Segment Information

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company has two operating segments for which it recognizes revenue; Clinical Services and Pharma Services. The Company’s Clinical Services segment provides various clinical testing services to community-based pathology and oncology practices, hospital pathology labs, and academic centers with reimbursement from various payers including client direct billing, commercial insurance, Medicare and other government payers, and patients. The Company’s Pharma Services segment supports pharmaceutical firms in their drug development programs by supporting various clinical trials and research as well as providing informatics related services often supporting Pharma commercialization efforts.

The financial information reviewed by the Chief Operating Decision Maker (“CODM”) includes revenues, cost of revenue and gross profit for each of the Company’s operating segments. Assets are not presented at the segment level as that information is not used by the CODM.

The following table summarizes the segment information (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net revenues:
Clinical Services	$	102,227	$	108,733	$	300,119	$	275,599
Pharma Services	19,113		16,711		58,478		42,852
Total revenue	121,340		125,444		358,597		318,451
Cost of revenue:
Clinical Services(1)	59,560		60,607		178,358		158,287
Pharma Services	14,541		10,772		38,436		31,724
Total cost of revenue	74,101		71,379		216,794		190,011
Gross Profit:
Clinical Services	42,667		48,126		121,761		117,312
Pharma Services	4,572		5,939		20,042		11,128
Total gross profit	47,239		54,065		141,803		128,440
Operating expenses:
General and administrative	63,839		36,128		158,953		107,085
Research and development	7,409		1,964		13,360		6,129
Sales and marketing	15,704		11,304		46,677		34,757
Total operating expenses	86,952		49,396		218,990		147,971
Loss (income) from operations	(39,713)		4,669		(77,187)		(19,531)
Interest expense, net	1,296		2,458		3,375		4,825
Other income, net	(89)		(11)		(431)		(7,639)
Gain on investment in and loan receivable from non-consolidated affiliate, net	(17,750)		—		(109,260)		—
Loss on extinguishment of debt	—		—		—		1,400
Loss on termination of cash flow hedge	—		—		—		3,506
(Loss) income before taxes	(23,170)		2,222		29,129		(21,623)
Income tax benefit	(2,822)		(335)		(4,283)		(10,378)
Net (loss) income	$	(20,348)	$	2,557	$	33,412	$	(11,245)

(1) Clinical Services cost of revenue for the three months ended September 30, 2021 includes $4.3 million of amortization of acquired developed technology intangible assets. Clinical Services cost of revenue for the nine months ended September 30, 2021 includes $5 million of amortization of acquired Inivata developed technology intangible assets and write-offs of $5.3 million for COVID-19 PCR testing inventory. Pharma Services cost of revenue for the three and nine months ended September 30, 2021 includes $0.5 million of amortization of acquired Inivata developed technology intangible assets.