(Mark One) | |||||
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(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||
☒ | Smaller reporting company | ||||||||||
Emerging growth company |
Page | ||||||||
PART I. | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
PART II. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
June 30, 2023 | December 31, 2022 | ||||||||||
ASSETS | (unaudited) | ||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable investment securities | |||||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Long-term accounts receivable, net | |||||||||||
Property and equipment, net | |||||||||||
Operating lease assets | |||||||||||
Goodwill and other intangible assets, net | |||||||||||
Other assets – long-term | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued compensation | |||||||||||
Operating lease liabilities | |||||||||||
Other accrued and current liabilities | |||||||||||
Total current liabilities | |||||||||||
Noncurrent operating lease liabilities | |||||||||||
Deferred tax liability | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and Contingencies (Note 11) | |||||||||||
Stockholders’ Equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated deficit | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
NET REVENUES | $ | $ | $ | $ | |||||||||||||||||||
OPERATING EXPENSES AND OTHER OPERATING INCOME | |||||||||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Amortization of acquired intangible assets | |||||||||||||||||||||||
Change in fair value of contingent consideration | ( | ( | |||||||||||||||||||||
Total operating expenses, net | |||||||||||||||||||||||
Operating loss | ( | ( | ( | ( | |||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Loss per share, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted-average shares outstanding, basic and diluted | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive (loss) income: | |||||||||||||||||||||||
Net unrealized (loss) gain on marketable investment securities | ( | ||||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2022 | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under the employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, MARCH 31, 2022 | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock in acquisition of business | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2022 | $ | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
BALANCE, JANUARY 1, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under the employee stock purchase plan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain on marketable investment securities | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, MARCH 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock from vested restricted stock units and payment of employees’ taxes | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Net unrealized loss on marketable investment securities | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation expense | |||||||||||
Change in fair value of contingent consideration | ( | ||||||||||
Deferred income taxes | ( | ||||||||||
Accretion of discounts on marketable investment securities | ( | ||||||||||
Other | |||||||||||
Change in operating assets and liabilities: | |||||||||||
Accounts receivable | ( | ( | |||||||||
Prepaid expenses and other current assets | ( | ||||||||||
Inventory | ( | ( | |||||||||
Operating lease assets | ( | ||||||||||
Other assets | ( | ||||||||||
Accounts payable | |||||||||||
Operating lease liabilities | ( | ||||||||||
Accrued compensation | ( | ( | |||||||||
Other accrued and current liabilities | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
INVESTING ACTIVITIES | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Asset acquisition, adjustment to purchase price | |||||||||||
Acquisition of business, net of cash and cash equivalents acquired | ( | ||||||||||
Proceeds from sale of property and equipment | |||||||||||
Purchases of marketable investment securities | ( | ||||||||||
Proceeds from maturities of marketable investment securities | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
FINANCING ACTIVITIES | |||||||||||
Proceeds from exercise of common stock options | |||||||||||
Payment of employees’ taxes on vested restricted stock units | ( | ( | |||||||||
Proceeds from contributions to the employee stock purchase plan | |||||||||||
Repayment of principal portion of finance lease liabilities | ( | ( | |||||||||
Net cash provided by financing activities | |||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | ( | ( | |||||||||
Beginning of period | |||||||||||
End of period | $ | $ | |||||||||
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
Accrued purchases of property and equipment | $ | $ | |||||||||
Common stock issued in acquisition of business | $ | $ | |||||||||
Contingent consideration in acquisition of business | $ | $ | |||||||||
Consideration payable in acquisition of business | $ | $ | |||||||||
Operating lease assets obtained in exchange for lease obligations | $ | $ | |||||||||
Property and equipment acquired with tenant improvement allowance | $ | $ | |||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Dermatologic(1) | $ | $ | $ | $ | |||||||||||||||||||
Non-Dermatologic(2) | |||||||||||||||||||||||
Total net revenues | $ | $ | $ | $ |
Percentage of Revenues | |||||||||||||||||||||||||||||||||||
Six Months Ended June 30, | Percentage of Accounts Receivable (current) as of | Percentage of Accounts Receivable (noncurrent) as of | |||||||||||||||||||||||||||||||||
2023 | 2022 | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Medicare | % | % | % | % | * | * | |||||||||||||||||||||||||||||
Payor A | % | % | % | % | % | % | |||||||||||||||||||||||||||||
Payor B | * | * | % | * | % | * |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Stock options | |||||||||||||||||||||||
RSUs and PSUs | |||||||||||||||||||||||
ESPP | |||||||||||||||||||||||
Total |
June 30, 2023 | |||||||||||||||||||||||
Amortized Cost | Unrealized | Estimated Fair Value | |||||||||||||||||||||
Gains | Losses | ||||||||||||||||||||||
U.S. government securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Total | $ | $ | $ | ( | $ |
December 31, 2022 | |||||||||||||||||||||||
Amortized Cost | Unrealized | Estimated Fair Value | |||||||||||||||||||||
Gains | Losses | ||||||||||||||||||||||
U.S. government securities | $ | $ | $ | ( | $ | ||||||||||||||||||
Total | $ | $ | $ | ( | $ |
Pro Forma Data | |||||||||||
Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | ||||||||||
Net revenues | $ | $ | |||||||||
Net loss | $ | ( | $ | ( |
June 30, 2023 | December 31, 2022 | ||||||||||
Lab equipment(1) | $ | $ | |||||||||
Leasehold improvements | |||||||||||
Computer equipment | |||||||||||
Furniture and fixtures | |||||||||||
Construction-in-progress | |||||||||||
Total | |||||||||||
Less accumulated depreciation(1) | ( | ( | |||||||||
Property and equipment, net | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
June 30, 2023 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net | Weighted-Average Remaining Life (in years) | ||||||||||||||||||||
Developed technology | $ | $ | ( | $ | |||||||||||||||||||
Assembled workforce | ( | ||||||||||||||||||||||
Total other intangible assets, net | $ | $ | ( | $ |
December 31, 2022 | |||||||||||||||||||||||
Gross carrying value | Accumulated amortization | Net | Weighted-Average Remaining Life (in years) | ||||||||||||||||||||
Developed technology | $ | $ | ( | $ | |||||||||||||||||||
Assembled workforce | ( | ||||||||||||||||||||||
Total other intangible assets, net | $ | $ | ( | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Clinical studies | $ | $ | |||||||||
Accrued service fees | |||||||||||
ESPP contributions | |||||||||||
Other | |||||||||||
Total | $ | $ |
As of June 30, 2023 | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Items (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Money market funds(1) | $ | $ | $ | $ | |||||||||||||||||||
U.S. government securities(2) | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Contingent consideration(3) | $ | $ | $ | $ |
As of December 31, 2022 | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Items (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | ||||||||||||||||||||
Assets | |||||||||||||||||||||||
Money market funds(1) | $ | $ | $ | $ | |||||||||||||||||||
U.S. government securities(2) | $ | $ | $ | $ | |||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Contingent consideration(3) | $ | $ | $ | $ |
Weighted-Average | |||||||||||||||||||||||
Stock Options Outstanding | Exercise Price | Remaining Contractual Term (Years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
Balance as of December 31, 2022 | $ | ||||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Forfeited/Cancelled | ( | $ | |||||||||||||||||||||
Balance as of June 30, 2023 | $ | $ | |||||||||||||||||||||
Exercisable at June 30, 2023 | $ | $ |
Restricted Stock Units Outstanding | Weighted-Average Grant Date Fair Value | ||||||||||
Balance as of December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Vested(1) | ( | $ | |||||||||
Forfeited/Cancelled | ( | $ | |||||||||
Balance as of June 30, 2023 | $ |
Performance-Based Restricted Stock Units Outstanding | Weighted-Average Grant Date Fair Value | ||||||||||
Balance as of December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Vested | $ | ||||||||||
Forfeited/Cancelled | $ | ||||||||||
Balance as of June 30, 2023 | $ |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Average expected term (years) | |||||||||||
Expected stock price volatility | |||||||||||
Risk-free interest rate | |||||||||||
Dividend yield |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Average expected term (years) | |||||||||||
Expected stock price volatility | |||||||||||
Risk-free interest rate | |||||||||||
Dividend yield | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | $ | $ | $ | $ | |||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Total stock-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
Proprietary Dermatologic GEP Tests | |||||||||||||||||||||||||||||||||||||||||||||||
DecisionDx- Melanoma | DecisionDx-SCC | Diagnostic GEP offering (1) | Dermatologic Total | DecisionDx-UM | TissueCypher Barrett’s Esophagus Test | IDgenetix(2) | Grand Total | ||||||||||||||||||||||||||||||||||||||||
Q1 2023 | 7,583 | 2,411 | 980 | 10,974 | 409 | 1,383 | 2,150 | 14,916 | |||||||||||||||||||||||||||||||||||||||
Q2 2023 | 8,597 | 2,681 | 953 | 12,231 | 461 | 1,447 | 2,681 | 16,820 | |||||||||||||||||||||||||||||||||||||||
For the six months ended June 30, 2023 | 16,180 | 5,092 | 1,933 | 23,205 | 870 | 2,830 | 4,831 | 31,736 | |||||||||||||||||||||||||||||||||||||||
Q1 2022 | 6,023 | 1,142 | 950 | 8,115 | 456 | 56 | — | 8,627 | |||||||||||||||||||||||||||||||||||||||
Q2 2022 | 7,125 | 1,344 | 955 | 9,424 | 431 | 352 | 827 | 11,034 | |||||||||||||||||||||||||||||||||||||||
For the six months ended June 30, 2022 | 13,148 | 2,486 | 1,905 | 17,539 | 887 | 408 | 827 | 19,661 | |||||||||||||||||||||||||||||||||||||||
Q3 2022 | 7,354 | 1,636 | 834 | 9,824 | 392 | 690 | 1,208 | 12,114 | |||||||||||||||||||||||||||||||||||||||
Q4 2022 | 7,301 | 1,845 | 822 | 9,968 | 432 | 1,030 | 1,214 | 12,644 | |||||||||||||||||||||||||||||||||||||||
For year ended December 31, 2022 | 27,803 | 5,967 | 3,561 | 37,331 | 1,711 | 2,128 | 3,249 | 44,419 |
Three Months Ended June 30, | Change | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Net revenues | $ | 50,138 | $ | 34,838 | $ | 15,300 | 43.9 | % | |||||||||||||||
Operating expenses and other operating income | |||||||||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | 11,058 | 7,686 | 3,372 | 43.9 | % | ||||||||||||||||||
Research and development | 13,308 | 11,926 | 1,382 | 11.6 | % | ||||||||||||||||||
Selling, general and administrative | 44,681 | 37,498 | 7,183 | 19.2 | % | ||||||||||||||||||
Amortization of acquired intangible assets | 2,248 | 2,097 | 151 | 7.2 | % | ||||||||||||||||||
Change in fair value of contingent consideration | — | (20,398) | 20,398 | 100.0 | % | ||||||||||||||||||
Total operating expenses, net | 71,295 | 38,809 | 32,486 | 83.7 | % | ||||||||||||||||||
Operating loss | (21,157) | (3,971) | (17,186) | (432.8) | % | ||||||||||||||||||
Interest income | 2,399 | 370 | 2,029 | 548.4 | % | ||||||||||||||||||
Interest expense | (3) | (4) | 1 | 25.0 | % | ||||||||||||||||||
Loss before income taxes | (18,761) | (3,605) | (15,156) | (420.4) | % | ||||||||||||||||||
Income tax expense (benefit) | 16 | (1,957) | 1,973 | 100.8 | % | ||||||||||||||||||
Net loss | $ | (18,777) | $ | (1,648) | $ | (17,129) | NM |
Three Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | $ | 1,202 | $ | 897 | $ | 305 | |||||||||||
Research and development | 2,486 | 1,831 | 655 | ||||||||||||||
Selling, general and administrative | 9,161 | 6,055 | 3,106 | ||||||||||||||
Total stock-based compensation expense | $ | 12,849 | $ | 8,783 | $ | 4,066 |
Three Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Dermatologic(1) | $ | 43,030 | $ | 31,897 | $ | 11,133 | |||||||||||
Non-Dermatologic(2) | 7,108 | 2,941 | 4,167 | ||||||||||||||
Total net revenues | $ | 50,138 | $ | 34,838 | $ | 15,300 |
Three Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Net revenues | $ | 50,138 | $ | 34,838 | $ | 15,300 | |||||||||||
Less: Cost of sales (exclusive of amortization of acquired intangible assets) | 11,058 | 7,686 | 3,372 | ||||||||||||||
Less: Amortization of acquired intangible assets | 2,248 | 2,097 | 151 | ||||||||||||||
Gross margin | $ | 36,832 | $ | 25,055 | $ | 11,777 | |||||||||||
Gross margin percentage | 73.5 | % | 71.9 | % | 1.6 | % |
Three Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Sales and marketing | $ | 28,252 | $ | 21,581 | $ | 6,671 | |||||||||||
General and administrative | 16,429 | 15,917 | 512 | ||||||||||||||
Total selling, general and administrative expense | $ | 44,681 | $ | 37,498 | $ | 7,183 |
Six Months Ended June 30, | Change | ||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||
Net revenues | $ | 92,175 | $ | 61,690 | $ | 30,485 | 49.4 | % | |||||||||||||||
Operating expenses and other operating income | |||||||||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | 21,240 | 13,630 | 7,610 | 55.8 | % | ||||||||||||||||||
Research and development | 27,701 | 22,687 | 5,014 | 22.1 | % | ||||||||||||||||||
Selling, general and administrative | 91,443 | 67,951 | 23,492 | 34.6 | % | ||||||||||||||||||
Amortization of acquired intangible assets | 4,470 | 3,745 | 725 | 19.4 | % | ||||||||||||||||||
Change in fair value of contingent consideration | — | (17,836) | 17,836 | 100.0 | % | ||||||||||||||||||
Total operating expenses, net | 144,854 | 90,177 | 54,677 | 60.6 | % | ||||||||||||||||||
Operating loss | (52,679) | (28,487) | (24,192) | (84.9) | % | ||||||||||||||||||
Interest income | 4,735 | 400 | 4,335 | NM | |||||||||||||||||||
Interest expense | (7) | (7) | — | — | % | ||||||||||||||||||
Loss before income taxes | (47,951) | (28,094) | (19,857) | (70.7) | % | ||||||||||||||||||
Income tax expense (benefit) | 30 | (1,823) | 1,853 | 101.6 | % | ||||||||||||||||||
Net loss | $ | (47,981) | $ | (26,271) | $ | (21,710) | (82.6) | % |
Six Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Cost of sales (exclusive of amortization of acquired intangible assets) | $ | 2,474 | $ | 1,750 | $ | 724 | |||||||||||
Research and development | 5,073 | 3,659 | 1,414 | ||||||||||||||
Selling, general and administrative | 18,827 | 11,793 | 7,034 | ||||||||||||||
Total stock-based compensation expense | $ | 26,374 | $ | 17,202 | $ | 9,172 | |||||||||||
Six Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Dermatologic(1) | $ | 78,941 | $ | 56,236 | $ | 22,705 | |||||||||||
Non-Dermatologic(2) | 13,234 | 5,454 | 7,780 | ||||||||||||||
Total net revenues | $ | 92,175 | $ | 61,690 | $ | 30,485 |
Six Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Net revenues | $ | 92,175 | $ | 61,690 | $ | 30,485 | |||||||||||
Less: Cost of sales (exclusive of amortization of acquired intangible assets) | 21,240 | 13,630 | 7,610 | ||||||||||||||
Less: Amortization of acquired intangible assets | 4,470 | 3,745 | 725 | ||||||||||||||
Gross margin | $ | 66,465 | $ | 44,315 | $ | 22,150 | |||||||||||
Gross margin percentage | 72.1 | % | 71.8 | % | 0.3 | % |
Six Months Ended June 30, | |||||||||||||||||
2023 | 2022 | Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Sales and marketing | $ | 58,197 | $ | 39,802 | $ | 18,395 | |||||||||||
General and administrative | 33,246 | 28,149 | 5,097 | ||||||||||||||
Total selling, general and administrative expense | $ | 91,443 | $ | 67,951 | $ | 23,492 |
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
(unaudited) | |||||||||||
Net cash used in operating activities | $ | (29,225) | $ | (30,431) | |||||||
Net cash provided by (used in) investing activities | 1,197 | (27,913) | |||||||||
Net cash provided by financing activities | 954 | 1,877 | |||||||||
Net change in cash and cash equivalents | (27,074) | (56,467) | |||||||||
Cash and cash equivalents, beginning of period | 122,948 | 329,633 | |||||||||
Cash and cash equivalents, end of period | $ | 95,874 | $ | 273,166 |
Exhibit Number | Description of document | |||||||
2.1#+ | ||||||||
2.2#+ | ||||||||
3.1 | ||||||||
3.2 | ||||||||
4.1 | ||||||||
4.2 | ||||||||
10.1 | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
101.INS* | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase. | |||||||
104* | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101). |
CASTLE BIOSCIENCES, INC. | ||||||||||||||
Date: | August 2, 2023 | By: | /s/ Derek J. Maetzold | |||||||||||
Derek J. Maetzold President and Chief Executive Officer (Principal Executive Officer) | ||||||||||||||
Date: | August 2, 2023 | By: | /s/ Frank Stokes | |||||||||||
Frank Stokes Chief Financial Officer (Principal Financial and Accounting Officer) |
I, Derek J. Maetzold, certify that: | ||||||||||||||
1. | I have reviewed this Quarterly Report on Form 10-Q of Castle Biosciences, Inc.; | |||||||||||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||||||||||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||||||||||||
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |||||||||||||
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||||||||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||||||||
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||||||||||
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||||||||||
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |||||||||||||
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and | |||||||||||||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 2, 2023 | /s/ Derek J. Maetzold | ||||||
Derek J. Maetzold President and Chief Executive Officer (Principal Executive Officer) |
I, Frank Stokes, certify that: | ||||||||||||||
1. | I have reviewed this Quarterly Report on Form 10-Q of Castle Biosciences, Inc.; | |||||||||||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |||||||||||||
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |||||||||||||
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |||||||||||||
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |||||||||||||
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||||||||
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |||||||||||||
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |||||||||||||
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |||||||||||||
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and | |||||||||||||
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | August 2, 2023 | /s/ Frank Stokes | ||||||
Frank Stokes Chief Financial Officer (Principal Financial and Accounting Officer) |
In connection with the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 of Castle Biosciences, Inc. (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Derek J. Maetzold, President and Chief Executive Officer of the Company, and Frank Stokes, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge: | ||||||||
(1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and | |||||||
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | August 2, 2023 | ||||||||||
/s/ Derek J. Maetzold | /s/ Frank Stokes | ||||||||||
Derek J. Maetzold President and Chief Executive Officer (Principal Executive Officer) | Frank Stokes Chief Financial Officer (Principal Financial and Accounting Officer) |
This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Castle Biosciences, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing. |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 26,784,008 | 26,553,681 |
Common stock, shares outstanding (in shares) | 26,784,008 | 26,553,681 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Income Statement [Abstract] | ||||
NET REVENUES | $ 50,138 | $ 34,838 | $ 92,175 | $ 61,690 |
OPERATING EXPENSES AND OTHER OPERATING INCOME | ||||
Cost of sales (exclusive of amortization of acquired intangible assets) | 11,058 | 7,686 | 21,240 | 13,630 |
Research and development | 13,308 | 11,926 | 27,701 | 22,687 |
Selling, general and administrative | 44,681 | 37,498 | 91,443 | 67,951 |
Amortization of acquired intangible assets | 2,248 | 2,097 | 4,470 | 3,745 |
Change in fair value of contingent consideration | 0 | (20,398) | 0 | (17,836) |
Total operating expenses, net | 71,295 | 38,809 | 144,854 | 90,177 |
Operating loss | (21,157) | (3,971) | (52,679) | (28,487) |
Interest income | 2,399 | 370 | 4,735 | 400 |
Interest expense | (3) | (4) | (7) | (7) |
Loss before income taxes | (18,761) | (3,605) | (47,951) | (28,094) |
Income tax expense (benefit) | 16 | (1,957) | 30 | (1,823) |
Net loss | $ (18,777) | $ (1,648) | $ (47,981) | $ (26,271) |
Loss per share, basic (in dollars per share) | $ (0.70) | $ (0.06) | $ (1.80) | $ (1.02) |
Loss per share, diluted (in dollars per share) | $ (0.70) | $ (0.06) | $ (1.80) | $ (1.02) |
Weighted-average shares outstanding, basic (in shares) | 26,733 | 26,064 | 26,670 | 25,746 |
Weighted-average shares outstanding, diluted (in shares) | 26,733 | 26,064 | 26,670 | 25,746 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (18,777) | $ (1,648) | $ (47,981) | $ (26,271) |
Other comprehensive (loss) income: | ||||
Net unrealized (loss) gain on marketable investment securities | (8) | 0 | 237 | 0 |
Comprehensive loss | $ (18,785) | $ (1,648) | $ (47,744) | $ (26,271) |
Organization and Description of Business |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Castle Biosciences, Inc. (the ‘‘Company”, “we”, “us” or “our”) was incorporated in the state of Delaware on September 12, 2007. We are a commercial-stage diagnostics company focused on providing clinicians and their patients with personalized, clinically actionable information to inform treatment decisions and improve health outcomes. We are based in Friendswood, Texas (a suburb of Houston, Texas) and our laboratory operations are conducted at our facilities located in Phoenix, Arizona and Pittsburgh, Pennsylvania. We have a history of recurring net losses and negative cash flows and as of June 30, 2023, we had an accumulated deficit of $208.9 million. We believe our $95.9 million of cash and cash equivalents and $129.6 million of marketable investment securities as of June 30, 2023, and anticipated revenue from our test reports, will be sufficient to meet our cash requirements through at least the 12-month period following the date that these unaudited condensed consolidated financial statements were issued.
|
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). All intercompany accounts and transactions have been eliminated in consolidation. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of June 30, 2023; the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive loss and the condensed consolidated statements of stockholders’ equity, each for the three and six months ended June 30, 2023 and 2022; and the condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of June 30, 2023, the results of our consolidated operations for the three and six months ended June 30, 2023 and 2022 and our consolidated cash flows for the six months ended June 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2023 and 2022 are also unaudited. The results for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period. The balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the unaudited interim consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 (the "2022 Form 10-K"). Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of contingent consideration and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. Cash and Cash Equivalents including Concentrations of Credit Risk Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the financial institutions in which deposits are held. Marketable Investment Securities All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of any related deferred income tax effects, on our condensed consolidated balance sheets. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment. Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations. Impairments of available-for-sale debt securities, if any, are recorded in our unaudited condensed consolidated statements of operations. See Notes 5 and 10 for further details. Revenue Recognition In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. See Note 3 for further details. Accounts Receivable and Allowance for Credit Losses We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments. We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of June 30, 2023 and December 31, 2022. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. On June 2, 2023, a Medicare administrative contractor (“MAC”) finalized a local coverage determination (“LCD”) pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023. On June 5, 2023, our stock price decreased significantly and did not recover before June 30, 2023. In response to this trigger, we tested goodwill for impairment at June 30, 2023. We elected to bypass the optional qualitative assessment and proceeded directly to the quantitative assessment. In conducting our interim test, we concluded that our business consists of a single reporting unit. To measure the fair value of our reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium. The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us. Our impairment test indicated that the fair value of our reporting unit exceeded its carrying value by 13% and therefore no impairment was indicated. In July 2023, the MAC suspended the LCD and then posted a new draft LCD for comment that is substantially the same as the LCD that was to become effective. Factors that could result in a future impairment of goodwill include declines in the price of our common stock, increased competition, changes in macroeconomic developments, unfavorable government or regulatory developments and changes in coverage or reimbursement conditions. Accrued Compensation We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of June 30, 2023 and December 31, 2022, we accrued approximately $10,350,000 and $18,209,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment. Stock-Based Compensation Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements. In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date. For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. Forfeitures are accounted for as they occur. Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss is made up of net loss plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss).
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue All of our revenues from contracts with customers are associated with the provision of testing services. Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma. We also provide a test for patients with cutaneous squamous cell carcinoma (“SCC”), DecisionDx®-SCC, a test for use in patients with suspicious pigmented lesions, MyPath® Melanoma and DiffDx®-Melanoma, a test for uveal melanoma (“UM”), DecisionDx®-UM and a test for patients diagnosed with Barrett’s esophagus, the TissueCypher® Barrett’s Esophagus Test. We also began offering a pharmacogenomics testing service focused on mental health, IDgenetix®, following a business combination completed in April 2022. Information on the disaggregation of revenues is included below. Once we satisfy our performance obligations and bill for the service, the timing of the collection of payments may vary based on the payment practices of the third-party payor and the existence of contractually established reimbursement rates. The payments for our services are primarily made by third-party payors, including Medicare and commercial health insurance carriers. Certain contracts contain a contractual commitment of a reimbursement rate that differs from our list prices. However, absent a positive coverage policy, with or without a contractually committed reimbursement rate, with a commercial carrier or governmental program, our diagnostic tests may or may not be paid by these entities. In addition, patients do not enter into direct agreements with us that commit them to pay any portion of the cost of the tests in the event that their insurance provider declines to reimburse us. We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan. These situations may result in a delay in the collection of payments. The Medicare claims that are covered by Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt. Medicare claims that were either submitted to Medicare prior to the LCD or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed ‘‘redetermination’’), second (termed ‘‘reconsideration’’) or third level of appeal (de novo hearing with an Administrative Law Judge). A successful appeal at any of these levels may result in prompt payment. In the absence of Medicare coverage, contractually established reimbursements rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions. Variable consideration attributable to these price concessions is measured at the expected value using the ‘‘most likely amount’’ method under ASC 606. The amounts are estimated using historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties. Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time. Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues. Included in revenues for the three months ended June 30, 2023 and 2022 were $88,000 of net negative revenue adjustments and $578,000 of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration related to performance obligations satisfied in previous periods. Such amounts of variable consideration for the six months ended June 30, 2023 and 2022 were $1,705,000 and $300,000 of net negative revenue adjustments, respectively. These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration. Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations. Any incremental costs to obtain contracts are recorded as selling, general and administrative expenses as incurred due to the short duration of our contracts. Contract balances consisted solely of accounts receivable (both current and noncurrent) as of June 30, 2023 and December 31, 2022. Disaggregation of Revenues The table below provides the disaggregation of revenue by type (in thousands):
(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma). (2)Consists of TissueCypher Barrett’s Esophagus Test, DecisionDx-UM and IDgenetix. Payor Concentration We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our tests. Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows:
* Less than 10% There were no other third-party payors that individually accounted for more than 10% of our total revenue or accounts receivable for the periods shown in the table above.
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Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share | Loss Per Share Basic loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period. Diluted loss per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, vesting of RSUs and PSUs or purchases under the ESPP. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Contingently issuable PSU awards are included in the computation of diluted loss per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period. However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive. The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss per share for the three and six months ended June 30, 2023 and 2022 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands):
In addition, in connection with our acquisition of AltheaDx, Inc. (“AltheaDx”) in April 2022, we may be required to issue shares of our common stock to satisfy the contingent consideration obligations, pending the outcome of certain commercial and regulatory milestones, as required by the definitive agreement to acquire AltheaDx. For purposes of calculating diluted loss per share, no such shares were assumed to have been issued because none of the applicable conditions have been met to date. See Note 10 for additional information.
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Marketable Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Investment Securities | Marketable Investment Securities The following tables present our available-for-sale debt securities (in thousands):
Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity. We classify all investments as current assets, as these are readily available for use in current operations. The cost of securities sold is determined based on the specific identification method for purposes of recording gains and losses. There were no realized gains or losses on sales of investments for the three and six months ended June 30, 2023 and 2022. We evaluated our investment portfolio under the available-for-sale debt securities impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities. As of June 30, 2023, unrealized losses on our available-for-sale investments are not attributed to credit risk. We believe that an allowance for credit losses is unnecessary because the unrealized losses on certain of our marketable investment securities are due to market factors. No credit-related or noncredit-related impairment losses were recorded for the three and six months ended June 30, 2023 and 2022. The allowance for credit losses was zero as of June 30, 2023 and December 31, 2022. As of June 30, 2023, all of our available-for-sale debt securities had contractual maturities of one year or less. Accrued interest receivable is included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets. As of June 30, 2023 and December 31, 2022 the accrued interest receivable balance was immaterial. Additional information relating to the fair value of marketable investment securities can be found in Note 10.
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Acquisition |
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Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition | Acquisition On April 26, 2022, we completed the acquisition of 100% of the equity interests in AltheaDx which offers the IDgenetix test that focuses on mental health. We acquired AltheaDx for $30.5 million in cash and $17.1 million in common stock issued, for total consideration of $47.6 million. The fair value of assets acquired and liabilities assumed primarily consisted of finite-lived intangible assets of $35.0 million, goodwill of $10.7 million, cash and cash equivalents of $3.5 million and deferred tax liabilities of $1.7 million. We have concluded that the transaction represents a business combination under ASC Topic 805, Business Combinations. The financial results of AltheaDx have been included in our unaudited condensed consolidated financial statements since the date of the acquisition. For further details refer to our consolidated financial statements included in our 2022 From 10-K. The amount of revenue attributable to AltheaDx included in the unaudited consolidated statements of operations from the acquisition date was not material for the three and six months ended June 30, 2022. The loss attributable to AltheaDx included in the unaudited consolidated statements of operations from the acquisition date was approximately $3,383,000 for the three and six months ended June 30, 2022. This amount does not reflect transaction costs from the acquisition or the effects of the valuation allowance reduction discussed in Note 13. Transaction costs associated with the acquisition were $1,711,000 for both the three and six months ended June 30, 2022 and were recognized as expenses in the unaudited condensed consolidated statements of operations. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information for the three and six months ended June 30, 2022 combines our historical financial results and the results of AltheaDx, assuming that the companies were combined as of January 1, 2021, and includes adjustments for amortization expense from the acquired intangible assets and additional stock-based compensation expense. Non-recurring pro forma adjustments consist of acquisition-related transaction costs of $1,711,000 and an income tax benefit of $1,769,000, both assumed to have been recognized during the year ended December 31, 2021 and therefore removed from the three and six months ended June 30, 2022. The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods:
Related Parties Derek J. Maetzold, our President and Chief Executive Officer, and a member of our board of directors, and Daniel M. Bradbury, the Chairperson of our board of directors, each served on the board of directors of AltheaDx until the acquisition of AltheaDx was completed, were direct or indirect beneficial owners of AltheaDx securities and received consideration in connection with our acquisition of AltheaDx. Further, Frank Stokes, our Chief Financial Officer; Tobin W. Juvenal, our Chief Commercial Officer; Kristen Oelschlager, our Chief Operating Officer and certain immediate family members of Mr. Maetzold and Ms. Oelschlager were direct or indirect beneficial owners of AltheaDx securities and received consideration in the transaction. These individuals may receive additional contingent consideration based on the achievement of certain commercial milestones relating to the 2022, 2023, and 2024 commercial milestones (“AltheaDx Earnout Payments”) if the relevant commercial and regulatory milestone events occur. As of June 30, 2023 and December 31, 2022, our contingent consideration liability for the AltheaDx Earnout Payments was zero. See Note 10 for additional information. Our entry into the definitive agreement to acquire AltheaDx was approved by our board of directors based upon the unanimous recommendation of a special transaction committee comprised entirely of independent members of our board of directors without any financial interest in AltheaDx or any conflict of interest with respect to the acquisition of AltheaDx.
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Property and Equipment, Net |
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Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following (in thousands):
(1) As of June 30, 2023 and December 31, 2022, includes lab equipment under finance lease of $369 thousand and $369 thousand, respectively, and accumulated depreciation of $207 thousand and $137 thousand, respectively. Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands):
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Goodwill and Other Intangible Assets, Net |
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Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net Goodwill The balance of our goodwill was $10.7 million as of June 30, 2023 and December 31, 2022. There were no accumulated impairments of goodwill as of June 30, 2023 or December 31, 2022. Other Intangible Assets, Net Our other intangible assets, net consist of the following (in thousands):
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Other Accrued and Current Liabilities |
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Other Accrued and Current Liabilities | Other Accrued and Current Liabilities Other accrued and current liabilities consisted of the following (in thousands):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used in measuring fair value. There are three levels to the fair value hierarchy based on the reliability of inputs, as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or amounts recorded may not be indicative of the amount that we or holders of the instruments could realize in a current market exchange. The table below provides information, by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):
(1)Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets. (2)Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets. (3)Current portion, if any, classified as “Other accrued and current liabilities” in the unaudited condensed consolidated balance sheets. Contingent Consideration In connection with our acquisition of Cernostics, Inc. (“Cernostics”) in December 2021, we recorded a liability for contingent consideration of up to $50.0 million that could have been payable based on the achievement of certain commercial milestones relating to the year ending December 31, 2022 (“Cernostics Earnout Payments”). At our sole discretion, we could have settled Cernostics Earnout Payments in cash or shares of our common stock, subject to certain limitations. There were no Cernostics Earnout Payments that became payable because the commercial milestones were not achieved during the earnout period and the final valuation of the contingent consideration was assessed to be zero as of December 31, 2022. The fair value of the contingent consideration associated with our acquisition of Cernostics decreased by $20.8 million and $18.2 million for the three and six months ended June 30, 2022, respectively, with no similar activity for the same periods in 2023. In connection with our acquisition of AltheaDx, we agreed to pay contingent consideration of up to $75.0 million relating to the AltheaDx Earnout Payments. The portion of the AltheaDx Earnout Payments associated with the commercial milestones for the year ended December 31, 2022 was not paid since the applicable commercial milestones were not met. This portion represented $35.0 million of the $75.0 million total potential payment obligation, exclusive of the catch-up payment in 2023 of $17.5 million, which will become payable if all 2023 commercial milestones are fully met. Therefore, as of June 30, 2023, we have a potential payment obligation of up to $57.5 million with respect to the remaining commercial milestones for 2023 and 2024. If the settlement of the remaining portion of the AltheaDx Earnout Payments would have occurred on June 30, 2023, no amounts would have been due because no commercial milestones had been achieved as of such date. The contingent consideration was classified as a Level 3 fair value measurement due to the use of significant unobservable inputs and a Monte Carlo simulation to determine its fair value. The Monte Carlo simulation uses projections of the commercial milestones for the applicable period as well as the corresponding targets and approximate timing of payment based on the terms of the arrangement. We recognized a loss of $0.4 million during the three and six months ended June 30, 2022 associated with the change in fair value of the preliminary AltheaDx contingent consideration. The valuation of the AltheaDx contingent consideration was zero as of June 30, 2023 and December 31, 2022, and no gains or losses were recorded associated with changes in fair value during the three and six months ended June 30, 2023. The contingent consideration liability is remeasured at fair value at each reporting period taking into account any updated assumptions or changes in circumstances. Any changes in the fair value are recorded as gains or losses in our unaudited condensed consolidated statement of operations.
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Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies From time to time, we may be involved in legal proceedings arising in the ordinary course of business. We believe there is no threatened litigation or litigation pending that could have, individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows. |
Stock Incentive Plans and Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans and Stock-Based Compensation | Stock Incentive Plans and Stock-Based Compensation Stock Incentive Plans Effective January 1, 2023, an additional 1,327,684 shares became available under our 2019 Equity Incentive Plan (the “2019 Plan”) pursuant to an automatic annual increase. The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5% of our common shares outstanding as of the immediately preceding year end, through January 1, 2029. As of June 30, 2023, we have granted awards with an aggregate of 9,930 shares of underlying common stock in excess of the number of shares authorized for issuance under the 2019 Plan. On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the “Inducement Plan”). Our Inducement Plan provides for the grant of RSU awards and other stock awards made as an inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following a bona fide period of non-employment with us. As of June 30, 2023, there were 161,264 shares available for grant under the Inducement Plan. Stock Options Stock option activity under our stock plans for the six months ended June 30, 2023 is set forth below:
Restricted Stock Units RSUs represent the right to receive shares of our common stock at a specified future date, subject to vesting. Our RSUs generally vest annually from the grant date in four equal installments subject to the holder’s continued service with us. We issue new shares of common stock upon the vesting of RSUs. The following table summarizes our RSU activity for the six months ended June 30, 2023:
(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 37,556 for the six months ended June 30, 2023. Performance-Based Restricted Stock Units PSUs represent the right to receive shares of our common stock contingent upon the achievement of certain financial performance measures. We issue new shares of common stock upon the vesting of PSUs. The following table summarizes our PSU activity for the six months ended June 30, 2023:
Retirement Policy In January 2023, our board of directors approved a retirement policy (the “Retirement Policy”) that provides for acceleration of a portion of unvested awards that were granted to certain eligible employees upon meeting age, service and notice requirements. We considered the adoption of the Retirement Policy to be a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation. The modification did not result in any incremental compensation cost. However, the adoption of the of the policy resulted in a new estimate of the requisite service period for certain awards, which we reassess at each balance sheet date. In connection with the Retirement Policy, we accelerated the recognition of compensation expense of $0.4 million and $1.1 million during the three and six months ended June 30, 2023, respectively. Employee Stock Purchase Plan The ESPP provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 265,536 shares becoming available under the ESPP effective January 1, 2023. During the six months ended June 30, 2023, we issued 77,190 of common stock pursuant to scheduled purchases under the ESPP. As of June 30, 2023, 1,002,945 shares remained available for issuance under the ESPP. Determining Fair Value - Summary of Assumptions We use the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date. The following table sets forth the assumptions used to determine the fair value of stock options:
The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:
We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs. Stock-Based Compensation Expense Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):
For the six months ended June 30, 2023 and 2022, the weighted-average grant date fair value of stock options was $15.99 and $14.07 per option, respectively, and the weighted-average grant date fair value of the purchase rights granted under the ESPP was $11.00 and $19.91 per share, respectively. As of June 30, 2023, the total unrecognized stock-based compensation cost related to outstanding awards was $108,870,000, which is expected to be recognized over a weighted-average period of 2.6 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.
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Income Taxes |
6 Months Ended |
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Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesIn connection with our acquisition of AltheaDx in 2022, we recorded deferred tax liabilities based on our allocation of the fair values of assets acquired and liabilities assumed. As a result of these additional deferred tax liabilities, we recorded a $1,769,000 reduction to our existing valuation allowance on deferred tax assets, which was reflected in our income tax benefit on the condensed consolidated statements of operations for the three and six months ended June 30, 2022 as a discrete item. |
Subsequent Event |
6 Months Ended |
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Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn July 10, 2023, following approval by our board of directors, we entered into a definitive agreement to purchase a plot of land located in Friendswood, Texas for a purchase price of $7.6 million, subject to certain adjustments. We have the option to terminate the contract within 90 days, for any reason, and will use this time to complete initial suitability diligence. Closing, if it should occur, is expected in late 2023. |
Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). |
Consolidation | All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of contingent consideration and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. |
Cash and Cash Equivalents | Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. |
Concentration of Credit Risk | Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the financial institutions in which deposits are held. |
Marketable Investment Securities | All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of any related deferred income tax effects, on our condensed consolidated balance sheets. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment. Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations. Impairments of available-for-sale debt securities, if any, are recorded in our unaudited condensed consolidated statements of operations. |
Revenue Recognition | In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. |
Accounts Receivable | We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments. |
Allowance for Credit Losses | We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant. The allowance for credit losses was zero as of June 30, 2023 and December 31, 2022. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. |
Goodwill | Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. On June 2, 2023, a Medicare administrative contractor (“MAC”) finalized a local coverage determination (“LCD”) pursuant to which the DecisionDx-SCC test would no longer be covered by Medicare effective July 17, 2023. On June 5, 2023, our stock price decreased significantly and did not recover before June 30, 2023. In response to this trigger, we tested goodwill for impairment at June 30, 2023. We elected to bypass the optional qualitative assessment and proceeded directly to the quantitative assessment. In conducting our interim test, we concluded that our business consists of a single reporting unit. To measure the fair value of our reporting unit, we used a market approach whereby we calculated our total market capitalization on the impairment test date, based on the closing price of our common stock as reported on the Nasdaq Global Market, and applied a reasonable control premium. The control premium was based on an analysis of control premiums paid in recent acquisitions of companies in the same or similar industry as us. Our impairment test indicated that the fair value of our reporting unit exceeded its carrying value by 13% and therefore no impairment was indicated. In July 2023, the MAC suspended the LCD and then posted a new draft LCD for comment that is substantially the same as the LCD that was to become effective. Factors that could result in a future impairment of goodwill include declines in the price of our common stock, increased competition, changes in macroeconomic developments, unfavorable government or regulatory developments and changes in coverage or reimbursement conditions.
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Accrued Compensation | We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of June 30, 2023 and December 31, 2022, we accrued approximately $10,350,000 and $18,209,000, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment. |
Stock-Based Compensation | Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements. In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date. For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. Forfeitures are accounted for as they occur. |
Comprehensive Loss | Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss is made up of net loss plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss). |
Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedules of Disaggregation of Revenue | The table below provides the disaggregation of revenue by type (in thousands):
(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma). (2)Consists of TissueCypher Barrett’s Esophagus Test, DecisionDx-UM and IDgenetix.
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Schedules of Concentration of Risk, by Risk Factor | Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows:
* Less than 10%
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Loss Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted loss per share for the three and six months ended June 30, 2023 and 2022 because to do so would be antidilutive or, in the case of PSUs, the applicable performance conditions have not yet been met (in thousands):
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Marketable Investment Securities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Securities, Available-for-Sale | The following tables present our available-for-sale debt securities (in thousands):
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Acquisition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combination and Asset Acquisition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unaudited Pro forma Financial Information and Net Income | The following unaudited pro forma financial information (in thousands) is for informational purposes only and is not necessarily indicative of (i) the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2021 or (ii) the results of operations that are expected in future periods:
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Property and Equipment, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands):
(1) As of June 30, 2023 and December 31, 2022, includes lab equipment under finance lease of $369 thousand and $369 thousand, respectively, and accumulated depreciation of $207 thousand and $137 thousand, respectively. Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands):
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Goodwill and Other Intangible Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | Our other intangible assets, net consist of the following (in thousands):
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Other Accrued and Current Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued And Current Liabilities | Other accrued and current liabilities consisted of the following (in thousands):
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below provides information, by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of June 30, 2023 and December 31, 2022 (in thousands):
(1)Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets. (2)Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets. (3)Current portion, if any, classified as “Other accrued and current liabilities” in the unaudited condensed consolidated balance sheets.
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Stock Incentive Plans and Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Arrangement on Stock Option Activity | Stock option activity under our stock plans for the six months ended June 30, 2023 is set forth below:
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Schedule of Share-based Payment Arrangement on Restricted Stock Units | The following table summarizes our RSU activity for the six months ended June 30, 2023:
(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 37,556 for the six months ended June 30, 2023.
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Schedule of Share-Based Payment Arrangement, Performance Shares, Activity | The following table summarizes our PSU activity for the six months ended June 30, 2023:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table sets forth the assumptions used to determine the fair value of stock options:
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Schedule of Share-based Payment Award, ESPP, Valuation Assumptions | The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:
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Schedule of Share-based Payment Arrangement, Expensed and Capitalized, Amount | Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):
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Organization and Description of Business (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 208,886 | $ 160,905 |
Cash and cash equivalents | 95,874 | 122,948 |
Marketable investment securities | $ 129,634 | $ 135,677 |
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
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Accounting Policies [Abstract] | ||
Allowance for credit losses | $ 0 | $ 0 |
Percentage of fair value in excess of carrying value (percent) | 13.00% | |
Goodwill impairment | $ 0 | |
Accrued bonuses | $ 10,350,000 | $ 18,209,000 |
Vesting period | 4 years |
Revenue - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
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Revenue from Contract with Customer [Abstract] | ||||
Number of days contract with customer is generally paid | 30 days | |||
Variable consideration adjustments included in revenue | $ (88) | $ 578 | $ (1,705) | $ (300) |
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
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Disaggregation of Revenue [Line Items] | ||||
Total net revenues | $ 50,138 | $ 34,838 | $ 92,175 | $ 61,690 |
Dermatologic | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenues | 43,030 | 31,897 | 78,941 | 56,236 |
Non-Dermatologic | ||||
Disaggregation of Revenue [Line Items] | ||||
Total net revenues | $ 7,108 | $ 2,941 | $ 13,234 | $ 5,454 |
Marketable Investment Securities - Schedule of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | $ 129,778 | $ 136,058 |
Unrealized gains | 0 | 0 |
Unrealized losses | (144) | (381) |
Estimated Fair Value | 129,634 | 135,677 |
U.S. government securities | ||
Debt Securities, Available-for-Sale [Line Items] | ||
Amortized Cost | 129,778 | 136,058 |
Unrealized gains | 0 | 0 |
Unrealized losses | (144) | (381) |
Estimated Fair Value | $ 129,634 | $ 135,677 |
Marketable Investment Securities - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
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Investments, Debt and Equity Securities [Abstract] | |||||
Realized gain (loss) on sale of investment | $ 0 | $ 0 | $ 0 | $ 0 | |
Impairment loss | 0 | $ 0 | 0 | $ 0 | |
Allowance for credit loss | $ 0 | $ 0 | $ 0 |
Acquisition - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Apr. 26, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
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Business Acquisition [Line Items] | |||||||
Goodwill | $ 10,700 | $ 10,700 | $ 10,700 | ||||
Income tax (expense) benefit | $ (16) | $ 1,957 | $ (30) | $ 1,823 | |||
AltheaDx, Inc | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of voting interest acquired | 100.00% | ||||||
Payments to acquire business | $ 30,500 | ||||||
Consideration transferred, equity interests transferred | 17,100 | ||||||
Total consideration transferred | 47,600 | ||||||
Finite-lived intangible assets acquired | 35,000 | ||||||
Goodwill | 10,700 | ||||||
Cash acquired | 3,500 | ||||||
Deferred tax liability acquired | $ 1,700 | ||||||
Loss from acquisition date | 3,383 | 3,383 | |||||
AltheaDx, Inc | Acquisition-related Costs | |||||||
Business Acquisition [Line Items] | |||||||
Transaction costs expensed | $ 1,711 | $ 1,711 | $ 1,711 | ||||
AltheaDx, Inc | Income Tax Adjustment | |||||||
Business Acquisition [Line Items] | |||||||
Income tax (expense) benefit | $ 1,769 |
Acquisition - Schedule of Unaudited Pro forma Financial Information and Net Income (Details) - AltheaDx, Inc - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2022 |
|
Business Acquisition [Line Items] | ||
Net revenues | $ 35,243 | $ 62,242 |
Net loss | $ (4,062) | $ (31,945) |
Property and Equipment, Net - Property and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total | $ 26,803 | $ 22,163 |
Less accumulated depreciation | (6,292) | (7,848) |
Property and equipment, net | 20,511 | 14,315 |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 10,929 | 9,721 |
Finance lease, right-of-use asset, before accumulated amortization | 369 | 369 |
Finance lease, right-of-use asset, accumulated amortization | 207 | 137 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total | 9,306 | 5,171 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total | 3,853 | 4,336 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total | 2,332 | 1,660 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Total | $ 383 | $ 1,275 |
Property and Equipment, Net - Depreciation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 792 | $ 531 | $ 1,462 | $ 1,034 |
Cost of sales (exclusive of amortization of acquired intangible assets) | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | 405 | 185 | 700 | 354 |
Research and development | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | 83 | 80 | 162 | 170 |
Selling, general and administrative | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 304 | $ 266 | $ 600 | $ 510 |
Goodwill and Other Intangible Assets, Net - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 10,700,000 | $ 10,700,000 | $ 10,700,000 | ||
Goodwill accumulated impairment | 0 | 0 | $ 0 | ||
Amortization of acquired intangible assets | $ 2,248,000 | $ 2,097,000 | $ 4,470,000 | $ 3,745,000 |
Goodwill and Other Intangible Assets, Net - Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 125,880 | $ 125,880 |
Accumulated amortization | (14,693) | (10,224) |
Net | 111,187 | 115,656 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | 125,317 | 125,317 |
Accumulated amortization | (14,516) | (10,102) |
Net | $ 110,801 | $ 115,215 |
Weighted-Average Remaining Life (in years) | 12 years 6 months | 12 years 10 months 24 days |
Assembled workforce | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 563 | $ 563 |
Accumulated amortization | (177) | (122) |
Net | $ 386 | $ 441 |
Weighted-Average Remaining Life (in years) | 3 years 7 months 6 days | 4 years |
Other Accrued and Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Clinical studies | $ 3,601 | $ 1,822 |
Accrued service fees | 2,333 | 2,125 |
ESPP contributions | 936 | 900 |
Other | 448 | 415 |
Total | $ 7,318 | $ 5,262 |
Stock Incentive Plans and Stock-Based Compensation - Assumptions Used in Fair Value of Stock Options and ESPP (Details) |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Average expected term (years) | 1 year 3 months 18 days | 1 year 3 months 18 days |
Expected stock price volatility, minimum | 72.80% | 62.98% |
Expected stock price volatility, maximum | 82.61% | 66.75% |
Risk-free interest rate, minimum | 4.77% | 0.60% |
Risk-free interest rate, maximum | 5.07% | 1.30% |
Dividend yield | 0.00% | 0.00% |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Average expected term (years) | 5 years | 5 years 9 months 18 days |
Expected stock price volatility, minimum | 75.57% | 68.34% |
Expected stock price volatility, maximum | 76.01% | 71.58% |
Risk-free interest rate, minimum | 3.57% | 1.54% |
Risk-free interest rate, maximum | 3.57% | 2.91% |
Dividend yield | 0.00% | 0.00% |
Stock Incentive Plans and Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 12,849 | $ 8,783 | $ 26,374 | $ 17,202 |
Cost of sales (exclusive of amortization of acquired intangible assets) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 1,202 | 897 | 2,474 | 1,750 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 2,486 | 1,831 | 5,073 | 3,659 |
Selling, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 9,161 | $ 6,055 | $ 18,827 | $ 11,793 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2022 |
Jun. 30, 2022 |
|
AltheaDx, Inc | ||
Business Acquisition [Line Items] | ||
Reduction of existing valuation allowance on deferred tax assets | $ 1,769 | $ 1,769 |
Subsequent Event (Details) - Subsequent Event - Plot of Land, Friendswood Texas $ in Millions |
Jul. 10, 2023
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Purchase of land | $ 7.6 |
Option to terminate contract | 90 days |
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