Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 21, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-38984 | ||
Entity Registrant Name | CASTLE BIOSCIENCES, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 77-0701774 | ||
Entity Address, Address Line One | 505 S. Friendswood Drive | ||
Entity Address, Address Line Two | Suite 401 | ||
Entity Address, City or Town | Friendswood | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 77546 | ||
City Area Code | 866 | ||
Local Phone Number | 788-9007 | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | ||
Trading Symbol | CSTL | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 472 | ||
Entity Common Stock, Shares Outstanding | 26,575,616 | ||
Documents Incorporated by Reference | Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission, or SEC, subsequent to the date hereof pursuant to Regulation 14A in connection with the registrant’s 2023 Annual Meeting of Stockholders, are incorporated by reference into Part III of this Annual Report on Form 10-K. The registrant intends to file such proxy statement with the SEC not later than 120 days after the conclusion of its fiscal year ended December 31, 2022. | ||
Entity Central Index Key | 0001447362 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | KPMG LLP |
Auditor Location | San Diego, CA |
Auditor Firm ID | 185 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 122,948 | $ 329,633 |
Marketable investment securities | 135,677 | 0 |
Accounts receivable, net | 23,476 | 17,282 |
Inventory | 3,980 | 2,021 |
Prepaid expenses and other current assets | 6,207 | 4,807 |
Total current assets | 292,288 | 353,743 |
Long-term accounts receivable, net | 1,087 | 1,308 |
Property and equipment, net | 14,315 | 9,501 |
Operating lease assets | 12,181 | 7,383 |
Goodwill and other intangible assets, net | 126,348 | 88,922 |
Other assets – long-term | 1,110 | 1,715 |
Total assets | 447,329 | 462,572 |
Current Liabilities | ||
Accounts payable | 4,731 | 2,546 |
Accrued compensation | 24,358 | 15,483 |
Operating lease liabilities | 1,777 | 1,179 |
Other accrued and current liabilities | 5,262 | 5,678 |
Total current liabilities | 36,128 | 24,886 |
Noncurrent portion of contingent consideration | 0 | 18,287 |
Noncurrent operating lease liabilities | 11,533 | 6,900 |
Deferred tax liability | 428 | 635 |
Other liabilities | 90 | 124 |
Total liabilities | 48,179 | 50,832 |
Commitments and Contingencies (Note 12) | ||
Stockholders’ Equity | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of December 31, 2022 and 2021; no shares issued and outstanding as of December 31, 2022 and 2021. | 0 | 0 |
Common stock, $0.001 par value; 200,000,000 authorized as of December 31, 2022 and 2021; 26,553,681 and 25,378,520 shares issued and outstanding as of December 31, 2022 and 2021, respectively. | 27 | 25 |
Additional paid-in capital | 560,409 | 505,482 |
Accumulated deficit | (160,905) | (93,767) |
Accumulated other comprehensive loss | (381) | 0 |
Total stockholders’ equity | 399,150 | 411,740 |
Total liabilities and stockholders’ equity | $ 447,329 | $ 462,572 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 26,553,681 | 25,378,520 |
Common stock, shares outstanding (in shares) | 26,553,681 | 25,378,520 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
NET REVENUES | $ 137,039 | $ 94,085 |
OPERATING EXPENSES AND OTHER OPERATING INCOME | ||
Cost of sales (exclusive of amortization of acquired intangible assets) | 32,009 | 15,822 |
Research and development | 44,903 | 29,646 |
Selling, general and administrative | 143,003 | 86,738 |
Amortization of acquired intangible assets | 8,266 | 1,958 |
Change in fair value of contingent consideration | (18,287) | 0 |
Total operating expenses, net | 209,894 | 134,164 |
Operating loss | (72,855) | (40,079) |
Interest income | 3,968 | 68 |
Interest expense | (17) | (1) |
Loss before income taxes | (68,904) | (40,012) |
Income tax benefit | (1,766) | (8,720) |
Net loss | $ (67,138) | $ (31,292) |
Loss per share, basic (in dollars per share) | $ (2.58) | $ (1.24) |
Loss per share, diluted (in dollars per share) | $ (2.58) | $ (1.24) |
Weighted-average shares outstanding, basic (in shares) | 26,054 | 25,137 |
Weighted-average shares outstanding, diluted (in shares) | 26,054 | 25,137 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (67,138) | $ (31,292) |
Other comprehensive loss: | ||
Net unrealized loss on available-for-sale securities | (381) | 0 |
Comprehensive loss | $ (67,519) | $ (31,292) |
CONSOLIDATED STATEMENTS STOCKHO
CONSOLIDATED STATEMENTS STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 24,812,487 | ||||||
Beginning balance at Dec. 31, 2020 | $ 415,691 | $ 21 | $ 0 | $ 25 | $ 478,162 | $ (62,496) | $ 21 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation expense | $ 21,740 | 21,740 | ||||||
Exercise of common stock options (in shares) | 414,890 | 416,037 | ||||||
Exercise of common stock options | $ 4,234 | 4,234 | ||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes (in shares) | 39,548 | |||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes | (781) | (781) | ||||||
Public offerings of common stock, adjustment to offering costs | 39 | 39 | ||||||
Issuance of common stock under the employee stock purchase plan (in shares) | 110,448 | |||||||
Issuance of common stock under the employee stock purchase plan | 2,088 | 2,088 | ||||||
Net unrealized loss on available-for-sale securities | 0 | |||||||
Net loss | (31,292) | (31,292) | ||||||
Ending balance (in shares) at Dec. 31, 2021 | 0 | 25,378,520 | ||||||
Ending balance at Dec. 31, 2021 | $ 411,740 | $ 0 | $ 25 | 505,482 | (93,767) | $ 0 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Accounting Standards Update [Extensible Enumeration] | Accounting Standards Update 2016-02 | |||||||
Stock-based compensation expense | $ 36,321 | 36,321 | ||||||
Exercise of common stock options (in shares) | 148,735 | 148,735 | ||||||
Exercise of common stock options | $ 833 | $ 1 | 832 | |||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes (in shares) | 183,887 | |||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes | (1,688) | (1,688) | ||||||
Issuance of common stock under the employee stock purchase plan (in shares) | 78,652 | |||||||
Issuance of common stock under the employee stock purchase plan | 2,352 | 2,352 | ||||||
Issuance of common stock in acquisition of business (in shares) | 763,887 | |||||||
Issuance of common stock in acquisition of business | 17,111 | $ 1 | 17,110 | |||||
Net unrealized loss on available-for-sale securities | (381) | (381) | ||||||
Net loss | (67,138) | (67,138) | ||||||
Ending balance (in shares) at Dec. 31, 2022 | 0 | 26,553,681 | ||||||
Ending balance at Dec. 31, 2022 | $ 399,150 | $ 0 | $ 27 | $ 560,409 | $ (160,905) | $ (381) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
OPERATING ACTIVITIES | ||
Net loss | $ (67,138) | $ (31,292) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 10,543 | 3,407 |
Stock-based compensation expense | 36,321 | 21,740 |
Change in fair value of contingent consideration | (18,287) | 0 |
Deferred income taxes | (1,877) | (8,736) |
Accretion of discounts on marketable investment securities | (1,368) | 0 |
Other | 158 | 0 |
Change in operating assets and liabilities: | ||
Accounts receivable | (6,218) | (4,631) |
Prepaid expenses and other current assets | (1,224) | 617 |
Inventory | (1,680) | 327 |
Operating lease assets | 991 | 931 |
Other assets | 618 | (180) |
Accounts payable | 582 | (182) |
Operating lease liabilities | (608) | (852) |
Accrued compensation | 8,495 | 6,208 |
Medicare advance payment | 0 | (8,350) |
Other accrued and current liabilities | (963) | 2,286 |
Other liabilities | 0 | (276) |
Net cash used in operating activities | (41,655) | (18,983) |
INVESTING ACTIVITIES | ||
Purchases of property and equipment | (5,632) | (3,483) |
Asset acquisitions, net of cash and cash equivalents acquired | 547 | (63,184) |
Acquisition of business, net of cash and cash equivalents acquired | (26,966) | 0 |
Proceeds from sale of property and equipment | 195 | 10 |
Purchases of marketable investment securities | (134,689) | 0 |
Net cash used in investing activities | (166,545) | (66,657) |
FINANCING ACTIVITIES | ||
Payment of common stock offering costs | 0 | (336) |
Proceeds from exercise of common stock options | 833 | 4,234 |
Payment of employees’ taxes on vested restricted stock units | (1,688) | (781) |
Proceeds from contributions to the employee stock purchase plan | 2,492 | 2,312 |
Repayment of principal portion of finance lease liabilities | (122) | (8) |
Net cash provided by financing activities | 1,515 | 5,421 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (206,685) | (80,219) |
Beginning of year | 329,633 | 409,852 |
End of year | 122,948 | 329,633 |
SUPPLEMENTAL DISCLOSURE OF CASH PAID FOR: | ||
Interest | 16 | 1 |
Income taxes | 120 | 16 |
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Accrued purchases of property and equipment | 1,396 | 33 |
Common stock issued in acquisition of business | 17,111 | 0 |
Operating lease assets obtained in exchange for lease obligations | 6,075 | 2,892 |
Asset acquisition, liability for contingent consideration | 0 | 18,287 |
Property and equipment acquired with tenant improvement allowance | 51 | 54 |
Asset acquisition, receivable for purchase price adjustment | $ 0 | $ 519 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Castle Biosciences, Inc. (the ‘‘Company”, “we”, “us” or “our”) was incorporated in the state of Delaware on September 12, 2007. We are a commercial-stage diagnostics company focused on providing clinicians and their patients with personalized, clinically actionable information to inform treatment decisions and improve health outcomes. We are based in Friendswood, Texas (a suburb of Houston, Texas) and our laboratory operations are conducted at our facilities located in Phoenix, Arizona and Pittsburgh, Pennsylvania. We have a history of recurring net losses and negative cash flows and as of December 31, 2022, we had an accumulated deficit of $160.9 million. We believe our marketable investment securities of $135.7 million, cash and cash equivalents of $122.9 million as of December 31, 2022 and revenue from our test reports will be sufficient to meet our anticipated cash requirements through at least the 12-month period following the date that these consolidated financial statements were issued. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation Our consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realization of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets, the valuation of contingent consideration and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. Operating Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. All revenues are attributable to U.S.-based operations and all assets are held in the United States. Cash and Cash Equivalents including Concentrations of Credit Risk Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the institutions in which deposits are held. We have not experienced any losses on our cash or cash equivalents. Marketable Investment Securities All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of related deferred income tax effects on our consolidated balance sheets. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment. Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the consolidated statements of operations. Impairments on available-for-sale debt securities, if any, are recorded in consolidated statements of operations. See Notes 5 and 11 for further details. Revenue Recognition In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. See Note 3 for further details. Accounts Receivable and Allowance for Credit Losses We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments. We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of December 31, 2022 and 2021. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Inventory We carry inventories of test supplies in our laboratory facilities. The inventories are carried at the lower of weighted average cost and net realizable value and expensed through cost of sales as the supplies are used. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between five Intangible Assets Our intangible assets, which are comprised primarily of acquired developed technology, are considered to be finite-lived and are amortized on a straight-line basis over their estimated useful lives. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other , our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. We have concluded that our business is comprised of a single reporting unit. For our annual impairment test for the year ended December 31, 2022, we elected to bypass the qualitative assessment and proceeded directly to the quantitative assessment by comparing our reporting unit’s fair value to its carrying value. Since we have a single reporting unit, fair value of the reporting unit was measured at our total market capitalization on the impairment test date based on the closing price of our common stock. Our impairment test indicated that the fair value of our reporting unit substantially exceeded its carrying value. Factors that could result in an impairment of goodwill in the future include declines in the price of our common stock, increased competition, changes in macroeconomic developments and unfavorable government or regulatory developments. Long-Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than the carrying amount. Impairment, if any, would be calculated based on the excess of the carrying amount of the long-lived asset over the long-lived asset’s fair value. There were no impairment charges recognized for the years ended December 31, 2022 and 2021. Acquisitions We assess acquisitions under ASC Topic 805, Business Combinations (“ASC 805”) , to determine whether a transaction represents the acquisition of assets or a business combination. Under this guidance, we apply a two-step model. The first step involves a screening test where we evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar assets. If the screening test is met, we account for the set as an asset acquisition. If the screening test is not met, we apply the second step of the model to determine if the set meets the definition of a business based on the guidance in ASC 805. If so, the transaction is treated as a business combination. Otherwise, it is treated as an asset acquisition. Asset acquisitions are accounted for by allocating the cost of the acquisition, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis without recognition of goodwill. Business combinations are accounted for using the acquisition method. Under the acquisition method, goodwill is measured as a residual amount equal to the fair value of the consideration transferred less the net recognized fair value of the identifiable assets acquired and the liabilities assumed, as of the acquisition date, and transaction costs are expensed as incurred. Contingent Consideration Under the terms of business combinations or asset acquisitions, we may be required to pay additional contingent consideration if specified future events occur or if certain conditions are met. In a business combination, in accordance with ASC 805, contingent consideration is recorded at fair value as of the acquisition date and classified as liabilities or equity based on applicable U.S. GAAP. For contingent consideration classified as liabilities, we remeasure the contingent consideration at fair value each period with changes in fair value recorded in the statements of operations each period. For contingent consideration in transactions that are not business combinations, we apply U.S. GAAP. With respect to additional contingent consideration that must or may be settled by issuance of a variable number of shares, we account for the contingent consideration as a liability in accordance with ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). In accordance with ASC 480, we record the contingent consideration initially and subsequently at fair value with changes in fair value recorded in the statements of operations each period. Contingent consideration is classified as current or noncurrent in our consolidated balance sheets based on the contractual timing of future settlement. For additional information on the contingent consideration, see Notes 6 and 11. Leases Effective January 1, 2021, we account for leases in accordance with ASC Topic 842, Leases (“ ASC 842”) . We categorize leases at their commencement as either operating or finance leases based on the criteria in ASC 842. Under ASC 842, we record right-of-use (“ROU”) assets and lease liabilities for each lease arrangement identified, except that we have elected the short-term lease exemption for all leases with a term of 12 months or less. Lease liabilities are recorded at the present value of future lease payments discounted using our incremental borrowing rate for the lease established at the commencement date and ROU assets are measured at the amount of the lease liability plus any initial direct costs, less any lease incentives received before commencement. For our operating leases, we recognize a single lease cost over the lease term on a straight-line basis. We have elected the practical expedient of not separating nonlease components from lease components in all leases. Upon adoption of ASC 842, effective January 1, 2021, we recognized operating lease ROU assets of $5,405,000, operating lease liabilities of $6,076,000, reductions to noncurrent liabilities of $751,000, reductions to current assets of $59,000 and a credit to accumulated deficit of $21,000. See Note 10 for details on our leases. Cost of Sales (exclusive of amortization of acquired intangible assets) Cost of sales is expensed as incurred and includes material and service costs associated with testing samples, personnel costs (including salaries, bonuses, benefits and stock-based compensation expense), electronic medical records, order and delivery systems, shipping charges to transport samples, third-party test fees, and allocated overhead including rent, information technology costs, equipment and facilities depreciation and utilities. Research and Development Research and development (“R&D”) costs are charged to operations as incurred. Advance payments for goods and services that will be used in future R&D activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform R&D services on behalf of us will be expensed as services are rendered or when the milestone is achieved. R&D costs include, but are not limited to, payroll and personnel-related expenses, stock-based compensation expense, materials, laboratory supplies, and consulting costs. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses are attributable to sales, marketing, executive, finance and accounting, legal and human resources functions. These expenses consist of personnel costs (including salaries, employee benefit costs, bonuses and stock-based compensation expenses), customer services expenses, direct marketing expenses, educational and promotional expenses, market research, audit and legal expenses, and consulting. We expense all SG&A costs as incurred. Accrued Compensation We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of December 31, 2022 and 2021, we accrued approximately $18,209,000 and $12,071,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the balance sheets based on the expected timing of payment. Retirement Plan We have an Internal Revenue Code (“IRC”) Section 401(k) profit sharing plan (the “Plan”) for eligible employees. The Plan is funded by employee contributions and provides for discretionary contributions in the form of matching and/or profit-sharing contributions. For the years ended December 31, 2022 and 2021, we provided a discretionary matching contribution of $3,525,000 and $2,036,000, respectively. The higher amount for the year ended December 31, 2022 primarily reflects an increase in the number of employees compared to the year ended December 31, 2021. Income Taxes We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the statutory enactment date. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. A liability for unrecognized tax benefits is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. Our policy for recording interest and penalties associated with uncertain tax positions is to record such items as a component of tax expense. No material amounts of tax-related interest or penalties were recorded during the years ended December 31, 2022 and 2021. Stock-Based Compensation Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the awards’ vesting period (typically four years). For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Forfeitures are accounted for as they occur. Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss is made up of net loss plus other comprehensive loss, if any. CARES Act Payroll Tax Deferral The CARES Act permitted employers to defer the payment of the employer share of social security taxes due for the period beginning March 27, 2020 and ending December 31, 2020. Of the amounts deferred, 50% were required to be paid by December 31, 2021 and the remaining 50% were required to be paid by December 31, 2022. We began deferring payment of the employer share of social security taxes in May 2020. Of the $551,000 originally deferred, 50% was repaid during the year ended December 31, 2021 and the remaining $276,000 of such taxes were repaid during the year ended December 31, 2022. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | RevenueAll of our revenues from contracts with customers are associated with the provision of diagnostic and prognostic testing services. Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma. We also provide a test for patients with cutaneous squamous cell carcinoma, DecisionDx®-SCC, two tests for use in patients with suspicious pigmented lesions, MyPath® Melanoma and DiffDx®-Melanoma, a test for uveal melanoma (“UM”), DecisionDx®-UM, and a test for patients diagnosed with Barrett’s esophagus (“BE”), the TissueCypher® Barrett’s Esophagus Test. We also began offering a pharmacogenomics (“PGx”) testing service focused on mental health, IDgenetix®, following a business combination completed in April 2022. Information on the disaggregation of revenues is included below. Once we satisfy our performance obligations and bill for the service, the timing of the collection of payments may vary based on the payment practices of the third-party payor and the existence of contractually established reimbursement rates. The payments for our services are primarily made by third-party payors, including Medicare and commercial health insurance carriers. Certain contracts contain a contractual commitment of a reimbursement rate that differs from our list prices. However, absent a positive coverage policy, with or without a contractually committed reimbursement rate, with a commercial carrier or governmental program, our diagnostic tests may or may not be paid by these entities. In addition, patients do not enter into direct agreements with us that commit them to pay any portion of the cost of the tests in the event that their insurance provider declines to reimburse us. We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan. These situations may result in a delay in the collection of payments. The Medicare claims that are covered by Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt. Medicare claims that were either submitted to Medicare prior to the local coverage determination (“LCD”) or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed ‘‘redetermination’’), second (termed ‘‘reconsideration’’) or third level of appeal ( de novo hearing with an Administrative Law Judge). A successful appeal at any of these levels may result in prompt payment. In the absence of Medicare coverage, contractually established reimbursements rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions. Variable consideration attributable to these price concessions is measured at the expected value using the ‘‘most likely amount’’ method under ASC 606. The amounts are determined by historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties. Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time. Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues. Included in revenues for the years ended December 31, 2022 and 2021 were $1,987,000 of net negative revenue adjustments and $3,324,000 of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration. Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations. Any incremental costs to obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of our contracts. Contract balances consisted solely of accounts receivable (both current and noncurrent) as of December 31, 2022 and 2021. Medicare Advance Payment On April 16, 2020, we received an advance payment of $8.3 million (the “Advance Payment”) from the Centers for Medicare & Medicaid Services (“CMS”) under its Accelerated and Advance Payment Program, which was expanded to provide increased cash flow to service providers during the COVID-19 pandemic. CMS began recoupment of the Advance Payment in April 2021 by applying 25% of the Medicare payments otherwise owed to us against the balance of the Advance Payment. Recoupment of the full amount of the Advance Payment was complete by December 31, 2021. Disaggregation of revenues The table below provides the disaggregation of revenue by type (in thousands): Years Ended December 31, 2022 2021 Dermatologic $ 124,809 $ 85,753 Other 12,230 8,332 Total net revenues $ 137,039 $ 94,085 Payor Concentration We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our diagnostic and prognostic tests. Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows: Percentage of Revenues Percentage of Accounts Receivable (current) Percentage of Accounts Receivable (noncurrent) Year Ended December 31, As of December 31, As of December 31, 2022 2021 2022 2021 2022 2021 Medicare 53 % 57 % 28 % 24 % * * Payor A 12 % * 14 % 12 % 16 % 15 % Payor B * * * 10 % * * * Less than 10% There were no other third-party payors that individually accounted for more than 10% of the Company’s total revenue or accounts receivable for the periods shown in the table above. |
Loss Per Share
Loss Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share Basic loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, vesting of RSUs and PSUs or purchases under the ESPP. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Contingently issuable PSU awards are included in the computation of diluted loss per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period. However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive. Because we reported a net loss for all periods presented, all potentially dilutive securities are antidilutive and are excluded from the computation of diluted loss per share for such periods. The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss per share for the years ended December 31, 2022 and 2021 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands): Years Ended December 31, 2022 2021 Stock options 3,521 3,209 RSUs and PSUs 1,650 250 ESPP 146 62 Total 5,317 3,521 In addition, in connection with the acquisition of AltheaDx, Inc. (“AltheaDx”), we may be required to issue shares of our common stock to satisfy the contingent consideration obligations, pending the outcome of certain commercial and regulatory milestones, as required by the definitive agreement to acquire AltheaDx. For purposes of calculating diluted loss per share, no such shares were assumed to have been issued because none of the applicable conditions have been met to date. See Notes 6 and 11 for additional information. |
Marketable Investment Securitie
Marketable Investment Securities | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Investment Securities | Marketable Investment Securities The following table presents our available-for-sale debt securities (in thousands): December 31, 2022 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities $ 136,058 $ — $ (381) $ 135,677 Total $ 136,058 $ — $ (381) $ 135,677 We had no available-for-sale debt securities as of December 31, 2021. Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity. We classify all investments as current assets, as these are readily available for use in current operations. The cost of securities sold is determined based on the specific identification method for purposes of recording gains and losses. There were no realized gains or losses on sales of investments for the years ended December 31, 2022 and 2021. We evaluated our investment portfolio under the available-for-sale debt securities impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities. As of December 31, 2022, unrealized losses on available-for-sale investments are not attributed to credit risk. We believe that an allowance for credit losses is unnecessary because the unrealized losses on certain of our marketable investment securities are due to market factors. No credit-related or noncredit-related impairment losses were recorded for the years ended December 31, 2022 and 2021. The allowance for credit losses was zero as of December 31, 2022 and 2021. As of December 31, 2022, all of our available-for-sale debt securities had contractual maturities of one year or less. Accrued interest receivable is included in prepaid expenses and other current assets in our consolidated balance sheets. As of December 31, 2022 and 2021 the accrued interest receivable balance was immaterial and zero, respectively. Additional information relating to the fair value of marketable investment securities can be found in Note 11. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Myriad myPath, LLC On May 28, 2021, we completed the acquisition of all of the equity of Myriad myPath, LLC, a laboratory in Salt Lake City where the MyPath Melanoma test for difficult-to-diagnose melanocytic lesions was developed and offered, for a cash purchase price of $32,500,000. Following the completion of the acquisition, we became the sole provider of the MyPath Melanoma test. Based on the guidance in ASC 805, we concluded that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset and therefore the transaction represents an asset acquisition. We incurred $684,000 of direct transaction costs that were included in the cost of the acquisition. The allocation of the acquisition to individual assets resulted in an intangible asset representing developed technology of $33,054,000 and inventory of $130,000. The intangible asset has an estimated useful life of 12 years and is being amortized on a straight-line basis. Cernostics, Inc. On December 3, 2021, we completed the acquisition of Cernostics, Inc. (“Cernostics”), which offers the TissueCypher Barrett’s Esophagus Test for patients with BE. We acquired Cernostics for an upfront cash purchase price of $30,732,000, including $653,000 of direct transaction costs. A portion of the upfront cash consideration is being held in escrow for a specified period following closing to secure indemnification claims, if any. Our consolidated balance sheet at December 31, 2021 reflected a receivable for the post-closing purchase price adjustment, representing the difference between actual and estimated cash and working capital at closing, among other things. During the year ended December 31, 2022, we received cash of $547,000 in settlement of this receivable. We also agreed to pay up to an additional $50.0 million in cash or shares of our common stock, at our sole discretion, based on the achievement of certain commercial milestones relating to the year ended December 31, 2022 (“Cernostics Earnout Payments”). The portion of any Cernostics Earnout Payments that could have been settled in shares of our common stock was subject to certain limitations and the aggregate number of shares that could have been issued for the Cernostics Earnout Payments may not have exceeded 5,034,653 shares. Any Cernostics Earnout Payments in shares of our common stock would have been based on the volume weighted-average price of our common stock for the 15 trading days ending December 30, 2022. The Cernostics Earnout Payments represent contingent consideration. ASC 480 provides guidance on accounting for certain obligations that must or may be settled by issuance of a variable number of shares. In accordance with that guidance, we recognized a liability of $18,287,000, which represented the fair value of the obligation as of the acquisition date. Our consolidated balance sheet at December 31, 2022 reflected a liability of zero for the Cernostics Earnout Payments since the applicable commercial milestones were not met. See Note 11 for additional information on the measurement of the contingent consideration. Based on the guidance in ASC 805, we concluded that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset and therefore the transaction represents an asset acquisition. The cost of the acquisition, which is comprised of the cash consideration, transaction costs and contingent consideration, was allocated to the assets acquired and the liabilities assumed as follows (in thousands): December 3, 2021 Cash and cash equivalents $ 1,251 Accounts receivable 104 Prepaid expenses and other current assets 198 Property and equipment 455 Intangible assets 57,827 Accounts payable (655) Accrued compensation (167) Other accrued and current liabilities (386) Finance lease liabilities (237) Deferred tax liabilities (9,371) Total cost allocated $ 49,019 The intangible assets were comprised of developed technology of $57,264,000 with an estimated useful life of 15 years and an assembled workforce of $563,000, with an estimated useful life of five years, and each is being amortized on a straight-line basis. AltheaDx, Inc. On April 26, 2022, we completed the acquisition of 100% of the equity interests in AltheaDx. AltheaDx offers the IDgenetix test, a PGx test focused on mental health. We believe this acquisition enabled us to expand upon our existing portfolio of testing solutions in support of our growth strategy. We have concluded that the transaction represents a business combination under ASC 805. The financial results of AltheaDx have been included in our consolidated financial statements since the date of the acquisition. The amount of revenue from AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was $912,000. The loss attributable to AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was approximately $12,372,000. This amount does not reflect transaction costs from the acquisition or the effects of the valuation allowance reduction discussed in Note 15. Transaction costs associated with the acquisition were $1,711,000 for the year ended December 31, 2022 and were recognized as expenses in the consolidated statements of operations. We have also agreed to pay up to an additional $75.0 million in cash and common stock in connection with the achievement of certain milestones based on 2022, 2023 and 2024 commercial milestones for the IDgenetix test (the “AltheaDx Earnout Payments”). Upon any achievement of each relevant milestone event, the associated payment will be paid 50% in cash and 50% in shares of our common stock based on a price per share equal to the volume-weighted-average price of our common stock for the 20 trading days as of the applicable milestone determination date. In accordance with the terms of the definitive agreement governing the acquisition of AltheaDx, the maximum number of shares of our common stock issuable to former AltheaDx security holders may not exceed 1,271,718 shares. Therefore, taking into consideration the number of shares already issued at closing, a maximum of 507,831 additional shares of our common stock remain issuable with respect to the AltheaDx Earnout Payments. In the event a number of shares in excess of 507,831 would otherwise be issuable in connection with the AltheaDx Earnout Payments, we will issue shares up to the maximum number permitted and pay cash for the remaining portion of the obligation. Contingent consideration liability associated with the AltheaDx Earnout Payments was zero as of the April 26, 2022 date of acquisition. Our calculations of the consideration transferred and the purchase price allocation for the acquisition of AltheaDx are finalized as of December 31, 2022. During the measurement period, we recorded adjustments to accrued liabilities, income taxes, intangible assets, contingent consideration and the resulting goodwill after finalizing our valuation of these items. The following table presents the acquisition-date fair value of the consideration transferred, summarizes the final allocation of the fair values of assets acquired and liabilities assumed in the acquisition of AltheaDx, and includes measurement period adjustments recorded during 2022 (in thousands, except for shares): April 26, 2022 Measurement Period Adjustments April 26, 2022 Consideration Transferred Cash $ 30,510 $ (8) $ 30,502 Common stock (763,887 shares) 17,111 — 17,111 Contingent consideration 1,528 (1,528) — Total consideration transferred $ 49,149 $ (1,536) $ 47,613 Fair Value Allocation Cash and cash equivalents $ 3,536 $ — $ 3,536 Accounts receivable 302 — 302 Inventory 279 — 279 Prepaid expenses and other current assets 262 — 262 Property and equipment 314 — 314 Intangible asset 37,000 (2,000) 35,000 Other assets – long-term 12 — 12 Accounts payable (231) — (231) Accrued compensation (380) — (380) Other accrued and current liabilities (532) 119 (413) Deferred tax liabilities (1,819) 147 (1,672) Other liabilities (88) — (88) Net identifiable assets acquired 38,655 (1,734) 36,921 Goodwill 10,494 198 10,692 Total fair value of net assets assumed $ 49,149 $ (1,536) $ 47,613 The fair value of the common stock issued was measured using the April 26, 2022 closing price of $22.40 per share, as reported by the Nasdaq Global Market. A portion of the upfront cash and stock consideration is being held in escrow for a specified period following closing to secure indemnification claims, if any. During the fourth quarter of 2022, we reversed losses originally recorded during the second and third quarters of 2022 that were associated with the remeasurement of contingent consideration before finalizing the valuation. Also during the fourth quarter of 2022, we recorded an immaterial adjustment to reduce the amortization expense associated with the intangible asset. The intangible asset is comprised of developed technology with an estimated useful life of 15 years and is being amortized on a straight-line basis. The goodwill, which is not expected to be deductible for income tax purposes, was primarily attributable to potential future growth opportunities and the organized workforce. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information for the years ended December 31, 2022 and 2021 combines our historical financial results and the results of AltheaDx, assuming that the companies were combined as of January 1, 2021, and includes adjustments for amortization expense from the acquired intangible assets and additional stock-based compensation expense. Nonrecurring pro forma adjustments consist of acquisition-related transaction costs of $1,711,000 and an income tax benefit of $1,626,000, both assumed to have been recognized during the year ended December 31, 2021 and therefore removed from the year ended December 31, 2022. The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods: Pro Forma Data Years Ended December 31, 2022 2021 Net revenues $ 137,591 $ 94,671 Net loss $ (72,819) $ (41,764) Related Parties Derek J. Maetzold, our President and Chief Executive Officer (“CEO”), and a member of our board of directors, and Daniel M. Bradbury, the Chairperson of our board of directors, each served on the board of directors of AltheaDx until the acquisition of AltheaDx was completed, were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction. Further, Frank Stokes, our Chief Financial Officer; Tobin W. Juvenal, our Chief Commercial Officer; Kristen Oelschlager, our Chief Operating Officer and certain immediate family members of Mr. Maetzold and Ms. Oelschlager were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction. These individuals may receive additional contingent consideration in the form of the AltheaDx Earnout Payments if the relevant commercial and regulatory milestone events occur. Our entry into the definitive agreement to acquire AltheaDx was approved by our board of directors based upon the unanimous recommendation of a special transaction committee comprised entirely of independent members of our board of directors without any financial interest in AltheaDx or any conflict of interest with respect to the acquisition of AltheaDx. |
Acquisitions | Acquisitions Myriad myPath, LLC On May 28, 2021, we completed the acquisition of all of the equity of Myriad myPath, LLC, a laboratory in Salt Lake City where the MyPath Melanoma test for difficult-to-diagnose melanocytic lesions was developed and offered, for a cash purchase price of $32,500,000. Following the completion of the acquisition, we became the sole provider of the MyPath Melanoma test. Based on the guidance in ASC 805, we concluded that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset and therefore the transaction represents an asset acquisition. We incurred $684,000 of direct transaction costs that were included in the cost of the acquisition. The allocation of the acquisition to individual assets resulted in an intangible asset representing developed technology of $33,054,000 and inventory of $130,000. The intangible asset has an estimated useful life of 12 years and is being amortized on a straight-line basis. Cernostics, Inc. On December 3, 2021, we completed the acquisition of Cernostics, Inc. (“Cernostics”), which offers the TissueCypher Barrett’s Esophagus Test for patients with BE. We acquired Cernostics for an upfront cash purchase price of $30,732,000, including $653,000 of direct transaction costs. A portion of the upfront cash consideration is being held in escrow for a specified period following closing to secure indemnification claims, if any. Our consolidated balance sheet at December 31, 2021 reflected a receivable for the post-closing purchase price adjustment, representing the difference between actual and estimated cash and working capital at closing, among other things. During the year ended December 31, 2022, we received cash of $547,000 in settlement of this receivable. We also agreed to pay up to an additional $50.0 million in cash or shares of our common stock, at our sole discretion, based on the achievement of certain commercial milestones relating to the year ended December 31, 2022 (“Cernostics Earnout Payments”). The portion of any Cernostics Earnout Payments that could have been settled in shares of our common stock was subject to certain limitations and the aggregate number of shares that could have been issued for the Cernostics Earnout Payments may not have exceeded 5,034,653 shares. Any Cernostics Earnout Payments in shares of our common stock would have been based on the volume weighted-average price of our common stock for the 15 trading days ending December 30, 2022. The Cernostics Earnout Payments represent contingent consideration. ASC 480 provides guidance on accounting for certain obligations that must or may be settled by issuance of a variable number of shares. In accordance with that guidance, we recognized a liability of $18,287,000, which represented the fair value of the obligation as of the acquisition date. Our consolidated balance sheet at December 31, 2022 reflected a liability of zero for the Cernostics Earnout Payments since the applicable commercial milestones were not met. See Note 11 for additional information on the measurement of the contingent consideration. Based on the guidance in ASC 805, we concluded that substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset and therefore the transaction represents an asset acquisition. The cost of the acquisition, which is comprised of the cash consideration, transaction costs and contingent consideration, was allocated to the assets acquired and the liabilities assumed as follows (in thousands): December 3, 2021 Cash and cash equivalents $ 1,251 Accounts receivable 104 Prepaid expenses and other current assets 198 Property and equipment 455 Intangible assets 57,827 Accounts payable (655) Accrued compensation (167) Other accrued and current liabilities (386) Finance lease liabilities (237) Deferred tax liabilities (9,371) Total cost allocated $ 49,019 The intangible assets were comprised of developed technology of $57,264,000 with an estimated useful life of 15 years and an assembled workforce of $563,000, with an estimated useful life of five years, and each is being amortized on a straight-line basis. AltheaDx, Inc. On April 26, 2022, we completed the acquisition of 100% of the equity interests in AltheaDx. AltheaDx offers the IDgenetix test, a PGx test focused on mental health. We believe this acquisition enabled us to expand upon our existing portfolio of testing solutions in support of our growth strategy. We have concluded that the transaction represents a business combination under ASC 805. The financial results of AltheaDx have been included in our consolidated financial statements since the date of the acquisition. The amount of revenue from AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was $912,000. The loss attributable to AltheaDx included in the consolidated statements of operations from the acquisition date through December 31, 2022 was approximately $12,372,000. This amount does not reflect transaction costs from the acquisition or the effects of the valuation allowance reduction discussed in Note 15. Transaction costs associated with the acquisition were $1,711,000 for the year ended December 31, 2022 and were recognized as expenses in the consolidated statements of operations. We have also agreed to pay up to an additional $75.0 million in cash and common stock in connection with the achievement of certain milestones based on 2022, 2023 and 2024 commercial milestones for the IDgenetix test (the “AltheaDx Earnout Payments”). Upon any achievement of each relevant milestone event, the associated payment will be paid 50% in cash and 50% in shares of our common stock based on a price per share equal to the volume-weighted-average price of our common stock for the 20 trading days as of the applicable milestone determination date. In accordance with the terms of the definitive agreement governing the acquisition of AltheaDx, the maximum number of shares of our common stock issuable to former AltheaDx security holders may not exceed 1,271,718 shares. Therefore, taking into consideration the number of shares already issued at closing, a maximum of 507,831 additional shares of our common stock remain issuable with respect to the AltheaDx Earnout Payments. In the event a number of shares in excess of 507,831 would otherwise be issuable in connection with the AltheaDx Earnout Payments, we will issue shares up to the maximum number permitted and pay cash for the remaining portion of the obligation. Contingent consideration liability associated with the AltheaDx Earnout Payments was zero as of the April 26, 2022 date of acquisition. Our calculations of the consideration transferred and the purchase price allocation for the acquisition of AltheaDx are finalized as of December 31, 2022. During the measurement period, we recorded adjustments to accrued liabilities, income taxes, intangible assets, contingent consideration and the resulting goodwill after finalizing our valuation of these items. The following table presents the acquisition-date fair value of the consideration transferred, summarizes the final allocation of the fair values of assets acquired and liabilities assumed in the acquisition of AltheaDx, and includes measurement period adjustments recorded during 2022 (in thousands, except for shares): April 26, 2022 Measurement Period Adjustments April 26, 2022 Consideration Transferred Cash $ 30,510 $ (8) $ 30,502 Common stock (763,887 shares) 17,111 — 17,111 Contingent consideration 1,528 (1,528) — Total consideration transferred $ 49,149 $ (1,536) $ 47,613 Fair Value Allocation Cash and cash equivalents $ 3,536 $ — $ 3,536 Accounts receivable 302 — 302 Inventory 279 — 279 Prepaid expenses and other current assets 262 — 262 Property and equipment 314 — 314 Intangible asset 37,000 (2,000) 35,000 Other assets – long-term 12 — 12 Accounts payable (231) — (231) Accrued compensation (380) — (380) Other accrued and current liabilities (532) 119 (413) Deferred tax liabilities (1,819) 147 (1,672) Other liabilities (88) — (88) Net identifiable assets acquired 38,655 (1,734) 36,921 Goodwill 10,494 198 10,692 Total fair value of net assets assumed $ 49,149 $ (1,536) $ 47,613 The fair value of the common stock issued was measured using the April 26, 2022 closing price of $22.40 per share, as reported by the Nasdaq Global Market. A portion of the upfront cash and stock consideration is being held in escrow for a specified period following closing to secure indemnification claims, if any. During the fourth quarter of 2022, we reversed losses originally recorded during the second and third quarters of 2022 that were associated with the remeasurement of contingent consideration before finalizing the valuation. Also during the fourth quarter of 2022, we recorded an immaterial adjustment to reduce the amortization expense associated with the intangible asset. The intangible asset is comprised of developed technology with an estimated useful life of 15 years and is being amortized on a straight-line basis. The goodwill, which is not expected to be deductible for income tax purposes, was primarily attributable to potential future growth opportunities and the organized workforce. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information for the years ended December 31, 2022 and 2021 combines our historical financial results and the results of AltheaDx, assuming that the companies were combined as of January 1, 2021, and includes adjustments for amortization expense from the acquired intangible assets and additional stock-based compensation expense. Nonrecurring pro forma adjustments consist of acquisition-related transaction costs of $1,711,000 and an income tax benefit of $1,626,000, both assumed to have been recognized during the year ended December 31, 2021 and therefore removed from the year ended December 31, 2022. The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods: Pro Forma Data Years Ended December 31, 2022 2021 Net revenues $ 137,591 $ 94,671 Net loss $ (72,819) $ (41,764) Related Parties Derek J. Maetzold, our President and Chief Executive Officer (“CEO”), and a member of our board of directors, and Daniel M. Bradbury, the Chairperson of our board of directors, each served on the board of directors of AltheaDx until the acquisition of AltheaDx was completed, were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction. Further, Frank Stokes, our Chief Financial Officer; Tobin W. Juvenal, our Chief Commercial Officer; Kristen Oelschlager, our Chief Operating Officer and certain immediate family members of Mr. Maetzold and Ms. Oelschlager were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction. These individuals may receive additional contingent consideration in the form of the AltheaDx Earnout Payments if the relevant commercial and regulatory milestone events occur. Our entry into the definitive agreement to acquire AltheaDx was approved by our board of directors based upon the unanimous recommendation of a special transaction committee comprised entirely of independent members of our board of directors without any financial interest in AltheaDx or any conflict of interest with respect to the acquisition of AltheaDx. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): As of December 31, 2022 2021 Lab equipment (1) $ 9,721 $ 3,727 Leasehold improvements 5,171 5,044 Computer equipment 4,336 2,457 Furniture and fixtures 1,660 1,288 Construction-in-progress 1,275 27 Total 22,163 12,543 Less accumulated depreciation (1) (7,848) (3,042) Property and equipment, net $ 14,315 $ 9,501 (1) Includes lab equipment under a finance lease of $369 thousand and accumulated depreciation of $137 thousand as of December 31, 2022 and $237 thousand and accumulated depreciation of $8 thousand as of December 31, 2021. Depreciation expense was recorded in the consolidated statements of operations as follows (in thousands): Years Ended December 31, 2022 2021 Cost of sales (exclusive of amortization of acquired intangible assets) $ 874 $ 478 Research and development 337 248 Selling, general and administrative 1,067 722 Total $ 2,278 $ 1,448 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net Goodwill Information on the change in carrying value of our goodwill is presented below (in thousands): Goodwill Balance, December 31, 2021 $ — Acquisition of AltheaDx 10,692 Balance, December 31, 2022 $ 10,692 There were no accumulated impairments of goodwill as of December 31, 2022 or 2021. We had no goodwill as of December 31, 2021. Other Intangible Assets, Net Our other intangible assets, net consist of the following (in thousands): December 31, 2022 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 125,317 $ (10,102) $ 115,215 12.9 Assembled workforce 563 (122) 441 4.0 Total other intangible assets, net $ 125,880 $ (10,224) $ 115,656 December 31, 2021 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 90,317 $ (1,949) $ 88,368 13.2 Assembled workforce 563 (9) 554 4.9 Total other intangible assets, net $ 90,880 $ (1,958) $ 88,922 The estimated future aggregate amortization expense as of December 31, 2022 is as follows (in thousands): Years Ending December 31, 2023 $ 9,013 2024 9,038 2025 9,013 2026 9,004 2027 8,901 Thereafter 70,687 Total $ 115,656 |
Other Accrued and Current Liabi
Other Accrued and Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Other Accrued and Current Liabilities | Other Accrued and Current Liabilities Other accrued liabilities consisted of the following (in thousands): As of December 31, 2022 2021 Accrued service fees $ 2,125 $ 1,905 Clinical studies 1,822 1,655 Employee stock purchase plan contributions 900 760 Payroll-related liabilities 37 695 Other 378 663 Total $ 5,262 $ 5,678 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases Operating Leases We lease office space in Friendswood, Texas (the “Friendswood Lease”) for use as our corporate headquarters. The Friendswood Lease commenced in late 2020 under a 60-month term and a renewal option for one additional five-year term. We lease two facilities in Phoenix, Arizona for laboratory and office space. For both leases, the current terms end in 2033 with options to renew for two additional five-year terms. On April 1, 2022, we entered into a lease agreement for commercial office space in Pittsburgh, Pennsylvania, which provides for a term of 10.5 years, a five-year renewal option, an early termination clause and a lease incentive allowance of $2.5 million to apply toward leasehold improvements. In September 2022, we obtained access to the facilities and initiated leasehold improvement work. Lease payments will commence at a future date upon the completion of leasehold improvements, at which point the facilities will be ready for intended use. We intend to use the additional space for general office and laboratory facilities. We have not included the optional renewal periods in the measurement of the lease obligations because it is not reasonably certain that we will exercise these renewal options. Our other operating leases primarily consist of office equipment. Finance Lease In connection with the acquisitions of AltheaDx in April 2022 and Cernostics in December 2021, we assumed finance leases for laboratory equipment. Discount Rates We discount our lease obligations using our incremental borrowing rate at the commencement date. The incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We primarily consider industry data, our credit rating and the lease term to determine our incremental borrowing rate. Lease Balances and Costs Lease balances reflected in the consolidated balance sheet were as follows (in thousands): As of December 31, Lease Balance Classification 2022 2021 Lease Assets Operating Operating lease assets $ 12,181 $ 7,383 Finance Property and equipment, net $ 232 $ 229 Lease Liabilities Current Operating Operating lease liabilities $ 1,777 $ 1,179 Finance Other accrued and current liabilities $ 148 $ 105 Noncurrent Operating Noncurrent operating lease liabilities $ 11,533 $ 6,900 Finance Other liabilities $ 90 $ 124 Costs associated with our leases were included in the consolidated statement of operations as follows (in thousands): Years Ended December 31, Lease Cost 2022 2021 Operating lease cost (1) $ 1,997 $ 1,450 Finance lease cost Amortization of lease assets 129 8 Interest on finance lease liabilities 16 1 Short-term lease cost 477 29 Total lease cost $ 2,619 $ 1,488 (1) Includes variable lease cost of $371 thousand and $187 thousand for the years ended December 31, 2022 and 2021, respectively. Other Information Supplemental cash flow information on leases is as follows (in thousands): Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,283 $ 1,145 Operating cash flows from interest paid on finance leases $ 16 $ 1 Financing cash flows from finance leases $ 122 $ 8 Information regarding the weighted-average lease term and weighted-average discount rate is presented below: As of December 31, 2022 2021 Weighted-average remaining lease term (years) Operating leases 9.4 9.1 Finance leases 1.9 2.3 Weighted-average discount rate Operating leases 7.3 % 4.9 % Finance leases 6.4 % 5.0 % The following is a maturity analysis of our operating lease and finance lease liabilities as of December 31, 2022 (in thousands): Operating leases Finance leases Years Ending December 31, 2023 $ 1,838 $ 153 2024 2,122 72 2025 2,014 30 2026 2,180 — 2027 2,219 — Thereafter 12,921 — Total lease payments 23,294 255 Less: Interest component (9,984) (17) Present value of lease payments $ 13,310 $ 238 As of December 31, 2022, we expect $0.7 million in undiscounted future lease payments for leases that had not yet commenced. |
Leases | Leases Operating Leases We lease office space in Friendswood, Texas (the “Friendswood Lease”) for use as our corporate headquarters. The Friendswood Lease commenced in late 2020 under a 60-month term and a renewal option for one additional five-year term. We lease two facilities in Phoenix, Arizona for laboratory and office space. For both leases, the current terms end in 2033 with options to renew for two additional five-year terms. On April 1, 2022, we entered into a lease agreement for commercial office space in Pittsburgh, Pennsylvania, which provides for a term of 10.5 years, a five-year renewal option, an early termination clause and a lease incentive allowance of $2.5 million to apply toward leasehold improvements. In September 2022, we obtained access to the facilities and initiated leasehold improvement work. Lease payments will commence at a future date upon the completion of leasehold improvements, at which point the facilities will be ready for intended use. We intend to use the additional space for general office and laboratory facilities. We have not included the optional renewal periods in the measurement of the lease obligations because it is not reasonably certain that we will exercise these renewal options. Our other operating leases primarily consist of office equipment. Finance Lease In connection with the acquisitions of AltheaDx in April 2022 and Cernostics in December 2021, we assumed finance leases for laboratory equipment. Discount Rates We discount our lease obligations using our incremental borrowing rate at the commencement date. The incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. We primarily consider industry data, our credit rating and the lease term to determine our incremental borrowing rate. Lease Balances and Costs Lease balances reflected in the consolidated balance sheet were as follows (in thousands): As of December 31, Lease Balance Classification 2022 2021 Lease Assets Operating Operating lease assets $ 12,181 $ 7,383 Finance Property and equipment, net $ 232 $ 229 Lease Liabilities Current Operating Operating lease liabilities $ 1,777 $ 1,179 Finance Other accrued and current liabilities $ 148 $ 105 Noncurrent Operating Noncurrent operating lease liabilities $ 11,533 $ 6,900 Finance Other liabilities $ 90 $ 124 Costs associated with our leases were included in the consolidated statement of operations as follows (in thousands): Years Ended December 31, Lease Cost 2022 2021 Operating lease cost (1) $ 1,997 $ 1,450 Finance lease cost Amortization of lease assets 129 8 Interest on finance lease liabilities 16 1 Short-term lease cost 477 29 Total lease cost $ 2,619 $ 1,488 (1) Includes variable lease cost of $371 thousand and $187 thousand for the years ended December 31, 2022 and 2021, respectively. Other Information Supplemental cash flow information on leases is as follows (in thousands): Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,283 $ 1,145 Operating cash flows from interest paid on finance leases $ 16 $ 1 Financing cash flows from finance leases $ 122 $ 8 Information regarding the weighted-average lease term and weighted-average discount rate is presented below: As of December 31, 2022 2021 Weighted-average remaining lease term (years) Operating leases 9.4 9.1 Finance leases 1.9 2.3 Weighted-average discount rate Operating leases 7.3 % 4.9 % Finance leases 6.4 % 5.0 % The following is a maturity analysis of our operating lease and finance lease liabilities as of December 31, 2022 (in thousands): Operating leases Finance leases Years Ending December 31, 2023 $ 1,838 $ 153 2024 2,122 72 2025 2,014 30 2026 2,180 — 2027 2,219 — Thereafter 12,921 — Total lease payments 23,294 255 Less: Interest component (9,984) (17) Present value of lease payments $ 13,310 $ 238 As of December 31, 2022, we expect $0.7 million in undiscounted future lease payments for leases that had not yet commenced. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements 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 the principal or most advantageous market in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used in measuring fair value. There are three levels to the fair value hierarchy based on the reliability of inputs, as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our 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 use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or amounts recorded may not be indicative of the amount that us or holders of the instruments could realize in a current market exchange. The table below provides information by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2022 and 2021 (in thousands): As of December 31, 2022 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 108,673 $ — $ — $ 108,673 U.S. government securities (2) $ 135,677 $ — $ — $ 135,677 Liabilities Contingent consideration (3) $ — $ — $ — $ — As of December 31, 2021 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 327,721 $ — $ — $ 327,721 U.S. government securities (2) $ — $ — $ — $ — Liabilities Contingent consideration (3) $ — $ — $ 18,287 $ 18,287 (1) Classified as “Cash and cash equivalents” in the consolidated balance sheets. (2) Classified as “Marketable investment securities” in the consolidated balance sheets. (3) Current portion, if any, classified as “Other accrued and current liabilities” in the consolidated balance sheets. Contingent Consideration In connection with our acquisition of Cernostics, we recorded a contingent consideration liability for the additional contingent consideration of up to $50.0 million that could have been payable based on the achievement of certain commercial milestones relating to the year ending December 31, 2022. The Cernostics Earnout Payments could have been settled in cash or shares of our common stock, at our sole discretion. The portion of any Cernostics Earnout Payments that could have been settled in shares of our common stock were subject to certain limitations and the aggregate number of shares that could have been issued for the Cernostics Earnout Payments could not have exceeded 5,034,653 shares. Any Cernostics Earnout Payments in shares of our common stock could have been based on the volume weighted-average price of our common stock for the 15 trading days ending December 30, 2022. There were no Cernostics Earnout Payments that became payable because the commercial milestones were not achieved during the earnout period. In connection with our acquisition of AltheaDx, we agreed to pay contingent consideration of up to $75.0 million based on the achievement of certain commercial milestones relating to the 2022, 2023, and 2024 commercial milestones, as discussed further in Note 6. The portion of the AltheaDx Earnout Payments associated with the commercial milestones for the year ended December 31, 2022 will not be paid since the applicable commercial milestones were not met. This portion represented $35.0 million of the $75.0 million total potential payment obligation, exclusive of the catch-up payment in 2023 of $17.5 million which will become payable if all 2023 commercial milestones are fully met. Therefore, a potential payment obligation of up to $57.5 million with respect to the remaining commercial milestones for 2023 and 2024 remains as of December 31, 2022. If the settlement of the remaining portion of the Althea Earnout Payments were to occur as of December 31, 2022, no amounts would be due based on the achievement of the commercial milestones to date. The contingent consideration was classified as a Level 3 fair value measurement due to the use of significant unobservable inputs and a Monte Carlo simulation to determine its fair value. The Monte Carlo simulation uses projections of the commercial milestones for the applicable period as well as the corresponding targets and approximate timing of payment based on the terms of the arrangement. The analysis for the Cernostics Earnout Payments used assumptions for expected volatility of the financial metrics and a risk-adjusted discount rate, which were 20.0% and 16.1%, respectively, as of December 31, 2021. The final valuation for the contingent consideration as of the date of acquisition was assessed to be zero and resulted in a measurement period adjustment. See Note 6 for additional information on the measurement period adjustment. Since the final valuation, there have been no changes in the fair value of the contingent consideration during the year ended December 31, 2022. The contingent consideration liability is remeasured at fair value at each reporting period taking into account any updated assumptions or changes in circumstances. Any changes in the fair value are recorded as gains or losses in our consolidated statement of operations. A measurement period adjustment was recognized in the fourth quarter of 2022 to reverse the preliminary valuation of the contingent consideration and losses recorded during the interim period. The following table discloses the summary of changes in the contingent consideration liability measured at fair value using Level 3 inputs for the year ended December 31, 2022 (in thousands): Cernostics AltheaDx Total Balance, December 31, 2021 $ 18,287 $ — $ 18,287 Acquisition of AltheaDx — — — Change in fair value (18,287) — (18,287) Balance, December 31, 2022 $ — $ — $ — |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesFrom time to time, we may be involved in legal proceedings arising in the ordinary course of business. We believe there is no threatened litigation or litigation pending that could have, individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Capital Stock The Company’s Amended and Restated Certificate of Incorporation, dated July 29, 2019, authorizes the Company to issue up to 200,000,000 shares of common stock with a par value of $0.001 per share. The Company is also authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.001 per share. No dividends were declared or paid during the years ended December 31, 2022 or 2021. During the year ended December 31, 2021, we paid $336,000 in common stock offering costs related to a public offering of common stock completed in December 2020. |
Stock Incentive Plans and Stock
Stock Incentive Plans and Stock Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock Incentive Plans and Stock Based Compensation | Stock Incentive Plans and Stock-Based Compensation Stock Incentive Plans Our stock incentive plans provide for the granting of options to purchase common stock and other equity-based awards to our employees, directors and consultants. On September 6, 2008, we adopted the 2008 Stock Plan (the “2008 Plan”), on August 15, 2018, we adopted the 2018 Stock Plan (the “2018 Plan”) and on July 24, 2019, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”). Following the adoption of the 2018 Plan, no additional stock awards were granted under the 2008 Plan and following the adoption of the 2019 Plan, no additional stock awards were granted under the 2018 Plan. On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the “Inducement Plan”) to reserve 350,000 shares of our common stock that may be issued pursuant to awards made as an inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following a bona fide period of non-employment with us. Options under the plans may be granted as incentive stock options (“ISO”) or non-statutory stock options (“NSOs”). ISOs may only be granted to our employees (including directors who are also considered employees). NSOs may be granted to our employees, directors and consultants. Options may be granted for terms up to ten years from the date of grant, as determined by the board of directors; provided, however, that with respect to an ISO granted to a person who owns stock representing more than 10% of the voting power of all classes of stock of ours, the terms shall be for no more than five years from the date of grant. The exercise price of options granted must be no less than 100% of the fair market value of the shares on the date of grant, provided, however, that with respect to an ISO granted to an employee who at the time of grant of such options owns stock representing more than 10% of the voting power of all classes of stock of ours, the exercise price shall not be less than 110% of the fair market value of the shares on the date of grant. Options generally vest over four years (generally 25% after one year and monthly thereafter), subject to the option holder’s continued service with us. We issue new shares to satisfy option exercises. As of December 31, 2022, we have granted awards for 1,473,888 shares in excess of the number of shares authorized for issuance under the 2019 Plan. The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5% of our common shares outstanding as of the immediately preceding year end, through January 1, 2029. Under this provision, effective January 1, 2023, an additional 1,327,684 shares became available under the 2019 Plan. Stock Options Stock option activity under our stock plans for the years ended December 31, 2022 and 2021 is set forth below: Weighted-Average Stock Options Exercise Remaining Aggregate Balance as of January 1, 2021 3,369,502 $ 28.11 Granted 841,336 $ 48.97 Exercised (414,890) $ 10.13 Forfeited/Cancelled (209,260) $ 33.97 Balance as of December 31, 2021 3,586,688 $ 34.75 Granted 263,645 $ 22.35 Exercised (148,735) $ 5.59 Forfeited/Cancelled (281,758) $ 34.08 Balance as of December 31, 2022 3,419,840 $ 35.11 7.5 $ 12,643 Exercisable at December 31, 2022 2,032,859 $ 30.09 7.0 $ 11,713 Restricted Stock Units RSUs represent the right to receive shares of our common stock at a specified future date, subject to vesting. Our RSUs generally vest annually from the grant date in four equal installments subject to the holder’s continued service with us. We issue new shares to satisfy RSUs upon vesting. The following table summarizes our RSU activity for the years ended December 31, 2022 and 2021: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of January 1, 2021 161,477 $ 59.16 Granted 958,361 $ 43.05 Vested (1) (56,002) $ 61.07 Forfeited/Cancelled (13,662) $ 62.80 Balance as of December 31, 2021 1,050,174 $ 44.31 Granted 2,988,107 $ 23.15 Vested (1) (257,708) $ 45.14 Forfeited/Cancelled (302,651) $ 27.12 Balance as of December 31, 2022 3,477,922 $ 27.56 (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 73,821 and 16,640 for the years ended December 31, 2022 and 2021, respectively. RSU Awards to Related Parties On October 1, 2021, the Audit Committee of our board of directors approved, at the recommendation of our Compensation Committee, a one-time award of RSUs to three employees who are the children of our CEO which we have determined to be outside the ordinary course of business. Under the IRC, those owning more than a specified percentage of a company’s stock are not eligible to receive certain preferential tax benefits that are afforded to qualifying stock compensation arrangements. In determining eligibility under the IRC, when calculating the number of shares of common stock owned, an individual must attribute all shares owned by specified family members. Because of the stock ownership of our CEO and this attribution requirement, the three children have not been eligible to participate in the ESPP and, at times, have not qualified to receive stock option grants on terms as favorable as those received by other similar employees. Our Compensation Committee recommended, and our Audit Committee approved, a one-time grant of RSUs designed to compensate the three children for these differences. The aggregate number of shares underlying the RSUs granted to the three children was 17,275 which are included in the table above. The awards had an aggregate grant date fair value of $1,129,000, vested immediately upon grant and were recognized as stock-based compensation expense, included in selling, general and administrative expenses, during the year ended December 31, 2021. Performance-Based Restricted Stock Units PSUs represent the right to receive shares of our common stock contingent upon the achievement of certain financial performance measures. We issue new shares to satisfy PSUs upon vesting. The following table summarizes our PSU activity for the year ended December 31, 2022: Performance-Based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2021 — $ — Granted 196,033 $ 23.23 Vested — $ — Forfeited/Cancelled — $ — Balance as of December 31, 2022 196,033 $ 23.23 Employee Stock Purchase Plan The ESPP became effective July 24, 2019. Offerings under the ESPP are generally 24 months in length with four six-month purchase periods unless terminated earlier, as described below. Eligible employees who enroll in an offering are able to purchase shares of our common stock at a discount through payroll deductions, subject to certain limitations. The purchase price of the shares of common stock is the lesser of (i) 85% of the fair market value of such shares on the offering date and (ii) 85% of the fair market value of such shares on the purchase date. A new offering begins approximately every six months. Offerings are concurrent, but in the event the fair market value of a share of common stock on the first day of any purchase period during an offering (the “New Offering”) is less than or equal to the fair market value of a share of common stock on the offering date for an ongoing offering (the “Ongoing Offering”), then the Ongoing Offering terminates immediately following the purchase of shares on the purchase date immediately preceding the New Offering and the participants in the terminated Ongoing Offering are automatically enrolled in the New Offering. In such case, we account for this event as a modification of the Ongoing Offering. Notwithstanding the above, our board of directors (or an authorized committee thereof) may modify the terms of or suspend any future offerings prior to their commencement. As of December 31, 2022, 814,599 shares remained available for issuance under the ESPP. The ESPP provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 265,536 shares becoming available under the ESPP effective January 1, 2023. We issue new shares to satisfy the ESPP purchases. Determining Fair Value - Summary of Assumptions We use the Black-Scholes option pricing model to estimate the fair value of stock options and purchase rights granted under the ESPP at the date of grant, start of the offering or other relevant measurement date. Set forth below is a description of the significant assumptions used in the option pricing model: • Expected term . The expected term is the period of time that granted options are expected to be outstanding. For stock options, we have set the expected term using the simplified method based on the weighted average of both the period to vesting and the period to maturity for each option, as we have concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate the expected term. For the ESPP, the expected term is the period of time from the offering date to the purchase date. • Expected volatility . Previously, because of the limited period of time our stock had been traded in an active market, we calculated expected volatility by using the historical stock prices of a group of similar companies looking back over the estimated life of the option or the ESPP purchase right and averaging the volatilities of these companies. In the third quarter of 2021, we adjusted this calculation to include our own stock price on a relative basis to the peer group in the calculation of expected volatility, as our common stock has now been traded in an active market for more than two years. • Risk-free interest rate . We base the risk-free interest rate used in the Black-Scholes valuation model on the market yield in effect at the time of option grant and at the offering date for the ESPP, provided from the Federal Reserve Board’s Statistical Releases and historical publications from the Treasury constant maturities rates for the equivalent remaining terms. • Dividend yield . We have not paid, and does not have plans to pay, cash dividends. Therefore, we use an expected dividend yield of zero in the Black-Scholes option valuation model. The fair value of our common stock is also an assumption used to determine the fair value of stock options. Prior to our initial public offering of common stock on July 29, 2019 (the “IPO”), our common stock was not publicly traded, therefore we estimated the fair value of our common stock. Following the IPO, the fair value of our common stock is the closing selling price per share of its common stock as reported on the Nasdaq Global Market on the date of grant or other relevant determination date. We use the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date. The following table sets forth the assumptions used to determine the fair value of stock options: Years Ended December 31, 2022 2021 Average expected term (years) 5.8 6.1 Expected stock price volatility 68.34% - 75.02% 66.50% - 68.83% Risk-free interest rate 1.54% - 4.21% 0.51% - 1.48% Dividend yield —% —% The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Years Ended December 31, 2022 2021 Average expected term (years) 1.3 1.2 Expected stock price volatility 62.98% - 91.78% 61.13% - 86.50% Risk-free interest rate 0.60% - 3.45% 0.06% - 0.20% Dividend yield —% —% We use the closing price of our common stock on the date of grant to determine the fair value of RSUs. Stock-Based Compensation Expense Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands): Years Ended December 31, 2022 2021 Cost of sales (exclusive of amortization of acquired intangible assets) $ 3,755 $ 2,058 Research and development 7,635 4,522 Selling, general and administrative 24,931 15,160 Total stock-based compensation expense $ 36,321 $ 21,740 For the years ended December 31, 2022 and 2021, the weighted-average grant date fair value of stock options was $14.34 and $29.89 per option, respectively, and the weighted-average grant date fair value of the purchase rights granted under the ESPP was $16.79 and $27.60 per share, respectively. As of December 31, 2022, the total unrecognized stock-based compensation cost related to outstanding awards was $131,644,000, which is expected to be recognized on a straight-line basis over a weighted-average period of 3 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2022 and 2021 was $3,745,000 and $27,191,000, respectively. The aggregate intrinsic value of shares issued under the ESPP was $534,000 and $6,341,000 during |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income tax expense (benefit) are as follows (in thousands): Years Ended December 31, 2022 2021 Current tax expense U.S. federal $ — $ — State and local 111 16 Total current 111 16 Deferred tax benefit U.S. federal (1,626) (8,726) State and local (251) (10) Total deferred (1,877) (8,736) Total income tax benefit $ (1,766) $ (8,720) The differences between income taxes expected at the U.S. federal statutory rate (21%) and the reported income tax expense (benefit) are summarized as follows (in thousands): Years Ended December 31, 2022 2021 Pre-tax loss $ (68,904) $ (40,012) U.S. federal taxes at statutory rate (14,470) (8,402) State income taxes (3,751) (1,764) Research and development tax credit (1,814) (1,658) Change in valuation allowance 17,075 2,570 Stock-based compensation 3,323 (880) Non-deductible officers’ compensation 1,326 1,571 Change in fair value of contingent consideration (3,840) — Transaction costs 359 — Other 26 (157) Income tax benefit $ (1,766) $ (8,720) Significant components of deferred tax assets and liabilities are as follows (in thousands): As of December 31, 2022 2021 Deferred tax assets: Net operating loss (“NOL”) carryforwards $ 49,253 $ 24,316 Accrued liabilities 6,503 4,168 Capitalized R&D costs 6,738 — Lease liabilities 3,549 2,114 Stock-based compensation 4,489 2,202 R&D tax credit 5,665 3,670 Other 445 240 Total deferred tax assets 76,642 36,710 Less valuation allowance (49,953) (17,774) Deferred tax assets, net $ 26,689 $ 18,936 Deferred tax liabilities: Prepaid expenses $ (289) $ (330) Property and equipment (3,269) (2,285) Intangible assets (19,026) (12,913) ROU assets (3,577) (2,166) Section 481(a) adjustment (cash to accrual) (956) (1,877) Total deferred tax liabilities (27,117) (19,571) Net deferred tax liability $ (428) $ (635) At December 31, 2022, we had NOL carryforwards for federal income tax purposes of approximately $207,242,000 of which $106,093,000 will begin to expire in 2029 if not utilized to offset taxable income, and $101,149,000 may be carried forward indefinitely. Future changes in ownership, as defined by Section 382 of the IRC, could limit the amount of NOL carryforwards used in any one year. Also, as of December 31, 2022, we had state NOL carryforwards of approximately $114,041,000, which begin to expire in 2028 if not utilized to offset state taxable income. Our R&D tax credit carryforwards of $5,665,000 at December 31, 2022 will begin to expire in 2034 if not utilized to offset federal income tax. In general, under Section 382 and 383 of the IRC, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and certain tax credits, to offset future taxable income and tax. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders changes by more than 50 percentage points over such stockholders’ lowest percentage of ownership during the testing period (generally three years). We performed a Section 382 analysis from inception through the year ended December 31, 2022 and concluded we had experienced an ownership change in 2011, 2014 and 2020. These changes in ownership did not result in the expiration of any NOLs or R&D credits. However, future changes in ownership may further limit the ability of us to utilize our NOL carryforwards and R&D tax credit carryforwards. We have also performed Section 382 analyses with respect to the NOLs we obtained in our acquisitions of Cernostics and AltheaDx. Based on changes in ownership that have occurred, $36,347,000 of NOLs are expected to expire unused as a result of Section 382 limitations. During the years ended December 31, 2022 and 2021, in connection with the acquisitions of AltheaDx and Cernostics, we recorded additional net deferred tax liabilities of $1,672,000 and $9,371,000, respectively, primarily due to book-tax differences related to the acquired intangible assets. As a result of these additional deferred tax liabilities, we determined that $1,626,000 and $8,726,000 of our existing valuation allowance should be reduced, which was reflected in our income tax benefit for the years ended December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, we placed a valuation allowance of $49,953,000 and $17,774,000, respectively, against our net deferred tax asset balances, as we have determined that it is more likely than not that they will not be realized. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Our consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). |
Consolidation | All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realization of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets, the valuation of contingent consideration and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. |
Operating Segments | Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. All revenues are attributable to U.S.-based operations and all assets are held in the United States. |
Cash and Cash Equivalents | Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. |
Concentrations of Credit Risk | Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the institutions in which deposits are held. We have not experienced any losses on our cash or cash equivalents. |
Marketable Investment Securities | All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component |
Revenue Recognition, Cost of Sales (exclusive of amortization of acquired intangible assets) | In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), |
Accounts Receivable | We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments. |
Allowance for Credit Losses | We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of December 31, 2022 and 2021. Adjustments for implicit price concessions attributable to variable consideration, as discussed above, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. |
Inventory | We carry inventories of test supplies in our laboratory facilities. The inventories are carried at the lower of weighted average cost and net realizable value and expensed through cost of sales as the supplies are used. |
Property and Equipment | Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between five |
Intangible Assets | Our intangible assets, which are comprised primarily of acquired developed technology, are considered to be finite-lived and are amortized on a straight-line basis over their estimated useful lives. |
Goodwill | Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other , our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment , by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. We have concluded that our business is comprised of a single reporting unit. For our annual impairment test for the year ended December 31, 2022, we elected to bypass the qualitative assessment and proceeded directly to the quantitative assessment by comparing our reporting unit’s fair value to its carrying value. Since we have a single reporting unit, fair value of the reporting unit was measured at our total market capitalization on the impairment test date based on the closing price of our common stock. Our impairment test indicated that the fair value of our reporting unit substantially exceeded its carrying value. Factors that could result in an impairment of goodwill in the future include declines in the price of our common stock, increased competition, changes in macroeconomic developments and unfavorable government or regulatory developments. |
Long-Lived Assets | We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than the carrying amount. Impairment, if any, would be calculated based on the excess of the carrying amount of the long-lived asset over the long-lived asset’s fair value. |
Acquisitions, Contingent Consideration | We assess acquisitions under ASC Topic 805, Business Combinations (“ASC 805”) , to determine whether a transaction represents the acquisition of assets or a business combination. Under this guidance, we apply a two-step model. The first step involves a screening test where we evaluate whether substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar assets. If the screening test is met, we account for the set as an asset acquisition. If the screening test is not met, we apply the second step of the model to determine if the set meets the definition of a business based on the guidance in ASC 805. If so, the transaction is treated as a business combination. Otherwise, it is treated as an asset acquisition. Asset acquisitions are accounted for by allocating the cost of the acquisition, including transaction costs, to the individual assets acquired and liabilities assumed on a relative fair value basis without recognition of goodwill. Business combinations are accounted for using the acquisition method. Under the acquisition method, goodwill is measured as a residual amount equal to the fair value of the consideration transferred less the net recognized fair value of the identifiable assets acquired and the liabilities assumed, as of the acquisition date, and transaction costs are expensed as incurred. Contingent Consideration Under the terms of business combinations or asset acquisitions, we may be required to pay additional contingent consideration if specified future events occur or if certain conditions are met. In a business combination, in accordance with ASC 805, contingent consideration is recorded at fair value as of the acquisition date and classified as liabilities or equity based on applicable U.S. GAAP. For contingent consideration classified as liabilities, we remeasure the contingent consideration at fair value each period with changes in fair value recorded in the statements of operations each period. For contingent consideration in transactions that are not business combinations, we apply U.S. GAAP. With respect to additional contingent consideration that must or may be settled by issuance of a variable number of shares, we account for the contingent consideration as a liability in accordance with ASC Topic 480, Distinguishing Liabilities from Equity |
Leases | Effective January 1, 2021, we account for leases in accordance with ASC Topic 842, Leases (“ ASC 842”) . |
Research and Development | Research and development (“R&D”) costs are charged to operations as incurred. Advance payments for goods and services that will be used in future R&D activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Upfront and milestone payments due to third parties that perform R&D services on behalf of us will be expensed as services are rendered or when the milestone is achieved. R&D costs include, but are not limited to, payroll and personnel-related expenses, stock-based compensation expense, materials, laboratory supplies, and consulting costs. |
Selling, General and Administrative Expenses | Selling, general and administrative (“SG&A”) expenses are attributable to sales, marketing, executive, finance and accounting, legal and human resources functions. These expenses consist of personnel costs (including salaries, employee benefit costs, bonuses and stock-based compensation expenses), customer services expenses, direct marketing expenses, educational and promotional expenses, market research, audit and legal expenses, and consulting. We expense all SG&A costs as incurred. |
Accrued Compensation, Stock-Based Compensation | We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of December 31, 2022 and 2021, we accrued approximately $18,209,000 and $12,071,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the balance sheets based on the expected timing of payment.Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the awards’ vesting period (typically four years). For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Forfeitures are accounted for as they occur. |
Retirement Plan | We have an Internal Revenue Code (“IRC”) Section 401(k) profit sharing plan (the “Plan”) for eligible employees. The Plan is funded by employee contributions and provides for discretionary contributions in the form of matching and/or profit-sharing contributions. |
Income Taxes | We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the statutory enactment date. Valuation allowances are established to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement. A liability for unrecognized tax benefits is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. |
Comprehensive Loss | Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The table below provides the disaggregation of revenue by type (in thousands): Years Ended December 31, 2022 2021 Dermatologic $ 124,809 $ 85,753 Other 12,230 8,332 Total net revenues $ 137,039 $ 94,085 |
Schedules of Concentration of Risk, by Risk Factor | Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows: Percentage of Revenues Percentage of Accounts Receivable (current) Percentage of Accounts Receivable (noncurrent) Year Ended December 31, As of December 31, As of December 31, 2022 2021 2022 2021 2022 2021 Medicare 53 % 57 % 28 % 24 % * * Payor A 12 % * 14 % 12 % 16 % 15 % Payor B * * * 10 % * * * Less than 10% |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss per share for the years ended December 31, 2022 and 2021 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands): Years Ended December 31, 2022 2021 Stock options 3,521 3,209 RSUs and PSUs 1,650 250 ESPP 146 62 Total 5,317 3,521 |
Marketable Investment Securit_2
Marketable Investment Securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Debt Securities, Available-for-Sale | The following table presents our available-for-sale debt securities (in thousands): December 31, 2022 Amortized Cost Unrealized Estimated Fair Value Gains Losses U.S. government securities $ 136,058 $ — $ (381) $ 135,677 Total $ 136,058 $ — $ (381) $ 135,677 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisition | The cost of the acquisition, which is comprised of the cash consideration, transaction costs and contingent consideration, was allocated to the assets acquired and the liabilities assumed as follows (in thousands): December 3, 2021 Cash and cash equivalents $ 1,251 Accounts receivable 104 Prepaid expenses and other current assets 198 Property and equipment 455 Intangible assets 57,827 Accounts payable (655) Accrued compensation (167) Other accrued and current liabilities (386) Finance lease liabilities (237) Deferred tax liabilities (9,371) Total cost allocated $ 49,019 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents the acquisition-date fair value of the consideration transferred, summarizes the final allocation of the fair values of assets acquired and liabilities assumed in the acquisition of AltheaDx, and includes measurement period adjustments recorded during 2022 (in thousands, except for shares): April 26, 2022 Measurement Period Adjustments April 26, 2022 Consideration Transferred Cash $ 30,510 $ (8) $ 30,502 Common stock (763,887 shares) 17,111 — 17,111 Contingent consideration 1,528 (1,528) — Total consideration transferred $ 49,149 $ (1,536) $ 47,613 Fair Value Allocation Cash and cash equivalents $ 3,536 $ — $ 3,536 Accounts receivable 302 — 302 Inventory 279 — 279 Prepaid expenses and other current assets 262 — 262 Property and equipment 314 — 314 Intangible asset 37,000 (2,000) 35,000 Other assets – long-term 12 — 12 Accounts payable (231) — (231) Accrued compensation (380) — (380) Other accrued and current liabilities (532) 119 (413) Deferred tax liabilities (1,819) 147 (1,672) Other liabilities (88) — (88) Net identifiable assets acquired 38,655 (1,734) 36,921 Goodwill 10,494 198 10,692 Total fair value of net assets assumed $ 49,149 $ (1,536) $ 47,613 |
Schedule of Unaudited Pro forma Financial Information and Net Income | The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods: Pro Forma Data Years Ended December 31, 2022 2021 Net revenues $ 137,591 $ 94,671 Net loss $ (72,819) $ (41,764) |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment, net consisted of the following (in thousands): As of December 31, 2022 2021 Lab equipment (1) $ 9,721 $ 3,727 Leasehold improvements 5,171 5,044 Computer equipment 4,336 2,457 Furniture and fixtures 1,660 1,288 Construction-in-progress 1,275 27 Total 22,163 12,543 Less accumulated depreciation (1) (7,848) (3,042) Property and equipment, net $ 14,315 $ 9,501 (1) Includes lab equipment under a finance lease of $369 thousand and accumulated depreciation of $137 thousand as of December 31, 2022 and $237 thousand and accumulated depreciation of $8 thousand as of December 31, 2021. Depreciation expense was recorded in the consolidated statements of operations as follows (in thousands): Years Ended December 31, 2022 2021 Cost of sales (exclusive of amortization of acquired intangible assets) $ 874 $ 478 Research and development 337 248 Selling, general and administrative 1,067 722 Total $ 2,278 $ 1,448 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Change in Carrying Value of Our Goodwill | Information on the change in carrying value of our goodwill is presented below (in thousands): Goodwill Balance, December 31, 2021 $ — Acquisition of AltheaDx 10,692 Balance, December 31, 2022 $ 10,692 |
Schedule of Finite-Lived Intangible Assets | Our other intangible assets, net consist of the following (in thousands): December 31, 2022 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 125,317 $ (10,102) $ 115,215 12.9 Assembled workforce 563 (122) 441 4.0 Total other intangible assets, net $ 125,880 $ (10,224) $ 115,656 December 31, 2021 Gross carrying value Accumulated amortization Net Weighted-Average Remaining Life (in years) Developed technology $ 90,317 $ (1,949) $ 88,368 13.2 Assembled workforce 563 (9) 554 4.9 Total other intangible assets, net $ 90,880 $ (1,958) $ 88,922 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future aggregate amortization expense as of December 31, 2022 is as follows (in thousands): Years Ending December 31, 2023 $ 9,013 2024 9,038 2025 9,013 2026 9,004 2027 8,901 Thereafter 70,687 Total $ 115,656 |
Other Accrued and Current Lia_2
Other Accrued and Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Other accrued liabilities consisted of the following (in thousands): As of December 31, 2022 2021 Accrued service fees $ 2,125 $ 1,905 Clinical studies 1,822 1,655 Employee stock purchase plan contributions 900 760 Payroll-related liabilities 37 695 Other 378 663 Total $ 5,262 $ 5,678 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of Lease Balances | Lease Balances and Costs Lease balances reflected in the consolidated balance sheet were as follows (in thousands): As of December 31, Lease Balance Classification 2022 2021 Lease Assets Operating Operating lease assets $ 12,181 $ 7,383 Finance Property and equipment, net $ 232 $ 229 Lease Liabilities Current Operating Operating lease liabilities $ 1,777 $ 1,179 Finance Other accrued and current liabilities $ 148 $ 105 Noncurrent Operating Noncurrent operating lease liabilities $ 11,533 $ 6,900 Finance Other liabilities $ 90 $ 124 |
Schedule of Lease Cost | Costs associated with our leases were included in the consolidated statement of operations as follows (in thousands): Years Ended December 31, Lease Cost 2022 2021 Operating lease cost (1) $ 1,997 $ 1,450 Finance lease cost Amortization of lease assets 129 8 Interest on finance lease liabilities 16 1 Short-term lease cost 477 29 Total lease cost $ 2,619 $ 1,488 (1) Includes variable lease cost of $371 thousand and $187 thousand for the years ended December 31, 2022 and 2021, respectively. Supplemental cash flow information on leases is as follows (in thousands): Years Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,283 $ 1,145 Operating cash flows from interest paid on finance leases $ 16 $ 1 Financing cash flows from finance leases $ 122 $ 8 Information regarding the weighted-average lease term and weighted-average discount rate is presented below: As of December 31, 2022 2021 Weighted-average remaining lease term (years) Operating leases 9.4 9.1 Finance leases 1.9 2.3 Weighted-average discount rate Operating leases 7.3 % 4.9 % Finance leases 6.4 % 5.0 % |
Schedule of Operating Lease, Liability, Maturity | The following is a maturity analysis of our operating lease and finance lease liabilities as of December 31, 2022 (in thousands): Operating leases Finance leases Years Ending December 31, 2023 $ 1,838 $ 153 2024 2,122 72 2025 2,014 30 2026 2,180 — 2027 2,219 — Thereafter 12,921 — Total lease payments 23,294 255 Less: Interest component (9,984) (17) Present value of lease payments $ 13,310 $ 238 |
Schedule of Finance Lease, Liability, Fiscal Year Maturity | The following is a maturity analysis of our operating lease and finance lease liabilities as of December 31, 2022 (in thousands): Operating leases Finance leases Years Ending December 31, 2023 $ 1,838 $ 153 2024 2,122 72 2025 2,014 30 2026 2,180 — 2027 2,219 — Thereafter 12,921 — Total lease payments 23,294 255 Less: Interest component (9,984) (17) Present value of lease payments $ 13,310 $ 238 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below provides information by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2022 and 2021 (in thousands): As of December 31, 2022 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 108,673 $ — $ — $ 108,673 U.S. government securities (2) $ 135,677 $ — $ — $ 135,677 Liabilities Contingent consideration (3) $ — $ — $ — $ — As of December 31, 2021 Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs Total Assets Money market funds (1) $ 327,721 $ — $ — $ 327,721 U.S. government securities (2) $ — $ — $ — $ — Liabilities Contingent consideration (3) $ — $ — $ 18,287 $ 18,287 (1) Classified as “Cash and cash equivalents” in the consolidated balance sheets. (2) Classified as “Marketable investment securities” in the consolidated balance sheets. (3) Current portion, if any, classified as “Other accrued and current liabilities” in the consolidated balance sheets. |
Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table discloses the summary of changes in the contingent consideration liability measured at fair value using Level 3 inputs for the year ended December 31, 2022 (in thousands): Cernostics AltheaDx Total Balance, December 31, 2021 $ 18,287 $ — $ 18,287 Acquisition of AltheaDx — — — Change in fair value (18,287) — (18,287) Balance, December 31, 2022 $ — $ — $ — |
Stock Incentive Plans and Sto_2
Stock Incentive Plans and Stock Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Arrangement on Stock Option Activity | Stock option activity under our stock plans for the years ended December 31, 2022 and 2021 is set forth below: Weighted-Average Stock Options Exercise Remaining Aggregate Balance as of January 1, 2021 3,369,502 $ 28.11 Granted 841,336 $ 48.97 Exercised (414,890) $ 10.13 Forfeited/Cancelled (209,260) $ 33.97 Balance as of December 31, 2021 3,586,688 $ 34.75 Granted 263,645 $ 22.35 Exercised (148,735) $ 5.59 Forfeited/Cancelled (281,758) $ 34.08 Balance as of December 31, 2022 3,419,840 $ 35.11 7.5 $ 12,643 Exercisable at December 31, 2022 2,032,859 $ 30.09 7.0 $ 11,713 |
Schedule of Share-based Payment Arrangement on Restricted Stock Units | The following table summarizes our RSU activity for the years ended December 31, 2022 and 2021: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of January 1, 2021 161,477 $ 59.16 Granted 958,361 $ 43.05 Vested (1) (56,002) $ 61.07 Forfeited/Cancelled (13,662) $ 62.80 Balance as of December 31, 2021 1,050,174 $ 44.31 Granted 2,988,107 $ 23.15 Vested (1) (257,708) $ 45.14 Forfeited/Cancelled (302,651) $ 27.12 Balance as of December 31, 2022 3,477,922 $ 27.56 (1) The aggregate number of shares withheld upon vesting for employee tax obligations was 73,821 and 16,640 for the years ended December 31, 2022 and 2021, respectively. |
Schedule of Share-based Payment Arrangement on, Performance-Based Restricted Stock Units | The following table summarizes our PSU activity for the year ended December 31, 2022: Performance-Based Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value Balance as of December 31, 2021 — $ — Granted 196,033 $ 23.23 Vested — $ — Forfeited/Cancelled — $ — Balance as of December 31, 2022 196,033 $ 23.23 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table sets forth the assumptions used to determine the fair value of stock options: Years Ended December 31, 2022 2021 Average expected term (years) 5.8 6.1 Expected stock price volatility 68.34% - 75.02% 66.50% - 68.83% Risk-free interest rate 1.54% - 4.21% 0.51% - 1.48% Dividend yield —% —% |
Schedule of Share-based Payment Award, ESPP, Valuation Assumptions | The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP: Years Ended December 31, 2022 2021 Average expected term (years) 1.3 1.2 Expected stock price volatility 62.98% - 91.78% 61.13% - 86.50% Risk-free interest rate 0.60% - 3.45% 0.06% - 0.20% Dividend yield —% —% |
Schedule of Share-based Payment Arrangement, Expensed and Capitalized, Amount | Stock-based compensation expense is included in the consolidated statements of operations as follows (in thousands): Years Ended December 31, 2022 2021 Cost of sales (exclusive of amortization of acquired intangible assets) $ 3,755 $ 2,058 Research and development 7,635 4,522 Selling, general and administrative 24,931 15,160 Total stock-based compensation expense $ 36,321 $ 21,740 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense (benefit) are as follows (in thousands): Years Ended December 31, 2022 2021 Current tax expense U.S. federal $ — $ — State and local 111 16 Total current 111 16 Deferred tax benefit U.S. federal (1,626) (8,726) State and local (251) (10) Total deferred (1,877) (8,736) Total income tax benefit $ (1,766) $ (8,720) |
Schedule of Effective Income Tax Rate Reconciliation | The differences between income taxes expected at the U.S. federal statutory rate (21%) and the reported income tax expense (benefit) are summarized as follows (in thousands): Years Ended December 31, 2022 2021 Pre-tax loss $ (68,904) $ (40,012) U.S. federal taxes at statutory rate (14,470) (8,402) State income taxes (3,751) (1,764) Research and development tax credit (1,814) (1,658) Change in valuation allowance 17,075 2,570 Stock-based compensation 3,323 (880) Non-deductible officers’ compensation 1,326 1,571 Change in fair value of contingent consideration (3,840) — Transaction costs 359 — Other 26 (157) Income tax benefit $ (1,766) $ (8,720) |
Schedule of Deferred Tax Assets and Liabilities | Significant components of deferred tax assets and liabilities are as follows (in thousands): As of December 31, 2022 2021 Deferred tax assets: Net operating loss (“NOL”) carryforwards $ 49,253 $ 24,316 Accrued liabilities 6,503 4,168 Capitalized R&D costs 6,738 — Lease liabilities 3,549 2,114 Stock-based compensation 4,489 2,202 R&D tax credit 5,665 3,670 Other 445 240 Total deferred tax assets 76,642 36,710 Less valuation allowance (49,953) (17,774) Deferred tax assets, net $ 26,689 $ 18,936 Deferred tax liabilities: Prepaid expenses $ (289) $ (330) Property and equipment (3,269) (2,285) Intangible assets (19,026) (12,913) ROU assets (3,577) (2,166) Section 481(a) adjustment (cash to accrual) (956) (1,877) Total deferred tax liabilities (27,117) (19,571) Net deferred tax liability $ (428) $ (635) |
Organization and Description _2
Organization and Description of Business (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (160,905) | $ (93,767) |
Marketable investment securities | 135,677 | 0 |
Cash and cash equivalents | $ 122,948 | $ 329,633 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Jan. 01, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Class of Stock [Line Items] | ||||
Number of operating segments | segment | 1 | |||
Allowance for doubtful accounts | $ 0 | $ 0 | ||
Goodwill, impairment loss | 0 | 0 | ||
Long-lived assets, impairment charges | 0 | 0 | ||
Operating lease assets | 12,181,000 | 7,383,000 | ||
Operating lease liabilities | 13,310,000 | |||
Current assets | (292,288,000) | (353,743,000) | ||
Accumulated deficit | (160,905,000) | (93,767,000) | ||
Accrued bonuses | 18,209,000 | 12,071,000 | ||
Discretionary matching contributions | 3,525,000 | 2,036,000 | ||
Deferred payroll taxes, CARES Act | $ 276,000 | $ 276,000 | $ 551,000 | |
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjustment | ||||
Class of Stock [Line Items] | ||||
Operating lease assets | $ 5,405,000 | |||
Operating lease liabilities | 6,076,000 | |||
Noncurrent liabilities | 751,000 | |||
Current assets | 59,000 | |||
Accumulated deficit | $ 21,000 | |||
Stock options | ||||
Class of Stock [Line Items] | ||||
Service period | 4 years | |||
Restricted Stock Units (RSUs) | ||||
Class of Stock [Line Items] | ||||
Service period | 4 years | |||
Minimum | ||||
Class of Stock [Line Items] | ||||
Property, plant and equipment, useful life | 5 years | |||
Maximum | ||||
Class of Stock [Line Items] | ||||
Property, plant and equipment, useful life | 10 years |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Apr. 16, 2020 | |
Revenue from Contract with Customer [Abstract] | |||
Number of days contract with customer is generally paid | 30 days | ||
Variable consideration adjustments included in revenue | $ (1,987) | $ 3,324 | |
Amount received from CMS under its accelerated and advance payment program | $ 8,300 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Total net revenues | $ 137,039 | $ 94,085 |
Dermatologic | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenues | 124,809 | 85,753 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total net revenues | $ 12,230 | $ 8,332 |
Revenue - Payor Concentration (
Revenue - Payor Concentration (Details) - Third-Party Payor Concentration Risk | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Medicare | Percentage of Revenues | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 53% | 57% |
Medicare | Percentage of Accounts Receivable (current) | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 28% | 24% |
Payor A | Percentage of Revenues | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 12% | |
Payor A | Percentage of Accounts Receivable (current) | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 14% | 12% |
Payor A | Percentage of Accounts Receivable (noncurrent) | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 16% | 15% |
Payor B | Percentage of Accounts Receivable (current) | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 10% |
Loss Per Share - Schedule of An
Loss Per Share - Schedule of Antidilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 5,317 | 3,521 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 3,521 | 3,209 |
RSUs and PSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 1,650 | 250 |
ESPP | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 146 | 62 |
Marketable Investment Securit_3
Marketable Investment Securities - Schedule of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | $ 136,058 | |
Unrealized gains | 0 | |
Unrealized losses | (381) | |
Estimated Fair Value | 135,677 | $ 0 |
U.S. government securities | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | 136,058 | |
Unrealized gains | 0 | |
Unrealized losses | (381) | |
Estimated Fair Value | $ 135,677 |
Marketable Investment Securit_4
Marketable Investment Securities - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | ||
Available-for-sale debt securities | $ 135,677 | $ 0 |
Realized gain (loss) on sale of investment | 0 | 0 |
Impairment loss | 0 | 0 |
Allowance for credit loss | $ 0 | $ 0 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ / shares in Units, $ in Thousands | 8 Months Ended | 12 Months Ended | ||||
Apr. 26, 2022 USD ($) tradingDay $ / shares shares | Dec. 03, 2021 USD ($) | May 28, 2021 USD ($) | Dec. 31, 2022 USD ($) tradingDay $ / shares shares | Dec. 31, 2022 USD ($) tradingDay $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | |
Business Acquisition [Line Items] | ||||||
Noncurrent portion of contingent consideration | $ 0 | $ 0 | $ 18,287 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Income tax (benefit) expense | $ 1,766 | $ 8,720 | ||||
AltheaDx, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of voting interest acquired | 100% | |||||
Revenue from acquisition date | $ 912 | |||||
Loss from acquisition date | $ 12,372 | |||||
Additional consideration payable based on achievement of certain commercial milestones | $ 75,000 | |||||
Contingent consideration paid in cash (as a percent) | 50% | |||||
Contingent consideration paid in common stock (as a percent) | 50% | |||||
Business acquisition, number of shares issued or issuable in transaction (in shares) | shares | 763,887 | |||||
Contingent consideration in acquisition of business | $ 0 | |||||
Share price (in dollars per share) | $ / shares | $ 22.40 | |||||
AltheaDx, Inc | Acquisition-related Costs | ||||||
Business Acquisition [Line Items] | ||||||
Transaction costs expensed | $ 1,711 | |||||
AltheaDx, Inc | Income Tax Adjustment | ||||||
Business Acquisition [Line Items] | ||||||
Income tax (benefit) expense | $ 1,626 | |||||
AltheaDx, Inc | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life (in years) | 15 years | |||||
AltheaDx, Inc | Common Stock | ||||||
Business Acquisition [Line Items] | ||||||
Common stock, share price, volume-weighted average price, number of trading days | tradingDay | 20 | |||||
Business acquisition, number of shares issued or issuable in transaction (in shares) | shares | 1,271,718 | |||||
Consideration transferred, number of remaining shares authorized to be issued (in shares) | shares | 507,831 | |||||
Myriad myPath, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Cash purchase price | $ 32,500 | |||||
Asset acquisition, transaction costs | 684 | |||||
Inventory | 130 | |||||
Myriad myPath, LLC | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 33,054 | |||||
Estimated useful life (in years) | 12 years | |||||
Cernostics, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Cash purchase price | $ 30,732 | |||||
Asset acquisition, transaction costs | 653 | |||||
Intangible assets | 57,827 | |||||
Asset acquisition, consideration transferred, equity interest issued and issuable | 50,000 | |||||
Maximum number of shares payable in earnout payment (in shares) | shares | 5,034,653 | 5,034,653 | ||||
Number of trading days to determine volume weighted-average price of common stock | tradingDay | 15 | 15 | ||||
Consideration transferred, contingent consideration | 18,287 | |||||
Noncurrent portion of contingent consideration | $ 0 | $ 0 | ||||
Cash received from settlement of receivable | $ 547 | |||||
Cernostics, Inc. | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 57,264 | |||||
Estimated useful life (in years) | 15 years | |||||
Cernostics, Inc. | Assembled workforce | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 563 | |||||
Estimated useful life (in years) | 5 years |
Acquisitions - Schedule of Asse
Acquisitions - Schedule of Assets and Liabilities Acquired In Asset Acquisition (Details) - Cernostics, Inc. $ in Thousands | Dec. 03, 2021 USD ($) |
Asset Acquisition [Line Items] | |
Cash and cash equivalents | $ 1,251 |
Accounts receivable | 104 |
Prepaid expenses and other current assets | 198 |
Property and equipment | 455 |
Intangible assets | 57,827 |
Accounts payable | (655) |
Accrued compensation | (167) |
Other accrued and current liabilities | (386) |
Finance lease liabilities | (237) |
Deferred tax liabilities | (9,371) |
Total cost allocated | $ 49,019 |
Acquisitions - Assets Acquired
Acquisitions - Assets Acquired and Liabilities Assumed (Details) - USD ($) | Apr. 26, 2022 | Dec. 31, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | |||
Goodwill | $ 10,692,000 | $ 0 | |
AltheaDx, Inc | |||
Business Acquisition [Line Items] | |||
Cash | $ 30,502,000 | ||
Common stock (763,887 shares) | $ 17,111,000 | ||
Business acquisition, number of shares issued or issuable in transaction (in shares) | 763,887 | ||
Contingent consideration | $ 0 | ||
Total consideration transferred | 47,613,000 | ||
Measurement Period Adjustments, Cash | (8,000) | ||
Measurement Period Adjustments, Contingent Consideration | (1,528,000) | ||
Measurement Period Adjustments, Consideration Transferred | (1,536,000) | ||
Cash and cash equivalents | 3,536,000 | ||
Accounts receivable | 302,000 | ||
Inventory | 279,000 | ||
Prepaid expenses and other current assets | 262,000 | ||
Property and equipment | 314,000 | ||
Intangible asset | 35,000,000 | ||
Measurement Period Adjustments, Intangible asset | (2,000,000) | ||
Other assets – long-term | 12,000 | ||
Accounts payable | (231,000) | ||
Accrued compensation | (380,000) | ||
Measurement Period Adjustments, Other accrued and current liabilities | 119,000 | ||
Other accrued and current liabilities | (413,000) | ||
Measurement Period Adjustments, Adjustment, deferred tax liabilities | 147,000 | ||
Deferred tax liabilities | (1,672,000) | $ (1,672,000) | |
Other liabilities | (88,000) | ||
Net identifiable assets acquired | 36,921,000 | ||
Measurement Period Adjustments, Net identifiable assets acquired | (1,734,000) | ||
Goodwill | 10,692,000 | ||
Measurement Period Adjustments, Goodwill | 198,000 | ||
Total fair value of net assets assumed | 47,613,000 | ||
Measurement Period Adjustments, Total consideration transferred | (1,536,000) | ||
AltheaDx, Inc | Previously Reported | |||
Business Acquisition [Line Items] | |||
Cash | 30,510,000 | ||
Common stock (763,887 shares) | 17,111,000 | ||
Contingent consideration | 1,528,000 | ||
Total consideration transferred | 49,149,000 | ||
Cash and cash equivalents | 3,536,000 | ||
Accounts receivable | 302,000 | ||
Inventory | 279,000 | ||
Prepaid expenses and other current assets | 262,000 | ||
Property and equipment | 314,000 | ||
Intangible asset | 37,000,000 | ||
Other assets – long-term | 12,000 | ||
Accounts payable | (231,000) | ||
Accrued compensation | (380,000) | ||
Other accrued and current liabilities | (532,000) | ||
Deferred tax liabilities | (1,819,000) | ||
Other liabilities | (88,000) | ||
Net identifiable assets acquired | 38,655,000 | ||
Goodwill | 10,494,000 | ||
Total fair value of net assets assumed | $ 49,149,000 |
Acquisitions - Schedule of Unau
Acquisitions - Schedule of Unaudited Pro forma Financial Information and Net Income (Details) - AltheaDx, Inc - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | ||
Net revenues | $ 137,591 | $ 94,671 |
Net loss | $ (72,819) | $ (41,764) |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Total | $ 22,163 | $ 12,543 |
Less: accumulated depreciation | (7,848) | (3,042) |
Property and equipment, net | 14,315 | 9,501 |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 9,721 | 3,727 |
Finance lease, right-of-use asset, before accumulated amortization | 369 | 237 |
Finance lease, right-of-use asset, accumulated amortization | 137 | 8 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 5,171 | 5,044 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 4,336 | 2,457 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | 1,660 | 1,288 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 1,275 | $ 27 |
Property and Equipment, Net -_2
Property and Equipment, Net - Summary of Depreciation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | $ 2,278 | $ 1,448 |
Cost of sales (exclusive of amortization of acquired intangible assets) | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | 874 | 478 |
Research and development | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | 337 | 248 |
Selling, general and administrative | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation and amortization | $ 1,067 | $ 722 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, Net - Schedule of Change in Carrying Value of Our Goodwill (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, beginning balance | $ 0 |
Acquisition of AltheaDx | 10,692,000 |
Goodwill, ending balance | $ 10,692,000 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, Net - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill accumulated impairment | $ 0 | $ 0 |
Goodwill | 10,692,000 | 0 |
Amortization of acquired intangible assets | $ 8,266,000 | $ 1,958,000 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets, Net - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 125,880 | $ 90,880 |
Accumulated amortization | (10,224) | (1,958) |
Net | 115,656 | 88,922 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 125,317 | 90,317 |
Accumulated amortization | (10,102) | (1,949) |
Net | $ 115,215 | $ 88,368 |
Weighted-Average Remaining Life (in years) | 12 years 10 months 24 days | 13 years 2 months 12 days |
Assembled workforce | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 563 | $ 563 |
Accumulated amortization | (122) | (9) |
Net | $ 441 | $ 554 |
Weighted-Average Remaining Life (in years) | 4 years | 4 years 10 months 24 days |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets, Net - Future Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 9,013 | |
2024 | 9,038 | |
2025 | 9,013 | |
2026 | 9,004 | |
2027 | 8,901 | |
Thereafter | 70,687 | |
Net | $ 115,656 | $ 88,922 |
Other Accrued and Current Lia_3
Other Accrued and Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued service fees | $ 2,125 | $ 1,905 |
Clinical studies | 1,822 | 1,655 |
Employee stock purchase plan contributions | 900 | 760 |
Payroll-related liabilities | 37 | 695 |
Other | 378 | 663 |
Other accrued and current liabilities | $ 5,262 | $ 5,678 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Millions | 12 Months Ended | |
Apr. 01, 2022 USD ($) | Dec. 31, 2022 USD ($) renewal_option offering | |
Operating Leased Assets [Line Items] | ||
Undiscounted future lease payments for leases that had not yet commenced | $ | $ 0.7 | |
Pittsburgh Lease | ||
Operating Leased Assets [Line Items] | ||
Lease arrangement, renewal term | 5 years | |
Term of contract | 10 years 6 months | |
Leasehold improvements to be contributed by landlord | $ | $ 2.5 | |
Office Space | ||
Operating Leased Assets [Line Items] | ||
Lease arrangement, term of contract | 60 months | |
Lease arrangement, number of renewal options | renewal_option | 1 | |
Lease arrangement, renewal term | 5 years | |
Office and Laboratory Facility | ||
Operating Leased Assets [Line Items] | ||
Lease arrangement, number of renewal options | renewal_option | 2 | |
Lease arrangement, renewal term | 5 years | |
Number of facilities leased | offering | 2 |
Leases - Balance Sheet Classifi
Leases - Balance Sheet Classification of Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating lease assets | $ 12,181 | $ 7,383 |
Finance lease assets | 232 | 229 |
Operating lease liabilities | 1,777 | 1,179 |
Finance lease liabilities | 148 | 105 |
Noncurrent operating lease liabilities | 11,533 | 6,900 |
Finance lease liability, noncurrent | $ 90 | $ 124 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other accrued and current liabilities | Other accrued and current liabilities |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other liabilities | Other liabilities |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease cost | $ 1,997 | $ 1,450 |
Amortization of lease assets | 129 | 8 |
Interest on finance lease liabilities | 16 | 1 |
Short-term lease cost | 477 | 29 |
Total lease cost | 2,619 | 1,488 |
Variable lease cost | $ 371 | $ 187 |
Leases - Other information (Det
Leases - Other information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating lease liabilities | $ 1,283 | $ 1,145 |
Operating cash flows from interest paid on finance leases | 16 | 1 |
Repayment of principal portion of finance lease liabilities | $ 122 | $ 8 |
Weighted-average remaining lease term (years) | ||
Operating leases | 9 years 4 months 24 days | 9 years 1 month 6 days |
Finance leases | 1 year 10 months 24 days | 2 years 3 months 18 days |
Weighted-average discount rate | ||
Operating leases | 7.30% | 4.90% |
Finance leases | 6.40% | 5% |
Leases - Operating Lease and Fi
Leases - Operating Lease and Finance Lease Maturity (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Operating leases | |
2023 | $ 1,838 |
2024 | 2,122 |
2025 | 2,014 |
2026 | 2,180 |
2027 | 2,219 |
Thereafter | 12,921 |
Total lease payments | 23,294 |
Less: Interest component | (9,984) |
Operating lease liabilities | 13,310 |
Finance leases | |
2023 | 153 |
2024 | 72 |
2025 | 30 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total lease payments | 255 |
Less: Interest component | (17) |
Present value of lease payments | $ 238 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Assets and Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | $ 135,677 | $ 0 |
Contingent consideration | 0 | 18,287 |
U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 135,677 | |
Fair Value, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 108,673 | 327,721 |
Contingent consideration | 0 | 18,287 |
Fair Value, Recurring | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 135,677 | 0 |
Fair Value, Recurring | Quoted Prices in Active Markets for Identical Items (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 108,673 | 327,721 |
Contingent consideration | 0 | 0 |
Fair Value, Recurring | Quoted Prices in Active Markets for Identical Items (Level 1) | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 135,677 | 0 |
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Contingent consideration | 0 | 0 |
Fair Value, Recurring | Significant Other Observable Inputs (Level 2) | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | 0 | 0 |
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Contingent consideration | 0 | 18,287 |
Fair Value, Recurring | Significant Unobservable Inputs (Level 3) | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale debt securities | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) tradingDay shares | Dec. 31, 2021 | Apr. 26, 2022 USD ($) | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
FairValueRecurringBasisUnobservableInputReconciliationLiabilityGainLossStatementOfIncomeExtensibleListNotDisclosedFlag | contingent consideration | ||
AltheaDx, Inc | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Contingent consideration in acquisition of business | $ 0 | ||
Additional consideration payable based on achievement of certain commercial milestones | $ 75,000,000 | ||
Contingent consideration, portion not paid | $ 35,000,000 | ||
Contingent consideration, catch up payment | 17,500,000 | ||
Potential payment obligation | 57,500,000 | ||
Earnout payment, amounts due | 0 | ||
Cernostics, Inc. | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Additional consideration payable based on achievement of certain commercial milestones | $ 50,000,000 | ||
Maximum number of shares payable in earnout payment (in shares) | shares | 5,034,653 | ||
Number of trading days to determine volume weighted-average price of common stock | tradingDay | 15 | ||
Earnout payments | $ 0 | ||
Valuation, Income Approach | Measurement Input, Discount Rate | Cernostics, Inc. | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Asset acquisition, contingent consideration, liability, measurement input | 16.10% | ||
Valuation, Income Approach | Measurement Input, Price Volatility | Cernostics, Inc. | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Asset acquisition, contingent consideration, liability, measurement input | 20% |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance, December 31, 2021 | $ 18,287 |
Acquisition of AltheaDx | 0 |
Change in fair value | (18,287) |
Balance, December 31, 2022 | 0 |
AltheaDx, Inc | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance, December 31, 2021 | 0 |
Acquisition of AltheaDx | 0 |
Change in fair value | 0 |
Balance, December 31, 2022 | 0 |
Cernostics, Inc. | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance, December 31, 2021 | 18,287 |
Acquisition of AltheaDx | 0 |
Change in fair value | (18,287) |
Balance, December 31, 2022 | $ 0 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity [Abstract] | ||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, dividends declared (in dollars per share) | 0 | 0 |
Common stock, dividends paid (in dollars per share) | $ 0 | $ 0 |
Payment of common stock offering costs | $ 0 | $ 336 |
Stock Incentive Plans and Sto_3
Stock Incentive Plans and Stock Based Compensation - Narrative (Details) | 12 Months Ended | |||||
Jan. 01, 2023 shares | Jan. 01, 2022 shares | Oct. 01, 2021 USD ($) employee shares | Dec. 31, 2022 USD ($) vesting_period purchase_period $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | Dec. 22, 2022 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation expense | $ | $ 131,644,000 | |||||
Unrecognized compensation expense, period for recognition | 3 years | |||||
Options exercised, intrinsic value | $ | $ 3,745,000 | $ 27,191,000 | ||||
Tax benefits related to stock-based compensation | $ | $ 0 | $ 0 | ||||
2022 Inducement Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares of common stock (in shares) | shares | 350,000 | |||||
2019 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares issued in excess of shares authorized (in shares) | shares | 1,473,888 | |||||
Percentage of outstanding stock | 5% | |||||
2019 Equity Incentive Plan | Subsequent Event | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Increase in number of shares authorized for issuance (in shares) | shares | 1,327,684 | |||||
Employee stock purchase plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options granted, weighted average grant date fair value (in dollars per share) | $ / shares | $ 16.79 | $ 27.60 | ||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 10 years | |||||
Percentage of share price at grant date | 100% | |||||
Vesting period | 4 years | |||||
Options granted, weighted average grant date fair value (in dollars per share) | $ / shares | $ 14.34 | $ 29.89 | ||||
Stock options | First Year of Vesting | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 1 year | |||||
Vesting percentage | 25% | |||||
ISOs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 5 years | |||||
Percentage of voting power ownership | 10% | |||||
Percentage of share price at grant date | 110% | |||||
ESPP | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate intrinsic value of shares issued under the ESPP | $ | $ 534,000 | $ 6,341,000 | ||||
ESPP | Employee stock purchase plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for grant (in shares) | shares | 814,599 | |||||
Increase in number of shares authorized for issuance (in shares) | shares | 265,536 | |||||
Offering period | 24 months | |||||
Number of offering periods | purchase_period | 4 | |||||
Purchase period | 6 months | |||||
Purchase price of common stock, percentage of fair market value | 85% | |||||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate fair value of restricted stock units vested | $ | $ 5,863,000 | $ 2,698,000 | ||||
Number of vesting periods | vesting_period | 4 | |||||
Restricted Stock Units (RSUs) | Immediate Family Member of Management or Principal Owner | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | shares | 17,275 | |||||
Grant date fair value of awards granted | $ | $ 1,129,000 | |||||
Number of employees to receive awards | employee | 3 |
Stock Incentive Plans and Sto_4
Stock Incentive Plans and Stock Based Compensation - Activity Under Stock Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Options Outstanding | ||
Beginning balance (in shares) | 3,586,688 | 3,369,502 |
Granted (in shares) | 263,645 | 841,336 |
Exercised (in shares) | (148,735) | (414,890) |
Forfeited/Cancelled (in shares) | (281,758) | (209,260) |
Ending balance (in shares) | 3,419,840 | 3,586,688 |
Options exercisable, number of options (in shares) | 2,032,859 | |
Exercise Price | ||
Beginning balance (in dollars per share) | $ 34.75 | $ 28.11 |
Granted (in dollars per share) | 22.35 | 48.97 |
Exercised (in dollars per share) | 5.59 | 10.13 |
Forfeited/Cancelled (in dollars per share) | 34.08 | 33.97 |
Ending balance (in dollars per share) | 35.11 | $ 34.75 |
Options exercisable, weighted average exercise price (in dollars per share) | $ 30.09 | |
Stock Option Activity, Additional Disclosures | ||
Options outstanding, weighted average remaining contractual term | 7 years 6 months | |
Options outstanding, aggregate intrinsic value | $ 12,643 | |
Options exercisable, weighted average remaining contractual term | 7 years | |
Options exercisable, aggregate intrinsic value | $ 11,713 |
Stock Incentive Plans and Sto_5
Stock Incentive Plans and Stock Based Compensation - Restricted Stock Units and Performance Stock Units (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Stock Units (RSUs) | ||
Restricted Stock Units Outstanding | ||
Beginning balance (in shares) | 1,050,174 | 161,477 |
Granted (in shares) | 2,988,107 | 958,361 |
Vested (in shares) | (257,708) | (56,002) |
Forfeited/Cancelled (in shares) | (302,651) | (13,662) |
Ending balance (in shares) | 3,477,922 | 1,050,174 |
Weighted-Average Grant Date Fair Value | ||
Weighted average grant date fair value at beginning balance (in dollars per share) | $ 44.31 | $ 59.16 |
Granted (in dollars per share) | 23.15 | 43.05 |
Vested (in dollars per share) | 45.14 | 61.07 |
Forfeited / Cancelled (in dollars per share) | 27.12 | 62.80 |
Weighted average grant date fair value at ending balance (in dollars per share) | $ 27.56 | $ 44.31 |
Shares withheld for tax withholding obligations | 73,821 | 16,640 |
Performance-Based Restricted Stock Units | ||
Restricted Stock Units Outstanding | ||
Beginning balance (in shares) | 0 | |
Granted (in shares) | 196,033 | |
Vested (in shares) | 0 | |
Forfeited/Cancelled (in shares) | 0 | |
Ending balance (in shares) | 196,033 | 0 |
Weighted-Average Grant Date Fair Value | ||
Weighted average grant date fair value at beginning balance (in dollars per share) | $ 0 | |
Granted (in dollars per share) | 23.23 | |
Vested (in dollars per share) | 0 | |
Forfeited / Cancelled (in dollars per share) | 0 | |
Weighted average grant date fair value at ending balance (in dollars per share) | $ 23.23 | $ 0 |
Stock Incentive Plans and Sto_6
Stock Incentive Plans and Stock Based Compensation - Assumptions Used in Fair Value of Stock Options and ESPP (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Average expected term (years) | 1 year 3 months 18 days | 1 year 2 months 12 days |
Expected stock price volatility, minimum | 62.98% | 61.13% |
Expected stock price volatility, maximum | 91.78% | 86.50% |
Risk-free interest rate, minimum | 0.60% | 0.06% |
Risk-free interest rate, maximum | 3.45% | 0.20% |
Dividend yield | 0% | 0% |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Average expected term (years) | 5 years 9 months 18 days | 6 years 1 month 6 days |
Expected stock price volatility, minimum | 68.34% | 66.50% |
Expected stock price volatility, maximum | 75.02% | 68.83% |
Risk-free interest rate, minimum | 1.54% | 0.51% |
Risk-free interest rate, maximum | 4.21% | 1.48% |
Dividend yield | 0% | 0% |
Stock Incentive Plans and Sto_7
Stock Incentive Plans and Stock Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 36,321 | $ 21,740 |
Cost of sales (exclusive of amortization of acquired intangible assets) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 3,755 | 2,058 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | 7,635 | 4,522 |
Selling, general and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 24,931 | $ 15,160 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current tax expense | ||
U.S. federal | $ 0 | $ 0 |
State and local | 111 | 16 |
Total current | 111 | 16 |
Deferred tax benefit | ||
U.S. federal | (1,626) | (8,726) |
State and local | (251) | (10) |
Total deferred | (1,877) | (8,736) |
Total income tax benefit | $ (1,766) | $ (8,720) |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Pre-tax loss | $ (68,904) | $ (40,012) |
U.S. federal taxes at statutory rate | (14,470) | (8,402) |
State income taxes | (3,751) | (1,764) |
Research and development tax credit | (1,814) | (1,658) |
Change in valuation allowance | 17,075 | 2,570 |
Stock-based compensation | 3,323 | (880) |
Non-deductible officers’ compensation | 1,326 | 1,571 |
Change in fair value of contingent consideration | (3,840) | 0 |
Transaction costs | 359 | 0 |
Other | 26 | (157) |
Total income tax benefit | $ (1,766) | $ (8,720) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets And Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss (“NOL”) carryforwards | $ 49,253 | $ 24,316 |
Accrued liabilities | 6,503 | 4,168 |
Capitalized R&D costs | 6,738 | 0 |
Lease liabilities | 3,549 | 2,114 |
Stock-based compensation | 4,489 | 2,202 |
R&D tax credit | 5,665 | 3,670 |
Other | 445 | 240 |
Total deferred tax assets | 76,642 | 36,710 |
Less valuation allowance | (49,953) | (17,774) |
Deferred tax assets, net | 26,689 | 18,936 |
Deferred tax liabilities: | ||
Prepaid expenses | (289) | (330) |
Property and equipment | (3,269) | (2,285) |
Intangible assets | (19,026) | (12,913) |
ROU assets | (3,577) | (2,166) |
Section 481(a) adjustment (cash to accrual) | (956) | (1,877) |
Total deferred tax liabilities | (27,117) | (19,571) |
Net deferred tax liability | $ (428) | $ (635) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 03, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 26, 2022 | |
Operating Loss Carryforwards [Line Items] | ||||
NOLs acquired, subject to expiration | $ 36,347 | |||
Decrease in valuation allowance | 1,626 | $ 8,726 | ||
Deferred tax assets, valuation allowance | 49,953 | $ 17,774 | ||
AltheaDx, Inc | ||||
Operating Loss Carryforwards [Line Items] | ||||
Business combination, deferred tax liabilities | 1,672 | $ 1,672 | ||
Cernostics, Inc. | ||||
Operating Loss Carryforwards [Line Items] | ||||
Deferred tax liabilities | $ (9,371) | |||
Domestic Tax Authority | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | 207,242 | |||
NOL carryforwards, subject to expiration | 106,093 | |||
NOL carryforwards, not subject to expiration | 101,149 | |||
State and Local Jurisdiction | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating loss carryforwards | $ 114,041 |