | ||
Non-cash stock-based compensation expense | $ 3,900 | |||
Former Chief Operating Officer | ||||
Stock-based compensation | ||||
Accelerated vesting, shares | 69,950 | |||
Former Chief Operating Officer | Restricted Shares and RSUs | ||||
Stock-based compensation | ||||
Accelerated vesting, shares | 54,350 |
STOCK-BASED COMPENSATION - Fair
STOCK-BASED COMPENSATION - Fair Value and Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Jun. 28, 2019 | |
Valuation assumptions | ||||||
Dividend yield (as a percent) | 0.00% | |||||
Aggregate Intrinsic Value | ||||||
Weighted average period for recognition of cost | 3 years | |||||
Minimum | ||||||
Valuation assumptions | ||||||
Expected term (in years) | 6 years 3 months 10 days | 5 years 5 months 12 days | ||||
Maximum | ||||||
Valuation assumptions | ||||||
Expected term (in years) | 6 years 5 months 8 days | |||||
Option Plan Shares | ||||||
Valuation assumptions | ||||||
Risk-free interest rates, minimum (as a percent) | 2.54% | 2.73% | ||||
Risk-free interest rates, maximum (as a percent) | 2.59% | 2.79% | ||||
Expected term (in years) | 6 years 3 months 10 days | |||||
Expected volatility, minimum (as a percent) | 64.95% | 61.82% | ||||
Expected volatility, maximum (as a percent) | 65.00% | 66.17% | ||||
Dividend yield (as a percent) | 0.00% | 0.00% | ||||
Weighted average fair value per share of options granted during the period (in dollars per share) | $ 57.11 | $ 24.55 | ||||
ESPP Shares | ||||||
Valuation assumptions | ||||||
Risk-free interest rates, minimum (as a percent) | 2.31% | 2.05% | 2.31% | 2.05% | ||
Risk-free interest rates, maximum (as a percent) | 2.44% | 2.50% | 2.44% | 2.50% | ||
Expected volatility, minimum (as a percent) | 55.00% | 51.70% | 55.00% | 51.70% | ||
Expected volatility, maximum (as a percent) | 57.60% | 65.40% | 57.60% | 65.40% | ||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | |||
Weighted average fair value per share of options granted during the period (in dollars per share) | $ 35.91 | $ 18.68 | $ 35.91 | $ 18.68 | ||
ESPP Shares | Minimum | ||||||
Valuation assumptions | ||||||
Expected term (in years) | 6 months | 6 months | 6 months | 6 months | ||
ESPP Shares | Maximum | ||||||
Valuation assumptions | ||||||
Expected term (in years) | 2 years | 2 years | 2 years | 2 years | ||
Restricted Shares and RSUs | ||||||
Restricted Shares and RSUs | ||||||
Outstanding at the beginning of the period (in shares) | 6,246,174 | |||||
Granted (in shares) | 1,513,290 | |||||
Released (in shares) | (3,506,123) | |||||
Forfeited (in shares) | (130,125) | |||||
Outstanding at the end of the period (in shares) | 4,123,216 | 4,123,216 | 6,246,174 | |||
Weighted Average Grant Date Fair Value | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 23.16 | |||||
Granted (in dollars per share) | 91.36 | |||||
Released (in dollars per share) | 11.52 | |||||
Forfeited (in dollars per share) | 54.17 | |||||
Outstanding at the end of the period (in dollars per share) | $ 57.49 | $ 57.49 | $ 23.16 | |||
Stock Plans | ||||||
Shares | ||||||
Outstanding at the beginning of the period (in shares) | 2,531,561 | |||||
Granted (in shares) | 186,044 | |||||
Exercised (in shares) | (314,071) | |||||
Forfeited (in shares) | (16,548) | |||||
Outstanding at the end of the period (in shares) | 2,386,986 | 2,386,986 | 2,531,561 | |||
Exercisable at the end of the period (in shares) | 1,431,015 | 1,431,015 | ||||
Weighted Average Exercise Price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 17.86 | |||||
Granted (in dollars per share) | 92.61 | |||||
Exercised (in dollars per share) | 15.91 | |||||
Forfeited (in dollars per share) | 32.35 | |||||
Outstanding at the end of the period (in dollars per share) | $ 23.84 | 23.84 | $ 17.86 | |||
Exercisable at the end of the period (in dollars per share) | $ 14.35 | $ 14.35 | ||||
Weighted Average Remaining Contractual Term | ||||||
Outstanding at the end of the period | 6 years 7 months 6 days | 6 years 3 months 18 days | ||||
Exercisable at the end of the period | 5 years 7 months 6 days | |||||
Aggregate Intrinsic Value | ||||||
Outstanding at the end of the period | $ 224,845 | $ 224,845 | ||||
Exercisable at the end of the period | 148,385 | 148,385 | ||||
Total intrinsic value of options exercised | 22,600 | $ 36,300 | ||||
Unrecognized compensation cost | $ 198,900 | $ 198,900 | ||||
Stock Plans | Maximum | ||||||
Aggregate Intrinsic Value | ||||||
Market price (in dollars per share) | $ 118.04 |
FAIR VALUE - Fair Value Measure
FAIR VALUE - Fair Value Measurements (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Fair value measurements | ||
Cash and cash equivalents | $ 205,058 | $ 160,430 |
Available-for-sale marketable securities | 1,034,364 | 963,752 |
Fair Value | ||
Fair value measurements | ||
Contingent consideration | (2,942) | (3,060) |
Total | 1,236,710 | 1,121,122 |
Level 1 | ||
Fair value measurements | ||
Total | 125,471 | 86,375 |
Level 2 | ||
Fair value measurements | ||
Total | 1,114,181 | 1,037,807 |
Level 3 | ||
Fair value measurements | ||
Contingent consideration | (2,942) | (3,060) |
Total | (2,942) | (3,060) |
Cash and money market | Fair Value | ||
Fair value measurements | ||
Cash and cash equivalents | 125,471 | 86,375 |
Cash and money market | Level 1 | ||
Fair value measurements | ||
Cash and cash equivalents | 125,471 | 86,375 |
U.S. government agency securities | Fair Value | ||
Fair value measurements | ||
Cash and cash equivalents | 61,357 | 49,985 |
Available-for-sale marketable securities | 220,173 | 250,471 |
U.S. government agency securities | Level 2 | ||
Fair value measurements | ||
Cash and cash equivalents | 61,357 | 49,985 |
Available-for-sale marketable securities | 220,173 | 250,471 |
Commercial paper | Fair Value | ||
Fair value measurements | ||
Cash and cash equivalents | 18,230 | 24,070 |
Available-for-sale marketable securities | 16,898 | 12,151 |
Commercial paper | Level 2 | ||
Fair value measurements | ||
Cash and cash equivalents | 18,230 | 24,070 |
Available-for-sale marketable securities | 16,898 | 12,151 |
Corporate bonds | Fair Value | ||
Fair value measurements | ||
Available-for-sale marketable securities | 448,531 | 392,287 |
Corporate bonds | Level 2 | ||
Fair value measurements | ||
Available-for-sale marketable securities | 448,531 | 392,287 |
Asset backed securities | Fair Value | ||
Fair value measurements | ||
Available-for-sale marketable securities | 292,854 | 276,999 |
Asset backed securities | Level 2 | ||
Fair value measurements | ||
Available-for-sale marketable securities | 292,854 | 276,999 |
Certificates of deposit | Fair Value | ||
Fair value measurements | ||
Available-for-sale marketable securities | 55,908 | 31,844 |
Certificates of deposit | Level 2 | ||
Fair value measurements | ||
Available-for-sale marketable securities | 55,908 | $ 31,844 |
Deferred compensation plan assets | Fair Value | ||
Fair value measurements | ||
Other long-term assets | 230 | |
Deferred compensation plan assets | Level 2 | ||
Fair value measurements | ||
Other long-term assets | $ 230 |
FAIR VALUE - Unrealized loss po
FAIR VALUE - Unrealized loss positions and contractual underlying maturities (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | $ 65,871 |
Total fair value of available for sale securities in a continuous unrealized loss position for greater than twelve months | 35,160 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 101,031 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (8) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for greater than twelve months | (18) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (26) |
Contractual maturities of the available-for-sale investments, Cost | |
Due in one year or less | 514,891 |
Due after one year through four years | 516,742 |
Contractual maturities of the available-for-sale investments, Fair Value | |
Due in one year or less | 515,693 |
Due after one year through four years | 518,671 |
Corporate bonds | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 27,195 |
Total fair value of available for sale securities in a continuous unrealized loss position for greater than twelve months | 2,500 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 29,695 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (3) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for greater than twelve months | (3) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (6) |
Contractual maturities of the available-for-sale investments, Cost | |
Due in one year or less | 208,610 |
Due after one year through four years | 238,559 |
Contractual maturities of the available-for-sale investments, Fair Value | |
Due in one year or less | 208,852 |
Due after one year through four years | 239,679 |
U.S. government agency securities | |
Contractual maturities of the available-for-sale investments, Cost | |
Due in one year or less | 164,809 |
Due after one year through four years | 55,002 |
Contractual maturities of the available-for-sale investments, Fair Value | |
Due in one year or less | 165,153 |
Due after one year through four years | 55,020 |
Asset backed securities | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 16,774 |
Total fair value of available for sale securities in a continuous unrealized loss position for greater than twelve months | 32,660 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 49,434 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (3) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for greater than twelve months | (15) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (18) |
Contractual maturities of the available-for-sale investments, Cost | |
Due in one year or less | 77,717 |
Due after one year through four years | 214,256 |
Contractual maturities of the available-for-sale investments, Fair Value | |
Due in one year or less | 77,862 |
Due after one year through four years | 214,992 |
Certificates of deposit | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 5,004 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 5,004 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (1) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (1) |
Contractual maturities of the available-for-sale investments, Cost | |
Due in one year or less | 46,856 |
Due after one year through four years | 8,925 |
Contractual maturities of the available-for-sale investments, Fair Value | |
Due in one year or less | 46,928 |
Due after one year through four years | 8,980 |
Commercial paper | |
Fair value of investments in unrealized loss positions | |
Total fair value of available-for-sale securities in a continuous unrealized loss position for less than twelve months | 16,898 |
Total fair value of available-for-sale securities in a continuous unrealized loss position | 16,898 |
Gross unrealized loss of investments in unrealized loss positions | |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position for less than twelve months | (1) |
Total gross unrealized losses of available-for-sale securities in a continuous unrealized loss position | (1) |
Contractual maturities of the available-for-sale investments, Cost | |
Due in one year or less | 16,899 |
Contractual maturities of the available-for-sale investments, Fair Value | |
Due in one year or less | $ 16,898 |
FAIR VALUE - Long-Term Debt and
FAIR VALUE - Long-Term Debt and Convertible Notes (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Carrying Amount | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Construction loan | $ 24,844 | $ 24,502 |
Fair Value | Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Construction loan | 24,844 | 24,502 |
2027 Convertible notes | Carrying Amount | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Convertible notes | 469,595 | |
2027 Convertible notes | Fair Value | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Convertible notes | 916,158 | |
2025 Convertible notes | Carrying Amount | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Convertible notes | 311,598 | 664,749 |
2025 Convertible notes | Fair Value | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Convertible notes | $ 696,337 | $ 956,196 |
NEW MARKET TAX CREDIT (Details)
NEW MARKET TAX CREDIT (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2014USD ($)facility | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | |
Other long-term liabilities | |||||
Disclosures related to New Market Tax Credit | |||||
Financing arrangement, amount outstanding | $ 2.4 | ||||
New Market Tax Credit Program | |||||
Disclosures related to New Market Tax Credit | |||||
Net proceeds received from financing arrangements | $ 2.4 | ||||
Number of facilities receiving working capital and capital improvements from financing agreements | facility | 1 | ||||
Amortization of contribution liability recognized as a decrease in expenses | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 | |
New Market Tax Credit Program | Other long-term liabilities | |||||
Disclosures related to New Market Tax Credit | |||||
Financing arrangement, amount outstanding | $ 0.8 | $ 0.8 | |||
Variable Interest Entity, Primary Beneficiary | |||||
Disclosures related to New Market Tax Credit | |||||
Debt issuance costs | $ 0.2 | ||||
Investor | New Market Tax Credit Program | |||||
Disclosures related to New Market Tax Credit | |||||
Recapture period | 7 years | ||||
Investor | Variable Interest Entity, Primary Beneficiary | Cash and cash equivalents | |||||
Disclosures related to New Market Tax Credit | |||||
Financing arrangement, investor contribution | $ 2.4 | ||||
Investor | Variable Interest Entity, Primary Beneficiary | Other long-term liabilities | |||||
Disclosures related to New Market Tax Credit | |||||
Financing arrangement, amount outstanding | $ 1.2 | $ 1.2 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) | Oct. 12, 2015 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2018 | Jun. 30, 2015 |
Long-term debt | |||||||
Consideration received in the sale, financing obligation | $ 6,800,000 | ||||||
Amortization of debt issuance costs | $ 645,000 | $ 517,000 | 1,330,000 | $ 920,000 | |||
Building Purchase Mortgage | |||||||
Long-term debt | |||||||
Credit agreement, outstanding balance | $ 0 | $ 0 | |||||
Fully repaid outstanding balance of the mortgage | $ 4,500,000 | ||||||
Deferred financing costs | $ 0 | ||||||
Building Purchase Mortgage | |||||||
Long-term debt | |||||||
Credit agreement, outstanding balance | $ 5,100,000 | ||||||
Interest rate (as a percent) | 4.15% | ||||||
Monthly principal and interest payments | $ 31,000 | ||||||
Final payment that would have been due June 12, 2019 | $ 4,400,000 | ||||||
Deferred financing costs | $ 100,000 | ||||||
Amortization of debt issuance costs | $ 4,000 | $ 9,000 |
LONG-TERM DEBT - Revolving and
LONG-TERM DEBT - Revolving and Construction Loan Agreements (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Dec. 31, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | Nov. 30, 2017 | |
Long-term debt | |||||||
Amortization of Financing Costs | $ 645,000 | $ 517,000 | $ 1,330,000 | $ 920,000 | |||
Construction Loan Agreement | |||||||
Long-term debt | |||||||
Amount drawn from loan | 25,000,000 | 25,000,000 | $ 24,700,000 | ||||
Face amount | $ 25,600,000 | ||||||
Amortization period | 20 years | ||||||
Initial investment | $ 16,400,000 | ||||||
Interest-only payments | 200,000 | 200,000 | |||||
Interest incurred, accrued for as an interest reserve | 700,000 | ||||||
Interest Costs Capitalized | 700,000 | ||||||
Amortization of Financing Costs | $ 11,000 | $ 11,000 | $ 23,000 | $ 23,000 | |||
Deferred financing costs | $ 200,000 | ||||||
Construction Loan Agreement | 1-month LIBOR | |||||||
Long-term debt | |||||||
Variable rate | 2.25% | ||||||
Revolving Loan Agreement | |||||||
Long-term debt | |||||||
Term | 24 months | ||||||
Maximum borrowing capacity | $ 15,000,000 | ||||||
Revolving Loan Agreement | 1-month LIBOR | |||||||
Long-term debt | |||||||
Variable rate | 2.00% | ||||||
Revolving Loan Agreement | 3-month LIBOR | |||||||
Long-term debt | |||||||
Variable rate | 2.00% | ||||||
Revolving Loan Agreement | MB Bank Reference Rate | |||||||
Long-term debt | |||||||
Variable rate | 0.50% | ||||||
City Letter of Credit | |||||||
Long-term debt | |||||||
Interest-only payment, period | 24 months | ||||||
City Letter of Credit | Construction Loan Agreement | |||||||
Long-term debt | |||||||
Maximum borrowing capacity | $ 600,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - (Details) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Options to terminate the lease | false | false |
Termination term | 1 year | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease terms | 1 year | 1 year |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Remaining lease terms | 6 years | 6 years |
Renewal term of lease | 10 years | 10 years |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | Jan. 01, 2019 | |
Components of lease expense | |||
Operating lease cost (cost resulting from lease payments) | $ 1,306 | $ 2,392 | |
Short-term lease cost | 42 | 103 | |
Total lease expense | 1,348 | 2,495 | |
Right-of-use assets | $ 21,700 | $ 21,700 | $ 20,600 |
Financial position | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Total | $ 20,585 | $ 20,585 | $ 20,100 |
Outstanding lease obligations, current | $ 3,700 | $ 3,700 | $ 3,000 |
Financial position | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Outstanding lease obligations, noncurrent | $ 16,900 | $ 16,900 | $ 17,100 |
Financial position | us-gaap:ContractualObligation | us-gaap:ContractualObligation | us-gaap:ContractualObligation |
Single lease component | true | ||
Weighted average discount rate | 7.82% | 7.82% | |
Weighted average lease term remaining on lease liabilities | 5 years 11 months 15 days | 5 years 11 months 15 days | |
Operating cash flows from operating leases | $ 1,300 | $ 2,400 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 |
Maturities of operating lease liabilities | ||
2019 | $ 5,075 | |
2020 | 4,585 | |
2021 | 3,910 | |
2022 | 3,768 | |
2023 | 3,779 | |
Thereafter | 7,156 | |
Total minimum lease payments | 28,273 | |
Imputed interest | (7,688) | |
Total | $ 20,585 | $ 20,100 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Contribution funded by owner | $ 3,900 | ||
Option to extend lease not yet commenced | false | ||
Initial term of lease not yet commenced | 15 years | ||
Renewal term of lease not yet commenced | 10 years | ||
Amount funded towards construction costs | $ 4,500 | ||
Additional amount to be recognized at lease commencement for the right-of-use asset | 21,700 | $ 20,600 | |
Tenant Improvements | 1,100 | ||
Additional amount to be recognized at lease commencement for the lease liability | 20,585 | $ 20,100 | |
Accounts Payable and Accrued Liabilities [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Contribution funded by owner | 1,800 | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Tenant Improvements | 5,500 | ||
Construction project | |||
Lessee, Lease, Description [Line Items] | |||
Amount of contribution | 2,700 | ||
Construction project | Other long-term liabilities | |||
Lessee, Lease, Description [Line Items] | |||
Contribution funded by owner | $ 2,100 | ||
Forecast Adjustment | |||
Lessee, Lease, Description [Line Items] | |||
Additional amount to be recognized at lease commencement for the right-of-use asset | 32,200 | ||
Additional amount to be recognized at lease commencement for the lease liability | $ 32,200 |
WISCONSIN ECONOMIC DEVELOPMEN_2
WISCONSIN ECONOMIC DEVELOPMENT TAX CREDIT (Details) - Wisconsin Economic Development Tax Credit Agreement $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2015USD ($)item | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | |
Agreements | |||||
Refundable tax credits available, contingent on the Company expending $26.3 million in capital investments and establishing 758 full-time positions | $ 9 | ||||
Capital investment expenditures over specified period, requirement to earn the refundable tax credits | $ 26.3 | ||||
Full-time positions that must be created over a specified time period to earn the refundable tax credits | item | 758 | ||||
Period over which the capital investment expenditures must be incurred and the creation of full-time positions must be completed | 7 years | ||||
Refundable tax credits earned | $ 9 | ||||
Refundable tax credit received | 4.3 | ||||
Refundable tax credit receivable | $ 4.7 | 4.7 | |||
Amortization of tax credits | 0.6 | $ 0.4 | 1.2 | $ 1 | |
Prepaid expenses and other current assets | |||||
Agreements | |||||
Refundable tax credit receivable | 1.6 | 1.6 | |||
Other long-term assets | |||||
Agreements | |||||
Refundable tax credit receivable | 3.1 | 3.1 | |||
Short-term other liabilities | |||||
Agreements | |||||
Refundable tax credit, offsetting liability | 2.4 | 2.4 | |||
Other long-term liabilities | |||||
Agreements | |||||
Refundable tax credit, offsetting liability | $ 1 | $ 1 |
CONVERTIBLE NOTES (Details)
CONVERTIBLE NOTES (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 31, 2019 | Mar. 08, 2019 | Dec. 31, 2018 | Jan. 17, 2018 |
Convertible Notes | |||||
Convertible notes | |||||
Coupon Interest Rate | 1.00% | ||||
Notes | |||||
Convertible notes | |||||
Coupon Interest Rate | 0.375% | 0.375% | |||
Total Convertible notes | $ 1,162,604 | $ 908,500 | |||
Less: Debt discount | (363,603) | (227,403) | |||
Less: Debt issuance costs | (17,808) | (16,348) | |||
Net convertible debt including current maturities | 781,193 | 664,749 | |||
Less: Current maturities | (311,598) | ||||
Net long-term convertible debt | $ 469,595 | 664,749 | |||
2027 Convertible notes | |||||
Convertible notes | |||||
Coupon Interest Rate | 0.375% | ||||
Effective interest rate (as a percent) | 6.30% | ||||
Fair Value of Liability Component at Issuance | $ 472,501 | ||||
Total Convertible notes | 747,500 | ||||
Less: Debt discount | $ (266,952) | ||||
2025 Convertible notes | |||||
Convertible notes | |||||
Coupon Interest Rate | 1.00% | ||||
Effective interest rate (as a percent) | 6.00% | ||||
Fair Value of Liability Component at Issuance | $ 299,188 | ||||
Total Convertible notes | 415,104 | 908,500 | |||
Less: Debt discount | $ (96,651) | (227,403) | |||
Liability component | 654,800 | ||||
Equity component | 269,700 | ||||
Premium | $ 14,200 |
CONVERTIBLE NOTES - Unamortized
CONVERTIBLE NOTES - Unamortized discount and debt issuance costs (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Notes | ||
Convertible notes | ||
Unamortized discount | $ 363,603 | $ 227,403 |
Debt issuance costs, gross | 17,808 | 16,348 |
2027 Convertible notes | ||
Convertible notes | ||
Unamortized discount | 266,952 | |
Debt issuance costs, gross | 10,954 | |
2025 Convertible notes | ||
Convertible notes | ||
Unamortized discount | 96,651 | 227,403 |
Debt issuance costs, gross | $ 6,854 | $ 16,348 |
CONVERTIBLE NOTES - Additional
CONVERTIBLE NOTES - Additional information (Details) | Mar. 08, 2019USD ($) | Jun. 12, 2018USD ($) | Jan. 17, 2018USD ($) | Mar. 31, 2019USD ($)shares | Jun. 30, 2019USD ($)$ / shares | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 28, 2019$ / shares |
Debt Instrument [Line Items] | |||||||||
Net proceeds from issuance | $ 729,479,000 | $ 896,425,000 | |||||||
Repayments of debt in cash | $ 493,356,000 | ||||||||
Issuance of common stock upon convertible notes settlement (in shares) | shares | 2,158,991 | ||||||||
Closing price of common stock | $ / shares | $ 118.04 | ||||||||
Interest expense | |||||||||
Debt issuance costs amortization | $ 645,000 | $ 517,000 | $ 1,330,000 | 920,000 | |||||
Debt discount amortization | 10,075,000 | 6,171,000 | 18,468,000 | 10,822,000 | |||||
Loss on settlement of convertible notes | 10,558,000 | ||||||||
Coupon interest expense | 1,739,000 | 1,866,000 | 3,846,000 | 3,271,000 | |||||
Interest Expense, Debt, Total | 12,459,000 | 8,554,000 | 34,202,000 | 15,013,000 | |||||
Other interest expense | 253,000 | 49,000 | 500,000 | 100,000 | |||||
Total interest expense | $ 12,712,000 | $ 8,603,000 | $ 34,702,000 | $ 15,113,000 | |||||
Convertible Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Fixed interest rate (as a percent) | 1.00% | ||||||||
Net proceeds from issuance | $ 671,100,000 | ||||||||
Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount issued and sold | $ 747,500,000 | ||||||||
Fixed interest rate (as a percent) | 0.375% | 0.375% | |||||||
Net proceeds from issuance | $ 729,500,000 | ||||||||
Repurchase price, as percentage of principal amount, if company undergoes change of control | 100 | ||||||||
2027 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of debt in cash | $ 494,000,000 | ||||||||
Issuance of common stock upon convertible notes settlement (in shares) | shares | 2,200,000 | ||||||||
Value of shares issued to settle notes payable | $ 182,400,000 | ||||||||
Total consideration | 676,500,000 | ||||||||
Conversion rate, number of shares to be issued per $1,000 of principal amount (in shares) | 8.9554 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 111.66 | $ 111.66 | |||||||
Interest expense amortization term | 8 years | 7 years 8 months 15 days | |||||||
Total transaction costs | $ 18,000,000 | ||||||||
Transaction costs allocated to liability component | $ 11,400,000 | ||||||||
If-converted value of debt in excess of principal amount | $ 42,700,000 | ||||||||
2025 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Repayments of Debt | 493,400,000 | ||||||||
Total consideration, allocated to liability component | 375,100,000 | ||||||||
Total consideration, allocated to equity component | 300,800,000 | ||||||||
Amount used to pay off interest accrued | $ 600,000 | ||||||||
Conversion rate, number of shares to be issued per $1,000 of principal amount (in shares) | 13.2569 | ||||||||
Conversion price (in dollars per share) | $ / shares | $ 75.43 | $ 75.43 | |||||||
Interest expense amortization term | 5 years 6 months 18 days | ||||||||
Percentage of closing sales price of entity's common stock that the conversion price must exceed in order for notes to be convertible | 130.00% | ||||||||
Number of days within 30 consecutive trading days in which the closing price of entity's common stock must exceed the conversion price for notes to be convertible into common stock | 20 | ||||||||
Number of consecutive trading days during which the closing price of entity's common stock must exceeds the conversion price for at least 20 days in order for the notes to be convertible into common stock | 30 | ||||||||
If-converted value of debt in excess of principal amount | $ 234,500,000 | ||||||||
January 2018 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount issued and sold | $ 690,000,000 | ||||||||
Fixed interest rate (as a percent) | 1.00% | ||||||||
Net proceeds from issuance | $ 671,100,000 | ||||||||
Interest expense amortization term | 7 years | ||||||||
Total transaction costs | $ 18,800,000 | ||||||||
Transaction costs allocated to liability component | $ 13,600,000 | ||||||||
June 2018 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Amount issued and sold | $ 218,500,000 | ||||||||
Fixed interest rate (as a percent) | 1.00% | ||||||||
Net proceeds from issuance | $ 225,300,000 | ||||||||
Interest expense amortization term | 6 years 6 months | ||||||||
Total transaction costs | $ 7,400,000 | ||||||||
Transaction costs allocated to liability component | $ 5,100,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income tax benefit (expense) | $ 443,000 | $ 1,000 | $ 913,000 | $ (58,000) |
RELATED PARTY TRANSACTION (Deta
RELATED PARTY TRANSACTION (Details) - Director - Professional Services Agreement - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | |
RELATED PARTY TRANSACTIONS | ||
Aggregate cash payments | $ 20,000 | $ 0.1 |
Charges incurred | $ 0.1 | $ 0.2 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jan. 01, 2019 |
Components of lease expense | ||
Right-of-use assets | $ 21,700 | $ 20,600 |
Financial position | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Total | $ 20,585 | $ 20,100 |
Outstanding lease obligations, current | $ 3,700 | $ 3,000 |
Financial position | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Outstanding lease obligations, noncurrent | $ 16,900 | $ 17,100 |
Financial position | us-gaap:ContractualObligation | us-gaap:ContractualObligation |
SUBSEQUENT EVENTS - Merger Agre
SUBSEQUENT EVENTS - Merger Agreement (Details) - Subsequent Event - Merger Agreement with Genomic Health, Inc. - Forecast | Jul. 28, 2019USD ($)$ / shares |
Subsequent events | |
Cash and stock transaction, value | $ 2,800,000,000 |
Conversion of shares, cash received per share | $ / shares | $ 27.50 |
Conversion ratio, if measurement price is equal or greater than $120.75 | 0.36854 |
Volume-weighted average price, Number of trading days | 15 days |
0.36854 conversion ratio, minimum measurement price | $ 120.75 |
Price used to calculate the measurement price | 44.50 |
Measurement price, threshold, bottom of range | 98.79 |
Measurement price, threshold, top of range | $ 120.75 |
Conversion ratio, if measurement price is equal or less than $98.79 | 0.45043 |
.45043 conversion ratio, maximum measurement price | $ 98.79 |