QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
S | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller Reporting Company | ||||||||||||
Emerging Growth Company |
(unaudited) September 30, 2023 | December 31, 2022 | |||||||||||||
ASSETS | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Marketable securities, at fair value | ||||||||||||||
Accounts receivable, net | ||||||||||||||
Inventories | ||||||||||||||
Prepaid assets | ||||||||||||||
Other current assets | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment (net of accumulated depreciation of $ | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Other assets | ||||||||||||||
Total non-current assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current liabilities | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued compensation | ||||||||||||||
Accrued expenses and other liabilities | ||||||||||||||
Current portion of equipment financing obligations | ||||||||||||||
Current portion of operating lease liabilities | ||||||||||||||
Contract liabilities | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term liabilities | ||||||||||||||
Convertible senior notes, net | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Deferred income tax liabilities, net | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total long-term liabilities | ||||||||||||||
Total liabilities | $ | $ | ||||||||||||
Commitments and contingencies (Note 11) | ||||||||||||||
Stockholders’ equity | ||||||||||||||
Common stock, $ | $ | $ | ||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Total stockholders’ equity | $ | $ | ||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
NET REVENUE | |||||||||||||||||||||||
Clinical Services | $ | $ | $ | $ | |||||||||||||||||||
Advanced Diagnostics | |||||||||||||||||||||||
Total net revenue | |||||||||||||||||||||||
COST OF REVENUE | |||||||||||||||||||||||
GROSS PROFIT | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Restructuring charges | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
LOSS FROM OPERATIONS | ( | ( | ( | ( | |||||||||||||||||||
Interest (income) expense, net | ( | ( | |||||||||||||||||||||
Other expense (income), net | ( | ( | |||||||||||||||||||||
Loss before taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit | ( | ( | ( | ( | |||||||||||||||||||
NET LOSS | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
NET LOSS PER SHARE | |||||||||||||||||||||||
Basic | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
NET LOSS | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||||||||||||
Net unrealized gain (loss) on marketable securities, net of tax | ( | ( | ||||||||||||||||||||||||
Total other comprehensive income (loss), net of tax | ( | ( | ||||||||||||||||||||||||
COMPREHENSIVE LOSS | $ | ( | $ | ( | $ | ( | $ | ( |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense - ESPP | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation expense - options and restricted stock | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance for common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense - ESPP | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation expense - options and restricted stock | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance for common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock issuance fees and expenses | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Stock-based compensation expense - ESPP | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation expense - options and restricted stock | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized gain on marketable securities, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | ( | $ | ( | $ |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | — | ( | — | — | ( | ||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | |||||||||||||||||||||||||||||||||
Stock-based compensation expense - ESPP | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation expense - options and restricted stock | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized loss on marketable securities, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( | — | — | ( | |||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense - ESPP | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation expense - options and restricted stock | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized loss on marketable securities, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance for common stock for ESPP | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of restricted stock, net of forfeitures | ( | — | — | ( | |||||||||||||||||||||||||||||||
Issuance of common stock for stock options | — | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense - ESPP | — | — | — | — | |||||||||||||||||||||||||||||||
Stock-based compensation expense - options and restricted stock | — | — | — | — | |||||||||||||||||||||||||||||||
Net unrealized loss on marketable securities, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | ( | $ | ( | $ |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||
Net loss | $ | ( | $ | ( | ||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||
Depreciation | ||||||||||||||
Amortization of intangibles | ||||||||||||||
Non-cash stock-based compensation | ||||||||||||||
Non-cash operating lease expense | ||||||||||||||
Amortization of convertible debt discount | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Loss on disposal of assets, net | ||||||||||||||
Impairment of assets | ||||||||||||||
Gain on sale of assets held for sale | ( | |||||||||||||
Other adjustments | ||||||||||||||
Changes in assets and liabilities, net | ||||||||||||||
Accounts receivable, net | ( | |||||||||||||
Inventories | ( | ( | ||||||||||||
Prepaid and other assets | ( | ( | ||||||||||||
Operating lease liabilities | ( | ( | ||||||||||||
Deferred income tax liabilities, net | ( | ( | ||||||||||||
Accrued compensation | ( | |||||||||||||
Accounts payable and other liabilities | ( | ( | ||||||||||||
Net cash used in operating activities | ( | ( | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||
Purchases of marketable securities | ( | ( | ||||||||||||
Proceeds from maturities of marketable securities | ||||||||||||||
Purchases of property and equipment | ( | ( | ||||||||||||
Proceeds from assets held for sale | ||||||||||||||
Net cash provided by investing activities | ||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||||
Repayment of equipment financing obligations | ( | ( | ||||||||||||
Issuance of common stock, net | ||||||||||||||
Net cash provided by financing activities | ||||||||||||||
Net change in cash and cash equivalents | ( | |||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ |
Supplemental disclosure of cash flow information: | ||||||||||||||
Interest paid | $ | $ | ||||||||||||
Income taxes paid, net | $ | $ | ||||||||||||
Supplemental disclosure of non-cash investing and financing information: | ||||||||||||||
Purchases of property and equipment included in accounts payable | $ | $ |
September 30, 2023 | ||||||||||||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Short-term marketable securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
Yankee bonds | ( | |||||||||||||||||||||||||
Agency bonds | ( | |||||||||||||||||||||||||
Municipal bonds | ( | |||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Asset-backed securities | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
December 31, 2022 | ||||||||||||||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Short-term marketable securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | ( | $ | |||||||||||||||||||||
Yankee bonds | ( | |||||||||||||||||||||||||
Agency bonds | ( | |||||||||||||||||||||||||
Municipal bonds | ( | |||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Asset-backed securities | ( | |||||||||||||||||||||||||
Corporate bonds | ( | |||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ |
September 30, 2023 | ||||||||||||||||||||||||||
(in thousands) | One Year or Less | Over One Year Through Five Years | Over Five Years | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Marketable Securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | ||||||||||||||||||||||
Yankee bonds | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2022 | ||||||||||||||||||||||||||
(in thousands) | One Year or Less | Over One Year Through Five Years | Over Five Years | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Marketable Securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | $ | $ | $ | $ | ||||||||||||||||||||||
Yankee bonds | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
September 30, 2023 | ||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||||||||
Yankee bonds | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
December 31, 2022 | ||||||||||||||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||
Financial Assets: | ||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Marketable securities: | ||||||||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||||||||
Yankee bonds | ||||||||||||||||||||||||||
Agency bonds | ||||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||
Commercial paper | ||||||||||||||||||||||||||
Asset-backed securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Clinical Services | $ | $ | ||||||||||||
Advanced Diagnostics | ||||||||||||||
Total | $ | $ |
September 30, 2023 | ||||||||||||||||||||||||||
Amortization Period (years) | Cost | Accumulated Amortization | Net | |||||||||||||||||||||||
Customer Relationships | $ | $ | $ | |||||||||||||||||||||||
Developed Technology | ||||||||||||||||||||||||||
Marketing Assets | ||||||||||||||||||||||||||
Trademarks | ||||||||||||||||||||||||||
Trade Name | ||||||||||||||||||||||||||
Trademark - Indefinite lived | — | — | ||||||||||||||||||||||||
Total | $ | $ | $ |
December 31, 2022 | ||||||||||||||||||||||||||
Amortization Period (years) | Cost | Accumulated Amortization | Net | |||||||||||||||||||||||
Customer Relationships | $ | $ | $ | |||||||||||||||||||||||
Developed Technology | ||||||||||||||||||||||||||
Marketing Assets | ||||||||||||||||||||||||||
Trademarks | ||||||||||||||||||||||||||
Trade Name | ||||||||||||||||||||||||||
Trademark - Indefinite lived | — | — | ||||||||||||||||||||||||
Total | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Amortization of intangibles included in cost of revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of intangibles included in general and administrative expenses | ||||||||||||||||||||||||||
Total amortization of intangibles | $ | $ | $ | $ |
Remainder of 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total | $ |
Number of Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding at December 31, 2022 | $ | |||||||||||||
Granted | $ | |||||||||||||
Exercised | ( | $ | ||||||||||||
Forfeited | ( | $ | ||||||||||||
Outstanding at September 30, 2023 | $ | |||||||||||||
Exercisable at September 30, 2023 | $ |
Nine Months Ended September 30, 2023 | |||||
Expected term (in years) | |||||
Risk-free interest rate (%) | |||||
Expected volatility (%) | |||||
Dividend yield (%) | |||||
Weighted average grant date fair value per share | $ |
Number of Restricted Shares | Weighted Average Grant Date Fair Value | |||||||||||||
Nonvested at December 31, 2022 | $ | |||||||||||||
Granted | $ | |||||||||||||
Vested | ( | $ | ||||||||||||
Forfeited | ( | $ | ||||||||||||
Nonvested at September 30, 2023 | $ |
Number of Stock Units | Weighted Average Grant Date Fair Value | |||||||||||||
Nonvested at December 31, 2022 | $ | |||||||||||||
Granted | $ | |||||||||||||
Vested | $ | |||||||||||||
Forfeited | $ | |||||||||||||
Nonvested at September 30, 2023 | $ |
Nine Months Ended September 30, 2023 | |||||
Expected term (in years) | |||||
Risk-free interest rate (%) | |||||
Expected volatility (%) | |||||
Dividend yield (%) | |||||
Weighted average grant date fair value per share | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Current contract assets (1) | $ | $ | |||||||||
Long-term contract assets (2) | |||||||||||
Total assets | $ | $ | |||||||||
Current capitalized commissions (1) | $ | $ | |||||||||
Long-term capitalized commissions (2) | |||||||||||
Total capitalized commissions | $ | $ | |||||||||
Current contract liabilities | $ | $ | |||||||||
Long-term contract liabilities (3) | |||||||||||
Total contract liabilities | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Clinical Services | ||||||||||||||||||||||||||
Client direct billing | $ | $ | $ | $ | ||||||||||||||||||||||
Commercial Insurance | ||||||||||||||||||||||||||
Medicare and Medicaid | ||||||||||||||||||||||||||
Self-Pay | ||||||||||||||||||||||||||
Total Clinical Services | $ | $ | $ | $ | ||||||||||||||||||||||
Advanced Diagnostics | ||||||||||||||||||||||||||
Total Revenue | $ | $ | $ | $ |
Severance and Other Employee Costs | Facility Footprint Optimization | Consulting and Implementation Costs | Total | |||||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | $ | $ | ||||||||||||||||||||||
Impairment of facility related assets | ||||||||||||||||||||||||||
Cash payments and other adjustments(1) | ( | ( | ( | ( | ||||||||||||||||||||||
Balance as of March 31, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||
Impairment of facility related assets | ||||||||||||||||||||||||||
Cash payments and other adjustments(1) | ( | ( | ( | ( | ||||||||||||||||||||||
Balance as of June 30, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||
Impairment of facility related assets | ||||||||||||||||||||||||||
Cash payments and other adjustments(1) | ( | ( | ( | ( | ||||||||||||||||||||||
Balance as of September 30, 2023 | $ | $ | $ | $ | ||||||||||||||||||||||
Current liabilities | $ | |||||||||||||||||||||||||
Long-term liabilities | ||||||||||||||||||||||||||
$ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
NET LOSS | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Basic weighted average shares outstanding | ||||||||||||||||||||||||||
Diluted weighted average shares outstanding | ||||||||||||||||||||||||||
Basic net loss per share | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Diluted net loss per share | $ | ( | $ | ( | $ | ( | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Stock options | ||||||||||||||||||||||||||
Restricted stock awards | ||||||||||||||||||||||||||
2025 Convertible Notes | ||||||||||||||||||||||||||
2028 Convertible Notes |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net revenues: | ||||||||||||||||||||||||||
Clinical Services | $ | $ | $ | $ | ||||||||||||||||||||||
Advanced Diagnostics | ||||||||||||||||||||||||||
Total revenue | ||||||||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||||
Clinical Services(1) | ||||||||||||||||||||||||||
Advanced Diagnostics(2) | ||||||||||||||||||||||||||
Total cost of revenue | ||||||||||||||||||||||||||
Gross Profit: | ||||||||||||||||||||||||||
Clinical Services | ||||||||||||||||||||||||||
Advanced Diagnostics | ||||||||||||||||||||||||||
Total gross profit | $ | $ | $ | $ | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change | |||||||||||||||||||||||||||||||||||||||||||
Net revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Clinical Services | $ | 127,553 | $ | 106,162 | $ | 21,391 | 20.1 | % | $ | 365,578 | $ | 310,588 | $ | 54,990 | 17.7 | % | ||||||||||||||||||||||||||||||||||
Advanced Diagnostics | 24,401 | 22,620 | 1,781 | 7.9 | % | 70,513 | 60,435 | 10,078 | 16.7 | % | ||||||||||||||||||||||||||||||||||||||||
Total net revenue | $ | 151,954 | $ | 128,782 | $ | 23,172 | 18.0 | % | $ | 436,091 | $ | 371,023 | $ | 65,068 | 17.5 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||||||||||||||||||
Clinical Services(1) | $ | 73,994 | $ | 65,261 | 13.4 | % | $ | 213,032 | $ | 197,563 | 7.8 | % | ||||||||||||||||||||||||||
Advanced Diagnostics(2) | 15,649 | 14,628 | 7.0 | % | 46,043 | 42,389 | 8.6 | % | ||||||||||||||||||||||||||||||
Total cost of revenue | $ | 89,643 | $ | 79,889 | 12.2 | % | $ | 259,075 | $ | 239,952 | 8.0 | % | ||||||||||||||||||||||||||
Cost of revenue as a % of revenue | 59.0% | 62.0% | 59.4% | 64.7% | ||||||||||||||||||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||||||||||||||
Clinical Services | $ | 53,559 | $ | 40,901 | 30.9 | % | $ | 152,546 | $ | 113,025 | 35.0 | % | ||||||||||||||||||||||||||
Advanced Diagnostics | 8,752 | 7,992 | 9.5 | % | 24,470 | 18,046 | 35.6 | % | ||||||||||||||||||||||||||||||
Total gross profit | $ | 62,311 | $ | 48,893 | 27.4 | % | $ | 177,016 | $ | 131,071 | 35.1 | % | ||||||||||||||||||||||||||
Gross profit margin | 41.0% | 38.0% | 40.6% | 35.3% |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
General and administrative | $ | 61,486 | $ | 64,282 | $ | (2,796) | (4.3) | % | $ | 183,343 | $ | 188,481 | $ | (5,138) | (2.7) | % | ||||||||||||||||||||||||||||||||||
As a % of revenue | 40.5 | % | 49.9 | % | 42.0 | % | 50.8 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Research and development | $ | 5,285 | $ | 7,312 | $ | (2,027) | (27.7) | % | $ | 20,182 | $ | 23,651 | $ | (3,469) | (14.7) | % | ||||||||||||||||||||||||||||||||||
As a % of revenue | 3.5 | % | 5.7 | % | 4.6 | % | 6.4 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Sales and marketing | $ | 17,610 | $ | 16,809 | $ | 801 | 4.8 | % | $ | 52,770 | $ | 50,179 | $ | 2,591 | 5.2 | % | ||||||||||||||||||||||||||||||||||
As a % of revenue | 11.6 | % | 13.1 | % | 12.1 | % | 13.5 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Restructuring charges | $ | 2,125 | $ | — | $ | 2,125 | 100.0 | % | $ | 9,883 | $ | — | $ | 9,883 | 100.0 | % | ||||||||||||||||||||||||||||||||||
As a % of revenue | 1.4 | % | — | % | 2.3 | % | — | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||||
Interest (income) expense, net | $ | (2,840) | $ | 139 | $ | (2,979) | (2,143.2) | % | $ | (6,831) | $ | 2,366 | $ | (9,197) | (388.7) | % | ||||||||||||||||||||||||||||||||||
As a % of revenue | (1.9) | % | 0.1 | % | (1.6) | % | 0.6 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
NET LOSS | $ | (18,516) | $ | (36,852) | $ | (73,642) | $ | (121,563) | ||||||||||||||||||
Basic weighted average shares outstanding | 125,687 | 124,425 | 125,358 | 124,055 | ||||||||||||||||||||||
Diluted weighted average shares outstanding | 125,687 | 124,425 | 125,358 | 124,055 | ||||||||||||||||||||||
Basic net loss per share | $ | (0.15) | $ | (0.30) | $ | (0.59) | $ | (0.98) | ||||||||||||||||||
Diluted net loss per share | $ | (0.15) | $ | (0.30) | $ | (0.59) | $ | (0.98) |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Net loss (GAAP) | $ | (18,516) | $ | (36,852) | $ | (73,642) | $ | (121,563) | ||||||||||||||||||
Adjustments to net loss: | ||||||||||||||||||||||||||
Interest (income) expense, net | (2,840) | 139 | (6,831) | 2,366 | ||||||||||||||||||||||
Income tax benefit | (2,935) | (2,772) | (8,169) | (12,255) | ||||||||||||||||||||||
Depreciation | 9,349 | 8,973 | 27,872 | 25,894 | ||||||||||||||||||||||
Amortization of intangibles | 8,784 | 8,490 | 26,350 | 25,470 | ||||||||||||||||||||||
EBITDA (non-GAAP) | $ | (6,158) | $ | (22,022) | $ | (34,420) | $ | (80,088) | ||||||||||||||||||
Further adjustments to EBITDA: | ||||||||||||||||||||||||||
Acquisition and integration related expenses | — | 197 | — | 2,479 | ||||||||||||||||||||||
CEO transition costs | — | 2,792 | 500 | 4,518 | ||||||||||||||||||||||
Non-cash stock-based compensation expense | 7,180 | 4,280 | 17,643 | 20,009 | ||||||||||||||||||||||
Restructuring charges | 2,125 | — | 9,883 | — | ||||||||||||||||||||||
Other significant expenses, net(1) | 158 | 3,195 | 532 | 6,240 | ||||||||||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 3,305 | $ | (11,558) | $ | (5,862) | $ | (46,842) |
Nine Months Ended September 30, | ||||||||||||||
(in thousands) | 2023 | 2022 | ||||||||||||
Net cash (used in) provided by: | ||||||||||||||
Operating activities | $ | (19,737) | $ | (62,308) | ||||||||||
Investing activities | 59,512 | $ | 1,580 | |||||||||||
Financing activities | 3,284 | $ | 10,027 | |||||||||||
Net change in cash and cash equivalents | 43,059 | (50,701) | ||||||||||||
Cash and cash equivalents, beginning of period | $ | 263,180 | $ | 316,827 | ||||||||||
Cash and cash equivalents, end of period | $ | 306,239 | $ | 266,126 | ||||||||||
Working Capital (1), end of period | $ | 494,024 | $ | 518,357 |
Period of Repurchase | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||
July 1, 2023 - July 31, 2023 | 471 | $ | 16.10 | — | — | ||||||||||||||||||
August 1, 2023 - August 31, 2023 | 141 | $ | 17.15 | — | — | ||||||||||||||||||
September 1, 2023 - September 30, 2023 | 2,035 | $ | 14.85 | — | — | ||||||||||||||||||
Total | 2,647 | — | — |
Exhibit Number | Description of Exhibit | Location | ||||||||||||
31.1 | Provided herewith. | |||||||||||||
31.2 | Provided herewith. | |||||||||||||
32.1 | Provided herewith. | |||||||||||||
101.INS | XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Provided herewith. | ||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | Provided herewith. | ||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Provided herewith. | ||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Provided herewith. | ||||||||||||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | Provided herewith. | ||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Provided herewith. | ||||||||||||
104 | Cover Page Interactive File (formatted as inline XBRL and contained within Exhibit 101) | Provided herewith. | ||||||||||||
Date: November 6, 2023 | NEOGENOMICS, INC. | |||||||||||||
By: | /s/ Christopher M. Smith | |||||||||||||
Name: | Christopher M. Smith | |||||||||||||
Title: | Director and Chief Executive Officer | |||||||||||||
By: | /s/ Jeffrey S. Sherman | |||||||||||||
Name: | Jeffrey S. Sherman | |||||||||||||
Title: | Chief Financial Officer | |||||||||||||
November 6, 2023 | /s/ Christopher M. Smith | |||||||
Christopher M. Smith | ||||||||
Director and Chief Executive Officer |
November 6, 2023 | /s/ Jeffrey S. Sherman | |||||||
Jeffrey S. Sherman | ||||||||
Chief Financial Officer |
Date: | November 6, 2023 | /s/ Christopher M. Smith | |||||||||
Christopher M. Smith | |||||||||||
Director and Chief Executive Officer |
Date: | November 6, 2023 | /s/ Jeffrey S. Sherman | |||||||||
Jeffrey S. Sherman | |||||||||||
Chief Financial Officer |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Property and equipment, accumulated depreciation | $ 154,840 | $ 131,930 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 127,261,476 | 126,913,992 |
Common stock, shares outstanding (in shares) | 127,261,476 | 126,913,992 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Total net revenue | $ 151,954,000 | $ 128,782,000 | $ 436,091,000 | $ 371,023,000 |
COST OF REVENUE | 89,643,000 | 79,889,000 | 259,075,000 | 239,952,000 |
GROSS PROFIT | 62,311,000 | 48,893,000 | 177,016,000 | 131,071,000 |
Operating expenses: | ||||
General and administrative | 61,486,000 | 64,282,000 | 183,343,000 | 188,481,000 |
Research and development | 5,285,000 | 7,312,000 | 20,182,000 | 23,651,000 |
Sales and marketing | 17,610,000 | 16,809,000 | 52,770,000 | 50,179,000 |
Restructuring charges | 2,125,000 | 0 | 9,883,000 | 0 |
Total operating expenses | 86,506,000 | 88,403,000 | 266,178,000 | 262,311,000 |
LOSS FROM OPERATIONS | (24,195,000) | (39,510,000) | (89,162,000) | (131,240,000) |
Interest (income) expense, net | (2,840,000) | 139,000 | (6,831,000) | 2,366,000 |
Other expense (income), net | 96,000 | (25,000) | (520,000) | 212,000 |
Loss before taxes | (21,451,000) | (39,624,000) | (81,811,000) | (133,818,000) |
Income tax benefit | (2,935,000) | (2,772,000) | (8,169,000) | (12,255,000) |
NET LOSS | $ (18,516,000) | $ (36,852,000) | $ (73,642,000) | $ (121,563,000) |
NET LOSS PER SHARE | ||||
Basic (in dollars per share) | $ (0.15) | $ (0.30) | $ (0.59) | $ (0.98) |
Diluted (in dollars per share) | $ (0.15) | $ (0.30) | $ (0.59) | $ (0.98) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
Basic (in shares) | 125,687 | 124,425 | 125,358 | 124,055 |
Diluted (in shares) | 125,687 | 124,425 | 125,358 | 124,055 |
Clinical Services | ||||
Total net revenue | $ 127,553,000 | $ 106,162,000 | $ 365,578,000 | $ 310,588,000 |
COST OF REVENUE | 73,994,000 | 65,261,000 | 213,032,000 | 197,563,000 |
GROSS PROFIT | 53,559,000 | 40,901,000 | 152,546,000 | 113,025,000 |
Advanced Diagnostics | ||||
Total net revenue | 24,401,000 | 22,620,000 | 70,513,000 | 60,435,000 |
COST OF REVENUE | 15,649,000 | 14,628,000 | 46,043,000 | 42,389,000 |
GROSS PROFIT | $ 8,752,000 | $ 7,992,000 | $ 24,470,000 | $ 18,046,000 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
NET LOSS | $ (18,516) | $ (36,852) | $ (73,642) | $ (121,563) |
OTHER COMPREHENSIVE INCOME (LOSS): | ||||
Net unrealized gain (loss) on marketable securities, net of tax | 726 | (1,048) | 2,053 | (4,466) |
Total other comprehensive income (loss), net of tax | 726 | (1,048) | 2,053 | (4,466) |
COMPREHENSIVE LOSS | $ (17,790) | $ (37,900) | $ (71,589) | $ (126,029) |
Nature of the Business |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business | Nature of the BusinessNeoGenomics, Inc., a Nevada corporation (the “Parent,” “Company,” or “NeoGenomics”), and its subsidiaries, operate as a certified, high complexity clinical laboratory in accordance with the federal government’s Clinical Laboratory Improvement Act, as amended, and is dedicated to the delivery of clinical diagnostic services to pathologists, oncologists, urologists, hospitals, and other laboratories as well as providing clinical trial services to pharmaceutical firms. |
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying interim Consolidated Financial Statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. All intercompany transactions and balances have been eliminated in the accompanying Consolidated Financial Statements. The accounting policies of the Company are the same as those set forth in Note 2. Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, except for Stock-based Compensation and new accounting standards discussed under Recent Accounting Pronouncements as referenced below. Unaudited Interim Financial Information Certain information and footnote disclosures normally included in the Company’s annual audited Consolidated Financial Statements and accompanying notes have been condensed or omitted in these accompanying interim Consolidated Financial Statements and footnotes. Accordingly, the accompanying interim unaudited Consolidated Financial Statements included herein should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for any future periods. In the opinion of management, these unaudited Consolidated Financial Statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein. Use of Estimates The Company prepares its Consolidated Financial Statements in conformity with GAAP. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the Consolidated Financial Statements. Actual results and outcomes may differ from management’s estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these Consolidated Financial Statements include, but are not limited, to those related to revenues, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets and intangible assets, income taxes and valuation allowances, stock-based compensation, impairment analysis of goodwill, and restructuring reserves. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected on the Consolidated Financial Statements prospectively from the date of the change in estimate. Segment Reporting The Company has historically reported its activities in two reportable segments; (1) the Clinical Services segment and (2) the Pharma Services segment. In the second quarter of 2023, the Pharma Services segment was rebranded as the Advanced Diagnostics segment. Functions within the Clinical Services segment include oncology diagnostics, community-based oncology and pathology sales, patient engagement, and clinical decision support. Functions within the Advanced Diagnostics segment include pharma services, informatics, R&D, minimal residual disease, liquid biopsy and therapy selection business development. For further financial information regarding reportable segments, please refer to Note 13. Segment Information. Sales and Marketing Expenses Sales and marketing expenses are primarily attributable to employee-related costs including sales management, sales representatives, sales and marketing consultants, and marketing and customer service personnel in the Clinical Services segment. Advertising costs are expensed at the time they are incurred and were immaterial for the three and nine months ended September 30, 2023 and 2022. Stock-based Compensation In the second quarter of 2023, the Company began granting performance stock units (“PSUs”) subject to a market condition to certain of its executives as part of its executive compensation program. The number of shares awarded will be subject to adjustment based on the achievement of an absolute total shareholder return (“TSR”) performance target. If the TSR performance target is achieved, the awards will vest at the end of the three-year requisite service period so long as the employee remains employed with the Company through the applicable vesting date. The Company measures compensation expense for stock-based awards to employees, non-employee contracted physicians, and directors based upon the awards’ initial grant-date fair values. Stock-based compensation expense for stock options, restricted stock awards, restricted stock units and performance awards is recorded over the requisite service period in general and administrative expenses on the Consolidated Statements of Operations. For awards with only a service condition, the Company expenses stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, the Company expenses the grant date fair value at the target over the vesting period regardless of the value that the award recipients ultimately receive. The fair values of stock option grants are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes”). The fair value of restricted stock with a market condition is estimated at the date of grant using the Monte Carlo simulation model (“Monte Carlo”). The Black-Scholes and Monte Carlo models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield. The fair value of restricted stock without a market condition is estimated using the current market price of the Company’s common stock on the date of grant. Black-Scholes is affected by the stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free interest rate, the expected volatility of common stock, and expected dividend yield; each of which is described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value. Expected Term: The expected term of an option is determined using the simplified method under SAB 107 which represents the average between the vesting term and the contractual term. The Company utilizes the simplified method to determine the expected life of the options due to insufficient exercise activity during recent years. Risk-free Interest Rate: The risk-free interest rate used in the Black-Scholes model is based on the implied yield at the grant date of the U.S. Treasury zero-coupon issue with an equivalent term to the stock-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from available maturities. Expected Stock Price Volatility: The Company uses its own historical weekly volatility because that is more reflective of market conditions. Dividend Yield: Because the Company has never paid a dividend and does not expect to begin doing so in the foreseeable future, the Company assumed no dividend yield in valuing the stock-based awards. The fair value of the PSUs granted during the nine months ended September 30, 2023 was estimated as of the grant date using the Monte Carlo, which requires management to make assumptions regarding risk-free interest rates and volatility of the Company’s stock price. The Monte Carlo incorporates the same assumptions as Black-Scholes as to stock price volatility, the risk-free interest rate and dividend yield. The Company utilized the expected life of the PSUs for the expected term of the award, as the vesting term and contractual term of the awards are identical. Recent Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This update amends guidance to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted including adoption in an interim period. If the Company early adopts in an interim period, the Company is required to apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The amendments in ASU 2021-08 should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company adopted this standard as of January 1, 2023 and there was no impact on its Consolidated Financial Statements.
|
Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy has been established based on three levels of inputs, of which the first two are considered observable and the last unobservable. Level 1: Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2: Inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. These are typically obtained from readily-available pricing sources for comparable instruments. Level 3: Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances. Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The Company measures certain financial assets at fair value on a recurring basis, including its marketable securities and certain cash equivalents. The Company considers all securities available-for-sale, including those with maturity dates beyond 12 months, and therefore these securities are classified within current assets on the Consolidated Balance Sheets as they are available to support current operational liquidity needs. The money market accounts are valued based on quoted market prices in active markets and are included in cash and cash equivalents on the Consolidated Balance Sheets. The marketable securities are generally valued based on other observable inputs for those securities (including market corroborated pricing or other models that utilize observable inputs such as interest rates and yield curves) based on information provided by independent third-party pricing entities, except for U.S. Treasury securities which are valued based on quoted market prices in active markets. The following tables set forth the amortized cost, gross unrealized gains, gross unrealized losses and fair values of the Company’s marketable securities accounted for as available-for-sale securities as of September 30, 2023 and December 31, 2022.
The Company had $1.6 million and $0.9 million of accrued interest receivable at September 30, 2023 and December 31, 2022, respectively, included in other current assets on its Consolidated Balance Sheets related to its marketable securities. There were no realized gains or losses on marketable securities for the three and nine months ended September 30, 2023. Realized gains or losses for the three and nine months ended September 30, 2022 were immaterial. The following tables set forth the fair value of available-for-sale marketable securities by contractual maturity at September 30, 2023 and December 31, 2022.
The following tables set forth the Company’s cash equivalents and marketable securities accounted for as available-for-sale securities that were measured at fair value on a recurring basis based on the fair value hierarchy as of September 30, 2023 and December 31, 2022.
There were no transfers of financial assets or liabilities into or out of Level 1, Level 2, or Level 3 for the three and nine months ended September 30, 2023 and September 30, 2022. The carrying value of cash and cash equivalents, accounts receivable, net, accounts payable, accrued expenses and other liabilities, and other current assets and liabilities, are considered reasonable estimates of their respective fair values at September 30, 2023 and December 31, 2022 due to their short-term nature.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table summarizes the carrying amounts of goodwill by segment at September 30, 2023 and December 31, 2022 (in thousands):
Intangible assets consisted of the following (in thousands):
The Company records amortization expense within cost of revenue and general and administrative expense on the Consolidated Statement of Operations. The following table summarizes the amortization expense for the three and nine months ended September 30, 2023 and 2022 (in thousands):
The estimated amortization expense related to amortizable intangible assets for each of the following periods as of September 30, 2023 is as follows (in thousands):
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Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt 2028 Convertible Senior Notes On January 11, 2021, the Company completed the sale of $345.0 million of Convertible Senior Notes with a stated interest rate of 0.25% and a maturity date of January 15, 2028 (the “2028 Convertible Notes”), unless earlier converted, redeemed, or repurchased. The last reported sales price of the Company’s common stock was not greater than or equal to 130.0% of the conversion price of the 2028 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended June 30, 2023. Based on the terms of the 2028 Convertible Notes, the holders could not have converted all or a portion of their 2028 Convertible Notes in the third quarter of 2023. The last reported sales price of the Company’s common stock was not greater than or equal to 130.0% of the conversion price of the 2028 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended September 30, 2023. Based on the terms of the 2028 Convertible Notes, the holders cannot convert all or a portion of their 2028 Convertible Notes in the fourth quarter of 2023. The value of the 2028 Convertible Notes, if-converted, does not exceed the principal amount based on a closing stock price of $12.30 on September 29, 2023. The interest expense recognized on the 2028 Convertible Notes includes $0.2 million, $0.4 million and $8,500 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2023. The interest expense recognized on the 2028 Convertible Notes includes $0.6 million, $1.1 million and $26,000 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2023. The interest expense recognized on the 2028 Convertible Notes includes $0.2 million, $0.4 million and $8,500 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2022. The interest expense recognized on the 2028 Convertible Notes includes $0.7 million, $1.1 million and $25,300 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2022. The effective interest rate on the 2028 Convertible Notes is 0.70%, which includes the interest on the 2028 Convertible Notes and amortization of the debt discount and debt issuance costs. The 2028 Convertible Notes bear interest at a rate of 0.25% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2021. At September 30, 2023, the estimated fair values (Level 2) of the 0.25% Convertible Senior Notes due 2028 was $245.8 million. At December 31, 2022, the estimated fair value (Level 2) of the 0.25% Convertible Senior Notes due 2028 was $218.2 million. 2025 Convertible Senior Notes On May 4, 2020, the Company completed the sale of $201.3 million of Convertible Senior Notes with a stated interest rate of 1.25% and a maturity date of May 1, 2025 (the “2025 Convertible Notes”), unless earlier converted, redeemed, or repurchased. The last reported sales price of the Company’s common stock was not greater than or equal to 130.0% of the conversion price of the 2025 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended June 30, 2023. Based on the terms of the 2025 Convertible Notes, the holders could not have converted all or a portion of their 2025 Convertible Notes in the third quarter of 2023. The last reported sales price of the Company’s common stock was not greater than or equal to 130.0% of the conversion price of the 2025 Convertible Notes on at least 20 of the last 30 consecutive trading days of the quarter ended September 30, 2023. Based on the terms of the 2025 Convertible Notes, the holders cannot convert all or a portion of their 2025 Convertible Notes in the fourth quarter of 2023. The value of the 2025 Convertible Notes, if-converted, does not exceed the principal amount based on a closing stock price of $12.30 on September 29, 2023. The interest expense recognized on the 2025 Convertible Notes includes $0.6 million, $0.3 million and $37,900 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2023. The interest expense recognized on the 2025 Convertible Notes includes $1.9 million, $0.9 million and $0.1 million for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2023. The interest expense recognized on the 2025 Convertible Notes includes $0.6 million, $0.3 million and $37,200 for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the three months ended September 30, 2022. The interest expense recognized on the 2025 Convertible Notes includes $1.9 million, $0.9 million and $0.1 million for the contractual coupon interest, the amortization of the debt discount and the amortization of the debt issuance costs, respectively, for the nine months ended September 30, 2022. The effective interest rate on the 2025 Convertible Notes is 1.96%, which includes the interest on the 2025 Convertible Notes and amortization of the debt discount and debt issuance costs. The 2025 Convertible Notes bear interest at a rate of 1.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, which began on November 1, 2020. At September 30, 2023, the estimated fair values (Level 2) of the 1.25% Convertible Senior Notes due 2025 was $187.3 million. At December 31, 2022, the estimated fair value (Level 2) of the 1.25% Convertible Senior Notes due 2025 was $169.6 million.
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Stock-Based Compensation |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Equity Incentive Plan Effective May 25, 2023, the Company adopted the NeoGenomics, Inc. 2023 Equity Incentive Plan (the “2023 Plan”) as approved by the Board of Directors on March 28, 2023 and the Company’s stockholders on May 25, 2023. The 2023 Plan replaced the NeoGenomics, Inc. Amended and Restated Equity Incentive Plan, as most recently amended and subsequently approved by the stockholders on May 25, 2017 (the “Prior Plan”). The 2023 Plan allows for the award of equity incentives including stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance shares, performance units, and other stock-based awards to certain employees, directors, or officers of, or key non-employee advisers or consultants, including contracted physicians to the Company or its subsidiaries. The 2023 Plan provides that the maximum aggregate number of shares of the Company’s common stock reserved and available for issuance under the 2023 Plan is 3,975,000. Additionally, effective May 25, 2023, any remaining unissued shares from the Prior Plan are available for the grant of new awards under the 2023 Plan. The Company recorded approximately $7.2 million and $4.3 million for stock-based compensation in general and administrative expenses on the Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022, respectively, and approximately $17.6 million and $20.0 million for the nine months ended September 30, 2023 and 2022, respectively. Stock Options The Company recorded approximately $3.0 million and $1.6 million for stock-based compensation related to stock options in general and administrative expenses on the Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022, respectively, and approximately $7.0 million and $6.4 million for the nine months ended September 30, 2023 and 2022, respectively. A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2023 is as follows:
The fair value of each stock option award granted during the nine months ended September 30, 2023 was estimated as of the grant date using a Black-Scholes model with the following assumptions:
As of September 30, 2023, there was approximately $15.8 million of unrecognized stock-based compensation expense related to stock options that will be recognized over a weighted-average period of approximately 1.9 years. Restricted Stock The Company recorded approximately $3.4 million and $2.4 million for stock-based compensation related to restricted stock in general and administrative expenses on the Consolidated Statements of Operations for the three months ended September 30, 2023 and 2022, respectively, and approximately $8.9 million and $12.8 million for the nine months ended September 30, 2023 and 2022, respectively. A summary of the restricted stock activity under the Company’s plans for the nine months ended September 30, 2023 is as follows:
As of September 30, 2023, there was approximately $18.8 million of unrecognized stock-based compensation expense related to restricted stock that will be recognized over a weighted-average period of approximately 1.9 years. Performance-Based Restricted Stock Units In the second quarter of 2023, the Company granted 305,105 PSUs subject to a market condition to certain of its executives with an aggregated grant date fair value of approximately $6.7 million. The number of shares awarded will be subject to adjustment based on the achievement of a TSR performance target. If the TSR performance target is achieved, the awards will vest at the end of the three-year requisite service period so long as the employee remains employed with the Company through the applicable vesting date. Compensation cost for the PSUs is recognized straight-line over the requisite service period, regardless of when, if ever, the market condition is satisfied. The Company recognized approximately $0.6 million and $0.9 million of stock-based compensation related to the PSUs in general and administrative expenses on the Consolidated Statements of Operations for the three and nine months ended September 30, 2023, respectively. There were no such amounts for the three and nine months ended September 30, 2022. A summary of the PSU activity under the Company’s plans for the nine months ended September 30, 2023 is as follows:
The fair value of each PSU granted during the nine months ended September 30, 2023 was estimated as of the grant date using a Monte Carlo with the following assumptions:
As of September 30, 2023, there was approximately $5.8 million of unrecognized stock-based compensation expense related to PSUs that will be recognized over a weighted-average period of approximately 2.6 years. Modification of Stock Option and Restricted Stock Awards In the second quarter of 2023, upon the departure of certain executives from the Company and in accordance with the terms of each of their respective employment agreements, 101,937 previously granted time-based vesting stock option awards and 61,746 previously granted time-based vesting restricted stock awards accelerated vesting. The Company accounted for the effects of the accelerated vesting of these stock awards as modifications, and recognized $0.9 million of incremental stock-based compensation which consisted of $0.3 million and $0.6 million for the acceleration of stock option awards and restricted stock awards, respectively, within general and administrative expenses on the Consolidated Statements of Operations for the nine months ended September 30, 2023. There were no such amounts for the three months ended September 30, 2023 and for the three and nine months ended September 30, 2022. In the second quarter of 2022, upon the prior Chief Legal Officer’s departure from the Company and in accordance with the terms of the prior Chief Legal Officer’s employment agreement, 41,487 previously granted time-based vesting stock option awards and 76,138 previously granted time-based vesting restricted stock awards accelerated vesting. The Company accounted for the effects of the accelerated vesting of these stock awards as a modification, and recognized $2.2 million of incremental stock-based compensation which consisted of $0.3 million and $1.9 million for the acceleration of stock option awards and restricted stock awards, respectively, within general and administrative expenses on the Consolidated Statements of Operations for the nine months ended September 30, 2022. There were no such amounts for the three and nine months ended September 30, 2023. In the first quarter of 2022, upon the prior Chief Executive Officer’s departure from the Company and in accordance with the terms of the prior Chief Executive Officer’s separation agreement, 237,960 previously granted time-based vesting stock option awards and 142,302 previously granted time-based vesting restricted stock awards accelerated vesting. The Company accounted for the effects of the accelerated vesting of these stock awards as a modification, and recognized $5.9 million of incremental stock-based compensation which consisted of $2.3 million and $3.6 million for the acceleration of stock option awards and restricted stock awards, respectively, within general and administrative expenses on the Consolidated Statements of Operations for the nine months ended September 30, 2022. There were no such amounts for the three and nine months ended September 30, 2023.
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Revenue Recognition |
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Revenue Recognition | Revenue Recognition The Company’s two reportable segments for which it recognizes revenue are (1) Clinical Services and (2) Advanced Diagnostics. The Clinical Services segment provides various clinical-testing services related to oncology diagnostics, community-based oncology and pathology sales, patient engagement, and clinical decision support. Functions within the Advanced Diagnostics segment include pharma services, informatics, R&D, and minimal residual disease, liquid biopsy and therapy selection business development. Clinical Services Revenue The Company’s specialized diagnostic services are performed based on a written test requisition form or an electronic equivalent. The performance obligation is satisfied and revenues are recognized once the diagnostic services have been performed and the results have been delivered to the ordering physician. These diagnostic services are billed to various payers, including client direct billing, commercial insurance, Medicare and other government payers, and patients. Revenue is recorded for all payers based on the amount expected to be collected, which considers implicit price concessions. Implicit price concessions represent differences between amounts billed and the estimated consideration the Company expects to receive based on negotiated discounts, historical collection experience, and other anticipated adjustments, including anticipated payer denials. Advanced Diagnostics Revenue The Company’s Advanced Diagnostics segment generally enters into contracts with pharmaceutical and biotech customers as well as other contract research organizations (“CROs”) to provide research and clinical trial services. Such services also include validation studies and assay development. The Company records revenue on a unit-of-service basis based on the number of units completed towards the satisfaction of a performance obligation. In addition, certain contracts include upfront fees and the revenue for those contracts is recognized over time as services are performed. Additional offerings within the Advanced Diagnostics portfolio includes Informatics, which involves the licensing of de-identified data to pharmaceutical and biotech customers in the form of either retrospective records or prospective deliveries of data. Informatics revenue is recognized at a point in time upon delivery of retrospective data or over time for prospective data feeds. The Company negotiates billing schedules and payment terms on a contract-by-contract basis, and contract terms generally provide for payments based on a unit-of-service arrangement. Amounts collected in advance of services being provided are deferred as contract liabilities on the Consolidated Balance Sheets. The associated revenue is recognized and the contract liability is reduced as the contracted services are subsequently performed. Contract assets are established for revenue recognized but not yet billed. These contract assets are reduced once the customer is invoiced and a corresponding receivable is recorded. Additionally, Advanced Diagnostics incurs sales commissions in the process of obtaining contracts with customers. Sales commissions that are payable upon contract award are recognized as assets and amortized over the expected contract term. The amortization of commission expense is based on the weighted average contract duration for all commissionable awards in the respective business in which the commission expense is paid, which approximates the period over which goods and services are transferred to the customer. For offerings with primarily short-term contracts, such as Informatics, the Company applies the practical expedient which allows costs to obtain a contract to be expensed when incurred, if the amortization period of the assets that would otherwise have been recognized is one year or less. Contract assets and capitalized commissions are included in other current assets and other assets on the Consolidated Balance Sheets. Most contracts are terminable by the customers, either immediately or according to advance notice terms specified within the contracts. All contracts require payment of fees to the Company for services rendered through the date of termination and may require payment for subsequent services necessary to conclude the study or close out the contract. The following table summarizes the values of contract assets, capitalized commissions and contract liabilities (in thousands):
(1) Recorded within other current assets on the Consolidated Balance Sheets. (2) Recorded within other assets on the Consolidated Balance Sheets. (3) Recorded within other long-term liabilities on the Consolidated Balance Sheets. Revenue recognized for the three and nine months ended September 30, 2023 related to contract liability balances outstanding at the beginning of the period was $1.4 million and $4.9 million, respectively. Revenue recognized for the three and nine months ended September 30, 2022 related to contract liability balances outstanding at the beginning of the period was $0.7 million and $4.8 million, respectively. Amortization of capitalized commissions for the three and nine months ended September 30, 2023 was $0.2 million and $0.7 million, respectively. Amortization of capitalized commissions for the three and nine months ended September 30, 2022 was $0.3 million and $0.6 million, respectively. Disaggregation of Revenue The Company considered various factors for both its Clinical Services and Advanced Diagnostics segments in determining appropriate levels of homogeneous data for its disaggregation of revenue; including the nature, amount, timing, and uncertainty of revenue and cash flows. Clinical Services categories align with the types of customers due to similarities of billing method, level of reimbursement, and timing of cash receipts. Unbilled amounts are accrued and allocated to payer categories based on historical experience. In future periods actual billings by payer category may differ from accrued amounts. Advanced Diagnostics relate to contracts with large pharmaceutical and biotech customers as well as other CROs. Because the nature, timing, and uncertainty of revenue and cash flows are similar and primarily driven by individual contract terms Advanced Diagnostics revenue is not further disaggregated. The following table details the disaggregation of revenue for both the Clinical Services and Advanced Diagnostics Segments (in thousands):
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Restructuring |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | Restructuring In 2022, the Company embarked on a restructuring program to improve execution and drive efficiency across the organization. This program is a framework for identifying, prioritizing and executing operational improvements. Restructuring charges incurred consist of severance and other employee costs, costs for optimizing the Company’s geographic presence (“Facility Footprint Optimization”), and consulting and other costs. There were no such charges for the three and nine months ended September 30, 2022. The following table summarizes the changes in the Company’s accrued restructuring balance (in thousands):
(1) Other adjustments include non-cash asset charges related to Facility Footprint Optimization costs. Restructuring activities are ongoing and the Company expects to incur additional restructuring charges of approximately $5.9 million. The Company estimates these additional restructuring charges to be comprised of approximately $0.7 million in severance and other employee costs, $4.5 million of Facility Footprint Optimization costs, and $0.7 million of consulting and other costs. In the third quarter of 2023, in response to new incremental information including ongoing negotiations with counterparties, the Company revised its original restructuring plan cost and timing of approved projects. As a result, the Company anticipates incurring further restructuring charges extending into 2024. The Company expects these charges will ultimately result in enhanced operational efficiencies as it continues to optimize its geographic presence.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes At the end of each interim period, management estimates the annual effective tax rate based on forecasted pre-tax results of the Company’s global operations and applies such rate to its ordinary quarterly earnings to calculate income tax expense related to ordinary income. The tax effects of items significant, unusual and infrequent in nature are discretely calculated and recognized in the period during which they occur. These discrete items often relate to changes in tax laws, excess tax benefits/deficiencies related to share-based compensation or adjustments to previously reported tax expense/benefits. Management assesses the recoverability of its deferred tax assets as of the end of each quarter, weighing available positive and negative evidence, and is required to establish and maintain a valuation allowance for these assets if it is more likely than not that some or all of the deferred income tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which the evidence can be objectively verified. If negative evidence exists, positive evidence is necessary to support a conclusion that a valuation allowance is not needed. A cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome. Cumulative loss in recent years is commonly defined as a three-year cumulative loss position. As of September 30, 2023, all of the Company’s ongoing operations were in a three-year cumulative loss position. Management determined that sufficient objectively verifiable positive evidence did not exist to overcome the negative evidence of the Company’s cumulative loss position. Accordingly, the Company’s estimated annual effective tax rate applied to the Company’s pre-tax loss for the three and nine months ended September 30, 2023, includes the unfavorable impact of a valuation allowance against the Company’s deferred income tax assets expected to be created in 2023 for additional U.S. net operating loss and tax credit carryforwards as well as Switzerland, China and Singapore deferred tax assets. The reversal of U.K. deferred tax liabilities will provide a source of realization to support a portion of the U.K. deferred tax assets, and therefore a partial valuation has been established for those deferred tax assets. Accordingly, the Company’s estimated annual effective tax rate applied to the Company’s pre-tax loss for the nine months ended September 30, 2023, includes the favorable impact of recognizing the realizable portion of the U.K. benefit. In August 2023, the Company received notification from the Internal Revenue Service that their review of the examination of the Company’s U.S federal tax return for the tax year ended December 31, 2017 was complete. There were no changes to the reported tax and the notice had no impact to the Consolidated Financial Statements.
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Net Loss Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share The Company presents both basic earnings per share (“EPS”) and diluted EPS. Basic EPS excludes potential dilution and is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options were exercised, stock awards vested and if the 2028 Convertible Notes and 2025 Convertible Notes were converted. The potential dilution from stock awards is accounted for using the treasury stock method based on the average market value of the Company’s common stock. The potential dilution from conversion of the 2028 Convertible Notes and 2025 Convertible Notes is accounted for using the if-converted method, which requires that all of the shares of the Company’s common stock issuable upon conversion of the 2028 Convertible Notes and the 2025 Convertible Notes will be included in the calculation of diluted EPS assuming conversion of the 2028 Convertible Notes and the 2025 Convertible Notes at the beginning of the reporting period (or at time of issuance, if later). The following table shows the calculations (in thousands, except net loss per share amounts):
The following potential dilutive shares were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive (in thousands):
In addition, 408,362 and 214,169 shares of PSU awards are excluded from the computation of diluted EPS for the three and nine months ended September 30, 2023, respectively, as the contingency had not been satisfied. In connection with the 2028 Convertible Notes offering, on January 11, 2021, the Company entered into separate, privately negotiated convertible note hedge transactions (collectively, the “Capped Call Transactions”) with option counterparties pursuant to capped call confirmations at a cost of approximately $29.3 million. The potential effect of the Capped Call Transactions were excluded from the calculation of diluted net loss per share in the three and nine months ended September 30, 2023 as the Company’s closing price of $12.30 on September 29, 2023 did not exceed the conversion price of $85.75 per share. The Capped Call Transactions are not reflected in diluted net loss per share as they are anti-dilutive.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings On January 20, 2021, Natera, Inc. filed a patent infringement complaint against the Company’s newly-acquired subsidiary Inivata Limited and its subsidiary Inivata, Inc. in U.S. District Court for the district of Delaware, alleging Inivata’s InVisionFirst®-Lung cancer diagnostic test of infringing two patents. Natera then filed a second patent infringement complaint on December 20, 2022 against Inivata Limited and Inivata Inc. alleging that the RaDaR® minimal residual disease test infringes one patent. The litigation is in the discovery stage. On July 31, 2023, Natera, Inc. filed a patent infringement complaint against the Company’s subsidiary, NeoGenomics Laboratories, Inc., in the U.S. District Court for the Middle District of North Carolina, alleging that the RaDaR® minimal residual test infringes on two patents. The complaint seeks damages and injunctive relief. The Company believes that it has good and substantial defenses to the claims alleged in these suits, but there is no guarantee that the Company will prevail. At the time of filing the outcome of these matters are not estimable or probable. On December 16, 2022, a purported shareholder class action captioned Daniel Goldenberg v. NeoGenomics, Inc., Douglas VanOort, Mark Mallon, Kathryn McKenzie, and William Bonello was filed in the United States District Court for the Southern District of New York, naming the Company and certain of the Company’s current and former officers as defendants. This lawsuit was filed by a stockholder who claims to be suing on behalf of anyone who purchased or otherwise acquired the Company’s securities between February 27, 2020 and April 26, 2022. The lawsuit alleges that material misrepresentations and/or omissions of material fact were made in the Company’s public disclosures in violation of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. The alleged improper disclosures relate to statements regarding the Company’s menu of tests, business operations and compliance with health care laws and regulations. The plaintiff seeks unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including attorney’s fees and expert fees. On April 27, 2023, a shareholder of the Company filed a shareholder derivative action on behalf of the Company captioned Puskarich v. VanOort, et al. in Clark County Nevada, naming certain of the Company’s current and former officers and directors as defendants. The allegations are substantially similar to the allegations asserted in the Goldenberg action. Substantially similar shareholder derivative actions were subsequently filed in Lee County, Florida and in the United States District Court for the Southern District of New York, captioned Wong v. VanOort, et al. and Mellema v. VanOort, et al., respectively. The Company believes that it has valid defenses to the claims alleged in the lawsuits, but there is no guarantee that the Company will prevail. At the time of filing the outcome of these matters are not estimable or probable. Regulatory Matter With the assistance of outside counsel, the Company voluntarily conducted an internal investigation that focused on the compliance of certain consulting and service agreements with federal healthcare laws and regulations, including those relating to fraud, waste and abuse. Based on this internal investigation, the Company voluntarily notified the Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”) of the Company’s internal investigation in November 2021. The Company’s interactions with regulatory authorities and the Company’s related review of this matter are ongoing. The Company has a reserve of $11.2 million in other long-term liabilities as of September 30, 2023 and December 31, 2022 on the Consolidated Balance Sheets for potential damages and liabilities primarily associated with the federal healthcare program revenue received by the Company in connection with the agreements at issue that were identified during the course of this internal investigation. This reserve reflects management’s best estimate of the minimum probable loss associated with this matter. As a result of the internal investigation and ongoing interactions with regulatory authorities, the Company may accrue additional reserves for any related potential damages and liabilities arising out of this matter. The Company was notified on June 30, 2022 that the Department of Justice (“DOJ”) will be leading the investigation of this matter. At this time, the Company is unable to predict the duration, scope, result or related costs associated with any further investigation, including by the OIG, DOJ, or any other governmental authority, or what penalties or remedial actions they may seek. Accordingly, at this time, the Company is unable to estimate a range of possible loss in excess of the amount reserved. Any determination that the Company’s operations or activities are not in compliance with existing laws or regulations, however, could result in the imposition of civil or criminal fines, penalties, disgorgement, restitution, equitable relief, or other losses or conduct restrictions, which could be material to the Company’s financial results or business operations.
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Related Party Transactions |
9 Months Ended |
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Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsThe Company has Advanced Diagnostics contracts with HOOKIPA Pharma, Inc., an entity with whom a director of the Company, Michael A. Kelly, was a director of until April 7, 2023. In connection with these contracts, the Company recognized $0.1 million and $0.3 million of revenue in the Consolidated Statements of Operations for the three and nine months ended September 30, 2023, respectively. Revenue recognized in the Consolidated Statements of Operations in connection with these contracts was $0.3 million for both the three and nine months ended September 30, 2022. |
Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company has historically reported its activities in two reportable segments; (1) the Clinical Services segment and (2) the Pharma Services segment. In the second quarter of 2023, the Pharma Services segment was rebranded as the Advanced Diagnostics segment. The financial information reviewed by the CODM includes revenues, cost of revenue, and gross profit for both reportable segments. Assets, operating expenses, loss from operations, and net loss are not presented at the segment level as that information is not used by the CODM. For further details regarding segment reporting, please refer to Note 2. Summary of Significant Accounting Policies. The following table summarizes the segment information (in thousands):
(1) Clinical Services cost of revenue for both the three months ended September 30, 2023 and September 30, 2022 includes $4.3 million of amortization of acquired Inivata developed technology intangible assets. Clinical Services cost of revenue for both the nine months ended September 30, 2023 and September 30, 2022 includes $12.8 million of amortization of acquired Inivata developed technology intangible assets. (2) Advanced Diagnostics cost of revenue for both the three months ended September 30, 2023 and September 30, 2022 includes $0.6 million of amortization of acquired Inivata developed technology intangible assets. Advanced Diagnostics cost of revenue for both the nine months ended September 30, 2023 and September 30, 2022 includes $1.8 million of amortization of acquired Inivata developed technology intangible assets.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
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Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
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Mar. 31, 2022 |
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Pay vs Performance Disclosure | ||||||||
NET LOSS | $ (18,516) | $ (24,331) | $ (30,795) | $ (36,852) | $ (35,303) | $ (49,408) | $ (73,642) | $ (121,563) |
Insider Trading Arrangements |
3 Months Ended | 9 Months Ended |
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Sep. 30, 2023
shares
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Sep. 30, 2023
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Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Christopher Smith [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On August 15, 2023, Christopher Smith, our Director and Chief Executive Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 140,000 shares of our common stock. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement is estimated to be from November 14, 2023 until December 31, 2024, or earlier if all transactions under the trading arrangement are completed. | |
Name | Christopher Smith | |
Title | Director and Chief Executive Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | August 15, 2023 | |
Arrangement Duration | 413 days | |
Aggregate Available | 140,000 | 140,000 |
Alicia Olivo [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On August 18, 2023, Alicia Olivo, our General Counsel and Corporate Secretary, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate number shares of our common stock. The planned sale of aggregated shares is to be equal to 40 restricted shares plus a designated percentage of the net number of such restricted shares vesting on certain applicable dates. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement is estimated to be from November 17, 2023 until December 31, 2024, or earlier if all transactions under the trading arrangement are completed. | |
Name | Alicia Olivo | |
Title | General Counsel and Corporate Secretary | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | August 18, 2023 | |
Arrangement Duration | 410 days | |
Alicia Olivo Trading Arrangement, Restricted Shares [Member] | Alicia Olivo [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 40 | 40 |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim Consolidated Financial Statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information. All intercompany transactions and balances have been eliminated in the accompanying Consolidated Financial Statements. The accounting policies of the Company are the same as those set forth in Note 2. Summary of Significant Accounting Policies, to the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, except for Stock-based Compensation and new accounting standards discussed under Recent Accounting Pronouncements as referenced below.
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Use of Estimates | Use of Estimates The Company prepares its Consolidated Financial Statements in conformity with GAAP. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the Consolidated Financial Statements. Actual results and outcomes may differ from management’s estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these Consolidated Financial Statements include, but are not limited, to those related to revenues, accounts receivable and related allowances, contingencies, useful lives and recovery of long-term assets and intangible assets, income taxes and valuation allowances, stock-based compensation, impairment analysis of goodwill, and restructuring reserves. These estimates, judgments, and assumptions are reviewed periodically and the effects of material revisions in estimates are reflected on the Consolidated Financial Statements prospectively from the date of the change in estimate.
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Segment Reporting | Segment ReportingThe Company has historically reported its activities in two reportable segments; (1) the Clinical Services segment and (2) the Pharma Services segment. In the second quarter of 2023, the Pharma Services segment was rebranded as the Advanced Diagnostics segment. Functions within the Clinical Services segment include oncology diagnostics, community-based oncology and pathology sales, patient engagement, and clinical decision support. Functions within the Advanced Diagnostics segment include pharma services, informatics, R&D, minimal residual disease, liquid biopsy and therapy selection business development. |
Sales and Marketing Expenses | Sales and Marketing Expenses Sales and marketing expenses are primarily attributable to employee-related costs including sales management, sales representatives, sales and marketing consultants, and marketing and customer service personnel in the Clinical Services segment. Advertising costs are expensed at the time they are incurred and were immaterial for the three and nine months ended September 30, 2023 and 2022.
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Stock-Based Compensation | Stock-based Compensation In the second quarter of 2023, the Company began granting performance stock units (“PSUs”) subject to a market condition to certain of its executives as part of its executive compensation program. The number of shares awarded will be subject to adjustment based on the achievement of an absolute total shareholder return (“TSR”) performance target. If the TSR performance target is achieved, the awards will vest at the end of the three-year requisite service period so long as the employee remains employed with the Company through the applicable vesting date. The Company measures compensation expense for stock-based awards to employees, non-employee contracted physicians, and directors based upon the awards’ initial grant-date fair values. Stock-based compensation expense for stock options, restricted stock awards, restricted stock units and performance awards is recorded over the requisite service period in general and administrative expenses on the Consolidated Statements of Operations. For awards with only a service condition, the Company expenses stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, the Company expenses the grant date fair value at the target over the vesting period regardless of the value that the award recipients ultimately receive. The fair values of stock option grants are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes”). The fair value of restricted stock with a market condition is estimated at the date of grant using the Monte Carlo simulation model (“Monte Carlo”). The Black-Scholes and Monte Carlo models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield. The fair value of restricted stock without a market condition is estimated using the current market price of the Company’s common stock on the date of grant. Black-Scholes is affected by the stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free interest rate, the expected volatility of common stock, and expected dividend yield; each of which is described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value. Expected Term: The expected term of an option is determined using the simplified method under SAB 107 which represents the average between the vesting term and the contractual term. The Company utilizes the simplified method to determine the expected life of the options due to insufficient exercise activity during recent years. Risk-free Interest Rate: The risk-free interest rate used in the Black-Scholes model is based on the implied yield at the grant date of the U.S. Treasury zero-coupon issue with an equivalent term to the stock-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from available maturities. Expected Stock Price Volatility: The Company uses its own historical weekly volatility because that is more reflective of market conditions. Dividend Yield: Because the Company has never paid a dividend and does not expect to begin doing so in the foreseeable future, the Company assumed no dividend yield in valuing the stock-based awards. The fair value of the PSUs granted during the nine months ended September 30, 2023 was estimated as of the grant date using the Monte Carlo, which requires management to make assumptions regarding risk-free interest rates and volatility of the Company’s stock price. The Monte Carlo incorporates the same assumptions as Black-Scholes as to stock price volatility, the risk-free interest rate and dividend yield. The Company utilized the expected life of the PSUs for the expected term of the award, as the vesting term and contractual term of the awards are identical.
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Recently Accounting Pronouncements | Recent Accounting Pronouncements In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). This update amends guidance to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606). At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption of the amendments is permitted including adoption in an interim period. If the Company early adopts in an interim period, the Company is required to apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application. The amendments in ASU 2021-08 should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company adopted this standard as of January 1, 2023 and there was no impact on its Consolidated Financial Statements.
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following tables set forth the amortized cost, gross unrealized gains, gross unrealized losses and fair values of the Company’s marketable securities accounted for as available-for-sale securities as of September 30, 2023 and December 31, 2022.
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Schedule of Investments Classified by Contractual Maturity Date | The following tables set forth the fair value of available-for-sale marketable securities by contractual maturity at September 30, 2023 and December 31, 2022.
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Schedule of Fair Value, Assets Measured on Recurring Basis | The following tables set forth the Company’s cash equivalents and marketable securities accounted for as available-for-sale securities that were measured at fair value on a recurring basis based on the fair value hierarchy as of September 30, 2023 and December 31, 2022.
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Goodwill and Intangible Assets (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following table summarizes the carrying amounts of goodwill by segment at September 30, 2023 and December 31, 2022 (in thousands):
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Schedule of Classes of Intangible Assets | Intangible assets consisted of the following (in thousands):
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Schedule of Intangible Asset Amortization Expense | The following table summarizes the amortization expense for the three and nine months ended September 30, 2023 and 2022 (in thousands):
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Schedule of Estimated Amortization Expense | The estimated amortization expense related to amortizable intangible assets for each of the following periods as of September 30, 2023 is as follows (in thousands):
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Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Option Activity | A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2023 is as follows:
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Schedule of Fair Value of Each Stock Option Award Granted | The fair value of each stock option award granted during the nine months ended September 30, 2023 was estimated as of the grant date using a Black-Scholes model with the following assumptions:
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Schedule of Restricted Stock Activity | A summary of the restricted stock activity under the Company’s plans for the nine months ended September 30, 2023 is as follows:
A summary of the PSU activity under the Company’s plans for the nine months ended September 30, 2023 is as follows:
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Schedule of Fair Value of PSU Award Granted | The fair value of each PSU granted during the nine months ended September 30, 2023 was estimated as of the grant date using a Monte Carlo with the following assumptions:
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Revenue Recognition (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contract Assets and Liabilities | The following table summarizes the values of contract assets, capitalized commissions and contract liabilities (in thousands):
(1) Recorded within other current assets on the Consolidated Balance Sheets. (2) Recorded within other assets on the Consolidated Balance Sheets. (3) Recorded within other long-term liabilities on the Consolidated Balance Sheets.
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Schedule of Disaggregation of Revenue | The following table details the disaggregation of revenue for both the Clinical Services and Advanced Diagnostics Segments (in thousands):
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Restructuring (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Restructuring | The following table summarizes the changes in the Company’s accrued restructuring balance (in thousands):
(1) Other adjustments include non-cash asset charges related to Facility Footprint Optimization costs.
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Net Loss Per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table shows the calculations (in thousands, except net loss per share amounts):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potential dilutive shares were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive (in thousands):
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Segment Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Information | The following table summarizes the segment information (in thousands):
(1) Clinical Services cost of revenue for both the three months ended September 30, 2023 and September 30, 2022 includes $4.3 million of amortization of acquired Inivata developed technology intangible assets. Clinical Services cost of revenue for both the nine months ended September 30, 2023 and September 30, 2022 includes $12.8 million of amortization of acquired Inivata developed technology intangible assets. (2) Advanced Diagnostics cost of revenue for both the three months ended September 30, 2023 and September 30, 2022 includes $0.6 million of amortization of acquired Inivata developed technology intangible assets. Advanced Diagnostics cost of revenue for both the nine months ended September 30, 2023 and September 30, 2022 includes $1.8 million of amortization of acquired Inivata developed technology intangible assets.
|
Summary of Significant Accounting Policies (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
segment
| |
Accounting Changes and Error Corrections [Abstract] | |
Number of reportable segments | 2 |
Requisite service period (in years) | 3 years |
Goodwill and Intangible Assets - Schedule of Goodwill (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 522,766 | $ 522,766 |
Clinical Services | ||
Goodwill [Line Items] | ||
Goodwill | 458,782 | 458,782 |
Advanced Diagnostics | ||
Goodwill [Line Items] | ||
Goodwill | $ 63,984 | $ 63,984 |
Goodwill and Intangible Assets - Schedule of Amortization Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization of intangibles | $ 8,784 | $ 8,490 | $ 26,350 | $ 25,470 |
Amortization of intangibles included in cost of revenue | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization of intangibles | 4,853 | 4,853 | 14,560 | 14,559 |
Amortization of intangibles included in general and administrative expenses | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Total amortization of intangibles | $ 3,931 | $ 3,637 | $ 11,790 | $ 10,911 |
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2023 | $ 8,783 |
2024 | 33,447 |
2025 | 33,343 |
2026 | 33,308 |
2027 | 32,758 |
Thereafter | 226,824 |
Total | $ 368,463 |
Stock-Based Compensation - Summary of Stock Option Activity (Details) - $ / shares |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Number of Shares | |
Beginning balance (in shares) | 4,214,617 |
Granted (in shares) | 1,644,070 |
Exercised (in shares) | (223,044) |
Forfeited (in shares) | (1,142,470) |
Ending balance (in shares) | 4,493,173 |
Exercisable at end of period (in shares) | 1,126,578 |
Weighted Average Exercise Price | |
Beginning balance (in dollars per share) | $ 16.48 |
Granted (in dollars per share) | 17.17 |
Exercised (in dollars per share) | 10.70 |
Forfeited (in dollars per share) | 21.11 |
Ending balance (in dollars per share) | 15.84 |
Exercisable, ending balance (in dollars per share) | $ 21.05 |
Revenue Recognition - Narrative (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
segment
|
Sep. 30, 2022
USD ($)
|
|
Revenue from Contract with Customer [Abstract] | ||||
Number of operating segments | segment | 2 | |||
Pharma contract liability, revenue recognized | $ 1.4 | $ 0.7 | $ 4.9 | $ 4.8 |
Amortization of contract commissions | $ 0.2 | $ 0.3 | $ 0.7 | $ 0.6 |
Revenue Recognition - Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Contract with Customer, Asset, Net [Abstract] | ||
Current contract assets | $ 424 | $ 1,898 |
Long-term contract assets | 0 | 31 |
Total assets | 424 | 1,929 |
Capitalized Contract Cost [Abstract] | ||
Current capitalized commissions | 937 | 800 |
Long-term capitalized commissions | 257 | 715 |
Total capitalized commissions | 1,194 | 1,515 |
Contract with Customer, Liability [Abstract] | ||
Current contract liabilities | 3,617 | 7,557 |
Long-term contract liabilities | 0 | 19 |
Total contract liabilities | $ 3,617 | $ 7,576 |
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 151,954 | $ 128,782 | $ 436,091 | $ 371,023 |
Clinical Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 127,553 | 106,162 | 365,578 | 310,588 |
Clinical Services | Client direct billing | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 86,160 | 73,234 | 246,159 | 208,123 |
Clinical Services | Commercial Insurance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 21,722 | 17,105 | 64,772 | 53,904 |
Clinical Services | Medicare and Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 19,624 | 15,795 | 54,407 | 48,427 |
Clinical Services | Self-Pay | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | 47 | 28 | 240 | 134 |
Advanced Diagnostics | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenue | $ 24,401 | $ 22,620 | $ 70,513 | $ 60,435 |
Restructuring - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 2,125,000 | $ 0 | $ 9,883,000 | $ 0 |
Restructuring cost | 5,900,000 | 5,900,000 | ||
Severance and Other Employee Costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | 700,000 | 700,000 | ||
Facility Footprint Optimization | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | 4,500,000 | 4,500,000 | ||
Consulting costs | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost | $ 700,000 | $ 700,000 |
Net Loss Per Share - Schedule of Basic and Diluted Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Earnings Per Share [Abstract] | ||||
NET LOSS | $ (18,516) | $ (36,852) | $ (73,642) | $ (121,563) |
Basic weighted average shares outstanding (in shares) | 125,687 | 124,425 | 125,358 | 124,055 |
Diluted weighted average shares outstanding (in shares) | 125,687 | 124,425 | 125,358 | 124,055 |
Basic net loss per share (in dollars per share) | $ (0.15) | $ (0.30) | $ (0.59) | $ (0.98) |
Diluted net loss per share (in dollars per share) | $ (0.15) | $ (0.30) | $ (0.59) | $ (0.98) |
Commitments and Contingencies (Details) $ in Millions |
Jul. 31, 2023
patent
|
Dec. 20, 2022
patent
|
Jan. 20, 2021
patent
|
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
---|---|---|---|---|---|
Patent Infringement Complaint | |||||
Contractual Obligation [Line Items] | |||||
Number of patents allegedly infringed upon | patent | 2 | 1 | 2 | ||
Federal Healthcare Program Revenue | |||||
Contractual Obligation [Line Items] | |||||
Loss contingency accrual | $ | $ 11.2 | $ 11.2 |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Related Party Transaction [Line Items] | ||||
Total Revenue | $ 151,954 | $ 128,782 | $ 436,091 | $ 371,023 |
Related Party | ||||
Related Party Transaction [Line Items] | ||||
Total Revenue | $ 100 | $ 300 | $ 300 | $ 300 |
Segment Information - Narrative (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Schedule of Segment Information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
segment
|
Sep. 30, 2022
USD ($)
|
|
Segment Reporting [Abstract] | ||||
Number of operating segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Total Revenue | $ 151,954 | $ 128,782 | $ 436,091 | $ 371,023 |
Total cost of revenue | 89,643 | 79,889 | 259,075 | 239,952 |
GROSS PROFIT | 62,311 | 48,893 | 177,016 | 131,071 |
Amortization of acquired intangible assets | 12,800 | |||
Clinical Services | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 127,553 | 106,162 | 365,578 | 310,588 |
Total cost of revenue | 73,994 | 65,261 | 213,032 | 197,563 |
GROSS PROFIT | 53,559 | 40,901 | 152,546 | 113,025 |
Amortization of acquired intangible assets | 4,300 | 4,300 | 12,800 | |
Advanced Diagnostics | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenue | 24,401 | 22,620 | 70,513 | 60,435 |
Total cost of revenue | 15,649 | 14,628 | 46,043 | 42,389 |
GROSS PROFIT | 8,752 | 7,992 | 24,470 | 18,046 |
Amortization of acquired intangible assets | $ 600 | $ 600 | $ 1,800 | $ 1,800 |
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