COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Leases

Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows:


	Nine Months Ended September 30, 2020
(In thousands)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	12,827	$	3,744
Operating cash flows from finance leases	125		—
Finance cash flows from finance leases	620		—
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities (1)	13,662		20,147
Right-of-use assets obtained in exchange for new finance lease liabilities	17,420		—

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(1)For the nine months ended September 30, 2019, this includes right-of-use assets obtained from the initial adoption of ASC 842 of approximately $17.9 million.

As of September 30, 2020 and December 31, 2019, the Company’s right-of-use assets from operating leases are $129.8 million and $126.4 million, respectively, which are reported in operating lease right-of-use assets in the Company’s condensed consolidated balance sheets. As of September 30, 2020, the Company has outstanding operating lease obligations of $134.7 million, of which $10.7 million is reported in operating lease liabilities, current portion and $124.0 million is reported in operating lease liabilities, less current portion in the Company’s condensed consolidated balance sheets. As of December 31, 2019, the Company had outstanding operating lease obligations of $126.6 million, of which $7.9 million is reported in operating lease liabilities, current portion and $118.7 million is reported in operating lease liabilities, less current portion in the Company’s condensed consolidated balance sheets. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the U.S. Treasury rate and an indicative Moody’s rating for operating leases. The Company’s weighted average discount rate and weighted average lease term remaining on operating lease liabilities is approximately 6.83% and 8.95 years, respectively.

As of September 30, 2020 and December 31, 2019, the Company’s right-of-use assets from finance leases are $16.9 million and $0.3 million, respectively, which are reported in other long-term assets, net in the Company’s condensed consolidated balance sheets. As of September 30, 2020, the Company has outstanding finance lease obligations of $16.9 million, of which $4.0 million is reported in other current liabilities and $12.9 million is reported in other long-term liabilities in the Company’s condensed consolidated balance sheets. As of December 31, 2019, the Company had outstanding finance lease obligations of $0.2 million, of which $32,000 is reported in other current liabilities and $0.2 million is reported in other long-term liabilities in the Company’s condensed consolidated balance sheets. The Company calculates its incremental borrowing rates for specific lease terms, used to discount future lease payments, as a function of the U.S. Treasury rate and an indicative Moody’s rating for finance leases. The Company’s weighted average discount rate and weighted average lease term remaining on finance lease liabilities is approximately 5.87% and 3.86 years, respectively

Legal Matters

The Company is currently responding to civil investigative demands initiated by the United States Department of Justice (“DOJ”) concerning (1) Genomic Health’s compliance with the Medicare Date of Service billing regulations and (2) allegations that the Company offered or gave gift cards to patients in exchange for returning the Cologuard screening test, in violation of the Federal Anti-Kickback Statute and False Claims Act. The Company has

been cooperating with these inquires and has produced documents in response thereto. Adverse outcomes from these investigations could include the Company being required to pay treble damages, incur civil and criminal penalties, paying attorneys' fees, entering into a corporate integrity agreement, being excluded from participation in government healthcare programs, including Medicare and Medicaid, and other adverse actions that could materially and adversely affect the Company's business, financial condition and results of operation.

The DOJ's investigations are still in process and the scope and outcome of the investigations is not determinable at this time. Refer to the Company’s 2019 Form 10-K for additional information on the Company's fair value determination of the pre-acquisition loss contingency related to the Genomic Health investigation. There can be no assurance that any settlement, resolution, or other outcome of these matters during any subsequent reporting period will not have a material adverse effect on the Company’s results of operations or cash flows for that period or on the Company’s financial position.