In June 2015, the Company, through a wholly-owned subsidiary, entered into a series of agreements with Avero. The subsidiary entity entered into a purchase agreement to acquire certain assets from Mattison used in the operations of Avero. The purchase agreement was accounted for under the acquisition method in accordance with the provisions of ASC Topic 805, Business Combinations. The subsidiary entity also entered into a nominee agreement which provided it with the right, but not the obligation, to purchase, or to designate a person(s) to purchase, the stock of Avero at any time for a nominal amount.

In December 2021, the Company entered into an asset purchase agreement with Northwest Pathology to sell certain assets and liabilities of Avero Diagnostics for $10.9 million. The Company no longer has a controlling interest in Avero and therefore does not consolidate Avero as of December 31, 2021. Prior to the date of sale, Avero income statement activity is included in discontinued operations in the consolidated statements of operations.

In June 2015, the Company's subsidiary entity entered into a management services arrangement that authorized the Company to perform the management services in the manner that it deemed reasonably appropriate to meet the day-to-day business needs of Avero. The management services included funding ongoing operational needs, directing activities related to contract negotiation, billing, human resources, and legal and administrative matters and processes, among others. In exchange for the management services provided, the Company's subsidiary entity was entitled to receive an annual management fee equal to the amount of the net operating income of Avero. The agreement had a 10 year term, but was terminated at the time of the sale of Avero.

Through the management services arrangement with Avero, the Company had (1) the power to direct the activities of Avero that most significantly impact its economic performance, and (2) the obligation to absorb losses of Avero or the right to receive benefits from Avero that could potentially be significant to Avero. Based on these determinations, the Company determined that Avero was a variable interest entity and that the Company was the primary beneficiary. The Company did not own any equity interest in Avero; however, as these agreements provide the Company the controlling financial interest in Avero, the Company consolidated Avero’s balances and activities within its consolidated financial statements.

In December 2018, Avero entered into a settlement agreement with Cigna. The Company provided financial support to Avero in the amount of $3.0 million during the year ended December 31, 2020 related to the Cigna settlement obligation, which was fully settled as of December 31, 2020. The Company did not provide any additional financial support to Avero during the years ended December 31, 2021 and 2020, other than the Cigna settlement obligation and agreed upon management services.

The following table presents the assets and liabilities of Avero that are included in the Company’s consolidated balance sheets as of December 31, 2020 (in thousands). The assets and liabilities that were included in the sale of Avero in December 2021 are included in assets and liabilities held for sale (see Note 4). The assets and liabilities exclude intercompany balances that eliminate in consolidation:


	December 31, 2020
Assets of Avero that can only be used to settle obligations of Avero
Cash and cash equivalents	$	556
Accounts receivable, net		6,047
Inventory		3,382
Prepaid expenses and other current assets		1,254
Property and equipment, net		5,436
Other assets		30
Goodwill		147
Other intangible assets, net		3,843
Total assets of Avero that can only be used to settle obligations of Avero	$	20,695
Liabilities of Avero
Accounts payable	$	4,722
Accrued expenses and other accrued liabilities		3,472
Current portion of capital lease obligations		46
Current portion of mortgage payable		199
Capital lease obligations, net of current portion		4
Mortgage payable, net of current portion		1,520
Other long-term liabilities		428
Total liabilities of Avero	$	10,391