Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 23, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
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 | 980-9190 | ||
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 | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 5,260 | ||
Entity Common Stock, Shares Outstanding | 120,757,877 | ||
Entity Central Index Key | 0001604821 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Location | San Mateo, California | ||
Auditor Firm ID | 42 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash, cash equivalents and restricted cash | $ 642,095 | $ 466,091 |
Short-term investments | 236,882 | 432,301 |
Accounts receivable, net of allowance of $6,481 in 2023 and $3,830 in 2022 | 278,289 | 244,385 |
Inventory | 40,759 | 35,406 |
Prepaid expenses and other current assets, net | 60,524 | 33,634 |
Total current assets | 1,258,549 | 1,211,817 |
Property and equipment, net | 111,210 | 92,453 |
Operating lease right-of-use assets | 56,537 | 71,874 |
Other assets | 15,403 | 18,330 |
Total assets | 1,441,699 | 1,394,474 |
Current liabilities: | ||
Accounts payable | 14,998 | 31,148 |
Accrued compensation | 45,857 | 44,010 |
Other accrued liabilities | 149,405 | 144,214 |
Deferred revenue, current portion | 16,612 | 10,777 |
Short-term debt financing | 80,402 | 80,350 |
Total current liabilities | 307,274 | 310,499 |
Long-term debt financing | 282,945 | 281,653 |
Deferred revenue, long-term portion | 19,128 | 20,001 |
Operating lease liabilities, long-term portion | 67,025 | 76,577 |
Total liabilities | 676,372 | 688,730 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value: 750,000 shares authorized at both December 31, 2023 and 2022; 119,581 and 111,255 shares issued and outstanding at December 31, 2023 and 2022, respectively | 11 | 11 |
Additional paid in capital | 3,145,837 | 2,664,730 |
Accumulated deficit | (2,377,436) | (1,942,635) |
Accumulated other comprehensive loss | (3,085) | (16,362) |
Total stockholders' equity | 765,327 | 705,744 |
Total liabilities and stockholders' equity | $ 1,441,699 | $ 1,394,474 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Consolidated Balance Sheets | ||
Allowances on accounts receivable | $ 6,481 | $ 3,830 |
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 | 119,581,000 | 111,255,000 |
Common stock, shares outstanding | 119,581,000 | 111,255,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | |||
Total revenues | $ 1,082,571 | $ 820,222 | $ 625,486 |
Cost and expenses | |||
Research and development | 320,678 | 316,415 | 264,208 |
Selling, general and administrative | 618,307 | 588,591 | 511,034 |
Total cost and expenses | 1,528,816 | 1,361,262 | 1,093,660 |
Loss from operations | (446,245) | (541,040) | (468,174) |
Interest expense | (12,638) | (9,319) | (8,305) |
Interest and other income, net | 24,353 | 3,538 | 5,381 |
Loss before income taxes | (434,530) | (546,821) | (471,098) |
Income tax expense | (271) | (978) | (618) |
Net loss | (434,801) | (547,799) | (471,716) |
Unrealized gain (loss) on available-for-sale securities, net of tax | 13,277 | (14,075) | (6,546) |
Comprehensive loss | $ (421,524) | $ (561,874) | $ (478,262) |
Net Loss per Share | |||
Basic (in dollars per share) | $ (3.78) | $ (5.57) | $ (5.21) |
Diluted (in dollars per share) | $ (3.78) | $ (5.57) | $ (5.21) |
Weighted-average number of shares used in computing basic and diluted net loss per share: | |||
Basic (in shares) | 114,997 | 98,408 | 90,558 |
Diluted (in shares) | 114,997 | 98,408 | 90,558 |
Product | |||
Revenues | |||
Total revenues | $ 1,068,522 | $ 797,307 | $ 580,080 |
Cost and expenses | |||
Cost of revenues | 588,564 | 453,632 | 315,195 |
Licensing and other | |||
Revenues | |||
Total revenues | 14,049 | 22,915 | 45,406 |
Cost and expenses | |||
Cost of revenues | $ 1,267 | $ 2,624 | $ 3,223 |
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, 2020 | $ 9 | $ 1,411,286 | $ 4,259 | $ (929,318) | $ 486,236 |
Balance (in shares) at Dec. 31, 2020 | 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 | ||||
Issuance of common stock for IPR&D | 30,601 | 30,601 | |||
Issuance of common stock for IPR&D (in shares) | 274,000 | ||||
Vesting of restricted stock units (in shares) | 2,117,000 | ||||
Stock based compensation | 115,219 | 115,219 | |||
Unrealized gain (loss) on available-for sale securities | (6,546) | (6,546) | |||
Cumulative-effect adjustment upon adoption | (82,876) | 6,198 | (76,678) | ||
Issuance of common stock for public offering, net | $ 1 | 550,821 | 550,822 | ||
Issuance of common stock for public offering, net (in shares) | 5,175,000 | ||||
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 | ||||
Issuance of common stock upon exercise of stock options | 6,411 | 6,411 | |||
Issuance of common stock upon exercise of stock options (in shares) | 828,000 | ||||
Issuance of common stock under employee stock purchase plan | 13,037 | 13,037 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 437,000 | ||||
Issuance of common stock for IPR&D | 9,290 | 9,290 | |||
Issuance of common stock for IPR&D (in shares) | 225,000 | ||||
Vesting of restricted stock units (in shares) | 1,480,000 | ||||
Stock based compensation | 152,384 | 152,384 | |||
Unrealized gain (loss) on available-for sale securities | (14,075) | (14,075) | |||
Issuance of common stock for public offering, net | $ 1 | 433,191 | 433,192 | ||
Issuance of common stock for public offering, net (in shares) | 13,145,000 | ||||
Net loss | (547,799) | (547,799) | |||
Balance at Dec. 31, 2022 | $ 11 | 2,664,730 | (16,362) | (1,942,635) | $ 705,744 |
Balance (in shares) at Dec. 31, 2022 | 111,255,000 | 111,255,000 | |||
Issuance of common stock upon exercise of stock options | 3,892 | $ 3,892 | |||
Issuance of common stock upon exercise of stock options (in shares) | 298,000 | ||||
Issuance of common stock under employee stock purchase plan | 15,128 | 15,128 | |||
Issuance of common stock under employee stock purchase plan (in shares) | 392,000 | ||||
Issuance of common stock for IPR&D | $ 336 | 14,435 | 14,435 | ||
Vesting of restricted stock units (in shares) | 2,401,000 | ||||
Stock based compensation | 192,437 | 192,437 | |||
Issuance of common stock for bonuses | 19,774 | 19,774 | |||
Issuance of common stock for bonuses (in shares) | 349,000 | ||||
Unrealized gain (loss) on available-for sale securities | 13,277 | 13,277 | |||
Issuance of common stock for public offering, net | 235,441 | 235,441 | |||
Issuance of common stock for public offering, net (in shares) | 4,550,000 | ||||
Net loss | (434,801) | (434,801) | |||
Balance at Dec. 31, 2023 | $ 11 | $ 3,145,837 | $ (3,085) | $ (2,377,436) | $ 765,327 |
Balance (in shares) at Dec. 31, 2023 | 119,581,000 | 119,581,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities: | |||
Net loss | $ (434,801) | $ (547,799) | $ (471,716) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 24,097 | 16,702 | 11,254 |
Expensed in-process research and development | 2,679 | 9,290 | 35,604 |
Non-cash lease expense | 14,519 | 13,770 | 10,926 |
Stock-based compensation | 191,808 | 152,384 | 115,219 |
Premium amortization and discount accretion on investment securities | 1,087 | 4,837 | 7,814 |
(Gain) loss on investments | 906 | (46) | |
Foreign exchange adjustment | 265 | (2) | (11) |
Amortization of debt discount and issuance cost | 1,292 | 1,259 | 1,227 |
Non-cash interest expense | 52 | 302 | 94 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (33,904) | (122,311) | (43,509) |
Inventory | (5,353) | (8,497) | (6,878) |
Operating lease right-of-use assets | 8,354 | 622 | |
Prepaid expenses and other assets | (26,072) | (1,202) | (3,182) |
Accounts payable | (15,458) | 5,462 | 19,222 |
Accrued compensation | 21,619 | 3,069 | 10,569 |
Operating lease liabilities | (12,448) | (9,999) | (10,296) |
Other accrued liabilities | 10,347 | 47,650 | 32,682 |
Deferred revenue | 4,962 | 2,056 | (44,209) |
Net cash used in operating activities | (246,955) | (431,501) | (335,236) |
Investing activities: | |||
Purchases of investments | (98,303) | (86,947) | (876,095) |
Proceeds from sale of investments | 248,482 | 187,580 | |
Proceeds from maturity of investments | 306,000 | 216,500 | 532,910 |
Purchases of property and equipment, net | (39,199) | (47,697) | (41,030) |
Cash paid for acquisition of an asset | (8,558) | ||
Net cash provided by (used in) investing activities | 168,498 | 330,338 | (205,193) |
Financing activities: | |||
Proceeds from exercise of stock options | 3,892 | 6,411 | 11,816 |
Proceeds from issuance of common stock under employee stock purchase plan | 15,128 | 13,037 | 13,550 |
Proceeds from public offering, net of issuance cost | 235,441 | 433,192 | 550,822 |
Proceeds from Credit Line | 30,000 | ||
Net cash provided by financing activities | 254,461 | 482,640 | 576,188 |
Net change in cash, cash equivalents and restricted cash | 176,004 | 381,477 | 35,759 |
Beginning cash, cash equivalents and restricted cash | 466,091 | 84,614 | 48,855 |
Ending cash, cash equivalents and restricted cash | 642,095 | 466,091 | 84,614 |
Supplemental disclosure of cash flow information: | |||
Cash paid for income taxes | 295 | 549 | 283 |
Cash paid for interest | 11,346 | 8,060 | 7,077 |
Non-cash investing and financing activities: | |||
Purchases of property and equipment in accounts payable and accruals | 1,582 | $ (1,940) | $ 5,173 |
Issuance of common stock for IPR&D milestone | 14,435 | ||
Issuance of common stock for bonuses | 19,774 | ||
Stock-based compensation included in capitalized software development costs | $ 629 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2023 | |
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 focuses on applying its technology to three main areas of healthcare – women’s health, oncology and organ health. In the women’s health space, the Company 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. In oncology, the Company commercializes, among others, a personalized blood-based DNA test to detect molecular residual disease and monitor for disease recurrence across a broad range of cancer types. The Company’s third area of focus is organ health, with tests to assess kidney, heart, and lung transplant rejection as well as genetic testing for chronic kidney disease. The Company operates laboratories in Austin, Texas and San Carlos, California 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 one segment, the development and commercialization of molecular testing services, applying its proprietary technology in the fields of women’s health, oncology and organ health. The Company’s key product offerings include its Panorama Non-Invasive Prenatal Test (“Panorama”) that screens for chromosomal abnormalities of a fetus as well as in twin pregnancies, typically with a blood draw from the mother; Horizon Carrier Screening (“Horizon”) to determine carrier status for a large number of severe genetic diseases that could be passed on to the carrier’s children; its Signatera molecular residual disease test (“Signatera”)to detect circulating tumor DNA in patients previously diagnosed with cancer to assess molecular residual disease, monitor for recurrence, and evaluate treatment response; and its Prospera test, to assess organ transplant rejection in patients who have undergone kidney, heart, or lung transplantation. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
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”). Some items in the prior period financial statements were reclassified to conform to the current presentation. 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 $434.8 million for the year ended December 31, 2023 and an accumulated deficit of $2.4 billion as of December 31, 2023. As of December 31, 2023, the Company had $642.1 million in cash, cash equivalents, and restricted cash, $236.9 million in marketable securities, $80.4 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”). The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral for its Credit Line which is classified as short-term investments in the consolidated balance sheet. As of December 31, 2023, the Company had $20.0 million remaining available on the Credit Line. 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 operating costs that exceeds 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. In September 2023, the Company completed an underwritten equity offering and sold 4,550,000 shares of its common stock at a price of $55 per share to the public. Before estimated offering expenses of $0.4 million, the Company received proceeds of approximately $235.8 million net of the underwriting discount. In November 2022, the Company completed an underwritten equity offering and sold 13,144,500 shares of its common stock at a price of $35 per share to the public. Before estimated offering expenses of $0.5 million, the Company received proceeds of approximately $433.2 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. 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 was estimated to be paid via issuance of an estimated 269,547 additional Natera common shares, consistent with the registration statement filed with the SEC on September 10, 2021, upon achievement of defined milestones relating to product development, commercial launch and continued employment of certain selling shareholders, each of which was revalued at each reporting date and amount of compensation expense was adjusted accordingly and reported in research and development expenses. In November 2022, the terms of the payment for any remaining consideration were modified, resulting in $10.0 million of consideration paid in December 2022 and $15.0 million of consideration paid in March 2023, with such consideration primarily consisting of Natera common stock. 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 28, 2024. 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. All intercompany balances and transactions have been eliminated. Use of Estimates Cash, Cash Equivalents, and Restricted Cash Cash, cash equivalents, and restricted cash consist of cash, liquid demand deposits, and money market funds. Highly liquid investments purchased with an original maturity of three months or less are also considered cash equivalents. Restricted cash as of December 31, 2023 and 2022 was immaterial. 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. Available-for-sale debt securities. Accounts Receivable Trade accounts receivable and other receivables. Balance Sheet Components Inventory Inventory is recorded at the lower of cost or net realizable value, determined on a first-in, first-out basis. Inventory consists entirely of supplies, which are consumed when providing its test reports, and therefore, the Company does not maintain any finished goods inventory. The Company enters into inventory purchases commitments so that it can meet future delivery schedules based on forecasted demand for its tests. The following is a roll-forward of the inventory reserve for the years ended December 31, 2023 and 2022. December 31, 2023 2022 (in thousands) Beginning balance $ 748 $ 988 Write-offs (2,175) (240) Net additions to reserve 2,299 — Ending balance $ 872 $ 748 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 to five years determined by the classification of the property and equipment class in accordance with the Company’s fixed asset policy. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. The Company periodically reviews the useful lives assigned to property and equipment placed in service in accordance with the Company’s fixed asset policy and changes the estimates of useful lives to reflect the results of such reviews. 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 $8.7 million and $5.9 million as of December 31, 2023 and 2022, respectively. Amortization expense for amounts previously capitalized for the years ended December 31, 2023, 2022, and 2021, was $2.4 million, $0.2 million, and $1.1 million, respectively. 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. Operating Lease Right-of-Use Assets The Company determines if an arrangement is or contains a lease at inception and classify each lease as operating or financing. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments made during the lease term, net of any tenant improvement allowance. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of committed lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, which includes significant assumptions made including the Company’s estimated credit rating, annual percentage yields from corporate debt financings of companies of similar size and credit rating over a loan term approximating the remaining term of each lease, and government bond yields for terms approximating the remaining term of each lease in countries where the leased assets are located. Certain leases include payments of operating expenses that are dependent on the landlord’s estimate, and these variable payments are therefore excluded from the lease payments used to determine the operating lease right-of-use asset and lease liability. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise any such options. Operating lease right-of-use assets are adjusted for prepaid lease payments, lease incentives and initial direct costs incurred. Lease expense is recognized on a straight-line basis over the expected lease term. The Company elected to not apply the recognition requirements of Topic 842 to short-term leases with terms of 12 months or less. For short-term leases, lease payments are recognized as operating expenses on a straight-line basis over the lease term. Accumulated Other Comprehensive Income (Loss) Comprehensive loss and its components encompass all changes in equity other than those with stockholders, and include net loss, unrealized gains and losses on available-for-sale marketable securities, and foreign currency translation adjustments. December 31, 2023 2022 (in thousands) Beginning balance $ (16,362) $ (2,287) Net unrealized gain (loss) on available-for-sale securities, net of tax and foreign currency translation adjustment 13,277 (14,075) Ending balance $ (3,085) $ (16,362) Revenue Recognition The Company recognizes revenue under, ASC 606, using the following five step process: ● 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. 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 clients using Constellation, the Company’s cloud software product clients, development and support services relating to our strategic partnership agreements, and other costs. Research and Development The Company records research and development costs in the period incurred. Research and development costs consist of personnel costs, including stock-based compensation expense, 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 $1.1 million, $1.8 million, and $2.2 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021 were $42.2 million, $36.0 million, and $22.0 million, respectively. Income Taxes Income taxes are recorded in accordance with Financial Accounting Standards Board ASC Topic 740, Income Taxes Income Taxes Stock-Based Compensation Stock-based compensation related to stock options, restricted stock units (“RSUs”), performance-based awards, market-based awards, and stock purchase rights under an Employee Stock Purchase Plan (“ESPP”) 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. If awards have both a service condition and performance or market condition, then a graded attribution method is used to recognize expense. No compensation cost is recognized when the requisite service has not been met and the awards are therefore forfeited. Employee stock-based compensation expense is 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 is not adjusted for estimated forfeitures up until the occurrence of the actual forfeiture of the associated awards. 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. Net Loss Per Share 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). Related Party Transactions 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 a cash payment of approximately $4.0 million, which represents 5.25% of MyOme on a fully diluted basis. The Company does not hold a seat on MyOme’s board of directors. The Company’s investment in MyOme is recorded at cost and no impairment was identified as of December 31, 2023. The following are the Company’s related persons and the basis of each such related person’s relationship with MyOme: ● Matthew Rabinowitz, the Company’s executive chairman and co-founder, is the chairman of the board and founder of MyOme, and a beneficial holder of approximately 28.6% of the outstanding shares of MyOme on a fully dilutive basis; ● Jonathan Sheena, the Company’s co-founder and a member of the Company’s board of directors, is a stockholder and a member of the board of directors of Myome; ● Daniel Rabinowitz, the Company’s Secretary and Chief Legal Officer, is a stockholder of MyOme; and ● Roelof Botha, the Lead Independent Director of the Company’s board of directors, is a managing member of Sequoia Capital. Certain funds affiliated with Sequoia Capital also participated in MyOme’s series B financing. None of the related party investments in MyOme by our executives and directors noted above were at the behest of the Company nor funded by the Company. In February 2024, the Company entered into a collaboration and commercialization agreement (the "Collaboration Agreement") with MyOme pursuant to which the parties will partner to offer certain genetic testing services to be developed and funded solely by MyOme and overseen by a joint steering committee. In connection with the Collaboration Agreement, the Company received a 10-year Risk and Uncertainties Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents, and restricted 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. For the years ended December 31, 2023, 2022, and 2021, there were no customers exceeding 10% of total revenues on an individual basis. As of December 31, 2023 and 2022, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. For the years ended December 2023, 2022, and 2021, approximately 12.8%, 11.2%, and 5.1%, respectively, of total revenue were paid by Medicare on behalf of multiple customers. For the years ended December 2023 and 2022, approximately 13.9% and 14.1%, respectively, of accounts receivable expected to be paid by Medicare on behalf of multiple customers. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications 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 accounting standards updates recently issued that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. New Accounting Pronouncements Not Yet Adopted In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) In November 2023, ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In December 2023, ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2023 | |
Revenue Recognition | |
Revenue Recognition | 3. Revenue Recognition Product Revenues Product revenues are derived by performing genetic testing services and the Company’s performance obligation is complete when test results are delivered to a clinic or patient, who are considered the customer for such services as further discussed below. Additionally, the Company enters into agreements with pharmaceutical companies to utilize the Company’s Signatera tests typically to study new cancer treatments or to validate the outcomes of clinical trials for which the pharmaceutical companies are identified as customers. Such arrangements generally involve performing whole exome sequencing (“WES”) services and the testing of patient samples to detect cancer mutations using its Signatera test. In addition to performing Signatera tests, these agreements typically include certain activities to fulfill the contract, such as customer data setup and management and ongoing reporting. Each test result is billable to customers upon delivery and the personalized cancer profile also makes each test distinct within the context of the contract as customers can exercise control over the test results upon delivery. Accordingly, the Company recognizes the test processing revenue as individual test results are delivered to customers. For certain contracts with pharmaceutical companies where the Company is developing a companion diagnostic test in addition to performing regular testing services, revenue is primarily recognized proportionally as services are performed and/or tests are delivered. 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 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 collect in exchange for the Company’s products is an estimate and may be fixed or variable. Consideration includes reimbursement from both patients and insurance carriers, adjusted for variable consideration related to disallowed cases, percent of patient responsibility collected, refunds and doubtful accounts, and is estimated using the most likely method. For insurance carriers and product types with similar reimbursement characteristics, the Company uses a portfolio of relevant historical data to estimate variable consideration and total collections for the Company’s products. 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. The consideration expected from laboratory partners usually includes a fixed amount, but it can be variable depending on the volume of tests performed, and the Company determines the variable consideration using the expected value approach. For 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 expected to be received from insurance carriers and patients, a certain percentage of revenues is further constrained for estimated refunds. 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. 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. The Company generally collects approximately 90% of tests billed to insurance carriers, laboratory distribution partners, and directly to patients within 9 months with the remaining collections generally taking an additional 6 months. 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 equal to the total consideration (as described above) expected to be received at a point in time when the test results are delivered. Approximately 90% of cash collections attributable to such product revenue occurs within 9 months with the remaining collections generally taking an additional 6 months. During this time, management routinely reassesses its estimates of actual to expected cash collections, which are based on historical collection rates and adjusted for current information and trends. To the extent cash collections for tests delivered in prior periods are trending higher than expectations, the Company will increase revenue recognized when sufficient evidence is obtained to conclude the additional revenue will not result in a reversal of revenue in a future period. If cash collections for tests delivered in prior periods are trending below expectations, the Company will reduce revenue to the amount expected to be collected based on the latest information and expectations. Increases or decreases to the amount of cash expected to be collected for tests delivered in prior periods are recognized in product revenue with a corresponding impact to accounts receivable during the period such determination is made. During the years ended December 31, 2023, 2022 and 2021, the Company increased revenue by a net of $5.3 million, $19.5 million and $12.5 million, respectively, for changes in estimate that increased revenue for tests delivered in prior periods that were fully collected, which increased revenue and decreased net loss Product revenue is constrained via refunds estimated to be paid to insurance carriers. Such refunds are recognized in accrued liabilities until they are either paid to the respective insurance carrier or it is determined the refund will not ultimately be paid, at which time the related accrual is reduced with a corresponding increase to revenue. During the year ended December 31, 2023, 2022 and 2021, the reserves for refunds to insurance carriers were reduced and product revenue increased by $13.1 million, $5.8 million and $5.7 million, respectively, for amounts the Company determined would not be refunded to insurance carriers. The increased revenue and corresponding decreased net loss 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 its strategic collaboration agreements, such as those with BGI Genomics Co., Ltd. and Foundation Medicine, Inc. The Company recognizes licensing revenue through agreements with pharmaceutical companies in support of potential clinical trials managed by the pharmaceutical companies. Other revenues include data sales, patient referral services and royalties. Constellation The laboratory partners with whom 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 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 or the 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 Company’s statements of operations and comprehensive loss. Qiagen In March 2018, the Company entered into a License, Development and Distribution Agreement (the “Qiagen Agreement”) with Qiagen under which the Company granted Qiagen a license to develop, manufacture, distribute and commercialize NGS-based genetic testing assays and sequencing systems utilizing such assays, which incorporate the Company’s proprietary technology. Effective in March 2020, the Company terminated the Qiagen Agreement. Subsequently, in March 2021, the Company and Qiagen signed a Termination and Settlement Agreement where the Company agreed to refund a net $10.0 million as a result of the termination. The remaining $28.6 million of deferred revenue was recognized as licensing and other revenue in the first quarter of 2021. BGI Genomics In February 2019, the Company entered into a License Agreement (the “BGI Genomics Agreement”) with BGI Genomics to develop, manufacture, and commercialize NGS-based genetic testing assays for clinical and commercial use. The BGI Genomics Agreement has a term of ten years and expires in February 2029. Pursuant to the BGI Genomics Agreement, the Company licensed its intellectual property to and provided development services for BGI. Following completion of development services, the Company began providing assay interpretation services over the term of the agreement. Revenue associated with the development services performance obligation was 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. 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 are not material on an accumulated basis and therefore have not been capitalized but have been expensed as incurred. 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. According to the BGI Genomics Agreement, the Company is entitled to a total of $50.0 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. Due to uncertainties in achieving certain milestones, $6.0 million of the $50.0 million was constrained. A net of $44.0 million has been collected by the Company in cash, which includes $20.0 million in prepaid royalties. 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, representing two separate performance obligations, to which $24.0 million of transaction consideration was allocated. Of this amount, $0.1 million, $8.0 million and $0.6 million were recognized in the years ended December 31, 2023, 2022 and 2021, respectively. This performance obligation was fully satisfied in March 2023 and no further related amounts will be recognized as revenue. As of December 31, 2023, the Company's performance obligation to provide ongoing NIPT assay interpretation services was removed. Therefore, the Company now has a single remaining performance obligation related to Oncology assay interpretation services, to which $20.0 million of transaction consideration was allocated and prepaid by BGI Genomics. During the year ended December 31, 2023, the Company recognized $1.5 million related to oncology assay interpretation services, of which $1.2 million was recognized against deferred royalties. The Company did not recognize revenue in 2022 and 2021. The Company currently has $18.8 million in deferred revenue as of December 31, 2023. As required by the BGI Genomics Agreement, 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 are for equipment and services to be received in future periods, which was assessed as a standalone transaction that did not reduce revenue, aggregated to $10.0 million and was originally recorded in long-term advances on the Company’s Consolidated Balance Sheet and will be periodically assessed for impairment. During the year ended December 31, 2023, $5.1 million in equipment and services was received, which brought the remaining advanced payments to $4.9 million, with $3.1 million recorded in prepaid expenses and other current assets and $1.8 million recorded in other assets. 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. Pursuant to the Foundation Medicine Agreement, the Company will provide development services that are required to customize its proprietary Signatera test to work with Foundation Medicine’s FoundationOne CDx in conjunction with granting the use of the Company’s intellectual property. Following completion of those development services, the Company is currently providing assay testing services over the term of the agreement. 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 which commenced in the second quarter of 2021. 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. The Company is entitled to a total of $32.0 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. $7.7 million is constrained due to uncertainties in achieving certain milestones. A net of $24.3 million has been collected by the Company in cash, which includes $5.0 million of prepaid royalties. The Company concluded that the license is not a distinct performance obligation as it does not have a stand-alone value to Foundation Medicine apart from the related development services. Therefore, license and related development services, for Oncology products, represent a single performance obligation, to which $19.3 million of transaction consideration was allocated. Of this amount, $0.2 million, $3.5 million, and $8.0 million were recognized in the years ended December 31, 2023, 2022 and 2021, respectively. This performance obligation was fully satisfied in March 2023 and no further related amounts will be recognized as revenue. Royalties related to assay interpretation services represent separate performance obligations for Oncology products, to which $5.0 million of transaction consideration was allocated and prepaid by Foundation Medicine. During the years ended December 31, 2023, 2022, and 2021, the Company recognized $1.0 million, $0.4 million and $0.4 million, respectively, related to oncology assay interpretation services. The Company currently has $3.2 million in deferred revenue as of December 31, 2023. Disaggregation of Revenues Year Ended December 31, 2023 2022 2021 (in thousands) Insurance carriers $ 954,155 $ 690,754 $ 492,563 Laboratory partners 98,891 94,910 100,019 Patients 29,525 34,558 32,904 Total revenues $ 1,082,571 $ 820,222 $ 625,486 The following table presents total revenues by geographic area based on the location of the Company’s payers: Year ended December 31, 2023 2022 2021 (in thousands) United States $ 1,047,636 $ 785,849 $ 590,872 Americas, excluding U.S. 4,908 3,705 4,047 Europe, Middle East, India, Africa 22,811 16,640 20,429 Asia Pacific and Other 7,216 14,028 10,138 Total $ 1,082,571 $ 820,222 $ 625,486 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, 2023 2022 (in thousands) Assets: Accounts receivable $ 278,289 $ 244,385 Liabilities: Deferred revenue, current portion $ 16,612 $ 10,777 Deferred revenue, long-term portion 19,128 20,001 Total deferred revenues $ 35,740 $ 30,778 Balance at Balance at December 31, December 31, 2023 2022 (in thousands) Beginning balance $ 30,778 $ 28,722 Increase in deferred revenues 35,573 28,978 Reclasses from deferred revenues to other short-term liabilities (522) (337) Revenue recognized during the period that was included in (10,564) (8,782) Revenue recognized from performance obligations satisfied (19,525) (17,803) Ending balance $ 35,740 $ 30,778 During the year ended December 31, 2023, revenue recognized that was included in the deferred revenue balance at the beginning of the period totaled $10.6 million with approximately $1.3 million related to BGI Genomics and Foundation Medicine, and the remaining $9.3 million related to genetic testing services. During the year ended December 31, 2023, $19.5 million was recognized as deferred revenue and later earned as revenue in the same period with approximately $1.2 million related to BGI Genomics and Foundation Medicine, and the remaining $18.3 million related to genetic testing services. The current portion of deferred revenue includes $13.7 million from genetic testing services, $1.7 million from Foundation Medicine and $1.2 million from the BGI Genomics agreement. The non-current portion of deferred revenue includes $17.6 million from the BGI Genomics agreement and $1.5 million from Foundation Medicine. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2023 | |
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; and 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, 2023 December 31, 2022 Level I Level II Level III Total Level I Level II Level III Total (in thousands) Financial Assets: Cash, cash equivalents and restricted cash (1) 642,095 — — 642,095 466,091 — — 466,091 U.S. Treasury securities 200,418 — — 200,418 346,057 — — 346,057 Corporate bonds and notes — — — — — 23,529 — 23,529 Municipal securities — 36,464 — 36,464 — 62,715 — 62,715 Total financial assets $ 842,513 $ 36,464 $ — $ 878,977 $ 812,148 $ 86,244 $ — $ 898,392 (1) Cash equivalents includes money market deposits, liquid demand deposits, and other liquid investments with original maturity dates less than three months. Fair Value of Short-Term and Long-Term Debt: As of December 31, 2023, the estimated fair value of the total principal outstanding and accrued interest of the Credit Line, which are not presented at fair value on the Consolidated Balance Sheets for both December 31, 2023 and 2022, was $80.4 million, and was based upon observable Level 2 inputs, including the interest rate based on the 30-day Secured Overnight Financing Rate (“SOFR”) average, plus 0.5%. As of December 31, 2023, the estimated fair value of the Convertible Notes, which are not presented at fair value on the Consolidated Balance Sheets as of December 31, 2023 and 2022, was $491.8 million and $358.4 million, respectively, 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, 2023 | |
Financial Instruments | |
Financial Instruments | 5. Financial Instruments The Company elected to invest a portion of its cash assets in conservative, income earning, and liquid investments. Cash, cash equivalents, restricted cash and investments, which are classified as available-for-sale securities, consisted of the following: December 31, 2023 December 31, 2022 Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value (in thousands) Cash, cash equivalents and restricted cash (2) 642,095 — — 642,095 466,091 — — 466,091 U.S. Treasury securities (1) 201,522 14 (1,118) 200,418 358,385 — (12,328) 346,057 Corporate bonds and notes (1) — — — — 24,045 — (516) 23,529 Municipal securities (1) 38,091 — (1,627) 36,464 65,973 1 (3,259) 62,715 Total $ 881,708 $ 14 $ (2,745) $ 878,977 $ 914,494 $ 1 $ (16,103) $ 898,392 Classified as: Cash, cash equivalents and restricted cash (2) $ 642,095 $ 466,091 Short-term investments 236,882 432,301 Total $ 878,977 $ 898,392 (1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period. (2) Cash equivalents includes liquid demand deposits, money market funds, and other liquid investments having an original maturity of less than three months. 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 did not sell any investments in the year ending December 31, 2023. $248.5 million of investments were sold in the year ended December 31, 2022 resulting in a gross realized losses upon sales of investments of $0.9 million. 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, 2023, the Company had 19 investments in an unrealized loss position in its portfolio. Gross unrealized losses were not material as of December 31, 2023. As of December 31, 2022, gross unrealized losses were primarily due to declines in the value of fixed rate instruments as interest rates in the broader market increased, and were not indictive of a decline in the credit worthiness of the underlying issuers. Accordingly, the Company did not record a credit loss reserve as of December 31, 2022. The following table presents debt securities available-for-sale that were in an unrealized loss position as of December 31, 2023, aggregated by major security type and length of time in a continuous loss position. There were no debt securities available-for-sale in an unrealized loss position for less than 12 months as of December 31, 2023. Total Fair Value Unrealized Loss (in thousands) U.S. Treasury securities $ 78,908 $ (1,118) Corporate bonds and notes — — Municipal securities 36,464 (1,627) Total $ 115,372 $ (2,745) The following table summarizes the Company’s portfolio of available-for-sale securities by contractual maturity as of December 31, 2023: December 31, 2023 Amortized Cost Fair Value (in thousands) Less than or equal to one year $ 216,548 $ 215,095 Greater than one year but less than five years 23,065 21,787 Total $ 239,613 $ 236,882 |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2023 | |
Balance Sheet Components | |
Balance Sheet Components | 6. Balance Sheet Components Allowance for Doubtful Accounts The following is a roll-forward of the allowances for doubtful accounts related to trade accounts receivable for the years ended December 31, 2023, 2022 and 2021: December 31, 2023 2022 2021 (in thousands) Beginning balance $ 3,830 $ 2,429 $ 4,220 Provision for doubtful accounts 2,645 1,770 (156) Write-offs 6 (369) (1,635) Total $ 6,481 $ 3,830 $ 2,429 Property and Equipment, net The Company’s property and equipment consisted of the following: December 31, December 31, Useful Life 2023 2022 (in thousands) Machinery and equipment 3-5 years $ 85,626 $ 66,262 Computer equipment 3 years 1,850 1,308 Purchased and capitalized software held for internal use 3 years 11,636 5,464 Leasehold improvements Lesser of useful life or lease term 38,999 29,747 Construction-in-process 29,392 25,370 167,503 128,151 Less: Accumulated depreciation and amortization (56,293) (35,698) Total Property and Equipment, net $ 111,210 $ 92,453 The Company’s property and equipment are mostly located in the United States. During the years ended December 31, 2023, 2022, and 2021, depreciation expense of $22.7 million, $16.7 million, $11.3 million was recorded, respectively. The Company did not incur any material impairment charges during the years ended December 31, 2023, 2022, and 2021. As of December 31, 2023, 2022, and 2021, the Company’s consolidated balance sheets included $5.5 million, $4.7 million, and $3.5 million, respectively, of capitalized cloud-based implementation costs recorded as other assets within the Company’s consolidated balance sheets. These balances primarily consist of capitalized implementation costs related to the enterprise resource planning system which the Company implemented in 2022. Accumulated amortization associated with these assets was $2.5 million, $0.9 million, and $1.5 million as of December 31, 2023, 2022, and 2021, respectively. The net book value of these capitalized cloud-based implementation was $3.0 million, $3.8 million, and $2.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. Accrued Compensation The Company’s accrued compensation consisted of the following: December 31, December 31, 2023 2022 (in thousands) Accrued paid time off $ 3,121 $ 2,930 Accrued commissions 10,522 11,821 Accrued bonuses 24,651 20,426 Other accrued compensation 7,563 8,833 Total accrued compensation $ 45,857 $ 44,010 Other Accrued Liabilities December 31, December 31, 2023 2022 (in thousands) Reserves for refunds to insurance carriers $ 23,245 $ 18,948 Accrued charges for third-party testing 14,823 17,036 Testing and laboratory materials from suppliers 11,229 13,281 Marketing and corporate affairs 10,085 8,943 Legal, audit and consulting fees 43,897 36,710 Accrued shipping charges 3,646 485 Sales and income tax payable 3,731 4,319 Accrued third-party service fees 7,111 6,631 Clinical trials and studies 12,126 23,301 Operating lease liabilities, current portion 11,621 7,639 Property and equipment purchases 4,316 1,821 Other accrued interest 1,078 1,078 Other accrued expenses 2,497 4,022 Total other accrued liabilities $ 149,405 $ 144,214 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 and if these previously accrued amounts are no longer required based on actual refunds requested, any remaining reserve amounts are released. 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 years ended December 31, 2023 and 2022: December 31, December 31, 2023 2022 (in thousands) Beginning balance $ 18,948 $ 17,210 Additional reserves 14,974 23,717 Refunds to carriers (1,583) (1,800) Reserves released to revenue (9,094) (20,179) Ending balance $ 23,245 $ 18,948 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases. | |
Leases | 7. Leases Operating Leases 36-month The Company entered into a lease agreement in September 2023 to lease 16,319 square feet of space located in Pleasanton, California over a 60-month As part of the IPR&D asset acquisition in September 2021, the Company inherited a 24-month The Company has also historically entered into leases of individual workspaces and storage spaces at various locations on both a month-to-month basis without an established lease term, and more recently for certain locations, has committed to terms approximating one For the year ended December 31, 2023, the Company recorded noncash activities of $2.1 million primarily related to additional right-of-use assets primarily as a result of the Pleasanton, California lease. For the year ended December 31, 2022, the Company recorded noncash activities of $22.1 million primarily related to additional right-of-use assets of which $20.1 million was a result of the first and second Austin expansion premises. December 31, December 31, 2023 2022 (in thousands) Operating lease liabilities, current portion included in other accrued liabilities $ 11,621 $ 7,639 Operating lease liabilities, long-term portion 67,025 76,577 Total operating lease liabilities $ 78,646 $ 84,216 6.69 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 $14.5 million, $13.8 million, and $10.9 million for the years ended December 31, 2023, 2022, and 2021, respectively. Cash paid for amounts in the measurement of operating lease liabilities totaled $12.4 million, $9.4 million, and $10.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. The present value of the future minimum lease payments under all non-cancellable operating leases as of December 31, 2023 is as follows: Operating Leases (in thousands) Year ending December 31: 2024 $ 16,554 2025 16,899 2026 17,263 2027 14,223 2028 6,590 2029 and thereafter 27,924 Total future minimum lease payments 99,453 Less: imputed interest (20,807) Operating lease liabilities $ 78,646 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies Legal Proceedings The Company is involved in legal matters, including investigations, subpoenas, demands, disputes, litigation, requests for information, and other regulatory or administrative actions or proceedings, including those with respect to intellectual property, testing and test performance, billing, reimbursement, marketing, short seller and media allegations, employment, and other matters. An independent committee of the Company’s board of directors initiated and has completed an internal investigation into the allegations made in a March 2022 short seller report, with the assistance of the law firm of WilmerHale LLP. WilmerHale had access to company executives, personnel, records, communications, and documents. Based on the investigation, the independent committee, on behalf of the board, has concluded that the allegations of wrongdoing against the Company in the report were unfounded. The Company is responding to ongoing regulatory and governmental investigations, subpoenas and inquiries, and contesting its current legal matters, but cannot provide any assurance as to the ultimate outcome with respect to any of the foregoing. There are many uncertainties associated with these matters. Such matters may cause the Company to incur costly litigation and/or substantial settlement charges, divert management attention, result in adverse judgments, fines, penalties, injunctions or other relief, and may result in loss of customer or investor confidence regardless of their merit or ultimate outcome. 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 any of the foregoing were to occur, the Company's business, financial condition, results of operations, cash flows, prospects, or stock price 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. Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. During the periods presented, the Company does not believe there are such matters that will have a material effect on its financial condition. 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 CareDx Patent Case, 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 “CareDx Patents”). The complaint sought unspecified damages and injunctive relief. In September 2021, the Court granted the Company’s motion for summary judgment, finding all three CareDx Patents invalid. This finding was affirmed on appeal by the United States Court of Appeals for the Federal Circuit. CareDx’s petition for rehearing by the Federal Circuit, and its subsequent petition for certiorari to the United States Supreme Court, were both denied. In the second CareDx Patent Case, the Company alleged, in suits filed in January 2020 and May 2022, infringement by CareDx of certain of the Company’s patents, seeking unspecified damages and injunctive relief. In January 2024, after trial, the jury returned a verdict in favor of the Company, finding both asserted patents valid and one patent infringed by CareDx. The jury awarded damages to the Company for lost profits and past royalties totaling $96.3 million. In January 2020, the Company filed suit against ArcherDX, Inc. (“ArcherDX”) in the United States District Court for the District of Delaware. In January 2021, the Company named an additional Archer DX entity, ArcherDx LLC, and Invitae Corp. (“Invitae”) as defendants. The Company alleged, among other things, that certain ArcherDX products, including the Personalized Cancer Monitoring (“PCM”) test, infringed three of the Company’s patents (the “ArcherDX Case”) and sought unspecified monetary damages and injunctive relief. Following a jury trial in May 2023 and a bench trial in June 2023, all three asserted patents were found to be valid and infringed by ArcherDX and Invitae, and the jury awarded damages totaling $19.35 million to the Company. In November 2023, the Court granted in part the Company’s motion for a permanent injunction against the PCM test, which the defendants have appealed. In February 2024, Invitae and ArcherDX filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey, resulting in an automatic bankruptcy stay in the case. 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 and seeking monetary damages and injunctive relief. In January 2024, after trial, the jury returned a verdict of non-willful infringement by the Company and found damages of $57 million. The Company intends to appeal certain of the rulings. In addition, various parties, including the Company, have filed petitions challenging the validity of the asserted patents with the United States Patent and Trademark Office, all of which were instituted for review, and some of which were decided in favor of upholding the challenged claims. The petitions filed by the Company and certain others remain pending. 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 products infringe one of the Company’s patents and seeking unspecified monetary damages and injunctive relief. The case has been stayed pending the entry of a final judgment in the ArcherDX Case, in which the subject patent is also asserted. In February 2024, Genosity filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey. The Company filed suits against Inivata, Inc. and Inivata Ltd. (collectively “Inivata”) in the United States District Court for the District of Delaware in January 2021 and December 2022, alleging that certain of Inivata’s oncology products infringe certain of the Company’s patents and seeking unspecified monetary damages and injunctive relief. The two suits have been consolidated. Inivata has filed a motion to dismiss the Company’s complaint with respect to one patent, which motion is currently pending before the Court. Trial is currently set for October 2025. The Company is the subject of lawsuits filed against it by 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. The parties have filed cross-motions for summary judgment, which motions are currently pending before the Court. In February 2024, subsequent to Invitae’s voluntary Chapter 11 petition described above, the Court granted Invitae’s request to suspend the trial. A status conference is currently set for March 2024. In July 2023, the Company filed suit against NeoGenomics Laboratories, Inc. (“NeoGenomics”) in the United States District Court for the Middle District of North Carolina (the “District Court”), alleging infringement of certain Natera patents by NeoGenomics’ commercialization of the RaDaR test. The complaint seeks monetary damages and injunctive relief. In December 2023, the Court denied NeoGenomics’ motion to dismiss the complaint, and granted the Company’s motion for preliminary injunction. The injunction went into effect as of January 12, 2024. NeoGenomics filed a motion to modify and stay the injunction, which was denied by the District Court and will be heard on appeal by the Federal Circuit Court of Appeals in March 2024. NeoGenomics has also filed a petition challenging the validity of one of the asserted patents with the United States Patent and Trademark Office. Other Litigation Matters. CareDx filed suit against the Company in April 2019 in the United States District Court for the District of Delaware, alleging false advertising, and related claims based on statements describing studies that concern the Company’s technology and CareDx’s technology, seeking unspecified damages and injunctive relief. 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. In March 2022, after trial, the jury returned a verdict that the Company was liable to CareDx and found damages of $44.9 million. The jury also returned a verdict against CareDx, finding that CareDx had engaged in false advertising. In July 2023, the Court granted in part the Company’s motion for judgment as a matter of law requesting that the Court set aside the portions of the jury verdict adverse to the Company, ruling that CareDx is not entitled to any damages. The jury verdict of false advertising by CareDx remains in place. Both parties have filed notices of appeal. In May 2021, Guardant. Inc. (“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. Also in May 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 and has asserted the claims from the Texas action as counterclaims in the California action, seeking unspecified damages and injunctive relief. In August 2021, Guardant moved to dismiss the Company’s counterclaims, which motion was denied in all material respects. Both parties filed cross-motions for summary judgment, which were granted in part and denied in part. Trial is currently anticipated to be scheduled for 2024. 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 May 2023, the Court granted the Company’s motion to dismiss the lawsuit, and the case was dismissed without prejudice. In July 2023, the plaintiff filed analogous claims in the Superior Court of California, County of San Mateo, and subsequently filed an amended claim with an additional plaintiff. Based on the additional plaintiff, the case was transferred back to the United States District Court for the Northern District of California. In February 2022, two purported class action lawsuits were filed against the Company in the United States District Court for the Northern District of California. Each suit was filed by an individual patient alleging various causes of action related to the marketing of Panorama and seeking, among other relief, class certification, monetary damages, attorneys’ fees, and costs. These matters have been consolidated. The Company filed a motion to dismiss the consolidated lawsuit, which resulted in the plaintiffs filing an amended complaint in April 2023. In March 2022, a purported class action lawsuit was filed against the Company and certain of its management in the Supreme Court of the State of New York, County of New York, asserting claims under Sections 11, 12, and 15 of the Securities Act of 1933. The complaint alleges, among other things, that the Company failed to disclose certain information regarding its Panorama test. The complaint seeks, among other relief, monetary damages, attorneys’ fees, and costs. This matter has been dismissed and the claims raised in this matter have been included in the lawsuit discussed below. A purported class action lawsuit was filed against the Company and certain of its management in the United States District Court for the Western District of Texas, asserting claims under Sections 10(b) and 20(a) of the Securities Act of 1934 and Rule 10b-5 thereunder. The complaint, filed in April 2022 and amended in October 2022 (to include, among others, the claims raised in the lawsuit discussed in the preceding paragraph), alleges, among other things, that the management defendants made materially false or misleading statements, and/or omitted material information that was required to be disclosed, about certain of the Company’s products and operations. The complaint seeks, among other relief, monetary damages, attorneys’ fees, and costs. The Company filed a motion to dismiss this lawsuit, which was granted in part and denied in part. In each of October 2023 and January 2024, shareholder derivative complaints were filed in the United States District Court for the Western District of Texas and the United States District Court for the District of Delaware, respectively, against the Company as nominal defendant and certain of the Company’s management. Each complaint alleges, among other things, that the management defendants made materially false or misleading statements, and/or omitted material information that was required to be disclosed, about certain of the Company’s products and operations. Each complaint seeks, among other relief, 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 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 if probable and estimable. Contractual Commitments The following table sets forth the material unconditional purchase obligations and contractual commitments as of December 31, 2023 with a remaining term of at least one year: Party Total Commitments Expiry Date (in thousands) Laboratory instruments supplier $ 9,400 December 2024 Material suppliers 20,709 March 2028 Application service providers 12,571 March 2026 Cloud platform service provider 40,000 December 2028 Other material suppliers 11,853 Various Total $ 94,533 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
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 least 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 after they are granted. These awards generally expire earlier if the participant's service terminates earlier. Restricted Shares and Stock Units. The Company also periodically awards phantom stock units, under a separate incentive arrangement, to certain international personnel, which are settled in cash upon vesting and accounted for as liability-based awards with no impact to the shares available for grant. Employee Stock Purchase Plan General Share Reserve. Purchase Price. Offering Periods. Stock Options and Restricted Stock Units The following table summarizes option and RSU activity during the year ended December 31, 2023: 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, 2022 3,263 5,300 $ 21.11 4.84 $ 131,385 Additional shares authorized 3,500 — $ — Options granted (499) 499 $ 44.27 Options exercised — (298) $ 13.09 RSUs granted (6,096) RSUs forfeited/cancelled 934 Balance at December 31, 2023 1,102 5,501 $ 23.65 4.36 $ 231,133 Exercisable at December 31, 2023 4,509 $ 13.97 3.49 $ 221,758 Vested and expected to vest at December 31, 2023 5,435 $ 23.12 4.31 $ 230,521 The total intrinsic value of stock options exercised during the years ended December 31, 2023, 2022, and 2021 were $14.7 million, $26.9 million, and $97.0 million, respectively. The weighted-average grant date fair value of options granted during the years ended December 31, 2023, 2022, and 2021 were $27.31, $34.00, and $48.97 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 assessed the performance-based awards with the appropriate valuation method and has recognized the applicable stock-based compensation expense. The Company has recognized $54.2 million in stock-based compensation for performance-based awards for the year ended December 31, 2023 compared to $48.2 million for the year ended December 31, 2022. Performance-based awards with market conditions and a fair value estimated using a Monte Carlo simulation model were granted in the year ended December 31, 2021, with no such awards granted in the years ended December 31, 2023 and 2022. The following inputs were used to estimate the fair value of performance-based awards granted with market conditions using a Monte Carlo simulation model: December 31, December 31, December 31, 2023 2022 2021 Risk-free interest rate — % — % 0.80 % — 1.52 % Expected dividend yield — % — % — % Expected volatility — % — % 60 % Expected term (years) — — 7.25 — 10.00 Restricted Stock Units The following table summarizes unvested RSU for the year ended December 31, 2023: Weighted- Average Number of Grant Date Shares Fair Value (in thousands) Balance at December 31, 2022 6,836 $ 57.12 Granted 6,096 $ 44.90 Vested (2,750) $ 57.74 Cancelled/Forfeited (934) $ 49.54 Balance at December 31, 2023 9,248 $ 49.50 Stock-Based Compensation Expense The following table presents stock-based compensation expense recorded for equity classified awards in the statement of operations and comprehensive loss: Year ended December 31, 2023 2022 2021 Employee Non-Employee Total Employee Non-Employee Total Employee Non-Employee Total (in thousands) Cost of revenues $ 11,665 $ 87 $ 11,752 $ 7,905 $ — $ 7,905 $ 4,811 $ — $ 4,811 Research and development 63,445 2,881 66,326 44,655 1,890 46,545 24,507 1,361 25,868 Selling, general and administrative 112,236 1,494 113,730 97,379 555 97,934 84,368 172 84,540 Total $ 187,346 $ 4,462 $ 191,808 $ 149,939 $ 2,445 $ 152,384 $ 113,686 $ 1,533 $ 115,219 Additionally, the stock-based compensation expense for liability classified awards for the years ended December 31, 2023, 2022, and 2021 was $0.8 million, $0.6 million, and $0.4 million, respectively. As of December 31, 2023, approximately $331.5 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 2.4 years. Valuation of Stock Option Grants The Company utilizes Black-Scholes option pricing model when estimating the fair value of stock options. The following valuation assumptions were applied to options. Year ended December 31, 2023 2022 2021 Expected term (years) 5.20 — 6.11 5.12 — 10.00 5.11 — 10.00 Expected volatility 67.75 % — 70.07 % 55.91 % — 62.30 % 55.33 % — 63.30 % Expected dividend rate — % — % — % Risk-free interest rate 3.41 % — 4.80 % 1.62 % — 4.16 % 0.81 % — 1.67 % As of December 31, 2023, there were no options outstanding held by non-employees. 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, 2023 | |
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 was fully drawn down in 2016. The Credit Line was amended in July 2017 and bears interest at 30-day LIBOR plus 1.10%. The interest rate was subsequently changed to the 30-day SOFR average, plus 1.21%. The SOFR rate is variable. The interest rate as of December 31, 2023 was 5.84%. The Credit Line was subsequently increased from $50.0 million to $150.0 million in 2020. In November 2022, the Company drew down $30.0 million from the $100.0 million available from the Credit Line. The Credit Line is secured by a first priority lien and security interest in the Company’s money market and marketable securities held in its managed investment account with UBS. The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral which is classified as short-term investments in the consolidated balance sheet. 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. In June 2023, the Credit Line decreased from $150.0 million to $100.0 million. In October 2023, the interest rate for the Credit Line was subsequently changed to the 30-day SOFR average, plus 0.5%. As of December 31, 2023, the Company has drawn down a total of $80.0 million and there is $20.0 million remaining and available on the Credit Line. For the years ended December 31, 2023, 2022, and 2021, the Company recorded interest expense of $4.9 million, $1.6 million, and $0.6 million, respectively. Interest payments totaling $4.9 million, $1.6 million, and $0.6 million had been made on the Credit Line during the years ended December 31, 2023, 2022, and 2021, respectively. As of December 31, 2023, and the total principal amount outstanding including accrued interest was $80.4 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. The first circumstance has been met as of December 31, 2023. However, there were no conversions for the period ending December 31, 2023. December 31, 2023 2022 (in thousands) Long-Term Debt Outstanding Principal $ 287,500 $ 287,500 Unamortized debt discount and debt issuance cost (4,555) (5,847) Net carrying amount $ 282,945 $ 281,653 The following table presents total interest expense recognized related to the Convertible Notes during the years as follows: December 31, 2023 2022 2021 (in thousands) Cash interest expense Contractual interest expense $ 6,469 $ 6,469 $ 6,469 Non-cash interest expense Amortization of debt discount and debt issuance cost 1,292 1,259 1,227 Total interest expense $ 7,761 $ 7,728 $ 7,696 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2023 | |
Stockholders' Equity | |
Stockholders' Equity | 11. Stockholders’ Equity As of December 31, 2023, the Company had 50,000,000 authorized shares of its preferred stock, of which no shares were issued and outstanding outstanding In September 2023, the Company completed an underwritten equity offering and sold 4,550,000 shares of its common stock at a price of $55 per share to the public. Before estimated offering expenses of $0.4 million, the Company received proceeds of approximately $235.8 million net of the underwriting discount. In November 2022, the Company completed an underwritten equity offering and sold 13,144,500 shares of its common stock at a price of $35 per share to the public. Before offering expenses of $0.5 million, the Company received proceeds of $433.2 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. In November 2022, the remaining consideration was modified, resulting in a $10.0 million milestone payment primarily made in the form of the Company’s common stock in December 2022 and a remaining $15.0 million milestone payment made in March 2023 primarily in the Company’s common stock. 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. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income Taxes | 12. Income Taxes The Company's effective tax rates for the years ended December 31, 2023, 2022, and 2021 differ from the U.S. federal statutory rate as follows: December 31, 2023 2022 2021 (in thousands, except percentages) U.S. federal taxes (benefit) at statutory rate $ (91,251) 21.00 % $ (114,832) 21.00 % $ (98,931) 21.00 % State tax expense (13,492) 3.10 % (21,676) 3.96 % (29,206) 6.20 % Research and development credits (10,837) 2.49 % (7,024) 1.28 % (9,193) 1.95 % Stock-based compensation (6,422) 1.48 % 3,949 (0.72) % (46,128) 9.79 % Foreign tax (106) 0.02 % 332 (0.06) % 167 (0.04) % Nondeductible officers' compensation 8,651 (1.99) % 4,883 (0.89) % 24,387 (5.18) % Acquisition costs 563 (0.13) % 3,226 (0.59) % 8,901 (1.89) % Other (3,397) 0.79 % 1,964 (0.36) % 344 (0.05) % Change in valuation allowance 116,562 (26.82) % 130,156 (23.80) % 150,277 (31.90) % Provision for income taxes $ 271 (0.06) % $ 978 (0.18) % $ 618 (0.13) % During the years ended December 31, 2023, 2022, and 2021, the Company recorded total income tax expense of $0.3 million, $1.0 million and $0.6 million, respectively. The total provision for income taxes includes foreign withholding and state income tax expense. 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, 2023 2022 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 399,287 $ 358,109 Research and development tax credit carryforwards 67,035 52,319 Capitalized research costs 95,923 59,128 Reserves and accruals 34,898 22,781 Lease Liabilities 19,339 21,000 Stock-based compensation 29,005 23,814 Other 9,449 9,162 Total deferred tax assets before valuation allowance 654,936 546,313 Less: valuation allowance (639,510) (526,235) Total deferred tax assets after valuation allowance 15,426 20,078 Deferred tax liabilities: Fixed Assets (1,524) (1,219) Right-of-use lease assets (13,902) (18,859) Total deferred tax liabilities (15,426) (20,078) Net deferred tax assets $ — $ — The Company established a full valuation allowance against its net deferred tax assets in 2023 and 2022 due to the uncertainty surrounding realization of these assets. The valuation allowance increased to $639.5 million as of 2023 from $526.2 million as of 2022 due to current year losses and credits claimed. As of December 31, 2023, the Company had federal, state, and foreign net operating loss (“NOLs”) carryforwards of approximately $1.6 billion, $1.1 billion, and $3.8 million, respectively, which begin to expire in 2027, 2024, and 2027, respectively, if not utilized. Approximately $1.3 billion of federal net operating loss included above can be carried forward indefinitely. The Company also had federal research and development credit carryforwards of approximately $64.3 million, which begin to expire in 2027, and state research and development credit carryforwards of approximately $36.7 million, which begin to expire in 2031. 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, 2023 2022 2021 (in thousands) Balance at beginning of year $ 23,844 $ 17,514 $ 11,500 Additions based on tax positions related to the current year 7,034 6,301 6,017 Additions (reductions) for tax positions of prior years 34 29 (3) Balance at end of year $ 30,912 $ 23,844 $ 17,514 During the years ended December 31, 2023, 2022, and 2021, the amount of unrecognized tax benefits increased $7.1 million, $6.3 million, and $6.0 million, respectively, due to additional research and development credits generated during the year. As of December 31, 2023, 2022, and 2021, the total amount of unrecognized tax benefits was $30.9 million, $23.8 million, and $17.5 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, 2023. The Company recognizes any interest and/or penalties related to income tax matters as a component of income tax expense. As of December 31, 2023, there were no In 2021, the OECD announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax. These rules broadly call for the taxation of large multinational corporations at a minimum rate of 15%. We continue to evaluate the enacted and pending legislation to implement these rules in the non-U.S. tax jurisdictions we operate in but do not currently believe the impact to be material. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2023 | |
Net Loss per Share | |
Net Loss per Share | 13. Net Loss per Share The Convertible Notes are convertible by the holders as of December 31, 2023. 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 shares issued to settle the Convertible Notes would exceed the Convertible Note principal by $118.5 million based on the closing price of the Company’s common stock as of December 31, 2023. 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 have been excluded from the calculation of diluted earnings per share. If converted, the Company does not intend to settle the obligation in cash. 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, 2023, 2022, and 2021: December 31, 2023 2022 2021 (in thousands) Options to purchase common stock 5,501 5,300 5,898 Performance-based awards and restricted stock units 9,248 6,836 3,988 Employee stock purchase plan 88 90 33 Convertible Note 7,411 7,411 7,411 Earnouts for development with acquired Canadian entity — 361 353 22,248 19,998 17,683 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Events In January 2024, the Company acquired from Invitae Corp. certain assets relating to Invitae’s non-invasive prenatal screening and carrier screening business. The Company has made an upfront payment in the amount of $10 million to Invitae. In addition, the transaction includes $42.5 million in potential milestone payments. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
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”). Some items in the prior period financial statements were reclassified to conform to the current presentation. |
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 $434.8 million for the year ended December 31, 2023 and an accumulated deficit of $2.4 billion as of December 31, 2023. As of December 31, 2023, the Company had $642.1 million in cash, cash equivalents, and restricted cash, $236.9 million in marketable securities, $80.4 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”). The Company is required to maintain a minimum of at least $150.0 million in its UBS accounts as collateral for its Credit Line which is classified as short-term investments in the consolidated balance sheet. As of December 31, 2023, the Company had $20.0 million remaining available on the Credit Line. 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 operating costs that exceeds 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. In September 2023, the Company completed an underwritten equity offering and sold 4,550,000 shares of its common stock at a price of $55 per share to the public. Before estimated offering expenses of $0.4 million, the Company received proceeds of approximately $235.8 million net of the underwriting discount. In November 2022, the Company completed an underwritten equity offering and sold 13,144,500 shares of its common stock at a price of $35 per share to the public. Before estimated offering expenses of $0.5 million, the Company received proceeds of approximately $433.2 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. 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 was estimated to be paid via issuance of an estimated 269,547 additional Natera common shares, consistent with the registration statement filed with the SEC on September 10, 2021, upon achievement of defined milestones relating to product development, commercial launch and continued employment of certain selling shareholders, each of which was revalued at each reporting date and amount of compensation expense was adjusted accordingly and reported in research and development expenses. In November 2022, the terms of the payment for any remaining consideration were modified, resulting in $10.0 million of consideration paid in December 2022 and $15.0 million of consideration paid in March 2023, with such consideration primarily consisting of Natera common stock. 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 28, 2024. |
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. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash Cash, cash equivalents, and restricted cash consist of cash, liquid demand deposits, and money market funds. Highly liquid investments purchased with an original maturity of three months or less are also considered cash equivalents. Restricted cash as of December 31, 2023 and 2022 was immaterial. |
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. Available-for-sale debt securities. |
Accounts Receivable | Accounts Receivable Trade accounts receivable and other receivables. Balance Sheet Components |
Inventory | Inventory Inventory is recorded at the lower of cost or net realizable value, determined on a first-in, first-out basis. Inventory consists entirely of supplies, which are consumed when providing its test reports, and therefore, the Company does not maintain any finished goods inventory. The Company enters into inventory purchases commitments so that it can meet future delivery schedules based on forecasted demand for its tests. The following is a roll-forward of the inventory reserve for the years ended December 31, 2023 and 2022. December 31, 2023 2022 (in thousands) Beginning balance $ 748 $ 988 Write-offs (2,175) (240) Net additions to reserve 2,299 — Ending balance $ 872 $ 748 |
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 to five years determined by the classification of the property and equipment class in accordance with the Company’s fixed asset policy. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the assets or the remaining term of the lease, whichever is shorter. The Company periodically reviews the useful lives assigned to property and equipment placed in service in accordance with the Company’s fixed asset policy and changes the estimates of useful lives to reflect the results of such reviews. 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 $8.7 million and $5.9 million as of December 31, 2023 and 2022, respectively. Amortization expense for amounts previously capitalized for the years ended December 31, 2023, 2022, and 2021, was $2.4 million, $0.2 million, and $1.1 million, respectively. 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. |
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 $8.7 million and $5.9 million as of December 31, 2023 and 2022, respectively. Amortization expense for amounts previously capitalized for the years ended December 31, 2023, 2022, and 2021, was $2.4 million, $0.2 million, and $1.1 million, respectively. |
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. |
Operating lease right-of-use assets | Operating Lease Right-of-Use Assets The Company determines if an arrangement is or contains a lease at inception and classify each lease as operating or financing. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments made during the lease term, net of any tenant improvement allowance. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of committed lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, which includes significant assumptions made including the Company’s estimated credit rating, annual percentage yields from corporate debt financings of companies of similar size and credit rating over a loan term approximating the remaining term of each lease, and government bond yields for terms approximating the remaining term of each lease in countries where the leased assets are located. Certain leases include payments of operating expenses that are dependent on the landlord’s estimate, and these variable payments are therefore excluded from the lease payments used to determine the operating lease right-of-use asset and lease liability. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise any such options. Operating lease right-of-use assets are adjusted for prepaid lease payments, lease incentives and initial direct costs incurred. Lease expense is recognized on a straight-line basis over the expected lease term. The Company elected to not apply the recognition requirements of Topic 842 to short-term leases with terms of 12 months or less. For short-term leases, lease payments are recognized as operating expenses on a straight-line basis over the lease term. |
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, unrealized gains and losses on available-for-sale marketable securities, and foreign currency translation adjustments. December 31, 2023 2022 (in thousands) Beginning balance $ (16,362) $ (2,287) Net unrealized gain (loss) on available-for-sale securities, net of tax and foreign currency translation adjustment 13,277 (14,075) Ending balance $ (3,085) $ (16,362) |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under, ASC 606, using the following five step process: ● 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. |
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 clients using Constellation, the Company’s cloud software product clients, development and support services relating to our strategic partnership agreements, and other costs. |
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, including stock-based compensation expense, 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 $1.1 million, $1.8 million, and $2.2 million for the years ended December 31, 2023, 2022, and 2021, 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, 2023, 2022, and 2021 were $42.2 million, $36.0 million, and $22.0 million, respectively. |
Income Taxes | Income Taxes Income taxes are recorded in accordance with Financial Accounting Standards Board ASC Topic 740, Income Taxes Income Taxes |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation related to stock options, restricted stock units (“RSUs”), performance-based awards, market-based awards, and stock purchase rights under an Employee Stock Purchase Plan (“ESPP”) 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. If awards have both a service condition and performance or market condition, then a graded attribution method is used to recognize expense. No compensation cost is recognized when the requisite service has not been met and the awards are therefore forfeited. Employee stock-based compensation expense is 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 is not adjusted for estimated forfeitures up until the occurrence of the actual forfeiture of the associated awards. 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. |
Net loss per share | Net Loss Per Share |
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). |
Related Party | Related Party Transactions 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 a cash payment of approximately $4.0 million, which represents 5.25% of MyOme on a fully diluted basis. The Company does not hold a seat on MyOme’s board of directors. The Company’s investment in MyOme is recorded at cost and no impairment was identified as of December 31, 2023. The following are the Company’s related persons and the basis of each such related person’s relationship with MyOme: ● Matthew Rabinowitz, the Company’s executive chairman and co-founder, is the chairman of the board and founder of MyOme, and a beneficial holder of approximately 28.6% of the outstanding shares of MyOme on a fully dilutive basis; ● Jonathan Sheena, the Company’s co-founder and a member of the Company’s board of directors, is a stockholder and a member of the board of directors of Myome; ● Daniel Rabinowitz, the Company’s Secretary and Chief Legal Officer, is a stockholder of MyOme; and ● Roelof Botha, the Lead Independent Director of the Company’s board of directors, is a managing member of Sequoia Capital. Certain funds affiliated with Sequoia Capital also participated in MyOme’s series B financing. None of the related party investments in MyOme by our executives and directors noted above were at the behest of the Company nor funded by the Company. In February 2024, the Company entered into a collaboration and commercialization agreement (the "Collaboration Agreement") with MyOme pursuant to which the parties will partner to offer certain genetic testing services to be developed and funded solely by MyOme and overseen by a joint steering committee. In connection with the Collaboration Agreement, the Company received a 10-year |
Risk and Uncertainties | Risk and Uncertainties Financial instruments that potentially subject the Company to credit risk consist of cash, cash equivalents, and restricted 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. For the years ended December 31, 2023, 2022, and 2021, there were no customers exceeding 10% of total revenues on an individual basis. As of December 31, 2023 and 2022, there were no customers with an outstanding balance exceeding 10% of net accounts receivable. For the years ended December 2023, 2022, and 2021, approximately 12.8%, 11.2%, and 5.1%, respectively, of total revenue were paid by Medicare on behalf of multiple customers. For the years ended December 2023 and 2022, approximately 13.9% and 14.1%, respectively, of accounts receivable expected to be paid by Medicare on behalf of multiple customers. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications 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 accounting standards updates recently issued that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. New Accounting Pronouncements Not Yet Adopted In March 2020, ASU 2020-04, Reference Rate Reform (Topic 848) In November 2023, ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In December 2023, ASU 2023-09, Income Taxes - Improvements to Income Tax Disclosures |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Roll-forward of inventory reserve | December 31, 2023 2022 (in thousands) Beginning balance $ 748 $ 988 Write-offs (2,175) (240) Net additions to reserve 2,299 — Ending balance $ 872 $ 748 |
Schedule of Accumulated Other Comprehensive Income (Loss) | December 31, 2023 2022 (in thousands) Beginning balance $ (16,362) $ (2,287) Net unrealized gain (loss) on available-for-sale securities, net of tax and foreign currency translation adjustment 13,277 (14,075) Ending balance $ (3,085) $ (16,362) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue Recognition | |
Schedule of disaggregation of revenues by payer types | Year Ended December 31, 2023 2022 2021 (in thousands) Insurance carriers $ 954,155 $ 690,754 $ 492,563 Laboratory partners 98,891 94,910 100,019 Patients 29,525 34,558 32,904 Total revenues $ 1,082,571 $ 820,222 $ 625,486 |
Schedule of total revenue by geographic area | Year ended December 31, 2023 2022 2021 (in thousands) United States $ 1,047,636 $ 785,849 $ 590,872 Americas, excluding U.S. 4,908 3,705 4,047 Europe, Middle East, India, Africa 22,811 16,640 20,429 Asia Pacific and Other 7,216 14,028 10,138 Total $ 1,082,571 $ 820,222 $ 625,486 |
Schedule of beginning and ending balances of accounts receivable and deferred revenues | Balance at Balance at December 31, December 31, 2023 2022 (in thousands) Assets: Accounts receivable $ 278,289 $ 244,385 Liabilities: Deferred revenue, current portion $ 16,612 $ 10,777 Deferred revenue, long-term portion 19,128 20,001 Total deferred revenues $ 35,740 $ 30,778 |
Schedule of changes in the balance of deferred revenues | Balance at Balance at December 31, December 31, 2023 2022 (in thousands) Beginning balance $ 30,778 $ 28,722 Increase in deferred revenues 35,573 28,978 Reclasses from deferred revenues to other short-term liabilities (522) (337) Revenue recognized during the period that was included in (10,564) (8,782) Revenue recognized from performance obligations satisfied (19,525) (17,803) Ending balance $ 35,740 $ 30,778 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Summary of financial assets and liabilities measured on recurring basis | December 31, 2023 December 31, 2022 Level I Level II Level III Total Level I Level II Level III Total (in thousands) Financial Assets: Cash, cash equivalents and restricted cash (1) 642,095 — — 642,095 466,091 — — 466,091 U.S. Treasury securities 200,418 — — 200,418 346,057 — — 346,057 Corporate bonds and notes — — — — — 23,529 — 23,529 Municipal securities — 36,464 — 36,464 — 62,715 — 62,715 Total financial assets $ 842,513 $ 36,464 $ — $ 878,977 $ 812,148 $ 86,244 $ — $ 898,392 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Financial Instruments | |
Schedule of available-for-sale securities | December 31, 2023 December 31, 2022 Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value Amortized Cost Gross Unrealized Gain Gross Unrealized (Loss) Estimated Fair Value (in thousands) Cash, cash equivalents and restricted cash (2) 642,095 — — 642,095 466,091 — — 466,091 U.S. Treasury securities (1) 201,522 14 (1,118) 200,418 358,385 — (12,328) 346,057 Corporate bonds and notes (1) — — — — 24,045 — (516) 23,529 Municipal securities (1) 38,091 — (1,627) 36,464 65,973 1 (3,259) 62,715 Total $ 881,708 $ 14 $ (2,745) $ 878,977 $ 914,494 $ 1 $ (16,103) $ 898,392 Classified as: Cash, cash equivalents and restricted cash (2) $ 642,095 $ 466,091 Short-term investments 236,882 432,301 Total $ 878,977 $ 898,392 (1) Per the Company’s investment policy, all debt securities are classified as short-term investments irrespective of holding period. (2) Cash equivalents includes liquid demand deposits, money market funds, and other liquid investments having an original maturity of less than three months. |
Schedule of debt securities available-for-sale in unrealized loss position | Total Fair Value Unrealized Loss (in thousands) U.S. Treasury securities $ 78,908 $ (1,118) Corporate bonds and notes — — Municipal securities 36,464 (1,627) Total $ 115,372 $ (2,745) |
Summarized portfolio of available-for-sale securities by contractual maturity | December 31, 2023 Amortized Cost Fair Value (in thousands) Less than or equal to one year $ 216,548 $ 215,095 Greater than one year but less than five years 23,065 21,787 Total $ 239,613 $ 236,882 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Balance Sheet Components | |
Schedule of allowances for doubtful accounts | December 31, 2023 2022 2021 (in thousands) Beginning balance $ 3,830 $ 2,429 $ 4,220 Provision for doubtful accounts 2,645 1,770 (156) Write-offs 6 (369) (1,635) Total $ 6,481 $ 3,830 $ 2,429 |
Schedule of property and equipment | December 31, December 31, Useful Life 2023 2022 (in thousands) Machinery and equipment 3-5 years $ 85,626 $ 66,262 Computer equipment 3 years 1,850 1,308 Purchased and capitalized software held for internal use 3 years 11,636 5,464 Leasehold improvements Lesser of useful life or lease term 38,999 29,747 Construction-in-process 29,392 25,370 167,503 128,151 Less: Accumulated depreciation and amortization (56,293) (35,698) Total Property and Equipment, net $ 111,210 $ 92,453 |
Schedule of accrued compensation | December 31, December 31, 2023 2022 (in thousands) Accrued paid time off $ 3,121 $ 2,930 Accrued commissions 10,522 11,821 Accrued bonuses 24,651 20,426 Other accrued compensation 7,563 8,833 Total accrued compensation $ 45,857 $ 44,010 |
Schedule of other accrued liabilities | December 31, December 31, 2023 2022 (in thousands) Reserves for refunds to insurance carriers $ 23,245 $ 18,948 Accrued charges for third-party testing 14,823 17,036 Testing and laboratory materials from suppliers 11,229 13,281 Marketing and corporate affairs 10,085 8,943 Legal, audit and consulting fees 43,897 36,710 Accrued shipping charges 3,646 485 Sales and income tax payable 3,731 4,319 Accrued third-party service fees 7,111 6,631 Clinical trials and studies 12,126 23,301 Operating lease liabilities, current portion 11,621 7,639 Property and equipment purchases 4,316 1,821 Other accrued interest 1,078 1,078 Other accrued expenses 2,497 4,022 Total other accrued liabilities $ 149,405 $ 144,214 |
Schedule of insurance carrier reserve balance | December 31, December 31, 2023 2022 (in thousands) Beginning balance $ 18,948 $ 17,210 Additional reserves 14,974 23,717 Refunds to carriers (1,583) (1,800) Reserves released to revenue (9,094) (20,179) Ending balance $ 23,245 $ 18,948 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases. | |
Schedule of lease liabilities | December 31, December 31, 2023 2022 (in thousands) Operating lease liabilities, current portion included in other accrued liabilities $ 11,621 $ 7,639 Operating lease liabilities, long-term portion 67,025 76,577 Total operating lease liabilities $ 78,646 $ 84,216 |
Schedule of annual minimum lease payments | Operating Leases (in thousands) Year ending December 31: 2024 $ 16,554 2025 16,899 2026 17,263 2027 14,223 2028 6,590 2029 and thereafter 27,924 Total future minimum lease payments 99,453 Less: imputed interest (20,807) Operating lease liabilities $ 78,646 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies | |
Schedule of material contractual commitments | Party Total Commitments Expiry Date (in thousands) Laboratory instruments supplier $ 9,400 December 2024 Material suppliers 20,709 March 2028 Application service providers 12,571 March 2026 Cloud platform service provider 40,000 December 2028 Other material suppliers 11,853 Various Total $ 94,533 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of stock option activity | Outstanding Options Weighted- Weighted- Average Shares Average Remaining Aggregate Available for Number of Exercise Contractual Intrinsic Grant Shares Price Life Value (in thousands, except for contractual life and exercise price) (in years) Balance at December 31, 2022 3,263 5,300 $ 21.11 4.84 $ 131,385 Additional shares authorized 3,500 — $ — Options granted (499) 499 $ 44.27 Options exercised — (298) $ 13.09 RSUs granted (6,096) RSUs forfeited/cancelled 934 Balance at December 31, 2023 1,102 5,501 $ 23.65 4.36 $ 231,133 Exercisable at December 31, 2023 4,509 $ 13.97 3.49 $ 221,758 Vested and expected to vest at December 31, 2023 5,435 $ 23.12 4.31 $ 230,521 |
Restricted stock units | Weighted- Average Number of Grant Date Shares Fair Value (in thousands) Balance at December 31, 2022 6,836 $ 57.12 Granted 6,096 $ 44.90 Vested (2,750) $ 57.74 Cancelled/Forfeited (934) $ 49.54 Balance at December 31, 2023 9,248 $ 49.50 |
Summary of stock-based compensation expenses | Year ended December 31, 2023 2022 2021 Employee Non-Employee Total Employee Non-Employee Total Employee Non-Employee Total (in thousands) Cost of revenues $ 11,665 $ 87 $ 11,752 $ 7,905 $ — $ 7,905 $ 4,811 $ — $ 4,811 Research and development 63,445 2,881 66,326 44,655 1,890 46,545 24,507 1,361 25,868 Selling, general and administrative 112,236 1,494 113,730 97,379 555 97,934 84,368 172 84,540 Total $ 187,346 $ 4,462 $ 191,808 $ 149,939 $ 2,445 $ 152,384 $ 113,686 $ 1,533 $ 115,219 |
Schedule of assumptions used in valuation of fair value | December 31, December 31, December 31, 2023 2022 2021 Risk-free interest rate — % — % 0.80 % — 1.52 % Expected dividend yield — % — % — % Expected volatility — % — % 60 % Expected term (years) — — 7.25 — 10.00 |
Employee Stock Option [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions used in valuation of fair value | Year ended December 31, 2023 2022 2021 Expected term (years) 5.20 — 6.11 5.12 — 10.00 5.11 — 10.00 Expected volatility 67.75 % — 70.07 % 55.91 % — 62.30 % 55.33 % — 63.30 % Expected dividend rate — % — % — % Risk-free interest rate 3.41 % — 4.80 % 1.62 % — 4.16 % 0.81 % — 1.67 % |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt | |
Schedule of outstanding Convertible Notes | December 31, 2023 2022 (in thousands) Long-Term Debt Outstanding Principal $ 287,500 $ 287,500 Unamortized debt discount and debt issuance cost (4,555) (5,847) Net carrying amount $ 282,945 $ 281,653 |
Summary of interest expense | December 31, 2023 2022 2021 (in thousands) Cash interest expense Contractual interest expense $ 6,469 $ 6,469 $ 6,469 Non-cash interest expense Amortization of debt discount and debt issuance cost 1,292 1,259 1,227 Total interest expense $ 7,761 $ 7,728 $ 7,696 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of effective tax rates differing from U.S. federal statutory rate | December 31, 2023 2022 2021 (in thousands, except percentages) U.S. federal taxes (benefit) at statutory rate $ (91,251) 21.00 % $ (114,832) 21.00 % $ (98,931) 21.00 % State tax expense (13,492) 3.10 % (21,676) 3.96 % (29,206) 6.20 % Research and development credits (10,837) 2.49 % (7,024) 1.28 % (9,193) 1.95 % Stock-based compensation (6,422) 1.48 % 3,949 (0.72) % (46,128) 9.79 % Foreign tax (106) 0.02 % 332 (0.06) % 167 (0.04) % Nondeductible officers' compensation 8,651 (1.99) % 4,883 (0.89) % 24,387 (5.18) % Acquisition costs 563 (0.13) % 3,226 (0.59) % 8,901 (1.89) % Other (3,397) 0.79 % 1,964 (0.36) % 344 (0.05) % Change in valuation allowance 116,562 (26.82) % 130,156 (23.80) % 150,277 (31.90) % Provision for income taxes $ 271 (0.06) % $ 978 (0.18) % $ 618 (0.13) % |
Schedule of tax effects of temporary differences that give rise to significant portions of the deferred tax assets | December 31, 2023 2022 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 399,287 $ 358,109 Research and development tax credit carryforwards 67,035 52,319 Capitalized research costs 95,923 59,128 Reserves and accruals 34,898 22,781 Lease Liabilities 19,339 21,000 Stock-based compensation 29,005 23,814 Other 9,449 9,162 Total deferred tax assets before valuation allowance 654,936 546,313 Less: valuation allowance (639,510) (526,235) Total deferred tax assets after valuation allowance 15,426 20,078 Deferred tax liabilities: Fixed Assets (1,524) (1,219) Right-of-use lease assets (13,902) (18,859) Total deferred tax liabilities (15,426) (20,078) Net deferred tax assets $ — $ — |
Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits | December 31, 2023 2022 2021 (in thousands) Balance at beginning of year $ 23,844 $ 17,514 $ 11,500 Additions based on tax positions related to the current year 7,034 6,301 6,017 Additions (reductions) for tax positions of prior years 34 29 (3) Balance at end of year $ 30,912 $ 23,844 $ 17,514 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Net Loss per Share | |
Total outstanding potentially dilutive shares | December 31, 2023 2022 2021 (in thousands) Options to purchase common stock 5,501 5,300 5,898 Performance-based awards and restricted stock units 9,248 6,836 3,988 Employee stock purchase plan 88 90 33 Convertible Note 7,411 7,411 7,411 Earnouts for development with acquired Canadian entity — 361 353 22,248 19,998 17,683 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2023 | Nov. 30, 2022 | Jul. 31, 2021 | Apr. 30, 2020 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Policies | ||||||||
Revenues | $ 1,082,571 | $ 820,222 | $ 625,486 | |||||
Net Income (Loss) | (434,801) | (547,799) | (471,716) | |||||
Accumulated deficit | 2,377,436 | 1,942,635 | ||||||
Cash, cash equivalents and restricted cash | 642,095 | 466,091 | 84,614 | $ 48,855 | ||||
Marketable securities | 236,882 | 432,301 | ||||||
Short-term Credit Line, outstanding balance | 80,402 | 80,350 | ||||||
Borrowings under credit facility | $ 30,000 | |||||||
Collateral amount | 150,000 | |||||||
Remaining borrowing capacity | $ 20,000 | |||||||
Common stock, shares issued | 4,550,000 | 13,144,500 | 5,175,000 | 119,581,000 | 111,255,000 | |||
Stock issued (in dollars per share) | $ 55 | $ 35 | $ 113 | |||||
Payment of offering expenses | $ 400 | $ 500 | $ 400 | |||||
Proceeds from issuance of common stock | $ 235,800 | $ 433,200 | $ 551,200 | |||||
Net proceeds | 278,300 | |||||||
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 | 4,550,000 | |||||||
Licensing and other | ||||||||
Policies | ||||||||
Revenues | $ 14,049 | $ 22,915 | 45,406 | |||||
Cost of revenues | 1,267 | 2,624 | 3,223 | |||||
Product | ||||||||
Policies | ||||||||
Revenues | 1,068,522 | 797,307 | 580,080 | |||||
Cost of revenues | $ 588,564 | $ 453,632 | $ 315,195 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Inventory Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Beginning balance | $ 748 | $ 988 |
Write-offs | (2,175) | (240) |
Net additions to reserve | 2,299 | |
Ending balance | $ 872 | $ 748 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Asset acquisition (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Sep. 10, 2021 | Mar. 31, 2023 | Dec. 31, 2022 | Nov. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Asset Acquisition [Line Items] | ||||||||
Research and development | $ 320,678 | $ 316,415 | $ 264,208 | |||||
In-process research and development acquisition | ||||||||
Asset Acquisition [Line Items] | ||||||||
Asset acquisition, consideration | $ 35,600 | $ 15,000 | $ 10,000 | |||||
Issuance of common stock | 276,346 | |||||||
Value of common stock issued | $ 30,900 | $ 10,000 | $ 15,000 | |||||
Cash consideration | 3,900 | |||||||
Net liabilities assumed | 200 | |||||||
Acquisition related costs | 600 | |||||||
Research and development | 35,600 | |||||||
Value of additional shares potentially issuable | $ 35,000 | |||||||
Number of additional shares potentially issuable | 269,547 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Related Party (Details) - MyOme, Inc. - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | ||
Feb. 28, 2024 | Dec. 31, 2023 | Dec. 06, 2021 | |
Related Party Transaction [Line Items] | |||
Investment in equity securities without readily determinable fair value | $ 4 | ||
Equity securities without readily determinable fair value, impairment loss | $ 0 | ||
Ownership percentage | 5.25% | ||
Subsequent event | |||
Related Party Transaction [Line Items] | |||
Warrant term | 10 years | ||
Warrant convertible into number of common stock shares | 3,058,485 | ||
Warrant exercise price (in dollars per share) | $ 0.25 | ||
Executive chairman | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 28.60% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Concentration (Details) - customer | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Sales | Customer | |||
Risk and Uncertainties | |||
Number of customers exceeding 10% of benchmark | 0 | 0 | 0 |
Sales | Customer | Medicare | |||
Risk and Uncertainties | |||
Concentration risk (as a percent) | 12.80% | 11.20% | 5.10% |
Accounts receivable | Credit | |||
Risk and Uncertainties | |||
Number of customers exceeding 10% of benchmark | 0 | 0 | |
Accounts receivable | Credit | Medicare | |||
Risk and Uncertainties | |||
Concentration risk (as a percent) | 13.90% | 14.10% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - AOCIL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | $ (16,362) | $ (2,287) |
Ending balance | (3,085) | (16,362) |
Net unrealized gain (loss) on available-for-sale securities, net of tax and foreign currency translation adjustment | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Increase (decrease) in other comprehensive income (loss) | $ 13,277 | $ (14,075) |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Capitalized software | $ 8.7 | $ 5.9 | |
Advertising costs | 1.1 | 1.8 | $ 2.2 |
Software held for internal use | |||
Amortized expense | $ 2.4 | 0.2 | 1.1 |
Estimated useful life (in years) | 3 years | ||
Shipping and handling costs | |||
Cost of revenues | $ 42.2 | $ 36 | $ 22 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2021 USD ($) | Dec. 31, 2023 USD ($) item $ / shares | Dec. 31, 2022 USD ($) $ / shares | Dec. 31, 2021 USD ($) $ / shares | Aug. 31, 2019 USD ($) | Jun. 30, 2019 USD ($) | |
Revenue recognized | $ 19,500 | |||||
Deferred revenue, Long-term | 19,128 | $ 20,001 | ||||
Other assets | 15,403 | 18,330 | ||||
Deferred revenue | 35,740 | 30,778 | $ 28,722 | |||
Deferred revenue, current portion | 16,612 | 10,777 | ||||
Total revenues | 1,082,571 | 820,222 | 625,486 | |||
Deferred revenue, long-term portion | 19,128 | 20,001 | ||||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | $ 10,564 | 8,782 | ||||
Product | ||||||
Approximate percentage of revenue collected within 9 months | 90% | |||||
Billing collection period (in months) | 9 months | |||||
Cost of revenues | $ 588,564 | 453,632 | 315,195 | |||
Total revenues | 1,068,522 | 797,307 | 580,080 | |||
Tests delivered in prior periods that were fully collected | ||||||
Increased (decreased) revenues | 5,300 | 19,500 | 12,500 | |||
(Increased) decreased net loss | $ 5,300 | $ 19,500 | $ 12,500 | |||
(Increased) decreased net loss per share | $ / shares | $ 0.05 | $ 0.20 | $ 0.14 | |||
Amounts not refunded to insurance carriers | ||||||
Increased (decreased) revenues | $ 13,100 | $ 5,800 | $ 5,700 | |||
(Increased) decreased net loss | $ 13,100 | $ 5,800 | $ 5,700 | |||
(Increased) decreased net loss per share | $ / shares | $ 0.11 | $ 0.06 | $ 0.06 | |||
Licensing and other | ||||||
Cost of revenues | $ 1,267 | $ 2,624 | $ 3,223 | |||
Total revenues | 14,049 | 22,915 | 45,406 | |||
Genetic testing services | ||||||
Revenue recognized | 18,300 | |||||
Deferred revenue, current portion | 13,700 | |||||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 9,300 | |||||
Qiagen | Other licensing and other revenue | ||||||
Refunds of revenues previously deferred | $ 10,000 | |||||
Deferred revenue | $ 28,600 | |||||
BGI Genomics | ||||||
Revenue recognized | $ 44,000 | |||||
Agreement term | 10 years | |||||
Revenue, remaining performance obligation | $ 6,000 | |||||
Deferred revenue, Long-term | 17,600 | |||||
Transaction price | 50,000 | |||||
Deferred revenue | 18,800 | |||||
Deferred revenue, current portion | 1,200 | |||||
Prepaid royalties | 20,000 | |||||
Deferred revenue, long-term portion | 17,600 | |||||
BGI Genomics | License and related development services | ||||||
Revenue recognized | $ 100 | 8,000 | 600 | |||
Number of performance obligations | item | 2 | |||||
Revenue, remaining performance obligation | $ 24,000 | |||||
BGI Genomics | Sequencing services | ||||||
Other assets | 4,900 | $ 6,000 | ||||
BGI Genomics | Sequencing products | ||||||
Other assets | 4,000 | |||||
Prepaid expenses and other current assets | 3,100 | |||||
Equipment and services received | 5,100 | |||||
BGI Genomics | Sequencing products and services | ||||||
Other assets | 1,800 | $ 10,000 | ||||
BGI Genomics | Oncology assay interpretation services | ||||||
Revenue recognized | 1,500 | 0 | 0 | |||
Revenue, remaining performance obligation | 20,000 | |||||
Deferred revenue | 1,200 | |||||
Foundation Medicine ("FMI") | ||||||
Revenue recognized | $ 24,300 | |||||
Agreement term | 5 years | |||||
Automatic renewals, successive period thereafter | 1 year | |||||
Revenue, remaining performance obligation | $ 7,700 | |||||
Deferred revenue, Long-term | 1,500 | |||||
Transaction price | $ 32,000 | |||||
Deferred revenue | 3,200 | |||||
Deferred revenue, current portion | 1,700 | |||||
Prepaid royalties | 5,000 | |||||
Deferred revenue, long-term portion | 1,500 | |||||
Foundation Medicine ("FMI") | Oncology assay interpretation services | ||||||
Revenue recognized | 1,000 | 400 | 400 | |||
Revenue, remaining performance obligation | 5,000 | |||||
Foundation Medicine ("FMI") | Oncology products | ||||||
Revenue recognized | 200 | $ 3,500 | $ 8,000 | |||
Revenue, remaining performance obligation | $ 19,300 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 1,082,571 | $ 820,222 | $ 625,486 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 1,047,636 | 785,849 | 590,872 |
Americas, excluding U.S. | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 4,908 | 3,705 | 4,047 |
Europe, Middle East, India, and Africa | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 22,811 | 16,640 | 20,429 |
Asia Pacific and Other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 7,216 | 14,028 | 10,138 |
Insurance carriers | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 954,155 | 690,754 | 492,563 |
Laboratory partners | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 98,891 | 94,910 | 100,019 |
Patients | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 29,525 | 34,558 | 32,904 |
Licensing and other | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 14,049 | $ 22,915 | $ 45,406 |
Revenue Recognition - Accounts
Revenue Recognition - Accounts Receivable and Deferred Revenue (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | |||
Accounts receivable, net | $ 278,289 | $ 244,385 | |
Liabilities: | |||
Deferred revenue, current portion | 16,612 | 10,777 | |
Deferred revenue, long-term portion | 19,128 | 20,001 | |
Total deferred revenues | $ 35,740 | $ 30,778 | $ 28,722 |
Revenue Recognition - Changes i
Revenue Recognition - Changes in Balance of Deferred Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue Recognition | ||
Beginning balance | $ 30,778 | $ 28,722 |
Increase in deferred revenues | 35,573 | 28,978 |
Reclasses from deferred revenues to other short-term liabilities | (522) | (337) |
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | (10,564) | (8,782) |
Revenue recognized from performance obligations satisfied within the same period | (19,525) | (17,803) |
Ending Balance | $ 35,740 | $ 30,778 |
Revenue Recognition - Deferred
Revenue Recognition - Deferred Revenues (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | $ 10,564 | $ 8,782 | |
Revenue recognized | 19,500 | ||
Deferred revenue, current portion | 16,612 | 10,777 | |
Deferred revenue, Long-term | 19,128 | 20,001 | |
Deferred revenue | 35,740 | $ 30,778 | $ 28,722 |
BGI Genomics | |||
Revenue recognized | 44,000 | ||
Deferred revenue, current portion | 1,200 | ||
Deferred revenue, Long-term | 17,600 | ||
Deferred revenue | 18,800 | ||
Foundation Medicine ("FMI") | |||
Revenue recognized | 24,300 | ||
Deferred revenue, current portion | 1,700 | ||
Deferred revenue, Long-term | 1,500 | ||
Deferred revenue | 3,200 | ||
BGI Genomics and Foundation Medicine ("FMI") | |||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 1,300 | ||
Revenue recognized | 1,200 | ||
Genetic testing services | |||
Revenue recognized during the period that was included in deferred revenues at the beginning of the period | 9,300 | ||
Revenue recognized | 18,300 | ||
Deferred revenue, current portion | $ 13,700 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Line Of Credit-UBS | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Line of credit facility, fair value of amount outstanding | $ 80,400 | $ 80,400 | |
Line Of Credit-UBS | SOFR | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Spread on interest rate (as a percent) | 0.50% | 0.50% | 1.21% |
Level 2 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Fair value of long-term debt | $ 491,800 | $ 358,400 | |
Recurring | Available-for-sale securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 878,977 | 898,392 | |
Recurring | Liquid demand deposits | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 642,095 | 466,091 | |
Recurring | U.S. Treasury securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 200,418 | 346,057 | |
Recurring | Corporate bonds and notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 23,529 | ||
Recurring | Municipal securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 36,464 | 62,715 | |
Recurring | Level 1 | Available-for-sale securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 842,513 | 812,148 | |
Recurring | Level 1 | Liquid demand deposits | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 642,095 | 466,091 | |
Recurring | Level 1 | U.S. Treasury securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 200,418 | 346,057 | |
Recurring | Level 2 | Available-for-sale securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 36,464 | 86,244 | |
Recurring | Level 2 | Corporate bonds and notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | 23,529 | ||
Recurring | Level 2 | Municipal securities | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total financial assets | $ 36,464 | $ 62,715 |
Financial Instruments (Details)
Financial Instruments (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) | Dec. 31, 2023 USD ($) position | |
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Proceeds from investments sold | $ 248,500 | |
Gross realized gains (losses) | (900) | |
Number of investments, unrealized loss position | position | 19 | |
Number of investments, unrealized loss position less than 12 months | position | 0 | |
Fair value | $ 115,372 | |
Unrealized loss | (2,745) | |
Amortized Cost | ||
Less than or equal to one year | 216,548 | |
Greater than one year but less than five years | 23,065 | |
Total | 239,613 | |
Fair Value | ||
Less than or equal to one year | 215,095 | |
Greater than or equal to one year but less than five years | 21,787 | |
Total | 236,882 | |
Available-for-sale securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 914,494 | 881,708 |
Gross Unrealized Gain | 1 | 14 |
Gross Unrealized Loss | (16,103) | (2,745) |
Estimated Fair Value | 898,392 | 878,977 |
Gross unrealized loss | 16,103 | 2,745 |
Liquid demand deposits | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 466,091 | 642,095 |
Estimated Fair Value | 466,091 | 642,095 |
U.S. Treasury securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 358,385 | 201,522 |
Gross Unrealized Gain | 14 | |
Gross Unrealized Loss | (12,328) | (1,118) |
Estimated Fair Value | 346,057 | 200,418 |
Fair value | 78,908 | |
Unrealized loss | (1,118) | |
Gross unrealized loss | 12,328 | 1,118 |
Corporate bonds and notes | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 24,045 | |
Gross Unrealized Loss | (516) | |
Estimated Fair Value | 23,529 | |
Gross unrealized loss | 516 | |
Municipal securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Amortized Cost | 65,973 | 38,091 |
Gross Unrealized Gain | 1 | |
Gross Unrealized Loss | (3,259) | (1,627) |
Estimated Fair Value | 62,715 | 36,464 |
Fair value | 36,464 | |
Unrealized loss | (1,627) | |
Gross unrealized loss | 3,259 | 1,627 |
Cash equivalents | Available-for-sale securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Estimated Fair Value | 466,091 | 642,095 |
Short-term investments | Available-for-sale securities | ||
Debt Securities, Available-for-sale, Fair Value to Amortized Cost [Abstract] | ||
Estimated Fair Value | $ 432,301 | $ 236,882 |
Balance Sheet Components - Allo
Balance Sheet Components - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Allowance for doubtful accounts | |||
Beginning balance | $ 3,830 | $ 2,429 | $ 4,220 |
Provision for doubtful accounts | 2,645 | 1,770 | (156) |
Write-offs | 6 | (369) | (1,635) |
Total | $ 6,481 | $ 3,830 | $ 2,429 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property and Equipment, net | |||
Property and equipment, gross | $ 167,503 | $ 128,151 | |
Less: Accumulated depreciation and amortization | (56,293) | (35,698) | |
Total Property and Equipment, net | 111,210 | 92,453 | |
Depreciation expense | 22,700 | 16,700 | $ 11,300 |
Cloud-based implementation costs | 5,500 | 4,700 | 3,500 |
Cloud-based implementation costs, accumulated amortization | 2,500 | 900 | 1,500 |
Cloud-based implementation costs, net book value | 3,000 | 3,800 | $ 2,100 |
Equipment pledged | 150,000 | ||
Machinery and equipment | |||
Property and Equipment, net | |||
Property and equipment, gross | 85,626 | 66,262 | |
Computer equipment | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 1,850 | 1,308 | |
Useful Life | 3 years | ||
Software held for internal use | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 11,636 | 5,464 | |
Useful Life | 3 years | ||
Leasehold improvements | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 38,999 | 29,747 | |
Construction-in-process | |||
Property and Equipment, net | |||
Property and equipment, gross | $ 29,392 | $ 25,370 | |
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, 2023 | Dec. 31, 2022 |
Balance Sheet Components | ||
Accrued paid time off | $ 3,121 | $ 2,930 |
Accrued commissions | 10,522 | 11,821 |
Accrued bonuses | 24,651 | 20,426 |
Other accrued compensation | 7,563 | 8,833 |
Total accrued compensation | $ 45,857 | $ 44,010 |
Balance Sheet Components - Othe
Balance Sheet Components - Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheet Components | |||
Reserves for refunds to insurance carriers | $ 23,245 | $ 18,948 | $ 17,210 |
Accrued charges for third-party testing | 14,823 | 17,036 | |
Testing and laboratory materials from suppliers | 11,229 | 13,281 | |
Marketing and corporate affairs | 10,085 | 8,943 | |
Legal, audit and consulting fees | 43,897 | 36,710 | |
Accrued shipping charges | 3,646 | 485 | |
Sales and income tax payable | 3,731 | 4,319 | |
Accrued third-party service fees | 7,111 | 6,631 | |
Clinical trials and studies | 12,126 | 23,301 | |
Operating lease liabilities, current portion | 11,621 | 7,639 | |
Property and equipment purchases | 4,316 | 1,821 | |
Other accrued interest | 1,078 | 1,078 | |
Other accrued expenses | 2,497 | 4,022 | |
Total other accrued liabilities | $ 149,405 | $ 144,214 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Total other accrued liabilities | Total other accrued liabilities |
Balance Sheet Components - Rese
Balance Sheet Components - Reserve Balance and Activities for Refunds (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Balance Sheet Components | ||
Beginning balance | $ 18,948 | $ 17,210 |
Additional reserves | 14,974 | 23,717 |
Refunds to carriers | (1,583) | (1,800) |
Reserves released to revenue | (9,094) | (20,179) |
Ending balance | $ 23,245 | $ 18,948 |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) ft² location lease | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Operating lease liabilities, current portion included in other accrued liabilities | $ 11,621 | $ 7,639 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Accrued Liability, Current | Other Accrued Liability, Current | |
Operating lease liabilities, long-term portion | $ 67,025 | $ 76,577 | |
Operating lease liabilities | 78,646 | 84,216 | |
Noncash activities related to right-of-use assets | $ 2,100 | 22,100 | |
Weighted average remaining lease term | 6 years 8 months 8 days | ||
Weighted average discount rate (as a percent) | 6.80% | ||
Lease expense | $ 14,500 | 13,800 | $ 10,900 |
Operating lease payments | $ 12,400 | 9,400 | $ 10,300 |
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] | |||
Lease space (area) | ft² | 94,000 | ||
Number of office space locations | lease | 2 | ||
Term of lease | 132 months | ||
Noncash activities related to right-of-use assets | $ 20,100 | ||
First Expansion Premises | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 32,500 | ||
Second Expansion Premises | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 65,222 | ||
Corporate Headquarters Lease | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 136,000 | ||
Number of office space locations | location | 2 | ||
"First Space" Sublease | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 88,000 | ||
"Second Space" Sublease | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 48,000 | ||
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] | |||
Lease space (area) | ft² | 10,000 | ||
Term of lease | 62 months | ||
Renewal term of lease | 5 years | ||
South San Francisco, CA Lease | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 11,395 | ||
Term of lease | 36 months | ||
Renewal term of lease | 3 years | ||
Lease expense | $ 900 | ||
Pleasanton, CA Lease | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 16,319 | ||
Annual lease payment | $ 500 | ||
Term of lease | 60 months | ||
Laboratory space in Canada | |||
Lessee, Lease, Description [Line Items] | |||
Lease space (area) | ft² | 7,107 | ||
Annual lease payment | $ 200 | ||
Term of lease | 24 months |
Leases - Payments (Details)
Leases - Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Leases. | ||
2024 | $ 16,554 | |
2025 | 16,899 | |
2026 | 17,263 | |
2027 | 14,223 | |
2028 | 6,590 | |
2029 and thereafter | 27,924 | |
Total future minimum lease payments | 99,453 | |
Less: imputed interest | (20,807) | |
Operating lease liabilities | $ 78,646 | $ 84,216 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | ||||||||||||
Jan. 31, 2024 USD ($) | Jul. 31, 2023 patent | Jun. 30, 2023 USD ($) patent | Dec. 31, 2022 patent lawsuit | Mar. 31, 2022 USD ($) | Nov. 30, 2021 patent | Sep. 30, 2021 patent | Jan. 31, 2021 patent | Oct. 31, 2020 patent | Jun. 30, 2020 patent | Mar. 31, 2020 patent lawsuit | Mar. 31, 2024 USD ($) patent | Dec. 31, 2023 USD ($) | Feb. 28, 2022 lawsuit | |
Other commitments | ||||||||||||||
Total | $ 94,533 | |||||||||||||
Material suppliers | ||||||||||||||
Other commitments | ||||||||||||||
Total | 20,709 | |||||||||||||
Application service providers | ||||||||||||||
Other commitments | ||||||||||||||
Total | 12,571 | |||||||||||||
Cloud platform service provider | ||||||||||||||
Other commitments | ||||||||||||||
Total | 40,000 | |||||||||||||
Other material suppliers | ||||||||||||||
Other commitments | ||||||||||||||
Total | 11,853 | |||||||||||||
Laboratory instruments supplier | ||||||||||||||
Other commitments | ||||||||||||||
Total | $ 9,400 | |||||||||||||
CareDX Patent Case | ||||||||||||||
Other commitments | ||||||||||||||
Number of patent litigations | lawsuit | 2 | |||||||||||||
Loss contingency, patents allegedly infringed, number | patent | 3 | 3 | ||||||||||||
Amount awarded to other party | $ 44,900 | |||||||||||||
CareDX Patent Case | Subsequent event | ||||||||||||||
Other commitments | ||||||||||||||
Gain contingency, patents allegedly infringed, number | patent | 1 | |||||||||||||
Amount awarded from other party | $ 96,300 | |||||||||||||
ArcherDX Case | ||||||||||||||
Other commitments | ||||||||||||||
Gain contingency, patents allegedly infringed, number | patent | 3 | 3 | ||||||||||||
Amount awarded from other party | $ 19,350 | |||||||||||||
Ravgen Patent Case | ||||||||||||||
Other commitments | ||||||||||||||
Loss contingency, patents allegedly infringed, number | patent | 2 | |||||||||||||
Ravgen Patent Case | Subsequent event | ||||||||||||||
Other commitments | ||||||||||||||
Amount awarded to other party | $ 57,000 | |||||||||||||
Genosity Inc. Patent Case | ||||||||||||||
Other commitments | ||||||||||||||
Gain contingency, patents allegedly infringed, number | patent | 1 | |||||||||||||
Inivata Patent Case | ||||||||||||||
Other commitments | ||||||||||||||
Number of patent litigations | lawsuit | 2 | |||||||||||||
Gain contingency, patents allegedly infringed, number | patent | 1 | |||||||||||||
Inivitae Patent Case | ||||||||||||||
Other commitments | ||||||||||||||
Loss contingency, patents allegedly infringed, number | patent | 3 | |||||||||||||
NeoGenomics Patent Case | ||||||||||||||
Other commitments | ||||||||||||||
Gain contingency, patents allegedly infringed, number | patent | 1 | |||||||||||||
Class action | ||||||||||||||
Other commitments | ||||||||||||||
Number of lawsuits | lawsuit | 2 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 12 Months Ended | |||
Dec. 31, 2023 USD ($) period shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) | Jun. 30, 2015 shares | |
Stock Based Compensation | ||||
Shares granted | 6,096,000 | |||
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% | |||
2015 Plan | Minimum | ||||
Stock Based Compensation | ||||
Shares reserved for issuance | 3,500,000 | |||
Employee stock purchase plan | ||||
Stock Based Compensation | ||||
Shares reserved for issuance | 3,772,225 | |||
Additional shares reserved for issuance | 880,000 | |||
Shares reserved for issuance as a proportion of common stock outstanding (as a percent) | 1% | |||
Price in relation to fair market value of common stock on the date of grant, lower range limit (as a percent) | 85% | |||
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 | |||
Maximum employee contribution of employee's cash compensation (as a percent) | 15% | |||
Performance-based awards | ||||
Stock Based Compensation | ||||
Stock-based compensation expense | $ | $ 54,200,000 | $ 48,200,000 | ||
Options to purchase common stock | ||||
Stock Based Compensation | ||||
Stock-based compensation expense | $ | $ 191,808,000 | $ 152,384,000 | $ 115,219,000 | |
Shares available for issuance | 1,102,000 | 3,263,000 | ||
Options outstanding (in shares) | 5,501,000 | 5,300,000 | ||
Restricted stock units | ||||
Stock Based Compensation | ||||
Number of shares vested | 2,750 | |||
Shares granted | 6,096 | |||
Non-employee stock options | ||||
Stock Based Compensation | ||||
Stock-based compensation expense | $ | $ 4,462,000 | $ 2,445,000 | $ 1,533,000 | |
Options outstanding (in shares) | 0 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Based Compensation | |||
RSUs granted (in shares) | (6,096,000) | ||
RSUs forfeited/cancelled (in shares) | 934,000 | ||
Options to purchase common stock | |||
Stock Based Compensation | |||
Shares available for grant, beginning balance | 3,263,000 | ||
Additional shares authorized | 3,500,000 | ||
Options granted (in shares) | (499,000) | ||
Shares available for grant, end balance | 1,102,000 | 3,263,000 | |
Number of shares Outstanding | |||
Outstanding, beginning balance (in shares) | 5,300,000 | ||
Options granted (in shares) | 499,000 | ||
Options exercised (in shares) | (298,000) | ||
Outstanding, end balance (in shares) | 5,501,000 | 5,300,000 | |
Exercisable (in shares) | 4,509,000 | ||
Vested and expected to vest (in shares) | 5,435,000 | ||
Weighted-Average Exercise Price | |||
Outstanding, beginning balance (in dollars per share) | $ 21.11 | ||
Granted (in dollars per share) | 44.27 | ||
Exercised (in dollars per share) | 13.09 | ||
Outstanding, end balance (in dollars per share) | 23.65 | $ 21.11 | |
Exercisable (in dollars per share) | 13.97 | ||
Vested and expected to vest (in dollars per share) | $ 23.12 | ||
Additional disclosures | |||
Weighted average contractual term, options outstanding | 4 years 4 months 9 days | 4 years 10 months 2 days | |
Exercisable (in years) | 3 years 5 months 26 days | ||
Vested and expected to vest (in years) | 4 years 3 months 21 days | ||
Aggregate intrinsic value, options outstanding | $ 231,133 | $ 131,385 | |
Aggregate intrinsic value, options exercisable | 221,758 | ||
Aggregate intrinsic value, vested and expected to vest | 230,521 | ||
Aggregate intrinsic value, options exercised | 14,700 | 26,900 | $ 97,000 |
Fair value, options vested | $ 57,500 | $ 49,000 | $ 46,000 |
Weighted-average grant date fair value, options granted | $ 27.31 | $ 34 | $ 48.97 |
Non-employee stock options | |||
Number of shares Outstanding | |||
Outstanding, end balance (in shares) | 0 | ||
Restricted stock units | |||
Stock Based Compensation | |||
RSUs granted (in shares) | (6,096) | ||
RSUs forfeited/cancelled (in shares) | 934 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Shares | |
Granted (in shares) | 6,096,000 |
Canceled/Forfeited (in shares) | (934,000) |
Restricted stock units | |
Shares | |
Balance (in shares) | 6,836 |
Granted (in shares) | 6,096 |
Vested (in shares) | (2,750) |
Canceled/Forfeited (in shares) | (934) |
Balance (in shares) | 9,248 |
Weighted Average Grant Date Fair Value | |
Balance (in dollars per share) | $ / shares | $ 57.12 |
Granted (in dollars per share) | $ / shares | 44.90 |
Vested (in dollars per share) | $ / shares | 57.74 |
Canceled/Forfeited (in dollars per share) | $ / shares | 49.54 |
Balance (in dollars per share) | $ / shares | $ 49.50 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Performance-based awards | |||
Valuation of Stock Option Grants to Employees | |||
Risk free interest rate, minimum | 0.80% | ||
Risk free interest rate, maximum | 1.52% | ||
Expected volatility | 60% | ||
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 | ||
Options to purchase common stock | |||
Stock Based Compensation | |||
Options granted (in shares) | 499 | ||
Employee Stock Option [Member] | |||
Valuation of Stock Option Grants to Employees | |||
Risk free interest rate, minimum | 3.41% | 1.62% | 0.81% |
Risk free interest rate, maximum | 4.80% | 4.16% | 1.67% |
Expected volatility, minimum | 67.75% | 55.91% | 55.33% |
Expected volatility, maximum | 70.07% | 62.30% | 63.30% |
Employee Stock Option [Member] | Minimum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 5 years 2 months 12 days | 5 years 1 month 13 days | 5 years 1 month 9 days |
Employee Stock Option [Member] | Maximum | |||
Valuation of Stock Option Grants to Employees | |||
Expected term (years) | 6 years 1 month 9 days | 10 years | 10 years |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense (Details) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Options to purchase common stock | |||
Stock based compensation expense | |||
Options granted (in shares) | 499 | ||
Stock-based compensation expense | $ 191,808 | $ 152,384 | $ 115,219 |
Unrecognized compensation expense | $ 331,500 | ||
Unrecognized compensation expense, weighted average period of recognition | 2 years 4 months 24 days | ||
Options to purchase common stock | Cost of revenues | |||
Stock based compensation expense | |||
Stock-based compensation expense | $ 11,752 | 7,905 | 4,811 |
Options to purchase common stock | Research and development | |||
Stock based compensation expense | |||
Stock-based compensation expense | 66,326 | 46,545 | 25,868 |
Options to purchase common stock | Selling, general and administrative | |||
Stock based compensation expense | |||
Stock-based compensation expense | 113,730 | 97,934 | 84,540 |
Employee Stock Option [Member] | |||
Stock based compensation expense | |||
Stock-based compensation expense | 187,346 | 149,939 | 113,686 |
Employee Stock Option [Member] | Cost of revenues | |||
Stock based compensation expense | |||
Stock-based compensation expense | 11,665 | 7,905 | 4,811 |
Employee Stock Option [Member] | Research and development | |||
Stock based compensation expense | |||
Stock-based compensation expense | 63,445 | 44,655 | 24,507 |
Employee Stock Option [Member] | Selling, general and administrative | |||
Stock based compensation expense | |||
Stock-based compensation expense | 112,236 | 97,379 | 84,368 |
Non-employee stock options | |||
Stock based compensation expense | |||
Stock-based compensation expense | 4,462 | 2,445 | 1,533 |
Non-employee stock options | Cost of revenues | |||
Stock based compensation expense | |||
Stock-based compensation expense | 87 | ||
Non-employee stock options | Research and development | |||
Stock based compensation expense | |||
Stock-based compensation expense | 2,881 | 1,890 | 1,361 |
Non-employee stock options | Selling, general and administrative | |||
Stock based compensation expense | |||
Stock-based compensation expense | 1,494 | 555 | 172 |
Liability classified awards | |||
Stock based compensation expense | |||
Stock-based compensation expense | $ 800 | $ 600 | $ 400 |
Debt (Details)
Debt (Details) | 1 Months Ended | 12 Months Ended | |||||||||
Oct. 31, 2023 | Nov. 30, 2022 USD ($) $ / shares shares | Apr. 30, 2020 USD ($) | Dec. 31, 2023 USD ($) D $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | Sep. 30, 2023 $ / shares shares | Jun. 30, 2023 USD ($) | Jul. 31, 2021 $ / shares shares | Dec. 31, 2020 USD ($) | Sep. 30, 2015 USD ($) | |
Debt Instrument [Line Items] | |||||||||||
Proceeds from Convertible Note, net of issuance costs | $ 278,300,000 | ||||||||||
Remaining borrowing capacity | $ 20,000,000 | ||||||||||
Borrowings under credit facility | $ 30,000,000 | ||||||||||
Collateral amount | $ 150,000,000 | ||||||||||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.0001 | $ 0.0001 | |||||||||
Common stock, shares issued | shares | 13,144,500 | 119,581,000 | 111,255,000 | 4,550,000 | 5,175,000 | ||||||
Stock issued (in dollars per share) | $ / shares | $ 35 | $ 55 | $ 113 | ||||||||
Carrying value | $ 282,945,000 | $ 281,653,000 | |||||||||
Debt, repayment amount | 79,200,000 | ||||||||||
Accrued Interest | 1,078,000 | 1,078,000 | |||||||||
Amortization of debt discount and issuance cost | 1,292,000 | 1,259,000 | 1,227,000 | ||||||||
Interest expense | 12,638,000 | 9,319,000 | 8,305,000 | ||||||||
Convertible Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Aggregate principal amount | $ 287,500,000 | $ 287,500,000 | |||||||||
Per annum interest rate (as a percent) | 2.25% | 2.25% | |||||||||
Interest expense | $ 7,761,000 | 7,728,000 | 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% | ||||||||||
Commencing after September 30, 2020 | Convertible Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Threshold trading days | D | 30 | ||||||||||
Percentage of conversion price | 130% | ||||||||||
5 consecutive trading day period | Convertible Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Threshold trading days | D | 5 | ||||||||||
Percentage of conversion price | 98% | ||||||||||
Redeemable for cash on or after May 2024 | Convertible Notes | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Threshold trading days | D | 30 | ||||||||||
Percentage of conversion price | 130% | ||||||||||
Percentage of principal amount converted | 100% | ||||||||||
Level 2 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Fair value of long-term debt | $ 491,800,000 | 358,400,000 | |||||||||
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 | $ 100,000,000 | $ 150,000,000 | $ 50,000,000 | ||||||||
Outstanding balance | $ 80,400,000 | 80,400,000 | |||||||||
Credit facility drawn down | 80,000,000 | ||||||||||
Remaining borrowing capacity | 20,000,000 | ||||||||||
Borrowings under credit facility | $ 30,000,000 | ||||||||||
Collateral amount | 150,000,000 | ||||||||||
Interest expense | 4,900,000 | 1,600,000 | 600,000 | ||||||||
Interest paid | $ 4,900,000 | $ 1,600,000 | $ 600,000 | ||||||||
Effective interest rate (as a percent) | 5.84% | ||||||||||
Line Of Credit-UBS | London Interbank Offered Rate Member | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Spread on interest rate (as a percent) | 1.10% | ||||||||||
Line Of Credit-UBS | SOFR | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Spread on interest rate (as a percent) | 0.50% | 0.50% | 1.21% |
Debt - Discount and Issuance Co
Debt - Discount and Issuance Costs (Details) - Convertible Notes | 12 Months Ended |
Dec. 31, 2023 | |
Effective interest rate (as a percent) | 2.72% |
Debt instrument, term | 7 years |
Debt - Convertible Notes Balanc
Debt - Convertible Notes Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt | ||
Outstanding principle | $ 287,500 | $ 287,500 |
Unamortized debt discount and debt issuance cost | (4,555) | (5,847) |
Net carrying amount | $ 282,945 | $ 281,653 |
Debt - Interest Expense Recogni
Debt - Interest Expense Recognized Related To Convertible Notes (Details) - Convertible Notes - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash interest expense | |||
Contractual interest expense | $ 6,469 | $ 6,469 | $ 6,469 |
Non-cash interest expense | |||
Amortization of debt discount and debt issuance cost | 1,292 | 1,259 | 1,227 |
Total interest expense | $ 7,761 | $ 7,728 | $ 7,696 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||
Sep. 10, 2021 | Sep. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Nov. 30, 2022 | Jul. 31, 2021 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock issued (in dollars per share) | $ 55 | $ 35 | $ 113 | ||||||||
Payment of offering expenses | $ 400 | $ 500 | $ 400 | ||||||||
Proceeds from issuance of common stock | $ 235,800 | $ 433,200 | $ 551,200 | ||||||||
Research and development | $ 320,678 | $ 316,415 | $ 264,208 | ||||||||
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 | 750,000,000 | ||||||||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||
Common stock, shares issued | 4,550,000 | 111,255,000 | 13,144,500 | 5,175,000 | 119,581,000 | 111,255,000 | |||||
Common stock, shares outstanding | 111,255,000 | 119,581,000 | 111,255,000 | ||||||||
In-process research and development acquisition | |||||||||||
Asset acquisition, consideration | $ 35,600 | $ 15,000 | $ 10,000 | ||||||||
Issuance of common stock | 276,346 | ||||||||||
Value of common stock issued | $ 30,900 | $ 10,000 | $ 15,000 | ||||||||
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 | ||||||||||
Research and development | $ 35,600 | ||||||||||
Common stock | |||||||||||
Common stock, shares issued | 111,255,000 | 119,581,000 | 111,255,000 | 95,140,000 | 86,223,000 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rates (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Effective tax rates differing from U.S. federal statutory rate | |||
U.S. Federal taxes (benefit) at statutory rate | $ (91,251) | $ (114,832) | $ (98,931) |
State tax expense | (13,492) | (21,676) | (29,206) |
Research and development credits | (10,837) | (7,024) | (9,193) |
Stock-based compensation | (6,422) | 3,949 | (46,128) |
Foreign tax | (106) | 332 | 167 |
Nondeductible officers' compensation | 8,651 | 4,883 | 24,387 |
Acquisition costs | 563 | 3,226 | 8,901 |
Other | (3,397) | 1,964 | 344 |
Change in valuation allowance | 116,562 | 130,156 | 150,277 |
Provision for income taxes | $ 271 | $ 978 | $ 618 |
U.S. Federal taxes (benefit) at statutory rate (as a percent) | 21% | 21% | 21% |
State tax expense (as a percent) | 3.10% | 3.96% | 6.20% |
Research and development credits (as a percent) | 2.49% | 1.28% | 1.95% |
Stock-based compensation (as a percent) | 1.48% | (0.72%) | 9.79% |
Foreign tax differential (as a percent) | 0.02% | (0.06%) | (0.04%) |
Nondeductible officers' compensation (as a percent) | (1.99%) | (0.89%) | (5.18%) |
Acquisition costs (as a percent) | (0.13%) | (0.59%) | (1.89%) |
Other (as a percent) | 0.79% | (0.36%) | (0.05%) |
Change in valuation allowance (as a percent) | (26.82%) | (23.80%) | (31.90%) |
Provision for income taxes (as a percent) | (0.06%) | (0.18%) | (0.13%) |
Income tax expense | $ 271 | $ 978 | $ 618 |
Income Taxes - Deferred Income
Income Taxes - Deferred Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Income Taxes | ||
Valuation allowance | $ 639,510 | $ 526,235 |
Deferred tax assets | ||
Net operating loss carryforwards | 399,287 | 358,109 |
Research and development tax credit carryforwards | 67,035 | 52,319 |
Capitalized research costs | 95,923 | 59,128 |
Reserves and accruals | 34,898 | 22,781 |
Lease Liabilities | 19,339 | 21,000 |
Stock based compensation | 29,005 | 23,814 |
Other | 9,449 | 9,162 |
Total deferred tax assets before valuation allowance | 654,936 | 546,313 |
Less: valuation allowance | (639,510) | (526,235) |
Total deferred tax assets after valuation allowance | 15,426 | 20,078 |
Deferred tax liabilities | ||
Fixed Assets | (1,524) | (1,219) |
Right-of-use lease assets | (13,902) | (18,859) |
Total deferred tax liabilities | (15,426) | (20,078) |
Net deferred tax assets |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Federal | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 1,600 |
State | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | 1,100 |
Foreign | |
Operating Loss Carryforwards [Line Items] | |
Net operating loss carryforwards | $ 3.8 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Federal | Research and development tax credit carryforward | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | $ 64.3 |
Federal | Tax credit that can be carried forward indefinitely | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | 1,300 |
State | Research and development tax credit carryforward | |
Tax Credit Carryforward [Line Items] | |
Tax credit carryforward | $ 36.7 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
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 | 23,844 | $ 17,514 | $ 11,500 |
Additions based on tax positions related to the current year | 7,034 | 6,301 | 6,017 |
Additions (reductions) for tax positions of prior years | (3) | ||
Additions for tax positions of prior years | 34 | 29 | |
Balance at end of year | 30,912 | 23,844 | 17,514 |
Research and development tax credit carryforward | |||
Income Taxes [Line Items] | |||
Unrecognized tax benefits increase | $ 7,100 | $ 6,300 | $ 6,000 |
Net Loss per Share - Loss per S
Net Loss per Share - Loss per Share (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Convertible Notes | |
Earnings or Loss per Share [Line Items] | |
Convertible, If-converted value in excess of principal | $ 118.5 |
Net Loss per Share - Potentiall
Net Loss per Share - Potentially Dilutive Shares (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 22,248 | 19,998 | 17,683 |
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 5,501 | 5,300 | 5,898 |
Performance-based awards and restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 9,248 | 6,836 | 3,988 |
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 | 88 | 90 | 33 |
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 | 7,411 |
Earnouts for development with acquired Canadian entity | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive shares not included in diluted per share calculation | 361 | 353 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - Assets acquired from Invitae $ in Millions | 1 Months Ended |
Jan. 31, 2024 USD ($) | |
Subsequent Event [Line Items] | |
Upfront payment to acquire assets | $ 10 |
Potential milestone payments | $ 42.5 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ (434,801) | $ (547,799) | $ (471,716) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On December 8, 2023, Steve Chapman, our chief executive officer, terminated On December 11, 2023, Mr. Chapman adopted arrangement Also on December 11, 2023, Mr. Chapman adopted arrangement On December 12, 2023, Jonathan Sheena, our co-founder and a member of our board of directors, adopted |
Jonathan Sheena | |
Trading Arrangements, by Individual | |
Name | Jonathan Sheena |
Title | co-founder and a member of our board of directors |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | December 12, 2023 |
Aggregate Available | 88,400 |
Expiration Date | April 3, 2025 |
Arrangement One | Steve Chapman | |
Trading Arrangements, by Individual | |
Name | Steve Chapman |
Title | chief executive officer |
Non-Rule 10b5-1 Arrangement Terminated | true |
Termination Date | December 8, 2023 |
Aggregate Available | 1,029,696 |
Expiration Date | December 31, 2024 |
Arrangement Two | Steve Chapman | |
Trading Arrangements, by Individual | |
Name | Steve Chapman |
Title | chief executive officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | December 11, 2023 |
Aggregate Available | 876,564 |
Expiration Date | December 8, 2025 |
Arrangement Three | Steve Chapman | |
Trading Arrangements, by Individual | |
Name | Steve Chapman |
Title | chief executive officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | December 11, 2023 |
Aggregate Available | 50,910 |
Expiration Date | March 15, 2026 |