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Covid-19
6 Months Ended
Jun. 30, 2020
Reorganizations [Abstract]  
Covid-19 COVID-19
The current COVID-19 worldwide pandemic has presented substantial public health challenges and is affecting the Company's employees, patients, physicians and other healthcare providers, communities and business operations, as well as the U.S. and global economies and financial markets. International and U.S. governmental authorities in impacted regions are taking actions in an effort to slow the spread of COVID-19, including issuing varying forms of "stay-at-home" orders, and restricting business functions outside of one's home. As a result of these limitations and reordering of priorities across the U.S. healthcare system, which have resulted in a reduction in patient flow, the Company's test volumes began to decrease in the second half of March 2020. From March 15 through March 31 and during the second quarter of 2020 as compared to the same period a year ago, the Company has experienced AVISE® CTD test volumes decreases of approximately 12% and 31%, respectively. In addition, the Company has experienced significant impacts from COVID-19 related restrictions in Florida, New York, California, New Jersey, Texas and Georgia when comparing the AVISE® CTD tests volumes in the first quarter of 2020 to the second quarter of 2020. The Company expects its test volumes to continue to be adversely affected by COVID-19 and cannot predict when volumes will return to normal levels. However, from July 1 through July 24 as compared to the same period a year ago, the Company has experienced AVISE® CTD test volumes increase of approximately 2%. The Company has also experienced sequential monthly AVISE® CTD test volumes increases from April 2020 of approximately 45% in May 2020 and 52% in June 2020. In addition, the Company believes there are several other important factors that have impacted, and that it expects will impact its operating performance and results of operations, including shutdowns of its facilities and operations as well as those of its suppliers and courier services, disruptions to the supply chain of material needed for its tests, its sales and commercialization activities and its ability to receive specimens and perform or deliver the results from its tests, delays in reimbursement and coverage decisions from Medicare and third-party payors and in interactions with regulatory authorities, as well its inability to achieve volume-based pricing discounts with its key suppliers and absorb fixed laboratory expenses. In addition, the Company has experienced delays in patient enrollment for ongoing and planned clinical studies involving its tests. The Company may also experience a decrease or potential halt in shipments of its testing products as the Company's suppliers may be required to focus their resources to manufacture testing kits in response to the COVID-19 pandemic, which could in turn result in decreased gross margins.
While the full impact COVID-19 will have on the Company's future business is unpredictable at this time, the Company expects it to have a material impact on its financial results for at least the next quarter and potentially beyond, depending upon the timing of any lifting or re-imposition of COVID-19 limitations on the U.S. healthcare system and general economic recovery. In response to the COVID-19 pandemic, the Company has equipped most of its employees with the ability to work remotely with the exception of its clinical laboratory employees, and implemented measures to protect the health of its employees and to support the functionality of its clinical laboratory. In March 2020, as a result of the COVID-19 pandemic, the Company terminated temporary employees and six full-time employees, which included three employees at the vice president level. The termination of full-time employees resulted in the recognition of a restructuring charge for termination benefits of $0.3 million which has been paid as of May 2020. Additionally, as a result of the workforce reduction, the Company recognized a reversal of stock-based compensation expense of $0.1 million in March 2020. In May 2020, the Company terminated an additional 11 full-time employees, as a result of the COVID-19 pandemic, which resulted in an immaterial
restructuring charge. The restructuring charges were included in selling, general and administrative expenses in the condensed statements of operations. In addition, the Company has increased the use of virtual sales tools, halted employee travel, implemented work schedule reductions as required from time to time due to volume decreases, and scaled marketing spend. The full extent to which the COVID-19 pandemic will directly or indirectly continue to impact the Company's business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. The CARES Act did not have a material impact on the Company's effective tax rate or income tax provision for the three months ended March 31, 2020. Under the Tax Cuts and Jobs Act (TCJA), NOLs generated post TCJA were allowed to be carried forward indefinitely but were only allowed to offset 80% of taxable income. As a result of the CARES Act and the change to permit NOLs generated in taxable years 2018, 2019 and 2020 to offset 100% of taxable income, the Company released valuation allowance against its deferred tax assets in the amount of $0.1 million. The release of valuation allowance resulted in a discrete tax benefit of $0.1 million in the first quarter of 2020.

In April 2020, the Company received $0.7 million of funding under the CARES Act Provider Relief Fund, subject to the Company's agreement to comply with the Department of Health & Human Services' standard terms and conditions. The CARES Act Provider Relief Fund is a federal fund allocated for general distributions to Medicare facilities and providers impacted by the COVID-19 pandemic and is intended to support COVID-related expenses or lost revenue attributable to COVID-19. The funding received is considered a government grant which is recognized when there is reasonable assurance that the grant will be received and that conditions attached to the grant have been met. During the three and six months ended June 30, 2020, the Company recognized $0.7 million due to lost revenue attributable to COVID-19, which is reflected in other income, net, on its condensed statement of operations.
On April 16, 2020, the Company entered into a promissory note (the Note) with BOKF, NA dba Bank of Oklahoma (BofO), the lender, evidencing an unsecured loan pursuant to the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP) of the CARES Act of approximately $2.9 million (the PPP Loan). The Company applied for and received the PPP Loan pursuant to the then published PPP qualification and certification requirements. On April 23, 2020, the SBA, in consultation with the Department of Treasury, issued new guidance that created uncertainty regarding the qualification requirements for the PPP Loan (the "New Guidance"). In light of the New Guidance, on May 11, 2020, the Company paid off in full the principal and interest on the PPP Loan, resulting in the termination of the Note.