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Revenue and Accounts Receivable Credit Concentration
 12 Months Ended
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]  
Revenue and Accounts Receivable Credit Concentration

Note 11 – Revenue and Accounts Receivable Credit Concentration

We derive our revenue from two primary sources: (i) providing diagnostic testing in the clinical setting (Diagnostic tests); and (ii) providing biopharmaceutical companies with services that include diagnostic research, clinical research, clinical trial testing, development and testing services generally provided outside the clinical setting and governed by individual contracts with third parties as well as development and commercialization of companion diagnostics (Services).

Diagnostic test revenues consist of blood-based lung tests and COVID-19 tests, which are recognized in the amount expected to be received in exchange for diagnostic tests when the diagnostic tests are delivered. The Company conducts diagnostic tests and delivers the completed test results to the prescribing physician or patient, as applicable. The fees for diagnostic tests are billed either to a third party such as Medicare, medical facilities, commercial insurance payers, or to the patient. The Company determines the transaction price

related to its diagnostic test contracts by considering the nature of the payer and historical price concessions granted to groups of customers. For diagnostic test revenue, the Company estimates the transaction price, which is the amount of consideration it expects to be entitled to receive in exchange for providing services based on its historical collection experience, using a portfolio approach. The Company recognizes revenues for diagnostic tests upon delivery of the tests to the physicians requesting the tests or patient, as applicable.

Services revenue consists of on-market tests, pipeline tests, custom diagnostic testing, and other scientific services for a purpose as defined by any individual customer, which is often with biopharmaceutical companies. The performance obligations and related revenue for these sales is defined by a written agreement between the Company and the customer. These services are generally completed upon the delivery of testing results, or other contractually defined milestone(s), to the customer. Revenue for these services is recognized upon delivery of the completed test results, or upon completion of the contractual milestone(s).

Revenues consisted of the following (in thousands):

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

Diagnostic tests

 

$

34,538

 

 

$

48,937

 

Services

 

 

3,674

 

 

 

5,569

 

Total revenue

 

$

38,212

 

 

$

54,506

 

Deferred Revenue

Deferred revenue consists of cash payments from customers received in advance of delivery. As test results are delivered, the Company recognizes the deferred revenue in ‘Revenues’ in the statements of operations. Of the $1.9 million in ‘Deferred revenue’ recorded in the balance sheet as of December 31, 2021, $1.2 million was recognized in revenues during the year ended December 31, 2022. In addition, $0.7 million was added to ‘Deferred revenue’ for up-front cash payments received for which the revenue recognition criteria have not been met and $0.4 million was reclassed to non-current deferred revenue. The ‘Deferred revenue’ of $1.0 million recorded in the balance sheet as of December 31, 2022 is expected to be recognized in revenues over the next twelve months as test results are delivered and services are performed. As of December 31, 2022 and 2021, the Company had $0.4 million and $0.8 million in non-current deferred revenue, respectively, recorded within ‘Other long-term liabilities’ in the balance sheets which represent amounts to be recognized in excess of twelve months from the respective balance sheet date.

The Company’s customers in excess of 10% of total revenue both pertain to our COVID-19 diagnostic testing services, and their related revenue as a percentage of total revenue were as follows:

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

The State of Colorado

 

 

10

%

 

 

—

 

The Big Ten Conference

 

 

—

 

 

 

40

%

In addition to the above table, we collect reimbursement on behalf of customers covered by Medicare, which accounted for 37% and 18% of the Company’s total revenue for the years ended December 31, 2022 and 2021, respectively. The Company is subject to credit risk from its accounts receivable related to services provided to its customers.

The Company’s third-party payors and other customers in excess of 10% of accounts receivable, and their related accounts receivable as a percentage of total accounts receivable were as follows:

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

Medicare

 

 

23

%

 

 

30

%

Astrazeneca UK

 

 

18

%

 

 

—

 

Janssen Research and Development, LLC

 

 

—

 

 

 

14

%

LabCorp DD (formerly Covance)

 

 

—

 

 

 

11

%