Exhibit 99.2

Counsyl, Inc.

Condensed Consolidated Balance Sheets

Unaudited

	December 31, 2017			March 31, 2018 unaudited
	(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	33,995		$	23,627
Accounts receivable, less allowance for doubtful accounts of $863 as of December 31, 2017 and $685 as of March 31, 2018		16,232			21,721
Inventory		3,863			3,841
Prepaid expenses and other current assets		3,637			4,599
Total current assets		57,727			53,788
Property and equipment, net		14,133			13,088
Other assets		752			3,067
Total assets	$	72,612		$	69,943
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	4,182		$	3,157
Accrued liabilities		12,920			14,143
Lease payable, current		1,051			1,066
Deferred rent, current		—			57
Total current liabilities		18,153			18,423
Lease payable, noncurrent		1,718			1,446
Long-term debt, noncurrent		66,901			67,772
Deferred rent, noncurrent		2,343			2,913
Put option liability		2,126			2,090
Common stock warrant liability		10,650			10,700
Redeemable convertible preferred stock warrant liability		1,601			1,701
Total liabilities		103,492			105,045
Commitments and contingencies (Note 7)
Redeemable convertible preferred stock; $0.001 par value, 14,431,477 shares authorized; 13,299,837 shares issued and outstanding; liquidation preference of $ 91,561 at December 31, 2017 and 14,431,477 shares authorized; liquidation preference of $91,561 at March 31, 2018.		90,474			90,474
Stockholders’ deficit:
Common stock, $0.001 par value, 90,000,000 shares authorized; 46,884,067 issued and outstanding at December 31, 2017; 90,000,000 shares authorized; 47,431,728 issued and outstanding at March 31, 2018.		18			19
Additional paid-in capital		28,533			28,616
Accumulated deficit		(149,905	)		(154,211	)
Total stockholders’ deficit		(121,354	)		(125,576	)
Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit	$	72,612		$	69,943

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Operations and Comprehensive Loss

Unaudited

	Three months ended March 31,
	2017			2018
	(In thousands, except share and per share data)
Revenue	$	29,003		$	39,087
Cost of revenue		12,879			15,656
Gross profit		16,124			23,431
Operating expenses:
Sales and marketing		11,709			11,379
Research and development		5,418			5,362
General and administrative		6,517			7,812
Total operating expenses		23,644			24,553
Loss from operations		(7,520	)		(1,122	)
Interest expense		(1,136	)		(3,141	)
Other income (expense), net		—			(43	)
Net loss and comprehensive loss	$	(8,656	)	$	(4,306	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.19	)	$	(0.09	)
Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders		46,308,416			47,417,293

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

Unaudited

	Redeemable Convertible								Additional		Accumulated Other					Total
	Preferred Stock				Common Stock				Paid-In		Comprehensive		Accumulated			Stockholders’
(In thousands)	Shares		Amount		Shares		Amount		Capital		Loss		Deficit			Deficit
Balance at December 31, 2017		13,300	$	90,474		46,884	$	18	$	28,533		—	$	(149,905	)	$	(121,354	)
Net loss		—		—		—		—		—		—		(4,306	)		(4,306	)
Issuance of shares upon exercise of stock options		—		—		548		1		21		—		—			22
Stock-based compensation expense		—		—		—		—		62		—		—			62
Balance at March 31, 2018		13,300	$	90,474		47,432	$	19	$	28,616		—	$	(154,211	)	$	(125,576	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows Unaudited

	Three months ended March 31,
	2017			2018
	(In thousands)
Cash flows from operating activities:
Net loss	$	(8,656	)	$	(4,306	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,067			1,754
Provision for doubtful accounts		(12	)		31
Stock-based compensation		185			62
Loss on disposal of property and equipment		10			54
Accrued interest expense and amortization of debt discount and issuance costs		178			905
Change in fair value of redeemable convertible preferred stock warrant liability		—			100
Change in fair value of redeemable convertible common stock warrant liability		—			50
Change in fair value of put option		—			(36	)
Changes in operating assets and liabilities:
Accounts receivable		(1,555	)		(5,520	)
Inventory		(778	)		22
Other assets		(1,427	)		(962	)
Accounts payable		2,008			(1,169	)
Accrued compensation		(149	)		(855	)
Accrued other liabilities		564			187
Deferred rent		230			628
Net cash used in operating activities	$	(7,335	)	$	(9,055	)
Cash flows from investing activities:
Purchases of property and equipment		(2,234	)		(385	)
Net cash used in investing activities	$	(2,234	)	$	(385	)
Cash flows from financing activities:
Proceeds from equipment loan		1,302			—
Principal payments of equipment loan		(105	)		(258	)
Proceeds from the exercise of stock options		22			22
Payment of deferred offering costs		—			(692	)
Net cash provided by (used in) financing activities		1,219		$	(928	)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(8,350	)	$	(10,368	)
Cash, cash equivalents, and restricted cash at beginning of period	$	32,139		$	34,489
Cash, cash equivalents, and restricted cash at end of period	$	23,789		$	24,121
Supplemental cash flow information:
Cash paid for interest	$	948		$	2,270
Other supplemental cash flow information:
Property and equipment acquired through capital lease obligations	$	1,490		$	—
Purchase of property and equipment in accounts payable and accrued liabilities	$	620		$	378
Deferred offering costs in accounts payable and accrued liabilities	$	—		$	1,816
Cash and cash equivalents	$	23,242		$	23,627
Current portion of restricted cash included in prepaid expenses and other current assets		50			—
Non-current portion of restricted cash included in other assets		497			494
Total cash, cash equivalents, and restricted cash shown in the consolidated statement of cash flows	$	23,789		$	24,121

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Counsyl, Inc. (“Counsyl” or the “Company”) was incorporated in the State of Delaware in October 2007. Counsyl operates a clinical laboratory that offers genetic tests. The Company integrates technology with custom automation in its clinical laboratory that has been certified under the Clinical Laboratory Improvement Amendments (“CLIA”), accredited by the College of American Pathologists (“CAP”), and certified by the New York State Clinical Laboratory Evaluation Program (“NYS CLEP”).

Since inception, the Company has incurred recurring annual losses from operations. The Company incurred a net loss of $8.7 million and $4.3 million for three months ended March 31, 2017 and 2018, respectively. The Company had an accumulated deficit of $149.9 million as of December 31, 2017 and $154.2 million as of March 31, 2018. While the Company has introduced multiple products that are generating revenue, this revenue has not been sufficient to fully fund the Company’s operations. To date, in addition to the cash flows generated from its commercial sales, the Company has been funded primarily by issuance of common stock, redeemable convertible preferred stock and debt financings.

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the three months ended March 31, 2018, the Company used $9.1 million of cash in operating activities. The Company has not achieved positive cash flow from operations, and the Company expects to incur increased sales and marketing expenses with the commercialization of new and existing products as well as increased research and development expenses as it develops new products. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued.

The Company may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements. However, there can be no guarantee that the Company will be successful in acquiring additional funding at levels sufficient to fund its operations or on terms favorable to the Company. If the Company is unsuccessful in its efforts to raise additional financing, the Company will be required to significantly reduce or cease operations. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited condensed consolidated financial statements should be read in conjunction the

Company’s audited annual financial statements and related notes thereto for the year ended December 31, 2017. These condensed consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). The Company’s functional and reporting currency is the United States (“U.S.”) dollar.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. However, these interim financial statements include all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to fairly state the results of the interim period and the Company believes that the disclosures are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected for the full year.

Principles of Consolidation

The condensed consolidated financial statements and the accompanying notes include the accounts of the Company’s wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. The Company has a wholly-owned foreign subsidiary with no activities in the periods presented.

Comprehensive Loss

Comprehensive loss is composed of two components: net loss and other comprehensive loss. Other comprehensive loss refers to gains and losses that under U.S. GAAP are recorded as an element of stockholders’ deficit, but are excluded from net loss. The Company did not record any transactions within other comprehensive loss in the periods presented and, therefore, net loss and comprehensive loss were the same for all periods presented.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to estimates of inventory, useful lives for internally developed software and property and equipment, accrued liabilities, valuation of redeemable convertible preferred stock warrant liability, valuation of common stock warrant liability, provision for accounting for income taxes, revenue recognition including estimated reimbursements, bad debt expense and valuation of stock awards. Actual results could differ from these estimates.

Concentrations of Credit Risk

The Company is subject to credit risks related to its financial instruments including cash and cash equivalents and accounts receivable. The Company’s cash and cash equivalents are deposited with three reputable U.S. financial institutions as of December 31, 2017 and March 31, 2018. Such deposits may, at times, exceed federally insured limits. The Company monitors the financial institutions where it invests its cash and cash equivalents with diversification among counterparties to mitigate exposure to any single financial institution.

As of December 31, 2017, and March 31, 2018, one customer represented 10% or more of net accounts receivable with such customer representing 17% of net accounts receivable as of December 31, 2017 and 10% of net accounts receivable as of March 31, 2018.

No individual customer represented 10% or more of revenue for the three months ended March 31, 2017 and 2018.

Risks and Uncertainties

The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, payer practices and policies, shifting customer demands, the emergence of competitive products, and other factors could negatively impact the Company’s operating results.

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. The Company limits its exposure to credit loss by placing its cash in financial institutions with high credit ratings. The Company’s cash may consist of deposits held with banks that may at times exceed federally insured limits. The Company performs evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution.

The Company is subject to a number of risks similar to other companies in the early stage, including, but not limited to, the need to obtain adequate additional funding, competitors developing new technological innovations, and protection of proprietary technology.

Segments

The Company’s chief operating decision maker is the Chief Executive Officer. The Chief Executive Officer reviews financial information on an aggregate basis for the purposes of evaluating financial performance and allocating the Company’s resources. Accordingly, the Company has determined that it has a single reportable and operating segment structure.

Fair Value of Financial Instruments

The carrying amounts for financial instruments consisting of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. The redeemable convertible preferred stock warrant liability, common stock warrant and put option liability is carried at fair value based on unobservable market inputs.

The Company determines the fair value of financial assets and liabilities using the fair value hierarchy which describes three levels of inputs that may be used to measure fair value, as follows:

• Level 1—Observable inputs, such as quoted prices in active markets for identical assets and liabilities.

• Level 2—Observable inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company does not have any Level 1 or 2 instruments as of December 31, 2017 and March 31, 2018. The Company’s Level 3 instrument consists of the redeemable convertible preferred stock warrant liability, common stock warrant liability and put option liability associated with the Company’s debt agreements.

Cash and Cash Equivalents

Cash equivalents consist of short-term, highly liquid investments with stated maturities of three months or less from the date of purchase. As of December 31, 2017 and March 31, 2018, cash and cash equivalents consist of cash on deposit with banks denominated in U.S. Dollars.

Restricted Cash

Restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements. Restricted cash as of December 31, 2017 and March 31, 2018 consists of security deposits and collateral for letters of credit and is included in prepaid expenses and other current assets and other assets on the condensed consolidated balance sheets.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable is comprised of amounts due from sales of the Company’s genetic tests and is recorded net of allowance for doubtful accounts. The allowance for doubtful accounts is determined based on the Company’s best estimate of the amount of probable losses in the Company’s existing accounts receivable, which is based on historical write-off experience, customer creditworthiness, the age of the receivable and current market and economic conditions. The allowance for doubtful accounts was $0.9 million and $0.7 million as of December 31, 2017 and as of March 31, 2018, respectively. Accounts receivable balances are charged against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventory

Inventory consists of reagents and other laboratory supplies which are used to test and process samples. Inventory is valued at the lower of cost, computed on a first-in, first-out basis, or net realizable value. The Company estimates the recoverability of its inventory by reference to internal estimates of future demands and product life cycles, including expiration.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method and is recorded over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the underlying assets or the term of the lease agreement. The Company expenses repairs and maintenance costs as incurred.

Internally Developed Software

The Company incurs costs to develop software for internal use. The Company expenses all costs that relate to the planning and post-implementation phases as incurred. Costs incurred in the development phase are capitalized and amortized over the product’s estimated useful life. The Company’s policy is to amortize capitalized internal software development costs on a straight-line basis over the estimated useful life of the products of three years. The useful lives of these assets are evaluated on an annual basis and tested for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. The Company capitalized $0.2 million for the three months ended March 31, 2018. The Company presents internally developed software costs as a component of property and equipment, net on the condensed consolidated balance sheets.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for indications of possible impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amounts to the future undiscounted cash flows, attributable to these assets or asset groups. Should impairment exist, the impairment would be measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from those assets. There have been no such impairments of long-lived assets as of December 31, 2017 and March 31, 2018.

Redeemable Convertible Preferred Stock

The Company recorded the redeemable convertible preferred stock at fair value on the dates of issuance, net of issuance costs. The redeemable convertible preferred stock is recorded outside of permanent equity because while it is not mandatorily redeemable, in the event of certain events considered not solely within the Company’s control, such as a merger, acquisition and sale of all or substantially all of the Company’s assets (each, a “deemed liquidation event”), the redeemable convertible preferred stock will become redeemable at the option of the holders. The Company has not adjusted the carrying values of the redeemable convertible preferred stock to the liquidation preferences of such shares because it is uncertain whether or when an event would occur that would obligate the Company to pay the liquidation preferences to holders of shares of redeemable convertible preferred stock. Subsequent adjustments to the carrying values to the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur.

Redeemable Convertible Preferred Stock Warrants

The Company’s redeemable convertible preferred stock warrants require liability classification and accounting as the underlying redeemable convertible preferred stock is considered contingently redeemable and may obligate the Company to transfer assets to the holders at a future date under certain circumstances, such as a deemed liquidation event. The warrants are recorded at fair value upon issuance and are subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss. The Company will continue to adjust the warrant liability for changes in fair value until the earlier of the exercise or expiration of the redeemable convertible preferred stock warrants, the completion of a deemed liquidation event, the conversion of redeemable convertible preferred stock into common stock, or until holders of the redeemable convertible preferred stock can no longer trigger a deemed liquidation event. Upon an IPO, the redeemable convertible preferred stock warrants will be automatically exercised for shares of the Company’s common stock with no consideration due from the warrant holder (see Note 11).

Common Stock Warrants

The Company’s common stock warrants require liability classification and accounting as the Company may be required to transfer assets to settle the warrants at a future date (see Note 6). The warrants are recorded at fair value upon issuance and are subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss. The Company will continue to adjust the warrant liability for changes in fair value until the earlier of the exercise or expiration of the common stock warrants or such time the common stock warrant will meet all criteria for equity classification. Upon an IPO, the common stock warrants will be automatically net share exercised for shares of the Company’s common stock (see Note 12).

Put Option Liability

The Credit Agreement and Guaranty and related agreements (the “Credit Agreement”) with Perceptive Credit Holdings LP (“Perceptive”) for a secured term loan, provide Perceptive with a top-up fee payable upon exercise of the put option on common stock warrants (the “Put Option”) in connection with the sale of a majority of the Company’s stock or all, or substantially all, of the Company’s assets (a “Sale of the Company”) and prior to the consummation of an IPO. The top-up fee payable upon exercise of the Put Option and in connection with the Sale of the Company is an embedded derivative and meets the criteria requiring its bifurcation from the Credit Agreement and is accounted for as a separate derivative instrument (the “Put Option Liability”). The Put Option is recorded at fair value upon issuance and was recorded as a debt discount and reduction to the carrying value of long-term debt on the condensed consolidated balance sheet. The Put Option is subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recognized in the condensed consolidated statements of operations and comprehensive loss. The Company will continue to adjust the Put Option liability for changes in fair value until the earlier of the consummation of an IPO or in connection with the first sale of the Company occurring during the warrants’ exercise period (see Notes 6 and 13).

Revenue Recognition

The Company generates revenue from sales of its tests and receives payments from payers, including commercial payers and government payers, laboratory services intermediaries and self-paying individuals. Payment from payers includes insurance reimbursement and patient out-of-pocket costs. The Company is contracted with the majority of commercial payers and enrolled with the majority of government payers across the United States, defined as in-network payers. Payment from laboratory services intermediaries is based on a fixed price per test. The fixed prices identified in contracts with laboratory services intermediaries only change if a pricing amendment is agreed upon between both parties. Payment from self-paying individuals is based on a self-pay cash price and is collected directly from patients.

Under Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2017, the Company accounts for a contract with a customer when there’s approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

The Company’s contracts are between the Company and the patients, as patients receive the benefit of the services provided. However, the Company may have contracts with additional third-parties such as payers and laboratory services intermediaries.

The Company evaluates the promises contained in contracts with customers, in accordance with ASC 606, to determine whether promised goods or services are distinct, such that the customer can benefit from the goods or services on their own, and whether the goods or services can be separately identifiable from other goods or services in the contract. The Company evaluated the suite of services provided as part of Counsyl Complete, and has concluded that results delivery is the only distinct service that meets the definition of a performance obligation under ASC 606, and therefore the Company recognizes revenue at a single point in time: when the test results are delivered to the prescribing physician. The Company determined that the test results have been delivered, and that the customer has obtained control of the promised service, as soon as the test results report has been made available to the prescribing physician. The Company concluded that other activities, including ordering, pre-test education and coverage and transparent price estimates are not distinct services, but instead are steps in the process of delivering results, and thus do not impact the timing of revenue recognition. Genetic counseling was deemed to be immaterial in the context of the contract, and thus under the guidance of ASC 606, the Company did not assess whether this service represents a performance obligation. Thus, the delivery of genetic counseling services does not impact the timing of revenue recognition as well.

The Company recognizes revenue on an accrual basis at the time the tests results are delivered, at an amount that reflects the consideration to which the Company expects to be entitled to in exchange for delivering the test results. This revenue recognition policy applies to all test result deliveries, regardless of whether the test is billed through in-network payers, out-of-network payers, laboratory services intermediaries, or self-paying individuals.

The actual consideration received by the Company often varies significantly from the amounts billed, and the determination of the expected reimbursement amount requires significant judgment and estimation by the Company. The Company estimates the variable consideration to be included in the transaction price for tests billed through in-network payers, out-of-network-payers, and self-paying individuals using the expected value method, as the Company has a large number of contracts with similar characteristics. The consideration to be included in the transaction price for tests billed to laboratory services intermediaries is fixed, and revenue is recognized at the fixed invoiced amount, if collection is probable.

From time to time, the Company receives requests for refunds due to overpayments made by payers and patients. In accordance with ASC 606-10-32-10, the Company records a refund liability at the amount received for which the Company does not expect to be entitled. Such amounts are not included in the estimated transaction price.

Countries outside of the United States, based on the billing address of customers, represented less than 1% of the Company’s revenue for the three months ended March 31, 2017 and 2018.

Contract Balances

The timing of revenue recognition may differ from the timing of billing to customers. Accounts receivable are recorded at the expected reimbursement amount. A receivable is recognized in the period the Company delivers the test results. In instances where the timing of revenue recognition differs from the timing of billing, the Company has determined that its contracts do not include a significant financing component. The Company applied the practical expedient that the promised amount of consideration need not be adjusted for the effects of a significant financing component as the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. The balance of accounts receivable, net of allowance for doubtful accounts, as of December 31, 2017 and March 31, 2018, is presented in the condensed consolidated balance sheets and the condensed consolidated balance sheets, respectively. The Company records deferred revenue when cash payments are received in advance of delivering the test results. The balance of deferred revenue accounts of $0.1 million as of December 31, 2017, and as of March 31, 2018 is included in accrued liabilities in the condensed consolidated balance sheets.

Research and Development

Research and development expenses include costs incurred to develop the Company’s technology, further refine its laboratory testing and automation processes, develop new testing methods and protocols, to conduct studies to develop and support the clinical utility of its tests and to optimize its workflow solutions for patients and providers. These costs consist of personnel costs, including employee payroll and benefits, stock-based compensation expense; prototype materials; laboratory supplies; consulting costs; regulatory costs; and allocated overhead, including rent, information technology, depreciation and amortization, and utilities. The Company expenses all research and development costs in the periods in which they are incurred.

Stock-Based Compensation

Stock-based compensation expense for awards granted to employees with a service condition is measured at the grant date based on the fair value of the award and it is recognized as expense on a straight-line basis over the requisite service period, which is generally over a four-year vesting period. Prior to January 1, 2017, the fair value of the portion of the award that was ultimately expected to vest was recognized as expense over the requisite service periods in the condensed consolidated statements of operations and comprehensive loss. Upon the adoption of ASU 2016-09 on January 1, 2017, the Company has elected to recognize the actual forfeitures by reducing the employee stock-based compensation expense in the same period as the forfeitures occur. Hence, the Company stopped estimating forfeitures upon the adoption of ASU 2016-09.

Stock-based compensation expense for awards granted to employees with a performance-based condition was recognized based on the probability of achieving certain performance criteria. Prior to January 1, 2017, the fair value of the portion of the award that is ultimately expected to vest was recognized as expense when it became probable that the performance criteria would be met using the accelerated attribution method. Upon the adoption of ASU 2016-09 on January 1, 2017, the Company has elected to recognize the actual forfeitures by reducing the employee stock-based compensation expense in the same period as the forfeitures occur. Hence, the Company stopped estimating forfeitures upon the adoption of ASU 2016-09.

The Company accounts for stock-based compensation arrangements with non-employees using a fair value approach. The Company believes that for stock awards issued to non-employees, the fair value of the stock award is more reliably measurable than the fair value of the services rendered. Therefore, the Company estimates the fair value of non-employee stock options using a Black-Scholes option-pricing model with appropriate inputs. The estimated fair value of non-employee stock options is remeasured on each balance sheet date over the vesting period.

Income Taxes

The Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements but have not been reflected in the Company’s taxable income. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred income tax assets will not be realized in the future.

The Company recognizes benefits of uncertain tax positions if it is more-likely-than-not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more-likely than-not to be realized upon the ultimate settlement. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense or benefit. For the three months ended March 31, 2018, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Deferred Offering Costs

Deferred offering costs, consisting of legal, accounting and other fees and costs relating to the Company’s planned IPO, are recorded within other assets on the condensed consolidated balance sheets. The deferred offering costs will be offset against the proceeds received upon the closing of the planned IPO. In the event the planned IPO is terminated, all of the deferred offering costs will be expensed within the Company’s condensed consolidated statements of operations and comprehensive loss. As of December 31, 2017 and March 31, 2018, $0.2 million and $2.5 million, respectively, of deferred offering costs were recorded as other assets on the condensed consolidated balance sheets.

Net Loss per Share Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the redeemable convertible preferred stock, common stock subject to repurchase, stock options, preferred and common stock option warrants and restricted stock units are considered to be potentially dilutive securities. Basic and diluted net loss attributable to common stockholders per share is presented in conformity with the two-class method required for participating securities as the redeemable convertible preferred stock is considered a participating security. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. As such, the net loss was attributed entirely to common stockholders. As the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

Recent Accounting Pronouncements Not Yet Adopted

In February 2018, FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The guidance permits companies to reclassify disproportionate tax effects in accumulated other comprehensive income (“AOCI”) caused by the Tax Act to retained earnings. The guidance is effective for all companies for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company will consider whether to adopt or not in a later period.

In July 2017, FASB issued ASU 2017-11, Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815) (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. This update simplifies the accounting for certain financial instruments with down round features, a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings. Down round features are common in warrants, preferred shares and convertible debt instruments issued by private companies and development-stage public companies. This update requires companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability or equity classification. The provisions of this update related to down rounds are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact the adoption of this standard will have on its condensed consolidated financial statements and related disclosures.

In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply. The Company is currently evaluating the impact the adoption of this standard will have on its condensed consolidated financial statements and related disclosures.

3. NEW ACCOUNTING STANDARDS

Stock Compensation

ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. On January 1, 2018, the Company prospectively adopted guidance that was issued to provide clarity and reduce both the (1) diversity in practice and (2) cost and complexity when changing the terms or conditions of share-based payment awards. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the updated guidance, a modification is defined as a change in the terms or conditions of a share-based payment award, and an entity should account for the effects of a modification unless all of the following are met:

1.The fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation techniques that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification.

2.The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified.

3.The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified.

Historically, the Company’s application of the modification accounting has been consistent with ASU 2017-09. Therefore, the adoption of ASU 2017-09 did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Statement of Cash Flows

ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments of this standard provide guidance on eight specific cash flow issues to reduce the existing diversification in practice, including (a) debt prepayment or debt extinguishment costs; (b) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (c) contingent consideration payments made after a business combination; (d) proceeds from settlement of insurance claims; (e) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (f) distributions received from equity method investees; (g) beneficial interests in securitization transactions; and (h) separately identifiable cash flows and application of the predominance principle. On January 1, 2018, the Company adopted this guidance and applied this amendment using a retrospective transition method to each period presented in the Company’s condensed consolidated statements of cash flows. The condensed consolidated statement of cash flows for the periods ended March 31, 2017 and 2018 have been presented in accordance with this amendment. The adoption of this amendment did not have a material impact on the Company’s condensed consolidated financial statements and disclosures.

ASU 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash. This ASU applies to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows. The ASU requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This ASU should be applied using a retrospective transition method to each period presented. On January 1, 2018, the Company adopted ASU 2016-18 and applied this ASU retrospectively to the periods presented in the Company’s condensed consolidated statements of cash flows. As a result, restricted cash was included with cash and cash equivalents to reconcile amounts on the cash flows for the periods ended March 31, 2017 and 2018. Restricted cash amounts as of March 31, 2017 and 2018, respectively, are primarily related to security deposits and collateral for letters of credit. The adoption of this amendment did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Disaggregation of Revenue

The actual consideration received by the Company often varies significantly from the amounts billed, and the determination of the expected reimbursement amount requires significant judgment and estimation by the Company. The Company estimates the variable consideration to be included in the transaction price for tests billed through in-network payers, out-of-network-payers, and self-paying individuals using the expected value method, as the Company has a large number of contracts with similar characteristics.

The Company determines its estimated transaction price based on its historical collection experience, including an assessment to ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Subsequent changes to the estimate of the transaction price are generally recorded as adjustments to revenue in the period of change. In the period ended March 31, 2018, the Company recognized $2.7 million in revenue for tests in which the performance obligation of delivering the tests results was met in prior periods, primarily driven by changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payers and patients that was unknown at the time the performance obligation was met and settlements with third party payers.

The following table disaggregates the Company’s revenue by major source for the three months ended March 31, 2017 and 2018 (in thousands):

	Three months ended March 31,
	2017		2018
Revenue from tests billed through in-network payers	$	21,281	$	30,662
Revenue from tests billed through laboratory service intermediaries		4,932		4,210
Revenue from tests billed through out-of-network payers		2,579		3,949
Revenue from tests billed through self-paying individuals		211		266
Total revenue	$	29,003	$	39,087

4. BALANCE SHEET COMPONENTS

Property and Equipment, Net

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

	Useful Life (years)	As of December 31, 2017			As of March 31, 2018
Capitalized software development costs	3	$	19,640		$	19,477
Laboratory equipment	3		22,582			23,045
Leasehold improvements	8 - 9		8,660			8,674
Computers and equipment	2		5,118			5,164
Furniture and fixtures	3		526			526
Purchased software	3		244			268
Subtotal		$	56,770		$	57,154
Accumulated depreciation and amortization			(42,637	)		(44,066	)
Property and equipment, net		$	14,133		$	13,088

The Company recorded $0.1 million and $0.4 million of depreciation expense of assets under its capital leases for the three months ended March 31, 2017 and 2018, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	As of December 31, 2017		As of March 31, 2018
Accrued compensation	$	5,927	$	5,119
Accrued professional services		2,764		4,311
Accrued refunds payable		1,505		1,461
Accrued royalties		1,797		1,938
Accrued other liabilities		927		1,314
Total accrued liabilities	$	12,920	$	14,143

5. FAIR VALUE MEASUREMENTS

The estimated fair value of debt approximates the carrying value because the interest rate on such debt adjusts to market rates on a periodic basis (Level 2 in the fair value hierarchy). The following table represents the fair value hierarchy for the Company’s financial liabilities measured at fair value on a recurring basis as of December 31, 2017 and March 31, 2018 (in thousands):

	Level 1		Level 2		Level 3
Balance as of December 31, 2017:
Liabilities:
Common stock warrant liability	$	—	$	—	$	10,650
Put option liability	$	—	$	—	$	2,126
Redeemable convertible preferred stock warrant liability	$	—	$	—	$	1,601
Total	$	—	$	—	$	14,377
Balance as of March 31, 2018:
Liabilities:
Common stock warrant liability	$	—	$	—	$	10,700
Put option liability	$	—	$	—	$	2,090
Redeemable convertible preferred stock warrant liability	$	—	$	—	$	1,701
Total	$	—	$	—	$	14,491

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial instruments (in thousands):

	Redeemable
	Convertible
	Preferred Stock		Common Stock
	Warrant Liability		Warrant Liability		Put Option Liability
Fair value as of December 31, 2017	$	1,601	$	10,650	$	2,126
Change in fair value included in other (income) expense, net		100		50		(36	)
Fair value as of March 31, 2018	$	1,701	$	10,700	$	2,090

6. LONG-TERM DEBT

In October 2011, the Company entered into a loan and security agreement with Venture Lending & Leasing VI, Inc. (“WTI”) (the “WTI Agreement”). The WTI Agreement includes a $10.0 million borrowing capacity under term loan advances. In conjunction with the WTI Agreement, the Company also issued warrants to purchase its Series B redeemable convertible preferred stock (Note 11).

In December 2013, the Company entered into a loan and security agreement with Silicon Valley Bank (“SVB”) (the “2013 SVB Agreement”). The agreement included a $5.0 million revolving line of credit and an additional $10.0 million of borrowing capacity under term loan advances. Upon drawing down the first tranche from SVB in December 2013, the Company terminated the loan with WTI and repaid the outstanding balance in full.

The 2013 SVB Agreement was amended in January 2015 to increase the initial term loan to $7.6 million and revise the payment schedule such that monthly payments for the first 12 months following the amendment would consist of interest-only payments with the borrowings amortizing in 36 equal monthly payments of principal and interest thereafter. The amendment was accounted for as a modification of existing debt. No incremental expense was recorded in the Company’s condensed consolidated statements of operations and comprehensive loss as a result of the debt modification.

In August 2015, the Company entered into a loan and security agreement with SVB and MidCap Funding III Trust (“MidCap”) (the “SVB and MidCap Loan”). The agreement includes a $5.0 million revolving line of credit from SVB and an additional $40.0 million of borrowing capacity under term loan advances from each of SVB and MidCap, for a total of $45.0 million of borrowing capacity.

Upon drawing down the first tranche of the loan from SVB in August 2015, the Company terminated the 2013 SVB Agreement and repaid the outstanding balance in full. The termination was accounted for as an extinguishment of debt and the Company recorded a loss of $0.3 million, which was recognized in the condensed consolidated statements of operations and comprehensive loss.

The term loan advances under the SVB and MidCap Loan were available in three tranches. The Company borrowed the initial tranche of $12.0 million in August 2015, the second tranche of $13.0 million in February 2016 and the third tranche of $15.0 million in September 2016. The Company also drew down on the $5.0 million revolving line of credit in August 2016. The loan was scheduled to be fully repaid by July 2020. The initial tranche term loan bears interest at 8.65% per annum, and the second and third tranche term loans each bear interest at 8.9% per annum. The revolving line of credit bears interest at the prime rate plus 0.75% per annum and was to expire in July 2018.

On November 3, 2017 (the “Closing Date”), the Company entered into the Credit Agreement with Perceptive for a secured term loan of $80.0 million and paid $1.2 million in issuance costs and upfront fees. Upon drawing down the loan from Perceptive in November 2017, the Company terminated the SVB and MidCap loan and repaid in full the balance of its obligations under such agreement, $43.4 million, consisting of $41.1 million in principal and $2.3 million in end-of-term interest and prepayment fees. The termination was accounted as an extinguishment of debt and the Company recorded a loss of $1.3 million of previously capitalized debt discount, prepayment and other fees and issuance cost in the condensed consolidated statements of operations and comprehensive loss. The loss on debt extinguishment is mainly due to the write-off of previously capitalized debt discount and legal and prepayment fees paid on termination.

The Credit Agreement is payable in monthly installments of $1.2 million starting November 2020 and a final payment of $65.6 million on November 3, 2021. The principal amount outstanding on the loan will accrue interest at the one-month LIBOR rate (floating with a 1.50% floor) plus 9.50%.

In connection with the Credit Agreement, the Company issued a Perceptive warrant (the “Perceptive Warrant”) to purchase 5,000,000 shares of the Company’s common stock. The Perceptive Warrant can be exercised at (i) an exercise price equal to 50% of the per share offering price of common stock in connection with an IPO in which the Company receives more than $50.0 million in gross proceeds and its common stock is listed on either the New York Stock Exchange or the NASDAQ Stock market (a “Perceptive Warrant IPO”), (ii) an exercise price equal to 50% of the value of the per share consideration payable to the holders of common stock as a result of the sale of the Company, and (iii) an exercise price equal to implied per share value of common stock assuming a total enterprise value for the Company of $275.0 million during the period January 1, 2020 and prior to November 3, 2027.

The fair value of the warrants on the date of issuance was calculated at $10.5 million and is classified as a liability on the balance sheet. Refer to Note 12 for information regarding the determination of the fair value of the warrants.

The Credit Agreement provides Perceptive with a top-up fee payable upon exercise of the Put Option in connection with a Sale of the Company and prior to the consummation of a Perceptive Warrant IPO. If Perceptive exercises the Put Option, the purchase price per share payable by the Company is equal to the imputed per share value of a share of the Company’s common stock in the Sale of the Company. Additionally, if Perceptive exercises the Put Option, the Company would be required to pay Perceptive an additional fee (the “Top-Up Fee”) such that the total return to Perceptive, including all payments made as a result of the Sale of the Company, and all payments of principal, interest, prepayments fees, penalties or otherwise, and payments in respect of the Perceptive Warrant or shares issued upon the exercise of the Perceptive Warrant, is at least equal to (1) $104.0 million if the Sale of the Company occurs prior to November 3, 2018, or (2) $120.0 million if such Sale of the Company occurs on or after November 3, 2018. In the event that Perceptive does not exercise the Put Option in connection with a Sale of the Company, the Put Option shall expire automatically.

The Top-Up Fee payable upon exercise of the Put Option and in connection with the Sale of the Company is an embedded derivative and meets the criteria requiring its bifurcation from the Credit Agreement and is accounted for as a separate derivative instrument. The Company valued the Put Option using the Black-Scholes method, which included significant estimates regarding the probability and expected time to exercise, volatility and a discount rate. The estimated fair value of the Put Option on the date of issuance was determined to be approximately $2.1 million and was recorded as a debt discount and recorded on the condensed consolidated balance sheet as a reduction to the carrying value of long-term debt. The embedded derivative is remeasured each period end with changes in fair value recorded in the condensed consolidated statements of operations and comprehensive loss.

The outstanding principal of the loan balance under the Perceptive loan was $80.0 million as of December 31, 2017 and March 31, 2018. The fair value of warrants, fair value of put option, issuance costs and upfront fees are accounted as debt discount and recorded on the condensed consolidated balance sheets, as a reduction to the carrying value of long-term debt.

Perceptive has an interest in substantially all of the Company’s tangible and intangible assets, to secure any outstanding amounts under the Credit Agreement. The Credit Agreement contains customary events of default, conditions to borrowing and covenants, including restrictions on the Company’s ability to dispose of assets, make acquisitions, incur debt, incur liens and make distributions to stockholders, including the payment of dividends. In addition, the Perceptive Loan also contains a Material Adverse Change clause in which any material adverse change or effect on the business, condition, operations, or ability to perform obligations under the terms of the loan are also considered an event of default. In addition, the loan contains operating and financial covenants, including maintaining minimum levels of revenue and a minimum aggregate cash balance of $4.0 million.

As of December 31, 2017 and March 31, 2018, the Company was in compliance with regards to all financial covenants under the terms of the Credit Agreement.

Future principal repayments as of March 31, 2018 are as follows (in thousands):

	Amount
As of March 31, 2018
2020	$	2,400
2021		77,600
Total	$	80,000
Less: unamortized balance of debt discount		(12,311	)
Add: end-of-term interest payment		83
Long-term portion, net of discount	$	67,772

7. COMMITMENTS AND CONTINGENCIES

The following table summarizes the Company’s future minimum commitments under non-cancelable contracts as of March 31, 2018 (in thousands):

	Commitments and contingencies
Years ending December 31:	Operating leases		Capital leases		Minimum royalties			Total
2018 (remaining nine months)	$	2,652	$	881	$	100		$	3,633
2019		3,653		1,175		100		$	4,928
2020		3,776		619		100		$	4,495
2021		3,904		—		100		$	4,004
2022		4,035		—		100		$	4,135
2023 and thereafter		10,415		—		100	*	$	10,515
	$	28,435	$	2,675	$	600		$	31,710

* Reflects annual, ongoing minimum royalty commitment

Operating Lease Commitments

The Company leased two buildings in South San Francisco, California. In December 2016, the Company renewed its lease for its first building, located on Kimball Way in South San Francisco. The total lease payment over the life of the lease is $30.4 million, offset by $2.6 million in tenant improvement allowances. The lease expires on April 30, 2025.

In May 2017, the Company renewed its lease for its second building, located on Littlefield Avenue in South San Francisco. The total lease payment over the life of the second building lease is $9.3 million, offset by $0.1 million in tenant improvement allowances. The lease expires on September 30, 2025.

These lease agreements contain escalation clauses whereby monthly rent increases over time. Rent expense is recognized on a straight-line basis over the lease period. Rent expense was $0.9 million and $0.9 million for the three months ended March 31, 2017 and 2018, respectively.

Capital Lease Commitments

As of December 31, 2017 and March 31, 2018, the gross amount of assets recorded under capital leases was $6.4 million, of which $5.9 million was attributed to laboratory equipment and $0.5 million to computer equipment. The outstanding balance of lease payable was $2.8 million and $2.5 million as of December 31, 2017 and March 31, 2018, respectively. The equipment under this lease agreement is being depreciated over the term of the estimated useful life of the underlying asset, which is shorter than the lease term.

In 2017, the Company entered into capital lease agreements for laboratory equipment and computer equipment for $3.8 million. The term of the capital leases are 36 months and the minimum lease payments due under the agreement are $4.1 million.

Minimum Royalty Commitments

On January 17, 2011, the Company entered into a non-exclusive license agreement (“Stanford License”) with The Board of Trustees of the Leland Stanford Junior University (“Stanford”). The dollar amount of such royalty payment per test is tiered depending on the amount for which a given test is sold by the Company. The Company must also make an annual license maintenance payment of $0.1 million, which is fully creditable against any earned royalties. The Company recorded royalty expenses of $0.2 million and $0.2 million under the Stanford License for the three months ended March 31, 2017 and 2018, respectively, which are included in cost of revenue in the condensed consolidated statements of operations and comprehensive loss and the condensed consolidated statement of operations and comprehensive loss, respectively.

The term of the Stanford License extends until the expiration of the last patent that is the subject of the Stanford License, unless it is otherwise terminated early pursuant to its terms. The Company may terminate the Stanford License at any time for convenience on 30 days’ notice to Stanford. Stanford may also terminate the Stanford License for specified uncured breach of the Stanford License by the Company.

On October 16, 2015, the Company entered into a supply agreement with Illumina, Inc. (“Illumina”), which was amended on January 25, 2016 and again on February 14, 2017, to revise the pricing and product offerings thereunder (the “Supply Agreement”). Under the terms of the Supply Agreement, Illumina supplies the Company certain DNA sequencing instruments and consumables, referred to as Supplied Products, for commercial use. In addition to transfer prices payable for Supplied Products, the Company is required to pay a royalty for each test that is processed using the Supplied Products for the detection of fetal chromosomal conditions. The Company recorded royalty expenses of $1.1 million and $1.8 million under the Supply Agreement for the three months ended March 31, 2017 and 2018, respectively.

The term of the Supply Agreement extends through April 1, 2019, unless extended by the parties, or it is otherwise terminated early pursuant to its terms. Each party may terminate the Supply Agreement prior to expiration upon the bankruptcy or insolvency of the other party, an uncured material breach by the other party, if such party has a reasonable basis to believe or is notified by a regulatory agency or government body that its performance under the Supply Agreement violates any law, or the other party initiates a lawsuit for patent infringement against such party. In addition, Illumina may terminate the supply agreement on specified change of control scenarios.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made and that such expenditures can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount.

In the normal course of business, the Company provides indemnifications of varying scope to customers against claims made by third parties arising from the use of its products. Historically, costs related to indemnification provisions have not been material and the Company is unable to estimate the maximum potential impact of these indemnification provisions on its future results of operations.

To the extent permitted under Delaware law, the Company has agreements whereby it indemnifies its directors and officers for certain events or occurrences while the director or officer is, or was serving, at the Company’s request in such capacity. The indemnification period covers all pertinent events and occurrences during the director’s or officer’s service. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is not specified in the agreements; however, the Company has director and officer insurance coverage that reduces its exposure and enables the Company to recover a portion of any future amounts paid. The Company believes the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is minimal.

Legal Matters

In September 2013, the Company filed a complaint for declaratory judgment against Myriad Genetics in federal court in the Northern District of California around several patents owned, assigned or licensed to Myriad Genetics that have subject matter relating to the Company’s screening for certain genes related to breast and other cancers. In June 2014, Myriad Genetics, along with co-plaintiffs Endorecherche, University of Utah Research Foundation, Trustees of the University of Pennsylvania, and HSC Research and Development Limited Partnership, countersued. As of December 31, 2015, all of the claims have been dismissed with prejudice.

From time to time, the Company may become involved in legal proceedings arising from the ordinary course of its business. The Company records a legal liability when it believes that it is probable both that a liability may be incurred and that the amount of the liability can be reasonably estimated. Significant judgment by the Company is required to determine both probability and the estimated amount. The Company does not believe it is party to any currently pending legal proceedings that will result in a material adverse effect on its business, condensed consolidated financial position, results of operations or cash flows.

8. REDEEMABLE CONVERTIBLE PREFERRED STOCK

Redeemable convertible preferred stock consists of the following as of December 31, 2017 and March 31, 2018 (in thousands, except per share data):

	Shares Authorized		Original Issue Price		Shares Issued and Outstanding		Proceeds, net of issuance costs		Liquidation Value
Series A		1,752	$	4.28		1,752	$	7,500	$	7,503
Series B		7,138		5.05		6,780		34,031		34,239
Series C		928		8.84		928		7,456		8,204
Series D		4,613		10.84		3,840		41,487		41,615
Balance at December 31, 2017 and March 31, 2018		14,431				13,300	$	90,474	$	91,561

Conversion

Each share of redeemable convertible preferred stock is, at the option of the holder, convertible at any time into shares of common stock, subject to certain anti-dilution adjustments (e.g., stock split, payment of stock dividends or otherwise), in accordance with the conversion formula provided in the Company’s Certificate of Incorporation. Each share of Series A redeemable convertible preferred stock shall automatically be converted into shares of common stock at the conversion rate then in effect for Series A redeemable convertible preferred stock upon the earlier of (i) immediately prior to the sale of the Company’s common stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), with gross proceeds of not less than $30.0 million in aggregate, or (ii) the receipt by the Company of a written request of the holders of a majority of the outstanding shares of the Series A redeemable convertible preferred stock. Each share of Series B redeemable convertible preferred stock shall automatically be converted into shares of common stock at the conversion rate then in effect for Series B redeemable convertible preferred stock upon the earlier of (i) immediately prior to the sale of the Company’s common stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act, with gross proceeds of not less than $30.0 million in aggregate and at a price per share of the Company common stock not less than $15.16 (as adjusted for any stock dividend, stock split, combination of shares, reorganization, recapitalization, reclassification or similar event) (a “Qualified IPO”), or (ii) the receipt by the Company of a written request of the holders of at least 60% of the outstanding shares of the Series B redeemable convertible preferred stock. Each share of Series C redeemable convertible preferred stock shall automatically be converted into shares of common stock at the conversion rate then in effect for Series C redeemable convertible preferred stock upon the earlier of (i) immediately prior the sale of the Company’s common stock in a Qualified IPO, or (ii) upon the receipt by the Company of a written request of the holders of a majority of the outstanding shares of the Series C redeemable convertible preferred stock. Each share of Series D redeemable convertible preferred stock shall automatically be converted into shares of common stock at the conversion rate then in effect for Series D redeemable convertible preferred stock upon the earlier of (i) immediately prior the sale of the Company’s common stock in a Qualified IPO, or (ii) upon the receipt by the Company of a written request of the holders of a majority of the outstanding shares of the Series D redeemable convertible preferred stock. As of December 31, 2017 and March 31, 2018, all series of redeemable convertible preferred stock convert into shares of common stock on a one-to-one basis.

Dividends

Dividends are non-cumulative and are payable at a rate of 8% of the original issue price of $4.28, $5.05, $8.84 and $10.84 per share for Series A, B, C and D redeemable convertible preferred stock, respectively, when, as and if, declared by the Company’s Board of Directors (the “Board”). Such dividends are in preference to any dividends to holders of common stock. As of December 31, 2017 and March 31, 2018, no such dividends have been declared.

Voting

Each share of redeemable convertible preferred stock is entitled to the number of votes equal to the number of shares of common stock into which such shares could be converted. Holders of redeemable convertible preferred stock and common stock vote as a single class.

Liquidation Preference

Upon liquidation, dissolution or winding down of the Company, the holders of the redeemable convertible preferred stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of shares of common stock, an amount equal to the per share issue price of such series of redeemable convertible preferred stock, plus all declared and unpaid dividends on such shares (the “liquidation preference”). If available assets are insufficient to pay the full liquidation preference, the available assets will be distributed among the holders of the redeemable convertible preferred stock, on a pari passu and pro rata basis. After the payment of the liquidation preference, all remaining assets available for distribution will be distributed ratably among the holders of the common stock.

Redemption and Balance Sheet Classification

The redeemable convertible preferred stock is recorded in mezzanine equity because, while it is not mandatorily redeemable, it will become redeemable at the option of the shareholders upon the occurrence of certain deemed liquidation events that are considered not solely within the Company’s control.

9. COMMON STOCK

Common stockholders are entitled to dividends when and if declared by the Board, subject to the prior rights of the redeemable convertible preferred stockholders. The holder of each share of common stock is entitled to one vote. As of December 31, 2017 and March 31, 2018, no dividends have been declared.

The Company had reserved shares of common stock, on an as-converted basis, for issuance as follows (in thousands):

	As of December 31, 2017		As of March 31, 2018
Conversion of Series A redeemable convertible preferred stock		1,752		1,752
Conversion of Series B redeemable convertible preferred stock		6,780		6,780
Conversion of Series C redeemable convertible preferred stock		928		928
Conversion of Series D redeemable convertible preferred stock		3,840		3,840
Options and RSU issued and outstanding		16,055		17,544
Remaining shares available for issuance under stock options plans		5,705		3,668
Shares issuable upon exercise of redeemable convertible preferred stock warrants		358		358
Shares issuable upon exercise of common stock warrants		5,000		5,000
Total		40,418		39,870

10. STOCK INCENTIVE PLANS

Stock Incentive Plans

In October 2007, Board approved the 2007 Stock Plan (the “2007 Plan”). In August 2014, the Board approved the 2014 Stock Plan (the “2014 Plan”). Including the shares that were terminated under the 2007 Plan and transferred to the 2014 Plan, the Board reserved 15.7 million shares of common stock for future issuance under the 2014 Plan. Shares cancelled or forfeited under the 2007 Plan were transferred to the 2014 Plan and are available for re-issuance.

On February 10, 2017, the Board authorized the increase of shares available for grant under the 2014 Plan by 8,433,024 shares.

Under the 2014 Plan, the Company may grant incentive stock options (“ISOs”) and non-qualified stock options, stock appreciation rights, restricted stock and restricted stock units (“RSUs”). ISOs may be granted only to employees, and all other awards may be granted to Company employees and directors and to consultants, independent contractors and advisors of the Company for services rendered. Stock options generally include a one-year cliff vest of 25% of the respective award, followed by monthly vesting in equal installments over the next 36 months, and expire no later than ten years from the date of grant. The Company satisfies option exercises through the issuance of new shares.

On February 27, 2018 the Board approved the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan will become effective on the date of IPO and no additional grants will be issued under 2014 Plan. Any awards granted under the 2014 Plan will remain subject to the terms of the 2014 Plan and applicable award agreements.

On February 27, 2018 the Board approved 2018 Employee Stock Purchase Plan (the “ESPP”). The purpose of the 2014 ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward the Company’s success and that of the Company’s affiliates. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. The ESPP would permit eligible employees to purchase the Company’s common stock through payroll deductions, which may not exceed 15% of the employee’s base compensation. Stock may be purchased under the plan at a price equal to 85% of the fair market value of the Company’s common stock on offering date or on the applicable purchase date, whichever is lower.

Stock Option Activity

A summary of stock option activity for the three months ended March 31, 2018 is as follows (in thousands, except per share data):

	Number of Shares Available for Grant			Number of Shares Underlying Outstanding Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding, December 31, 2017		5,705			2,728		$	1.16		2.39	$	8,401
Authorized		—			—
Granted		(2,437	)		—
Exercised		—			(548	)	$	0.04
Forfeited		400			(7	)	$	3.31
Outstanding, March 31, 2018		3,668			2,173		$	1.43		2.79	$	6,142
Exercisable, March 31, 2018					2,149		$	1.41		2.79	$	6,130
Options vested or expected to vest, March 31, 2018					2,173		$	1.43		2.79	$	6,142

During the three months ended March 31, 2017, the Company granted options with a weighted-average grant date fair value of $2.10. There were no options granted in the three months ended March 31, 2018.

The total intrinsic value of options exercised was $0.2 million and $2.3 million for the three months ended March 31, 2017 and 2018, respectively. The fair value of shares that vested was $0.1 million and $23,000 for the three months ended March 31, 2017 and 2018, respectively.

As of March 31, 2018, total unrecognized stock-based compensation expense related to unvested stock options was $0.5 million. This cost will be amortized on a straight-line basis over a weighted average remaining period of 2.3 years.

Stock-based compensation expense related to options granted to non-employees for the three months ended March 31, 2017 and 2018 was $10,000 and nil, respectively.

Fair Value of Options Granted

In determining fair value of the stock options granted, the Company uses the Black–Scholes model and a single option award approach, which requires the input of subjective assumptions. These assumptions include: estimating the length of time employees will retain their vested stock options before exercising them (expected term), the estimated volatility of the Company’s common stock price over the expected term (expected volatility), risk-free interest rate (interest rate), expected dividends and the number of shares subject to options that will ultimately not complete their vesting requirements (forfeitures). Changes in the following assumptions can materially affect the estimate of fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop:

• Expected term. The expected term is calculated using the simplified method where there is insufficient historical data about exercise patterns and post-vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant, or for each vesting-tranche for awards with graded vesting. The mid-point between the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting-tranches, the times from grant until the mid-points for each of the tranches may be averaged to provide an overall expected term.

• Expected volatility. The Company used an average historical stock price volatility of a peer group of comparable publicly traded diagnostics companies to be representative of its expected future stock price volatility, as the Company did not have any trading history for its common stock. For each grant, the Company measured historical volatility over a period equivalent to the expected term.

• Risk-free interest rate. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of a stock award.

• Expected dividend rate. The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero.

There were no grants for three months ended March 31, 2018. The fair value of the Company’s stock options granted for the three months ended March 31, 2017 was estimated using the following assumptions:

	Three months ended
	March 31, 2017
Expected term (in years)		5.9
Expected volatility		59.0	%
Risk-free interest rate		2.02	%
Dividend yield		0.0	%

Restricted Stock Units

RSU activity for the three months ended March 31, 2018 was as follows (in thousands, except per share data):

	Number of Shares Underlying Outstanding RSUs			Weighted Average Grant Date Fair Value
Unvested, December 31, 2017		13,327		$	3.87
Granted		2,437		$	4.26
Vested		—			—
Cancelled/forfeited		(393	)	$	3.84
Unvested, March 31, 2018		15,371		$	3.93

As of December 31, 2017 and March 31, 2018, RSUs representing 13,327,264 and 15,371,511 shares of common stock have been issued to employees and include both service- and performance-based conditions to vest in the underlying shares of common stock. Generally, the service condition will be satisfied 25% on the one-year anniversary of the vesting commencement date, and 25% on each subsequent yearly anniversary of the vesting commencement date. For RSUs issued prior to March 18, 2017, the performance condition will be satisfied on the first to occur of: (1) the date that is the earlier of (a) the six-month anniversary of the effective date of an IPO or (b) February 10th of the calendar year following the year in which the IPO was declared effective, or (2) a change in control (as defined in the 2014 Plan). For RSUs issued prior to Mach 18, 2017, an employee who satisfied any portion of the service-based condition vests in the underlying shares on the liquidity event regardless of whether they are employed by the Company at the date of IPO or change in control. On March 18, 2017, the Company changed the terms for RSUs granted after March 18, 2017, requiring an employee to be employed by the Company at the time the performance condition is satisfied in order to vest in the underlying shares.

For RSUs issued after March 18, 2017, the performance condition will be satisfied on the first to occur of: (1) the date that is the earlier of (a) the six-month anniversary of the effective date of an IPO or (2) a change in control (as defined in the 2014 Plan). Stock-based compensation expense is recognized only for those RSUs that are expected to meet the service- and performance-based conditions using the accelerated attribution method. An IPO or change in control event are not deemed probable until consummated. As of December 31, 2017 and March 31, 2018, achievement of the performance condition was not probable and therefore, no stock-based compensation expense was recognized in the periods presented. If an IPO had occurred on March 31, 2018, the Company would have recognized $33.4 million of stock-based compensation expense for all RSUs with a performance condition that had satisfied the service-based condition on that date and would have $26.5 million of unrecognized compensation expense which is expected to be recognized over a weighted-average period of 3.3 years.

Stock-Based Compensation Expense by Function

The following table is a summary of stock compensation expense by function recognized for the three months ended March 31, 2017 and 2018 (in thousands):

	Three months ended March 31,
	2017		2018
Cost of revenue	$	12	$	6
Sales and marketing		64		1
Research and development		15		6
General and administrative		94		49
Total stock-based compensation expense	$	185	$	62

11. REDEEMABLE CONVERTIBLE PREFERRED STOCK WARRANTS

The Company issued warrants to purchase shares of Series B redeemable convertible preferred stock in October 2011 in connection with the WTI Agreement (Note 6). Warrants to purchase 358,253 shares of Series B redeemable convertible preferred stock have an exercise price of $4.28 per share and have a contractual term that ends on September 1, 2022. Upon occurrence of an IPO, the redeemable convertible preferred stock warrants will be automatically exercised for shares of the Company’s common stock with no consideration due from the warrant holder. The estimated fair value of the redeemable convertible preferred stock warrants on the date of issuance of $1.5 million was recorded as a debt discount. The redeemable convertible preferred stock warrant liability has been adjusted for the three months ended March 31, 2017 and 2018, based on the change in fair value in those periods with changes in fair value recorded in the condensed consolidated statements of operations and comprehensive loss. As of March 31, 2018, all of the warrants remain outstanding. The Company used the Black-Scholes option valuation model to estimate fair value of the warrants. The following assumptions were used to estimate the fair value of the redeemable convertible preferred stock warrants issued:

• Expected Term. The expected term represents the period for which the redeemable convertible preferred stock warrants are expected to be outstanding, which is estimated based on expected time to an IPO or change in control.

• Expected Volatility. The Company used an average historical stock price volatility of a peer group of comparable publicly traded diagnostics companies to be representative of the Company’s expected future stock price volatility, as it did not have any trading history for the Company’s redeemable convertible preferred stock. The Company has measured historical volatility over a period equivalent to the expected term. The Company believes that historical volatility provides a reasonable estimate of future expected volatility.

• Risk-Free Interest Rate. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the warrants.

• Expected Dividends. The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero.

• Fair Value of Redeemable Convertible Preferred Stock. The fair value of the shares of redeemable convertible preferred stock underlying the redeemable convertible preferred stock warrants has been determined by management at the end of each reporting period by considering a number of objective and subjective factors, including valuation of comparable companies, sales of redeemable convertible preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock and general and industry specific economic outlook, among other factors. The fair value was determined in accordance with applicable elements of the practice aid issued by the American Institute of Certified Public Accountants entitled Valuation of Privately Held Company Equity Securities Issued as Compensation.

The following assumptions were used to determine the fair value of redeemable convertible preferred stock warrants:

	Year ended			Three months ended
	December 31, 2017			March 31, 2018
Expected term (in years)		2.0			2.0
Expected volatility		55	%		55	%
Risk-free interest rate		1.89	%		2.27	%
Dividend yield		—			—

Upon occurrence of an IPO, the redeemable convertible preferred stock warrants will be automatically exercised for shares of the Company’s common stock with no consideration due from the warrant holder.

12. COMMON STOCK WARRANTS

In November 2017, in connection with the Credit Agreement, the Company issued warrants to Perceptive to purchase 5,000,000 shares of the Company’s common stock (see Note 6). The estimated fair value of the common stock warrants on the date of issuance of $10.5 million was recorded as a debt discount. The common stock warrant liability has been adjusted for the three months ended March 31, 2018 based on the change in fair value in the period with changes in fair value recorded in the condensed consolidated statements of operations and comprehensive loss.

The Company used the Black-Scholes option valuation model to estimate fair value of the common stock warrants liability. The following assumptions were used to estimate the fair value of the common stock warrants issued:

• Expected Term. The expected term represents the period for which the common stock warrants are expected to be outstanding, which is estimated based on expected time to an IPO or change in control.

• Expected Volatility. The Company used an average historical stock price volatility of a peer group of comparable publicly traded diagnostics companies to be representative of the Company’s expected future stock price volatility, as it did not have any trading history for the Company’s common stock. The Company has measured historical volatility over a period equivalent to the expected term. The Company believes that historical volatility provides a reasonable estimate of future expected volatility.

• Risk-Free Interest Rate. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the warrants.

• Expected Dividends. The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero.

• Fair Value of Common Stock. As the common stock is not publicly traded, the Company must estimate its fair value. The fair value of common stock was determined on a periodic basis by the Company’s board of directors, with the assistance of an independent third-party valuation firm.

The following assumptions were used to determine the fair value of common stock warrants:

	Year ended			Three months ended
	December 31, 2017			March 31, 2018
Expected term (in years)		2.0			2.0
Expected volatility		55	%		55	%
Risk-free interest rate		1.89	%		2.27	%
Dividend yield		—			—

13. PUT OPTION LIABILITY

The Credit Agreement provides the holders a Put Option. The Put Option is valued using a framework that isolates the cash flow(s) associated with the Put Option. The present value equivalent is the estimated value of the Put Option. The method considers probability estimates of 50% that sale of Company will happen within first year from the close of the loan and 50% that sale will happen between year 1 and year 2. The probability weighted value is discounted at a 17% factor that the Company will be sold in a private deal.

The Company used the Black-Scholes option valuation model to estimate fair value of the Put Option liability under each scenario and applied the probability estimates to calculated values under each scenario. The following assumptions were used to estimate the fair value of the Put Option:

• Expected Term. The expected term represents the period for which the Put Option liability is expected to be outstanding, which is estimated based on expected time to change in control.

• Expected Volatility. The Company used an average historical stock price volatility of a peer group of comparable publicly traded diagnostics companies to be representative of the Company’s expected future stock price volatility, as it did not have any trading history for the Company’s common stock. The Company has measured historical volatility over a period equivalent to the expected term. The Company believes that historical volatility provides a reasonable estimate of future expected volatility.

• Risk-Free Interest Rate. The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the warrants.

• Expected Dividends. The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero.

• Fair Value of Common Stock. As the common stock is not publicly traded, the Company must estimate its fair value. The fair value of common stock was determined on a periodic basis by the Company’s board of directors, with the assistance of an independent third-party valuation firm.

The following assumptions were used to determine the fair value of the Put Option liability:

	As of December 31, 2017			As of December 31, 2017			As of March 31, 2018			As of March 31, 2018
	If sold in year 1			If sold in year 2			If sold in year 1			If sold in year 2
Expected term (in years)		0.83			1.83			0.58			1.58
Expected volatility		41	%		40	%		53	%		51	%
Risk-free interest rate		1.68	%		1.87	%		1.96	%		2.20	%
Dividend yield		—			—			—			—

14. INCOME TAXES

The Company did not record a provision or benefit for income taxes during the three months ended March 31, 2017 and 2018. The Company is not under tax authority examination. The Company continues to maintain a full valuation allowance against its net deferred tax assets.

On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering the U.S. corporate income tax rates and implementing a territorial tax system. The corporate tax rate was reduced from 35% to 21% for tax years beginning after December 31, 2017 and certain provisions exist on which to allow accelerated expensing of equipment for a portion of 2017 and for future years. This will largely only affect the value of the Company’s deferred tax asset with a corresponding offset to valuation allowance. The Tax Act also limits the amount of net operating losses that can be used to reduce taxable income to 80% for net operating losses generated for periods beginning after December 31, 2017. Existing net operating losses, arising in years on or before December 31, 2017 are not affected by the Tax Act.

Due to the complexity of the provision for accelerated expensing of property and the lack of the current guidance, under the guidance of Staff Accounting Bulletin 118, the Company has recorded the provisional amount of $2.7 million as the bonus depreciation at the end of 2017, for which the accounting is incomplete but a reasonable estimate can be determined. Provisional amounts or adjustments to provisional amounts identified in the measurement period, as defined, would be included as an adjustment to tax expense or benefit from continuing operations in the period the amounts are determined. The Company has determined a reasonable estimate for the tax reform effects, and reported the estimates as a provisional amount in its financial statements for which the accounting under ASC Topic 740 is completed. The Company will finalize the calculation in 2018.

As of March 31, 2018, the Company had unrecognized tax benefits of $1.7 million, none of which would currently affect the Company’s effective tax rate if recognized due to the Company’s net deferred tax assets being fully offset by a valuation allowance. The Company does not anticipate that the amount of unrecognized tax benefits relating to tax positions existing at March 31, 2018 will significantly increase or decrease within the next 12 months. There was no interest expense or penalties related to unrecognized tax benefits recorded through March 31, 2018.

A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular position could require the use of cash.

15. NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):

	Three months ended March 31,
	2017			2018
Net loss attributable to common stockholders	$	(8,656	)	$	(4,306	)
Weighted average shares used to compute basic and diluted net loss per share attributable to common stockholders		46,308,416			47,417,293
Net loss per share attributable to common stockholders, basic and diluted	$	(0.19	)	$	(0.09	)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive:

	Three months ended March 31,
	2017		2018
Stock options issued and outstanding under stock options plans		4,308,791		2,172,938
Unvested RSUs		8,342,529		15,371,511
Series B redeemable convertible preferred stock warrant		358,253		358,253
Common stock warrant		—		5,000,000
Conversion of redeemable convertible preferred stock		13,299,837		13,299,837
Total		26,309,410		36,202,539

16. DEFINED CONTRIBUTION PLAN

The Company sponsors a defined contribution plan under Section 401(k) of the Internal Revenue Code covering substantially all employees over the age of 21 years. Contributions made by the Company are voluntary and are determined annually by the Board subject to the maximum allowable amount under federal tax regulations. The Company has made no contributions to the plan since its inception.

17. SUBSEQUENT EVENTS

The Company has reviewed and evaluated subsequent events through May 9, 2018, the date the unaudited condensed consolidated financial statements were available to be issued.

On May 2, 2018, the Company commenced a rescission offer under Rule 701 to holders of 124,703 options, 7,404,506 RSUs and 8,795 shares of the Company’s common stock, pursuant to which the Company is offering to repurchase these outstanding options, RSUs and shares from the holder. The rescission offer seeks to address the possibility that certain of the options granted by the Company and the shares issued upon exercise of these options, as well as certain of the RSUs granted by the Company, may have been issued in violation of federal or state securities laws, or both, and may be subject to a right to rescission by the holder. If the rescission offer is accepted by all offerees, the Company may be required to make an aggregate payment to the affected security holders of up to approximately $359,000, inclusive of interest. The rescission offer is set to expire on June 1, 2018. Management does not believe that this rescission offer will have a material effect on the Company’s results of operations, cash flows or financial position.

Subsequent to March 31, 2018, the Company has granted 3.2 million shares of RSUs, which include both service-and performance-based conditions to vest. The Performance Condition is subject to a liquidity event occurring as described in Note 10 of the condensed consolidated financial statements. Additionally, the Company has granted 0.4 million shares of RSUs, which include only performance based conditions to vest. The Performance Condition is subject to a liquidity event occurring as described in Note 10 of the condensed consolidated financial statements.

Events Subsequent to Original Issuance of Condensed Consolidated Financial Statements

On July 31, 2018, Myriad Genetics, Inc. acquired the Company as contemplated in the Merger Agreement entered into on May 25, 2018