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REVENUE
 9 Months Ended
Sep. 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 September 30,
20242023
(in millions)U.S.RoWTotalU.S.RoWTotal
Testing revenues:
Hereditary Cancer$78.4 $12.1 $90.5 $75.1 $11.4 $86.5 
Tumor Profiling26.5 5.1 31.6 22.0 8.2 30.2 
Prenatal43.4 0.1 43.5 39.4 0.1 39.5 
Pharmacogenomics47.7 — 47.7 35.7 — 35.7 
Total revenue$196.0 $17.3 $213.3 $172.2 $19.7 $191.9 
Nine months ended September 30,
20242023
(in millions)U.S.RoWTotalU.S.RoWTotal
Testing revenues:
Hereditary Cancer$235.6 $34.5 $270.1 $203.6 $35.3 $238.9 
Tumor Profiling77.1 18.0 95.1 78.1 25.4 103.5 
Prenatal131.7 0.5 132.2 110.8 0.5 111.3 
Pharmacogenomics129.6 — 129.6 102.9 — 102.9 
Total revenue$574.0 $53.0 $627.0 $495.4 $61.2 $556.6 
Under Accounting Standards Codification ("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 contracts 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 to be received. 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, among other factors, assumptions for changes in payor mix, payor collections, current customer contractual requirements, experience with collections from third-party payors, and changes in medical policies. 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 Income/Loss.
Cash collections for certain tests delivered may differ from rates estimated due to changes in the estimated transaction price for contractual adjustments, obtaining updated information from payors and patients that was unknown at the time the performance obligation was met, settlements with third-party payors, or as a result of third-party payors disputing our bills or denying payment for tests that we have performed, among other reasons. 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 and nine months ended September 30, 2024, the Company recognized $8.6 million and $17.3 million, respectively, which resulted in $0.09 and $0.19 impact to earnings per share, respectively, for testing in which the performance obligation was met in prior periods, primarily due to a changes in the estimated transaction price. Additionally, during the nine months ended September 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. For the three and nine months ended September 30, 2023, the Company recognized $7.1 million and $6.2 million in revenue, respectively, which resulted in a $0.07 and $0.06, respectively, 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.
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 both of the three and nine months ended September 30, 2024 and 12% of total revenue for both of the three and nine months ended September 30, 2023. 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 one payor that accounted for more than 10% of accounts receivable at September 30, 2024 and December 31, 2023. The balance of accounts receivable from this one payor represented 19% and 12% of the total accounts receivable balance as of September 30, 2024 and December 31, 2023, respectively. The Company does not require collateral from its customers.