5. Balance Sheet Components

Property and Equipment, net

The Company’s property and equipment consisted of the following:


		September 30,		December 31,
	Useful Life	2017		2016
		(in thousands)
Machinery and equipment	3-5 years	$	31,515	$	27,303
Furniture and fixtures	3 years		1,216		1,087
Computer equipment	3 years		1,951		861
Capitalized software held for internal use	3 years		4,081		2,172
Leasehold improvements	Lesser of useful life or lease term		10,668		10,444
Construction-in-process			6,149		9,759
			55,580		51,626
Less: Accumulated depreciation and amortization			(25,163)		(19,337)
Total Property and Equipment, net		$	30,417	$	32,289

During the nine months ended September 30, 2017, the Company recorded an asset impairment charge of $0.6 million in cost of product revenues in the statements of operations and comprehensive loss. This charge was recorded following an impairment analysis completed in the fourth quarter of 2016 on certain sequencing and automation equipment whose service lives were determined to be significantly shorter than initially expected. Those equipment were completely phased out in January 2017 as the Company began its transition to the next generation of sequencing and automation equipment to help streamline its production workflows.

Other Assets

In April 2016, the Company entered into a four-year agreement with a health insurance carrier whereby in return for partial exclusivity and the right to pricing benefits the Company agreed to pay total consideration of $3.2 million. The total consideration was paid in the third quarter of 2016. As of September 30, 2017 and December 31, 2016, $2.0 million and $2.6 million of deferred costs related to the total consideration paid were included in other long-term assets, respectively. The deferred costs are being amortized ratably over the four-year term of the agreement and for the three and nine months ended September 30, 2017, the Company amortized $0.2 million and $0.6 million of such costs, respectively, which was recorded as a reduction of product revenue in the statements of operations and comprehensive loss.

In August 2017, the Company entered into the 2017 Term Loan with OrbiMed and issued 300,000 shares of its common stock in exchange for OrbiMed’s initial and remaining funding commitments (as described in Note 8). The consideration had a fair value of $2.4 million and is accounted for as a debt discount. The Company has classified $1.8 million of the debt discount as a direct reduction from the outstanding debt balance, while $0.6 million remains in noncurrent assets for the unused borrowing capacity of $25.0 million. The debt discount is being amortized on a straight-line basis over the term of the loan. For the three months ended September 30, 2017, amortization of the debt discount was insignificant. As of September 30, 2017, total unamortized debt discount was $0.6 million.

Accrued Compensation

The Company’s accrued compensation consisted of the following:


	September 30,		December 31,
	2017		2016
	(in thousands)
Accrued paid time off	$	1,801	$	1,892
Accrued commissions		2,951		3,868
Accrued bonuses		1,950		2,387
Other accrued compensation		2,726		2,920
Total accrued compensation	$	9,428	$	11,067

Other Accrued Liabilities

The Company’s other accrued liabilities consisted of the following:


	September 30,		December 31,
	2017		2016
	(in thousands)
Reserves for refunds to insurance carriers	$	8,138	$	7,535
Accrued charges for outsourced testing		6,033		3,261
Testing and laboratory materials from suppliers		1,151		543
Other accrued expenses		3,466		4,521
Marketing and corporate affairs		1,005		202
Legal, audit and consulting fees		289		180
Accrued shipping charges		370		467
Sales tax payable		351		459
Accrued specimen service fees		958		469
Accrued rent		766		195
Clinical trials and studies		495		388
Leasehold improvement projects in progress		—		1,659
Total other accrued liabilities	$	23,022	$	19,879