Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 18, 2022 | Jun. 30, 2021 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity File Number | 001-37478 | ||
Entity Registrant Name | NATERA, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 01-0894487 | ||
Entity Address, Address Line One | 13011 McCallen Pass | ||
Entity Address, Address Line Two | Building A Suite 100 | ||
Entity Address, City or Town | Austin | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 78753 | ||
City Area Code | 650 | ||
Local Phone Number | 249-9090 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | NTRA | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 9,330 | ||
Entity Common Stock, Shares Outstanding | 95,470,898 | ||
Entity Central Index Key | 0001604821 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Location | Redwood City, California | ||
Auditor Firm ID | 42 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 84,386 | $ 48,668 |
Restricted cash | 228 | 187 |
Short-term investments | 829,896 | 688,606 |
Accounts receivable, net of allowance of $2,429 in 2021 and $3,080 in 2020 | 122,074 | 78,565 |
Inventory | 26,909 | 20,031 |
Prepaid expenses and other current assets, net | 29,645 | 26,606 |
Total current assets | 1,093,138 | 862,663 |
Property and equipment, net | 65,516 | 33,348 |
Operating lease right-of-use assets | 59,013 | 21,399 |
Other assets | 18,820 | 14,743 |
Total assets | 1,236,487 | 932,153 |
Current liabilities: | ||
Accounts payable | 27,206 | 8,096 |
Accrued compensation | 40,941 | 30,371 |
Other accrued liabilities | 93,353 | 60,407 |
Deferred revenue, current portion | 7,404 | 50,125 |
Short-term debt financing | 50,052 | 50,054 |
Total current liabilities | 218,956 | 199,053 |
Long-term debt financing | 280,394 | 202,493 |
Deferred revenue, long-term portion | 21,318 | 22,805 |
Operating lease liabilities, long-term portion | 61,036 | 21,246 |
Other long-term liabilities | 1,479 | 320 |
Total liabilities | 583,183 | 445,917 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value: 750,000 shares authorized at December 31, 2021 and 2020, respectively; 95,140 and 86,223 shares issued and outstanding at December 31, 2021 and 2020, respectively | 10 | 9 |
Additional paid in capital | 2,050,417 | 1,411,286 |
Accumulated deficit | (1,394,836) | (929,318) |
Accumulated other comprehensive gain (loss) | (2,287) | 4,259 |
Total stockholders' equity | 653,304 | 486,236 |
Total liabilities and stockholders' equity | $ 1,236,487 | $ 932,153 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Allowances on accounts receivable | $ 2,429 | $ 3,080 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 95,140,000 | 86,223,000 |
Common stock, shares outstanding | 95,140,000 | 86,223,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | |||
Total revenues | $ 625,486 | $ 391,005 | $ 302,328 |
Cost and expenses | |||
Research and development | 264,208 | 100,035 | 51,357 |
Selling, general and administrative | 511,034 | 303,627 | 206,176 |
Gain from disposal of business | (14,388) | ||
Total cost and expenses | 1,093,660 | 607,282 | 418,615 |
Loss from operations | (468,174) | (216,277) | (116,287) |
Interest expense | (8,305) | (15,082) | (10,693) |
Interest and other income, net | 5,381 | 7,562 | 4,152 |
Loss on debt extinguishment | (5,848) | ||
Loss before income taxes | (471,098) | (229,645) | (122,828) |
Income tax expense | (618) | (98) | (1,999) |
Net loss | (471,716) | (229,743) | (124,827) |
Unrealized gain (loss) on available-for-sale securities, net of tax | (6,546) | 3,340 | 1,471 |
Comprehensive loss | $ (478,262) | $ (226,403) | $ (123,356) |
Net loss per share (Note 14): | |||
Basic (in dollars per share) | $ (5.21) | $ (2.84) | $ (1.79) |
Diluted (in dollars per share) | $ (5.21) | $ (2.84) | $ (1.79) |
Weighted-average number of shares used in computing basic and diluted net loss per share: | |||
Basic (in shares) | 90,558 | 81,011 | 69,555 |
Diluted (in shares) | 90,558 | 81,011 | 69,555 |
Product | |||
Revenues | |||
Total revenues | $ 567,149 | $ 367,211 | $ 269,881 |
Cost and expenses | |||
Cost of revenues | 302,663 | 185,865 | 162,604 |
Licensing and other | |||
Revenues | |||
Total revenues | 58,337 | 23,794 | 32,447 |
Cost and expenses | |||
Cost of revenues | $ 15,755 | $ 17,755 | $ 12,866 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 7 | $ 607,236 | $ (552) | $ (574,529) | $ 32,162 |
Balance (in shares) at Dec. 31, 2018 | 62,083,000 | ||||
Issuance of common stock upon exercise of stock options | 13,041 | 13,041 | |||
Issuance of common stock upon exercise of stock options (in shares) | 2,464,000 | ||||
Issuance of common stock under employee stock purchase plan | 4,323 | 4,323 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 268,000 | ||||
Issuance of common stock to Orbimed | 507 | 507 | |||
Issuance of common stock to Orbimed (in shares) | 25,000 | ||||
Vesting of restricted stock (in shares) | 541,000 | ||||
Stock based compensation | 28,624 | 28,624 | |||
Unrealized (loss) gain on available-for-sale securities | 1,471 | 1,471 | |||
Cumulative-effect adjustment upon adoption | (185) | 185 | |||
Issuance/Sale of common stock for offering, net | $ 1 | 323,409 | 323,410 | ||
Issuance/Sale of common stock for offering, net (in shares) | 12,624,000 | ||||
Net loss | (124,827) | (124,827) | |||
Balance at Dec. 31, 2019 | $ 8 | 976,955 | 919 | (699,171) | 278,711 |
Balance (in shares) at Dec. 31, 2019 | 78,005,000 | ||||
Issuance of common stock upon exercise of stock options | 23,524 | 23,524 | |||
Issuance of common stock upon exercise of stock options (in shares) | 2,092,000 | ||||
Issuance of common stock under employee stock purchase plan | 7,114 | 7,114 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 234,000 | ||||
Vesting of restricted stock (in shares) | 1,100,000 | ||||
Stock based compensation | 50,171 | 50,171 | |||
Unrealized (loss) gain on available-for-sale securities | 3,340 | 3,340 | |||
Cumulative-effect adjustment upon adoption | (404) | (404) | |||
Equity component of Convertible Notes, net | 82,873 | 82,873 | |||
Issuance/Sale of common stock for offering, net | $ 1 | 270,649 | 270,650 | ||
Issuance/Sale of common stock for offering, net (in shares) | 4,792,000 | ||||
Net loss | (229,743) | (229,743) | |||
Balance at Dec. 31, 2020 | $ 9 | 1,411,286 | 4,259 | (929,318) | $ 486,236 |
Balance (in shares) at Dec. 31, 2020 | 86,223,000 | 86,223,000 | |||
Issuance of common stock upon exercise of stock options | 11,816 | $ 11,816 | |||
Issuance of common stock upon exercise of stock options (in shares) | 1,165,000 | ||||
Issuance of common stock under employee stock purchase plan | 13,550 | 13,550 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 186,000 | ||||
Vesting of restricted stock (in shares) | 2,117,000 | ||||
Stock based compensation | 115,219 | 115,219 | |||
Unrealized (loss) gain on available-for-sale securities | (6,546) | (6,546) | |||
Cumulative-effect adjustment upon adoption | (82,876) | 6,198 | (76,678) | ||
Issuance/Sale of common stock for offering, net | $ 1 | 550,821 | 550,822 | ||
Issuance/Sale of common stock for offering, net (in shares) | 5,175,000 | ||||
Issuance of common stock for IPR&D acquisition | 30,601 | 30,601 | |||
Issuance of common stock for IPR&D acquisition (in shares) | 274,000 | ||||
Net loss | (471,716) | (471,716) | |||
Balance at Dec. 31, 2021 | $ 10 | $ 2,050,417 | $ (2,287) | $ (1,394,836) | $ 653,304 |
Balance (in shares) at Dec. 31, 2021 | 95,140,000 | 95,140,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities: | |||
Net loss | $ (471,716) | $ (229,743) | $ (124,827) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 11,254 | 8,613 | 7,730 |
Expensed in-process research and development | 35,604 | ||
Non-cash lease expense | 10,926 | 7,834 | 7,748 |
Impairment of assets | 0 | 1,671 | |
Stock-based compensation | 115,219 | 50,171 | 28,624 |
Inventory reserve adjustments | 628 | (163) | 321 |
Premium amortization and discount accretion on investment securities | 7,814 | 5,761 | 945 |
Loss on investments | (46) | (105) | (16) |
Unrealized losses on investment securities | (11) | ||
Amortization of debt discount and issuance cost | 1,227 | 149 | 457 |
Other non-cash benefits (charges) | 94 | (149) | (51) |
Gain on disposal of business | (14,388) | ||
Provision for credit losses | (156) | 1,354 | 1,141 |
Loss on debt extinguishment | 5,848 | ||
Accretion of Convertible Note | 7,048 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (43,353) | (25,831) | 2,418 |
Inventory | (7,506) | (7,474) | 917 |
Prepaid expenses and other current assets | (10,545) | (23,386) | (13,956) |
Other assets | (2,933) | (60) | (9,099) |
Accounts payable | 19,222 | (118) | (6,262) |
Accrued compensation | 10,569 | 14,284 | 3,419 |
Other accrued liabilities | 32,682 | 10,340 | 8,606 |
Deferred revenue | (44,209) | (6,895) | 40,848 |
Other long-term liabilities | 10 | 310 | |
Net cash used in operating activities | (335,236) | (182,512) | (63,444) |
Investing activities: | |||
Purchases of investments | (876,095) | (685,239) | (446,626) |
Proceeds from sale of investments | 187,580 | 30,067 | 1,666 |
Proceeds from maturity of investments | 532,910 | 343,315 | 173,900 |
Net proceeds from disposal of business | 9,675 | ||
Purchases of property and equipment, net | (41,030) | (19,604) | (4,968) |
Cash paid for acquisition of an asset | (8,558) | ||
Net cash used in investing activities | (205,193) | (331,461) | (266,353) |
Financing activities: | |||
Proceeds from exercise of stock options | 11,816 | 23,524 | 13,041 |
Proceeds from issuance of common stock under employee stock purchase plan | 13,550 | 7,114 | 4,323 |
Proceeds from Convertible Note, net of issuance costs | 278,316 | ||
Loan payment | (78,757) | ||
Proceeds from public offering, net of issuance costs | 550,822 | 270,650 | 323,410 |
Net cash provided by financing activities | 576,188 | 500,847 | 340,774 |
Net increase (decrease) in cash equivalents and restricted cash | 35,759 | (13,126) | 10,977 |
Beginning - cash equivalents & restricted cash | 48,855 | 61,981 | 51,004 |
Ending - cash equivalents and restricted cash | 84,614 | 48,855 | 61,981 |
Supplemental disclosure of cash flow information: | |||
Cash paid for income taxes | 283 | 67 | 2,154 |
Cash paid for interest | 7,077 | 3,296 | 12,455 |
Non-cash investing and financing activities: | |||
Purchases of property and equipment in accounts payable and accruals | $ 5,173 | $ 2,781 | $ 3,706 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2021 | |
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 is a diagnostics company with proprietary molecular and bioinformatics technology that it is applying to change the management of disease worldwide. The Company’s cell-free DNA (“cfDNA”) technology combines its novel molecular assays, which reliably measure many informative regions across the genome from samples as small as a single cell, with its statistical algorithms which incorporate data available from the broader scientific community to identify genetic variations covering a wide range of serious conditions with high accuracy and coverage. The Company’s technology has been proven clinically and commercially in the women’s health space, in which it develops and commercializes non- or minimally-invasive tests to evaluate risk for, and thereby enable early detection of, a wide range of genetic conditions, such as Down syndrome. The Company is now translating its success in women’s health and applying its core technology to the oncology market, in which it is commercializing a personalized blood-based DNA test to detect molecular residual disease and monitor disease recurrence, as well as to the organ health market, initially with a test to assess kidney transplants for rejection. The Company operates laboratories certified under the Clinical Laboratory Improvement Amendments ("CLIA") providing a host of cell-free DNA-based molecular 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 operates The Company's product offerings include its Panorama Non-Invasive Prenatal Test ("NIPT") that screens for chromosomal abnormalities of a fetus as well as in twin pregnancies, typically with a blood draw from the mother; 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 Genetics (“Spectrum”) to evaluate embryos to identify chromosomal anomalies or inherited genetic conditions to improve the chances of a healthy pregnancy during an in vitro fertilization ("IVF") cycle; Anora Miscarriage Test (“Anora”) to rapidly and extensively analyze fetal chromosomes to understand the cause of miscarriage; Non-Invasive Paternity Testing (“PAT”), which is exclusively marketed and sold by a licensee from whom the Company receives a royalty; Signatera, which detects circulating tumor DNA in patients previously diagnosed with cancer to assess molecular residual disease and monitor for recurrence; and Prospera, to assess organ transplant rejection. All testing is available principally in the United States. The Company also offers its Panorama test to customers outside of the United States, primarily in Europe. The Company also offers Constellation, a cloud-based software platform that enables laboratory customers to gain access through the cloud to the Company’s algorithms and bioinformatics in order to validate and launch their own tests based on the Company’s technology. Through the third quarter of 2019, the Company offered Evercord for the collection and storage of newborn cord blood and cord tissue units, which was sold in the third quarter of 2019 to a third-party buyer. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2 Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Liquidity Matters The Company has incurred net losses since its inception and anticipates net losses and negative operating cash flows for the near future. The Company had a net loss of $471.7 million for the year ended December 31, 2021 and an accumulated deficit of $1.4 billion as of December 31, 2021. As of December 31, 2021, the Company had $84.6 million in cash, cash equivalents, and restricted cash, $829.9 million in marketable securities, $50.1 million of outstanding balance of the Credit Line (as defined in Note 10, Debt) including accrued interest, and $287.5 million outstanding principal balance of its 2.25% Convertible Senior Notes (the “Convertible Notes”). In April 2020, the Company used a portion of the net proceeds from the offering of the Convertible Notes to repay its obligations under its 2017 Term Loan with OrbiMed. While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations and business plans. Accordingly, the Company has funded the portion of its operating costs and business plans that exceed revenues through a combination of equity issuances, debt issuances, and other financings. The Company continues to invest in the development and commercialization of its existing and 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 will 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 when necessary, 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 or slow its investment in the development and commercialization of its products and significantly scale back its business and operations. On September 10, 2021, the Company entered into an agreement with a third party for an asset acquisition where the acquired asset was in-process research and development primarily in exchange for an equity consideration payment. In addition, pursuant to the agreement, certain employees of the third party became employees of the Company. The third party was a biotechnology company focused on oncology. The total upfront acquisition consideration amounts to $35.6 million composed of the issuance of 276,346 shares of the Company's common stock with a fair value of $30.9 million, approximately $3.9 million of cash consideration, assumed net liabilities of $0.2 million, as well as $0.6 million of acquisition related legal and accounting costs directly attributable to the acquisition of the asset. The Company accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired was concentrated in a single identified in-process research and development asset (“IPR&D”) thus satisfying the requirements of the screen test in ASU 2017-01. The estimated fair value of the acquired workforce was not significant. The Company concluded the acquired IPR&D has no alternative-future use and accordingly expensed approximately $35.6 million, on the day the transaction closed as research and development expense, which is reflected in its consolidated statement of operations. Further, additional consideration aggregating up to approximately $35.0 million may be paid in an estimated 269,547 of additional shares, consistent with the registration statement filed with the SEC on September 10, 2021, that are potentially issuable to legacy shareholders of this third party upon the achievement of defined milestones relating to product development, commercial launch and continued employment of certain selling shareholders, each of which will be revalued at each reporting date and amount of compensation expense will be adjusted accordingly. The Company assessed these milestones as probable as of September 30, 2021 and December 31, 2021. As achievement of all milestones is contingent upon the continued employment of certain selling shareholders, the Company accounted for the consideration related to all of the milestones as compensation expenses and recognized these expenses ratably over the estimated performance period of 24 months, to approximately August 2023. In April 2019, the Company completed an underwritten equity offering and sold 6,052,631 shares of its common stock at a price of $19 per share to the public. Before offering expenses of $0.6 million, the Company received proceeds of $108.1 million net of the underwriting discount. In October 2019, the Company completed another underwritten equity offering and sold 6,571,428 shares of its common stock at a price of $35 per share to the public. Before offering expenses of $0.4 million, the Company received proceeds of $216.2 million net of the underwriting discount. In September 2020, the Company completed an additional underwritten equity offering and sold 4,791,665 shares of its common stock at a price of $60.00 per share to the public. Before offering expenses of $0.3 million, the Company received proceeds of $271.0 million net of the underwriting discount. In July 2021, the Company completed an underwritten equity offering and sold 5,175,000 shares of its common stock at a price of $113 per share to the public. Before offering expenses of $0.4 million, the Company received proceeds of $551.2 million net of the underwriting discount. 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 February 24, 2022. Principles of Consolidation The accompanying consolidated financial statements include all the accounts of the Company and its subsidiaries. The Company established a subsidiary that operates in the state of Texas to support the Company’s laboratory and operational functions. The Company established a subsidiary that operates in Canada following the acquisition of the IPR&D asset, which includes a lease for the laboratory space located in Canada. All intercompany balances and transactions have been eliminated. Use of Estimates Revenue Stock-based compensation requisite service period in which the awards are expected to vest and forfeitures are estimated based on historical trends at the time of grant and revised as necessary. Stock option awards that include a service condition and a performance condition are considered expected to vest when the performance condition is probable of being met. The Black-Scholes model considers several variables and assumptions in estimating the fair value of stock-based awards. These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield and the expected stock price volatility over the expected term. For all stock options granted, we calculate the expected term using the simplified method for “plain vanilla” stock option awards. We determine expected volatility using the historical volatility of the stock price of similar publicly traded peer companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. Income Taxes Income Taxes Income Taxes Allowance for doubtful accounts Financial Instruments—Credit Losses Inventory and scrapped inventory. Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded to cost of revenue on our consolidated statements of operations. The Company makes assumptions about future demand, market conditions and the release of new products that may supersede older products. However, if actual market conditions are less favorable than anticipated, additional inventory write-downs may be required. Investments and financial instruments Right-of-use assets Property and equipment three years Other accrued liabilities Cash and Cash Equivalents Cash and cash equivalents consist of cash and money market deposits with financial institutions. Restricted Cash Restricted cash is currently presented as a separate line item in the Company’s balance sheet. In the statements of cash flows, it is included together with cash and cash equivalents and considered as part of the total ending cash balance. 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: December 31, December 31, 2021 2020 (in thousands) Cash and cash equivalents in balance sheet $ 84,386 $ 48,668 Restricted cash, current portion in balance sheet 228 187 Total cash, cash equivalents and restricted cash in statements of cash flows $ 84,614 $ 48,855 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, irrespective of maturity 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. On December 6, 2021, the Company participated along with certain other investors in the series B financing of MyOme, Inc. (“MyOme”), and purchased preferred shares and warrants in exchange for approximately $4.0 million cash payment. Matthew Rabinowitz is the Chairman of the board of directors and Co-Founder of both the Company and MyOme. The Company’s investment in MyOme is recorded at cost and will be evaluated for impairment at the end of each reporting period. 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). Risk and Uncertainties The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, and the full extent and duration of the impact of the COVID 19 pandemic on our business, our operations, and the global economy as a whole is not yet known. While the Company’s test volumes as well as overall average selling prices increased in the year ended December 31, 2021 compared to the year ended December 31, 2020, the Company cannot predict the potential nature, magnitude and duration of the effects of the COVID-19 pandemic on the macroeconomic environment. 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 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 years ended December 31, 2021, 2020, and 2019, there were no customers exceeding 10% of total revenues on an individual basis. As of December 31, 2021 and 2020, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. Credit Losses Trade accounts receivable and other receivables. The following is a roll-forward of the allowances for credit losses related to trade accounts receivable and other receivables for the year ended December 31, 2021: December 31, 2021 (in thousands) Beginning balance $ 4,220 Provision for credit losses (156) Write-offs (1,635) Total $ 2,429 Available-for-sale debt securities. The amended guidance from ASU 2016-13 requires the measurement of expected credit losses for available-for-sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The Company evaluated its investment portfolio under the new available-for-sale debt securities impairment model guidance. The vast majority of the Company’s investment portfolio are low risk, investment grade securities. Revenue Recognition The Company adopted the new revenue recognition guidance, ASC 606, beginning January 1, 2018 on a full retrospective basis. 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 Revenue Recognition, Cost of Product Revenues The components of our 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, costs incurred from third party test processing fees, and allocated overhead such as rent, information technology costs, equipment depreciation and utilities. Costs associated with Whole Exome Sequencing (“WES”) are also included, as well as labor costs, relating to our Signatera CLIA offering. Costs associated with performing tests are recorded when the test is accessioned. We expect cost of product revenues in absolute dollars to increase as the number of tests we perform increases. Cost of Licensing and Other Revenues The components of our cost of licensing and other revenues are material costs associated with test kits sold to Constellation clients, development and support services relating to our Strategic Partnership Agreements, and costs associated with specimens and Whole Exome Sequencing (“WES”), as well as labor costs, relating to our Signatera (RUO) and CDx offering. We consider our cost of licensing and other revenues for the Constellation software platform to be relatively low, and therefore we expect its associated gross margin is higher. We expect our cost of licensing will increase in relation to volume growth. Research and Development The Company records research and development costs in the period incurred. Research and development costs consist of personnel costs, contract services, cost of materials utilized in performing tests, costs of clinical trials and allocated facilities and related overhead expenses. Advertising Costs The Company expenses advertising costs as incurred. The Company incurred advertising costs of $2.2 million, $0.6 million, and $0.2 million for the years ended December 31, 2021, 2020, and 2019, respectively. Product Shipment Costs The Company expenses product shipment costs in cost of product revenues in the accompanying statements of operations. Shipping and handling costs for the years ended December 31, 2021, 2020, and 2019 were $22.0 million, $13.3 million, and $13.3 million, respectively. Income Taxes Income taxes are recorded in accordance with Financial Accounting Standards Board ASC Topic 740, Income Taxes Stock-Based Compensation Stock-based compensation related to stock options and restricted stock units (“RSUs”) granted to the Company’s employees 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. For stock options with market conditions, the Company derives the requisite service period using the Monte Carlo simulation model. For stock options and RSUs that vest upon meeting performance conditions or market conditions in combination with performance conditions, the Company derives the requisite service period from the grant date to the date it is probable that the vesting conditions will be met. 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, which includes successful validation and approval from management. 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. 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 $2.3 million and $1.7 million as of December 31, 2021 and 2020, respectively. Amortization expense for amounts previously capitalized for the years ended December 31, 2021, 2020, and 2019, was $1.1 million, $1.0 million, and $1.2 million, respectively. Accumulated Other Comprehensive Income (Loss) Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, and unrealized gains and losses on available-for-sale marketable securities. December 31, 2021 2020 (in thousands) Beginning balance $ 4,259 $ 919 Net unrealized gains (losses) on available-for-sale securities, net of tax (6,546) 3,340 Ending balance $ (2,287) $ 4,259 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 five or the remaining term of the lease, whichever is shorter. The Company periodically reviews the depreciable lives assigned to property and equipment placed in service and change the estimates of useful lives to reflect the results of such reviews. Impairment of Long-lived Assets The Company evaluates 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 amounts of the 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. Inventory Inventory is valued at the lower of the standard cost, which approximates actual cost, or market. Cost is determined using the first-in, first-out (“FIFO”) method. Inventory consists entirely of supplies, which are consumed when providing its test reports, and therefore does not maintain any finished goods inventory. The Company enters into inventory purchases and commitments so that it can meet future delivery schedules based on forecasted demand for its tests. The Company recorded inventory obsolescence charges totaling $0.9 million, $0.2 million, and $0.3 million, in the years ended December 31, 2021, 2020, and 2019, respectively. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “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 Income Taxes Codification Improvements Debt In August 2020, ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) cumulative effect of the change was recognized as an adjustment to the opening balance of retained earnings at the date of adoption. The comparative information has not been restated and continues to be presented according to accounting standards in effect for those periods. This adjustment was calculated based on the carrying amount of the Convertible Notes as if it had always been treated only as a liability. Further, an adjustment was recorded to the debt discount and issuance costs as if these had always been treated as a contra liability only. Interest expense related to the accretion of the Convertible Notes is no longer recognized. Interest expense for the Convertible Notes for the year ended December 31, 2021 would have been $9.4 million higher without the adoption of ASU 2020-06. As such, net loss from continuing operations attributable to the Company for the year ended December 31, 2021 was $0.10 per common share lower due to the effect of adoption of ASU 2020-06. December 31, ASU 2020-06 January 1, 2020 Adoption Adjustment 2021 (in thousands) Liabilities Outstanding Principal $ 287,500 $ — $ 287,500 Unamortized debt discount and issuance cost (85,007) 76,674 (8,333) Net carrying amount $ 202,493 $ 76,674 $ 279,167 Equity Additional paid-in-capital $ (1,411,286) $ 82,876 $ (1,328,410) Accumulated deficit (929,318) 6,198 (923,120) New Accounting Pronouncements Not Yet Adopted In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Revenue Recognition | 3. Revenue Recognition Product Revenues Product revenues are derived from contracts with insurance carriers, laboratory partners and patients in connection with sales primarily related to prenatal 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 performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once the Company has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. 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 the performance obligations in those contracts, which are the delivery of the test results. The total consideration which the Company expects to be entitled to from patients and insurance carriers in exchange for the Company's products is determined based on agreements with insurance carriers, effects of variable consideration, and customary business practices. The transaction price is estimated based on the contractual pricing agreed to with each insurance carrier for each test (CPT code) performed adjusted for variable consideration related to historical percent of cases allowed, historical percent of patient responsibility collected, and historical percent of contract price collected from insurance carriers. The Company uses the expected-value approach of estimating variable consideration. The Company also considers recent trends, past events not expected to recur, and future known changes such as anticipated contractual pricing changes or insurance coverages. For insurance carriers with similar reimbursement characteristics, the Company uses a portfolio approach to estimate the effects of variable consideration. The Company also applies a constraint to the estimated variable consideration when it assesses it is probable that a significant reversal in the amount of cumulative revenue may occur in future periods. The total consideration which the Company expects to be entitled to from lab partners is generally fixed, but can be variable depending on the volume of tests performed, which is estimated 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 further constrained for estimated refunds. 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 payment, 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 years ended December 31, 2021, 2020, and 2019, $5.7 million, $5.4 million, and $2.4 million, respectively, were 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 and IVD kits. The Company also recognizes revenues from the Signatera research use only (“RUO”) and CDx offering, the Qiagen LLC, BGI Genomics Co., Ltd., and Foundation Medicine, Inc. agreements. 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 professional services through the cloud software. These arrangements often include: (i) the delivery of the services through the cloud software, (ii) the necessary support and training, and (iii) the 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 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 (i.e., upon the delivery of each test) and reported in licensing and other revenues in the statements of operations and comprehensive loss. Signatera Qiagen BGI Genomics In February 2019, the Company entered into a License Agreement with BGI Genomics Co., Ltd. (“BGI Genomics”) to develop, manufacture, and commercialize NGS-based genetic testing assays for clinical and commercial use. The agreement has a term of ten years and expires in February 2029. According to the agreement, the Company is entitled to a total of $50 million, comprised of upfront technology license fees, prepaid royalties relating to future sales of licensed products and performance of assay interpretation services, and milestone payments. During the three months ended June 30, 2019, the Company received $35.6 million, net of withholding taxes, of these amounts. The Company recorded a receivable of $2.5 million upon achieving the first milestone as of June 30, 2019, which was received in January 2021. Also, as required by the agreement with BGI Genomics, in June 2019 the Company prepaid $6.0 million to BGI Genomics for future sequencing services and $4.0 million for future sequencing equipment. These advance payments for equipment and services to be received in future periods aggregating to $10.0 million were recorded in long-term advances on the Balance Sheet. Pursuant to the agreement, the Company licensed its intellectual property and will provide development services. Following completion of development services, the Company will provide assay interpretation services over the term of the agreement. The Company concluded that the license is not a distinct performance obligation as it does not have a stand-alone value to BGI Genomics apart from the related development services. Therefore, license and related development services, for each of the NIPT and Oncology products, represents a single performance obligation. The Company is responsible for granting a license to specified intellectual property and performing certain development activities to customize its genetic testing assays for oncology and NIPT for use with BGI Genomics’ sequencing instruments and proprietary technology platform. Revenue associated with these performance obligations is recognized over time using the input method, based on costs incurred to perform the development services, since the level of costs incurred over time best reflect the transfer of development services. Revenue associated with the assay interpretation services will be recognized upon delivery of these services. Funds received in advance are recorded as deferred revenue and will be recognized as the related services are delivered. The initial transaction price was primarily comprised of license and milestone fees. The Company constrains the estimated variable consideration when it assesses it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. Certain milestone and license fees were constrained and not included in the transaction price due to the uncertainties of research and development. The Company re-evaluates the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur. 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. 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 incremental costs incurred in connection with the BGI Genomics arrangement is not material on an accumulated basis and therefore will not be capitalized on the balance sheet but will be expensed as incurred. Foundation Medicine, Inc. In August 2019, the Company entered into a License and Collaboration Agreement (the “Foundation Medicine Agreement”) with Foundation Medicine to develop and commercialize personalized circulating tumor DNA monitoring assays, for use by biopharmaceutical and clinical customers who order Foundation Medicine’s FoundationOne CDx. The Foundation Medicine Agreement has an initial term of five years, expiring in August 2024, with automatic renewals thereafter for successive one-year terms, unless the Foundation Medicine Agreement is earlier terminated in accordance with its terms. Natera and Foundation Medicine will share the revenues generated from both biopharmaceutical and clinical customers in accordance with the terms of the Foundation Medicine Agreement. The Foundation Medicine Agreement provides for approximately $13.3 million in upfront licensing fees and prepaid revenues payable to the Company, and up to approximately $32.0 million in minimum annual payments and payments tied to the Company’s achievement of certain developmental, regulatory, and commercial milestones. As of December 31, 2019, the Company received $16.3 million of these amounts, of which $3.0 million was for achieving certain milestones, and $13.3 million was for licensing fees and prepaid revenue. There was an additional milestone met in May 2021. The Company recorded the $1.0 million milestone amount against accounts receivable and short-term deferred revenue. The milestone was paid Pursuant to the agreement, the Company will provide development services in conjunction with granting the use of the Company’s intellectual property. Following completion of those development services, the Company will provide assay testing services over the term of the agreement. The Company has concluded that the license is not a distinct performance obligation as it is highly interrelated and interdependent with the related development services. Therefore, license and related development services represent a single performance obligation. The Company is responsible for providing the technology license and certain development services that are required to customize its proprietary Signatera test to work with Foundation Medicine’s FoundationOne CDx. The intellectual property has been licensed to Foundation Medicine for the customized test. In addition, the Company is responsible for delivering clinical study plans in order to demonstrate efficacy of the customized test. Revenues associated with each of the performance obligations are recognized over time using the input method, based on costs incurred to perform the development services, since the level of costs incurred over time best reflect the transfer of development services. Revenue associated with the assay testing services will be recognized upon delivery of these services. Funds received in advance are recorded as deferred revenue and will be recognized as the related services are delivered. The initial transaction price was primarily comprised of license and milestone fees. The Company constrains the estimated variable consideration when it assesses it is probable that a significant reversal in the amount of cumulative revenue recognized may occur in future periods. Certain milestone fees were constrained and not included in the transaction price due to the uncertainties of research and development. The Company re-evaluates the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur. 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. 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. Since the incremental costs to obtain the Foundation Medicine Agreement would be amortized over a period of one year or less, these costs were expensed as incurred. Disaggregation of Revenues Year Ended December 31, 2021 2020 2019 (in thousands) Insurance carriers $ 492,563 $ 300,220 $ 210,919 Laboratory partners 100,019 58,196 59,876 Patients 32,904 32,589 31,533 Total revenues $ 625,486 $ 391,005 $ 302,328 The following table presents total revenues by geographic area based on the location of the Company’s payers: Year ended December 31, 2021 2020 2019 (in thousands) United States $ 590,872 $ 365,660 $ 260,846 Americas, excluding U.S. 4,047 3,469 3,218 Europe, Middle East, India, Africa 20,429 14,332 15,434 Asia Pacific and Other 10,138 7,544 22,830 Total $ 625,486 $ 391,005 $ 302,328 The following table summarizes the Company’s beginning and ending balances of accounts receivable and deferred revenues: Balance at Balance at December 31, December 31, 2021 2020 (in thousands) Assets: Accounts receivable $ 122,074 $ 78,565 Liabilities: Deferred revenue, current portion $ 7,404 $ 50,125 Deferred revenue, long-term portion 21,318 22,805 Total deferred revenues $ 28,722 $ 72,930 Deferred Revenues (in thousands) Balance at December 31, 2020 $ 72,930 Increase in deferred revenues 7,915 Reclasses from deferred revenues to other to short-term liabilities (10,080) Revenue recognized during the period that was included in (37,784) Revenue recognized from performance obligations satisfied (4,259) Balance at December 31, 2021 $ 28,722 During the year ended December 31, 2021, revenue recognized that was included in the deferred revenue balance at the beginning of the period totaled $37.8 million with approximately $8.9 million related to BGI Genomics and Foundation Medicine, $28.6 million related to Qiagen and the remaining $0.3 million related to genetic testing services. During the year ended December 31, 2021, $4.3 million was recognized as deferred revenue and later earned as revenue in the same period. The current portion of deferred revenue includes $3.2 million from the BGI Genomics agreement and $0.5 million from the Foundation Medicine agreement. The non-current portion of deferred revenue includes $20.4 million from the BGI Genomics agreement and $0.9 million from the Foundation Medicine agreement. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
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. 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: December 31, 2021 December 31, 2020 Level I Level II Level III Total Level I Level II Level III Total (in thousands) Financial Assets: Money market deposits $ 10,041 $ — $ — $ 10,041 $ 28,990 $ — $ — $ 28,990 U.S. Treasury securities 688,097 — — 688,097 597,744 — — 597,744 Corporate bonds and notes — 52,337 — 52,337 — 12,328 — 12,328 Municipal securities — 89,462 — 89,462 — 78,534 — 78,534 Total financial assets $ 698,138 $ 141,799 $ — $ 839,937 $ 626,734 $ 90,862 $ — $ 717,596 Fair Value of Long-Term Debt: As of December 31, 2021, the estimated fair value of the Convertible Notes, which are not presented at fair value on the Consolidated Balance Sheet as of December 31, 2021, was $715.7 million and was based upon observable Level 2 inputs, including pricing information from recent trades of the Convertible Notes (see Note 10, Debt |
Financial Instruments
Financial Instruments | 12 Months Ended |
Dec. 31, 2021 | |
Financial Instruments | |
Financial Instruments | 5. Financial Instruments The Company elected to invest a portion of its cash assets in conservative, income earning, liquid investments. Cash equivalents and investments, all of which are classified as available-for-sale securities, consisted of the following: December 31, 2021 December 31, 2020 Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value (in thousands) Money market deposits $ 10,041 $ — $ — $ 10,041 $ 28,990 $ — $ — $ 28,990 U.S. Treasury securities (1) 689,640 1,081 (2,624) 688,097 594,252 3,512 (20) 597,744 Corporate bonds and notes (1) 52,729 — (392) 52,337 12,331 2 (5) 12,328 Municipal securities 89,814 261 (613) 89,462 77,764 796 (26) 78,534 Total $ 842,224 $ 1,342 $ (3,629) $ 839,937 $ 713,337 $ 4,310 $ (51) $ 717,596 Classified as: Cash equivalents (2) $ 10,041 $ 28,990 Short-term investments 829,896 688,606 Total $ 839,937 $ 717,596 (1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period. (2) Cash equivalents includes cash sweep accounts and U.S. Treasury money market mutual funds. 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). The Company sold $187.6 million and $30.1 million of investments during the years ended December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, 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 December 31, 2021, the Company had 61 investments in an unrealized loss position in its portfolio. An allowance for credit losses was not necessary as decrease in the fair market value for a majority of the available-for-sale securities was as a result of a significant average yield rate decrease for similar securities as of December 31, 2021. T he Company has assessed the unrealized loss position for available-for-sale debt securities for which an allowance for credit losses has not been recorded. The fair value for investment securities at an unrealized loss position as of December 31, 2021 was $604.7 million. The aggregate amount of unrealized losses of these securities was $ 3.6 million, and the impact of the securities in a continuous loss position to the consolidated statements of operations and comprehensive loss were not material as of December 31, 2021. The following table summarizes the Company’s portfolio of available-for-sale securities by contractual maturity as of December 31, 2021: December 31, 2021 Amortized Cost Fair Value (in thousands) Less than or equal to one year $ 274,879 $ 275,331 Greater than one year but less than five years 557,304 554,565 Total $ 832,183 $ 829,896 |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2021 | |
Balance Sheet Components | |
Balance Sheet Components | 6. Balance Sheet Components Credit Losses The following is a roll-forward of the allowances for credit losses related to trade accounts receivable and other current assets for the years ended December 31, 2021, 2020 and 2019: December 31, December 31, December 31, 2021 2020 2019 (in thousands) Beginning balance $ 4,220 $ 2,919 $ 1,788 Cumulative-effect adjustment upon adoption of ASU 2016-13 — 404 — Provision for credit losses (156) 1,354 1,141 Write offs (1,635) (457) (10) Ending balance $ 2,429 $ 4,220 $ 2,919 Property and Equipment, net The Company’s property and equipment consisted of the following: December 31, December 31, Useful Life 2021 2020 (in thousands) Machinery and equipment 3-5 years $ 33,722 $ 51,001 Furniture and fixtures 3 years — 1,376 Computer equipment 3 years 4,893 2,428 Capitalized software held for internal use 3 years 2,395 7,417 Leasehold improvements Life of lease 13,640 14,810 Construction-in-process 30,279 6,370 84,929 83,402 Less: Accumulated depreciation and amortization (19,413) (50,054) Total Property and Equipment, net $ 65,516 $ 33,348 The Company’s property and equipment are primarily located in the United States. During the year ended December 31, 2021, the increase in net property and equipment was due to purchases of new equipment for the Company’s laboratories located in Texas and California to expand testing capabilities, offset by depreciation expense of $11.3 million recorded in the year ended December 31, 2021. During the year ended December 31, 2021, the Company has written off $41.9 million in fully depreciated assets. The Company did not incur an impairment charge during the year ended December 31, 2021. Accrued Compensation The Company’s accrued compensation consisted of the following: December 31, December 31, 2021 2020 (in thousands) Accrued paid time off $ 2,567 $ 2,260 Accrued commissions 15,726 12,686 Accrued bonuses 15,854 9,635 Other accrued compensation 6,794 5,790 Total accrued compensation $ 40,941 $ 30,371 Other Accrued Liabilities December 31, December 31, 2021 2020 (in thousands) Reserves for refunds to insurance carriers $ 17,210 $ 17,366 Accrued charges for third-party testing 5,849 5,141 Testing and laboratory materials from suppliers 3,799 2,720 Marketing and corporate affairs 7,853 3,325 Legal, audit and consulting fees 11,758 4,189 Accrued shipping charges 969 1,604 Sales tax payable 2,230 1,723 Accrued third-party service fees 13,442 2,355 Clinical trials, studies, and other development 11,218 2,353 Operating lease liabilities, current portion 5,752 7,300 Fixed asset purchases 1,853 1,691 Other accrued interest 1,078 1,078 Other accrued expenses 10,342 9,562 Total other accrued liabilities $ 93,353 $ 60,407 Reserves for refunds to insurance carriers include overpayments from and amounts to be refunded to insurance carriers, and additional amounts that the Company estimates for potential refund requests during the period. When the Company releases these previously accrued amounts, they are recognized as product revenues in the statements of operations and comprehensive loss. The following table summarizes the reserve balance and activities for refunds to insurance carriers for the year ended December 31, 2021: December 31, December 31, 2021 2020 (in thousands) Beginning balance $ 17,366 $ 9,410 Additional reserves 16,340 19,427 Refunds to carriers (10,784) (6,066) Reserves released to revenue (5,712) (5,405) Ending balance $ 17,210 $ 17,366 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases. | |
Leases | 7. Leases Operating Leases 36-month 24-month one December 31, 2021 (in thousands) Operating lease liabilities, current portion included in other accrued liabilities $ 5,752 Operating lease liabilities, long-term portion 61,036 Total operating lease liabilities $ 66,788 rate to each lease was not readily determinable. In accordance with ASC 842, the incremental borrowing rate was estimated as the annual percentage yield resulting from a corporate debt financing over a loan term approximating the remaining term of each lease, with the effect of certain credit risk rating. As of December 31, 2021, the weighted-average remaining lease term was 4.77 The Company continues to recognize lease expense on a straight-line basis. The lease expense includes the amortization of the right-of-assets with the associated interest component estimated by applying the effective interest method. Total lease expense recognized in the statements of operations and comprehensive loss were $10.9 million, $7.8 million, and $7.8 million for the years ended December 31, 2021, 2020, and 2019, respectively. Cash paid for amounts in the measurement of operating lease liabilities totaled $10.3 million, $9.0 million, and $8.6 million for the years ended December 31, 2021, 2020, and 2019, respectively. The present value of the future minimum lease payments under all non-cancellable operating leases as of December 31, 2021 is as follows: Operating Leases (in thousands) Year ending December 31: 2022 $ 9,980 2023 11,082 2024 12,258 2025 12,494 2026 12,845 2027 and thereafter 27,331 Total future minimum lease payments 85,990 Less: imputed interest (19,202) Operating lease liabilities $ 66,788 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Legal Proceedings From time to time, the Company is involved in disputes, litigation, and other regulatory or administrative actions, including those with respect to intellectual property, employment, testing, billing, reimbursement and other matters. Such actions may include allegations of negligence, products/professional liability or other legal claims, and could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. The Company is aggressively defending and/or prosecuting its current litigation matters, 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. There are many uncertainties associated with any litigation and these actions or other third party claims against the Company, including by governmental entities, or by the Company against third parties, 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 Company assesses legal contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. When evaluating legal contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation or other matters may be unsupported, exaggerated or unrelated to possible outcomes, and as such are not meaningful indicators of its potential liability. During the periods presented, the Company has not recorded any accrual for loss contingencies associated with such legal proceedings or other matters, determined that an unfavorable outcome is probable or reasonably possible, or determined that the amount or range of any possible loss is reasonably estimable. Intellectual Property Litigation Matters. The Company has been involved in two patent litigations against CareDx, Inc. (“CareDx”) in the United States District Court for the District of Delaware (“CareDx Patent Cases”). In the first suit, CareDx alleged, in a complaint filed jointly with the Board of Trustees of the Leland Stanford Junior University (“Stanford”) in March 2019 and amended in March 2020, that the Company infringed three patents. The complaint sought unspecified damages and injunctive relief. On September 28, 2021, the Court granted the Company’s motion for summary judgment, finding all three of Stanford’s patents invalid. CareDx and Stanford have filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. In the second suit, filed by the Company in January 2020, the Company alleged infringement by CareDx of two of the Company’s patents, seeking unspecified damages and injunctive relief. The case is currently pending and is scheduled for trial in July 2023. The Company has filed suit against ArcherDX, Inc. (“ArcherDX”) in the United States District Court for the District of Delaware, alleging, in complaints filed in January, April, and August of 2020, which cases were consolidated in September 2020, that certain ArcherDX DNA oncology products infringe five of the Company’s patents. In June 2020, ArcherDX filed a motion to dismiss aspects of the Company’s case, including to invalidate several of the Company’s asserted patents. That motion was denied in its entirety in October 2020. In January 2021, the Company filed a second amended complaint naming an additional Archer DX entity, ArcherDx LLC, and Invitae Corp. as defendants. The Company is seeking unspecified monetary damages and injunctive relief. Both parties filed motions for summary judgment in January 2022. A jury trial is currently set for May 16, 2022. The Company is the subject of a lawsuit filed against it by Ravgen, Inc. (“Ravgen”) in June 2020 in the United States District Court for the Western District of Texas, alleging infringement of two Ravgen patents. The complaint seeks monetary damages and injunctive relief. Various parties, including Natera, have filed challenges to the validity of the asserted patents with the Patent Office, which are pending. The Company filed suit against Progenity, Inc. (“Progenity”) in June 2020 in the United States District Court for the Western District of Texas and in the United States District Court for the Northern District of Texas, in each case alleging that Progenity’s NIPT test infringes six of the Company’s patents. The complaints sought treble damages and injunctive relief. In July 2020, Progenity filed suit against the Company in the United States District Court for the Southern District of California, seeking declaratory judgment of non-infringement of the Company’s asserted patents. Progenity also petitioned the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office for inter partes In October 2020, the Company filed suit against Genosity Inc. (“Genosity”), in the United States District Court for the District of Delaware, alleging that various Genosity oncology products infringe one of the Company’s patents and seeking unspecified monetary damages and injunctive relief. In March 2021, the Company filed a motion to dismiss certain of Genosity’s affirmative defenses and a counterclaim. Trial is set for October 2023. In January 2021, the Company filed suit against Inivata, Inc. and Inivata Ltd. (collectively “Inivata”) in the United States District Court for the District of Delaware. The complaint, amended by the Company in May 2021, alleges that various Inivata oncology products infringe two of the Company’s patents and seeks unspecified monetary damages and injunctive relief. In June 2021, Inivata filed a motion to dismiss the Company’s amended complaint. The Company is the subject of lawsuits filed against it by Invitae Corp. (“Invitae”) in the United States District Court of the District of Delaware alleging, in complaints filed in May and November of 2021, infringement of three patents and seeking monetary damages and injunctive relief. Trial is set for January 2024. Other Litigation Matters. In August 2019, a suit was filed against the Company in the Circuit Court of Cook County, Illinois by a patient alleging claims relating to a discordant test result and seeking monetary damages. The suit was dismissed in June 2021. The Company is also the subject of a lawsuit filed by CareDx against the Company in April 2019 in the United States District Court for the District of Delaware, alleging false advertising, trademark disparagement, unfair competition, and unfair or deceptive trade practices based on statements describing studies that concern the Company’s technology and CareDx’s technology (“CareDx’s Advertising Case”). The complaint seeks unspecified damages and injunctive relief. In May 2019, the Company filed a motion to dismiss the entirety of CareDx’s Advertising Case for failure to state a claim, following which in February 2020, CareDx filed an amended complaint withdrawing its trademark disparagement claim. Also in February 2020, the Company filed a counterclaim against CareDx in the United States District Court for the District of Delaware, alleging false advertising, unfair competition and deceptive trade practices and seeking unspecified damages and injunctive relief. The parties cross-moved for partial summary judgment, which was denied in April 2021. The matter is set for trial on March 7, 2022. The Company is involved in litigation against Guardant, Inc. (“Guardant”). On or about May 27, 2021, Guardant filed suit against the Company in the United States District Court of the Northern District of California alleging false advertising and related claims and seeking unspecified damages and injunctive relief. On or about May 28, 2021, the Company filed suit against Guardant in the Western District of Texas, alleging false advertising and related claims. The Company has voluntarily dismissed its Texas suit against Guardant. In the California action, the Company has answered Guardant’s complaint and has asserted its claims as counterclaims, seeking unspecified damages and injunctive relief. On August 3, 2021, Guardant moved to dismiss the Company’s counterclaims, which motion was denied in all material respects. In November 2021, a purported class action lawsuit was filed against the Company in the United States District Court for the Northern District of California, by a patient alleging various causes of action relating to the Company’s patient billing and seeks, among other relief, class certification, injunctive relief, restitution and/or disgorgement, attorneys’ fees, and costs. In February 2022, a purported class action lawsuit was filed against the Company in the United States District Court for the Northern District of California, by a patient alleging various causes of action related to the marketing of Panorama and seeks, among other relief, class certification, monetary damages, attorneys’ fees, and costs. Director and Officer Indemnifications As permitted under Delaware law, and as set forth in the Company’s Amended and Restated Certificate of Incorporation and its Amended and Restated 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 standard retention amounts for securities related 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 From time to time, the Company receives recoupment requests from third-party payers for alleged overpayments. The Company disagrees with the contentions of pending requests and/or has recorded an estimated reserve for the alleged overpayments. Contractual Commitments The following table sets forth the material unconditional purchase obligations and contractual commitments as of December 31, 2021 with a remaining term of at least one year: Party Total Commitments Expiry Date (in thousands) Material suppliers $ 16,040 June 2026 Application service providers 35,279 March 2026 Earnouts for development with third party (1) 35,000 September 2023 Software development provider 4,463 December 2024 Leases (2) 29,683 March 2033 Other material suppliers 17,510 Various Total 137,975 (1) The earnouts for asset development with the acquired Canadian entity consists of three milestones which are achieved upon the satisfaction of certain contractual conditions. Upon achievement, the earnout consideration will primarily be paid in the Company’s common stock. (2) Represents executed leases which have not commenced. Please refer to Note 7, Leases , for additional information . |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2021 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9. Stock-Based Compensation Equity Plans 2015 Equity Incentive Plan General Share Reserve The initial number of shares of the Company’s common stock available for issuance under the 2015 Plan was 3,451,495 shares. The number of shares reserved for issuance under the 2015 Plan will be increased automatically on the first business day of each fiscal year, commencing in 2016, by a number equal to the smallest of ● 3,500,000 shares; ● 4% of the shares of common stock outstanding on the last business day of the prior fiscal year; or ● the number of shares determined by the Company’s board of directors. Stock options vest as determined by the compensation committee. In general, they will vest over a four-year period following the date of grant. Stock options expire at the time determined by the compensation committee but in no event more than ten years Restricted Shares and Stock Units. 2015 Employee Stock Purchase Plan General Share Reserve. ● 880,000 shares; ● 1% of the shares of common stock outstanding on the last business day of the prior fiscal year; or ● the number of shares determined by the Company’s board of directors. The number of shares reserved under the 2015 ESPP will automatically be adjusted in the event of a stock split, stock dividend or a reverse stock split (including an adjustment to the per-purchase period share limit). Purchase Price. shares may be purchased 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 exceeding $25,000 fair market value of stock for each calendar year in which such option is outstanding at any time. Offering Periods. The following table summarizes the offering activity during the years ended December 31, 2021 and 2020: Number of Total Shares Purchased Proceeds Offering Period (in thousands) November 1, 2019 - April 30, 2020 97,247 $ 3,062 May 1, 2020 - October 31, 2020 136,288 $ 4,052 November 1, 2020 - April 30, 2021 106,435 $ 6,085 May 1, 2021 - October 31, 2021 79,820 $ 7,465 Stock Options The following table summarizes option and RSU activity during the year ended December 31, 2021: Outstanding Options Weighted- Weighted- Average Shares Average Remaining Aggregate Available for Number of Exercise Contractual Intrinsic Grant Shares Price Life Value (in thousands, except for contractual life and exercise price) (in years) Balance at December 31, 2020 3,148 6,707 $ 11.19 6.04 $ 592,468 Additional shares authorized 3,446 — $ — Options granted (391) 391 $ 104.03 Options exercised — (1,165) $ 10.14 Options forfeited/cancelled 33 (33) $ 15.00 RSUs granted (2,208) RSUs forfeited/cancelled 291 Balance at December 31, 2021 4,319 5,900 $ 17.54 5.40 $ 451,505 Exercisable at December 31, 2021 4,977 $ 10.65 4.90 $ 411,841 Vested and expected to vest at December 31, 2021 5,840 $ 17.17 5.37 $ 449,026 The total intrinsic value of stock options exercised during the years ended December 31, 2021, 2020, and 2019 were $97.0 million, $184.7 million, and $70.0 million, respectively. The weighted-average grant date fair value of options granted during the years ended December 31, 2021, 2020, and 2019 were $104.03, $27.70 and $8.01 per share, respectively. Performance-based Awards The Company grants certain senior-level executives performance stock options and units which vest based on either market and time-based service conditions or performance and time-based service conditions, which are referred to herein as performance-based awards. The Company has assessed the performance-based award with the appropriate valuation method and has recognized the applicable stock-based compensation expense. The following table summarizes the performance-based and market-based awards as of December 31, 2021: Period Granted Options Granted RSUs Granted Options Vested RSUs Vested Milestone Valuation Method (in thousands) Q1 2019 200 300 200 300 (1) Monte-Carlo Simulation Q2 2019 — 188 — 81 (2) Fair Market Value Q3 2019 — 50 — 50 (1) Monte-Carlo Simulation Q1 2020 150 300 130 289 (1) Monte-Carlo Simulation Q1 2020 — 436 — 408 (3) Fair Market Value Q1 2020 129 — 129 — (3) Black-Scholes-Merton Q2 2020 — 21 — 21 (3) Fair Market Value Q3 2020 10 — 10 — (4) Black-Scholes-Merton Q3 2020 — 27 — 17 (3) Fair Market Value Q4 2020 — 32 — 19 (1) Monte-Carlo Simulation Q4 2020 — 22 — 2 (5) Fair Market Value Q1 2021 150 125 — — (1) Monte-Carlo Simulation Q1 2021 — 279 — 10 (3) Fair Market Value Q2 2021 163 — — — (1) Monte-Carlo Simulation Q2 2021 29 — — — (3) Black-Scholes-Merton Q2 2021 — 7 — — (3) Fair Market Value Q4 2021 — 20 — — (1) Monte-Carlo Simulation Q4 2021 — 205 — — (3) Fair Market Value (1) The awards vest based on the achievement of certain values of the Company’s common stock at multiple thresholds within certain periods and are contingent upon the completion of requisite service through the date of such vesting. (2) The vesting of the awards will be triggered after the end of the achievement milestone, as measured by the Company. (3) The awards vest based on achievement of certain revenue targets, units, and system implementation, contingent upon the completion of requisite service through the date of such vesting. (4) The awards have vested based on a change of coverage. (5) The awards will vest based on achievement of certain revenue and recruiting targets. The Company has recognized $50.3 million in stock-based compensation for performance-based awards for the year ended December 31, 2021 compared to $17.2 million in stock-based compensation for performance-based awards for the year ended December 31, 2020. The fair value of the performance-based awards with market conditions granted estimated using a Monte Carlo simulation model used the following inputs for the years ended December 31, 2021 and 2020: December 31, December 31, 2021 2020 Risk-free interest rate 0.80 % — 1.52 % 0.54 % — 1.64 % Expected dividend yield — — Expected volatility 60 % 55 65 % Expected term (years) 7.25 — 10.0 5.25 — 7.25 Restricted Stock Units The following table summarizes restricted stock unit (“RSU”) activity for the year ended December 31, 2021: Weighted- Average Number of Grant Date Shares Fair Value (in thousands) Balance at December 31, 2020 4,188 $ 34.02 Granted 2,208 $ 106.74 Vested (2,117) $ 29.46 Canceled/Forfeited (291) $ 55.16 Balance at December 31, 2021 3,988 $ 74.33 Stock-Based Compensation Expense Stock based compensation is related to stock options and 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 on a straight-line basis. No compensation cost is recognized when the requisite service has not been met and the awards are therefore forfeited. 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. Non-employee stock-based compensation expense was not adjusted for estimated forfeitures up until the occurrence of the actual forfeiture of the associated awards. The following table presents the effect of employee and non-employee stock-based compensation expense on selected statements of operations line items for the years ended December 31, 2021, 2020, and 2019. Year ended December 31, 2021 2020 2019 Employee Non-Employee Total Employee Non-Employee Total Employee Non-Employee Total (in thousands) Cost of revenues $ 4,811 $ — $ 4,811 $ 1,691 $ — $ 1,691 $ 905 $ 32 $ 937 Research and development 24,507 1,361 25,868 10,777 647 11,424 5,354 — 5,354 Selling, general and administrative 84,368 172 84,540 36,747 309 37,056 21,730 603 22,333 Total $ 113,686 $ 1,533 $ 115,219 $ 49,215 $ 956 $ 50,171 $ 27,989 $ 635 $ 28,624 As of December 31, 2021, approximately $233.3 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 2.8 years. Valuation of Stock Option Grants to Employees and Non-Employees The Company utilizes Black-Scholes option pricing model when estimating the fair value of stock options. For the year ended December 31, 2021 the following valuation assumptions were applied on both the employee and non- employee options. In the same period of the prior year, the valuation assumptions as follows were only used for stock options granted to employees. Year ended December 31, 2021 2020 2019 Expected term (years) 5.11 — 10.00 5.22 — 10.00 5.23 — 10.00 Expected volatility 55.33 % — 63.30 % 49.94 % — 61.96 % 42.53 % — 45.84 % Expected dividend rate 0 % 0 % 0 % Risk-free interest rate 0.81 % — 1.67 % 0.31 % — 1.70 % 1.60 % — 2.60 % As of December 31, 2021, total options outstanding include 31,553 shares of option awards that were granted to non-employees, of which 730 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. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Debt | 10. 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 which can be drawn down in increments at any time. The Credit Line was amended in July 2017 and bears interest at 30-day LIBOR plus 1.10%, and it 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 years ended December 31, 2021, 2020, and 2019, the Company recorded interest expense of $0.6 million, $0.8 million, and $1.7 million, respectively. Interest payments totaling $0.6 million, $0.8 million, and $1.7 million had been made on the Credit Line during the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, remaining accrued interest was $1.1 million, and the total principal amount outstanding including accrued interest was $49.0 million. Convertible Notes ● During any fiscal quarter commencing after September 30, 2020 (and only during such fiscal quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day. ● During the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of that five -day consecutive trading period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day. ● If the Company calls any or all of the Convertible Notes for redemption at any time prior to the close of business on the second business day prior to the redemption date. ● Upon the occurrence of certain distributions. ● Upon the occurrence of specified corporate transactions. December 31, 2021 (in thousands) Liability Component Outstanding Principal $ 287,500 Unamortized debt discount and debt issuance cost (7,106) Net carrying amount $ 280,394 The following table presents total interest expense recognized related to the Convertible Notes during the year ended December 31, 2021: December 31, 2021 (in thousands) Cash interest expense Contractual interest expense $ 6,469 Non-cash interest expense Amortization of debt discount and debt issuance cost 1,227 Total interest expense $ 7,696 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 11. Stockholders’ Equity In April 2019, the Company completed an underwritten equity offering to sell 5,263,158 shares of its common stock at a price to the public of $19 per share. On April 26, 2019, the Company sold an additional 789,473 shares of its common stock to the underwriters at the same price upon their exercise of the option to purchase those shares. Before offering expenses of $0.6 million, the Company received proceeds of $108.1 million net of the underwriting discount. In October 2019, the Company completed an underwritten equity offering to sell 5,714,286 shares of its common stock at a price to the public of $35 per share. The same day, the Company sold an additional 857,142 shares of its common stock to the underwriters at the same price upon their exercise of the option to purchase those shares. Before offering expenses of $0.4 million, the Company received proceeds of $216.2 million net of the underwriting discount. In September 2020, the Company completed an underwritten equity offering and sold 4,791,665 shares of its common stock at a price of $60 per share to the public. Before offering expenses of $0.3 million, the Company received proceeds of $271.0 million net of the underwriting discount. In July 2021, the Company completed an underwritten equity offering and sold 5,175,000 shares of its common stock at a price of $113 per share to the public. Before offering expenses of $0.4 million, the Company received proceeds of $551.2 million net of the underwriting discount. On September 10, 2021, the Company entered into an agreement with a third party for an asset acquisition where the acquired asset was in-process research and development primarily in exchange for an equity consideration payment. The total upfront acquisition consideration amounts to $35.6 million composed of the issuance of 276,346 shares of the Company's common stock with a fair value of $30.9 million, approximately $3.9 million of cash consideration, assumed net liabilities of $0.2 million, as well as $0.6 million of acquisition related legal and accounting costs directly attributable to the acquisition of the asset. As of December 31, 2021, the Company had 50,000,000 authorized shares of its preferred stock, of which no shares were issued and outstanding outstanding |
Disposal of Business
Disposal of Business | 12 Months Ended |
Dec. 31, 2021 | |
Disposal of Business | |
Disposal of Business | 12. Disposal of Business Sale of Evercord In September 2019, the Company sold the Evercord business that provides cord blood and cord tissue processing and storage services for total estimated consideration of $15.4 million, including $9.7 million in cash, $1.0 million of cash deposited in a third-party escrow account recorded in short-term other receivables, and $4.7 million of additional consideration. The additional consideration is primarily related to the accounts receivable transferred to the buyer. The cash held in escrow serve as security for the indemnification obligations of the Company and eligible for release 12 months after the closing date. The assets relating to the Evercord services transferred to the buyer had a net book value of $6.2 million as of the sale date, and consisted of accounts receivables and equipment. The obligations and liabilities relating to the Evercord services transferred to the buyer consisted of deferred revenues of $5.2 million. The sale of the Evercord business did not meet criteria to be reported as a discontinued operation, because it did not represent a strategic shift with a major effect on the Company’s operations and financial results. The Company recognized a gain of $14.4 million on the sale, which was included in Loss from operations in the Consolidated Statements of Operations and Comprehensive Loss. The following table summarizes the computation of the gain realized from the disposal of business: December 31, 2019 (in thousands) Proceeds on disposal: $ 15,377 Assets sold: Accounts receivable, net 5,782 Equipment and inventory 419 Total assets sold $ 6,201 Liabilities assumed by purchaser: Deferred revenues 5,212 Net assets and liabilities sold $ 989 Net gain realized on disposal $ 14,388 In connection with the sale of the Evercord business, the Company recorded impairment expense on the retained assets previously used in this business of $1.7 million in selling, general, and administrative expenses in the consolidated statement of operations and comprehensive loss. This expense is comprised of $1.2 million from the impairment of leasehold improvements, $0.1 million from the impairment of capitalized software held for internal use, and $0.4 million of right-of-use asset from the storage facility lease. In addition, the Company expects to incur $0.4 million of exit or disposal activity—$0.1 million of involuntary employee termination benefits were incurred in the third quarter of 2019, recorded in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss, and $0.3 million of early contract termination fee from biological sample processing and storage provider to be incurred in the next fiscal year. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Income Taxes | 13. Income Taxes The Company's effective tax rates for the years ended December 31, 2021, 2020, and 2019 differ from the U.S. federal statutory rate as follows: December 31, 2021 2020 2019 (in thousands, except percentages) U.S. federal taxes (benefit) at statutory rate $ (98,931) (21.00) % $ (48,226) (21.00) % $ (25,794) (21.00) % State tax expense (29,206) (6.20) % (10,672) (4.65) % (6,607) (5.38) % Research and development credits (9,193) (1.95) % (3,964) (1.73) % (1,645) (1.34) % Stock-based compensation (46,128) (9.80) % (23,791) (10.36) % (7,544) (6.14) % Foreign tax 167 0.04 % 55 0.02 % 1,612 1.31 % Other nondeductible items 344 0.07 % 792 0.35 % 769 0.63 % Nondeductible officers' compensation 24,387 5.18 % 8,984 3.91 % 609 0.50 % Acquisition costs 8,901 1.89 % — — % — — % Change in valuation allowance 150,277 31.90 % 76,920 33.50 % 40,599 33.05 % Provision for income taxes $ 618 0.13 % $ 98 0.04 % $ 1,999 1.63 % During the year ended December 31, 2021, the Company recorded total income tax expense of $0.6 million. The Company provides testing to clinics and also licenses its cloud-based software to licensees that are based in a foreign country, which contributed to a foreign income tax expense of $0.3 million. Total income tax expense also included a state income tax expense of $0.3 million for the year ended December 31, 2021. During the year ended December 31, 2020, the Company recorded total income tax expense of $0.1 million. The Company provides testing to clinics and also licenses its cloud-based software to licensees that are based in a foreign country, which contributed to a foreign income tax expense of $0.1 million. Total income tax expense also included a state income tax benefit of $9,000 for the year ended December 31, 2020. During the year ended December 31, 2019, the Company recorded total income tax expense of $2.0 million, which included a foreign withholding tax expense of $1.9 million, foreign income tax expense of $0.1 million and state income tax benefit of $0.04 million. Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss and tax credit carryforwards. The components of the net deferred income tax assets are as follows: December 31, 2021 2020 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 315,552 $ 177,899 Intangibles 4,443 — Research and development tax credit carryforwards 38,725 24,332 Reserves and accruals 14,098 21,770 Lease Liabilities 16,843 7,123 Deferred revenue 6,363 6,386 Stock-based compensation 15,928 10,673 Total deferred tax assets before valuation allowance 411,952 248,183 Less: valuation allowance (396,079) (222,521) 15,873 25,662 Deferred tax liabilities: Convertible debt — (19,143) Right-of-use lease assets (15,873) (6,519) Net deferred tax assets $ — $ — The Company established a full valuation allowance against its net deferred tax assets in 2021 and 2020 due to the uncertainty surrounding realization of these assets. The valuation allowance increased to $396.1 million as of December 31, 2021 from $222.5 million as of December 31, 2020 due to current year losses and credits claimed. As of December 31, 2021, the Company had federal, state, and foreign net operating loss (“NOLs”) carryforwards of approximately $1.3 billion, $796.7 million, and $4.0 million, respectively, which begin to expire in 2027, 2028, and 2031, respectively, if not utilized. Approximately $950.2 million of federal net operating loss included above can be carried forward indefinitely. The Company also had federal research and development credit carryforwards of approximately $34.5 million, which begin to expire in 2027, and state research and development credit carryforwards of approximately $23.0 million, which can be carried forward indefinitely. Realization of these deferred tax assets would require $1.5 billion in taxable income to fully utilize. Realization is dependent on generating sufficient taxable income prior to expiration of the loss and credit carryforwards. Federal, state and foreign tax laws impose substantial restrictions on the utilization of NOLs and credit carryforwards in the event of an "ownership change" for tax purpose, as defined in Section 382 of the Internal Revenue Code. Accordingly, the Company's ability to utilize these carryforwards may be limited as the result of such ownership change. Such a limitation could result in limitation in the use of the NOLs in future years and possibly a reduction of the NOLs available. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: December 31, 2021 2020 2019 (in thousands) Balance at beginning of year $ 11,500 $ 8,619 $ 7,362 Additions based on tax positions related to the current year 6,017 2,889 1,426 Additions (reductions) for tax positions of prior years (3) (8) (169) Balance at end of year $ 17,514 $ 11,500 $ 8,619 During the years ended December 31, 2021, 2020, and 2019, the amount of unrecognized tax benefits increased $6.0 million, $2.9 million, and $1.3 million, respectively, due to additional research and development credits generated during the year. As of December 31, 2021, 2020, and 2019, the total amount of unrecognized tax benefits was $17.5 million, $11.5 million, and $8.6 million, respectively. The reversal of the uncertain tax benefits would not affect the Company's effective tax rate to the extent that it continues to maintain a full valuation allowance against its deferred tax assets. The Company is subject to U.S. federal, state, and foreign income taxes. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations, and require significant judgment to apply. The Company is subject to U.S. federal, state and local tax examinations by tax authorities for all prior tax years since incorporation. The Company does not anticipate significant changes to its current uncertain tax positions through December 31, 2022. The Company recognizes any interest and/or penalties related to income tax matters as a component of income tax expense. As of December 31, 2021, there were no |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2021 | |
Net Loss per Share | |
Net Loss per Share | 14. 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, and restricted stock units 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. The Convertible Notes are convertible as of December 31, 2021. Upon conversion, the Company has the option to pay cash, issue shares of common stock, or any combination thereof for the aggregate amount due upon conversion. If converted, the value of the Convertible Notes based on contractual settlement provisions would exceed its principal amount by $441.9 million as of December 31, 2021. Since the Company is in a net loss position in the periods presented, the shares which would be issued upon conversion of the Convertible Notes are excluded from the net loss per share calculation as it would have an antidilutive effect. As such, the 7.4 million shares underlying the conversion option of the Convertible Notes will not have an impact on the Company’s diluted earnings per share. If converted, the Company does not intend to settle the obligation in cash. The following table provides the basic and diluted net loss per share computations for the years ended December 31, 2021, 2020, and 2019: December 31, 2021 2020 2019 (in thousands, except per share data) Numerator: Net loss used to compute net loss per share, basic and diluted $ (471,716) $ (229,743) $ (124,827) Denominator: Weighted-average number of shares used in computing net loss per share, basic and diluted 90,558 81,011 69,555 Net loss per share, basic and diluted $ (5.21) $ (2.84) $ (1.79) The following table shows the potentially dilutive common stock equivalents that were excluded from the computations of diluted net loss per share as their effect would be anti-dilutive, as of December 31, 2021, 2020, and 2019: December 31, 2021 2020 2019 (in thousands) Options to purchase common stock 5,898 6,707 8,497 Restricted stock units 3,988 4,188 2,404 Employee stock purchase plan 33 37 32 Convertible Note 7,411 7,411 — Estimated earnout shares for an asset acquisition 353 — — 17,683 18,343 10,933 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events | |
Subsequent Events | 15. Subsequent Events None. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). |
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. The Company had a net loss of $471.7 million for the year ended December 31, 2021 and an accumulated deficit of $1.4 billion as of December 31, 2021. As of December 31, 2021, the Company had $84.6 million in cash, cash equivalents, and restricted cash, $829.9 million in marketable securities, $50.1 million of outstanding balance of the Credit Line (as defined in Note 10, Debt) including accrued interest, and $287.5 million outstanding principal balance of its 2.25% Convertible Senior Notes (the “Convertible Notes”). In April 2020, the Company used a portion of the net proceeds from the offering of the Convertible Notes to repay its obligations under its 2017 Term Loan with OrbiMed. While the Company has introduced multiple products that are generating revenues, these revenues have not been sufficient to fund all operations and business plans. Accordingly, the Company has funded the portion of its operating costs and business plans that exceed revenues through a combination of equity issuances, debt issuances, and other financings. The Company continues to invest in the development and commercialization of its existing and 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 will 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 when necessary, 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 or slow its investment in the development and commercialization of its products and significantly scale back its business and operations. On September 10, 2021, the Company entered into an agreement with a third party for an asset acquisition where the acquired asset was in-process research and development primarily in exchange for an equity consideration payment. In addition, pursuant to the agreement, certain employees of the third party became employees of the Company. The third party was a biotechnology company focused on oncology. The total upfront acquisition consideration amounts to $35.6 million composed of the issuance of 276,346 shares of the Company's common stock with a fair value of $30.9 million, approximately $3.9 million of cash consideration, assumed net liabilities of $0.2 million, as well as $0.6 million of acquisition related legal and accounting costs directly attributable to the acquisition of the asset. The Company accounted for the transaction as an asset acquisition as substantially all of the estimated fair value of the gross assets acquired was concentrated in a single identified in-process research and development asset (“IPR&D”) thus satisfying the requirements of the screen test in ASU 2017-01. The estimated fair value of the acquired workforce was not significant. The Company concluded the acquired IPR&D has no alternative-future use and accordingly expensed approximately $35.6 million, on the day the transaction closed as research and development expense, which is reflected in its consolidated statement of operations. Further, additional consideration aggregating up to approximately $35.0 million may be paid in an estimated 269,547 of additional shares, consistent with the registration statement filed with the SEC on September 10, 2021, that are potentially issuable to legacy shareholders of this third party upon the achievement of defined milestones relating to product development, commercial launch and continued employment of certain selling shareholders, each of which will be revalued at each reporting date and amount of compensation expense will be adjusted accordingly. The Company assessed these milestones as probable as of September 30, 2021 and December 31, 2021. As achievement of all milestones is contingent upon the continued employment of certain selling shareholders, the Company accounted for the consideration related to all of the milestones as compensation expenses and recognized these expenses ratably over the estimated performance period of 24 months, to approximately August 2023. In April 2019, the Company completed an underwritten equity offering and sold 6,052,631 shares of its common stock at a price of $19 per share to the public. Before offering expenses of $0.6 million, the Company received proceeds of $108.1 million net of the underwriting discount. In October 2019, the Company completed another underwritten equity offering and sold 6,571,428 shares of its common stock at a price of $35 per share to the public. Before offering expenses of $0.4 million, the Company received proceeds of $216.2 million net of the underwriting discount. In September 2020, the Company completed an additional underwritten equity offering and sold 4,791,665 shares of its common stock at a price of $60.00 per share to the public. Before offering expenses of $0.3 million, the Company received proceeds of $271.0 million net of the underwriting discount. In July 2021, the Company completed an underwritten equity offering and sold 5,175,000 shares of its common stock at a price of $113 per share to the public. Before offering expenses of $0.4 million, the Company received proceeds of $551.2 million net of the underwriting discount. 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 February 24, 2022. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include all the accounts of the Company and its subsidiaries. The Company established a subsidiary that operates in the state of Texas to support the Company’s laboratory and operational functions. The Company established a subsidiary that operates in Canada following the acquisition of the IPR&D asset, which includes a lease for the laboratory space located in Canada. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates Revenue Stock-based compensation requisite service period in which the awards are expected to vest and forfeitures are estimated based on historical trends at the time of grant and revised as necessary. Stock option awards that include a service condition and a performance condition are considered expected to vest when the performance condition is probable of being met. The Black-Scholes model considers several variables and assumptions in estimating the fair value of stock-based awards. These variables include the per share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected annual dividend yield and the expected stock price volatility over the expected term. For all stock options granted, we calculate the expected term using the simplified method for “plain vanilla” stock option awards. We determine expected volatility using the historical volatility of the stock price of similar publicly traded peer companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. Income Taxes Income Taxes Income Taxes Allowance for doubtful accounts Financial Instruments—Credit Losses Inventory and scrapped inventory. Any write-down of inventory to net realizable value establishes a new cost basis and will be maintained even if certain circumstances suggest the inventory is recoverable in subsequent periods. Costs associated with the write-down of inventory are recorded to cost of revenue on our consolidated statements of operations. The Company makes assumptions about future demand, market conditions and the release of new products that may supersede older products. However, if actual market conditions are less favorable than anticipated, additional inventory write-downs may be required. Investments and financial instruments Right-of-use assets Property and equipment three years Other accrued liabilities |
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 Restricted cash is currently presented as a separate line item in the Company’s balance sheet. In the statements of cash flows, it is included together with cash and cash equivalents and considered as part of the total ending cash balance. 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: December 31, December 31, 2021 2020 (in thousands) Cash and cash equivalents in balance sheet $ 84,386 $ 48,668 Restricted cash, current portion in balance sheet 228 187 Total cash, cash equivalents and restricted cash in statements of cash flows $ 84,614 $ 48,855 |
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, irrespective of maturity 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. On December 6, 2021, the Company participated along with certain other investors in the series B financing of MyOme, Inc. (“MyOme”), and purchased preferred shares and warrants in exchange for approximately $4.0 million cash payment. Matthew Rabinowitz is the Chairman of the board of directors and Co-Founder of both the Company and MyOme. The Company’s investment in MyOme is recorded at cost and will be evaluated for impairment at the end of each reporting period. |
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). |
Risk and Uncertainties | Risk and Uncertainties The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, and the full extent and duration of the impact of the COVID 19 pandemic on our business, our operations, and the global economy as a whole is not yet known. While the Company’s test volumes as well as overall average selling prices increased in the year ended December 31, 2021 compared to the year ended December 31, 2020, the Company cannot predict the potential nature, magnitude and duration of the effects of the COVID-19 pandemic on the macroeconomic environment. 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 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 years ended December 31, 2021, 2020, and 2019, there were no customers exceeding 10% of total revenues on an individual basis. As of December 31, 2021 and 2020, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. |
Credit Losses | Credit Losses Trade accounts receivable and other receivables. The following is a roll-forward of the allowances for credit losses related to trade accounts receivable and other receivables for the year ended December 31, 2021: December 31, 2021 (in thousands) Beginning balance $ 4,220 Provision for credit losses (156) Write-offs (1,635) Total $ 2,429 Available-for-sale debt securities. The amended guidance from ASU 2016-13 requires the measurement of expected credit losses for available-for-sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The Company evaluated its investment portfolio under the new available-for-sale debt securities impairment model guidance. The vast majority of the Company’s investment portfolio are low risk, investment grade securities. |
Revenue Recognition | Revenue Recognition The Company adopted the new revenue recognition guidance, ASC 606, beginning January 1, 2018 on a full retrospective basis. 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 Revenue Recognition, |
Cost of Product Revenues | Cost of Product Revenues The components of our 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, costs incurred from third party test processing fees, and allocated overhead such as rent, information technology costs, equipment depreciation and utilities. Costs associated with Whole Exome Sequencing (“WES”) are also included, as well as labor costs, relating to our Signatera CLIA offering. Costs associated with performing tests are recorded when the test is accessioned. We expect cost of product revenues in absolute dollars to increase as the number of tests we perform increases. |
Cost of Licensing and Other Revenues | Cost of Licensing and Other Revenues The components of our cost of licensing and other revenues are material costs associated with test kits sold to Constellation clients, development and support services relating to our Strategic Partnership Agreements, and costs associated with specimens and Whole Exome Sequencing (“WES”), as well as labor costs, relating to our Signatera (RUO) and CDx offering. We consider our cost of licensing and other revenues for the Constellation software platform to be relatively low, and therefore we expect its associated gross margin is higher. We expect our cost of licensing will increase in relation to volume growth. |
Research and Development | Research and Development The Company records research and development costs in the period incurred. Research and development costs consist of personnel costs, contract services, cost of materials utilized in performing tests, costs of clinical trials and allocated facilities and related overhead expenses. |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. The Company incurred advertising costs of $2.2 million, $0.6 million, and $0.2 million for the years ended December 31, 2021, 2020, and 2019, respectively. |
Product Shipment Costs | Product Shipment Costs The Company expenses product shipment costs in cost of product revenues in the accompanying statements of operations. Shipping and handling costs for the years ended December 31, 2021, 2020, and 2019 were $22.0 million, $13.3 million, and $13.3 million, respectively. |
Income Taxes | Income Taxes Income taxes are recorded in accordance with Financial Accounting Standards Board ASC Topic 740, Income Taxes |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation related to stock options and restricted stock units (“RSUs”) granted to the Company’s employees 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. For stock options with market conditions, the Company derives the requisite service period using the Monte Carlo simulation model. For stock options and RSUs that vest upon meeting performance conditions or market conditions in combination with performance conditions, the Company derives the requisite service period from the grant date to the date it is probable that the vesting conditions will be met. |
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, which includes successful validation and approval from management. 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. 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 $2.3 million and $1.7 million as of December 31, 2021 and 2020, respectively. Amortization expense for amounts previously capitalized for the years ended December 31, 2021, 2020, and 2019, was $1.1 million, $1.0 million, and $1.2 million, respectively. |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, and unrealized gains and losses on available-for-sale marketable securities. December 31, 2021 2020 (in thousands) Beginning balance $ 4,259 $ 919 Net unrealized gains (losses) on available-for-sale securities, net of tax (6,546) 3,340 Ending balance $ (2,287) $ 4,259 |
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 five or the remaining term of the lease, whichever is shorter. The Company periodically reviews the depreciable lives assigned to property and equipment placed in service and change the estimates of useful lives to reflect the results of such reviews. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The Company evaluates 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 amounts of the 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. |
Inventory | Inventory Inventory is valued at the lower of the standard cost, which approximates actual cost, or market. Cost is determined using the first-in, first-out (“FIFO”) method. Inventory consists entirely of supplies, which are consumed when providing its test reports, and therefore does not maintain any finished goods inventory. The Company enters into inventory purchases and commitments so that it can meet future delivery schedules based on forecasted demand for its tests. The Company recorded inventory obsolescence charges totaling $0.9 million, $0.2 million, and $0.3 million, in the years ended December 31, 2021, 2020, and 2019, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (the “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 Income Taxes Codification Improvements Debt In August 2020, ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) cumulative effect of the change was recognized as an adjustment to the opening balance of retained earnings at the date of adoption. The comparative information has not been restated and continues to be presented according to accounting standards in effect for those periods. This adjustment was calculated based on the carrying amount of the Convertible Notes as if it had always been treated only as a liability. Further, an adjustment was recorded to the debt discount and issuance costs as if these had always been treated as a contra liability only. Interest expense related to the accretion of the Convertible Notes is no longer recognized. Interest expense for the Convertible Notes for the year ended December 31, 2021 would have been $9.4 million higher without the adoption of ASU 2020-06. As such, net loss from continuing operations attributable to the Company for the year ended December 31, 2021 was $0.10 per common share lower due to the effect of adoption of ASU 2020-06. December 31, ASU 2020-06 January 1, 2020 Adoption Adjustment 2021 (in thousands) Liabilities Outstanding Principal $ 287,500 $ — $ 287,500 Unamortized debt discount and issuance cost (85,007) 76,674 (8,333) Net carrying amount $ 202,493 $ 76,674 $ 279,167 Equity Additional paid-in-capital $ (1,411,286) $ 82,876 $ (1,328,410) Accumulated deficit (929,318) 6,198 (923,120) New Accounting Pronouncements Not Yet Adopted In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Summary Of Significant Accounting Policies [Line Items] | |
Schedule of reconciliation of restricted cash | December 31, December 31, 2021 2020 (in thousands) Cash and cash equivalents in balance sheet $ 84,386 $ 48,668 Restricted cash, current portion in balance sheet 228 187 Total cash, cash equivalents and restricted cash in statements of cash flows $ 84,614 $ 48,855 |
Schedule of allowances for credit losses related to trade accounts receivable and other receivables | December 31, 2021 (in thousands) Beginning balance $ 4,220 Provision for credit losses (156) Write-offs (1,635) Total $ 2,429 |
Schedule of allowances for credit losses | December 31, December 31, December 31, 2021 2020 2019 (in thousands) Beginning balance $ 4,220 $ 2,919 $ 1,788 Cumulative-effect adjustment upon adoption of ASU 2016-13 — 404 — Provision for credit losses (156) 1,354 1,141 Write offs (1,635) (457) (10) Ending balance $ 2,429 $ 4,220 $ 2,919 |
Schedule of Accumulated Other Comprehensive Income (Loss) | December 31, 2021 2020 (in thousands) Beginning balance $ 4,259 $ 919 Net unrealized gains (losses) on available-for-sale securities, net of tax (6,546) 3,340 Ending balance $ (2,287) $ 4,259 |
Accounting Standards Update 2020-06 | |
Summary Of Significant Accounting Policies [Line Items] | |
Schedule of new accounting pronouncements and changes in accounting principle | December 31, ASU 2020-06 January 1, 2020 Adoption Adjustment 2021 (in thousands) Liabilities Outstanding Principal $ 287,500 $ — $ 287,500 Unamortized debt discount and issuance cost (85,007) 76,674 (8,333) Net carrying amount $ 202,493 $ 76,674 $ 279,167 Equity Additional paid-in-capital $ (1,411,286) $ 82,876 $ (1,328,410) Accumulated deficit (929,318) 6,198 (923,120) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue Recognition | |
Schedule of disaggregation of revenues by payer types | Year Ended December 31, 2021 2020 2019 (in thousands) Insurance carriers $ 492,563 $ 300,220 $ 210,919 Laboratory partners 100,019 58,196 59,876 Patients 32,904 32,589 31,533 Total revenues $ 625,486 $ 391,005 $ 302,328 |
Schedule of total revenue by geographic area | Year ended December 31, 2021 2020 2019 (in thousands) United States $ 590,872 $ 365,660 $ 260,846 Americas, excluding U.S. 4,047 3,469 3,218 Europe, Middle East, India, Africa 20,429 14,332 15,434 Asia Pacific and Other 10,138 7,544 22,830 Total $ 625,486 $ 391,005 $ 302,328 |
Schedule of beginning and ending balances of accounts receivable and deferred revenues | Balance at Balance at December 31, December 31, 2021 2020 (in thousands) Assets: Accounts receivable $ 122,074 $ 78,565 Liabilities: Deferred revenue, current portion $ 7,404 $ 50,125 Deferred revenue, long-term portion 21,318 22,805 Total deferred revenues $ 28,722 $ 72,930 |
Schedule of changes in the balance of deferred revenues | Deferred Revenues (in thousands) Balance at December 31, 2020 $ 72,930 Increase in deferred revenues 7,915 Reclasses from deferred revenues to other to short-term liabilities (10,080) Revenue recognized during the period that was included in (37,784) Revenue recognized from performance obligations satisfied (4,259) Balance at December 31, 2021 $ 28,722 |
Schedule of insurance carrier reserve balance | December 31, December 31, 2021 2020 (in thousands) Beginning balance $ 17,366 $ 9,410 Additional reserves 16,340 19,427 Refunds to carriers (10,784) (6,066) Reserves released to revenue (5,712) (5,405) Ending balance $ 17,210 $ 17,366 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Measurements | |
Summary of financial assets and liabilities measured on recurring basis | December 31, 2021 December 31, 2020 Level I Level II Level III Total Level I Level II Level III Total (in thousands) Financial Assets: Money market deposits $ 10,041 $ — $ — $ 10,041 $ 28,990 $ — $ — $ 28,990 U.S. Treasury securities 688,097 — — 688,097 597,744 — — 597,744 Corporate bonds and notes — 52,337 — 52,337 — 12,328 — 12,328 Municipal securities — 89,462 — 89,462 — 78,534 — 78,534 Total financial assets $ 698,138 $ 141,799 $ — $ 839,937 $ 626,734 $ 90,862 $ — $ 717,596 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Financial Instruments | |
Schedule of available-for-sale securities | December 31, 2021 December 31, 2020 Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value (in thousands) Money market deposits $ 10,041 $ — $ — $ 10,041 $ 28,990 $ — $ — $ 28,990 U.S. Treasury securities (1) 689,640 1,081 (2,624) 688,097 594,252 3,512 (20) 597,744 Corporate bonds and notes (1) 52,729 — (392) 52,337 12,331 2 (5) 12,328 Municipal securities 89,814 261 (613) 89,462 77,764 796 (26) 78,534 Total $ 842,224 $ 1,342 $ (3,629) $ 839,937 $ 713,337 $ 4,310 $ (51) $ 717,596 Classified as: Cash equivalents (2) $ 10,041 $ 28,990 Short-term investments 829,896 688,606 Total $ 839,937 $ 717,596 (1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period. (2) Cash equivalents includes cash sweep accounts and U.S. Treasury money market mutual funds. |
Summarized portfolio of available-for-sale securities by contractual maturity | December 31, 2021 Amortized Cost Fair Value (in thousands) Less than or equal to one year $ 274,879 $ 275,331 Greater than one year but less than five years 557,304 554,565 Total $ 832,183 $ 829,896 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Balance Sheet Components | |
Schedule of allowances for credit losses | December 31, December 31, December 31, 2021 2020 2019 (in thousands) Beginning balance $ 4,220 $ 2,919 $ 1,788 Cumulative-effect adjustment upon adoption of ASU 2016-13 — 404 — Provision for credit losses (156) 1,354 1,141 Write offs (1,635) (457) (10) Ending balance $ 2,429 $ 4,220 $ 2,919 |
Schedule of property and equipment | December 31, December 31, Useful Life 2021 2020 (in thousands) Machinery and equipment 3-5 years $ 33,722 $ 51,001 Furniture and fixtures 3 years — 1,376 Computer equipment 3 years 4,893 2,428 Capitalized software held for internal use 3 years 2,395 7,417 Leasehold improvements Life of lease 13,640 14,810 Construction-in-process 30,279 6,370 84,929 83,402 Less: Accumulated depreciation and amortization (19,413) (50,054) Total Property and Equipment, net $ 65,516 $ 33,348 |
Schedule of accrued compensation | December 31, December 31, 2021 2020 (in thousands) Accrued paid time off $ 2,567 $ 2,260 Accrued commissions 15,726 12,686 Accrued bonuses 15,854 9,635 Other accrued compensation 6,794 5,790 Total accrued compensation $ 40,941 $ 30,371 |
Schedule of other accrued liabilities | December 31, December 31, 2021 2020 (in thousands) Reserves for refunds to insurance carriers $ 17,210 $ 17,366 Accrued charges for third-party testing 5,849 5,141 Testing and laboratory materials from suppliers 3,799 2,720 Marketing and corporate affairs 7,853 3,325 Legal, audit and consulting fees 11,758 4,189 Accrued shipping charges 969 1,604 Sales tax payable 2,230 1,723 Accrued third-party service fees 13,442 2,355 Clinical trials, studies, and other development 11,218 2,353 Operating lease liabilities, current portion 5,752 7,300 Fixed asset purchases 1,853 1,691 Other accrued interest 1,078 1,078 Other accrued expenses 10,342 9,562 Total other accrued liabilities $ 93,353 $ 60,407 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases. | |
Schedule of lease liabilities | December 31, 2021 (in thousands) Operating lease liabilities, current portion included in other accrued liabilities $ 5,752 Operating lease liabilities, long-term portion 61,036 Total operating lease liabilities $ 66,788 |
Schedule of annual minimum lease payments | Operating Leases (in thousands) Year ending December 31: 2022 $ 9,980 2023 11,082 2024 12,258 2025 12,494 2026 12,845 2027 and thereafter 27,331 Total future minimum lease payments 85,990 Less: imputed interest (19,202) Operating lease liabilities $ 66,788 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies | |
Schedule of material contractual commitments | Party Total Commitments Expiry Date (in thousands) Material suppliers $ 16,040 June 2026 Application service providers 35,279 March 2026 Earnouts for development with third party (1) 35,000 September 2023 Software development provider 4,463 December 2024 Leases (2) 29,683 March 2033 Other material suppliers 17,510 Various Total 137,975 (1) The earnouts for asset development with the acquired Canadian entity consists of three milestones which are achieved upon the satisfaction of certain contractual conditions. Upon achievement, the earnout consideration will primarily be paid in the Company’s common stock. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of offering activity | Number of Total Shares Purchased Proceeds Offering Period (in thousands) November 1, 2019 - April 30, 2020 97,247 $ 3,062 May 1, 2020 - October 31, 2020 136,288 $ 4,052 November 1, 2020 - April 30, 2021 106,435 $ 6,085 May 1, 2021 - October 31, 2021 79,820 $ 7,465 |
Schedule of performance-based awards | Period Granted Options Granted RSUs Granted Options Vested RSUs Vested Milestone Valuation Method (in thousands) Q1 2019 200 300 200 300 (1) Monte-Carlo Simulation Q2 2019 — 188 — 81 (2) Fair Market Value Q3 2019 — 50 — 50 (1) Monte-Carlo Simulation Q1 2020 150 300 130 289 (1) Monte-Carlo Simulation Q1 2020 — 436 — 408 (3) Fair Market Value Q1 2020 129 — 129 — (3) Black-Scholes-Merton Q2 2020 — 21 — 21 (3) Fair Market Value Q3 2020 10 — 10 — (4) Black-Scholes-Merton Q3 2020 — 27 — 17 (3) Fair Market Value Q4 2020 — 32 — 19 (1) Monte-Carlo Simulation Q4 2020 — 22 — 2 (5) Fair Market Value Q1 2021 150 125 — — (1) Monte-Carlo Simulation Q1 2021 — 279 — 10 (3) Fair Market Value Q2 2021 163 — — — (1) Monte-Carlo Simulation Q2 2021 29 — — — (3) Black-Scholes-Merton Q2 2021 — 7 — — (3) Fair Market Value Q4 2021 — 20 — — (1) Monte-Carlo Simulation Q4 2021 — 205 — — (3) Fair Market Value (1) The awards vest based on the achievement of certain values of the Company’s common stock at multiple thresholds within certain periods and are contingent upon the completion of requisite service through the date of such vesting. (2) The vesting of the awards will be triggered after the end of the achievement milestone, as measured by the Company. (3) The awards vest based on achievement of certain revenue targets, units, and system implementation, contingent upon the completion of requisite service through the date of such vesting. (4) The awards have vested based on a change of coverage. (5) The awards will vest based on achievement of certain revenue and recruiting targets. |
Summary of stock option activity | Outstanding Options Weighted- Weighted- Average Shares Average Remaining Aggregate Available for Number of Exercise Contractual Intrinsic Grant Shares Price Life Value (in thousands, except for contractual life and exercise price) (in years) Balance at December 31, 2020 3,148 6,707 $ 11.19 6.04 $ 592,468 Additional shares authorized 3,446 — $ — Options granted (391) 391 $ 104.03 Options exercised — (1,165) $ 10.14 Options forfeited/cancelled 33 (33) $ 15.00 RSUs granted (2,208) RSUs forfeited/cancelled 291 Balance at December 31, 2021 4,319 5,900 $ 17.54 5.40 $ 451,505 Exercisable at December 31, 2021 4,977 $ 10.65 4.90 $ 411,841 Vested and expected to vest at December 31, 2021 5,840 $ 17.17 5.37 $ 449,026 |
Restricted stock units | Weighted- Average Number of Grant Date Shares Fair Value (in thousands) Balance at December 31, 2020 4,188 $ 34.02 Granted 2,208 $ 106.74 Vested (2,117) $ 29.46 Canceled/Forfeited (291) $ 55.16 Balance at December 31, 2021 3,988 $ 74.33 |
Summary of stock-based compensation expenses | Year ended December 31, 2021 2020 2019 Employee Non-Employee Total Employee Non-Employee Total Employee Non-Employee Total (in thousands) Cost of revenues $ 4,811 $ — $ 4,811 $ 1,691 $ — $ 1,691 $ 905 $ 32 $ 937 Research and development 24,507 1,361 25,868 10,777 647 11,424 5,354 — 5,354 Selling, general and administrative 84,368 172 84,540 36,747 309 37,056 21,730 603 22,333 Total $ 113,686 $ 1,533 $ 115,219 $ 49,215 $ 956 $ 50,171 $ 27,989 $ 635 $ 28,624 |
Performance-based awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions used in valuation of fair value | December 31, December 31, 2021 2020 Risk-free interest rate 0.80 % — 1.52 % 0.54 % — 1.64 % Expected dividend yield — — Expected volatility 60 % 55 65 % Expected term (years) 7.25 — 10.0 5.25 — 7.25 |
Employee stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions used in valuation of fair value | Year ended December 31, 2021 2020 2019 Expected term (years) 5.11 — 10.00 5.22 — 10.00 5.23 — 10.00 Expected volatility 55.33 % — 63.30 % 49.94 % — 61.96 % 42.53 % — 45.84 % Expected dividend rate 0 % 0 % 0 % Risk-free interest rate 0.81 % — 1.67 % 0.31 % — 1.70 % 1.60 % — 2.60 % |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt | |
Schedule of outstanding Convertible Notes | December 31, 2021 (in thousands) Liability Component Outstanding Principal $ 287,500 Unamortized debt discount and debt issuance cost (7,106) Net carrying amount $ 280,394 |
Summary of interest expense | December 31, 2021 (in thousands) Cash interest expense Contractual interest expense $ 6,469 Non-cash interest expense Amortization of debt discount and debt issuance cost 1,227 Total interest expense $ 7,696 |
Disposal of Business (Tables)
Disposal of Business (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Disposal of Business | |
Schedule of computation of the gain realized from the disposal of business | December 31, 2019 (in thousands) Proceeds on disposal: $ 15,377 Assets sold: Accounts receivable, net 5,782 Equipment and inventory 419 Total assets sold $ 6,201 Liabilities assumed by purchaser: Deferred revenues 5,212 Net assets and liabilities sold $ 989 Net gain realized on disposal $ 14,388 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Taxes | |
Schedule of effective tax rates differing from U.S. federal statutory rate | December 31, 2021 2020 2019 (in thousands, except percentages) U.S. federal taxes (benefit) at statutory rate $ (98,931) (21.00) % $ (48,226) (21.00) % $ (25,794) (21.00) % State tax expense (29,206) (6.20) % (10,672) (4.65) % (6,607) (5.38) % Research and development credits (9,193) (1.95) % (3,964) (1.73) % (1,645) (1.34) % Stock-based compensation (46,128) (9.80) % (23,791) (10.36) % (7,544) (6.14) % Foreign tax 167 0.04 % 55 0.02 % 1,612 1.31 % Other nondeductible items 344 0.07 % 792 0.35 % 769 0.63 % Nondeductible officers' compensation 24,387 5.18 % 8,984 3.91 % 609 0.50 % Acquisition costs 8,901 1.89 % — — % — — % Change in valuation allowance 150,277 31.90 % 76,920 33.50 % 40,599 33.05 % Provision for income taxes $ 618 0.13 % $ 98 0.04 % $ 1,999 1.63 % |
Schedule of tax effects of temporary differences that give rise to significant portions of the deferred tax assets | December 31, 2021 2020 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 315,552 $ 177,899 Intangibles 4,443 — Research and development tax credit carryforwards 38,725 24,332 Reserves and accruals 14,098 21,770 Lease Liabilities 16,843 7,123 Deferred revenue 6,363 6,386 Stock-based compensation 15,928 10,673 Total deferred tax assets before valuation allowance 411,952 248,183 Less: valuation allowance (396,079) (222,521) 15,873 25,662 Deferred tax liabilities: Convertible debt — (19,143) Right-of-use lease assets (15,873) (6,519) Net deferred tax assets $ — $ — |
Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits | December 31, 2021 2020 2019 (in thousands) Balance at beginning of year $ 11,500 $ 8,619 $ 7,362 Additions based on tax positions related to the current year 6,017 2,889 1,426 Additions (reductions) for tax positions of prior years (3) (8) (169) Balance at end of year $ 17,514 $ 11,500 $ 8,619 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net Loss per Share | |
Basic and diluted net loss per share | December 31, 2021 2020 2019 (in thousands, except per share data) Numerator: Net loss used to compute net loss per share, basic and diluted $ (471,716) $ (229,743) $ (124,827) Denominator: Weighted-average number of shares used in computing net loss per share, basic and diluted 90,558 81,011 69,555 Net loss per share, basic and diluted $ (5.21) $ (2.84) $ (1.79) |
Total outstanding potentially dilutive shares | December 31, 2021 2020 2019 (in thousands) Options to purchase common stock 5,898 6,707 8,497 Restricted stock units 3,988 4,188 2,404 Employee stock purchase plan 33 37 32 Convertible Note 7,411 7,411 — Estimated earnout shares for an asset acquisition 353 — — 17,683 18,343 10,933 |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Dec. 31, 2021segmentsubsidiary | |
Description of Business | |
Number of operating segments | segment | 1 |
Number of subsidiaries | subsidiary | 3 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Liquidity Matters (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||
Jul. 31, 2021 | Sep. 30, 2020 | Apr. 30, 2020 | Oct. 31, 2019 | Apr. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 26, 2019 | Dec. 31, 2018 | |
Policies | ||||||||||
Net (loss) income | $ (471,716) | $ (229,743) | $ (124,827) | |||||||
Accumulated deficit | 1,394,836 | 929,318 | ||||||||
Cash, cash equivalents and restricted cash | 84,614 | 48,855 | $ 61,981 | $ 51,004 | ||||||
Marketable securities | 829,896 | 688,606 | ||||||||
Short-term Credit Line, outstanding balance | $ 50,052 | $ 50,054 | ||||||||
Common stock, shares issued | 5,175,000 | 4,791,665 | 5,714,286 | 5,263,158 | 95,140,000 | 86,223,000 | ||||
Stock issued (in dollars per share) | $ 113 | $ 35 | $ 19 | |||||||
Payment of offering expenses | $ 400 | $ 300 | $ 400 | $ 600 | ||||||
Proceeds from issuance of common stock | $ 551,200 | $ 271,000 | $ 216,200 | $ 108,100 | ||||||
Net proceeds | $ 278,316 | |||||||||
Loss on debt extinguishment | $ 5,848 | |||||||||
Convertible Notes | ||||||||||
Policies | ||||||||||
Outstanding principal balance | $ 287,500 | $ 287,500 | ||||||||
Per annum interest rate (as a percent) | 2.25% | 2.25% | ||||||||
Equity offering | ||||||||||
Policies | ||||||||||
Common stock, shares issued | 5,175,000 | 4,791,665 | 6,571,428 | 6,052,631 | ||||||
Stock issued (in dollars per share) | $ 113 | $ 60 | $ 35 | $ 19 | ||||||
Payment of offering expenses | $ 400 | $ 300 | $ 400 | $ 600 | ||||||
Proceeds from issuance of common stock | $ 551,200 | $ 271,000 | $ 216,200 | $ 108,100 | ||||||
Option for additional shares | ||||||||||
Policies | ||||||||||
Common stock, shares issued | 857,142 | 789,473 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Asset acquisition (Details) - In-process research and development acquisition $ in Millions | Sep. 10, 2021USD ($)shares |
Asset Acquisition [Line Items] | |
Asset acquisition, consideration transferred | $ 35.6 |
Issuance of common stock | shares | 276,346 |
Fair value of common stock issued | $ 30.9 |
Cash consideration | 3.9 |
Net liabilities assumed | 0.2 |
Acquisition related costs | 0.6 |
Value of additional shares potentially issuable | $ 35 |
Number of additional shares potentially issuable | shares | 269,547 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents in balance sheet | $ 84,386 | $ 48,668 | ||
Restricted cash, current portion in balance sheet | 228 | 187 | ||
Total cash, cash equivalents and restricted cash in statements of cash flows | $ 84,614 | $ 48,855 | $ 61,981 | $ 51,004 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Investments (Details) $ in Millions | Dec. 06, 2021USD ($) |
Summary of Significant Accounting Policies | |
Investment in "MyOme" equity securities without readily determinable fair value | $ 4 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Concentration (Details) - customer | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Sales | Customer | |||
Risk and Uncertainties | |||
Number of customers exceeding 10% of benchmark | 0 | 0 | 0 |
Accounts receivable | Credit | |||
Risk and Uncertainties | |||
Number of customers exceeding 10% of benchmark | 0 | 0 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Credit Losses (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Summary of Significant Accounting Policies | |
Beginning balance | $ 4,220 |
Provision for credit losses | (156) |
Write-offs | (1,635) |
Total | $ 2,429 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Advertising costs | $ 2.2 | $ 0.6 | $ 0.2 |
Capitalized software | $ 2.3 | 1.7 | |
Impairment of capitalized software | 0.1 | ||
Capitalized software held for internal use | |||
Estimated useful life (in years) | 3 years | ||
Amortized expense | $ 1.1 | 1 | 1.2 |
Shipping and handling costs | |||
Cost of revenues | $ 22 | $ 13.3 | $ 13.3 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - AOCIL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | $ 4,259 | $ 919 |
Ending balance | (2,287) | 4,259 |
Net unrealized gain (loss) on available-for-sale securities, net of tax | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Increase (decrease) in other comprehensive loss | $ (6,546) | $ 3,340 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Property (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Internal-use software | |
Property and Equipment | |
Estimated useful life | P3Y |
Machinery and equipment | Minimum | |
Property and Equipment | |
Estimated useful life | P3Y |
Machinery and equipment | Maximum | |
Property and Equipment | |
Estimated useful life | P5Y |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |||
Inventory obsolescence charges | $ 0.9 | $ 0.2 | $ 0.3 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Accounting Pronouncements (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Outstanding principle | $ 287,500 | |
Net carrying amount | 280,394 | |
Accumulated deficit | (1,394,836) | $ (929,318) |
Convertible Notes | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Interest expense | 7,696 | |
Outstanding principle | 287,500 | |
Previously reported | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Interest expense | $ 9,400 | |
Previously reported | Convertible Notes | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Outstanding principle | 287,500 | |
Unamortized debt discount and issuance cost | (85,007) | |
Net carrying amount | 202,493 | |
Additional paid-in-capital | (1,411,286) | |
Accumulated deficit | (929,318) | |
Adoption Adjustment | Cumulative effect adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Accumulated deficit | 404 | |
Accounting Standards Update 2020-06 | Convertible Notes | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Outstanding principle | 287,500 | |
Unamortized debt discount and issuance cost | (8,333) | |
Net carrying amount | 279,167 | |
Additional paid-in-capital | (1,328,410) | |
Accumulated deficit | (923,120) | |
Accounting Standards Update 2020-06 | Adoption Adjustment | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Reduction in net loss from continuing operations per share | $ 0.10 | |
Accounting Standards Update 2020-06 | Adoption Adjustment | Convertible Notes | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Unamortized debt discount and issuance cost | 76,674 | |
Net carrying amount | 76,674 | |
Additional paid-in-capital | 82,876 | |
Accumulated deficit | $ 6,198 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Jul. 31, 2021 | Feb. 28, 2019 | Mar. 31, 2021 | Jun. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | May 31, 2021 | Aug. 31, 2019 | |
Deferred revenue, Long-term | $ 21,318 | $ 22,805 | ||||||||
Other assets | 18,820 | 14,743 | ||||||||
Deferred revenue | 28,722 | 72,930 | ||||||||
Deferred revenue, current portion | 7,404 | 50,125 | ||||||||
Total revenues | 625,486 | 391,005 | $ 302,328 | |||||||
Deferred revenue, long-term portion | 21,318 | 22,805 | ||||||||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 37,784 | |||||||||
Product | ||||||||||
Revenue recognized | 5,700 | 5,400 | 2,400 | |||||||
Cost of revenues | 302,663 | 185,865 | 162,604 | |||||||
Total revenues | 567,149 | 367,211 | 269,881 | |||||||
Licensing and other | ||||||||||
Cost of revenues | 15,755 | 17,755 | 12,866 | |||||||
Total revenues | 58,337 | $ 23,794 | 32,447 | |||||||
Genetic testing services and provision of IVD kits | ||||||||||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 300 | |||||||||
Qiagen | ||||||||||
Proceeds from license agreement | $ 5,000 | |||||||||
Agreement term | 10 years | |||||||||
Revenue, remaining performance obligation | 40,000 | |||||||||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 28,600 | |||||||||
Qiagen | Volume, regulatory and commercial milestones | ||||||||||
Revenue, remaining performance obligation | $ 10,000 | |||||||||
Qiagen | Other licensing and other revenue | ||||||||||
Refunds of revenues previously deferred | $ 10,000 | |||||||||
Deferred revenue | $ 28,600 | |||||||||
BGI Genomics | ||||||||||
Proceeds from license agreement | $ 50,000 | $ 35,600 | ||||||||
Receivable | 2,500 | |||||||||
Deferred revenue, Long-term | 20,400 | |||||||||
Deferred revenue, current portion | 3,200 | |||||||||
Deferred revenue, long-term portion | 20,400 | |||||||||
BGI Genomics | Sequencing services | ||||||||||
Other assets | 6,000 | |||||||||
BGI Genomics | Sequencing products | ||||||||||
Other assets | 4,000 | |||||||||
BGI Genomics | Sequencing products and services | ||||||||||
Other assets | $ 10,000 | |||||||||
Foundation Medicine ("FMI") | ||||||||||
Proceeds from license agreement | 16,300 | |||||||||
Agreement term | 5 years | |||||||||
Automatic renewals, successive period thereafter | 1 year | |||||||||
Deferred revenue, Long-term | 900 | |||||||||
Deferred revenue, current portion | 500 | |||||||||
Deferred revenue, long-term portion | 900 | |||||||||
Foundation Medicine ("FMI") | Milestone payments | ||||||||||
Proceeds from license agreement | $ 1,000 | |||||||||
Deferred revenue, current portion | $ 2,000 | $ 1,000 | ||||||||
Foundation Medicine ("FMI") | Upfront licensing fees and prepaid revenues | ||||||||||
Initial transaction price | $ 13,300 | |||||||||
Foundation Medicine ("FMI") | Developmental, regulatory, and commercial milestones | ||||||||||
Initial transaction price | $ 32,000 | |||||||||
Foundation Medicine ("FMI") | Developmental performance milestones | ||||||||||
Proceeds from license agreement | 3,000 | |||||||||
Foundation Medicine ("FMI") | Licensing fees and prepaid revenue | ||||||||||
Proceeds from license agreement | $ 13,300 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 625,486 | $ 391,005 | $ 302,328 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 590,872 | 365,660 | 260,846 |
Americas, excluding U.S. | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 4,047 | 3,469 | 3,218 |
Europe, Middle East, India, and Africa | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 20,429 | 14,332 | 15,434 |
Asia Pacific and Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 10,138 | 7,544 | 22,830 |
Insurance carriers | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 492,563 | 300,220 | 210,919 |
Laboratory partners | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 100,019 | 58,196 | 59,876 |
Patients | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 32,904 | 32,589 | 31,533 |
Licensing and other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 58,337 | $ 23,794 | $ 32,447 |
Revenue Recognition - Accounts
Revenue Recognition - Accounts Receivable and Deferred Revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Accounts receivable | $ 122,074 | $ 78,565 |
Liabilities: | ||
Deferred revenue, current portion | 7,404 | 50,125 |
Deferred revenue, long-term portion | 21,318 | 22,805 |
Total deferred revenues | $ 28,722 | $ 72,930 |
Revenue Recognition - Changes i
Revenue Recognition - Changes in Balance of Deferred Revenues (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Revenue Recognition | |
Balance | $ 72,930 |
Increase in deferred revenues | 7,915 |
Reclasses from deferred revenues to other short-term liabilities | (10,080) |
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | (37,784) |
Revenue recognized from performance obligations satisfied within the same period | (4,259) |
Balance | $ 28,722 |
Revenue Recognition - Deferred
Revenue Recognition - Deferred Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | $ 37,784 | |
Deferred revenue, current portion | 7,404 | $ 50,125 |
Deferred revenue, Long-term | 21,318 | 22,805 |
Deferred revenue | 28,722 | $ 72,930 |
BGI Genomics | ||
Deferred revenue, current portion | 3,200 | |
Deferred revenue, Long-term | 20,400 | |
Foundation Medicine ("FMI") | ||
Deferred revenue, current portion | 500 | |
Deferred revenue, Long-term | 900 | |
BGI Genomics and Foundation Medicine ("FMI") | ||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 8,900 | |
Revenue recognized | 4,300 | |
Qiagen | ||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 28,600 | |
Genetic testing services and provision of IVD kits | ||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | $ 300 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | $ 715,700 | |
Recurring | Available-for-sale securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 839,937 | $ 717,596 |
Recurring | Money market deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 10,041 | 28,990 |
Recurring | U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 688,097 | 597,744 |
Recurring | Corporate bonds and notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 52,337 | 12,328 |
Recurring | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 89,462 | 78,534 |
Recurring | Level 1 | Available-for-sale securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 698,138 | 626,734 |
Recurring | Level 1 | Money market deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 10,041 | 28,990 |
Recurring | Level 1 | U.S. Treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 688,097 | 597,744 |
Recurring | Level 2 | Available-for-sale securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 141,799 | 90,862 |
Recurring | Level 2 | Corporate bonds and notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | 52,337 | 12,328 |
Recurring | Level 2 | Municipal securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total financial assets | $ 89,462 | $ 78,534 |
Financial Instruments (Details)
Financial Instruments (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021USD ($)position | Dec. 31, 2020USD ($) | |
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Estimated Fair Value | $ 829,896 | $ 688,606 |
Proceeds from investments sold | $ 187,600 | 30,100 |
Number of investments, unrealized loss position | position | 61 | |
Unrealized loss position | $ 604,700 | |
Amortized Cost | ||
Less than or equal to one year | 274,879 | |
Greater than one year but less than five years | 557,304 | |
Total | 832,183 | |
Fair Value | ||
Less than or equal to one year | 275,331 | |
Greater than or equal to one year but less than five years | 554,565 | |
Total | 829,896 | |
Available-for-sale securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 842,224 | 713,337 |
Gross Unrealized Gain | 1,342 | 4,310 |
Gross Unrealized Loss | (3,629) | (51) |
Estimated Fair Value | 839,937 | 717,596 |
Money market deposits | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 10,041 | 28,990 |
Estimated Fair Value | 10,041 | 28,990 |
U.S. Treasury securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 689,640 | 594,252 |
Gross Unrealized Gain | 1,081 | 3,512 |
Gross Unrealized Loss | (2,624) | (20) |
Estimated Fair Value | 688,097 | 597,744 |
Corporate bonds and notes | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 52,729 | 12,331 |
Gross Unrealized Gain | 2 | |
Gross Unrealized Loss | (392) | (5) |
Estimated Fair Value | 52,337 | 12,328 |
Municipal securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 89,814 | 77,764 |
Gross Unrealized Gain | 261 | 796 |
Gross Unrealized Loss | (613) | (26) |
Estimated Fair Value | 89,462 | 78,534 |
Cash equivalents | Available-for-sale securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Estimated Fair Value | 10,041 | 28,990 |
Short-term investments | Available-for-sale securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Estimated Fair Value | $ 829,896 | $ 688,606 |
Balance Sheet Components - Allo
Balance Sheet Components - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Allowance for doubtful accounts | |||
Beginning balance | $ 4,220 | $ 2,919 | $ 1,788 |
Cumulative-effect adjustment upon adoption of ASU 2016-13 | (1,394,836) | (929,318) | |
Provision for credit losses | (156) | 1,354 | 1,141 |
Write-offs | (1,635) | (457) | (10) |
Total | $ 2,429 | 4,220 | $ 2,919 |
Cumulative effect adjustment | Adoption Adjustment | |||
Allowance for doubtful accounts | |||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | $ 404 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2019 | Dec. 31, 2020 | |
Property and Equipment, net | |||
Property and equipment, gross | $ 84,929 | $ 83,402 | |
Less: Accumulated depreciation and amortization | (19,413) | (50,054) | |
Total Property and Equipment, net | 65,516 | 33,348 | |
Depreciation expense | 11,300 | ||
Assets written off | 41,900 | ||
Impairment charge | 0 | $ 1,671 | |
Impairment of leasehold improvements | 1,200 | ||
Impairment of capitalized software | 100 | ||
Impairment of right-of-use assets | 400 | ||
Selling, general and administrative | |||
Property and Equipment, net | |||
Impairment charge | $ 1,700 | ||
Machinery and equipment | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 33,722 | 51,001 | |
Furniture and fixtures | |||
Property and Equipment, net | |||
Property and equipment, gross | 1,376 | ||
Useful Life | 3 years | ||
Computer equipment | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 4,893 | 2,428 | |
Useful Life | 3 years | ||
Capitalized software held for internal use | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 2,395 | 7,417 | |
Useful Life | 3 years | ||
Leasehold improvements | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 13,640 | 14,810 | |
Construction-in-process | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 30,279 | $ 6,370 | |
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 - Accr
Balance Sheet Components - Accrued Compensation (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Balance Sheet Components | ||
Accrued paid time off | $ 2,567 | $ 2,260 |
Accrued commissions | 15,726 | 12,686 |
Accrued bonuses | 15,854 | 9,635 |
Other accrued compensation | 6,794 | 5,790 |
Total accrued compensation | $ 40,941 | $ 30,371 |
Balance Sheet Components - Othe
Balance Sheet Components - Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Balance Sheet Components | |||
Reserves for refunds to insurance carriers | $ 17,210 | $ 17,366 | $ 9,410 |
Accrued charges for third-party testing | 5,849 | 5,141 | |
Testing and laboratory materials from suppliers | 3,799 | 2,720 | |
Marketing and corporate affairs | 7,853 | 3,325 | |
Legal, audit and consulting fees | 11,758 | 4,189 | |
Accrued shipping charges | 969 | 1,604 | |
Sales tax payable | 2,230 | 1,723 | |
Accrued third-party service fees | 13,442 | 2,355 | |
Clinical trials, studies, and other development | 11,218 | 2,353 | |
Operating lease liabilities, current portion | 5,752 | 7,300 | |
Fixed asset purchases | 1,853 | 1,691 | |
Other accrued interest | 1,078 | 1,078 | |
Other accrued expenses | 10,342 | 9,562 | |
Total other accrued liabilities | $ 93,353 | $ 60,407 |
Balance Sheet Components - Rese
Balance Sheet Components - Reserve Balance and Activities for Refunds (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Balance Sheet Components | ||
Beginning balance | $ 17,366 | $ 9,410 |
Additional reserves | 16,340 | 19,427 |
Refunds to carriers | (10,784) | (6,066) |
Reserves released to revenue | (5,712) | (5,405) |
Ending balance | $ 17,210 | $ 17,366 |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)ft²leaselocation | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Operating lease liabilities, current portion included in other accrued liabilities | $ 5,752 | $ 7,300 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Accrued Liability, Current | Other Accrued Liability, Current | |
Operating lease liabilities, long-term portion | $ 61,036 | $ 21,246 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Operating lease liabilities, long-term portion | ||
Operating lease liabilities | $ 66,788 | ||
Noncash investing activities related to right-of-use assets | $ 44,400 | ||
Weighted average remaining lease term | 4 years 9 months 7 days | ||
Weighted average discount rate (as a percent) | 6.40% | ||
Lease expense | $ 10,900 | 7,800 | $ 7,800 |
Impairment of right-of-use assets | 400 | ||
Operating lease payments | $ 10,300 | $ 9,000 | $ 8,600 |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Term of lease | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Term of lease | 5 years | ||
Austin TX, Long-term Lease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 94,000 | ||
Number of office space locations | lease | 2 | ||
Term of lease | 132 months | ||
First Expansion Premises | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 32,500 | ||
Second Expansion Premises | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 65,222 | ||
Corporate Headquarters Lease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 113,000 | ||
Number of office space locations | location | 2 | ||
Term of lease | 84 months | ||
Renewal term of lease | 5 years | ||
"First Space" Sublease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 88,000 | ||
"Second Space" Sublease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 25,000 | ||
Corporate Headquarters Lease Amendment | |||
Lessee, Lease, Description [Line Items] | |||
Renewal term of lease | 48 months | ||
Lease expense | $ 9,300 | ||
Tukwila, WA Lease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 10,000 | ||
Term of lease | 62 months | ||
Renewal term of lease | 5 years | ||
San Carlos, CA Lease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 25,879 | ||
Term of lease | 48 months | ||
Noncash investing activities related to right-of-use assets | $ 29,700 | ||
Lease expense | $ 1,900 | ||
San Carlos, CA Lease | Rentable square feet surrendered in lease amendment | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 25,879 | ||
South San Francisco, CA Lease | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 11,395 | ||
Term of lease | 36 months | ||
Lease expense | $ 900 | ||
Laboratory space in Canada | |||
Lessee, Lease, Description [Line Items] | |||
Office space (area) | ft² | 7,107 | ||
Annual lease payment | $ 200 | ||
Term of lease | 24 months |
Leases - Payments (Details)
Leases - Payments (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Leases. | |
2022 | $ 9,980 |
2023 | 11,082 |
2024 | 12,258 |
2025 | 12,494 |
2026 | 12,845 |
2027 and thereafter | 27,331 |
Total | 85,990 |
Less: imputed interest | (19,202) |
Operating lease liabilities | $ 66,788 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | Sep. 28, 2021patent | Jun. 01, 2020patent | May 31, 2021patent | Oct. 31, 2020patent | Sep. 30, 2020patent | Jul. 31, 2020claim | Jun. 30, 2020patent | Mar. 31, 2020patentlawsuit | Jan. 31, 2020patent | Dec. 31, 2021USD ($) |
Other commitments | ||||||||||
Total | $ | $ 137,975 | |||||||||
Material suppliers | ||||||||||
Other commitments | ||||||||||
Total | $ | 16,040 | |||||||||
Application service providers | ||||||||||
Other commitments | ||||||||||
Total | $ | 35,279 | |||||||||
Earnouts for development with third party | ||||||||||
Other commitments | ||||||||||
Total | $ | 35,000 | |||||||||
Software development provider | ||||||||||
Other commitments | ||||||||||
Total | $ | 4,463 | |||||||||
Lease commitments | ||||||||||
Other commitments | ||||||||||
Total | $ | 29,683 | |||||||||
Other material suppliers | ||||||||||
Other commitments | ||||||||||
Total | $ | $ 17,510 | |||||||||
CareDX Patent Case | ||||||||||
Other commitments | ||||||||||
Number of invalid patents | 3 | |||||||||
Gain contingency, patents allegedly infringed, number | 2 | |||||||||
CareDX Patent Case | Patent infringement | ||||||||||
Other commitments | ||||||||||
Number of patent litigations | lawsuit | 2 | |||||||||
Loss contingency, patents allegedly infringed, number | 3 | |||||||||
ArcherDX Patent Case | ||||||||||
Other commitments | ||||||||||
Gain contingency, patents allegedly infringed, number | 5 | |||||||||
Ravgen Patent Case | ||||||||||
Other commitments | ||||||||||
Loss contingency, patents allegedly infringed, number | 2 | |||||||||
Progenity Patent Case | ||||||||||
Other commitments | ||||||||||
Gain contingency, patents allegedly infringed, number | 6 | |||||||||
Genosity Inc. Patent Case | ||||||||||
Other commitments | ||||||||||
Gain contingency, patents allegedly infringed, number | 1 | |||||||||
Inivitae Patent Case | Patent infringement | ||||||||||
Other commitments | ||||||||||
Gain contingency, patents allegedly infringed, number | 2 | |||||||||
Claims remaining | Progenity Patent Case | ||||||||||
Other commitments | ||||||||||
Number of patent litigations | claim | 3 | |||||||||
Claims dropped or dismissed | Progenity Patent Case | ||||||||||
Other commitments | ||||||||||
Number of patent litigations | claim | 3 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 6 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2021USD ($)shares | Apr. 30, 2021USD ($)shares | Oct. 31, 2020USD ($)shares | Apr. 30, 2020USD ($)shares | Dec. 31, 2021USD ($)periodshares | Dec. 31, 2020USD ($)shares | Dec. 31, 2019USD ($) | Jun. 30, 2015shares | |
Stock Based Compensation | ||||||||
Shares granted | 2,208,000 | |||||||
2015 Plan | ||||||||
Stock Based Compensation | ||||||||
Shares reserved for issuance | 3,451,495 | |||||||
Shares reserved for issuance as a proportion of common stock outstanding (as a percent) | 4.00% | |||||||
2015 Plan | Minimum | ||||||||
Stock Based Compensation | ||||||||
Shares reserved for issuance | 3,500,000 | |||||||
Employee stock purchase plan | ||||||||
Stock Based Compensation | ||||||||
Shares reserved for issuance | 893,548 | |||||||
Shares available for issuance | 2,859,711 | |||||||
Shares reserved for issuance as a proportion of 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 offering period, term | 27 months | |||||||
Number of expected offering periods each year | period | 2 | |||||||
Offering period, expected term | 6 months | |||||||
Number of Shares Purchased | 79,820 | 106,435 | 136,288 | 97,247 | ||||
Total Proceeds | $ | $ 7,465,000 | $ 6,085,000 | $ 4,052,000 | $ 3,062,000 | ||||
Maximum employee contribution of employee's cash compensation (as a percent) | 15.00% | |||||||
Employee stock purchase plan | Minimum | ||||||||
Stock Based Compensation | ||||||||
Shares reserved for issuance | 880,000 | |||||||
Performance-based awards | ||||||||
Stock Based Compensation | ||||||||
Stock-based compensation expense | $ | $ 50,300,000 | $ 17,200,000 | ||||||
Employee and non-employee stock options | ||||||||
Stock Based Compensation | ||||||||
Stock-based compensation expense | $ | $ 115,219,000 | $ 50,171,000 | $ 28,624,000 | |||||
Shares available for issuance | 4,319,000 | 3,148,000 | ||||||
Employee and non-employee stock options | 2015 Plan | ||||||||
Stock Based Compensation | ||||||||
Vesting period | 4 years | |||||||
Expiration period | 10 years | |||||||
Stock appreciation rights | 2015 Plan | ||||||||
Stock Based Compensation | ||||||||
Expiration period | 10 years | |||||||
Restricted stock units | ||||||||
Stock Based Compensation | ||||||||
Number of shares vested | 2,117 | |||||||
Shares granted | 2,208 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / shares | |
Stock Based Compensation | |||
RSUs granted (in shares) | (2,208,000) | ||
RSUs forfeited/cancelled (in shares) | 291,000 | ||
Employee and non-employee stock options | |||
Stock Based Compensation | |||
Shares available for grant, beginning balance | 3,148,000 | ||
Additional shares authorized | 3,446,000 | ||
Options granted (in shares) | (391,000) | ||
Options forfeited (in shares) | 33,000 | ||
Shares available for grant, end balance | 4,319,000 | 3,148,000 | |
Number of shares | |||
Outstanding, beginning balance (in shares) | 6,707,000 | ||
Options granted (in shares) | 391,000 | ||
Options exercised (in shares) | (1,165,000) | ||
Options forfeited (in shares) | (33,000) | ||
Outstanding, end balance (in shares) | 5,900,000 | 6,707,000 | |
Exercisable (in shares) | 4,977,000 | ||
Vested and expected to vest (in shares) | 5,840,000 | ||
Weighted-Average Exercise Price | |||
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 11.19 | ||
Granted (in dollars per share) | $ / shares | 104.03 | ||
Exercised (in dollars per share) | $ / shares | 10.14 | ||
Forfeited (in dollars per share) | $ / shares | 15 | ||
Outstanding, end balance (in dollars per share) | $ / shares | 17.54 | $ 11.19 | |
Exercisable (in dollars per share) | $ / shares | 10.65 | ||
Vested and expected to vest (in dollars per share) | $ / shares | $ 17.17 | ||
Additional disclosures | |||
Weighted average contractual term, options outstanding | 5 years 4 months 24 days | 6 years 14 days | |
Exercisable (in years) | 4 years 10 months 24 days | ||
Vested and expected to vest (in years) | 5 years 4 months 13 days | ||
Aggregate intrinsic value, options outstanding | $ | $ 451,505 | $ 592,468 | |
Aggregate intrinsic value, options exercisable | $ | 411,841 | ||
Aggregate intrinsic value, vested and expected to vest | $ | 449,026 | ||
Aggregate intrinsic value, options exercised | $ | 97,000 | 184,700 | $ 70,000 |
Fair value, options vested | $ | $ 46,000 | $ 52,500,000 | $ 11,000 |
Weighted-average grant date fair value, options granted | $ / shares | $ 104.03 | $ 27.70 | $ 8.01 |
Non-employee stock options | |||
Stock Based Compensation | |||
Options granted (in shares) | (31,553) | ||
Number of shares | |||
Options granted (in shares) | 31,553 | ||
Additional disclosures | |||
Options unvested (in shares) | 730 | ||
Restricted stock units | |||
Stock Based Compensation | |||
RSUs granted (in shares) | (2,208) | ||
RSUs forfeited/cancelled (in shares) | 291 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance-based Awards (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
RSUs Granted (in shares) | 2,208,000 | ||||||||||||
Performance-based awards | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Stock-based compensation expense | $ 50,300 | $ 17,200 | |||||||||||
Restricted stock units | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
RSUs Granted (in shares) | 2,208 | ||||||||||||
Vested (in shares) | 2,117 | ||||||||||||
Restricted stock units | Fair Market Value | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
RSUs Granted (in shares) | 205,000 | 7,000 | 279,000 | 22,000 | 27,000 | 21,000 | 436,000 | 188,000 | |||||
Vested (in shares) | 10,000 | 2,000 | 17,000 | 21,000 | 408,000 | 81,000 | |||||||
Restricted stock units | Monte-Carlo | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
RSUs Granted (in shares) | 20,000 | 125,000 | 32,000 | 300,000 | 50,000 | 300,000 | |||||||
Vested (in shares) | 19,000 | 289,000 | 50,000 | 300,000 | |||||||||
Employee and non-employee stock options | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options Granted (in shares) | 391,000 | ||||||||||||
Stock-based compensation expense | $ 115,219 | $ 50,171 | $ 28,624 | ||||||||||
Employee and non-employee stock options | Black-Scholes Merton | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options Granted (in shares) | 29,000 | 10,000 | 129,000 | ||||||||||
Options Vested (in shares) | 10,000 | 129,000 | |||||||||||
Employee and non-employee stock options | Monte-Carlo | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||
Options Granted (in shares) | 163,000 | 150,000 | 150,000 | 200,000 | |||||||||
Options Vested (in shares) | 130,000 | 200,000 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) - shares | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Valuation of Stock Option Grants to Employees | |||
Expected volatility, minimum | 55.00% | ||
Minimum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 5 years 3 months | ||
Performance-based awards | |||
Valuation of Stock Option Grants to Employees | |||
Risk free interest rate, minimum | 0.80% | 0.54% | |
Risk free interest rate, maximum | 1.52% | 1.64% | |
Expected volatility, maximum | 60.00% | 65.00% | |
Performance-based awards | Minimum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 7 years 3 months | ||
Performance-based awards | Maximum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 10 years | 7 years 3 months | |
Employee and non-employee stock options | |||
Stock Based Compensation | |||
Options granted (in shares) | 391,000 | ||
Employee stock options | |||
Valuation of Stock Option Grants to Employees | |||
Risk free interest rate, minimum | 0.81% | 0.31% | 1.60% |
Risk free interest rate, maximum | 1.67% | 1.70% | 2.60% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility, minimum | 55.33% | 49.94% | 42.53% |
Expected volatility, maximum | 63.30% | 61.96% | 45.84% |
Employee stock options | Minimum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 5 years 1 month 9 days | 5 years 2 months 19 days | 5 years 2 months 23 days |
Employee stock options | Maximum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 10 years | 10 years | 10 years |
Non-employee stock options | |||
Stock Based Compensation | |||
Options granted (in shares) | 31,553 | ||
Options unvested (in shares) | 730 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) | 12 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Shares | |
Granted (in shares) | 2,208,000 |
Canceled/Forfeited (in shares) | (291,000) |
Restricted stock units | |
Shares | |
Balance (in shares) | 4,188 |
Granted (in shares) | 2,208 |
Vested (in shares) | (2,117) |
Canceled/Forfeited (in shares) | (291) |
Balance (in shares) | 3,988 |
Weighted Average Grant Date Fair Value | |
Balance (in dollars per share) | $ / shares | $ 34.02 |
Granted (in dollars per share) | $ / shares | 106.74 |
Vested (in dollars per share) | $ / shares | 29.46 |
Canceled/Forfeited (in dollars per share) | $ / shares | 55.16 |
Balance (in dollars per share) | $ / shares | $ 74.33 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Employee and non-employee stock options | |||
Stock based compensation expense | |||
Options granted (in shares) | 391,000 | ||
Stock-based compensation expense | $ 115,219 | $ 50,171 | $ 28,624 |
Unrecognized compensation expense | $ 233,300 | ||
Unrecognized compensation expense, weighted average period of recognition | 2 years 10 months 24 days | ||
Employee and non-employee stock options | Cost of revenues | |||
Stock based compensation expense | |||
Stock-based compensation expense | $ 4,811 | 1,691 | 937 |
Employee and non-employee stock options | Research and development | |||
Stock based compensation expense | |||
Stock-based compensation expense | 25,868 | 11,424 | 5,354 |
Employee and non-employee stock options | Selling, general and administrative | |||
Stock based compensation expense | |||
Stock-based compensation expense | 84,540 | 37,056 | 22,333 |
Employee stock options | |||
Stock based compensation expense | |||
Stock-based compensation expense | 113,686 | 49,215 | 27,989 |
Employee stock options | Cost of revenues | |||
Stock based compensation expense | |||
Stock-based compensation expense | 4,811 | 1,691 | 905 |
Employee stock options | Research and development | |||
Stock based compensation expense | |||
Stock-based compensation expense | 24,507 | 10,777 | 5,354 |
Employee stock options | Selling, general and administrative | |||
Stock based compensation expense | |||
Stock-based compensation expense | $ 84,368 | 36,747 | 21,730 |
Non-employee stock options | |||
Stock based compensation expense | |||
Options granted (in shares) | 31,553 | ||
Options unvested (in shares) | 730 | ||
Stock-based compensation expense | $ 1,533 | 956 | 635 |
Non-employee stock options | Cost of revenues | |||
Stock based compensation expense | |||
Stock-based compensation expense | 32 | ||
Non-employee stock options | Research and development | |||
Stock based compensation expense | |||
Stock-based compensation expense | 1,361 | 647 | |
Non-employee stock options | Selling, general and administrative | |||
Stock based compensation expense | |||
Stock-based compensation expense | $ 172 | $ 309 | $ 603 |
Debt (Details)
Debt (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Apr. 30, 2020USD ($) | Dec. 31, 2021USD ($)D$ / sharesshares | Dec. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)D$ / sharesshares | Dec. 31, 2019USD ($) | Jul. 31, 2021$ / sharesshares | Sep. 30, 2020$ / sharesshares | Oct. 31, 2019$ / sharesshares | Apr. 30, 2019$ / sharesshares | Sep. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||||||||||
Proceeds from Convertible Note, net of issuance costs | $ 278,316,000 | |||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Issuance of common stock to Orbimed | $ 507,000 | |||||||||
Common stock, shares issued | shares | 95,140,000 | 95,140,000 | 86,223,000 | 5,175,000 | 4,791,665 | 5,714,286 | 5,263,158 | |||
Stock issued (in dollars per share) | $ / shares | $ 113 | $ 35 | $ 19 | |||||||
Stock price (in dollars per share) | $ / shares | $ 60 | |||||||||
Carrying value | $ 280,394,000 | $ 280,394,000 | ||||||||
Debt, repayment amount | $ 79,200,000 | |||||||||
Accrued Interest | 1,078,000 | 1,078,000 | 1,078,000 | |||||||
Amortization of debt discount and issuance cost | 1,227,000 | 149,000 | 457,000 | |||||||
Interest expense | 8,305,000 | $ 15,082,000 | 10,693,000 | |||||||
Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Aggregate principal amount | $ 287,500,000 | 287,500,000 | $ 287,500,000 | |||||||
Per annum interest rate (as a percent) | 2.25% | 2.25% | ||||||||
Interest expense | $ 7,696,000 | |||||||||
Debt instrument, term | 7 years | |||||||||
Effective interest rate (as a percent) | 2.72% | |||||||||
Principal amount per convertible note | $ 1,000 | $ 1,000 | ||||||||
Threshold business days | D | 5 | |||||||||
Conversion price (in dollars per share) | $ / shares | $ 38.79 | |||||||||
Initial conversion rate | 25.7785 | |||||||||
Convertible to shares of common stock | 7,411,704 | |||||||||
Percentage of principal amount converted | 100.00% | |||||||||
Convertible Notes | Accounting Standards Update 2020-06 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Carrying value | $ 279,167,000 | |||||||||
Commencing after September 30, 2020 | Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | D | 30 | |||||||||
Percentage of conversion price | 130.00% | |||||||||
5 consecutive trading day period | Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | D | 5 | |||||||||
Percentage of conversion price | 98.00% | |||||||||
Redeemable for cash on or after May 2024 | Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | D | 30 | |||||||||
Percentage of conversion price | 130.00% | |||||||||
Percentage of principal amount converted | 100.00% | |||||||||
Level 2 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of long-term debt | $ 715,700,000 | $ 715,700,000 | ||||||||
Minimum | Commencing after September 30, 2020 | Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | D | 20 | |||||||||
Minimum | Redeemable for cash on or after May 2024 | Convertible Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | D | 20 | |||||||||
Line Of Credit-UBS | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing capacity | $ 50,000,000 | |||||||||
Outstanding balance | $ 49,000,000 | 49,000,000 | ||||||||
Interest expense | 600,000 | $ 800,000 | 1,700,000 | |||||||
Interest paid | 600,000 | $ 800,000 | $ 1,700,000 | |||||||
Debt, interest accrued | $ 1,100,000 | |||||||||
Line Of Credit-UBS | LIBOR | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Spread on interest rate (as a percent) | 1.10% |
Debt - Carrying Amount (Details
Debt - Carrying Amount (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Debt | ||
Debt principal balance | $ 287,500 | |
Loss on debt extinguishment | $ 5,848 |
Debt - Discount and Issuance Co
Debt - Discount and Issuance Costs (Details) - Convertible Notes | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Effective interest rate (as a percent) | 2.72% | |
Debt instrument, term | 7 years |
Debt - Convertible Notes Balanc
Debt - Convertible Notes Balances (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Outstanding principle | $ 287,500 |
Unamortized debt discount and debt issuance cost | (7,106) |
Net carrying amount | 280,394 |
Convertible Notes | |
Outstanding principle | $ 287,500 |
Debt - Interest Expense Recogni
Debt - Interest Expense Recognized Related To Convertible Notes (Details) - Convertible Notes $ in Thousands | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Cash interest expense | |
Contractual interest expense | $ 6,469 |
Non-cash interest expense | |
Amortization of debt discount and debt issuance cost | 1,227 |
Total interest expense | $ 7,696 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 10, 2021 | Jul. 31, 2021 | Sep. 30, 2020 | Oct. 31, 2019 | Apr. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 26, 2019 | Dec. 31, 2018 |
Stock price (in dollars per share) | $ 60 | |||||||||
Stock issued (in dollars per share) | $ 113 | $ 35 | $ 19 | |||||||
Payment of offering expenses | $ 400 | $ 300 | $ 400 | $ 600 | ||||||
Proceeds from issuance of common stock | $ 551,200 | $ 271,000 | $ 216,200 | $ 108,100 | ||||||
Research and development | $ 264,208 | $ 100,035 | $ 51,357 | |||||||
Preferred stock, shares authorized | 50,000,000 | |||||||||
Preferred stock, shares issued | 0 | |||||||||
Preferred stock, shares outstanding | 0 | |||||||||
Common stock, shares authorized | 750,000,000 | 750,000,000 | ||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||||||||
Common stock, shares issued | 5,175,000 | 4,791,665 | 5,714,286 | 5,263,158 | 95,140,000 | 86,223,000 | ||||
Common stock, shares outstanding | 95,140,000 | 86,223,000 | ||||||||
In-process research and development acquisition | ||||||||||
Asset acquisition, consideration transferred | $ 35,600 | |||||||||
Issuance of common stock | 276,346 | |||||||||
Fair value of common stock issued | $ 30,900 | |||||||||
Cash consideration | 3,900 | |||||||||
Net liabilities assumed | 200 | |||||||||
Acquisition related costs | 600 | |||||||||
Value of additional shares potentially issuable | $ 35,000 | |||||||||
Number of additional shares potentially issuable | 269,547 | |||||||||
Option for additional shares | ||||||||||
Common stock, shares issued | 857,142 | 789,473 | ||||||||
Common stock | ||||||||||
Common stock, shares issued | 95,140,000 | 86,223,000 | 78,005,000 | 62,083,000 |
Disposal of Business (Details)
Disposal of Business (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2021 | Dec. 31, 2019 | Sep. 30, 2019 | Sep. 11, 2019 | |
Gain from disposal of business | $ 14,388 | |||
Impairment charge | $ 0 | 1,671 | ||
Impairment of leasehold improvements | 1,200 | |||
Impairment of capitalized software | 100 | |||
Impairment of right-of-use asset | 400 | |||
Exit or disposal activity | 400 | |||
Termination benefits | 100 | |||
Early contract termination fee | $ 300 | |||
Selling, general and administrative | ||||
Impairment charge | 1,700 | |||
Evercord | ||||
Estimated consideration | 15,377 | $ 15,400 | ||
Cash consideration | 9,700 | |||
Accounts receivable | 5,782 | 1,000 | ||
Assets | 6,201 | |||
Deferred revenues | $ 5,200 | |||
Gain from disposal of business | $ 14,388 | |||
Contingent consideration | Evercord | ||||
Total consideration | $ 4,700 |
Disposal of Business - Summary
Disposal of Business - Summary of Gain from Disposal (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Sep. 30, 2019 | |
Net gain realized on disposal | $ 14,388 | |
Evercord | ||
Proceeds on disposal: | 15,377 | $ 15,400 |
Accounts receivable, net | 5,782 | $ 1,000 |
Equipment and inventory | 419 | |
Total assets sold | 6,201 | |
Deferred revenues | 5,212 | |
Net assets and liabilities sold | 989 | |
Net gain realized on disposal | $ 14,388 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rates (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effective tax rates differing from U.S. federal statutory rate | |||
U.S. Federal taxes (benefit) at statutory rate | $ (98,931,000) | $ (48,226,000) | $ (25,794,000) |
State tax expense | (29,206,000) | (10,672,000) | (6,607,000) |
Research and development credits | (9,193,000) | (3,964,000) | (1,645,000) |
Stock-based compensation | (46,128,000) | (23,791,000) | (7,544,000) |
Foreign tax | 167,000 | 55,000 | 1,612,000 |
Other nondeductible items | 344,000 | 792,000 | 769,000 |
Nondeductible officers' compensation | 24,387,000 | 8,984,000 | 609,000 |
Acquisition costs | 8,901,000 | ||
Change in valuation allowance | 150,277,000 | 76,920,000 | 40,599,000 |
Provision for income taxes | $ 618,000 | $ 98,000 | $ 1,999,000 |
U.S. Federal taxes (benefit) at statutory rate (as a percent) | (21.00%) | (21.00%) | (21.00%) |
State tax expense (as a percent) | (6.20%) | (4.65%) | (5.38%) |
Research and development credits (as a percent) | (1.95%) | (1.73%) | (1.34%) |
Stock-based compensation (as a percent) | (9.80%) | (10.36%) | (6.14%) |
Foreign tax differential (as a percent) | 0.04% | 0.02% | 1.31% |
Other nondeductible items (as a percent) | 0.07% | 0.35% | 0.63% |
Nondeductible officers' compensation (as a percent) | 5.18% | 3.91% | 0.50% |
Acquisition costs (as a percent) | 1.89% | ||
Change in valuation allowance (as a percent) | 31.90% | 33.50% | 33.05% |
Provision for income taxes (as a percent) | 0.13% | 0.04% | 1.63% |
Income tax expense | $ 618,000 | $ 98,000 | $ 1,999,000 |
Foreign withholding tax expense | 1,900,000 | ||
Foreign income tax expense | 100,000 | ||
State income tax expense | 300,000 | 9,000 | $ 40,000 |
Clinical testing and software licensing | |||
Effective tax rates differing from U.S. federal statutory rate | |||
Foreign income tax expense | $ 300,000 | $ 100,000 |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | |||
Valuation allowance | $ 396,079 | $ 222,521 | |
Effect Of Tax Cuts And Jobs Act Of 2017 [Abstract] | |||
Corporate tax rate | 21.00% | 21.00% | 21.00% |
Deferred tax assets | |||
Net operating loss carryforwards | $ 315,552 | $ 177,899 | |
Intangibles | 4,443 | ||
Research and development tax credit carryforwards | 38,725 | 24,332 | |
Reserves and accruals | 14,098 | 21,770 | |
Lease Liabilities | 16,843 | 7,123 | |
Deferred revenue | 6,363 | 6,386 | |
Stock based compensation | 15,928 | 10,673 | |
Total deferred tax assets before valuation allowance | 411,952 | 248,183 | |
Less: valuation allowance | (396,079) | (222,521) | |
Deferred tax assets, net | 15,873 | 25,662 | |
Deferred tax liabilities | |||
Convertible debt | (19,143) | ||
Right-of-use lease assets | (15,873) | (6,519) | |
Net deferred tax assets |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) $ in Millions | Dec. 31, 2021USD ($) |
Federal | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 1,300 |
State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 796.7 |
Foreign | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 4 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) $ in Millions | Dec. 31, 2021USD ($) |
Tax Credit Carryforward [Line Items] | |
Taxable income required for full realization of deferred tax assets | $ 1,500 |
Federal | Research and development tax credit carryforward | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | 34.5 |
Federal | Tax credit that can be carried forward indefinitely | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | 950.2 |
State | Research and development tax credit carryforward | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | $ 23 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes [Line Items] | |||
Interest and penalties accrued | $ 0 | ||
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | |||
Balance at beginning of year | 11,500 | $ 8,619 | $ 7,362 |
Additions based on tax positions related to the current year | 6,017 | 2,889 | 1,426 |
Additions (reductions) for tax positions of prior years | (3) | (8) | (169) |
Balance at end of year | 17,514 | 11,500 | 8,619 |
Research and development tax credit carryforward | |||
Income Taxes [Line Items] | |||
Unrecognized tax benefits increase | $ 6,000 | $ 2,900 | $ 1,300 |
Net Loss per Share - Loss per S
Net Loss per Share - Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Numerator: | |||
Net loss used to compute net loss per share, basic and diluted | $ (471,716) | $ (229,743) | $ (124,827) |
Denominator: | |||
Weighted-average number of shares used in computing net loss per share, basic | 90,558 | 81,011 | 69,555 |
Weighted-average number of shares used in computing net loss per share, diluted | 90,558 | 81,011 | 69,555 |
Net loss per share, basic (in dollars per share) | $ (5.21) | $ (2.84) | $ (1.79) |
Net loss per share, diluted (in dollars per share) | $ (5.21) | $ (2.84) | $ (1.79) |
Potentially dilutive shares not included in diluted per share calculation | 17,683 | 18,343 | 10,933 |
Convertible Notes | |||
Denominator: | |||
Convertible, If-converted value in excess of principal | $ 441,900 | ||
Potentially dilutive shares not included in diluted per share calculation | 7,411 | 7,411 |
Net Loss per Share - Potentiall
Net Loss per Share - Potentially Dilutive Shares (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 17,683 | 18,343 | 10,933 |
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 calculation | 5,898 | 6,707 | 8,497 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 3,988 | 4,188 | 2,404 |
Employee stock purchase plan | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 33 | 37 | 32 |
Convertible Notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 7,411 | 7,411 | |
Estimated earnout shares for an asset acquisition | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 353 |