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BALANCE SHEET COMPONENTS | 12 Months Ended
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Dec. 31, 2023
Balance Sheet Components [Abstract] |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Inventory, Net Inventory, net, consisted of the following components:
| December 31,
(in thousands) | 2023 |  | 2022
Purchased materials | $ | 20,168 |  |  | $ | 24,139 |
Work in process | 23,436 |  |  | 14,062 |
Finished goods | 13,072 |  |  | 12,180 |
Inventory, net | $ | 56,676 |  |  | $ | 50,381 |
Property and Equipment, Net Property and equipment, net, consisted of the following components:
| December 31,
(in thousands) | 2023 |  | 2022
Laboratory equipment and machinery | $ | 44,907 |  |  | $ | 38,998 |
Leasehold improvements | 35,226 |  |  | 34,129 |
Computer equipment | 19,528 |  |  | 18,438 |
Software | 6,628 |  |  | 6,879 |
Furniture and fixtures | 3,594 |  |  | 3,426 |
Construction in progress | 1,343 |  |  | 4,698 |
Total | 111,226 |  |  | 106,568 |
Less: Accumulated depreciation | (74,794) |  |  | (64,988) |
Property and equipment, net | $ | 36,432 |  |  | $ | 41,580 |
Construction in progress consists of capitalizable costs that have been incurred for the construction of long-lived assets and is primarily comprised of amounts that will be classified as lab equipment. Depreciation expense during the years ended December 31, 2023, 2022, and 2021 was $11.5 million, $9.5 million, and $7.2 million, respectively. Goodwill and intangible Assets Goodwill As of December 31, 2023 and 2022, the goodwill balance was $462.3 million and $410.0 million, respectively. Goodwill preliminarily increased by $52.3 million, due to the Apton acquisition, of which $11.3 million relates to a deferred income tax liability. Goodwill is reviewed for impairment at least annually during the second quarter, or more frequently if an event occurs indicating the potential for impairment. We performed our annual assessment for goodwill impairment in the second quarter of 2023, noting no impairment. Acquired Intangible Assets Intangible assets include acquired IPR&D of $55.0 million as a result of the Apton acquisition in August 2023. As of December 31, 2023, the research and development project had not been completed or abandoned and, therefore, the IPR&D intangible asset is not currently subject to amortization. During the year ended December 31, 2023, acquired IPR&D of $400.0 million as a result of the Omniome acquisition in September 2021 was completed and became subject to amortization. IPR&D is reviewed for impairment at least annually, or more frequently if an event occurs indicating the potential for impairment. We performed our annual assessment for IPR&D impairment in the third quarter of 2023, noting no impairment. In addition to IPR&D, we had the following acquired definite-lived intangible assets as of December 31, 2023 (in thousands, except years):
| Estimated Useful Life (in years) |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Amount
Developed technology | 15 |  | $ | 411,179 |  |  | $ | (9,195) |  |  | $ | 401,984 |
Customer relationships | 2 |  | 360 |  |  | (360) |  |  | — |
Total |  |  | $ | 411,539 |  |  | $ | (9,555) |  |  | $ | 401,984 |
Amortization expense of intangibles was $8.3 million, $0.9 million and $0.4 million for the years ended December 31, 2023, 2022, and 2021, respectively. For the years ended December 31, 2023, 2022, and 2021 amortization expense of intangibles in cost of revenue was $2.0 million, $0.7 million, and $0.3 million, respectively. For the years ended December 31, 2023, 2022, and 2021, amortization expense of intangibles in operating expenses was $6.3 million, $0.2 million, and $0.1 million, respectively. Amortization of intangible assets is included within our cost of revenue if the costs and expenses related to the intangible assets are attributable to revenue generating activities. Amortization expense for intangible assets that are not directly related to sales generating activities are amortized to operating expenses. For developed technology intangible assets that are utilized in both revenue generating activities and in research and development activities, we allocate the amortization expense between cost of revenue and operating expenses. The definite-lived intangible assets are amortized using the straight-line method over their estimated useful lives. The estimated future amortization expense of acquisition-related intangible assets with definite lives is estimated as follows (in thousands):
2024 | $ | 27,412 |
2025 | 27,412 |
2026 | 27,412 |
2027 | 27,412 |
2028 | 27,412 |
2029 and thereafter | 264,924 |
Total | $ | 401,984 |
Accrued Expenses Accrued expenses consisted of the following components:
| December 31,
(in thousands) | 2023 |  | 2022
Salaries and benefits | $ | 29,337 |  |  | $ | 17,432 |
Accrued interest payable | 2,834 |  |  | 5,100 |
Accrued purchase commitments | 2,613 |  |  | 3,705 |
Accrued product development costs | 1,033 |  |  | 2,326 |
Accrued professional services and legal fees | 2,641 |  |  | 1,005 |
Inventory accrual | 353 |  |  | 332 |
Warranty accrual | 4,681 |  |  | 1,651 |
Other | 2,216 |  |  | 1,045 |
Accrued expenses | $ | 45,708 |  |  | $ | 32,596 |
Product Warranties We generally provide a one-year warranty on instruments. In addition, we provide a limited warranty on consumables. At the time revenue is recognized, an accrual is established for estimated warranty costs based on historical experience as well as anticipated product performance. We periodically review the warranty reserve for adequacy and adjust the warranty accrual, if necessary, based on actual experience and estimated costs to be incurred. Warranty expense is recorded as a component of cost of product revenue. There were no material changes in estimates for the periods presented below. Changes in the reserve for product warranties were as follows:
| Years Ended December 31,
(in thousands) | 2023 |  | 2022
Balance at beginning of period | $ | 1,651 |  |  | $ | 594 |
Additions charged to cost of product revenue | 8,227 |  |  | 3,199 |
Repairs and replacements | (5,197) |  |  | (2,142) |
Balance at end of period | $ | 4,681 |  |  | $ | 1,651 |
Deferred Revenue As of December 31, 2023, we had a total of $21.9 million of deferred revenue, $16.3 million of which was recorded as deferred revenue, current and primarily relates to future performance obligations under the Amended and Restated Agreement with Invitae, as described in Note 3. Invitae Collaboration, as well as deferred service contract revenues. The deferred revenue, non-current balance of $5.6 million primarily relates to future performance obligations under the Amended and Restated Agreement with Invitae and deferred service contract revenues and is scheduled to be recognized in the next 5 years. The deferred revenue, non-current balance includes $2.9 million that was reclassified from deferred revenue, current to deferred revenue, non-current following receipt of a non-cancellable order from Invitae during the year ended December 31, 2023 for partial utilization of the available credits, which is expected to be recognized in revenue after 12 months from December 31, 2023. Revenue recorded in the year ended December 31, 2023 includes $18.9 million of previously deferred revenue that was included in deferred revenue, current as of December 31, 2022. Term Loans In connection with the acquisition of Omniome, we acquired $1.3 million in short-term debt and $3.0 million in long-term debt relating to a term loan facility that Omniome obtained in April 2020. Borrowings on the term loan facility were used to fund Omniome’s purchases of equipment, which serves as collateral. Each term loan has a term of 43 months and bears a fixed interest rate of approximately 17% annually. The fee for the elective option to prepay all, but not less than all, of the borrowed amounts at any time after the 24 th month and before the 43 rd month after the commencement date, is 4% of the outstanding loan balance. Payments are made in equal monthly installments including principal and interest. As of December 31, 2023, the carrying value of term loans outstanding was $0.5 million, recorded as part of other liabilities, current on the consolidated balance sheet. The interest expense was $0.3 million for the year ended December 31, 2023, which was included as part of interest expense in the consolidated statements of operations and comprehensive loss. As of December 31, 2023, the future principal payments remaining on term loans was the following:
(in thousands) |
2024 | $ | 490 |
Total | $ | 490 |
Other Liabilities, Current Other liabilities, current, consisted of the following components:
| December 31,
(in thousands) | 2023 |  | 2022
Accrued Employee Stock Purchase Plan | $ | 3,715 |  |  | $ | 3,638 |
Short-term loan | 490 |  |  | 1,842 |
Other | 4,121 |  |  | 1,753 |
Other liabilities, current | $ | 8,326 |  |  | $ | 7,233 |

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- Definition The entire disclosure for supplemental balance sheet disclosures, including descriptions and amounts for assets, liabilities, and equity. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 210 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//210/tableOfContent + Details
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