Natera (NTRA) 10-Q 10 May 18 2018 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 03, 2018
Document and Entity Information
Entity Registrant Name	Natera, Inc.
Entity Central Index Key	1,604,821
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		54,512,645
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 33,674	$ 12,620
Restricted cash, current portion	5,674	59
Short-term investments	80,023	106,247
Accounts receivable, net of allowance of $1,881 in 2018 and $2,000 in 2017	50,326	44,089
Inventory	11,911	8,998
Prepaid expenses and other current assets	5,915	8,612
Total current assets	187,523	180,625
Property and equipment, net	26,878	29,667
Restricted cash, long term portion	342	342
Other assets	3,912	3,979
Total assets	218,655	214,613
Current liabilities:
Accounts payable	8,608	8,529
Accrued compensation	9,933	9,599
Other accrued liabilities	31,523	33,257
Deferred revenue, current portion	1,443	1,420
Short-term debt financing	50,125	50,112
Warrants	2,751	2,644
Total current liabilities	104,383	105,561
Long-term debt financing	73,138	73,065
Deferred rent, net of current portion	9,548	9,241
Deferred revenue, long-term	35,462
Other long-term liabilities		1,329
Total liabilities	222,531	189,196
Commitments and contingencies (Note 7)
Stockholders' equity (deficit):
Common stock, $0.0001 par value: 750,000 shares authorized at both March 31, 2018 and December 31, 2017, respectively; 54,251 and 54,040 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	6	6
Additional paid in capital	476,270	472,552
Accumulated deficit	(479,248)	(446,375)
Accumulated other comprehensive loss	(904)	(766)
Total stockholders' (deficit) equity	(3,876)	25,417
Total liabilities and stockholders' equity (deficit)	$ 218,655	$ 214,613

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Condensed Consolidated Balance Sheets
Allowances on accounts receivable	$ 1,881	$ 2,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	750,000	750,000
Common stock, shares issued	54,251	54,040
Common stock, shares outstanding	54,251	54,040

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues
Total revenues	$ 62,340	$ 49,382
Cost and expenses
Cost of product revenues	39,055	33,088
Research and development	14,340	12,650
Selling, general and administrative	37,925	37,582
Total cost and expenses	92,857	83,932
Loss from operations	(30,517)	(34,550)
Interest expense	(2,389)	(183)
Interest and other income	137	1,300
Loss before income taxes	(32,769)	(33,433)
Income tax expense	(104)	(47)
Net loss	(32,873)	(33,480)
Unrealized (loss) gain on available-for-sale securities, net of tax	(138)	200
Comprehensive loss	$ (33,011)	$ (33,280)
Net loss per share (Note 12):
Basic (in dollars per share)	$ (0.61)	$ (0.63)
Diluted (in dollars per share)	$ (0.61)	$ (0.65)
Weighted-average number of shares used in computing basic and diluted net loss per share:
Basic (in shares)	54,132	52,758
Diluted (in shares)	54,132	53,043
Product
Revenues
Total revenues	$ 54,269	$ 48,394
Licensing and other
Revenues
Total revenues	8,071	988
Cost and expenses
Cost of product revenues	$ 1,537	$ 612

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Operating activities
Net loss	$ (32,873)	$ (33,480)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,860	1,758
Stock-based compensation	3,154	2,543
Premium amortization and discount accretion on investment securities	144	269
Amortization of debt discount	98
Inventory excess adjustments	45	145
Loss on disposal of property and equipment		12
Impairment of assets	1,544	576
Non-cash interest accrual	13	184
Loss on investments	32	40
Loss (gain) from changes in fair value of warrants	108	(1,042)
Provision for doubtful accounts	48	(101)
Changes in operating assets and liabilities
Accounts receivable	(6,284)	3,538
Inventory	(2,959)	(1,954)
Prepaid expenses and other current assets	2,524	(810)
Other assets	215	165
Accounts payable	51	(1,902)
Accrued compensation	333	(1,739)
Other accrued liabilities	(2,799)	5,612
Deferred revenue	35,485	18
Deferred rent, net of current portion	307	1,548
Net cash provided by (used in) operating activities	1,046	(24,620)
Investing activities
Purchases of investments	(9,986)	(3,995)
Proceeds from sale of investments	27,896	25,053
Proceeds from maturity of investments	8,000	3,000
Purchases of property and equipment, net	(852)	(6,338)
Net cash provided by investing activities	25,058	17,720
Financing activities
Proceeds from exercise of stock options	565	413
Net cash provided by financing activities	565	413
Net increase (decrease) in cash, cash equivalents and restricted cash	26,669	(6,487)
Cash, cash equivalents and restricted cash, beginning of period	13,021	16,690
Cash, cash equivalents and restricted cash, end of period	$ 39,690	$ 10,203

Description of Business

Description of Business	3 Months Ended
	Mar. 31, 2018
Description of Business
Description of Business	1. Description of Business Natera, Inc. (the "Company") was formed in the state of California as Gene Security Network, LLC in November 2003 and incorporated in the state of Delaware in January 2007. The Company’s mission is to change the management of genetic disease worldwide. The Company operates a laboratory certified under the Clinical Laboratory Improvement Amendments ("CLIA") providing a host of preconception and prenatal genetic testing services. The Company determines its operating segments based on the way it organizes its business to make operating decisions and assess performance. The Company has only one segment, which is the discovery, development and commercialization of genetic testing services, and it has a subsidiary that operates in the state of Texas. The Company's product offerings include its Panorama Non-Invasive Prenatal Test ("NIPT") that screens for chromosomal abnormalities of a fetus typically with a blood draw from the mother; Vistara (“Vistara”), a single-gene mutations screening test performed to identify single-gene disorders; Horizon Carrier Screening ("HCS") to determine carrier status for a large number of severe genetic diseases that could be passed on to the carrier’s children; Spectrum Pre-implantation Genetic Screening ("PGS") and Spectrum Pre-implantation Genetic Diagnosis ("PGD") to analyze chromosomal anomalies or inherited genetic conditions during an in vitro fertilization ("IVF") cycle to select embryos with the highest probability of becoming healthy children; Anora Products of Conception ("POC") test to rapidly and extensively analyze fetal chromosomes to understand the cause of miscarriage; Non-Invasive Paternity Testing ("PAT"), to determine paternity by analyzing the fragments of fetal deoxyribonucleic acid ("DNA") in a pregnant mother's blood and a blood sample from the alleged father(s), which is marketed and sold by a licensee from whom the Company receives a royalty. All testing is available principally in the United States, and the Company also offers its Panorama test to customers primarily in Europe. The Company also offers Constellation (“Constellation”), a cloud-based software product that allows laboratory customers to gain access through the cloud to the Company’s algorithms and bioinformatics in order to validate and launch tests based on the Company’s technology. The Company also offers Evercord, which is a cord blood and cord tissue processing and storage service; and Signatera TM , a circulating tumor DNA technology that analyzes and tracks mutations specific to an individual's tumor, for research use only by oncology researchers and biopharmaceutical companies. Further, the Company has expanded its Panorama test to now screen twin pregnancies for zygosity and chromosomal abnormalities.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Effective January 1, 2018, the Company adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers retroactively to January 1, 2016, as discussed under the Recently Adopted Accounting Pronouncements section in Note 2. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new accounting standards, as indicated by the “as revised” notation. In the opinion of management, the unaudited interim condensed consolidated financial information includes only adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity, and cash flows. The results of operations for the three months ended March 31, 2018, are not necessarily indicative of the results for the full year or the results for any future periods. The condensed consolidated balance sheet as of December 31, 2017 has been derived from audited financial statements at that date, these financial statements should be read in conjunction with the audited financial statements, and related notes for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2018. Liquidity Matters The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows for the near future. For the three months ended March 31, 2018, the Company had a net loss of $32.9 million, which increased the accumulated deficit to $479.3 million at March 31, 2018 from $446.4 million at December 31, 2017 following the full retrospective adoption of Accounting Codification Standards 606, Revenue from Contracts with Customers (“ASC 606”), which required a cumulative-effect adjustment to be recorded to the opening balance of the Company’s accumulated deficit as of January 1, 2016. At March 31, 2018, the Company had $33.7 million in cash and cash equivalents, $80.0 million in marketable securities, $50.1 million of outstanding balance of the Credit Line (as defined in Note 9) including accrued interest, and $73.1 million of net carrying amount of the 2017 Term Loan (as defined in Note 9). While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations. Accordingly, the Company has funded the portion of operating costs that exceeds revenues through a combination of equity issuances, debt issuances, and other financings. The Company continues to develop and commercialize future products and, consequently, it will need to generate additional revenues to achieve future profitability and may need to raise additional equity or debt financing. If the Company raises additional funds by issuing equity securities, its stockholders would experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and requires significant debt service payments, which diverts resources from other activities. Additional financing may not be available at all, or in amounts or on terms acceptable to the Company. If the Company is unable to obtain additional financing, it may be required to delay the development and commercialization of its products and significantly scale back its business and operations. Based on the Company’s current business plan, the Company believes that its existing cash and marketable securities will be sufficient to meet its anticipated cash requirements for at least 12 months after May 10, 2018. Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company and its subsidiary. The Company established a subsidiary that operates in the state of Texas to support the Company’s laboratory and operational functions. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Significant items subject to such estimates include the allowance for doubtful accounts, contract assets and deferred revenue, accrued liability for potential refund requests, stock-based compensation, the fair value of common stock and warrants, income tax uncertainties, and the expected consideration to be received from contracts with customers. These estimates and assumptions are based on management's best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors, including contractual terms and statutory limits; however, actual results could differ from these estimates and could have an adverse effect on the Company's financial statements. Fair Value The Company discloses the fair value of financial instruments for financial assets and liabilities for which the value is practicable to estimate. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and the Company currently carries its warrants at fair value according to the fair value measurement guidance. Cash and Cash Equivalents Cash and cash equivalents consist of cash and money market deposits with financial institutions. Restricted Cash The Company discloses both short-term and long-term restricted cash. Short-term restricted cash consists of $5.7 million cash deposits held to secure commercial letters of credit issued by financial institutions, of which approximately $5.6 million pertains to a letter of credit associated with a settlement agreement in connection with reimbursement related claims (as described in Note 7 under Legal Proceedings ) as of March 31, 2018. Long-term restricted cash consists of $0.3 million deposit per credit card terms. The Company adopted ASU 2016-18 effective January 1, 2018, which required the change in restricted cash to be included as part of the total cash and cash equivalents. While restricted cash is still presented as a separate line item in the Company’s balance sheet, it will no longer be presented as a separate item in the statements of cash flows. ASU 2016-18 also required a restatement of the statements of cash flows in the prior period presented to report this change. The following is the reconciliation between how restricted cash is presented in the balance sheet and the statements of cash flows for all periods presented: March 31, December 31, March 31, December 31, 2018 2017 2017 2016 (in thousands) Cash and cash equivalents in balance sheet $ 33,674 $ 12,620 $ 9,086 $ 15,256 Restricted cash, current portion in balance sheet 5,674 59 775 1,092 Restricted cash in other assets in balance sheet 342 342 342 342 Total cash, cash equivalents and restricted cash in statements of cash flows $ 39,690 $ 13,021 $ 10,203 $ 16,690 Investments Investments consist primarily of debt securities such as U.S. Treasuries, U.S. agency and municipal bonds. Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company generally classifies its entire investment portfolio as available-for-sale. The Company views its available-for-sale portfolio as available for use in current operations. Accordingly, the Company classifies all investments as short-term, even though the stated maturity may be more than one year from the current balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity. Risk and Uncertainties Financial instruments that potentially subject the Company to credit risk consist of cash, accounts receivable and investments. The Company limits its exposure to credit loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits. The Company performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. The Company bills third-party payers for certain tests performed. The amount that is ultimately received from the payer for the Company’s claim and the timing of such payments are subject to the determination of the payer based on the nature of the test performed and their view of the Company’s business practices with respect to collections of plan deductibles and co-payments from patients and other activities. This determination can impact both the amount and timing of when the Company’s invoices are collected. Payers may also withhold payments and request refunds of prior payments if the payer asserts that the Company has not performed in accordance with the policies of these payers. The Company performs evaluations of financial conditions for insurance carriers, patients, clinics and laboratory partners and generally does not require collateral to support credit sales. For the three months ended March 31, 2018 and 2017, there were no customers exceeding 10% of total revenues on an individual basis. As of March 31, 2018 and December 31, 2017, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. Revenue Recognition The Company adopted the new revenue recognition guidance, ASC 606, beginning January 1, 2018. ASC 606 mandates revenue recognition to be evaluated using the following five steps: · Identification of a contract, or contracts, with a customer; · Identification of the performance obligations in the contract; · Determination of the transaction price; · Allocation of the transaction price to the performance obligations in the contract; and · Revenue recognition when, or as, the performance obligations are satisfied See Note 3, Revenue Recognition , for detailed discussions of product revenues, licensing and other revenues, and how the five steps described above are applied. Cost of Product Revenues The components of cost of product revenues are material and service costs, impairment charges associated with testing equipment, personnel costs, including stock-based compensation expense, equipment and infrastructure expenses associated with testing samples, 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 depreciation and utilities. Costs associated with the performance of diagnostic services are recorded as tests are accessioned. Cost of Licensing and Other Revenues The components of cost of licensing and other revenues are material costs associated with test kits, engineering costs incurred to improve and maintain the Constellation software platform, and amortization of Constellation software development costs. Costs also include collection kits consumed during the processing of cord blood samples, processing service and storage of the cord blood samples, and freight charged to transport the samples to the storage facility. Stock‑Based Compensation Stock‑based compensation is related to stock options and restricted stock units (“RSUs”) granted to the Company’s employees and is measured at the grant date based on the fair value of the award. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. No compensation cost is recognized when the requisite service has not been met and the awards are therefore forfeited. The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of stock options issued to employees and non-employees. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest, and the resulting change in value, if any, is recognized in the Company's statements of operations and comprehensive loss during the period that the related services are rendered. The Black-Scholes option-pricing model requires the input of the Company's expected stock price volatility, the expected term of the awards, and a risk-free interest rate. Determining these assumptions requires significant judgment. The expected term was the calculation of the average of—(i) the employees’ historical stock option exercise behavior and (ii) the weighted-average of the time-to-vesting and the total contractual life of the options. The volatility rate was based on that of publicly traded companies in the DNA sequencing, diagnostics, or personalized medicine industries. When selecting the public companies in these industries to be used in the volatility calculation, companies were selected with comparable characteristics to the Company, including enterprise value and financial leverage. Companies were also selected with historical share price volatility sufficient to meet the expected term of the Company's stock options. The historical volatility data was computed using the daily closing prices for the selected companies' shares during the equivalent period of the calculated expected term of the Company's stock options. The expected term of the non-employee option grants was based on their remaining contractual life at the measurement date. The risk-free interest rate assumption was based on U.S. Treasury instruments with maturities that were consistent with the option's expected term. Warrants The Company accounts for warrants to purchase shares of its common stock as a liability at fair value on the balance sheet date because the Company may be obligated to redeem these warrants at some point in the future. The warrants are subject to re-measurement at each balance sheet date, with changes in fair value of the warrants recognized as a gain or loss in interest and other income in the statements of operations and comprehensive loss. The Company will continue to adjust the liability for changes in fair value until such time that the warrants are converted or expire. Capitalized Software Held for Internal Use The Company capitalizes salaries and related costs of employees and consultants who devote time to the development of internal-use software development projects. Capitalization begins during the application development stage, once the preliminary project stage has been completed. If a project constitutes an enhancement to previously developed software, the Company assesses whether the enhancement is significant and creates additional functionality to the software, thus qualifying the work incurred for capitalization. Once the project is available for general release, capitalization ceases and the Company estimates the useful life of the asset and begins amortization. The Company periodically assesses whether triggering events are present to review internal-use software for impairment. Changes in estimates related to internal-use software would increase or decrease operating expenses or amortization recorded during the reporting period. See Property and Equipment, net under Note 6 for more detail regarding an impairment charge recorded to write off certain project development costs during the three months ended March 31, 2018. The Company amortizes its internal-use software over the estimated useful lives of three years. The net book value of capitalized software held for internal use was $2.2 million and $2.6 million as of March 31, 2018 and December 31, 2017, respectively. Amortized expense for amounts previously capitalized for the three months ended March 31, 2018 and 2017 was $0.4 million and $0.2 million, respectively. Accumulated Other Comprehensive Loss Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, unrealized gains and losses on available-for-sale marketable securities. Balance at Balance at December 31, Reclassification March 31, 2017 Increase Adjustment 2018 (in thousands) Unrealized (loss) gain on available-for-sale securities, net of tax $ (766) $ (170) $ 32 $ (904) Total accumulated other comprehensive (loss) income, net of tax $ (766) $ (170) $ 32 $ (904) Net Loss per Share Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration for potential dilutive shares. For purposes of the diluted net loss per share calculation, outstanding common stock options, RSUs, ESPP, and warrants are considered potential dilutive shares but are excluded from this calculation as the result becomes anti-dilutive, unless the consideration of any one of them gives a dilutive effect. Property and Equipment Property and equipment, including purchased and internally developed software, are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are generally three years. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. Impairment of Long-lived Assets The Company periodically evaluates the carrying value of its long-lived assets for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company then compares the carrying amount of the long-lived assets with the future net undiscounted cash flows expected to be generated by such asset. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value determined using discounted estimates of future cash flows. See Note 6 for more detail regarding assets impairment. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications (“ASC”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed below, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers , which amends the existing accounting standards for revenue recognition. ASU 2014-09, which defines the core principles of ASC 606, establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. ASC 606 also impacts the accounting for costs incurred in obtaining a contract with a customer, provided that such costs are considered incremental and recoverable by the Company. Effective January 1, 2018, the Company adopted ASC 606 using the full retrospective approach. The Company revised the financial results in its statements of operations and comprehensive loss for three months ended March 31, 2017 and balance sheet as of December 31, 2017, as if ASC 606 had been effective for those periods. The adoption of ASC 606 resulted in a cumulative-effect adjustment of $41.6 million retroactively to the opening balance of accumulated deficit as of January 1, 2016. The impact of adopting the new guidance on product revenues for the three months ended March 31, 2017 was an increase of $2.5 million. For financial statement disclosure purposes, the Company elected one of the practical expedients under ASC 606 to forego disclosures related to the allocation of consideration to the remaining performance obligations and the timing in which revenues will be recognized from such performance obligations. Upon the adoption of ASC 606, the Company revised the following selected amounts in its condensed consolidated balance sheet from amounts previously reported: December 31, 2017 As Previously Adoption of Reported ASC 606 As Revised (in thousands) Accounts receivable, net of allowance $ 8,252 $ 35,837 $ 44,089 Other accrued liabilities 33,207 50 33,257 Accumulated deficit $ (482,162) $ 35,787 $ (446,375) Upon the adoption of ASC 606, the Company restated the following selected amounts in its unaudited condensed consolidated statements of operations and comprehensive loss from amounts previously reported: Three months ended March 31, 2017 As Previously Adoption of Reported ASC 606 As Revised (in thousands) Product revenues $ 45,913 $ 2,481 $ 48,394 Licensing and other revenues 988 — 988 Total revenues 46,901 2,481 49,382 Loss from operations (37,031) 2,481 (34,550) Net loss (35,961) 2,481 (33,480) Net loss per share: Basic (0.68) 0.05 (0.63) Diluted $ (0.70) $ 0.05 $ (0.65) In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (“ASU 2016-08”), Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). The new guidance requires restricted cash to be combined with cash and cash equivalents when reconciling the beginning and ending balances of cash on the statement of cash flows. Further, the new guidance requires the nature of the restrictions to be disclosed, as well as a reconciliation between the balance sheet and the statement of cash flows on how restricted and unrestricted cash are segregated. The Company adopted this new guidance beginning January 1, 2018 and retroactively adjusted the statements of cash flows for three months ended March 31, 2017 to show the combined result of cash and cash equivalents and restricted cash. Three months ended March 31, 2017 As Previously Adoption of Adoption of Reported ASU 2016-18 ASC 606 As Revised (in thousands) Operating activities: Net loss $ (35,961) $ — $ 2,481 $ (33,480) Changes in operating assets and liabilities: Accounts receivable 6,019 — (2,481) 3,538 Net cash used in operating activities (24,303) (317) — (24,620) Cash, cash equivalents and restricted cash, beginning of period 15,256 1,434 — 16,690 Cash, cash equivalents and restricted cash, end of period $ 9,086 $ 1,117 $ — $ 10,203 In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the Emerging Issues Task Force) (“ASU 2016-15”) . The purpose of ASU 2016-15 is to limit diversity in the classification of certain transactions in the statement of cash flows. Such transactions include (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon bonds, (3) contingent consideration payments made after a business combination, (4) proceeds from insurance claims settlement, (5) proceeds from settlement of life insurance policies, and (6) distributions of equity method investments. The Company adopted this new guidance beginning January 1, 2018, which did not result in a material impact on its financial statements as none of the transactions described above occurred during the three months ended March 31, 2018. In May 2017, the FASB issued Accounting Standards Update No. 2017-09 (“ASU 2017-09”), Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting . The purpose of this ASU is to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Company adopted this new guidance beginning January 1, 2018, and the impact on its financial statements is not material upon adoption. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for the Company in the fiscal year beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The modified retrospective approach must be applied to leases in existence as of the date of the adoption, and the Company expects that its lease assets and lease liabilities will increase in its financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This new guidance was established as a result of the Tax Cuts and Jobs Act passed in December 2017, which provides an opportunity for entities to reclassify residual income tax effects from accumulated other comprehensive income to retained earnings due to the reduction of the corporate income tax rate. The new guidance will be effective in the first quarter of 2019, and interim periods within that year, with early adoption permitted. The Company will have the option to apply this new guidance using either the full retrospective approach or to record the reclassifications as of the beginning date in the period of adoption. The Company is currently evaluating the impact of adopting ASU 2018-02 on its financial statements.

Revenue Recognition

Revenue Recognition	3 Months Ended
	Mar. 31, 2018
Revenue Recognition
Revenue Recognition	3. Revenue Recognition The Company recognizes revenues when, or as, performance obligations in the contracts are satisfied, in the amount reflecting the expected consideration to be received from the goods or services transferred to the customers. Product Revenues Product revenues are derived from contracts with insurance carriers, laboratory partners and patients in connection with sales of prenatal genetic tests. The majority of the Company’s revenues is derived from Panorama NIPT, HCS (as defined in Note 1), and to a lesser extent, other genetic tests. The Company enters into contracts with insurance carriers with primarily payment terms related to tests provided to the patients who have health insurance coverage. Insurance carriers are considered as third-party payers on behalf of the patients, and the patients are considered as the customers who receive genetic test services. Tests may be billed to insurance carriers, patients, or a combination of insurance carriers and patients. Further, the Company sells tests to a number of domestic and international laboratory partners and identifies the laboratory partners as customers provided that there is a test services agreement between the two parties. A performance obligation represents a promise in a contract to transfer a distinct good or service to a customer, which represents a unit of accounting in accordance with ASC 606. A portion of the consideration should be allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The Company evaluates its contracts with insurance carriers, laboratory partners and patients and identifies a single performance obligation in those contracts, which is the delivery of the test results. The total consideration which the Company expects to collect in exchange for the Company’s products is an estimate and may be fixed or variable. Consideration includes reimbursement from both patients and insurance carriers, adjusted for variable consideration related to disallowed cases, discounts, refunds and doubtful accounts, and is estimated using the expected value approach. For insurance carriers with similar reimbursement characteristics, the Company uses the portfolio approach to estimate total collections for the Company’s products. The consideration expected from laboratory partners usually includes a fixed amount, but it can be variable depending on the volume of tests performed, and the Company determines the variable consideration using the expected value approach. For insurance carriers, laboratory partners and patients, the Company allocates the total consideration to a single performance obligation, which is the delivery of the test results to the customers. When assessing the total consideration for insurance carriers and patients, a certain percentage of revenues is adjusted for refunds, which is considered as variable consideration that constrains to ensure that no material reversal of revenues occurs in subsequent periods. The Company generally bills an insurance carrier, a laboratory partner or a patient upon delivery of test results. The Company also bills patients directly for out-of-pocket costs involving co-pays and deductibles that they are responsible for. Tests billed to insurance carriers and directly to patients usually take an average of nine to twelve months to collect the payments, and for tests billed to laboratory distribution partners, the average collection cycle takes approximately two to three months. At times, the Company may or may not get reimbursed for the full amount billed. Further, the Company may not get reimbursed at all for tests performed if such tests are not covered under the insurance carrier’s reimbursement policies or the Company is not a qualified provider to the insurance carrier, or if the tests were not previously authorized. Product revenue is recognized in an amount that equals to the total consideration (as described above) at a point in time when the test results are delivered. The Company reserves certain amounts in other accrued liabilities on the balance sheet in anticipation of requests for refunds of payments previously made by insurance carriers, which are accounted for as reductions in product revenues in the statement of operations and comprehensive loss. During the three months ended March 31, 2018, $0.9 million was released from amounts previously held in reserves in other accrued liabilities and recognized as product revenue. Licensing and Other Revenues The Company recognizes licensing revenues from its cloud-based distribution service offering, Constellation, by granting licenses to its licensees to use certain of the Company’s proprietary intellectual properties and cloud-based software. The Company also recognizes revenues from Evercord for the collection and storage of newborn cord blood and cord tissue units. Constellation The laboratory partners with which the Company enters into a licensing arrangement represent the licensees and are identified as customers. The licensees do not have the right to possess the Company’s software, but rather receive the software as a service. These arrangements often include: (i) the delivery of the software as a service, (ii) the necessary support and training, and (iii) the reagent kits (“IVD kits”) to be consumed as tests are processed. The Company does not consider the software as a service, the support and training as being distinct in the context of such arrangements, and therefore they are combined as a single performance obligation. The software, support and training are delivered simultaneously to the licensees over the term of the arrangement. The Company provides IVD kits that are customized for its licensees to process tests using its cloud-based software. IVD kits revenues are recognized based on their standalone selling price at a point in time upon delivery to the licensees. The Company bills the majority of licensees, who process the tests in their laboratories, a fixed price for each test processed. Licensing revenues are recognized as the performance obligations are satisfied over time and reported in licensing and other revenues in the statements of operations and comprehensive loss. Evercord The Company recognizes revenues from Evercord for the collection and storage of newborn cord blood and cord tissue units. The patient enters into an enrollment agreement with the Company. According to the agreement, there are two performance obligations: (i) the provision of a collection kit and the processing of newborn cord blood and cord tissue units, which are considered delivered at the beginning of the process (the “processing services”), and (ii) the storage of the cord blood and cord tissue units (the “storage services”), for either an annual fee or a prepayment covering an extended period or the lifetime of the newborn donor. The Company offers its processing services together with storage services, and each of them is capable of being distinct, and is distinct in the context of the contract, and therefore, represents separate performance obligations. Evercord customers may pay for both processing and storage services over a period of 6, 12, or 18 months. The transaction price for the processing and storage services is calculated as the stated contract price, adjusted for discounts, refunds, and significant financing components. The Company determines that the transaction price represents the standalone selling prices that are observable in the market for both the processing and storage services. The total consideration is allocated between the processing services and storage services based on their standalone selling prices. Upon the completion of the processing services, the Company issues a certificate of preservation indicating that the cord blood and cord tissue units are ready for storage, and processing revenues are recognized at this particular point in time. Storage revenues are recognized over time, which is the applicable storage period. The Company believes the methodology of recognizing storage revenues over time meaningfully depicts the timing of storage services delivered to customers as it exerts the necessary efforts to deliver such services equally over time. Evercord revenues are reported in licensing and other revenues in the statements of operations and comprehensive loss. Qiagen In March 2018, the Company entered into a License, Development and Distribution Agreement (“the Qiagen Agreement”) with Qiagen under which the Company granted Qiagen a license to develop, manufacture, distribute and commercialize NGS-based genetic testing assays and sequencing systems utilizing such assays, which incorporate the Company’s proprietary technology. According to the terms of the agreement, the Company is initially entitled to receive an upfront license fee and prepaid royalties totaling $40.0 million. All or a portion of the prepaid royalties are refundable in limited circumstances. In addition, the Company is entitled to potential milestone payments from Qiagen upon the achievement of certain volume, regulatory and commercial milestones, and tiered royalties. The Qiagen Agreement has a term of 10 years and expires in March 2028, and it may be terminated earlier in certain circumstances. Upon termination of the Qiagen Agreement, the license granted to Qiagen will also terminate, except in certain limited circumstances. The Company provided to Qiagen standard indemnification protections, which is part of an assurance that the license meets the contract’s specifications and is not an obligation to provide goods or services. The Company identified the following goods and services in the agreement that it concluded were distinct performance obligations: Technology license. The Company granted the right to Qiagen to use its proprietary intellectual properties (“technology license”) to develop, manufacture, distribute and commercialize genetic testing assays and sequencing systems in certain countries. The technology license was transferred to Qiagen at the inception of this agreement when the license became effective and the technology transfer was completed. Development services. The Company is responsible for providing certain support services to assist Qiagen in its design and development of the genetic testing assays. Market development support. The Company is required to support Qiagen’s market development for the genetic testing assays. Option to expand commercialization to another country. The Company has provided an option to Qiagen to expand the commercialization of its genetic testing assays to another country following all of the necessary regulatory approvals. The initial transaction price was estimated to be $15.0 million based on the most likely amount approach, which was comprised of the upfront non-refundable fee and a payment associated with the initial milestone under the agreement. The remaining milestone and prepaid royalty amounts were not included in the transaction price due to the uncertainties of research and development and the potential for prepaid royalty refund, as it is not currently probable that the associated revenue, if recognized, would not be reversed later. Royalties, including prepaid royalties, will generally not be recognized until earned. The allocation of the transaction price was performed based on standalone selling prices, which are based on estimated amounts that the Company would charge for a performance obligation if it were sold separately. Future variable consideration such as milestones and royalties is considered associated with the technology license performance obligation. The amounts included in the initial transaction price were allocated to the remaining value of the technology license, as well as development services, market development support and the option to expand commercialization using the relative standalone selling price approach. The amount initially allocated to the technology license was $5.5 million. For the three months ended March 31, 2018, the Company recognized revenue of $5.5 million upon the delivery of its technology license to Qiagen. As of March 31, 2018, the Company reported a net amount of $34.5 million as deferred revenue, long-term portion, in its balance sheet. The remaining performance obligations were comprised of development services and market development support, for which revenue will be recognized over time based on the value of services; and the option for Qiagen to expand its commercialization to another country, with revenue recognized at a point in time when such option is exercised or expires. The Company expects to recognize $9.5 million of the amounts reported as long-term deferred revenue as each remaining performance obligation is satisfied. There were no incremental origination costs associated with entering into the Qiagen Agreement. The primary source of the Company’s revenues relates to the sale of prenatal genetic tests. The Company also recognizes licensing revenues from its cloud-based software platform, Constellation and other revenues. The following table shows disaggregation of revenues by types of products and services, with sales of genetic tests further disaggregated by test families: Three months ended March 31, 2018 2017 (Amounts in thousands) (As Revised) Sales of genetic tests Panorama NIPT $ 33,267 $ 32,559 HCS 18,262 12,953 Other genetic tests 2,740 2,882 Product revenues 54,269 48,394 Licensing and other Constellation 1,305 988 Other 6,766 — Licensing and other revenues 8,071 988 Total revenues $ 62,340 $ 49,382 The Company measures its performance results primarily based on revenues recognized from the three categories described below. The following table shows disaggregation of revenues by payer types: Three months ended March 31, 2018 2017 (Amounts in thousands) (As Revised) Insurance carriers $ 44,142 $ 38,840 Laboratory partners 14,888 8,093 Patients 3,310 2,449 Total revenues $ 62,340 $ 49,382 The following table presents total revenues by geographic area based on the location of the Company’s payers: Three months ended March 31, 2018 2017 (Amounts in thousands) (As Revised) United States $ 50,364 $ 43,825 Americas, excluding U.S. 850 700 Europe, Middle East, India, Africa 9,322 3,216 Other 1,804 1,641 Total revenues $ 62,340 $ 49,382 In accordance with ASC 340-40, any incremental costs incurred to obtain a contract with a customer are required to be capitalized and amortized over the period in which the goods and services are transferred to the customer. The Company has elected to apply a practical expedient under ASC 340-40 to recognize the incremental costs of obtaining a contract as an expense when incurred provided that the amortization period of such costs, if capitalized, is one year or less. The following table summarizes changes in the balances of the Company’s accounts receivable and deferred revenue during the three months ended March 31, 2018: Balance at Balance at December 31, March 31, 2017 Additions Deductions 2018 (Amounts in thousands) (As Revised) Assets: Accounts receivable $ 44,089 $ 55,004 $ (48,767) $ 50,326 Liabilities: Deferred revenue, current portion $ 1,420 $ 964 $ (941) $ 1,443 Deferred revenue, long-term $ — $ 35,462 $ — $ 35,462 During the three months ended March 31, 2018, the Company recognized $0.9 million of revenue from Evercord storage services that were undelivered in prior periods. As of March 31, 2018, deferred revenues totaled $2.4 million, which consisted of $1.4 million of Evercord storage services that will be fulfilled within the next 12 months, and $1.0 million of such will be delivered by the Company over the remaining contractual life.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2018
Fair Value Measurements
Fair Value Measurements	4. Fair Value Measurements The Company's financial assets and liabilities carried at fair value are comprised of investment assets that include money market and investments, and a liability for common stock warrants. The fair value accounting guidance requires that assets and liabilities be carried at fair value and classified in one of the following three categories: Level I: Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access Level II: Observable market‑based inputs or unobservable inputs that are corroborated by market data, such as quoted prices, interest rates, and yield curves Level III: Inputs that are unobservable data points that are not corroborated by market data. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Assets and Liabilities That Are Measured at Fair Value on a Recurring Basis The following table represents the fair value hierarchy for the Company’s financial assets and financial liabilities measured at fair value on a recurring basis: March 31, 2018 December 31, 2017 Level I Level II Level III Total Level I Level II Level III Total (in thousands) Financial Assets: Money market deposits $ 21,349 $ — $ — $ 21,349 $ 3,477 $ — $ — $ 3,477 U.S. Treasury securities 45,920 — — 45,920 67,026 — — 67,026 U.S. agency securities — 22,329 — 22,329 — 27,072 — 27,072 Municipal securities — 11,774 — 11,774 — 12,149 — 12,149 Total financial assets $ 67,269 $ 34,103 $ — $ 101,372 $ 70,503 $ 39,221 $ — $ 109,724 Current Liabilities: Warrants $ — $ — $ 2,751 $ 2,751 $ — $ — $ 2,644 $ 2,644 Total financial liabilities $ — $ — $ 2,751 $ 2,751 $ — $ — $ 2,644 $ 2,644 During the three months ended March 31, 2018, the Company did not make any transfers between Level I and Level II assets. The Company's warrants to purchase common stock are valued using Level III inputs; the Company used inputs from a Black-Scholes model with market volatility that is determined for comparable companies in the same business sector. The carrying amounts of cash, accounts receivable, and accounts payable approximate their fair value and are excluded from the table above. The following table provides a roll forward of the fair value, as determined by Level III inputs, of the warrants for the three months ended March 31, 2018: Warrants (in thousands) Balance at December 31, 2017 $ 2,644 Change in fair value 107 Balance at March 31, 2018 $ 2,751 Warrants The significant unobservable inputs used in the fair value of warrants are derived from the Company's common stock valuation that is based on inputs from a Black-Scholes option-pricing model, with the expected term of 5.0 years, risk-free interest rate of 2.56%, and market volatility of 40.95% that was determined for comparable companies in the same business sector. The inherent risk in the market volatility is the selection of companies with similar business attributes to the Company. Determining the fair value of warrants requires the application of judgment on the associated valuation assumptions described above. The assumptions used in calculating the fair value of warrants represent the Company’s estimates, but these estimates involve inherent uncertainties. As a result, if factors change and the Company uses different assumptions, the fair value of warrants could be significantly different in the future.

Financial Instruments

Financial Instruments	3 Months Ended
	Mar. 31, 2018
Financial Instruments
Financial Instruments	5. Financial Instruments The Company elected to invest a portion of its cash assets in conservative, income earning, and liquid investments. Cash equivalents and investments, all of which are classified as available-for-sale securities, consisted of the following: March 31, 2018 December 31, 2017 Amortized Gross Gross Estimated Fair Value Amortized Gross Gross Estimated Fair Value (in thousands) Money market deposits $ 21,349 $ — $ — $ 21,349 $ 3,477 $ — $ — $ 3,477 U.S. Treasury securities 46,496 1 (577) 45,920 67,480 10 (464) 67,026 U.S. agency securities 22,562 — (233) 22,329 27,293 — (221) 27,072 Municipal securities 11,869 — (95) 11,774 12,240 — (91) 12,149 Total $ 102,276 $ 1 $ (905) $ 101,372 $ 110,490 $ 10 $ (776) $ 109,724 Classified as: Cash equivalents $ 21,349 $ 3,477 Short-term investments 80,023 106,247 Total $ 101,372 $ 109,724 The Company invests in U.S. Treasuries, U.S. agency and high quality municipal bonds which mature at par value and are all paying their coupons on schedule. The Company has therefore concluded there is currently no other than temporary impairment of its investments and will continue to recognize unrealized gains and losses in other comprehensive income (loss). During the three months ended March 31, 2018 and 2017, the amount of gross realized gains and realized losses upon sales of investments were insignificant. The Company uses the specific investment identification method to calculate realized gains and losses and amounts reclassified out of other comprehensive income to net income. As of March 31, 2018, the Company had 17 investments in an unrealized loss position in its portfolio. The following table summarizes the Company’s portfolio of available-for-sale securities by contractual maturity as of March 31, 2018: March 31, 2018 Amortized Fair (in thousands) Less than one year $ 39,157 $ 39,021 Greater than one year but less than five years 41,770 41,002 Total $ 80,927 $ 80,023

Balance Sheet Components

Balance Sheet Components	3 Months Ended
	Mar. 31, 2018
Balance Sheet Components
Balance Sheet Components	6. Balance Sheet Components Property and Equipment, net The Company’s property and equipment consisted of the following: March 31, December 31, Useful Life 2018 2017 (in thousands) Machinery and equipment 3-5 years $ 32,022 $ 31,825 Furniture and fixtures 3 years 1,265 1,216 Computer equipment 3 years 2,028 1,958 Capitalized software held for internal use 3 years 4,465 4,465 Leasehold improvements Lesser of useful life or lease term 10,745 10,691 Construction-in-process 5,198 6,497 55,723 56,652 Less: Accumulated depreciation and amortization (28,845) (26,985) Total Property and Equipment, net $ 26,878 $ 29,667 During the three months ended March 31, 2018, an asset impairment charge of $1.6 million was recorded in research and development expenses in the statements of operations and comprehensive loss. This charge was recorded to write off the project development costs that were previously capitalized. Other Assets In April 2016, the Company entered into a four-year agreement with a health insurance carrier whereby in return for partial exclusivity and the right to pricing benefits the Company agreed to pay total consideration of $3.2 million. The total consideration was paid in the third quarter of 2016. As of March 31, 2018 and December 31, 2017, $1.6 million and $1.8 million of deferred costs related to the total consideration paid were included in other long-term assets, respectively. The deferred costs are being amortized ratably over the four-year term of the agreement and for the three months ended March 31, 2018, the Company amortized $0.2 million of such costs, which was recorded as a reduction of product revenues in the statements of operations and comprehensive loss. In August 2017, the Company entered into the 2017 Term Loan with OrbiMed and issued 300,000 shares of its common stock in exchange for OrbiMed’s initial and remaining funding commitments (as described in Note 9). The Company also paid legal fees totaling $0.3 million in connection with this term loan. Total debt issuance costs of $2.7 million is accounted for as a debt discount. For financial statement presentation purposes, the Company has classified $2.0 million of the debt discount as a direct reduction from the outstanding debt balance, while $0.7 million of such remains in noncurrent assets for the unused borrowing capacity of $25.0 million. The debt discount is being amortized on a straight-line basis over the term of the loan. For the three months ended March 31, 2018, amortization of the debt discount was insignificant. As of March 31, 2018, total unamortized debt discount was $0.6 million. Accrued Compensation The Company’s accrued compensation consisted of the following: March 31, December 31, 2018 2017 (in thousands) Accrued paid time off $ 1,808 $ 1,806 Accrued commissions 3,365 3,558 Accrued bonuses 1,433 2,063 Other accrued compensation 3,327 2,172 Total accrued compensation $ 9,933 $ 9,599 Other Accrued Liabilities The Company’s other accrued liabilities consisted of the following: March 31, December 31, 2018 2017 (Amounts in thousands) (As Revised) Settlement accrued for reimbursement related claims $ 6,074 $ 10,062 Reserves for refunds to insurance carriers 7,071 6,794 Accrued charges for third party test fees 7,301 6,566 Testing and laboratory materials from suppliers 1,653 1,367 Marketing and corporate affairs 1,223 1,456 Legal, audit and consulting fees 913 206 Accrued shipping charges 482 198 Sales tax payable 947 504 Accrued specimen service fees 1,026 683 Accrued rent 868 856 Clinical trials and studies 557 483 Other accrued expenses 3,408 4,082 Total other accrued liabilities $ 31,523 $ 33,257 As of December 31, 2017, the Company accrued a total of $11.4 million for amounts due under a settlement agreement related to reimbursement related claims, of which $10.1 million was the current portion and $1.3 million was recorded in other long-term liabilities. As of March 31, 2018, the Company had reclassified the noncurrent portion of the $1.3 million to other current liabilities. The Company was allowed to make four equal installments, and the first installment of approximately $5.3 million had been paid as of March 31, 2018. During the three months ended March 31, 2018, the Company reserved approximately $1.2 million for refunds to insurance carriers. Amounts totaling $0.9 million previously held in reserves from payers were released and recognized as product revenues in the statements of operations and comprehensive loss. Amounts reserved totaled $7.1 million as of March 31, 2018 and December 31, 2017.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies
Commitments and Contingencies	7. Commitments and Contingencies Operating Leases As of March 31, 2018, the Company leases office facilities under non‑cancelable operating lease agreements. The Company currently occupies approximately 113,000 square feet of laboratory and office space at its San Carlos, California corporate headquarters pursuant to a lease that it directly entered into with its landlord in October 2016. This lease covers two office spaces (the “First Space” and the “Second Space”). The First Space covers approximately 88,000 square feet at a base rent of $319,095 per month. The Second Space covers approximately 25,000 square feet at a base rent of $97,431 per month. The Company paid a security deposit totaling $0.7 million on this lease. The term of this lease is approximately 84 months and expires in October 2023. According to the terms of this lease, the Company submitted claims for tenant improvements allowance totaling $0.2 million to the landlord for reimbursements in March 2018. The tenant improvements allowance is being amortized over the lease term. In March 2018, the Company entered into a lease for its cord blood tissue storage facility in Tukwila, Washington that covers approximately 10,000 square feet. The lease term of this facility will begin in June 2018 with rent payment commencing in August 2018 at $11,900 per month, subject to an annual increase of approximately 3%. The lease term is 62 months expiring in July 2023. In October 2016, the Company entered into a sublease for additional office space in Redwood City, California that covers approximately 13,000 square feet. The lease term of the additional space began in November 2016 and carried a monthly base rent of $49,140, subject to an annual increase of 3%, with a security deposit of $0.1 million. According to the lease agreement, the Company was given an option to terminate this sublease as early as September 30, 2018, provided that the landlord was notified in writing six months prior to the termination date. In March 2018, the Company submitted the required written notification to the landlord to terminate this sublease early by September 30, 2018, and is continuing to make rent payments until that point in time. In September 2015, the Company’s subsidiary entered into a long-term lease agreement for laboratory and office space totaling approximately 94,000 square feet in Austin, Texas. The lease term is 132 months beginning in December 2015 and expiring in November 2026 with monthly payments beginning in December 2016, increasing from $0.1 million to $0.2 million. Pursuant to the terms of the lease, the subsidiary paid a security deposit of $0.4 million, and the landlord allotted the subsidiary an allowance for leasehold improvements of up to $7.8 million. As of March 31, 2018, the full amount of the allowance has been reimbursed by the landlord. The future annual minimum lease payments under all non-cancelable operating leases as of March 31, 2018 are as follows: Operating Leases (in thousands) Year ending December 31: 2018 (remaining 9 months) $ 6,164 2019 8,692 2020 8,825 2021 9,067 2022 9,319 2023 and thereafter 14,832 Total future minimum lease payments $ 56,899 Rent expense for the three months ended March 31, 2018 and 2017 was $2.1 million and $1.7 million, respectively. The Company is also required to pay its share of facility operating expenses with respect to the facilities in which it operates. Legal Proceedings From time to time, the Company is involved in disputes, litigation, and other legal actions. The Company is aggressively defending its current litigation matters, and while there can be no assurances and the outcome of these matters is currently not determinable, the Company currently believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its financial position. There are many uncertainties associated with any litigation and these actions or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could adversely affect gross margins in future periods. If this were to occur, the Company's business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company's estimates, if any, which could result in the need to record or adjust a liability and record additional expenses. During the periods presented, the Company has not recorded any accrual for loss contingencies associated with such legal proceedings, determined that an unfavorable outcome is probable or reasonably possible, or determined that the amount or range of any possible loss is reasonably estimable, except for the amount accrued in connection with the settlement agreement with the United States Department of Justice described below. On March 16, 2018, a lawsuit against the Company was filed in the United States District Court for the Northern District of California by Illumina, Inc., alleging that the Company’s Panorama test infringes certain claims of U.S. Patent No. 9,493,831 (the ‘831 patent). Among other relief, the complaint seeks damages or other monetary relief including costs and pre- and post-judgment interest, treble damages, injunctive relief, attorneys’ fees and costs. The Company intends to vigorously defend against the claims in this lawsuit, but cannot provide any assurance as to the ultimate outcome or that an adverse resolution of this lawsuit would not have a material adverse effect on its financial condition and results of operations. The Company is unable to predict the outcome and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome. On each of February 17, 2016, March 10, 2016, March 28, 2016 and April 4, 2016, purported class action lawsuits were filed in the Superior Court of the State of California for the County of San Mateo (the “San Mateo Superior Court”), against Natera, its directors, certain of its officers and 5% stockholders and their affiliates, and each of the underwriters of the Company’s July 1, 2015 initial public offering (the "IPO"). The complaints assert claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended. The complaints allege, among other things, that the Registration Statement and Prospectus for the Company’s IPO contained materially false or misleading statements, and/or omitted material information that was required to be disclosed, about the Company’s business and prospects. Among other relief, the complaints seek class certification, unspecified compensatory damages, rescission, attorneys' fees, and costs. The Company removed these actions to the United States District Court for the Northern District of California, and the actions were subsequently remanded back to the San Mateo Superior Court. The Company has appealed the remand and discovery has been stayed, or held, pending the appeal. The Company also filed a demurrer, or a request for dismissal as a matter of law, in the San Mateo Superior Court, which was granted on October 23, 2017. The San Mateo Superior Court demurred the claims under Sections 12(a)(2) and 15 of the Securities Act of 1933, as amended, without leave to re-file. The San Mateo Superior Court granted the demurrer as to Section 11 of the Act with leave to re-file. Plaintiffs refiled an amended complaint on November 22, 2017. The Company filed a motion for judgment on the pleadings under the amended complaint on January 25, 2018, which the plaintiffs opposed. The hearing on the motion is scheduled for May 2018. The Company intends to continue to defend the matter vigorously, but cannot provide any assurance as to the ultimate outcome or that an adverse resolution would not have a material adverse effect on its financial condition and results of operations. The Company is unable to predict the ultimate outcome and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome. On March 4, 2016, a lawsuit was filed against the Company in the Superior Court of the State of California for the County of San Diego, by a patient alleging that Natera failed to perform a carrier screening test that was ordered. The complaint seeks compensatory damages. On May 26, 2017, the Company filed a motion for summary judgment, which was denied. On December 12, 2015, the Company received a civil investigative demand from the United States Department of Justice in connection with a qui tam action related to past reimbursement submissions for some of its testing. The qui tam action was originally filed under seal by the relators on January 26, 2015 in the United States District Court for the Western District of Kentucky. The qui tam complaint alleged that Natera submitted false claims to government health care programs for its testing services performed during the period from January 1, 2013 to December 31, 2016, and sought damages and penalties. The complaint was unsealed on February 8, 2018. On March 7, 2018, the Company reached agreement with the United States Department of Justice to resolve all claims made against it in the action. Under the settlement agreement, the Company will pay a total of approximately $11.4 million to the federal government and the participating state Medicaids, of which approximately $5.3 million plus applicable interest will be paid in four equal quarterly installments, subject to the Company’s option to prepay without penalty. In exchange for the payment of the settlement amounts, the United States and the relators agreed to release the Company from certain claims, including civil or administrative monetary relief sought under the complaint. The settlement agreement does not contain or represent an admission of liability or wrongdoing by the Company, and there will be no corporate integrity agreement. For the year ended December 31, 2017, the Company recorded a charge of $11.4 million associated with this settlement in its statements of operations and comprehensive loss. As of December 31, 2017, the Company classified $10.1 million of this settlement in other accrued liabilities and the remaining $1.3 million in other long-term liabilities. Director and Officer Indemnifications As permitted under Delaware law, and as set forth in the Company’s Certificate of Incorporation and its Bylaws, the Company indemnifies its directors, executive officers, other officers, employees and other agents for certain events or occurrences that may arise while in such capacity. The maximum potential amount of future payments the Company could be required to make under this indemnification is unlimited; however, the Company has insurance policies that may limit its exposure and may enable it to recover a portion of any future amounts paid. Assuming the applicability of coverage, the willingness of the insurer to assume coverage, and subject to certain retention, loss limits and other policy provisions, the Company believes any obligations under this indemnification would not be material, other than an initial $1.5 million for securities related claims and $0.3 million for commercial general liability claims. However, no assurances can be given that the covering insurers will not attempt to dispute the validity, applicability, or amount of coverage without expensive litigation against these insurers, in which case the Company may incur substantial liabilities as a result of these indemnification obligations. Third-Party Payer Reimbursement Audits Three third-party payers have alleged that they have overpaid the Company, and demanded recoupment of the alleged overpayments. The Company disagrees with the contentions. Contractual Commitments As of March 31, 2018, the Company has non-cancelable contractual commitments with a supplier for approximately $5.9 million and other material supplier commitments for approximately $5.0 million for inventory material used in the laboratory testing process. As of March 31, 2018, the Company has a non-cancelable license agreement with a vendor for approximately $1.0 million. This represents binding and remaining commitments with the vendor through December 31, 2019. As of March 31, 2018, the Company has non-cancelable contractual commitments with a vendor for biological sample processing and storage totaling approximately $0.6 million for the next 12 months. As of March 31, 2018, the Company has non-cancelable minimum purchase commitments with a supplier of diagnostic reagents totaling approximately $3.7 million through February 2020. As of March 31, 2018, the Company has $3.7 million of non-cancelable contractual commitments with a vendor for a minimum number of tests processed until December 31, 2018.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2018
Stock-Based Compensation
Stock-Based Compensation	8. Stock‑Based Compensation 2015 Equity Incentive Plan In June 2015, the Board adopted, and the Company’s stockholders approved, the Company’s 2015 Equity Incentive Plan (the “2015 Plan”), which, by its terms, took effect as of the Company’s IPO on July 2, 2015. The 2015 Plan replaced the Company’s 2007 Stock Plan (the “2007 Plan”). No further awards have been granted under the 2007 Plan after July 1, 2015. However, any remaining awards that were outstanding under the 2007 Plan will continue to be governed by the terms of that plan. The Company initially reserved 3,451,495 shares of its common stock for issuance under the 2015 Plan; in addition, the Company authorized the reservation of up to 9,890,310 shares of common stock to cover shares reserved but unissued under the 2007 Plan and shares subject to outstanding awards under the 2007 Plan that expire or lapse unexercised or shares issued under the 2007 Plan that are subsequently reacquired by the Company. Performance-based Awards In June 2017, the Board approved a stock option grant of 425,000 shares to the Company’s chief executive officer, of which 200,000 shares are performance-based options. The vesting of these performance-based options is contingent upon the completion of requisite service for the next three years and the achievement of certain milestones within such time period. The milestones are (i) to successfully secure a specified strategic arrangement, at which point 50,000 shares will begin vesting over one year in equal quarterly installments, (ii) to successfully secure a specified licensing arrangement, at which point 75,000 shares will begin vesting over one year in equal quarterly installments, and (iii) to successfully secure specified licensing arrangements related to oncology, at which point 75,000 shares will begin vesting over one year in equal quarterly installments. Each milestone is independent of the other. For the three months ended March 31, 2018, the Company recognized stock-based compensation expense of $0.2 million associated with the performance-based options after it evaluated that milestone (ii) described above was probable of being achieved. Employee Stock Purchase Plan In the second quarter of 2015, shareholders approved the 2015 Natera, Inc. Employee Stock Purchase Plan (the “ESPP”), which became effective upon the Company’s IPO on July 2, 2015. Under the ESPP, employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 15% of the employee’s compensation and employees may not purchase more than 5,000 shares of stock during any offering period. A participant shall not be granted an option under the ESPP if such option would permit the participant’s rights to purchase stock to accrue at a rate that exceeds $25,000 fair market value of stock for each calendar year in which such option is outstanding at any time. The Company has made 893,548 shares available for issuance under the Plan, a number that is automatically increased by the least of (i) 1% of the total number of shares of common stock actually issued and outstanding on the last business day of the prior fiscal year, (ii) 880,000 shares of common stock (subject to certain adjustments pursuant to Subsection (c) below), or (iii) a number of shares of common stock determined by the Board. The first offering period of 2018 started on November 1, 2017 and ended on April 30, 2018. As of March 31 2018, no shares had been purchased in this offering period. Stock Options The following table summarizes option activity for the three months ended March 31, 2018: Outstanding Options Weighted- Weighted- Average Shares Average Remaining Aggregate Available for Number of Exercise Contractual Intrinsic (in thousands, except for contractual life and exercise price) Grant Shares Price Life Value (In years) Balance at December 31, 2017 4,737 9,963 $ 6.54 7.03 $ 31,902 Additional shares authorized 2,162 — Options granted (1,150) 1,150 $ 9.20 Options exercised — (144) $ 3.91 Options forfeited/cancelled 237 (237) $ 11.23 Balance at March 31, 2018 5,986 10,732 $ 6.76 7.13 $ 32,784 Exercisable at March 31, 2018 6,494 $ 4.80 5.98 $ 31,337 Vested and expected to vest at March 31, 2018 10,511 $ 6.70 7.09 $ 32,709 Restricted Stock Units The following table summarizes RSU activity for the three months ended March 31, 2018: Weighted- Average Grant Date (in thousands, except for grant date fair value) Shares Fair Value Balance at December 31, 2017 389 $ 10.38 Granted 703 $ 9.31 Vested (66) $ 10.19 Canceled/forfeited (12) $ 10.26 Balance at March 31, 2018 1,014 $ 9.65 Stock‑Based Compensation Expense Employee and non‑employee stock‑based compensation expense was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods, if actual forfeitures differ from those estimates. The following tables present the effect of employee and non‑employee stock‑based compensation expense on selected statements of operations line items for the three months ended March 31, 2018 and 2017. Three months ended March 31, 2018 2017 Employee Non-Employee Total Employee Non-Employee Total (in thousands) Cost of revenues $ 138 $ 4 $ 142 $ 143 $ (12) $ 131 Research and development 903 — 903 650 — 650 Selling, general and administrative 2,108 1 2,109 1,764 (2) 1,762 Total $ 3,149 $ 5 $ 3,154 $ 2,557 $ (14) $ 2,543 As of March 31, 2018, approximately $28.0 million of unrecognized compensation expense, adjusted for estimated forfeitures, related to unvested option awards and RSUs will be recognized over a weighted‑average period of approximately 2.86 years. Valuation of Stock Option Grants to Employees The Company estimates the fair value of its stock options granted to employees on the grant date using the Black‑Scholes option‑pricing model. The fair value of employee stock options is amortized on a straight‑line basis over the requisite service period of the awards, generally the vesting period. The fair value of employee stock options was estimated using the following assumptions: Three months ended March 31, 2018 2017 Expected term (years) 5.24 — 5.59 5.10 Expected volatility 40.28 % — 40.88 % 62.71 % Expected dividend rate 0.00 % 0.00 % Risk-free interest rate 2.37 % — 2.70 % 1.91 % Valuation of Stock Option Grants to Non-Employees As of March 31, 2018, total options outstanding include 105,448 shares of option awards that were granted to non-employees, of which 7,301 shares are unvested. Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock option is earned and the services are rendered. The Company believes that the estimated fair value of the stock options is more readily measurable than the fair value of the services rendered. The fair value of the stock options granted to non-employees is calculated at each reporting date using the Black-Scholes options-pricing model with the following assumptions: Three months ended March 31, 2018 2017 Expected term (years) 2.72 — 2.74 2.67 Expected volatility 41.48 — 41.71 % 51.69 % Expected dividend rate 0.00 % 0.00 % Risk-free interest rate 2.36 — 2.40 % 1.42 % Expected Term : The expected term of options represents the period of time that options are expected to be outstanding. For granted “at-the-money” stock options, the Company estimated the expected term by using the simplified method up until December 31, 2015, which involved calculating the average of the time-to-vesting and the total contractual life of the options. Starting January 1, 2016, the Company uses a different approach by calculating the average of (1) its employees’ historical stock options exercise behavior, and (2) the weighted-average of the time-to-vesting and the total contractual life of the options. For employee stock options that are not granted “at-the-money,” the Company uses the binomial lattice model to calculate the expected term. Regarding non-employee stock options, the Company estimated the expected term by assessing their historical exercise behavior and length of service, and calculated the average of these two components. Expected Volatility : The Company derived the expected volatility from the average historical volatilities of comparable publicly traded companies within its peer group over a period approximately equal to the expected term. Expected Dividend Rate : The Company has not paid and does not anticipate paying any dividends in the near future. Risk-Free Interest Rate : The risk-free interest rate assumption is based on U.S. Treasury yield in effect at the time of grant for zero coupon U. S. Treasury notes with maturities approximately equal to the expected term.

Debt

Debt	3 Months Ended
	Mar. 31, 2018
Debt
Debt	9. Debt Credit Line Agreement In September 2015, the Company entered into a credit line with UBS (the “Credit Line”) providing for a $50.0 million revolving line of credit that can be drawn down in increments at any time. The Credit Line bears interest at 30-day LIBOR plus 1.10%. The Credit Line is secured by a first priority lien and security interest in the Company’s money market and marketable securities held in its managed investment account with UBS. UBS has the right to demand full or partial payment of the Credit Line Obligations and terminate the Credit Line, in its discretion and without cause, at any time. For the three months ended March 31, 2018, the Company made interest payments on the Credit Line totaling $0.3 million. As of March 31, 2018, remaining accrued interest was $1.1 million, and the total principal amount outstanding with accrued interest was $50.1 million. 2017 Term Loan In August 2017, the Company entered into the 2017 Term Loan with OrbiMed, which has a maximum borrowing capacity of $100.0 million. On the closing date of August 8, 2017, the Company borrowed $75.0 million, with the remaining $25.0 million available to borrow at the Company’s option at any time through December 31, 2018, subject to standard conditions. The amounts borrowed under 2017 Term Loan will primarily be used for general corporate purposes and to fund and support the Company’s business and operations. Interest is accrued on the outstanding balance of the loan at a rate equal to the sum of (i) 8.75% plus (ii) the higher of 1.00% or LIBOR. The 2017 Term Loan has an eighty-four month term and will mature in August 2024. The Company is required to make interest payments on a quarterly basis, with repayment of the full outstanding balance on the maturity date. The Company’s obligations under the 2017 Term Loan are secured by substantially all of its assets, including its intellectual property, subject to certain customary exceptions. The 2017 Term Loan contains customary affirmative and negative covenants including financial information maintenance covenants, indebtedness limitation covenants, minimum net revenues covenants, and investment covenants. It also includes standard events of default such as payment defaults and nonperformance of obligations and covenants described above. Upon an event of default, an additional interest of 3.00% may be applied to the outstanding debt balance until such default is cured, and OrbiMed may declare all outstanding obligations immediately due and payable. As of March 31, 2018, the Company was in compliance with all of its covenants under the 2017 Term Loan. The Company is allowed to voluntarily make prepayments on its outstanding debt balance either partially or in full. When prepayments are made, an additional prepayment premium will be applied to the outstanding principal amount at the time. The prepayment premium will gradually reduce from 12.5% to 2.5% over the term of the loan. On August 14, 2017, the Company paid OrbiMed a fee in consideration of providing the 2017 Term Loan by issuing 300,000 shares of its common stock. The fair value of the fee was $2.4 million, which was determined based on the Company’s stock price of $8.16 on August 8, 2017. Additionally, the Company paid legal fees of $0.3 million in connection with this term loan. Total debt issuance costs incurred amounted to $2.7 million, which is accounted for as a debt discount to be amortized on a straight-line basis over the term of the loan. The Company has classified $2.0 million of the debt discount as a direct reduction from the outstanding debt balance of $75.0 million, while the remainder is classified as noncurrent assets (as described in Note 6). For the three months ended March 31, 2018, total debt discount amortized as interest expense in the statements of operations and comprehensive loss was $0.1 million. In addition, the Company made interest payments totaling $1.9 million. Interest expense totaling $2.0 million was recorded during the three months ended March 31, 2018. As of March 31, 2018, the amount of the unamortized debt discount was $1.9 million, and the net carrying amount of the debt was $73.1 million.

Warrants

Warrants	3 Months Ended
	Mar. 31, 2018
Warrants.
Warrants	10. Warrants In April 2014, the Company granted approximately 376,691 warrants to purchase common stock with an exercise price of $2.3229 per common share. The warrants were granted to ROS in connection with a senior secured term loan that has since been repaid and expires on April 18, 2023. It was determined that the warrants granted are detachable and therefore are a standalone component of the senior secured term loan to be fair valued using Level III inputs as a separate derivative. As of March 31, 2018, these warrants remain exercisable for common stock.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2018
Income Taxes
Income Taxes	11. Income Taxes During the three months ended March 31, 2018, the Company recorded total income tax expense of $0.1 million. The Company provides testing to clinics and licenses the cloud-based software to its licensees that are based in a foreign country, which contributed to a foreign income tax expense of $60,000 for the three months ended March 31, 2018. State tax expense of $44,000 based on income was also recorded for the three months ended March 31, 2018. During the same period of the prior year, the Company recorded a foreign income tax expense of $47,000, and no state income tax expense was recorded. The federal and state effective tax rate is approximately 24% before research and development credits and permanent adjustments including stock-based compensation and change in the fair value of warrants. Due to the Company’s history of cumulative operating losses, the Company concluded that, after considering all the available objective evidence, it is not more likely than not that all of the Company’s net deferred tax assets will be realized. Accordingly, all of the Company’s deferred tax assets, which includes net operating loss or NOL carryforwards and tax credits related primarily to research and development continue to be subjected to a valuation allowance as of March 31, 2018. The Company will continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets. In December 2017, the U.S. Congress passed the Tax Cuts and Jobs Act of 2017. As a result, corporate tax rate was reduced to 21%, effective January 1, 2018. ASC 740, Income Taxes , requires entities to recognize the effect of the tax law changes in the period of enactment. Shortly after the enactment of the Act, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when an entity does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The Company has made adjustments to reduce its deferred tax assets and liabilities by $42.1 million and $0.2 million, respectively, based on the reduction of the U.S. federal corporate tax rate from 34% to 21% and assessed the realizability of its deferred tax assets based on its current understanding of the provisions of the new law. A corresponding net reduction to valuation allowance of $42.2 million has been made for the year ended December 31, 2017. The Company considers its accounting for the impacts of the new law to be provisional and the Company will continue to assess the impact of the recently enacted tax law (and expected further guidance from federal and state tax authorities as well as further guidance for the associated income tax accounting) on its business and consolidated financial statements over the next 12 months. The Company had $6.3 million and $5.9 million in unrecognized tax benefits at March 31, 2018 and December 31, 2017, respectively. The reversal of the uncertain tax benefits would not affect the effective tax rate to the extent that the Company continues to maintain a full valuation allowance against its deferred tax assets. Unrecognized tax benefits may change during the next twelve months for items that arise in the ordinary course of business. Interest and/or penalties related to income tax matters are recognized as a component of income tax expense. As of March 31, 2018, there were no accrued interest and penalties related to uncertain tax positions.

Net Loss per Share

Net Loss per Share	3 Months Ended
	Mar. 31, 2018
Net Loss per Share
Net Loss per Share	12. Net Loss per Share Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, excluding shares subject to repurchase and without consideration of potentially dilutive securities. Diluted net loss per share is computed by giving effect to all potentially dilutive common shares outstanding for the period. For purposes of this computation, outstanding common stock options, restricted stock units and warrants are considered to be common share equivalents. Common share equivalents are excluded from the computation in periods in which they have an anti-dilutive effect, unless the consideration of any one of them gives a dilutive effect. For the three months ended March 31, 2018, the warrants were excluded from the computation of diluted net loss per share as the change in its fair value and assumed exercises yielded an anti-dilutive effect. Other potentially dilutive common share equivalents such as outstanding common stock options and restricted stock were not included in the computation of diluted net loss per share for all periods as they also gave an anti-dilutive effect, which represents a reduction of the net loss per share. For the three months ended March 31, 2017, the Company reversed the remeasurement gain on the change in the fair value of warrants from its net loss, and by using the treasury stock method, the Company included the incremental shares from the assumed exercise of the warrants in the computation of its weighted-average shares outstanding as they yielded a dilutive effect to the loss per share in that period. The following table provides the basic and diluted net loss per share computations for the three months ended March 31, 2018 and 2017. Three months ended March 31, (in thousands, except per share data) 2018 2017 (As Revised) Numerator: Net loss used to compute net loss per share, basic $ (32,873) $ (33,480) Less: Remeasurement gain on warrant liability — (1,042) Net loss used to compute net loss per share, diluted $ (32,873) $ (34,522) Denominator: Weighted-average number of shares used in computing net loss per share, basic 54,132 52,758 Add: incremental shares from assumed exercise of warrants — 285 Weighted-average number of shares used in computing net loss per share, diluted 54,132 53,043 Net loss per share, basic $ (0.61) $ (0.63) Net loss per share, diluted $ (0.61) $ (0.65) The following table shows total outstanding potentially dilutive shares excluded from the computation of diluted loss per share as their effect would be anti-dilutive, as of March 31, 2018 and 2017: March 31, 2018 2017 (in thousands) Options to purchase common stock 10,732 8,774 Warrants to purchase common stock 377 — Restricted stock units 1,014 138 Employee stock purchase plan 181 207 12,304 9,119

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2018
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Effective January 1, 2018, the Company adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers retroactively to January 1, 2016, as discussed under the Recently Adopted Accounting Pronouncements section in Note 2. All amounts and disclosures set forth in this Form 10-Q have been updated to comply with the new accounting standards, as indicated by the “as revised” notation. In the opinion of management, the unaudited interim condensed consolidated financial information includes only adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity, and cash flows. The results of operations for the three months ended March 31, 2018, are not necessarily indicative of the results for the full year or the results for any future periods. The condensed consolidated balance sheet as of December 31, 2017 has been derived from audited financial statements at that date, these financial statements should be read in conjunction with the audited financial statements, and related notes for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 15, 2018.
Liquidity Matters	Liquidity Matters The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows for the near future. For the three months ended March 31, 2018, the Company had a net loss of $32.9 million, which increased the accumulated deficit to $479.3 million at March 31, 2018 from $446.4 million at December 31, 2017 following the full retrospective adoption of Accounting Codification Standards 606, Revenue from Contracts with Customers (“ASC 606”), which required a cumulative-effect adjustment to be recorded to the opening balance of the Company’s accumulated deficit as of January 1, 2016. At March 31, 2018, the Company had $33.7 million in cash and cash equivalents, $80.0 million in marketable securities, $50.1 million of outstanding balance of the Credit Line (as defined in Note 9) including accrued interest, and $73.1 million of net carrying amount of the 2017 Term Loan (as defined in Note 9). While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations. Accordingly, the Company has funded the portion of operating costs that exceeds revenues through a combination of equity issuances, debt issuances, and other financings. The Company continues to develop and commercialize future products and, consequently, it will need to generate additional revenues to achieve future profitability and may need to raise additional equity or debt financing. If the Company raises additional funds by issuing equity securities, its stockholders would experience dilution. Additional debt financing, if available, may involve covenants restricting its operations or its ability to incur additional debt. Any additional debt financing or additional equity that the Company raises may contain terms that are not favorable to it or its stockholders and requires significant debt service payments, which diverts resources from other activities. Additional financing may not be available at all, or in amounts or on terms acceptable to the Company. If the Company is unable to obtain additional financing, it may be required to delay the development and commercialization of its products and significantly scale back its business and operations. Based on the Company’s current business plan, the Company believes that its existing cash and marketable securities will be sufficient to meet its anticipated cash requirements for at least 12 months after May 10, 2018.
Principles of Consolidation	Principles of Consolidation The accompanying condensed consolidated financial statements include all the accounts of the Company and its subsidiary. The Company established a subsidiary that operates in the state of Texas to support the Company’s laboratory and operational functions. All intercompany balances and transactions have been eliminated.
Use of Estimates	Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions about future events that affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Significant items subject to such estimates include the allowance for doubtful accounts, contract assets and deferred revenue, accrued liability for potential refund requests, stock-based compensation, the fair value of common stock and warrants, income tax uncertainties, and the expected consideration to be received from contracts with customers. These estimates and assumptions are based on management's best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors, including contractual terms and statutory limits; however, actual results could differ from these estimates and could have an adverse effect on the Company's financial statements.
Fair Value	Fair Value The Company discloses the fair value of financial instruments for financial assets and liabilities for which the value is practicable to estimate. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and the Company currently carries its warrants at fair value according to the fair value measurement guidance.
Cash and Cash Equivalents	Cash and Cash Equivalents Cash and cash equivalents consist of cash and money market deposits with financial institutions.
Restricted Cash	Restricted Cash The Company discloses both short-term and long-term restricted cash. Short-term restricted cash consists of $5.7 million cash deposits held to secure commercial letters of credit issued by financial institutions, of which approximately $5.6 million pertains to a letter of credit associated with a settlement agreement in connection with reimbursement related claims (as described in Note 7 under Legal Proceedings ) as of March 31, 2018. Long-term restricted cash consists of $0.3 million deposit per credit card terms. The Company adopted ASU 2016-18 effective January 1, 2018, which required the change in restricted cash to be included as part of the total cash and cash equivalents. While restricted cash is still presented as a separate line item in the Company’s balance sheet, it will no longer be presented as a separate item in the statements of cash flows. ASU 2016-18 also required a restatement of the statements of cash flows in the prior period presented to report this change. The following is the reconciliation between how restricted cash is presented in the balance sheet and the statements of cash flows for all periods presented: March 31, December 31, March 31, December 31, 2018 2017 2017 2016 (in thousands) Cash and cash equivalents in balance sheet $ 33,674 $ 12,620 $ 9,086 $ 15,256 Restricted cash, current portion in balance sheet 5,674 59 775 1,092 Restricted cash in other assets in balance sheet 342 342 342 342 Total cash, cash equivalents and restricted cash in statements of cash flows $ 39,690 $ 13,021 $ 10,203 $ 16,690
Investments	Investments Investments consist primarily of debt securities such as U.S. Treasuries, U.S. agency and municipal bonds. Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company generally classifies its entire investment portfolio as available-for-sale. The Company views its available-for-sale portfolio as available for use in current operations. Accordingly, the Company classifies all investments as short-term, even though the stated maturity may be more than one year from the current balance sheet date. Available-for-sale securities are carried at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity.
Risk and Uncertainties	Risk and Uncertainties Financial instruments that potentially subject the Company to credit risk consist of cash, accounts receivable and investments. The Company limits its exposure to credit loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits. The Company performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. The Company bills third-party payers for certain tests performed. The amount that is ultimately received from the payer for the Company’s claim and the timing of such payments are subject to the determination of the payer based on the nature of the test performed and their view of the Company’s business practices with respect to collections of plan deductibles and co-payments from patients and other activities. This determination can impact both the amount and timing of when the Company’s invoices are collected. Payers may also withhold payments and request refunds of prior payments if the payer asserts that the Company has not performed in accordance with the policies of these payers. The Company performs evaluations of financial conditions for insurance carriers, patients, clinics and laboratory partners and generally does not require collateral to support credit sales. For the three months ended March 31, 2018 and 2017, there were no customers exceeding 10% of total revenues on an individual basis. As of March 31, 2018 and December 31, 2017, there were no customers with an outstanding balance exceeding 10% of net accounts receivable.
Revenue Recognition	Revenue Recognition The Company adopted the new revenue recognition guidance, ASC 606, beginning January 1, 2018. ASC 606 mandates revenue recognition to be evaluated using the following five steps: · Identification of a contract, or contracts, with a customer; · Identification of the performance obligations in the contract; · Determination of the transaction price; · Allocation of the transaction price to the performance obligations in the contract; and · Revenue recognition when, or as, the performance obligations are satisfied See Note 3, Revenue Recognition , for detailed discussions of product revenues, licensing and other revenues, and how the five steps described above are applied.
Cost of Product Revenues	Cost of Product Revenues The components of cost of product revenues are material and service costs, impairment charges associated with testing equipment, personnel costs, including stock-based compensation expense, equipment and infrastructure expenses associated with testing samples, 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 depreciation and utilities. Costs associated with the performance of diagnostic services are recorded as tests are accessioned.
Cost of Licensing and Other Revenues	Cost of Licensing and Other Revenues The components of cost of licensing and other revenues are material costs associated with test kits, engineering costs incurred to improve and maintain the Constellation software platform, and amortization of Constellation software development costs. Costs also include collection kits consumed during the processing of cord blood samples, processing service and storage of the cord blood samples, and freight charged to transport the samples to the storage facility.
Stock-Based Compensation	Stock‑Based Compensation Stock‑based compensation is related to stock options and restricted stock units (“RSUs”) granted to the Company’s employees and is measured at the grant date based on the fair value of the award. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective awards. No compensation cost is recognized when the requisite service has not been met and the awards are therefore forfeited. The Company uses the Black‑Scholes option‑pricing model to estimate the fair value of stock options issued to employees and non-employees. The measurement of stock-based compensation is subject to periodic adjustments as the underlying equity instruments vest, and the resulting change in value, if any, is recognized in the Company's statements of operations and comprehensive loss during the period that the related services are rendered. The Black-Scholes option-pricing model requires the input of the Company's expected stock price volatility, the expected term of the awards, and a risk-free interest rate. Determining these assumptions requires significant judgment. The expected term was the calculation of the average of—(i) the employees’ historical stock option exercise behavior and (ii) the weighted-average of the time-to-vesting and the total contractual life of the options. The volatility rate was based on that of publicly traded companies in the DNA sequencing, diagnostics, or personalized medicine industries. When selecting the public companies in these industries to be used in the volatility calculation, companies were selected with comparable characteristics to the Company, including enterprise value and financial leverage. Companies were also selected with historical share price volatility sufficient to meet the expected term of the Company's stock options. The historical volatility data was computed using the daily closing prices for the selected companies' shares during the equivalent period of the calculated expected term of the Company's stock options. The expected term of the non-employee option grants was based on their remaining contractual life at the measurement date. The risk-free interest rate assumption was based on U.S. Treasury instruments with maturities that were consistent with the option's expected term.
Warrants	Warrants The Company accounts for warrants to purchase shares of its common stock as a liability at fair value on the balance sheet date because the Company may be obligated to redeem these warrants at some point in the future. The warrants are subject to re-measurement at each balance sheet date, with changes in fair value of the warrants recognized as a gain or loss in interest and other income in the statements of operations and comprehensive loss. The Company will continue to adjust the liability for changes in fair value until such time that the warrants are converted or expire.
Capitalized Software Held for Internal Use	Capitalized Software Held for Internal Use The Company capitalizes salaries and related costs of employees and consultants who devote time to the development of internal-use software development projects. Capitalization begins during the application development stage, once the preliminary project stage has been completed. If a project constitutes an enhancement to previously developed software, the Company assesses whether the enhancement is significant and creates additional functionality to the software, thus qualifying the work incurred for capitalization. Once the project is available for general release, capitalization ceases and the Company estimates the useful life of the asset and begins amortization. The Company periodically assesses whether triggering events are present to review internal-use software for impairment. Changes in estimates related to internal-use software would increase or decrease operating expenses or amortization recorded during the reporting period. See Property and Equipment, net under Note 6 for more detail regarding an impairment charge recorded to write off certain project development costs during the three months ended March 31, 2018. The Company amortizes its internal-use software over the estimated useful lives of three years. The net book value of capitalized software held for internal use was $2.2 million and $2.6 million as of March 31, 2018 and December 31, 2017, respectively. Amortized expense for amounts previously capitalized for the three months ended March 31, 2018 and 2017 was $0.4 million and $0.2 million, respectively.
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, unrealized gains and losses on available-for-sale marketable securities. Balance at Balance at December 31, Reclassification March 31, 2017 Increase Adjustment 2018 (in thousands) Unrealized (loss) gain on available-for-sale securities, net of tax $ (766) $ (170) $ 32 $ (904) Total accumulated other comprehensive (loss) income, net of tax $ (766) $ (170) $ 32 $ (904)
Net Loss per Share	Net Loss per Share Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration for potential dilutive shares. For purposes of the diluted net loss per share calculation, outstanding common stock options, RSUs, ESPP, and warrants are considered potential dilutive shares but are excluded from this calculation as the result becomes anti-dilutive, unless the consideration of any one of them gives a dilutive effect.
Property and Equipment	Property and Equipment Property and equipment, including purchased and internally developed software, are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, which are generally three years. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter.
Impairment of Long-lived Assets	Impairment of Long-lived Assets The Company periodically evaluates the carrying value of its long-lived assets for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. The Company then compares the carrying amount of the long-lived assets with the future net undiscounted cash flows expected to be generated by such asset. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value determined using discounted estimates of future cash flows. See Note 6 for more detail regarding assets impairment.
Recent Accounting Pronouncements	Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications (“ASC”) or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed below, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Recently Adopted Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers , which amends the existing accounting standards for revenue recognition. ASU 2014-09, which defines the core principles of ASC 606, establishes principles for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. ASC 606 also impacts the accounting for costs incurred in obtaining a contract with a customer, provided that such costs are considered incremental and recoverable by the Company. Effective January 1, 2018, the Company adopted ASC 606 using the full retrospective approach. The Company revised the financial results in its statements of operations and comprehensive loss for three months ended March 31, 2017 and balance sheet as of December 31, 2017, as if ASC 606 had been effective for those periods. The adoption of ASC 606 resulted in a cumulative-effect adjustment of $41.6 million retroactively to the opening balance of accumulated deficit as of January 1, 2016. The impact of adopting the new guidance on product revenues for the three months ended March 31, 2017 was an increase of $2.5 million. For financial statement disclosure purposes, the Company elected one of the practical expedients under ASC 606 to forego disclosures related to the allocation of consideration to the remaining performance obligations and the timing in which revenues will be recognized from such performance obligations. Upon the adoption of ASC 606, the Company revised the following selected amounts in its condensed consolidated balance sheet from amounts previously reported: December 31, 2017 As Previously Adoption of Reported ASC 606 As Revised (in thousands) Accounts receivable, net of allowance $ 8,252 $ 35,837 $ 44,089 Other accrued liabilities 33,207 50 33,257 Accumulated deficit $ (482,162) $ 35,787 $ (446,375) Upon the adoption of ASC 606, the Company restated the following selected amounts in its unaudited condensed consolidated statements of operations and comprehensive loss from amounts previously reported: Three months ended March 31, 2017 As Previously Adoption of Reported ASC 606 As Revised (in thousands) Product revenues $ 45,913 $ 2,481 $ 48,394 Licensing and other revenues 988 — 988 Total revenues 46,901 2,481 49,382 Loss from operations (37,031) 2,481 (34,550) Net loss (35,961) 2,481 (33,480) Net loss per share: Basic (0.68) 0.05 (0.63) Diluted $ (0.70) $ 0.05 $ (0.65) In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (“ASU 2016-08”), Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). The new guidance requires restricted cash to be combined with cash and cash equivalents when reconciling the beginning and ending balances of cash on the statement of cash flows. Further, the new guidance requires the nature of the restrictions to be disclosed, as well as a reconciliation between the balance sheet and the statement of cash flows on how restricted and unrestricted cash are segregated. The Company adopted this new guidance beginning January 1, 2018 and retroactively adjusted the statements of cash flows for three months ended March 31, 2017 to show the combined result of cash and cash equivalents and restricted cash. Three months ended March 31, 2017 As Previously Adoption of Adoption of Reported ASU 2016-18 ASC 606 As Revised (in thousands) Operating activities: Net loss $ (35,961) $ — $ 2,481 $ (33,480) Changes in operating assets and liabilities: Accounts receivable 6,019 — (2,481) 3,538 Net cash used in operating activities (24,303) (317) — (24,620) Cash, cash equivalents and restricted cash, beginning of period 15,256 1,434 — 16,690 Cash, cash equivalents and restricted cash, end of period $ 9,086 $ 1,117 $ — $ 10,203 In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the Emerging Issues Task Force) (“ASU 2016-15”) . The purpose of ASU 2016-15 is to limit diversity in the classification of certain transactions in the statement of cash flows. Such transactions include (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon bonds, (3) contingent consideration payments made after a business combination, (4) proceeds from insurance claims settlement, (5) proceeds from settlement of life insurance policies, and (6) distributions of equity method investments. The Company adopted this new guidance beginning January 1, 2018, which did not result in a material impact on its financial statements as none of the transactions described above occurred during the three months ended March 31, 2018. In May 2017, the FASB issued Accounting Standards Update No. 2017-09 (“ASU 2017-09”), Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting . The purpose of this ASU is to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Company adopted this new guidance beginning January 1, 2018, and the impact on its financial statements is not material upon adoption. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for the Company in the fiscal year beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The modified retrospective approach must be applied to leases in existence as of the date of the adoption, and the Company expects that its lease assets and lease liabilities will increase in its financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This new guidance was established as a result of the Tax Cuts and Jobs Act passed in December 2017, which provides an opportunity for entities to reclassify residual income tax effects from accumulated other comprehensive income to retained earnings due to the reduction of the corporate income tax rate. The new guidance will be effective in the first quarter of 2019, and interim periods within that year, with early adoption permitted. The Company will have the option to apply this new guidance using either the full retrospective approach or to record the reclassifications as of the beginning date in the period of adoption. The Company is currently evaluating the impact of adopting ASU 2018-02 on its financial statements.

Summary of Significant Accoun19

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2018
Summary Of Significant Accounting Policies [Line Items]
Schedule of reconciliation of restricted cash	March 31, December 31, March 31, December 31, 2018 2017 2017 2016 (in thousands) Cash and cash equivalents in balance sheet $ 33,674 $ 12,620 $ 9,086 $ 15,256 Restricted cash, current portion in balance sheet 5,674 59 775 1,092 Restricted cash in other assets in balance sheet 342 342 342 342 Total cash, cash equivalents and restricted cash in statements of cash flows $ 39,690 $ 13,021 $ 10,203 $ 16,690
Schedule of Accumulated Other Comprehensive Loss	Balance at Balance at December 31, Reclassification March 31, 2017 Increase Adjustment 2018 (in thousands) Unrealized (loss) gain on available-for-sale securities, net of tax $ (766) $ (170) $ 32 $ (904) Total accumulated other comprehensive (loss) income, net of tax $ (766) $ (170) $ 32 $ (904)
Accounting Standards Update 2014-09
Summary Of Significant Accounting Policies [Line Items]
Schedule of cumulative-effect adjustment	Upon the adoption of ASC 606, the Company revised the following selected amounts in its condensed consolidated balance sheet from amounts previously reported: December 31, 2017 As Previously Adoption of Reported ASC 606 As Revised (in thousands) Accounts receivable, net of allowance $ 8,252 $ 35,837 $ 44,089 Other accrued liabilities 33,207 50 33,257 Accumulated deficit $ (482,162) $ 35,787 $ (446,375) Upon the adoption of ASC 606, the Company restated the following selected amounts in its unaudited condensed consolidated statements of operations and comprehensive loss from amounts previously reported: Three months ended March 31, 2017 As Previously Adoption of Reported ASC 606 As Revised (in thousands) Product revenues $ 45,913 $ 2,481 $ 48,394 Licensing and other revenues 988 — 988 Total revenues 46,901 2,481 49,382 Loss from operations (37,031) 2,481 (34,550) Net loss (35,961) 2,481 (33,480) Net loss per share: Basic (0.68) 0.05 (0.63) Diluted $ (0.70) $ 0.05 $ (0.65) In November 2016, the FASB issued Accounting Standards Update No. 2016-18 (“ASU 2016-08”), Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”). The new guidance requires restricted cash to be combined with cash and cash equivalents when reconciling the beginning and ending balances of cash on the statement of cash flows. Further, the new guidance requires the nature of the restrictions to be disclosed, as well as a reconciliation between the balance sheet and the statement of cash flows on how restricted and unrestricted cash are segregated. The Company adopted this new guidance beginning January 1, 2018 and retroactively adjusted the statements of cash flows for three months ended March 31, 2017 to show the combined result of cash and cash equivalents and restricted cash. Three months ended March 31, 2017 As Previously Adoption of Adoption of Reported ASU 2016-18 ASC 606 As Revised (in thousands) Operating activities: Net loss $ (35,961) $ — $ 2,481 $ (33,480) Changes in operating assets and liabilities: Accounts receivable 6,019 — (2,481) 3,538 Net cash used in operating activities (24,303) (317) — (24,620) Cash, cash equivalents and restricted cash, beginning of period 15,256 1,434 — 16,690 Cash, cash equivalents and restricted cash, end of period $ 9,086 $ 1,117 $ — $ 10,203
Accounting Standards Update 2016-18
Summary Of Significant Accounting Policies [Line Items]
Schedule of cumulative-effect adjustment	Three months ended March 31, 2017 As Previously Adoption of Adoption of Reported ASU 2016-18 ASC 606 As Revised (in thousands) Operating activities: Net loss $ (35,961) $ — $ 2,481 $ (33,480) Changes in operating assets and liabilities: Accounts receivable 6,019 — (2,481) 3,538 Net cash used in operating activities (24,303) (317) — (24,620) Cash, cash equivalents and restricted cash, beginning of period 15,256 1,434 — 16,690 Cash, cash equivalents and restricted cash, end of period $ 9,086 $ 1,117 $ — $ 10,203

Revenue Recognition (Tables)

Revenue Recognition (Tables)	3 Months Ended
	Mar. 31, 2018
Revenue Recognition
Schedule of disaggregation of revenue by test families	Three months ended March 31, 2018 2017 (Amounts in thousands) (As Revised) Sales of genetic tests Panorama NIPT $ 33,267 $ 32,559 HCS 18,262 12,953 Other genetic tests 2,740 2,882 Product revenues 54,269 48,394 Licensing and other Constellation 1,305 988 Other 6,766 — Licensing and other revenues 8,071 988 Total revenues $ 62,340 $ 49,382
Schedule of disaggregation of revenue by sales vertical	Three months ended March 31, 2018 2017 (Amounts in thousands) (As Revised) Insurance carriers $ 44,142 $ 38,840 Laboratory partners 14,888 8,093 Patients 3,310 2,449 Total revenues $ 62,340 $ 49,382
Schedule of total revenue by geographic area	Three months ended March 31, 2018 2017 (Amounts in thousands) (As Revised) United States $ 50,364 $ 43,825 Americas, excluding U.S. 850 700 Europe, Middle East, India, Africa 9,322 3,216 Other 1,804 1,641 Total revenues $ 62,340 $ 49,382
Schedule of changes in the balances of the Company?s contract assets and liabilities	Balance at Balance at December 31, March 31, 2017 Additions Deductions 2018 (Amounts in thousands) (As Revised) Assets: Accounts receivable $ 44,089 $ 55,004 $ (48,767) $ 50,326 Liabilities: Deferred revenue, current portion $ 1,420 $ 964 $ (941) $ 1,443 Deferred revenue, long-term $ — $ 35,462 $ — $ 35,462

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2018
Summary of financial assets and liabilities measured on recurring basis	March 31, 2018 December 31, 2017 Level I Level II Level III Total Level I Level II Level III Total (in thousands) Financial Assets: Money market deposits $ 21,349 $ — $ — $ 21,349 $ 3,477 $ — $ — $ 3,477 U.S. Treasury securities 45,920 — — 45,920 67,026 — — 67,026 U.S. agency securities — 22,329 — 22,329 — 27,072 — 27,072 Municipal securities — 11,774 — 11,774 — 12,149 — 12,149 Total financial assets $ 67,269 $ 34,103 $ — $ 101,372 $ 70,503 $ 39,221 $ — $ 109,724 Current Liabilities: Warrants $ — $ — $ 2,751 $ 2,751 $ — $ — $ 2,644 $ 2,644 Total financial liabilities $ — $ — $ 2,751 $ 2,751 $ — $ — $ 2,644 $ 2,644
Warrants
Rollforward of fair value determined by Level 3 inputs	Warrants (in thousands) Balance at December 31, 2017 $ 2,644 Change in fair value 107 Balance at March 31, 2018 $ 2,751

Financial Instruments (Tables)

Financial Instruments (Tables)	3 Months Ended
	Mar. 31, 2018
Financial Instruments
Schedule of available-for-sale securities	March 31, 2018 December 31, 2017 Amortized Gross Gross Estimated Fair Value Amortized Gross Gross Estimated Fair Value (in thousands) Money market deposits $ 21,349 $ — $ — $ 21,349 $ 3,477 $ — $ — $ 3,477 U.S. Treasury securities 46,496 1 (577) 45,920 67,480 10 (464) 67,026 U.S. agency securities 22,562 — (233) 22,329 27,293 — (221) 27,072 Municipal securities 11,869 — (95) 11,774 12,240 — (91) 12,149 Total $ 102,276 $ 1 $ (905) $ 101,372 $ 110,490 $ 10 $ (776) $ 109,724 Classified as: Cash equivalents $ 21,349 $ 3,477 Short-term investments 80,023 106,247 Total $ 101,372 $ 109,724
Summarized portfolio of available-for-sale securities by contractual maturity	March 31, 2018 Amortized Fair (in thousands) Less than one year $ 39,157 $ 39,021 Greater than one year but less than five years 41,770 41,002 Total $ 80,927 $ 80,023

Balance Sheet Components (Table

Balance Sheet Components (Tables)	3 Months Ended
	Mar. 31, 2018
Balance Sheet Components
Schedule of property and equipment	March 31, December 31, Useful Life 2018 2017 (in thousands) Machinery and equipment 3-5 years $ 32,022 $ 31,825 Furniture and fixtures 3 years 1,265 1,216 Computer equipment 3 years 2,028 1,958 Capitalized software held for internal use 3 years 4,465 4,465 Leasehold improvements Lesser of useful life or lease term 10,745 10,691 Construction-in-process 5,198 6,497 55,723 56,652 Less: Accumulated depreciation and amortization (28,845) (26,985) Total Property and Equipment, net $ 26,878 $ 29,667
Schedule of accrued compensation	March 31, December 31, 2018 2017 (in thousands) Accrued paid time off $ 1,808 $ 1,806 Accrued commissions 3,365 3,558 Accrued bonuses 1,433 2,063 Other accrued compensation 3,327 2,172 Total accrued compensation $ 9,933 $ 9,599
Schedule of other accrued liabilities	March 31, December 31, 2018 2017 (Amounts in thousands) (As Revised) Settlement accrued for reimbursement related claims $ 6,074 $ 10,062 Reserves for refunds to insurance carriers 7,071 6,794 Accrued charges for third party test fees 7,301 6,566 Testing and laboratory materials from suppliers 1,653 1,367 Marketing and corporate affairs 1,223 1,456 Legal, audit and consulting fees 913 206 Accrued shipping charges 482 198 Sales tax payable 947 504 Accrued specimen service fees 1,026 683 Accrued rent 868 856 Clinical trials and studies 557 483 Other accrued expenses 3,408 4,082 Total other accrued liabilities $ 31,523 $ 33,257

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2018
Commitments and Contingencies
Schedule of future minimum lease payments	Operating Leases (in thousands) Year ending December 31: 2018 (remaining 9 months) $ 6,164 2019 8,692 2020 8,825 2021 9,067 2022 9,319 2023 and thereafter 14,832 Total future minimum lease payments $ 56,899

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Summary of stock option activity	Outstanding Options Weighted- Weighted- Average Shares Average Remaining Aggregate Available for Number of Exercise Contractual Intrinsic (in thousands, except for contractual life and exercise price) Grant Shares Price Life Value (In years) Balance at December 31, 2017 4,737 9,963 $ 6.54 7.03 $ 31,902 Additional shares authorized 2,162 — Options granted (1,150) 1,150 $ 9.20 Options exercised — (144) $ 3.91 Options forfeited/cancelled 237 (237) $ 11.23 Balance at March 31, 2018 5,986 10,732 $ 6.76 7.13 $ 32,784 Exercisable at March 31, 2018 6,494 $ 4.80 5.98 $ 31,337 Vested and expected to vest at March 31, 2018 10,511 $ 6.70 7.09 $ 32,709
Restricted stock units	Weighted- Average Grant Date (in thousands, except for grant date fair value) Shares Fair Value Balance at December 31, 2017 389 $ 10.38 Granted 703 $ 9.31 Vested (66) $ 10.19 Canceled/forfeited (12) $ 10.26 Balance at March 31, 2018 1,014 $ 9.65
Summary of stock-based compensation expenses	Three months ended March 31, 2018 2017 Employee Non-Employee Total Employee Non-Employee Total (in thousands) Cost of revenues $ 138 $ 4 $ 142 $ 143 $ (12) $ 131 Research and development 903 — 903 650 — 650 Selling, general and administrative 2,108 1 2,109 1,764 (2) 1,762 Total $ 3,149 $ 5 $ 3,154 $ 2,557 $ (14) $ 2,543
Employee stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Schedule of assumptions used in valuation of fair value of employee stock options	Three months ended March 31, 2018 2017 Expected term (years) 5.24 — 5.59 5.10 Expected volatility 40.28 % — 40.88 % 62.71 % Expected dividend rate 0.00 % 0.00 % Risk-free interest rate 2.37 % — 2.70 % 1.91 %
Non-employee stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Schedule of assumptions used in valuation of fair value of employee stock options	Three months ended March 31, 2018 2017 Expected term (years) 2.72 — 2.74 2.67 Expected volatility 41.48 — 41.71 % 51.69 % Expected dividend rate 0.00 % 0.00 % Risk-free interest rate 2.36 — 2.40 % 1.42 %

Net Loss per Share (Tables)

Net Loss per Share (Tables)	3 Months Ended
	Mar. 31, 2018
Net Loss per Share
Basic and diluted net loss per common share	Three months ended March 31, (in thousands, except per share data) 2018 2017 (As Revised) Numerator: Net loss used to compute net loss per share, basic $ (32,873) $ (33,480) Less: Remeasurement gain on warrant liability — (1,042) Net loss used to compute net loss per share, diluted $ (32,873) $ (34,522) Denominator: Weighted-average number of shares used in computing net loss per share, basic 54,132 52,758 Add: incremental shares from assumed exercise of warrants — 285 Weighted-average number of shares used in computing net loss per share, diluted 54,132 53,043 Net loss per share, basic $ (0.61) $ (0.63) Net loss per share, diluted $ (0.61) $ (0.65)
Total outstanding potentially dilutive shares not included in the calculation of dilutive EPS	March 31, 2018 2017 (in thousands) Options to purchase common stock 10,732 8,774 Warrants to purchase common stock 377 — Restricted stock units 1,014 138 Employee stock purchase plan 181 207 12,304 9,119

Description of Business (Detail

Description of Business (Details)	3 Months Ended
	Mar. 31, 2018segment
Description of Business
Number of operating segments	1

Summary of Significant Accoun28

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Aug. 08, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Aug. 14, 2017	Dec. 31, 2016
Policies
Common stock, shares issued		54,251,000		54,040,000
Net (loss) income		$ (32,873)	$ (33,480)
Accumulated deficit		479,248		$ 446,375
Cash and cash equivalents		33,674	$ 9,086	12,620		$ 15,256
Marketable securities		80,023		106,247
Short-term Credit Line, outstanding balance		50,125		50,112
Long-term Term Loan, carrying amount		73,138		73,065
Restricted cash
Restricted cash, current portion		5,674		59
Restricted cash, long term portion		$ 342		$ 342
2017 Term Loan
Policies
Maximum borrowing capacity	$ 100,000
Available borrowing capacity	75,000
Remaining borrowing capacity	$ 25,000
Debt instrument, term	84 months
Common stock, shares issued					300,000
2017 Term Loan | Base Rate
Policies
Spread on interest rate (as a percent)	8.75%
Base interest rate (as a percent)	1.00%

Summary of Significant Accoun29

Summary of Significant Accounting Policies (Restricted Cash) (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Cash and cash equivalents in balance sheet	$ 33,674	$ 12,620	$ 9,086	$ 15,256
Restricted cash, current portion in balance sheet	5,674	59	775	1,092
Restricted cash in other assets in balance sheet	342	342	342	342
Total cash, cash equivalents and restricted cash in statements of cash flows	39,690	$ 13,021	10,203	16,690
Accounting Standards Update 2016-18
Total cash, cash equivalents and restricted cash in statements of cash flows			$ 1,117	$ 1,434
Letter of Credit | Accounting Standards Update 2016-18
Restricted cash, current portion in balance sheet	$ 5,600

Summary of Significant Accoun30

Summary of Significant Accounting Policies - Concentration (Details) $ in Millions	3 Months Ended		15 Months Ended
	Mar. 31, 2018USD ($)customer	Mar. 31, 2017customer	Mar. 31, 2018
Risk and Uncertainties
Revenue recognized | $	$ 0.9
Sales | Customer
Risk and Uncertainties
Number of customers exceeding 10% of benchmark | customer	0	0
Accounts Receivable | Credit
Risk and Uncertainties
Concentration risk (as a percent)			0.00%

Summary of Significant Accoun31

Summary of Significant Accounting Policies - Costs (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Capitalized software	$ 2.2		$ 2.6
Capitalized software held for internal use
Estimated useful life (in years)	3 years
Amortized expense	$ 0.4	$ 0.2

Summary of Significant Accoun32

Summary of Significant Accounting Policies - AOCL (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	$ (766)
Balance	(904)
Unrealized (loss) gain on available-for-sale securities, net of tax
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(766)
Increase	(170)
Reclassification adjustment	32
Balance	(904)
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(766)
Increase	(170)
Reclassification adjustment	32
Balance	$ (904)

Summary of Significant Accoun33

Summary of Significant Accounting Policies - Property (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Summary of Significant Accounting Policies
Estimated useful life	P3Y
Impairment of assets	$ 1,544	$ 576

Summary of Significant Accoun34

Summary of Significant Accounting Policies - Pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended	15 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Mar. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable, net of allowance	$ 50,326		$ 44,089	$ 50,326
Other accrued liabilities	31,523		33,257	31,523
Accumulated deficit	(479,248)		(446,375)	(479,248)
Total revenues	62,340	$ 49,382	49,382
Loss from operations	(30,517)	(34,550)
Net loss	$ (32,873)	$ (33,480)
Net loss per share (Note 12):
Basic (in dollars per share)	$ (0.61)	$ (0.63)
Diluted (in dollars per share)	$ (0.61)	$ (0.65)
Operating activities
Net loss	$ (32,873)	$ (33,480)
Changes in operating assets and liabilities:
Accounts receivable	(6,284)	3,538
Net cash (used in) provided by operating activities	1,046	(24,620)
Cash, cash equivalents and restricted cash, beginning of period	13,021	16,690	16,690	16,690
Cash, cash equivalents and restricted cash, end of period	39,690	10,203	13,021	39,690
Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenues	54,269	48,394	48,394
Licensing and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenues	$ 8,071	988	988
Accounting Standards Update 2016-18
Changes in operating assets and liabilities:
Net cash (used in) provided by operating activities		(317)
Cash, cash equivalents and restricted cash, beginning of period		1,434	1,434	1,434
Cash, cash equivalents and restricted cash, end of period		1,117
As Previously Reported
Operating activities
Net loss		(35,961)
Changes in operating assets and liabilities:
Accounts receivable		6,019
Net cash (used in) provided by operating activities		(24,303)
Cash, cash equivalents and restricted cash, beginning of period		15,256	15,256	$ 15,256
Cash, cash equivalents and restricted cash, end of period		9,086
As Previously Reported | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Accounts receivable, net of allowance			8,252
Other accrued liabilities			33,207
Accumulated deficit			(482,162)
Total revenues		46,901
Loss from operations		(37,031)
Net loss		$ (35,961)
Net loss per share (Note 12):
Basic (in dollars per share)		$ (0.68)
Diluted (in dollars per share)		$ (0.70)
As Previously Reported | Accounting Standards Update 2014-09 | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenues		$ 45,913
As Previously Reported | Accounting Standards Update 2014-09 | Licensing and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenues		988
Adoption of ASC 606
Operating activities
Net loss		2,481
Changes in operating assets and liabilities:
Accounts receivable		(2,481)
Adoption of ASC 606 | Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect adjustment			41,600
Accounts receivable, net of allowance			35,837
Other accrued liabilities			50
Accumulated deficit			$ 35,787
Total revenues		2,481
Loss from operations		2,481
Net loss		$ 2,481
Net loss per share (Note 12):
Basic (in dollars per share)		$ 0.05
Diluted (in dollars per share)		$ 0.05
Adoption of ASC 606 | Accounting Standards Update 2014-09 | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Total revenues		$ 2,481

Revenue Recognition (Details)

Revenue Recognition (Details) $ in Thousands	1 Months Ended	3 Months Ended		12 Months Ended
	Apr. 30, 2016	Mar. 31, 2018USD ($)item	Mar. 31, 2017USD ($)	Dec. 31, 2017USD ($)
Agreement term	4 years
Total revenues		$ 62,340	$ 49,382	$ 49,382
Noncurrent deferred revenue		35,462
Deferred revenue, current portion		1,443		1,420
Product
Revenue recognized		900
Total revenues		$ 54,269	48,394	48,394
Product | Minimum
Performance obligation, expected timing		9 months
Product | Maximum
Performance obligation, expected timing		12 months
Licensing and other
Total revenues		$ 8,071	$ 988	$ 988
Evercord
Deferred revenue		$ 2,400
Evercord | Processing and storage services
Number of performance obligations | item		2
Evercord | Processing and storage services | Minimum
Performance obligation, expected timing		6 months
Evercord | Processing and storage services | Maximum
Performance obligation, expected timing		18 months
Qiagen
Revenue recognized		$ 5,500
Qiagen | The Qiagen Agreement
Agreement term		10 years
Initial transaction price		$ 15,000
Qiagen | Estimated recognition through 2022
Deferred revenue, noncurrent		$ 9,500
Laboratory distribution partners | Product | Minimum
Performance obligation, expected timing		2 months
Laboratory distribution partners | Product | Maximum
Performance obligation, expected timing		3 months

Revenue Recognition - Disaggreg

Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Total revenues	$ 62,340	$ 49,382	$ 49,382
United States
Disaggregation of Revenue [Line Items]
Total revenues	50,364	43,825
Americas, excluding U.S.
Disaggregation of Revenue [Line Items]
Total revenues	850	700
Europe, Middle East, India, Africa
Disaggregation of Revenue [Line Items]
Total revenues	9,322	3,216
Other
Disaggregation of Revenue [Line Items]
Total revenues	1,804	1,641
Insurance carriers
Disaggregation of Revenue [Line Items]
Total revenues	44,142	38,840
Laboratory partners
Disaggregation of Revenue [Line Items]
Total revenues	14,888	8,093
Patients
Disaggregation of Revenue [Line Items]
Total revenues	3,310	2,449
Panorama NIPT
Disaggregation of Revenue [Line Items]
Total revenues	33,267		32,559
HCS
Disaggregation of Revenue [Line Items]
Total revenues	18,262		12,953
Other genetic tests
Disaggregation of Revenue [Line Items]
Total revenues	2,740		2,882
Product
Disaggregation of Revenue [Line Items]
Total revenues	54,269	48,394	48,394
Constellation
Disaggregation of Revenue [Line Items]
Total revenues	1,305		988
Other, licensing and other
Disaggregation of Revenue [Line Items]
Total revenues	6,766
Licensing and other
Disaggregation of Revenue [Line Items]
Total revenues	$ 8,071	$ 988	$ 988

Revenue Recognition - Accounts

Revenue Recognition - Accounts Receivable and Deferred Revenue (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)
Assets
Accounts receivable, balance	$ 44,089
Accounts receivable, additions	55,004
Accounts receivable, deductions	(48,767)
Accounts receivable, balance	50,326
Liabilities:
Deferred revenue, current portion, balance	1,420
Deferred revenue, current portion, additions	964
Deferred revenue, current portion, deductions	(941)
Deferred revenue, current portion, balance	1,443
Deferred revenue, noncurrent, balance
Deferred revenue, noncurrent, additions	35,462
Deferred revenue, noncurrent, balance	$ 35,462

Revenue Recognition - Remaining

Revenue Recognition - Remaining Obligations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Deferred revenue, current portion	$ 1,443	$ 1,420
Amounts included in deferred revenue at beginning of the period	(941)
Evercord
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Deferred revenue, noncurrent	1,000
Qiagen
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items]
Revenue, remaining performance obligation	$ 40,000

Fair Value Measurements - Hiera

Fair Value Measurements - Hierarchy (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Transfers between Levels 1 and 2
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	$ 0
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	0
Recurring
Financial Assets:
Total financial assets	101,372,000	$ 109,724,000
Current Liabilities:
Warrants	2,751,000	2,644,000
Total financial liabilities	2,751,000	2,644,000
Recurring | Money market deposits
Financial Assets:
Total financial assets	21,349,000	3,477,000
Recurring | U.S. Treasury securities
Financial Assets:
Total financial assets	45,920,000	67,026,000
Recurring | U.S. agency securities
Financial Assets:
Total financial assets	22,329,000	27,072,000
Recurring | Municipal securities
Financial Assets:
Total financial assets	11,774,000	12,149,000
Recurring | Level 1
Financial Assets:
Total financial assets	67,269,000	70,503,000
Recurring | Level 1 | Money market deposits
Financial Assets:
Total financial assets	21,349,000	3,477,000
Recurring | Level 1 | U.S. Treasury securities
Financial Assets:
Total financial assets	45,920,000	67,026,000
Recurring | Level 2
Financial Assets:
Total financial assets	34,103,000	39,221,000
Recurring | Level 2 | U.S. agency securities
Financial Assets:
Total financial assets	22,329,000	27,072,000
Recurring | Level 2 | Municipal securities
Financial Assets:
Total financial assets	11,774,000	12,149,000
Recurring | Level 3
Current Liabilities:
Warrants	2,751,000	2,644,000
Total financial liabilities	$ 2,751,000	$ 2,644,000

Fair Value Measurements - Level

Fair Value Measurements - Level III (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 2,644
Change in fair value	107
Ending balance	$ 2,751

Fair Value Measurements - Assum

Fair Value Measurements - Assumptions (Details) - Warrants	3 Months Ended
	Mar. 31, 2018
Fair Value Inputs, Liabilities, Quantitative Information [Line Items]
Expected term	5 years
Risk-free interest rate	2.56%
Volatility (as a percent)	40.95%

Financial Instruments (Details)

Financial Instruments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018USD ($)position	Dec. 31, 2017USD ($)
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Estimated Fair Value	$ 80,023	$ 106,247
Other than temporary impairment	$ 0
Number of investments, unrealized loss position | position	17
Amortized Cost
Less than one year	$ 39,157
Greater than one year but less than five years	41,770
Total	80,927
Fair Value
Less than one year	39,021
Greater than one year but less than five years	41,002
Total	80,023
Available-for-sale securities
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost	102,276	110,490
Unrealized Gain	1	10
Unrealized Loss	(905)	(776)
Estimated Fair Value	101,372	109,724
Money market deposits
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost	21,349	3,477
Estimated Fair Value	21,349	3,477
U.S. Treasury securities
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost	46,496	67,480
Unrealized Gain	1	10
Unrealized Loss	(577)	(464)
Estimated Fair Value	45,920	67,026
U.S. agency securities
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost	22,562	27,293
Unrealized Loss	(233)	(221)
Estimated Fair Value	22,329	27,072
Municipal securities
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Cost	11,869	12,240
Unrealized Loss	(95)	(91)
Estimated Fair Value	11,774	12,149
Cash equivalents | Available-for-sale securities
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Estimated Fair Value	21,349	3,477
Short-term investments | Available-for-sale securities
Available-for-sale Securities, Fair Value to Amortized Cost Basis [Abstract]
Estimated Fair Value	$ 80,023	$ 106,247

Balance Sheet Components - Prop

Balance Sheet Components - Property (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Property and Equipment, net
Property and equipment, gross	$ 55,723		$ 56,652
Less: Accumulated depreciation and amortization	(28,845)		(26,985)
Total Property and Equipment, net	26,878		29,667
Impairment of assets	1,544	$ 576
Cost of product revenues
Property and Equipment, net
Impairment of assets	1,600
Machinery and equipment
Property and Equipment, net
Property and equipment, gross	32,022		31,825
Furniture and fixtures
Property and Equipment, net
Property and equipment, gross	$ 1,265		1,216
Useful Life	3 years
Computer equipment
Property and Equipment, net
Property and equipment, gross	$ 2,028		1,958
Useful Life	3 years
Capitalized software held for internal use
Property and Equipment, net
Property and equipment, gross	$ 4,465		4,465
Useful Life	3 years
Leasehold improvements
Property and Equipment, net
Property and equipment, gross	$ 10,745		10,691
Construction-in-process
Property and Equipment, net
Property and equipment, gross	$ 5,198		$ 6,497
Minimum | Machinery and equipment
Property and Equipment, net
Useful Life	3 years
Maximum | Machinery and equipment
Property and Equipment, net
Useful Life	5 years

Balance Sheet Components - Othe

Balance Sheet Components - Other Assets (Details) - USD ($) $ in Thousands	Aug. 08, 2017	Apr. 30, 2016	Mar. 31, 2018	Dec. 31, 2017	Aug. 14, 2017
Balance Sheet Components [Line Items]
Agreement term		4 years
Total consideration		$ 3,200
Deferred costs included in other long-term assets			$ 1,600	$ 1,800
Amortization of deferred costs			$ 200
Common stock, shares issued			54,251,000	54,040,000
Debt discount			$ 600
Noncurrent assets			3,912	$ 3,979
2017 Term Loan
Balance Sheet Components [Line Items]
Common stock, shares issued					300,000
Payments of debt issuance costs	$ 300
Debt discount	2,700
Debt instrument, fee amount	2,400
Remaining borrowing capacity	25,000
2017 Term Loan | Direct reduction from outstanding debt balance
Balance Sheet Components [Line Items]
Debt instrument, fee amount	2,000		$ 1,900
2017 Term Loan | Noncurrent assets
Balance Sheet Components [Line Items]
Debt instrument, fee amount	$ 700

Balance Sheet Components - Accr

Balance Sheet Components - Accrued Compensation (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Balance Sheet Components
Accrued paid time off	$ 1,808	$ 1,806
Accrued commissions	3,365	3,558
Accrued bonuses	1,433	2,063
Other accrued compensation	3,327	2,172
Total accrued compensation	$ 9,933	$ 9,599

Balance Sheet Components - Ot46

Balance Sheet Components - Other Accured Liabilities (Details) $ in Thousands	Mar. 07, 2018USD ($)installment	Mar. 31, 2018USD ($)installment	Dec. 31, 2017USD ($)
Balance Sheet Components
Settlement accrued for reimbursement related claims		$ 6,074	$ 10,062
Reserves for refunds to insurance carriers		7,071	6,794
Accrued charges for third party test fees		7,301	6,566
Testing and laboratory materials from suppliers		1,653	1,367
Marketing and corporate affairs		1,223	1,456
Legal, audit and consulting fees		913	206
Accrued shipping charges		482	198
Sales tax payable		947	504
Accrued specimen service fees		1,026	683
Accrued rent		868	856
Clinical trials and studies		557	483
Other accrued expenses		3,408	4,082
Total other accrued liabilities		31,523	33,257
Accrued settlement liability	$ 11,400	7,100	11,400
Accrued settlement liability, current			10,100
Accrued settlement liability, long-term			$ 1,300
Additional reserves for refunds to insurance carriers		1,200
Revenue recognized		900
Other accrued liabilities, current		$ 1,300
Settlement agreement, number of equal quarterly installments | installment	4	4
Settlement agreement, amount plus applicable interest to be paid in installments	$ 5,300	$ 5,300

Commitments and Contingencies47

Commitments and Contingencies (Details)	1 Months Ended		3 Months Ended
	Mar. 31, 2018USD ($)ft²	Nov. 30, 2016USD ($)	Mar. 31, 2018USD ($)ft²location	Mar. 31, 2017USD ($)	Oct. 31, 2016ft²
Future minimum lease payments
2018 (remaining 9 months)	$ 6,164,000		$ 6,164,000
2,019	8,692,000		8,692,000
2,020	8,825,000		8,825,000
2,021	9,067,000		9,067,000
2,022	9,319,000		9,319,000
2023 and thereafter	14,832,000		14,832,000
Total future minimum lease payment	$ 56,899,000		56,899,000
Rent expense			$ 2,100,000	$ 1,700,000
Corporate Headquarters Lease
Operating Leases
Office space (area) | ft²	113,000		113,000
Number of office space locations | location			2
Security Deposit	$ 700,000	$ 100,000	$ 700,000
Term of lease			84 months
Security deposit	$ 700,000	100,000	$ 700,000
Reimbursement from landlord			$ 200,000
"First Space" Sublease
Operating Leases
Office space (area) | ft²	88,000		88,000
Monthly base rent			$ 319,095
"Second Space" Sublease
Operating Leases
Office space (area) | ft²	25,000		25,000
Monthly base rent			$ 97,431
Corporate Headquarters Sublease
Operating Leases
Office space (area) | ft²					13,000
Monthly base rent		$ 49,140
Percentage of annual increase in rent		3.00%
Austin TX, Long-term Lease
Operating Leases
Office space (area) | ft²	94,000		94,000
Monthly base rent			$ 100,000
Security Deposit	$ 400,000		$ 400,000
Term of lease			132 months
Maximum monthly base rent after escalation			$ 200,000
Security deposit	400,000		400,000
Allowance for leasehold improvements	$ 7,800,000		$ 7,800,000
Tukwila, WA lease
Operating Leases
Office space (area) | ft²	10,000		10,000
Monthly base rent	$ 11,900
Term of lease	62 months
Percentage of annual increase in rent	3.00%

Commitments and Contingencies -

Commitments and Contingencies - Legal (Details) $ in Millions	Mar. 07, 2018USD ($)installment	Mar. 31, 2018USD ($)iteminstallment	Dec. 31, 2017USD ($)
Other commitments
Shareholders (as a percent)		5.00%
Accrued settlement liability	$ 11.4	$ 7.1	$ 11.4
Settlement agreement, amount plus applicable interest to be paid in installments	$ 5.3	$ 5.3
Settlement agreement, number of equal quarterly installments | installment	4	4
Accrued settlement liability, current			10.1
Accrued settlement liability, long-term			$ 1.3
Number of third-party payers that have alleged to have overpaid the company | item		3
Inventory material
Other commitments
Purchase commitment		$ 5.9
Other supplier commitments | Inventory material
Other commitments
Purchase commitment		5
Supplier two | Inventory material
Other commitments
Purchase commitment		1
Supplier three | Biological sample processing and storage
Other commitments
Purchase commitment		0.6
Supplier Four | Diagnostic reagents
Other commitments
Purchase commitment		3.7
Supplier Five | Tests
Other commitments
Purchase commitment		3.7
Securities related claims
Other commitments
Estimate of possible loss		1.5
Commercial general liability claims
Other commitments
Estimate of possible loss		$ 0.3

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($)	Mar. 31, 2018	Jun. 30, 2017	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Jun. 30, 2015
Stock Based Compensation
Stock-based compensation expense			$ 3,154,000	$ 2,543,000
Chief Executive Officer
Stock Based Compensation
Stock option shares approved		425,000
2015 Plan
Stock Based Compensation
Shares reserved for issuance						3,451,495
Additional shares reserved for issuance						9,890,310
Employee stock purchase plan
Stock Based Compensation
Issuance of common stock under employee stock purchase plan (in shares)	0
Performance-baseed awards | Chief Executive Officer
Stock Based Compensation
Stock option shares approved		200,000
Requisite service period		3 years
Performance-baseed awards | First Vesting Milestone | Chief Executive Officer
Stock Based Compensation
Number of options vested		50,000
Vesting period		1 year
Performance-baseed awards | Second Vesting Milestone | Chief Executive Officer
Stock Based Compensation
Number of options vested		75,000
Vesting period		1 year
Performance-baseed awards | Third Vesting Milestone | Chief Executive Officer
Stock Based Compensation
Number of options vested		75,000
Vesting period		1 year
Employee and non-employee stock options
Stock Based Compensation
Shares available for issuance	5,986,000		5,986,000		4,737,000
Restricted stock units
Stock Based Compensation
Shares granted			703,000
2015 Employee Stock Purchase Plan
Stock Based Compensation
Shares reserved for issuance	893,548		893,548
Shares reserved for issuance as a proportion common stock outstanding (as a percent)			1.00%
Price in relation to fair market value of common stock on the date of grant, lower range limit (as a percent)			85.00%
Maximum number of shares a participant may receive during the period (in shares)			5,000
Maximum amount of award or purchase during a calendar year			$ 25,000
Maximum employee contribution of employee's cash compensation (as a percent)	15.00%		15.00%
2015 Employee Stock Purchase Plan | Minimum
Stock Based Compensation
Shares reserved for issuance	880,000		880,000

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Options (Details) - Employee and non-employee stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Stock Based Compensation
Shares available for grant, beginning balance	4,737
Additional shares authorized	2,162
Options granted (in shares)	(1,150)
Options forfeited (in shares)	237
Shares available for grant, end balance	5,986	4,737
Number of shares
Outstanding, beginning balance (in shares)	9,963
Options granted (in shares)	1,150
Options exercised (in shares)	(144)
Options forfeited (in shares)	(237)
Outstanding, end balance (in shares)	10,732	9,963
Exercisable (in shares)	6,494
Vested and expected to vest (in shares)	10,511
Weighted-Average Exercise Price
Outstanding, beginning balance (in dollars per share)	$ 6.54
Granted (in dollars per share)	9.20
Exercised (in dollars per share)	3.91
Forfeited (in dollars per share)	11.23
Outstanding, end balance (in dollars per share)	6.76	$ 6.54
Exercisable (in dollars per share)	4.80
Vested and expected to vest (in dollars per share)	$ 6.70
Additional disclosures
Weighted average contractual term, options outstanding	7 years 1 month 17 days	7 years 11 days
Exercisable (in years)	5 years 11 months 23 days
Vested and expected to vest (in years)	7 years 1 month 2 days
Aggregate intrinsic value, options outstanding	$ 32,784	$ 31,902
Aggregate intrinsic value, options exercisable	31,337
Aggregate intrinsic value, vested and expected to vest	$ 32,709

Stock-Based Compensation - Perf

Stock-Based Compensation - Performance-based Awards (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 3,154	$ 2,543

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units shares in Thousands	3 Months Ended
	Mar. 31, 2018$ / sharesshares
Shares
Balance (in shares) | shares	389
Granted (in shares) | shares	703
Vested (in shares) | shares	(66)
Canceled/Forfeited (in shares) | shares	(12)
Balance (in shares) | shares	1,014
Weighted Average Grant Date Fair Value
Balance (in dollars per share) | $ / shares	$ 10.38
Granted (in dollars per share) | $ / shares	9.31
Vested (in dollars per share) | $ / shares	10.19
Canceled/Forfeited (in dollars per share) | $ / shares	10.26
Balance (in dollars per share) | $ / shares	$ 9.65

Stock-Based Compensation - Comp

Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Stock based compensation expense
Stock-based compensation expense	$ 3,154	$ 2,543
Cost of product revenues
Stock based compensation expense
Stock-based compensation expense	142	131
Research and development
Stock based compensation expense
Stock-based compensation expense	903	650
Selling, general and administrative
Stock based compensation expense
Stock-based compensation expense	$ 2,109	1,762
Employee and non-employee stock options
Stock based compensation expense
Options granted (in shares)	1,150,000
Unrecognized compensation expense	$ 28,000
Unrecognized compensation expense recognized over weighted average period	2 years 10 months 10 days
Employee stock options
Stock based compensation expense
Stock-based compensation expense	$ 3,149	2,557
Employee stock options | Cost of product revenues
Stock based compensation expense
Stock-based compensation expense	138	143
Employee stock options | Research and development
Stock based compensation expense
Stock-based compensation expense	903	650
Employee stock options | Selling, general and administrative
Stock based compensation expense
Stock-based compensation expense	$ 2,108	1,764
Non-employee stock options
Stock based compensation expense
Options granted (in shares)	105,448
Options unvested (in shares)	7,301
Stock-based compensation expense	$ 5	(14)
Non-employee stock options | Cost of product revenues
Stock based compensation expense
Stock-based compensation expense	4	(12)
Non-employee stock options | Selling, general and administrative
Stock based compensation expense
Stock-based compensation expense	$ 1	$ (2)

Stock-Based Compensation - Assu

Stock-Based Compensation - Assumptions (Details) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee and non-employee stock options
Stock Based Compensation
Options granted (in shares)	1,150,000
Employee stock options
Valuation of Stock Option Grants to Employees
Expected term (years)		5 years 1 month 6 days
Expected volatility		62.71%
Expected volatility, minimum	40.28%
Expected dividend rate	0.00%	0.00%
Risk free interest rate, maximum		1.91%
Employee stock options | Minimum
Valuation of Stock Option Grants to Employees
Expected term (years)	5 years 2 months 27 days
Risk free interest rate, minimum	2.37%
Employee stock options | Maximum
Valuation of Stock Option Grants to Employees
Expected term (years)	5 years 7 months 2 days
Expected volatility, maximum	40.88%
Risk free interest rate, maximum	2.70%
Non-employee stock options
Stock Based Compensation
Options granted (in shares)	105,448
Options unvested (in shares)	7,301
Valuation of Stock Option Grants to Employees
Expected term (years)		2 years 8 months 1 day
Expected volatility		51.69%
Expected volatility, minimum	41.48%
Expected volatility, maximum	41.71%
Expected dividend rate	0.00%	0.00%
Risk free interest rate		1.42%
Risk free interest rate, minimum	2.36%
Risk free interest rate, maximum	2.40%
Non-employee stock options | Minimum
Valuation of Stock Option Grants to Employees
Expected term (years)	2 years 8 months 19 days
Non-employee stock options | Maximum
Valuation of Stock Option Grants to Employees
Expected term (years)	2 years 8 months 27 days

Debt (Details)

Debt (Details) - USD ($) $ / shares in Units, $ in Thousands	Aug. 08, 2017	Mar. 31, 2018	Mar. 31, 2017	Sep. 30, 2017	Dec. 31, 2017	Aug. 14, 2017	Sep. 30, 2015
Debt Instrument [Line Items]
Common stock, shares issued		54,251,000			54,040,000
Interest expense		$ 2,389	$ 183
Interest expense		2,000
Amortization of debt discount		98
Debt discount		600
Unamortized debt discount		1,900
Net carrying amount		73,138			$ 73,065
Line Of Credit-UBS
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 50,000
Outstanding balance		50,100
Accrued interest		$ 300		$ 1,100
Line Of Credit-UBS | 30-day LIBOR
Debt Instrument [Line Items]
Spread on interest rate (as a percent)		1.10%
2017 Term Loan
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 100,000
Available borrowing capacity	75,000
Remaining borrowing capacity	$ 25,000
Additional interest in the event of default (as a percent)	3.00%
Debt instrument, term	84 months
Common stock, shares issued						300,000
Debt instrument, fee amount	$ 2,400
Stock price	$ 8.16
Payments of debt issuance costs	$ 300
Debt discount	$ 2,700
2017 Term Loan | Minimum
Debt Instrument [Line Items]
Prepayment premium (as a percent)	2.50%
2017 Term Loan | Maximum
Debt Instrument [Line Items]
Prepayment premium (as a percent)	12.50%
2017 Term Loan | Base Rate
Debt Instrument [Line Items]
Spread on interest rate (as a percent)	8.75%
Base interest rate (as a percent)	1.00%
2017 Term Loan | Direct reduction from outstanding debt balance
Debt Instrument [Line Items]
Debt instrument, fee amount	$ 2,000	$ 1,900

Warrants (Details)

Warrants (Details) - Secured Loan Arrangement	Mar. 31, 2018$ / sharesshares
Class of Stock [Line Items]
Warrants outstanding (in shares) | shares	376,691
Warrants exercise price (in dollars per share) | $ / shares	$ 2.3229

Income taxes (Details)

Income taxes (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Income Taxes
Income tax expense	$ 104,000	$ 47,000
Foreign income tax expense	60,000	47,000
State income tax expense	$ 44,000	$ 0
Effective income tax rate before adjustments (as a percent)	24.00%
Corporate tax rate	21.00%		34.00%
Decrease related to deferred tax assets			$ 42,100,000
Increase related to deferred tax liabilities			200,000
Valuation allowance reduction			42,200,000
Unrecognized tax benefits	$ 6,300,000		$ 5,900,000
Interest and penalties accrued	$ 0

Net Loss per Share - Loss per S

Net Loss per Share - Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Numerator:
Net loss used to compute net loss per share, basic	$ (32,873)	$ (33,480)
Less: Remeasurement gain on warrant liability		(1,042)
Net loss used to compute net loss per share, diluted	$ (32,873)	$ (34,522)
Denominator:
Weighted-average number of shares used in computing net loss per share, basic	54,132	52,758
Add: incremental shares from assumed exercise of warrants		285
Weighted-average number of shares used in computing net loss per share, basic and diluted	54,132	53,043
Net loss per share, basic (in dollars per share)	$ (0.61)	$ (0.63)
Net loss per share, diluted (in dollars per share)	$ (0.61)	$ (0.65)

Net Loss per Share - Potentiall

Net Loss per Share - Potentially Dilutive Shares (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculations	12,304	9,119
Employee and non-employee stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculations	10,732	8,774
Warrants to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculations	377
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculations	1,014	138
Employee stock purchase plan
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in diluted per share calculations	181	207