Balance Sheet Components

12 Months Ended

Dec. 31, 2019

Balance Sheet Components

Balance Sheet Components

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,
	2019		2018		2017
	(in thousands)
Beginning balance	$	1,788	$	2,000	$	1,890
Provision for estimated bad debts		1,141		(41)		143
Write offs		(10)		(171)		(33)
Ending balance	$	2,919	$	1,788	$	2,000

Property and Equipment, net

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

		December 31,		December 31,
	Useful Life	2019		2018
		(in thousands)
Machinery and equipment	3-5 years	$	36,414	$	35,400
Furniture and fixtures	3 years		1,376		1,319
Computer equipment	3 years		1,828		2,117
Capitalized software held for internal use	3 years		5,917		4,868
Leasehold improvements	Life of lease		11,556		10,916
Construction-in-process			7,716		4,013
			64,807		58,633
Less: Accumulated depreciation and amortization			(41,524)		(34,297)
Total Property and Equipment, net		$	23,283	$	24,336

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

During the year ended December 31, 2019, an impairment charge of $1.7 million was recorded in selling, general, and administrative expenses in the consolidated statement of operations and comprehensive loss. This charge is comprised of $1.2 million from the impairment of leasehold improvements, $0.1 million from the impairment of capitalized software held for internal use, and $0.4 million from the right-of-use asset (Note 7, Leases) related to the disposal of business (Note 13, Disposal of Business). The right-of-use asset and the leasehold improvements relate to the storage facility located in Tukwila, Washington, and both assets were evaluated for impairment as a single asset group. Subsequent to the sale of Evercord, the impairment charge wrote off the leasehold improvements that was previously capitalized for the storage facility and wrote down the right-of-use asset to its fair value as of the sale date. The impairment charge to capitalized

software relate to an internally developed module that was solely used for the Evercord business and scrapped subsequent to the sale of Evercord.

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.

Other Assets

In August 2017, the Company entered into the 2017 Term Loan with OrbiMed (as described in Note 10) and issued 300,000 shares of its common stock in exchange for OrbiMed’s initial and remaining funding commitments. In April 2019, the Company issued an additional 25,000 shares of its common stock to OrbiMed for extending the expiration date to draw the unused borrowing capacity until December 31, 2019. The Company has classified $1.2 million out of the total debt issuance costs in noncurrent assets for the unused borrowing capacity of $50.0 million. The debt discount is being amortized on a straight-line basis over the remaining term of the loan. For the year ended December 31, 2019 and 2018, debt discount amortized from noncurrent assets was $0.2 million and $0.1 million, respectively. The debt discount amortized from noncurrent assets for the year ended December 31, 2017 was not significant. As of December  31, 2019, total unamortized remaining in noncurrent assets was $0.9 million.

As of December 31, 2019, other assets also included long-term advances to BGI of $10.0 million for future sequencing equipment and services. In addition, other assets include additional consideration of consideration estimated at $4.7 million in connection with the disposal of business (Note 13). It is primarily related to the accounts receivable transferred to the buyer.

Accrued Compensation

The Company’s accrued compensation consisted of the following:

	December 31,		December 31,
	2019		2018
	(in thousands)
Accrued paid time off	$	1,850	$	1,825
Accrued commissions		5,767		4,492
Accrued bonuses		5,710		3,757
Other accrued compensation		2,761		2,594
Total accrued compensation	$	16,088	$	12,668

Other Accrued Liabilities

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

	December 31,		December 31,
	2019		2018
(Amounts in thousands)
Settlement accrued for reimbursement related claims	$	—	$	1,378
Reserves for refunds to insurance carriers		9,410		10,012
Accrued charges for outsourced testing		8,408		5,001
Testing and laboratory materials from suppliers		4,301		2,742
Marketing and corporate affairs		2,957		1,306
Legal, audit and consulting fees		2,873		1,058
Accrued shipping charges		305		852
Sales tax payable		1,691		1,255
Accrued specimen service fees		2,269		1,378
Accrued rent		—		903
Clinical trials and studies		1,092		1,694
Operating lease liabilities, current portion		5,739		—
Fixed asset purchases		1,482		—
Other accrued expenses		8,516		4,863
Total other accrued liabilities	$	49,043	$	32,442

Reserves for refunds to insurance carriers include overpayments from and amounts to be refunded to insurance carriers, and additional amounts that the Company estimates for potential refund requests during the period. When the Company releases these previously accrued amounts, they are recognized as product revenues in the statements of operations and comprehensive loss.

The following table summarizes the reserve balance and activities for refunds to insurance carriers (in thousands):

	December 31,		December 31,
	2019		2018
(Amounts in thousands)
Beginning balance	$	10,012	$	6,795
Additional reserves		9,560		10,295
Reserves released		(10,162)		(7,078)
Ending balance	$	9,410	$	10,012
Released into revenue	$	2,410	$	3,324