Business Combinations

3 Months Ended

Mar. 31, 2022

HalioDx

On August 2, 2021, the Company acquired 100% of the equity interests (the "HalioDx Acquisition") of HalioDx SAS and 100% of the equity interest of HalioDx Inc., historically a wholly-owned subsidiary of HalioDx SAS, (collectively referred to as “HalioDx”). The HalioDx Acquisition gave the Company the capabilities and expertise to manufacture its own IVD test kits for use on the nCounter Analysis System. The acquisition also deepened the Company's scientific expertise into the rapidly growing area of immuno-oncology, expanded its reach into colon cancer with the Immunoscore test and further strengthened its offerings to biopharmaceutical and other partners. The consideration to acquire HalioDx was $319.6 million, comprised of $147.1 million in the form of 3.3 million shares of the Company’s common stock based on the Company's share price on the closing date, $4.2 million in liabilities, and the remainder in cash.

The following table summarizes the fair values of assets acquired and liabilities assumed in the acquisition of HalioDx at the date of acquisition (in thousands):


Cash and cash equivalents	$	5,938
Accounts receivable	9,298
Supplies inventory	3,610
Prepaids and other current assets	7,045
Property and equipment, net	2,716
Right-of-use assets, financing lease	733
Right-of-use assets, operating lease	2,136
Intangible assets	60,303
Other assets	524
Total identifiable assets acquired	92,303
Accounts payable	(2,645)
Accrued liabilities	(5,627)
Current portion of financing lease liability	(247)
Current portion of operating lease liability	(448)
Long-term debt	(1,171)
Deferred revenue	(3,250)
Financing lease liability, net of current portion	(488)
Operating lease liability, net of current portion	(1,687)
Deferred tax liability	(6,946)
Net identifiable assets acquired	69,794
Goodwill	249,846
Total purchase price	$	319,640

The Company's purchase price allocation for the HalioDx Acquisition is preliminary and subject to revision as additional information about the fair value of the assets and liabilities becomes available. The fair values assigned to tangible and intangible assets acquired, and liabilities assumed, are based on management’s estimates and assumptions and may be subject to change as additional information is received. Primary areas that are not yet finalized are related to certain income tax items, intangible assets, deferred revenue, accounts receivable, other assets, commitments and contingencies and goodwill. Additional information that existed as of the closing date but not known at the time of this filing may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the closing date.

Since the acquisition, the Company has recorded certain measurement period adjustments due to new information becoming available pertaining to the valuation of accounts payable and certain other assets. These adjustments were recorded as net increases to goodwill totaling $0.2 million and did not impact the condensed consolidated statements of operations.

Decipher Biosciences

On March 12, 2021, the Company acquired 100% of the equity interests of Decipher Biosciences, a privately-held company developing diagnostic tests in urologic cancers, for approximately $594.7 million (the "Decipher Acquisition").

The following table summarizes the fair values of assets acquired and liabilities assumed through the Company's acquisition of Decipher Biosciences at the date of acquisition (in thousands):


Cash and cash equivalents	$	19,782
Accounts receivable	7,562
Supplies inventory	1,641
Prepaids and other current assets	778
Property and equipment, net	1,737
Right-of-use assets, operating lease	7,601
Finite-lived intangible assets	94,000
Indefinite-lived intangible assets	7,300
Restricted cash	146
Other assets	3,075
Total identifiable assets acquired	143,622
Accounts payable	(2,351)
Accrued liabilities	(4,322)
Operating lease obligations (current)	(1,241)
Operating lease obligations, net of current portion	(4,540)
Deferred tax liability	(4,740)
Net identifiable assets acquired	126,428
Goodwill	468,266
Total purchase price	$	594,694

During the three months ended March 31, 2022, there were no measurement period adjustments.

Related Party Transactions

Members of Veracyte's board of directors, Dr. Tina S. Nova, Ph.D. and Dr. Robert S. Epstein, M.D., M.S., served on the board of directors of Decipher Biosciences prior to the acquisition of Decipher Biosciences, with Dr. Nova additionally serving as President and Chief Executive Officer of Decipher Biosciences. Pursuant to Veracyte's related party transactions policy, Dr. Nova and Dr. Epstein recused themselves from all discussions of its board of directors related to the Decipher Acquisition, and the Decipher Acquisition was approved by each of the non-interested members of the board of directors. In connection with the Decipher Acquisition, certain Decipher Biosciences equity awards held by Dr. Nova and Dr. Epstein were fully-accelerated and certain incentive bonus payments were made to Dr. Nova pursuant to a management incentive plan established by the Decipher Biosciences board of directors, resulting in payments of approximately $26.5 million and $1.4 million to each of them, respectively. Dr. Nova resigned from Veracyte’s board of directors and now serves as Veracyte's President of its CLIA US Business. Dr. Epstein continues to serve on Veracyte’s board of directors.