Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 22, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | GENOMIC HEALTH INC | ||
Entity Central Index Key | 1,131,324 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1 | ||
Entity Common Stock, Shares Outstanding | 36,904,013 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 61,645 | $ 45,518 |
Short-term marketable securities | 148,149 | 84,057 |
Accounts receivable (net of allowance for doubtful accounts; 2018—$0 and 2017—$3,884) | 51,531 | 31,161 |
Prepaid expenses and other current assets | 13,511 | 13,524 |
Total current assets | 274,836 | 174,260 |
Property and equipment, net | 39,532 | 46,440 |
Long-term marketable securities | 4,066 | |
Other assets | 15,938 | 10,917 |
Total assets | 334,372 | 231,617 |
Current liabilities: | ||
Accounts payable | 8,849 | 156 |
Accrued compensation and employee benefits | 34,457 | 24,953 |
Accrued expenses and other current liabilities | 15,870 | 14,084 |
Other current liabilities | 600 | 323 |
Total current liabilities | 59,776 | 39,516 |
Other liabilities | 4,436 | 3,810 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $0.0001 par value; 100,000,000 shares authorized, 37,468,618 and 36,110,767 shares issued and 36,407,287 and 35,049,436 shares outstanding at December 31, 2018 and 2017, respectively | 3 | 3 |
Additional paid-in capital | 506,679 | 464,637 |
Accumulated other comprehensive loss | (87) | (294) |
Accumulated deficit | (206,325) | (245,945) |
Treasury stock, at cost | (30,110) | (30,110) |
Total stockholders' equity | 270,160 | 188,291 |
Total liabilities and stockholders' equity | $ 334,372 | $ 231,617 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 0 | $ 3,884 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 37,468,618 | 36,110,767 |
Common stock, shares outstanding | 36,407,287 | 35,049,436 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||
Total revenues | $ 394,111 | $ 340,750 | $ 327,868 |
Operating expenses: | |||
Research and development | 64,200 | 62,811 | 60,158 |
Selling and marketing | 164,779 | 157,001 | 151,042 |
General and administrative | 76,910 | 72,670 | 73,272 |
Total operating expenses | 370,215 | 347,200 | 343,300 |
Income (loss) from operations | 23,896 | (6,450) | (15,432) |
Interest income | 2,385 | 934 | 418 |
Gain on sale of equity securities | 2,807 | 3,208 | |
Unrealized gain on equity securities | 875 | 7 | |
Other income (expense), net | (232) | 349 | (732) |
Income (loss) before income taxes | 26,924 | (2,353) | (12,538) |
Income tax expense | 1,247 | 1,504 | 1,381 |
Net income (loss) | $ 25,677 | $ (3,857) | $ (13,919) |
Basic net income (loss) per share (in dollars per share) | $ 0.72 | $ (0.11) | $ (0.42) |
Diluted net income (loss) per share (in dollars per share) | $ 0.68 | $ (0.11) | $ (0.42) |
Shares used in computing basic net income (loss) per share (in shares) | 35,727 | 34,495 | 33,264 |
Shares used in computing diluted net income (loss) per share (in shares) | 37,555 | 34,495 | 33,264 |
Product | |||
Revenues: | |||
Total revenues | $ 394,111 | $ 340,451 | $ 326,918 |
Operating expenses: | |||
Cost of product revenues | $ 64,326 | 54,718 | 58,828 |
Contract | |||
Revenues: | |||
Total revenues | $ 299 | $ 950 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net income (loss) | $ 25,677 | $ (3,857) | $ (13,919) |
Other comprehensive income (loss): | |||
Unrealized gain (loss), net, on available-for-sale marketable securities, net of tax of $0 for the years ended December 31, 2018, 2017 and 2016, respectively | 27 | (366) | 300 |
Reclassification adjustment for net gain on sale of equity securities included in net loss | (1,126) | (1,854) | |
Comprehensive income (loss) | $ 25,704 | $ (5,349) | $ (15,473) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Unrealized gain (loss), net, on available-for-sale marketable securities, tax | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock at Cost | Total |
Balance at Dec. 31, 2015 | $ 3 | $ 395,059 | $ 2,752 | $ (228,169) | $ (30,110) | $ 139,535 |
Balance (in shares) at Dec. 31, 2015 | 32,800,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units | 8,385 | 8,385 | ||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units (in shares) | 799,000 | |||||
Issuance of common stock upon settlement of employee stock purchase plan | 5,155 | 5,155 | ||||
Issuance of common stock upon settlement of employee stock purchase plan (in shares) | 226,000 | |||||
Issuance of restricted stock to directors in lieu of fees | 200 | 200 | ||||
Issuance of restricted stock to directors in lieu of fees (in shares) | 7,000 | |||||
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan | 18,303 | 18,303 | ||||
Net income (loss) | (13,919) | (13,919) | ||||
Unrealized gain (loss) on investments, net of tax | 300 | 300 | ||||
Reclassification adjustment for net gain on sale of equity securities included in net loss | (1,854) | (1,854) | ||||
Balance at Dec. 31, 2016 | $ 3 | 427,102 | 1,198 | (242,088) | (30,110) | 156,105 |
Balance (in shares) at Dec. 31, 2016 | 33,832,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units | 11,636 | 11,636 | ||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units (in shares) | 1,000,000 | |||||
Issuance of common stock upon settlement of employee stock purchase plan | 5,443 | 5,443 | ||||
Issuance of common stock upon settlement of employee stock purchase plan (in shares) | 211,000 | |||||
Issuance of restricted stock to directors in lieu of fees | 200 | 200 | ||||
Issuance of restricted stock to directors in lieu of fees (in shares) | 6,000 | |||||
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan | 20,256 | 20,256 | ||||
Net income (loss) | (3,857) | (3,857) | ||||
Unrealized gain (loss) on investments, net of tax | (366) | (366) | ||||
Reclassification adjustment for net gain on sale of equity securities included in net loss | (1,126) | (1,126) | ||||
Balance at Dec. 31, 2017 | $ 3 | 464,637 | (294) | (245,945) | (30,110) | $ 188,291 |
Balance (in shares) at Dec. 31, 2017 | 35,049,000 | 35,049,436 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Cumulative effect of change in accounting policies (1) | 180 | 13,943 | $ 14,123 | |||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units | 15,756 | 15,756 | ||||
Issuance of common stock upon exercise of stock options for cash and vesting of restricted stock units (in shares) | 1,182,000 | |||||
Issuance of common stock upon settlement of employee stock purchase plan | 4,996 | 4,996 | ||||
Issuance of common stock upon settlement of employee stock purchase plan (in shares) | 171,000 | |||||
Issuance of restricted stock to directors in lieu of fees | 200 | 200 | ||||
Issuance of restricted stock to directors in lieu of fees (in shares) | 5,000 | |||||
Stock-based compensation expense related to employee stock options, restricted stock units and employee stock purchase plan | 21,090 | 21,090 | ||||
Net income (loss) | 25,677 | 25,677 | ||||
Unrealized gain (loss) on investments, net of tax | 27 | 27 | ||||
Balance at Dec. 31, 2018 | $ 3 | $ 506,679 | $ (87) | $ (206,325) | $ (30,110) | $ 270,160 |
Balance (in shares) at Dec. 31, 2018 | 36,407,000 | 36,407,287 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities | |||
Net income (loss) | $ 25,677 | $ (3,857) | $ (13,919) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 12,669 | 11,759 | 8,933 |
Employee stock-based compensation | 21,090 | 20,256 | 18,303 |
Write-off of previously capitalized software costs | 2,347 | 76 | 2,600 |
Impairment of long-lived assets | 2,358 | 22 | 56 |
Loss on disposal of property and equipment | 27 | 35 | 33 |
Outside director restricted stock awarded in lieu of fees | 200 | 200 | 200 |
Gain on sale of equity securities | (2,807) | (3,208) | |
Discount on convertible promissory note | 671 | ||
Discount on equity investment | 322 | ||
Unrealized net gain on revaluation of equity investments | (875) | (7) | |
Write-off of convertible promissory note | 1,329 | ||
Deferred tax benefit from unrealized gain on available-for-sale marketable securities, net | 820 | 727 | |
Changes in assets and liabilities: | |||
Accounts receivable | (6,247) | 4,018 | 1,985 |
Prepaid expenses and other assets | (2,464) | 64 | (4,556) |
Accounts payable | 8,374 | (2,308) | (4,579) |
Accrued compensation and employee benefits | 9,504 | (2,947) | 5,661 |
Accrued expenses and other liabilities | 2,573 | 4,164 | 1,645 |
Deferred revenues | 121 | (431) | |
Net cash provided by operating activities | 76,562 | 30,602 | 13,450 |
Investing activities | |||
Purchases of property and equipment | (10,076) | (13,276) | (19,786) |
Proceeds from sale of property and equipment | 55 | 10 | 8 |
Purchases of marketable securities | (172,563) | (109,249) | (69,722) |
Maturities of marketable securities | 103,979 | 71,802 | 66,757 |
Proceeds from sales of marketable securities | 10,155 | 9,717 | |
Other investments | (2,500) | (2,000) | (6,100) |
Net cash used in investing activities | (81,105) | (42,558) | (19,126) |
Financing activities | |||
Proceeds from issuance of common stock under stock plans | 26,250 | 21,776 | 17,010 |
Withholding taxes related to restricted stock units net share settlement | (5,498) | (4,697) | (3,469) |
Net cash provided by financing activities | 20,752 | 17,079 | 13,541 |
Net increase in cash, cash equivalents and restricted cash | 16,209 | 5,123 | 7,865 |
Cash, cash equivalents and restricted cash at the beginning of period | 45,708 | 40,585 | 32,720 |
Cash, cash equivalents and restricted cash at the end of period | 61,917 | 45,708 | 40,585 |
Supplemental disclosure of cash flow information | |||
Cash paid for income taxes | 620 | 1,093 | 428 |
Non-cash investing and financing activities | |||
Accrued purchases of property and equipment | 1,110 | 717 | 1,452 |
Change in fair value of investments | $ (454) | $ (495) | $ (316) |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | Not The Company Genomic Health, Inc. (the “Company”) is a global healthcare company that provides actionable genomic information to personalize cancer treatment decisions. The Company develops and globally commercializes genomic‑based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. The Company was incorporated in Delaware in August 2000. The Company’s first product, the Oncotype DX breast cancer test, was launched in 2004 and is used for early stage invasive breast cancer patients to predict the likelihood of breast cancer recurrence and the likelihood of chemotherapy benefit. In January 2010, the Company launched its second product, the Oncotype DX colon cancer test, which is used to predict the likelihood of colon cancer recurrence in patients with stage II disease. The tests for invasive breast and colon cancer 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 disease 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 (“GPS”) to predict disease aggressiveness in men with low risk prostate cancer and to improve treatment decisions for prostate cancer patients in conjunction with the Gleason score, or tumor grading. In February 2018, the Oncotype DX AR-V7 Nucleus Detect test, for men with metastatic castration-resistant prostate cancer (“mCRPC”) became commercially available. Principles of Consolidation These consolidated financial statements include all the accounts of the Company and its wholly‑owned subsidiaries. The Company had two wholly-owned subsidiaries at December 31, 2018: 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 eight wholly-owned subsidiaries. The functional currency for the Company’s wholly-owned subsidiaries incorporated outside the United States is the U.S. dollar. All significant intercompany balances and transactions have been eliminated. Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the Company’s consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. There have been no material changes in the Company’s significant accounting policies, other than the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) Nos. 2014-09, 2016-01, 2016-15 and 2016-18 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, 2017. The Company recast prior period consolidated statements of cash flows to conform with the adoption of the new accounting guidance related to presentation of restricted cash in the statement of cash flows as described below. Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. Marketable Securities The Company invests in marketable securities, primarily money market funds, obligations of U.S. Government agencies and government‑sponsored entities, corporate bonds, commercial paper and equity securities. The Company considers all investments with a maturity date of less than one year as of the balance sheet date to be short‑term investments. Those investments with a maturity date greater than one year as of the balance sheet date are considered to be long‑term investments. Prior to January 1, 2018, the Company accounted for its marketable equity securities at fair value with unrealized gains and losses recognized in accumulated other comprehensive income on the balance sheet. Realized gains and losses on marketable equity securities sold or impaired were recognized in other income (expense), net. On January 1, 2018, the Company adopted ASU No. 2016-01 which changed the way the Company accounts for marketable equity securities. The Company’s marketable equity securities are measured at fair value and starting January 1, 2018, unrealized gains and losses are recognized in other income (expense), net. Upon adoption, the Company reclassified $180,000 of unrealized loss related to marketable equity securities from accumulated other comprehensive income to opening accumulated deficit. In December 2017, the Company invested €3.4 million or $4.0 million in 270,000 shares of the common stock of Biocartis N.V. (“Biocartis”), a public company listed on the Euronext exchange. This corporate equity security investment was accounted for as an available-for-sale marketable security and valued at €3.0 million or $3.5 million at December 31, 2017. During the year ended December 31, 2017, $180,000 of unrealized losses relating to changes in the fair value of this investment were recorded in other comprehensive income. These securities were subject to a lock-up agreement which expired in December 2018. During the year ended December 31, 2017, a discount of $322,000 relating to the lock-up agreement was recognized in research and development expense, and a foreign currency revaluation gain of $7,000 was recorded in other income. In accordance with ASU No 2016-01, the Company recorded a decrease in fair value of $296,000 and a foreign currency revaluation loss of $157,000, in other income (expense), net during the year ended December 31, 2018. Beginning in 2011, the Company made investments in various tranches of the preferred stock of Invitae Corporation (“Invitae”), which at the time was a privately-held company, such that the carrying value of this investment was $13.9 million at December 31, 2014. On February 18, 2015, Invitae completed an initial public offering of its common stock and the Company’s preferred stock investment automatically converted into 2,207,793 shares of Invitae common stock. This investment was accounted for on the cost method as an available-for-sale marketable security and valued at $18.1 million at December 31, 2015. During the year ended December 31, 2016, the Company sold a portion of its shares of the common stock of Invitae for proceeds of $9.7 million based on a cost of $6.28 per share, resulting in a realized gain of $3.2 million. The fair value of the remaining investment was $9.3 million at December 31, 2016. This investment, which was accounted for under the cost method, was valued at $7.3 million at December 31, 2016. Unrealized gains or losses resulting from changes in the fair value of this investment were recognized in other comprehensive income until the securities were sold. During the year ended December 31, 2017, the Company sold its remaining shares of the common stock of Invitae 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 years ended December 31, 2017 and 2016, $1.1 million of unrealized gains, net of tax of $820,000, and $1.9 million of unrealized gains, net of tax of $727,000, respectively, related to the shares sold were reclassified out of accumulated other comprehensive income into earnings. The cost of securities sold is determined using specific identification. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, trade receivables and accounts payable. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, trade receivables, note receivables, foreign currency forward contracts and accounts payable, approximate fair value due to their short maturities. See Note 5, “ Fair Value Measurements ” for further information on the fair value of the Company’s financial instruments. Concentration of Risk The Company is subject to credit risk from its portfolio of cash equivalents and marketable securities. The Company invests in money market funds through a major U.S. bank and is exposed to credit risk in the event of default by the financial institution to the extent of amounts recorded on the consolidated balance sheets. The Company invests in short‑term, investment‑grade debt instruments and by policy limits the amount in any one type of investment, except for securities issued or guaranteed by the U.S. government. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. The Company is also subject to credit risk from its accounts receivable related to its product sales. The majority of the Company’s accounts receivable arise from product sales in the United States. Reimbursement on behalf of customers covered by Medicare accounted for 24%, 22% and 21% of the Company’s product revenues for the years ended December 31, 2018, 2017 and 2016, respectively, and represented 17% and 23% of the Company’s total accounts receivable balance as of December 31, 2018 and 2017, respectively. No other third‑party payor represented more than 10% of the Company’s product revenues or accounts receivable balances for these periods. Allowance for Doubtful Accounts There was no bad debt expense for the year ended December 31, 2018 due to the Company’s implementation of the new revenue guidance on January 1, 2018, on a modified retrospective basis. However, the Company may incur bad debt expense in the future. Prior to January 1, 2018, the Company accrued an allowance for doubtful accounts against its accounts receivable based on estimates consistent with historical payment experience. Bad debt expense was included in general and administrative expense on the Company’s consolidated statements of operations. Accounts receivable were written off against the allowance when the appeals process had been exhausted, when an unfavorable coverage decision had been received or when there was other substantive evidence that the account would not be paid. The Company’s allowance for doubtful accounts as of December 31, 2018 and 2017 was $0 and $3.9 million, respectively. Write‑offs for doubtful accounts of $3.9 million and $7.2 million were recorded against the allowance during the years ended December 31, 2018 and 2017, respectively. Bad debt expense was $6.8 million and $7.9 million for the years ended December 31, 2017 and 2016, respectively. Property and Equipment Property and equipment, including purchased and internally developed software, are stated at cost. Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which generally range from three to seven years. Leasehold improvements are amortized using the straight‑line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. Internal-use Software Costs incurred to develop software for internal use are capitalized and amortized over the estimated useful life of the software. Costs related to maintenance of internal-use software are expensed as incurred. For the years ended December 31, 2018, 2017 and 2016, the Company capitalized $3.7 million (including $2.1 million of personnel-related expenses), $5.1 million (including $2.7 million of personnel-related expenses), and $3.4 million (including $1.2 million of personnel-related expenses), respectively, of costs associated with internal-use software development. Amortization of previously capitalized amounts was $3.8 million, $3.2 million, and $2.5 million for the years ended December 31, 2018, 2017, and 2016, respectively. Intangible Assets Intangible assets with finite useful lives are recorded at cost, less accumulated amortization. Amortization is recognized over the estimated useful lives of the assets. The Company’s intangible assets with finite lives, which are related to patent licenses, are not material and are included in non‑current other assets on the Company’s consolidated balance sheets. Investments in Privately Held Companies The Company determines whether its investments in privately held companies are debt or equity based on their characteristics, in accordance with the applicable accounting guidance for such investments. The Company also evaluates the investee to determine if the entity is a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary of the VIE, in order to determine whether consolidation of the VIE is required in accordance with accounting guidance for consolidations. If consolidation is not required and the Company owns less than 50.1% of the voting interest of the entity, the investment is evaluated to determine if the equity method of accounting should be applied. The equity method applies to investments in common stock or in‑substance common stock where the Company exercises significant influence over the investee, typically represented by ownership of 20% or more of the voting interests of an entity. Prior to January 1, 2018, if the equity method did not apply, investments in privately held companies determined to be equity securities were accounted for using the cost method. As discussed below, on January 1, 2018, the Company adopted ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which changed the way it accounts for non-marketable securities. The Company adjusts the carrying value of its non-marketable equity securities for changes from observable transactions for identical or similar investments of the same issuer, less impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other income (expense), net. 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 years ended December 31, 2017 and 2016, the Company invested $1.4 million and $6.1 million, respectively, in the subordinated convertible promissory notes of Epic Sciences, Inc. (“Epic Sciences”). See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ,” for additional information regarding the terms of this investment. On March 8, 2017, all of the Company’s investment in the subordinated convertible promissory notes were converted into preferred stock of Epic Sciences representing approximately 9% of Epic Sciences’ voting interests, at which time the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $7.1 million. In June 2018, the Company invested an additional $2.5 million in preferred stock of Epic Sciences as part of a new equity financing. As a result of this transaction, the Company’s ownership interest in Epic Sciences was reduced to approximately 8%. 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 FASB ASC 810, Consolidation . The Company will continue to assess its investment and future commitments to the investee and to the extent its relationship with the investee changes, may be required to consolidate the investee in future periods. The Company determined that the investment is an equity investment for which the Company does not have the ability to exercise significant influence. Prior to the adoption of ASU 2016-01, the Company accounted for such preferred stock using the cost method of accounting and accordingly recorded such preferred stock in other assets. There were no identified events or changes in circumstances that had a significant adverse effect on the fair value of the preferred stock during the remainder of the year ended December 31, 2017. On January 1, 2018, the Company adopted ASU No. 2016-01 which changed the way it accounts for non-marketable equity securities. The Company adjusts the carrying value of its non-marketable equity securities for changes from observable transactions for identical or similar investments of the same issuer, less impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other income (expense), net. As of December 31, 2018, the carrying value of the preferred stock of Epic Sciences was $10.8 million, of which $8.3 million was remeasured to fair value based on observable transactions during the year ended December 31, 2018. The upward adjustment of $1.2 million during the year ended December 31, 2018 was recorded as an unrealized gain on equity securities and included as an adjustment to the carrying value of other assets held at December 31, 2018. The preferred stock of Epic Sciences is classified within Level 3 in the fair value hierarchy because the Company estimated the value during the year ended December 31, 2018 utilizing an option pricing model that considered a recent observable transaction and other unobservable inputs including volatility and long-term plans of Epic Sciences. During the year ended December 31, 2017, the Company invested $2.0 million in the convertible promissory note of Cleveland Diagnostics, Inc. (“Cleveland Diagnostics”). See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ” for additional information regarding the terms of this investment. The Company estimated the fair value of the convertible promissory note to be approximately $1.3 million. The investment in the convertible promissory note represented a variable interest in the investee. The Company had concluded it was not the primary beneficiary and thus had not consolidated the investee pursuant to the requirements of FASB ASC 810. The Company determined that it did not have the ability to exercise significant influence over the investee company. In June 2018, the Company made a business decision to terminate its milestone-based collaboration with Cleveland Diagnostics and wrote off the convertible promissory note. See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ,” for additional information. Derivative Financial Instruments The Company hedges a portion of its foreign currency exposures related to outstanding monetary assets and liabilities using foreign currency forward contracts. The foreign currency forward contracts, included in prepaid expenses and other current assets or in accrued liabilities, depending on the contracts’ net position, the Company uses to hedge the exposure are not designated as hedges, and as a result, changes in their fair value are recorded in other income (expense). As of December 31, 2018 and 2017, the Company had open foreign currency forward contracts with notional amounts of $17.1 million and $16.1 million, respectively. Impairment of Long‑Lived Assets The Company reviews long‑lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. For property and equipment and intangible assets, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using undiscounted cash flows. For investments in non‑marketable equity securities, evidence of impairment might include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. If the fair value of the investment is determined to be less than the carrying value, the asset is written down to its fair value. During the year ended December 31, 2018, the Company wrote off $4.8 million of previously capitalized equipment and software development costs, primarily due to disposal activities. See Note 14, “ Restructuring Costs ” for additional information regarding the disposal activities. Income Taxes The Company uses the liability method for income taxes, whereby deferred income taxes are provided on items recognized for financial reporting purposes over different periods than for income tax purposes. Valuation allowances are provided when the expected realization of tax assets does not meet a more‑likely‑than‑not criterion. The Company accounts for uncertain income tax positions using a benefit recognition model with a two‑step approach, a more‑likely‑than‑not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement, in accordance with the accounting guidance for uncertain tax positions. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense when and if incurred. See Note 13, “ Income Taxes ” for additional information regarding unrecognized tax benefits. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. See Note 2 “ Revenues ” for further discussion on Revenues. Cost of Product Revenues Cost of product revenues includes the cost of materials, direct labor, equipment and infrastructure expenses associated with processing tissue samples (including sample accessioning, histopathology, anatomical pathology, paraffin extraction, reverse transcription polymerase chain reaction (“RT‑PCR”), quality control analyses and shipping charges to transport tissue samples) and license fees. Infrastructure expenses include allocated facility occupancy and information technology costs. Costs associated with performing the Company’s tests are recorded as tests are processed. Costs recorded for tissue sample processing and shipping charges represent the cost of all the tests processed during the period regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of product revenues and fixed annual payments relating to the launch and commercialization of the Company’s tests are recorded as license fees in cost of product revenues at the time product revenues are recognized or in accordance with other contractual obligations. Research and Development Expenses Research and development expenses are comprised of costs incurred to develop technology and carry out clinical studies and include salaries and benefits, reagents and supplies used in research and development laboratory work, infrastructure expenses, including allocated facility occupancy and information technology costs, contract services, and other outside costs. Research and development expenses also include costs related to activities performed under contracts with biopharmaceutical and pharmaceutical companies. Research and development costs are expensed as incurred. The Company enters into collaboration and clinical trial agreements with clinical collaborators and records these costs as research and development expenses. The Company records accruals for estimated study costs comprised of work performed by its collaborators under contract terms. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized and recognized as expense as the goods are delivered or the related services are performed. Stock‑based Compensation The Company uses the Black‑Scholes option valuation model, single‑option approach, which requires the use of estimates such as stock price volatility and expected option lives, as well as expected option forfeiture rates, to value employee stock‑based compensation at the date of grant, and recognizes stock‑based compensation expense ratably over the requisite service period. Equity instruments granted to non‑employees are also valued using the Black‑Scholes option valuation model and are subject to periodic revaluation over their vesting terms. The Company did not grant any stock options to non‑employees during any of the years presented. 401(k) Plan Substantially all of the Company’s employees are eligible to participate in its defined contribution plan qualified under Section 401(k) of the Internal Revenue Code. The Company contributed dollar for dollar matching of employee contributions up to a maximum of $4,000 for each of the years ended December 31, 2018, 2017 and 2016, respectively, for each employee per year based on a full calendar year of service. The match is funded concurrently with a participant’s semi‑monthly contributions to the 401(k) Plan. The Company recorded expense for its contributions under the 401(k) Plan of $3.6 million, $2.9 million and $3.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. Foreign Currency Transactions Net foreign currency transaction gains or losses are included in other income (expense), net on the Company’s consolidated statements of operations. Net foreign currency transaction gains (losses) totaled $(277,000), $317,000 and $(782,000) for the years ended December 31, 2018, 2017 and 2016, respectively. Comprehensive Gain or Loss Other comprehensive gain or loss consists of unrealized gains and losses on available‑for‑sale securities. Leases The Company enters into lease agreements for its laboratory and office facilities. These leases are classified as operating leases. Rental expense is recognized on a straight‑line basis over the term of the lease. Incentives granted under the Company’s facilities leases, including allowances to fund leasehold improvements and rent holidays, are capitalized and are recognized as reductions to rental expense on a straight‑line basis over the term of the lease. Guarantees and Indemnifications The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a directors and officers insurance policy that limits its exposure and may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2018 and 2017. Recently Adopted 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 ASC 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. The Company adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Upon adoption, the Company recognized the cumulative effect of adopting this guidance as an adjustment to its opening accumulated deficit balance. The Company recorded an increase to opening accounts receivable, net, and a reduction to opening accumulated deficit of $14.1 million. as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact related to certain payors who were not accrual payors. See Note 2, “ Revenues ” for additional information. 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 Company adopted the ASU as of January 1, 2018 using the modified retrospective method for marketable equity securities and the prospective method for non-marketable equity securities. The Company recorded a reduction to accumulated deficit of $180,000 as of January 1, 2018 due to the cumulative impact of adopting the ASU, with the impact related to unrealized loss on Biocartis’ common stock at December 31, 2017. The Company has elected to use the measurement alternative for its non-marketable equity securities, defined as cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less impairment. The adoption of ASU 2016-01 increases the volatility of other income (expense), net, as a result of the remeasurement of the Company’s investments in equity securities. In November 2016, the FASB issued ASU Nos. 2016-15 and 2016-18 amending the presentation of restricted cash within the statement of cash flows. The guidance requires that restricted cash be included within cash and cash equivalents on the statement of cash flows. The ASU became effective retrospectively for reporting periods beginning after December 15, 2017. The Company adopted these standards effective January 1, 2018. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance requires the lessees to recognize a right-of-use asset and a lease liability on the balance sheet for almost all leases. Additional qualitative and quantitative disclosures will also be required. The ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company will adopt the new standard effective January 1, 2019 using the modified retrospective method and will not restate comparative periods. As permitted under the transition guidance, the Company will carry forward the assessment of whether its contracts contain or are leases, classification of its leases and remaining le |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2018 | |
Revenues | |
Revenues | Note 2. Revenues Adoption of ASC Topic 606, Revenue from Contracts with Customers On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under Topic 605. See Note 1 “ Organization and Summary of Significant Accounting Policies ” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for the Company’s revenue recognition policy under Topic 605. The Company recorded a one-time increase to opening accounts receivable, net, and a reduction to opening accumulated deficit of $14.1 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact related to certain payors who were not accrual payors. In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on the Company’s consolidated balance sheet as of December 31, 2018 and statement of operations for the year ended December 31, 2018 was as follows: As Reported Balance Without Adoption of ASC 606 Adjustments (In thousands) Income statement Year Ended December 31, 2018 Revenues: Product revenues 394,111 394,759 (648) Operating expenses: General and administrative 76,910 80,024 (3,114) Net income 25,677 23,211 2,466 Balance Sheet at December 31, 2018 Assets: Accounts receivable, net 51,531 31,090 20,441 Equity: Accumulated deficit (206,325) (222,914) 16,589 Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The estimated uncollectible amounts that were historically classified as bad debt expense are now generally considered implicit price concessions that are a direct reduction to accounts receivable rather than allowance for doubtful accounts. The majority of the Company’s historical product revenues have been derived from the sale of its Oncotype DX breast cancer test. For product revenues, the Company estimates the transaction price which is the amount of consideration it expects to be entitled to receive in exchange for providing services based on its historical collection experience using a portfolio approach as a practical expedient to account for patient contracts as collective groups rather than individually. The Company monitors its estimates of transaction price to depict conditions that exist at each reporting date. If the Company subsequently determines that it will collect more consideration than it originally estimated for a contract with a patient, it will account for the change as an increase in the estimate of the transaction price in the period identified. Similarly, if the Company subsequently determines that the amount it expects to collect from a patient is less than it originally estimated, it will generally account for the change as a decrease in the estimate of the transaction price. The Company’s performance obligations are satisfied at the point in time when test reports are delivered. The Company also provides services to patients with whom the Company does not have contracts as defined in Topic 606. The Company recognizes revenue for these patients when contracts as defined in Topic 606 are established at the amount of consideration to which it expects to be entitled or when the Company receives substantially all of the consideration subsequent to the performance obligations being satisfied. During the year ended December 31, 2018, cash collections for certain tests delivered during the nine months ended September 30, 2018 came in at rates higher than originally accrued. As a result, the Company changed its estimate of the amounts to be recognized for these tests and recognized an additional $3.5 million and $6.3 million of revenue for the three months and year ended December 31, 2018, respectively. These changes in estimates resulted in increases in diluted net income per share of approximately $0.09 and $0.16 for the three months and year ended December 31, 2018, respectively. The following table presents the Company’s product revenues disaggregated by revenue source, as well as geographic region, under Topic 606 for the year ended December 31, 2018: United States Outside of the United States Total (In thousands) Invasive breast cancer test $ 299,415 $ 58,795 $ 358,210 Prostate cancer test 26,814 190 27,004 Other 8,453 444 8,897 Total revenues $ 334,682 $ 59,429 $ 394,111 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. The Company typically uses an input method that recognizes revenue based on the Company’s efforts to satisfy the performance obligation relative to the total expected inputs to the satisfaction of that performance obligation. Advance payments received in excess of revenues recognized are classified as deferred revenue until such time as the revenue recognition criteria have been met. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | Note 3. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) for the period by the weighted-average number of common shares outstanding for the period without consideration of potential common shares. Diluted earnings per share is calculated using the weighted-average number of common shares outstanding including the dilutive effect of stock awards as determined under the treasury-stock method. In periods when the Company has a net loss, stock awards are excluded from the calculation of diluted net loss per share as their inclusion would have an antidilutive effect. Year Ended December 31, 2018 2017 2016 (In thousands except per share data) Numerator: Net income (loss) $ 25,677 $ (3,857) $ (13,919) Denominator: Weighted-average shares of common stock outstanding used in the calculation of basic net income (loss) per share 35,727 34,495 33,264 Effect of dilutive securities: Options to purchase common stock 1,311 — — Restricted stock units 490 ESPP 27 — — Total 1,828 — — Weighted-average shares of common stock outstanding used in the calculation of diluted net income (loss) per share 37,555 34,495 33,264 Basic net income (loss) per share $ 0.72 $ (0.11) $ (0.42) Diluted net income (loss) per share $ 0.68 $ (0.11) $ (0.42) The Company excluded stock awards of 46,000, 800,000, and 828,000 for the years ended December 31, 2018, 2017 and 2016 from the computation of diluted net income per share because their effect was anti-dilutive. |
Cash, Cash Equivalents, Restric
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities | 12 Months Ended |
Dec. 31, 2018 | |
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities | |
Cash, Cash Equivalents and Restricted Cash, and Marketable Securities | Note 4. Cash, Cash Equivalents, Restricted Cash, and Marketable Securities The following tables set forth the Company’s cash, cash equivalents, restricted cash, and marketable securities as of the dates indicated: December 31, December 31, 2018 2017 (In thousands) Cash, cash equivalents, and restricted cash Cash $ 49,046 $ 35,303 Money market deposits 10,364 10,215 Commercial paper 2,235 - Restricted cash (1) 272 190 Total cash, cash equivalents and restricted cash 61,917 45,708 Marketable securities Commercial paper 70,162 30,272 Corporate debt securities 78,981 50,260 Corporate equity securities 3,072 3,525 Total marketable securities 152,215 84,057 Total cash and cash equivalents, restricted cash and marketable securities $ 214,132 $ 129,765 (1) Restricted cash is included in Other assets on the consolidated balance sheet. The following tables summarize the Company’s available-for-sale securities that are measured at fair value as of the dates indicated: December 31, 2018 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 72,455 $ — $ (58) $ 72,397 Corporate debt securities 79,009 18 (46) 78,981 Total $ 151,464 $ 18 $ (104) $ 151,378 December 31, 2017 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 30,315 $ — $ (43) $ 30,272 Corporate debt securities 50,331 2 (73) 50,260 Corporate equity securities 4,020 — (495) 3,525 Total $ 84,666 $ 2 $ (611) $ 84,057 The Company had realized gains of $0, $2.8 million and $3.2 million for the years ended December 31, 2018, 2017 and 2016, respectively, on its available‑for‑sale marketable securities. The following table provides the breakdown of the available-for-sale marketable securities with unrealized losses as of the dates indicated: In a Loss Position for Less Than 12 Months Gross Unrealized Estimated Losses Fair Value (In thousands) As of December 31, 2018: Commercial paper $ (58) $ 59,423 Corporate debt securities (46) 37,608 Total $ (104) $ 97,031 As of December 31, 2017: Commercial paper $ (43) $ 30,272 Corporate debt securities (73) 45,110 Corporate equity securities (495) 3,525 Total $ (611) $ 78,907 The following table provides the amortized cost and fair value of fixed maturity securities available for sale by contractual maturity: December 31, 2018 December 31, 2017 Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value (In thousands) Due in one year or less $ 147,398 $ 147,312 $ 84,666 $ 84,057 Due in more than one year but less than five years 4,066 4,066 — — Total $ 151,464 $ 151,378 $ 84,666 $ 84,057 Prior to January 1, 2018, the Company accounted for its marketable equity securities at fair value with unrealized gains and losses recognized in accumulated other comprehensive income on the balance sheet. Realized gains and losses on marketable equity securities sold or impaired were recognized in other income (expense), net. On January 1, 2018, the Company adopted ASU No. 2016-01 which changed the way the Company accounts for marketable equity securities. The Company’s marketable equity securities are measured at fair value and starting January 1, 2018, unrealized gains and losses are recognized in other income (expense), net. Upon adoption, the Company reclassified $180,000 of unrealized loss related to marketable equity securities from accumulated other comprehensive income to opening accumulated deficit. In December 2017, the Company invested €3.4 million or $4.0 million in 270,000 shares of the common stock of Biocartis, a public company listed on the Euronext exchange. This corporate equity security investment was accounted for as an available-for-sale marketable security and valued at €3.0 million or $3.5 million at December 31, 2017. During the year ended December 31, 2017, $180,000 of unrealized losses relating to changes in the fair value of this investment were recorded in other comprehensive income. These securities were subject to a lock-up agreement which expired in December 2018. During the year ended December 31, 2017, a discount of $322,000 relating to the lock-up agreement was recognized in research and development expense, and a foreign currency revaluation gain of $7,000 was recorded in other income. In accordance with ASU No 2016-01, the Company recorded a decrease in fair value of $296,000 and a foreign currency revaluation loss of $157,000, in other income (expense), net during the year ended December 31, 2018, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 5. Fair Value Measurements The Company measures certain financial assets, including cash equivalents and marketable securities, at their fair value on a recurring basis. The fair value of these financial assets was determined based on a hierarchy of three levels of inputs, of which the first two are considered observable and the last unobservable, as follows: Level 1 : Quoted prices in active markets for identical assets or liabilities. Level 2 : Observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company did not have any non‑financial assets or liabilities that were measured or disclosed at fair value on a recurring basis at December 31, 2018 and 2017, respectively. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis at December 31, 2018 and 2017 by level within the fair value hierarchy: Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2018 (In thousands) As of December 31, 2018: Assets Money market deposits $ 10,364 $ — $ — $ 10,364 Commercial paper — 72,397 — 72,397 Corporate debt securities — 78,981 — 78,981 Corporate equity securities 3,072 — — 3,072 Total $ 13,436 $ 151,378 $ — $ 164,814 Liabilities Foreign exchange derivative instruments $ — $ 135 — $ 135 Total $ — $ 135 $ — $ 135 Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2017 (In thousands) As of December 31, 2017: Assets Money market deposits $ 10,215 $ — $ — $ 10,215 Commercial paper — 30,272 — 30,272 Corporate debt securities — 50,260 — 50,260 Corporate equity securities — 3,525 — 3,525 Convertible promissory note — — 1,329 1,329 Total $ 10,215 $ 84,057 $ 1,329 $ 95,601 Liabilities Foreign exchange derivative instruments $ — $ 203 — $ 203 Total $ — $ 203 $ — $ 203 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. Foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. 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 was transferred from Level 2 to Level 1 during the year ended December 31, 2018, due the expiration of lock-up agreement in December 2018. There were no transfers between Level 1 and Level 2 categories during the year ended December 31, 2017. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company reviews the fair value of long-lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. During the year ended December 31, 2018 the Company wrote off $4.7 million of previously capitalized equipment and software development costs. See Note 14 “ Restructuring ” for additional information. During the year ended December 31, 2017, the Company wrote off $98,000 of previously capitalized equipment and software development costs. During the year ended December 31, 2016, the Company wrote off $2.6 million of previously capitalized software development costs related to a project for enhanced report delivery due to scope change. Impairment charges related to the write off are included in the selling and marketing expenses in the accompanying consolidated statements of operations. During the year ended December 31, 2017, the Company invested $2.0 million in a convertible promissory note of Cleveland Diagnostics. The Company estimated the fair value of the convertible promissory note to be approximately $1.3 million at December 31, 2017. The convertible promissory note was classified as Level 3 as it is valued using unobservable inputs that were primarily based on the Company’s estimate of the fair value of the underlying preferred stock into which the notes would be convertible. In June 2018, the Company made a business decision to terminate its milestone-based collaboration with Cleveland Diagnostics and wrote off the convertible promissory note. See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ” for additional information regarding the terms of this investment. In June 2018, the Company invested an additional $2.5 million in Epic Sciences preferred stock bringing the estimated fair value of the overall investment to approximately $10.8 million, of which $8.3 million was remeasured to fair value based on observable transactions. The increase in fair value of $1.2 million was recorded as an unrealized gain on equity securities and included as an adjustment to the carrying value during the year ended December 31, 2018. The preferred stock of Epic Sciences is classified within Level 3 in the fair value hierarchy because the Company estimated the value during the year ended December 31, 2018 utilizing an option pricing model that considered a recent observable transaction and other unobservable inputs including volatility and long-term plans of Epic Sciences. The Company accounted for such preferred stock using the cost method of accounting and accordingly recorded such preferred stock in other assets. There were no additional identified events or changes in circumstances that may have a significant adverse effect on the fair value of the preferred stock during the remainder of the year ended December 31, 2018. See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ” for additional information regarding the terms of this investment. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Property and Equipment | Note 6. Property and Equipment The following table summarizes the Company’s property and equipment as of the dates indicated: December 31, 2018 2017 (In thousands) Laboratory equipment $ 32,669 $ 37,560 Computer equipment 10,385 10,498 Computer software—internal use 30,145 26,483 Furniture and fixtures 5,240 4,749 Leasehold improvements 29,960 29,126 Work in progress 3,597 3,698 111,996 112,114 Less accumulated depreciation and amortization (72,464) (65,674) Total $ 39,532 $ 46,440 For the years ended December 31, 2018, 2017 and 2016, the Company recognized property and equipment depreciation and amortization expense of $12.6 million, $11.6 million and $8.8 million, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 7. Accrued Expenses and Other Current Liabilities The following table summarizes the Company’s accrued expenses and other current liabilities as of the dates indicated: December 31, 2018 2017 (In thousands) Accrued expenses $ 5,391 $ 7,197 Accrued professional and other service fees 2,592 3,114 Accrued refunds 120 87 Accrued rebate 773 407 Accrued collaboration expense 5,184 2,532 Accrued taxes payable 1,097 746 Deferred rent 688 — Other current liabilities 25 1 Total $ 15,870 $ 14,084 Accrued professional and other service fees include third‑party billing and collections costs, legal expenses, accounting and audit fees and investor relations expenses. Accrued refunds include overpayments due to third‑party payors. |
Collaboration and Commercial Te
Collaboration and Commercial Technology Licensing Agreements | 12 Months Ended |
Dec. 31, 2018 | |
Collaboration and Commercial Technology Licensing Agreements | |
Collaboration and Commercial Technology Licensing Agreements | Note 8. 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 $10.0 million, $7.3 million and $4.6 million for the years ended December 31, 2018, 2017 and 2016, respectively, relating to services 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 has specified options and rights relating to joint inventions arising out of these 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 DX tests. While certain agreements contain provisions for fixed annual payments, license fees are generally calculated as a percentage of product revenues, with rates that vary by agreement and may be tiered, and payments that may be capped at annual minimum or maximum amounts. The Company recognized costs under these agreements totaling $264,000, $314,000 and $5.3 million for the years ended December 31, 2018, 2017 and 2016, respectively, which were included in cost of product revenues. The decrease in costs for these agreements for the years ended December 31, 2018 and 2017 compared to the year ended December 31, 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 PCR, homogeneous polymerase chain reaction, and “RT PCR”. The effective date of the termination was November 27, 2016. The Company believes it has satisfied all obligations to make royalty payments to Roche. In January 2014, the Company entered into a collaboration agreement to conduct a prostate study with a goal to determine the association between the GPS provided by the Company’s assay and the likelihood of experiencing disease progression while on active surveillance. In July 2014, the Company entered into a collaboration agreement to conduct a prostate observational study in men who choose active surveillance at one and two years after receiving the Oncotype DX prostate cancer GPS. In August 2014, the Company entered into an agreement to provide support to conduct the main phase of a prospective study dealing with individualization of adjuvant decision-making in early-stage breast cancer. In November 2017, the Company entered into a collaboration agreement to provide support to conduct a data sweep and analysis for a mid-range recurrence score group for a prospective study which was designed to explore breast cancer recurrences in patients with early stage breast cancer. As of December 31, 2018, the estimated total remaining obligations for these agreements, including certain milestone payments, is approximately $790,000. All future milestone payments are contingent on certain accomplishments, and therefore the timing for any related payments cannot be estimated. In June 2016, the Company entered into a collaboration agreement with Epic Sciences under which the Company was granted exclusive distribution rights to commercialize Epic Sciences’ AR-V7 Nucleus Detect test in the United States, which is marketed 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, claims appeals, customer support, and providing and maintaining order management systems for the test. Epic Sciences is responsible for performing all tests, performing studies including analytic and clinical validation studies, and seeking Medicare coverage and a Medicare payment rate from the Centers for Medicare and Medicaid Services (“CMS”) for the test. Future revenues generated from the test will be shared by the Company and Epic Sciences in accordance with the terms of the agreement. During 2016 and 2017 the Company 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 estimated to be approximately $7.1 million while the difference of $375,000 was deferred as of December 31, 2017 and had been recognized as an additional cost of purchases of Oncotype DX AR-V7 Nucleus Detect tests, which the Company believes would be at a discount to fair value. The Company originally agreed to invest an additional $2.5 million in Epic Sciences preferred stock, upon achievement of one of the milestones. In June 2018, prior to the achievement of the milestone, the Company invested an additional $2.5 million in Epic Sciences preferred stock and the milestone payment was waived by Epic Sciences. In December 2018, another milestone was achieved and the Company recorded the payment of $2.0 million in other assets, which will be recognized as cost of product revenue over the term of the collaboration agreement. Additional terms of the agreement include the Company’s obligation to pay Epic Sciences $2.0 million upon achievement of certain future milestones. The collaboration agreement has a term of 10 years, unless terminated earlier under certain circumstances. In September 2017, the Company entered into an exclusive license and development agreement with Biocartis, a molecular diagnostics company based in Belgium, to develop and commercialize an in vitro diagnostic (“IVD”) version of the Oncotype DX breast cancer test on the Biocartis’ Idylla platform that can be performed locally by laboratory partners and in hospitals around the world. Under the terms of the license and development agreement, the Company has an exclusive, worldwide, royalty-bearing license to develop and commercialize an IVD version of the Oncotype DX breast cancer test on the Biocartis Idylla platform, and an option to expand the collaboration to include additional tests in oncology and urology. The Company has primary responsibility for developing, validating and obtaining regulatory authorizations and registrations for IVD Oncotype DX tests to be performed on the Idylla platform. The Company is also responsible for manufacturing and commercialization activities with respect to such tests. Pursuant to the license and development agreement, the Company recorded a one-time upfront license and option fee of €2.8 million, or $3.2 million, which is included in research and development expenses for the year ended December 31, 2017. In December 2017, the Company purchased 270,000 ordinary shares of Biocartis at the market price of €12.50 for a total cost of €3.4 million or $4.0 million. This investment was subject to a lock-up agreement that expired in December 2018. The investment has been recognized at fair value, which the Company estimated to be $3.1 million and $3.5 million for the years ended December 31, 2018 and 2017, respectively. In September 2018, the Company extended its option to expand the collaboration to include urology, and recorded a €1.0 million, or $1.2 million, expense. In November 2018, the Company and Biocartis signed an addendum to the license and development agreement in which the Company exercised the option to expand the collaboration to include urology and recorded a €2.0 million, or $2.3 million, expense. In addition, the Company obtained a right of first refusal to add an additional test, a non-invasive detection of prostate cancer in a pre-biopsy setting, and recorded a €500,000, or $575,000, expense. Additional terms of the license and development agreement and the addendum include the Company’s obligation to pay Biocartis an aggregate of €5.5 million in cash upon achievement of certain milestones, and royalties based primarily on the future sales volumes of the Company’s test performed on the Idylla platform and expansion of the collaboration to include additional tests in oncology and urology. In November 2017, the Company entered into an exclusive licensing agreement with Cleveland Diagnostics to develop and commercialize new prostate cancer tests based on Cleveland Diagnostics' IsoPSA reagents and technology. During the year ended December 31, 2017, the Company invested $2.0 million in a convertible promissory note of Cleveland Diagnostics. The convertible promissory note has been recognized at fair value, which the Company estimated to be approximately $1.3 million at December 31, 2017 based on the Company’s estimate of the fair value of the underlying preferred stock into which the note is convertible. In June 2018, the Company made a business decision to discontinue development of the IsoPSA assay and terminate its agreement with Cleveland Diagnostics following its internal review for advancing an early stage technology into the next phase of product development. As a result, the Company wrote off the convertible promissory note and interest accrued through the termination date in the aggregate amount of $1.4 million in the second quarter of 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 9. Commitments and Contingencies Lease Obligations The Company leases approximately 180,700 square feet of office and laboratory space under five non-cancellable operating leases, with terms that expire between 2021 and 2023 in Redwood City, California, and 7,500 square feet of office space for the Company’s European subsidiary under a non-cancellable operating lease that expires in 2021 in Geneva, Switzerland. The Company’s Redwood City, California leases each contain options to extend the terms of such leases for an additional five years as well as tenant improvement allowances that could total as much as $214,000 to the extent utilized by November 2019. Rental expense under operating lease agreements amounted to $6.2 million, $6.3 million and $5.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. Future non‑cancelable commitments under these operating leases at December 31, 2018 were as follows: Annual Payments (In thousands) Years Ending December 31, 2019 $ 6,831 2020 7,161 2021 4,911 2022 4,173 2023 1,081 2024 and thereafter — Total minimum payments $ 24,157 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. Legal proceedings, including litigation, government investigations and enforcement actions, could result in material costs, occupy significant management resources and entail civil and criminal penalties, even if the Company ultimately prevails. Any of the foregoing consequences could result in serious harm to the Company’s business, results of operations and financial condition. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2018 | |
Capital Stock | |
Capital Stock | Note 10. Capital Stock Common Stock As of December 31, 2018, the Company had 36,407,287 shares of common stock outstanding. Shares of common stock reserved for future issuance as of December 31, 2018 were as follows: Number of Shares (In thousands) Shares to be issued upon exercise of outstanding stock options and vesting of RSUs 3,926 Shares available for future stock option and RSU grants, settlement of employee stock purchase plan (ESPP) and restricted stock to be issued to outside directors in lieu of director fees 4,152 Shares of common stock reserved for future issuance 8,078 Treasury Stock In December 2012, the Company entered into an accelerated share repurchase agreement with a financial institution to repurchase $30.1 million of its common stock on an accelerated basis. The shares of common stock repurchased under the agreement were 984,074 and 77,257 during the year ended December 31, 2012 and 2013, respectively. The average purchase price of the Company’s common stock from the accelerated share repurchase program was $28.27 per share. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 11. Stock‑Based Compensation 2005 Stock Incentive Plan On September 8, 2005, the Board of Directors approved the 2005 Stock Incentive Plan (the “2005 Plan”), which was later approved by the Company’s stockholders. Pursuant to the 2005 Plan, stock options, restricted shares, stock units, including RSUs, and stock appreciation rights may be granted to employees, consultants, and outside directors of the Company. Options granted may be either incentive stock options or nonstatutory stock options. The Company initially reserved 5,000,000 shares of the Company’s common stock for issuance under the 2005 Plan, effective upon the closing of the Company’s initial public offering on October 4, 2005. On June 8, 2009, the Company’s stockholders approved an amendment to the 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 3,980,000 shares. 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. On June 6, 2018 the Company’s stockholders approved an amended and restated 2005 Plan to increase the shares reserved for issuance under the 2005 Plan by 1,000,000 sharers and as of the restatement date award be counted as 1.9 shares against the aggregate . The amended and restated plan also extends the term under which awards may be granted under the 2005 Plan until March 18, 2024. As of December 31, 2018, a total of 2,954,000 shares remain available for future grant under the 2005 Plan. Stock Option Activity Stock options are governed by stock option agreements between the Company and recipients of stock options. Incentive stock options may be granted under the 2005 Plan at an exercise price of not less than 100% of the fair market value of the common stock on the date of grant, determined by the Compensation Committee of the Board of Directors. Nonstatutory stock options may be granted under the 2005 Plan at an exercise price of not less than 85% of the fair market value of the common stock on the date of grant, determined by the Compensation Committee of the Board of Directors. Options become exercisable and expire as determined by the Compensation Committee, provided that the term of incentive stock options may not exceed 10 years from the date of grant. Stock option agreements may provide for accelerated exercisability in the event of an optionee’s death, disability, or retirement or other events. Under the 2005 Plan, each outside director who joins the board after the effective date of the 2005 Plan will receive an automatic nonstatutory stock option grant that vests at a rate of 25% at the end of the first year, with the remaining balance vesting monthly over the next three years. On the first business day following the annual meeting of the Company’s stockholders, each outside director who is continuing board service and who was not initially elected to the board at the annual meeting will receive an additional nonstatutory stock option grant, which will vest in full on the first anniversary of the date of grant or, if earlier, immediately prior to the next annual meeting of the Company’s stockholders. Nonstatutory stock options granted to outside directors must have an exercise price equal to 100% of the fair market value of the common stock on the date of grant. Nonstatutory stock options terminate on the earlier of the day before the tenth anniversary of the date of grant or the date twelve months after termination of the outside director’s service as a member of the Board of Directors. The following table summarizes option activity for the year ended December 31, 2018: Weighted-Average Outstanding Options Remaining Aggregate Number of Weighted-Average Contractual Intrinsic Shares Exercise Price Life Value (In thousands) (In years) (In thousands) Balance at December 31, 2017 3,460 $ 26.42 Options granted 667 $ 35.12 Options exercised (907) $ 23.42 Options forfeited (137) $ 29.79 Options expired — $ 25.59 Balance at December 31, 2018 3,083 $ 29.03 6.3 $ 109,074 Exercisable at December 31, 2018 1,983 $ 27.42 5.0 $ 73,341 Vested and expected to vest at December 31, 2018 3,016 $ 28.97 6.2 $ 106,871 The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2017 and 2016 was $29.5 million, $8.0 million and $5.6 million, respectively. The total fair value of stock options vested during the years ended December 31, 2018, 2017 and 2016 was $6.9 million, $6.2 million and $5.3 million, respectively. Performance-Based Vesting Stock Options Under the 2005 Plan, the Company grants performance-based vesting stock options (“PV stock options”) which vest upon achievement of specified performance goals. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criterion is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criterion is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criterion been probable of achievement since the grant of the award. Restricted Stock Unit Activity The Company began granting RSUs in 2011. The RSUs generally vest in three equal annual installments. As of April 2011, outside directors were given the option to elect to receive some or all of their retainers (other than retainers for serving as committee chair) in the form of fully‑vested restricted stock. Restricted shares, stock units and stock appreciation rights granted under the 2005 Plan are governed by agreements between the Company and recipients of the awards. Terms of the agreements are determined by the Compensation Committee. A following table summarizes RSU activity for the year ended December 31, 2018: Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2017 964 $ 28.25 RSUs granted 544 $ 34.78 RSUs vested (437) $ 28.67 RSUs cancelled (228) $ 30.25 Balance at December 31, 2018 843 $ 31.70 The weighted-average per share grant date fair values of RSUs were $34.78, $28.35 and $27.50 during the years ended December 31, 2018, 2017 and 2016, respectively. The fair value of RSUs vested were $15.5 million, $12.0 million and $8.6 million for the year ended December 31, 2018, 2017 and 2016, respectively. Performance-Based Restricted Stock Unit Activity Under the 2005 Plan, the Company grants performance-based restricted stock units (“PVRSUs”) which vest upon achievement of specified performance goals. The fair value of each PVRSU is estimated at the date of grant or when performance objectives are defined for the grants. The Company recognizes the fair value of these awards to the extent the achievement of the related performance criteria is estimated to be probable. If a performance criteria is subsequently determined to not be probable of achievement, any related expense is reversed in the period such determination is made. Conversely, if a performance criteria is not currently expected to be achieved but is later determined to be probable of achievement, a “catch-up” entry is recorded in the period such determination is made for the expense that would have been recognized had the performance criteria been probable of achievement since the grant of the award. There were no PVRSU activities during the years ended December 31, 2018 and 2017. The weighted-average per share grant date fair values of PVRSUs was $28.09 during the year ended December 31, 2016. The fair value of PVRSUs vested was $163,000 during the year ended December 31, 2016. Restricted Stock in Lieu of Directors’ Fees Outside members of the Company’s Board of Directors may elect to receive fully‑vested restricted stock in lieu of cash compensation for services as a director. During the years ended December 31, 2018, 2017 and 2016, the Company issued 4,755, 6,375, and 6,970 shares of restricted stock, respectively, to outside directors, with vesting date fair values of $200,000 for each of the years, and a weighted‑average grant date fair value of $41.97, $31.33, and $28.65 per share, respectively. Employee Stock Purchase Plan In June 2011, the Company’s stockholders approved the Company’s Employee Stock Purchase Plan (“ESPP”). The ESPP provides eligible employees with an opportunity to purchase common stock from the Company and to pay for their purchases through payroll deductions. The ESPP is implemented through a series of offerings of purchase rights to eligible employees beginning December 1, 2011. Under the ESPP, the Compensation Committee of the Company’s Board of Directors may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each offering. During each purchase period, payroll deductions accumulate without interest. On the last day of the purchase period, accumulated payroll deductions are used to purchase common stock for employees participating in the offering. The purchase price is specified pursuant to the offering, but cannot, under the terms of the ESPP, be less than 85% of the fair market value per share of the Company’s common stock on either the last trading day preceding the offering date or on the purchase date, whichever is less. The Company’s Board of Directors has determined that the purchase periods initially shall have a duration of six months and that the purchase price will be 85% of the fair market value per share of the Company’s common stock on either the last trading day preceding the offering date or the purchase date, whichever is less. The length of the purchase period applicable to U.S. employees and the purchase price may not be changed without the approval of the independent members of the Company’s Board of Directors. A total of 1,250,000 shares of common stock were initially reserved for issuance under the 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. As of December 31, 2018, a total of 1,197,627 shares were available for issuance under the ESPP. During 2018, 2017 and 2016, 171,086, 210,880 and 226,303 shares were issued under the ESPP, respectively. As of December 31, 2018, there was $941,000 of unrecognized compensation expense related to the ESPP, which is expected to be recognized over a period of five months. Employee Stock‑Based Compensation Expense Stock-based compensation is recognized as expense over the requisite service periods in the consolidated statements of operations using the straight-line expense attribution approach for stock options and RSUs, and using a graded vesting expense attribution approach for PV stock options and PVRSUs. The Company recognized employee stock‑based compensation expense of $21.1 million, $20.3 million and $18.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. Employee stock‑based compensation expense was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Employee stock‑based compensation expense includes expense related to stock options granted to outside directors of the Company as well as stock purchased under the ESPP. As of December 31, 2018, unrecognized compensation expense related to unvested stock options and RSUs net of estimated forfeitures was $10.9 million and $15.8 million, respectively. The Company expects to recognize these expenses for unvested stock options and RSUs over a weighted‑average period of 1.8 years, respectively. There was no unrecognized compensation expense related to unvested PV stock options and PVRSUs. Valuation Assumptions Fair values of awards granted under the 2005 Plan and ESPP were estimated at grant or purchase dates using a Black‑Scholes option valuation model. Option valuation models require the input of highly subjective assumptions that can vary over time. The Company’s assumptions regarding expected volatility are based on the historical volatility of the Company’s common stock. The expected life of options granted is estimated based on historical option exercise data and assumptions related to unsettled options. The risk‑free interest rate is estimated using published rates for U.S. Treasury securities with a remaining term approximating the expected life of the options granted. The Company uses a dividend yield of zero as it has never paid cash dividends and does not anticipate paying cash dividends in the foreseeable future. The weighted‑average fair values and assumptions used in calculating such values during each fiscal year are as follows: Year Ended December 31, 2018 2017 2016 Expected volatility: Stock options 39 % 40 % 44 % ESPP 36 % 33 % 44 % Risk-free interest rate: Stock options 2.60 % 2.01 % 1.36 % ESPP 1.87 % 0.91 % 0.47 % Expected life in years: Stock options 6.29 6.22 6.10 ESPP 0.50 0.50 0.50 Weighted-average fair value: Stock options $ 14.99 $ 11.83 $ 11.73 ESPP $ 9.70 $ 7.16 $ 7.35 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Segment Information | Note 12. Segment Information The Company operates in one business segment, which primarily focuses on the development and global commercialization of genomic‑based clinical laboratory services that analyze the underlying biology of cancer, allowing physicians and patients to make individualized treatment decisions. The Company’s Oncotype DX breast, colon and prostate cancer tests have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment. As of December 31, 2018, the majority of the Company’s product revenues have been derived from sales of one product, the Oncotype DX breast cancer test. The Company adopted the requirements of Topic 606 on January 1, 2018 using the modified retrospective method, therefore there is a lack of comparability to the prior periods presented. See Recently Adopted Accounting Pronouncements in Note 1 “ Organization and Summary of Significant Accounting Policies ” and Note 2 “ Revenues ” for additional information. The following table summarizes total revenue from customers by geographic region. Product revenues are attributed to countries based on ship‑to location. Year Ended December 31, 2018 2017 2016 (In thousands) United States $ 334,682 $ 287,662 $ 281,077 Outside of the United States 59,429 53,088 46,791 Total revenues $ 394,111 $ 340,750 $ 327,868 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 13. Income Taxes The components of the Company’s income (loss) before income taxes were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Domestic $ 23,531 $ (5,404) $ (14,676) Foreign 3,393 3,051 2,138 Total income (loss) before income taxes $ 26,924 $ (2,353) $ (12,538) The components of the Company’s income tax expense were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Current expense (benefit): Federal $ — $ (140) $ 18 State 106 31 67 Foreign 861 792 569 Deferred tax expense: Federal — 792 702 State — 29 25 Foreign 280 — — Total income tax expense $ 1,247 $ 1,504 $ 1,381 The income tax expense differs from the amount computed by applying the statutory federal income tax rate as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Federal tax at statutory rate $ 5,654 $ (824) $ (4,388) Stock-based compensation (5,173) (687) 867 Non-deductible meals and entertainment 488 534 530 Net operating losses (used) not used (2,739) 1,846 3,705 Tax effect on available-for-sale securities — 792 702 Impact of foreign earnings 2,321 185 — Foreign tax 428 (279) (179) Federal AMT refundable credit — (122) — State tax, net of federal benefit 84 39 68 Other 184 20 76 Total income tax expense $ 1,247 $ 1,504 $ 1,381 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are as follows: December 31, 2018 2017 (In thousands) Deferred tax assets: Net operating loss carryforwards $ 29,620 $ 34,450 Stock-based compensation 8,120 8,120 Research tax credits 23,220 21,710 Fixed assets 280 690 Accrued compensation 4,990 3,070 Other 7,400 7,150 Total deferred tax assets before valuation allowance 73,630 75,190 Valuation allowance (73,630) (75,190) Total deferred tax assets — — Deferred tax liabilities: Other (280) — Total deferred tax liabilities (280) — Net deferred tax liabilities $ (280) $ — Based on all available objective evidence, the Company believes that it is more likely than not that its deferred tax assets will not be fully realizable. Accordingly, the Company recorded a valuation allowance against all of its deferred tax assets as of both December 31, 2018 and 2017. The Company will continue to maintain a full valuation allowance on its deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. The net valuation allowance increased (decreased) by $(1.6) million, $(12.8) million and $6.1 million during the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, the Company had federal and state net operating loss carryforwards of approximately $135.0 million and $60.1 million, respectively, and federal and state research and development tax credit carryforwards of approximately $16.4 million and $15.8 million, respectively. The federal net operating loss and federal tax credit carryforwards will expire at various dates beginning in 2021. The state net operating loss carryforwards begin to expire in 2019 if not utilized. The state tax credit carryforwards have no expiration date. None of the net operating loss and tax credit carryforwards are subject to the limitations imposed by Sections 382 and 383 of the Internal Revenue Code. The Company had $6.4 million, $2.4 million and $2.1 million of unrecognized tax benefits as of December 31, 2018, 2017 and 2016, respectively. The unrecognized tax benefits are primarily research tax credits for all years. The following table summarizes the activity related to unrecognized tax benefits: Year Ended December 31, 2018 2017 2016 (In thousands) Balance at January 1 $ 2,409 $ 2,078 $ 2,847 Increase (decrease) related to prior year tax positions 3,047 — (1,076) Increase related to current year tax positions 985 331 307 Balance at December 31 $ 6,441 $ 2,409 $ 2,078 The Company performed an analysis on qualifying research expenditures during 2018 and determined an increase in unrecognized tax benefits related to prior year tax positions was necessary. Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. The Company does not anticipate a material change to its unrecognized tax benefits over the next twelve months that would affect the Company’s effective tax rate. Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the Company’s income tax provision in its consolidated statements of operations. For the year ended December 31, 2018, 2017 and 2016, the Company recognized $9,500, $8,800 and $8,000 in interest and penalties, respectively, related to unrecognized tax benefits. The Company files federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. The statute of limitations remains open for the years 2001 through 2018 in U.S. federal and state jurisdictions, and for the years 2013 through 2018 in foreign jurisdictions. Fiscal years outside the normal statute of limitations remain open to audit by tax authorities due to tax attributes generated in early years which have been carried forward and may be audited in subsequent years when utilized. On December 22, 2017, the 2017 Tax Cut and Jobs Act “the Act” was enacted into law and the new legislation contains several key tax provisions, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. The Company is required to recognize the effect of the tax law changes in the period of enactment, such as determining the estimated transition tax, re-measuring its U.S. deferred tax assets and liabilities at a 21% rate as well as reassessing the net realizability of its deferred tax assets and liabilities. The one-time transition tax does not generate a tax liability as the deemed distribution is offset by tax attributes. The provisional amount related to the re-measurement of the Company’s deferred tax balance was estimated to be a reduction of approximately $31.4 million at December 31, 2017. Due to the corresponding valuation allowance fully offsetting deferred taxes, there was no income statement impact. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation was yet to be issued, the Company’s accounting of the transition tax and deferred tax re-measurements was incomplete as of December 31, 2017. The Company filed its 2017 Federal corporate income tax return in the fourth quarter of 2018. The Company’s final analysis and impact of the Act is reflected in the tax provision and related tax disclosures for the year ended December 31, 2018. There was a net decrease of approximately $0.6 million to the originally estimated $31.4 million remeasurement of deferred tax assets. The Company considers the $0.6 million true-up to be an immaterial change in estimate which has been reflected within the measurement period in accordance with SAB 118. Of the $0.6 million, $0.3 million had no impact on the income statement or balance sheet due to the corresponding valuation allowance offsetting deferred taxes. The remaining $0.3 million increased tax expense with a corresponding increase in the deferred tax liability. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provision of the Act. The GILTI provisions imposes a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or treating any taxes on GILTI inclusions as a period cost are both acceptable methods subject to an accounting policy election. The Company has elected to treat any taxes on GILTI inclusions as a period cost. |
Restructuring
Restructuring | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring | |
Restructuring | Note 14. Restructuring On March 8, 2018, the Company announced its decision to no longer provide its commercial offering of Oncotype SEQ Liquid Select or any further investment in next generation sequencing (NGS) panels due to a decision to focus the Company’s efforts to develop in vitro diagnostic test solutions and other tests with more predictable reimbursement, higher proprietary value and better prospects for global adoption. With this shift in strategic direction, the Company announced a reduction of its workforce of approximately 10%. In March 2018, the Company recorded charges of $8.5 million consisting of $4.8 million in non-cash asset impairments and $3.7 million in employee separation charges, all of which were recorded as operating expenses in the consolidated statements of operations. During the second quarter of 2018, the Company recorded an additional separation charge of $69,000 and adjustments to reduce non-cash asset impairments for $80,000. Of the $3.7 million of employee separation charges, the Company paid all of the employee separation charges during 2018. There were no restructuring costs during the years ended December 31, 2017 and 2016. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | Note 15. Selected Quarterly Financial Data (Unaudited) The following table contains selected unaudited consolidated statement of operations information for each of the quarters in 2018 and 2017. The Company believes that the following information reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period. Quarter Ended March 31, June 30, September 30, December 31, (In thousands, except per share data) 2018: Total revenues $ 92,625 $ 95,619 $ 101,258 $ 104,609 Product revenues 92,625 95,619 101,258 104,609 Cost of product revenues 18,733 14,383 15,518 15,692 Net income (loss) (3,775) 8,317 12,225 8,910 Basic net income (loss) per common share $ (0.11) $ 0.23 $ 0.34 $ 0.25 Diluted net income (loss) per common share $ (0.11) $ 0.23 $ 0.32 $ 0.23 2017: Total revenues $ 83,979 $ 85,487 $ 83,821 $ 87,463 Product revenues 83,979 85,487 83,821 87,164 Cost of product revenues 13,672 13,798 13,433 13,814 Net income (loss) (806) (2,739) (2,191) 1,879 Basic net income (loss) per common share $ (0.02) $ (0.08) $ (0.06) $ 0.05 Diluted net income (loss) per common share $ (0.02) $ (0.08) $ (0.06) $ 0.05 The quarterly increases in product revenues during 2018 and 2017 were primarily attributable to increased adoption of the Oncotype DX breast and Oncotype DX prostate cancer tests by physicians, international expansion, increased revenues recorded on an accrual basis (in 2017), and increased reimbursement for these tests by third‑party payors. The Company adopted the requirements of Topic 606 on January 1, 2018 using the modified retrospective method, therefore there is a lack of comparability in the quarterly 2018 and 2017 Total revenues and Product revenues presented. See Recently Adopted Accounting Pronouncements in Note 1 “ Organization and Summary of Significant Accounting Policies ” and Note 2 “ Revenues ” for additional information. Per share amounts for the quarters and full year have been calculated separately. Accordingly, quarterly amounts may not add up to the annual amount because of differences in the weighted‑average common shares outstanding during each period, due primarily to the effect of the Company’s issuing shares of its common stock during the year. Except for the quarters ended December 31, 2017, June 30, 2018, September 30, 2018 and December 31, 2018, basic and diluted net loss per common share were identical as potential common shares were excluded from the calculation because their effects were anti‑dilutive. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2018 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2018, 2017, and 2016. SCHEDULE II GENOMIC HEALTH, INC. VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2018, 2017 and 2016 Balance at Balance at Beginning of End of Period Expenses Deductions Period (In thousands) Allowance for Doubtful Accounts: Year ended December 31, 2018 $ 3,884 $ — $ 3,884 $ — Year ended December 31, 2017 $ 4,508 $ 6,554 $ 7,178 $ 3,884 Year ended December 31, 2016 $ 3,988 $ 7,654 $ 7,134 $ 4,508 |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation These consolidated financial statements include all the accounts of the Company and its wholly‑owned subsidiaries. The Company had two wholly-owned subsidiaries at December 31, 2018: 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 eight wholly-owned subsidiaries. The functional currency for the Company’s wholly-owned subsidiaries incorporated outside the United States is the U.S. dollar. All significant intercompany balances and transactions have been eliminated. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the Company’s consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. There have been no material changes in the Company’s significant accounting policies, other than the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) Nos. 2014-09, 2016-01, 2016-15 and 2016-18 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, 2017. The Company recast prior period consolidated statements of cash flows to conform with the adoption of the new accounting guidance related to presentation of restricted cash in the statement of cash flows as described below. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. |
Marketable Securities | Marketable Securities The Company invests in marketable securities, primarily money market funds, obligations of U.S. Government agencies and government‑sponsored entities, corporate bonds, commercial paper and equity securities. The Company considers all investments with a maturity date of less than one year as of the balance sheet date to be short‑term investments. Those investments with a maturity date greater than one year as of the balance sheet date are considered to be long‑term investments. Prior to January 1, 2018, the Company accounted for its marketable equity securities at fair value with unrealized gains and losses recognized in accumulated other comprehensive income on the balance sheet. Realized gains and losses on marketable equity securities sold or impaired were recognized in other income (expense), net. On January 1, 2018, the Company adopted ASU No. 2016-01 which changed the way the Company accounts for marketable equity securities. The Company’s marketable equity securities are measured at fair value and starting January 1, 2018, unrealized gains and losses are recognized in other income (expense), net. Upon adoption, the Company reclassified $180,000 of unrealized loss related to marketable equity securities from accumulated other comprehensive income to opening accumulated deficit. In December 2017, the Company invested €3.4 million or $4.0 million in 270,000 shares of the common stock of Biocartis N.V. (“Biocartis”), a public company listed on the Euronext exchange. This corporate equity security investment was accounted for as an available-for-sale marketable security and valued at €3.0 million or $3.5 million at December 31, 2017. During the year ended December 31, 2017, $180,000 of unrealized losses relating to changes in the fair value of this investment were recorded in other comprehensive income. These securities were subject to a lock-up agreement which expired in December 2018. During the year ended December 31, 2017, a discount of $322,000 relating to the lock-up agreement was recognized in research and development expense, and a foreign currency revaluation gain of $7,000 was recorded in other income. In accordance with ASU No 2016-01, the Company recorded a decrease in fair value of $296,000 and a foreign currency revaluation loss of $157,000, in other income (expense), net during the year ended December 31, 2018. Beginning in 2011, the Company made investments in various tranches of the preferred stock of Invitae Corporation (“Invitae”), which at the time was a privately-held company, such that the carrying value of this investment was $13.9 million at December 31, 2014. On February 18, 2015, Invitae completed an initial public offering of its common stock and the Company’s preferred stock investment automatically converted into 2,207,793 shares of Invitae common stock. This investment was accounted for on the cost method as an available-for-sale marketable security and valued at $18.1 million at December 31, 2015. During the year ended December 31, 2016, the Company sold a portion of its shares of the common stock of Invitae for proceeds of $9.7 million based on a cost of $6.28 per share, resulting in a realized gain of $3.2 million. The fair value of the remaining investment was $9.3 million at December 31, 2016. This investment, which was accounted for under the cost method, was valued at $7.3 million at December 31, 2016. Unrealized gains or losses resulting from changes in the fair value of this investment were recognized in other comprehensive income until the securities were sold. During the year ended December 31, 2017, the Company sold its remaining shares of the common stock of Invitae 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 years ended December 31, 2017 and 2016, $1.1 million of unrealized gains, net of tax of $820,000, and $1.9 million of unrealized gains, net of tax of $727,000, respectively, related to the shares sold were reclassified out of accumulated other comprehensive income into earnings. The cost of securities sold is determined using specific identification. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, trade receivables and accounts payable. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, trade receivables, note receivables, foreign currency forward contracts and accounts payable, approximate fair value due to their short maturities. See Note 5, “ Fair Value Measurements ” for further information on the fair value of the Company’s financial instruments. |
Concentration of Risk | Concentration of Risk The Company is subject to credit risk from its portfolio of cash equivalents and marketable securities. The Company invests in money market funds through a major U.S. bank and is exposed to credit risk in the event of default by the financial institution to the extent of amounts recorded on the consolidated balance sheets. The Company invests in short‑term, investment‑grade debt instruments and by policy limits the amount in any one type of investment, except for securities issued or guaranteed by the U.S. government. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after‑tax rate of return. The Company is also subject to credit risk from its accounts receivable related to its product sales. The majority of the Company’s accounts receivable arise from product sales in the United States. Reimbursement on behalf of customers covered by Medicare accounted for 24%, 22% and 21% of the Company’s product revenues for the years ended December 31, 2018, 2017 and 2016, respectively, and represented 17% and 23% of the Company’s total accounts receivable balance as of December 31, 2018 and 2017, respectively. No other third‑party payor represented more than 10% of the Company’s product revenues or accounts receivable balances for these periods. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts There was no bad debt expense for the year ended December 31, 2018 due to the Company’s implementation of the new revenue guidance on January 1, 2018, on a modified retrospective basis. However, the Company may incur bad debt expense in the future. Prior to January 1, 2018, the Company accrued an allowance for doubtful accounts against its accounts receivable based on estimates consistent with historical payment experience. Bad debt expense was included in general and administrative expense on the Company’s consolidated statements of operations. Accounts receivable were written off against the allowance when the appeals process had been exhausted, when an unfavorable coverage decision had been received or when there was other substantive evidence that the account would not be paid. The Company’s allowance for doubtful accounts as of December 31, 2018 and 2017 was $0 and $3.9 million, respectively. Write‑offs for doubtful accounts of $3.9 million and $7.2 million were recorded against the allowance during the years ended December 31, 2018 and 2017, respectively. Bad debt expense was $6.8 million and $7.9 million for the years ended December 31, 2017 and 2016, respectively. |
Property and Equipment | Property and Equipment Property and equipment, including purchased and internally developed software, are stated at cost. Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which generally range from three to seven years. Leasehold improvements are amortized using the straight‑line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. |
Internal-use Software | Internal-use Software Costs incurred to develop software for internal use are capitalized and amortized over the estimated useful life of the software. Costs related to maintenance of internal-use software are expensed as incurred. For the years ended December 31, 2018, 2017 and 2016, the Company capitalized $3.7 million (including $2.1 million of personnel-related expenses), $5.1 million (including $2.7 million of personnel-related expenses), and $3.4 million (including $1.2 million of personnel-related expenses), respectively, of costs associated with internal-use software development. Amortization of previously capitalized amounts was $3.8 million, $3.2 million, and $2.5 million for the years ended December 31, 2018, 2017, and 2016, respectively. |
Intangible Assets | Intangible Assets Intangible assets with finite useful lives are recorded at cost, less accumulated amortization. Amortization is recognized over the estimated useful lives of the assets. The Company’s intangible assets with finite lives, which are related to patent licenses, are not material and are included in non‑current other assets on the Company’s consolidated balance sheets. |
Investments in Privately Held Companies | Investments in Privately Held Companies The Company determines whether its investments in privately held companies are debt or equity based on their characteristics, in accordance with the applicable accounting guidance for such investments. The Company also evaluates the investee to determine if the entity is a variable interest entity (“VIE”) and, if so, whether the Company is the primary beneficiary of the VIE, in order to determine whether consolidation of the VIE is required in accordance with accounting guidance for consolidations. If consolidation is not required and the Company owns less than 50.1% of the voting interest of the entity, the investment is evaluated to determine if the equity method of accounting should be applied. The equity method applies to investments in common stock or in‑substance common stock where the Company exercises significant influence over the investee, typically represented by ownership of 20% or more of the voting interests of an entity. Prior to January 1, 2018, if the equity method did not apply, investments in privately held companies determined to be equity securities were accounted for using the cost method. As discussed below, on January 1, 2018, the Company adopted ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which changed the way it accounts for non-marketable securities. The Company adjusts the carrying value of its non-marketable equity securities for changes from observable transactions for identical or similar investments of the same issuer, less impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other income (expense), net. 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 years ended December 31, 2017 and 2016, the Company invested $1.4 million and $6.1 million, respectively, in the subordinated convertible promissory notes of Epic Sciences, Inc. (“Epic Sciences”). See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ,” for additional information regarding the terms of this investment. On March 8, 2017, all of the Company’s investment in the subordinated convertible promissory notes were converted into preferred stock of Epic Sciences representing approximately 9% of Epic Sciences’ voting interests, at which time the Company estimated the fair value of the subordinated convertible promissory notes to be approximately $7.1 million. In June 2018, the Company invested an additional $2.5 million in preferred stock of Epic Sciences as part of a new equity financing. As a result of this transaction, the Company’s ownership interest in Epic Sciences was reduced to approximately 8%. 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 FASB ASC 810, Consolidation . The Company will continue to assess its investment and future commitments to the investee and to the extent its relationship with the investee changes, may be required to consolidate the investee in future periods. The Company determined that the investment is an equity investment for which the Company does not have the ability to exercise significant influence. Prior to the adoption of ASU 2016-01, the Company accounted for such preferred stock using the cost method of accounting and accordingly recorded such preferred stock in other assets. There were no identified events or changes in circumstances that had a significant adverse effect on the fair value of the preferred stock during the remainder of the year ended December 31, 2017. On January 1, 2018, the Company adopted ASU No. 2016-01 which changed the way it accounts for non-marketable equity securities. The Company adjusts the carrying value of its non-marketable equity securities for changes from observable transactions for identical or similar investments of the same issuer, less impairment. All gains and losses on non-marketable equity securities, realized and unrealized, are recognized in other income (expense), net. As of December 31, 2018, the carrying value of the preferred stock of Epic Sciences was $10.8 million, of which $8.3 million was remeasured to fair value based on observable transactions during the year ended December 31, 2018. The upward adjustment of $1.2 million during the year ended December 31, 2018 was recorded as an unrealized gain on equity securities and included as an adjustment to the carrying value of other assets held at December 31, 2018. The preferred stock of Epic Sciences is classified within Level 3 in the fair value hierarchy because the Company estimated the value during the year ended December 31, 2018 utilizing an option pricing model that considered a recent observable transaction and other unobservable inputs including volatility and long-term plans of Epic Sciences. During the year ended December 31, 2017, the Company invested $2.0 million in the convertible promissory note of Cleveland Diagnostics, Inc. (“Cleveland Diagnostics”). See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ” for additional information regarding the terms of this investment. The Company estimated the fair value of the convertible promissory note to be approximately $1.3 million. The investment in the convertible promissory note represented a variable interest in the investee. The Company had concluded it was not the primary beneficiary and thus had not consolidated the investee pursuant to the requirements of FASB ASC 810. The Company determined that it did not have the ability to exercise significant influence over the investee company. In June 2018, the Company made a business decision to terminate its milestone-based collaboration with Cleveland Diagnostics and wrote off the convertible promissory note. See Note 8, “ Collaboration and Commercial Technology Licensing Agreements ,” for additional information. |
Derivative Financial Instruments | Derivative Financial Instruments The Company hedges a portion of its foreign currency exposures related to outstanding monetary assets and liabilities using foreign currency forward contracts. The foreign currency forward contracts, included in prepaid expenses and other current assets or in accrued liabilities, depending on the contracts’ net position, the Company uses to hedge the exposure are not designated as hedges, and as a result, changes in their fair value are recorded in other income (expense). As of December 31, 2018 and 2017, the Company had open foreign currency forward contracts with notional amounts of $17.1 million and $16.1 million, respectively. |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets The Company reviews long‑lived assets, which include property and equipment, intangible assets and investments in privately held companies, for impairment whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. For property and equipment and intangible assets, an impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using undiscounted cash flows. For investments in non‑marketable equity securities, evidence of impairment might include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment. If the fair value of the investment is determined to be less than the carrying value, the asset is written down to its fair value. During the year ended December 31, 2018, the Company wrote off $4.8 million of previously capitalized equipment and software development costs, primarily due to disposal activities. See Note 14, “ Restructuring Costs ” for additional information regarding the disposal activities. |
Income Taxes | Income Taxes The Company uses the liability method for income taxes, whereby deferred income taxes are provided on items recognized for financial reporting purposes over different periods than for income tax purposes. Valuation allowances are provided when the expected realization of tax assets does not meet a more‑likely‑than‑not criterion. The Company accounts for uncertain income tax positions using a benefit recognition model with a two‑step approach, a more‑likely‑than‑not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement, in accordance with the accounting guidance for uncertain tax positions. If it is not more likely than not that the benefit will be sustained on its technical merits, no benefit is recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense when and if incurred. See Note 13, “ Income Taxes ” for additional information regarding unrecognized tax benefits. |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. To determine revenue recognition for the arrangements that the Company determines are within the scope of FASB Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. See Note 2 “ Revenues ” for further discussion on Revenues. |
Cost of Product Revenues | Cost of Product Revenues Cost of product revenues includes the cost of materials, direct labor, equipment and infrastructure expenses associated with processing tissue samples (including sample accessioning, histopathology, anatomical pathology, paraffin extraction, reverse transcription polymerase chain reaction (“RT‑PCR”), quality control analyses and shipping charges to transport tissue samples) and license fees. Infrastructure expenses include allocated facility occupancy and information technology costs. Costs associated with performing the Company’s tests are recorded as tests are processed. Costs recorded for tissue sample processing and shipping charges represent the cost of all the tests processed during the period regardless of whether revenue was recognized with respect to that test. Royalties for licensed technology calculated as a percentage of product revenues and fixed annual payments relating to the launch and commercialization of the Company’s tests are recorded as license fees in cost of product revenues at the time product revenues are recognized or in accordance with other contractual obligations. |
Research and Development Expenses | Research and Development Expenses Research and development expenses are comprised of costs incurred to develop technology and carry out clinical studies and include salaries and benefits, reagents and supplies used in research and development laboratory work, infrastructure expenses, including allocated facility occupancy and information technology costs, contract services, and other outside costs. Research and development expenses also include costs related to activities performed under contracts with biopharmaceutical and pharmaceutical companies. Research and development costs are expensed as incurred. The Company enters into collaboration and clinical trial agreements with clinical collaborators and records these costs as research and development expenses. The Company records accruals for estimated study costs comprised of work performed by its collaborators under contract terms. Advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized and recognized as expense as the goods are delivered or the related services are performed. |
Share-based Compensation | Stock‑based Compensation The Company uses the Black‑Scholes option valuation model, single‑option approach, which requires the use of estimates such as stock price volatility and expected option lives, as well as expected option forfeiture rates, to value employee stock‑based compensation at the date of grant, and recognizes stock‑based compensation expense ratably over the requisite service period. Equity instruments granted to non‑employees are also valued using the Black‑Scholes option valuation model and are subject to periodic revaluation over their vesting terms. The Company did not grant any stock options to non‑employees during any of the years presented. |
401(k) Plan | 401(k) Plan Substantially all of the Company’s employees are eligible to participate in its defined contribution plan qualified under Section 401(k) of the Internal Revenue Code. The Company contributed dollar for dollar matching of employee contributions up to a maximum of $4,000 for each of the years ended December 31, 2018, 2017 and 2016, respectively, for each employee per year based on a full calendar year of service. The match is funded concurrently with a participant’s semi‑monthly contributions to the 401(k) Plan. The Company recorded expense for its contributions under the 401(k) Plan of $3.6 million, $2.9 million and $3.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
Foreign Currency Transactions | Foreign Currency Transactions Net foreign currency transaction gains or losses are included in other income (expense), net on the Company’s consolidated statements of operations. Net foreign currency transaction gains (losses) totaled $(277,000), $317,000 and $(782,000) for the years ended December 31, 2018, 2017 and 2016, respectively. |
Comprehensive Gain or Loss | Comprehensive Gain or Loss Other comprehensive gain or loss consists of unrealized gains and losses on available‑for‑sale securities. |
Leases | Leases The Company enters into lease agreements for its laboratory and office facilities. These leases are classified as operating leases. Rental expense is recognized on a straight‑line basis over the term of the lease. Incentives granted under the Company’s facilities leases, including allowances to fund leasehold improvements and rent holidays, are capitalized and are recognized as reductions to rental expense on a straight‑line basis over the term of the lease. |
Guarantees and Indemnifications | Guarantees and Indemnifications The Company, as permitted under Delaware law and in accordance with its bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a directors and officers insurance policy that limits its exposure and may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of December 31, 2018 and 2017. |
Recently Issued Accounting Pronouncements | Recently Adopted 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 ASC 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. The Company adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Upon adoption, the Company recognized the cumulative effect of adopting this guidance as an adjustment to its opening accumulated deficit balance. The Company recorded an increase to opening accounts receivable, net, and a reduction to opening accumulated deficit of $14.1 million. as of January 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact related to certain payors who were not accrual payors. See Note 2, “ Revenues ” for additional information. 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 Company adopted the ASU as of January 1, 2018 using the modified retrospective method for marketable equity securities and the prospective method for non-marketable equity securities. The Company recorded a reduction to accumulated deficit of $180,000 as of January 1, 2018 due to the cumulative impact of adopting the ASU, with the impact related to unrealized loss on Biocartis’ common stock at December 31, 2017. The Company has elected to use the measurement alternative for its non-marketable equity securities, defined as cost adjusted for changes from observable transactions for identical or similar investments of the same issuer, less impairment. The adoption of ASU 2016-01 increases the volatility of other income (expense), net, as a result of the remeasurement of the Company’s investments in equity securities. In November 2016, the FASB issued ASU Nos. 2016-15 and 2016-18 amending the presentation of restricted cash within the statement of cash flows. The guidance requires that restricted cash be included within cash and cash equivalents on the statement of cash flows. The ASU became effective retrospectively for reporting periods beginning after December 15, 2017. The Company adopted these standards effective January 1, 2018. Recently Issued Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new guidance requires the lessees to recognize a right-of-use asset and a lease liability on the balance sheet for almost all leases. Additional qualitative and quantitative disclosures will also be required. The ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company will adopt the new standard effective January 1, 2019 using the modified retrospective method and will not restate comparative periods. As permitted under the transition guidance, the Company will carry forward the assessment of whether its contracts contain or are leases, classification of its leases and remaining lease terms. Based on the Company’s portfolio of leases as of December 31, 2018, approximately $18 million of lease assets and $23 million of lease liabilities will be recognized on its consolidated balance sheets upon adoption, primarily relating to real estate. The Company is substantially complete with its implementation efforts. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires measurement and recognition of expected credit losses for financial assets. This guidance will become effective for the Company beginning January 1, 2020 with early adoption permitted. The Company is evaluating the impact of the adoption of this standard on its consolidated financial statements. |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue | |
Schedule of product revenues disaggregated by revenue source and geographic region | United States Outside of the United States Total (In thousands) Invasive breast cancer test $ 299,415 $ 58,795 $ 358,210 Prostate cancer test 26,814 190 27,004 Other 8,453 444 8,897 Total revenues $ 334,682 $ 59,429 $ 394,111 |
ASU 2014-09 | |
Revenue | |
Schedule of the impact of adoption on the Company’s consolidated balance sheet and statement of operations | As Reported Balance Without Adoption of ASC 606 Adjustments (In thousands) Income statement Year Ended December 31, 2018 Revenues: Product revenues 394,111 394,759 (648) Operating expenses: General and administrative 76,910 80,024 (3,114) Net income 25,677 23,211 2,466 Balance Sheet at December 31, 2018 Assets: Accounts receivable, net 51,531 31,090 20,441 Equity: Accumulated deficit (206,325) (222,914) 16,589 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Net Income (Loss) Per Share | |
Schedule of reconciliation of numerator and denominator used in calculation of basic and diluted net income (loss) per share | Year Ended December 31, 2018 2017 2016 (In thousands except per share data) Numerator: Net income (loss) $ 25,677 $ (3,857) $ (13,919) Denominator: Weighted-average shares of common stock outstanding used in the calculation of basic net income (loss) per share 35,727 34,495 33,264 Effect of dilutive securities: Options to purchase common stock 1,311 — — Restricted stock units 490 ESPP 27 — — Total 1,828 — — Weighted-average shares of common stock outstanding used in the calculation of diluted net income (loss) per share 37,555 34,495 33,264 Basic net income (loss) per share $ 0.72 $ (0.11) $ (0.42) Diluted net income (loss) per share $ 0.68 $ (0.11) $ (0.42) |
Cash, Cash Equivalents, Restr_2
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities | |
Schedule of cash, cash equivalents, restricted cash and marketable securities | December 31, December 31, 2018 2017 (In thousands) Cash, cash equivalents, and restricted cash Cash $ 49,046 $ 35,303 Money market deposits 10,364 10,215 Commercial paper 2,235 - Restricted cash (1) 272 190 Total cash, cash equivalents and restricted cash 61,917 45,708 Marketable securities Commercial paper 70,162 30,272 Corporate debt securities 78,981 50,260 Corporate equity securities 3,072 3,525 Total marketable securities 152,215 84,057 Total cash and cash equivalents, restricted cash and marketable securities $ 214,132 $ 129,765 (1) Restricted cash is included in Other assets on the consolidated balance sheet. |
Summary of available-for-sale securities | December 31, 2018 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 72,455 $ — $ (58) $ 72,397 Corporate debt securities 79,009 18 (46) 78,981 Total $ 151,464 $ 18 $ (104) $ 151,378 December 31, 2017 Cost or Gross Gross Total Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value (In thousands) Commercial paper $ 30,315 $ — $ (43) $ 30,272 Corporate debt securities 50,331 2 (73) 50,260 Corporate equity securities 4,020 — (495) 3,525 Total $ 84,666 $ 2 $ (611) $ 84,057 |
Schedule of the breakdown of available-for-sale marketable securities with unrealized losses | In a Loss Position for Less Than 12 Months Gross Unrealized Estimated Losses Fair Value (In thousands) As of December 31, 2018: Commercial paper $ (58) $ 59,423 Corporate debt securities (46) 37,608 Total $ (104) $ 97,031 As of December 31, 2017: Commercial paper $ (43) $ 30,272 Corporate debt securities (73) 45,110 Corporate equity securities (495) 3,525 Total $ (611) $ 78,907 |
Summary of fixed maturity securities by contractual maturity | December 31, 2018 December 31, 2017 Amortized Estimated Amortized Estimated Cost Fair Value Cost Fair Value (In thousands) Due in one year or less $ 147,398 $ 147,312 $ 84,666 $ 84,057 Due in more than one year but less than five years 4,066 4,066 — — Total $ 151,464 $ 151,378 $ 84,666 $ 84,057 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Schedule of financial instruments measured at fair value on recurring basis | Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2018 (In thousands) As of December 31, 2018: Assets Money market deposits $ 10,364 $ — $ — $ 10,364 Commercial paper — 72,397 — 72,397 Corporate debt securities — 78,981 — 78,981 Corporate equity securities 3,072 — — 3,072 Total $ 13,436 $ 151,378 $ — $ 164,814 Liabilities Foreign exchange derivative instruments $ — $ 135 — $ 135 Total $ — $ 135 $ — $ 135 Actively Quoted Significant Markets for Other Significant Identical Observable Unobservable Balance at Assets Inputs Inputs December 31, Level 1 Level 2 Level 3 2017 (In thousands) As of December 31, 2017: Assets Money market deposits $ 10,215 $ — $ — $ 10,215 Commercial paper — 30,272 — 30,272 Corporate debt securities — 50,260 — 50,260 Corporate equity securities — 3,525 — 3,525 Convertible promissory note — — 1,329 1,329 Total $ 10,215 $ 84,057 $ 1,329 $ 95,601 Liabilities Foreign exchange derivative instruments $ — $ 203 — $ 203 Total $ — $ 203 $ — $ 203 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Summary of the Company's property and equipment | December 31, 2018 2017 (In thousands) Laboratory equipment $ 32,669 $ 37,560 Computer equipment 10,385 10,498 Computer software—internal use 30,145 26,483 Furniture and fixtures 5,240 4,749 Leasehold improvements 29,960 29,126 Work in progress 3,597 3,698 111,996 112,114 Less accumulated depreciation and amortization (72,464) (65,674) Total $ 39,532 $ 46,440 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | |
Summary of the Company's accrued expenses and other current liabilities | December 31, 2018 2017 (In thousands) Accrued expenses $ 5,391 $ 7,197 Accrued professional and other service fees 2,592 3,114 Accrued refunds 120 87 Accrued rebate 773 407 Accrued collaboration expense 5,184 2,532 Accrued taxes payable 1,097 746 Deferred rent 688 — Other current liabilities 25 1 Total $ 15,870 $ 14,084 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Schedule of future non-cancelable commitments under operating leases | Annual Payments (In thousands) Years Ending December 31, 2019 $ 6,831 2020 7,161 2021 4,911 2022 4,173 2023 1,081 2024 and thereafter — Total minimum payments $ 24,157 |
Capital Stock (Tables)
Capital Stock (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Capital Stock | |
Schedule of shares of common stock reserved for future issuance | Number of Shares (In thousands) Shares to be issued upon exercise of outstanding stock options and vesting of RSUs 3,926 Shares available for future stock option and RSU grants, settlement of employee stock purchase plan (ESPP) and restricted stock to be issued to outside directors in lieu of director fees 4,152 Shares of common stock reserved for future issuance 8,078 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Summary of option activity | Weighted-Average Outstanding Options Remaining Aggregate Number of Weighted-Average Contractual Intrinsic Shares Exercise Price Life Value (In thousands) (In years) (In thousands) Balance at December 31, 2017 3,460 $ 26.42 Options granted 667 $ 35.12 Options exercised (907) $ 23.42 Options forfeited (137) $ 29.79 Options expired — $ 25.59 Balance at December 31, 2018 3,083 $ 29.03 6.3 $ 109,074 Exercisable at December 31, 2018 1,983 $ 27.42 5.0 $ 73,341 Vested and expected to vest at December 31, 2018 3,016 $ 28.97 6.2 $ 106,871 |
Summary of RSU activity | Weighted-Average Number of Grant Date Fair Shares Value (In thousands) Balance at December 31, 2017 964 $ 28.25 RSUs granted 544 $ 34.78 RSUs vested (437) $ 28.67 RSUs cancelled (228) $ 30.25 Balance at December 31, 2018 843 $ 31.70 |
Schedule of weighted-average fair values and assumptions used in calculation of fair value of stock options and employee stock purchase plan | Year Ended December 31, 2018 2017 2016 Expected volatility: Stock options 39 % 40 % 44 % ESPP 36 % 33 % 44 % Risk-free interest rate: Stock options 2.60 % 2.01 % 1.36 % ESPP 1.87 % 0.91 % 0.47 % Expected life in years: Stock options 6.29 6.22 6.10 ESPP 0.50 0.50 0.50 Weighted-average fair value: Stock options $ 14.99 $ 11.83 $ 11.73 ESPP $ 9.70 $ 7.16 $ 7.35 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Summary of total revenue from customers by geographic region | Year Ended December 31, 2018 2017 2016 (In thousands) United States $ 334,682 $ 287,662 $ 281,077 Outside of the United States 59,429 53,088 46,791 Total revenues $ 394,111 $ 340,750 $ 327,868 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of components of the Company's income (loss) before income taxes | Year Ended December 31, 2018 2017 2016 (In thousands) Domestic $ 23,531 $ (5,404) $ (14,676) Foreign 3,393 3,051 2,138 Total income (loss) before income taxes $ 26,924 $ (2,353) $ (12,538) |
Schedule of components of the Company's income tax expense | Year Ended December 31, 2018 2017 2016 (In thousands) Current expense (benefit): Federal $ — $ (140) $ 18 State 106 31 67 Foreign 861 792 569 Deferred tax expense: Federal — 792 702 State — 29 25 Foreign 280 — — Total income tax expense $ 1,247 $ 1,504 $ 1,381 |
Schedule of reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate | Year Ended December 31, 2018 2017 2016 (In thousands) Federal tax at statutory rate $ 5,654 $ (824) $ (4,388) Stock-based compensation (5,173) (687) 867 Non-deductible meals and entertainment 488 534 530 Net operating losses (used) not used (2,739) 1,846 3,705 Tax effect on available-for-sale securities — 792 702 Impact of foreign earnings 2,321 185 — Foreign tax 428 (279) (179) Federal AMT refundable credit — (122) — State tax, net of federal benefit 84 39 68 Other 184 20 76 Total income tax expense $ 1,247 $ 1,504 $ 1,381 |
Schedule of significant components of deferred tax assets and liabilities | December 31, 2018 2017 (In thousands) Deferred tax assets: Net operating loss carryforwards $ 29,620 $ 34,450 Stock-based compensation 8,120 8,120 Research tax credits 23,220 21,710 Fixed assets 280 690 Accrued compensation 4,990 3,070 Other 7,400 7,150 Total deferred tax assets before valuation allowance 73,630 75,190 Valuation allowance (73,630) (75,190) Total deferred tax assets — — Deferred tax liabilities: Other (280) — Total deferred tax liabilities (280) — Net deferred tax liabilities $ (280) $ — |
Summary of the activity related to unrecognized tax benefits | Year Ended December 31, 2018 2017 2016 (In thousands) Balance at January 1 $ 2,409 $ 2,078 $ 2,847 Increase (decrease) related to prior year tax positions 3,047 — (1,076) Increase related to current year tax positions 985 331 307 Balance at December 31 $ 6,441 $ 2,409 $ 2,078 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of selected quarterly unaudited consolidated statement of operations information | Quarter Ended March 31, June 30, September 30, December 31, (In thousands, except per share data) 2018: Total revenues $ 92,625 $ 95,619 $ 101,258 $ 104,609 Product revenues 92,625 95,619 101,258 104,609 Cost of product revenues 18,733 14,383 15,518 15,692 Net income (loss) (3,775) 8,317 12,225 8,910 Basic net income (loss) per common share $ (0.11) $ 0.23 $ 0.34 $ 0.25 Diluted net income (loss) per common share $ (0.11) $ 0.23 $ 0.32 $ 0.23 2017: Total revenues $ 83,979 $ 85,487 $ 83,821 $ 87,463 Product revenues 83,979 85,487 83,821 87,164 Cost of product revenues 13,672 13,798 13,433 13,814 Net income (loss) (806) (2,739) (2,191) 1,879 Basic net income (loss) per common share $ (0.02) $ (0.08) $ (0.06) $ 0.05 Diluted net income (loss) per common share $ (0.02) $ (0.08) $ (0.06) $ 0.05 |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Principles of Consolidation) (Details) | 12 Months Ended |
Dec. 31, 2018subsidiary | |
Principles of Consolidation | |
Number of wholly-owned subsidiaries | 2 |
Genomic Health International Holdings, LLC | |
Principles of Consolidation | |
Number of wholly-owned subsidiaries | 8 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Marketable Securities-Biocartis) (Details) € in Millions | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017EUR (€)shares | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($)shares | |
Marketable Securities | ||||||
Accumulated deficit | $ (206,325,000) | $ (245,945,000) | ||||
Biocartis N.V. | ||||||
Marketable Securities | ||||||
Amount invested in shares of common stock | € 3.4 | $ 4,000,000 | ||||
Estimated fair value, equity securities | € 3 | $ 3,500,000 | ||||
Unrealized losses recorded in other comprehensive income | $ 180,000 | |||||
Biocartis N.V. | Research and development | ||||||
Marketable Securities | ||||||
Discount relating to lock-up agreement | 322,000 | |||||
Biocartis N.V. | Other income (expense) | ||||||
Marketable Securities | ||||||
Foreign currency revaluation gain (loss) | $ 7,000 | |||||
Biocartis N.V. | Common Stock | ||||||
Marketable Securities | ||||||
Number of shares purchased | shares | 270,000 | 270,000 | ||||
ASU 2016-01 | ||||||
Marketable Securities | ||||||
Accumulated deficit | $ 180,000 | |||||
ASU 2016-01 | Biocartis N.V. | ||||||
Marketable Securities | ||||||
Unrealized gain (loss) on revaluation of equity investment | (296,000) | |||||
ASU 2016-01 | Biocartis N.V. | Other income (expense) | ||||||
Marketable Securities | ||||||
Unrealized gain (loss) on revaluation of equity investment | (296,000) | |||||
Foreign currency revaluation gain (loss) | $ (157,000) |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies (Marketable Securities-Invitae) (Details) - Invitae - USD ($) $ in Millions | Feb. 18, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Marketable Securities | ||||
Carrying value | $ 7.3 | $ 13.9 | ||
Estimated fair value, equity securities | $ 9.3 | $ 18.1 | ||
Common Stock | ||||
Marketable Securities | ||||
Number of shares of common stock issued from conversion | 2,207,793 |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies (Marketable Securities Sold) (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Marketable Securities | ||||
Amount reclassified out of accumulated other comprehensive income | $ 1,126,000 | $ 1,854,000 | ||
Invitae | ||||
Marketable Securities | ||||
Estimated fair value, equity securities | 9,300,000 | $ 18,100,000 | ||
Carrying value | 7,300,000 | $ 13,900,000 | ||
Invitae | Sale | ||||
Marketable Securities | ||||
Proceeds from sales of marketable securities | $ 10,200,000 | |||
Cost per share (in dollars per share) | $ 6.28 | |||
Realized gains on available-for-sale marketable securities | $ 2,800,000 | |||
Invitae | Common Stock | Sale | ||||
Marketable Securities | ||||
Proceeds from sales of marketable securities | $ 9,700,000 | |||
Cost per share (in dollars per share) | $ 6.28 | |||
Realized gains on available-for-sale marketable securities | $ 3,200,000 | |||
Amount reclassified out of accumulated other comprehensive income | 1,100,000 | 1,900,000 | ||
Amount reclassified out of accumulated other comprehensive income, tax portion | $ 820,000 | $ 727,000 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies (Concentration of Risk) (Details) - Medicare | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Product revenues | Customer | |||
Concentration of Risk | |||
Concentration risk percentage | 24.00% | 22.00% | 21.00% |
Net accounts receivable | Credit | |||
Concentration of Risk | |||
Concentration risk percentage | 17.00% | 23.00% |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies (Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for Doubtful Accounts | |||
Bad debt expense | $ 0 | $ 6,800 | $ 7,900 |
Allowance for doubtful accounts | 0 | 3,884 | |
Write-offs for doubtful accounts recorded against allowance | $ 3,900 | $ 7,200 |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies (Property and Equipment and Internal-use Software) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and equipment | Minimum | |||
Property and Equipment | |||
Estimated useful lives of the assets | 3 years | ||
Property and equipment | Maximum | |||
Property and Equipment | |||
Estimated useful lives of the assets | 7 years | ||
Computer software—internal use | |||
Internal-use Software | |||
Costs to develop internal-use software capitalized | $ 3.7 | $ 5.1 | $ 3.4 |
Personnel-related expenses | 2.1 | 2.7 | 1.2 |
Amortization | $ 3.8 | $ 3.2 | $ 2.5 |
Organization and Summary of _10
Organization and Summary of Significant Accounting Policies (Investments in Privately Held Companies) (Details) - USD ($) $ in Thousands | Mar. 08, 2017 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Investments in Privately Held Companies | |||||
Debt securities fair value | $ 151,378 | $ 84,057 | |||
Amount invested | 172,563 | 109,249 | $ 69,722 | ||
Marketable Securities | 152,215 | 84,057 | |||
Unrealized gain on equity securities | 875 | 7 | |||
Epic Sciences, Inc. | Subordinated convertible promissory notes | |||||
Investments in Privately Held Companies | |||||
Amount invested in notes | 1,400 | $ 6,100 | |||
Debt securities fair value | $ 7,100 | ||||
Epic Sciences, Inc. | Preferred stock | |||||
Investments in Privately Held Companies | |||||
Percentage of ownership interest in private company | 9.00% | 8.00% | |||
Amount invested | $ 2,500 | ||||
Marketable Securities | 10,800 | 10,800 | |||
Corporate equity securities | $ 8,300 | 8,300 | |||
Unrealized gain on equity securities | $ 1,200 | ||||
Cleveland Diagnostics | Convertible promissory notes | |||||
Investments in Privately Held Companies | |||||
Amount invested in notes | 2,000 | ||||
Debt securities fair value | $ 1,300 |
Organization and Summary of _11
Organization and Summary of Significant Accounting Policies (Derivative Financial Instruments) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Foreign exchange forward contract | ||
Derivative Financial Instruments | ||
Notional amount | $ 17.1 | $ 16.1 |
Organization and Summary of _12
Organization and Summary of Significant Accounting Policies (Impairment of Long-Lived Assets) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Previously capitalized equipment and software development costs | |
Impairment of Long-lived Assets | |
Impairments | $ 4.8 |
Organization and Summary of _13
Organization and Summary of Significant Accounting Policies (401k plan and Foreign Currency Transactions) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
401(k) Plan | |||
Maximum amount of matching employer contribution for each employee per year | $ 4,000 | $ 4,000 | $ 4,000 |
Contributions expensed | 3,600,000 | 2,900,000 | 3,500,000 |
Foreign Currency Transactions | |||
Net foreign currency gains (losses) | $ (277,000) | $ 317,000 | $ (782,000) |
Organization and Summary of _14
Organization and Summary of Significant Accounting Policies (Recently Issued Accounting Pronouncements) (Details) - USD ($) | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Recently Issued Accounting Pronouncements | ||||
Accounts receivable, net | $ 51,531,000 | $ 31,161,000 | ||
Retained earnings (deficit) | (206,325,000) | $ (245,945,000) | ||
ASU 2016-01 | ||||
Recently Issued Accounting Pronouncements | ||||
Retained earnings (deficit) | $ 180,000 | |||
Restatement adjustment | ASU 2016-02 | ||||
Recently Issued Accounting Pronouncements | ||||
Lease assets | $ 18,000,000 | |||
Lease liabilities | $ 23,000,000 | |||
Adjustments | ASU 2014-09 | ||||
Recently Issued Accounting Pronouncements | ||||
Accounts receivable, net | 20,441,000 | 14,100,000 | ||
Retained earnings (deficit) | $ 16,589,000 | $ 14,100,000 |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Revenues: | ||||||||||||
Total revenues | $ 104,609 | $ 101,258 | $ 95,619 | $ 92,625 | $ 87,164 | $ 83,821 | $ 85,487 | $ 83,979 | $ 394,111 | $ 340,750 | $ 327,868 | |
Operating expenses: | ||||||||||||
General and administrative | 76,910 | 72,670 | 73,272 | |||||||||
Net income | 8,910 | $ 12,225 | $ 8,317 | $ (3,775) | 1,879 | $ (2,191) | $ (2,739) | $ (806) | 25,677 | (3,857) | $ (13,919) | |
Assets: | ||||||||||||
Accounts receivable, net | 51,531 | 31,161 | 51,531 | 31,161 | ||||||||
Equity: | ||||||||||||
Accumulated deficit | (206,325) | $ (245,945) | (206,325) | $ (245,945) | ||||||||
Balance Without Adoption of ASC 606 | ASU 2014-09 | ||||||||||||
Revenues: | ||||||||||||
Total revenues | 394,759 | |||||||||||
Operating expenses: | ||||||||||||
General and administrative | 80,024 | |||||||||||
Net income | 23,211 | |||||||||||
Assets: | ||||||||||||
Accounts receivable, net | 31,090 | 31,090 | ||||||||||
Equity: | ||||||||||||
Accumulated deficit | (222,914) | (222,914) | ||||||||||
Adjustments | ASU 2014-09 | ||||||||||||
Revenues: | ||||||||||||
Total revenues | (648) | |||||||||||
Operating expenses: | ||||||||||||
General and administrative | (3,114) | |||||||||||
Net income | 2,466 | |||||||||||
Assets: | ||||||||||||
Accounts receivable, net | 20,441 | 20,441 | $ 14,100 | |||||||||
Equity: | ||||||||||||
Accumulated deficit | $ 16,589 | $ 16,589 | $ 14,100 |
Revenues (Revenue Recognition)
Revenues (Revenue Recognition) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of Revenue | |||||||||||
Total revenues | $ 104,609 | $ 101,258 | $ 95,619 | $ 92,625 | $ 87,164 | $ 83,821 | $ 85,487 | $ 83,979 | $ 394,111 | $ 340,750 | $ 327,868 |
Diluted net income ( loss) per common share (in dollars per share) | $ 0.23 | $ 0.32 | $ 0.23 | $ (0.11) | $ 0.05 | $ (0.06) | $ (0.08) | $ (0.02) | $ 0.68 | $ (0.11) | $ (0.42) |
Change in Estimate | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | $ 3,500 | $ 6,300 | |||||||||
Diluted net income ( loss) per common share (in dollars per share) | $ 0.09 | $ 0.16 |
Revenues (Disaggregation of Rev
Revenues (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation of Revenue | |||||||||||
Total revenues | $ 104,609 | $ 101,258 | $ 95,619 | $ 92,625 | $ 87,164 | $ 83,821 | $ 85,487 | $ 83,979 | $ 394,111 | $ 340,750 | $ 327,868 |
Product | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 394,111 | 340,451 | 326,918 | ||||||||
Invasive breast cancer test | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 358,210 | ||||||||||
Prostate cancer test | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 27,004 | ||||||||||
Other | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 8,897 | ||||||||||
Contract | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 299 | 950 | |||||||||
United States | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 334,682 | 287,662 | 281,077 | ||||||||
United States | Invasive breast cancer test | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 299,415 | ||||||||||
United States | Prostate cancer test | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 26,814 | ||||||||||
United States | Other | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 8,453 | ||||||||||
Outside of the United States | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 59,429 | $ 53,088 | $ 46,791 | ||||||||
Outside of the United States | Invasive breast cancer test | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 58,795 | ||||||||||
Outside of the United States | Prostate cancer test | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | 190 | ||||||||||
Outside of the United States | Other | |||||||||||
Disaggregation of Revenue | |||||||||||
Total revenues | $ 444 |
Net Income (Loss) Per Share (Ca
Net Income (Loss) Per Share (Calculation) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | |||||||||||
Net income (loss) | $ 25,677 | $ (3,857) | $ (13,919) | ||||||||
Denominator: | |||||||||||
Weighted-average shares of common stock outstanding used in the calculation of basic net income (loss) per share | 35,727 | 34,495 | 33,264 | ||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 1,828 | ||||||||||
Weighted-average shares of common stock outstanding used in the calculation of diluted net income (loss) per share | 37,555 | 34,495 | 33,264 | ||||||||
Basic net income (loss) per share (in dollars per share) | $ 0.25 | $ 0.34 | $ 0.23 | $ (0.11) | $ 0.05 | $ (0.06) | $ (0.08) | $ (0.02) | $ 0.72 | $ (0.11) | $ (0.42) |
Diluted net income (loss) per share (in dollars per share) | $ 0.23 | $ 0.32 | $ 0.23 | $ (0.11) | $ 0.05 | $ (0.06) | $ (0.08) | $ (0.02) | $ 0.68 | $ (0.11) | $ (0.42) |
Stock Options | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 1,311 | ||||||||||
Restricted stock units | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 490 | ||||||||||
Employee Stock Purchase Plan | |||||||||||
Effect of dilutive securities: | |||||||||||
Effect of dilutive securities (in shares) | 27 |
Net Income (Loss) Per Share (Di
Net Income (Loss) Per Share (Dilutive stock awards excluded) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net Income (Loss) Per Share | |||
Stock awards excluded from the computation (in shares) | 46,000 | 800,000 | 828,000 |
Cash and Cash Equivalents, Rest
Cash and Cash Equivalents, Restricted Cash, and Marketable Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Marketable Securities | ||||
Total cash, cash equivalents and restricted cash | $ 61,917 | $ 45,708 | $ 40,585 | $ 32,720 |
Total marketable securities | 152,215 | 84,057 | ||
Total cash and cash equivalents, and marketable securities | 214,132 | 129,765 | ||
Commercial paper | ||||
Marketable Securities | ||||
Total marketable securities | 70,162 | 30,272 | ||
Corporate debt securities | ||||
Marketable Securities | ||||
Total marketable securities | 78,981 | 50,260 | ||
Corporate equity securities | ||||
Marketable Securities | ||||
Total marketable securities | 3,072 | 3,525 | ||
Cash | ||||
Marketable Securities | ||||
Total cash, cash equivalents and restricted cash | 49,046 | 35,303 | ||
Money market deposits | ||||
Marketable Securities | ||||
Total cash, cash equivalents and restricted cash | 10,364 | 10,215 | ||
Commercial paper | ||||
Marketable Securities | ||||
Total cash, cash equivalents and restricted cash | 2,235 | |||
Restricted cash | ||||
Marketable Securities | ||||
Total cash, cash equivalents and restricted cash | $ 272 | $ 190 |
Cash, Cash Equivalents, Restr_3
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (Available-for-sale Securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt securities | ||
Total | $ 151,464 | $ 84,666 |
Gross Unrealized Gains, Debt Securities | 18 | |
Gross Unrealized Losses, Debt Securities | (104) | |
Debt securities | 151,378 | 84,057 |
Available-for-sale securities | ||
Cost or Amortized Cost | 84,666 | |
Gross Unrealized Gains | 2 | |
Gross Unrealized Losses | (611) | |
Total Estimated Fair Value | 84,057 | |
Commercial paper | ||
Debt securities | ||
Total | 72,455 | |
Gross Unrealized Losses, Debt Securities | (58) | |
Debt securities | 72,397 | |
Available-for-sale securities | ||
Cost or Amortized Cost | 30,315 | |
Gross Unrealized Losses | (43) | |
Total Estimated Fair Value | 30,272 | |
Corporate debt securities | ||
Debt securities | ||
Total | 79,009 | |
Gross Unrealized Gains, Debt Securities | 18 | |
Gross Unrealized Losses, Debt Securities | (46) | |
Debt securities | $ 78,981 | |
Available-for-sale securities | ||
Cost or Amortized Cost | 50,331 | |
Gross Unrealized Gains | 2 | |
Gross Unrealized Losses | (73) | |
Total Estimated Fair Value | 50,260 | |
Corporate equity securities | ||
Available-for-sale securities | ||
Cost or Amortized Cost | 4,020 | |
Gross Unrealized Losses | (495) | |
Total Estimated Fair Value | $ 3,525 |
Cash, Cash Equivalents, Restr_4
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (Realized gains) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities | ||
Gain on sale of equity securities | $ 2,807 | $ 3,208 |
Cash, Cash Equivalents, Restr_5
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (Available-For-Sale Marketable Securities with Unrealized losses) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Marketable Securities [Line Items] | ||
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | $ (104) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | 97,031 | |
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | $ (611) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | 78,907 | |
Commercial paper | ||
Marketable Securities [Line Items] | ||
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | (58) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | 59,423 | |
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | (43) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | 30,272 | |
Corporate debt securities | ||
Marketable Securities [Line Items] | ||
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | (46) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | $ 37,608 | |
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | (73) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | 45,110 | |
Corporate equity securities | ||
Marketable Securities [Line Items] | ||
In a Loss Position for Less Than 12 Months, Gross Unrealized Losses | (495) | |
In a Loss Position for Less Than 12 Months, Estimated Fair Value | $ 3,525 |
Cash, Cash Equivalents, Restr_6
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (Contractual Maturity) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Amortized Cost | ||
Due in one year or less | $ 147,398 | $ 84,666 |
Due in more than one year but less than five years | 4,066 | |
Total | 151,464 | 84,666 |
Estimated Fair Value | ||
Due in one year or less | 147,312 | 84,057 |
Due in more than one year but less than five years | 4,066 | |
Total | $ 151,378 | $ 84,057 |
Cash, Cash Equivalents, Restr_7
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities (ASU 2016-01 and Biocartis) (Details) € in Millions | 1 Months Ended | 12 Months Ended | ||||
Dec. 31, 2017EUR (€)shares | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($)shares | |
Marketable Securities | ||||||
Retained earnings (deficit) | $ (206,325,000) | $ (245,945,000) | ||||
Biocartis N.V. | ||||||
Marketable Securities | ||||||
Amount invested in shares of common stock | € 3.4 | $ 4,000,000 | ||||
Estimated fair value, equity securities | € 3 | $ 3,500,000 | ||||
Unrealized losses recorded in other comprehensive income | $ 180,000 | |||||
Biocartis N.V. | Research and development | ||||||
Marketable Securities | ||||||
Discount relating to lock-up agreement | 322,000 | |||||
Biocartis N.V. | Other income (expense) | ||||||
Marketable Securities | ||||||
Foreign currency revaluation gain (loss) | $ 7,000 | |||||
Biocartis N.V. | Common Stock | ||||||
Marketable Securities | ||||||
Number of shares purchased | shares | 270,000 | 270,000 | ||||
ASU 2016-01 | ||||||
Marketable Securities | ||||||
Retained earnings (deficit) | $ 180,000 | |||||
ASU 2016-01 | Biocartis N.V. | ||||||
Marketable Securities | ||||||
Unrealized gain (loss) on revaluation of equity investment | (296,000) | |||||
ASU 2016-01 | Biocartis N.V. | Other income (expense) | ||||||
Marketable Securities | ||||||
Unrealized gain (loss) on revaluation of equity investment | (296,000) | |||||
Foreign currency revaluation gain (loss) | $ (157,000) |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Debt securities | $ 151,378 | $ 84,057 |
Liabilities | ||
Transfer of assets from level 1 to level 2 | 0 | 0 |
Transfer of assets from level 2 to level 1 | 0 | 0 |
Transfer of liabilities from level 1 to level 2 | 0 | 0 |
Transfer of liabilities from level 2 to level 1 | 0 | 0 |
Commercial paper | ||
Assets | ||
Debt securities | 72,397 | |
Corporate debt securities | ||
Assets | ||
Debt securities | 78,981 | |
Recurring basis | ||
Assets | ||
Money market deposits | 10,364 | 10,215 |
Corporate equity securities | 3,072 | |
Corporate equity securities | 3,525 | |
Total assets at fair value | 164,814 | 95,601 |
Liabilities | ||
Foreign exchange derivative instruments | 135 | 203 |
Total | 135 | 203 |
Recurring basis | Commercial paper | ||
Assets | ||
Debt securities | 72,397 | 30,272 |
Recurring basis | Corporate debt securities | ||
Assets | ||
Debt securities | 78,981 | 50,260 |
Recurring basis | Convertible promissory notes | ||
Assets | ||
Debt securities | 1,329 | |
Recurring basis | Actively Quoted Markets for Identical Assets Level 1 | ||
Assets | ||
Money market deposits | 10,364 | 10,215 |
Corporate equity securities | 3,072 | |
Total assets at fair value | 13,436 | 10,215 |
Recurring basis | Significant Other Observable Inputs Level 2 | ||
Assets | ||
Corporate equity securities | 3,525 | |
Total assets at fair value | 151,378 | 84,057 |
Liabilities | ||
Foreign exchange derivative instruments | 135 | 203 |
Total | 135 | 203 |
Recurring basis | Significant Other Observable Inputs Level 2 | Commercial paper | ||
Assets | ||
Debt securities | 72,397 | 30,272 |
Recurring basis | Significant Other Observable Inputs Level 2 | Corporate debt securities | ||
Assets | ||
Debt securities | $ 78,981 | 50,260 |
Recurring basis | Significant Unobservable Inputs Level 3 | ||
Assets | ||
Total assets at fair value | 1,329 | |
Recurring basis | Significant Unobservable Inputs Level 3 | Convertible promissory notes | ||
Assets | ||
Debt securities | $ 1,329 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets-Nonrecurring Basis) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 08, 2017 | |
Investment fair value | |||||
Impairment of capitalized software development costs | $ 2,347,000 | $ 76,000 | $ 2,600,000 | ||
Debt securities fair value | 151,378,000 | 84,057,000 | |||
Amount invested | 172,563,000 | 109,249,000 | 69,722,000 | ||
Carrying value | 152,215,000 | 84,057,000 | |||
Unrealized gain on equity securities | 875,000 | 7,000 | |||
Subordinated convertible promissory notes | Epic Sciences, Inc. | |||||
Investment fair value | |||||
Amount invested in notes | 1,400,000 | 6,100,000 | |||
Debt securities fair value | $ 7,100,000 | ||||
Convertible promissory notes | Cleveland Diagnostics | |||||
Investment fair value | |||||
Amount invested in notes | 2,000,000 | ||||
Debt securities fair value | 1,300,000 | ||||
Preferred stock | Epic Sciences, Inc. | |||||
Investment fair value | |||||
Amount invested | $ 2,500,000 | ||||
Carrying value | 10,800,000 | 10,800,000 | |||
Estimated fair value | $ 8,300,000 | 8,300,000 | |||
Unrealized gain on equity securities | 1,200,000 | ||||
Previously capitalized equipment and software development costs | |||||
Investment fair value | |||||
Impairments | 4,800,000 | ||||
Previously capitalized equipment and software development costs | Selling and marketing | |||||
Investment fair value | |||||
Impairments | $ 4,700,000 | 98,000 | |||
Held for sale | Previously capitalized software | Selling and marketing | |||||
Investment fair value | |||||
Impairment of capitalized software development costs | $ 2,600,000 | ||||
Significant Unobservable Inputs Level 3 | Convertible promissory notes | Cleveland Diagnostics | |||||
Investment fair value | |||||
Debt securities fair value | $ 1,300,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment | |||
Property and equipment, gross | $ 111,996 | $ 112,114 | |
Less accumulated depreciation and amortization | (72,464) | (65,674) | |
Total | 39,532 | 46,440 | |
Depreciation and amortization expense | 12,600 | 11,600 | $ 8,800 |
Laboratory equipment | |||
Property and Equipment | |||
Property and equipment, gross | 32,669 | 37,560 | |
Computer equipment | |||
Property and Equipment | |||
Property and equipment, gross | 10,385 | 10,498 | |
Computer software—internal use | |||
Property and Equipment | |||
Property and equipment, gross | 30,145 | 26,483 | |
Furniture and fixtures | |||
Property and Equipment | |||
Property and equipment, gross | 5,240 | 4,749 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, gross | 29,960 | 29,126 | |
Work in progress | |||
Property and Equipment | |||
Property and equipment, gross | $ 3,597 | $ 3,698 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses and Other Current Liabilities | ||
Accrued expenses | $ 5,391 | $ 7,197 |
Accrued professional and other service fees | 2,592 | 3,114 |
Accrued refunds | 120 | 87 |
Accrued rebate | 773 | 407 |
Accrued collaboration expense | 5,184 | 2,532 |
Accrued taxes payable | 1,097 | 746 |
Deferred rent | 688 | |
Other current liabilities | 25 | 1 |
Total | $ 15,870 | $ 14,084 |
Collaboration and Commercial _2
Collaboration and Commercial Technology Licensing Agreements (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Collaboration and specimen transfer agreements | |||
Collaboration agreements | |||
Collaboration expense | $ 10,000,000 | $ 7,300,000 | $ 4,600,000 |
Technology license agreements | Cost of product revenues | |||
Collaboration agreements | |||
Costs recorded under collaborative arrangements | $ 264,000 | $ 314,000 | $ 5,300,000 |
Collaboration and Commercial _3
Collaboration and Commercial Technology Licensing Agreements (GPS and Prostate Study) (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Jul. 31, 2014 | Dec. 31, 2018 | |
Oncotype DX GPS | Minimum | ||
Collaboration agreements | ||
Number of years of active surveillance | 1 year | |
Oncotype DX GPS | Maximum | ||
Collaboration agreements | ||
Number of years of active surveillance | 2 years | |
Prostate and breast cancer agreements | ||
Collaboration agreements | ||
Estimated total remaining obligation, including milestone payments | $ 790,000 |
Collaboration and Commercial _4
Collaboration and Commercial Technology Licensing Agreements (Epic) (Details) | 1 Months Ended | 12 Months Ended | 24 Months Ended | ||||
Dec. 31, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2016USD ($)Milestone | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($) | |
Collaboration agreements | |||||||
Debt securities fair value | $ 151,378,000 | $ 151,378,000 | $ 84,057,000 | $ 84,057,000 | |||
Amount invested | $ 172,563,000 | 109,249,000 | $ 69,722,000 | ||||
Exclusive distribution rights Epic's AR-V7 Nucleus Detect | |||||||
Collaboration agreements | |||||||
Amount invested in notes | 7,500,000 | ||||||
Debt securities fair value | 7,100,000 | 7,100,000 | |||||
Deferred cost | $ 375,000 | $ 375,000 | |||||
Investment in preferred stock per collaboration agreement | $ 2,500,000 | ||||||
Number of milestones needed to be achieved for conversion into preferred stock | Milestone | 1 | ||||||
Obligation upon achievement of certain future milestones | $ 2,000,000 | ||||||
Term of agreement | 10 years | ||||||
Exclusive distribution rights Epic's AR-V7 Nucleus Detect | Corporate equity securities | |||||||
Collaboration agreements | |||||||
Amount invested | $ 2,500,000 | ||||||
Exclusive distribution rights Epic's AR-V7 Nucleus Detect | Corporate equity securities | Other Assets | |||||||
Collaboration agreements | |||||||
Amount invested | $ 2,000,000 |
Collaboration and Commercial _5
Collaboration and Commercial Technology Licensing Agreements (Biocartis) (Details) | 1 Months Ended | 12 Months Ended | ||||||||||
Nov. 30, 2018EUR (€) | Nov. 30, 2018USD ($) | Sep. 30, 2018EUR (€) | Sep. 30, 2018USD ($) | Dec. 31, 2017EUR (€)€ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017EUR (€)€ / shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017USD ($)shares | Sep. 30, 2017EUR (€) | |
Collaboration agreements | ||||||||||||
Amount invested | $ 172,563,000 | $ 109,249,000 | $ 69,722,000 | |||||||||
Exclusive license and development agreement with Biocartis NV | ||||||||||||
Collaboration agreements | ||||||||||||
Number of shares purchased | shares | 270,000 | |||||||||||
Market price | € / shares | € 12.50 | € 12.50 | ||||||||||
Amount invested | € 3,400,000 | $ 4,000,000 | ||||||||||
Estimated fair value | $ 3,100,000 | |||||||||||
Estimated fair value, equity securities | $ 3,500,000 | |||||||||||
Cash obligation upon achievement of certain milestones | € | € 5,500,000 | |||||||||||
Investment expense | € 1,000,000 | $ 1,200,000 | ||||||||||
Exclusive license and development agreement with Biocartis NV | Research and development | ||||||||||||
Collaboration agreements | ||||||||||||
Upfront license and option fee payment | € 2,800,000 | $ 3,200,000 | ||||||||||
Addendum too license and development agreement to include urology | ||||||||||||
Collaboration agreements | ||||||||||||
Collaboration expense | € 2,000,000 | $ 2,300,000 | ||||||||||
Collaborative Arrangement First Right To Additional Test Prostate Cancer [Member] | ||||||||||||
Collaboration agreements | ||||||||||||
Collaboration expense | € 500,000 | $ 575,000 |
Collaboration and Commercial _6
Collaboration and Commercial Technology Licensing Agreements (Cleveland Diagnostics) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | |
Collaboration agreements | |||
Debt securities fair value | $ 84,057 | $ 151,378 | |
Exclusive licensing agreement with Cleveland Diagnostics | Convertible promissory notes | |||
Collaboration agreements | |||
Amount invested in notes | 2,000 | ||
Debt securities fair value | $ 1,300 | ||
Write off of investment | $ 1,400 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)ft²item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Lease Obligations | |||
Rent expense | $ 6,200,000 | $ 6,300,000 | $ 5,700,000 |
Non-cancelable commitments under operating leases | |||
2,019 | 6,831,000 | ||
2,020 | 7,161,000 | ||
2,021 | 4,911,000 | ||
2,022 | 4,173,000 | ||
2,023 | 1,081,000 | ||
Total minimum payments | $ 24,157,000 | ||
Leased laboratory and office space located in Redwood City, California | |||
Lease Obligations | |||
Area leased under non-cancelable operating lease agreement (in square feet) | ft² | 180,700 | ||
Number of non-cancelable operating leases | item | 5 | ||
Period of time for which entity has an option to extend lease term | 5 years | ||
Allowance for certain tenant improvements | $ 214,000 | ||
Leased office space located in Geneva, Switzerland | |||
Lease Obligations | |||
Area leased under non-cancelable operating lease agreement (in square feet) | ft² | 7,500 |
Capital Stock (Details)
Capital Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | 13 Months Ended | |||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2018 | Dec. 31, 2017 | |
Common Stock | |||||
Common stock outstanding (in shares) | 36,407,287 | 35,049,436 | |||
Shares of common stock reserved for future issuance | 8,078,000 | ||||
Treasury Stock | |||||
Amount of common stock to be repurchased on an accelerated basis under accelerated share repurchase agreement | $ 30.1 | ||||
Number of common shares received under accelerated share repurchase agreement | 77,257 | 984,074 | |||
Average purchase price of common stock from the accelerated share repurchase program (in dollars per share) | $ 28.27 | ||||
Shares to be issued upon exercise of outstanding stock options and vesting of RSUs | |||||
Common Stock | |||||
Shares of common stock reserved for future issuance | 3,926,000 | ||||
Shares available for future stock option and RSU grants, settlement of employee stock purchase plan (ESPP) and restricted stock to be issued to outside directors in lieu of director fees | |||||
Common Stock | |||||
Shares of common stock reserved for future issuance | 4,152,000 |
Stock-Based Compensation (2005
Stock-Based Compensation (2005 Stock Incentive Plan) (Details) - 2005 Plan - shares | Jun. 06, 2018 | Jun. 15, 2017 | Jun. 09, 2016 | Jun. 08, 2009 | Dec. 31, 2018 | Sep. 08, 2005 |
Stock awards other than options | ||||||
Shares of common stock reserved for issuance | 5,000,000 | |||||
Increase in shares reserved for issuance | 1,000,000 | 1,500,000 | 1,500,000 | 3,980,000 | ||
Number of each restricted share unit or award | 1.9 | |||||
Shares of common stock available for future grant | 2,954,000 |
Stock-Based Compensation (Stock
Stock-Based Compensation (Stock Option) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Incentive Stock Options | Minimum | |
Additional disclosure related to options | |
Exercise price as a percentage of the fair market value of the company's stock | 100.00% |
Incentive Stock Options | Maximum | |
Additional disclosure related to options | |
Term of incentive stock options from the date of grant | 10 years |
Nonstatutory Stock Options | Outside directors | |
Additional disclosure related to options | |
Exercise price as a percentage of the fair market value of the company's stock | 100.00% |
Nonstatutory Stock Options | Minimum | |
Additional disclosure related to options | |
Exercise price as a percentage of the fair market value of the company's stock | 85.00% |
Nonstatutory Stock Options | Maximum | Outside directors | |
Additional disclosure related to options | |
Term of stock options after termination of the outside directors' service | 12 months |
Nonstatutory Stock Options | End of first year | Outside directors | |
Additional disclosure related to options | |
Vesting percentage | 25.00% |
Nonstatutory Stock Options | After first year | Outside directors | |
Additional disclosure related to options | |
Vesting period | 3 years |
Stock-Based Compensation (Sto_2
Stock-Based Compensation (Stock Option Activity) (Details) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares | |||
Options outstanding at the beginning of the period (in shares) | 3,460 | ||
Options granted (in shares) | 667 | ||
Options exercised (in shares) | (907) | ||
Options forfeited (in shares) | (137) | ||
Options outstanding at the end of the period (in shares) | 3,083 | 3,460 | |
Exercisable at the end of the period (in shares) | 1,983 | ||
Vested and expected to vest at the end of the period (in shares) | 3,016 | ||
Weighted-Average Exercise Price | |||
Options outstanding at the beginning of the period (in dollars per share) | $ 26.42 | ||
Options granted (in dollars per share) | 35.12 | ||
Options exercised (in dollars per share) | 23.42 | ||
Options forfeited (in dollars per share) | 29.79 | ||
Options expired (in dollars per share) | 25.59 | ||
Options outstanding at the end of the period (in dollars per share) | 29.03 | $ 26.42 | |
Exercisable at the end of the period (in dollars per share) | 27.42 | ||
Vested and expected to vest at the end of the period (in dollars per share) | $ 28.97 | ||
Weighted-Average Remaining Contractual Life | |||
Options outstanding at the end of the period | 6 years 3 months 18 days | ||
Exercisable at the end of the period | 5 years | ||
Vested and expected to vest at the end of the period | 6 years 2 months 12 days | ||
Aggregate Intrinsic Value | |||
Options outstanding at the end of the period (in dollars) | $ 109,074 | ||
Exercisable at the end of the period (in dollars) | 73,341 | ||
Vested and expected to vest at the end of the period (in dollars) | 106,871 | ||
Intrinsic value (in dollars) | 29,500 | $ 8,000 | $ 5,600 |
Fair value of shares vested (in dollars) | $ 6,900 | $ 6,200 | $ 5,300 |
Stock-Based Compensation (RSU A
Stock-Based Compensation (RSU Activity) (Details) - Restricted stock units $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)installment$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / shares | |
Stock based compensation | |||
Number of equal annual installments | installment | 3 | ||
Number of Shares | |||
Balance at the beginning of the period (in shares) | shares | 964 | ||
Granted (in shares) | shares | 544 | ||
Vested (in shares) | shares | (437) | ||
Cancelled (in shares) | shares | (228) | ||
Balance at the end of the period (in shares) | shares | 843 | 964 | |
Weighted-Average Grant Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 28.25 | ||
Granted (in dollars per share) | $ / shares | 34.78 | $ 28.35 | $ 27.50 |
Vested (in dollars per share) | $ / shares | 28.67 | ||
Cancelled (in dollars per share) | $ / shares | 30.25 | ||
Balance at the end of the period (in dollars per share) | $ / shares | $ 31.70 | $ 28.25 | |
Additional Disclosure | |||
Fair value (in dollars) | $ | $ 15.5 | $ 12 | $ 8.6 |
Stock-Based Compensation (RSU P
Stock-Based Compensation (RSU Performance Based) (Details) - Restricted stock units - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock based compensation | |||
Granted (in dollars per share) | $ 34.78 | $ 28.35 | $ 27.50 |
Fair value (in dollars) | $ 15,500,000 | $ 12,000,000 | $ 8,600,000 |
Performance-Based Vesting | |||
Stock based compensation | |||
Granted (in dollars per share) | $ 28.09 | ||
Fair value (in dollars) | $ 163,000 |
Stock-Based Compensation (RSU D
Stock-Based Compensation (RSU Directors' Fees) (Details) - Restricted stock units - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock based compensation | |||
Granted (in shares) | 544,000 | ||
Fair value (in dollars) | $ 15,500,000 | $ 12,000,000 | $ 8,600,000 |
Granted (in dollars per share) | $ 34.78 | $ 28.35 | $ 27.50 |
Outside directors | |||
Stock based compensation | |||
Granted (in shares) | 4,755 | 6,375 | 6,970 |
Fair value (in dollars) | $ 200,000 | $ 200,000 | $ 200,000 |
Granted (in dollars per share) | $ 41.97 | $ 31.33 | $ 28.65 |
Stock-Based Compensation (Emplo
Stock-Based Compensation (Employee Stock Purchase Plan) (Details) - Employee Stock Purchase Plan - USD ($) | Jun. 15, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2011 |
Employee Stock Purchase Plan | |||||
Maximum period for offerings under ESPP | 27 months | ||||
Exercise price as a percentage of the fair market value of the company's stock | 85.00% | ||||
Length of purchase period under ESPP | 6 months | ||||
Shares of common stock reserved for issuance | 1,250,000 | ||||
Increase in shares reserved for issuance | 1,250,000 | ||||
Shares of common stock available for future grant | 1,197,627 | ||||
Number of shares issued | 171,086 | 210,880 | 226,303 | ||
Unrecognized compensation expense (in dollars) | $ 941,000 | ||||
Weighted-average period of recognition of unrecognized stock-based compensation expense | 5 months | ||||
Maximum | |||||
Employee Stock Purchase Plan | |||||
Exercise price as a percentage of the fair market value of the company's stock | 85.00% |
Stock-Based Compensation (Emp_2
Stock-Based Compensation (Employee Stock-Based Compensation Expense) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Employee Stock Based Compensation Expense | |||
Stock-based compensation expense (in dollars) | $ 21,100,000 | $ 20,300,000 | $ 18,300,000 |
Stock Options | Unvested Stock Options | |||
Employee Stock Based Compensation Expense | |||
Unrecognized compensation expense (in dollars) | 10,900,000 | ||
Restricted stock units | |||
Employee Stock Based Compensation Expense | |||
Unrecognized compensation expense (in dollars) | $ 15,800,000 | ||
Stock options and restricted stock units | Unvested Stock Options | |||
Employee Stock Based Compensation Expense | |||
Weighted-average period of recognition of unrecognized stock-based compensation expense | 1 year 9 months 18 days | ||
Stock options and restricted stock units | Performance-Based Vesting | |||
Employee Stock Based Compensation Expense | |||
Unrecognized compensation expense (in dollars) | $ 0 |
Stock-Based Compensation (Valua
Stock-Based Compensation (Valuation Assumptions) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted-average fair values and assumptions used in calculation of fair value | |||
Dividend yield (as a percent) | 0.00% | ||
Employee Stock Purchase Plan | |||
Weighted-average fair values and assumptions used in calculation of fair value | |||
Expected volatility (as a percent) | 36.00% | 33.00% | 44.00% |
Risk-free interest rate (as a percent) | 1.87% | 0.91% | 0.47% |
Expected life | 6 months | 6 months | 6 months |
Weighted-average fair value (in dollars per share) | $ 9.70 | $ 7.16 | $ 7.35 |
Stock Options | |||
Weighted-average fair values and assumptions used in calculation of fair value | |||
Expected volatility (as a percent) | 39.00% | 40.00% | 44.00% |
Risk-free interest rate (as a percent) | 2.60% | 2.01% | 1.36% |
Expected life | 6 years 3 months 15 days | 6 years 2 months 19 days | 6 years 1 month 6 days |
Weighted-average fair value (in dollars per share) | $ 14.99 | $ 11.83 | $ 11.73 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($)product | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segmentproduct | Dec. 31, 2017USD ($) | Dec. 31, 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 | $ 104,609 | $ 101,258 | $ 95,619 | $ 92,625 | $ 87,164 | $ 83,821 | $ 85,487 | $ 83,979 | $ 394,111 | $ 340,750 | $ 327,868 |
United States | |||||||||||
Segment information | |||||||||||
Total revenues | 334,682 | 287,662 | 281,077 | ||||||||
Outside of the United States | |||||||||||
Segment information | |||||||||||
Total revenues | $ 59,429 | $ 53,088 | $ 46,791 |
Income Taxes (Components of Inc
Income Taxes (Components of Income (Loss) Before Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Components of income (loss) before income taxes | |||
Domestic | $ 23,531 | $ (5,404) | $ (14,676) |
Foreign | 3,393 | 3,051 | 2,138 |
Income (loss) before income taxes | $ 26,924 | $ (2,353) | $ (12,538) |
Income Taxes (Components of I_2
Income Taxes (Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current expense (benefit): | |||
Federal | $ (140) | $ 18 | |
State | $ 106 | 31 | 67 |
Foreign | 861 | 792 | 569 |
Deferred tax expense: | |||
Federal | 792 | 702 | |
State | 29 | 25 | |
Foreign | 280 | ||
Total income tax expense | $ 1,247 | $ 1,504 | $ 1,381 |
Income Taxes (Reconciliation of
Income Taxes (Reconciliation of Income Tax) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate | |||
Federal tax at statutory rate | $ 5,654 | $ (824) | $ (4,388) |
Stock-based compensation | (5,173) | (687) | 867 |
Non-deductible meals and entertainment | 488 | 534 | 530 |
Net operating losses (used) not used | (2,739) | 1,846 | 3,705 |
Tax effect on available-for-sale securities | 792 | 702 | |
Impact of foreign earnings | 2,321 | 185 | |
Foreign tax | 428 | (279) | (179) |
Federal AMT refundable credit | (122) | ||
State tax, net of federal benefit | 84 | 39 | 68 |
Other | 184 | 20 | 76 |
Total income tax expense | $ 1,247 | $ 1,504 | $ 1,381 |
Income Taxes (Deferred Tax Asse
Income Taxes (Deferred Tax Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 29,620 | $ 34,450 | |
Stock-based compensation | 8,120 | 8,120 | |
Research tax credits | 23,220 | 21,710 | |
Fixed assets | 280 | 690 | |
Accrued compensation | 4,990 | 3,070 | |
Other | 7,400 | 7,150 | |
Total deferred tax assets before valuation allowance | 73,630 | 75,190 | |
Valuation allowance | (73,630) | (75,190) | |
Other | (280) | ||
Total deferred tax liabilities | (280) | ||
Net deferred tax liabilities | (280) | ||
Increase (decrease) in net valuation allowance | $ (1,600) | $ (12,800) | $ 6,100 |
Income Taxes (Net Operating Los
Income Taxes (Net Operating Loss Carryforwards) (Details) $ in Millions | Dec. 31, 2018USD ($) |
Federal | |
Net operating loss carryforwards | |
Net operating loss carryforwards | $ 135 |
State | |
Net operating loss carryforwards | |
Net operating loss carryforwards | $ 60.1 |
Income Taxes (Tax Credit Carryf
Income Taxes (Tax Credit Carryforwards) (Details) - Research and development. $ in Millions | Dec. 31, 2018USD ($) |
Federal | |
Tax credit carryforwards | |
Research and development tax credit carryforwards | $ 16.4 |
State | |
Tax credit carryforwards | |
Research and development tax credit carryforwards | $ 15.8 |
Income Taxes (Activity Related
Income Taxes (Activity Related to Unrecognized Tax Benefits) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Activity related to unrecognized tax benefits | |||
Balance at the beginning of the period | $ 2,409,000 | $ 2,078,000 | $ 2,847,000 |
Increase related to prior year tax positions | 3,047,000 | ||
(Decrease) related to prior year tax positions | (1,076,000) | ||
Increase related to current year tax positions | 985,000 | 331,000 | 307,000 |
Balance at the end of the period | 6,441,000 | 2,409,000 | 2,078,000 |
Unrecognized tax benefits | |||
Interest and penalties | $ 9,500 | $ 8,800 | $ 8,000 |
Income Taxes (Tax Cuts and Jobs
Income Taxes (Tax Cuts and Jobs Acts) (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2018 |
Income Taxes | |||
Corporate tax rate | 21.00% | 21.00% | |
Estimated income tax expense (benefit) remeasurement of deferred tax balance | $ (31.4) | ||
Increase in tax expense (benefit) relating to remeaurement of deferred tax balance | $ 0.6 | ||
Deferred tax liability increase and valuation allowance decrease relating to Tax Cuts and Jobs Act of 2017 adjustment | 0.3 | ||
Increase in income tax expense relating to Tax Cuts and Jobs Act of 2017 | $ 0.3 |
Restructuring (Details)
Restructuring (Details) - USD ($) | Mar. 08, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Restructuring | ||||||
Percentage reduction of workforce (as a percent) | 10.00% | |||||
Restructuring charges | $ 0 | $ 0 | ||||
Payment of employee separation charges | $ 3,700,000 | |||||
Operating expenses | ||||||
Restructuring | ||||||
Restructuring charges | $ 8,500,000 | |||||
Non-cash asset impairments | 4,800,000 | $ 80,000 | ||||
Employee separation charges | $ 3,700,000 | $ 69,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Total revenues | $ 104,609 | $ 101,258 | $ 95,619 | $ 92,625 | $ 87,463 | $ 83,821 | $ 85,487 | $ 83,979 | |||
Total revenues | $ 104,609 | $ 101,258 | $ 95,619 | $ 92,625 | $ 87,164 | $ 83,821 | $ 85,487 | $ 83,979 | $ 394,111 | $ 340,750 | $ 327,868 |
Type of Revenue [Extensible List] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | |||
Cost of product revenues | $ 15,692 | $ 15,518 | $ 14,383 | $ 18,733 | $ 13,814 | $ 13,433 | $ 13,798 | $ 13,672 | |||
Type of Cost, Good or Service [Extensible List] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | Product [Member] | |||
Net income (loss) | $ 8,910 | $ 12,225 | $ 8,317 | $ (3,775) | $ 1,879 | $ (2,191) | $ (2,739) | $ (806) | $ 25,677 | $ (3,857) | $ (13,919) |
Basic net income (loss) per share (in dollars per share) | $ 0.25 | $ 0.34 | $ 0.23 | $ (0.11) | $ 0.05 | $ (0.06) | $ (0.08) | $ (0.02) | $ 0.72 | $ (0.11) | $ (0.42) |
Diluted net income (loss) per share (in dollars per share) | $ 0.23 | $ 0.32 | $ 0.23 | $ (0.11) | $ 0.05 | $ (0.06) | $ (0.08) | $ (0.02) | $ 0.68 | $ (0.11) | $ (0.42) |
SCHEDULE II VALUATION AND QUA_2
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Movement in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 3,884 | $ 4,508 | $ 3,988 |
Expenses | 6,554 | 7,654 | |
Deductions | $ 3,884 | 7,178 | 7,134 |
Balance at End of Period | $ 3,884 | $ 4,508 |