Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Jul. 31, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | GENOMIC HEALTH INC | |
Entity Central Index Key | 1,131,324 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,645,568 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 42,200 | $ 40,404 |
Short-term marketable securities | 67,599 | 56,585 |
Accounts receivable (net of allowance for doubtful accounts; 2017—$3,106, 2016—$4,508) | 32,427 | 35,179 |
Prepaid expenses and other current assets | 12,278 | 13,796 |
Total current assets | 154,504 | 145,964 |
Property and equipment, net | 48,908 | 45,688 |
Other assets | 9,518 | 9,462 |
Total assets | 212,930 | 201,114 |
Current liabilities: | ||
Accounts payable | 5,322 | 2,864 |
Accrued compensation and employee benefits | 21,355 | 27,900 |
Accrued expenses and other current liabilities | 12,185 | 10,180 |
Other current liabilities | 222 | 231 |
Total current liabilities | 39,084 | 41,175 |
Other liabilities | 3,899 | 3,834 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock | 3 | 3 |
Additional paid- in capital | 445,713 | 427,102 |
Accumulated other comprehensive (loss) income | (26) | 1,198 |
Accumulated deficit | (245,633) | (242,088) |
Treasury stock, at cost | (30,110) | (30,110) |
Total stockholders' equity | 169,947 | 156,105 |
Total liabilities and stockholders' equity | $ 212,930 | $ 201,114 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 3,106 | $ 4,508 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Product revenues | $ 85,487 | $ 81,886 | $ 169,467 | $ 162,780 |
Contract revenues | 88 | 88 | ||
Total revenues | 85,487 | 81,974 | 169,467 | 162,868 |
Operating expenses: | ||||
Cost of product revenues | 13,798 | 15,598 | 27,471 | 31,752 |
Research and development | 15,781 | 14,948 | 30,655 | 30,557 |
Selling and marketing | 40,656 | 37,989 | 82,163 | 77,489 |
General and administrative | 18,395 | 18,537 | 35,146 | 36,975 |
Total operating expenses | 88,630 | 87,072 | 175,435 | 176,773 |
Loss from operations | (3,143) | (5,098) | (5,968) | (13,905) |
Interest income | 206 | 87 | 364 | 165 |
Gain on sales of equity securities | 676 | 2,807 | 2,009 | |
Other income (expense), net | 357 | (150) | 452 | (63) |
Loss before income taxes | (2,580) | (4,485) | (2,345) | (11,794) |
Income tax expense | 159 | 1,615 | 1,200 | 657 |
Net loss | $ (2,739) | $ (6,100) | $ (3,545) | $ (12,451) |
Basic and diluted net loss per share (in dollars per share) | $ (0.08) | $ (0.18) | $ (0.10) | $ (0.38) |
Shares used in computing basic and diluted net loss per share (in shares) | 34,428 | 33,130 | 34,219 | 33,015 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Net loss | $ (2,739) | $ (6,100) | $ (3,545) | $ (12,451) |
Other comprehensive Loss: | ||||
Unrealized loss, net, on available-for-sale marketable securities, net of tax expense of $0 for both the three and six months ended June 30, 2017 and $1,257 and $0 for the three and six months ended June 30, 2016, respectively | (4) | (3,589) | (97) | (1,198) |
Reclassification adjustment for net gain on sale of equity securities included in net loss | (345) | (1,127) | (787) | |
Comprehensive loss | $ (2,743) | $ (10,034) | $ (4,769) | $ (14,436) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | ||||
Unrealized gain on available-for-sale marketable securities, tax (benefit) | $ 0 | $ 1,257 | $ 0 | $ 0 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Operating activities | ||
Net loss | $ (3,545) | $ (12,451) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 5,434 | 4,365 |
Employee stock-based compensation | 10,302 | 9,389 |
Impairment of assets held for sale and long-lived assets | 56 | |
Gain on disposal of property and equipment | 35 | |
Outside director restricted stock awarded in lieu of fees | 100 | 100 |
Gain on sale of equity securities | (2,807) | (2,009) |
Deferred tax benefit from unrealized gain on available-for-sale marketable securities, net | 820 | 348 |
Changes in assets and liabilities: | ||
Accounts receivable | 2,752 | 3,553 |
Prepaid expenses and other assets | 1,384 | (1,186) |
Accounts payable | 2,161 | (2,368) |
Accrued compensation and employee benefits | (6,545) | (1,725) |
Accrued expenses and other liabilities | 1,795 | 3,970 |
Deferred revenues | (197) | |
Net cash provided by operating activities | 11,886 | 1,845 |
Investing activities | ||
Purchases of property and equipment | (8,057) | (6,879) |
Proceeds from sale of property and equipment | 10 | |
Purchases of marketable securities | (50,338) | (35,932) |
Maturities of marketable securities | 29,932 | 40,007 |
Proceeds from sales of marketable securities | 10,155 | 5,117 |
Net cash (used in) provided by investing activities | (18,298) | 2,313 |
Financing activities | ||
Net proceeds from issuance of common stock under stock plans | 12,522 | 7,072 |
Withholding taxes related to restricted stock units net share settlement | (4,314) | (3,103) |
Net cash provided by financing activities | 8,208 | 3,969 |
Net increase in cash and cash equivalents | 1,796 | 8,127 |
Cash and cash equivalents at the beginning of the period | 40,404 | 32,533 |
Cash and cash equivalents at the end of the period | 42,200 | 40,660 |
Non-cash investing and financing activities | ||
Accrued purchases of property and equipment | $ 2,005 | 605 |
Change in fair value of equity investment | $ (1,404) |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Note 1. Organization and Summary of Significant Accounting Policies 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 the Company plans to deliver, along with its Oncotype DX tests, as part of its Oncotype IQ Genomic Intelligence Platform. Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries. The Company had two wholly-owned subsidiaries at June 30, 2017: 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 nine 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 interim period condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated balance sheet as of June 30, 2017, condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016, and condensed consolidated statements of cash flows for the six months ended June 30, 2017 and 2016 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2016 has been derived from audited financial statements, but it does not include certain information and notes required by GAAP for complete consolidated financial statements. 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 condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The accompanying interim period condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There have been no material changes in the Company’s significant accounting policies, other than the adoption of Accounting Standards Update ("ASU") 2016-09 described below, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Certain reclassifications have been made to prior period amounts to conform to the current period presentation. For the three and six months ended June 30, 2016, a reclassification of certain expenses from research and development to cost of product revenue was made in the condensed consolidated statements of operations to conform to the current period presentation. 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 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 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 $216,000 and $487,000 at June 30, 2017 and December 31, 2016, respectively, and are included in accrued expenses and other current liabilities. 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. 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 June 30, 2017 and December 31, 2016 was $3.1 million and $4.5 million, respectively. Write-offs for doubtful accounts of $1.7 million and $3.0 million were recorded against the allowance during the three and six months ended June 30, 2017, respectively, and write-offs of $1.8 million and $4.2 million were recorded against the allowance during the three and six months ended June 30, 2016, respectively. Bad debt expense was $1.2 million and $1.6 million for the three and six months ended June 30, 2017, respectively, and $2.2 million and $4.5 million for the three and six months ended June 30, 2016, respectively. 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. During the six months ended June 30, 2017, the Company sold its remaining shares of the common stock of Invitae Corporation for net proceeds of $10.2 million based on a cost of $6.28 per share, resulting in a realized gain of $2.8 million. During the six months ended June 30, 2016, the Company sold a portion of its shares of the common stock of Invitae Corporation for net proceeds of $5.1 million at the cost of $6.28 per share, resulting in a realized gain of $2.0 million. This investment, which was accounted for under the cost method, was valued at $10.7 million at June 30, 2016. Unrealized gains or losses resulting from changes in the fair value of this investment were recorded in other comprehensive income until the securities are sold. During the six months ended June 30, 2017 and 2016, $1.1 million and $787,000, respectively, of unrealized gain, net of tax of $821,000 and $448,000, respectively, related to the shares sold was reclassified out of accumulated other comprehensive income into earnings. As of June 30, 2017 and December 31, 2016, respectively, all investments in marketable securities were classified as available-for-sale securities. 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 accumulated other comprehensive income on a specific identification basis and recorded in earnings for the period. The cost of securities sold is determined using specific identification. 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 six months ended June 30, 2017 and the year ended December 2016, the Company invested $1.4 million and $6.1 million, respectively, in the subordinated convertible promissory notes of a private company (see Note 4). On March 8, 2017, all of the Company’s investment in subordinated convertible promissory notes was converted into preferred stock of the private company representing approximately 9% of the private entity’s voting interests, at which time the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $7.1 million. The preferred stock represents 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. The Company determined that the investment is an equity investment for which the Company does not have the ability to exercise significant influence. 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 equity investments are accounted for using the cost method of accounting and recorded in other assets on the Company’s condensed consolidated balance sheets. Recently Issued Accounting Pronouncements In May 2014, the FASB issued 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. In addition, Topic 606 requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. 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 intends to 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. The Company also plans to elect the practical expedient of applying the new guidance only to contracts that are not completed as of the date of initial application. 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. The Company is in the process of completing its assessment of the impact Topic 606 will have on its consolidated financial statements and related disclosures. The Company’s implementation of this standard includes a project management framework that includes a dedicated lead project manager and an implementation team responsible for assessing the impact that Topic 606 will have on the Company’s accounting, financial statement presentation and disclosure for contracts with customers. The assessment phase of this project has included the analysis of the Company’s current portfolio of customer contracts, including a review of historical accounting policies and practices to identify potential differences in applying Topic 606. The Company is also performing a comprehensive review of its current processes and systems to determine and implement changes required to support the adoption of Topic 606. The assessment has resulted in the identification of potential accounting changes to the timing of revenue recognition from certain payors who are not currently accrual payors to be accelerated. During the second quarter of 2017, the implementation team continued to identify changes to business processes, systems and controls to support recognition, presentation and disclosure under the new standard. An implementation plan for the second half of 2017 has been developed and includes tasks around documentation, design of new processes and controls as well as testing of the controls. 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 adopted this ASU in the first quarter of 2017 and elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. As a result, in the first quarter of 2017, the Company recorded an $11.6 million cumulative-effect adjustment decrease in accumulated deficit and an offsetting increase in deferred tax assets for previously unrecognized excess tax benefits that existed as of December 31, 2016. However, as all of the Company’s deferred tax assets, net of deferred tax liabilities, are subject to a valuation allowance and the realization of these assets is not more likely than not to be achieved, the Company recorded an $11.6 million valuation allowance against these deferred tax assets with an offsetting increase in accumulated deficit. The presentation requirement for cash flows related to employee taxes paid for withheld shares will not impact the statements of cash flows since such cash flows have historically been presented as a financing activity. The adoption was on a prospective basis and therefore had no impact on prior periods. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2017 | |
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: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (In thousands) (In thousands) Options and RSUs excluded from the computation 788 677 774 737 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3. Fair Value Measurements Fair Value Hierarchy 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; and 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 either June 30, 2017 or December 31, 2016. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016 by level within the fair value hierarchy: Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs June 30, Level 1 Level 2 Level 3 2017 (In thousands) As of June 30, 2017: Assets Money market deposits $ 10,830 $ — $ — $ 10,830 Commercial paper — 37,774 — 37,774 Corporate debt securities — 29,825 — 29,825 Total $ 10,830 $ 67,599 $ — $ 78,429 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 $ 13,198 $ — $ — $ 13,198 Commercial paper — 32,421 — 32,421 Corporate debt securities — 14,869 — 14,869 Corporate equity securities — 9,295 — 9,295 Total $ 13,198 $ 56,585 $ — $ 69,783 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. During the year ended December 31, 2016, the Company invested $6.1 million in subordinated convertible promissory notes of a private company. 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 and recorded in other assets. The subordinated convertible promissory notes were 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. In March 2017, the subordinated convertible promissory notes were converted into preferred stock of the privately held company. The Company accounted for such preferred stock using the cost method of accounting and accordingly recorded such preferred stock in other assets on its condensed consolidated balance sheets. There was no change in the fair value of such preferred stock during the three months ended June 30, 2017. All of the Company’s marketable securities are classified as available-for-sale. The following tables illustrate the Company’s available-for-sale marketable securities as of the dates indicated: June 30, 2017 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 37,782 $ 1 $ (8) $ 37,775 Corporate debt securities 29,842 — (18) 29,824 Total $ 67,624 $ 1 $ (26) $ 67,599 December 31, 2016 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 32,350 $ 71 $ — $ 32,421 Corporate debt securities 14,868 3 (2) 14,869 Corporate equity securities 7,348 1,947 — 9,295 Total $ 54,566 $ 2,021 $ (2) $ 56,585 The Company realized gains of $0 and $2.8 million on available-for-sale marketable securities for the three and six months ended June 30, 2017, respectively, and $676,000 and $2.0 million for the three and six months ended June 30, 2016, respectively. All of the Company’s available-for-sale marketable securities had contractual maturities of one year or less as of June 30, 2017 and December 31, 2016. 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 business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. There were no impairments recorded during both of the three and six months ended June 30, 2017 and $0 and $56,000 in three and six months ended June 30, 2016, respectively. |
Collaboration and Commercial Te
Collaboration and Commercial Technology Licensing Agreements | 6 Months Ended |
Jun. 30, 2017 | |
Collaboration and Commercial Technology Licensing Agreements | |
Collaboration and Commercial Technology Licensing Agreements | Note 4. 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 $912,000 and $1.8 million for the three and six months ended June 30, 2017, respectively, and $1.6 million and $2.5 million for the three and six months ended June 30, 2016, respectively, relating to services provided in connection with these agreements. In addition to these expenses, some of the agreements contain provisions for royalties from inventions resulting from the collaborations. 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 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 have annual minimum or maximum amounts. The Company recognized costs recorded under these agreements totaling $94,000 and $190,000 for the three and six months ended June 30, 2017, respectively, and $2.5 million and $5.1 million for the three and six months ended June 30, 2016, respectively, which were included in cost of product revenues. The decrease in costs for these agreements for the three and six months ended June 30, 2017 compared to the same periods in 2016, 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 polymerase chain reaction (“PCR”), homogeneous polymerase chain reaction, and reverse transcription polymerase chain reaction (“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. In June 2016, the Company entered into a collaboration agreement with Epic Sciences, Inc. (“Epic Sciences”), under which the Company was granted exclusive rights to commercialize in the United States a test developed by Epic Sciences, which test 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 Oncotype DX AR-V7 Nucleus Detect. Epic Sciences is responsible for performing test analysis, performing studies, including analytic and clinical validation studies, and seeking Medicare coverage from the Centers for Medicare and Medicaid Services (“CMS”) for the test at a certain minimum rate. The collaboration agreement has a term of 10 years, unless terminated earlier under certain circumstances. As of June 30, 2017, the Company had invested $7.5 million in subordinated convertible promissory notes of Epic Sciences that converted into shares of Epic Sciences’ preferred stock in March 2017. The subordinated convertible promissory notes had been recognized at fair value, which the Company believed was approximately $7.1 million while the difference of $375,000 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 as of June 30, 2017. Upon achievement of an additional milestone, the Company has agreed to invest an additional $2.5 million in Epic Sciences’ preferred stock. Future revenues generated from sales of Oncotype DX AR-V7 Nucleus Detect will be shared by the Company and Epic Sciences in accordance with the terms of the collaboration agreement. Additional terms of the agreement include the Company’s obligation to pay Epic Sciences $4.0 million in cash upon achievement of certain additional milestones. The Company is required to make a series of fixed annual payments under a collaboration agreement beginning with the one-year anniversary of achieving a key milestone for the Company’s DCIS clinical study in June 2014. As of June 30, 2017, a final payment of $504,000 is due in 2017. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies | |
Commitments | Note 5. Commitments and Contingencies Lease Obligations The Company has entered into non-cancellable operating leases for laboratory and office facilities. Rental expense under operating lease agreements was $1.6 million and $3.1 million for the three and six months ended June 30, 2017, respectively, and $1.3 million and $2.5 million for the three and six months ended June 30, 2016, respectively. Future non‑cancelable commitments under these operating leases at June 30, 2017 were as follows: Annual Payments (In thousands) Years Ending December 31, 2017 (remainder of year) $ 2,621 2018 5,965 2019 6,752 2020 7,082 2021 4,825 2022 and thereafter 5,117 Total minimum payments $ 32,362 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. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 6. Stock-Based Compensation 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 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. On June 15, 2017, 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. Stock Options A summary of the stock option activity under the 2005 Plan for the six months ended June 30, 2017 is as follows: Number of Weighted-Average Shares Exercise Price (In thousands) Balance at December 31, 2016 3,606 $ 25.07 Options granted 684 $ 27.84 Options exercised (460) $ 21.20 Options forfeited (19) $ 28.30 Options expired (4) $ 20.08 Balance at June 30, 2017 3,807 $ 26.02 Exercisable at June 30, 2017 2,502 $ 24.96 Vested and expected to vest at June 30, 2017 3,707 $ 25.98 Restricted Stock Units A summary of the RSU activity under the 2005 Plan for the six months ended June 30, 2017 is as follows: Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2016 871 $ 28.42 RSUs granted 538 $ 27.97 RSUs vested (346) $ 28.70 RSUs cancelled (51) $ 28.41 Balance at June 30, 2017 1,012 $ 28.09 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 six months ended June 30, 2017, the Company issued 3,285 shares of restricted stock to outside directors, with a grant date fair value of $100,000 and a weighted-average grant date fair value of $30.40 per share. Employee Stock Purchase Plan A total of 1,250,000 shares of common stock have been reserved for issuance under the Employee Stock Purchase Plan (“ESPP”). On June 15, 2017, the Company’s stockholders approved an amendment to the ESPP to increase the shares reserved for issuance under the ESPP by 1,250,000 shares. 1,472,734 shares were available for issuance as of June 30, 2017. Shares are issued twice yearly at the end of each offering period. During the six months ended June 30, 2017, 106,859 shares of common stock were issued under the ESPP. As of June 30, 2017, there was $595,000 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 Share-based compensation expense recognized and included in the condensed consolidated statements of operations and comprehensive income (loss) was allocated as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (In thousands) (In thousands) Cost of product revenues $ 170 $ 152 $ 361 $ 312 Research and development 1,443 1,269 2,831 2,522 Selling and marketing 1,478 1,437 2,989 2,875 General and administrative 2,106 1,989 4,121 3,680 Total $ 5,197 $ 4,847 $ 10,302 $ 9,389 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information | |
Segment Information | Note 7. 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 June 30, 2017, the majority of the Company’s product revenues have been derived from sales of one product, the Oncotype DX breast cancer test. The following table summarizes total revenue from customers by geographic region. Product revenues are attributed to countries based on ship-to location. Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (In thousands) (In thousands) United States $ 72,409 $ 69,644 $ 142,998 $ 140,139 Outside of the United States 13,078 12,330 26,469 22,729 Total revenues $ 85,487 $ 81,974 $ 169,467 $ 162,868 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Taxes | |
Income Taxes | Note 8. Income Taxes The Company recognized income tax expense of $159,000 and $1.2 million for the three and six months ended June 30, 2017 respectively, and income tax expense of $1.6 million and $657,000 for the three and six months ended June 30, 2016, respectively, which was computed using the “discrete” (or “cut-off”) method. The income tax expense for the three and six months ended June 30, 2017 and June 30, 2016 was primarily comprised of the intraperiod tax allocation of the deferred tax impact for available-for-sale marketable securities and foreign income tax expense. Based on all available objective evidence, the Company believes that it is still more likely than not that its net deferred tax assets will not be fully realized. Accordingly, the Company maintains a valuation allowance against all of its net deferred tax assets as of both June 30, 2017 and December 31, 2016. The Company will continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets. The Company had $2.2 million and $2.1 million of unrecognized tax benefits at June 30, 2017 and December 31, 2016, respectively. The Company does not anticipate a material change to its unrecognized tax benefits over the next 12 months that would affect its effective tax rate. Unrecognized tax benefits may change during the next 12 months for items that arise in the ordinary course of business. Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the Company’s income tax provision in its condensed consolidated statements of operations. The statute of limitations remain open for the years 2001 through 2017 in U.S. federal and state jurisdictions, and for the years 2011 through 2017 in foreign jurisdictions. |
Organization and Summary of S16
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization and Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries. The Company had two wholly-owned subsidiaries at June 30, 2017: 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 nine 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 interim period condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated balance sheet as of June 30, 2017, condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016, and condensed consolidated statements of cash flows for the six months ended June 30, 2017 and 2016 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2016 has been derived from audited financial statements, but it does not include certain information and notes required by GAAP for complete consolidated financial statements. 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 condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. The accompanying interim period condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There have been no material changes in the Company’s significant accounting policies, other than the adoption of Accounting Standards Update ("ASU") 2016-09 described below, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Certain reclassifications have been made to prior period amounts to conform to the current period presentation. For the three and six months ended June 30, 2016, a reclassification of certain expenses from research and development to cost of product revenue was made in the condensed consolidated statements of operations to conform to the current period presentation. |
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 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 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 $216,000 and $487,000 at June 30, 2017 and December 31, 2016, respectively, and are included in accrued expenses and other current liabilities. 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. |
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 June 30, 2017 and December 31, 2016 was $3.1 million and $4.5 million, respectively. Write-offs for doubtful accounts of $1.7 million and $3.0 million were recorded against the allowance during the three and six months ended June 30, 2017, respectively, and write-offs of $1.8 million and $4.2 million were recorded against the allowance during the three and six months ended June 30, 2016, respectively. Bad debt expense was $1.2 million and $1.6 million for the three and six months ended June 30, 2017, respectively, and $2.2 million and $4.5 million for the three and six months ended June 30, 2016, respectively. |
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. During the six months ended June 30, 2017, the Company sold its remaining shares of the common stock of Invitae Corporation for net proceeds of $10.2 million based on a cost of $6.28 per share, resulting in a realized gain of $2.8 million. During the six months ended June 30, 2016, the Company sold a portion of its shares of the common stock of Invitae Corporation for net proceeds of $5.1 million at the cost of $6.28 per share, resulting in a realized gain of $2.0 million. This investment, which was accounted for under the cost method, was valued at $10.7 million at June 30, 2016. Unrealized gains or losses resulting from changes in the fair value of this investment were recorded in other comprehensive income until the securities are sold. During the six months ended June 30, 2017 and 2016, $1.1 million and $787,000, respectively, of unrealized gain, net of tax of $821,000 and $448,000, respectively, related to the shares sold was reclassified out of accumulated other comprehensive income into earnings. As of June 30, 2017 and December 31, 2016, respectively, all investments in marketable securities were classified as available-for-sale securities. 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 accumulated other comprehensive income on a specific identification basis and recorded in earnings for the period. The cost of securities sold is determined using specific identification. |
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 six months ended June 30, 2017 and the year ended December 2016, the Company invested $1.4 million and $6.1 million, respectively, in the subordinated convertible promissory notes of a private company (see Note 4). On March 8, 2017, all of the Company’s investment in subordinated convertible promissory notes was converted into preferred stock of the private company representing approximately 9% of the private entity’s voting interests, at which time the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $7.1 million. The preferred stock represents 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. The Company determined that the investment is an equity investment for which the Company does not have the ability to exercise significant influence. 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 equity investments are accounted for using the cost method of accounting and recorded in other assets on the Company’s condensed consolidated balance sheets. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued 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. In addition, Topic 606 requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. 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 intends to 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. The Company also plans to elect the practical expedient of applying the new guidance only to contracts that are not completed as of the date of initial application. 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. The Company is in the process of completing its assessment of the impact Topic 606 will have on its consolidated financial statements and related disclosures. The Company’s implementation of this standard includes a project management framework that includes a dedicated lead project manager and an implementation team responsible for assessing the impact that Topic 606 will have on the Company’s accounting, financial statement presentation and disclosure for contracts with customers. The assessment phase of this project has included the analysis of the Company’s current portfolio of customer contracts, including a review of historical accounting policies and practices to identify potential differences in applying Topic 606. The Company is also performing a comprehensive review of its current processes and systems to determine and implement changes required to support the adoption of Topic 606. The assessment has resulted in the identification of potential accounting changes to the timing of revenue recognition from certain payors who are not currently accrual payors to be accelerated. During the second quarter of 2017, the implementation team continued to identify changes to business processes, systems and controls to support recognition, presentation and disclosure under the new standard. An implementation plan for the second half of 2017 has been developed and includes tasks around documentation, design of new processes and controls as well as testing of the controls. 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 adopted this ASU in the first quarter of 2017 and elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. As a result, in the first quarter of 2017, the Company recorded an $11.6 million cumulative-effect adjustment decrease in accumulated deficit and an offsetting increase in deferred tax assets for previously unrecognized excess tax benefits that existed as of December 31, 2016. However, as all of the Company’s deferred tax assets, net of deferred tax liabilities, are subject to a valuation allowance and the realization of these assets is not more likely than not to be achieved, the Company recorded an $11.6 million valuation allowance against these deferred tax assets with an offsetting increase in accumulated deficit. The presentation requirement for cash flows related to employee taxes paid for withheld shares will not impact the statements of cash flows since such cash flows have historically been presented as a financing activity. The adoption was on a prospective basis and therefore had no impact on prior periods. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Net Loss Per Share | |
Schedule of potentially dilutive common shares excluded from computation of diluted net loss per share | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (In thousands) (In thousands) Options and RSUs excluded from the computation 788 677 774 737 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 June 30, Level 1 Level 2 Level 3 2017 (In thousands) As of June 30, 2017: Assets Money market deposits $ 10,830 $ — $ — $ 10,830 Commercial paper — 37,774 — 37,774 Corporate debt securities — 29,825 — 29,825 Total $ 10,830 $ 67,599 $ — $ 78,429 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 $ 13,198 $ — $ — $ 13,198 Commercial paper — 32,421 — 32,421 Corporate debt securities — 14,869 — 14,869 Corporate equity securities — 9,295 — 9,295 Total $ 13,198 $ 56,585 $ — $ 69,783 |
Summary of available-for-sale marketable securities | June 30, 2017 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 37,782 $ 1 $ (8) $ 37,775 Corporate debt securities 29,842 — (18) 29,824 Total $ 67,624 $ 1 $ (26) $ 67,599 December 31, 2016 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 32,350 $ 71 $ — $ 32,421 Corporate debt securities 14,868 3 (2) 14,869 Corporate equity securities 7,348 1,947 — 9,295 Total $ 54,566 $ 2,021 $ (2) $ 56,585 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies | |
Schedule of future non-cancelable commitments under operating leases | Annual Payments (In thousands) Years Ending December 31, 2017 (remainder of year) $ 2,621 2018 5,965 2019 6,752 2020 7,082 2021 4,825 2022 and thereafter 5,117 Total minimum payments $ 32,362 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Stock-Based Compensation | |
Summary of option activity | Number of Weighted-Average Shares Exercise Price (In thousands) Balance at December 31, 2016 3,606 $ 25.07 Options granted 684 $ 27.84 Options exercised (460) $ 21.20 Options forfeited (19) $ 28.30 Options expired (4) $ 20.08 Balance at June 30, 2017 3,807 $ 26.02 Exercisable at June 30, 2017 2,502 $ 24.96 Vested and expected to vest at June 30, 2017 3,707 $ 25.98 |
Summary of RSU activity | Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2016 871 $ 28.42 RSUs granted 538 $ 27.97 RSUs vested (346) $ 28.70 RSUs cancelled (51) $ 28.41 Balance at June 30, 2017 1,012 $ 28.09 |
Schedule of share-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (In thousands) (In thousands) Cost of product revenues $ 170 $ 152 $ 361 $ 312 Research and development 1,443 1,269 2,831 2,522 Selling and marketing 1,478 1,437 2,989 2,875 General and administrative 2,106 1,989 4,121 3,680 Total $ 5,197 $ 4,847 $ 10,302 $ 9,389 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Segment Information | |
Summary of total revenue from customers by geographic region | Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (In thousands) (In thousands) United States $ 72,409 $ 69,644 $ 142,998 $ 140,139 Outside of the United States 13,078 12,330 26,469 22,729 Total revenues $ 85,487 $ 81,974 $ 169,467 $ 162,868 |
Organization and Summary of S22
Organization and Summary of Significant Accounting Policies (Principles of Consolidation) (Details) | 6 Months Ended |
Jun. 30, 2017subsidiary | |
Principles of Consolidation | |
Number of wholly-owned subsidiaries | 2 |
Genomic Health International Holdings, LLC | |
Principles of Consolidation | |
Number of wholly-owned subsidiaries | 9 |
Organization and Summary of S23
Organization and Summary of Significant Accounting Policies (Other) (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)Testcountry | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Revenue Recognition | |||||
Minimum number of Oncotype tests by exclusive distribution agreements | Test | 1 | ||||
Minimum number of countries covered for distribution agreements establishment | country | 90 | ||||
Accrued refunds | $ 216,000 | $ 216,000 | $ 487,000 | ||
Allowance for Doubtful Accounts | |||||
Allowance for doubtful accounts | 3,106,000 | 3,106,000 | $ 4,508,000 | ||
Write-offs for doubtful accounts recorded against allowance | 1,700,000 | $ 1,800,000 | 3,000,000 | $ 4,200,000 | |
Bad debt expense | $ 1,200,000 | $ 2,200,000 | $ 1,600,000 | $ 4,500,000 |
Organization and Summary of S24
Organization and Summary of Significant Accounting Policies (Marketable Securities Sold) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Investments in Privately Held Companies | |||
Proceeds from sales of marketable securities | $ 10,155,000 | $ 5,117,000 | |
Realized gains on available-for-sale marketable securities | $ 676,000 | 2,807,000 | 2,009,000 |
Amount reclassified out of accumulated other comprehensive income | 345,000 | 1,127,000 | 787,000 |
Invitae | |||
Investments in Privately Held Companies | |||
Carrying value | $ 10,700,000 | 10,700,000 | |
Amount reclassified out of accumulated other comprehensive income | 1,100,000 | 787,000 | |
Amount reclassified out of accumulated other comprehensive income, tax portion | 821,000 | 448,000 | |
Common Stock | Sale | Invitae | |||
Investments in Privately Held Companies | |||
Proceeds from sales of marketable securities | $ 10,200,000 | $ 5,100,000 | |
Cost per share (in dollars per share) | $ 6.28 | $ 6.28 | |
Realized gains on available-for-sale marketable securities | $ 2,800,000 | $ 2,000,000 |
Organization and Summary of S25
Organization and Summary of Significant Accounting Policies (Investments in Privately Held Companies) (Details) - Privately Held Companies - Subordinated convertible promissory notes - USD ($) $ in Millions | Mar. 08, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Investments in Privately Held Companies | |||
Amount invested in subordinated convertible promissory notes | $ 1.4 | $ 6.1 | |
Percentage of ownership interest in private company | 9.00% | ||
Other Assets | |||
Investments in Privately Held Companies | |||
Estimated fair value | $ 7.1 |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies (ASU 2016-09) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Recently Issued Accounting Pronouncements | |||
Accumulated deficit | $ (245,633) | $ (242,088) | |
ASU 2016-09 | |||
Recently Issued Accounting Pronouncements | |||
Cumulative-effect adjustment | $ 11,600 | ||
Deferred tax assets | 11,600 | ||
Deferred tax assets valuation allowance | 11,600 | ||
Accumulated deficit | $ (11,600) |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Loss Per Share | ||||
Options and RSUs excluded from the computation (in shares) | 788 | 677 | 774 | 737 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Mar. 08, 2017 | |
Privately Held Companies | ||||
Investment fair value | ||||
Change in fair value of preferred stock | $ 0 | |||
Subordinated convertible promissory notes | Privately Held Companies | ||||
Investment fair value | ||||
Amount invested in subordinated convertible promissory notes | $ 1,400 | $ 6,100 | ||
Subordinated convertible promissory notes | Privately Held Companies | Other Assets | ||||
Investment fair value | ||||
Estimated fair value | $ 7,100 | |||
Significant Unobservable Inputs Level 3 | Subordinated convertible promissory notes | Other Assets | ||||
Investment fair value | ||||
Estimated fair value | 5,800 | |||
Recurring basis | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 78,429 | 78,429 | 69,783 | |
Recurring basis | Money market deposits | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 10,830 | 10,830 | 13,198 | |
Recurring basis | Commercial paper | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 37,774 | 37,774 | 32,421 | |
Recurring basis | Corporate debt securities | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 29,825 | 29,825 | 14,869 | |
Recurring basis | Corporate equity securities | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 9,295 | |||
Recurring basis | Actively Quoted Markets for Identical Assets Level 1 | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 10,830 | 10,830 | 13,198 | |
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 | 10,830 | 10,830 | 13,198 | |
Recurring basis | Significant Other Observable Inputs Level 2 | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 67,599 | 67,599 | 56,585 | |
Recurring basis | Significant Other Observable Inputs Level 2 | Commercial paper | ||||
Assets measured at fair value on a recurring basis: | ||||
Total assets at fair value | 37,774 | 37,774 | 32,421 | |
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 | $ 29,825 | $ 29,825 | 14,869 | |
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 |
Fair Value Measurements (Availa
Fair Value Measurements (Available-For-Sale Marketable Securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Marketable securities classified as available-for-sale | ||
Cost or Amortized Cost | $ 67,624 | $ 54,566 |
Gross Unrealized Gains | 1 | 2,021 |
Gross Unrealized Losses | (26) | (2) |
Total Estimated Fair Value | 67,599 | 56,585 |
Commercial paper | ||
Marketable securities classified as available-for-sale | ||
Cost or Amortized Cost | 37,782 | 32,350 |
Gross Unrealized Gains | 1 | 71 |
Gross Unrealized Losses | (8) | |
Total Estimated Fair Value | 37,775 | 32,421 |
Corporate debt securities | ||
Marketable securities classified as available-for-sale | ||
Cost or Amortized Cost | 29,842 | 14,868 |
Gross Unrealized Gains | 3 | |
Gross Unrealized Losses | (18) | (2) |
Total Estimated Fair Value | $ 29,824 | 14,869 |
Corporate equity securities | ||
Marketable securities classified as available-for-sale | ||
Cost or Amortized Cost | 7,348 | |
Gross Unrealized Gains | 1,947 | |
Total Estimated Fair Value | $ 9,295 |
Fair Value Measurements (Avai30
Fair Value Measurements (Available-For-Sale Marketable Securities with Unrealized Losses) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Fair Value Measurements | ||||
Realized gains on available-for-sale marketable securities | $ 676 | $ 2,807 | $ 2,009 | |
Maximum contractual maturities of Company's available-for-sale marketable securities | 1 year | 1 year |
Fair Value Measurements (Impair
Fair Value Measurements (Impairment) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value Measurements | ||||
Impairment of assets held for use | $ 0 | $ 0 | $ 0 | $ 56,000 |
Collaboration and Commercial 32
Collaboration and Commercial Technology Licensing Agreements (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2014 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Feb. 28, 2017 | |
Collaboration and specimen transfer agreements | ||||||||
Collaboration payments and costs | ||||||||
Collaboration expense | $ 912,000 | $ 1,600,000 | $ 1,800,000 | $ 2,500,000 | ||||
Technology license agreements | ||||||||
Collaboration payments and costs | ||||||||
Costs recorded under collaborative arrangements | 94,000 | 2,500,000 | 190,000 | 5,100,000 | ||||
Oncotype DX DCIS clinical study | ||||||||
Collaboration payments and costs | ||||||||
Period from achieving key milestone entity required to make fixed annual payments | 1 year | |||||||
Final payment | 504,000 | 504,000 | ||||||
Exclusive distribution rights Epic's AR-V7 Nucleus Detect | ||||||||
Collaboration payments and costs | ||||||||
Obligation upon achievement of certain milestones | $ 4,000,000 | 4,000,000 | 4,000,000 | |||||
Investment in subordinated convertible promissory notes per agreement | $ 7,500,000 | $ 7,500,000 | ||||||
Investment in preferred stock per collaboration agreement | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | |||||
Term of agreement | 10 years | |||||||
Fair value of convertible promissory notes | $ 7,100,000 | |||||||
Deferred cost | $ 375,000 |
Commitments and Contingencies33
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Commitments and Contingencies | ||||
Rent expense | $ 1,600 | $ 1,300 | $ 3,100 | $ 2,500 |
Non-cancelable commitments under operating leases | ||||
2017 (remainder of year) | 2,621 | 2,621 | ||
2,018 | 5,965 | 5,965 | ||
2,019 | 6,752 | 6,752 | ||
2,020 | 7,082 | 7,082 | ||
2,021 | 4,825 | 4,825 | ||
2022 and thereafter | 5,117 | 5,117 | ||
Total minimum payments | $ 32,362 | $ 32,362 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - 2005 Stock Incentive Plan - shares | Jun. 15, 2017 | Jun. 09, 2016 | Jun. 11, 2015 | Jun. 08, 2009 | Oct. 04, 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 | 1,500,000 | 3,980,000 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock Option Activity) (Details) - Stock Options shares in Thousands | 6 Months Ended |
Jun. 30, 2017$ / sharesshares | |
Number of Shares | |
Options outstanding at the beginning of the period (in shares) | shares | 3,606 |
Options granted (in shares) | shares | 684 |
Options exercised (in shares) | shares | (460) |
Options forfeited (in shares) | shares | (19) |
Options expired (in shares) | shares | (4) |
Options outstanding at the end of the period (in shares) | shares | 3,807 |
Exercisable at the end of the period (in shares) | shares | 2,502 |
Vested and expected to vest at the end of the period (in shares) | shares | 3,707 |
Weighted-Average Exercise Price | |
Options outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 25.07 |
Options granted (in dollars per share) | $ / shares | 27.84 |
Options exercised (in dollars per share) | $ / shares | 21.20 |
Options forfeited (in dollars per share) | $ / shares | 28.30 |
Options expired (in dollars per share) | $ / shares | 20.08 |
Options outstanding at the end of the period (in dollars per share) | $ / shares | 26.02 |
Exercisable at the end of the period (in dollars per share) | $ / shares | 24.96 |
Vested and expected to vest at the end of the period (in dollars per share) | $ / shares | $ 25.98 |
Stock-Based Compensation (RSU A
Stock-Based Compensation (RSU Activity) (Details) | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
RSUs | |
Number of Shares | |
Balance at the beginning of the period (in shares) | shares | 871,000 |
Granted (in shares) | shares | 538,000 |
Vested (in shares) | shares | (346,000) |
Cancelled (in shares) | shares | (51,000) |
Balance at the end of the period (in shares) | shares | 1,012,000 |
Weighted-Average Grant Date Fair Value | |
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 28.42 |
Granted (in dollars per share) | $ / shares | 27.97 |
Vested (in dollars per share) | $ / shares | 28.70 |
Cancelled (in dollars per share) | $ / shares | 28.41 |
Balance at the end of the period (in dollars per share) | $ / shares | $ 28.09 |
Restricted Stock | Outside directors | |
Number of Shares | |
Granted (in shares) | shares | 3,285 |
Weighted-Average Grant Date Fair Value | |
Granted (in dollars per share) | $ / shares | $ 30.40 |
Additional Disclosure | |
Grant-date fair value (in dollars) | $ | $ 100,000 |
Stock-Based Compensation (Emplo
Stock-Based Compensation (Employee Stock Purchase Plan) (Details) - Employee Stock Purchase Plan - USD ($) | Jun. 15, 2017 | Jun. 30, 2017 |
Employee Stock Purchase Plan | ||
Shares of common stock reserved for issuance | 1,250,000 | |
Increase in shares reserved for issuance | 1,250,000 | |
Shares of common stock available for future grant | 1,472,734 | |
Number of shares issued | 106,859 | |
Unrecognized compensation expense (in dollars) | $ 595,000 | |
Weighted-average period of recognition of unrecognized stock-based compensation expense | 5 months |
Stock-Based Compensation (Emp38
Stock-Based Compensation (Employee Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Employee Stock Based Compensation Expense | ||||
Stock-based compensation expense (in dollars) | $ 5,197 | $ 4,847 | $ 10,302 | $ 9,389 |
Cost of product revenues | ||||
Employee Stock Based Compensation Expense | ||||
Stock-based compensation expense (in dollars) | 170 | 152 | 361 | 312 |
Research and development | ||||
Employee Stock Based Compensation Expense | ||||
Stock-based compensation expense (in dollars) | 1,443 | 1,269 | 2,831 | 2,522 |
Selling and marketing | ||||
Employee Stock Based Compensation Expense | ||||
Stock-based compensation expense (in dollars) | 1,478 | 1,437 | 2,989 | 2,875 |
General and administrative | ||||
Employee Stock Based Compensation Expense | ||||
Stock-based compensation expense (in dollars) | $ 2,106 | $ 1,989 | $ 4,121 | $ 3,680 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)product | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)segmentproduct | Jun. 30, 2016USD ($) | |
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 | $ 85,487 | $ 81,974 | $ 169,467 | $ 162,868 |
United States | ||||
Segment information | ||||
Total revenues | 72,409 | 69,644 | 142,998 | 140,139 |
Outside of the United States | ||||
Segment information | ||||
Total revenues | $ 13,078 | $ 12,330 | $ 26,469 | $ 22,729 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Income Taxes | |||||
Income tax expense (benefit) | $ 159 | $ 1,615 | $ 1,200 | $ 657 | |
Unrecognized tax benefits | $ 2,200 | $ 2,200 | $ 2,100 |