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Revenue and Accounts Receivable Credit Concentration
 3 Months Ended
Mar. 31, 2023
Revenue from Contract with Customer [Abstract]  
Revenue and Accounts Receivable Credit Concentration

Note 9 – 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):

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Diagnostic tests

 

$

8,645

 

 

$

5,633

 

Services

 

 

411

 

 

 

915

 

Total revenue

 

$

9,056

 

 

$

6,548

 

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 condensed statements of operations. Of the $1.0 million in ‘Deferred revenue’ recorded in the condensed balance sheet as of December 31, 2022, $0.2 million was recognized in revenues during the three months ended March 31, 2023. In addition, $0.3 million was added to ‘Deferred revenue’ for up-front cash payments received for which the revenue recognition criteria have not been met. The ‘Deferred revenue’ of $1.1 million recorded in the condensed balance sheet as of March 31, 2023 is expected to be recognized in revenues over the next twelve months as test results are delivered and services are performed. As of March 31, 2023 and December 31, 2022, the Company had $0.4 million in non-current deferred revenue, respectively, recorded within ‘Other long-term liabilities’ in the condensed 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 and their related revenue as a percentage of total revenue were as follows:

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

United Healthcare

 

 

11

%

 

 

—

 

In addition to the above table, we collect reimbursement on behalf of customers covered by Medicare, which accounted for 46% and 41% of the Company’s total revenue for three months ended March 31, 2023 and 2022, 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

 

 

 

March 31, 2023

 

 

December 31, 2022

 

Medicare

 

 

20

%

 

 

23

%

AstraZeneca UK

 

 

20

%

 

 

18

%