(3)	Share-Based Compensation

The Company maintains a share-based compensation plan, the 2010 Employee, Director and Consultant Equity Incentive Plan, as amended (the “2010 Plan”), that has been approved by the Company’s shareholders. The 2010 Plan allows the Company, under the direction of the Compensation Committee of the Board of Directors, to make grants of stock options, restricted and unrestricted stock awards and other stock-based awards to employees, consultants and directors. On December 5, 2013, the shareholders approved an amendment to the 2010 Plan to set the number of shares available for grant to 3,500,000. At September 30, 2014, 1,674,800 shares were available for issuance. In addition, as of September 30, 2014, the Company may grant up to 4,638,636 additional shares under the 2010 Plan if options previously granted under the Company’s terminated 2003 Employee, Director and Consultant Option Plan are cancelled or expire without the issuance of shares of common stock by the Company.

The number of shares, terms, and vesting period of awards under the 2010 Plan are determined by the Compensation Committee of the Board of Directors for each equity award. Stock options granted under the plan prior to December 5, 2012 generally vest ratably over four years and expire ten years from the grant date. Stock options granted after December 5, 2012 generally vest ratably over four years and expire eight years from the grant date. The exercise price of options granted is equivalent to the fair market value of the stock on the grant date. In September 2014, the Company began issuing restricted stock units (“RSUs”) which vest ratably over four years on the anniversary date of the grant in lieu of stock options. The number of shares subject to these awards will be based on one-third of the number of stock options that would have been granted in order to reduce the dilutive impact to shareholders. Certain executive officers have additional financial performance metrics that must be met for vesting to occur.

Stock Options

A summary of the stock option activity under the Company’s plans for the three months ended September 30, 2014 is as follows:


			Weighted
	Number		average
	of		exercise
	shares		price
Options outstanding at June 30, 2014		14,238,603	$	23.30
Options granted		1,000		37.17
Less:
Options exercised		705,944		21.39
Options canceled or expired		83,785		24.41

Options outstanding at September 30, 2014		13,449,874	$	23.39

As of September 30, 2014, options to purchase 8,600,742 shares were vested and exercisable at a weighted average price of $22.39.

As of September 30, 2014, there was $36.0 million of total unrecognized share-based compensation expense related to stock options that will be recognized over a weighted-average period of 2.10 years.

Restricted Stock Units

A summary of the RSU activity under the Company’s plans for the three months ended September 30, 2014 is as follows:


	Number		Weighted
	of		average grant
	shares		date fair value
RSUs outstanding at June 30, 2014		—	$	—
RSUs granted		1,085,733		38.12
Less:
RSUs vested		—		—
RSUs canceled		3,200		38.12

RSUs outstanding at September 30, 2014		1,082,533	$	38.12

The grant date fair value of an RSU equals the closing price of our common stock on the grant date. The weighted average grant date fair value for the three months ended September 30, 2014 is $38.12. As of September 30, 2014, no RSUs were vested.

As of September 30, 2014, there was $33.6 million of total unrecognized share-based compensation expense related to RSUs that will be recognized over a weighted-average period of 3.27 years. This unrecognized compensation expense is equal to the fair value of RSUs expected to vest.

Employee Stock Purchase Plan

The Company also has an Employee Stock Purchase Plan that was approved by shareholders in 2012 (the “2012 Purchase Plan”), under which 2,000,000 shares of common stock have been authorized. Shares are issued under the 2012 Purchase Plan twice yearly at the end of each offering period. As of September 30, 2014, approximately 236,000 shares of common stock have been issued under the 2012 Purchase Plan and approximately 1,764,000 were available for issuance.

Share-Based Compensation Expense

Share-based compensation expense recognized and included in the condensed consolidated statements of income and comprehensive income was allocated as follows:


	Three months ended
	September 30,
(In thousands)	2014		2013
Cost of molecular diagnostic testing	$	198	$	223
Cost of pharmaceutical and clinical services		160		62
Research and development expense		764		782
Selling, general, and administrative expense		5,758		5,868

Total share-based compensation expense	$	6,880	$	6,935