Document

Company Operations and Summary of Significant Accounting Policies

Accounting Policies [Abstract]

The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with generally accepted accounting principles in the U.S.

Concentration of Credit Risk—Financial instruments that potentially subject the Company to significant concentrations of credit risk consists principally of trade accounts receivable.



	December 31,
	2016		2015
Raw materials	$	9,297	$	10,289
Work-in-process (materials, labor and overhead)	7,990		7,441
Finished goods (materials, labor and overhead)	8,758		8,658
Total inventories	$	26,045	$	26,388

Property, plant and equipment consisted of the following (in thousands):



	December 31,
	2016			2015
Equipment, furniture and fixtures	$	61,972		$	59,736
Building and improvements	34,243			33,048
Leased instruments	24,014			18,280
Land	1,080			1,080
Total property, plant and equipment, gross	121,309			112,144
Less: accumulated depreciation and amortization	(70,451		)	(59,597		)
Total property, plant and equipment, net	$	50,858		$	52,547



		December 31, 2016							December 31, 2015
Description	Weighted-average useful life (years)	Gross assets		Accumulated amortization			Net		Gross assets		Accumulated amortization			Net
Purchased technology	8.4	53,600		(41,369		)	12,231		52,560		(34,911		)	17,649
Customer relationships	7.6	7,157		(5,928		)	1,229		7,171		(4,972		)	2,199
License agreements	10.4	6,009		(3,222		)	2,787		5,512		(2,542		)	2,970
Patent and trademark costs	12.0	11,240		(3,522		)	7,718		10,530		(2,588		)	7,942
Software development costs	5	6,000		(2,326		)	3,674		2,913		(1,840		)	1,073
Total intangible assets		$	84,006	$	(56,367	)	$	27,639	$	78,686	$	(46,853	)	$	31,833

The expected future annual amortization expense of the Company’s intangible assets is as follows (in thousands):



For the years ending December 31,	Amortization expense
2017	$	9,822
2018	4,332
2019	3,079
2020	2,700
2021	2,582
Thereafter	5,124
Total	$	27,639

Other current liabilities—Other current liabilities consisted of the following (in thousands):



	December 31,
	2016		2015
Customer incentives	$	3,766	$	4,030
Accrued interest	227		202
Other	1,006		2,767
Total other current liabilities	$	4,999	$	6,999

Royalty income from the grant of license rights is recognized during the period in which the revenue is earned and the amount is determinable from the licensee.

The Company earns income from grants for research and commercialization activities. On November 6, 2012, the Company was awarded a milestone-based grant totaling up to $8.3 million from the Bill and Melinda Gates Foundation to develop, manufacture and validate a quantitative, low-cost, nucleic acid assay for HIV drug treatment monitoring on the integrated Savanna MDx platform for use in limited resource settings. Upon execution of the grant agreement, the Company received $2.6 million to fund subsequent research and development activities and received milestone payments totaling $2.5 million in 2013. On September 10, 2014, the Company entered into an amended grant agreement with the Bill and Melinda Gates Foundation for additional funding of up to $12.6 million in order to accelerate the development of the Savanna MDx platform in the developing world. Upon execution of the amended grant agreement, the Company received $10.6 million in cash. The Company received payments of $2.4 million in April 2015 and $2.8 million in July 2016 based on milestone achievements for both the original and the amended grant agreements. Under the original and amended grant agreements, the Company recognized grant revenue on the basis of the lesser of the amount recognized on a proportional performance basis or the amount of cash payments that were non-refundable as of the end of each reporting period. For the years ended December 31, 2016, 2015 and 2014, the Company recognized $6.5 million, $5.1 million and $6.3 million as grant revenue, respectively. Cash payments received were restricted as to use until expenditures contemplated in the grant were incurred or committed. As of December 31, 2016, all payment related milestones have been achieved and all of the grant revenue of $20.9 million has been recorded.

Advertising Costs—Advertising costs are expensed as incurred. Advertising costs were $0.3 million, $0.7 million and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable and accrued liabilities approximate their fair values due to their short-term nature.

Comprehensive Loss—Comprehensive loss includes unrealized gains and losses excluded from the Company’s Consolidated Statements of Operations.

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Debt

3.25% Convertible Senior Notes due 2020

Debt Disclosure [Abstract]

Debt

The Company accounts separately for the liability and equity components of the Convertible Senior Notes in accordance with authoritative guidance for convertible debt instruments that may be settled in cash upon conversion. The guidance requires the carrying amount of the liability component to be estimated by measuring the fair value of a similar liability that does not have an associated conversion feature. Because the Company had no outstanding non-convertible public debt, the Company determined that senior, unsecured corporate bonds traded on the market represent a similar liability to the Convertible Senior Notes without the conversion option. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry with similar credit ratings and with similar maturity, the Company estimated the implied interest rate of its Convertible Senior Notes to be 6.9%, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, which were defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Convertible Senior Notes, which resulted in a fair value of the liability component of $141.9 million upon issuance, calculated as the present value of implied future payments based on the $172.5 million aggregate principal amount. The $30.7 million difference between the cash proceeds of $172.5 million and the estimated fair value of the liability component was recorded in additional paid-in capital, net of tax and issuance costs, as the Convertible Senior Notes were not considered redeemable.



	December 31,
	2016			2015
Principal amount of Convertible Senior Notes outstanding	$	167,314		$	172,500
Unamortized discount of liability component	(20,221		)	(25,703		)
Unamortized deferred issuance costs	(2,753		)	(3,500		)
Net carrying amount of liability component	144,340			143,297
Less: current portion	—			—
Long-term debt	$	144,340		$	143,297
Carrying value of equity component, net of issuance costs	$	29,211		$	29,758
Fair value of outstanding Convertible Senior Notes	$	165,223		$	170,120
Remaining amortization period of discount on the liability component	4 years			5 years

Line of Credit

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Income Taxes

Significant components of the (benefit) provision for income taxes are as follows (in thousands):

Income Tax Disclosure [Abstract]

Income Taxes



	December 31,
	2016			2015			2014
Current:
Federal	$	(117	)	$	948		$	61
State	246			399			(1,294		)
Foreign	84			41			69
Total current provision (benefit)	213			1,388			(1,164		)
Deferred:
Federal	(2,545		)	(4,624		)	(5,267		)
State	(63		)	—			2,488
Foreign	4			18			34
Total deferred benefit	(2,604		)	(4,606		)	(2,745		)
Benefit for income taxes	$	(2,391	)	$	(3,218	)	$	(3,909	)

The Company’s (loss) income before (benefit) provision for income taxes was subject to taxes in the following jurisdictions for the following periods (in thousands):



	December 31,
	2016			2015			2014
United States	$	(16,426	)	$	(9,480	)	$	(11,328	)
Foreign	227			183			345
Loss before benefit for income taxes	$	(16,199	)	$	(9,297	)	$	(10,983	)

Significant components of the Company’s deferred tax assets and deferred tax liabilities as of December 31, 2016 and 2015 are shown below (in thousands).



	December 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	3,255		$	1,199
Intangible assets	2,351			3,574
Sale-leaseback, net	888			1,224
Allowance for returns and discounts	4,043			4,308
Stock-based compensation	10,963			9,884
Tax credit carryforwards	3,430			2,341
Other, net	4,066			5,200
Total deferred tax assets	28,996			27,730
Valuation allowance for deferred tax assets	(7,774		)	(3,087		)
Total deferred tax assets, net of valuation allowance	21,222			24,643
Deferred tax liabilities:
Convertible Senior Notes	(7,592		)	(9,474		)
Intangible assets	(7,557		)	(9,977		)
Property, plant and equipment	(6,131		)	(7,162		)
Total deferred tax liabilities	(21,280		)	(26,613		)
Net deferred tax liabilities	$	(58	)	$	(1,970	)

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative before-tax loss incurred over the three-year periods ended December 31, 2016 and 2015. Such objective evidence limits the ability to consider other subjective evidence such as the Company's projections for future profitability. On the basis of this evaluation, as of December 31, 2016, the Company had recorded a valuation allowance of $7.8 million, which represents the portion of the deferred tax asset that management could no longer conclude was more likely or not to be realized. The amount of the deferred tax assets considered realizable, however, could be adjusted in the future based on changes in available evidence and additional weight may be given to subjective evidence such as the Company's projections for profitability. During the year ended December 31, 2016, the allowance increased by $4.7 million.

The benefit for income taxes reconciles to the amount computed by applying the federal statutory rate to loss before taxes as follows (in thousands):



	Year ended December 31,
	2016		2015		2014
Tax benefit at statutory tax rate	(5,775	)	(3,254	)	(3,844	)
State tax benefit, net of federal tax benefit	(390	)	(235	)	(151	)
Permanent differences	129		157		70
Federal and state research credits—current year	(979	)	(722	)	(765	)
Accrual (release) of uncertain tax positions	43		101		(21	)
Expiration of statutes for uncertain tax positions	—		—		(953	)
Impact of change in federal and state tax rate on revaluing deferred tax assets	(4	)	56		110
Change in valuation allowance	4,687		756		2,331
Acquisition related adjustments	—		—		(485	)
Other	(102	)	(77	)	(201	)
Benefit for income taxes	(2,391	)	(3,218	)	(3,909	)

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):



	Year ended December 31,
	2016			2015			2014
Beginning balance	$	7,684		$	7,065		$	7,765
Decreases related to prior year tax positions	(10		)	(12		)	(68		)
Increases related to current year tax positions	773			631			642
Decreases due to settlements	—			—			(42		)
Expiration of the statute of limitations for the assessment of taxes	—			—			(1,232		)
Other	$	157		$	—		$	—
Ending balance	$	8,604		$	7,684		$	7,065

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Stockholders' Equity	12 Months Ended
Stockholders' Equity	Dec. 31, 2016
Equity [Abstract]
Stockholders' Equity	Stockholders’ Equity Preferred Stock. The Company’s certificate of incorporation, as amended, authorizes the issuance of up to five million preferred shares. The Board of Directors is authorized to fix the number of shares of any series of preferred stock and to determine the designation of such shares. However, the amended certificate of incorporation specifies the initial series and the rights of that series. No shares of preferred stock were outstanding as of December 31, 2016, 2015 or 2014. Equity Incentive Plan. The Company grants stock options, time-based restricted stock units (RSUs) and performance-based restricted stock units (PSUs) to employees and non-employee directors under its 2016 Equity Incentive Plan (the “2016 Plan”). The Company previously granted stock options under the Amended and Restated 2010 Equity Incentive Plan (the "2010 Plan") and the Amended and Restated 2001 Equity Incentive Plan (the "2001 Plan"). The 2010 Plan and 2001 Plan were terminated at the time of adoption of the new Plans, but the terminated Plans continue to govern outstanding options granted thereunder. The Company has stock options and RSUs outstanding, which were issued under each of these equity incentive plans to certain employees and directors. Stock options granted under these plans have terms ranging up to ten years, have exercise prices ranging from $8.50 to $27.91 per share, and generally vest over four years. As of December 31, 2016, approximately 2.6 million shares remained available for grant under the 2016 Plan. Restricted Stock. The Company grants time-based RSUs and PSUs to certain officers, directors and management. Until the restrictions lapse, ownership of the affected RSUs and PSUs granted to the Company’s officers is conditional upon continuous employment with the Company. For the years ended December 31, 2016, 2015 and 2014, the Company granted approximately 0.2 million, 0.2 million and 0.1 million shares, respectively, of RSUs to officers and management, which have a time-based four-year vesting provision. For purposes of measuring compensation expense of PSUs, the amount of shares ultimately expected to vest is estimated at each reporting date based on management’s expectations regarding the relevant performance criteria. The recognition of compensation expense associated with the PSUs requires judgment in assessing the probability of meeting the performance goals, as well as defined criteria for assessing achievement of the performance-related goals. The grant date of the PSUs takes place when the grant is authorized and the specific achievement goals are communicated. The communication date of the performance goals can impact the valuation and associated expense of the PSUs. PSUs granted in March 2012 included a three-year vesting cliff based on the achievement of a performance metric tied to earnings per share for the year ended December 31, 2014. During the fourth quarter ended December 31, 2014, the Compensation Committee of the Board of Directors amended the performance metric to include adjustments for certain items, some of which are non-recurring. This resulted in a modification of the original award and the Company recorded additional stock-based compensation expense of $0.3 million for the year ended December 31, 2014. The PSUs granted in March 2012 were released in March 2015 as performance metrics were achieved. There were no PSUs outstanding as of December 31, 2016 or December 31, 2015. During the years ended December 31, 2016, 2015 and 2014, RSUs were granted to certain members of the Board of Directors in lieu of cash compensation as a part of the Company’s non-employee director’s deferred compensation program. The compensation expense associated with these RSU grants were $0.4 million, $0.5 million and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. Employee Deferred Bonus Compensation Program. For the years ended December 31, 2016, 2015 and 2014, certain employees of the Company were eligible to participate in the Company’s deferred bonus compensation program with respect to any payments received under the Company’s cash incentive plan. Participating employees could elect to receive 50% or 100% of the cash value of their cash bonus in the form of fully vested, restricted stock units plus an additional premium as additional restricted stock units, issued under the 2016 Plan. The premium restricted stock units are subject to a one-year vesting requirement from the date of issuance. The additional premium will be determined based on the length of time of the deferral period selected by the participating employee as follows: (i) if one year from the date of grant, a premium of 10% on the amount deferred, (ii) if two years from the date of grant, a premium of 20% on the amount deferred, or (iii) if four years from the date of grant, a premium of 30% on the amount deferred. Employee Stock Purchase Plan. Under the Company’s Amended and Restated 1983 Employee Stock Purchase Plan (the “ESPP”), full-time employees are allowed to purchase common stock through payroll deductions (which cannot exceed 10% of the employee’s compensation) at the lower of 85% of fair market value at the beginning or end of each six-month purchase period. As of December 31, 2016, 1,214,175 shares had been sold under the Plan, leaving 285,825 shares available for future issuance. Share Repurchase Program. On January 25, 2016, our Board of Directors authorized an amendment to extend our previously announced stock repurchase program. The Board of Directors has authorized the Company to repurchase up to an aggregate of $50.0 million in shares of our common stock under our stock repurchase program. Any shares of common stock repurchased under this program will no longer be deemed outstanding upon repurchase and will be returned to the pool of authorized shares. During the year ended December 31, 2016, 1,152,386 shares of outstanding common stock were repurchased under the Company's previously announced share repurchase program for approximately $19.6 million. At December 31, 2016, $35.0 million remains available under this program. The repurchase program will expire on January 25, 2018 unless extended by the Board of Directors. Shares Reserved for Future Issuance. At December 31, 2016, approximately 7.0 million shares of common stock were reserved under the Company’s equity incentive plans and 285,825 shares were reserved for purchases under the ESPP.

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The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Stock-Based Compensation

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Stock-based compensation expense related to stock options, RSUs and PSUs was as follows (in thousands):



	Year ended December 31,
	2016		2015		2014
Cost of sales	$	617	$	581	$	609
Research and development	1,551		734		1,062
Sales and marketing	1,189		1,554		1,059
General and administrative	4,629		4,550		3,994
	$	7,986	$	7,419	$	6,724

Stock-based compensation expense capitalized to inventory and compensation expense related to the Company’s ESPP were not material for the years ended December 31, 2016, 2015 and 2014.

Stock Options



	Year ended December 31,
	2016		2015		2014
Risk-free interest rate	1.47	%	1.50	%	1.59	%
Expected option life (in years)	6.59		6.24		5.78
Volatility rate	36	%	40	%	42	%
Dividend rate	—	%	—	%	—	%

A summary of the status of stock option activity for the years ended December 31, 2014, 2015 and 2016 is as follows (in thousands, except price data and years):



	Number of Shares		Weighted- average exercise price per share		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value
Outstanding at January 1, 2014	3,474		$	14.74
Granted	559		26.63
Exercised	(251	)	13.67
Cancelled	(175	)	20.63
Outstanding at December 31, 2014	3,607		16.37
Granted	659		23.15
Exercised	(168	)	12.30
Cancelled	(131	)	23.41
Outstanding at December 31, 2015	3,967		17.44
Granted	677		15.48
Exercised	(553	)	13.76
Cancelled	(150	)	20.86
Outstanding at December 31, 2016	3,941		$	17.49	5.52	$	19,236
Vested and expected to vest at December 31, 2016	3,781		$	17.45	5.38	$	18,590
Exercisable at December 31, 2016	2,529		$	15.92	3.95	$	15,451
Available for future grant at December 31, 2016	2,572

Restricted Stock Units

A summary of the status of stock awards activity for the years ended December 31, 2014, 2015 and 2016 is as follows (in thousands, except price data):



	Shares		Weighted-average grant date fair value
Non-vested at January 1, 2014	454		$	16.22
Granted	145		25.73
Vested	(174	)	28.27
Forfeited	(23	)	18.19
Non-vested at December 31, 2014	402		14.84
Granted	171		22.79
Vested	(96	)	18.01
Forfeited	(18	)	22.87
Non-vested at December 31, 2015	459		21.61
Granted	185		16.14
Vested	(120	)	18.50
Forfeited	(23	)	20.80
Non-vested at December 31, 2016	501		$	20.37

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The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Commitments and Contingencies

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Leases

The Company leases its facilities and certain equipment. Commitments for minimum rentals under non-cancelable leases at the end of 2016 are as follows (in thousands):



Years ending December 31,	Operating Leases		Lease obligation
2017	$	2,245	$	937
2018	2,296		946
2019	2,342		956
2020	2,365		967
2021	2,261		—
Thereafter	625		—
Total minimum lease payments	$	12,134	$	3,806

Purchase Commitments

The Company has $4.3 million in firm purchase commitments with respect to planned inventory and capital expenditures as of December 31, 2016.

Legal

Licensing Arrangements

Research and Development Agreements

Contingent Consideration

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Industry and Geographic Information

Industry and Geographic Information

Segment Reporting [Abstract]

The Company had sales to individual customers in excess of 10% of total revenue, as follows:



	Year ended December 31,
	2016		2015		2014
Customer:
A	16	%	20	%	19	%
B	15	%	17	%	18	%
C	13	%	11	%	11	%
	44	%	48	%	48	%

As of December 31, 2016 and 2015, accounts receivable from individual customers with balances due in excess of 10% of total accounts receivable totaled $13.9 million and $12.0 million, respectively.

The following presents long-lived assets (excluding intangible assets) and total net revenue by geographic territory (in thousands):



	Long-lived assets as of December 31,				Total revenue for the years ended December 31,
	2016		2015		2016		2015		2014
Domestic	$	50,774	$	52,426	$	158,244	$	168,809	$	159,845
Foreign	84		121		33,359		27,320		24,313
	$	50,858	$	52,547	$	191,603	$	196,129	$	184,158

Consolidated net revenues by product category are as follows (in thousands):



	Year ended December 31,
	2016		2015		2014
Immunoassays	$	121,416	$	130,348	$	118,715
Molecular	9,506		5,424		3,418
Virology	40,083		43,747		44,771
Specialty products	9,387		9,001		7,779
Royalties, grants and other	11,211		7,609		9,475
	$	191,603	$	196,129	$	184,158

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Fair Value Measurement

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods (in thousands):

Fair Value Disclosures [Abstract]

Fair Value Measurement



	December 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	133,540		—		—		133,540		133,147		—		—		133,147
Total assets measured at fair value	$	133,540	$	—	$	—	$	133,540	$	133,147	$	—	$	—	$	133,147
Liabilities:
Contingent consideration	—		—		5,175		5,175		—		—		5,516		5,516
Total liabilities measured at fair value	$	—	$	—	$	5,175	$	5,175	$	—	$	—	$	5,516	$	5,516

There were no transfers of assets or liabilities between Level 1, Level 2 and Level 3 categories of the fair value hierarchy during the years ended December 31, 2016 and 2015.

Changes in estimated fair value of contingent consideration liabilities from December 31, 2015 through December 31, 2016 are as follows (in thousands):



	Contingent consideration liability (Level 3 measurement)
Balance at December 31, 2015	$	5,516
Cash payments	(207		)
Net gain recorded for fair value adjustments	(485		)
Additional liability recorded for current period acquisition	353
Unrealized gain on foreign currency translation	(2		)
Balance at December 31, 2016	$	5,175

XML 34 R17.htm IDEA: XBRL DOCUMENT

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]
Employee Benefit Plan	Employee Benefit Plan The Company has a defined contribution 401(k) plan (the “401(k) Plan”) covering all employees who are eligible to join the 401(k) Plan upon employment. Employee contributions are subject to a maximum limit by federal law. This Plan includes an employer match of 50% on the first 6% of pay contributed by the employee. The Company contributed approximately $1.5 million, $1.3 million and $1.1 million to the 401(k) Plan during the years ended December 31, 2016, 2015 and 2014, respectively.

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Impairment Loss	12 Months Ended
Impairment Loss	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment Loss	Impairment Loss The Company originally acquired certain automated direct fluorescent antibody cell analyzer technology as part of its DHI acquisition in 2010. This technology and the related program named "Project Stella" or "Bobcat" continued in development or evaluation (both the technology and associated instrument system) after the acquisition. During the third quarter of 2014, the Company evaluated the potential cash flows related to Project Stella as well as potential sale of the assets or joint development opportunities with third parties. These assets included $1.5 million of software development costs, $1.6 million of in-process research and development, and $0.3 million in manufacturing line costs. Based on the analyses, the Company determined the carrying value was not recoverable and an impairment loss was measured by comparing the carrying value to the estimated fair value of the assets. The fair value of the Project Stella assets was estimated utilizing the discounted cash flow analysis. As a result, the Company recognized an impairment loss of $3.4 million in the third quarter of 2014, included in the Company's Consolidated Statements of Operations. Additionally, $0.2 million was included in the impairment loss related to the expense to terminate a manufacturing contract with a third party to manufacture Project Stella instruments. The Company recorded no further impairment charges for the year ended December 31, 2014 and recorded no impairment charges for the years ended December 31, 2016 and 2015.

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Acquisition	12 Months Ended
Acquisition	Dec. 31, 2016
Business Combinations [Abstract]
Acquisition	Acquisition On March 18, 2016, the Company acquired Immutopics, Inc., a privately-held, life science research company, based in San Clemente, California. The acquisition has been accounted for in conformity with ASC Topic 805, Business Combinations. Total consideration for the acquisition was $5.5 million, which included $5.1 million in initial cash payments and $0.4 million in fair value of contingent consideration based upon achievement of certain revenue targets through September 2024. The Immutopics portfolio of products are included with the Company's specialty products revenue category that serve the bone health research community.

XML 37 R20.htm IDEA: XBRL DOCUMENT

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1497-128463

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 805
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-Section 50
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-URI http://asc.fasb.org/extlink&oid=65885119&loc=d3e1490-128463

Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 805
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 805
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-URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 805
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=73530397&loc=SL65897772-128472

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Selected Quarterly Financial Data (unaudited)

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data (unaudited)



	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share data)
2016
Total revenues	$	50,321		$	39,133		$	49,341		$	52,808
Cost of sales (excludes amortization of intangible assets)	19,249			17,318			17,728			19,119
Gross profit (1)	29,482			20,225			30,023			32,001
Total costs and expenses	53,781			48,152			47,216			46,893
Net loss	(3,446		)	(7,840		)	(572		)	(1,950		)
Basic and diluted loss per share	(0.11		)	(0.24		)	(0.02		)	(0.06		)
2015
Total revenues	$	61,701		$	35,204		$	46,812		$	52,412
Cost of sales (excludes amortization of intangible assets)	21,112			15,493			16,961			18,122
Gross profit (1)	39,018			18,121			28,261			32,700
Total costs and expenses	53,012			45,029			45,600			49,750
Net income (loss)	3,991			(8,931		)	(762		)	(377		)
Basic net earnings (loss) per share (2)	0.12			(0.26		)	(0.02		)	(0.01		)
Diluted net earnings (loss) per share (2)	0.11			(0.26		)	(0.02		)	(0.01		)

(1)


(2)	Basic and diluted EPS amounts in each quarter are computed using the weighted-average number of shares outstanding during that quarter, while basic and diluted EPS for the full year is computed using the weighted-average number of shares outstanding during the year. Therefore, the sum of the four quarters’ basic or diluted EPS may not equal the full year basic or diluted EPS.

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Consolidated Valuation and Qualifying Accounts

Valuation and Qualifying Accounts [Abstract]

Consolidated Valuation and Qualifying Accounts

SCHEDULE II

QUIDEL CORPORATION

CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS



Description	Balance at beginning of period		Additions charged to expense or as reductions to revenue (1)		Deductions (2)			Balance at end of period
	(in thousands)
Year ended December 31, 2016
Accounts receivable allowance	$	7,488	$	28,329	$	(28,652	)	$	7,165
Year ended December 31, 2015:
Accounts receivable allowance	$	8,221	$	31,532	$	(32,265	)	$	7,488
Year ended December 31, 2014:
Accounts receivable allowance	$	5,790	$	23,447	$	(21,016	)	$	8,221


(1)	Represents charges associated primarily to accruals for early payment discounts, volume discounts and contract rebates recorded as reductions to revenue. Additions to allowance for doubtful accounts are recorded to sales and marketing expenses.


(2)	The deductions represent actual charges against the accrual described above.

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Company Operations and Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Consolidation	Consolidation—The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Cash and Cash Equivalents	Cash and Cash Equivalents—The Company considers cash equivalents to be highly liquid investments with a maturity at the date of purchase of three months or less. The Company invests its cash equivalents primarily in money market funds and commercial paper. Cash equivalents are maintained with high quality institutions.
Accounts Receivable	Accounts Receivable—The Company sells its products directly to hospitals and reference laboratories in the U.S. as well as to distributors in the U.S. and internationally (see Note 7). The Company periodically assesses the financial strength of these customers and establishes reserves for anticipated losses when necessary, which historically have not been material. The Company’s reserves primarily consist of amounts related to cash discounts and contract rebates. The balance of accounts receivable is net of reserves of $7.2 million and $7.5 million at December 31, 2016 and 2015, respectively.
Concentration of Credit Risk	Concentration of Credit Risk—Financial instruments that potentially subject the Company to significant concentrations of credit risk consists principally of trade accounts receivable. The Company performs credit evaluations of its customers’ financial condition and limits the amount of credit extended when deemed necessary, but generally requires no collateral. Credit quality is monitored regularly by reviewing credit history. The Company believes that the concentration of credit risk in its trade accounts receivables is moderated by its credit evaluation process, relatively short collection terms, the high level of credit worthiness of its customers, and letters of credit issued on the Company’s behalf. Potential credit losses are limited to the gross value of accounts receivable.
Inventories	Inventories—Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. The Company reviews the components of its inventory on a quarterly basis for excess, obsolete and impaired inventory and makes appropriate dispositions as obsolete stock is identified.
Property, Plant and Equipment	Property, Plant and Equipment—Property, plant and equipment is recorded at cost and depreciated over the estimated useful lives of the assets (three to 15 years) using the straight-line method. Amortization of leasehold improvements is computed on the straight-line method over the estimated useful lives of the assets. The total expense for depreciation of fixed assets and amortization of leasehold improvements was $13.4 million, $12.7 million and $10.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. Maintenance and minor repairs are charged to operations as incurred.
Intangible Assets	The Company completed its annual evaluation for impairment of goodwill and determined that no impairment of goodwill existed as of December 31, 2016. Goodwill and Intangible Assets—Intangible assets are recorded at cost and amortized on a straight-line basis over their estimated useful lives, except for software development costs and indefinite-lived intangibles such as goodwill. Software development costs associated with software to be sold, leased or otherwise marketed are expensed as incurred until technological feasibility has been established. After technological feasibility is established, software development costs are capitalized. The capitalized cost is amortized on a straight-line basis over the estimated product life or on the ratio of current revenues to total projected product revenues, whichever is greater.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets—The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the total book value of an asset may not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and the eventual disposition are less than its carrying amount. An impairment loss is equal to the excess of the book value of an asset over its determined fair value.
Convertible Debt	Convertible Debt—The Company accounts for convertible debt instruments that may be settled in cash upon conversion (including combination settlement of cash equal to the “principal portion” and delivery of the “share amount” in excess of the conversion value over the principal portion in shares of common stock and/or cash) by separating the liability and equity components of the instruments in a manner that reflects our nonconvertible debt borrowing rate. The Company determines the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If no similar debt instrument exists, the Company estimates fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatilities. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions are judgmental in nature and could have a significant impact on the determination of the debt component, and the associated non-cash interest expense. See Note 2 for additional discussion of the Convertible Senior Notes issued in December 2014.
Revenue Recognition	Revenue Recognition—
Research and Development Costs	Research and Development Costs—Research and development costs are charged to operations as incurred. In conjunction with certain third party service agreements, the Company is required to make periodic payments based on achievement of certain milestones. The costs related to these research and development services are also charged to operations as incurred.
Product Shipment Costs	Product Shipment Costs—Product shipment costs are included in sales and marketing expense in the accompanying Consolidated Statements of Operations.
Advertising Costs	Advertising Costs—Advertising costs are expensed as incurred.
Deferred Rent	Deferred Rent—Rent expense is recorded on a straight-line basis over the term of the lease. The difference between rent expense and amounts paid under the lease agreement are recorded as deferred rent.
Income Taxes	Income Taxes—Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company’s policy is to recognize the interest expense and penalties related to income tax matters as a component of income tax expense.
Fair Value of Financial Instruments	Fair Value of Financial Instruments— The Company uses the fair value hierarchy established in ASC Topic 820, Fair Value Measurements and Disclosures, that requires the valuation of assets and liabilities subject to fair value measurements using a three tiered approach and fair value measurement be classified and disclosed by the Company in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The carrying amounts of the Company’s financial instruments, including cash, receivables, accounts payable and accrued liabilities approximate their fair values due to their short-term nature.
Product Warranty	Product Warranty—The Company generally sells products with a limited product warranty and certain limited indemnifications. Due to product testing, the short time between product shipment and the detection and correction of product failures and a low historical rate of payments on indemnification claims, the historical activity and the related expense were not significant for the fiscal years presented.
Stock-Based Compensation	Stock-Based Compensation—Compensation expense related to stock options granted is recognized ratably over the service vesting period for the entire option. The total number of stock options expected to vest is adjusted by estimated forfeiture rates. The Company determined the estimated fair value of each stock option on the date of grant using the Black-Scholes option valuation model. Compensation expense for restricted stock units (RSUs) is measured at the grant date and recognized ratably over the vesting period. The fair value of RSUs is determined based on the closing market price of the Company’s common stock on the grant date.
Earnings Per Share	Computation of (Loss) Earnings Per Share—For the years ended December 31, 2016, 2015 and 2014, basic loss per share was computed by dividing net loss by the weighted-average number of common shares outstanding, including restricted stock units vested during the period. Diluted earnings per share (“EPS”) reflects the potential dilution that could occur if the earnings were divided by the weighted-average number of common shares and potentially dilutive common shares from outstanding stock options as well as unvested restricted stock units. Potential dilutive common shares were calculated using the treasury stock method and represent incremental shares issuable upon exercise of the Company’s outstanding stock options and unvested restricted stock units. For the years ended December 31, 2016, 2015 and 2014, there were no differences between the number of common shares used for the basic and diluted EPS computation because the Company incurred a net loss and the effect would be anti-dilutive. Stock options and shares of restricted stock that would have been included in the diluted EPS calculation if the Company had earnings amounted to 0.8 million, 1.0 million and 1.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. Additionally, stock options are excluded from the calculation of diluted EPS when the combined exercise price, unrecognized stock-based compensation and expected tax benefits upon exercise are greater than the average market price for the Company’s common stock because their effect is anti-dilutive. Stock options totaling 2.8 million, 1.9 million and 1.0 million for the years ended December 31, 2016, 2015 and 2014, respectively, were not included in the computation of diluted EPS because the exercise of such options would be anti-dilutive. As discussed in Note 2, the Company issued its 3.25% Convertible Senior Notes due 2020 (“Convertible Senior Notes”) in December 2014. It is the Company’s intent and policy to settle conversions through combination settlement, which essentially involves repayment of an amount of cash equal to the “principal portion” and delivery of the “share amount” in excess of the conversion value over the principal portion in cash or shares of common stock (“conversion premium”). No conversion premium existed as of December 31, 2016, 2015 and 2014; therefore, there was no dilutive impact from the Convertible Senior Notes to diluted EPS during the years ended December 31, 2016 2015 and 2014.
Comprehensive (Loss) Income	Comprehensive Loss—Comprehensive loss includes unrealized gains and losses excluded from the Company’s Consolidated Statements of Operations.
Use of Estimates	Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Accounting Periods	Accounting Periods—Each of the Company’s fiscal quarters end on the Sunday closest to the end of the calendar quarter. The Company’s fiscal year ends are January 1, 2017, January 3, 2016 and December 28, 2014. For ease of reference, the calendar quarter end dates are used herein.
Recent Accounting Pronouncements	Recent Accounting Pronouncements—In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance codified in Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which amends the guidance in former ASC 605, Revenue Recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current authoritative guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The FASB has issued several amendments to the new standard, which include clarification of accounting guidance related to identification of performance obligations, intellectual property licenses, and principal vs. agent considerations. The standard will be effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein. The Company has assigned internal resources to assist in the adoption of the new standard and is in the initial stages of its evaluation of the impact of the new standard on its accounting policies, processes and system requirements. The Company has begun the process of identifying, categorizing and analyzing its various revenue streams, however, has not yet completed its assessment of the impact. The Company will continue to evaluate the future impact and method of adoption of ASU 2014-09 and related amendments on the Consolidated Financial Statements and related disclosures throughout 2017. The Company will adopt the new standard beginning January 2018. In August 2014, the FASB issued guidance codified in ASU 2014-15 (Subtopic 205-40), Presentation of Financial Statements - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The guidance requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued (or available to be issued when applicable). Management will be required to make this evaluation for both annual and interim reporting periods and will make certain disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the entity’s ability to continue as a going concern. Substantial doubt exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in ASC Topic 450, Contingencies. The guidance is effective for annual periods ending after December 15, 2016 and for interim reporting periods starting in the first quarter 2017, with early adoption permitted. The Company's adoption of this guidance in the annual period ended December 31, 2016 did not have an impact on the consolidated financial statements. In February 2015, the FASB issued guidance codified in ASU 2015-02 (Topic 810), Consolidation - Amendments to the Consolidation Analysis. The guidance affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. Specifically, the guidance amends (i) the identification of variable interests (fees paid to a decision maker or service provider), (ii) the variable interest entity (VIE) characteristics for a limited partnership or similar entity and (iii) the primary beneficiary determination. The guidance is effective for annual periods beginning after December 15, 2015 and for interim reporting periods starting in the first quarter 2016. The Company's adoption of this guidance in the first quarter of 2016 did not have a significant impact on the consolidated financial statements. In July 2015, the FASB issued guidance codified in ASU 2015-11 (Topic 330), Simplifying the Measurement of Inventory. The guidance applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost. Under the guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted as of the beginning of an interim or annual reporting period. The Company's adoption of this guidance in the first quarter of 2016 did not have a significant impact on the consolidated financial statements. In February 2016, the FASB issued guidance codified in ASU 2016-02 (Topic 842), Leases. The guidance requires a lessee to recognize a lease liability for the obligation to make lease payments and a right-to-use asset representing the right to use the underlying asset for the lease term on the balance sheet. The guidance is effective for fiscal years beginning after December 15, 2018 including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of this guidance and expects to adopt the standard in the first quarter of 2019. In March 2016, the FASB issued guidance codified in ASU 2016-09 (Topic 718), Improvements to Employee Share Based Payments Accounting. Under the guidance, entities will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (APIC). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated. In addition, entities will recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Under current guidance, excess tax benefits are not recognized until the deduction reduces taxes payable. Companies will apply this part of the guidance using a modified retrospective transition method and will record a cumulative-effect adjustment in retained earnings for excess tax benefits not previously recognized. The guidance also allows an employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, but all of the guidance must be adopted in the same period. The Company has excess tax benefits for which a benefit could not be previously recognized of approximately $1.8 million. Upon adoption the balance of the unrecognized excess tax benefits will be reversed with the impact recorded to (accumulated deficit) retained earnings, including any change to the valuation allowance as a result of the adoption. Due to the full valuation allowance on the U.S. deferred tax assets as of December 31, 2016, the Company does not expect any impact to the financial statements as a result of this adoption in the first quarter of 2017.
Fair Value Measurements and Disclosures	In conjunction with Financial Accounting Standards Board Accounting Standard Update No. 2009-05, Fair Value Measurements and Disclosures (Topic 820), the Company assigned $28.8 million to the licensed technology and $0.7 million as a one-time charge to cost of sales to settle royalty claims. In determining the fair value allocation between the intangible asset licensed technology and the one-time charge to cost of sales, the Company assessed the past and estimated future revenue streams related to present and future products that use the patents that were subject to the Amendment. The effective life and related amortization of the licensed technology was based on the higher of the percentage of usage or the straight-line method. This percentage of usage was determined using the revenues generated from products covered by the patents that were subject to the Amendment. The terms of the Amendment provide for an estimated useful life of 3.5 years for this asset.

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Company Operations and Summary of Significant Accounting Policies (Tables)

Inventories consisted of the following, net of reserves of $0.7 million at December 31, 2016 and 2015 (in thousands):

Accounting Policies [Abstract]

Summary of Inventories



	December 31,
	2016		2015
Raw materials	$	9,297	$	10,289
Work-in-process (materials, labor and overhead)	7,990		7,441
Finished goods (materials, labor and overhead)	8,758		8,658
Total inventories	$	26,045	$	26,388

Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):



	December 31,
	2016			2015
Equipment, furniture and fixtures	$	61,972		$	59,736
Building and improvements	34,243			33,048
Leased instruments	24,014			18,280
Land	1,080			1,080
Total property, plant and equipment, gross	121,309			112,144
Less: accumulated depreciation and amortization	(70,451		)	(59,597		)
Total property, plant and equipment, net	$	50,858		$	52,547

Summary of Intangible Assets

oodwill of $83.8 million as of December 31, 2016 and $80.7 million as of December 31, 2015. Intangible assets consisted of the following (dollar amounts in thousands):



		December 31, 2016							December 31, 2015
Description	Weighted-average useful life (years)	Gross assets		Accumulated amortization			Net		Gross assets		Accumulated amortization			Net
Purchased technology	8.4	53,600		(41,369		)	12,231		52,560		(34,911		)	17,649
Customer relationships	7.6	7,157		(5,928		)	1,229		7,171		(4,972		)	2,199
License agreements	10.4	6,009		(3,222		)	2,787		5,512		(2,542		)	2,970
Patent and trademark costs	12.0	11,240		(3,522		)	7,718		10,530		(2,588		)	7,942
Software development costs	5	6,000		(2,326		)	3,674		2,913		(1,840		)	1,073
Total intangible assets		$	84,006	$	(56,367	)	$	27,639	$	78,686	$	(46,853	)	$	31,833

Summary of Expected Future Annual Amortization Expense

The expected future annual amortization expense of the Company’s intangible assets is as follows (in thousands):



For the years ending December 31,	Amortization expense
2017	$	9,822
2018	4,332
2019	3,079
2020	2,700
2021	2,582
Thereafter	5,124
Total	$	27,639

Schedule of Other Current Liabilities

Other current liabilities—Other current liabilities consisted of the following (in thousands):



	December 31,
	2016		2015
Customer incentives	$	3,766	$	4,030
Accrued interest	227		202
Other	1,006		2,767
Total other current liabilities	$	4,999	$	6,999

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Debt Tables (Tables)

Schedule of Long-term Debt Instruments

Debt Disclosure [Abstract]



	December 31,
	2016			2015
Principal amount of Convertible Senior Notes outstanding	$	167,314		$	172,500
Unamortized discount of liability component	(20,221		)	(25,703		)
Unamortized deferred issuance costs	(2,753		)	(3,500		)
Net carrying amount of liability component	144,340			143,297
Less: current portion	—			—
Long-term debt	$	144,340		$	143,297
Carrying value of equity component, net of issuance costs	$	29,211		$	29,758
Fair value of outstanding Convertible Senior Notes	$	165,223		$	170,120
Remaining amortization period of discount on the liability component	4 years			5 years

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Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6479336&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21521-112644

+ Details

Income Taxes (Tables)

Components of (Benefit) Provision for Income Taxes

Income Tax Disclosure [Abstract]

Significant components of the (benefit) provision for income taxes are as follows (in thousands):



	December 31,
	2016			2015			2014
Current:
Federal	$	(117	)	$	948		$	61
State	246			399			(1,294		)
Foreign	84			41			69
Total current provision (benefit)	213			1,388			(1,164		)
Deferred:
Federal	(2,545		)	(4,624		)	(5,267		)
State	(63		)	—			2,488
Foreign	4			18			34
Total deferred benefit	(2,604		)	(4,606		)	(2,745		)
Benefit for income taxes	$	(2,391	)	$	(3,218	)	$	(3,909	)

Schedule of Income before (Benefit) Provision for Income Taxes

The Company’s (loss) income before (benefit) provision for income taxes was subject to taxes in the following jurisdictions for the following periods (in thousands):



	December 31,
	2016			2015			2014
United States	$	(16,426	)	$	(9,480	)	$	(11,328	)
Foreign	227			183			345
Loss before benefit for income taxes	$	(16,199	)	$	(9,297	)	$	(10,983	)

Schedule of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and deferred tax liabilities as of December 31, 2016 and 2015 are shown below (in thousands).



	December 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	3,255		$	1,199
Intangible assets	2,351			3,574
Sale-leaseback, net	888			1,224
Allowance for returns and discounts	4,043			4,308
Stock-based compensation	10,963			9,884
Tax credit carryforwards	3,430			2,341
Other, net	4,066			5,200
Total deferred tax assets	28,996			27,730
Valuation allowance for deferred tax assets	(7,774		)	(3,087		)
Total deferred tax assets, net of valuation allowance	21,222			24,643
Deferred tax liabilities:
Convertible Senior Notes	(7,592		)	(9,474		)
Intangible assets	(7,557		)	(9,977		)
Property, plant and equipment	(6,131		)	(7,162		)
Total deferred tax liabilities	(21,280		)	(26,613		)
Net deferred tax liabilities	$	(58	)	$	(1,970	)

Reconciliation of Income Tax Computed at Federal Statutory Rate



	Year ended December 31,
	2016		2015		2014
Tax benefit at statutory tax rate	(5,775	)	(3,254	)	(3,844	)
State tax benefit, net of federal tax benefit	(390	)	(235	)	(151	)
Permanent differences	129		157		70
Federal and state research credits—current year	(979	)	(722	)	(765	)
Accrual (release) of uncertain tax positions	43		101		(21	)
Expiration of statutes for uncertain tax positions	—		—		(953	)
Impact of change in federal and state tax rate on revaluing deferred tax assets	(4	)	56		110
Change in valuation allowance	4,687		756		2,331
Acquisition related adjustments	—		—		(485	)
Other	(102	)	(77	)	(201	)
Benefit for income taxes	(2,391	)	(3,218	)	(3,909	)

Summary of Unrecognized Tax Benefits

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):



	Year ended December 31,
	2016			2015			2014
Beginning balance	$	7,684		$	7,065		$	7,765
Decreases related to prior year tax positions	(10		)	(12		)	(68		)
Increases related to current year tax positions	773			631			642
Decreases due to settlements	—			—			(42		)
Expiration of the statute of limitations for the assessment of taxes	—			—			(1,232		)
Other	$	157		$	—		$	—
Ending balance	$	8,604		$	7,684		$	7,065

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Stock-Based Compensation (Tables)

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Compensation Expense Related to Stock-Based Compensation Plans

tock-based compensation expense related to stock options, RSUs and PSUs was as follows (in thousands):



	Year ended December 31,
	2016		2015		2014
Cost of sales	$	617	$	581	$	609
Research and development	1,551		734		1,062
Sales and marketing	1,189		1,554		1,059
General and administrative	4,629		4,550		3,994
	$	7,986	$	7,419	$	6,724

Estimated Fair Value of Each Stock Option Award

The estimated fair value of each stock option was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the option grants:



	Year ended December 31,
	2016		2015		2014
Risk-free interest rate	1.47	%	1.50	%	1.59	%
Expected option life (in years)	6.59		6.24		5.78
Volatility rate	36	%	40	%	42	%
Dividend rate	—	%	—	%	—	%

Summary of Status of Stock Option Activity

A summary of the status of stock option activity for the years ended December 31, 2014, 2015 and 2016 is as follows (in thousands, except price data and years):



	Number of Shares		Weighted- average exercise price per share		Weighted- average remaining contractual term (in years)	Aggregate intrinsic value
Outstanding at January 1, 2014	3,474		$	14.74
Granted	559		26.63
Exercised	(251	)	13.67
Cancelled	(175	)	20.63
Outstanding at December 31, 2014	3,607		16.37
Granted	659		23.15
Exercised	(168	)	12.30
Cancelled	(131	)	23.41
Outstanding at December 31, 2015	3,967		17.44
Granted	677		15.48
Exercised	(553	)	13.76
Cancelled	(150	)	20.86
Outstanding at December 31, 2016	3,941		$	17.49	5.52	$	19,236
Vested and expected to vest at December 31, 2016	3,781		$	17.45	5.38	$	18,590
Exercisable at December 31, 2016	2,529		$	15.92	3.95	$	15,451
Available for future grant at December 31, 2016	2,572

Summary of Status of Stock Awards Activity

A summary of the status of stock awards activity for the years ended December 31, 2014, 2015 and 2016 is as follows (in thousands, except price data):



	Shares		Weighted-average grant date fair value
Non-vested at January 1, 2014	454		$	16.22
Granted	145		25.73
Vested	(174	)	28.27
Forfeited	(23	)	18.19
Non-vested at December 31, 2014	402		14.84
Granted	171		22.79
Vested	(96	)	18.01
Forfeited	(18	)	22.87
Non-vested at December 31, 2015	459		21.61
Granted	185		16.14
Vested	(120	)	18.50
Forfeited	(23	)	20.80
Non-vested at December 31, 2016	501		$	20.37

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Commitments and Contingencies (Tables)

Commitments and Contingencies Disclosure [Abstract]

Commitments for Minimum Rentals under Non-cancelable Leases

The Company leases its facilities and certain equipment. Commitments for minimum rentals under non-cancelable leases at the end of 2016 are as follows (in thousands):



Years ending December 31,	Operating Leases		Lease obligation
2017	$	2,245	$	937
2018	2,296		946
2019	2,342		956
2020	2,365		967
2021	2,261		—
Thereafter	625		—
Total minimum lease payments	$	12,134	$	3,806

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Industry and Geographic Information (Tables)

Sales to Individual Customers in Excess of 10% of Total Revenue

Segment Reporting [Abstract]

The Company had sales to individual customers in excess of 10% of total revenue, as follows:



	Year ended December 31,
	2016		2015		2014
Customer:
A	16	%	20	%	19	%
B	15	%	17	%	18	%
C	13	%	11	%	11	%
	44	%	48	%	48	%

Long-Lived Assets (Excluding Intangible Assets) and Total Net Revenue

The following presents long-lived assets (excluding intangible assets) and total net revenue by geographic territory (in thousands):



	Long-lived assets as of December 31,				Total revenue for the years ended December 31,
	2016		2015		2016		2015		2014
Domestic	$	50,774	$	52,426	$	158,244	$	168,809	$	159,845
Foreign	84		121		33,359		27,320		24,313
	$	50,858	$	52,547	$	191,603	$	196,129	$	184,158

Consolidated Net Product Revenues by Disease State

Consolidated net revenues by product category are as follows (in thousands):



	Year ended December 31,
	2016		2015		2014
Immunoassays	$	121,416	$	130,348	$	118,715
Molecular	9,506		5,424		3,418
Virology	40,083		43,747		44,771
Specialty products	9,387		9,001		7,779
Royalties, grants and other	11,211		7,609		9,475
	$	191,603	$	196,129	$	184,158

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Fair Value Measurement (Tables)

Assets and Liabilities Measured at Fair Value on Recurring Basis

Fair Value Disclosures [Abstract]

The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods (in thousands):



	December 31, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	133,540		—		—		133,540		133,147		—		—		133,147
Total assets measured at fair value	$	133,540	$	—	$	—	$	133,540	$	133,147	$	—	$	—	$	133,147
Liabilities:
Contingent consideration	—		—		5,175		5,175		—		—		5,516		5,516
Total liabilities measured at fair value	$	—	$	—	$	5,175	$	5,175	$	—	$	—	$	5,516	$	5,516

Changes in Estimated Fair Value of Contingent Consideration Liabilities

Changes in estimated fair value of contingent consideration liabilities from December 31, 2015 through December 31, 2016 are as follows (in thousands):



	Contingent consideration liability (Level 3 measurement)
Balance at December 31, 2015	$	5,516
Cash payments	(207		)
Net gain recorded for fair value adjustments	(485		)
Additional liability recorded for current period acquisition	353
Unrealized gain on foreign currency translation	(2		)
Balance at December 31, 2016	$	5,175

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Selected Quarterly Financial Data (unaudited) (Tables)