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Recently Adopted and Issued Accounting Guidance | 3 Months Ended
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Mar. 31, 2018
Accounting Changes and Error Corrections [Abstract] |
Recently Adopted and Issued Accounting Guidance | Recently Adopted and Issued Accounting Guidance Adopted In May 2014, the FASB issued ASU 2014-09, which amends FASB Accounting Standards Codification by creating Topic 606, Revenues from Contracts with Customers. This standard update calls for a number of revisions in the revenue recognition rules. The Company adopted this ASU on January 1, 2018 using a full retrospective method of adoption. Under this method, the Company has restated its results for each prior reporting period presented as if ASC 606 had been effective for those periods. The adoption of this standard required us to implement new revenue policies, procedures and internal controls related to revenue recognition. In addition, the adoption resulted in enhanced financial statement disclosures surrounding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. For further details, see Note C. The new standard impacts each of our two reportable segments differently due to the transactional nature of the Clinical Services Division versus the generally long-term nature of our Pharma Services Division contracts. The specific effect on our reportable segments is explained below: Clinical Testing Revenue Under the new standard, substantially all of our bad debt expense, which has historically been presented as part of general and administrative expense, is considered an implicit price concession and is reported as a reduction in revenue. As a result of ASC 606, we reported a material cumulative reduction in clinical revenue from previously reported periods and a similar reduction in general and administrative expenses. Pharma Testing Revenue The adoption of ASC 606 also resulted in changes to the timing of revenue recognition related to Pharma Services contracts as certain individual deliverables such as study setup fees, for which revenue was previously recognized in the period when the deliverables were completed and invoiced, will be recognized over the remaining performance period under the new standard. Additionally, certain costs to obtain contracts, primarily for sales commissions, are capitalized when incurred and are amortized over the term of the contract. Under ASC 606, the Company is required to make estimates of the total transaction price per contract, including estimates of variable consideration and the number of performance obligations, and recognize the estimated amount as revenue as it transfers control of the product or performance obligations to its customers. The estimation of total transaction price, number of performance obligations, variable consideration and the application of the related constraint, was not required under previous GAAP and requires the use of significant management judgment and estimates. The Company elected certain practical expedients as allowed under the standard including the following: contracts that began and ended within the same annual reporting period were not restated; contracts with variable consideration were estimated using the transaction price at the date the contract was completed; contract modifications that occurred prior to earliest reporting period have not been retrospectively restated but have rather been reflected as an aggregate adjustment in the earliest reporting period. The cumulative effect of this standard did not result in a material change to our Pharma Services revenue. ASC 606 Adoption Impact to Previously Reported Results We adjusted our condensed consolidated financial statements from amounts previously reported due to the adoption of ASC 606. Select condensed consolidated balance sheet line items, which reflect the adoption of ASC 606, are as follows (in thousands):
| December 31, 2017
| As Reported |  | Impact of Adoption |  | As Adjusted
Other current assets | $ | 4,241 |  |  | $ | 912 |  |  | $ | 5,153 |
Other assets | 689 |  |  | 202 |  |  | 891 |
Total Assets | $ | 343,340 |  |  | $ | 1,114 |  |  | $ | 344,454 |
Accrued expenses and other liabilities | $ | 6,144 |  |  | $ | 1,406 |  |  | $ | 7,550 |
Long-term pharma contract liability | — |  |  | 283 |  |  | 283 |
Deferred income tax liability, net | 6,307 |  |  | 381 |  |  | 6,688 |
Stockholders' Equity | 172,918 |  |  | (956 | ) |  | 171,962 |
Total Liabilities and Stockholders' Equity | $ | 343,340 |  |  | $ | 1,114 |  |  | $ | 344,454 |
Select unaudited condensed consolidated statement of operations line items, which reflect the adoption of ASC 606, are as follows (in thousands):
| For the Three Months Ended March 31, 2017
| As Reported |  | Impact of Adoption |  | As Adjusted
Net Revenue |  |  |  |  |
Clinical Testing | $ | 56,690 |  |  | $ | (3,783 | ) |  | $ | 52,907 |
Pharma Services | 4,986 |  |  | (465 | ) |  | 4,521 |
Total Revenue | $ | 61,676 |  |  | $ | (4,248 | ) |  | $ | 57,428 |
Gross Profit | $ | 27,196 |  |  | $ | (4,248 | ) |  | $ | 22,948 |
Total operating expenses | $ | 27,311 |  |  | $ | (3,783 | ) |  | $ | 23,528 |
Loss from Operations | (115 | ) |  | (465 | ) |  | (580 | )
Interest expense | 1,364 |  |  | — |  |  | 1,364 |
Income tax (benefit) expense | (825 | ) |  | 46 |  |  | (779 | )
Net Loss | $ | (654 | ) |  | $ | (511 | ) |  | (1,165 | )
In May 2017 the FASB issued ASU 2017-09, Compensation – Stock Compensation. This standard provides guidance related to the scope of stock option modification accounting, to reduce diversity in practice and reduce cost and complexity regarding existing guidance. This update is effective for annual periods beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have an impact on the consolidated financial statements. In January 2017 the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. This standard eliminates Step 2 of the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This update is effective for annual and interim periods beginning after December 15, 2019. The Company early adopted this standard on January 1, 2018. The adoption of this standard did not have an impact on the consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments. This standard clarifies how specific cash receipts and cash payments are classified and presented in the statement of cash flows. This update is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. The Company adopted this standard on January 1, 2018. The adoption of this standard did not have an impact on the consolidated financial statements. Issued In August 2017 the FASB issued ASU 2017-12, Derivatives and Hedging. This standard refines hedge accounting to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This update is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-12 to have a material effect on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases. The update was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities, including for operating leases, on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of this ASU will result in an increase on the balance sheet for lease liabilities and right to use assets. The Company is currently evaluating the quantitative impact that adopting ASU 2016-02 will have on its consolidated financial statements and assessing any changes to its processes and controls.

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- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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