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v3.26.1

Business Combinations and Contingent Consideration Liabilities | 3 Months Ended
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Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
Business Combinations and Contingent Consideration Liabilities | 3. Business Combinations and Contingent Consideration Liabilities Acquisition of IGI On January 31, 2020 (the “IGI Merger Date”), iMDx completed its acquisition of IGI pursuant to the IGI Merger Agreement. iMDx determined there were two types of contingent consideration in connection with the IGI Merger, the Milestone Contingent Consideration and the Royalty Contingent Consideration. There were three milestones comprising the Milestone Contingent Consideration, in connection with the IGI Merger which iMDx valued and recorded as part of the contingent consideration as of the IGI Merger Date (see table below), which consisted of (i) a payment for clinical trial completion and related data publication (“Milestone 1”), (ii) a payment for an affirmative final LCD from CMS for a specified lung cancer test (“Milestone 2”), and (iii) a payment for achieving specified CMS reimbursement milestones (“Milestone 3”). If achieved, any respective Milestone will be paid at the contractual value shown below, with the payment made either in cash or in shares of iMDx's common stock as determined by iMDx. There can be no assurance that any of the Milestones will be achieved. The following table shows the IGI Merger Date contractual payment amounts, as applicable, and the corresponding fair value of each respective contingent consideration liability:
|  | Contractual Value |  |  | Fair Value on the Merger Date |
|  | (In thousands) |
Milestone 1 (a) (c) |  | $ | 1,500 |  |  | $ | 1,340 |
Milestone 2 (a) |  |  | 3,000 |  |  |  | 1,830 |
Milestone 3 (a) |  |  | 1,500 |  |  |  | 770 |
Royalty 1 (b) (c) |  | See(b) |  |  |  | 5,980 |
Royalty 2 (b) (c) |  | See(b) |  |  |  | 1,210 |
Total |  | $ | 6,000 |  |  | $ | 11,130 |
(a) Indicates the maximum amount payable if the Milestone is achieved. (b) As defined, Royalty Payments are based on a percentage of future revenues of DetermaIO and Laboratory Services over their respective useful life, accordingly there is no fixed contractual value for the Royalty Contingent Consideration. (c) Contingent consideration is currently not expected to be paid out. The fair value of the contingent consideration after the IGI Merger Date is reassessed by iMDx as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in iMDx’s consolidated statements of operations. Since December 2023, Milestone 1 and Royalty 2 (Laboratory Services) are not expected to be paid and are excluded from the current fair value. Since December 2025, Royalty 1 (DetermaIO) is not expected to be paid and is excluded from the current fair value. During 2026, based on iMDx’s reassessment of significant assumptions, there was a decrease of approximately $38,000 to the fair value of the contingent consideration primarily attributable to revised estimates of the possible future payouts and, accordingly, this amount was recorded as a change in fair value of contingent consideration in the consolidated statement of operations for the three months ended March 31, 2026. iMDx uses a discounted cash flow valuation technique to determine the fair value of its Level 3 contingent consideration liabilities. The significant unobservable inputs used in IGI’s contingent consideration valuation on March 31, 2026, included: (i) a discount period, based on the expected Milestone payment dates, ranging from 1.7 years to 1.9 years, (ii) a discount rate of 13.7%, and (iii) a management probability estimate of 25% to 50%. The significant unobservable inputs used in IGI’s contingent consideration valuation on March 31, 2025, included: (i) a discount period, based on the expected Milestone payment dates, ranging from 1.7 years to 7.5 years, (ii) a discount rate of 13.2% to 13.4%, and (iii) a management probability estimate of 25% to 50%. Changes to significant unobservable inputs to different amounts could result in a significantly higher or lower fair value measurement at the reporting date. The following tables reflect the activity for the IGI contingent consideration measured at fair value using Level 3 inputs:
|  | Fair Value |
|  | (In thousands) |
Balance at December 31, 2024 |  | $ | 2,593 |
Change in estimated fair value |  |  | 31 |
Balance at March 31, 2025 |  | $ | 2,624 |
Balance at December 31, 2025 |  | $ | 1,807 |
Change in estimated fair value |  |  | (38 | )
Balance at March 31, 2026 |  | $ | 1,769 |
Acquisition of Chronix On April 15, 2021 (the “Chronix Merger Date”), iMDx completed its acquisition of Chronix pursuant to the Chronix Merger Agreement. As additional consideration for holders of certain classes and series of Chronix capital stock, the Chronix Merger Agreement required iMDx to pay certain contingent consideration. On February 8, 2023, the Company and the equity holder representative named in the Chronix Merger Agreement entered into Amendment No. 1 to the Chronix Merger Agreement, pursuant to which the parties agreed that (i) Chronix’s equity holders will be paid earnout consideration of 10% of net collections for sales of specified tests and products, until the expiration of intellectual property related to such tests and products, (ii) Chronix’s equity holders will be paid 5% of the gross proceeds received from any sale of all or substantially all of the rights, titles, and interests in and to Chronix’s patents for use in transplantation medicine to such third-party, and (iii) all of the previous payment obligations were eliminated. The fair value of the Chronix contingent consideration after the Chronix Merger Date is reassessed by iMDx as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in iMDx’s consolidated statements of operations. During 2026, based on iMDx’s reassessment of significant assumptions, there was a decrease of approximately $5.9 million to the fair value of the contingent consideration primarily attributable to revised estimates of the possible future payouts and, accordingly, this amount was recorded as a change in fair value of contingent consideration in the consolidated statement of operations for the three months ended March 31, 2026. iMDx uses a discounted cash flow valuation technique to determine the fair value of its Level 3 contingent consideration liabilities. The significant unobservable inputs used in Chronix’s contingent consideration valuation on March 31, 2026, included: (i) a discount period, based on the related patent expiration dates, ranging from 8.6 years to 9.5 years, (ii) a discount rate of 13.7% to 14.2%, and (iii) a payout percentage of 10% based on the earnout provision. The significant unobservable inputs used in Chronix’s contingent consideration valuation on March 31, 2025, included: (i) a discount period, based on the related patent expiration dates, ranging from 9.6 years to 10.5 years, (ii) a discount rate of 13.2% to 13.5%, and (iii) a payout percentage of 10% based on the earnout provision. Changes to significant unobservable inputs to different amounts could result in a significantly higher or lower fair value measurement at the reporting date. The following tables reflect the activity for the Chronix contingent consideration measured at fair value using Level 3 inputs:
|  | Fair Value |
|  | (In thousands) |
Balance at December 31, 2024 |  | $ | 35,346 |
Earnout payments |  |  | — |
Change in estimated fair value |  |  | 848 |
Balance at March 31, 2025 |  | $ | 36,194 |
Balance at December 31, 2025 |  | $ | 42,076 |
Earnout payments |  |  | — |
Change in estimated fair value |  |  | (5,880 | )
Balance at March 31, 2026 |  | $ | 36,196 |
The accompanying consolidated balance sheets separately present the IGI and Chronix total contingent consideration liabilities as current and noncurrent based on our expectations of the timing of product commercialization and subsequent revenues that trigger the payouts. Contingent consideration is not deductible for tax purposes, even if paid; therefore, no deferred tax assets related to the contingent consideration were recorded.

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