COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Leases

The components of lease expense were as follows:


	Year Ended December 31,
(In thousands)	2024		2023		2022
Finance lease cost
Amortization of right-of-use assets	$	7,311	$	3,845	$	4,612
Interest on lease liabilities	1,406		800		808
Operating lease cost	31,797		36,576		36,291
Short-term lease cost	1,036		750		476
Variable lease cost	9,055		8,449		7,985
Total lease Cost	$	50,605	$	50,420	$	50,172

Supplemental disclosure of cash flow information related to the Company’s cash and non-cash activities with its leases are as follows:


	Year Ended December 31,
(In thousands)	2024			2023			2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	38,135		$	39,301		$	33,448
Operating cash flows from finance leases	1,359			783			699
Finance cash flows from finance leases	6,827			3,569			4,345
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities	19,674			4,986			24,572
Right-of-use assets obtained in exchange for new finance lease liabilities	16,425			5,443			11,276
Weighted-average remaining lease term - operating leases (in years)	7.37			6.87			7.43
Weighted-average remaining lease term - finance leases (in years)	2.90			2.80			3.27
Weighted-average discount rate - operating leases	6.54		%	6.59		%	6.37		%
Weighted-average discount rate - finance leases	6.69		%	7.43		%	6.60		%

As of December 31, 2024 and 2023, the Company’s right-of-use assets from operating leases are $117.0 million and $143.7 million, respectively, which are reported in operating lease right-of-use assets in the Company’s consolidated balance sheets. As of December 31, 2024, the Company has outstanding operating lease obligations of $184.5 million, of which $27.4 million is reported in operating lease liabilities, current portion and $157.1 million is reported in operating lease liabilities, less current portion in the Company’s consolidated balance sheets. As of December 31, 2023, the Company had outstanding operating lease obligations of $190.4 million, of which $29.4 million is reported in operating lease liabilities, current portion and $161.1 million is reported in operating lease liabilities, less current portion in the Company’s consolidated balance sheets.

In the third quarter of 2024, the Company recorded an impairment charge of $18.7 million, which consisted of a right-of-use asset of $11.8 million and associated leasehold improvements of $6.9 million relating to one of its domestic facilities that was vacated in the fourth quarter of 2024 as a result of a change in strategic priorities. The Company used the income approach, under which the recoverability of the assets was measured by comparing the carrying amount of the asset to future undiscounted, pre-tax cash flows generated by the assets held. The fair value of the assets was determined using discounted cash flows, and the impairment charge recorded represents the difference between the carrying value and fair value of the impaired assets. The impairment charge recorded is included in impairment of long-lived and indefinite-lived assets in the Company’s consolidated statement of operations for the year ended December 31, 2024.

As of December 31, 2024 and 2023, the Company’s right-of-use assets from finance leases are $19.8 million and $11.3 million, respectively, which are reported in other long-term assets, net in the Company’s consolidated balance sheets. As of December 31, 2024, the Company has outstanding finance lease obligations of $21.0 million, of which $7.8 million is reported in other current liabilities and $13.2 million is reported in other long-term liabilities in the Company’s consolidated balance sheets. As of December 31, 2023, the Company had outstanding finance lease obligations of $11.9 million, of which $4.4 million is reported in other current liabilities and $7.5 million is reported in other long-term liabilities in the Company’s consolidated balance sheets.

Maturities of operating lease liabilities on an annual basis as of December 31, 2024 were as follows:


(In thousands)
2025	$	37,400
2026	36,242
2027	35,873
2028	29,703
2029	20,526
Thereafter	76,081
Total minimum lease payments	235,825
Imputed interest	(51,287)
Total	$	184,538

Maturities of finance lease liabilities on an annual basis as of December 31, 2024 were as follows:


(In thousands)
2025	$	8,857
2026	7,262
2027	5,345
2028	1,303
2029	93
Thereafter	129
Total minimum lease payments	22,989
Imputed interest	(2,006)
Total	$	20,983

Legal Matters

The Company accrues costs for certain legal proceedings and regulatory matters to the extent that it determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While such accrued costs reflect the Company’s best estimate of the probable loss for such matters, the recorded amounts may differ materially from the actual amount of any such losses. In some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal and regulatory proceedings, which may be exacerbated by various factors, including but not limited to, that they may involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; involve a large number of parties, claimants or regulatory bodies; are in the early stages of the proceedings; involve a number of separate proceedings and/or a wide range of potential outcomes; or result in a change of business practices.

As of the date of this Annual Report on Form 10-K, amounts accrued for legal proceedings and regulatory matters were not significant except for the amounts accrued related to the matters discussed below. However, it is possible that in a particular quarter or annual period the Company’s financial condition, results of operations, cash flow and/or liquidity could be materially adversely affected by an ultimate unfavorable resolution of, or development in, legal and/or regulatory proceedings, including as described below. Except for the proceedings discussed below, the Company believes that the ultimate outcome of any of the regulatory and legal proceedings that are currently pending against it should not have a material adverse effect on financial condition, results of operations, cash flow or liquidity.

Intellectual Property Litigation Matters

In May 2023, after receiving a cease-and-desist letter from the Company regarding its patent infringement, Geneoscopy Inc. (“Geneoscopy”) requested a reexamination of the Company’s U.S. Patent No. 11,634,781 (the “’781 Patent”) by the United States Patent and Trademark Office (the “USPTO”). Upon completion of the reexamination in October 2023, the USPTO rejected Geneoscopy’s challenge. In November 2023, the Company filed suit against Geneoscopy in the United States District Court for the District of Delaware, alleging that certain of Geneoscopy’s products infringe the ‘781 Patent and seeking unspecified monetary damages and injunctive relief (the “’781 Action”) and in May 2024, the Company filed a second complaint against Geneoscopy alleging infringement of the Company’s U.S. Patent No. 11,970,746 (the “’746 Patent”), which has been consolidated with the ’781 Action. On June 28, 2024, Geneoscopy filed counterclaims against the Company challenging the validity of the patents at issue and alleging breach of contract, misappropriation of trade secrets, unfair competition, and other violations of state and federal law seeking unspecified monetary damages and injunctive relief, which were amended on August 16, 2024. On July 16, 2024, the Company filed a motion for preliminary injunction seeking an order prohibiting Geneoscopy from selling its infringing Colosense test in the United States. On August 8, 2024, Geneoscopy filed a motion to stay pending inter partes review of the ‘781 Patent, which was denied on November 1, 2024 with leave to refile if the ’746 Patent IPR is instituted. On August 30, 2024, the Company filed a motion to dismiss the amended counterclaim. On January 31, 2025, the Court held a hearing and (i) took the Company’s preliminary injunction motion under advisement; (ii) denied Geneoscopy’s motion to dismiss the false advertising claims and (iii) granted in part and denied in part the Company’s motion to dismiss the amended counterclaims, with leave for Geneoscopy to amend and refile the dismissed counterclaims. The Court set trial for November 2026.

In January 2024, Geneoscopy petitioned the USPTO to institute an inter partes review (“IPR”) challenging the validity of the ‘781 Patent before the Patent Trial and Appeals Board (“PTAB”). On July 26, 2024, the PTAB notified the Company that it decided to institute review. The Company filed its Patent Owner Response on October 25, 2024, and the parties are currently engaged in discovery. Geneoscopy filed its reply to the Patent Owner Response on January 27, 2025 and the Company’s sur-reply is due March 10, 2025. The Company intends to defend the validity of the ‘781 Patent, and a final decision of that review will be made on or before July 26, 2025.

In August 2024, Geneoscopy filed a petition for inter partes review of the ‘746 Patent before the PTAB. On November 26, 2024, the Company filed its Patent Owner Preliminary Response. On February 14, 2025, the PTAB notified the Company that it decided to institute review. The Company’s Patent Owner Response is due May 9, 2025. The Company intends to defend the validity of the ‘746 Patent, and a final decision of that review is expected to be made on or before February 14, 2026.

DOS Rule Matter

In September 2023, the Company’s wholly owned subsidiary Genomic Health, Inc., which was acquired in November 2019, entered into a settlement agreement with the United States of America, acting through the Department of Justice (“DOJ”) and on behalf of the Office of Inspector General of the Department of Health and Human Services, and two qui tam relators to resolve the previously disclosed civil investigation concerning Genomic Health’s compliance with the Medicare Date of Service billing regulations (the “DOS Rule Matter”). Genomic Health entered into the settlement agreement to avoid the delay, uncertainty and expense of protracted litigation. The settlement agreement contains no admission of liability by Genomic Health.

Under the terms of the settlement agreement, the Company made a payment of $32.5 million in September 2023, of which $22.4 million and $10.1 million is included in general and administrative expenses in the Company’s consolidated statements of operations for the years ended December 31, 2023 and 2021, respectively. Following the United States’ receipt of the settlement payment, the Company was released from any civil or administrative monetary claims under the civil False Claims Act and other specified civil statutes and common law theories of liability concerning the conduct identified in the settlement agreement.

On September 29, 2023, the United States District Court for the Eastern District of New York unsealed two qui tam actions filed under the False Claims Act involving the DOS Rule Matter, and on October 2, 2023, those two actions were dismissed with prejudice pursuant to the terms of the settlement agreement.

Gift Card Matter

In September 2023, the Company entered into a settlement agreement to resolve the previously disclosed False Claims Act qui tam suit that alleged a violation of the Federal Anti-Kickback Statute and False Claims Act for offering gift cards to patients in exchange for returning the Cologuard screening test (the “Qui Tam Suit”). In accordance with the settlement agreement, the Company made payment of $13.8 million plus legal fees in October 2023, which is included in general and administrative expenses in the Company's consolidated statement of operations for the year ended December 31, 2023. Following payment of the settlement amount, the Company was released from any civil or administrative monetary claims under the civil False Claims Act and other specified civil statutes and common law theories of liability concerning the conduct identified in the settlement agreement. On November 1, 2023, the court dismissed the qui tam suit with prejudice pursuant to the terms of the settlement agreement.