CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2024 |
Dec. 31, 2023 |
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| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
| Preferred stock, shares issued (in shares) | 0 | 0 |
| Preferred stock, shares outstanding (in shares) | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
| Common stock, shares issued (in shares) | 27,975,808 | 27,410,532 |
| Common stock, shares outstanding (in shares) | 27,975,808 | 27,410,532 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
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| Income Statement [Abstract] | ||||
| NET REVENUES | $ 85,782 | $ 61,493 | $ 245,758 | $ 153,668 |
| OPERATING EXPENSES | ||||
| Cost of sales (exclusive of amortization of acquired intangible assets) | 15,609 | 11,319 | 44,022 | 32,559 |
| Research and development | 12,323 | 12,923 | 40,268 | 40,624 |
| Selling, general and administrative | 50,499 | 44,619 | 150,082 | 136,062 |
| Amortization of acquired intangible assets | 2,272 | 2,272 | 6,766 | 6,742 |
| Total operating expenses, net | 80,703 | 71,133 | 241,138 | 215,987 |
| Operating income (loss) | 5,079 | (9,640) | 4,620 | (62,319) |
| Interest income | 3,404 | 2,769 | 9,544 | 7,504 |
| Interest expense | (201) | (2) | (485) | (9) |
| Income (loss) before income taxes | 8,282 | (6,873) | 13,679 | (54,824) |
| Income tax expense | 6,013 | 32 | 5,024 | 62 |
| Net income (loss) | $ 2,269 | $ (6,905) | $ 8,655 | $ (54,886) |
| Earnings (loss) per share: | ||||
| Basic (in dollars per share) | $ 0.08 | $ (0.26) | $ 0.31 | $ (2.05) |
| Diluted (in dollars per share) | $ 0.08 | $ (0.26) | $ 0.30 | $ (2.05) |
| Weighted-average shares outstanding: | ||||
| Basic (in shares) | 27,840 | 26,834 | 27,659 | 26,725 |
| Diluted (in shares) | 29,401 | 26,834 | 28,838 | 26,725 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
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| Statement of Comprehensive Income [Abstract] | ||||
| Net income (loss) | $ 2,269 | $ (6,905) | $ 8,655 | $ (54,886) |
| Other comprehensive income: | ||||
| Net unrealized gain on marketable investment securities | 645 | 73 | 337 | 310 |
| Comprehensive income (loss) | $ 2,914 | $ (6,832) | $ 8,992 | $ (54,576) |
Organization and Description of Business |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Description of Business | Organization and Description of Business Castle Biosciences, Inc. (the ‘‘Company”, “we”, “us” or “our”) was incorporated in the state of Delaware on September 12, 2007. We are a commercial-stage diagnostics company focused on providing clinicians and their patients with personalized, clinically actionable information to inform treatment decisions and improve health outcomes. We are based in Friendswood, Texas (a suburb of Houston, Texas) and our laboratory operations are conducted at our facilities located in Phoenix, Arizona and Pittsburgh, Pennsylvania.
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Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2024 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). All intercompany accounts and transactions have been eliminated in consolidation. We have a history of recurring net losses and negative cash flows and as of September 30, 2024, we had an accumulated deficit of $209.7 million. We believe our $95.0 million of cash and cash equivalents and $184.8 million of marketable investment securities as of September 30, 2024, and anticipated revenue from our test reports, will be sufficient to meet our cash requirements through at least the 12-month period following the date that these unaudited condensed consolidated financial statements were issued. Unaudited Interim Financial Information The accompanying condensed consolidated balance sheet as of September 30, 2024; the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss) and the condensed consolidated statements of stockholders’ equity, each for the three and nine months ended September 30, 2024 and 2023; and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our consolidated financial position as of September 30, 2024, the results of our consolidated operations for the three and nine months ended September 30, 2024 and 2023 and our consolidated cash flows for the nine months ended September 30, 2024 and 2023. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2024 and 2023 are also unaudited. The results for the three and nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period. The balance sheet as of December 31, 2023 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the unaudited interim consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 28, 2024 (the “2023 10-K”). Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of contingent consideration and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. Cash and Cash Equivalents including Concentrations of Credit Risk Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the financial institutions in which deposits are held. Marketable Investment Securities All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of any related deferred income tax effects, on our condensed consolidated balance sheets. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment. Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations. Impairments of available-for-sale debt securities, if any, are recorded in our unaudited condensed consolidated statements of operations. See Notes 5 and 11 for further details. Revenue Recognition In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. See Note 3 for further details. Accounts Receivable and Allowance for Credit Losses We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments. We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant given our application of the constraint to variable consideration. The allowance for credit losses was zero as of September 30, 2024 and December 31, 2023. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses. Property and Equipment 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 and ten 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. Our leasehold improvements primarily relate to our office and laboratory facilities in Friendswood, Texas, Phoenix, Arizona and Pittsburgh, Pennsylvania, and are generally being depreciated through the end of the lease terms in 2025 and 2033, respectively. Maintenance and repairs are charged to expense as incurred, and material improvements are capitalized. Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready for its intended use, at which point the capitalized interest costs are amortized using the straight-line method over the estimated useful life of the underlying asset. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. Factors that could result in a future impairment of goodwill include declines in the price of our common stock, increased competition, changes in macroeconomic developments, unfavorable government or regulatory developments and changes in coverage or reimbursement conditions. Accrued Compensation We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of September 30, 2024 and December 31, 2023, we accrued approximately $17.9 million and $21.7 million, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment. Stock-Based Compensation Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements. In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date. For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. Forfeitures are accounted for as they occur. Comprehensive Income (Loss) Comprehensive income (loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is made up of net income (loss) plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss). Accounting Pronouncements Yet to be Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosure, which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures. We have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on our consolidated financial statements or disclosures upon adoption.
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| Revenue | Revenue All of our revenues from contracts with customers are associated with the provision of testing services. Our revenues are primarily attributable to our DecisionDx®-Melanoma test for cutaneous melanoma. We also provide a test for patients with cutaneous squamous cell carcinoma, DecisionDx®-SCC, a test for use in patients with suspicious pigmented lesions, MyPath® Melanoma, a test for uveal melanoma, DecisionDx®-UM, a test for patients diagnosed with Barrett’s esophagus, the TissueCypher® Barrett’s Esophagus Test and a pharmacogenomics testing service focused on mental health, IDgenetix®. We previously offered a second test for patients with suspicious pigmented lesions, DiffDx®-Melanoma, which we suspended in February 2023. Information on the disaggregation of revenues is included below. Once we satisfy our performance obligations and bill for the service, the timing of the collection of payments may vary based on the payment practices of the third-party payor and the existence of contractually established reimbursement rates. The payments for our services are primarily made by third-party payors, including Medicare and commercial health insurance carriers. Certain contracts contain a contractual commitment of a reimbursement rate that differs from our list prices. However, absent a positive coverage policy, with or without a contractually committed reimbursement rate, with a commercial carrier or governmental program, our diagnostic tests may or may not be paid by these entities. In addition, patients do not enter into direct agreements with us that commit them to pay any portion of the cost of the tests in the event that their insurance provider declines to reimburse us. We may pursue, on a case-by-case basis, reimbursement from such patients in the form of co-payments and co-insurance, in accordance with the contractual obligations that we have with the insurance carrier or health plan. These situations may result in a delay in the collection of payments. The Medicare claims that are covered by Medicare are generally paid at a rate established on Medicare’s Clinical Laboratory Fee Schedule or by the respective Medicare contractor within 30 days from receipt. Medicare claims that were either submitted to Medicare prior to the local coverage determination or other coverage commencement date or are not covered but meet the definition of being medically reasonable and necessary pursuant to the controlling Section 1862(a)(1)(A) of the Social Security Act are generally appealed and may ultimately be paid at the first (termed ‘‘redetermination’’), second (termed ‘‘reconsideration’’) or third level of appeal (de novo hearing with an Administrative Law Judge). A successful appeal at any of these levels may result in prompt payment. In the absence of Medicare coverage, contractually established reimbursements rates or other coverage, we have concluded that our contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than our standard rates or not paid at all, with such differences considered implicit price concessions. Variable consideration attributable to these price concessions is measured at the expected value using the ‘‘most likely amount’’ method under ASC 606. The amounts are estimated using historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of our past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as the judgment and actions of third parties. Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor. Accordingly, in such situations revenues are recognized on the basis of actual cash collections. Variable consideration for Medicare claims that are not covered by Medicare, including those claims undergoing appeal, is deemed to be fully constrained due to factors outside our influence (e.g., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time. Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues. Included in revenues for the three months ended September 30, 2024 and 2023 were $0.6 million of net negative revenue adjustments and $0.9 million of net positive revenue adjustments, respectively, associated with changes in estimated variable consideration. Included in revenues for the nine months ended September 30, 2024 and 2023 were $1.3 million and $3.1 million of net negative revenue adjustments, respectively, associated with changes in estimated variable consideration. These amounts include (i) adjustments for actual collections versus estimated amounts and (ii) cash collections and the related recognition of revenue in current period for tests delivered in prior periods due to the release of the constraint on variable consideration. Because our contracts with customers have an expected duration of one year or less, we have elected the practical expedient in ASC 606 to not disclose information about our remaining performance obligations. Any incremental costs to obtain contracts are recorded as selling, general and administrative expenses as incurred due to the short duration of our contracts. Contract balances consisted solely of accounts receivable (both current and noncurrent) as of September 30, 2024 and December 31, 2023. Disaggregation of Revenues The table below provides the disaggregation of revenue by type (in thousands):
(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma). (2)Consists of TissueCypher Barrett’s Esophagus Test, DecisionDx-UM and IDgenetix. Payor Concentration We rely upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of our tests. Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows:
* Less than 10% There were no other third-party payors that individually accounted for more than 10% of our total revenue or accounts receivable for the periods shown in the table above.
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) Per Share | Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, vesting of RSUs and PSUs or purchases under the ESPP. The treasury stock method is used to calculate the potential dilutive effect of these common stock equivalents. Contingently issuable PSU awards are included in the computation of diluted earnings (loss) per share when the applicable performance criteria would be met and the common shares would be issuable if the end of the reporting period were the end of the contingency period. However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive. The following table shows the computation of basic and diluted earnings (loss) per share for the following three and nine months ended September 30, 2024 and 2023 (in thousands, except per share data):
The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted earnings (loss) per share for the three and nine months ended September 30, 2024 and 2023 because to do so would be antidilutive. With regard to the PSUs, we assume that the associated performance targets will be met at the target level of performance for purposes of calculating diluted net income per common share until such time that it is probable that actual performance will be above or below target (in thousands):
In addition, in connection with our acquisition of AltheaDx, Inc. (“AltheaDx”) in April 2022, we may be required to issue shares of our common stock to satisfy the contingent consideration obligations, pending the outcome of certain commercial and regulatory milestones, as required by the definitive agreement to acquire AltheaDx. For purposes of calculating diluted earnings (loss) per share, no such shares were assumed to have been issued because none of the applicable conditions have been met to date. See Note 11 for additional information.
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Marketable Investment Securities |
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| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketable Investment Securities | Marketable Investment Securities The following tables present our available-for-sale debt securities (in thousands):
Although available to be sold to meet operating needs or otherwise, securities are generally held through maturity. We classify all investments as current assets, as these are readily available for use in current operations. The cost of securities sold is determined based on the specific identification method for purposes of recording gains and losses. There were no realized gains or losses on sales of investments for the three and nine months ended September 30, 2024 and 2023. We evaluated our investment portfolio under the available-for-sale debt securities impairment model guidance and determined our investment portfolio is comprised of low-risk, investment grade securities. As of September 30, 2024, unrealized losses on our available-for-sale investments are not attributed to credit risk. We believe that an allowance for credit losses is unnecessary because the unrealized losses on certain of our marketable investment securities are due to market factors. No credit-related or noncredit-related impairment losses were recorded for the three and nine months ended September 30, 2024 and 2023. The allowance for credit losses was zero as of September 30, 2024 and December 31, 2023. As of September 30, 2024, all of our available-for-sale debt securities had contractual maturities of one year or less. Accrued interest receivable is included in prepaid expenses and other current assets in our unaudited condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, the accrued interest receivable balance was immaterial. Additional information relating to the fair value of marketable investment securities can be found in Note 11.
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Property and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following (in thousands):
(1)On February 9, 2024, we purchased approximately 23 acres of land in Friendswood, Texas for purpose of developing a commercial office building to be used as our future corporate headquarters. Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands):
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Goodwill and Other Intangible Assets, Net |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Other Intangible Assets, Net | Goodwill and Other Intangible Assets, Net Goodwill The balance of our goodwill was $10.7 million as of September 30, 2024 and December 31, 2023. There were no accumulated impairments of goodwill as of September 30, 2024 or December 31, 2023. Other Intangible Assets, Net Our other intangible assets, net consist of the following (in thousands):
Amortization expense of intangible assets was $2.3 million and $6.8 million for the three and nine months ended September 30, 2024, respectively, and $2.3 million and $6.7 million for the three and nine months ended September 30, 2023, respectively.
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Other Accrued and Current Liabilities |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Accrued and Current Liabilities | Other Accrued and Current Liabilities Other accrued and current liabilities consisted of the following (in thousands):
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Long-Term Debt |
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| Long-Term Debt | Long-Term Debt We had no debt as of December 31, 2023. Our long-term debt as of September 30, 2024 is presented in the table below (in thousands):
Borrowings under our 2024 LSA approximate their fair value as the interest rate is variable and reflects market rates (Level 2 instrument). As of September 30, 2024, the carrying amount of borrowings under our 2024 LSA, exclusive of unamortized discount, and their estimated fair value were $10.2 million. Future maturities of principal amounts on long-term debt as of September 30, 2024 are as follows (in thousands):
2024 Loan and Security Agreement On March 26, 2024 (the ‘‘Closing Date’’), we entered into a Loan and Security Agreement (the ‘‘2024 LSA”), by and between us, our wholly owned subsidiary, Castle Narnia Real Estate Holding 1, LLC and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Lender’’). The 2024 LSA provides for (i) on the Closing Date, $10.0 million aggregate principal amount of term loans (discussed in the ‘‘2024 Term Loan’’ section below), and (ii) from the Closing Date until March 31, 2025, an additional line of credit of $25.0 million with the same interest rate and maturity as the term debt available (discussed in the ‘‘2024 Credit Line’’ section below) at our option. The obligations under the 2024 LSA are secured by substantially all of our assets, excluding intellectual property, the real property held by us, and are subject to certain other exceptions and limitations. We have the right to prepay the 2024 LSA in whole, subject to a prepayment fee of approximately 1.50% if prepaid prior to March 26, 2026. Amounts repaid under the 2024 LSA may not be reborrowed. In addition, the 2024 LSA contains customary conditions of borrowing, events of default and covenants, including covenants that restrict our ability to dispose of assets, merge with or acquire other entities, incur indebtedness and make distributions to holders of our capital stock. Should an event of default occur, including the occurrence of a material adverse change, we could be liable for immediate repayment of all obligations under the 2024 LSA. Should we seek to amend the terms of the 2024 LSA, the consent of the Lender would be required. As of September 30, 2024, we were in compliance with all of the covenants. The 2024 LSA bears interest at a floating rate equal to the greater of (a) the WSJ Prime Rate plus 0.25% or (b) 6.00% per annum. The Term Loans are interest only from the Closing Date through November 30, 2025, which may be extended at our option through November 30, 2026 as long as no event of default under the 2024 LSA has occurred. After the end of the interest only period, we are required to pay equal monthly installments of principal through the maturity date of November 1, 2028. We are also obligated to make an additional final payment of 2.00% of the aggregate original principal amounts of Term Loans advanced by the Lender, due at the earlier of the maturity date or date the Term Loans are repaid in full. 2024 Term Loan On March 26, 2024, we drew $10.0 million in Term Loans under the terms and provisions of the 2024 LSA. We are obligated to make a final payment of $0.2 million under the terms of the 2024 LSA final payment provisions. A discount on debt equal to this obligation was recorded on the draw date and is being amortized as additional interest expense using the effective interest method over the term of the debt. As of September 30, 2024, no payment on principal has been made. As of September 30, 2024, the weighted average effective interest rate for all outstanding debt under the 2024 Term Loan was 8.60%. 2024 Credit Line We have a $25.0 million line of credit under the terms and provisions of the 2024 LSA available from the Closing Date until March 31, 2025. Amounts repaid under the 2024 Credit Line may not be reborrowed. As of September 30, 2024, no draws had been made on the line of credit. Interest Expense on Long-Term Debt The table below shows the components of interest expense for the three and nine months ended September 30, 2024 (in thousands):
There was no interest expense on long term debt or capitalized interest for the three and nine months ended September 30, 2023.
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Leases |
9 Months Ended |
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Sep. 30, 2024 | |
| Leases [Abstract] | |
| Leases | Leases Lease Amendment On August 1, 2024 (“the Modification Date”) we amended our lease agreement for our Pittsburgh facilities to take early possession of additional square footage under an expansion provision in the original contract at an earlier date than provided for under the original agreement. The expansion option provided us with 23,821 additional square feet, most of which will be dedicated laboratory space, in exchange for an incremental increase in our fixed monthly payments. The amendment did not change the end date under the original lease term, or provide any additional options not already provided for under the original agreement. We evaluated the amendment under ASC Topic 842, Leases, and determined that it constituted a modification to an existing contract and assessed the classification remained an operating lease. Following the modification, our obligations for the remaining lease term increased and we used $1.3 million of lease incentives for leasehold improvements. As of September 30, 2024, we had no remaining credits for leasehold improvements under this contract. In our remeasurement, we recognized an additional $0.6 million in operating lease assets in exchange for an equal amount of additional lease liabilities. Discount Rate We remeasured our lease obligations using our incremental borrowing rate as of the Modification Date. The incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. As of the Modification Date, we had outstanding borrowings under the “2024 LSA” and referred to the interest rate of such debt for use as our incremental borrowing rate.
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used in measuring fair value. There are three levels to the fair value hierarchy based on the reliability of inputs, as follows: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or amounts recorded, may not be indicative of the amount that we or holders of the instruments could realize in a current market exchange. The tables below provide information, by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):
(1)Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets. (2)Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets. (3)Current portion, if any, classified as “Other accrued and current liabilities” in the unaudited condensed consolidated balance sheets. Contingent Consideration In connection with our acquisition of AltheaDx, we agreed to pay contingent consideration of up to $75.0 million of commercial milestone payments based on the achievement of certain net revenue targets relating to the years ending December 31, 2022, 2023 and 2024 (“AltheaDx Earnout Payments”). The portion of the AltheaDx Earnout Payments associated with the commercial milestones for the year ended December 31, 2023 was $37.5 million and was not paid since the applicable commercial milestones were not met. The AltheaDx Earnout Payments included a 2022 catch-up provision for additional payment of up to $17.5 million that expired in 2023. Therefore, as of September 30, 2024, we have a potential payment obligation of up to $20.0 million with respect to the remaining commercial milestones for 2024. If the settlement of the remaining portion of the AltheaDx Earnout Payments would have occurred on September 30, 2024, no amounts would have been due because no commercial milestones had been achieved as of such date. The contingent consideration was classified as a Level 3 fair value measurement due to the use of significant unobservable inputs and a Monte Carlo simulation to determine its fair value. The Monte Carlo simulation uses projections of the commercial milestones for the applicable period as well as the corresponding targets and approximate timing of payment based on the terms of the arrangement. The valuation of the AltheaDx contingent consideration was zero as of September 30, 2024 and December 31, 2023, and no gains or losses were recorded associated with changes in fair value during the three and nine months ended September 30, 2024 and 2023. The contingent consideration liability is remeasured at fair value at each reporting period taking into account any updated assumptions or changes in circumstances. Any changes in the fair value are recorded as gains or losses in our unaudited condensed consolidated statement of operations.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2024 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Commitments and Contingencies From time to time, we may be involved in legal proceedings arising in the ordinary course of business. We believe there is no threatened litigation or litigation pending that could have, individually or in the aggregate, a material adverse effect on our financial position, results of operations or cash flows. On February 1, 2024, we received a Subpoena from the Department of Health and Human Services, Office of Inspector General, seeking documents and information concerning claims submitted for payment under federal healthcare programs. The Subpoena requested that we produce documents relating primarily to interactions with medical providers and billing to government-funded healthcare programs for our tests. The time period covered by the Subpoena is January 1, 2015 through February 1, 2024. We are continuing to cooperate with the government’s request and are in the process of responding to the Subpoena. We are unable to predict what action, if any, might be taken in the future by the Department of Health and Human Services, Office of Inspector General, or any other governmental authority as a result of the matters related to this Subpoena. No claims have been made against us at this time. Any potential claims could subject us to significant liability for damages and harm our reputation. Our insurance and indemnities may not cover all claims that may be asserted against us. We are unable to predict the outcome and are unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome.
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Stock Incentive Plans and Stock-Based Compensation |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Incentive Plans and Stock-Based Compensation | Stock Incentive Plans and Stock-Based Compensation Stock Incentive Plans Effective January 1, 2024, an additional 1,370,526 shares became available under our 2019 Equity Incentive Plan (the “2019 Plan”) pursuant to an automatic annual increase. The 2019 Plan provides for automatic annual increases to the number of shares authorized for issuance, equal to 5% of our common shares outstanding as of the immediately preceding year end, through January 1, 2029. As of September 30, 2024, 556,925 shares remained available for grant under the 2019 Plan. On December 22, 2022, our board of directors approved the 2022 Inducement Plan (the “Inducement Plan”). Our Inducement Plan provides for the grant of RSU awards and other stock awards made as an inducement material to the grantee’s entering into employment with us to the extent such grantee was not previously an employee of ours or is entering into employment following a bona fide period of non-employment with us. As of September 30, 2024, there were 348,917 shares available for grant under the Inducement Plan. Stock Options Stock option activity under our stock plans for the nine months ended September 30, 2024 is set forth below:
Restricted Stock Units RSUs represent the right to receive shares of our common stock at a specified future date, subject to vesting. Our RSUs generally vest annually from the grant date in four equal installments subject to the holder’s continued service with us. We issue new shares of common stock upon the vesting of RSUs. The following table summarizes our RSU activity for the nine months ended September 30, 2024:
(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 71,944 for the nine months ended September 30, 2024. Performance-Based Restricted Stock Units PSUs represent the right to receive shares of our common stock contingent upon the achievement of certain financial performance measures. We issue new shares of common stock upon the vesting of PSUs. On August 9, 2024 (the “Initial Vesting Date”), the Board certified that the revenue goal for the PSUs granted on December 23, 2022 (“2022 PSUs”) was achieved. Therefore, 50% of the 2022 PSUs were vested and we immediately recognized $0.1 million of stock-based compensation related to this performance metric. The remaining 50% of the 2022 PSUs are all subject to time-based vesting and will vest in full on the one-year anniversary of the Initial Vesting Date. The following table summarizes our PSU activity for the nine months ended September 30, 2024:
(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 30,046 for the nine months ended September 30, 2024. Retirement Policy In January 2023, our board of directors approved a retirement policy (the “Retirement Policy”) that provides for acceleration of a portion of unvested awards that were granted to certain eligible employees upon meeting age, service and notice requirements. We considered the adoption of the Retirement Policy to be a modification of existing awards under ASC Topic 718, Compensation – Stock Compensation. The modification did not result in any incremental compensation cost. However, the adoption of the policy resulted in a new estimate of the requisite service period for certain awards, which we reassess at each balance sheet date. In connection with the Retirement Policy, we accelerated the recognition of compensation expense of $0.4 million and $0.5 million during the three months ended September 30, 2024 and 2023, respectively, and accelerated the recognition of compensation expense of $0.8 million and $1.6 million for the nine months ended September 30, 2024 and 2023, respectively. Employee Stock Purchase Plan The ESPP provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 274,105 shares becoming available under the ESPP effective January 1, 2024. During the nine months ended September 30, 2024, we issued 167,688 shares of common stock pursuant to scheduled purchases under the ESPP. As of September 30, 2024, 1,046,680 shares remained available for issuance under the ESPP. Determining Fair Value - Summary of Assumptions We use the Black-Scholes option pricing model to estimate the fair value of each option grant on the date of grant or any other measurement date. The following table sets forth the assumptions used to determine the fair value of stock options:
The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:
We use the closing price of our common stock on the date of grant to determine the fair value of RSUs and PSUs. Stock-Based Compensation Expense Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):
For the nine months ended September 30, 2024 and 2023 the weighted-average grant date fair value of stock options granted was $9.23 and $15.99 per option, respectively. For the nine months ended September 30, 2024 and 2023, the weighted-average grant date fair value of the purchase rights granted under the ESPP was $12.28 and $11.51 per share, respectively. As of September 30, 2024, the total unrecognized stock-based compensation cost related to outstanding awards was $77.6 million, which is expected to be recognized over a weighted-average period of 2.2 years. The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.
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Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Income Taxes For the three and nine months ended September 30, 2024, our effective income tax rate was 72.6% and 36.7%, respectively. For the three months ended September 30, 2024, differences in our effective rate and the federal statutory rate of 21% was due to revisions in estimated pre-tax income, reflecting uncertainty in continued Medicare coverage for our DecisionDx-SCC test and updated information, as well as stock-based compensation, permanent differences, changes in valuation allowance, research and development tax credit and state income taxes. For the nine months ended September 30, 2024, differences in our effective rate and the federal statutory rate of 21% was due to stock-based compensation, permanent differences, changes in valuation allowance, research and development tax credit and state income taxes. For the three and nine months ended September 30, 2023, our effective income tax rate was immaterial.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Sep. 30, 2023 |
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Mar. 31, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
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| Pay vs Performance Disclosure | ||||||||
| Net income (loss) | $ 2,269 | $ 8,920 | $ (2,534) | $ (6,905) | $ (18,777) | $ (29,204) | $ 8,655 | $ (54,886) |
Insider Trading Arrangements |
3 Months Ended | 9 Months Ended |
|---|---|---|
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Sep. 30, 2024
shares
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Sep. 30, 2024
shares
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| Trading Arrangements, by Individual | ||
| Non-Rule 10b5-1 Arrangement Adopted | false | |
| Rule 10b5-1 Arrangement Terminated | false | |
| Non-Rule 10b5-1 Arrangement Terminated | false | |
| Frank Stokes [Member] | ||
| Trading Arrangements, by Individual | ||
| Material Terms of Trading Arrangement | On August 13, 2024, Frank Stokes, Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 6,923 shares of our common stock plus any additional shares that remain unsold under his previous arrangement. The new trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement is estimated to be from November 15, 2024 until the earlier of all transaction under the trading arrangement being completed or the termination of the plan.
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| Name | Frank Stokes | |
| Title | Chief Financial Officer, | |
| Rule 10b5-1 Arrangement Adopted | true | |
| Adoption Date | August 13, 2024 | |
| Aggregate Available | 6,923 | 6,923 |
| Tobin Juvenal [Member] | ||
| Trading Arrangements, by Individual | ||
| Material Terms of Trading Arrangement | On September 11, 2024, Tobin Juvenal, our Chief Commercial Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale from time to time of an aggregate of up to 2,230 shares of our common stock plus any additional shares that remain unsold under his previous arrangement. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The duration of the trading arrangement will be from January 2, 2025 through December 31, 2025.
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| Name | Tobin Juvenal | |
| Title | Chief Commercial Officer | |
| Rule 10b5-1 Arrangement Adopted | true | |
| Adoption Date | September 11, 2024, | |
| Expiration Date | December 31, 2025 | |
| Arrangement Duration | 363 days | |
| Aggregate Available | 2,230 | 2,230 |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Our unaudited condensed consolidated financial statements include the accounts of Castle Biosciences, Inc. and our wholly owned subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’). |
| Consolidation | All intercompany accounts and transactions have been eliminated in consolidation. |
| Use of Estimates | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realizability of deferred tax assets, the useful lives and recoverability of long-lived assets, the goodwill impairment test, the valuation of acquired intangible assets and the valuation of contingent consideration and other contingent liabilities. We base these estimates on historical and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. |
| Cash and Cash Equivalents | Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Our cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S. government obligations. |
| Concentration of Credit Risk | Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC. Management believes that we are not exposed to significant credit risk on our cash deposits due to the financial position of the financial institutions in which deposits are held. |
| Marketable Investment Securities | All debt securities are recognized in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 320, Investments-Debt Securities (‘‘ASC 320’’). Management determines the appropriate classification of securities at the time of purchase and re-evaluates such determination at each balance sheet date. All debt securities are classified as available-for-sale and are recorded at fair value in accordance with ASC 320. We recognize the unrealized gains and losses related to changes in fair value as a separate component of accumulated other comprehensive loss within total stockholders’ equity, net of any related deferred income tax effects, on our condensed consolidated balance sheets. Premiums or discounts from par value are amortized to interest income over the life of the underlying investment. Realized gains and losses on available-for-sale securities are calculated at the individual security level and included in interest income in the condensed consolidated statements of operations. Impairments of available-for-sale debt securities, if any, are recorded in our unaudited condensed consolidated statements of operations. |
| Revenue Recognition | In accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we follow a five-step process to recognize revenues: (1) identify the contract with the customer, (2) identify the performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenues when the performance obligations are satisfied. We have determined that we have a contract with the patient when the treating clinician orders the test. Our contracts generally contain a single performance obligation, which is the delivery of the test report, and we satisfy our performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point we can bill for the report. The amount of revenue recognized reflects the amount of consideration to which we expect to be entitled, or the transaction price, and considers the effects of variable consideration. |
| Accounts Receivable | We classify accounts receivable balances that are expected to be paid more than one year from the consolidated balance sheet date as noncurrent assets. The estimated timing of payment utilized as a basis for classification as noncurrent is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments.
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| Allowance for Credit Losses | We accrue an allowance for credit losses against our accounts receivable based on management’s current estimate of amounts that will not be collected. Management’s estimates are typically based on historical loss information adjusted for current conditions. We generally do not perform evaluations of customers’ financial condition and generally do not require collateral. Historically, our credit losses have not been significant given our application of the constraint to variable consideration. The allowance for credit losses was zero as of September 30, 2024 and December 31, 2023. Adjustments for implicit price concessions attributable to variable consideration, as discussed below, are incorporated into the measurement of the accounts receivable balances and are not part of the allowance for credit losses.
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| Property and Equipment | 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 and ten 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. Our leasehold improvements primarily relate to our office and laboratory facilities in Friendswood, Texas, Phoenix, Arizona and Pittsburgh, Pennsylvania, and are generally being depreciated through the end of the lease terms in 2025 and 2033, respectively. Maintenance and repairs are charged to expense as incurred, and material improvements are capitalized. Interest costs incurred during the construction of major capital projects are capitalized until the underlying asset is ready for its intended use, at which point the capitalized interest costs are amortized using the straight-line method over the estimated useful life of the underlying asset. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations in the period realized.
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| Goodwill | Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. In accordance with ASC Topic 350, Intangibles—Goodwill and Other, our goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in circumstances indicate that it may be impaired. We perform annual impairment reviews of our goodwill balance during the fourth quarter of each fiscal year. We may perform a qualitative assessment to determine if it is necessary to perform a quantitative impairment test. If we determine that a quantitative impairment test is necessary, we apply the guidance in Accounting Standards Update (“ASU”) No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, by comparing the fair value of the reporting unit to its carrying value, including the goodwill. If the carrying value exceeds the fair value, we recognize an impairment loss for the amount by which the carrying value exceeds fair value, up to the total amount of goodwill allocated to the reporting unit. We did not incur any goodwill impairment losses in any of the periods presented. Factors that could result in a future impairment of goodwill include declines in the price of our common stock, increased competition, changes in macroeconomic developments, unfavorable government or regulatory developments and changes in coverage or reimbursement conditions.
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| Accrued Compensation | We accrue for liabilities under discretionary employee and executive bonus plans. Our estimated compensation liabilities are based on progress against corporate objectives approved by our board of directors, compensation levels of eligible individuals and target bonus percentage levels. Our board of directors reviews and evaluates the performance against these objectives and ultimately determines the actual achievement levels attained. We also accrue for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets. As of September 30, 2024 and December 31, 2023, we accrued approximately $17.9 million and $21.7 million, respectively, for liabilities associated with these bonus plans. These amounts are classified as current or noncurrent accrued liabilities in the unaudited condensed consolidated balance sheets based on the expected timing of payment.
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| Stock-Based Compensation | Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model. For restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), the fair value is equal to the closing price of our common stock on the date of grant. For awards with graded vesting and only service conditions, we recognize compensation costs on a straight-line basis over the requisite service period of the awards. For options and RSUs, the requisite service period is generally the award’s vesting period (typically four years). PSUs vest upon the achievement of certain performance conditions and the provision of service with us through a specified period. Accruals of compensation cost for PSUs are based on the probable outcome of the performance conditions and are reassessed each reporting period. We recognize compensation cost for PSUs separately for each vesting tranche on a ratable basis over the requisite service period. The requisite service period for PSUs is based on an analysis of vesting requirements and performance conditions for the particular award. Certain employees are entitled to acceleration of vesting of a portion of their awards upon retirement, subject to age, service and notice requirements. In these cases, the requisite service period takes into consideration the employee’s retirement eligibility, and is reassessed at each reporting date. For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date. Forfeitures are accounted for as they occur.
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| Comprehensive Income (Loss) | Comprehensive income (loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is made up of net income (loss) plus net unrealized gain (loss) on marketable investment securities, which is our only other item of other comprehensive income (loss).
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| Accounting Pronouncements Yet to be Adopted | In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for the Company prospectively to all annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosure, which require public companies disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. The guidance is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The guidance is applied retrospectively to all periods presented in the financial statements, unless it is impracticable. We are currently evaluating the impact this update will have on our consolidated financial statements and disclosures. We have evaluated all other recently issued, but not yet effective, accounting pronouncements and do not believe that these accounting pronouncements will have any material impact on our consolidated financial statements or disclosures upon adoption.
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Revenue (Tables) |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Disaggregation of Revenue | The table below provides the disaggregation of revenue by type (in thousands):
(1)Consists of DecisionDx-Melanoma, DecisionDx-SCC and our Diagnostic Gene Expression Profile offering (MyPath Melanoma and DiffDx-Melanoma). (2)Consists of TissueCypher Barrett’s Esophagus Test, DecisionDx-UM and IDgenetix.
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| Schedule of Concentration of Risk, by Risk Factor | Our significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows:
* Less than 10%
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Earnings (Loss) Per Share (Tables) |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Computation of Basic and Diluted Earnings (Loss) Per Share | The following table shows the computation of basic and diluted earnings (loss) per share for the following three and nine months ended September 30, 2024 and 2023 (in thousands, except per share data):
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| Schedule of Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share | The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in our calculation of diluted earnings (loss) per share for the three and nine months ended September 30, 2024 and 2023 because to do so would be antidilutive. With regard to the PSUs, we assume that the associated performance targets will be met at the target level of performance for purposes of calculating diluted net income per common share until such time that it is probable that actual performance will be above or below target (in thousands):
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Marketable Investment Securities (Tables) |
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| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Debt Securities, Available-for-Sale | The following tables present our available-for-sale debt securities (in thousands):
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Property and Equipment, Net (Tables) |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment, Net | Property and equipment, net consisted of the following (in thousands):
(1)On February 9, 2024, we purchased approximately 23 acres of land in Friendswood, Texas for purpose of developing a commercial office building to be used as our future corporate headquarters. Depreciation expense was recorded in the unaudited condensed consolidated statements of operations as follows (in thousands):
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Goodwill and Other Intangible Assets, Net (Tables) |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Finite-Lived Intangible Assets | Our other intangible assets, net consist of the following (in thousands):
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Other Accrued and Current Liabilities (Tables) |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued And Current Liabilities | Other accrued and current liabilities consisted of the following (in thousands):
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Long-Term Debt (Tables) |
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Instruments | Our long-term debt as of September 30, 2024 is presented in the table below (in thousands):
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| Schedule of Maturities of Long-Term Debt | Future maturities of principal amounts on long-term debt as of September 30, 2024 are as follows (in thousands):
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| Schedule of Components of Interest Expense | The table below shows the components of interest expense for the three and nine months ended September 30, 2024 (in thousands):
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Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The tables below provide information, by level within the fair value hierarchy, of our financial assets and liabilities that are accounted for at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):
(1)Classified as “Cash and cash equivalents” in the unaudited condensed consolidated balance sheets. (2)Classified as “Marketable investment securities” in the unaudited condensed consolidated balance sheets. (3)Current portion, if any, classified as “Other accrued and current liabilities” in the unaudited condensed consolidated balance sheets.
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Stock Incentive Plans and Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Share-based Payment Arrangement on Stock Option Activity | Stock option activity under our stock plans for the nine months ended September 30, 2024 is set forth below:
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| Schedule of Share-based Payment Arrangement on Restricted Stock Units | The following table summarizes our RSU activity for the nine months ended September 30, 2024:
(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 71,944 for the nine months ended September 30, 2024.
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| Schedule of Share-Based Payment Arrangement, Performance Shares, Activity | The following table summarizes our PSU activity for the nine months ended September 30, 2024:
(1)The aggregate number of shares withheld upon vesting for employee tax obligations was 30,046 for the nine months ended September 30, 2024.
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| Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table sets forth the assumptions used to determine the fair value of stock options:
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| Schedule of Share-based Payment Award, ESPP, Valuation Assumptions | The following table sets forth assumptions used to determine the fair value of the purchase rights issued under the ESPP:
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| Schedule of Share-based Payment Arrangement, Expensed and Capitalized, Amount | Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows (in thousands):
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Summary of Significant Accounting Policies (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
| Class of Stock [Line Items] | |||||
| Accumulated deficit | $ 209,716,000 | $ 209,716,000 | $ 218,371,000 | ||
| Cash and cash equivalents | 94,959,000 | 94,959,000 | 98,841,000 | ||
| Marketable investment securities | 184,826,000 | 184,826,000 | 144,258,000 | ||
| Allowance for credit losses | 0 | 0 | 0 | ||
| Goodwill impairment loss | 0 | $ 0 | 0 | $ 0 | |
| Accrued bonuses | $ 17,900,000 | $ 17,900,000 | $ 21,700,000 | ||
| Stock options | |||||
| Class of Stock [Line Items] | |||||
| Service period | 4 years | ||||
| Restricted Stock Units (RSUs) | |||||
| Class of Stock [Line Items] | |||||
| Service period | 4 years | ||||
| Minimum | |||||
| Class of Stock [Line Items] | |||||
| Property and equipment, useful life (in years) | 5 years | 5 years | |||
| Maximum | |||||
| Class of Stock [Line Items] | |||||
| Property and equipment, useful life (in years) | 10 years | 10 years | |||
Revenue - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Revenue from Contract with Customer [Abstract] | ||||
| Number of days contract with customer is generally paid | 30 days | |||
| Variable consideration adjustments included in revenue | $ (0.6) | $ 0.9 | $ (1.3) | $ (3.1) |
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Disaggregation of Revenue [Line Items] | ||||
| Total net revenues | $ 85,782 | $ 61,493 | $ 245,758 | $ 153,668 |
| Dermatologic | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total net revenues | 65,060 | 51,151 | 193,223 | 130,097 |
| Non-Dermatologic | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total net revenues | $ 20,722 | $ 10,342 | $ 52,535 | $ 23,571 |
Earnings (Loss) Per Share - Schedule of Basic and Diluted (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
Sep. 30, 2024 |
Jun. 30, 2024 |
Mar. 31, 2024 |
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Numerator: | ||||||||
| Net income (loss) | $ 2,269 | $ 8,920 | $ (2,534) | $ (6,905) | $ (18,777) | $ (29,204) | $ 8,655 | $ (54,886) |
| Denominator: | ||||||||
| Weighted-average common shares outstanding, basic (in shares) | 27,840 | 26,834 | 27,659 | 26,725 | ||||
| Assumed exercise of stock options (in shares) | 457 | 0 | 447 | 0 | ||||
| Assumed vesting of RSUs (in shares) | 1,041 | 0 | 663 | 0 | ||||
| Assumed vesting of PSUs (in shares) | 42 | 0 | 55 | 0 | ||||
| Assumed issuance of shares under the ESPP (in shares) | 21 | 0 | 14 | 0 | ||||
| Weighted-average common shares outstanding, diluted (in shares) | 29,401 | 26,834 | 28,838 | 26,725 | ||||
| Earnings (loss) per share: | ||||||||
| Basic (in dollars per share) | $ 0.08 | $ (0.26) | $ 0.31 | $ (2.05) | ||||
| Diluted (in dollars per share) | $ 0.08 | $ (0.26) | $ 0.30 | $ (2.05) | ||||
Marketable Investment Securities - Schedule of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Debt Securities, Available-for-Sale [Line Items] | ||
| Amortized Cost | $ 184,353 | $ 144,122 |
| Unrealized gains | 473 | 143 |
| Unrealized losses | 0 | (7) |
| Estimated Fair Value | 184,826 | 144,258 |
| U.S. government securities | ||
| Debt Securities, Available-for-Sale [Line Items] | ||
| Amortized Cost | 184,353 | 144,122 |
| Unrealized gains | 473 | 143 |
| Unrealized losses | 0 | (7) |
| Estimated Fair Value | $ 184,826 | $ 144,258 |
Marketable Investment Securities - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
| Investments, Debt and Equity Securities [Abstract] | |||||
| Realized gain (loss) on sale of investment | $ 0 | $ 0 | $ 0 | $ 0 | |
| Impairment loss | 0 | $ 0 | 0 | $ 0 | |
| Allowance for credit loss | $ 0 | $ 0 | $ 0 | ||
Property and Equipment, Net - Schedule of Property and Equipment (Details) $ in Thousands |
Feb. 09, 2024
a
|
Sep. 30, 2024
USD ($)
|
Dec. 31, 2023
USD ($)
|
|---|---|---|---|
| Property, Plant and Equipment [Line Items] | |||
| Total | $ 55,858 | $ 33,544 | |
| Less accumulated depreciation | (11,475) | (8,111) | |
| Property and equipment, net | 44,383 | 25,433 | |
| Acquisition of land (acres) | a | 23 | ||
| Land | |||
| Property, Plant and Equipment [Line Items] | |||
| Total | 7,245 | 0 | |
| Lab equipment | |||
| Property, Plant and Equipment [Line Items] | |||
| Total | 22,201 | 16,472 | |
| Leasehold improvements | |||
| Property, Plant and Equipment [Line Items] | |||
| Total | 14,438 | 9,990 | |
| Computer equipment | |||
| Property, Plant and Equipment [Line Items] | |||
| Total | 5,103 | 4,060 | |
| Furniture and fixtures | |||
| Property, Plant and Equipment [Line Items] | |||
| Total | 3,521 | 2,385 | |
| Construction-in-progress | |||
| Property, Plant and Equipment [Line Items] | |||
| Total | $ 3,350 | $ 637 |
Property and Equipment, Net - Schedule of Depreciation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | $ 1,269 | $ 902 | $ 3,463 | $ 2,364 |
| Cost of sales (exclusive of amortization of acquired intangible assets) | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | 766 | 505 | 2,058 | 1,205 |
| Research and development | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | 89 | 84 | 258 | 246 |
| Selling, general and administrative | ||||
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation | $ 414 | $ 313 | $ 1,147 | $ 913 |
Goodwill and Other Intangible Assets, Net - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||
| Goodwill | $ 10,700,000 | $ 10,700,000 | $ 10,700,000 | ||
| Goodwill accumulated impairment | 0 | 0 | $ 0 | ||
| Amortization expense of intangible assets | $ 2,272,000 | $ 2,272,000 | $ 6,766,000 | $ 6,742,000 | |
Goodwill and Other Intangible Assets, Net - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Gross carrying value | $ 125,880 | $ 125,880 |
| Accumulated amortization | (26,003) | (19,237) |
| Net | 99,877 | 106,643 |
| Developed technology | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Gross carrying value | 125,317 | 125,317 |
| Accumulated amortization | (25,684) | (19,003) |
| Net | $ 99,633 | $ 106,314 |
| Weighted-Average Remaining Life (in years) | 11 years 6 months | 12 years 2 months 12 days |
| Assembled workforce | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Gross carrying value | $ 563 | $ 563 |
| Accumulated amortization | (319) | (234) |
| Net | $ 244 | $ 329 |
| Weighted-Average Remaining Life (in years) | 2 years 2 months 12 days | 2 years 10 months 24 days |
Other Accrued and Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Clinical studies | $ 3,023 | $ 3,475 |
| Accrued service fees | 3,410 | 2,097 |
| ESPP contributions | 577 | 896 |
| Accrued benefits | 418 | 199 |
| Other | 640 | 650 |
| Total | $ 8,068 | $ 7,317 |
Long-Term Debt - Schedule of Long-term Debt Instruments (Details) - USD ($) |
Sep. 30, 2024 |
Dec. 31, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Term debt | $ 10,200,000 | |
| Unamortized discount | (185,000) | |
| Total long-term debt | 10,015,000 | $ 0 |
| Less: Current portion of long-term debt | 0 | |
| Total | $ 10,015,000 | $ 0 |
Long-Term Debt - Schedule of Maturities of Long-Term Debt (Details) $ in Thousands |
Sep. 30, 2024
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2024 | $ 0 |
| 2025 | 278 |
| 2026 | 3,333 |
| 2027 | 3,333 |
| 2028 | 3,056 |
| Total | $ 10,000 |
Long-Term Debt - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Mar. 26, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Debt Instrument [Line Items] | ||||
| Carrying amount of borrowings | $ 10,200,000 | |||
| Proceeds from term loan draw | $ 10,000,000 | $ 0 | ||
| Interest expense | $ 0 | $ 0 | ||
| 2024 Loan and Security Agreement | Secured Debt | ||||
| Debt Instrument [Line Items] | ||||
| Aggregate principal amount | $ 10,000,000 | |||
| Basis spread on variable rate | 0.25% | |||
| Debt instrument, interest rate, stated percentage | 6.00% | |||
| Final payment, percentage of principal | 2.00% | |||
| Proceeds from term loan draw | $ 10,000,000 | |||
| Final payment | $ 200,000 | |||
| Effective interest rate | 8.60% | |||
| 2024 Loan and Security Agreement | Secured Debt | Prior to March 26, 2026 | ||||
| Debt Instrument [Line Items] | ||||
| Prepayment fee percentage | 1.50% | |||
| 2024 Loan and Security Agreement | Secured Debt | Line of Credit | ||||
| Debt Instrument [Line Items] | ||||
| Maximum borrowing capacity | $ 25,000,000 | |||
| Proceeds from line of credit draw | $ 0 | |||
Long-Term Debt - Schedule of Components of Interest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2024 |
|
| Debt Disclosure [Abstract] | ||
| Interest expense on long term debt | $ 229 | $ 470 |
| Less: Capitalized interest | (37) | (49) |
| Total | $ 192 | $ 421 |
Leases - Narrative (Details) $ in Thousands |
9 Months Ended | ||
|---|---|---|---|
|
Aug. 01, 2024
USD ($)
ft²
|
Sep. 30, 2024
USD ($)
|
Sep. 30, 2023
USD ($)
|
|
| Leases [Abstract] | |||
| Operating lease, expansion option, additional area | ft² | 23,821 | ||
| Lessee, operating lease, recognition of lease incentives | $ 1,300 | ||
| Operating lease assets obtained in exchange for lease obligations | $ 600 | $ 607 | $ 499 |
Fair Value Measurements - Narrative (Details) - AltheaDx, Inc - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
Dec. 31, 2023 |
|
| Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||||
| Additional consideration payable based on achievement of certain commercial milestones | $ 75,000,000.0 | $ 75,000,000.0 | |||
| Contingent consideration, portion not paid | $ 37,500,000 | ||||
| Contingent consideration, catch up payment not paid | 17,500,000 | ||||
| Potential payment obligation | 20,000,000 | 20,000,000 | |||
| Earnout payment, amount due | 0 | 0 | |||
| Value of contingent consideration | 0 | 0 | $ 0 | ||
| Recognized (gain) loss of contingent consideration | $ 0 | $ 0 | $ 0 | $ 0 | |
Stock Incentive Plans and Stock-Based Compensation - Schedule of Assumptions Used in Fair Value of Stock Options and ESPP (Details) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Stock options | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Average expected term (years) | 5 years | 5 years |
| Expected stock price volatility, minimum | 80.20% | 75.57% |
| Expected stock price volatility, maximum | 80.20% | 76.01% |
| Risk-free interest rate, minimum | 4.39% | 3.57% |
| Risk-free interest rate, maximum | 4.39% | 3.57% |
| Dividend yield | 0.00% | 0.00% |
| ESPP | Employee Stock Purchase Plan | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Average expected term (years) | 1 year 2 months 12 days | 1 year 3 months 18 days |
| Expected stock price volatility, minimum | 59.85% | 93.17% |
| Expected stock price volatility, maximum | 130.95% | 130.95% |
| Risk-free interest rate, minimum | 3.82% | 4.74% |
| Risk-free interest rate, maximum | 5.33% | 5.33% |
| Dividend yield | 0.00% | 0.00% |
Stock Incentive Plans and Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total stock-based compensation expense | $ 13,027 | $ 13,043 | $ 38,881 | $ 39,417 |
| Cost of sales (exclusive of amortization of acquired intangible assets) | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total stock-based compensation expense | 1,464 | 1,245 | 4,179 | 3,719 |
| Research and development | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total stock-based compensation expense | 2,345 | 2,682 | 7,611 | 7,755 |
| Selling, general and administrative | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total stock-based compensation expense | $ 9,218 | $ 9,116 | $ 27,091 | $ 27,943 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2024 |
Sep. 30, 2023 |
Sep. 30, 2024 |
Sep. 30, 2023 |
|
| Income Tax Disclosure [Abstract] | ||||
| Effective income tax rate | 72.60% | 0.00% | 36.70% | 0.00% |