Related Party Transactions

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

In August 2020, the Company formed a new entity, PrognomiQ, Inc. (PrognomiQ), and entered into a stock purchase agreement with PrognomiQ, pursuant to which the Company transferred to PrognomiQ certain assets that comprised the Company’s human diagnostics activities in exchange for all the outstanding equity interests of PrognomiQ. The Company subsequently completed a pro-rata distribution to its stockholders of most of the shares of capital stock of PrognomiQ.

The Company has concluded that PrognomiQ is a VIE due to its reliance on future financing and insufficient equity investment at risk. However, the Company is not the primary beneficiary of the VIE as it does not have the power to direct the activities that most significantly impact the economic performance of PrognomiQ and does not have control over the PrognomiQ board of directors. The Company has determined that it has the ability to exercise significant influence over PrognomiQ and therefore has accounted for its investment in PrognomiQ using the equity method. As of the year ended December 31, 2022, the carrying value of the Company’s investment in PrognomiQ is nil due to recognized net losses based on its percentage of ownership in PrognomiQ.

PrognomiQ constitutes a related party and, as of June 30, 2023 and December 31, 2022, the Company held $0.6 million and $1.5 million in related party receivables, respectively, on the condensed consolidated balance sheets representing amounts due from product sales. For the three and six months ended June 30, 2023, the Company recognized revenue of $1.4 million and $2.7 million, respectively, which is presented as related party revenue on the condensed consolidated statements of operations and comprehensive loss and is comprised of the sale of instruments and consumables. For the three and six months ended June 30, 2022, the Company recognized revenue of $1.1 million and $2.2 million, respectively, which is presented as related party revenue on the condensed consolidated statements of operations and comprehensive loss and is comprised of the sale of instruments and consumables, and services performed.

During 2022, a member of the Company’s Board of Directors served as a board member and an executive officer at a company that is a customer of the Company. As of June 30, 2023 and December 31, 2022, the Company recorded nil and $0.3 million in related party receivables, respectively, on the condensed consolidated balance sheets, representing revenue from product sales. There was no revenue recognized for the three and six months ended June 30, 2023 and 2022. The Company has a contract for equipment leased to this customer that has been classified as a sales-type lease. As of each of June 30, 2023 and December 31, 2022, the lease receivables related to the sales-type lease are $0.2 million. The lease receivables are presented as prepaid expenses and other current assets on the condensed consolidated balance sheets.