INVITAE CORP, 10-K filed on 3/2/2020
Annual Report
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Cover Page - USD ($)
$ in Billions
12 Months Ended
Dec. 31, 2019
Feb. 24, 2020
Jun. 28, 2019
Cover page.      
Entity Registrant Name Invitae Corporation    
Document Type 10-K    
Document Annual Report true    
Document Transition Report false    
Document Period End Date Dec. 31, 2019    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Current Fiscal Year End Date --12-31    
Entity Central Index Key 0001501134    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 27-1701898    
Title of 12(b) Security Common Stock, $0.0001 par value per share    
Trading Symbol NVTA    
Security Exchange Name NYSE    
Entity File Number 001-36847    
Entity Current Reporting Status Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Amendment Flag false    
Entity Interactive Data Current Yes    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer Yes    
Entity Shell Company false    
Entity Address, Address Line One 1400 16th Street    
Entity Address, City or Town San Francisco    
Entity Address, State or Province CA    
Entity Address, Postal Zip Code 94103    
City Area Code 415    
Local Phone Number 374‑7782    
Entity Public Float     $ 2.1
Entity Common Stock, Shares Outstanding   98,961,385  
Documents Incorporated by Reference
Items 10 (as to directors and Section 16(a) Beneficial Ownership Reporting Compliance), 11, 12, 13 and 14 of Part III incorporate by reference information from the registrant’s proxy statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for the registrant’s 2020 Annual Meeting of Stockholders.
   
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Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 151,389 $ 112,158
Marketable securities 240,436 13,727
Accounts receivable 32,541 26,296
Prepaid expenses and other current assets 18,032 13,258
Total current assets 442,398 165,439
Property and equipment, net 37,747 27,886
Operating lease assets 36,640  
Restricted cash 6,183 6,006
Intangible assets, net 125,175 30,469
Goodwill 126,777 50,095
Other assets 6,681 3,064
Total assets 781,601 282,959
Current liabilities:    
Accounts payable 10,321 7,812
Accrued liabilities 64,814 26,563
Operating lease obligation 4,870  
Finance lease obligation 1,855  
Finance lease obligation   1,937
Total current liabilities 81,860 36,312
Operating lease obligation, net of current portion 42,191  
Finance lease obligation, net of current portion 1,155  
Finance lease obligation, net of current portion   1,375
Debt 0 74,477
Convertible senior notes, net 268,755 0
Other long-term liabilities 8,000 8,956
Total liabilities 401,961 121,120
Commitments and contingencies (Note 8)
Stockholders’ equity:    
Preferred stock, $0.0001 par value: 20,000 shares authorized; 125 and 3,459 shares issued and outstanding as of December 31, 2019 and 2018, respectively 0 0
Common stock, $0.0001 par value: 400,000 shares authorized; 98,796 and 75,481 shares issued and outstanding as of December 31, 2019 and 2018, respectively 10 8
Accumulated other comprehensive loss (9) (5)
Additional paid-in capital 1,138,316 678,548
Accumulated deficit (758,677) (516,712)
Total stockholders’ equity 379,640 161,839
Total liabilities and stockholders’ equity $ 781,601 $ 282,959
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Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, authorized (in shares) 20,000,000 20,000,000
Preferred stock, issued (in shares) 125,000 3,459,000
Preferred stock, outstanding (in shares) 125,000 3,459,000
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, authorized (in shares) 400,000,000 400,000,000
Common stock, issued (in shares) 98,796,000 75,481,000
Common stock, outstanding (in shares) 98,796,000 75,481,000
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Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Total revenue $ 216,824 $ 147,699 $ 68,221
Cost of revenue 118,103 80,105 50,142
Research and development 141,526 63,496 46,469
Selling and marketing 122,237 74,428 53,417
General and administrative 79,070 52,227 39,472
Loss from operations (244,112) (122,557) (121,279)
Other expense, net (3,891) (2,568) (303)
Interest expense (12,412) (7,030) (3,654)
Net loss before taxes (260,415) (132,155) (125,236)
Income tax benefit (18,450) (2,800) (1,856)
Net loss $ (241,965) $ (129,355) $ (123,380)
Net loss per share, basic and diluted (in dollars per share) $ (2.66) $ (1.94) $ (2.65)
Shares used in computing net loss per share, basic and diluted 90,859 66,747 46,512
Test revenue      
Total revenue $ 212,473 $ 144,560 $ 65,169
Other revenue      
Total revenue $ 4,351 $ 3,139 $ 3,052
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Consolidated Statements of Comprehensive Loss - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Comprehensive Income [Abstract]      
Net loss $ (241,965) $ (129,355) $ (123,380)
Other comprehensive income (loss):      
Unrealized income (loss) on available-for-sale marketable securities, net of tax (4) 166 (171)
Comprehensive loss $ (241,969) $ (129,189) $ (123,551)
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Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Total
Common stock:
Accumulated other comprehensive loss:
Additional paid-in capital:
Accumulated deficit:
Balance, beginning of period at Dec. 31, 2016   $ 4 $ 0 $ 374,288 $ (275,218)
Increase (Decrease) in Stockholders' Deficit          
Unrealized income (loss) on available-for-sale marketable securities, net of tax     (171)    
Common stock issued in private placement, net       68,896  
Common stock issued in connection with public offering, net   1      
Common stock issued on exercise of stock options, net       1,706  
Common stock issued pursuant to exercises of warrants       1,381  
Common stock issued pursuant to employee stock purchase plan       2,635  
Common stock issued pursuant to business combinations       50,808  
Warrants issued pursuant to loan agreement       740  
Stock-based compensation expense       18,832  
Other       1,272  
Net loss $ (123,380)       (123,380)
Balance, end of period at Dec. 31, 2017 121,794 5 (171) 520,558 (398,598)
Increase (Decrease) in Stockholders' Deficit          
Unrealized income (loss) on available-for-sale marketable securities, net of tax     166    
Common stock issued in connection with public offering, net   3   112,438  
Common stock issued on exercise of stock options, net       2,741  
Common stock issued pursuant to exercises of warrants       6,539  
Common stock issued pursuant to employee stock purchase plan       3,231  
Common stock issued pursuant to business combinations       6,455  
Warrants issued pursuant to loan agreement       383  
Common stock issued pursuant to securities purchase agreement       5,353  
Stock-based compensation expense       20,850  
Net loss (129,355)       (129,355)
Balance, end of period at Dec. 31, 2018 161,839 8 (5) 678,548 (516,712)
Increase (Decrease) in Stockholders' Deficit          
Unrealized income (loss) on available-for-sale marketable securities, net of tax     (4)    
Common stock issued in connection with public offering, net   2   204,024  
Common stock issued on exercise of stock options, net       3,456  
Common stock issued pursuant to exercises of warrants       181  
Common stock issued pursuant to employee stock purchase plan       5,833  
Common stock issued pursuant to business combinations       133,942  
Equity component of convertible senior notes, net       75,488  
Stock-based compensation expense       36,844  
Net loss (241,965)       (241,965)
Balance, end of period at Dec. 31, 2019 $ 379,640 $ 10 $ (9) $ 1,138,316 $ (758,677)
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Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Cash flows from operating activities:      
Net loss $ (241,965) $ (129,355) $ (123,380)
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 16,206 13,540 9,181
Stock-based compensation 75,948 20,850 19,221
Amortization of debt discount and issuance costs 4,416 0 0
Impairment losses 0 2,925 0
Income tax benefit (18,450) (2,800) (1,856)
Benefit from income taxes (18,535) (2,862) (1,856)
Debt extinguishment costs (8,926) (5,266) 0
Other 1,095 1,168 2,214
Changes in operating assets and liabilities, net of businesses acquired:      
Accounts receivable (6,131) (5,291) (1,963)
Prepaid expenses and other current assets (4,979) (1,445) (641)
Other assets 2,026 (163) (185)
Accounts payable 1,558 (417) (535)
Accrued expenses and other liabilities 16,297 3,564 (37)
Net cash used in operating activities (145,053) (92,220) (97,981)
Cash flows from investing activities:      
Purchases of marketable securities 260,917 9,680 101,867
Proceeds from sales of marketable securities 0 19,965 0
Proceeds from maturities of marketable securities 34,500 32,458 68,768
Acquisition of businesses, net of cash acquired (33,846) 0 2,821
Purchases of property and equipment (20,047) (5,970) (6,675)
Other 0 (1,000) 0
Net cash provided by (used in) investing activities (280,310) 35,773 (36,953)
Cash flows from financing activities:      
Proceeds from public offerings of common stock, net of issuance costs 204,024 112,441 0
Proceeds from issuance of common stock, net 9,470 17,511 74,619
Proceeds from issuance of convertible senior notes, net 339,900 0 0
Proceeds from issuance of debt, net 0 93,909 39,661
Payments of debt extinguishment costs (10,638) (4,609) 0
Loan payments (75,000) (60,000) (30,457)
Finance lease principal payments (2,075)    
Finance lease principal payments   (2,100) (2,952)
Other (910) 0 0
Net cash provided by financing activities 464,771 157,152 80,871
Net increase (decrease) in cash, cash equivalents and restricted cash 39,408 100,705 (54,063)
Cash, cash equivalents and restricted cash at beginning of period 118,164 17,459 71,522
Cash, cash equivalents and restricted cash at end of period 157,572 118,164 17,459
Supplemental cash flow information:      
Interest paid 4,731 6,231 2,852
Supplemental cash flow information of non-cash investing and financing activities:      
Equipment acquired through finance leases 1,892 0 6,789
Purchases of property and equipment in accounts payable and accrued liabilities 2,422 510 200
Amounts related to co-development agreement in other assets and accrued liabilities 0 2,000 0
Warrants issued pursuant to 2017 Loan Agreement 0 383 740
Common stock issued for acquisition of businesses 108,573 6,445 50,808
Consideration payable for acquisition of businesses 21,449 0 13,276
Common stock issued to settle assumed liabilities 0 $ 0 $ 1,272
Operating lease assets obtained in exchange for lease obligations, net $ 4,261    
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Organization and description of business
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and description of business Organization and description of business
Invitae Corporation ("Invitae," “the Company," "we," "us," and "our")  was incorporated in the State of Delaware on January 13, 2010, as Locus Development, Inc. and changed its name to Invitae Corporation in 2012. We utilize an integrated portfolio of laboratory processes, software tools and informatics capabilities to process DNA-containing samples, analyze information about patient-specific genetic variation and generate test reports for clinicians and patients. Our headquarters and main production facility is located in San Francisco, California. We currently have more than 20,000 genes in production and provide a variety of diagnostic tests that can be used in multiple indications. We offer genetic testing across multiple clinical areas, including hereditary cancer, cardiology, neurology, pediatrics, metabolic conditions and rare diseases. To augment our offering and realize our mission, we have acquired multiple assets including four businesses in 2017, which expanded our suite of genome management offerings and provided our entry into prenatal and perinatal genetic testing. To complement these, in the first quarter of 2019, we introduced our Non-invasive Prenatal Screen ("NIPS") and to advance this offering, in June 2019, we acquired Singular Bio, Inc. ("Singular Bio") to lower costs associated with NIPS. In July 2019, we acquired Jungla Inc. ("Jungla") to further enhance our genetic variant interpretation and in November 2019, to expand our ability to scale and deliver genetic information, we acquired Clear Genetics, Inc. ("Clear Genetics"). Invitae operates in one segment.
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Summary of significant accounting policies
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Summary of significant accounting policies Summary of significant accounting policies
Principles of consolidation
Our consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base these estimates on current facts, historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ materially from those judgments, estimates and assumptions. We evaluate our estimates on an ongoing basis.
Significant estimates and assumptions made by management include the determination of:
revenue recognition (See Note 3, “Revenue, accounts receivable and deferred revenue” for further information);
the fair value of assets and liabilities associated with business combinations;
the impairment assessment of goodwill and intangible assets;
valuation of our 2.00% convertible senior notes due 2024 issued in September 2019 ("Convertible Senior Notes");
the recoverability of long-lived assets;
our incremental borrowing rates used to calculate our lease balances;
stock-based compensation expense and the fair value of awards issued; and
income tax uncertainties.
Concentrations of credit risk and other risks and uncertainties
Financial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable. Our cash and cash equivalents are held by financial institutions in the United States. Such deposits may exceed federally insured limits.
Significant customers are those that represent 10% or more of our total revenue for each year presented on the statements of operations. Revenue for significant customers as a percentage of total revenue were as follows:
 
 
Year Ended December 31,
Customers
 
2019
 
2018
 
2017
Medicare
 
25
%
 
22
%
 
13
%

No customers represented more than 10% of accounts receivable as of December 31, 2019, and Medicare represented 21% of accounts receivable as of December 31, 2018.
Cash, cash equivalents, and restricted cash
We consider all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market funds, U.S. treasury notes and government agency securities.
Restricted cash consists primarily of money market funds that secure irrevocable standby letters of credit that serve as collateral for security deposits for our facility leases.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the statements of cash flows (in thousands):
 
December 31, 2019
 
December 31, 2018
Cash and cash equivalents
$
151,389

 
$
112,158

Restricted cash
6,183

 
6,006

Total cash, cash equivalents and restricted cash
$
157,572

 
$
118,164


Marketable securities
All marketable securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its marketable debt securities at the time of purchase and reevaluates such designation at each balance sheet date. Short-term marketable securities have maturities one year or less at the balance sheet date. Unrealized gains and losses are excluded from earnings and are reported as a component of other comprehensive loss. Realized gains and losses and declines in fair value judged to be other than temporary, if any, on available-for-sale securities are included in other expense, net. The cost of securities sold is based on the specific-identification method. Interest on marketable securities is included in other expense, net.
Accounts receivable
We receive payment for our tests from partners, patients, institutional customers and third-party payers. See Note 3, "Revenue, accounts receivable and deferred revenue" for further information.
Inventory
We maintain test reagents and other consumables primarily used in sample collection kits which are valued at the lower of cost or net realizable value. Cost is determined using actual costs on a first-in, first-out basis. Our inventory was $6.6 million and $8.3 million as of December 31, 2019 and 2018, respectively, and was recorded in prepaid expenses and other current assets in our consolidated balance sheets.
Business combinations
We apply Accounting Standards Codification ("ASC") 805, Business Combinations, or ASC 805, which requires recognition of assets acquired, liabilities assumed, and contingent consideration at their fair value on the acquisition date with subsequent changes recognized in earnings; requires acquisition-related expenses and restructuring costs to be recognized separately from the business combination and expensed as incurred; requires in-process research and development to be capitalized at fair value as an indefinite-lived intangible asset until completion or abandonment; and requires that changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision for taxes.
We account for acquisitions of entities that include inputs and processes and have the ability to create outputs as business combinations. The tangible and identifiable intangible assets acquired and liabilities assumed in a business combination are recorded based on their estimated fair values as of the business combination date, including identifiable intangible assets which either arise from a contractual or legal right or are separable from goodwill. We base the estimated fair value of identifiable intangible assets acquired in a business combination on independent valuations that use information and assumptions provided by our management, which consider our estimates of inputs and assumptions that a market participant would use. Any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed is recorded to goodwill. The use of alternative valuation assumptions, including estimated revenue projections, growth rates, estimated cost savings, cash flows, discount rates, estimated useful lives and probabilities surrounding the achievement of contingent milestones could result in different purchase price allocations and amortization expense in current and future periods.
In circumstances where an acquisition involves a contingent consideration arrangement that meets the definition of a liability under ASC Topic 480, Distinguishing Liabilities from Equity, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We remeasure this liability each reporting period and record changes in the fair value as a component of operating expenses.
Transaction costs associated with acquisitions are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in our operating results from the date of acquisition.
Intangible assets
Amortizable intangible assets include trade names, non-compete agreements, developed technology and customer relationships acquired as part of business combinations. Customer relationships are amortized on an accelerated basis, utilizing free cash flows, over periods ranging from five to 11 years. All other intangible assets subject to amortization are amortized using the straight-line method over their estimated useful lives ranging from two to 15 years. All intangible assets subject to amortization are reviewed for impairment in accordance with ASC 360, Property, Plant and Equipment.
Goodwill
In accordance with ASC 350, Intangibles-Goodwill and Other (“ASC 350”), our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Under ASC 350, we perform annual impairment reviews of our goodwill balance during the fourth fiscal quarter or more frequently if business factors indicate. In testing for impairment, we compare the fair value of our reporting unit to its carrying value including the goodwill of that unit. If the carrying value, including goodwill, exceeds the reporting unit’s fair value, we will recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit. We did not incur any goodwill impairment losses in any of the periods presented.
In-process research and development
Intangible assets related to in-process research and development costs (“IPR&D”) are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. If and when development is complete, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time. During this period, the assets will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts.
During the fourth quarter and if business factors indicate more frequently, we perform an assessment of the qualitative factors affecting the fair value of our IPR&D projects. If the fair value exceeds the carrying value, there is no impairment. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of an asset to its carrying value, without consideration of any recoverability test. We have not identified any such impairment losses to date.
Leases
Under ASC 842, Leases, we determine if an arrangement is a lease at inception. Operating leases are included in operating lease assets and operating lease obligations in our consolidated balance sheets. Finance leases are included in other assets and finance lease obligations in our consolidated balance sheets.
Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at commencement based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease which are recognized when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease terms, or in some cases, the useful life of the underlying asset.
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight‑line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized using the straight‑line method over the shorter of the estimated useful life of the asset or the term of the lease. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the statements of operations in the period realized.
The estimated useful lives of property and equipment are as follows:
Furniture and fixtures
7 years
Automobiles
7 years
Laboratory equipment
5 years
Computer equipment
3 years
Software
3 years
Leasehold improvements
Shorter of lease term or estimated useful life

Long‑lived assets
We review long‑lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the total estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, is assessed using discounted cash flows or other appropriate measures of fair value. There were no long-lived asset impairment losses recorded for any period presented.
Fair value of financial instruments
Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts payable, accrued liabilities, finance leases, debt and convertible senior notes. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued and other current liabilities approximate their current fair value due to the relatively short-term nature of these accounts. Based on borrowing rates available to us, the carrying value of finance leases approximate their fair values.
Revenue recognition
We recognize revenue when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. All revenues are generated from contracts with customers. We utilize the following practical expedients and exemptions:
Certain information about remaining performance obligations is not disclosed because the underlying contracts have an original expected duration of one year or less,
Costs to obtain or fulfill a contract are expensed when incurred because the amortization period would have been one year or less, and
No adjustments to promised consideration were made for financing as we expect, at contract inception, that the period between the transfer of a promised good or service and when the customer pays for that good or service will be one year or less.
Test revenue
The majority of our revenue is generated from genetic testing services that provide analysis and associated interpretation of the sequencing of parts of the genome. Test orders are placed under signed requisitions, and we often enter into contracts with institutions (e.g., hospitals, clinics, partners) and insurance companies that include pricing provisions under which such tests are billed. Billing terms are generally net thirty to sixty days.
While the transaction price of diagnostic tests is originally established either via contract or pursuant to our standard list price, we often provide concessions for tests billed to insurance carriers, and therefore the transaction price for patient insurance-billed tests is considered to be variable and revenue is recognized based on an estimate of the consideration to which we will be entitled at an amount for which it is probable that a reversal of cumulative consideration will not occur. Making these estimates requires significant judgments based upon such factors as length of payer relationship, historical payment patterns, changes in contract provisions and insurance reimbursement policies. These judgments are reviewed quarterly and updated as necessary.
In connection with some diagnostic test orders, we offer limited re-requisition rights (“Re-Requisition Rights”) that are considered distinct at contract inception, and therefore certain diagnostic test orders contain two performance obligations, the performance of the original test and the Re-Requisition Rights. When Re-Requisition Rights are granted, we allocate the transaction price to each performance obligation based on the relative estimated standalone selling prices. In order to comply with loss contract rules, the allocations are adjusted, if necessary, to ensure the amount deferred for Re-Requisition Rights is no less than the estimated cost of fulfilling our related obligations.
We look to transfer of control in assessing timing of recognition of revenue in connection with each performance obligation. In general, revenue in connection with diagnostic tests is recognized upon delivery of the underlying clinical report or when the report is made available on our web portal. Outstanding performance obligations pertaining to orders received but for which the underlying report has not been issued are generally satisfied within a thirty-day period. Revenue in connection with Re-Requisition Rights is recognized as the rights are exercised or expire unexercised, which is generally within ninety days of initial deferral.
Other revenue
We also enter into collaboration and genome network contracts. Collaboration agreements provide customers with diagnostic testing and related data aggregation reporting services that are provided over the contract term. Collaboration revenue is recognized as the testing and reporting services are delivered to the customer. Genome network offerings consist of subscription services related to a proprietary software platform designed to connect patients, clinicians, advocacy organizations, researchers and therapeutic developers to accelerate the understanding, diagnosis and treatment of hereditary disease. Such services are recognized on a straight-line basis over the subscription periods.
Amounts due under collaboration and genome network agreements are typically billable on net thirty-day terms.
Cost of revenue
Cost of revenue reflects the aggregate costs incurred in delivering the genetic testing results to clinicians and patients and includes expenses for personnel-related costs including stock-based compensation, materials and supplies, equipment and infrastructure expenses associated with testing and allocated overhead including rent, equipment depreciation, amortization of acquired intangibles and utilities.
Income taxes
We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Significant judgment is required in determining the net valuation allowance which includes our evaluation of all available evidence including past operating results, estimates on future taxable income and acquisition-related tax assets and liabilities. As of December 31, 2019, we recorded a full valuation allowance on our net deferred tax assets because we expect that it is more likely than not that our deferred tax assets will not be realized in the foreseeable future.
Stock-based compensation
We measure stock-based payment awards made to employees and directors based on the estimated fair values of the awards and recognize the compensation expense over the requisite service period. We use the Black-Scholes option-pricing model to estimate the fair value of stock option awards and employee stock purchase plan (“ESPP”) purchases. The fair value of restricted stock unit (“RSU”) awards with time-based vesting terms is based on the grant date share price. We grant performance-based restricted stock unit (“PRSU”) awards to certain employees which vest upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with us. The probability of vesting is assessed at each reporting period and compensation cost is adjusted based on this probability assessment. We recognize such compensation expense on an accelerated vesting method.
Stock-based compensation expense for awards without a performance condition is recognized using the straight-line method. Stock-based compensation expense is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, our stock-based compensation is reduced for estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
We account for stock issued in connection with business combinations based on the fair value of our common stock on the date of issuance.
Advertising
Advertising expenses are expensed as incurred. We incurred advertising expenses of $9.9 million, $0.6 million and $0.6 million during the years ended December 31, 2019, 2018 and 2017, respectively.
Comprehensive loss
Comprehensive loss is composed of two components: net loss and other comprehensive income (loss). Other comprehensive income (loss) refers to gains and losses that under U.S. GAAP are recorded as an element of stockholders’ equity, but are excluded from net loss. Our other comprehensive income (loss) consists of unrealized gains or losses on investments in available-for-sale securities.
Net loss per share
Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. Potentially dilutive securities, consisting of preferred stock, options to purchase common stock, common stock warrants, shares of common stock pursuant to ESPP, common stock issuable in connection with our Convertible Senior Notes, RSUs and PRSUs, are considered to be common stock equivalents and were excluded from the calculation of diluted net loss per share because their effect would be antidilutive for all periods presented.
Prior period reclassifications
We have reclassified certain amounts in prior periods to conform with current presentation.
Recent accounting pronouncements
We evaluate all Accounting Standards Updates (“ASUs”) issued by the FASB for consideration of their applicability. ASUs not included in the disclosures in this report were assessed and determined to be either not applicable or are not expected to have a material impact on our consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
In June 2016, FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires measurement and recognition of expected credit losses for financial assets. This guidance will become effective for us beginning in the first quarter of 2020 and must be adopted using a modified retrospective approach, with certain exceptions. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
Recently adopted accounting pronouncements
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 with early adoption permitted. We have early adopted this ASU effective for the year ended December 31, 2019.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and in July 2018 issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases (Topic 842): Targeted Improvements (the foregoing ASUs collectively referred to as “Topic 842”). Under this guidance, lessees are required to recognize a lease liability and a right-of-use asset for all leases at the commencement date and also make expanded disclosures about leasing arrangements.
On January 1, 2019, we adopted Topic 842 using the modified retrospective approach in accordance with Topic 842. Adoption of Topic 842 had a material impact on our consolidated balance sheets, but did not have an impact on our consolidated statements of operations. We elected the package of practical expedients permitted under the transition guidance which, among other things, allowed us to carry forward the historical classification of leases in place as of January 1, 2019.
The effect of the adoption of Topic 842 on our consolidated balance sheet as of January 1, 2019 was as follows (in thousands):
 
 
December 31, 2018
 
Adjustments Due to the Adoption of Topic 842
 
January 1, 2019
Property and equipment, net
 
$
27,886

 
$
(5,159
)
 
$
22,727

Operating lease assets
 
$

 
$
36,711

 
$
36,711

Other assets
 
$
3,064

 
$
5,159

 
$
8,223

Accrued liabilities
 
$
26,563

 
$
(490
)
 
$
26,073

Operating lease obligations
 
$

 
$
4,697

 
$
4,697

Operating lease obligations, net of current portion
 
$

 
$
41,279

 
$
41,279

Other long-term liabilities
 
$
8,956

 
$
(8,775
)
 
$
181


The adjustments due to the adoption of Topic 842 primarily relate to the recognition of operating and finance lease right-of-use assets and operating lease liabilities. Finance lease assets are recorded within other assets on our consolidated balance sheet and were $5.2 million as of implementation of Topic 842 on January 1, 2019 and $5.6 million as of December 31, 2019.
Under Topic 842, we determine if an arrangement is a lease at inception primarily based on the determination of the party responsible for directing the use of an underlying asset within a contract. Operating leases are included in operating lease assets and operating lease obligations in our consolidated balance sheets. Lease assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date which includes significant assumptions made by us including our estimated credit rating. Operating lease right-of-use assets also include any lease payments made prior to the lease commencement date and exclude any lease incentives paid or payable at the lease commencement date. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise any such options. Lease expense is recognized on a straight-line basis over the expected lease term, or in some cases, the useful life of the underlying asset.
As allowed under Topic 842, we elected to not apply the recognition requirements of Topic 842 to short-term leases, that is, leases with terms of 12 months or less which do not include an option to purchase the underlying asset that we are reasonably certain to exercise. For short-term leases, we recognize lease payments as operating expenses on a straight-line basis over the lease term.
As a result of our election of the package of practical expedients permitted under the Topic 842 transition guidance, for assets related to facilities leases we elected to account for lease and non-lease components, such as common area maintenance charges, as a single lease component.
We did not identify any material embedded leases with the adoption of Topic 842 and therefore the implementation of Topic 842 primarily focused on the treatment of our previously identified leases.
Prior period amounts were not adjusted and continue to be reported in accordance with our historic accounting under previous lease guidance, ASC 840: Leases. Under ASC 840, we rented facilities under operating lease agreements and recognized related rent expense on a straight-line basis over the term of the applicable lease agreement. Some of the lease agreements contained rent holidays, scheduled rent increases, lease incentives, and renewal options. Rent holidays and scheduled rent increases were included in the determination of rent expense recorded over the lease term. Lease incentives were recognized as a reduction of rent expense on a straight-line basis over the term of the lease. Renewals were not assumed in the determination of the lease term unless they were deemed to be reasonably assured at the inception of the lease. We recognized rent expense beginning on the date we obtained the legal right to use and control the leased space.
On January 1, 2018, we adopted the provisions of ASC Topic 606 using the modified retrospective method. From adoption to date, we have recognized all our revenue from contracts with customers within the scope of Topic 606. In connection with the adoption, we recognized the cumulative effect of initially applying this standard as an adjustment to retained earnings on the date of adoption. Comparative information prior to the date of adoption has not been restated and continues to be reported under the accounting standards in effect for those periods.
Under ASC 605, test revenue was recognized when persuasive evidence of an arrangement existed; delivery had occurred or services had been rendered; the fee was fixed or determinable; and collectability was reasonably assured. The criterion for whether the fee was fixed or determinable and whether collectability was reasonably assured were based on management’s judgments. When evaluating collectability, in situations where contracted reimbursement coverage did not exist, we considered whether we had sufficient history to reliably estimate a payer’s individual payment patterns. For most customers, we had not been able to demonstrate a predictable pattern of collectability, and therefore recognized revenue when payment was received. For customers who had demonstrated a consistent pattern of payment of tests billed at appropriate amounts, we recognized revenue at estimated realizable amounts upon delivery of test results.
v3.19.3.a.u2
Revenue, accounts receivable and deferred revenue
12 Months Ended
Dec. 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenue, accounts receivable and deferred revenue Revenue, accounts receivable and deferred revenue
Test revenue is generated from sales of diagnostic tests to three groups of customers: institutions, such as hospitals, clinics and partners; patients who pay directly; and patients’ insurance carriers. Amounts billed and collected, and the timing of collections, vary based on whether the payer is an institution, a patient or an insurance carrier. Other revenue consists principally of revenue recognized under collaboration and genome network agreements.
The following table includes our revenue as disaggregated by payer category (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017 (1)
Test revenue:
 
 
 
 
 
 
Institutions
 
$
41,049

 
$
34,618

 
$
17,238

Patient - direct
 
17,597

 
13,589

 
5,638

Patient - insurance
 
153,827

 
96,353

 
42,293

 Total test revenue
 
212,473

 
144,560

 
65,169

Other revenue
 
4,351

 
3,139

 
3,052

Total revenue
 
$
216,824

 
$
147,699

 
$
68,221

 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 2017 amounts are presented as originally reported based upon the accounting standards in effect for that period.

We recognize revenue related to billings based on estimates of the amount that will ultimately be realized. Cash collections for certain tests delivered may differ from rates originally estimated. As a result of new information, we updated our estimate of the amounts to be recognized for previously delivered tests which resulted in the following increases to revenue and decreases to our loss from operations and basic and diluted net loss per share (in millions, except per share amounts):
 
Year Ended December 31,
 
2019
 
2018
Revenue
$
4.1

 
$
4.5

Loss from operations
$
(4.1
)
 
$
(4.5
)
Net loss per share, basic and diluted
$
(0.05
)
 
$
(0.07
)

Accounts receivable
The majority of our accounts receivable represents amounts billed to institutions (e.g., hospitals, clinics, partners) and estimated amounts to be collected from third-party insurance payers for diagnostic test revenue recognized. Also included are amounts due under the terms of collaboration and genome network agreements for diagnostic testing and data aggregation reporting services provided and proprietary platform access rights transferred.
Deferred revenue
We record deferred revenue when cash payments are received or due in advance of our performance related to one or more performance obligations. The amounts deferred to date primarily consist of prepayments related to our consumer direct channel as well as consideration received pertaining to the estimated exercise of certain re-requisition rights. In order to comply with loss contract rules, our re-requisition rights revenue deferral is no less than the estimated cost of fulfilling related obligations. We recognize revenue related to re-requisition rights as the rights are exercised or expire unexercised, which is generally within 90 days of initial deferral.
v3.19.3.a.u2
Business combinations
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Business combinations Business combinations
Singular Bio
In June 2019, we acquired 100% of the fully diluted equity of Singular Bio, a privately held company developing single molecule detection technology, for approximately $57.3 million, comprised of $53.9 million in the form of 2.5 million shares of our common stock and the remainder in cash.
Prior to the acquisition, we entered into a co-development agreement with Singular Bio whereby we paid Singular Bio $3.0 million for a 12-month right of first refusal and an opportunity to conduct due diligence on its business. As of January 2019, we made all required payments under the terms of this agreement.
In connection with the acquisition, all of Singular Bio's equity awards that were outstanding and unvested prior to the acquisition became fully vested per the terms of the merger agreement. The acceleration of vesting required us to allocate the fair value of the equity attributable to pre-combination service to the purchase price and the remainder was considered our post-combination expense. We recognized post-combination expense related to the acceleration of unvested equity of $3.2 million and we also incurred transaction costs of $1.5 million related to the acquisition of Singular Bio; both of these charges were recorded as general and administrative expense during the year ended December 31, 2019. We included the financial results of Singular Bio in our consolidated financial statements from the acquisition date, which were not material for the year ended December 31, 2019.
Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by us. While we believe that our estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands):
Cash
$
4,988

Property and equipment
303

In-process research and development
29,988

Total identifiable assets acquired
35,279

Current liabilities assumed
(479
)
Deferred tax liability
(3,950
)
Net identifiable assets acquired
30,850

Goodwill
26,461

Total purchase price
$
57,311


Based on the guidance provided in ASC 805, we accounted for the acquisition of Singular Bio as a business combination in which we determined that 1) Singular Bio was a business which combines inputs and processes to create outputs, and 2) substantially all of the fair value of gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets.
Our purchase price allocation for the acquisition is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available, primarily related to our deferred tax liability assumed in connection with the acquisition as the short period tax return has not yet been filed. Additional information that existed
as of the acquisition date but at the time was unknown to us may become known to us during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The acquisition of Singular Bio resulted in the recognition of $26.5 million of goodwill which we believe consists primarily of technological expertise and capabilities within nucleic acid analysis and the ability to utilize the technology outside NIPS. Goodwill created as a result of the acquisition of Singular Bio is not deductible for tax purposes.
We recorded an income tax benefit of $4.0 million in June 2019 due to net deferred tax liabilities assumed in connection with our acquisition of Singular Bio which provided a future source of income to support the realization of our deferred tax assets and resulted in a partial release of our valuation allowance.
We granted approximately $90.0 million of RSUs under our 2015 Stock Incentive Plan as inducement awards to new employees who joined Invitae in connection with our acquisition of Singular Bio. $45.0 million of the RSUs are time-based and vest in three equal installments in December 2019, June 2020, and December 2020, subject to the employee's continued service with us ("Time-based RSUs") and $45.0 million of the RSUs are PRSUs that vest upon the achievement of certain performance conditions over a period of approximately 12 months from the date of acquisition, subject to the employee's continued service with us. Since the number of awards granted is based on a 30-day volume weighted-average share price with a fixed dollar value, these Time-based RSUs and PRSUs are liability-classified and the fair value will be estimated at each reporting period based on the number of shares that are expected to be issued at each reporting date and our closing stock price, which combined are categorized as Level 3 inputs. Therefore, fair value of the RSUs and PRSUs and the number of shares to be issued will not be fixed until the awards vest.
During the year ended December 31, 2019, we recorded research and development stock-based compensation expense of $14.7 million related to the Time-based RSUs and $24.4 million related to the PRSUs based on our evaluation of the probability of achieving performance conditions. As of December 31, 2019, the Time-based RSUs and PRSUs had a total fair value of $41.9 million and $42.6 million, respectively, based on a total estimated issuance of 5.2 million shares and expectation of the achievement of the performance conditions. As of December 31, 2019, 0.8 million of the Time-based RSUs had vested and none of these PRSUs had vested.     
Jungla
In July 2019, we acquired 100% of the equity interest of Jungla, a privately held company developing a platform for molecular evidence testing in genes, for approximately $59.0 million, comprised of $44.9 million in the form of shares of our common stock and the remainder in cash. We agreed to pay a portion of the cash and issue approximately 0.2 million shares of our common stock after a 12-month period, subject to a hold back to satisfy indemnification obligations that may arise. We incurred $0.8 million of transaction costs related to the acquisition of Jungla which were recorded as general and administrative expense during the year ended December 31, 2019.
We may be required to pay contingent consideration based on achievement of post-closing development milestones. As of the acquisition date, the fair value of this contingent consideration was $10.7 million, $9.6 million of which would be in the form of shares of our common stock, priced at the time of milestone achievement, and the remainder in cash. The milestones are expected to be completed within two years from the date of the acquisition. The material factors that may impact the fair value of the contingent consideration, and therefore, this liability, are the probabilities and timing of achieving the related milestones and the discount rate we used to estimate the fair value. Significant changes in any of the probabilities of success would result in a significant change in the fair value, which is estimated at each reporting date with changes reflected as a general and administrative expense. As of December 31, 2019, the fair value of the contingent consideration was $11.3 million.
In connection with the acquisition, a portion of Jungla's equity awards that were outstanding and unvested prior to the acquisition became fully vested per the terms of the merger agreement. The acceleration of vesting required us to allocate the fair value of the equity attributable to pre-combination service to the purchase price and the remaining amount was considered our post-combination expense. In July 2019, we recognized post-combination expense related to the acceleration of unvested equity of $2.9 million, which was recorded as general and administrative expense. We included the financial results of Jungla in our consolidated financial statements from the acquisition date, which were not material for the year ended December 31, 2019.
The following table summarizes the purchase price and post-combination expense recorded as a part of the acquisition of Jungla in July 2019 (in thousands):
 
Purchase Price
 
Post-combination Expense
Cash transferred
$
13,261

 
$
2,151

Hold-back consideration - cash
270

 
253

Hold-back consideration - common stock
4,574

 

Contingent consideration
10,158

 
542

Common stock transferred
30,753

 

Total
$
59,016

 
$
2,946


Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by us. While we believe that our estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands):
Cash
$
289

Developed technology
44,140

Total identifiable assets acquired
44,429

Accounts payable
(8
)
Deferred tax liability
(8,700
)
Net identifiable assets acquired
35,721

Goodwill
23,295

Total purchase price
$
59,016


Based on the guidance provided in ASC 805, we accounted for the acquisition of Jungla as a business combination in which we determined that 1) Jungla was a business which combines inputs and processes to create outputs, and 2) substantially all of the fair value of gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets.
Our purchase price allocation for the acquisition is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available, primarily related to our deferred tax liability assumed in connection with the acquisition as the short period tax return has not yet been filed. Additional information that existed as of the acquisition date but at the time was unknown to us may become known to us during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
We measured the identifiable assets and liabilities assumed at their acquisition date fair values separately from goodwill. The intangible asset acquired is developed technology related to Jungla's functional molecular platform. The fair value of the developed technology was estimated using an income approach with an estimated useful life of ten years.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The acquisition of Jungla resulted in the recognition of $23.3 million of goodwill which we believe consists primarily of technological expertise related to large-scale molecular and genomic technologies and the ability to expand the use of these into other areas of our business. Goodwill created as a result of the acquisition of Jungla is not deductible for tax purposes.
We recorded an income tax benefit of $8.7 million in July 2019 due to net deferred tax liabilities assumed in connection with our acquisition of Jungla which provided a future source of income to support the realization of our deferred tax assets and resulted in a partial release of our valuation allowance.
Pro forma financial information (unaudited)
The unaudited pro forma financial information in the table below summarizes the combined results of operations for Invitae, Singular Bio and Jungla as though the companies had been combined as of January 1, 2018. The pro forma amounts have been adjusted for:
transaction expenses incurred by Singular Bio, Jungla and us,
the impacts of the co-development agreement between Singular Bio and us,
the historical interest expense incurred by Singular Bio on its debt and debt-like items,
compensation expense recognized in relation to the equity awards granted in connection with the acquisition of Singular Bio,
amortization expense resulting from the developed technology acquired through the acquisition of Jungla,
post-combination expense,
income tax benefits resulting from the deferred tax liabilities acquired, and
the 2.5 million and 1.4 million shares of our common stock issued upon the closing of the Singular Bio and Jungla transactions, respectively.
The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisitions had taken place as of January 1, 2018 (in thousands, except per share data):
 
Year Ended December 31,
 
2019
 
2018
 
Invitae
 
Singular Bio
 
Jungla
 
Total
 
Invitae
 
Singular Bio
 
Jungla
 
Total
Revenue
$
216,824

 
$

 
$

 
$
216,824

 
$
(147,699
)
 
$

 
$

 
$
(147,699
)
Net loss
$
(241,965
)
 
$
39,752

 
$
(8,571
)
 
$
(210,784
)
 
$
(129,355
)
 
$
(2,003
)
 
$
(5,016
)
 
$
(136,374
)
Shares
90,859

 
1,160

 
735

 
92,754

 
66,747

 
2,499

 
1,366

 
70,612

Basic and diluted net loss per share
$
(2.66
)
 
 
 
 
 
$
(2.27
)
 
$
(1.94
)
 
 
 
 
 
$
(1.93
)

Clear Genetics
In November 2019, we acquired 100% of the equity interest of Clear Genetics, a developer of software for providing genetic services at scale, for approximately $50.1 million. Of the cash and stock purchase price consideration issued, $0.2 million of cash and approximately 0.4 million shares of our common stock are subject to a 12-month hold back to satisfy indemnification obligations that may arise.
In connection with the acquisition, a portion of Clear Genetics' equity awards that were outstanding and unvested prior to the acquisition became fully vested per the terms of the merger agreement. The acceleration of vesting required us to allocate the fair value of the equity attributable to pre-combination service to the purchase price and the remaining amount was considered our post-combination expense. In November 2019, we recognized post-combination expense related to the acceleration of unvested equity of $0.6 million, which was recorded as general and administrative expense. We included the financial results of Clear Genetics in our consolidated financial statements from the acquisition date, which were not material for the year ended December 31, 2019. We incurred $0.4 million of transaction costs related to the acquisition of Clear Genetics which were recorded as general and administrative expense during the year ended December 31, 2019.
The following table summarizes the purchase price and post-combination expense recorded as a part of the acquisition of Clear Genetics in November 2019 (in thousands):
 
Purchase Price
 
Post-combination Expense
Cash transferred
$
24,645

 
$
542

Hold-back consideration - cash
196

 
98

Hold-back consideration - common stock
7,294

 

Common stock transferred
17,927

 

Total
$
50,062

 
$
640


Assets acquired and liabilities assumed are recorded based on valuations derived from estimated fair value assessments and assumptions used by us. While we believe that our estimates and assumptions underlying the valuations are reasonable, different estimates and assumptions could result in different valuations assigned to the individual assets acquired and liabilities assumed, and the resulting amount of goodwill. The following table summarizes the fair values of assets acquired and liabilities assumed through our acquisition of Clear Genetics at the date of acquisition (in thousands):
Cash
$
599

Accounts receivable
114

Developed technology
28,293

Total identifiable assets acquired
29,006

Other current liabilities
(70
)
Deferred tax liability
(5,800
)
Net identifiable assets acquired
23,136

Goodwill
26,926

Total purchase price
$
50,062


Based on the guidance provided in ASC 805, we accounted for the acquisition of Clear Genetics as a business combination in which we determined that 1) Clear Genetics was a business which combines inputs and processes to create outputs, and 2) substantially all of the fair value of gross assets acquired was not concentrated in a single identifiable asset or group of similar identifiable assets.
Our purchase price allocation for the acquisition is preliminary and subject to revision as additional information about fair value of assets and liabilities becomes available, primarily related to our deferred tax liability assumed in connection with the acquisition as the short period tax return has not yet been filed. Additional information that existed as of the acquisition date but at the time was unknown to us may become known to us during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date.
We measured the identifiable assets and liabilities assumed at their acquisition date fair values separately from goodwill. The intangible asset acquired is developed technology related to Clear Genetics' patient support technology platform. The fair value of the developed technology was estimated using an income approach with an estimated useful life of eight years.
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The acquisition of Clear Genetics resulted in the recognition of $26.9 million of goodwill which we believe relates primarily to expansion of the acquired technology into all realms of genetic testing. Goodwill created as a result of the acquisition of Clear Genetics is not deductible for tax purposes.
We recorded an income tax benefit of $5.8 million in November 2019 due to net deferred tax liabilities assumed in connection with our acquisition of Clear Genetics which provided a future source of income to support the realization of our deferred tax assets and resulted in a partial release of our valuation allowance.
v3.19.3.a.u2
Goodwill and intangible assets
12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and intangible assets Goodwill and intangible assets
Goodwill
The changes in the carrying amounts of goodwill were as follows (in thousands):
Balance as of December 31, 2018
 
$
50,095

Goodwill acquired - Singular Bio
 
26,461

Goodwill acquired - Jungla
 
23,295

Goodwill acquired - Clear Genetics
 
26,926

Balance as of December 31, 2019
 
$
126,777


Intangible assets
The following table presents details of our acquired intangible assets as of December 31, 2019 (in thousands):
 
Cost
 
Accumulated
Amortization
 
Net
 
Weighted-Average
Useful Life
(in Years)
 
Weighted-Average
Estimated Remaining
Useful Life
(in Years)
Customer relationships
$
23,763

 
$
(5,141
)
 
$
18,622

 
10.0
 
7.6
Developed technology
84,396

 
(8,476
)
 
75,920

 
8.6
 
8.0
Non-compete agreement
286

 
(172
)
 
114

 
5.0
 
2.0
Trade name
576

 
(480
)
 
96

 
2.7
 
0.5
Patent licensing agreement
496

 
(70
)
 
426

 
15.0
 
12.9
Favorable leases
247

 
(238
)
 
9

 
2.2
 
0.1
In-process research and development
29,988

 

 
29,988

 
n/a
 
n/a
 
$
139,752

 
$
(14,577
)
 
$
125,175

 
8.9
 
7.9

Acquisition-related intangibles included in the above table are finite-lived, other than in-process research and development which has an indefinite life, and are carried at cost less accumulated amortization. Customer relationships are being amortized on an accelerated basis, in proportion to estimated cash flows. All other finite-lived acquisition-related intangibles are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are realized. Amortization expense was $7.7 million, $5.0 million, and $1.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. Intangible assets are carried at cost less accumulated amortization. Amortization expense is recorded to cost of revenue, research and development, sales and marketing and general and administrative expense.
The following table summarizes our estimated future amortization expense of intangible assets with finite lives as of December 31, 2019 (in thousands):
 
Amount
2020
$
13,479

2021
13,783

2022
12,078

2023
11,065

2024
10,787

Thereafter
33,995

Total estimated future amortization expense
$
95,187


v3.19.3.a.u2
Balance sheet components
12 Months Ended
Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]  
Balance sheet components Balance sheet components
Property and equipment, net
Property and equipment consisted of the following (in thousands):
 
December 31,
 
2019
 
2018
Leasehold improvements
$
18,352

 
$
13,034

Laboratory equipment
24,873

 
22,149

Equipment under capital lease

 
7,129

Computer equipment
5,995

 
4,723

Software
2,611

 
2,594

Furniture and fixtures
1,198

 
784

Automobiles
58

 
20

Construction-in-progress
10,795

 
1,962

Total property and equipment, gross
63,882

 
52,395

Accumulated depreciation and amortization
(26,135
)
 
(24,509
)
Total property and equipment, net
$
37,747

 
$
27,886


Depreciation expense was $7.1 million, $8.5 million and $7.2 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Accrued liabilities
Accrued liabilities consisted of the following (in thousands):
 
December 31,
 
2019
 
2018
Accrued compensation and related expenses
$
16,440

 
$
7,917

Deferred revenue
1,429

 
761

Compensation and other liabilities associated with business combinations
30,560

 
6,460

Liability associated with co-development agreement

 
2,000

Other
16,385

 
9,425

Total accrued liabilities
$
64,814

 
$
26,563


Other long-term liabilities
Other long-term liabilities consisted of the following (in thousands):
 
December 31,
 
2019
 
2018
Lease incentive obligation, non-current
$

 
$
3,280

Deferred rent, non-current

 
5,495

Liabilities associated with business combinations, non-current
8,000

 

Other non-current liabilities

 
181

Total other long-term liabilities
$
8,000

 
$
8,956


v3.19.3.a.u2
Fair value measurements
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair value measurements Fair value measurements
Financial assets and liabilities are recorded at fair value. 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 an orderly transaction between market participants at the reporting date. The authoritative guidance establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity.
The three-level hierarchy for the inputs to valuation techniques is summarized as follows:
Level 1—Observable inputs such as quoted prices (unadjusted) for identical instruments in active markets.
Level 2—Observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or model-derived valuations whose significant inputs are observable.
Level 3—Unobservable inputs that reflect the reporting entity’s own assumptions.
The following tables set forth the fair value of our consolidated financial instruments that were measured at fair value on a recurring basis (in thousands):
 
 
December 31, 2019
 
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Estimated Fair Value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 

 
 

 
 

Money market funds
 
$
39,396

 
$

 
$

 
$
39,396

 
$
39,396

 
$

 
$

Certificates of deposit
 
300

 

 

 
300

 

 
300

 

U.S. treasury notes
 
150,627

 

 
(15
)
 
150,612

 
150,612

 

 

U.S. government agency securities
 
193,302

 
6

 

 
193,308

 

 
193,308

 

Total financial assets
 
$
383,625

 
$
6

 
$
(15
)
 
$
383,616

 
$
190,008

 
$
193,608

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration
 
 
 
 
 
 
 
$
11,300

 
$

 
$

 
$
11,300

Total financial liabilities
 
 
 
 
 
 
 
$
11,300

 
$

 
$

 
$
11,300

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2019
Reported as:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
 
 
 
 
 
$
136,997
 
Restricted cash
 
 
 
 
 
 
 
 
 
 
 
6,183
 
Marketable securities
 
 
 
 
 
 
 
 
 
 
 
240,436
 
Total cash equivalents, restricted cash, and marketable securities
 
 
 
$
383,616
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
 
 
 
 
 
 
$
3,300
 
Other long-term liabilities
 
 
 
 
 
 
 
 
 
 
 
$
8,000
 
 
 
December 31, 2018
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Level 1
 
Level 2
 
Level 3
Financial assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
93,934

 
$

 
$

 
$
93,934

 
$
93,934

 
$

 
$

Certificates of deposit
 
300

 

 

 
300

 

 
300

 

Commercial paper
 
10,908

 

 
(1
)
 
10,907

 

 
10,907

 

U.S. treasury notes
 
9,990

 

 

 
9,990

 
9,990

 

 

U.S. government agency securities
 
6,001

 

 
(4
)
 
5,997

 

 
5,997

 

Total financial assets
 
$
121,133

 
$

 
$
(5
)
 
$
121,128

 
$
103,924

 
$
17,204

 
$

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration
 
 
 
 
 
 
 
$
4,998

 
$

 
$

 
$
4,998

Total financial liabilities
 
 
 
 
 
 
 
$
4,998

 
$

 
$

 
$
4,998

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
Reported as:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
 
 
 
 
 
$
101,395
 
Restricted cash
 
 
 
 
 
 
 
 
 
 
 
6,006
 
Marketable securities
 
 
 
 
 
 
 
 
 
 
 
13,727
 
Total cash equivalents, restricted cash, and marketable securities
 
 
 
$
121,128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
 
 
 
 
 
 
$
4,998
 

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented. The total fair value of investments with unrealized losses at December 31, 2019 was $150.6 million. None of the available-for-sale securities held as of December 31, 2019 has been in a material continuous unrealized loss position for more than one year. At December 31, 2019, unrealized losses on available-for-sale investments are not attributed to credit risk and are considered to be temporary. We believe it is more likely than not that investments in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, we have not identified any other-than-temporary declines in market value and thus has not recorded any impairment charges on our financial assets other than on an investment in a private company during 2018 of $2.9 million. Interest income generated from our investments was $5.2 million and $1.5 million during the years ended December 31, 2019 and 2018, respectively.
At December 31, 2019, the remaining contractual maturities of available-for-sale securities ranged from three to 12 months.
Our certificates of deposit, commercial paper and debt securities of U.S. government agency entities are classified as Level 2 as they are valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third-party data providers, including but not limited to benchmark yields, interest rate curves, reported trades, broker/dealer quotes and reference data.
As of December 31, 2019, we had contingent obligations of $11.3 million of our common stock to the former owners of Jungla in conjunction with our acquisition of Jungla in July 2019. The amount of the contingent obligation is dependent upon achievement of certain post-close development milestones. We estimated the fair value of the contingent consideration as $10.7 million at the acquisition date in July 2019 using a discounted cash flow technique based on estimated achievement of the post-close milestones and discount rates which were Level 3 inputs not supported by market activity. These inputs can significantly affect the estimated fair value of the contingent consideration. The value of the liability is subsequently remeasured to fair value at each reporting date with changes recorded as general and administrative expense.
As of December 31, 2018, we had a contingent obligation of $5.0 million of our common stock calculated using a 30-day trailing average share price to the former owners of AltaVoice in conjunction with our acquisition of AltaVoice in January 2017. The amount of the contingent obligation was dependent upon 2017 and 2018 revenue attributable to AltaVoice. Since revenue attributable to AltaVoice for the combined period of 2017 and 2018 was greater than the $10.0 million contingent milestone, in April 2019 we issued 0.2 million shares of our common stock to the former owners of AltaVoice which had a fair value on the date of issuance of $5.2 million to settle this contingent obligation.
v3.19.3.a.u2
Commitments and contingencies
12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and contingencies Commitments and contingencies
Leases

Operating leases
In 2015, we entered into a lease agreement for our headquarters and main production facility in San Francisco, California which commenced in 2016. This lease expires in 2026 and we may renew the lease for an additional ten years. This optional period was not considered reasonably certain to be exercised and therefore we determined the lease term to be a ten-year period expiring in 2026. In connection with the execution of the lease, we provided a security deposit of approximately $4.6 million which is included in restricted cash in our consolidated balance sheets. We also have other operating leases in for office and laboratory space in California and Massachusetts. We expect to enter into new leases and modifying existing leases as we support continued growth of our operations.
As of December 31, 2019, the weighted-average remaining lease term for our operating leases was 6.5 years and the weighted-average discount rate used to determine our operating lease liability was 11.8%. Cash payments included in the measurement of our operating lease liabilities were $10.2 million for the year ended December 31, 2019.
The components of lease costs, which were included in cost of revenue, research and development, selling and marketing and general and administrative expenses on our consolidated statements of operations, were as follows (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
Operating lease costs
 
$
10,329

 
$
9,648

 
$
8,709

Sublease income
 
(173
)
 
(156
)
 
(157
)
Total operating lease costs
 
10,156

 
9,492

 
8,552

Finance lease costs
 
1,546

 
1,820

 
1,590

Total lease costs
 
$
11,702

 
$
11,312

 
$
10,142


Future minimum payments under non-cancelable operating leases as of December 31, 2019 are as follows (in thousands):
2020
$
10,156

2021
10,183

2022
10,131

2023
9,912

2024
10,035

Thereafter
18,238

Future non-cancelable minimum operating lease payments
68,655

Less: imputed interest
(21,594
)
Total operating lease liabilities
47,061

Less: current portion
(4,870
)
Operating lease obligations, net of current portion
$
42,191


Finance leases
We have entered into various finance lease agreements to obtain laboratory equipment. The terms of our finance leases are generally three years with a weighted-average remaining lease term of 2.0 years as of December 31, 2019 and are typically secured by the underlying equipment. The weighted-average discount rate used to determine our finance lease liability was 5.5%. The portion of the future payments designated as principal repayment was classified as a finance lease obligation on our consolidated balance sheets. Cash payments included in the measurement of our finance lease liabilities were $2.1 million for the year ended December 31, 2019.
Future payments under finance leases at December 31, 2019 are as follows (in thousands):
2020
$
1,963

2021
608

2022
609

Total finance lease obligations
3,180

Less: interest
(170
)
Present value of net minimum finance lease payments
3,010

Less: current portion
(1,855
)
Finance lease obligations, net of current portion
$
1,155


Debt financing
In November 2018, we entered into a Note Purchase Agreement (the "2018 Note Purchase Agreement") pursuant to which we were eligible to borrow an aggregate principal amount up to $200.0 million over a seven year maturity term which included an initial borrowing of $75.0 million in November 2018. We received net proceeds of $10.3 million after terminating and repaying the balance of our obligations of approximately $64.7 million with our previous lender.
In September 2019, we settled our obligations under the 2018 Note Purchase Agreement in full for $85.7 million, which included repayment of principal of $75.0 million, accrued interest of $2.4 million, and prepayment fees of $8.9 million which were recorded as debt extinguishment costs in other expense, net in our statement of operations during the year ended December 31, 2019.
Interest expense related to our debt financings, excluding the impact of our Convertible Senior Notes, was $5.7 million, $6.7 million and $3.5 million for the years ended December 31, 2019, 2018 and 2017, respectively.
Convertible Senior Notes
In September 2019, we issued, at par value, $350.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2024 in a private offering. The Convertible Senior Notes are our senior unsecured obligations and will mature on September 1, 2024, unless earlier converted, redeemed or repurchased. The Convertible Senior Notes bear cash interest at a rate of 2.0% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2020.
In accounting for the issuance of the Convertible Senior Notes, we separated the notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature using the effective interest method. The excess of the principal amount of the liability component over its carrying amount, referred to as the debt discount, is amortized to interest expense over the five-year term of the Convertible Senior Notes. The equity component of $75.5 million, net of issuance costs, was recorded in additional paid-in capital on our consolidated balance sheet and will not be re-measured as long as it continues to meet the conditions for equity classification.
We received net proceeds of $339.9 million from the sale of the Convertible Senior Notes after deducting commissions and offering expenses. These transaction costs were allocated to the liability and equity components based on their relative fair values. The transaction costs attributable to the liability component are amortized to interest expense over the term of the Convertible Senior Notes under the effective interest method, and the transaction costs attributable to the equity component were netted with the equity component in stockholder's equity.
Upon conversion, the Convertible Senior Notes will be convertible into cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. Our current intent is to settle the principal amount of the Convertible Senior Notes in cash upon conversion, with any remaining conversion value being delivered in shares of our common stock.
The initial conversion rate for the Convertible Senior Notes is 33.6293 shares of our common stock per $1,000 principal amount of the Convertible Senior Notes (equivalent to an initial conversion price of approximately $29.74 per share of common stock). The conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for any accrued and unpaid interest. In addition, upon the occurrence of certain corporate events that occur prior to the maturity date or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for a holder that elects to convert its Convertible Senior Notes in connection with such a corporate event or notice of redemption.
If we undergo a fundamental change (as defined in the indenture governing the Convertible Senior Notes), the holders of the Convertible Senior Notes may require us to repurchase all or any portion of their Convertible Senior Notes for cash at a repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased plus accrued and unpaid interest to, but excluding, the redemption date.
The Convertible Senior Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding March 1, 2024, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price for the Convertible Senior Notes on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Convertible Senior Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) if we call any or all of the Convertible Senior Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after March 1, 2024 until the close of business on the business day immediately preceding the maturity date, holders may convert their Convertible Senior Notes at any time, regardless of the foregoing circumstances. As of December 31, 2019, none of the above circumstances had occurred and therefore the Convertible Senior Notes could not have been converted.
We may not redeem the Convertible Senior Notes prior to September 6, 2022. We may redeem for cash all or any portion of the Convertible Senior Notes, at our option, on or after September 6, 2022 and on or before the 30th scheduled trading day immediately before the maturity date if the last reported sale price of the Common Stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
The Convertible Senior Notes as of December 31, 2019 consisted of the following (in thousands):
Outstanding principal
$
350,000

Unamortized debt discount and issuance costs
(81,245
)
Net carrying amount, liability component
$
268,755


As of December 31, 2019, the fair value of the Convertible Senior Notes was $319.0 million. The estimated fair value of the Convertible Senior Notes, which are classified as Level 2 financial instruments, was determined based on the estimated or actual bid prices of the Convertible Senior Notes in an over-the-counter market. We recorded $6.5 million of interest expense related to the Convertible Senior Notes during the year ended December 31, 2019.
Guarantees and indemnifications
As permitted under Delaware law and in accordance with our bylaws, we indemnify our directors and officers for certain events or occurrences while the officer or director is or was serving in such capacity. The maximum amount of potential future indemnification is unlimited; however, we maintain director and officer liability insurance. This insurance allows the transfer of the risk associated with our exposure and may enable us to recover a portion of any future amounts paid. We believe the fair value of these indemnification agreements is minimal. Accordingly, we did not record any liabilities associated with these indemnification agreements at December 31, 2019 or 2018.
Other commitments
In the normal course of business, we enter into various purchase commitments primarily related to service agreements and laboratory supplies. At December 31, 2019, our total future payments under noncancelable unconditional purchase commitments having a remaining term of over one year were as follows (in thousands):
 
Amount
2020
$
3,278

2021
1,064

2022
41

Total
$
4,383


Contingencies
We were not a party to any material legal proceedings at December 31, 2019, or at the date of this report. We may from time to time become involved in various legal proceedings and claims arising in the ordinary course of business, and the resolution of any such claims could be material.
v3.19.3.a.u2
Stockholders' equity
12 Months Ended
Dec. 31, 2019
Equity [Abstract]  
Stockholders’ equity Stockholders’ equity
Shares outstanding
Shares of convertible preferred and common stock were as follows (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
2017
Convertible preferred stock:
 
 
 
 
 
 
Shares outstanding, beginning of period
 
3,459

 
3,459

 

Convertible preferred stock issued in private placement
 

 

 
3,459

Conversion into common stock
 
(3,334
)
 

 

Shares outstanding, end of period
 
125

 
3,459

 
3,459

 
 
 
 
 
 
 
Common stock:
 
 
 
 
 
 
Shares outstanding, beginning of period
 
75,481

 
53,597

 
41,144

Common stock issued in private placement
 

 

 
5,188

Common stock issued in connection with public offering
 
11,136

 
17,103

 

Common stock issued on exercise of stock options, net
 
468

 
351

 
387

Common stock issued pursuant to vesting of RSUs
 
2,683

 
1,369

 
925

Common stock issued pursuant to exercises of warrants
 
31

 
1,099

 
232

Common stock issued pursuant to employee stock purchase plan
 
455

 
566

 
379

Common stock issued pursuant to business combinations
 
5,208

 
1,022

 
5,176

Common stock issued pursuant to securities purchase agreement
 

 
374