Investment in Non-consolidated Affiliate

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investment in Non-Consolidated Affiliate

Investment in Non-Consolidated Affiliate

In addition to the Laboratory Services Agreement and Line of Credit, as discussed in Note 12. Related Party Transactions, the Company also entered into an Investment Agreement with Inivata (the “Investment Agreement”), pursuant to which the Company acquired Series C1 Preference Shares (the “Preference Shares”) for $25 million in cash (the “Investment”) resulting in a minority interest in Inivata’s outstanding equity and an Option Deed which provides the Company with an option to purchase Inivata (the “Purchase Option”). The Investment will be made in two equal installments, with the initial installment made in May 2020 and the second installment expected to occur in August 2020.

Inivata is a VIE and the Company's investment is under 20% of the total equity outstanding. The Company does not control Inivata, but does have significant influence over Inivata. However, because the Preference Shares were determined to not be in-substance common stock, and because the Preference Shares and the Purchase Option do not have readily determinable fair values, the Company has elected to measure the Preference Shares and the Purchase Option at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. There were no such events and the Company determined no adjustments to the carrying amounts of the Preference Shares and the Purchase Option were necessary at June 30, 2020.

Upon acquisition, the Investment was allocated between the Preference Shares and the Purchase Option based on the relative fair value of each and is recorded, along with associated transaction costs, as “Investment in non-consolidated affiliate” on the Consolidated Balance Sheets. At June 30, 2020, the carrying amount of the investment in non-consolidated affiliate is $13.1 million. The value is comprised of $9.6 million in Preference Shares, a $2.9 million Purchase Option and $0.6 million of associated transaction costs.