Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 26, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | IRTC | |
Entity Registrant Name | iRhythm Technologies, Inc. | |
Entity Central Index Key | 1,388,658 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 24,181,905 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 17,345 | $ 8,671 |
Short-term investments | 63,832 | 93,692 |
Accounts receivable, net | 20,465 | 12,953 |
Inventory | 2,320 | 1,683 |
Prepaid expenses and other current assets | 2,769 | 2,582 |
Total current assets | 106,731 | 119,581 |
Investments, long-term | 2,994 | |
Property and equipment, net | 8,250 | 6,221 |
Goodwill | 862 | 862 |
Other assets | 3,146 | 3,465 |
Total assets | 118,989 | 133,123 |
Current liabilities: | ||
Accounts payable | 1,911 | 2,395 |
Accrued liabilities | 19,178 | 15,644 |
Deferred revenue | 1,174 | 1,238 |
Accrued interest, current portion | 154 | |
Debt, current portion | 1,487 | |
Total current liabilities | 22,263 | 20,918 |
Debt | 32,554 | 32,491 |
Deferred rent, noncurrent portion | 214 | 161 |
Total liabilities | 55,031 | 53,570 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value – 5,000,000 authorized at September 30, 2018 and December 31, 2017, respectively; and none issued and outstanding at September 30, 2018 and December 31, 2017, respectively | ||
Common stock, $0.001 par value – 100,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; 24,148,814 and 23,377,315 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 23 | 23 |
Additional paid-in capital | 252,765 | 236,184 |
Accumulated other comprehensive loss | (29) | (65) |
Accumulated deficit | (188,801) | (156,589) |
Total stockholders’ equity | 63,958 | 79,553 |
Total liabilities, preferred stock and stockholders’ equity | $ 118,989 | $ 133,123 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
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 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 24,148,814 | 23,377,315 |
Common stock, shares outstanding | 24,148,814 | 23,377,315 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenue | $ 38,104 | $ 25,035 | $ 104,138 | $ 70,327 |
Cost of revenue | 9,949 | 6,920 | 28,050 | 20,002 |
Gross profit | 28,155 | 18,115 | 76,088 | 50,325 |
Operating expenses: | ||||
Research and development | 5,164 | 3,790 | 13,747 | 9,187 |
Selling, general and administrative | 32,739 | 20,308 | 94,410 | 57,787 |
Total operating expenses | 37,903 | 24,098 | 108,157 | 66,974 |
Loss from operations | (9,748) | (5,983) | (32,069) | (16,649) |
Interest expense | (861) | (862) | (2,580) | (2,522) |
Other income, net | 365 | 321 | 1,082 | 900 |
Net loss | $ (10,244) | $ (6,524) | $ (33,567) | $ (18,271) |
Net loss per common share, basic and diluted | $ (0.43) | $ (0.29) | $ (1.41) | $ (0.81) |
Weighted-average shares, basic and diluted | 24,059,010 | 22,811,907 | 23,764,153 | 22,446,399 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (10,244) | $ (6,524) | $ (33,567) | $ (18,271) |
Other comprehensive loss: | ||||
Net change in unrealized losses on available-for-sale securities | 19 | 21 | (83) | (19) |
Foreign currency translation loss | (10) | (10) | ||
Comprehensive loss | $ (10,235) | $ (6,503) | $ (33,660) | $ (18,290) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (33,567) | $ (18,271) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,673 | 1,103 |
Stock-based compensation | 11,534 | 7,024 |
Amortization of debt discount and issuance costs | 118 | 197 |
Amortization of premiums (accretion of discounts) on investments, net | (633) | (207) |
Loss on disposal of assets | 71 | |
Non-cash interest expense | 1,152 | |
Provision for doubtful accounts and contractual allowances | 8,921 | 5,927 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (15,088) | (8,560) |
Inventory | (637) | 76 |
Prepaid expenses and other current assets | (231) | (197) |
Other assets | 319 | (793) |
Accounts payable | (524) | (33) |
Accrued liabilities | 3,335 | 1,294 |
Deferred rent | 53 | 143 |
Deferred revenue | (64) | (43) |
Net cash used in operating activities | (24,720) | (11,188) |
Cash flows from investing activities | ||
Purchases of property and equipment | (3,687) | (2,651) |
Purchases of available-for-sale investments | (74,070) | (90,243) |
Maturities of available-for-sale investments | 107,605 | 68,682 |
Net cash provided by (used in) investing activities | 29,848 | (24,212) |
Cash flows from financing activities | ||
Repayment of debt | (1,500) | |
Proceeds from issuance of common stock, net | 6,684 | 4,095 |
Tax withholding upon vesting of restricted stock awards | (1,638) | |
Net cash provided by financing activities | 3,546 | 4,095 |
Net increase (decrease) in cash and cash equivalents | 8,674 | (31,305) |
Cash, cash equivalents and restricted cash beginning of period | 8,671 | 51,734 |
Cash, cash equivalents and restricted cash end of period | 17,345 | 20,429 |
Supplemental disclosures of cash flow information | ||
Interest paid | 2,552 | 1,152 |
Non-cash investing and financing activities | ||
Property, plant and equipment costs included in accounts payable and accrued liabilities | $ 86 | $ 6 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | 1. Organization and Description of Business iRhythm Technologies, Inc. (the “Company”) was incorporated in the state of Delaware in September 2006. The Company is a digital healthcare company redefining the way cardiac arrhythmias are clinically diagnosed by combining wearable biosensing technology with cloud-based data analytics and machine-learning capabilities. The Company commenced commercial introduction of its products in the United States in 2009 following clearance by the U.S. Food and Drug Administration. The Company is headquartered in San Francisco, California, which also serves as a clinical center. The Company has additional clinical centers in Lincolnshire, Illinois and Houston, Texas and a manufacturing facility in Cypress, California. In March 2016, the Company formed a wholly-owned subsidiary in the United Kingdom. The Company manages its operations as a single operating segment. Substantially all of the Company’s assets are maintained in the United States. The Company derives substantially all of its revenue from sales to customers in the United States. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2017, and related disclosures, have been derived from the audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed consolidated financial information. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period or for any other future year. The accompanying interim unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC on March 1, 2018. Accounts Receivable, Allowance for Doubtful Accounts and Contractual Allowance Accounts receivable consists of amounts due to the Company from institutions and third-party government and commercial payors and their related patients, as a result of the Company's normal business activities. Accounts receivable is reported on the condensed consolidated balance sheets net of an estimated allowance for doubtful accounts and contractual allowance. The Company establishes an allowance for doubtful accounts for estimated uncollectible receivables based on its historical experience and recognizes the provision as a component of selling, general and administrative expenses. The Company establishes a contractual allowance when it estimates that consideration to be received will be lower than the contracted rate based on its historical experience and recognizes the provision as a reduction to revenue. The following table presents the changes in the allowance for doubtful accounts (in thousands): Nine Months Ended September 30, Year Ended December 31, 2018 2017 Balance, beginning of period $ 3,568 $ 1,792 Add: provision for doubtful accounts 5,917 3,640 Less: write-offs, net of recoveries and other adjustments (2,514 ) (1,864 ) Balance, end of period $ 6,971 $ 3,568 The following table presents the changes in the contractual allowance (in thousands): Nine Months Ended September 30, Year Ended December 31, 2018 2017 Balance, beginning of period $ 7,444 $ 2,340 Add: allowance for contractual adjustments 3,004 5,763 Less: contractual allowance (2,467 ) (659 ) Balance, end of period $ 7,981 $ 7,444 Management reviews and updates its estimates for the allowances for doubtful accounts and contractual allowance periodically to reflect its experience regarding historical collections. If management were to make different judgments or utilize different estimates in the allowances for doubtful accounts and contractual allowance, differences in the amount of reported selling, general and administrative expenses and revenue could result, respectively. Concentrations of Risk Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. Cash, cash equivalents, and investments are deposited in financial institutions which, at times may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds. The Company invests in a variety of financial instruments, such as, but not limited to, United States Government securities, corporate notes, commercial paper and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many geographies. The Company does not require collateral. The Company records an allowance for doubtful accounts when it becomes probable that a receivable will not be collected. Federal government agencies, including Centers for Medicare and Medicaid Services (“CMS”) and the Veterans Administration, accounted for approximately 38% and 38% of the Company’s revenue for the three and nine months ended September 30, 2018, respectively and 39%, and 38% of the Company’s revenue for the three and nine months ended September 30, 2017, respectively. Accounts receivable related to government agencies accounted for 21% and 27% at September 30, 2018 and December 31, 2017, respectively. Revenue Recognition The Company adopted Accounting Standard Codification Topic 606, Revenue from Contracts with Customers Health Care Entities - Revenue Recognition Revenue Recognition The Company’s revenue is generated primarily from the provision of its cardiac rhythm monitoring service, the Zio XT service. The Zio XT is a cardiac rhythm monitoring service that has a patient wear period for up to 14 days and is billable when the monitoring reports are delivered to the healthcare provider, which is also when the service is complete and the Company recognizes revenue. The time from when the patient has the Zio XT device applied to the time the report is posted is generally around 20 days. The Company accounts for contract revenue with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. The Company's revenue is measured based on consideration specified in the contract with each customer. A unique aspect of healthcare is the involvement of multiple parties to the service transaction. In addition to the patient, often a third-party, for example a commercial or governmental payor or healthcare institution, like a hospital or clinic, will pay the Company for some or all of the service on the patient’s behalf. Separate contractual arrangements exist between the Company and third-party payors that establish amounts the third-party payor will pay on behalf of a patient for covered services rendered and should be considered in determining collectability and the transaction price for services provided to a patient covered by that third-party payor. The Company recognizes revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which is the difference between the amount submitted for payment and the amount received. These estimates require significant judgment by management. In determining the amount to accrue for a delivered report, the Company considers factors such as claim payment history from both payors and patient out-of-pocket costs, payor coverage, whether there is a contract between the payor or healthcare institution and the Company, amount paid per the service, and any current developments or changes that could impact reimbursement and healthcare institution payments. A summary of the payment arrangements with third-party payors and healthcare institutions is as follows: • Contracted third-party payors – The Company has contracts with negotiated prices for services provided for patients with commercial healthcare insurance carriers • Centers for Medicare and Medicaid Services (“CMS”) – The Company has received independent diagnostic testing facility approval from regional Medicare Administrative Contractors and will receive reimbursement per the relevant Current Procedural Terminology (“CPT”) code rate for the services rendered to the patient covered by CMS. • Non-contracted third-party payors: Non-contracted commercial and government payors often reimburse out-of-network rates provided under the relevant CPT codes on a case-by-case basis. The transaction price is based on an average of the Company’s historical collection experience for our non-contracted services. This rate is reviewed at least quarterly. • Healthcare institutions – Healthcare institutions are typically hospitals or physician practices in which the Company has negotiated amounts for its monitoring services, including certain governmental agencies such as the Veteran’s Administration and Department of Defense. The Company is utilizing the portfolio approach practical expedient under ASC 606 for revenue recognition. The Company accounts for the contracts within each portfolio as a collective group, rather than individual contracts. Based on history with these portfolios and the similar nature and characteristics of the patients within each portfolio, the Company has concluded that the financial statement effects are not materially different than if accounting for revenue on a contract-by-contract basis. For the healthcare institution and CMS portfolios, the Company has historical experience of collecting substantially all of the negotiated contractual rates and determined at contract inception that these customers, and or their related third-party payor that pays the Company on their behalf, have the intention and ability to pay the promised consideration. As such, the Company is not providing an implicit price concession but, rather, have chosen to accept the risk of default, and adjustments to the transaction price are recorded as bad debt expense. For contracted portfolios, the Company is providing an implicit price concession because, while the Company has a contract with the underlying payor, the Company expects to accept a lower amount of consideration when claims are adjudicated and allowable claims are determined by the commercial payor. The implicit price concession is recorded as variable consideration to the transaction price and recorded as an adjustment to revenue as a contractual allowance. Historical cash collection indicates that it is probable that substantially all of the contracted claim amount will be received. Subsequent adjustments to the transaction price less variable consideration are subject to impairment assessment where customer credit risk is recorded as bad debt expense. For non-contracted portfolios, the Company is providing an implicit price concession because the Company does not have a contract with the underlying payor, the result of which requires us to estimate transaction price based on historical cash collections utilizing the expected value method. Subsequent adjustments to the transaction price are recorded as an adjustment to revenue and not as bad debt expense. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers by payor type. The Company believes these categories aggregate the payor types by nature, amount, timing and uncertainty of our revenue streams. Disaggregated revenue by payor type and major service line for the three and nine months ended September 30, 2018 was as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Commercial Payors $ 17,861 $ 47,257 Centers for Medicare & Medicaid 10,782 29,291 Healthcare Institutions 9,461 27,590 Total $ 38,104 $ 104,138 Contract Liabilities ASC 606 requires an entity to present a revenue contract as a contract liability when the Company has an obligation to transfer goods or services to a customer for which the Company has received consideration from the customer, or an amount of consideration from the customer is due and unconditional (whichever is earlier). Certain of the Company’s customers pay the Company directly for the Zio XT service upon shipment of devices. Such advance payments, or contract liabilities are recorded as deferred revenue on the Condensed Consolidated Balance Sheets and revenue is recognized when reports are delivered to physicians. Total revenue recognized during the nine months ended September 30, 2018 that was included in the contract liability balance at the beginning of 2018 was $1.2 million. The total contract liability balance was recognized as revenue during the first half of 2018. Contract Costs Under ASC 340, the incremental costs of obtaining a contract with a customer are recognized as an asset. Incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Company’s current commission programs are considered incremental. However, as a practical expedient, ASC 340 permits the Company to immediately expense contract acquisition costs, as the asset that would have resulted from capitalizing these costs will be amortized in one year or less. Income Taxes The Tax Cuts and Jobs Act (“2017 Tax Act”) was enacted on December 22, 2017, and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%, among other significant changes. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance for the tax effect of the 2017 Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the 2017 Tax Act’s enactment date for companies to complete the accounting under Accounting Standards Codification Topic 740, Income Taxes Due to the timing of the enactment and the complexity involved in applying the provisions of the 2017 Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements for the year ended December 31, 2017. As the Company collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Department of the Treasury or other standard-setting bodies, the Company may make adjustments to the provisional amounts. In connection with the 2017 Tax Act, the Company recorded a provisional amount of $20.7 million to recognize the remeasurement of deferred taxes with an offset to the valuation allowance for the year ended December 31, 2017. In accordance with relevant SEC guidance, the effects of the 2017 Tax Act may be adjusted within a one-year measurement period from the enactment date for items that were previously reported as provisional, or where a provisional estimate could not be made. Income tax provision for the nine months ended September 30, 2018, did not reflect any adjustment to the previously assessed 2017 Tax Act enactment effect. For the global intangible low-taxed income provisions of the 2017 Tax Act, the Company has not yet elected an accounting policy with respect to either recognize deferred taxes for basis differences expected to reverse as global intangible low-taxed income, or to record such as period costs if and when incurred. The Company will continue to assess forthcoming guidance and accounting interpretations on the effects of the 2017 Tax Act and expects to complete its analysis within the measurement period in accordance with the SEC guidance. As a result of the 2017 Tax Act, the Company can repatriate its cumulative undistributed foreign earnings back to the United States when, and if, needed with minimal additional tax consequences. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits. Recently Adopted Accounting Guidance In May 2014, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) The Company adopted this standard on January 1, 2018 and used the modified retrospective approach. Upon adoption, the Company recognized the cumulative effect of $1.4 million as an adjustment to the opening balance of the Company’s accumulated deficit. This adjustment did not have a material impact on the Company’s consolidated financial statements. Prior periods will not be retrospectively adjusted. The following table presents the impact of adoption of ASU 2014-09 on the Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheets (in thousands): Three months ended September 30, 2018 Nine months ended September 30, 2018 Condensed Consolidated Statement of Operations Impact: As Reported Without the adoption of Topic 606 Impact As Reported Without the adoption of Topic 606 Impact Revenue $ 38,104 $ 38,349 $ (245 ) $ 104,138 $ 105,531 $ (1,393 ) Sales, General & Administrative Expense $ 32,739 $ 33,604 $ (865 ) $ 94,410 $ 97,974 $ (3,564 ) Net Loss $ (10,244 ) $ (10,864 ) $ 620 $ (33,567 ) $ (35,738 ) $ 2,171 September 30, 2018 Condensed Consolidated Balance Sheet Impact: As Reported Without the adoption of Topic 606 Impact Accounts Receivable, net $ 20,465 $ 16,939 $ 3,526 Accumulated Deficit $ (188,801 ) $ (192,327 ) $ 3,526 In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flow: Restricted Cash (Topic 230), which provides guidance on the classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. The amendments of this ASU are effective for interim and annual periods beginning after December 15, 2017. The standard must be applied retrospectively to all periods presented. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Statement of Cash Flows. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. In July 2018, the FASB issued ASU No. 2018-11, which provides entities with an additional transition method to adopt Topic 842. Under the new transition method, an entity initially applies the new leases standard at the adoption date, versus at the beginning of the earliest period presented, and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the impact of the adoption of this standard, but expects that it will have a material impact on its consolidated financial statements. The Company has identified that the standard is expected to result in changes to current accounting policies, processes, and internal controls, with the most significant impact being to the balance sheet as a result of recognizing right of use assets and liabilities for existing real estate leases and embedded leases with suppliers. The Company will adopt |
Cash Equivalents and Investment
Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2018 | |
Cash Equivalents And Investments [Abstract] | |
Cash Equivalents and Investments | 3. Cash Equivalents and Investments The fair value of securities, not including cash at September 30, 2018 and December 31, 2017, were as follows (in thousands): September 30, 2018 Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Money market funds $ 13,377 $ — $ — $ 13,377 U.S. government securities 12,454 — (4 ) 12,450 Corporate notes 15,938 — (15 ) 15,923 Commercial paper 35,459 — — 35,459 Total available-for-sale marketable debt securities $ 77,228 $ — $ (19 ) $ 77,209 Classified as: Cash equivalents $ 13,377 Short-term investments 63,832 Total cash equivalents and investments $ 77,209 December 31, 2017 Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Money market funds $ 5,574 $ — $ — $ 5,574 U.S. government securities 24,969 — (29 ) 24,940 Corporate notes 24,539 — (36 ) 24,503 Commercial paper 47,243 — — 47,243 Total available-for-sale marketable debt securities $ 102,325 $ — $ (65 ) $ 102,260 Classified as: Cash equivalents $ 5,574 Short-term investments 93,692 Long-term investments 2,994 Total cash equivalents and investments $ 102,260 The following table summarizes the fair value of the Company’s cash equivalents, short-term and long-term marketable securities classified by maturity (in thousands): September 30, December 31, 2018 2017 Due within one year $ 77,209 $ 99,266 Due after one year through three years — 2,994 Total available-for-sale marketable debt securities $ 77,209 $ 102,260 The following tables present the Company's available-for-sale securities that were in an unrealized loss position as of September 30, 2018 and December 31, 2017 (in millions): As of September 30, 2018 Less than 12 months Fair Value Unrealized Loss Assets U.S. government securities $ 12,450 $ (4 ) Corporate notes 15,923 (15 ) Total $ 28,373 $ (19 ) As of December 31, 2017 Less than 12 months Fair Value Unrealized Loss Assets U.S. government securities $ 24,940 $ (29 ) Corporate notes 24,503 (36 ) Commercial paper (1) 7,866 — Total $ 57,309 $ (65 ) ________________________________ (1) Available-for-sale securities held as of September 30, 2018 had a weighted average days to maturity of 93 days. There have been no material realized gains or realized losses on available-for-sale securities for the periods presented. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. 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 corporate notes, commercial paper and government bonds are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. The fair value of the Company’s outstanding interest-bearing obligations is estimated using the net present value of the payments, discounted at an interest rate that is consistent with market interest rates, which is a Level 2 input. The carrying amount and the estimated fair value of the Company’s outstanding interest-bearing obligations at September 30, 2018 are $32.6 million and $36.9 million, respectively. The carrying amount and the estimated fair value of the Company’s outstanding interest-bearing obligations at December 31, 2017 were $34.0 million and $38.6 million, respectively. The following table presents the fair value of the Company’s financial assets and liabilities determined using the inputs defined above (amounts in thousands). September 30, 2018 Level 1 Level 2 Level 3 Total Assets Money market funds $ 13,377 $ — $ — $ 13,377 U.S. government securities — 12,450 — 12,450 Corporate notes — 15,923 — 15,923 Commercial paper — 35,459 — 35,459 Total $ 13,377 $ 63,832 $ — $ 77,209 December 31, 2017 Level 1 Level 2 Level 3 Total Assets Money market funds $ 5,574 $ — $ — $ 5,574 U.S. government securities — 24,940 — 24,940 Corporate notes — 24,503 — 24,503 Commercial paper — 47,243 — 47,243 Total $ 5,574 $ 96,686 $ — $ 102,260 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Components | 5. Balance Sheet Components Inventory Inventory and Printed Circuit Board Assemblies (“PCBAs”), which are recorded as other assets as they are used many times over a period longer than one year on average, consisted of the following (in thousands): September 30, 2018 December 31, 2017 Raw materials $ 999 $ 1,103 Finished goods 3,630 3,830 Total $ 4,629 $ 4,933 Classified as: Inventory $ 2,320 $ 1,683 Other assets 2,309 3,250 Total $ 4,629 $ 4,933 Amounts reported as other assets are comprised of the PCBA costs that are included in both raw materials and finished goods totals above. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): September 30, December 31, 2018 2017 Laboratory and manufacturing equipment $ 2,373 $ 1,994 Computer equipment and software 1,049 1,015 Furniture and fixtures 925 953 Leasehold improvements 726 726 Internal-use software 7,807 4,598 Total property and equipment, gross 12,880 9,286 Less: accumulated depreciation and amortization (4,630 ) (3,065 ) Total property and equipment, net $ 8,250 $ 6,221 Depreciation and amortization expense was $0.6 million and $1.7 million for the three and nine months ended September 30 2018, respectively, and $0.5 million and $1.1 million for the three and nine months ended September 30, 2017, Accrued Liabilities Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2018 2017 Accrued vacation $ 2,619 $ 2,081 Accrued payroll and related expenses 10,635 9,361 Accrued ESPP contributions 1,397 275 Accrued professional services fees 705 1,041 Claims payable 2,374 1,375 Other 1,448 1,511 Total accrued liabilities $ 19,178 $ 15,644 Amounts related |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Lease Arrangements The Company leases office and manufacturing space under non-cancelable operating leases which expire on various dates through 2027. These leases generally contain scheduled rent increases or escalation clauses and renewal options. The Company recognizes rent expense on a straight-line basis over the lease period. On October 4, 2018, the Company entered into an office lease (“San Francisco Lease”) to rent approximately 117,560 rentable square feet in San Francisco, California. The lease has a twelve-year term, which is expected to expire on August 31, 2031. The Company is entitled to one option to extend the San Francisco Lease for a five-year term, subject to certain requirements. For further details, refer to Note 13. Subsequent events. The following table summarizes the Company’s future minimum lease payments as of September 30, 2018 (in thousands): Period Ending December 31: 2018 (remainder of year) $ 1,355 2019 5,346 2020 1,239 2021 406 2022 417 Thereafter 2,125 Total $ 10,888 The Company’s rent expense was $1.4 million and $4.1 million for the three and nine months ended September 30, 2018, respectively, and $1.3 million and $3.8 million for the three and nine months ended September 30, 2017, respectively. Legal Proceedings From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. Management is currently not aware of any matters that could have a material adverse effect on the financial position, results of operations or cash flows of the Company. Indemnifications In the ordinary course of business, the Company enters into agreements that may include indemnification provisions. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by California corporate law. The Company currently has directors’ and officers’ insurance. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions, and believes that the estimated fair value of these indemnification obligations is not material and it has not accrued any amounts for these obligations. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 7. Debt Pharmakon Loan Agreement In December 2015, the Company entered into a Loan Agreement with Biopharma Secured Investments III Holdings Cayman LP, or Pharmakon (the “Pharmakon Loan Agreement”). The Pharmakon Loan Agreement provides for up to $55.0 million in term loans split into two tranches as follows: (i) the Tranche A Loans are $30.0 million in term loans, and (ii) the Tranche B Loans are up to $25.0 million in term loans. The Tranche A Loans were drawn on December 4, 2015. The Tranche B Loans were available to be drawn prior to December 4, 2016. No additional draw was taken. The Company is subject to a financial covenant related to minimum trailing revenue targets that began in June 2017, and is tested on a semi-annual basis. The minimum net revenue covenant ranges from $44.7 million for the period ended June 30, 2017 to $102.6 million for the period ending December 31, 2021. To date all minimum revenue targets have been achieved. The minimum net revenues financial covenant has a 45-day equity cure period following required delivery date of the financial statements. Pursuant to this equity cure provision, the Company may cure a revenue covenant default by raising additional funds from the sale of equity. The Company was in compliance with loan covenants as of September 30, 2018. The loan matures in December 2021. The Tranche A Loans bear interest at a fixed rate equal to 9.50% per annum that is due and payable quarterly in arrears. During the first eight calendar quarters, 50% of the interest due and payable was added to the then outstanding principal. The Pharmakon Loan Agreement requires the Company to maintain a minimum consolidated liquidity and minimum net revenue during the term of the loan facility and contains customary affirmative and negative covenants and event of default provisions that could result in the acceleration of the repayment obligations under the loan facility. Upon a change in control of the Company, Pharmakon has the option to demand payment in full of the outstanding loans together with any prepayment premium. The obligations under the Pharmakon Loan Agreement are secured by a security interest in substantially all of the Company’s assets pursuant to the Pharmakon Guaranty and Security Agreement and this security interest is governed by an intercreditor agreement between Pharmakon and Silicon Valley Bank (“SVB”). The debt balance as of September 30, 2018 and December 31, 2017 was $32.6 million and $32.5 million, respectively. Bank Debt In December 2015, the Company entered into a Second Amended and Restated Loan and Security Agreement with SVB, (the “SVB Loan Agreement”). Under the SVB Loan Agreement the Company may borrow, repay and reborrow under a revolving credit line, but not in excess of the maximum loan amount of $15.0 million, until December 4, 2018, when all outstanding principal and accrued interest becomes due and payable. Any principal amount outstanding under the SVB Loan Agreement shall bear interest at a floating rate per annum equal to the rate published by The Wall Street Journal as the “Prime Rate” plus 0.25%. The Company may borrow up to 80% of its eligible accounts receivable, up to the maximum of $15.0 million. In August 2016, the Company obtained a $3.1 million standby letter of credit pursuant to the SVB Loan Agreement in connection with a lease for its San Francisco office The SVB Loan Agreement requires the Company to maintain a minimum consolidated liquidity and minimum net sales during the term of the loan facility. In addition, the SVB Loan Agreement contains customary affirmative and negative covenants and events of default. The Company was in compliance with loan covenants as of September 30, 2018. The obligations under the SVB Loan Agreement are collaterialized by substantially all assets of the Company and this security interest is governed by an intercreditor agreement between Pharmakon and SVB. On October 23, 2018 , the Company entered into a Third Amended and Restated Loan and Security Agreement with Silicon Valley Bank (“Third Amended and Restated SVB Loan Agreement”). Pursuant to the Third Amended and Restated SVB Loan Agreement, the Company also obtained a term loan (“SVB Term Loan”) for $35.0 million. The proceeds from the SVB Term Loan are to be primarily used to pay off the loan agreement with Biopharma Secured Investments III Holdings Cayman LP. In addition, under the Third Amended and Restated SVB Loan Agreement, the Company may borrow, repay, and reborrow under a revolving credit line, but not in excess of the maximum loan amount of $25.0 million, with $11.0 million standby letter of credit sublimit available. In October 2018, the Company obtained a $6.9 million standby letter of credit pursuant to the SVB Loan Agreement in connection with a lease for its San Francisco office. Refer to Note 13. Subsequent Events California HealthCare Foundation Note In November 2012, the Company entered into a Note Purchase Agreement and Promissory Note with the California HealthCare Foundation, or (the “CHCF Note”), through which the Company borrowed $1.5 million. The CHCF Note accrued simple interest of 2.0%. The accrued interest and the principal was to mature in November 2016. In partial consideration for the issuance of the CHCF Note, the Company issued warrants to purchase 22,807 shares of the Company’s Series D convertible preferred stock. In June 2015, the Company amended the CHCF Note to extend the maturity date to May 2018. The CHCF Note was subordinate to other debt. The debt balance, net of debt discount, as of December 31, 2017 was $1.5 million. In May 2018, the Company repaid the principal amount of $1.5 million and related $0.2 million in accrued interest on the CHCF Note. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The Company did not record a provision or benefit for income taxes during the nine months ended September 30, 2018 and 2017, respectively, as it reported losses in each period which are not more likely than not to be realized. Due to the uncertainties surrounding the realization of deferred tax assets through future taxable income, the Company has provided a full valuation allowance and, therefore, no benefit has been recognized for the net operating loss carryforwards and other deferred tax assets. At December 31, 2017, the Company had $0.9 million of unrecognized tax benefit, none of which, if recognized, would affect the effective tax rate as most of the unrecognized tax benefit is deferred tax assets currently offset by a valuation allowance. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves in light of changing facts and circumstances. Settlement of any particular position could require the use of cash. As of September 30, 2018, changes to the Company’s uncertain tax positions in the next twelve months that are reasonably probable are not expected to have a material impact on the Company’s financial position or results of operations. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 9. Stockholders’ Equity Common stock The Company’s amended and restated certificate of incorporation dated October 25, 2016, authorizes the Company to issue 100,000,000 shares of common stock with a par value of $0.001 per share and 5,000,000 shares of preferred stock with a par value of $0.001 per share. The holders of common stock are entitled to receive dividends whenever funds and assets are legally available and when declared by the board of directors , subject to the prior rights of holders of all series of convertible preferred stock outstanding The Company had reserved shares of common stock for issuance as follows: September 30, December 31, 2018 2017 Options issued and outstanding 2,205,126 2,601,181 Unvested restricted stock units 605,985 468,426 Common stock warrants issued and outstanding 4,857 4,857 Shares available for grant under future stock plans 5,657,190 4,650,669 Total 8,473,158 7,725,133 |
Stock Incentive Plans
Stock Incentive Plans | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Incentive Plans | 10. Stock Incentive Plans Equity Incentive Plan Activity A summary of share-based awards available for grant under the 2016 Plan is as follows: Awards Available for Grant Balance at December 31, 2016 3,743,037 Additional options authorized 1,106,966 Awards granted (837,436 ) Awards forfeited 21,585 Balance at December 31, 2017 4,034,152 Additional options authorized 1,168,865 Awards granted (607,269 ) Awards forfeited 108,060 Awards withheld for tax purposes 25,517 Balance at September 30, 2018 4,729,325 The following table summarizes stock option activity under the 2006 and 2016 Plans: Options Outstanding Options Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Balances at December 31, 2016 2,977,218 $ 6.16 6.93 $ 70,979 Options granted 465,271 $ 36.76 Options exercised (827,556 ) $ 4.11 Options forfeited (13,752 ) $ 14.43 Balances at December 31, 2017 2,601,181 $ 12.24 7.17 $ 113,958 Options granted 355,658 $ 67.97 Options exercised (683,534 ) $ 7.32 Options forfeited (68,179 ) $ 32.18 Balances at September 30, 2018 2,205,126 $ 22.14 7.21 $ 159,924 Options exercisable – September 30, 2018 1,296,158 $ 9.32 6.29 $ 110,608 Options vested and expected to vest – September 30, 2018 2,151,796 $ 21.48 7.17 $ 157,476 The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock. During the nine months ended September 30, 2018 and 2017, the Company granted options with a weighted-average grant date fair value of $32.23 and $18.50 per share, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 11. Stock-Based Compensation Employee Stock Options Valuation The fair value of employee and director stock options was estimated at the date of grant using a Black-Scholes option valuation model with the weighted average assumptions below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Expected term (in years) 6.1 6.1 6.1 6.1 Expected volatility 44.7 % 46.9 % 45.8 % 52.1 % Risk-free interest rate 2.85 % 1.94 % 2.74 % 2.07 % Dividend yield 0.0 % 0.0 % 0.0 % 0.0 % Stock-Based Compensation The following table summarizes the total stock-based compensation expense included in the statements of operations and comprehensive loss for all periods presented (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Cost of revenue $ 86 $ 36 $ 224 $ 112 Research and development 801 446 2,158 1,198 Selling, general and administrative 3,324 2,249 9,152 5,714 Total stock-based compensation expense $ 4,211 $ 2,731 $ 11,534 $ 7,024 As of September 30, 2018, there was total unamortized compensation costs of $15.3 million, net of estimated forfeitures, related to unvested stock options which the Company expects to recognize over a period of approximately 2.4 years, $21.1 million, net of estimated forfeitures, related to unrecognized restricted stock unit (“RSU”) expense, which the Company expects to recognize over a period of 2.4 years, and $0.6 million unrecognized ESPP expense, which the Company will recognize over years. |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | 12. Net Loss Per Common Share As the Company had net losses for the three and nine months ended September 30, 2018 and 2017, all potential common shares were determined to be anti-dilutive. The following table sets forth the computation of the basic and diluted net loss per share attributable to holders of common stock (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator: Net loss $ (10,244 ) $ (6,524 ) $ (33,567 ) $ (18,271 ) Denominator: Weighted-average shares used to compute net loss per common share, basic and diluted 24,059,010 22,811,907 23,764,153 22,446,399 Net loss per common share, basic and diluted $ (0.43 ) $ (0.29 ) $ (1.41 ) $ (0.81 ) The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the three and nine months ended September 30, 2018 and 2017, because their inclusion would be anti-dilutive: As of September 30, 2018 2017 Options to purchase common stock 2,205,126 2,765,902 RSUs issued and unvested 605,985 453,063 Warrants to purchase common stock 4,857 127,918 Total 2,815,968 3,346,883 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events Debt refinance On October 23, 2018, the Company entered into the Third Amended and Restated Loan and Security Agreement with Silicon Valley Bank (“Third Amended and Restated SVB Loan Agreement”). This Agreement amends and restates the Second Amended and Restated Loan and Security Agreement between the Company and Silicon Valley Bank (“SVB”) dated December 4, 2015, as amended by the First Loan Modification Agreement between the Company and SVB dated August 22, 2016. Pursuant to the Third Amended and Restated SVB Loan Agreement, the Company obtained a term loan (“SVB Term Loan”) for $35.0 million. Total proceeds from the SVB Term Loan were used to pay off the loan agreement with Biopharma Secured Investments III Holdings Cayman LP, or Pharmakon, totaling $35.8 million. The Company incurred a prepayment premium fee of $1.0 million and additional consideration related to prepayment of $1.5 million. The Company will make interest-only payments through August 31, 2020, followed by 36 monthly payments of principal plus interest on the SVB Term Loan. Interest charged on the SVB Term Loan will be the greater of (a) a floating rate based on the “Prime Rate” published by The Wall Street Journal minus 0.75%, or (b) 4.25%. Under the Third Amended and Restated SVB Loan Agreement, the Company may borrow, repay, and reborrow under a revolving credit line, but not in excess of the maximum loan amount of $25.0 million, which includes an $11.0 million standby letter of credit sublimit availability. In October 2018, a $6.9 million letter of credit was obtained in connection with a lease for the Company’s San Francisco headquarters. Any principal amount outstanding under the Third Amended and Restated SVB Loan Agreement revolving credit line shall bear interest at an amount that is the greater of (a) a floating rate per annum equal to the rate published by The Wall Street Journal as the “Prime Rate” or (b) 5.00%. The Company may borrow up to 75% of eligible accounts receivable, up to the maximum of $25.0 million. San Francisco Lease On October 4, 2018, the Company entered into an office lease (“San Francisco Lease”) to rent approximately 117,560 rentable square feet in San Francisco, California, which will become the Company’s new headquarters. The Company’s current headquarters is in the same building as the San Francisco Lease. The lease has a twelve-year term, which will expire on August 31, 2031. The Company is entitled to one option to extend the San Francisco Lease for a five-year term, subject to certain requirements. In addition, the landlord will provide a tenant improvement allowance of up to $2.4 million for leasehold improvements in connection with cost of construction of the initial alterations within the premises. Annual rental payments will be $10.0 million, with a 3% increase each year. The fair value of the lease to be capitalized in 2019 in accordance with Accounting Standards Codification 842 has not yet been determined. The Company has obtained a standby letter of credit |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2017, and related disclosures, have been derived from the audited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed consolidated financial information. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period or for any other future year. The accompanying interim unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2017 included in the Company’s Form 10-K, filed with the SEC on March 1, 2018. |
Accounts Receivable, Allowance for Doubtful Accounts and Contractual Allowance | Accounts Receivable, Allowance for Doubtful Accounts and Contractual Allowance Accounts receivable consists of amounts due to the Company from institutions and third-party government and commercial payors and their related patients, as a result of the Company's normal business activities. Accounts receivable is reported on the condensed consolidated balance sheets net of an estimated allowance for doubtful accounts and contractual allowance. The Company establishes an allowance for doubtful accounts for estimated uncollectible receivables based on its historical experience and recognizes the provision as a component of selling, general and administrative expenses. The Company establishes a contractual allowance when it estimates that consideration to be received will be lower than the contracted rate based on its historical experience and recognizes the provision as a reduction to revenue. The following table presents the changes in the allowance for doubtful accounts (in thousands): Nine Months Ended September 30, Year Ended December 31, 2018 2017 Balance, beginning of period $ 3,568 $ 1,792 Add: provision for doubtful accounts 5,917 3,640 Less: write-offs, net of recoveries and other adjustments (2,514 ) (1,864 ) Balance, end of period $ 6,971 $ 3,568 The following table presents the changes in the contractual allowance (in thousands): Nine Months Ended September 30, Year Ended December 31, 2018 2017 Balance, beginning of period $ 7,444 $ 2,340 Add: allowance for contractual adjustments 3,004 5,763 Less: contractual allowance (2,467 ) (659 ) Balance, end of period $ 7,981 $ 7,444 Management reviews and updates its estimates for the allowances for doubtful accounts and contractual allowance periodically to reflect its experience regarding historical collections. If management were to make different judgments or utilize different estimates in the allowances for doubtful accounts and contractual allowance, differences in the amount of reported selling, general and administrative expenses and revenue could result, respectively. |
Concentration of Credit Risk | Concentrations of Risk Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. Cash, cash equivalents, and investments are deposited in financial institutions which, at times may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds. The Company invests in a variety of financial instruments, such as, but not limited to, United States Government securities, corporate notes, commercial paper and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many geographies. The Company does not require collateral. The Company records an allowance for doubtful accounts when it becomes probable that a receivable will not be collected. Federal government agencies, including Centers for Medicare and Medicaid Services (“CMS”) and the Veterans Administration, accounted for approximately 38% and 38% of the Company’s revenue for the three and nine months ended September 30, 2018, respectively and 39%, and 38% of the Company’s revenue for the three and nine months ended September 30, 2017, respectively. Accounts receivable related to government agencies accounted for 21% and 27% at September 30, 2018 and December 31, 2017, respectively. |
Revenue Recognition | Revenue Recognition The Company adopted Accounting Standard Codification Topic 606, Revenue from Contracts with Customers Health Care Entities - Revenue Recognition Revenue Recognition The Company’s revenue is generated primarily from the provision of its cardiac rhythm monitoring service, the Zio XT service. The Zio XT is a cardiac rhythm monitoring service that has a patient wear period for up to 14 days and is billable when the monitoring reports are delivered to the healthcare provider, which is also when the service is complete and the Company recognizes revenue. The time from when the patient has the Zio XT device applied to the time the report is posted is generally around 20 days. The Company accounts for contract revenue with a customer when there is a legally enforceable contract between the Company and the customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract consideration is probable. The Company's revenue is measured based on consideration specified in the contract with each customer. A unique aspect of healthcare is the involvement of multiple parties to the service transaction. In addition to the patient, often a third-party, for example a commercial or governmental payor or healthcare institution, like a hospital or clinic, will pay the Company for some or all of the service on the patient’s behalf. Separate contractual arrangements exist between the Company and third-party payors that establish amounts the third-party payor will pay on behalf of a patient for covered services rendered and should be considered in determining collectability and the transaction price for services provided to a patient covered by that third-party payor. The Company recognizes revenue on an accrual basis based on estimates of the amount that will ultimately be realized, which is the difference between the amount submitted for payment and the amount received. These estimates require significant judgment by management. In determining the amount to accrue for a delivered report, the Company considers factors such as claim payment history from both payors and patient out-of-pocket costs, payor coverage, whether there is a contract between the payor or healthcare institution and the Company, amount paid per the service, and any current developments or changes that could impact reimbursement and healthcare institution payments. A summary of the payment arrangements with third-party payors and healthcare institutions is as follows: • Contracted third-party payors – The Company has contracts with negotiated prices for services provided for patients with commercial healthcare insurance carriers • Centers for Medicare and Medicaid Services (“CMS”) – The Company has received independent diagnostic testing facility approval from regional Medicare Administrative Contractors and will receive reimbursement per the relevant Current Procedural Terminology (“CPT”) code rate for the services rendered to the patient covered by CMS. • Non-contracted third-party payors: Non-contracted commercial and government payors often reimburse out-of-network rates provided under the relevant CPT codes on a case-by-case basis. The transaction price is based on an average of the Company’s historical collection experience for our non-contracted services. This rate is reviewed at least quarterly. • Healthcare institutions – Healthcare institutions are typically hospitals or physician practices in which the Company has negotiated amounts for its monitoring services, including certain governmental agencies such as the Veteran’s Administration and Department of Defense. The Company is utilizing the portfolio approach practical expedient under ASC 606 for revenue recognition. The Company accounts for the contracts within each portfolio as a collective group, rather than individual contracts. Based on history with these portfolios and the similar nature and characteristics of the patients within each portfolio, the Company has concluded that the financial statement effects are not materially different than if accounting for revenue on a contract-by-contract basis. For the healthcare institution and CMS portfolios, the Company has historical experience of collecting substantially all of the negotiated contractual rates and determined at contract inception that these customers, and or their related third-party payor that pays the Company on their behalf, have the intention and ability to pay the promised consideration. As such, the Company is not providing an implicit price concession but, rather, have chosen to accept the risk of default, and adjustments to the transaction price are recorded as bad debt expense. For contracted portfolios, the Company is providing an implicit price concession because, while the Company has a contract with the underlying payor, the Company expects to accept a lower amount of consideration when claims are adjudicated and allowable claims are determined by the commercial payor. The implicit price concession is recorded as variable consideration to the transaction price and recorded as an adjustment to revenue as a contractual allowance. Historical cash collection indicates that it is probable that substantially all of the contracted claim amount will be received. Subsequent adjustments to the transaction price less variable consideration are subject to impairment assessment where customer credit risk is recorded as bad debt expense. For non-contracted portfolios, the Company is providing an implicit price concession because the Company does not have a contract with the underlying payor, the result of which requires us to estimate transaction price based on historical cash collections utilizing the expected value method. Subsequent adjustments to the transaction price are recorded as an adjustment to revenue and not as bad debt expense. Disaggregation of Revenue The Company disaggregates revenue from contracts with customers by payor type. The Company believes these categories aggregate the payor types by nature, amount, timing and uncertainty of our revenue streams. Disaggregated revenue by payor type and major service line for the three and nine months ended September 30, 2018 was as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Commercial Payors $ 17,861 $ 47,257 Centers for Medicare & Medicaid 10,782 29,291 Healthcare Institutions 9,461 27,590 Total $ 38,104 $ 104,138 |
Contract Liabilities | Contract Liabilities ASC 606 requires an entity to present a revenue contract as a contract liability when the Company has an obligation to transfer goods or services to a customer for which the Company has received consideration from the customer, or an amount of consideration from the customer is due and unconditional (whichever is earlier). Certain of the Company’s customers pay the Company directly for the Zio XT service upon shipment of devices. Such advance payments, or contract liabilities are recorded as deferred revenue on the Condensed Consolidated Balance Sheets and revenue is recognized when reports are delivered to physicians. Total revenue recognized during the nine months ended September 30, 2018 that was included in the contract liability balance at the beginning of 2018 was $1.2 million. The total contract liability balance was recognized as revenue during the first half of 2018. |
Contract Costs | Contract Costs Under ASC 340, the incremental costs of obtaining a contract with a customer are recognized as an asset. Incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. The Company’s current commission programs are considered incremental. However, as a practical expedient, ASC 340 permits the Company to immediately expense contract acquisition costs, as the asset that would have resulted from capitalizing these costs will be amortized in one year or less. |
Income Taxes | Income Taxes The Tax Cuts and Jobs Act (“2017 Tax Act”) was enacted on December 22, 2017, and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%, among other significant changes. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance for the tax effect of the 2017 Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the 2017 Tax Act’s enactment date for companies to complete the accounting under Accounting Standards Codification Topic 740, Income Taxes Due to the timing of the enactment and the complexity involved in applying the provisions of the 2017 Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements for the year ended December 31, 2017. As the Company collects and prepares necessary data, and interprets any additional guidance issued by the U.S. Department of the Treasury or other standard-setting bodies, the Company may make adjustments to the provisional amounts. In connection with the 2017 Tax Act, the Company recorded a provisional amount of $20.7 million to recognize the remeasurement of deferred taxes with an offset to the valuation allowance for the year ended December 31, 2017. In accordance with relevant SEC guidance, the effects of the 2017 Tax Act may be adjusted within a one-year measurement period from the enactment date for items that were previously reported as provisional, or where a provisional estimate could not be made. Income tax provision for the nine months ended September 30, 2018, did not reflect any adjustment to the previously assessed 2017 Tax Act enactment effect. For the global intangible low-taxed income provisions of the 2017 Tax Act, the Company has not yet elected an accounting policy with respect to either recognize deferred taxes for basis differences expected to reverse as global intangible low-taxed income, or to record such as period costs if and when incurred. The Company will continue to assess forthcoming guidance and accounting interpretations on the effects of the 2017 Tax Act and expects to complete its analysis within the measurement period in accordance with the SEC guidance. As a result of the 2017 Tax Act, the Company can repatriate its cumulative undistributed foreign earnings back to the United States when, and if, needed with minimal additional tax consequences. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits. |
Recent Accounting Guidance / Pronouncements | Recently Adopted Accounting Guidance In May 2014, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) The Company adopted this standard on January 1, 2018 and used the modified retrospective approach. Upon adoption, the Company recognized the cumulative effect of $1.4 million as an adjustment to the opening balance of the Company’s accumulated deficit. This adjustment did not have a material impact on the Company’s consolidated financial statements. Prior periods will not be retrospectively adjusted. The following table presents the impact of adoption of ASU 2014-09 on the Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheets (in thousands): Three months ended September 30, 2018 Nine months ended September 30, 2018 Condensed Consolidated Statement of Operations Impact: As Reported Without the adoption of Topic 606 Impact As Reported Without the adoption of Topic 606 Impact Revenue $ 38,104 $ 38,349 $ (245 ) $ 104,138 $ 105,531 $ (1,393 ) Sales, General & Administrative Expense $ 32,739 $ 33,604 $ (865 ) $ 94,410 $ 97,974 $ (3,564 ) Net Loss $ (10,244 ) $ (10,864 ) $ 620 $ (33,567 ) $ (35,738 ) $ 2,171 September 30, 2018 Condensed Consolidated Balance Sheet Impact: As Reported Without the adoption of Topic 606 Impact Accounts Receivable, net $ 20,465 $ 16,939 $ 3,526 Accumulated Deficit $ (188,801 ) $ (192,327 ) $ 3,526 In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flow: Restricted Cash (Topic 230), which provides guidance on the classification of restricted cash to be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts on the statement of cash flows. The amendments of this ASU are effective for interim and annual periods beginning after December 15, 2017. The standard must be applied retrospectively to all periods presented. The adoption of this standard did not have a material impact on the Company’s Condensed Consolidated Statement of Cash Flows. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. In July 2018, the FASB issued ASU No. 2018-11, which provides entities with an additional transition method to adopt Topic 842. Under the new transition method, an entity initially applies the new leases standard at the adoption date, versus at the beginning of the earliest period presented, and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating the impact of the adoption of this standard, but expects that it will have a material impact on its consolidated financial statements. The Company has identified that the standard is expected to result in changes to current accounting policies, processes, and internal controls, with the most significant impact being to the balance sheet as a result of recognizing right of use assets and liabilities for existing real estate leases and embedded leases with suppliers. The Company will adopt |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of Changes in Allowance for Doubtful Accounts | The following table presents the changes in the allowance for doubtful accounts (in thousands): Nine Months Ended September 30, Year Ended December 31, 2018 2017 Balance, beginning of period $ 3,568 $ 1,792 Add: provision for doubtful accounts 5,917 3,640 Less: write-offs, net of recoveries and other adjustments (2,514 ) (1,864 ) Balance, end of period $ 6,971 $ 3,568 |
Schedule of Changes in Contractual Allowance | The following table presents the changes in the contractual allowance (in thousands): Nine Months Ended September 30, Year Ended December 31, 2018 2017 Balance, beginning of period $ 7,444 $ 2,340 Add: allowance for contractual adjustments 3,004 5,763 Less: contractual allowance (2,467 ) (659 ) Balance, end of period $ 7,981 $ 7,444 |
Disaggregated Revenue by Payor Type and Major Service | The Company disaggregates revenue from contracts with customers by payor type. The Company believes these categories aggregate the payor types by nature, amount, timing and uncertainty of our revenue streams. Disaggregated revenue by payor type and major service line for the three and nine months ended September 30, 2018 was as follows (in thousands): Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Commercial Payors $ 17,861 $ 47,257 Centers for Medicare & Medicaid 10,782 29,291 Healthcare Institutions 9,461 27,590 Total $ 38,104 $ 104,138 |
ASU 2014-09 | |
Schedule of Impact of Adoption of ASU 2014-09 on Financial Statements | The following table presents the impact of adoption of ASU 2014-09 on the Condensed Consolidated Statement of Operations and the Condensed Consolidated Balance Sheets (in thousands): Three months ended September 30, 2018 Nine months ended September 30, 2018 Condensed Consolidated Statement of Operations Impact: As Reported Without the adoption of Topic 606 Impact As Reported Without the adoption of Topic 606 Impact Revenue $ 38,104 $ 38,349 $ (245 ) $ 104,138 $ 105,531 $ (1,393 ) Sales, General & Administrative Expense $ 32,739 $ 33,604 $ (865 ) $ 94,410 $ 97,974 $ (3,564 ) Net Loss $ (10,244 ) $ (10,864 ) $ 620 $ (33,567 ) $ (35,738 ) $ 2,171 September 30, 2018 Condensed Consolidated Balance Sheet Impact: As Reported Without the adoption of Topic 606 Impact Accounts Receivable, net $ 20,465 $ 16,939 $ 3,526 Accumulated Deficit $ (188,801 ) $ (192,327 ) $ 3,526 |
Cash Equivalents and Investme_2
Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Cash Equivalents And Investments [Abstract] | |
Schedule of Fair Value of Securities, not Including Cash | The fair value of securities, not including cash at September 30, 2018 and December 31, 2017, were as follows (in thousands): September 30, 2018 Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Money market funds $ 13,377 $ — $ — $ 13,377 U.S. government securities 12,454 — (4 ) 12,450 Corporate notes 15,938 — (15 ) 15,923 Commercial paper 35,459 — — 35,459 Total available-for-sale marketable debt securities $ 77,228 $ — $ (19 ) $ 77,209 Classified as: Cash equivalents $ 13,377 Short-term investments 63,832 Total cash equivalents and investments $ 77,209 December 31, 2017 Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Money market funds $ 5,574 $ — $ — $ 5,574 U.S. government securities 24,969 — (29 ) 24,940 Corporate notes 24,539 — (36 ) 24,503 Commercial paper 47,243 — — 47,243 Total available-for-sale marketable debt securities $ 102,325 $ — $ (65 ) $ 102,260 Classified as: Cash equivalents $ 5,574 Short-term investments 93,692 Long-term investments 2,994 Total cash equivalents and investments $ 102,260 |
Schedule of Fair Value of Short-term and Long-term Marketable Securities Classified by Maturity | The following table summarizes the fair value of the Company’s cash equivalents, short-term and long-term marketable securities classified by maturity (in thousands): September 30, December 31, 2018 2017 Due within one year $ 77,209 $ 99,266 Due after one year through three years — 2,994 Total available-for-sale marketable debt securities $ 77,209 $ 102,260 |
Schedule of Available-for-Sale Securities Unrealized Loss Position | The following tables present the Company's available-for-sale securities that were in an unrealized loss position as of September 30, 2018 and December 31, 2017 (in millions): As of September 30, 2018 Less than 12 months Fair Value Unrealized Loss Assets U.S. government securities $ 12,450 $ (4 ) Corporate notes 15,923 (15 ) Total $ 28,373 $ (19 ) As of December 31, 2017 Less than 12 months Fair Value Unrealized Loss Assets U.S. government securities $ 24,940 $ (29 ) Corporate notes 24,503 (36 ) Commercial paper (1) 7,866 — Total $ 57,309 $ (65 ) ________________________________ (1) Balance includes investments that were in an immaterial unrealized loss position as of December 31, 2017. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Company's Financial Assets and Liabilities | The following table presents the fair value of the Company’s financial assets and liabilities determined using the inputs defined above (amounts in thousands). September 30, 2018 Level 1 Level 2 Level 3 Total Assets Money market funds $ 13,377 $ — $ — $ 13,377 U.S. government securities — 12,450 — 12,450 Corporate notes — 15,923 — 15,923 Commercial paper — 35,459 — 35,459 Total $ 13,377 $ 63,832 $ — $ 77,209 December 31, 2017 Level 1 Level 2 Level 3 Total Assets Money market funds $ 5,574 $ — $ — $ 5,574 U.S. government securities — 24,940 — 24,940 Corporate notes — 24,503 — 24,503 Commercial paper — 47,243 — 47,243 Total $ 5,574 $ 96,686 $ — $ 102,260 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Components of Inventory and Printed Circuit Board Assemblies ("PCBAs") | Inventory and Printed Circuit Board Assemblies (“PCBAs”), which are recorded as other assets as they are used many times over a period longer than one year on average, consisted of the following (in thousands): September 30, 2018 December 31, 2017 Raw materials $ 999 $ 1,103 Finished goods 3,630 3,830 Total $ 4,629 $ 4,933 Classified as: Inventory $ 2,320 $ 1,683 Other assets 2,309 3,250 Total $ 4,629 $ 4,933 |
Components of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands): September 30, December 31, 2018 2017 Laboratory and manufacturing equipment $ 2,373 $ 1,994 Computer equipment and software 1,049 1,015 Furniture and fixtures 925 953 Leasehold improvements 726 726 Internal-use software 7,807 4,598 Total property and equipment, gross 12,880 9,286 Less: accumulated depreciation and amortization (4,630 ) (3,065 ) Total property and equipment, net $ 8,250 $ 6,221 |
Components of Accrued Liabilities | Accrued liabilities consisted of the following (in thousands): September 30, December 31, 2018 2017 Accrued vacation $ 2,619 $ 2,081 Accrued payroll and related expenses 10,635 9,361 Accrued ESPP contributions 1,397 275 Accrued professional services fees 705 1,041 Claims payable 2,374 1,375 Other 1,448 1,511 Total accrued liabilities $ 19,178 $ 15,644 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases | The following table summarizes the Company’s future minimum lease payments as of September 30, 2018 (in thousands): Period Ending December 31: 2018 (remainder of year) $ 1,355 2019 5,346 2020 1,239 2021 406 2022 417 Thereafter 2,125 Total $ 10,888 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Common Stock Shares Reserved for Future Issuance | The Company had reserved shares of common stock for issuance as follows: September 30, December 31, 2018 2017 Options issued and outstanding 2,205,126 2,601,181 Unvested restricted stock units 605,985 468,426 Common stock warrants issued and outstanding 4,857 4,857 Shares available for grant under future stock plans 5,657,190 4,650,669 Total 8,473,158 7,725,133 |
Stock Incentive Plans (Tables)
Stock Incentive Plans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Share-based Awards Available for Grant under 2016 Plan | A summary of share-based awards available for grant under the 2016 Plan is as follows: Awards Available for Grant Balance at December 31, 2016 3,743,037 Additional options authorized 1,106,966 Awards granted (837,436 ) Awards forfeited 21,585 Balance at December 31, 2017 4,034,152 Additional options authorized 1,168,865 Awards granted (607,269 ) Awards forfeited 108,060 Awards withheld for tax purposes 25,517 Balance at September 30, 2018 4,729,325 |
Summary of Stock Option Activity Under 2006 and 2016 Plans | The following table summarizes stock option activity under the 2006 and 2016 Plans: Options Outstanding Options Outstanding Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands) Balances at December 31, 2016 2,977,218 $ 6.16 6.93 $ 70,979 Options granted 465,271 $ 36.76 Options exercised (827,556 ) $ 4.11 Options forfeited (13,752 ) $ 14.43 Balances at December 31, 2017 2,601,181 $ 12.24 7.17 $ 113,958 Options granted 355,658 $ 67.97 Options exercised (683,534 ) $ 7.32 Options forfeited (68,179 ) $ 32.18 Balances at September 30, 2018 2,205,126 $ 22.14 7.21 $ 159,924 Options exercisable – September 30, 2018 1,296,158 $ 9.32 6.29 $ 110,608 Options vested and expected to vest – September 30, 2018 2,151,796 $ 21.48 7.17 $ 157,476 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Schedule of Fair Value of Employee and Director Stock Options Estimated Using Weighted Average Assumptions | The fair value of employee and director stock options was estimated at the date of grant using a Black-Scholes option valuation model with the weighted average assumptions below. Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Expected term (in years) 6.1 6.1 6.1 6.1 Expected volatility 44.7 % 46.9 % 45.8 % 52.1 % Risk-free interest rate 2.85 % 1.94 % 2.74 % 2.07 % Dividend yield 0.0 % 0.0 % 0.0 % 0.0 % |
Summary of Total Stock-Based Compensation Expense Included in Statements of Operations and Comprehensive Loss | The following table summarizes the total stock-based compensation expense included in the statements of operations and comprehensive loss for all periods presented (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Cost of revenue $ 86 $ 36 $ 224 $ 112 Research and development 801 446 2,158 1,198 Selling, general and administrative 3,324 2,249 9,152 5,714 Total stock-based compensation expense $ 4,211 $ 2,731 $ 11,534 $ 7,024 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Loss per Share Attributable to Common Stock holders | The following table sets forth the computation of the basic and diluted net loss per share attributable to holders of common stock (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator: Net loss $ (10,244 ) $ (6,524 ) $ (33,567 ) $ (18,271 ) Denominator: Weighted-average shares used to compute net loss per common share, basic and diluted 24,059,010 22,811,907 23,764,153 22,446,399 Net loss per common share, basic and diluted $ (0.43 ) $ (0.29 ) $ (1.41 ) $ (0.81 ) |
Schedule of Anti-dilutive Securities Excluded from Diluted Net Loss per Common Share | The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the three and nine months ended September 30, 2018 and 2017, because their inclusion would be anti-dilutive: As of September 30, 2018 2017 Options to purchase common stock 2,205,126 2,765,902 RSUs issued and unvested 605,985 453,063 Warrants to purchase common stock 4,857 127,918 Total 2,815,968 3,346,883 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Schedule of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Receivables [Abstract] | ||
Balance, beginning of period | $ 3,568 | $ 1,792 |
Add: provision for doubtful accounts | 5,917 | 3,640 |
Less: write-offs, net of recoveries and other adjustments | (2,514) | (1,864) |
Balance, end of period | $ 6,971 | $ 3,568 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Changes in Contractual Allowance (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Receivables [Abstract] | ||
Balance, beginning of period | $ 7,444 | $ 2,340 |
Add: allowance for contractual adjustments | 3,004 | 5,763 |
Less: contractual allowance | (2,467) | (659) |
Balance, end of period | $ 7,981 | $ 7,444 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Jan. 01, 2018 | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Total revenue recognized that was included in contract liability | $ 1,200,000 | |||||
U.S. statutory tax rate | 21.00% | 35.00% | ||||
Provisional amount to recognize remeasurement of deferred taxes | $ 20,700,000 | |||||
Income tax position likely of being realized upon ultimate settlement | greater than 50% | |||||
Unrecognized tax benefits, income tax interest or penalties charge | $ 0 | |||||
Cumulative effect of adopting new standard | $ (188,801,000) | (188,801,000) | $ (156,589,000) | |||
Impact | ASU 2014-09 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Cumulative effect of adopting new standard | $ 3,526,000 | $ 3,526,000 | $ 1,400,000 | |||
Maximum | Zio XT service | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Equipment wear period | 14 days | |||||
Revenue | Customer Concentration Risk | Federal Government Agencies | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Concentration of credit risk | 38.00% | 39.00% | 38.00% | 38.00% | ||
Accounts Receivable | Accounts Receivable Concentration Risk | Government Agencies | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Concentration of credit risk | 21.00% | 27.00% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Disaggregated Revenue by Payor Type and Major Service (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 38,104 | $ 25,035 | $ 104,138 | $ 70,327 |
Commercial Payors | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 17,861 | 47,257 | ||
Centers for Medicare and Medicaid | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 10,782 | 29,291 | ||
Healthcare Institutions | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 9,461 | $ 27,590 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Impact of Adoption of ASU 2014-09 on Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Revenue | $ 38,104 | $ 25,035 | $ 104,138 | $ 70,327 | ||
Sales, General & Administrative Expense | 32,739 | 20,308 | 94,410 | 57,787 | ||
Net loss | (10,244) | $ (6,524) | (33,567) | $ (18,271) | ||
Accounts Receivable, net | 20,465 | 20,465 | $ 12,953 | |||
Accumulated deficit | (188,801) | (188,801) | $ (156,589) | |||
Without the adoption of Topic 606 | ASU 2014-09 | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Revenue | 38,349 | 105,531 | ||||
Sales, General & Administrative Expense | 33,604 | 97,974 | ||||
Net loss | (10,864) | (35,738) | ||||
Accounts Receivable, net | 16,939 | 16,939 | ||||
Accumulated deficit | (192,327) | (192,327) | ||||
Impact | ASU 2014-09 | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Revenue | (245) | (1,393) | ||||
Sales, General & Administrative Expense | (865) | (3,564) | ||||
Net loss | 620 | 2,171 | ||||
Accounts Receivable, net | 3,526 | 3,526 | ||||
Accumulated deficit | $ 3,526 | $ 3,526 | $ 1,400 |
Cash Equivalents and Investme_3
Cash Equivalents and Investments - Schedule of Fair Value of Securities, not Including Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 77,228 | $ 102,325 |
Gross Unrealized Losses | (19) | (65) |
Estimated Fair Value | 77,209 | 102,260 |
Cash equivalents | 13,377 | 5,574 |
Short-term investments | 63,832 | 93,692 |
Long-term investments | 2,994 | |
Total cash equivalents and investments | 77,209 | 102,260 |
Money Market Funds | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 13,377 | 5,574 |
Estimated Fair Value | 13,377 | 5,574 |
U.S. Government Securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 12,454 | 24,969 |
Gross Unrealized Losses | (4) | (29) |
Estimated Fair Value | 12,450 | 24,940 |
Corporate Notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 15,938 | 24,539 |
Gross Unrealized Losses | (15) | (36) |
Estimated Fair Value | 15,923 | 24,503 |
Commercial Paper | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 35,459 | 47,243 |
Estimated Fair Value | $ 35,459 | $ 47,243 |
Cash Equivalents and Investme_4
Cash Equivalents and Investments - Schedule of Fair Value of Short-term and Long-term Marketable Securities Classified by Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Marketable Securities [Abstract] | ||
Due within one year | $ 77,209 | $ 99,266 |
Due after one year through three years | 2,994 | |
Total available-for-sale marketable debt securities | $ 77,209 | $ 102,260 |
Cash Equivalents and Investme_5
Cash Equivalents and Investments - Schedule of Available-for-Sale Securities Unrealized Loss Position (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | |
Schedule Of Available For Sale Securities [Line Items] | |||
Available-for-sale securities, unrealized loss position, Less than 12 months, Fair Value | $ 28,373 | $ 57,309 | |
Available-for-sale securities, unrealized loss position, Less than 12 months, Unrealized Loss | (19) | (65) | |
U.S. Government Securities | |||
Schedule Of Available For Sale Securities [Line Items] | |||
Available-for-sale securities, unrealized loss position, Less than 12 months, Fair Value | 12,450 | 24,940 | |
Available-for-sale securities, unrealized loss position, Less than 12 months, Unrealized Loss | (4) | (29) | |
Corporate Notes | |||
Schedule Of Available For Sale Securities [Line Items] | |||
Available-for-sale securities, unrealized loss position, Less than 12 months, Fair Value | 15,923 | 24,503 | |
Available-for-sale securities, unrealized loss position, Less than 12 months, Unrealized Loss | $ (15) | (36) | |
Commercial Paper | |||
Schedule Of Available For Sale Securities [Line Items] | |||
Available-for-sale securities, unrealized loss position, Less than 12 months, Fair Value | [1] | $ 7,866 | |
[1] | Balance includes investments that were in an immaterial unrealized loss position as of December 31, 2017. |
Cash Equivalents and Investme_6
Cash Equivalents and Investments - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2018Investment | |
Cash Equivalents And Investments [Abstract] | |
Available-for-sale securities, weighted average days to maturity | 93 days |
Number of unrealized loss position in investments | 9 |
Number of unrealized loss position for more than 12 months in investments | 0 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Carrying amount | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Outstanding interest-bearing obligations | $ 32.6 | $ 34 |
Estimated fair value | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Outstanding interest-bearing obligations | $ 36.9 | $ 38.6 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value of Company's Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Total financial assets | $ 77,209 | $ 102,260 |
Level 1 | ||
Assets | ||
Total financial assets | 13,377 | 5,574 |
Level 2 | ||
Assets | ||
Total financial assets | 63,832 | 96,686 |
Money Market Funds | ||
Assets | ||
Total financial assets | 13,377 | 5,574 |
Money Market Funds | Level 1 | ||
Assets | ||
Total financial assets | 13,377 | 5,574 |
U.S. Government Securities | ||
Assets | ||
Total financial assets | 12,450 | 24,940 |
U.S. Government Securities | Level 2 | ||
Assets | ||
Total financial assets | 12,450 | 24,940 |
Corporate Notes | ||
Assets | ||
Total financial assets | 15,923 | 24,503 |
Corporate Notes | Level 2 | ||
Assets | ||
Total financial assets | 15,923 | 24,503 |
Commercial Paper | ||
Assets | ||
Total financial assets | 35,459 | 47,243 |
Commercial Paper | Level 2 | ||
Assets | ||
Total financial assets | $ 35,459 | $ 47,243 |
Balance Sheet Components - Comp
Balance Sheet Components - Components of Inventory and Printed Circuit Board Assemblies ("PCBAs") (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Total inventory and printed circuit board assemblies | $ 4,629 | $ 4,933 |
Inventory | 2,320 | 1,683 |
Other assets | 3,146 | 3,465 |
Printed Circuit Board Assemblies | ||
Inventory [Line Items] | ||
Other assets | 2,309 | 3,250 |
Raw Materials | ||
Inventory [Line Items] | ||
Total inventory and printed circuit board assemblies | 999 | 1,103 |
Finished Goods | ||
Inventory [Line Items] | ||
Total inventory and printed circuit board assemblies | $ 3,630 | $ 3,830 |
Balance Sheet Components - Co_2
Balance Sheet Components - Components of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | $ 12,880 | $ 9,286 |
Less: accumulated depreciation and amortization | (4,630) | (3,065) |
Total property and equipment, net | 8,250 | 6,221 |
Laboratory and Manufacturing Equipment | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 2,373 | 1,994 |
Computer Equipment and Software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 1,049 | 1,015 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 925 | 953 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 726 | 726 |
Internal-Use Software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | $ 7,807 | $ 4,598 |
Balance Sheet Components - Addi
Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Property Plant And Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 600 | $ 500 | $ 1,673 | $ 1,103 |
Balance Sheet Components - Co_3
Balance Sheet Components - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Payables And Accruals [Abstract] | ||
Accrued vacation | $ 2,619 | $ 2,081 |
Accrued payroll and related expenses | 10,635 | 9,361 |
Accrued ESPP contributions | 1,397 | 275 |
Accrued professional services fees | 705 | 1,041 |
Claims payable | 2,374 | 1,375 |
Other | 1,448 | 1,511 |
Total accrued liabilities | $ 19,178 | $ 15,644 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | Oct. 04, 2018ft² | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) |
Operating Leased Assets [Line Items] | |||||
Rent Expense | $ | $ 1.4 | $ 1.3 | $ 4.1 | $ 3.8 | |
Office Lease | San Francisco | Subsequent Event | |||||
Operating Leased Assets [Line Items] | |||||
Lease rentable area | ft² | 117,560 | ||||
Lease term | 12 years | ||||
Lease expiration date | Aug. 31, 2031 | ||||
Renewal term of lease | 5 years |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Operating Leases Future Minimum Payments Due [Abstract] | |
2018 (remainder of year) | $ 1,355 |
2,019 | 5,346 |
2,020 | 1,239 |
2,021 | 406 |
2,022 | 417 |
Thereafter | 2,125 |
Total | $ 10,888 |
Debt - Additional Information (
Debt - Additional Information (Details) | 1 Months Ended | 9 Months Ended | ||||||||
Oct. 31, 2018USD ($) | May 31, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2015USD ($)Tranche | Jun. 30, 2015 | Nov. 30, 2012USD ($)shares | Sep. 30, 2018USD ($) | Oct. 23, 2018USD ($) | Dec. 31, 2017USD ($) | Aug. 31, 2016USD ($) | |
Pharmakon Loan Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 55,000,000 | |||||||||
Number of tranches for loans | Tranche | 2 | |||||||||
Debt instrument, covenant description | The Company is subject to a financial covenant related to minimum trailing revenue targets that began in June 2017, and is tested on a semi-annual basis. The minimum net revenue covenant ranges from $44.7 million for the period ended June 30, 2017 to $102.6 million for the period ending December 31, 2021. To date all minimum revenue targets have been achieved. The minimum net revenues financial covenant has a 45-day equity cure period following required delivery date of the financial statements. | |||||||||
Debt instrument, covenant compliance minimum net revenue target | $ 44,700,000 | |||||||||
Debt instrument, covenant compliance minimum net revenue for period ending December 31, 2021 | $ 102,600,000 | |||||||||
Debt instrument, covenant equity cure period | 45 days | |||||||||
Debt instrument maturity date | Dec. 31, 2021 | |||||||||
Debt balance | $ 32,600,000 | $ 32,500,000 | ||||||||
Pharmakon Loan Agreement | Tranche A Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 30,000,000 | |||||||||
Debt instrument, fixed interest rate | 9.50% | |||||||||
Debt instrument, periodic payment | quarterly | |||||||||
Debt instrument, interest due and payable | 50.00% | |||||||||
Pharmakon Loan Agreement | Tranche B Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 25,000,000 | |||||||||
SVB Loan Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 15,000,000 | |||||||||
Credit facility expiration date | Dec. 4, 2018 | |||||||||
Borrowing capacity description | The Company may borrow up to 80% of its eligible accounts receivable, up to the maximum of $15.0 million | |||||||||
SVB Loan Agreement | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Percentage of eligible accounts receivable for borrowings | 80.00% | |||||||||
SVB Loan Agreement | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument interest rate spread | 0.25% | |||||||||
SVB Loan Agreement | Standby Letters of Credit | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Letter of credit | $ 3,100,000 | |||||||||
SVB Loan Agreement | Standby Letters of Credit | Subsequent Event | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 11,000,000 | |||||||||
SVB Loan Agreement | SVB Term Loan | Subsequent Event | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | 35,000,000 | |||||||||
SVB Loan Agreement | Revolving Credit Facility | Subsequent Event | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 25,000,000 | |||||||||
SVB Loan Agreement | Standby Letters of Credit | Subsequent Event | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Proceeds from line of credit | $ 6,900,000 | |||||||||
CHCF Note | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument maturity date | May 31, 2018 | Nov. 30, 2016 | ||||||||
Debt balance | $ 1,500,000 | |||||||||
Proceeds from long-term debt, net of issuance costs | $ 1,500,000 | |||||||||
Debt instrument accrues simple interest rate | 2.00% | |||||||||
Repayment of debt | $ 1,500,000 | |||||||||
Payment of accrued interest on debt | $ 200,000 | |||||||||
CHCF Note | Series D Convertible Preferred Stock | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants issued to purchase shares | shares | 22,807 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Provision or benefit for income taxes | $ 0 | $ 0 | |
Benefit recognized for net operating loss carryforwards | 0 | ||
Benefit recognized for other deferred tax assets | $ 0 | ||
Unrecognized tax benefit | $ 900,000 | ||
Unrecognized tax benefit that would affect effective tax rate if recognized | $ 0 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Dividends declared | $ 0 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule Of Common Stock Shares Reserved For Future Issuance (Details) - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Class Of Stock [Line Items] | ||
Total number of shares reserved for future issuance | 8,473,158 | 7,725,133 |
Common stock warrants issued and outstanding | ||
Class Of Stock [Line Items] | ||
Total number of shares reserved for future issuance | 4,857 | 4,857 |
Options Issued and Outstanding | ||
Class Of Stock [Line Items] | ||
Total number of shares reserved for future issuance | 2,205,126 | 2,601,181 |
Unvested restricted stock units | ||
Class Of Stock [Line Items] | ||
Total number of shares reserved for future issuance | 605,985 | 468,426 |
Shares Available for Grant Under Future Stock Plans | ||
Class Of Stock [Line Items] | ||
Total number of shares reserved for future issuance | 5,657,190 | 4,650,669 |
Stock Incentive Plans - Summary
Stock Incentive Plans - Summary of Share-based Awards Available for Grant under 2016 Plan (Details) - 2016 Plan - shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Awards Available for Grant, Beginning balance | 4,034,152 | 3,743,037 |
Awards Available for Grant, Additional options authorized | 1,168,865 | 1,106,966 |
Awards Available for Grant, Awards granted | (607,269) | (837,436) |
Awards Available for Grant, Awards forfeited | 108,060 | 21,585 |
Awards Available for Grant, Awards withheld for tax purposes | 25,517 | |
Awards Available for Grant, Ending balance | 4,729,325 | 4,034,152 |
Stock Incentive Plans - Summa_2
Stock Incentive Plans - Summary of Stock Option Activity Under 2006 and 2016 Plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||
Options Outstanding, Beginning balance | 2,601,181 | 2,977,218 | |
Options granted | 355,658 | 465,271 | |
Options exercised | (683,534) | (827,556) | |
Options forfeited | (68,179) | (13,752) | |
Options Outstanding, Ending balance | 2,205,126 | 2,601,181 | 2,977,218 |
Options exercisable | 1,296,158 | ||
Options vested and expected to vest | 2,151,796 | ||
Options Outstanding, Weighted Average Exercise Price Per Share, Beginning Balance | $ 12.24 | $ 6.16 | |
Options Outstanding, Weighted Average Exercise Price Per Share, Options granted | 67.97 | 36.76 | |
Options Outstanding, Weighted Average Exercise Price Per Share, Options exercised | 7.32 | 4.11 | |
Options Outstanding, Weighted Average Exercise Price Per Share, Options forfeited | 32.18 | 14.43 | |
Options Outstanding, Weighted Average Exercise Price Per Share, Ending Balance | 22.14 | $ 12.24 | $ 6.16 |
Options Outstanding, Weighted Average Exercise Price Per Share, Exercisable | 9.32 | ||
Options Outstanding, Weighted Average Exercise Price Per Share, vested and expected to vest | $ 21.48 | ||
Options Outstanding, Weighted- Average Remaining Contractual Life (years) | 7 years 2 months 15 days | 7 years 2 months 1 day | 6 years 11 months 4 days |
Options exercisable, Weighted- Average Remaining Contractual Life (years) | 6 years 3 months 14 days | ||
Options vested and expected to vest, Weighted- Average Remaining Contractual Life (years) | 7 years 2 months 1 day | ||
Options Outstanding, Aggregate Intrinsic Value | $ 159,924 | $ 113,958 | $ 70,979 |
Options exercisable, Aggregate Intrinsic Value | 110,608 | ||
Options vested and expected to vest, Aggregate Intrinsic Value | $ 157,476 |
Stock Incentive Plans - Additio
Stock Incentive Plans - Additional Information (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Weighted-average grant date fair value of options | $ 32.23 | $ 18.50 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Fair Value of Employee and Director Stock Options Estimated Using Weighted Average Assumptions (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||
Expected term (in years) | 6 years 1 month 6 days | 6 years 1 month 6 days | 6 years 1 month 6 days | 6 years 1 month 6 days |
Expected volatility | 44.70% | 46.90% | 45.80% | 52.10% |
Risk-free interest rate | 2.85% | 1.94% | 2.74% | 2.07% |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Total Stock-Based Compensation Expense Included in Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | $ 4,211 | $ 2,731 | $ 11,534 | $ 7,024 |
Cost of Revenue | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 86 | 36 | 224 | 112 |
Research and development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 801 | 446 | 2,158 | 1,198 |
Selling, general and administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | $ 3,324 | $ 2,249 | $ 9,152 | $ 5,714 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Total unamortized compensation costs, net of estimated forfeitures related to unvested stock options | $ 15.3 |
Unamortized compensation costs related to unvested stock options, expected period of recognition | 2 years 4 months 24 days |
Restricted Stock Units ("RSUs") | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unamortized compensation costs related to unvested stock options, expected period of recognition | 2 years 4 months 24 days |
Total unamortized compensation costs, net of estimated forfeitures related to restricted stock unit | $ 21.1 |
ESPP | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Total unamortized compensation costs, net of estimated forfeitures related to unvested stock options | $ 0.6 |
Unamortized compensation costs related to unvested stock options, expected period of recognition | 8 months 12 days |
Net Loss Per Common Share - Com
Net Loss Per Common Share - Computation of Basic and Diluted Net Loss per Share Attributable to Common Stock holders (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net loss | $ (10,244) | $ (6,524) | $ (33,567) | $ (18,271) |
Denominator: | ||||
Weighted-average shares used to compute net loss per common share, basic and diluted | 24,059,010 | 22,811,907 | 23,764,153 | 22,446,399 |
Net loss per common share, basic and diluted | $ (0.43) | $ (0.29) | $ (1.41) | $ (0.81) |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Anti-dilutive Securities Excluded from Diluted Net Loss per Common Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss per common share | 2,815,968 | 3,346,883 | 2,815,968 | 3,346,883 |
Options to Purchase Common Stock | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss per common share | 2,205,126 | 2,765,902 | 2,205,126 | 2,765,902 |
Restricted Stock Units ("RSUs") | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss per common share | 605,985 | 453,063 | 605,985 | 453,063 |
Warrants to Purchase Common Stock | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss per common share | 4,857 | 127,918 | 4,857 | 127,918 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Oct. 23, 2018USD ($) | Oct. 04, 2018USD ($)ft² | Oct. 31, 2018USD ($) | Dec. 31, 2015USD ($) |
Subsequent Event | San Francisco | Office Lease | ||||
Subsequent Event [Line Items] | ||||
Lease rentable area | ft² | 117,560 | |||
Lease term | 12 years | |||
Lease expiration date | Aug. 31, 2031 | |||
Renewal term of lease | 5 years | |||
Annual rental payments | $ 10,000,000 | |||
Percentage of increase to rental payments, each year | 3.00% | |||
Subsequent Event | Maximum | San Francisco | Office Lease | ||||
Subsequent Event [Line Items] | ||||
Tenant improvement allowance | $ 2,400,000 | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | SVB Term Loan | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 35,000,000 | |||
Last interest only payment date | Aug. 31, 2020 | |||
Number of monthly payments of principal and interest | 36 months | |||
Debt instrument, interest rate terms | Interest charged on the SVB Term Loan will be the greater of (a) a floating rate based on the “Prime Rate” published by The Wall Street Journal minus 0.75%, or (b) 4.25% | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | SVB Term Loan | Prime Rate | ||||
Subsequent Event [Line Items] | ||||
Basis spread deduction on variable rate | 0.75% | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | SVB Term Loan | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, interest rate | 4.25% | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | Revolving Credit Facility | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 25,000,000 | |||
Debt instrument, interest rate terms | Any principal amount outstanding under the Third Amended and Restated SVB Loan Agreement revolving credit line shall bear interest at an amount that is the greater of (a) a floating rate per annum equal to the rate published by The Wall Street Journal as the “Prime Rate” or (b) 5.00%. | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | Revolving Credit Facility | Minimum [Member] | ||||
Subsequent Event [Line Items] | ||||
Debt instrument, interest rate | 5.00% | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | Revolving Credit Facility | Maximum | ||||
Subsequent Event [Line Items] | ||||
Percentage of eligible accounts receivable for borrowings | 75.00% | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | Standby Letters of Credit | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 11,000,000 | |||
Third Amended and Restated SVB Loan Agreement | Subsequent Event | Standby Letters of Credit | ||||
Subsequent Event [Line Items] | ||||
Proceeds from line of credit | $ 6,900,000 | |||
Pharmakon Loan Agreement | ||||
Subsequent Event [Line Items] | ||||
Maximum borrowing capacity | $ 55,000,000 | |||
Pharmakon Loan Agreement | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Repayment of loan amount | 35,800,000 | |||
Prepayment premium fee | 1,000,000 | |||
Additional consideration for prepayment of debt | $ 1,500,000 |