View Filing Data

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Registrant Name	PROGENITY, INC.
Entity Central Index Key	0001580063
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		46,548,035
Entity File Number	001-39334
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-3950390
Entity Address, Address Line One	4330 La Jolla Village Drive
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92122
City Area Code	855
Local Phone Number	293-2639
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	PROG
Security Exchange Name	NASDAQ

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 113,613	$ 33,042
Accounts receivable, net	14,382	22,189
Inventory	10,246	10,937
Income tax receivable	15,596	634
Prepaid expenses and other current assets	6,130	7,846
Total current assets	159,967	74,648
Property and equipment, net	15,725	15,891
Other assets	198	198
Goodwill	6,219	6,219
Other intangible assets, net	4,307	4,771
Total assets	186,416	101,727
Current liabilities:
Accounts payable	15,679	15,754
Accrued expenses and other current liabilities	78,410	83,615
Current portion of mortgages payable	247	241
Current portion of capital lease obligations	516	727
Total current liabilities	94,852	100,337
Capital lease obligations, net of current portion	156	358
Mortgages payable, net of current portion	2,950	3,081
Note payable to related party, net of unamortized discount of $5,930 and $6,034 as of June 30, 2020 and December 31, 2019, respectively	69,071	68,966
Other long-term liabilities	36,547	12,859
Total liabilities	203,576	185,601
Commitments and contingencies
Stockholders' deficit:
Common stock – $0.001 par value. 350,000,000 and 300,000,000 shares authorized as of June 30, 2020 and December 31, 2019, respectively; 50,022,606 and 8,451,415 shares issued as of June 30, 2020 and December 31, 2019, respectively; 46,548,035 and 4,976,843 shares outstanding as of June 30, 2020 and December 31, 2019, respectively	50	9
Additional paid-in capital	420,242	283,260
Accumulated deficit	(418,681)	(348,478)
Treasury stock – at cost; 3,474,572 shares of common stock as of June 30, 2020 and December 31, 2019	(18,771)	(18,771)
Total stockholders' deficit	(17,160)	(83,874)
Total liabilities and stockholders' deficit	$ 186,416	101,727
Series A Preferred Stock
Stockholders' deficit:
Preferred Stock		4
Series B Preferred Stock
Stockholders' deficit:
Preferred Stock		$ 102

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Note payable, unamortized discount	$ 5,930	$ 6,034
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	350,000,000	300,000,000
Common stock, shares issued	50,022,606	8,451,415
Common stock, shares outstanding	46,548,035	4,976,843
Preferred stock, shares authorized	10,000,000	130,155,000
Treasury stock, at cost shares	3,474,572	3,474,572
Series A Preferred Stock
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	0	4,120,000
Preferred stock, shares issued	0	4,120,000
Preferred stock, shares outstanding	0	4,120,000
Series B Preferred Stock
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	0	126,035,000
Preferred stock, shares issued	0	101,867,405
Preferred stock, shares outstanding	0	101,867,405

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Revenues	$ 17,266	$ 57,230	$ 34,094	$ 104,737
Cost of sales	21,835	26,113	48,405	50,534
Gross profit (loss)	(4,569)	31,117	(14,311)	54,203
Operating expenses:
Research and development	12,234	16,463	23,474	31,711
Selling and marketing	12,736	14,680	27,172	30,247
General and administrative	17,181	14,272	34,289	28,550
Total operating expenses	42,151	45,415	84,935	90,508
Loss from operations	(46,720)	(14,298)	(99,246)	(36,305)
Interest expense	(2,507)	(2,282)	(4,809)	(4,551)
Interest and other income (expense), net	(3,556)	171	(3,576)	428
Loss before income taxes	(52,783)	(16,409)	(107,631)	(40,428)
Income tax benefit			(37,696)
Net loss	(52,783)	(16,409)	(69,935)	(40,428)
Dividend paid to preferred stockholders	(268)		(268)	(3,652)
Net loss attributable to common stockholders	$ (53,051)	$ (16,409)	$ (70,203)	$ (44,080)
Net loss per share attributable to common stockholders, basic and diluted	$ (6.11)	$ (3.34)	$ (10.26)	$ (9.16)
Weighted average number of shares outstanding used in calculating net loss per share attributable to common stockholders, basic and diluted	8,687,250	4,915,485	6,840,321	4,811,143

Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) $ in Thousands	Total	Initial Public Offering	Cumulative effect, period of adoption, adjustment	Common Stock	Common Stock Initial Public Offering	Preferred Stock Series A and A-1 Preferred Stock	Preferred Stock Series B Preferred Stock	Additional Paid-In Capital	Additional Paid-In Capital Initial Public Offering	Accumulated Deficit	Accumulated Deficit Cumulative effect, period of adoption, adjustment	Treasury Stock
Beginning Balance at Dec. 31, 2018	$ (36,968)			$ 8		$ 6	$ 14	$ 124,244		$ (142,469)		$ (18,771)
Beginning Balance, shares at Dec. 31, 2018				8,112,581		5,620,000	14,164,306					(3,474,572)
Issuance of common stock upon exercise of options	322							322
Issuance of common stock upon exercise, shares				268,549
Stock-based compensation expense	555							555
Dividends paid	(4,500)									(4,500)
Net loss	(24,019)									(24,019)
Ending Balance at Mar. 31, 2019	(40,944)		$ 23,666	$ 8		$ 6	$ 14	125,121		(147,322)	$ 23,666	$ (18,771)
Ending Balance, shares at Mar. 31, 2019				8,381,130		5,620,000	14,164,306					(3,474,572)
Beginning Balance at Dec. 31, 2018	(36,968)			$ 8		$ 6	$ 14	124,244		(142,469)		$ (18,771)
Beginning Balance, shares at Dec. 31, 2018				8,112,581		5,620,000	14,164,306					(3,474,572)
Net loss	(40,428)
Ending Balance at Jun. 30, 2019	(56,636)			$ 8		$ 6	$ 14	125,838		(163,731)		$ (18,771)
Ending Balance, shares at Jun. 30, 2019				8,397,066		5,620,000	14,164,306					(3,474,572)
Beginning Balance at Mar. 31, 2019	(40,944)		$ 23,666	$ 8		$ 6	$ 14	125,121		(147,322)	$ 23,666	$ (18,771)
Beginning Balance, shares at Mar. 31, 2019				8,381,130		5,620,000	14,164,306					(3,474,572)
Issuance of common stock upon exercise of options	120							120
Issuance of common stock upon exercise, shares				15,936
Stock-based compensation expense	597							597
Net loss	(16,409)									(16,409)
Ending Balance at Jun. 30, 2019	(56,636)			$ 8		$ 6	$ 14	125,838		(163,731)		$ (18,771)
Ending Balance, shares at Jun. 30, 2019				8,397,066		5,620,000	14,164,306					(3,474,572)
Beginning Balance at Dec. 31, 2019	(83,874)			$ 9		$ 4	$ 102	283,260		(348,478)		$ (18,771)
Beginning Balance, shares at Dec. 31, 2019				8,451,415		4,120,000	101,867,405					(3,474,572)
Issuance of common stock upon exercise of options	103							103
Issuance of common stock upon exercise, shares				56,729
Issuance of stock, net	14,072						$ 6	14,066
Issuance of stock, net, shares							6,033,796
Stock-based compensation expense	2,057							2,057
Net loss	(17,152)									(17,152)
Ending Balance at Mar. 31, 2020	(84,794)			$ 9		$ 4	$ 108	299,486		(365,630)		$ (18,771)
Ending Balance, shares at Mar. 31, 2020				8,508,144		4,120,000	107,901,201					(3,474,572)
Beginning Balance at Dec. 31, 2019	$ (83,874)			$ 9		$ 4	$ 102	283,260		(348,478)		$ (18,771)
Beginning Balance, shares at Dec. 31, 2019				8,451,415		4,120,000	101,867,405					(3,474,572)
Issuance of common stock upon exercise, shares	77,609
Net loss	$ (69,935)
Ending Balance at Jun. 30, 2020	(17,160)			$ 50				420,242		(418,681)		$ (18,771)
Ending Balance, shares at Jun. 30, 2020				50,022,606								(3,474,572)
Beginning Balance at Mar. 31, 2020	(84,794)			$ 9		$ 4	$ 108	299,486		(365,630)		$ (18,771)
Beginning Balance, shares at Mar. 31, 2020				8,508,144		4,120,000	107,901,201					(3,474,572)
Issuance of common stock upon exercise of options	45							45
Issuance of common stock upon exercise, shares				20,880
Issuance of stock, net	9,933	$ 88,665			$ 7		$ 4	9,929	$ 88,658
Issuance of stock, net, shares					6,666,667		4,444,444
Automatic conversion of preferred stock				$ 33		$ (4)	$ (112)	83
Automatic conversion of preferred stock, shares				33,443,562		(4,120,000)	(112,345,645)
Issuance of common stock upon conversion of debt	18,750			$ 1				18,749
Issuance of common stock upon conversion of debt, shares				1,250,000
Issuance of Stock Purchase Warrants								268		(268)
Issuance of common stock upon vesting of restricted stock unit awards, shares				133,353
Stock-based compensation expense	3,024							3,024
Net loss	(52,783)									(52,783)
Ending Balance at Jun. 30, 2020	$ (17,160)			$ 50				$ 420,242		$ (418,681)		$ (18,771)
Ending Balance, shares at Jun. 30, 2020				50,022,606								(3,474,572)

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities:
Net loss	$ (69,935)	$ (40,428)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash revenue reserve	23,729	513
Depreciation and amortization	2,501	2,303
Stock-based compensation expense	5,081	1,152
Loss on extinguishment of convertible note	3,401
Amortization of debt discount	1,330	802
Inventory write-down	7	64
Loss on disposal of property and equipment	18
Change in fair value of derivative liability	126
Changes in operating assets and liabilities:
Accounts receivable, net	7,808	(3,565)
Inventory	685	(2,494)
Income tax receivable	(14,961)	5,795
Prepaid expenses and other current assets	674	(3,680)
Other assets		(62)
Accounts payables	380	3,011
Accrued expenses and other liabilities	(5,879)	(805)
Other long-term liabilities	632	(132)
Net cash used in operating activities	(44,403)	(37,526)
Investing Activities:
Purchases of property and equipment	(1,627)	(1,753)
Purchases of short-term investments		(11,214)
Proceeds from sale of short-term investments		31,414
Proceeds from sale of equity method investment		50
Net cash (used in) provided by investing activities	(1,627)	18,497
Financing Activities:
Proceeds from issuance of common stock, net	90,937	442
Proceeds from issuance of Series B Preferred Stock, net	21,307
Proceeds from issuance of convertible note, net	14,895
Dividends paid		(4,500)
Principal payments on mortgages payable	(125)	(114)
Principal payments on capital lease obligations	(413)	(599)
Net cash provided by (used in) financing activities	126,601	(4,771)
Net increase (decrease) in cash and cash equivalents	80,571	(23,800)
Cash and cash equivalents at beginning of period	33,042	49,005
Cash and cash equivalents at end of period	113,613	25,205
Supplemental disclosure of cash flow information:
Cash paid for interest	1,901	3,749
Cash paid for income taxes	54	6
Supplemental schedule of non-cash investing and financing activities:
Conversion of convertible note	18,750
Issuance of preferred stock in settlement of interest payable	2,698
Equity offering costs incurred but not paid	2,133
Issuance of stock options in settlement of accrued bonuses	754
Purchases of property and equipment in accounts payable	$ 262	395
Capital lease obligations		$ 76

Organization and Description of Business

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Description of Business

1. Organization and Description of Business

Progenity, Inc. (the “Company” or “Progenity”), a Delaware corporation, commenced operations in 2010 with its corporate office located in San Diego, California. Progenity’s primary operations include a licensed Clinical License Improvement Amendment and College of American Pathologists certified laboratory located in Michigan specializing in the molecular testing markets serving women’s health providers in the obstetric, gynecological, fertility, and maternal fetal medicine specialty areas in the United States.

The Company has expertise in the national reference laboratory, clinical genetics, laboratory molecular testing, and biotechnology markets. Distribution is managed by a dedicated women’s health physician sales force and a field operations team who support all logistical functions in receiving clinical samples to the laboratory for analysis. The Company’s core business is focused on the prenatal carrier screening and noninvasive prenatal test market, targeting preconception planning, and routine pregnancy management for genetic disease risk assessment. Through its affiliation with Mattison Pathology, LLP (“Mattison”), a Texas limited liability partnership doing business as Avero Diagnostics (“Avero”), located in Lubbock and Dallas, Texas, the Company’s operations have expanded to provide anatomic and molecular pathology testing products in the United States.

On June 10, 2020, the Company amended its certificate of incorporation to reflect a one-for-6.178 reverse stock split of the Company’s common stock. The par value and the number of authorized shares of common stock were not adjusted as a result of the reverse stock split. All issued and outstanding shares of common stock and related per share amounts contained in the accompanying condensed consolidated financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. The reverse stock split resulted in an adjustment to the respective Series A and B preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.

On June 23, 2020, the Company completed the initial public offering of its common stock (the “IPO”). In the IPO, the Company issued and sold 6,666,667 shares of its common stock, at a price to the public of $15.00 per share. The Company received approximately $88.7 million in net proceeds, after deducting underwriting discounts and commissions and other offering expenses payable by the Company. In connection with the IPO, on June 23, 2020, all outstanding Series A and B preferred stock and the outstanding convertible promissory note converted into shares of common stock and the outstanding warrant to purchase shares of convertible preferred stock became exercisable for shares of common stock.

Liquidity

As of June 30, 2020, the Company had cash and cash equivalents of $113.6 million and an accumulated deficit of $418.7 million. For the six months ended June 30, 2020, the Company reported a net loss of $69.9 million and cash used in operating activities of $44.4 million. The Company’s primary sources of capital have historically been the sale of common stock, private placements of preferred stock and incurrence of debt. As of June 30, 2020, the Company had a $75.0 million term loan outstanding with a private equity firm (see Note 7), and mortgages outstanding of $3.2 million (see Note 8). Management does not believe that the current available cash and cash equivalents will be sufficient to fund the Company’s planned expenditures and meet its obligations for at least 12 months following the financial statement issuance date without raising additional funding. As a result, there is substantial doubt about the Company’s ability to continue as a going concern for 12 months following the issuance date of the condensed consolidated financial statements for the three and six months ended June 30, 2020. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funding. Management believes that the Company’s liquidity position provides sufficient runway to achieve critical R&D pipeline milestones and show continued progress in the molecular testing activities in 2020. Management intends to raise additional capital through equity offerings and/or debt financings or from other potential sources of liquidity, which may include new collaborations, licensing or other commercial agreements for one or more of our research programs or patent portfolios. Adequate funding, if needed, may not be available to the Company on acceptable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If the Company is unable to raise capital when needed or on attractive terms, it would be forced to delay, reduce, or eliminate its research and development programs or other operations. If any of these events occur, the Company’s ability to achieve its operational goals would be adversely affected.

Uncertainties Related to the COVID-19 Pandemic

In March 2020, the World Health Organization declared the novel coronavirus disease (“COVID-19”) a pandemic. The COVID‑19 pandemic has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets. The Company has been materially and negatively affected by the COVID-19 pandemic; however, the extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance, including its ability to execute its business strategies and initiatives in the expected time frame, will depend on future developments, including the duration and spread of the pandemic and related restrictions on travel and transports, all of which are uncertain and cannot be predicted. The Company could be negatively affected by the widespread outbreak of an illness or any other communicable disease, or any other public health crisis that results in economic and trade disruptions, including the disruption of global supply chains. An extended period of global supply chain and economic disruption could materially affect the Company’s business, results of operations, access to sources of liquidity and financial condition.

The estimates used for, but not limited to, determining the amount to be collected for accounts receivable, fair value of long-lived assets, and fair value of goodwill could be impacted by the pandemic. While the full impact of COVID-19 is unknown at this time, the Company has made appropriate estimates based on the facts and circumstances available as of the reporting date. These estimates may change as new events occur and additional information is obtained.

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The condensed consolidated financial statements include the accounts of Progenity, Inc., its wholly owned subsidiaries, and an affiliated professional partnership with Avero with respect to which the Company currently has a specific management arrangement. The Company has determined that Avero is a variable interest entity and that the Company is the primary beneficiary resulting in the consolidation of Avero as required by the accounting guidance for consolidation (see Note 3). All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s final prospectus filed with the Securities and Exchange Commission on June 22, 2020.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheet as of June 30, 2020, the statements of operations and the statements of stockholders’ deficit for the three and six months ended June 30, 2020 and 2019 and the statements of cash flows for the six months ended June 30, 2020 and 2019 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, that are necessary for the fair statement of the Company’s financial position as of June 30, 2020, and the results of its operations and its cash flows for the three and six months ended June 30, 2020 and 2019. The financial data and other information disclosed in these notes related to the three and six months ended June 30, 2020 and 2019 are also unaudited. The results for the three and six months ended June 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period, particularly in light of the COVID-19 pandemic and its impact on domestic and global economies. The balance sheet as of December 31, 2019 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim financial statements.

Use of Estimates

The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates include the estimate of variable consideration in connection with the recognition of revenue, the valuation of Series B preferred stock, the valuation of stock options, the valuation of goodwill and intangible assets, accrual for reimbursement claims and settlements, assessing future tax exposure and the realization of deferred tax assets, the useful lives and the recoverability of property and equipment. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes 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.

Operating Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker or decision-making group in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment. All revenues are attributable to U.S.-based operations and all assets are held in the United States.

Revenue Recognition

Revenue is recognized in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). In accordance with ASC 606, the Company follows 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.

Revenue is primarily derived from providing molecular testing products, which are reimbursed through arrangements with third-party payors, laboratory distribution partners, and amounts from individual patients. Third-party payors include commercial payors, such as health insurance companies, health maintenance organizations and government health benefit programs, such as Medicare and Medicaid. The Company’s contracts generally contain a single performance obligation, which is the delivery of the test results, and the Company satisfies its performance obligation at a point in time upon the delivery of the results, which then triggers the billing for the product. The amount of revenue recognized reflects the amount of consideration the Company expects to be entitled to (the “transaction price”) and considers the effects of variable consideration. Revenue is recognized when control of the promised product is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products.

The Company applies the following practical expedients and exemptions:

•

Incremental costs incurred to obtain a contract are expensed as incurred because the related amortization period would have been one year or less. The costs are included in selling and marketing expenses.

•

No adjustments to amounts of promised consideration are made for the effects of a significant financing component because the Company expects, at contract inception, that the period between the transfer of a promised good or service and customer payment for that good or service will be one year or less.

Payor Concentration

The Company relies upon reimbursements from third-party government payors and private-payor insurance companies to collect accounts receivable. The Company’s significant third-party payors and their related accounts receivable balances and revenues as a percentage of total accounts receivable balances and revenues are as follows:

	Percentage of Accounts Receivable
	June 30, 2020			December 31, 2019
Blue Shield of Texas		12.7	%		0.1	%
Government Health Benefits Programs		24.4	%		16.7	%
Aetna		6.2	%		6.0	%
Anthem		6.5	%		0.5	%
United Healthcare		8.3	%		31.5	%

	Percentage of Revenue
	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Blue Shield of Texas		41.9	%		12.7	%		42.2	%		14.5	%
Government Health Benefits Programs(1)		(14.4	)%		14.5	%		(26.6	)%		16.2	%
Aetna		13.8	%		7.6	%		12.9	%		7.6	%
Anthem		14.0	%		4.8	%		12.1	%		6.4	%
United Healthcare		4.8	%		40.1	%		4.4	%		31.3	%
____________
(1) The negative amounts presented in the percentage of revenues include accruals for reimbursement claims and settlements included in the estimates of variable consideration recorded during the three and six months ended June 30, 2020. Revenue recognized consider the effects of variable consideration, and include adjustments for estimates of disallowed cases, discounts, and refunds. The variable consideration includes reductions in revenues for the accrual for reimbursement claims and settlements, as described in Notes 4 and 9.

Accounts Receivable

Accounts receivable is recorded at the transaction price and considers the effects of variable consideration. The total consideration the Company expects to collect is an estimate and may be fixed or variable. Variable consideration includes reimbursement from third-party payors, laboratory distribution partners, and amounts from individual patients, and is adjusted for disallowed cases, discounts, and refunds using the expected value approach. The Company monitors these estimates at each reporting period based on actual cash collections in order to assess whether a revision to the estimate is required.

Net Loss Per Share

Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. The Company considers all series of preferred stock to be participating securities as the holders of such stock are entitled to receive non-cumulative dividends on an as-converted basis in the event that a dividend is paid on common stock. Under the two-class method, the net loss attributable to common stockholders is not allocated to the preferred stock as the holders of preferred stock do not have a contractual obligation to share in the Company’s losses. Under the two-class method, net income is attributed to common stockholders and participating securities based on their participation rights. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Net loss attributable to common stockholders is calculated by adjusting net loss with dividends to preferred stockholders, if any. As the Company has reported net losses for all periods presented, all potentially dilutive securities are antidilutive and, accordingly, basic net loss per share equals diluted net loss per share.

Comprehensive Loss

The Company did not have any other comprehensive income or loss for any of the periods presented, and therefore comprehensive loss was the same as the Company’s net loss.

Recent Accounting Pronouncements Adopted

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. The standard simplifies the accounting for share-based payments granted to nonemployees for goods and services and aligns most of the guidance on such payments to the nonemployees with the requirements for share-based payments granted to employees. The Company adopted the new accounting standard in fiscal year 2020 using the retrospective transition method for each period presented, which did not have a material impact on the condensed consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which removes certain exceptions to the general principles of Topic 740, Accounting for Income Taxes (“ASC 740”) and is intended to improve consistency and simplify GAAP in several other areas of ASC 740 by clarifying and amending existing guidance. The Company early adopted ASU No. 2019-12 for the quarter ended March 31, 2020, which did not have a material impact on the condensed consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of the new accounting standard did not have a material impact on the condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. In November 2019, the FASB issued ASU No. 2019-10, Leases (Topic 842): Effective Dates. The new standard is effective for the Company for annual reporting periods beginning after December 15, 2020. The Company is currently assessing the impact the new leasing standard will have on operations and financial position.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses, which requires the measurement of expected credit losses for financial instruments carried at amortized cost, such as accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this standard is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financing Instruments–Credit Losses, which included an amendment of the effective date. The standard is effective for the Company for annual reporting periods beginning after December 15, 2022. The Company does not expect the adoption of this standard to have a significant impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The new standard will simplify the measurement of goodwill by eliminating step two of the two-step impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. The new guidance requires an entity to compare the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The standard is effective for the Company for annual reporting periods beginning after December 15, 2021. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. The standard is effective for the Company for annual reporting periods beginning after December 15, 2019. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Variable Interest Entities

6 Months Ended

Jun. 30, 2020

Variable Interest Entities [Abstract]

Variable Interest Entity

3. Variable Interest Entity

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

The Company also entered into a management services arrangement that authorizes the Company to perform the management services in the manner that it deems reasonably appropriate to meet the day-to-day business needs of Avero. The Company’s management services include funding ongoing operational needs, directing activities related to contract negotiation, billing, human resources, and legal and administrative matters and processes, among others. In exchange for the management services provided, the Company is entitled to receive an annual management fee equal to the amount of the net operating income of Avero. The term of the agreement with Avero is 10 years, subject to automatic renewals. The agreement can be terminated by either party with a 90-day notice before the end of the term.

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

In December 2018, Avero entered into a settlement agreement with Cigna (the “Cigna settlement obligation”) whereby Avero agreed to pay an aggregate amount of $12.0 million with an upfront payment of $6.0 million and the remaining $6.0 million to be paid over 24 months, beginning in February 2019. The Company guaranteed the $12.0 million Cigna settlement obligation. The Company provided financial support to Avero in the amount of $0.8 million and $1.5 million during the three and six months ended June 30, 2020, respectively, and $0.8 million and $1.5 million during the three and six months ended June 30, 2019, respectively, related to the Cigna settlement obligation (see Note 9). The Company did not provide any additional financial support to Avero during the three or six months ended June 30, 2020 and 2019, other than the Cigna settlement obligation and agreed upon management services.

The following table presents the assets and liabilities of Avero that are included in the Company’s condensed consolidated balance sheets as of June 30, 2020 and December 31, 2019, in thousands. The creditors of Avero have no recourse to the general credit of the Company, with the exception of $1.8 million and $1.9 million in mortgage payable guaranteed by the Company as of June 30, 2020 and December 31, 2019, respectively (see Note 8), and $1.5 million and $3.0 million in remaining Cigna settlement obligation guaranteed by the Company as of June 30, 2020 and December 31, 2019, respectively. The assets and liabilities exclude intercompany balances that eliminate in consolidation:

	June 30, 2020		December 31, 2019
Assets of Avero that can only be used to settle obligations of Avero
Cash and cash equivalents	$	636	$	1,837
Accounts receivable, net		3,580		4,269
Inventory		2,221		2,572
Prepaid expenses and other current assets		1,268		1,181
Property and equipment, net		5,527		5,586
Other assets		30		30
Goodwill		6,219		6,219
Other intangible assets, net		4,307		4,771
Total assets of Avero that can only be used to settle obligations of Avero	$	23,788	$	26,465
Liabilities of Avero
Accounts payable	$	2,123	$	2,450
Accrued expenses and other accrued liabilities		4,409		5,630
Current portion of capital lease obligations		45		59
Current portion of mortgage payable		177		173
Capital lease obligations, net of current portion		27		50
Mortgage payable, net of current portion		1,638		1,733
Other long-term liabilities		468		467
Total liabilities of Avero	$	8,887	$	10,562

Revenues

6 Months Ended

Jun. 30, 2020

Revenue From Contract With Customer [Abstract]

Revenues

4. Revenues

Revenue is derived from contracts with healthcare insurers, government payors, laboratory partners and patients in connection with sales of prenatal genetic, anatomic or molecular pathology tests. The Company enters into contracts with healthcare insurers related to tests provided to patients who have health insurance coverage. Insurance carriers are considered third-party payors on behalf of the patients, and the patients who receive genetic, anatomic or molecular pathology test products are considered the customers. Tests may be billed to insurance carriers, patients, or a combination of insurance carriers and patients. The Company also sells tests to laboratory partners, which are also considered to be customers. The Company’s test volumes began to decrease in the second half of March 2020 as a result of the COVID-19 pandemic spreading in the United States and resulting limitations and reordering of priorities across the U.S. healthcare system. The Company expects test volumes to continue to be adversely affected by COVID-19 and cannot predict when volumes will return to normal.

In accordance with ASC 606, a performance obligation represents a promise in a contract to transfer a distinct good or service to a customer and the consideration should be allocated to each distinct performance obligation and recognized as revenue when or as the performance obligation is satisfied. The Company has evaluated its contracts with healthcare insurers, government payors, laboratory partners and patients and identified a single performance obligation in those contracts, the delivery of a test result. The Company satisfies its performance obligation at a point in time upon the delivery of the test result, at which point the Company can bill for its products. The amount of revenue recognized reflects the transaction price and considers the effects of variable consideration, which is discussed below.

Once the Company satisfies its performance obligations upon delivery of a test result and bills for the product, the timing of the collection of payments may vary based on the payment practices of the third-party payor. The Company bills patients directly for co-pays and deductibles that they are responsible for and also bills patients directly in cases where the customer does not have insurance.

The Company has established an accrual for refunds of payments previously made by healthcare insurers based on historical experience and executed settlement agreements with healthcare insurers. The refunds are accounted for as reductions in revenues in the statement of operations as an element of variable consideration. For example, during the three months ended June 30, 2020, the Company accrued $10.3 million for refunds to government payors related to reimbursement for the Company’s Preparent expanded carrier screening tests during 2019 and early 2020. In the United States, the American Medical Association (“AMA”) generally assigns specific billing codes for laboratory tests under a coding system known as Current Procedure Terminology (“CPT”), which we and our ordering healthcare providers must use to bill and receive reimbursement for our molecular tests. Effective January 1, 2019, the AMA issued a CPT code for genetic testing for severe inherited conditions that includes sequencing of at least 15 genes, which affects potential reimbursement for the Company’s Preparent expanded carrier screening tests. As part of the Company’s work to improve its compliance program, including its internal auditing and monitoring function, the Company commissioned a third-party review of its billing processes. In connection with that audit, the Company identified that it had not effectively transitioned to the implementation of the new CPT code in 2019, and as a result the Company received an overpayment of approximately $10.3 million from government payors during 2019 and early 2020. The final analysis of the amount of the overpayment is still being completed, but as a result of the analysis to date, during the three months ended June 30, 2020, the Company accrued $10.3 million for refunds to government payors. The Company’s deadline to report and return the overpayment to the government programs is 60 days from the time the overpayment was determined and quantified, thus the Company expects to repay this amount to the relevant government programs by early October 2020.

The transaction price is an estimate and may be fixed or variable. Variable consideration includes reimbursement from healthcare insurers, government payors, and patients and is adjusted for estimates of disallowed cases, discounts, and refunds using the expected value approach. Tests billed to healthcare insurers and directly to patients can take up to six months to collect and the Company may be paid less than the full amount billed or not paid at all. For insurance carriers and government payors, management utilizes the expected value method using a portfolio of relevant historical data for payors with similar reimbursement characteristics. The portfolio estimate is developed using historical reimbursement data from payors and patients, as well as known current reimbursement trends not reflected in the historical data. 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. The Company monitors these estimates at each reporting period based on actual cash collections and the status of settlement agreements with third-party payors, in order to assess whether a revision to the estimate is required. Both the initial estimate and any subsequent revision to the estimate contain uncertainty and require the use of judgment in the estimation of the transaction price and application of the constraint for variable consideration. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect revenue and earnings in the period such variances become known. The consideration expected from laboratory partners is generally a fixed amount.

The Company periodically updates its estimate of the variable consideration recognized for previously delivered performance obligations. These updates resulted in a reduction of $6.1 million and $18.9 million of revenue reported for the three and six months ended June 30, 2020, respectively, and an increase of $15.1 million and $15.5 million of revenue reported for the three and six months ended June 30, 2019, respectively. These amounts included (i) adjustments for actual collections versus estimated variable consideration as of the beginning of the reporting period and (ii) cash collections and the related recognition of revenue in the current period for tests delivered in prior periods due to the release of the constraint on variable consideration, offset by (iii) reductions in revenue for the accrual for reimbursement claims and settlements described in Note 9.

Disaggregation of Revenues

The following table shows a further disaggregation of revenues by payor type (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Commercial third-party payors	$	18,030		$	48,040	$	39,592		$	85,793
Government health benefit programs(1)		(2,922	)		8,310		(9,065	)		16,945
Patient/laboratory distribution partners		2,158			880		3,567			1,999
Total revenues	$	17,266		$	57,230	$	34,094		$	104,737
____________
(1) The revenue amounts include accruals for reimbursement claims and settlements included in the estimates of variable consideration recorded during the three and six months ended June 30, 2020. Revenue recognized reflect the effects of variable consideration, and include adjustments for estimates of disallowed cases, discounts, and refunds. The variable consideration includes reductions in revenues for the accrual for reimbursement claims and settlements.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Balance Sheet Components

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Balance Sheet Components

5. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Prepaid expenses	$	6,000	$	6,476
Other current assets		130		1,370
Total	$	6,130	$	7,846

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Computers and software	$	13,699		$	13,913
Building and leasehold improvements		9,466			9,491
Laboratory equipment		6,242			5,580
Furniture, fixtures, and office equipment		1,663			1,633
Construction in progress		1,635			1,493
Land		1,091			1,091
Total property and equipment		33,796			33,201
Less accumulated depreciation and amortization		(18,071	)		(17,310	)
Property and equipment, net	$	15,725		$	15,891

Capital leases included in property and equipment, net consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Capital leases	$	2,520		$	3,692
Less accumulated depreciation and amortization		(1,731	)		(2,239	)
Capital leases included in property and equipment, net	$	789		$	1,453

Depreciation expense was $1.0 million and $2.0 million for the three and six months ended June 30, 2020, respectively, and $0.9 million and $1.8 million for the three and six months ended June 30, 2019, respectively.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

June 30, 2020	Cost		Accumulated amortization			Net
Payor relationships	$	7,230	$	(3,675	)	$	3,555
Trade names		1,410		(717	)		693
Noncompete agreements		384		(325	)		59
Intangible assets, net	$	9,024	$	(4,717	)	$	4,307

December 31, 2019	Cost		Accumulated amortization			Net
Payor relationships	$	7,230	$	(3,314	)	$	3,916
Trade names		1,410		(646	)		764
Noncompete agreements		384		(293	)		91
Intangible assets, net	$	9,024	$	(4,253	)	$	4,771

Amortization expense of intangible assets was $0.2 million and $0.5 million for the three and six months ended June 30, 2020, respectively, and $0.2 million and $0.5 million for the three and six months ended June 30, 2019, respectively.

The future amortization of intangible assets at June 30, 2020 was (in thousands):

Year ending December 31,
Remainder of 2020	$	464
2021		891
2022		864
2023		864
2024		864
Thereafter		360
Total future minimum lease payments	$	4,307

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrual for reimbursement claims and settlements, current	$	56,763	$	60,386
Commission and bonus		6,494		6,357
Vacation and payroll benefits		7,352		5,506
Accrued professional services		3,648		5,322
Other		4,153		6,044
Total	$	78,410	$	83,615

Other Long-term Liabilities

Other long-term liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrual for reimbursement claims and settlements, net of current portion	$	35,400	$	12,205
Other		1,147		654
Total	$	36,547	$	12,859

Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

6. Fair Value Measurements

The Company's financial assets and liabilities carried at fair value are comprised of investment assets that include money market funds. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.

The authoritative guidance establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs to valuation techniques is summarized as follows:

Level 1 - Quoted prices in active markets for identical assets and liabilities that the Company has the ability to access.

Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data, such as quoted prices, interest rates, and yield curves.

Level 3 - Inputs that are unobservable data points that are not corroborated by market data.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value (in thousands):

	Quoted Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2020
Money market funds(1)	$	105,173	$	—	$	—
December 31, 2019
Money market funds(1)	$	24,432	$	—	$	—
____________
(1) Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets.

The Company’s policy is to recognize transfers between levels at the end of the reporting period. There were no significant transfers between Level 1 and Level 2 during the three and six months ended June 30, 2020 and 2019.

Fair Value of Financial Instruments

The carrying value of the Company’s accounts receivable, income tax receivable, accounts payable, and accrued expenses and other current liabilities are considered to be representative of their respective fair values because of their short-term nature.

The carrying value of the Company’s mortgages payable approximates their estimated fair value because the instruments bear interest at rates and have terms that are comparable to those available to the Company for similar loan instruments at June 30, 2020 and December 31, 2019.

The carrying value of the Company’s note payable to a related party does not approximate its fair value because the instrument bears interest at a rate that is not comparable to those available to the Company for a similar loan instrument at June 30, 2020 and December 31, 2019. The carrying value and the fair value of the Company’s term loan (the “2017 Term Loan”) was $75.0 million and $78.1 million, respectively, at June 30, 2020, and $75.0 million and $79.8 million, respectively, at December 31, 2019. The carrying value of the 2017 Term Loan is presented on the accompanying condensed consolidated balance sheets net of discount on the note and debt issuance cost.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions

7. Related Party Transactions

On October 27, 2017, the Company entered into a Credit and Security Agreement and a Series B Convertible Preferred Stock Purchase Agreement with a private equity firm (the “2017 Transaction”). The 2017 Transaction provided for the 2017 Term Loan, the issuance of Series B Preferred Stock (the “Series B Preferred Stock”), and the issuance of a warrant to purchase Series B Preferred Stock (the “Series B Preferred Stock Purchase Warrant”). The 2017 Term Loan accrues interest at a rate per annum equal to 9.5% and is due October 27, 2022.

The 2017 Term Loan contains customary covenants, including a requirement to maintain a minimum unrestricted cash balance at all times of at least $5.0 million. The Company is in compliance with the 2017 Term Loan covenants. The 2017 Term Loan is secured by all tangible and intangible property and assets of the Company, with the exception of its intellectual property.

The total proceeds of $124.2 million from the 2017 Transaction were allocated to the 2017 Term Loan, Series B Preferred Stock, and the Series B Preferred Stock Purchase Warrant based on the relative fair value of the term loan, equity, and warrant issued. As a result, the Company allocated proceeds of $65.7 million to the 2017 Term Loan. As the proceeds allocated to the 2017 Term Loan are lower than the stated loan amount of $75.0 million, the resulting $9.3 million discount is amortized as interest expense using the effective interest method over the term of the loan.

As of both June 30, 2020 and December 31, 2019, the outstanding unpaid principal under the 2017 Term Loan was $75.0 million. The unamortized discount on the 2017 Term Loan was $5.9 million and $6.0 million as of June 30, 2020 and December 31, 2019, respectively. During the three months ended June 30, 2020 and 2019, the Company recognized interest expense on the 2017 Term Loan of $2.5 million and $2.2 million, inclusive of $0.7 million and $0.4 million of discount amortization for the three months ended June 30, 2020 and 2019, respectively. During the six months ended June 30, 2020 and 2019, the Company recognized interest expense on the 2017 Term Loan of $4.7 million and $4.4 million, inclusive of $1.1 million and $0.8 million of discount amortization for the six months ended June 30, 2020 and 2019, respectively.

In connection with the IPO, on June 18, 2020, the Series B Preferred Stock Purchase Warrant became exercisable for 400,160 shares of common stock.

On March 31, 2020, the Company entered into the First Amendment to the Credit Agreement (the “Credit Agreement Amendment”), with the collateral agent and lender party thereto, providing for the payment of interest due and payable as of March 31, 2020 in shares of Series B Preferred Stock, and further providing for the payment of interest due and payable as of June 30, 2020 in shares of our Series B Preferred Stock in the event the IPO has not been consummated by such date. Pursuant to the Credit Agreement Amendment, the Company concurrently entered into a Series B Preferred Stock Subscription Agreement (the “Subscription Agreement”), with the lender, which provided for the issuance of 967,130 shares of Series B Preferred Stock at a subscription price of $2.25 per share, as payment for interest due and payable as of March 31, 2020 and all applicable fees as set forth in the Credit Agreement Amendment.

On May 8, 2020, the Company entered into an unsecured convertible promissory note (the “Note”) with an existing investor pursuant to a note purchase agreement, in an aggregate principal amount of $15.0 million, with an annual interest rate of 8.0% and a maturity date of May 8, 2022. The Note was convertible into (i) common stock upon an initial public offering at the lesser of the conversion price then in effect and a conversion price equal to 80% of the public offering price (or, if not a “qualified IPO” as defined in the Company’s certificate of incorporation, at the election of a majority of the holders), (ii) on the maturity date or at the election of a majority of the holders, Series B preferred stock at an initial conversion price of $13.90 per share subject to certain adjustments, or (iii) at the election of a majority of the holders, shares of another class of equity securities issued by the Company in a future financing at 80% of the price per share of such class of equity securities issued in such offering. Interest under the Note was not generally payable except that if the Note is not converted pursuant to its terms on or prior to the maturity date and there are not sufficient authorized and unissued shares of Series B preferred stock for issuance upon the conversion of the Note on the maturity date, then the Company is required to pay all outstanding principal and any accrued and unpaid interest under the Note in cash. If the holders of the Note have not elected to convert the Note prior to, or in connection with, any sale transaction or a liquidation, dissolution or winding up of the Company, either voluntary or involuntary, then, upon any such sale transaction or liquidation, dissolution or winding up of the Company, the Company would have been required to pay in cash the outstanding principal balance of the Note, together with accrued and unpaid interest thereon, plus a make whole premium of 50% of the aggregate principal amount (less accrued and unpaid interest). The Company evaluated the economic features embedded in the Note and identified features that were required to be bifurcated and accounted for separately as a derivative. Accordingly, a derivative liability of $3.6 million was recorded on the issuance date of the Note and $3.8 million was subsequently reclassified to equity representing the fair value of the derivative liability on the date of extinguishment. The change in the fair value of the derivative liability of $0.2 million is included in interest and other income (expense), net in the accompanying condensed consolidated statements of operations. In June 2020, in connection with completion of the IPO, the Note was converted into 1,250,000 shares of common stock and all obligations under the Note were extinguished. Upon the conversion, the Company recorded a $3.6 million loss on extinguishment of the debt, which represented the difference between the carrying value of the Note and the derivative liability and the fair value of the shares of common stock issued to the Note holder of $3.4 million combined with amortization of the related debt discount of $0.2 million. The loss on extinguishment of debt was included in the interest and other income (expense), net in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2020.

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Operating Leases

The Company has entered into various noncancelable operating lease agreements, primarily for office space, laboratory space, and vehicles, which expire over the next two to four years. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease. Rent expense for operating leases was $2.0 million and $4.2 million, for the three and six months ended June 30, 2020, respectively, and $2.2 million and $4.3 million, respectively, for the three and six months ended June 30, 2019.

As of June 30, 2020, net minimum payments under the non-cancelable operating leases were as follows (in thousands):

Year ending December 31,	Minimum Operating Lease Payments
Remainder of 2020	$	3,927
2021		5,148
2022		2,911
2023		996
2024 and thereafter		38
Total future minimum lease payments	$	13,020

Capital Leases

The Company has entered into various capital lease agreements, primarily for equipment. The outstanding leases have a weighted average imputed interest rate of 5.98% per annum. As of June 30, 2020, the future minimum payments under the capital leases were as follows (in thousands):

Year ending December 31,	Minimum Capital Lease Payments
Remainder of 2020	$	331
2021		324
2022 and thereafter		47
Total minimum lease payments		702
Less amounts representing interest		(30	)
Present value of minim capital lease payments		672
Less current portion of capital lease obligations		(516	)
Capital lease obligations, net of current portion	$	156

Contingencies

The Company, in the ordinary course of its business, can be involved in lawsuits, threats of litigation, and audit and investigative demands from third parties. While management is unable to predict the exact outcome of such matters, it is management’s current belief, that any potential liabilities resulting from these contingencies, individually or in the aggregate, could have a material impact on the Company’s financial position and results of operations.

The regulations governing government reimbursement programs (e.g., Medicaid, Tricare, and Medicare) and commercial payor reimbursement programs are complex and may be subject to interpretation. As a provider of services to patients covered under government and commercial payor programs, post payment review audits, and other forms of reviews and investigations are routine. The Company believes it complies in all material respects with the statutes, regulations, and other requirements applicable to its laboratory operations.

Federal Investigations

In April 2018, the Company received a civil investigative demand from an Assistant U.S. Attorney (“AUSA”) for the Southern District of New York (“SDNY”) and a Health Insurance Portability and Accountability Act subpoena issued by an AUSA for the Southern District of California (“SDCA”). In May 2018, the Company received a subpoena from the State of New York Medicaid Fraud Control Unit. Since that time, the Company has cooperated with federal civil and criminal investigations, and state civil investigations, regarding discontinued legacy billing practices for its non-invasive prenatal testing and microdeletion tests and the provision of alleged kickbacks or inducements to physicians and patients. The civil investigations also include inquiries about the Company’s laboratory licenses, its enrollment in state Medicaid programs, and the laboratories that performed testing for the Company.

On March 31, 2020, the Company reached an agreement on the monetary terms with the U.S. Department of Justice (the “DOJ”) and the State of New York (with the State of New York Attorney General representing or facilitating the interests of all States participating in the settlement (collectively, the “State AGs”)) with respect to relevant government health benefit programs to resolve all of the government’s outstanding civil and criminal investigations, including the investigations by the AUSA for the SDCA and the AUSA for SDNY, as well as the investigation by the State AGs. The terms of this agreement in principle contemplate that the Company will enter into a civil settlement agreement providing that the Company will pay $49.0 million in the aggregate over a five-year period, structured as follows: $8.0 million upon entering into the settlement; $4.0 million in December 2020; $5.0 million in December 2021; $7.0 million in December 2022; $8.0 million in December 2023; $9.0 million in December 2024; and $8.0 million in December 2025 for a release of the civil claims and that the Company will enter into a non-prosecution agreement to resolve all criminal allegations.

On July 21, 2020 and July 23, 2020, the Company entered into agreements with certain governmental agencies to resolve, with respect to such agencies, all of such agencies’ outstanding civil, and where applicable criminal, investigations described above. Specifically, the Company has entered into:

•

a civil settlement agreement, effective July 23, 2020, with the DOJ through the AUSA for SDNY, and on behalf of the Office of Inspector General of the Department of Health and Human Services (the “OIG”), and with the relator named therein (the “SDNY Civil Settlement Agreement”);

•

a civil settlement agreement, effective July 23, 2020, with the DOJ through the AUSA for SDCA, and on behalf of the Defense Health Agency, the Tricare Program and the Office of Personnel Management, which administers the Federal Employees Health Benefits Program (the “SDCA Civil Settlement Agreement”);

•

a non-prosecution agreement, effective July 21, 2020, with the AUSA for SDCA (the “Non-Prosecution Agreement”); and

•

a corporate integrity agreement, effective July 21, 2020, with the OIG (the “Corporate Integrity Agreement” and, together with the SDNY Civil Settlement Agreement, the SDCA Civil Settlement Agreement, and the Non-Prosecution Agreement, the “Agreements”).

The financial terms of the Agreements are substantially the same as the agreement on the monetary terms.

SDNY Civil Settlement Agreement

The SDNY Civil Settlement Agreement requires the Company to pay a settlement amount of approximately $19.4 million, which includes approximately $9.7 million designated as restitution to the U.S. federal government. The settlement amount is payable in six installments as follows:

•

approximately $9.1 million within 14 business days of July 23, 2020;

•

approximately $1.6 million on or before December 31, 2020;

•

approximately $2.0 million on or before December 31, 2021;

•

approximately $2.8 million on or before December 31, 2022;

•

approximately $3.2 million on or before December 31, 2023; and

•

approximately $0.8 million on or before December 31, 2024.

The amounts payable to the government, other than the initial $9.1 million payment, will be subject to interest at a rate of 1.25% per annum, and any or all amounts may be paid earlier at the option of the Company. Furthermore, the Company has agreed that, if during calendar years 2020 through 2023, and so long as amounts payable to the government remain unpaid, the Company receives any civil settlement, damages awards, or tax refunds, to the extent that the amounts exceed $5.0 million in a calendar year, it will pay 26% of the amount received in such civil settlement, damages award, or tax refunds as an accelerated payment on the scheduled amounts set forth above, first as a dollar-for-dollar acceleration of the scheduled payment due in December 2025 and then as an accelerated payment of the scheduled payments due in each prior year, up to a maximum total acceleration of $4.2 million. As previously reported, during the three months ended March 31, 2020, the Company recorded a discrete tax benefit of $37.7 million related to the net operating loss carryback provisions available under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) for taxes paid by the Company in years 2013, 2014, 2015 and 2017 (the “CARES Act Tax Benefit”). In June 2020, the Company received a tax benefit payment of approximately $22.7 million for a portion of the CARES Act Tax Benefit, and because this tax refund was received prior to the effective date of the SDNY Civil Settlement Agreement, pursuant to the Company’s agreement with the government on monetary terms, the payment to be made within 14 business days of July 23, 2020, includes an added payment of approximately $5.9 million and the SDNY Civil Settlement Agreement reflects a corresponding reduction in the previously agreed upon payment term and subsequent payment amounts. In addition, if the Company receives the remaining payment in full for the CARES Act Tax Benefit, the Company will pay an accelerated payment to the government under the SDNY Civil Settlement Agreement of approximately $3.9 million.

Additionally, under the SDNY Civil Settlement Agreement, the U.S. federal government and the relator agreed to dismiss all civil claims asserted by the relator under the qui tam provisions of the federal False Claims Act.

SDCA Civil Settlement Agreement

The SDCA Civil Settlement Agreement requires the Company to pay a settlement amount of approximately $16.4 million, which includes approximately $10.0 million designated as restitution to the U.S. federal government. The settlement amount is payable in six installments as follows:

•

approximately $7.7 million within ten days of July 21, 2020;

•

approximately $1.3 million on or before December 31, 2020;

•

approximately $1.7 million on or before December 31, 2021;

•

approximately $2.3 million on or before December 31, 2022;

•

approximately $2.7 million on or before December 31, 2023; and

•

approximately $0.7 million on or before December 31, 2024.

The amounts payable to the government, other than the initial $7.7 million payment, will be subject to interest at a rate of 1.25% per annum, and any or all amounts may be paid earlier at the option of the Company.

On July 21, 2020, the Company issued a promissory note to the U.S. federal government for the full settlement amount in connection with the SDCA Civil Settlement Agreement (the “Promissory Note”). The Promissory Note contains customary events of default and related acceleration of payment provisions. In addition, the Promissory Note provides, among other terms, that, if during calendar years 2020 through 2023, and so long as amounts payable to the government remain unpaid, the Company receives any civil settlement, damages awards, or tax refunds, to the extent that the amounts exceed $5.0 million in a calendar year, it will pay 22% of the amount received in such civil settlement, damages award, or tax refunds as an accelerated payment on the scheduled amounts set forth above, first as a dollar-for-dollar acceleration of the scheduled payment due in December 2024 and then as an accelerated payment of the scheduled payments due in each prior year, up to a maximum total acceleration of approximately $3.4 million. Because the Company received a tax benefit payment of approximately $22.7 million for a portion of the CARES Act Tax Benefit in June 2020 and because this tax refund was received prior to the effective date of the Promissory Note, the payment to be made within ten days of July 21, 2020 includes an added payment of $4.9 million, and the Promissory Note reflects a corresponding reduction in the previously agreed upon payment term and subsequent payment amounts. In addition, if the Company receives the remaining payment in full for the CARES Act Tax Benefit, the Company will pay an accelerated payment to the government under the SDCA Civil Settlement Agreement of approximately $3.3 million.

Non-Prosecution Agreement

Effective July 21, 2020, the Company entered into the Non-Prosecution Agreement, pursuant to which the Company agreed with the DOJ to (i) pay the restitution provided for under the SDCA Civil Settlement Agreement, (ii) not commit any felonies, (iii) continue to implement a compliance and ethics program designed to prevent and detect violations of applicable fraud and kickback laws throughout its operations and (iv) fulfill certain other disclosure, reporting and cooperation obligations. The DOJ agreed that it will not prosecute the Company for any conduct described in the Non-Prosecution Agreement provided that the Company performs its obligations under the Non-Prosecution Agreement during the period from July 21, 2020 through July 21, 2021. The Non-Prosecution Agreement provides that the DOJ may unilaterally, upon notice to the Company, extend the term of the agreement in 6-month increments, for a maximum total term of 24 months (that is, two 6-month extensions).

Corporate Integrity Agreement

In connection with the resolution of the investigated matters, and in exchange for the OIG’s agreement not to exercise its authority to permissively exclude the Company from participating in federal healthcare programs, effective July 21, 2020, the Company entered into a five-year Corporate Integrity Agreement with the OIG. The Corporate Integrity Agreement requires, among other matters, that the Company maintain a Compliance Officer, a Compliance Committee, board review and oversight of certain federal healthcare compliance matters, compliance programs, and disclosure programs; provide management certifications and compliance training and education; engage an independent review organization to conduct claims and arrangements reviews; and implement a risk assessment and internal review process. The Company’s failure to comply with its obligations under the Corporate Integrity Agreement could result in monetary penalties and/or the Company being excluded from participating in federal healthcare programs.

State Settlement Agreements

In addition, the Company has negotiated a resolution of claims by various participating states (the “States”) with respect to the investigated matters. The Company expects the States to complete their respective settlement approval processes two to six weeks following the date that this Quarterly Report is filed, after which the Company expects to separately enter into settlement agreements to resolve the outstanding state claims with the State of New York and each of the other participating states (collectively, the “State Settlement Agreements”). The agreement on the monetary terms with the States includes an aggregate payment of approximately $13.2 million to the States over a five year period pursuant to the collective settlements, for a total payment by the Company of $49.0 million (plus interest) payable under the Agreements and the State Settlement Agreements to settle the investigated matters. The State Settlement Agreements are expected to include acceleration provisions similar to the SDNY Civil Settlement Agreement and the SDCA Civil Settlement Agreements described below upon the Company’s receipt of civil settlements, damages awards, and tax refunds, with the amount of acceleration and timing subject to such receipts.

Settlement Accruals

As of December 31, 2019, the Company had accrued an aggregate of $35.8 million associated with a potential settlement with the DOJ and the participating State AGs within accrued expenses and other current liabilities and as a reduction of revenue as reflected on the consolidated balance sheet of the Company as of December 31, 2019 and consolidated statement of operations for the year ended December 31, 2019. In addition, in the quarter ended March 31, 2020, the Company accrued an additional $13.2 million with respect to the total amount to be paid under the agreement in principle to the DOJ and the participating State AGs, and additional amounts for related costs as of and for the quarterly period ended March 31, 2020. Furthermore, in connection with recording a discrete tax benefit of $37.7 million related to the net operating loss (“NOL”) carryback provisions available under the CARES Act legislation, the Company has agreed with the government that, if during calendar years 2020 through 2023, and as long as amounts payable to the government remain unpaid, it receives any civil settlement, damages awards, or tax refunds, to the extent that the amounts exceed $5.0 million in a calendar year, the Company will pay 65% of the amount received in such civil settlement, damages award, or tax refunds as an accelerated payment on the scheduled amounts set forth above, first as a dollar-for-dollar acceleration of the scheduled payment due in December 2025 and then as an accelerated payment of the scheduled payments due in each prior year, up to a maximum total acceleration of $24.96 million. During the three months ended March 31, 2020, we recorded a discrete tax benefit of $37.7 million related to the NOL carryback provisions available under the CARES Act legislation, and if fully paid, the Company expects that the total accelerated payments to the government will be $24.5 million. As of June 30, 2020, the Company’s accrual consists of $19.7 million in accrued expenses and other current liabilities and $29.3 million in other long-term liabilities. Until the final State Settlement Agreements are approved and signed by the States, there can be no assurance that the amount we have accrued will be sufficient to cover our obligations relating to this matter. Our obligations could also increase, potentially materially, depending on a number of factors including whether or not the agreement on the monetary terms with the States is finalized, whether an individual State or States opt out of the settlement prior to approval in order to pursue a separate action or resolution, the terms of the final approved agreements and the parties to the settlement.

Payor Settlement Agreements

On June 21, 2018, the Company received a letter from Cigna alleging damages related to contract terms. On December 5, 2018, Cigna and the Company entered into a settlement agreement whereby Avero agreed to pay an aggregate amount of $12.0 million with an upfront payment of $6.0 million and the remaining $6.0 million to be paid over 24 months. For the year ended December 31, 2018, the Company recorded a charge of $12.0 million associated with this claim in its consolidated statements of operations as a reduction to revenue. As of June 30, 2020, the remaining settlement accrual related to Cigna is $1.5 million in accrued expenses and other current liabilities.

On June 25, 2018, the Company received a letter from Aetna’s external legal counsel that included various allegations relating to the Company’s past practices. In November 2019, the Company and Aetna entered into a settlement agreement for $15.0 million, to be paid in installment payments through December 2020. During the year ended December 31, 2018, the Company recorded a charge of $15.0 million associated with this claim in its consolidated statements of operations as a reduction to revenue. As of June 30, 2020, the Company’s accrual consists of $7.5 million in accrued expenses and other current liabilities.

On October 18, 2018, the Company received a letter from UnitedHealth Group that included various allegations relating to the Company’s past practices. On September 30, 2019, the Company entered into a settlement agreement with United HealthCare Services, Inc. and UnitedHealthcare Insurance Company (“United”) in which the Company agreed to pay an aggregate amount of $30.0 million. The settlement is to be paid with an upfront payment of $2.0 million, and the remaining balance to be paid every six months starting December 31, 2019, with the first two installment payments of $5.0 million each, and $6.0 million each thereafter. As of June 30, 2020, the remaining settlement accrual related to United is $23.0 million consisting of $17.0 million in accrued expenses and other current liabilities and $6.0 million in other long-term liabilities.

Payor Recoveries

As noted above, the regulations governing government reimbursement programs (e.g., Medicaid, Tricare, and Medicare) and commercial payor reimbursement programs are complex and may be subject to interpretation. As a provider of services to patients covered under government and commercial payor programs, post payment review audits, and other forms of reviews and investigations are routine. If a third-party payor successfully challenges that payment to the Company for prior testing was in breach of contract or otherwise contrary to policy or law, they may recoup payment. The Company may also decide to negotiate and settle with a third-party payor in order to resolve an allegation of overpayment. In the ordinary course of business, the Company addresses and evaluates a number of such claims from payors. While management is unable to predict the exact outcome of any such claims, it is management’s current belief, that any potential liabilities resulting from these contingencies, individually or in the aggregate, could have a material impact on the Company’s financial position and results of operations.

In connection with the third-party review of the Company’s coding and billing processes described in Note 4, which identified that the Company had not effectively transitioned to the implementation of the new CPT code for reimbursement for the Company’s Preparent expanded carrier screening tests during 2019 and early 2020, the Company reviewed its reimbursement from commercial payors for these tests over the same time period. The Company may need to engage with payors in order to determine if any amounts could be subject to recovery or recoupment, as it is customarily done with commercial payors. Any amounts subject to recovery or recoupment will depend on the interpretation of widely variable payor medical and billing policies. The Company will not know if any overpayments exist until it completes this engagement with individual commercial payors. If negotiations with payors result in claims or conclusions that overpayments have been made, this could have a material impact on the Company’s financial results and position. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from any unfavorable outcome related to this matter.

Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Stockholders Equity Note [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

Common Stock

Pursuant to the Company’s eighth amended and restated certificate of incorporation, which went into effect immediately prior to the completion of the IPO, the Company is authorized to issue 350 million shares of common stock and 10 million shares of undesignated preferred stock. Each holder of common stock is entitled to one vote per share of common stock held.

On June 18, 2020, the Company completed its IPO. In the IPO, the Company issued and sold 6,666,667 shares of its common stock, at a price to the public of $15.00 per share. The Company received approximately $88.7 million in net proceeds, after deducting $7.0 million in underwriting discounts and commissions and $4.3 million in other offering expenses payable by the Company. Other offering costs consisted primarily of legal and accounting fees, which were direct and incremental fees related to the IPO. As of December 31, 2019, $1.1 million of deferred offering costs were included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheet.

Treasury Stock

In June 2014, the Company authorized an Equity Repurchase Program for Key Employees (the “Repurchase Program”). The Repurchase Program allowed the Company to repurchase for cash a portion of the common stock equity interests of certain employees, provided that (i) no more than 25% of the equity interest of any employee was repurchased under the Repurchase Program, (ii) the purchase price paid for each share of common stock equaled the most recent appraisal valuation of the Company’s common stock, and (iii) the aggregate repurchases did not exceed the lesser of (a) equity interest representing, in the aggregate, 0.8 million shares of common stock, (b) a purchase price, in the aggregate, of more than $6.0 million, and (c) the maximum repurchases permitted under the General Corporation Law of the State of Delaware. In addition, it was the Company’s practice to require individuals exercising stock options to hold the shares received upon exercising for a reasonable period of time in order for the holder to be exposed to the economic risks and rewards of share ownership prior to participating in the Repurchase Program. A reasonable period of time was defined as a period of at least six months and that covered at least two common stock appraisal valuations. The Repurchase Program has been discontinued.

Convertible Preferred Stock

As of December 31, 2019, the Company had outstanding Series A Preferred Stock and Series B Preferred Stock. The Company recorded the preferred stock at fair value on the dates of issuance net of issuance costs.

On August 27, 2019, the Company issued 9,090,910 shares of Series B Preferred Stock at an issuance price of $2.75 per share for an aggregate consideration of $25.0 million (the “August 2019 Financing”) pursuant to a Series B Preferred Stock Purchase Agreement with a private equity firm. In addition, the Company amended the Series B Preferred Stock Purchase Warrant dated October 27, 2017 to increase the Series B Preferred Stock underlying the Series B Preferred Stock Purchase Warrant from 1,416,431 shares to 1,818,182 shares and adjust the exercise price to $2.75 per share. The $25.0 million of proceeds from the August 2019 Financing were allocated among the newly issued Series B Preferred Stock shares and additional shares of Series B Preferred Stock Purchase Warrant based on their relative fair values.

In connection with the August 2019 Financing, the Board of Directors and stockholders approved a 1.28-for-1 stock split for the Company’s Series B Preferred Stock and Series B Preferred Stock Purchase Warrant issued and outstanding prior to the August 2019 Financing, which was effected on August 27, 2019 pursuant to an amendment to the amended and restated certificate of incorporation. The conversion price of the Series B Preferred Stock and exercise price of the outstanding Series B Preferred Stock Purchase Warrant was lowered from $3.53 to $2.75 per share. As a result, the Company issued 4,017,512 additional shares of Series B Preferred Stock as a stock dividend to the preferred stockholders, which was recorded as a $13.1 million increase to accumulated deficit in the consolidated statements of stockholders’ deficit during the year ended December 31, 2019.

On August 27, 2019, the Company entered into an Exchange Agreement with holders of Series A-1 Preferred Stock (the “Exchange Agreement”) pursuant to which the outstanding 1,500,000 shares of Series A-1 Preferred Stock were exchanged for 35,664,240 shares of Series B Preferred Stock. The exchange ratio was 1.2 to 1 on as-if converted to 4,810,651 shares of common stock that the Series A-1 Preferred Stock can be converted to, based on the conversion rate of 3.2 to 1. The Company determined that such exchange constituted a modification to the Series A-1 Preferred Stock. Accordingly, the increase comparing the fair value of the Series B Preferred Stock with the fair value of the Series A-1 Preferred Stock represented a dividend to the preferred stockholders of approximately $27.6 million, which was recorded as an increase to accumulated deficit in the consolidated statements of stockholders’ deficit during the year ended December 31, 2019.

On November 12, 2019, the Company entered into a Series B Preferred Stock Purchase Agreement (the “November Series B Preferred Stock Purchase Agreement”) with a private equity firm and received $25.0 million (the “November 2019 Financing”) in exchange for the issuance of 11,111,111 shares of Series B Preferred Stock at $2.25 per share. In connection with the November 2019 Financing, the Board of Directors and stockholders approved a 1.22-for-1 stock split for the Company’s Series B Preferred Stock and Series B Preferred Stock Purchase Warrant issued and outstanding prior to the November 2019 Financing. The conversion price of the Series B Preferred Stock and exercise price of the outstanding Series B Preferred Stock Purchase Warrant was lowered from $2.75 to $2.25 per share. As a result, the Company issued 13,985,993 additional shares of Series B Preferred Stock and adjusted the Series B Preferred Stock Purchase Warrant to purchase up to 2,222,222 shares of Series B Preferred Stock. The issuance of additional shares represented a stock dividend to the preferred stockholders, which was recorded as a $36.4 million increase to accumulated deficit in the consolidated statements of stockholders’ deficit during the year ended December 31, 2019. In connection with the November 2019 Financing, the Company amended the certificate of incorporation. Following the amendment, there are no authorized or outstanding shares of Series A-1 Preferred Stock.

On November 22, 2019, the Company completed an additional equity financing pursuant to the November Series B Preferred Stock Purchase Agreement with certain existing, accredited investors for an aggregate of $6.1 million in exchange for the issuance of an aggregate of 2,722,222 shares of Series B Preferred Stock at $2.25 per share.

On December 19, 2019, the Company completed an additional equity financing pursuant to the November Series B Preferred Stock Purchase Agreement with the same private equity firm as the November 2019 Financing for $25.0 million in exchange for the issuance of 11,111,111 million shares of Series B Preferred Stock at $2.25 per share.

In February 2020, the Company issued and sold an aggregate of 5,066,666 shares of Series B Preferred Stock at a purchase price of $2.25 per share to existing investors in exchange for aggregate consideration of approximately $11.4 million.

On March 31, 2020, in connection with the Credit Agreement Amendment, which provides for the payment of interest due and payable as of March 31, 2020 and June 30, 2020 (only in the event the IPO has not been consummated by such date) in shares of Series B Preferred Stock, the Company issued an aggregate of 967,130 shares of Series B Preferred Stock at a subscription price of $2.25 per share to existing investors as payment for interest due and payable as of March 31, 2020 and all applicable fees.

On April 3, 2020, the Company issued and sold an aggregate of 4,444,444 shares of its Series B Preferred Stock at a purchase price of $2.25 per share to existing investors in exchange for aggregate consideration of approximately $10.0 million in cash.

The fair value of the preferred stock was estimated using a hybrid between a probability-weighted expected return method (“PWERM”) and option pricing model (“OPM”), estimating the probability weighted value across multiple scenarios, while using an OPM to estimate the allocation of value within one or more of these scenarios. Under a PWERM, the value of the Company’s various classes of stock was estimated based upon an analysis of future values for the Company assuming various future outcomes, including two IPO scenarios and one scenario contemplating the continued operation of the Company as a privately held enterprise. Guideline public company multiples were used to value the Company under its various scenarios. Share value for each class of stock was based upon the probability-weighted present value of expected future share values, considering each of these possible future outcomes, as well as the rights of each share class.

The significant unobservable inputs into the valuation model used to estimate the fair value of the preferred stock include the timing of potential events (primarily the IPO) and their probability of occurring, the selection of guideline public company multiples, a discount for the lack of marketability of the common stock, and the discount rate used to calculate the present value of the estimated equity value allocated to each share class.

Preferred stock outstanding as of December 31, 2019 consisted of the following (in thousands, except share and per share data):

December 31, 2019	Shares Authorized		Shares Issued and Outstanding		Per Share Price at Issuance		Aggregate Liquidation Preference
Series A		4,120,000		4,120,000	$	0.48543	$	2,000
Series B		126,035,000		101,867,405		2.25000		229,202
Total preferred stock		130,155,000		105,987,405			$	231,202

In connection with the IPO, on June 18, 2020, all outstanding Series A Preferred Stock and Series B Preferred Stock converted into 33,443,562 shares of common stock, including the issuance of 2,045,522 shares of common stock pursuant to an adjustment in the conversion rate of all of our shares of Series B Preferred Stock outstanding immediately prior to the IPO. Upon conversion of the convertible preferred stock, the Company reclassified their carrying value to common stock and additional paid-in capital.

Common Stock Reserved for Future Issuance

The Company reserved shares of common stock, on an as-if-converted basis, for future issuance as follows:

	June 30, 2020		December 31, 2019
Series A Preferred Stock		—		13,213,254
Series B Preferred Stock		—		16,488,731
Series B Preferred Stock Purchase Warrant		—		359,699
Common stock warrant		400,160		—
Restricted stock units outstanding		1,095,095		322,608
Outstanding options to purchase common stock		3,848,838		2,561,866
Available for future issuance under equity incentive plan		4,393,376		1,717,817
Total		9,737,469		34,663,975

Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

11. Stock-Based Compensation

In February 2018, the Company adopted the 2018 Equity Incentive Plan (the “2018 Plan”), with 0.7 million shares available for future grant. Upon adoption of the 2018 Plan, no new stock options or awards are issuable under the Second Amended and Restated 2012 Stock Plan (the “2012 Plan”) or the 2015 Consultant Stock Plan (the “2015 Plan”). The 2018 Plan is the successor to and continuation of the 2012 Plan, as amended, and the 2015 Plan, and is administered with either stock options or restricted stock units. The 2018 Plan also provides for other types of equity to issue awards, which at this time the Company does not plan to utilize. The 2018 Plan was amended in March 2019 with 1.1 million shares available for future grant.

In December 2019, the Company adopted the Second Amended and Restated 2018 Equity Incentive Plan, which increased the number of shares available for future grant to 2.7 million shares. On March 4, 2020, the Board of Directors adopted the Third Amended and Restated 2018 Equity Incentive Plan (the “2018 Third Amended Plan”), which increased the number of shares available for future grant to a total of 7.6 million shares and was approved by stockholders on March 5, 2020. The Board of Directors administers the plans.

In January 2020, the Board of Directors approved the modification of the exercise price of certain outstanding stock options under the existing incentive plans. As a result of this modification, an additional stock-based compensation expense of $0.9 million is being recognized over the remaining vesting period for the unvested stock options.

Activity under the 2012 Plan, the 2015 Plan, and the 2018 Third Amended Plan for the six months ended June 30, 2020, is set forth below (in thousands, except share and per share data):

	Stock Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance at December 31, 2019		2,561,866		$	9.01
Options granted		1,520,900			10.56
Options exercised		(77,609	)		1.90
Options forfeited/cancelled		(156,319	)		12.15
Balance at June 30, 2020		3,848,838		$	8.33		7.02	$	7,316
Vested and expected to vest at June 30, 2020		3,568,553		$	8.16		6.83	$	7,316
Vested and exercisable at June 30, 2020		2,067,251		$	6.36		4.87	$	7,316

As of June 30, 2020, the number of shares available for grant under the 2018 Third Amended Plan was 4,393,376.

The Company uses 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 granted during the six months ended June 30, 2020:

	Six Months Ended June 30,
	2020
Risk-free interest rate	0.8% - 1.7%
Expected volatility	57.0% - 71.0%
Expected dividend yield		—
Expected life (years)	4.0 - 6.3 years

The following table presents total stock-based compensation expense included in each functional line item in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of sales	$	210	$	53	$	438	$	102
Research and development		850		206		1,512		382
Selling and marketing		512		129		885		251
General and administrative		1,452		209		2,246		417
Total stock-based compensation expense	$	3,024	$	597	$	5,081	$	1,152

The weighted-average grant date fair value of options granted during the six months ended June 30, 2020 and 2019 was $6.78 per option and $7.50 per option, respectively. At June 30, 2020 and December 31, 2019, there was $10.3 million and $4.1 million, respectively, unrecognized compensation cost related to unvested stock options, which are expected to be recognized over a remaining weighted average vesting period of 3.24 years and 2.69 years, respectively.

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Unaudited Interim Financial Information

Use of Estimates

Operating Segments

Revenue Recognition

The Company applies the following practical expedients and exemptions:

•

Payor Concentration

	Percentage of Accounts Receivable
	June 30, 2020			December 31, 2019
Blue Shield of Texas		12.7	%		0.1	%
Government Health Benefits Programs		24.4	%		16.7	%
Aetna		6.2	%		6.0	%
Anthem		6.5	%		0.5	%
United Healthcare		8.3	%		31.5	%

	Percentage of Revenue
	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Blue Shield of Texas		41.9	%		12.7	%		42.2	%		14.5	%
Government Health Benefits Programs(1)		(14.4	)%		14.5	%		(26.6	)%		16.2	%
Aetna		13.8	%		7.6	%		12.9	%		7.6	%
Anthem		14.0	%		4.8	%		12.1	%		6.4	%
United Healthcare		4.8	%		40.1	%		4.4	%		31.3	%
____________
(1) The negative amounts presented in the percentage of revenues include accruals for reimbursement claims and settlements included in the estimates of variable consideration recorded during the three and six months ended June 30, 2020. Revenue recognized consider the effects of variable consideration, and include adjustments for estimates of disallowed cases, discounts, and refunds. The variable consideration includes reductions in revenues for the accrual for reimbursement claims and settlements, as described in Notes 4 and 9.

Accounts Receivable

Net Loss Per Share

Comprehensive Loss

The Company did not have any other comprehensive income or loss for any of the periods presented, and therefore comprehensive loss was the same as the Company’s net loss.

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of Accounts Receivable Balances and Revenues as Percentage of Total Accounts Receivable Balances and Revenues

The Company’s significant third-party payors and their related accounts receivable balances and revenues as a percentage of total accounts receivable balances and revenues are as follows:

	Percentage of Accounts Receivable
	June 30, 2020			December 31, 2019
Blue Shield of Texas		12.7	%		0.1	%
Government Health Benefits Programs		24.4	%		16.7	%
Aetna		6.2	%		6.0	%
Anthem		6.5	%		0.5	%
United Healthcare		8.3	%		31.5	%

	Percentage of Revenue
	Three months ended						Six months ended
	June 30,						June 30,
	2020			2019			2020			2019
Blue Shield of Texas		41.9	%		12.7	%		42.2	%		14.5	%
Government Health Benefits Programs(1)		(14.4	)%		14.5	%		(26.6	)%		16.2	%
Aetna		13.8	%		7.6	%		12.9	%		7.6	%
Anthem		14.0	%		4.8	%		12.1	%		6.4	%
United Healthcare		4.8	%		40.1	%		4.4	%		31.3	%
____________
(1) The negative amounts presented in the percentage of revenues include accruals for reimbursement claims and settlements included in the estimates of variable consideration recorded during the three and six months ended June 30, 2020. Revenue recognized consider the effects of variable consideration, and include adjustments for estimates of disallowed cases, discounts, and refunds. The variable consideration includes reductions in revenues for the accrual for reimbursement claims and settlements, as described in Notes 4 and 9.

Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2020

Variable Interest Entities [Abstract]

Schedule of Assets and Liabilities

	June 30, 2020		December 31, 2019
Assets of Avero that can only be used to settle obligations of Avero
Cash and cash equivalents	$	636	$	1,837
Accounts receivable, net		3,580		4,269
Inventory		2,221		2,572
Prepaid expenses and other current assets		1,268		1,181
Property and equipment, net		5,527		5,586
Other assets		30		30
Goodwill		6,219		6,219
Other intangible assets, net		4,307		4,771
Total assets of Avero that can only be used to settle obligations of Avero	$	23,788	$	26,465
Liabilities of Avero
Accounts payable	$	2,123	$	2,450
Accrued expenses and other accrued liabilities		4,409		5,630
Current portion of capital lease obligations		45		59
Current portion of mortgage payable		177		173
Capital lease obligations, net of current portion		27		50
Mortgage payable, net of current portion		1,638		1,733
Other long-term liabilities		468		467
Total liabilities of Avero	$	8,887	$	10,562

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details

Balance Sheet Components (Tables)

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Prepaid expenses	$	6,000	$	6,476
Other current assets		130		1,370
Total	$	6,130	$	7,846

Summary of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Computers and software	$	13,699		$	13,913
Building and leasehold improvements		9,466			9,491
Laboratory equipment		6,242			5,580
Furniture, fixtures, and office equipment		1,663			1,633
Construction in progress		1,635			1,493
Land		1,091			1,091
Total property and equipment		33,796			33,201
Less accumulated depreciation and amortization		(18,071	)		(17,310	)
Property and equipment, net	$	15,725		$	15,891

Summary of Capital Leases Included in Property and Equipment, Net

Capital leases included in property and equipment, net consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Capital leases	$	2,520		$	3,692
Less accumulated depreciation and amortization		(1,731	)		(2,239	)
Capital leases included in property and equipment, net	$	789		$	1,453

Summary of Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

June 30, 2020	Cost		Accumulated amortization			Net
Payor relationships	$	7,230	$	(3,675	)	$	3,555
Trade names		1,410		(717	)		693
Noncompete agreements		384		(325	)		59
Intangible assets, net	$	9,024	$	(4,717	)	$	4,307

December 31, 2019	Cost		Accumulated amortization			Net
Payor relationships	$	7,230	$	(3,314	)	$	3,916
Trade names		1,410		(646	)		764
Noncompete agreements		384		(293	)		91
Intangible assets, net	$	9,024	$	(4,253	)	$	4,771

Summary of Future Amortization of Intangible Assets

The future amortization of intangible assets at June 30, 2020 was (in thousands):

Year ending December 31,
Remainder of 2020	$	464
2021		891
2022		864
2023		864
2024		864
Thereafter		360
Total future minimum lease payments	$	4,307

Summary of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrual for reimbursement claims and settlements, current	$	56,763	$	60,386
Commission and bonus		6,494		6,357
Vacation and payroll benefits		7,352		5,506
Accrued professional services		3,648		5,322
Other		4,153		6,044
Total	$	78,410	$	83,615

Summary of Other Long-term Liabilities

Other long-term liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrual for reimbursement claims and settlements, net of current portion	$	35,400	$	12,205
Other		1,147		654
Total	$	36,547	$	12,859

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2020

Stockholders Equity Note [Abstract]

Schedule of Preferred Stock Shares Authorized, Shares Issued and Outstanding, Per Share Price and Liquidation Preference

Preferred stock outstanding as of December 31, 2019 consisted of the following (in thousands, except share and per share data):

December 31, 2019	Shares Authorized		Shares Issued and Outstanding		Per Share Price at Issuance		Aggregate Liquidation Preference
Series A		4,120,000		4,120,000	$	0.48543	$	2,000
Series B		126,035,000		101,867,405		2.25000		229,202
Total preferred stock		130,155,000		105,987,405			$	231,202

Schedule of Reserved Shares of Common Stock, On An As-if-converted Basis, for Future Issuance

The Company reserved shares of common stock, on an as-if-converted basis, for future issuance as follows:

	June 30, 2020		December 31, 2019
Series A Preferred Stock		—		13,213,254
Series B Preferred Stock		—		16,488,731
Series B Preferred Stock Purchase Warrant		—		359,699
Common stock warrant		400,160		—
Restricted stock units outstanding		1,095,095		322,608
Outstanding options to purchase common stock		3,848,838		2,561,866
Available for future issuance under equity incentive plan		4,393,376		1,717,817
Total		9,737,469		34,663,975

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Options Activity under Plans

Activity under the 2012 Plan, the 2015 Plan, and the 2018 Third Amended Plan for the six months ended June 30, 2020, is set forth below (in thousands, except share and per share data):

	Stock Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance at December 31, 2019		2,561,866		$	9.01
Options granted		1,520,900			10.56
Options exercised		(77,609	)		1.90
Options forfeited/cancelled		(156,319	)		12.15
Balance at June 30, 2020		3,848,838		$	8.33		7.02	$	7,316
Vested and expected to vest at June 30, 2020		3,568,553		$	8.16		6.83	$	7,316
Vested and exercisable at June 30, 2020		2,067,251		$	6.36		4.87	$	7,316

Summary of Assumptions used to Determine Fair Value of Stock Options Granted

The following table sets forth the assumptions used to determine the fair value of stock options granted during the six months ended June 30, 2020:

	Six Months Ended June 30,
	2020
Risk-free interest rate	0.8% - 1.7%
Expected volatility	57.0% - 71.0%
Expected dividend yield		—
Expected life (years)	4.0 - 6.3 years

Schedule of Stock-based Compensation Expense

The following table presents total stock-based compensation expense included in each functional line item in the accompanying condensed consolidated statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Cost of sales	$	210	$	53	$	438	$	102
Research and development		850		206		1,512		382
Selling and marketing		512		129		885		251
General and administrative		1,452		209		2,246		417
Total stock-based compensation expense	$	3,024	$	597	$	5,081	$	1,152

Organization and Description of Business - Additional Information (Details) $ / shares in Units, $ in Thousands				3 Months Ended				6 Months Ended
	Jun. 23, 2020 USD ($) $ / shares shares	Jun. 18, 2020 USD ($) $ / shares shares	Jun. 10, 2020	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Description of stock split								On June 10, 2020, the Company amended its certificate of incorporation to reflect a one-for-6.178 reverse stock split of the Company’s common stock.
Stock split conversion ratio			0.162
Proceeds from issuance of common stock, net								$ 90,937	$ 442
Cash and cash equivalents				$ 113,613				113,613		$ 33,042
Accumulated deficit				(418,681)				(418,681)		$ (348,478)
Net loss				(52,783)	$ (17,152)	$ (16,409)	$ (24,019)	(69,935)	(40,428)
Cash used in operating activities								(44,403)	$ (37,526)
Mortgages
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Outstanding balance				3,200				3,200
Private Equity Firm \| 2017 Term Loan
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Outstanding balance				$ 75,000				$ 75,000
IPO \| Common Stock
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Common stock issued and sold \| shares	6,666,667	6,666,667
Share issued price per share \| $ / shares	$ 15.00	$ 15.00
Proceeds from issuance of common stock, net	$ 88,700	$ 88,700

Variable Interest Entities - Schedule of Assets and Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets
Cash and cash equivalents	$ 113,613	$ 33,042
Accounts receivable, net	14,382	22,189
Inventory	10,246	10,937
Prepaid expenses and other current assets	6,130	7,846
Property and equipment, net	15,725	15,891
Other assets	198	198
Goodwill	6,219	6,219
Other intangible assets, net	4,307	4,771
Total assets	186,416	101,727
Liabilities of Avero
Accounts payable	15,679	15,754
Current portion of capital lease obligations	516	727
Current portion of mortgages payable	247	241
Capital lease obligations, net of current portion	156	358
Mortgages payable, net of current portion	2,950	3,081
Other long-term liabilities	36,547	12,859
Total liabilities	203,576	185,601
Avero
Assets
Cash and cash equivalents	636	1,837
Accounts receivable, net	3,580	4,269
Inventory	2,221	2,572
Prepaid expenses and other current assets	1,268	1,181
Property and equipment, net	5,527	5,586
Other assets	30	30
Goodwill	6,219	6,219
Other intangible assets, net	4,307	4,771
Total assets	23,788	26,465
Liabilities of Avero
Accounts payable	2,123	2,450
Accrued expenses and other accrued liabilities	4,409	5,630
Current portion of capital lease obligations	45	59
Current portion of mortgages payable	177	173
Capital lease obligations, net of current portion	27	50
Mortgages payable, net of current portion	1,638	1,733
Other long-term liabilities	468	467
Total liabilities	$ 8,887	$ 10,562

Related Party Transactions - Additional Information (Details) - USD ($)			1 Months Ended	2 Months Ended	3 Months Ended		6 Months Ended
	May 08, 2020	Oct. 27, 2017	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 18, 2020	Apr. 03, 2020	Mar. 31, 2020	Feb. 29, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Debt discount amortization							$ 1,330,000	$ 802,000
Unamortized discount			$ 5,930,000	$ 5,930,000	$ 5,930,000		5,930,000						$ 6,034,000
Interest expense					2,507,000	$ 2,282,000	4,809,000	4,551,000
Change in fair value of derivative liability							(126,000)
Loss on extinguishment of debt							3,401,000
Unsecured Convertible Promissory Note
Related Party Transaction [Line Items]
Debt instrument, maturity date	May 08, 2022
Loan amount	$ 15,000,000
Debt discount amortization			200,000
Debt instrument, annual interest rate	8.00%
Conversion price percentage on IPO price	80.00%
Percentage of premium on aggregate principal amount	50.00%
Derivative liability, fair value	$ 3,600,000		3,800,000	3,800,000	$ 3,800,000		$ 3,800,000
Fair value of common shares issued			3,400,000
Unsecured Convertible Promissory Note \| Interest and Other Income (Expense), Net
Related Party Transaction [Line Items]
Change in fair value of derivative liability				$ 200,000
Loss on extinguishment of debt			$ 3,600,000
IPO \| Unsecured Convertible Promissory Note
Related Party Transaction [Line Items]
Number of shares on debt conversion			1,250,000
Series B Preferred Stock
Related Party Transaction [Line Items]
Preferred stock, shares issued			0	0	0		0			4,444,444		5,066,666	101,867,405
Shares issued, price per share												$ 2.25
Series B Preferred Stock \| Unsecured Convertible Promissory Note
Related Party Transaction [Line Items]
Convertible conversion price	$ 13.90
Percentage of price per share	80.00%
Series B Preferred Stock Purchase Warrant \| Common Stock \| IPO
Related Party Transaction [Line Items]
Warrants exercisable									400,160
2017 Term Loan
Related Party Transaction [Line Items]
Term loan			$ 75,000,000	$ 75,000,000	$ 75,000,000		$ 75,000,000						$ 75,000,000
Credit and Security Agreement and Series B Convertible Preferred Stock Purchase Agreement with Private Equity Firm
Related Party Transaction [Line Items]
Loan amount		$ 75,000,000
Debt discount amortization		$ 9,300,000
Credit and Security Agreement and Series B Convertible Preferred Stock Purchase Agreement with Private Equity Firm \| 2017 Term Loan
Related Party Transaction [Line Items]
Debt instrument, interest rate per annum		9.50%
Debt instrument, maturity date							Oct. 27, 2022
Debt instrument, covenant description							The 2017 Term Loan contains customary covenants, including a requirement to maintain a minimum unrestricted cash balance at all times of at least $5.0 million. The Company is in compliance with the 2017 Term Loan covenants. The 2017 Term Loan is secured by all tangible and intangible property and assets of the Company, with the exception of its intellectual property.
Proceeds from term loan		$ 65,700,000
Debt discount amortization					700,000	400,000	$ 1,100,000	800,000
Term loan			75,000,000	75,000,000	75,000,000		75,000,000						75,000,000
Unamortized discount			$ 5,900,000	$ 5,900,000	5,900,000		5,900,000						$ 6,000,000
Interest expense					$ 2,500,000	$ 2,200,000	$ 4,700,000	$ 4,400,000
Credit and Security Agreement and Series B Convertible Preferred Stock Purchase Agreement with Private Equity Firm \| 2017 Term Loan \| Series B Preferred Stock
Related Party Transaction [Line Items]
Proceeds from term loan, preferred stock and preferred stock purchase warrant		124,200,000
Credit and Security Agreement and Series B Convertible Preferred Stock Purchase Agreement with Private Equity Firm \| 2017 Term Loan \| Minimum
Related Party Transaction [Line Items]
Unrestricted cash		$ 5,000,000
Subscription Agreement with Lender \| Series B Preferred Stock
Related Party Transaction [Line Items]
Preferred stock, shares issued											967,130
Shares issued, price per share											$ 2.25

Mortgages Payable - Schedule of Minimum Principal Payments (Details) - Mortgages $ in Thousands	Jun. 30, 2020 USD ($)
Debt Instrument [Line Items]
Remainder of 2020	$ 122
2021	253
2022	265
2023	277
2024	1,323
Thereafter	957
Total future minimum payments	3,197
Less current portion of mortgages payable	(247)
Mortgages payable, net of current portion	$ 2,950

Commitments and Contingencies - Additional Information (Details) - USD ($)			1 Months Ended	3 Months Ended			6 Months Ended		12 Months Ended
	Jul. 23, 2020	Jul. 21, 2020	Jun. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 05, 2018	Oct. 18, 2018	Jun. 25, 2018
Commitment and Contingencies [Line Items]
Rent expense for operating leases				$ 2,000,000		$ 2,200,000	$ 4,200,000	$ 4,300,000
Weighted average imputed interest rate			5.98%	5.98%			5.98%
Income taxes percentage of payments related to civil settlement damages awards and tax refund, CARES Act					65.00%		65.00%
Acceleration scheduled payment due period							2025-12
Maximum acceleration amount							$ 24,960,000
Income tax discrete benefit related to net operating loss, CARES Act					$ 37,700,000		37,700,000
Accelerated payments			$ 24,500,000	$ 24,500,000			24,500,000
Accrual settlement amount					13,200,000					$ 35,800,000
Accrued Expenses And Other Current Liabilities
Commitment and Contingencies [Line Items]
Remaining accrual balance			19,700,000	19,700,000			19,700,000
Other Long Term Liabilities
Commitment and Contingencies [Line Items]
Remaining accrual balance			29,300,000	29,300,000			$ 29,300,000
Cigna Settlement Obligation \| Avero
Commitment and Contingencies [Line Items]
Litigation settlement agreement date							December 5, 2018
Litigation settlement amount agreed to pay to other party											$ 12,000,000
Litigation settlement upfront payment											6,000,000
Remaining settlement amount											$ 6,000,000
Litigation settlement reduction of revenue									$ 12,000,000
Cigna Settlement Obligation \| Accrued Expenses And Other Current Liabilities \| Avero
Commitment and Contingencies [Line Items]
Remaining accrual balance			1,500,000	1,500,000			$ 1,500,000
Aetna Settlement Agreement
Commitment and Contingencies [Line Items]
Litigation settlement agreement date							November 2019
Litigation settlement amount agreed to pay to other party													$ 15,000,000
Litigation settlement reduction of revenue									$ 15,000,000
Aetna Settlement Agreement \| Accrued Expenses And Other Current Liabilities
Commitment and Contingencies [Line Items]
Remaining accrual balance			7,500,000	7,500,000			$ 7,500,000
United Health Group Settlement Agreement
Commitment and Contingencies [Line Items]
Remaining accrual balance			23,000,000	23,000,000			$ 23,000,000
Litigation settlement agreement date							September 30, 2019
Litigation settlement amount agreed to pay to other party												$ 30,000,000
Litigation settlement upfront payment												$ 2,000,000
Litigation settlement amount for first two installments			5,000,000	5,000,000			$ 5,000,000
Litigation settlement amount for remaining installments			6,000,000	6,000,000			6,000,000
United Health Group Settlement Agreement \| Accrued Expenses And Other Current Liabilities
Commitment and Contingencies [Line Items]
Remaining accrual balance			17,000,000	17,000,000			17,000,000
United Health Group Settlement Agreement \| Other Long Term Liabilities
Commitment and Contingencies [Line Items]
Remaining accrual balance			6,000,000	6,000,000			6,000,000
Civil Settlement Agreement
Commitment and Contingencies [Line Items]
Contractual obligation					49,000,000
Initial payment amount					8,000,000
Contractual obligation in December 2020					4,000,000
Contractual obligation in December 2021					5,000,000
Contractual obligation in December 2022					7,000,000
Contractual obligation in December 2023					8,000,000
Contractual obligation in December 2024					9,000,000
Contractual obligation in December 2025					8,000,000
SDNY Civil Settlement Agreement
Commitment and Contingencies [Line Items]
Income tax discrete benefit related to net operating loss, CARES Act			22,700,000		37,700,000
SDNY Civil Settlement Agreement \| Subsequent Event
Commitment and Contingencies [Line Items]
Contractual obligation	$ 19,400,000
Initial payment amount	9,100,000
Contractual obligation in December 2020	1,600,000
Contractual obligation in December 2021	2,000,000
Contractual obligation in December 2022	2,800,000
Contractual obligation in December 2023	3,200,000
Contractual obligation in December 2024	800,000
Contractual obligation other than initial payment amount payable to government	$ 9,100,000
Interest rate	1.25%
Income taxes percentage of payments related to civil settlement damages awards and tax refund, CARES Act	26.00%
Acceleration scheduled payment due period	2025-12
Maximum acceleration amount	$ 4,200,000
Additional contractual obligation payable	5,900,000
Accelerated payments	3,900,000
SDNY Civil Settlement Agreement \| Subsequent Event \| U.S. Federal Government
Commitment and Contingencies [Line Items]
Contractual obligation	9,700,000
SDCA Civil Settlement Agreement
Commitment and Contingencies [Line Items]
Income tax discrete benefit related to net operating loss, CARES Act			22,700,000
SDCA Civil Settlement Agreement \| Subsequent Event
Commitment and Contingencies [Line Items]
Contractual obligation		$ 16,400,000
Initial payment amount		7,700,000
Contractual obligation in December 2020		1,300,000
Contractual obligation in December 2021		1,700,000
Contractual obligation in December 2022		2,300,000
Contractual obligation in December 2023		2,700,000
Contractual obligation in December 2024		700,000
Contractual obligation other than initial payment amount payable to government		$ 7,700,000
Interest rate		1.25%
Income taxes percentage of payments related to civil settlement damages awards and tax refund, CARES Act		22.00%
Acceleration scheduled payment due period		2024-12
Maximum acceleration amount		$ 3,400,000
Additional contractual obligation payable		4,900,000
Accelerated payments		3,300,000
SDCA Civil Settlement Agreement \| Subsequent Event \| U.S. Federal Government
Commitment and Contingencies [Line Items]
Contractual obligation		$ 10,000,000
Non-Prosecution Agreement \| Subsequent Event
Commitment and Contingencies [Line Items]
Maximum extension of term of agreement		24 months
State Settlement Agreements
Commitment and Contingencies [Line Items]
Contractual obligation			13,200,000	13,200,000			13,200,000
Contractual obligation plus interest			$ 49,000,000	$ 49,000,000			$ 49,000,000
Minimum
Commitment and Contingencies [Line Items]
Noncancelable operating lease term			2 years	2 years			2 years
Income taxes civil settlement damages awards and tax refund amount in single year, CARES Act					$ 5,000,000		$ 5,000,000
Minimum \| SDNY Civil Settlement Agreement \| Subsequent Event
Commitment and Contingencies [Line Items]
Income taxes civil settlement damages awards and tax refund amount in single year, CARES Act	$ 5,000,000
Minimum \| SDCA Civil Settlement Agreement \| Subsequent Event
Commitment and Contingencies [Line Items]
Income taxes civil settlement damages awards and tax refund amount in single year, CARES Act		$ 5,000,000
Maximum
Commitment and Contingencies [Line Items]
Noncancelable operating lease term			4 years	4 years			4 years

Commitments and Contingencies - Schedule of Future Minimum Payments Under Capital Leases (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Remainder of 2020	$ 331
2021	324
2022 and thereafter	47
Total minimum lease payments	702
Less amounts representing interest	(30)
Present value of minim capital lease payments	672
Less current portion of capital lease obligations	(516)
Capital lease obligations, net of current portion	$ 156

Stockholders' Equity - Additional Information (Details) $ / shares in Units, $ in Thousands									1 Months Ended		3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 23, 2020 USD ($) $ / shares shares	Jun. 18, 2020 USD ($) $ / shares shares	Jun. 10, 2020	Apr. 03, 2020 USD ($) $ / shares shares	Dec. 19, 2019 USD ($) $ / shares shares	Nov. 22, 2019 USD ($) $ / shares shares	Nov. 12, 2019 USD ($) $ / shares shares	Aug. 27, 2019 USD ($) $ / shares shares	Feb. 29, 2020 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) Appraisal shares	Jun. 30, 2020 USD ($) $ / shares shares	Jun. 30, 2020 USD ($) Vote $ / shares shares	Jun. 30, 2019 USD ($) shares	Dec. 31, 2019 USD ($) shares	Mar. 31, 2020 $ / shares shares	Mar. 31, 2019 shares	Dec. 31, 2018 shares	Oct. 27, 2017 shares
Class Of Stock [Line Items]
Common stock authorized to issue											350,000,000	350,000,000		300,000,000
Preferred stock, shares authorized											10,000,000	10,000,000		130,155,000
Number of vote per share of common stock held \| Vote												1
Proceeds from issuance of common stock, net \| $												$ 90,937	$ 442
Deferred offering costs \| $														$ 1,100
Stock repurchased during period											3,474,572	3,474,572		3,474,572
Stock value repurchased during period \| $											$ 18,771	$ 18,771		$ 18,771
Stock split			0.162
Accumulated deficit \| $											$ 418,681	418,681		348,478
Amount received in exchange for issuance of shares of preferred stock \| $												$ 21,307
August 2019 Financing
Class Of Stock [Line Items]
Preferred stock dividends, shares												4,017,512
Increase in accumulated deficit \| $														13,100
Exchange Agreement
Class Of Stock [Line Items]
Exchange ratio of shares								3.20%
Accumulated deficit \| $														27,600
November Series B Preferred Stock Purchase Agreement
Class Of Stock [Line Items]
Increase in accumulated deficit \| $														$ 36,400
Series B Preferred Stock Purchase Warrant \| August 2019 Financing
Class Of Stock [Line Items]
Preferred stock, shares issued								9,090,910
Shares issued, price per share \| $ / shares								$ 2.75
Consideration paid \| $								$ 25,000
Amended underlying preferred stock purchase warrant								1,416,431										1,818,182
Series B Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares authorized											0	0		126,035,000
Preferred stock, shares issued				4,444,444					5,066,666		0	0		101,867,405
Shares issued, price per share \| $ / shares				$ 2.25
Consideration paid \| $														$ 102
Amount received in exchange for issuance of shares of preferred stock \| $				$ 10,000					$ 11,400
Shares issued, price per share \| $ / shares									$ 2.25
Preferred stock, shares outstanding											0	0		101,867,405
Series B Preferred Stock \| August 2019 Financing
Class Of Stock [Line Items]
Stock split												1.28
Stock split, description												1.28-for-1
Series B Preferred Stock \| Exchange Agreement
Class Of Stock [Line Items]
Number of shares issued on conversion/exchange								35,664,240
Series B Preferred Stock \| November Series B Preferred Stock Purchase Agreement
Class Of Stock [Line Items]
Preferred stock, shares issued							11,111,111
Amount received in exchange for issuance of shares of preferred stock \| $							$ 25,000
Shares issued, price per share \| $ / shares							$ 2.25
Additional shares of preferred stock issued							13,985,993
Series B Preferred Stock \| November Series B Preferred Stock Purchase Agreement \| Series B Preferred Stock Purchase Warrant Issued and Outstanding
Class Of Stock [Line Items]
Stock split							1.22
Stock split, description												1.22-for-1 stock split
Conversion price and exercise price of preferred stock and preferred stock purchase warrants \| $ / shares							$ 2.75
Reduction in conversion price and exercise price of preferred stock and preferred stock purchase warrants \| $ / shares							$ 2.25
Adjusted preferred stock purchase warrant to purchase shares of preferred stock							2,222,222
Series B Preferred Stock \| Additional Equity Financing
Class Of Stock [Line Items]
Preferred stock, shares issued					11,111,111	2,722,222
Amount received in exchange for issuance of shares of preferred stock \| $					$ 25,000	$ 6,100
Shares issued, price per share \| $ / shares					$ 2.25	$ 2.25
Series B Preferred Stock \| Credit Agreement Amendment
Class Of Stock [Line Items]
Preferred stock, shares issued															967,130
Shares issued, price per share \| $ / shares															$ 2.25
Series A-1 Preferred Stock
Class Of Stock [Line Items]
Preferred stock, shares authorized							0
Preferred stock, shares outstanding							0
Series A-1 Preferred Stock \| Exchange Agreement
Class Of Stock [Line Items]
Shares outstanding								1,500,000
Exchange ratio of shares								1.20%
Minimum \| August 2019 Financing
Class Of Stock [Line Items]
Convertible conversion and exercise price \| $ / shares											$ 2.75	$ 2.75
Maximum \| August 2019 Financing
Class Of Stock [Line Items]
Convertible conversion and exercise price \| $ / shares											$ 3.53	$ 3.53
Repurchase Program
Class Of Stock [Line Items]
Percentage of equity interest repurchased by certain employee										25.00%
Stock repurchased during period										800,000
Stock value repurchased during period \| $										$ 6,000
Repurchase Program \| Minimum
Class Of Stock [Line Items]
Reasonable period of time to hold the shares under the program										6 years
Number of common stock appraisal valuations covered \| Appraisal										2
Common Stock
Class Of Stock [Line Items]
Shares outstanding											50,022,606	50,022,606	8,397,066	8,451,415	8,508,144	8,381,130	8,112,581
Number of shares issued on conversion/exchange		33,443,562									1,250,000
Number of shares issued to an adjustment in the conversion rate		2,045,522
Common Stock \| Exchange Agreement
Class Of Stock [Line Items]
Number of shares issued on conversion/exchange								4,810,651
IPO \| Common Stock
Class Of Stock [Line Items]
Common stock issued and sold	6,666,667	6,666,667
Shares issued, price per share \| $ / shares	$ 15.00	$ 15.00
Proceeds from issuance of common stock, net \| $	$ 88,700	$ 88,700
Underwriting discounts and commissions \| $		7,000
Other offering expenses \| $		$ 4,300
IPO \| Common Stock \| Series B Preferred Stock Purchase Warrant
Class Of Stock [Line Items]
Adjusted preferred stock purchase warrant to purchase shares of preferred stock		400,160

Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Mar. 04, 2020	Mar. 31, 2019	Feb. 28, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 900	$ 3,024	$ 597	$ 5,081	$ 1,152
Weighted-average grant date fair value of options granted				$ 6.78	$ 7.50
Unrecognized compensation cost related to unvested stock options expected to be recognized amount		$ 10,300		$ 10,300		$ 4,100
Unrecognized compensation cost related to unvested stock options expected to be recognized over remaining weighted average vesting period				3 years 2 months 26 days		2 years 8 months 8 days
2018 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grant								1,100,000	700,000
Second Amended and Restated 2012 Stock Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options issuable under the plan									0
2015 Consultant Stock Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options issuable under the plan									0
Second Amended and Restated 2018 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grant						2,700,000
Third Amended and Restated 2018 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grant							7,600,000
2018 Third Amended Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grant		4,393,376		4,393,376

Stock-Based Compensation - Summary of Stock Options Activity under Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock Options Outstanding Balance at December 31, 2019	2,561,866
Stock Options Outstanding Options granted	1,520,900
Stock Options Outstanding Options exercised	(77,609)
Stock Options Outstanding Options forfeited/cancelled	(156,319)
Stock Options Outstanding Balance at June 30, 2020	3,848,838
Stock Options Outstanding Vested and expected to vest at June 30, 2020	3,568,553
Stock Options Outstanding Vested and exercisable at June 30, 2020	2,067,251
Weighted-Average Exercise Price Balance at December 31, 2019	$ 9.01
Weighted-Average Exercise Price Options granted	10.56
Weighted-Average Exercise Price Options exercised	1.90
Weighted-Average Exercise Price Options forfeited/cancelled	12.15
Weighted-Average Exercise Price Balance at June 30, 2020	8.33
Weighted-Average Exercise Price Vested and expected to vest at June 30, 2020	8.16
Weighted-Average Exercise Price Vested and exercisable at June 30, 2020	$ 6.36
Weighted-Average Remaining Contractual Term (in years) Balance at June 30, 2020	7 years 7 days
Weighted-Average Remaining Contractual Term (in years) Vested and expected to vest at June 30, 2020	6 years 9 months 29 days
Weighted-Average Remaining Contractual Term (in years) Vested and exercisable at June 30, 2020	4 years 10 months 13 days
Aggregate Intrinsic Value Balance at June 30, 2020	$ 7,316
Aggregate Intrinsic Value Vested and expected to vest at June 30, 2020	7,316
Aggregate Intrinsic Value Vested and exercisable at June 30, 2020	$ 7,316

Summary of Significant Accounting Policies - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020 Segment
Summary Of Significant Accounting Policies [Line Items]
Number of operating segment	1
Maximum
Summary Of Significant Accounting Policies [Line Items]
Amortization period	1 year

Summary of Significant Accounting Policies - Schedule of Accounts Receivable Balances and Revenues as Percentage of Total Accounts Receivable Balances and Revenues (Details) - Customer Concentration Risk	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Blue Shield of Texas \| Accounts Receivable
Concentration Risk [Line Items]
Percentage of accounts receivable			12.70%		0.10%
Blue Shield of Texas \| Revenue
Concentration Risk [Line Items]
Percentage of revenues	41.90%	12.70%	42.20%	14.50%
Government Health Benefits Programs \| Accounts Receivable
Concentration Risk [Line Items]
Percentage of accounts receivable			24.40%		16.70%
Government Health Benefits Programs \| Revenue
Concentration Risk [Line Items]
Percentage of revenues	(14.40%)	14.50%	(26.60%)	16.20%
Aetna \| Accounts Receivable
Concentration Risk [Line Items]
Percentage of accounts receivable			6.20%		6.00%
Aetna \| Revenue
Concentration Risk [Line Items]
Percentage of revenues	13.80%	7.60%	12.90%	7.60%
Anthem \| Accounts Receivable
Concentration Risk [Line Items]
Percentage of accounts receivable			6.50%		0.50%
Anthem \| Revenue
Concentration Risk [Line Items]
Percentage of revenues	14.00%	4.80%	12.10%	6.40%
United Healthcare \| Accounts Receivable
Concentration Risk [Line Items]
Percentage of accounts receivable			8.30%		31.50%
United Healthcare \| Revenue
Concentration Risk [Line Items]
Percentage of revenues	4.80%	40.10%	4.40%	31.30%

Revenues - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020
Revenue From Contract With Customer [Abstract]
Amount of reimbursement overpayment received from government payors					$ 10.3
Accrued refunds to government payors	$ 10.3		$ 10.3		$ 10.3
Period of deadline to report and return overpayment to government programs from the time overpayments determined and quantified			60 days
Performance obligations resulted in increase (decrease) of revenue	$ (6.1)	$ 15.1	$ (18.9)	$ 15.5

Mortgages Payable - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019	Jan. 31, 2014
Comerica Bank
Debt Instrument [Line Items]
Mortgages Payable			$ 1.8
Outstanding balance	$ 1.4	$ 1.4
Mortgage maturity year	2024
Comerica Bank \| LIBOR
Debt Instrument [Line Items]
Interest rate	2.94%
American Bank of Commerce
Debt Instrument [Line Items]
Outstanding balance	$ 1.8	$ 1.9
Interest rate	4.25%
Mortgage maturity year	2029

Net Loss Per Share - Summary of Potentially Dilutive Securities Not Included in Calculation of Diluted Loss Per Share (Details) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share	5,344,093	23,496,379
Options to Purchase Common Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share	3,848,838	2,636,721
Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share	1,095,095	313,785
Common Stock Warrant
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share	400,160
Series A Preferred Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share		13,213,254
Series A-1 Preferred Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share		4,810,649
Series B Preferred Stock
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share		2,292,700
Series B Preferred Stock Purchase Warrant
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities not included in calculation of diluted loss per share		229,270

Variable Interest Entities - Additional Information (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 05, 2018
Variable Interest Entity [Line Items]
Liabilities		$ 203,576,000		$ 203,576,000			$ 185,601,000
Remaining settlement obligation of mortgage loan		1,500,000		1,500,000			3,000,000
Cigna Settlement Obligation
Variable Interest Entity [Line Items]
Settlement of obligations guaranteed						$ 12,000,000
Avero
Variable Interest Entity [Line Items]
Term of agreement	10 years
Financial support for obligation settlement		800,000		1,500,000
Liabilities		8,887,000		8,887,000			10,562,000
Mortgage payable		1,800,000		1,800,000			1,900,000
Avero \| Recourse
Variable Interest Entity [Line Items]
Liabilities		$ 0		$ 0			$ 0
Avero \| Cigna Settlement Obligation
Variable Interest Entity [Line Items]
Litigation settlement amount agreed to pay to other party								$ 12,000,000
Litigation settlement upfront payment								6,000,000
Remaining settlement amount								$ 6,000,000
Financial support for obligation settlement			$ 800,000		$ 1,500,000

Balance Sheet Components - Summary of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Property Plant And Equipment [Line Items]
Total property and equipment	$ 33,796	$ 33,201
Less accumulated depreciation and amortization	(18,071)	(17,310)
Property and equipment, net	15,725	15,891
Computers and Software [Member]
Property Plant And Equipment [Line Items]
Total property and equipment	13,699	13,913
Building and Leasehold Improvements [Member]
Property Plant And Equipment [Line Items]
Total property and equipment	9,466	9,491
Laboratory Equipment [Member]
Property Plant And Equipment [Line Items]
Total property and equipment	6,242	5,580
Furniture, Fixtures, and Office Equipment [Member]
Property Plant And Equipment [Line Items]
Total property and equipment	1,663	1,633
Construction in Progress [Member]
Property Plant And Equipment [Line Items]
Total property and equipment	1,635	1,493
Land [Member]
Property Plant And Equipment [Line Items]
Total property and equipment	$ 1,091	$ 1,091

Balance Sheet Components - Summary of Capital Leases Included in Property and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Capital leases	$ 2,520	$ 3,692
Less accumulated depreciation and amortization	(1,731)	(2,239)
Capital leases included in property and equipment, net	$ 789	$ 1,453

Balance Sheet Components - Summary of Intangible Assets, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Finite Lived Intangible Assets [Line Items]
Cost	$ 9,024	$ 9,024
Accumulated amortization	(4,717)	(4,253)
Net	4,307	4,771
Payor Relationships [Member]
Finite Lived Intangible Assets [Line Items]
Cost	7,230	7,230
Accumulated amortization	(3,675)	(3,314)
Net	3,555	3,916
Trade Names [Member]
Finite Lived Intangible Assets [Line Items]
Cost	1,410	1,410
Accumulated amortization	(717)	(646)
Net	693	764
Noncompete Agreements [Member]
Finite Lived Intangible Assets [Line Items]
Cost	384	384
Accumulated amortization	(325)	(293)
Net	$ 59	$ 91

Balance Sheet Components - Summary of Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Remainder of 2020	$ 464
2021	891
2022	864
2023	864
2024	864
Thereafter	360
Net	$ 4,307	$ 4,771

Balance Sheet Components - Summary of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Accrual for reimbursement claims and settlements, current	$ 56,763	$ 60,386
Commission and bonus	6,494	6,357
Vacation and payroll benefits	7,352	5,506
Accrued professional services	3,648	5,322
Other	4,153	6,044
Total	$ 78,410	$ 83,615

Balance Sheet Components - Summary of Other Long-term Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Accrual for reimbursement claims and settlements, net of current portion	$ 35,400	$ 12,205
Other	1,147	654
Total	$ 36,547	$ 12,859

Fair Value Measurements - Summary of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Fair Value on Recurring Basis \| Quoted Prices for Identical Assets (Level 1) \| Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total assets at fair value	$ 105,173	$ 24,432

Fair Value Measurements - Additional Information (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Transfer of assets from level 1 to level 2	$ 0		$ 0
Transfer of assets from level 2 to level 1	0		$ 0
2017 Term Loan
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Carrying value of term loan	75,000,000	$ 75,000,000
Fair value of term loan	$ 78,100,000	$ 79,800,000

Commitments and Contingencies - Schedule of Net Minimum Payments Under Non-Cancelable Operating Leases (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Remainder of 2020	$ 3,927
2021	5,148
2022	2,911
2023	996
2024 and thereafter	38
Total future minimum lease payments	$ 13,020

Stockholders' Equity - Schedule of Preferred Stock Shares Authorized, Shares Issued and Outstanding, Per Share Price and Liquidation Preference (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Class Of Stock [Line Items]
Shares Authorized	10,000,000	130,155,000
Shares Issued and Outstanding		105,987,405
Aggregate Liquidation Preference		$ 231,202
Series A
Class Of Stock [Line Items]
Shares Authorized	0	4,120,000
Shares Issued and Outstanding		4,120,000
Per Share Price at Issuance		$ 0.48543
Aggregate Liquidation Preference		$ 2,000
Series B
Class Of Stock [Line Items]
Shares Authorized	0	126,035,000
Shares Issued and Outstanding		101,867,405
Per Share Price at Issuance		$ 2.25000
Aggregate Liquidation Preference		$ 229,202

Stockholders' Equity - Schedule of Reserved Shares of Common Stock, On An As-if-converted Basis, for Future Issuance (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Class Of Stock [Line Items]
Common stock shares reserved for future issuance	$ 9,737,469	$ 34,663,975
Series A Preferred Stock
Class Of Stock [Line Items]
Common stock shares reserved for future issuance		13,213,254
Series B Preferred Stock
Class Of Stock [Line Items]
Common stock shares reserved for future issuance		16,488,731
Series B Preferred Stock Purchase Warrant
Class Of Stock [Line Items]
Common stock shares reserved for future issuance		359,699
Common Stock Warrant
Class Of Stock [Line Items]
Common stock shares reserved for future issuance	400,160
Restricted Stock Units Outstanding
Class Of Stock [Line Items]
Common stock shares reserved for future issuance	1,095,095	322,608
Outstanding Options to Purchase Common Stock
Class Of Stock [Line Items]
Common stock shares reserved for future issuance	3,848,838	2,561,866
Available for Future Issuance under Equity Incentive Plan
Class Of Stock [Line Items]
Common stock shares reserved for future issuance	$ 4,393,376	$ 1,717,817

Stock-Based Compensation - Summary of Assumptions used to Determine Fair Value of Stock Options Granted (Details)	6 Months Ended
	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk-free interest rate, minimum	0.80%
Risk-free interest rate, maximum	1.70%
Expected volatility, minimum	57.00%
Expected volatility, maximum	71.00%
Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (years)	4 years
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (years)	6 years 3 months 18 days