6. Balance Sheet Components

Allowance for Doubtful Accounts

The following table presents a reconciliation of the allowance for doubtful accounts:


	December 31,		December 31,		December 31,
	2018		2017		2016
	(in thousands)
Beginning balance	$	2,000	$	1,890	$	971
Provision for estimated bad debts		(41)		143		984
Write offs		(171)		(33)		(65)
Ending balance	$	1,788	$	2,000	$	1,890

Property and Equipment, net

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


		December 31,		December 31,
	Useful Life	2018		2017
		(in thousands)
Machinery and equipment	3-5 years	$	35,400	$	31,825
Furniture and fixtures	3 years		1,319		1,216
Computer equipment	3 years		2,117		1,958
Capitalized software held for internal use	3 years		4,868		4,465
Leasehold improvements	Life of lease		10,916		10,691
Construction-in-process			4,013		6,497
			58,633		56,652
Less: Accumulated depreciation and amortization			(34,297)		(26,985)
Total Property and Equipment, net		$	24,336	$	29,667

All of the Company’s long-lived assets are located in the United States.

During the year ended December 31, 2018, an asset impairment charge of $1.5 million was recorded in research and development expenses in the statements of operations and comprehensive loss. This charge was recorded to write off certain project development costs that were previously capitalized.

During the year ended December 31, 2017, the Company recorded asset impairment charges totaling $0.6 million as a result of fully decommissioning its previous generation of sequencing and automation equipment in January 2017. These charges were recorded in cost of product revenues in the statements of operations and comprehensive loss.

During the year ended December 31, 2016, the Company recorded asset impairment charges totaling $2.1 million in the statements of operations and comprehensive loss, of which $1.9 million was recorded in cost of product revenues and $0.2 million was included in general and administrative expenses, following its impairment analysis on its previous generation of sequencing and automation equipment whose service lives were determined to be significantly shorter than initially expected. These charges also included the write-off of $0.3 million unamortized maintenance service contract prepayments related to the impaired equipment described above. The Company expected to phase out the equipment in the first quarter of 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 an insurance carrier whereby in return for partial exclusivity and the right to pricing benefits the Company paid total consideration of $3.2 million. The total consideration was paid in the third quarter of 2016. As of December 31, 2018 and 2017, $1.0 million and $1.8 million in deferred costs were included in other noncurrent assets. The deferred costs are being amortized ratably over the four-year term of the agreement. During the years ended December 31, 2018 and 2017, amortization of such costs totaling $0.8 million was recorded for each of the two years as a reduction of product revenues in the statements of operations and comprehensive loss.

In August 2017, the Company entered into the 2017 Term Loan agreement 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 9). The Company also paid legal fees totaling $0.3 million in connection with this term loan. Total debt issuance costs of $2.7 million is accounted for as a debt discount. For financial statement presentation purposes, the Company has classified $2.0 million of the debt discount as a direct reduction from the outstanding debt balance, while $0.7 million of such remains in other noncurrent assets for the unused borrowing capacity of $50.0 million. The debt discount is being amortized on a straight-line basis over the term of the loan. For the year ended December 31, 2018, amortization of debt discount related to the unused borrowing capacity was $0.1 million. Amortization of debt discount for the unused borrowing capacity was insignificant in the year ended December 31, 2017. As of December 31, 2018, the unamortized portion of the debt discount remained at $0.6 million.

As of December 31, 2018, other assets also included receivables from Evercord customers who selected the financing option for their prepayment plans (as described in Note 3). Total receivables associated with the financing option over the period greater than 12 months were $0.5 million.

Accrued Compensation

The Company’s accrued compensation consisted of the following:


	December 31,		December 31,
	2018		2017
	(in thousands)
Accrued paid time off	$	1,825	$	1,806
Accrued commissions		4,492		3,558
Accrued bonuses		3,757		2,063
Other accrued compensation		2,594		2,172
Total accrued compensation	$	12,668	$	9,599

Other Accrued Liabilities

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


	December 31,		December 31,
	2018		2017
(Amounts in thousands)			(As Revised)
Settlement accrued for reimbursement related claims	$	1,378	$	10,062
Reserves for refunds to insurance carriers		10,012		6,794
Accrued charges for outsourced testing		5,001		6,566
Testing and laboratory materials from suppliers		2,742		1,367
Marketing and corporate affairs		1,306		1,456
Legal, audit and consulting fees		1,058		206
Accrued shipping charges		852		198
Sales tax payable		1,255		504
Accrued specimen service fees		1,378		683
Accrued rent		903		856
Clinical trials and studies		1,694		483
Other accrued expenses		4,863		4,082
Total other accrued liabilities	$	32,442	$	33,257

As of December 31, 2017, the Company accrued a total of $11.4 million for amounts due under a settlement agreement related to reimbursement related claims, of which $10.1 million was the current portion and $1.3 million due after 12 months was recorded in other long-term liabilities. The Company made approximately $5.3 million of settlement prepayments at the end of the first quarter of 2018, and the remaining payments were allowed to be made in subsequent quarterly installments with interest accrued as described in Note 7 under Legal Proceedings. Interest accrued was $0.2 million for the year ended December 31, 2018, which has been paid together with a total of three quarterly installments amounting to $4.2 million. Additionally, a separate payment of $0.8 million was made in connection with the settlement. As of December 31, 2018, the last quarterly installment of $1.4 million remained in other accrued liabilities.

Reserves for refunds to insurance carriers include overpayments from and amounts to be refunded to insurance carriers, and additional amounts that the Company estimates as reserves for potential refund requests during the period. When the Company releases these previously reserved amounts, they are recognized as product revenues in the statements of operations and comprehensive loss. As of December 31, 2017, reserves relating to payers were $6.8 million. During the year ended December 31, 2018, the Company reserved an additional $10.3 million, and amounts previously held in reserves relating to payers totaling $3.3 million were released. Remaining reserves relating to payers in other accrued liabilities were $10.0 million as of December 31, 2018.