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REVENUE | 6 Months Ended
--- | ---
Jun. 30, 2024
Revenue from Contract with Customer [Abstract] |
REVENUE | REVENUE The Company primarily generates revenue by performing genetic testing. Testing revenues are primarily derived from the following categories of products: Hereditary Cancer (MyRisk, BRACAnalysis, BRACAnalysis CDx), Tumor Profiling (MyChoice CDx, Prolaris, Precise Tumor, and EndoPredict), Prenatal (Foresight, Prequel, and SneakPeek), and Pharmacogenomics (GeneSight). Revenue is recorded at the estimated transaction price. The Company has determined that the communication of test results indicates transfer of control for revenue recognition purposes. The following table presents detail regarding the composition of the Company’s total revenue by product type and by geographical region, either U.S. or rest of world (“RoW”):
| Three months ended June 30,
| 2024 |  |  | 2023
(in millions) | U.S. |  | RoW |  | Total |  |  | U.S. |  | RoW |  | Total
Testing revenues: |  |  |  |  |  |  |  |  |  |  |  |
Hereditary Cancer | $ | 80.9 |  |  | $ | 10.6 |  |  | $ | 91.5 |  |  |  | $ | 64.5 |  |  | $ | 12.2 |  |  | $ | 76.7 |
Tumor Profiling | 26.7 |  |  | 5.9 |  |  | 32.6 |  |  |  | 27.3 |  |  | 8.7 |  |  | 36.0 |
Prenatal | 44.2 |  |  | 0.2 |  |  | 44.4 |  |  |  | 35.4 |  |  | 0.2 |  |  | 35.6 |
Pharmacogenomics | 43.0 |  |  | — |  |  | 43.0 |  |  |  | 35.2 |  |  | — |  |  | 35.2 |
Total revenue | $ | 194.8 |  |  | $ | 16.7 |  |  | $ | 211.5 |  |  |  | $ | 162.4 |  |  | $ | 21.1 |  |  | $ | 183.5 |
| Six months ended June 30,
| 2024 |  |  | 2023
(in millions) | U.S. |  | RoW |  | Total |  |  | U.S. |  | RoW |  | Total
Testing revenues: |  |  |  |  |  |  |  |  |  |  |  |
Hereditary Cancer | $ | 157.2 |  |  | $ | 22.4 |  |  | $ | 179.6 |  |  |  | $ | 128.5 |  |  | $ | 23.9 |  |  | $ | 152.4 |
Tumor Profiling | 50.6 |  |  | 12.9 |  |  | 63.5 |  |  |  | 56.1 |  |  | 17.2 |  |  | 73.3 |
Prenatal | 88.3 |  |  | 0.4 |  |  | 88.7 |  |  |  | 71.4 |  |  | 0.4 |  |  | 71.8 |
Pharmacogenomics | 81.9 |  |  | — |  |  | 81.9 |  |  |  | 67.2 |  |  | — |  |  | 67.2 |
Total revenue | $ | 378.0 |  |  | $ | 35.7 |  |  | $ | 413.7 |  |  |  | $ | 323.2 |  |  | $ | 41.5 |  |  | $ | 364.7 |
Under ASC 606: Revenue from Contracts with Customers, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company performs its obligation under a contract with a customer by processing tests and communicating the test results to customers, in exchange for consideration from the customer. The Company has the right to bill its customers upon the completion of performance obligations and thus does not record contract assets. Occasionally, customers make payments prior to the Company’s performance of its contractual obligations. When this occurs, the Company records a contract liability as Deferred revenue, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets. In accordance with ASC 606, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year. Furthermore, the Company has elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its agreements wherein the Company’s right to payment is in an amount that directly corresponds with the value of the Company’s performance to date. In determining the transaction price, the Company includes an estimate of the expected amount of consideration as revenue. The Company applies this method consistently for similar contracts when estimating the effect of any uncertainty on an amount of variable consideration to which it will be entitled. An estimate of transaction price does not include any estimated amount of variable consideration that is constrained. In addition, the Company considers all the information (historical, current, and forecast) that is reasonably available to identify possible consideration amounts. In determining the expected value, the Company considers the probability of the variable consideration for each possible scenario. The Company also has significant experience with historical discount patterns and uses this experience to estimate transaction prices. The estimate of revenue is affected by assumptions in payor behavior such as changes in payor mix, payor collections, current customer contractual requirements, and experience with collections from third-party payors. When assessing the total consideration for insurance carriers and patients, revenues are further constrained for estimated refunds. The Company reserves certain amounts in Accrued liabilities in the Company’s Condensed Consolidated Balance Sheets in anticipation of requests for refunds of payments made previously by insurance carriers, which are accounted for as reductions in revenues in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Cash collections for certain tests delivered may differ from rates estimated, primarily driven by changes in the estimated transaction price due to contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met, and settlements with third-party payors. As a result of this new information, the Company updates its estimate of the amounts to be recognized for previously delivered tests. During the three months ended June 30, 2024 and the three and six months ended June 30, 2023, the impact of the amounts to be recognized for previously delivered tests was not material to the Company's Condensed Consolidated Statements of Operations. During the six months ended June 30, 2024, the Company recognized $6.3 million in revenue, which resulted in a $0.07 impact to earnings per share for tests in which the performance obligation was met in prior periods, primarily driven by changes in the estimated transaction price. Additionally, during the six months ended June 30, 2024, the Company recognized $3.0 million in revenue due to a retroactive coverage change by a payor for one of its prenatal products. The Company applies the practical expedient related to costs to obtain or fulfill a contract since the amortization period for such costs will be one year or less. Accordingly, no costs incurred to obtain or fulfill a contract have been capitalized. The Company also applies the practical expedient for not adjusting revenue recognized for the effects of the time value of money. This practical expedient has been elected because the Company collects very little cash from customers under payment terms and the vast majority of payment terms have a payback period of less than one year. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company limits its exposure to loss by placing its cash in financial institutions with high credit ratings. The Company's cash may consist of deposits held with banks that may at times exceed federally insured limits of $250,000 per customer. Substantially all of the Company’s accounts receivable are with companies in the healthcare industry, U.S. and state governmental agencies, and individuals. The Company does not believe that receivables due from U.S. and state governmental agencies, such as Medicare, represent a credit risk since the related healthcare programs are funded by the U.S. and state governments. The Company only has one payor, Medicare, that represents greater than 10% of its revenues. Revenues received from Medicare represented 11% of total revenue for the three and six months ended June 30, 2024 and 12% and 11% of total revenue for the three and six months ended June 30, 2023, respectively. Concentrations of credit risk are mitigated due to the number of the Company’s customers as well as their dispersion across many geographic regions. The Company has only one payor that accounted for more than 10% of accounts receivable at June 30, 2024 and December 31, 2023. The balance of accounts receivable from the payor represented 13% and 12% of the total accounts receivable balance as of June 30, 2024 and December 31, 2023, respectively. The Company does not require collateral from its customers.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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