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Segment Information
 3 Months Ended
Mar. 31, 2024
Segment Reporting [Abstract]  
Segment Information

13. Segment Information

In 2024, in connection with an organizational realignment, we began operating our business as two reporting segments: MRD and Immune Medicine. These segments are organized by market opportunity in commercial diagnostics and drug discovery, respectively.

The MRD business focuses on the use of our highly sensitive, next-generation sequencing assay to measure MRD in patients with hematologic malignancies. It is comprised of our clonoSEQ clinical diagnostic test, offered to clinicians, and our clonoSEQ assay, offered to biopharmaceutical partners, to advance drug development efforts. Our MRD revenue consists of revenue generated from (1) providing our clonoSEQ report to clinical customers; (2) providing MRD sample testing services to biopharmaceutical customers and certain academic institutions, including investigator-led clinical trials; and (3) providing our clonoSEQ report or results to certain international laboratory sites through technology transfers.

The Immune Medicine business leverages our proprietary ability to sequence, map, pair and characterize TCRs and B cell receptors (“BCRs”) at scale. We have created a powerful data engine to drive the development of novel therapies. Our Immune Medicine revenue consists of revenue generated from (1) providing sample testing services for our commercial research product, Adaptive Immunosequencing, to biopharmaceutical customers and academic institutions; and (2) our collaboration agreements with Genentech and other biopharmaceutical customers in areas of drug and target discovery.

There are no inter-segment revenues. See Note 3, Revenue for more information about each segment's revenue. Our CODM evaluates performance of the MRD segment based on both revenue and Adjusted EBITDA and evaluates performance of the Immune Medicine segment based on Adjusted EBITDA. Adjusted EBITDA for each of our segments includes costs that are directly aligned to each segment, as well as certain allocated shared expenses. These shared expenses primarily relate to our general and administrative functions, our non-laboratory facility space in our corporate headquarters and our production laboratory. We use the relative direct headcount assigned to each of the respective segments and our production laboratory sample volume to allocate these expenses. We do not allocate certain expenses, such as our corporate insurance costs, external legal and audit costs and expenses related to our investor relations, chief executive officer and other related support functions. Additionally, we do not allocate costs related to our idle facility in Seattle, Washington, interest expense related to our Purchase Agreement nor interest and other income, net. Given these unallocated costs and income are not included in the measurements reviewed by the CODM to assess each segment's performance, they are included in "Unallocated Corporate" below. Our allocation methodology will be periodically evaluated and may change. Our CODM is not regularly provided nor reviews assets when assessing each segment's performance and to allocate resources. As such, assets for reportable segments are not disclosed.

The following tables set forth our segment information for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended March 31, 2024

 

 

 

MRD

 

 

Immune Medicine

 

 

Unallocated Corporate

 

 

Total

 

Revenue

 

$

32,626

 

 

$

9,247

 

 

$

—

 

 

$

41,873

 

Operating expenses

 

 

59,886

 

 

 

23,841

 

 

 

6,908

 

 

 

90,635

 

Adjusted EBITDA(1)

 

 

(17,259

)

 

 

(6,927

)

 

 

(3,994

)

 

 

(28,180

)

Reconciliation of Net Loss to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(27,260

)

 

$

(14,593

)

 

$

(5,680

)

 

$

(47,533

)

Net loss attributable to noncontrolling interest

 

 

—

 

 

 

—

 

 

 

26

 

 

 

26

 

Net loss attributable to Adaptive Biotechnologies Corporation

 

 

(27,260

)

 

 

(14,593

)

 

 

(5,654

)

 

 

(47,507

)

Interest and other income, net

 

 

—

 

 

 

—

 

 

 

(4,222

)

 

 

(4,222

)

Interest expense(2)

 

 

—

 

 

 

—

 

 

 

2,993

 

 

 

2,993

 

Depreciation and amortization expense

 

 

2,701

 

 

 

2,082

 

 

 

431

 

 

 

5,214

 

Restructuring expense(3)

 

 

467

 

 

 

577

 

 

 

—

 

 

 

1,044

 

Share-based compensation expense(4)

 

 

6,833

 

 

 

5,007

 

 

 

2,458

 

 

 

14,298

 

Adjusted EBITDA(1)

 

$

(17,259

)

 

$

(6,927

)

 

$

(3,994

)

 

$

(28,180

)

 

 

 

Three Months Ended March 31, 2023

 

 

 

MRD

 

 

Immune Medicine

 

 

Unallocated Corporate

 

 

Total

 

Revenue

 

$

21,427

 

 

$

16,220

 

 

$

—

 

 

$

37,647

 

Operating expenses

 

 

56,025

 

 

 

31,672

 

 

 

7,143

 

 

 

94,840

 

Adjusted EBITDA(1)

 

 

(26,386

)

 

 

(7,427

)

 

 

(3,285

)

 

 

(37,098

)

Reconciliation of Net Loss to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(34,597

)

 

$

(15,452

)

 

$

(7,651

)

 

$

(57,700

)

Net loss attributable to noncontrolling interest

 

 

—

 

 

 

—

 

 

 

1

 

 

 

1

 

Net loss attributable to Adaptive Biotechnologies Corporation

 

 

(34,597

)

 

 

(15,452

)

 

 

(7,650

)

 

 

(57,699

)

Interest and other income, net

 

 

—

 

 

 

—

 

 

 

(3,024

)

 

 

(3,024

)

Interest expense(2)

 

 

—

 

 

 

—

 

 

 

3,531

 

 

 

3,531

 

Depreciation and amortization expense

 

 

2,056

 

 

 

2,753

 

 

 

614

 

 

 

5,423

 

Share-based compensation expense(4)

 

 

6,155

 

 

 

5,272

 

 

 

3,244

 

 

 

14,671

 

Adjusted EBITDA(1)

 

$

(26,386

)

 

$

(7,427

)

 

$

(3,285

)

 

$

(37,098

)

 

(1) Adjusted EBITDA is a non-GAAP financial measure. See “Management's Discussion and Analysis of Financial Condition and Results of Operations—Adjusted EBITDA” for an explanation for how it is calculated and used by management.

(2) Represents costs associated with our revenue interest liability and noncash interest costs associated with the amortization of the related deferred issuance costs. See Note 8, Revenue Interest Purchase Agreement for details on the Purchase Agreement.

(3) Represents costs associated with our organizational realignment to our two segments initiated in the three months ended March 31, 2024. These costs primarily related to one-time termination benefits and ongoing benefit arrangements.

(4) Represents share-based compensation expense related to stock option, restricted stock unit and market-based restricted stock unit awards. See Note 11, Equity Incentive Plans for details on our share-based compensation expense.

Segment information for the three months ended March 31, 2023 is presented on a comparable basis to that of the current period and is based on judgments and allocation methods from our recent organizational changes.