Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired.

The following table presents details of the Company’s goodwill for the six months ended June 30, 2016 (in thousands):

	CareDx		Allenex			Total
Balance as of December 31, 2015	$	12,005	$	—		$	12,005
Goodwill acquired		—		16,786			16,786
Foreign currency translation adjustments		—		(719	)		(719	)
Balance as of June 30, 2016	$	12,005	$	16,067		$	28,072

The gross carrying amount of goodwill may change due to the effects of foreign currency fluctuations as a result of acquiring an entity with a functional currency other than the U.S. dollar.

Intangible Assets

The following tables present details of the Company’s intangible assets as of June 30, 2016 (in thousands):

	June 30, 2016
	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation			Net Carrying Amount		Weighted Average Remaining Useful Life (In Years)
Intangible assets with finite lives:
Customer relationships	$	12,650	$	(175	)	$	(547	)	$	11,928		14.5
Developed technology		11,650		(245	)		(504	)		10,901		9.5
Trademarks		2,260		(31	)		(98	)		2,131		14.5
Acquired contracts		490		(50	)		(21	)		419		1.8
Total intangible assets with finite lives		27,050		(501	)		(1,170	)		25,379		12.1
Acquired in-process technology―dd-cfDNA		6,650		—			—			6,650
Acquired in-process technology―QTYPE		4,510		—			(195	)		4,315
Total intangible assets	$	38,210	$	(501	)	$	(1,365	)	$	36,344

The gross carrying amount of intangible assets and the related amortization expense of intangible assets may change due to the effects of foreign currency fluctuations as a result of acquiring an entity with a functional currency other than the U.S. dollar. Amortization expense was $0.5 million for each of the three and six months ended June 30, 2016, of which $0.3 million was amortized to cost of product. There was no amortization recorded for the three and six months ended June 30, 2015, as the Company only had an intangible asset related to acquired in-process technology with an indefinite useful live in that period.

Intangible assets are carried at cost less accumulated amortization. Amortization expenses are recorded to cost of product and sales and marketing. Acquired IPR&D of $11.2 million has not reached technological feasibility as of June 30, 2016 and is therefore not subject to amortization. As such, the Company excluded amortization of acquired in-process technology from the future amortization expense table below.

The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of June 30, 2016 (in thousands):

Years Ending December 31,	Cost of Product		Sales and Marketing		Total
Remainder of 2016	$	690	$	485	$	1,175
2017		1,381		970		2,351
2018		1,216		970		2,186
2019		1,147		970		2,117
2020		1,147		970		2,117
2021		1,147		970		2,117
Thereafter		4,590		8,726		13,316
Total future amortization expense	$	11,318	$	14,061	$	25,379

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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