Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 28, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | GENOMIC HEALTH INC | ||
Entity Central Index Key | 1,131,324 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 485.3 | ||
Entity Common Stock, Shares Outstanding | 34,066,690 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 40,404 | $ 32,533 |
Short-term marketable securities | 56,585 | 62,410 |
Accounts receivable (net of allowance for doubtful accounts; 2016—$4,508, 2015—$3,988) | 35,179 | 37,164 |
Prepaid expenses and other current assets | 13,796 | 10,843 |
Total current assets | 145,964 | 142,950 |
Property and equipment, net | 45,688 | 39,746 |
Other assets | 9,462 | 1,921 |
Total assets | 201,114 | 184,617 |
Current liabilities: | ||
Accounts payable | 2,864 | 8,585 |
Accrued compensation and employee benefits | 27,900 | 22,239 |
Accrued license fees | 2,287 | |
Accrued expenses and other current liabilities | 10,180 | 8,922 |
Deferred revenues | 431 | |
Other current liabilities | 231 | 208 |
Total current liabilities | 41,175 | 42,672 |
Other liabilities | 3,834 | 2,410 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.0001 par value; 100,000,000 shares authorized, 34,893,329 and 33,861,759 shares issued and 33,831,998 and 32,800,428 shares outstanding at December 31, 2016 and 2015, respectively | 3 | 3 |
Additional paid- in capital | 427,102 | 395,059 |
Accumulated other comprehensive income | 1,198 | 2,752 |
Accumulated deficit | (242,088) | (228,169) |
Treasury stock, at cost, 1,061,331 shares at December 31, 2016 and 2015 | (30,110) | (30,110) |
Total stockholders' equity | 156,105 | 139,535 |
Total liabilities and stockholders' equity | $ 201,114 | $ 184,617 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 4,508 | $ 3,988 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 34,893,329 | 33,861,759 |
Common stock, shares outstanding | 33,831,998 | 32,800,428 |
Treasury stock, shares | 1,061,331 | 1,061,331 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues: | |||
Product revenues | $ 326,918 | $ 287,458 | $ 275,706 |
Contract revenues | 950 | ||
Total revenues | 327,868 | 287,458 | 275,706 |
Operating expenses: | |||
Cost of product revenues | 57,263 | 53,782 | 48,742 |
Research and development | 61,723 | 59,798 | 53,076 |
Selling and marketing | 151,042 | 143,557 | 137,846 |
General and administrative | 73,272 | 64,348 | 59,669 |
Total operating expenses | 343,300 | 321,485 | 299,333 |
Loss from operations | (15,432) | (34,027) | (23,627) |
Interest income | 418 | 221 | 192 |
Gain on sales of equity securities | 3,208 | 0 | 0 |
Other income (expense), net | (732) | (498) | (764) |
Loss before income taxes | (12,538) | (34,304) | (24,199) |
Income tax expense (benefit) | 1,381 | (996) | 393 |
Net loss | $ (13,919) | $ (33,308) | $ (24,592) |
Basic and diluted net loss per share (in dollars per share) | $ (0.42) | $ (1.03) | $ (0.78) |
Shares used in computing basic and diluted net loss per share (in shares) | 33,264 | 32,382 | 31,453 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net loss | $ (13,919) | $ (33,308) | $ (24,592) |
Other comprehensive income (loss): | |||
Unrealized gain (loss) on available-for-sale marketable securities, net of tax of $0, $1,548, and $0 for the years ended December 31, 2016, 2015 and 2014, respectively | 300 | 2,767 | (27) |
Reclassification adjustment for net gain on sale of equity securities included in net loss | (1,854) | ||
Comprehensive loss | $ (15,473) | $ (30,541) | $ (24,619) |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Unrealized gain on available-for-sale marketable securities, tax (benefit) | $ 0 | $ 1,548 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock at Cost | Total |
Balance at Dec. 31, 2013 | $ 3 | $ 345,345 | $ 12 | $ (170,269) | $ (30,110) | $ 144,981 |
Balance (in shares) at Dec. 31, 2013 | 30,964,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units | 4,156 | 4,156 | ||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units (in shares) | 748,000 | |||||
Issuance of common stock upon settlement of employee stock purchase plan | 4,227 | 4,227 | ||||
Issuance of common stock upon settlement of employee stock purchase plan (in shares) | 191,000 | |||||
Issuance of restricted stock to directors in lieu of fees | 230 | 230 | ||||
Issuance of restricted stock to directors in lieu of fees (in shares) | 8,000 | |||||
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan | 16,410 | 16,410 | ||||
Stock-based compensation expense related to consultant restricted stock units | 128 | 128 | ||||
Net loss | (24,592) | (24,592) | ||||
Unrealized gain (loss) on investments, net of tax | (27) | (27) | ||||
Balance at Dec. 31, 2014 | $ 3 | 370,496 | (15) | (194,861) | (30,110) | 145,513 |
Balance (in shares) at Dec. 31, 2014 | 31,911,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units | 3,664 | 3,664 | ||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units (in shares) | 678,000 | |||||
Issuance of common stock upon settlement of employee stock purchase plan | 4,694 | 4,694 | ||||
Issuance of common stock upon settlement of employee stock purchase plan (in shares) | 204,000 | |||||
Issuance of restricted stock to directors in lieu of fees | 200 | 200 | ||||
Issuance of restricted stock to directors in lieu of fees (in shares) | 7,000 | |||||
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan | 16,005 | 16,005 | ||||
Net loss | (33,308) | (33,308) | ||||
Unrealized gain (loss) on investments, net of tax | 2,767 | 2,767 | ||||
Balance at Dec. 31, 2015 | $ 3 | 395,059 | 2,752 | (228,169) | (30,110) | $ 139,535 |
Balance (in shares) at Dec. 31, 2015 | 32,800,000 | 32,800,428 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units | 8,385 | $ 8,385 | ||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units (in shares) | 799,000 | |||||
Issuance of common stock upon settlement of employee stock purchase plan | 5,155 | 5,155 | ||||
Issuance of common stock upon settlement of employee stock purchase plan (in shares) | 226,000 | |||||
Issuance of restricted stock to directors in lieu of fees | 200 | 200 | ||||
Issuance of restricted stock to directors in lieu of fees (in shares) | 7,000 | |||||
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan | 18,303 | 18,303 | ||||
Net loss | (13,919) | (13,919) | ||||
Unrealized gain (loss) on investments, net of tax | 300 | 300 | ||||
Reclassification adjustment for net gain on sale of equity securities included in net loss | (1,854) | (1,854) | ||||
Balance at Dec. 31, 2016 | $ 3 | $ 427,102 | $ 1,198 | $ (242,088) | $ (30,110) | $ 156,105 |
Balance (in shares) at Dec. 31, 2016 | 33,832,000 | 33,831,998 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net loss | $ (13,919) | $ (33,308) | $ (24,592) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 8,933 | 7,069 | 6,870 |
Employee stock-based compensation | 18,303 | 16,005 | 16,538 |
Write-off of previously capitalized software costs | 2,600 | 635 | |
Impairment of assets held for sale and long-lived assets | 56 | 123 | 375 |
Gain on disposal of property and equipment | 33 | (80) | (51) |
Outside director restricted stock awarded in lieu of fees | 200 | 200 | 230 |
Gain on sale of equity securities | (3,208) | 0 | 0 |
Deferred tax benefit from unrealized gain on available-for-sale marketable securities | (1,548) | ||
Changes in assets and liabilities: | |||
Accounts receivable | 1,985 | (2,248) | (5,470) |
Prepaid expenses and other assets | (4,550) | (1,292) | 741 |
Accounts payable | (4,579) | 949 | 985 |
Accrued compensation and employee benefits | 5,661 | 4,531 | 3,824 |
Accrued expenses and other liabilities | 2,372 | (2,963) | 3,088 |
Deferred revenues | (431) | 96 | (251) |
Net cash provided by (used in) operating activities | 13,456 | (11,831) | 2,287 |
Investing activities | |||
Purchases of property and equipment | (19,786) | (23,483) | (10,455) |
Proceeds from sale of property and equipment | 8 | 70 | 122 |
Purchases of marketable securities | (69,722) | (76,743) | (96,800) |
Maturities of marketable securities | 66,757 | 106,439 | 94,910 |
Proceeds from sales of marketable securities | 9,717 | ||
Other investments | (6,100) | (2,000) | |
Net cash (used in) provided by investing activities | (19,126) | 6,283 | (14,223) |
Financing activities | |||
Net proceeds from issuance of common stock under stock plans | 17,010 | 12,197 | 12,030 |
Withholding taxes related to restricted stock units net share settlement | (3,469) | (3,842) | (3,647) |
Net cash provided by financing activities | 13,541 | 8,355 | 8,383 |
Net increase (decrease) in cash and cash equivalents | 7,871 | 2,807 | (3,553) |
Cash and cash equivalents at the beginning of the period | 32,533 | 29,726 | 33,279 |
Cash and cash equivalents at the end of the period | 40,404 | 32,533 | 29,726 |
Supplemental disclosure of cash flow information | |||
Cash paid for income taxes | 428 | 459 | 432 |
Non-cash investing and financing activities | |||
Accrued purchases of property and equipment | 1,452 | 3,847 | $ 1,809 |
Change in fair value of equity investment | $ (316) | $ 4,269 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Not The Company Genomic Health, Inc. (the “Company”) is a global healthcare company that provides actionable genomic information to personalize cancer treatment decisions. The Company develops and globally commercializes genomic‑based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. The Company was incorporated in Delaware in August 2000. The Company’s first product, the Oncotype DX breast cancer test, was launched in 2004 and is used for early stage invasive breast cancer patients to predict the likelihood of breast cancer recurrence and the likelihood of chemotherapy benefit. In January 2010, the Company launched its second product, the Oncotype DX colon cancer test, which is used to predict the likelihood of colon cancer recurrence in patients with stage II disease. The tests for invasive breast and colon cancers result in a quantitative score referred to as a Recurrence Score. In December 2011, the Company made Oncotype DX available for patients with ductal carcinoma in situ (“DCIS”), a pre‑invasive form of breast cancer. This test provides a DCIS Score that is used to predict the likelihood of local recurrence. In June 2012, the Company began offering the Oncotype DX colon cancer test for use in patients with stage III disease treated with oxaliplatin‑containing adjuvant therapy. In May 2013, the Company launched the Oncotype DX prostate cancer test, which provides a Genomic Prostate Score, or GPS, to predict disease aggressiveness in men with low risk prostate cancer disease. This test is used to improve treatment decisions for prostate cancer patients, in conjunction with the Gleason score, or tumor grading. In June 2016, the Company introduced Oncotype SEQ Liquid Select, the first of several planned non-invasive liquid biopsy tests that Genomic Health plans to deliver as part of its Oncotype IQ Genomic Intelligence Platform. Principles of Consolidation These consolidated financial statements include all the accounts of the Company and its wholly‑owned subsidiaries. The Company had two wholly-owned subsidiaries at December 31, 2016: Genomic Health International Holdings, LLC, which was established in Delaware in 2010 and supports the Company’s international sales and marketing efforts; and Oncotype Laboratories, Inc., which was established in 2012, and is inactive. Genomic Health International Holdings, LLC has 10 wholly-owned subsidiaries. The functional currency for the Company’s wholly-owned subsidiaries incorporated outside the United States is the U.S. dollar. All significant intercompany balances and transactions have been eliminated. Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the Company’s consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Marketable Securities The Company invests in marketable securities, primarily money market funds, obligations of U.S. Government agencies and government‑sponsored entities, corporate bonds, commercial paper and equity securities. The Company considers all investments with a maturity date of less than one year as of the balance sheet date to be short‑term investments. Those investments with a maturity date greater than one year as of the balance sheet date are considered to be long‑term investments. Beginning in 2011, the Company made investments in various tranches of the preferred stock of Invitae Corporation (“Invitae”), which at the time was a privately-held company, such that the carrying value of this investment was $13.9 million at December 31, 2014. On February 18, 2015, Invitae completed an initial public offering of its common stock and the Company’s preferred stock investment automatically converted into 2,207,793 shares of Invitae common stock. This investment was accounted for as an available-for-sale marketable security and valued at $18.1 million at December 31, 2015. During the year ended December 31, 2016, the Company sold a portion of its shares of the common stock of Invitae for proceeds of $9.7 million based on a cost of $6.28 per share, resulting in a realized gain of $3.2 million. There were no shares sold during the year ended December 31, 2015. The fair value of the remaining investment was $9.3 million at December 31, 2016. This investment, which is accounted for under the cost method, was valued at $7.3 million at December 31, 2016. Unrealized gains or losses resulting from changes in the fair value of this investment will be recognized in other comprehensive income until the securities are sold. During the year ended December 31, 2016, $1.9 million of unrealized gains, net of tax of $727,000, related to the shares sold was reclassified out of accumulated other comprehensive income into earnings. There was no unrealized gain reclassified out of accumulated other comprehensive income into earnings during either of the years ended December 31, 2015 and 2014. In January 2017, the Company sold all remaining shares of Invitae common stock for proceeds of $10.2 million, resulting in a realized gain of $2.8 million. As of December 31, 2016, and 2015, respectively, all investments in marketable securities were classified as available for sale. These securities are carried at estimated fair value with unrealized gains and losses included in stockholders’ equity. Realized gains and losses and declines in value, if any, judged to be other than temporary on available‑for‑sale securities are reported in other income or expense. When securities are sold, any associated unrealized gain or loss initially recorded as a separate component of stockholders’ equity is reclassified out of stockholders’ equity on a specific‑identification basis and recorded in earnings for the period. The cost of securities sold is determined using specific identification. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, trade receivables and accounts payable. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, trade receivables and accounts payable, approximate fair value due to their short maturities. See Note 3, “ Fair Value Measurements ” for further information on the fair value of the Company’s financial instruments. Concentration of Risk Cash equivalents, marketable securities and trade accounts receivable are financial instruments which potentially subject the Company to concentrations of credit risk. Through December 31, 2016, no material losses had been incurred related to such credit risk. The Company is subject to credit risk from its portfolio of cash equivalents and marketable securities. The Company invests in money market funds through a major U.S. bank and is exposed to credit risk in the event of default by the financial institution to the extent of amounts recorded on the consolidated balance sheets. The Company invests in short‑term, investment‑grade debt instruments and by policy limits the amount in any one type of investment, except for securities issued or guaranteed by the U.S. government. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. The Company is also subject to credit risk from its accounts receivable related to its product sales. The Company performs evaluations of customers’ financial condition and generally does not require collateral. The majority of the Company’s accounts receivable arise from product sales in the United States. As of December 31, 2016, the substantial majority of the Company’s product revenues have been derived from sales of one product, the Oncotype DX breast cancer test. The majority of the Company’s tests to date have been delivered to physicians in the United States. All Oncotype DX tests are processed in the Company’s clinical reference laboratory facility in Redwood City, California. Medicare accounted for 21%, 20% and 20% of the Company’s product revenues for the years ended December 31, 2016, 2015 and 2014, respectively, and represented 24% and 14% of the Company’s total accounts receivable balance as of December 31, 2016 and 2015, respectively. No other third‑party payor represented more than 10% of the Company’s product revenues or accounts receivable balances for these periods. Allowance for Doubtful Accounts The Company accrues an allowance for doubtful accounts against its accounts receivable based on estimates consistent with historical payment experience. Bad debt expense is included in general and administrative expense on the Company’s consolidated statements of operations. Accounts receivable are written off against the allowance when the appeals process is exhausted, when an unfavorable coverage decision is received or when there is other substantive evidence that the account will not be paid. The Company’s allowance for doubtful accounts as of December 31, 2016 and 2015 was $4.5 million and $4.0 million, respectively. Write‑offs for doubtful accounts of $7.1 million and $5.2 million were recorded against the allowance during the years ended December 31, 2016 and 2015, respectively. Bad debt expense was $7.9 million, $6.0 million, and $6.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. Property and Equipment Property and equipment, including purchased software, are stated at cost. Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which generally range from three to seven years. Leasehold improvements are amortized using the straight‑line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. Internal-use Software Costs incurred to develop software for internal use are capitalized and amortized over the estimated useful life of the software. Costs related to maintenance of internal-use software are expensed as incurred. For the years ended December 31, 2016 and 2015, the Company capitalized $3.4 million (including $1.2 million of personnel-related expenses) and $15.1 million (including $5.9 million of personnel-related expenses), respectively, of costs associated with internal-use software development. No internal-use software development costs were capitalized for the year ended December 31, 2014. Amortization of previously capitalized amounts was $2.5 million, $380,000, and $0 for the years ended December 31, 2016, 2015, and 2014, respectively. Intangible Assets Intangible assets with finite useful lives are recorded at cost, less accumulated amortization. Amortization is recognized over the estimated useful lives of the assets. The Company’s intangible assets with finite lives, which are related to patent licenses, are not material and are included in non‑current other assets on the Company’s consolidated balance sheets. Investments in Privately Held Companies The Company determines whether its investments in privately held companies are debt or equity based on their characteristics, in accordance with the applicable accounting guidance for such investments. The Company also evaluates the investee to determine if the entity is a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary of the VIE, in order to determine whether consolidation of the VIE is required in accordance with accounting guidance for consolidations. If consolidation is not required and the Company owns less than 50.1% of the voting interest of the entity, the investment is evaluated to determine if the equity method of accounting should be applied. The equity method applies to investments in common stock or in‑substance common stock where the Company exercises significant influence over the investee, typically represented by ownership of 20% or more of the voting interests of an entity. If the equity method does not apply, investments in privately held companies determined to be equity securities are accounted for using the cost method. Investments in privately held companies determined to be debt securities are accounted for as available‑for‑sale or held‑to‑maturity securities, in accordance with the applicable accounting guidance for such investments. During the year ended December 31, 2016, the Company invested $6.1 million in the subordinated convertible promissory notes of a private company (see Note 6). The subordinated convertible promissory notes represent a variable interest in the investee. The Company has concluded it is not the primary beneficiary and thus has not consolidated the investee pursuant to the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810. However, the Company will continue to assess its investment and future commitments to the investee and to the extent its relationship with the investee changes, may be required to consolidate the investee in future periods. The Company determined that the investment was an available-for-sale debt security. As of December 31, 2016, the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $5.8 million, which is recorded in other assets. Impairment of Long‑lived Assets The Company reviews long‑lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. For property and equipment and intangible assets, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using undiscounted cash flows. For investments in non‑marketable equity securities, evidence of impairment might include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. The Company’s assessment as to whether any impairment is other than temporary is based on its ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, the asset is written down to its fair value. Income Taxes The Company uses the liability method for income taxes, whereby deferred income taxes are provided on items recognized for financial reporting purposes over different periods than for income tax purposes. Valuation allowances are provided when the expected realization of tax assets does not meet a more‑likely‑than‑not criterion. The Company accounts for uncertain income tax positions using a benefit recognition model with a two‑step approach, a more‑likely‑than‑not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement, in accordance with the accounting guidance for uncertain tax positions. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense when and if incurred. See Note 11, “Income Taxes” for additional information regarding unrecognized tax benefits. Revenue Recognition The Company derives its revenues from product sales and, to a lesser extent from contracts with biopharmaceutical and pharmaceutical companies. The majority of the Company’s historical product revenues have been derived from the sale of the Oncotype DX breast cancer test. The Company generally bills third‑party payors upon generation and delivery of a patient report to the physician. As such, the Company takes assignment of benefits and the risk of collection with the third‑party payor. The Company generally bills the patient directly for amounts owed after multiple requests for payment have been denied or only partially paid by the insurance carrier. The Company pursues case‑by‑case reimbursement where medical policies are not in place or payment history has not been established. The Company’s product revenues for tests performed are recognized when the following revenue recognition criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Criterion (1) is satisfied when the Company has an arrangement to pay or a contract with the payor in place addressing reimbursement for the Oncotype DX test. In the absence of such arrangements, the Company considers that criterion (1) is satisfied when a third‑party payor pays the Company for the test performed. Criterion (2) is satisfied when the Company performs the test and generates and delivers to the physician, or makes available on its web portal, a patient report. When evaluating whether the fee is fixed or determinable and collectible, the Company considers whether it has sufficient history to reliably estimate the total fee that will be received from a payor and a payor’s individual payment patterns. Determination of criteria (3) and (4) are based on management’s judgments regarding whether the fee charged for products or services delivered is fixed or determinable, and the collectability of those fees under any contract or arrangement. Based upon at least several months of payment history, the Company reviews the number of tests paid against the number of tests billed and the payor’s outstanding balance for unpaid tests to determine whether payments are being made at a consistently high percentage of tests billed and at appropriate amounts given the arrangement or contracted payment amount. The estimated accrual amounts per test, recorded upon delivery of a patient report, are calculated for each accrual payor and are based on the arrangement or contracted price adjusted for individual payment patterns resulting from co-payment amounts and excluded services in healthcare plans. The Company also reduces revenue for an estimate of amounts that qualify as patient assistance and related deductions that do not qualify for revenue recognition. When a payment received for an individual test is higher or lower than the estimated accrual amount, the Company recognizes the difference as either cash revenue, in the case of higher payments, or in the case of lower payments, a charge against either the patient assistance program and related deductions reserve or the allowance for doubtful accounts, as applicable. To the extent all criteria set forth above are not met when test results are delivered, product revenues are recognized when cash is received from the payor. The Company has exclusive distribution agreements for one or more of its Oncotype DX tests with distributors covering more than 90 countries outside of the United States. The distributor generally provides certain marketing and administrative services to the Company within its territory. As a condition of these agreements, the distributor generally pays the Company an agreed upon fee per test and the Company processes the tests. The same revenue recognition criteria described above generally apply to tests received through distributors. To the extent all criteria set forth above are not met when test results are delivered, product revenues are generally recognized when cash is received from the distributor. From time to time, the Company receives requests for refunds of payments, generally due to overpayments made by third party‑payors. Upon becoming aware of a refund request, the Company establishes an accrued liability for tests covered by the refund request until such time as the Company determines whether or not a refund is due. Accrued refunds were $487,000 and $609,000 at December 31, 2016 and 2015, respectively. Contract revenues are generally derived from studies conducted with biopharmaceutical and pharmaceutical companies. The specific methodology for revenue recognition is determined on a case‑by‑case basis according to the facts and circumstances applicable to a given contract. Under certain contracts, the Company’s input, measured in terms of full‑time equivalent level of effort or running a set of assays through its clinical reference laboratory under a contractual protocol, triggers payment obligations, and revenues are recognized as costs are incurred or assays are processed. Certain contracts have payments that are triggered as milestones are completed, such as completion of a successful set of experiments. Milestones are assessed on an individual basis and revenue is recognized when these milestones are achieved, as evidenced by acknowledgment from collaborators, provided that (1) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement and (2) the milestone payment is non‑refundable. Where separate milestones do not meet these criteria, the Company typically defaults to a performance‑based model, such as revenue recognition following delivery of effort as compared to an estimate of total expected effort. Advance payments received in excess of revenues recognized are classified as deferred revenue until such time as the revenue recognition criteria have been met. Cost of Product Revenues Cost of product revenues includes the cost of materials, direct labor, equipment and infrastructure expenses associated with processing tissue samples (including sample accessioning, histopathology, anatomical pathology, paraffin extraction, reverse transcription polymerase chain reaction (“RT‑PCR”), quality control analyses and shipping charges to transport tissue samples) and license fees. Infrastructure expenses include allocated facility occupancy and information technology costs. Costs associated with performing the Company’s tests are recorded as tests are processed. Costs recorded for tissue sample processing and shipping charges represent the cost of all the tests processed during the period regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of product revenues and fixed annual payments relating to the launch and commercialization of the Company’s tests are recorded as license fees in cost of product revenues at the time product revenues are recognized or in accordance with other contractual obligations. Research and Development Expenses Research and development expenses are comprised of costs incurred to develop technology and carry out clinical studies and include salaries and benefits, reagents and supplies used in research and development laboratory work, infrastructure expenses, including allocated facility occupancy and information technology costs, contract services, and other outside costs. Research and development expenses also include costs related to activities performed under contracts with biopharmaceutical and pharmaceutical companies. Research and development costs are expensed as incurred. The Company enters into collaboration and clinical trial agreements with clinical collaborators and records these costs as research and development expenses. The Company records accruals for estimated study costs comprised of work performed by its collaborators under contract terms. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized and recognized as expense as the goods are delivered or the related services are performed. Stock‑based Compensation The Company uses the Black‑Scholes option valuation model, single‑option approach, which requires the use of estimates such as stock price volatility and expected option lives, as well as expected option forfeiture rates, to value employee stock‑based compensation at the date of grant, and recognizes stock‑ based compensation expense ratably over the requisite service period. Equity instruments granted to non‑employees are also valued using the Black‑Scholes option valuation model and are subject to periodic revaluation over their vesting terms. The Company did not grant any stock options to non‑employee consultants during any of the years presented. 401(k) Plan Substantially all of the Company’s employees are eligible to participate in its defined contribution plan qualified under Section 401(k) of the Internal Revenue Code. The Company contributed dollar for dollar matching of employee contributions up to a maximum of $4,000, $3,000, and $2,000 for the years ended December 31, 2016, 2015 and 2014, respectively, for each employee per year based on a full calendar year of service. The match is funded concurrently with a participant’s semi‑monthly contributions to the 401(k) Plan. The Company recorded expense for its contributions under the 401(k) Plan of $3.5 million, $2.8 million and $1.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. Foreign Currency Transactions Net foreign currency transaction gains or losses are included in other income (expense), net on the Company’s consolidated statements of operations. Net foreign currency transaction losses totaled $782,000, $551,000 and $790,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Comprehensive Gain or Loss Other comprehensive gain or loss consists of unrealized gains and losses on available‑for‑sale securities. Leases The Company enters into lease agreements for its laboratory and office facilities. These leases are classified as operating leases. Rent expense is recognized on a straight‑line basis over the term of the lease. Incentives granted under the Company’s facilities leases, including allowances to fund leasehold improvements and rent holidays, are capitalized and are recognized as reductions to rental expense on a straight‑line basis over the term of the lease. Guarantees and Indemnifications The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2016 and 2015. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition , and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 will be effective for the Company in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. The Company will adopt Topic 606 effective January 1, 2018. Topic 606 permits the use of either a retrospective or modified retrospective application. The Company intends to use the modified retrospective approach. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to its opening accumulated deficit balance. Prior periods will not be retrospectively adjusted. Under Topic 606, the Company expects the timing of revenue recognition from certain payors who are not currently accrual payors to be accelerated. The Company is in the process of completing its analysis of the impact Topic 606 will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The guidance will become effective for the Company beginning in the first quarter of 2018. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842). Topic 842 generally requires entities to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. Topic 842 is effective for the Company’s interim and annual reporting periods during the year ending December 31, 2019, and all annual and interim reporting periods thereafter. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply. Full retrospective application is prohibited and early adoption by public entities is permitted. The Company is currently evaluating the impact that the adoption of Topic 842 will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company will adopt the ASU in the first quarter of 2017 and does not expect the impact on its consolidated financial statements to be material. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Dec. 31, 2016 | |
Net Loss Per Share | |
Net Loss Per Share | Note 2. Net Loss Per Share Basic net loss per share is calculated by dividing net loss for the period by the weighted-average number of common shares outstanding for the period without consideration of potential common shares. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding for the period and dilutive potential common shares for the period determined using the treasury-stock method. For purposes of this calculation, options to purchase common stock and restricted stock unit (“RSU”) awards are considered to be potential common shares and are not included in the calculation of diluted net loss per share because their effect is anti-dilutive. The following potentially dilutive common shares were excluded from the computation of diluted net loss per share for the periods presented because they would have been anti-dilutive: Year Ended December 31, 2016 2015 2014 (In thousands) Anti-dilutive options and RSUs excluded from the computation |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3. Fair Value Measurements The Company measures certain financial assets, including cash equivalents and marketable securities, at their fair value on a recurring basis. The fair value of these financial assets was determined based on a hierarchy of three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company did not have any non‑financial assets or liabilities that were measured or disclosed at fair value on a recurring basis at December 31, 2016 and 2015, respectively. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis at December 31, 2016 and 2015 by level within the fair value hierarchy: Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2016 (In thousands) As of December 31, 2016: Assets Money market deposits $ $ — $ — $ Commercial paper — — Corporate debt securities — — Corporate equity securities — — Total $ $ $ — $ Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2015 (In thousands) As of December 31, 2015: Assets Money market deposits $ $ — $ — $ Commercial paper — — Corporate debt securities — — Corporate equity securities — — Total $ $ $ — $ The Company’s commercial paper and corporate bonds are classified as Level 2 as they are valued using multi-dimensional relational pricing models that use observable market inputs, including benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. Not all inputs listed are available for use in the evaluation process on any given day for each security evaluation. In addition, market indicators and industry and economic events are monitored and may serve as a trigger to acquire further corroborating market data. The Company’s corporate equity securities are classified as Level 2 while subject to certain restrictions on sale. There were no transfers between Level 1 and Level 2 categories during the years ended December 31, 2016 and 2015, respectively. During the year ended December 31, 2016, the Company invested $6.1 million in subordinated convertible promissory notes of a private company (see Note 6). As of December 31, 2016, the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $5.8 million, which is not included in the table above but are recorded in other assets. The subordinated convertible promissory notes are classified as Level 3 as they are valued using unobservable inputs that are primarily based on the Company’s estimate of the fair value of the underlying preferred stock into which the notes are convertible. All of the Company’s marketable securities are classified as available-for-sale. The following tables summarize the Company’s available‑for‑sale marketable securities as of the dates indicated: December 31, 2016 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ $ $ — $ Corporate debt securities Corporate equity securities — Total $ $ $ $ December 31, 2015 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ $ $ — $ Corporate debt securities — Corporate equity securities — Total $ $ $ $ The Company had realized gain of $3.2 million for the year ended December 31, 2016 and no realized gains or losses on its available‑for‑sale marketable securities for both years ended December 31, 2015 and 2014. The following table provides the breakdown of the available‑for‑sale marketable securities with unrealized losses as of the date indicated: In a Loss Position for Less Than 12 Months Gross Unrealized Estimated As of December 31, 2016: Losses Fair Value (In thousands) Corporate debt securities $ $ Total $ $ All of the Company’s available‑for‑sale marketable securities had contractual maturities of one year or less as of December 31, 2016 and 2015. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company reviews the fair value of long-lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. During the year ended December 31, 2016, the Company wrote off $2.6 million of previously capitalized software development costs related to a project for enhanced report delivery due to delay and scope change. The impairment charge related the write off is included in the selling and marketing expenses in the accompanying consolidated statements of operations. In addition, during the year ended December 31, 2016, the Company recorded impairment losses of $56,000 for equipment classified as held for sale. During the year ended December 31, 2015, the Company wrote off $635,000 of previously capitalized software costs and recorded impairment losses of $123,000 for equipment classified as held for sale. The Company recorded impairment losses of $265,000 for equipment classified as held for sale and $110,000 for equipment disposed prior to placing it in service for the year ended December 31, 2014. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Property and Equipment | Note 4. Property and Equipment The following table summarizes the Company’s property and equipment as of the dates indicated: December 31, 2016 2015 (In thousands) Laboratory equipment $ $ Computer equipment Computer software—internal use Furniture and fixtures Leasehold improvements Work in progress Less accumulated depreciation and amortization Total $ $ For the years ended December 31, 2016, 2015 and 2014, the Company recognized property and equipment depreciation and amortization expense of $8.8 million, $6.9 million and $6.7 million, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 5. Accrued Expenses and Other Current Liabilities The following table summarizes the Company’s accrued expenses and other current liabilities as of the dates indicated: December 31, 2016 2015 (In thousands) Accrued expenses $ $ Accrued professional and other service fees Accrued refunds Accrued rebate Accrued collaboration expense Accrued taxes payable Other current liabilities Total $ $ Accrued professional and other service fees include third‑party billing and collections costs, legal expenses, accounting and audit fees and investor relations expenses. Accrued refunds include overpayments due to third‑party payors. |
Collaboration and Commercial Te
Collaboration and Commercial Technology Licensing Agreements | 12 Months Ended |
Dec. 31, 2016 | |
Collaboration and Commercial Technology Licensing Agreements | |
Collaboration and Commercial Technology Licensing Agreements | Note 6. Collaboration and Commercial Technology Licensing Agreements The Company has entered into a variety of collaboration and specimen transfer agreements relating to its development efforts. The Company recorded collaboration expenses of $4.6 million, $11.1 million and $6.4 million for the years ended December 31, 2016, 2015 and 2014, respectively, relating to services provided by the collaborators in connection with these agreements. In addition to these expenses, some of these agreements contain provisions for royalties from inventions resulting from these collaborations. The Company has specified options and rights relating to joint inventions arising out of these collaborations. In August 2013, the Company entered into a collaboration agreement to conduct a clinical study to validate the relationship between the Oncotype DX DCIS Score and the likelihood of local recurrence in patients with DCIS. The agreement includes a study fee and milestone payments dependent on the completion of certain key milestones. As a result of the primary objective of the study being met, the Company is required to make a series of fixed future annual payments under the collaboration agreement. As of December 31, 2016, a final payment of $504,000 is due in 2017. In January 2014, the Company entered into a collaboration agreement to conduct a prostate study with a goal to determine the association between the GPS provided by the assay and the likelihood of experiencing disease progression while on active surveillance. In July 2014, the Company entered into a collaboration agreement to conduct a prostate observational study in men who choose active surveillance at one and two years after receiving the Oncotype DX prostate cancer GPS. In August 2014, the Company entered into an agreement to provide support to conduct the main phase of a prospective study dealing with individualization of adjuvant decision-making in early-stage breast cancer. As of December 31, 2016, the estimated total remaining obligations for these agreements, including certain milestone payments, is approximately $1.8 million. All future milestone payments are contingent on certain accomplishments, and therefore the timing for any related payments cannot be estimated. In November 2013, the Company entered into an exclusive license agreement to develop and commercialize a test to predict benefit from DNA damage-based chemotherapy drugs, such as anthracycline-based regimens, in high risk breast cancer. The Company made an up‑front payment of $9.0 million, which was recognized in research and development expense in the fourth quarter of 2013, and milestone payments would have been required if certain clinical and commercial endpoints were achieved in the future. With successful commercialization of a test, the Company would have been obligated to pay royalties. During the quarter ended March 31, 2015, the Company accrued $5.5 million in anticipation of the wind-down of this license agreement and development program, which was recognized as research and development expense in the accompanying consolidated statements of operations. The license agreement was terminated in May 2015 and, as a result, the Company has no future obligations under this agreement. In June 2016, the Company entered into a collaboration agreement with Epic Sciences, Inc. (“Epic Sciences”), under which the Company has been granted exclusive distribution rights to commercialize Epic Sciences’ AR-V7 Nucleus Detect in the United States, which we refer to as Oncotype DX AR-V7 Nucleus Detect. The Company has primary responsibility, in accordance with applicable laws and regulations, for marketing and promoting the test, order fulfillment, billing and collections of receivables, customer support, and providing order management systems for the test. Epic Sciences is responsible for performing analysis for all tests, performing studies including analytic and clinical validation studies, and seeking Medicare coverage and a Medicare payment rate from the Centers for Medicare and Medicaid Services (“CMS”) for the test. Future revenues generated from the test will be shared by the Company and Epic Sciences in accordance with the terms of the agreement. Additional terms of the agreement include the Company’s obligation to pay Epic Sciences $4.0 million upon achievement of certain milestones. Also, the Company has agreed, subject to certain conditions, to invest up to an aggregate amount of $7.5 million in subordinated convertible promissory notes of Epic Sciences that will convert into preferred stock of Epic Sciences upon the satisfaction of certain conditions and, upon achievement of one of the milestones, to invest an additional $2.5 million in Epic Sciences preferred stock. The agreement has a term of 10 years, unless terminated earlier under certain circumstances. During the year ended December 31, 2016, the Company invested $6.1 million in subordinated convertible promissory notes of Epic Sciences. The subordinated convertible promissory notes have been recognized at fair value, which the Company believes is approximately $5.8 million while the difference of $305,000 has been deferred and will be recognized as additional cost of future expected purchases of Oncotype DX AR-V7 Nucleus Detect tests, which the Company believes will be at a discount to fair value. The Company is a party to various agreements under which it licenses technology on a non‑exclusive basis in the field of human diagnostics. Access to these licenses enables the Company to process its Oncotype DX tests. While certain agreements contain provisions for fixed annual payments, license fees are generally calculated as a percentage of product revenues, with rates that vary by agreement and may be tiered, and payments that may be capped at annual minimum or maximum amounts. The Company recognized costs under these agreements totaling $5.3 million, $9.2 million and $9.5 million for the years ended December 31, 2016, 2015 and 2014, respectively, which were included in cost of product revenues. The decrease in costs for these agreements for the year ended December 31, 2016 compared to the years ended December 31, 2015 and 2014, was primarily due to the satisfaction of certain royalty payment obligations. On October 28, 2016, the Company provided notice of termination of a license agreement with Roche Molecular Systems, Inc. (“Roche”), whereby the Company non-exclusively licensed from Roche a number of U.S. patents claiming nucleic acid amplification processes known as PCR, homogeneous polymerase chain reaction, and RT PCR. The effective date of the termination was November 27, 2016. The Company believes it has satisfied all obligations to make royalty payments to Roche. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Commitments | Note 7. Commitments and Contingencies Lease Obligations The Company leases approximately 180,700 square feet of office and laboratory space under five non-cancelable operating leases, with terms that expire between 2021 and 2023 in Redwood City, California, and 7,500 square feet of office space for the Company’s European subsidiary under a non-cancelable operating lease that expires in 2021 in Geneva, Switzerland. The Company’s Redwood City, California leases each contain options to extend the terms of such leases for an additional five years as well as tenant improvement allowances that could total as much as $2.3 million to the extent utilized by November 2018. Rent expense under operating leases amounted to $5.7 million, $4.1 million and $3.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. Future non‑cancelable commitments under these operating leases at December 31, 2016 were as follows: Annual Payments (In thousands) Years Ending December 31, 2017 $ 2018 2019 2020 2021 2022 and thereafter Total minimum payments $ Contingencies From time to time, the Company may be subject to various legal proceedings and claims arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its consolidated financial statements. An estimated loss contingency is accrued in the consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any such accruals were not material at either December 31, 2016 or 2015. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2016 | |
Capital Stock | |
Capital Stock | Note 8. Capital Stock Common Stock As of December 31, 2016, the Company had 33,831,998 shares of common stock outstanding. Shares of common stock reserved for future issuance as of December 31, 2016 were as follows: Number of Shares (In thousands) Shares to be issued upon exercise of outstanding stock options and vesting of RSUs Shares available for future stock option and RSU grants, settlement of employee stock purchase plan (ESPP) and restricted stock to be issued to outside directors in lieu of director fees Shares of common stock reserved for future issuance Treasury Stock In December 2012, the Company entered into an accelerated share repurchase agreement with a financial institution to repurchase $30.0 million of its common stock on an accelerated basis. The shares of common stock repurchased under the agreement were 984,074 and 77,257 during the year ended December 31, 2012 and 2013, respectively. The average purchase price of the Company’s common stock from the accelerated share repurchase program was $28.27 per share. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 9. Stock‑based Compensation 2005 Stock Incentive Plan On September 8, 2005, the Board of Directors approved the 2005 Stock Incentive Plan (the “2005 Plan”), which was later approved by the Company’s stockholders. Pursuant to the 2005 Plan, stock options, restricted shares, stock units, including RSUs, and stock appreciation rights may be granted to employees, consultants, and outside directors of the Company. Options granted may be either incentive stock options or nonstatutory stock options. The Company initially reserved 5,000,000 shares of the Company’s common stock for issuance under the 2005 Plan, effective upon the closing of the Company’s initial public offering on October 4, 2005. On June 8, 2009, the Company’s stockholders approved an amendment to the 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 3,980,000 shares. The amended and restated plan also extends the term under which awards may be granted under the 2005 Plan until January 27, 2019. On June 11, 2015, the Company’s stockholders approved an amendment to the amended and restated 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 1,500,000 shares. On June 9, 2016, the Company’s stockholders approved an amendment to the amended and restated 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 1,500,000 shares. As of December 31, 2016, a total of 2,624,000 shares remain available for future grant under the 2005 Plan. Stock Option Activity Stock options are governed by stock option agreements between the Company and recipients of stock options. Incentive stock options may be granted under the 2005 Plan at an exercise price of not less than 100% of the fair market value of the common stock on the date of grant, determined by the Compensation Committee of the Board of Directors. Nonstatutory stock options may be granted under the 2005 Plan at an exercise price of not less than 80% of the fair market value of the common stock on the date of grant, determined by the Compensation Committee of the Board of Directors. Options become exercisable and expire as determined by the Compensation Committee, provided that the term of incentive stock options may not exceed 10 years from the date of grant. Stock option agreements may provide for accelerated exercisability in the event of an optionee’s death, disability, or retirement or other events. Under the 2005 Plan, each outside director who joins the board after the effective date of the 2005 Plan will receive an automatic nonstatutory stock option grant that vests at a rate of 25% at the end of the first year, with the remaining balance vesting monthly over the next three years. On the first business day following the annual meeting of the Company’s stockholders, each outside director who is continuing board service and who was not initially elected to the board at the annual meeting will receive an additional nonstatutory stock option grant, which will vest in full on the first anniversary of the date of grant or, if earlier, immediately prior to the next annual meeting of the Company’s stockholders. Nonstatutory stock options granted to outside directors must have an exercise price equal to 100% of the fair market value of the common stock on the date of grant. Nonstatutory stock options terminate on the earlier of the day before the tenth anniversary of the date of grant or the date twelve months after termination of the outside director’s service as a member of the Board of Directors. The following table summarizes option activity for the year ended December 31, 2016: Weighted-Average Outstanding Options Remaining Aggregate Number of Weighted-Average Contractual Intrinsic Shares Exercise Price Life Value (In thousands) (In years) (In thousands) Balance at December 31, 2015 $ Options granted $ Options exercised $ Options forfeited $ Options expired $ Balance at December 31, 2016 $ 5.4 $ Exercisable at December 31, 2016 $ 4.2 $ Vested and expected to vest at December 31, 2016 $ 5.4 $ The total intrinsic value of stock options exercised during the years ended December 31, 2016, 2015 and 2014 was $5.6 million, $6.6 million and $8.2 million, respectively. The total fair value of stock options vested during the years ended December 31, 2016, 2015 and 2014 was $5.3 million, $4.2 million and $6.0 million, respectively. Performance-Based Vesting Stock Options Under the 2005 Plan, the Company grants performance-based vesting stock options (“PV stock options”) which vest upon achievement of specified performance goals. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criterion is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criterion is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criterion been probable of achievement since the grant of the award. In April 2016, the Company granted PV stock options to purchase 75,531 shares of common stock with an exercise price of $31.12 per share. The number of shares potentially issuable under PV stock options were subject to the attainment of a pre-established, corporate-level objective performance goal for the year ended December 31, 2016. In addition, the awards had a service vesting criteria following the achievement of performance criteria through February 2019. As of December 31, 2016, the achievement of the performance criteria was estimated to be remote and the award was cancelled. Restricted Stock Unit Activity The Company began granting RSUs in 2011. The RSUs generally vest in three equal annual installments. As of April 2011, outside directors were given the option to elect to receive some or all of their retainers (other than retainers for serving as committee chair) in the form of fully‑vested restricted stock. Restricted shares, stock units and stock appreciation rights granted under the 2005 Plan are governed by agreements between the Company and recipients of the awards. Terms of the agreements are determined by the Compensation Committee. A following table summarizes RSU activity for the year ended December 31, 2016: Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2015 $ RSUs granted $ RSUs vested $ RSUs cancelled $ Balance at December 31, 2016 $ The weighted-average per share grant date fair values of RSUs were $27.50, $30.65 and $29.05 during the years ended December 31, 2016, 2015 and 2014, respectively. The fair value of RSUs vested were $8.6 million, $9.4 million $9.1 million for the year ended December 31, 2016, 2015 and 2014, respectively. Performance-Based Restricted Stock Unit Activity Under the 2005 Plan, the Company grants performance-based restricted stock units (“PVRSUs”) which vest upon achievement of specified performance goals. The fair value of each PVRSU is estimated at the date of grant or when performance objectives are defined for the grants. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award. In March 2014, the Company awarded 13,533 PVRSUs with a grant-date fair value of $368,000, or $27.21 per share, subject to the attainment of pre-established, objective performance goals over a specified period. The awards also had a service vesting criteria following the achievement of performance criteria through February 2016. In April 2016, the Company awarded 11,720 PVRSUs with a grant-date fair value of $329,000, or $28.09 per share. The amount potentially available under the PVRSU was subject to the attainment of a pre-established, objective performance goal over a specified period. In addition, the award had a service vesting criteria following the achievement of performance criteria through February 2018. As of December 31, 2016, the achievement of the performance criteria was estimated to be remote and the award was cancelled. A following table summarizes PVRSU activity for the year ended December 31, 2016: Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2015 $ PVRSUs granted $ PVRSUs vested $ PVRSUs cancelled $ Balance at December 31, 2016 — $ — The weighted-average per share grant date fair values of PVRSUs were $28.09, $31.12 and $27.21 during the years ended December 31, 2016, 2015 and 2014, respectively. The fair value of PVRSUs vested was $163,000 and $211,000 for the year ended December 31, 2016 and 2015, respectively. No PVRSUs vested during the year ended December 31, 2014. Restricted Stock in Lieu of Directors’ Fees Outside members of the Company’s Board of Directors may elect to receive fully‑vested restricted stock in lieu of cash compensation for services as a director. During the years ended December 31, 2016, 2015 and 2014, the Company issued 6,970, 7,365, and 8,209 shares of restricted stock, respectively, to outside directors, with vesting date fair values of $200,000, $200,000, and $230,000, respectively, and a weighted‑average grant date fair value of $28.65, $27.10, and $29.97 per share, respectively. Employee Stock Purchase Plan In June 2011, the Company’s stockholders approved the Company’s Employee Stock Purchase Plan (“ESPP”). The ESPP provides eligible employees with an opportunity to purchase common stock from the Company and to pay for their purchases through payroll deductions. The ESPP is implemented through a series of offerings of purchase rights to eligible employees beginning December 1, 2011. Under the ESPP, the Compensation Committee of the Company’s Board of Directors may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each offering. During each purchase period, payroll deductions accumulate without interest. On the last day of the purchase period, accumulated payroll deductions are used to purchase common stock for employees participating in the offering. The purchase price is specified pursuant to the offering, but cannot, under the terms of the ESPP, be less than 85% of the fair market value per share of the Company’s common stock on either the last trading day preceding the offering date or on the purchase date, whichever is less. The Company’s Board of Directors has determined that the purchase periods initially shall have a duration of six months and that the purchase price will be 85% of the fair market value per share of the Company’s common stock on either the last trading day preceding the offering date or the purchase date, whichever is less. The length of the purchase period applicable to U.S. employees and the purchase price may not be changed without the approval of the independent members of the Company’s Board of Directors. A total of 1,250,000 shares of common stock have been reserved for issuance under the ESPP, of which 329,593 shares were available for issuance as of December 31, 2016. During 2016, 2015 and 2014, 226,303, 203,842 and 191,318 shares were issued under the ESPP, respectively. As of December 31, 2016, there was $648,000 of unrecognized compensation expense related to the ESPP, which is expected to be recognized over a period of five months. Employee Stock‑Based Compensation Expense Stock-based compensation is recognized as expense over the requisite service periods in the consolidated statements of operations using the straight-line expense attribution approach for stock options and RSUs, and using a graded vesting expense attribution approach for PV stock options and PVRSUs. The Company recognized employee stock‑based compensation expense of $18.3 million, $16.0 million and $16.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. Employee stock‑based compensation expense was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Employee stock‑based compensation expense includes expense related to stock options granted to outside directors of the Company as well as stock purchased under the ESPP. The following table presents the impact of employee stock‑based compensation expense on selected statement of operations line items for the periods indicated: Year Ended December 31, 2016 2015 2014 (In thousands) Cost of product revenues $ $ $ Research and development Selling and marketing General and administrative Total $ $ $ As of December 31, 2016, unrecognized compensation expense related to unvested stock options and RSUs net of estimated forfeitures was $8.8 million and $15.1 million, respectively. The Company expects to recognize these expenses over a weighted‑average period of 2.6 years and 1.8 years, respectively. There was no unrecognized compensation expense related to unvested PV stock options and PVRSUs. Valuation Assumptions Fair values of awards granted under the 2005 Plan and ESPP were estimated at grant or purchase dates using a Black‑Scholes option valuation model. Option valuation models require the input of highly subjective assumptions that can vary over time. The Company’s assumptions regarding expected volatility are based on the historical volatility of the Company’s common stock. The expected life of options granted is estimated based on historical option exercise data and assumptions related to unsettled options. The risk‑free interest rate is estimated using published rates for U.S. Treasury securities with a remaining term approximating the expected life of the options granted. The Company uses a dividend yield of zero as it has never paid cash dividends and does not anticipate paying cash dividends in the foreseeable future. The weighted‑average fair values and assumptions used in calculating such values during each fiscal year are as follows: Year Ended December 31, 2016 2015 2014 Expected volatility: Stock options % % % ESPP % % % Risk-free interest rate: Stock options % % % ESPP % % % Expected life in years: Stock options ESPP Weighted-average fair value: Stock options $ $ $ ESPP $ $ $ |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Segment Information | Note 10. Segment Information The Company operates in one business segment, which primarily focuses on the development and global commercialization of genomic‑based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. The Company’s Oncotype DX breast, colon and prostate cancer tests have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment. As of December 31, 2016, the majority of the Company’s product revenues have been derived from sales of one product, the Oncotype DX breast cancer test. As of December 31, 2016, the majority of the Company’s tests have been delivered to physicians in the United States. All Oncotype DX tests are processed in the Company’s clinical reference laboratory facility in Redwood City, California. The following table summarizes total revenues from customers, payors and collaboration partners by geographic region (in thousands). Product revenues are attributed to countries based on ship‑to location. Contract revenues are attributed to countries based on the location of the collaboration partner. Year Ended December 31, 2016 2015 2014 (In thousands) United States $ $ $ Outside of the United States Total revenues $ $ $ |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | Note 11. Income Taxes The components of the Company’s loss before income taxes were as follows: Year Ended December 31, 2016 2015 2014 (In thousands) Domestic $ $ $ Foreign Total loss before income taxes $ $ $ The components of the Company’s income tax expense (benefit) were as follows: Year Ended December 31, 2016 2015 2014 (In thousands) Current expense (benefit): Federal $ $ — $ — State Foreign Deferred tax expense (benefit): Federal — State — Foreign — — — Total income tax expense (benefit) $ $ $ The income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate as follows: Year Ended December 31, 2016 2015 2014 (In thousands) Federal tax at statutory rate $ $ $ Stock-based compensation Non-deductible meals and entertainment Net operating losses not used Tax benefit on available-for-sale securities — State tax, net of federal benefit Other Total income tax expense (benefit) $ $ $ Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are as follows: December 31, 2016 2015 (In thousands) Deferred tax assets: Net operating loss carryforwards $ $ Stock-based compensation Research tax credits Fixed assets Capitalized costs Accrued compensation Other Total deferred tax assets Valuation allowance Net deferred tax assets $ — $ — Based on all available objective evidence, the Company believes that it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company recorded a valuation allowance against all of its net deferred tax assets as of both December 31, 2016 and 2015. The Company will continue to maintain a full valuation allowance on its net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. The net valuation allowance increased by $6.1 million, $10.1 million and $9.9 million during the years ended December 31, 2016, 2015 and 2014, respectively. As of December 31, 2016, the Company had federal and state net operating loss carryforwards of approximately $148.8 million and $97.0 million, respectively, and federal and state research and development tax credit carryforwards of approximately $12.0 million and $11.1 million, respectively. The federal net operating loss and federal tax credit carryforwards will expire at various dates beginning in 2022. The state net operating loss carryforwards begin to expire in 2017 if not utilized. The state tax credit carryforwards have no expiration date. None of the net operating loss and tax credit carryforwards are subject to the limitations imposed by Sections 382 and 383 of the Internal Revenue Code. The Company tracks a portion of its deferred tax assets attributable to stock option benefits in a separate memorandum account. Therefore, these amounts are not included in the Company’s gross or net deferred tax assets. The benefit of these stock options will not be recorded in equity unless it reduces taxes payable. As of December 31, 2016, the portion of the federal and state net operating losses related to stock option benefits was approximately $31.6 million. The Company had $2.1 million, $2.8 million and $1.6 million of unrecognized tax benefits as of December 31, 2016, 2015 and 2014, respectively. The unrecognized tax benefits are primarily research tax credits for all years. The following table summarizes the activity related to unrecognized tax benefits: Year Ended December 31, 2016 2015 2014 (In thousands) Balance at January 1 $ $ $ Increase (decrease) related to prior year tax positions Increase related to current year tax positions Balance at December 31 $ $ $ Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months that would affect the Company’s effective tax rate. Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the Company’s income tax provision in its consolidated statements of operations. For the year ended December 31, 2016, 2015 and 2014, the Company recognized $8,000, $7,200 and $6,400 in interest and penalties, respectively, related to unrecognized tax benefits. The Company files federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. The statute of limitations remains open for the years 2001 through 2016 in U.S. federal and state jurisdictions, and for the years 2011 through 2016 in foreign jurisdictions. Fiscal years outside the normal statute of limitations remain open to audit by tax authorities due to tax attributes generated in early years which have been carried forward and may be audited in subsequent years when utilized. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | Note 12. Selected Quarterly Financial Data (Unaudited) The following table contains selected unaudited consolidated statement of operations information for each of the quarters in 2016 and 2015. The Company believes that the following information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period. Quarter Ended March 31, June 30, September 30, December 31, (In thousands, except per share data) 2016: Total revenues $ $ $ $ Product revenues Cost of product revenues Net income (loss) Basic net income (loss) per common share $ $ $ $ Diluted net income (loss) per common share $ $ $ $ 2015: Total revenues $ $ $ $ Product revenues Cost of product revenues Net loss Basic and diluted net loss per common share $ $ $ $ The quarterly increases in product revenues during 2016 and 2015 were primarily attributable to increased adoption of the Oncotype DX breast and colon cancer tests by physicians, international expansion, increased revenues recorded on an accrual basis, and increased reimbursement for these tests by third‑party payors. The increase in cost of product revenues during first six months of 2016 and 2015 was primarily due to incremental costs related to test processing associated with the Oncotype DX prostate cancer test. The decrease in cost of product revenues during the last six months of 2016 was due the satisfaction of certain royalty payment obligations. Per share amounts for the quarters and full year have been calculated separately. Accordingly, quarterly amounts may not add up to the annual amount because of differences in the weighted‑average common shares outstanding during each period, due primarily to the effect of the Company’s issuing shares of its common stock during the year. For all of the quarters presented, except for the quarter ended December 31, 2016, basic and diluted net loss per common share were identical as potential common shares were excluded from the calculation because their effects were anti‑dilutive. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II GENOMIC HEALTH, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2016, 2015 and 2014 Balance at Balance at Beginning of End of Period Expenses Deductions Period (In thousands) Allowance for Doubtful Accounts: Year ended December 31, 2016 $ $ $ $ Year ended December 31, 2015 $ $ $ $ Year ended December 31, 2014 $ $ $ $ |
Organization and Summary of S22
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation These consolidated financial statements include all the accounts of the Company and its wholly‑owned subsidiaries. The Company had two wholly-owned subsidiaries at December 31, 2016: Genomic Health International Holdings, LLC, which was established in Delaware in 2010 and supports the Company’s international sales and marketing efforts; and Oncotype Laboratories, Inc., which was established in 2012, and is inactive. Genomic Health International Holdings, LLC has 10 wholly-owned subsidiaries. The functional currency for the Company’s wholly-owned subsidiaries incorporated outside the United States is the U.S. dollar. All significant intercompany balances and transactions have been eliminated. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the Company’s consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. |
Marketable Securities | Marketable Securities The Company invests in marketable securities, primarily money market funds, obligations of U.S. Government agencies and government‑sponsored entities, corporate bonds, commercial paper and equity securities. The Company considers all investments with a maturity date of less than one year as of the balance sheet date to be short‑term investments. Those investments with a maturity date greater than one year as of the balance sheet date are considered to be long‑term investments. Beginning in 2011, the Company made investments in various tranches of the preferred stock of Invitae Corporation (“Invitae”), which at the time was a privately-held company, such that the carrying value of this investment was $13.9 million at December 31, 2014. On February 18, 2015, Invitae completed an initial public offering of its common stock and the Company’s preferred stock investment automatically converted into 2,207,793 shares of Invitae common stock. This investment was accounted for as an available-for-sale marketable security and valued at $18.1 million at December 31, 2015. During the year ended December 31, 2016, the Company sold a portion of its shares of the common stock of Invitae for proceeds of $9.7 million based on a cost of $6.28 per share, resulting in a realized gain of $3.2 million. There were no shares sold during the year ended December 31, 2015. The fair value of the remaining investment was $9.3 million at December 31, 2016. This investment, which is accounted for under the cost method, was valued at $7.3 million at December 31, 2016. Unrealized gains or losses resulting from changes in the fair value of this investment will be recognized in other comprehensive income until the securities are sold. During the year ended December 31, 2016, $1.9 million of unrealized gains, net of tax of $727,000, related to the shares sold was reclassified out of accumulated other comprehensive income into earnings. There was no unrealized gain reclassified out of accumulated other comprehensive income into earnings during either of the years ended December 31, 2015 and 2014. In January 2017, the Company sold all remaining shares of Invitae common stock for proceeds of $10.2 million, resulting in a realized gain of $2.8 million. As of December 31, 2016, and 2015, respectively, all investments in marketable securities were classified as available for sale. These securities are carried at estimated fair value with unrealized gains and losses included in stockholders’ equity. Realized gains and losses and declines in value, if any, judged to be other than temporary on available‑for‑sale securities are reported in other income or expense. When securities are sold, any associated unrealized gain or loss initially recorded as a separate component of stockholders’ equity is reclassified out of stockholders’ equity on a specific‑identification basis and recorded in earnings for the period. The cost of securities sold is determined using specific identification. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, trade receivables and accounts payable. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, trade receivables and accounts payable, approximate fair value due to their short maturities. See Note 3, “ Fair Value Measurements ” for further information on the fair value of the Company’s financial instruments. |
Concentration of Risk | Concentration of Risk Cash equivalents, marketable securities and trade accounts receivable are financial instruments which potentially subject the Company to concentrations of credit risk. Through December 31, 2016, no material losses had been incurred related to such credit risk. The Company is subject to credit risk from its portfolio of cash equivalents and marketable securities. The Company invests in money market funds through a major U.S. bank and is exposed to credit risk in the event of default by the financial institution to the extent of amounts recorded on the consolidated balance sheets. The Company invests in short‑term, investment‑grade debt instruments and by policy limits the amount in any one type of investment, except for securities issued or guaranteed by the U.S. government. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. The Company is also subject to credit risk from its accounts receivable related to its product sales. The Company performs evaluations of customers’ financial condition and generally does not require collateral. The majority of the Company’s accounts receivable arise from product sales in the United States. As of December 31, 2016, the substantial majority of the Company’s product revenues have been derived from sales of one product, the Oncotype DX breast cancer test. The majority of the Company’s tests to date have been delivered to physicians in the United States. All Oncotype DX tests are processed in the Company’s clinical reference laboratory facility in Redwood City, California. Medicare accounted for 21%, 20% and 20% of the Company’s product revenues for the years ended December 31, 2016, 2015 and 2014, respectively, and represented 24% and 14% of the Company’s total accounts receivable balance as of December 31, 2016 and 2015, respectively. No other third‑party payor represented more than 10% of the Company’s product revenues or accounts receivable balances for these periods. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company accrues an allowance for doubtful accounts against its accounts receivable based on estimates consistent with historical payment experience. Bad debt expense is included in general and administrative expense on the Company’s consolidated statements of operations. Accounts receivable are written off against the allowance when the appeals process is exhausted, when an unfavorable coverage decision is received or when there is other substantive evidence that the account will not be paid. The Company’s allowance for doubtful accounts as of December 31, 2016 and 2015 was $4.5 million and $4.0 million, respectively. Write‑offs for doubtful accounts of $7.1 million and $5.2 million were recorded against the allowance during the years ended December 31, 2016 and 2015, respectively. Bad debt expense was $7.9 million, $6.0 million, and $6.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Property and Equipment | Property and Equipment Property and equipment, including purchased software, are stated at cost. Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which generally range from three to seven years. Leasehold improvements are amortized using the straight‑line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. |
Internal-use Software | Internal-use Software Costs incurred to develop software for internal use are capitalized and amortized over the estimated useful life of the software. Costs related to maintenance of internal-use software are expensed as incurred. For the years ended December 31, 2016 and 2015, the Company capitalized $3.4 million (including $1.2 million of personnel-related expenses) and $15.1 million (including $5.9 million of personnel-related expenses), respectively, of costs associated with internal-use software development. No internal-use software development costs were capitalized for the year ended December 31, 2014. Amortization of previously capitalized amounts was $2.5 million, $380,000, and $0 for the years ended December 31, 2016, 2015, and 2014, respectively. |
Intangible Assets | Intangible Assets Intangible assets with finite useful lives are recorded at cost, less accumulated amortization. Amortization is recognized over the estimated useful lives of the assets. The Company’s intangible assets with finite lives, which are related to patent licenses, are not material and are included in non‑current other assets on the Company’s consolidated balance sheets. |
Investments in Privately Held Companies | Investments in Privately Held Companies The Company determines whether its investments in privately held companies are debt or equity based on their characteristics, in accordance with the applicable accounting guidance for such investments. The Company also evaluates the investee to determine if the entity is a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary of the VIE, in order to determine whether consolidation of the VIE is required in accordance with accounting guidance for consolidations. If consolidation is not required and the Company owns less than 50.1% of the voting interest of the entity, the investment is evaluated to determine if the equity method of accounting should be applied. The equity method applies to investments in common stock or in‑substance common stock where the Company exercises significant influence over the investee, typically represented by ownership of 20% or more of the voting interests of an entity. If the equity method does not apply, investments in privately held companies determined to be equity securities are accounted for using the cost method. Investments in privately held companies determined to be debt securities are accounted for as available‑for‑sale or held‑to‑maturity securities, in accordance with the applicable accounting guidance for such investments. During the year ended December 31, 2016, the Company invested $6.1 million in the subordinated convertible promissory notes of a private company (see Note 6). The subordinated convertible promissory notes represent a variable interest in the investee. The Company has concluded it is not the primary beneficiary and thus has not consolidated the investee pursuant to the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810. However, the Company will continue to assess its investment and future commitments to the investee and to the extent its relationship with the investee changes, may be required to consolidate the investee in future periods. The Company determined that the investment was an available-for-sale debt security. As of December 31, 2016, the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $5.8 million, which is recorded in other assets. |
Impairment of Long-lived Assets | Impairment of Long‑lived Assets The Company reviews long‑lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. For property and equipment and intangible assets, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using undiscounted cash flows. For investments in non‑marketable equity securities, evidence of impairment might include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. The Company’s assessment as to whether any impairment is other than temporary is based on its ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, the asset is written down to its fair value. |
Income Taxes | Income Taxes The Company uses the liability method for income taxes, whereby deferred income taxes are provided on items recognized for financial reporting purposes over different periods than for income tax purposes. Valuation allowances are provided when the expected realization of tax assets does not meet a more‑likely‑than‑not criterion. The Company accounts for uncertain income tax positions using a benefit recognition model with a two‑step approach, a more‑likely‑than‑not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement, in accordance with the accounting guidance for uncertain tax positions. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense when and if incurred. See Note 11, “Income Taxes” for additional information regarding unrecognized tax benefits. |
Revenue Recognition | Revenue Recognition The Company derives its revenues from product sales and, to a lesser extent from contracts with biopharmaceutical and pharmaceutical companies. The majority of the Company’s historical product revenues have been derived from the sale of the Oncotype DX breast cancer test. The Company generally bills third‑party payors upon generation and delivery of a patient report to the physician. As such, the Company takes assignment of benefits and the risk of collection with the third‑party payor. The Company generally bills the patient directly for amounts owed after multiple requests for payment have been denied or only partially paid by the insurance carrier. The Company pursues case‑by‑case reimbursement where medical policies are not in place or payment history has not been established. The Company’s product revenues for tests performed are recognized when the following revenue recognition criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Criterion (1) is satisfied when the Company has an arrangement to pay or a contract with the payor in place addressing reimbursement for the Oncotype DX test. In the absence of such arrangements, the Company considers that criterion (1) is satisfied when a third‑party payor pays the Company for the test performed. Criterion (2) is satisfied when the Company performs the test and generates and delivers to the physician, or makes available on its web portal, a patient report. When evaluating whether the fee is fixed or determinable and collectible, the Company considers whether it has sufficient history to reliably estimate the total fee that will be received from a payor and a payor’s individual payment patterns. Determination of criteria (3) and (4) are based on management’s judgments regarding whether the fee charged for products or services delivered is fixed or determinable, and the collectability of those fees under any contract or arrangement. Based upon at least several months of payment history, the Company reviews the number of tests paid against the number of tests billed and the payor’s outstanding balance for unpaid tests to determine whether payments are being made at a consistently high percentage of tests billed and at appropriate amounts given the arrangement or contracted payment amount. The estimated accrual amounts per test, recorded upon delivery of a patient report, are calculated for each accrual payor and are based on the arrangement or contracted price adjusted for individual payment patterns resulting from co-payment amounts and excluded services in healthcare plans. The Company also reduces revenue for an estimate of amounts that qualify as patient assistance and related deductions that do not qualify for revenue recognition. When a payment received for an individual test is higher or lower than the estimated accrual amount, the Company recognizes the difference as either cash revenue, in the case of higher payments, or in the case of lower payments, a charge against either the patient assistance program and related deductions reserve or the allowance for doubtful accounts, as applicable. To the extent all criteria set forth above are not met when test results are delivered, product revenues are recognized when cash is received from the payor. The Company has exclusive distribution agreements for one or more of its Oncotype DX tests with distributors covering more than 90 countries outside of the United States. The distributor generally provides certain marketing and administrative services to the Company within its territory. As a condition of these agreements, the distributor generally pays the Company an agreed upon fee per test and the Company processes the tests. The same revenue recognition criteria described above generally apply to tests received through distributors. To the extent all criteria set forth above are not met when test results are delivered, product revenues are generally recognized when cash is received from the distributor. From time to time, the Company receives requests for refunds of payments, generally due to overpayments made by third party‑payors. Upon becoming aware of a refund request, the Company establishes an accrued liability for tests covered by the refund request until such time as the Company determines whether or not a refund is due. Accrued refunds were $487,000 and $609,000 at December 31, 2016 and 2015, respectively. Contract revenues are generally derived from studies conducted with biopharmaceutical and pharmaceutical companies. The specific methodology for revenue recognition is determined on a case‑by‑case basis according to the facts and circumstances applicable to a given contract. Under certain contracts, the Company’s input, measured in terms of full‑time equivalent level of effort or running a set of assays through its clinical reference laboratory under a contractual protocol, triggers payment obligations, and revenues are recognized as costs are incurred or assays are processed. Certain contracts have payments that are triggered as milestones are completed, such as completion of a successful set of experiments. Milestones are assessed on an individual basis and revenue is recognized when these milestones are achieved, as evidenced by acknowledgment from collaborators, provided that (1) the milestone event is substantive and its achievability was not reasonably assured at the inception of the agreement and (2) the milestone payment is non‑refundable. Where separate milestones do not meet these criteria, the Company typically defaults to a performance‑based model, such as revenue recognition following delivery of effort as compared to an estimate of total expected effort. Advance payments received in excess of revenues recognized are classified as deferred revenue until such time as the revenue recognition criteria have been met. |
Cost of Product Revenues | Cost of Product Revenues Cost of product revenues includes the cost of materials, direct labor, equipment and infrastructure expenses associated with processing tissue samples (including sample accessioning, histopathology, anatomical pathology, paraffin extraction, reverse transcription polymerase chain reaction (“RT‑PCR”), quality control analyses and shipping charges to transport tissue samples) and license fees. Infrastructure expenses include allocated facility occupancy and information technology costs. Costs associated with performing the Company’s tests are recorded as tests are processed. Costs recorded for tissue sample processing and shipping charges represent the cost of all the tests processed during the period regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of product revenues and fixed annual payments relating to the launch and commercialization of the Company’s tests are recorded as license fees in cost of product revenues at the time product revenues are recognized or in accordance with other contractual obligations. |
Research and Development Expenses | Research and Development Expenses Research and development expenses are comprised of costs incurred to develop technology and carry out clinical studies and include salaries and benefits, reagents and supplies used in research and development laboratory work, infrastructure expenses, including allocated facility occupancy and information technology costs, contract services, and other outside costs. Research and development expenses also include costs related to activities performed under contracts with biopharmaceutical and pharmaceutical companies. Research and development costs are expensed as incurred. The Company enters into collaboration and clinical trial agreements with clinical collaborators and records these costs as research and development expenses. The Company records accruals for estimated study costs comprised of work performed by its collaborators under contract terms. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized and recognized as expense as the goods are delivered or the related services are performed. |
Stock-based Compensation | Stock‑based Compensation The Company uses the Black‑Scholes option valuation model, single‑option approach, which requires the use of estimates such as stock price volatility and expected option lives, as well as expected option forfeiture rates, to value employee stock‑based compensation at the date of grant, and recognizes stock‑ based compensation expense ratably over the requisite service period. Equity instruments granted to non‑employees are also valued using the Black‑Scholes option valuation model and are subject to periodic revaluation over their vesting terms. The Company did not grant any stock options to non‑employee consultants during any of the years presented. |
401(k) Plan | 401(k) Plan Substantially all of the Company’s employees are eligible to participate in its defined contribution plan qualified under Section 401(k) of the Internal Revenue Code. The Company contributed dollar for dollar matching of employee contributions up to a maximum of $4,000, $3,000, and $2,000 for the years ended December 31, 2016, 2015 and 2014, respectively, for each employee per year based on a full calendar year of service. The match is funded concurrently with a participant’s semi‑monthly contributions to the 401(k) Plan. The Company recorded expense for its contributions under the 401(k) Plan of $3.5 million, $2.8 million and $1.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Foreign Currency Transactions | Foreign Currency Transactions Net foreign currency transaction gains or losses are included in other income (expense), net on the Company’s consolidated statements of operations. Net foreign currency transaction losses totaled $782,000, $551,000 and $790,000 for the years ended December 31, 2016, 2015 and 2014, respectively. |
Comprehensive Gain or Loss | Comprehensive Gain or Loss Other comprehensive gain or loss consists of unrealized gains and losses on available‑for‑sale securities. |
Leases | Leases The Company enters into lease agreements for its laboratory and office facilities. These leases are classified as operating leases. Rent expense is recognized on a straight‑line basis over the term of the lease. Incentives granted under the Company’s facilities leases, including allowances to fund leasehold improvements and rent holidays, are capitalized and are recognized as reductions to rental expense on a straight‑line basis over the term of the lease. |
Guarantees and Indemnifications | Guarantees and Indemnifications The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that limits its exposure and may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2016 and 2015. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) . Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition , and requires entities to recognize revenue when they transfer control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. Topic 606 will be effective for the Company in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. The Company will adopt Topic 606 effective January 1, 2018. Topic 606 permits the use of either a retrospective or modified retrospective application. The Company intends to use the modified retrospective approach. Upon adoption, the Company will recognize the cumulative effect of adopting this guidance as an adjustment to its opening accumulated deficit balance. Prior periods will not be retrospectively adjusted. Under Topic 606, the Company expects the timing of revenue recognition from certain payors who are not currently accrual payors to be accelerated. The Company is in the process of completing its analysis of the impact Topic 606 will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU changes accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, it clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The guidance will become effective for the Company beginning in the first quarter of 2018. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this ASU will have on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU No. 2016-2, Leases (Topic 842). Topic 842 generally requires entities to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. Topic 842 is effective for the Company’s interim and annual reporting periods during the year ending December 31, 2019, and all annual and interim reporting periods thereafter. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply. Full retrospective application is prohibited and early adoption by public entities is permitted. The Company is currently evaluating the impact that the adoption of Topic 842 will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. The Company will adopt the ASU in the first quarter of 2017 and does not expect the impact on its consolidated financial statements to be material. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Net Loss Per Share | |
Schedule of potentially dilutive common shares excluded from computation of diluted net loss per share | Year Ended December 31, 2016 2015 2014 (In thousands) Anti-dilutive options and RSUs excluded from the computation |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Measurements | |
Schedule of financial instruments measured at fair value on recurring basis | Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2016 (In thousands) As of December 31, 2016: Assets Money market deposits $ $ — $ — $ Commercial paper — — Corporate debt securities — — Corporate equity securities — — Total $ $ $ — $ Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2015 (In thousands) As of December 31, 2015: Assets Money market deposits $ $ — $ — $ Commercial paper — — Corporate debt securities — — Corporate equity securities — — Total $ $ $ — $ |
Summary of available-for-sale marketable securities | December 31, 2016 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ $ $ — $ Corporate debt securities Corporate equity securities — Total $ $ $ $ December 31, 2015 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ $ $ — $ Corporate debt securities — Corporate equity securities — Total $ $ $ $ |
Schedule of the breakdown of available-for-sale marketable securities with unrealized losses | In a Loss Position for Less Than 12 Months Gross Unrealized Estimated As of December 31, 2016: Losses Fair Value (In thousands) Corporate debt securities $ $ Total $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Summary of the Company's property and equipment | December 31, 2016 2015 (In thousands) Laboratory equipment $ $ Computer equipment Computer software—internal use Furniture and fixtures Leasehold improvements Work in progress Less accumulated depreciation and amortization Total $ $ |
Accrued Expenses and Other Cu26
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accrued Expenses and Other Current Liabilities | |
Summary of the Company's accrued expenses and other current liabilities | December 31, 2016 2015 (In thousands) Accrued expenses $ $ Accrued professional and other service fees Accrued refunds Accrued rebate Accrued collaboration expense Accrued taxes payable Other current liabilities Total $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Schedule of future non-cancelable commitments under operating leases | Annual Payments (In thousands) Years Ending December 31, 2017 $ 2018 2019 2020 2021 2022 and thereafter Total minimum payments $ |
Capital Stock (Tables)
Capital Stock (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Capital Stock | |
Schedule of shares of common stock reserved for future issuance | Number of Shares (In thousands) Shares to be issued upon exercise of outstanding stock options and vesting of RSUs Shares available for future stock option and RSU grants, settlement of employee stock purchase plan (ESPP) and restricted stock to be issued to outside directors in lieu of director fees Shares of common stock reserved for future issuance |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of option activity | Weighted-Average Outstanding Options Remaining Aggregate Number of Weighted-Average Contractual Intrinsic Shares Exercise Price Life Value (In thousands) (In years) (In thousands) Balance at December 31, 2015 $ Options granted $ Options exercised $ Options forfeited $ Options expired $ Balance at December 31, 2016 $ 5.4 $ Exercisable at December 31, 2016 $ 4.2 $ Vested and expected to vest at December 31, 2016 $ 5.4 $ |
Summary of RSU activity | Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2015 $ RSUs granted $ RSUs vested $ RSUs cancelled $ Balance at December 31, 2016 $ |
Schedule of share-based compensation expense | Year Ended December 31, 2016 2015 2014 (In thousands) Cost of product revenues $ $ $ Research and development Selling and marketing General and administrative Total $ $ $ |
Schedule of weighted-average fair values and assumptions used in calculation of fair value of stock options and employee stock purchase plan | Year Ended December 31, 2016 2015 2014 Expected volatility: Stock options % % % ESPP % % % Risk-free interest rate: Stock options % % % ESPP % % % Expected life in years: Stock options ESPP Weighted-average fair value: Stock options $ $ $ ESPP $ $ $ |
Performance-Based Vesting | |
Summary of RSU activity | Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2015 $ PVRSUs granted $ PVRSUs vested $ PVRSUs cancelled $ Balance at December 31, 2016 — $ — |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Summary of total revenue from customers by geographic region | Year Ended December 31, 2016 2015 2014 (In thousands) United States $ $ $ Outside of the United States Total revenues $ $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of components of the Company's loss before income taxes | Year Ended December 31, 2016 2015 2014 (In thousands) Domestic $ $ $ Foreign Total loss before income taxes $ $ $ |
Schedule of components of the Company's income tax expense (benefit) | Year Ended December 31, 2016 2015 2014 (In thousands) Current expense (benefit): Federal $ $ — $ — State Foreign Deferred tax expense (benefit): Federal — State — Foreign — — — Total income tax expense (benefit) $ $ $ |
Schedule of reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate | Year Ended December 31, 2016 2015 2014 (In thousands) Federal tax at statutory rate $ $ $ Stock-based compensation Non-deductible meals and entertainment Net operating losses not used Tax benefit on available-for-sale securities — State tax, net of federal benefit Other Total income tax expense (benefit) $ $ $ |
Schedule of significant components of deferred tax assets and liabilities | December 31, 2016 2015 (In thousands) Deferred tax assets: Net operating loss carryforwards $ $ Stock-based compensation Research tax credits Fixed assets Capitalized costs Accrued compensation Other Total deferred tax assets Valuation allowance Net deferred tax assets $ — $ — |
Summary of the activity related to unrecognized tax benefits | Year Ended December 31, 2016 2015 2014 (In thousands) Balance at January 1 $ $ $ Increase (decrease) related to prior year tax positions Increase related to current year tax positions Balance at December 31 $ $ $ |
Selected Quarterly Financial 32
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of selected quarterly unaudited consolidated statement of operations information | Quarter Ended March 31, June 30, September 30, December 31, (In thousands, except per share data) 2016: Total revenues $ $ $ $ Product revenues Cost of product revenues Net income (loss) Basic net income (loss) per common share $ $ $ $ Diluted net income (loss) per common share $ $ $ $ 2015: Total revenues $ $ $ $ Product revenues Cost of product revenues Net loss Basic and diluted net loss per common share $ $ $ $ |
Organization and Summary of S33
Organization and Summary of Significant Accounting Policies (Principles of Consolidation) (Details) | 12 Months Ended |
Dec. 31, 2016subsidiary | |
Principles of Consolidation | |
Number of wholly-owned subsidiaries | 2 |
Genomic Health International Holdings, LLC | |
Principles of Consolidation | |
Number of wholly-owned subsidiaries | 10 |
Organization and Summary of S34
Organization and Summary of Significant Accounting Policies (Marketable Securities) (Details) - Invitae - USD ($) $ in Millions | Feb. 18, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Investments in Privately Held Companies | ||||
Carrying value | $ 7.3 | $ 13.9 | ||
Fair value | $ 9.3 | $ 18.1 | ||
Common Stock | ||||
Investments in Privately Held Companies | ||||
Number of shares of common stock issued from conversion | 2,207,793 |
Organization and Summary of S35
Organization and Summary of Significant Accounting Policies (Marketable Securities Sold) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Investments in Privately Held Companies | ||||
Proceeds from sales of marketable securities | $ 9,717,000 | |||
Realized gains on available-for-sale marketable securities | 3,208,000 | $ 0 | $ 0 | |
Amount reclassified out of accumulated other comprehensive income | 1,854,000 | |||
Invitae | ||||
Investments in Privately Held Companies | ||||
Fair value | 9,300,000 | 18,100,000 | ||
Carrying value | 7,300,000 | 13,900,000 | ||
Amount reclassified out of accumulated other comprehensive income | 1,900,000 | $ 0 | $ 0 | |
Amount reclassified out of accumulated other comprehensive income, tax portion | 727,000 | |||
Common Stock | Sale | Invitae | ||||
Investments in Privately Held Companies | ||||
Proceeds from sales of marketable securities | $ 10,200,000 | $ 9,700,000 | ||
Cost per share (in dollars per share) | $ 6.28 | |||
Realized gains on available-for-sale marketable securities | $ 2,800,000 | $ 3,200,000 | ||
Number of shares of cost method investment sold by entity | 0 |
Organization and Summary of S36
Organization and Summary of Significant Accounting Policies Concentration of Risk (Details) - product | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Concentration of Risk | |||
Number of products from which the majority of the entity's product revenues have been derived | 1 | ||
Product revenues | Third-party payor | |||
Concentration of Risk | |||
Number of products from which the majority of the entity's product revenues have been derived | 1 | ||
Product revenues | Third-party payor | Medicare | |||
Concentration of Risk | |||
Concentration risk percentage | 21.00% | 20.00% | 20.00% |
Net accounts receivable | Third-party payor | Medicare | |||
Concentration of Risk | |||
Concentration risk percentage | 24.00% | 14.00% |
Organization and Summary of S37
Organization and Summary of Significant Accounting Policies (Other) (Details) | 12 Months Ended | ||
Dec. 31, 2016USD ($)Testcountry | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Allowance for Doubtful Accounts | |||
Allowance for doubtful accounts | $ 4,508,000 | $ 3,988,000 | |
Write-offs for doubtful accounts recorded against allowance | 7,100,000 | 5,200,000 | |
Bad debt expense | 7,900,000 | 6,000,000 | $ 6,700,000 |
Impairment of Long-lived Assets | |||
Write-off of previously capitalized software costs | $ 2,600,000 | 635,000 | |
Revenue Recognition | |||
Minimum number of Oncotype DX tests by exclusive distribution agreements | Test | 1 | ||
Minimum number of countries covered for distribution agreements establishment | country | 90 | ||
Accrued refunds | $ 487,000 | 609,000 | |
401(k) Plan | |||
Maximum amount of matching employer contribution for each employee per year | 4,000 | 3,000 | 2,000 |
Contributions expensed | 3,500,000 | 2,800,000 | 1,900,000 |
Foreign Currency Transactions | |||
Net foreign currency transaction losses | 782,000 | 551,000 | 790,000 |
Previously Capitalized Software | |||
Impairment of Long-lived Assets | |||
Write-off of previously capitalized software costs | 635,000 | ||
Held for sale | Previously Capitalized Software | Selling and marketing | |||
Impairment of Long-lived Assets | |||
Write-off of previously capitalized software costs | 2,600,000 | ||
Invitae | |||
Investments in Privately Held Companies | |||
Carrying value of investments in privately held companies | 7,300,000 | 13,900,000 | |
Privately Held Companies | Subordinated convertible promissory notes | |||
Investments in Privately Held Companies | |||
Amount invested in subordinated convertible promissory notes | 6,100,000 | ||
Privately Held Companies | Subordinated convertible promissory notes | Other Assets | |||
Investments in Privately Held Companies | |||
Estimated fair value | $ 5,800,000 | ||
Property and equipment | Minimum | |||
Property and Equipment | |||
Estimated useful lives of the assets | 3 years | ||
Property and equipment | Maximum | |||
Property and Equipment | |||
Estimated useful lives of the assets | 7 years | ||
Computer software—internal use | |||
Internal-use Software | |||
Costs to develop internal-use software capitalized | $ 3,400,000 | 15,100,000 | 0 |
Personnel-related expenses | 1,200,000 | 5,900,000 | |
Amortization | $ 2,500,000 | $ 380,000 | $ 0 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net Loss Per Share | |||
Anti-dilutive options and RSUs excluded from the computation (in shares) | 828 | 945 | 1,213 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Assets measured at fair value on a recurring basis: | ||
Transfer of assets from level 1 to level 2 | $ 0 | |
Transfer of assets from level 2 to level 1 | 0 | |
Transfer of liabilities from level 1 to level 2 | 0 | |
Transfer of liabilities from level 2 to level 1 | 0 | |
Subordinated convertible promissory notes | ||
Assets measured at fair value on a recurring basis: | ||
Amount invested in subordinated convertible promissory notes | 6,100 | |
Significant Unobservable Inputs Level 3 | Subordinated convertible promissory notes | Other Assets | ||
Assets measured at fair value on a recurring basis: | ||
Estimated fair value | 5,800 | |
Recurring basis | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 69,783 | $ 83,637 |
Recurring basis | Money market deposits | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 13,198 | 13,928 |
Recurring basis | Commercial paper | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 32,421 | 29,224 |
Recurring basis | Corporate debt securities | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 14,869 | 22,359 |
Recurring basis | Corporate equity securities | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 9,295 | 18,126 |
Recurring basis | Actively Quoted Markets for Identical Assets Level 1 | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 13,198 | 13,928 |
Recurring basis | Actively Quoted Markets for Identical Assets Level 1 | Money market deposits | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 13,198 | 13,928 |
Recurring basis | Significant Other Observable Inputs Level 2 | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 56,585 | 69,709 |
Recurring basis | Significant Other Observable Inputs Level 2 | Commercial paper | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 32,421 | 29,224 |
Recurring basis | Significant Other Observable Inputs Level 2 | Corporate debt securities | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | 14,869 | 22,359 |
Recurring basis | Significant Other Observable Inputs Level 2 | Corporate equity securities | ||
Assets measured at fair value on a recurring basis: | ||
Total assets at fair value | $ 9,295 | $ 18,126 |
Fair Value Measurements (Availa
Fair Value Measurements (Available-For-Sale Marketable Securities) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Marketable securities classified as available-for-sale | |||
Cost or Amortized Cost | $ 54,566 | $ 58,110 | |
Gross Unrealized Gains | 2,021 | 4,310 | |
Gross Unrealized Losses | (2) | (10) | |
Total Estimated Fair Value | 56,585 | 62,410 | |
Realized gains on available-for-sale marketable securities | 3,208 | 0 | $ 0 |
Commercial paper | |||
Marketable securities classified as available-for-sale | |||
Cost or Amortized Cost | 32,350 | 23,684 | |
Gross Unrealized Gains | 71 | 41 | |
Total Estimated Fair Value | 32,421 | 23,725 | |
Corporate debt securities | |||
Marketable securities classified as available-for-sale | |||
Cost or Amortized Cost | 14,868 | 20,569 | |
Gross Unrealized Gains | 3 | ||
Gross Unrealized Losses | (2) | (10) | |
Total Estimated Fair Value | 14,869 | 20,559 | |
Corporate equity securities | |||
Marketable securities classified as available-for-sale | |||
Cost or Amortized Cost | 7,348 | 13,857 | |
Gross Unrealized Gains | 1,947 | 4,269 | |
Total Estimated Fair Value | $ 9,295 | $ 18,126 |
Fair Value Measurements (Avai41
Fair Value Measurements (Available-For-Sale Marketable Securities with Unrealized Losses) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair Value Measurements | ||
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | $ (2) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | $ 9,443 | |
Maximum contractual maturities of Company's available-for-sale marketable securities | 1 year | 1 year |
Corporate debt securities | ||
Fair Value Measurements | ||
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | $ (2) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | $ 9,443 |
Fair Value Measurements (Impair
Fair Value Measurements (Impairment) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of capitalized software development costs | $ 2,600,000 | $ 635,000 | |
Impairment of equipment held for sale | 56,000 | 123,000 | $ 375,000 |
Previously Capitalized Software | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of capitalized software development costs | 635,000 | ||
Previously Capitalized Software | Held for sale | Selling and marketing | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of capitalized software development costs | 2,600,000 | ||
Equipment | Held for sale | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of equipment held for sale | $ 56,000 | $ 123,000 | 265,000 |
Equipment | Prior to placing in service | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Impairment of equipment held for sale | $ 110,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment | |||
Property and equipment, gross | $ 102,404 | $ 91,281 | |
Less accumulated depreciation and amortization | (56,716) | (51,535) | |
Total | 45,688 | 39,746 | |
Depreciation and amortization expense | 8,800 | 6,900 | $ 6,700 |
Laboratory equipment | |||
Property and Equipment | |||
Property and equipment, gross | 29,992 | 27,955 | |
Computer equipment | |||
Property and Equipment | |||
Property and equipment, gross | 9,605 | 10,142 | |
Computer software—internal use | |||
Property and Equipment | |||
Property and equipment, gross | 23,790 | 22,289 | |
Furniture and fixtures | |||
Property and Equipment | |||
Property and equipment, gross | 4,055 | 3,983 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, gross | 20,756 | 20,673 | |
Work in progress | |||
Property and Equipment | |||
Property and equipment, gross | $ 14,206 | $ 6,239 |
Accrued Expenses and Other Cu44
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accrued Expenses and Other Current Liabilities | ||
Accrued expenses | $ 3,984,000 | $ 2,503,000 |
Accrued professional and other service fees | 1,902,000 | 1,633,000 |
Accrued refunds | 487,000 | 609,000 |
Accrued rebate | 588,000 | 690,000 |
Accrued collaboration expense | 2,418,000 | 2,873,000 |
Accrued taxes payable | 800,000 | 372,000 |
Other current liabilities | 1,000 | 242,000 |
Total | $ 10,180,000 | $ 8,922,000 |
Collaboration and Commercial 45
Collaboration and Commercial Technology Licensing Agreements (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2016USD ($)item | Jul. 31, 2014 | Dec. 31, 2013USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2015USD ($) | |
Specimen transfer agreements | |||||||
Collaboration payments and costs | |||||||
Collaboration expense | $ 4,600,000 | $ 11,100,000 | $ 6,400,000 | ||||
Technology license agreements | Cost of product revenues | |||||||
Collaboration payments and costs | |||||||
Costs recorded under collaborative arrangements | 5,300,000 | $ 9,200,000 | $ 9,500,000 | ||||
Exclusive license agreement | |||||||
Collaboration payments and costs | |||||||
Estimated total remaining obligation, including milestone payments | 0 | ||||||
Exclusive license agreement | Research and development | |||||||
Collaboration payments and costs | |||||||
Up-front payment | $ 9,000,000 | ||||||
Agreement break-up fee maximum | $ 5,500,000 | ||||||
Oncotype DX DCIS clinical study | |||||||
Collaboration payments and costs | |||||||
Final payment | 504,000 | ||||||
Exclusive distribution rights Epic's AR-V7 Nucleus Detect | |||||||
Collaboration payments and costs | |||||||
Obligation upon achievement of certain milestones | $ 4,000,000 | ||||||
Investment in subordinated convertible promissory notes per agreement | $ 7,500,000 | ||||||
Number of milestones needed to be achieved for conversion into preferred stock | item | 1 | ||||||
Investment in preferred stock per collaboration agreement | $ 2,500,000 | ||||||
Term of agreement | 10 years | ||||||
Exclusive distribution rights Epic's AR-V7 Nucleus Detect | Subordinated convertible promissory notes | |||||||
Collaboration payments and costs | |||||||
Amount invested in subordinated convertible promissory notes | 6,100,000 | ||||||
Estimated fair value | 5,800,000 | ||||||
Deferred cost | 305,000 | ||||||
Oncotype DX Prostate Cancer GPS | |||||||
Collaboration payments and costs | |||||||
Estimated total remaining obligation, including milestone payments | $ 1,800,000 | ||||||
Oncotype DX Prostate Cancer GPS | Minimum | |||||||
Collaboration payments and costs | |||||||
Number of years of active surveillance | 1 year | ||||||
Oncotype DX Prostate Cancer GPS | Maximum | |||||||
Collaboration payments and costs | |||||||
Number of years of active surveillance | 2 years |
Commitments and Contingencies46
Commitments and Contingencies (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)ft²item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Lease Obligations | |||
Rent expense | $ 5,700 | $ 4,100 | $ 3,700 |
Non-cancelable commitments under operating leases | |||
2,017 | 5,206 | ||
2,018 | 5,946 | ||
2,019 | 6,734 | ||
2,020 | 7,063 | ||
2,021 | 4,817 | ||
2022 and thereafter | 5,117 | ||
Total minimum payments | $ 34,883 | ||
Leased laboratory and office space located in Redwood City, California | |||
Lease Obligations | |||
Area leased under non-cancelable operating lease agreement (in square feet) | ft² | 180,700 | ||
Number of non-cancelable operating leases | item | 5 | ||
Period of time for which entity has an option to extend lease term | 5 years | ||
Allowance for certain tenant improvements | $ 2,300 | ||
Leased office space located in Geneva, Switzerland | |||
Lease Obligations | |||
Area leased under non-cancelable operating lease agreement (in square feet) | ft² | 7,500 |
Capital Stock (Details)
Capital Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | 13 Months Ended | |||
Feb. 28, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | |
Capital Stock | ||||||
Common stock outstanding (in shares) | 33,831,998 | 32,800,428 | ||||
Shares of common stock reserved for future issuance | 7,431,000 | |||||
Treasury Stock | ||||||
Amount of common stock to be repurchased on an accelerated basis under accelerated share repurchase agreement | $ 30 | |||||
Number of common shares received under accelerated share repurchase agreement | 77,257 | 984,074 | 77,257 | |||
Average purchase price of common stock from the accelerated share repurchase program (in dollars per share) | $ 28.27 | |||||
Exercise of outstanding stock options and vesting of RSUs | ||||||
Capital Stock | ||||||
Shares of common stock reserved for future issuance | 4,477,000 | |||||
Stock option and restricted stock unit grants, settlement of employee stock purchase plan (ESPP) and restricted stock to be issued to outside directors in lieu of director fees | ||||||
Capital Stock | ||||||
Shares of common stock reserved for future issuance | 2,954,000 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - 2005 Stock Incentive Plan - shares | Jun. 09, 2016 | Jun. 11, 2015 | Jun. 08, 2009 | Dec. 31, 2016 | Sep. 08, 2005 |
Stock awards other than options | |||||
Shares of common stock reserved for issuance | 5,000,000 | ||||
Increase in shares reserved for issuance | 1,500,000 | 1,500,000 | 3,980,000 | ||
Shares of common stock available for future grant | 2,624,000 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Options | ||||
Number of Shares | ||||
Options outstanding at the beginning of the period (in shares) | 3,630,000 | |||
Options granted (in shares) | 716,000 | |||
Options exercised (in shares) | (603,000) | |||
Options forfeited (in shares) | (47,000) | |||
Options expired (in shares) | (90,000) | |||
Options outstanding at the end of the period (in shares) | 3,606,000 | 3,630,000 | ||
Exercisable at the end of the period (in shares) | 2,629,000 | |||
Vested and expected to vest at the end of the period (in shares) | 3,543,000 | |||
Weighted-Average Exercise Price | ||||
Options outstanding at the beginning of the period (in dollars per share) | $ 23.80 | |||
Options granted (in dollars per share) | 26.98 | |||
Options exercised (in dollars per share) | 19.66 | |||
Options forfeited (in dollars per share) | 28.23 | |||
Options expired (in dollars per share) | 23.88 | |||
Options outstanding at the end of the period (in dollars per share) | 25.07 | $ 23.80 | ||
Exercisable at the end of the period (in dollars per share) | 23.91 | |||
Vested and expected to vest at the end of the period (in dollars per share) | $ 25.02 | |||
Weighted-Average Remaining Contractual Life | ||||
Options outstanding at the end of the period | 5 years 4 months 24 days | |||
Exercisable at the end of the period | 4 years 2 months 12 days | |||
Vested and expected to vest at the end of the period | 5 years 4 months 24 days | |||
Aggregate Intrinsic Value | ||||
Options outstanding at the end of the period (in dollars) | $ 17,518 | |||
Exercisable at the end of the period (in dollars) | 15,815 | |||
Vested and expected to vest at the end of the period (in dollars) | 17,403 | |||
Intrinsic value (in dollars) | 5,600 | $ 6,600 | $ 8,200 | |
Fair value of shares vested (in dollars) | $ 5,300 | $ 4,200 | $ 6,000 | |
Stock Options | Performance-Based Vesting | ||||
Number of Shares | ||||
Options granted (in shares) | 75,531 | |||
Weighted-Average Exercise Price | ||||
Options exercised (in dollars per share) | $ 31.12 | |||
Nonstatutory Stock Options | Outside directors | ||||
Additional disclosure related to options | ||||
Exercise price as a percentage of the fair market value of the company's stock | 100.00% | |||
Minimum | Incentive Stock Options | ||||
Additional disclosure related to options | ||||
Exercise price as a percentage of the fair market value of the company's stock | 100.00% | |||
Minimum | Nonstatutory Stock Options | ||||
Additional disclosure related to options | ||||
Exercise price as a percentage of the fair market value of the company's stock | 80.00% | |||
Maximum | Incentive Stock Options | ||||
Additional disclosure related to options | ||||
Term of incentive stock options from the date of grant | 10 years | |||
Maximum | Nonstatutory Stock Options | Outside directors | ||||
Additional disclosure related to options | ||||
Term of stock options after termination of the outside directors' service | 12 months | |||
End of first year | Nonstatutory Stock Options | Outside directors | ||||
Additional disclosure related to options | ||||
Vesting percentage | 25.00% | |||
Vesting period, after the first anniversary, in which the options vest monthly | 3 years |
Stock-Based Compensation (RSU A
Stock-Based Compensation (RSU Activity) (Details) | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2016USD ($)$ / sharesshares | Mar. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2016USD ($)installment$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | |
RSUs | |||||
Additional Disclosure | |||||
Number of equal annual installments | installment | 3 | ||||
Fair value (in dollars) | $ | $ 8,600,000 | $ 9,400,000 | $ 9,100,000 | ||
Number of Shares | |||||
Balance at the beginning of the period (in shares) | shares | 682,000 | ||||
Granted (in shares) | shares | 605,000 | ||||
Vested (in shares) | shares | (319,000) | ||||
Cancelled (in shares) | shares | (97,000) | ||||
Balance at the end of the period (in shares) | shares | 871,000 | 682,000 | |||
Weighted-Average Grant Date Fair Value | |||||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 30.18 | ||||
Granted (in dollars per share) | $ / shares | 27.50 | $ 30.65 | $ 29.05 | ||
Vested (in dollars per share) | $ / shares | 30.27 | ||||
Cancelled (in dollars per share) | $ / shares | 29.02 | ||||
Balance at the end of the period (in dollars per share) | $ / shares | $ 28.42 | $ 30.18 | |||
RSUs | Performance-Based Vesting | |||||
Additional Disclosure | |||||
Fair value (in dollars) | $ | $ 163,000 | $ 211,000 | |||
Grant-date fair value (in dollars) | $ | $ 329,000 | $ 368,000 | |||
Number of Shares | |||||
Balance at the beginning of the period (in shares) | shares | 6,000 | ||||
Granted (in shares) | shares | 11,720 | 13,533 | 12,000 | ||
Vested (in shares) | shares | (6,000) | 0 | |||
Cancelled (in shares) | shares | (12,000) | ||||
Balance at the end of the period (in shares) | shares | 6,000 | ||||
Weighted-Average Grant Date Fair Value | |||||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 27.21 | ||||
Granted (in dollars per share) | $ / shares | $ 28.09 | $ 27.21 | 28.09 | $ 31.12 | $ 27.21 |
Vested (in dollars per share) | $ / shares | 27.21 | ||||
Cancelled (in dollars per share) | $ / shares | $ 28.09 | ||||
Balance at the end of the period (in dollars per share) | $ / shares | $ 27.21 | ||||
Restricted Stock | Outside directors | |||||
Additional Disclosure | |||||
Fair value (in dollars) | $ | $ 200,000 | $ 200,000 | $ 230,000 | ||
Number of Shares | |||||
Granted (in shares) | shares | 6,970 | 7,365 | 8,209 | ||
Weighted-Average Grant Date Fair Value | |||||
Granted (in dollars per share) | $ / shares | $ 28.65 | $ 27.10 | $ 29.97 |
Stock-Based Compensation (Emplo
Stock-Based Compensation (Employee Stock Purchase Plan) (Details) - Employee Stock Purchase Plan - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Stock Purchase Plan | |||
Maximum period for offerings under ESPP | 27 months | ||
Exercise price as a percentage of the fair market value of the company's stock | 85.00% | ||
Length of purchase period under ESPP | 6 months | ||
Shares of common stock reserved for issuance | 1,250,000 | ||
Shares of common stock available for future grant | 329,593 | ||
Number of shares issued | 226,303 | 203,842 | 191,318 |
Unrecognized compensation expense (in dollars) | $ 648,000 | ||
Weighted-average period of recognition of unrecognized stock-based compensation expense | 5 months | ||
Maximum | |||
Employee Stock Purchase Plan | |||
Exercise price as a percentage of the fair market value of the company's stock | 85.00% |
Stock-Based Compensation (Emp52
Stock-Based Compensation (Employee Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Stock Based Compensation Expense | |||
Stock-based compensation expense (in dollars) | $ 18,303 | $ 16,005 | $ 16,538 |
Stock Options | Unvested Stock Options | |||
Employee Stock Based Compensation Expense | |||
Unrecognized compensation expense (in dollars) | $ 8,800 | ||
Weighted-average period of recognition of unrecognized stock-based compensation expense | 2 years 7 months 6 days | ||
RSUs | |||
Employee Stock Based Compensation Expense | |||
Unrecognized compensation expense (in dollars) | $ 15,100 | ||
Weighted-average period of recognition of unrecognized stock-based compensation expense | 1 year 9 months 18 days | ||
Cost of product revenues | |||
Employee Stock Based Compensation Expense | |||
Stock-based compensation expense (in dollars) | $ 590 | 525 | 497 |
Research and development | |||
Employee Stock Based Compensation Expense | |||
Stock-based compensation expense (in dollars) | 4,934 | 4,228 | 4,143 |
Selling and marketing | |||
Employee Stock Based Compensation Expense | |||
Stock-based compensation expense (in dollars) | 5,551 | 4,526 | 4,822 |
General and administrative | |||
Employee Stock Based Compensation Expense | |||
Stock-based compensation expense (in dollars) | $ 7,228 | $ 6,726 | $ 7,076 |
Stock-Based Compensation (Valua
Stock-Based Compensation (Valuation Assumptions) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted-average fair values and assumptions used in calculation of fair value | |||
Dividend yield (as a percent) | 0.00% | ||
Employee Stock Purchase Plan | |||
Weighted-average fair values and assumptions used in calculation of fair value | |||
Expected volatility (as a percent) | 44.00% | 35.00% | 37.00% |
Risk-free interest rate (as a percent) | 0.47% | 0.10% | 0.08% |
Expected life | 6 months | 6 months | 6 months |
Weighted-average fair value (in dollars per share) | $ 7.35 | $ 6.99 | $ 7.24 |
Stock Options | |||
Weighted-average fair values and assumptions used in calculation of fair value | |||
Expected volatility (as a percent) | 44.00% | 44.00% | 44.00% |
Risk-free interest rate (as a percent) | 1.36% | 1.66% | 1.97% |
Expected life | 6 years 1 month 6 days | 5 years 11 months 9 days | 6 years 7 months 10 days |
Weighted-average fair value (in dollars per share) | $ 11.73 | $ 13.37 | $ 14.13 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($)product | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)segmentproduct | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment information | |||||||||||
Number of business segments in which the entity operates | segment | 1 | ||||||||||
Number of products from which the majority of the entity's product revenues have been derived | product | 1 | 1 | |||||||||
Total revenues | $ 82,742 | $ 82,258 | $ 81,974 | $ 80,894 | $ 75,133 | $ 73,554 | $ 70,619 | $ 68,152 | $ 327,868 | $ 287,458 | $ 275,706 |
United States | |||||||||||
Segment information | |||||||||||
Total revenues | 281,077 | 246,008 | 230,657 | ||||||||
Outside of the United States | |||||||||||
Segment information | |||||||||||
Total revenues | $ 46,791 | $ 41,450 | $ 45,049 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Components of income (loss) before income taxes | |||
Domestic | $ (14,676) | $ (34,276) | $ (25,337) |
Foreign | 2,138 | (28) | 1,138 |
Loss before income taxes | (12,538) | (34,304) | (24,199) |
Current expense (benefit): | |||
Federal | 18 | ||
State | 67 | (15) | 40 |
Foreign | 569 | 566 | 353 |
Deferred tax expense (benefit): | |||
Federal | 702 | (1,494) | |
State | 25 | (53) | |
Total income tax expense (benefit) | 1,381 | (996) | 393 |
Reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate | |||
Federal tax at statutory rate | (4,388) | (12,006) | (8,470) |
Stock-based compensation | 867 | 782 | 789 |
Non-deductible meals and entertainment | 530 | 558 | 531 |
Net operating losses not used | 3,705 | 10,499 | 7,478 |
Tax benefit on available-for-sale securities | 702 | (1,494) | |
State tax, net of federal benefit | 68 | (63) | 26 |
Other | (103) | 728 | 39 |
Total income tax expense (benefit) | 1,381 | (996) | 393 |
Deferred tax assets: | |||
Net operating loss carryforwards | 42,550 | 43,870 | |
Stock-based compensation | 12,290 | 10,850 | |
Research tax credits | 17,620 | 15,220 | |
Fixed assets | 1,960 | 3,440 | |
Capitalized costs | 1,310 | 420 | |
Accrued compensation | 6,080 | 3,580 | |
Other | 6,180 | 4,500 | |
Total deferred tax assets | 87,990 | 81,880 | |
Valuation allowance | (87,990) | (81,880) | |
Increase (decrease) in net valuation allowance | $ 6,100 | $ 10,100 | $ 9,900 |
Income Taxes (Net Operating Los
Income Taxes (Net Operating Loss Carryforwards) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Net operating loss carryforwards | |
Net operating losses related to stock option benefits | $ 31.6 |
Federal | |
Net operating loss carryforwards | |
Net operating loss carryforwards | 148.8 |
Federal | Research and development. | |
Net operating loss carryforwards | |
Research and development tax credit carryforwards | 12 |
State | |
Net operating loss carryforwards | |
Net operating loss carryforwards | 97 |
State | Research and development. | |
Net operating loss carryforwards | |
Research and development tax credit carryforwards | $ 11.1 |
Income Taxes (Activity Related
Income Taxes (Activity Related to Unrecognized Tax Benefits) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Activity related to unrecognized tax benefits | |||
Balance at the beginning of the period | $ 2,847,000 | $ 1,600,000 | $ 2,160,000 |
Increase related to prior year tax positions | 927,000 | ||
(Decrease) related to prior year tax positions | (1,076,000) | (907,000) | |
Increase related to current year tax positions | 307,000 | 320,000 | 347,000 |
Balance at the end of the period | 2,078,000 | 2,847,000 | 1,600,000 |
Unrecognized tax benefits | |||
Interest and penalties | $ 8,000 | $ 7,200 | $ 6,400 |
Selected Quarterly Financial 58
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Total revenues | $ 82,742 | $ 82,258 | $ 81,974 | $ 80,894 | $ 75,133 | $ 73,554 | $ 70,619 | $ 68,152 | $ 327,868 | $ 287,458 | $ 275,706 |
Product revenues | 82,002 | 82,136 | 81,886 | 80,894 | 75,133 | 73,554 | 70,619 | 68,152 | 326,918 | 287,458 | 275,706 |
Cost of product revenues | 13,180 | 13,062 | 15,221 | 15,800 | 14,269 | 13,718 | 13,033 | 12,762 | 57,263 | 53,782 | 48,742 |
Net loss | $ 1,352 | $ (2,820) | $ (6,100) | $ (6,351) | $ (2,735) | $ (11,843) | $ (9,237) | $ (9,493) | $ (13,919) | $ (33,308) | $ (24,592) |
Basic net income (loss) per share (in dollars per share) | $ 0.04 | $ (0.08) | $ (0.18) | $ (0.19) | |||||||
Diluted net income (loss) per share (in dollars per share) | $ 0.04 | $ (0.08) | $ (0.18) | $ (0.19) | |||||||
Basic and diluted net loss per share (in dollars per share) | $ (0.08) | $ (0.36) | $ (0.29) | $ (0.30) | $ (0.42) | $ (1.03) | $ (0.78) |
SCHEDULE II VALUATION AND QUA59
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for Doubtful Accounts: - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 3,988 | $ 3,628 | $ 1,907 |
Expenses | 7,654 | 5,542 | 7,104 |
Deductions | 7,134 | 5,182 | 5,383 |
Balance at End of Period | $ 4,508 | $ 3,988 | $ 3,628 |