Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Description of Business
23andMe Holding Co. (the “Company”) is dedicated to helping people access, understand, and benefit from the human genome. The Company pioneered direct-to-consumer genetic testing through its Personal Genome Service® (“PGS”) products and services. Customers receive reports that provide them with information on their genetic health risks, their ancestry, and their traits, based on genetic testing of a saliva sample they send to the Company in an easy-to-use “spit kit” provided by the Company. Customers have the option to participate in the Company’s research programs. The Company analyzes consenting customers’ genotypic and phenotypic data to discover new insights into genetics. The Company uses these insights to generate new PGS reports, and, through its therapeutics business and collaborations with pharmaceutical companies, nonprofit institutions and universities, to discover and advance new therapies for unmet medical needs. The Company acquired Lemonaid Health, Inc. (“Lemonaid” or “Lemonaid Health”) in November 2021 (the “Lemonaid Acquisition”), which offers patients affordable and direct online access to medical care, from consultation through treatment, for a number of common conditions, using evidence-based guidelines and up-to-date clinical protocols to deliver quality patient care. Lemonaid Health’s telehealth platform provides patients with easy access to medical consultation and treatment, which enhances the Company’s ability to bring better healthcare and wellness offerings to patients.
23andMe, Inc., the Company’s accounting predecessor, was incorporated in Delaware in 2006. The Company is headquartered in South San Francisco, California. The Company’s predecessor, VG Acquisition Corp. (“VGAC”), was a blank check company originally incorporated in 2020 as a Cayman Islands exempted company. On June 16, 2021 (the “Closing Date”), VGAC and Chrome Merger Sub, Inc., a Delaware corporation and wholly owned direct subsidiary of VGAC (“Merger Sub”), consummated a merger with 23andMe, Inc. (the “Merger”), whereby Merger Sub merged with and into 23andMe, Inc., with 23andMe, Inc. being the surviving corporation and a wholly owned subsidiary of the Company. In connection with the Merger, VGAC changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware and changed its name to 23andMe Holding Co. (the “Domestication” and, together with the Merger, the “Business Combination”).
The Company has evaluated how it is organized and managed and has identified two reporting segments: Consumer and Research Services, and Therapeutics.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, and variable interest entities in which it holds a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.
For the six months ended September 30, 2022, the Company had operations primarily in the United States and insignificant operations in the United Kingdom. For the six months ended September 30, 2021, the Company had operations entirely in the United States.
There have been no changes to the Company’s significant accounting policies described in the audited consolidated financial statements for the year ended March 31, 2022 that have had a material impact on these condensed consolidated financial statements and related notes.
9
Table of Contents
Unaudited Interim Condensed Consolidated Financial Information
The accompanying interim condensed consolidated financial statements as of September 30, 2022 and for the three and six months ended September 30, 2022 and 2021 and accompanying notes, are unaudited. These unaudited interim condensed consolidated financial statements (the “condensed consolidated financial statements”) have been prepared in accordance with GAAP applicable to interim financial statements. These financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. As such, the information included herein should be read in conjunction with the consolidated financial statements and accompanying notes as of and for the year ended March 31, 2022 (the “audited consolidated financial statements”) that were included in the Company’s Annual Report on Form 10-K filed with the SEC on May 27, 2022, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on August 9, 2022. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements, which include only normal recurring adjustments, necessary for a fair statement of the Company’s financial position as of September 30, 2022 and its condensed consolidated results of operations and cash flows for the three and six months ended September 30, 2022 and 2021. The results of operations for the three and six months ended September 30, 2022 are not necessarily indicative of the results expected for the year ending March 31, 2023 or any other future interim or annual periods.
As a result of the Merger, prior period share and per share amounts presented in the accompanying condensed consolidated financial statements and these related notes have been retroactively converted.
Fiscal Year
The Company’s fiscal year ends on March 31. References to fiscal year 2023 and 2022 refer to the fiscal years ending and ended March 31, 2023 and 2022, respectively.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period and the accompanying notes. Significant items subject to such estimates and assumptions include, but are not limited to the determination of standalone selling price for various performance obligations; the estimated expected benefit period for the rate and recognition pattern of breakage revenue for purchases where a saliva collection kit (“Kit”) is never returned for processing; the capitalization and estimated useful life of internal use software; the useful life of long-lived assets; fair value of intangible assets acquired in business combinations; the carrying value of goodwill; the incremental borrowing rate for operating leases; stock-based compensation including the determination of the fair value of stock options, as well as the Company’s common stock prior to the Closing Date of the Merger; and the valuation of deferred tax assets and uncertain tax positions. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from these estimates, and such differences could be material to the condensed consolidated financial statements.
The coronavirus (“COVID-19”) pandemic has created significant global economic uncertainty and resulted in the slowdown of economic activity. COVID-19 has disrupted the Company’s general business operations since March 2020 and the Company expects that such disruption will continue for an unknown period. As the Company continues to closely monitor the COVID-19 pandemic, its top priority remains protecting the health and safety of the Company’s employees. Safety guidelines and procedures, including enhanced sanitization and air filtration, have been developed for on-site employees and these policies are regularly monitored. The Company is not aware of any specific event or circumstance that would require revisions to estimates, updates to judgments, or adjustments to the carrying value of assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and will be recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the condensed consolidated financial statements.
Concentration of Supplier Risk
Certain of the raw materials, components and equipment associated with the deoxyribonucleic acid (“DNA”) microarrays and Kits used by the Company in the delivery of its services are available only from third-party suppliers. The Company also relies on a third-party laboratory service for the processing of its customer samples. Shortages and slowdowns could occur in these essential materials, components, equipment, and laboratory services due to an interruption of supply or increased demand in the industry. If the Company were unable to procure certain materials, components, equipment, or laboratory services at acceptable prices, it would be required to reduce its laboratory operations, which could have a material adverse effect on its results of operations.
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Table of Contents
A single supplier accounted for 100% of the Company’s total purchases of microarrays and a separate single supplier accounted for 100% of the Company’s total purchases of Kits for the three and six months ended September 30, 2022 and 2021. One laboratory service provider accounted for 100% of the Company’s processing of customer samples for the three and six months ended September 30, 2022 and 2021.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents, and accounts receivable. The Company maintains its cash and cash equivalents with high-quality financial institutions in the United States, the composition and maturities of which are regularly monitored by the Company. The Company’s revenue and accounts receivable are derived primarily from the United States. See Revenue Recognition within Note 2, “Summary of Significant Accounting Policies,” for additional information regarding geographical disaggregation of revenue. The Company grants credit to its customers in the normal course of business, performs ongoing credit evaluations of its customers, and does not require collateral. The Company regularly monitors the aging of accounts receivable balances.
Significant customer information is as follows:
|
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|
|
|
|
|
|
|
September 30, |
|
|
March 31, |
|
|
|
2022 |
|
|
2022 |
|
Percentage of accounts receivable: |
|
|
|
|
|
|
Customer B |
|
|
95 |
% |
|
|
0 |
% |
Customer C |
|
|
3 |
% |
|
|
25 |
% |
Customer F |
|
|
1 |
% |
|
|
19 |
% |
Customer G |
|
|
0 |
% |
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Percentage of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Customer C |
|
|
23 |
% |
|
|
27 |
% |
|
|
19 |
% |
|
|
20 |
% |
Customer B |
|
|
20 |
% |
|
|
18 |
% |
|
|
17 |
% |
|
|
19 |
% |
Revenue Recognition
In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ("Topic 606"), the Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration, which the Company expects to receive in exchange for transferring the products or services to a customer (“transaction price”). The transaction price includes various forms of variable consideration, as discussed below. In general, the transaction price is paid by customers at contract inception.
For contracts with multiple performance obligations, the transaction price is allocated to each performance obligation on a relative stand-alone selling price (“SSP”) price basis. The SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. The SSP for each performance obligation is based on the prices at which the Company separately sells the products and services. If an observable price from stand-alone sales is not available, the Company uses the adjusted market assessment approach, using reasonably available information and applicable inputs, to estimate the selling price of each performance obligation.
PGS
The Company generates PGS revenue by providing customers with a broad suite of genetic reports, including information on customers’ genetic ancestral origins, personal genetic health risks, and chances of passing on certain rare carrier conditions to their children, as well as reports on how genetics can impact responses to medication.
The Company’s contracts with customers for PGS services include multiple performance obligations: (1) initial ancestry reports, (2) ancestry updates, (3) initial health reports, (4) health updates, and (5) subscriptions for extended health insights with access to exclusive reports and features. The transaction price for PGS revenue includes the amount of fixed consideration the Company expects to receive, as well as variable consideration related to refunds. The Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method.
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Table of Contents
The Company bases its estimates of variable consideration related to refunds on historical data and other information. Estimates include: (i) timing of the returns and fees incurred, (ii) pricing adjustments related to returns and fees, and (iii) the quantity of product that will be returned in the future. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period. Provisions for returns are based on service-level return rates and recent unprocessed return claims, as well as relevant market events and other factors.
The Company estimates the amount of sales that may be refunded and records the estimate as a reduction of revenue and a refund liability in the period the related PGS revenue is recognized. Based on the distribution model for PGS services and the nature of the services being provided, the Company believes there will be minimal refunds and has not experienced material historical refunds.
Revenue is recognized at a point in time upon delivery of the initial ancestry reports and initial health reports to the customer, as the customer obtains control when the report is received.
Revenue is recognized over time for ancestry updates and health updates over the period the customer is estimated to remain active. The Company estimates this period based on the historical average period that the customer continues to engage with the available report updates after the delivery of the initial reports. These updates are provided to the customer, when and if available, throughout the estimated period of activity during which the customer interacts with the PGS service. The Company re-evaluates these estimates at the end of each reporting period and adjusts accordingly. The Company has determined that access to the updates, when and if available, that are provided over the estimated period qualifies as a series of distinct goods or services, for which revenue is recognized ratably over the period estimated by the Company.
Subscription revenue for extended health insights is recognized ratably over the contractual subscription period as the customer benefits from having access to these insights evenly throughout this period.
The Company sells through multiple channels, including direct to consumer via the Company’s website and through online retailers. If the customer does not return the Kit for processing, services cannot be completed by the Company, potentially resulting in unexercised rights (“breakage”) revenue. To estimate breakage, the Company applies the practical expedient available under Topic 606 to assess its customer contracts on a portfolio basis as opposed to individual customer contracts, due to the similarity of customer characteristics, at the sales channel level. The Company recognizes the breakage amounts as revenue, proportionate to the pattern of revenue recognition of the returning Kits in these respective sales channel portfolios. The Company estimates breakage for the portion of Kits not expected to be returned using an analysis of historical data and considers other factors that could influence customer Kit return behavior. The Company updates its breakage rate estimate periodically and, if necessary, adjusts the deferred revenue balance accordingly. If actual Kit return patterns vary from the estimate, actual breakage revenue may differ from the amounts recorded. The Company recognized breakage revenue from unreturned Kits of $6.0 million and $4.1 million for the three months ended September 30, 2022 and 2021, respectively, and $11.0 million and $8.6 million for the six months ended September 30, 2022 and 2021, respectively.
Fees paid to certain sales channel partners include, in part, compensation for obtaining PGS contracts. Such contracts have an amortization period of one year or less, and the Company has applied the practical expedient to recognize these costs as sales and marketing expenses when incurred.
During the three and six months ended September 30, 2022, the Company did not recognize any PGS revenue for performance obligations satisfied in prior periods.
Research Services
The Company generates research services revenue by performing research services under agreements with third parties relating to the use of the Company’s genotypic and phenotypic data to perform various research activities, including identifying promising drug targets and further researching specific ailments or patient treatment areas.
The Company’s contracts with customers for research services can include multiple performance obligations: (1) genotyping, (2) survey, (3) data analysis, (4) recruitment, (5) web development, (6) project management, and (7) dedicated research time. The transaction price for research services revenue includes the amount of fixed consideration the Company expects to receive, as well as variable consideration including, but not limited to, per participant fees, additional compensation for certain industry approvals, payments for milestones achieved early, and penalties for customer delays. The Company estimates the amount of variable consideration that should be included in the transaction price using the most likely amount method.
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Table of Contents
The Company bases its estimates of variable consideration on historical data and other available information. The Company includes an estimated amount of variable consideration in the transaction price only if it is probable that a subsequent change in the estimate would not result in a significant revenue reversal. Based on the historical data available, the Company believes there will be minimal amounts of variable consideration earned and, as such, the transaction price for research services is not materially impacted. Variable consideration estimates are revisited at the end of each reporting period and adjustments are made accordingly.
To recognize revenue, the Company compares actual hours incurred to date to the overall total expected hours that will be required to satisfy the performance obligation. The use of personnel hours is a reasonable measure of progress as the Company fulfills its contractual obligations through research performed by the Company's personnel. Revenues are recognized over time as the hours are incurred. All estimates are reviewed by the Company at the end of each reporting period and adjustments are made accordingly.
During the three and six months ended September 30, 2022, the Company did not recognize any research services revenue for performance obligations satisfied in prior periods.
Telehealth
The Company generates telehealth revenues from pharmacy fees, patient fees, and membership fees. The transaction price for telehealth services includes the amount of fixed consideration the Company expects to receive, as well as variable consideration related to sales deductions, including (1) product returns, including return estimates and (2) fees for transaction processing and chargebacks. The Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method.
The Company estimates the amount of sales that may be refunded and records the estimate as a reduction of revenue and a refund liability in the period the related telehealth revenue is recognized. The Company's customers have limited return rights related to the telehealth services. The Company has not historically experienced material returns and believes there will be minimal returns in the future. As such, the transaction price for telehealth services is not materially impacted.
Provisions for transaction fees and chargebacks are primarily based on customer-level contractual terms. Accruals and related reserves are adjusted as new information becomes available, which generally consists of actual transaction fees and chargebacks processed relating to sales recognized.
Pharmacy fees, net – The Company primarily generates revenue through sale and delivery of prescription medications from the Affiliated Pharmacies (as defined below). A contract is entered into with a patient when the patient accepts the Company’s terms and conditions, requests a prescription, or chooses to refill, and provides access to payment. The Company has determined that these contracts contain one performance obligation. Revenue is recognized at the point in time in which prescription services are rendered for these transactions. Fees are charged as prescription services are rendered. Revenue is recorded net of refunds and transaction fees.
Patient fees, net – The Company primarily generates revenue through the PMCs (as defined below) from patient visit fees, which include healthcare professional consultations, lab testing, and ordering prescriptions. A contract is entered into with a patient when the patient accepts the Company’s terms and conditions and provides access to payment. The Company has determined that each service event is a distinct performance obligation. Revenue is recognized at the point in time in which services are rendered for these transactions. Fees are charged upfront prior to services being rendered and are allocated to each obligation to provide services to the patient. Revenue is recorded net of refunds, transaction fees, and pass-through lab and prescription costs.
Membership fees, net – The Company generates revenue through membership fees from patients, which includes a membership for unlimited medical visits and unlimited prescriptions during the membership period (generally one, three or twelve months). A contract is entered into with a patient when the patient accepts the Company’s terms and conditions and makes a pre-payment for the membership term. The Company has determined that access to the services over the membership period qualifies as a series of distinct goods or services for which revenue is recognized ratably over the respective membership period. Revenue is recorded net of refunds. Deferred revenue consists of advance payments from members related to membership performance obligations that have not been satisfied for memberships.
In providing telehealth services that include professional medical consultations, the Company maintains relationships with various affiliated professional medical corporations (“PMCs”). PMCs are organized under state law as professional entities that are owned by physicians licensed in the applicable state and that engage licensed healthcare professionals (each, a “Provider” and collectively, the “Providers”) to provide consultation services. See Note 4, “Variable Interest Entities,” for additional details. The Company accounts for service revenue as a principal in the arrangement with its patients.
13
Table of Contents
Additionally, with respect to its telehealth services involving the sale of prescription products, the Company maintains relationships with affiliated pharmacies (collectively, the “Affiliated Pharmacies”) to fill prescriptions that are ordered by the Company’s patients. The Company accounts for prescription product revenue as a principal in the arrangement with its patients.
During the three and six months ended September 30, 2022, the Company did not recognize any telehealth revenue for performance obligations satisfied in prior periods.
Disaggregation of Revenue
The following table presents revenue by category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
|
(in thousands, except percentages) |
|
|
(in thousands, except percentages) |
|
Point in Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PGS |
|
$ |
40,110 |
|
|
|
53 |
% |
|
$ |
41,403 |
|
|
|
75 |
% |
|
$ |
79,800 |
|
|
|
57 |
% |
|
$ |
86,426 |
|
|
|
76 |
% |
Telehealth (1) |
|
|
9,171 |
|
|
|
12 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
18,532 |
|
|
|
13 |
% |
|
|
— |
|
|
|
0 |
% |
Consumer services |
|
|
49,281 |
|
|
|
65 |
% |
|
|
41,403 |
|
|
|
75 |
% |
|
|
98,332 |
|
|
|
70 |
% |
|
|
86,426 |
|
|
|
76 |
% |
Research services |
|
|
— |
|
|
|
0 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
— |
|
|
|
0 |
% |
Total (2) |
|
|
49,281 |
|
|
|
65 |
% |
|
|
41,403 |
|
|
|
75 |
% |
|
|
98,332 |
|
|
|
70 |
% |
|
|
86,426 |
|
|
|
76 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PGS |
|
|
4,731 |
|
|
|
7 |
% |
|
|
3,085 |
|
|
|
6 |
% |
|
|
9,216 |
|
|
|
6 |
% |
|
|
5,912 |
|
|
|
5 |
% |
Telehealth (1) |
|
|
2,497 |
|
|
|
3 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
5,020 |
|
|
|
4 |
% |
|
|
— |
|
|
|
0 |
% |
Consumer services |
|
|
7,228 |
|
|
|
10 |
% |
|
|
3,085 |
|
|
|
6 |
% |
|
|
14,236 |
|
|
|
10 |
% |
|
|
5,912 |
|
|
|
5 |
% |
Research services |
|
|
19,150 |
|
|
|
25 |
% |
|
|
10,716 |
|
|
|
19 |
% |
|
|
27,604 |
|
|
|
20 |
% |
|
|
22,105 |
|
|
|
19 |
% |
Total (2) |
|
|
26,378 |
|
|
|
35 |
% |
|
|
13,801 |
|
|
|
25 |
% |
|
|
41,840 |
|
|
|
30 |
% |
|
|
28,017 |
|
|
|
24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PGS |
|
|
44,841 |
|
|
|
60 |
% |
|
|
44,488 |
|
|
|
81 |
% |
|
|
89,016 |
|
|
|
63 |
% |
|
|
92,338 |
|
|
|
81 |
% |
Telehealth (1) |
|
|
11,668 |
|
|
|
15 |
% |
|
|
— |
|
|
|
0 |
% |
|
|
23,552 |
|
|
|
17 |
% |
|
|
— |
|
|
|
0 |
% |
Consumer services |
|
|
56,509 |
|
|
|
75 |
% |
|
|
44,488 |
|
|
|
81 |
% |
|
|
112,568 |
|
|
|
80 |
% |
|
|
92,338 |
|
|
|
81 |
% |
Research services |
|
|
19,150 |
|
|
|
25 |
% |
|
|
10,716 |
|
|
|
19 |
% |
|
|
27,604 |
|
|
|
20 |
% |
|
|
22,105 |
|
|
|
19 |
% |
Total (2) |
|
$ |
75,659 |
|
|
|
100 |
% |
|
$ |
55,204 |
|
|
|
100 |
% |
|
$ |
140,172 |
|
|
|
100 |
% |
|
$ |
114,443 |
|
|
|
100 |
% |
(1)There was no telehealth revenue for the three and six months ended September 30, 2021, as the Lemonaid Acquisition closed in November 2021.
(2)There was no Therapeutics revenue for the three and six months ended September 30, 2022 and 2021.
The following table summarizes revenue by region based on the shipping address of customers or the location where the services are delivered:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
Amount |
|
|
% of Revenue |
|
|
|
(in thousands, except percentages) |
|
|
(in thousands, except percentages) |
|
United States |
|
$ |
52,546 |
|
|
|
69 |
% |
|
$ |
38,613 |
|
|
|
70 |
% |
|
$ |
100,655 |
|
|
|
72 |
% |
|
$ |
78,965 |
|
|
|
69 |
% |
United Kingdom |
|
|
19,030 |
|
|
|
25 |
% |
|
|
12,335 |
|
|
|
22 |
% |
|
|
31,004 |
|
|
|
22 |
% |
|
|
26,240 |
|
|
|
23 |
% |
Canada |
|
|
2,839 |
|
|
|
4 |
% |
|
|
2,748 |
|
|
|
5 |
% |
|
|
5,878 |
|
|
|
4 |
% |
|
|
5,988 |
|
|
|
5 |
% |
Other regions |
|
|
1,244 |
|
|
|
2 |
% |
|
|
1,508 |
|
|
|
3 |
% |
|
|
2,635 |
|
|
|
2 |
% |
|
|
3,250 |
|
|
|
3 |
% |
International |
|
|
23,113 |
|
|
|
31 |
% |
|
|
16,591 |
|
|
|
30 |
% |
|
|
39,517 |
|
|
|
28 |
% |
|
|
35,478 |
|
|
|
31 |
% |
Total |
|
$ |
75,659 |
|
|
|
100 |
% |
|
$ |
55,204 |
|
|
|
100 |
% |
|
$ |
140,172 |
|
|
|
100 |
% |
|
$ |
114,443 |
|
|
|
100 |
% |
14
Table of Contents
Contract Balances
Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts associated with contractual rights related to consideration for performance obligations and are included in prepaid expenses and other current assets on the condensed consolidated balance sheets. The amount of contract assets was immaterial as of September 30, 2022 and March 31, 2022.
Contract liabilities consist of deferred revenue. Revenue is deferred when the Company invoices in advance of fulfilling performance obligations under a contract. Deferred revenue primarily relates to Kits that have been shipped to consumers and non-consigned retail sites but not yet returned for processing by the consumer, as well as research services billed in advance of performance. Deferred revenue is recognized when the obligation to deliver results to the customer is satisfied and when research services are ultimately performed. Deferred revenue also consists of advance payments from members related to membership performance obligations and from customers related to subscription for extended health insight performance obligations that have not been satisfied as of the balance sheet date. Deferred revenue is recognized when the obligation to deliver membership services or subscription services is satisfied.
As of September 30, 2022 and 2021, deferred revenue for consumer services was $43.8 million and $32.5 million, respectively. Of the $51.3 million and $39.3 million of deferred revenue for consumer services as of March 31, 2022 and 2021, respectively, the Company recognized $10.0 and $6.4 million as revenue for during the three months ended September 30, 2022 and 2021, respectively, and $35.4 million and $32.0 million during the six months ended September 30, 2022 and 2021, respectively.
As of September 30, 2022 and 2021, deferred revenue for research services was $38.2 million and $35.2 million, respectively, which included related party deferred revenue amounts of $36.0 million and $33.9 million, respectively. Of the $11.6 million and $31.9 million of deferred revenue for research services as of March 31, 2022 and 2021, respectively, the Company recognized $1.1 million and $10.7 million as revenue during the three months ended September 30, 2022 and 2021, respectively, which included related party revenue amounts of $0.9 million and $10.0 million, respectively, and $9.5 million and $22.1 million during the six months ended September 30, 2022 and 2021, respectively, which included related party revenue amounts of $9.2 million and $21.2 million, respectively.
Remaining Performance Obligations
The transaction price allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that are expected to be billed and recognized as revenue in future periods. The Company has utilized the practical expedient available under Topic 606 to not disclose the value of unsatisfied performance obligations for PGS and telehealth as those contracts have an expected length of one year or less. As of September 30, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations for research services was $43.4 million. The Company expects to recognize revenue on 96% of this amount over the next 12 months and the remainder thereafter.
Comprehensive Loss
Comprehensive loss is composed of two components: net loss and other comprehensive income. The Company’s changes in foreign currency translation represents the components of other comprehensive income that are excluded from the reported net loss.
Segment Information
The Company currently operates in two reporting segments: Consumer and Research Services, and Therapeutics. The Consumer and Research Services segment consists of revenue and expenses from PGS and telehealth, as well as research services revenue and expenses from certain collaboration agreements (including the GSK Agreement (as defined below)). The Therapeutics segment consists of revenues from the out-licensing of intellectual property associated with identified drug targets and expenses related to therapeutic product candidates under clinical development. Substantially all of the Company’s revenues are derived from the Consumer and Research Services segment. See Revenue Recognition within Note 2, “Summary of Significant Accounting Policies,” for additional information regarding revenue. There are no inter-segment sales.
Certain department expenses such as Finance, Legal, Regulatory and Supplier Quality, Corporate Communications and CEO Office are not reported as part of the reporting segments as reviewed by the CODM (as defined below). These amounts are included in Unallocated Corporate in the reconciliations below. The chief operating decision-maker (“CODM”) is the Chief Executive Officer (“CEO”). The CODM evaluates the performance of each segment based on Adjusted EBITDA. Adjusted EBITDA is defined as net income (loss) before net interest income (expense), net other income (expense), changes in fair value of warrant liabilities, income tax benefit, depreciation and amortization of fixed assets, amortization of internal-use software, amortization of acquired intangible assets,
15
Table of Contents
non-cash stock-based compensation expense, acquisition-related costs, and expenses related to restructuring and other charges, if applicable for the period.
Adjusted EBITDA is a key measure used by the Company’s management and Board of Directors to understand and evaluate the Company’s operating performance and trends, to prepare and approve the annual budget, and to develop short-term and long-term operating plans. In particular, the exclusion of the items eliminated in calculating Adjusted EBITDA provides useful measures for period-to-period comparisons of the Company’s business. Accordingly, Adjusted EBITDA provides useful information in understanding and evaluating the Company’s operating results in the same manner as management and the Board of Directors. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. Other companies, including companies in the Company’s industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. There are a number of limitations related to the use of these non-GAAP financial measures rather than net loss, which is the most directly comparable financial measure calculated in accordance with GAAP.
Some of the limitations of Adjusted EBITDA include (i) Adjusted EBITDA does not properly reflect capital commitments to be paid in the future, and (ii) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures. In evaluating Adjusted EBITDA, the Company will incur expenses similar to the adjustments in this presentation in the future. The presentation of Adjusted EBITDA should not be construed as an inference that the Company’s future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating the Company’s performance, Adjusted EBITDA should be considered alongside other financial performance measures, including net loss and other GAAP results.
The Company’s revenue and Adjusted EBITDA by segment is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands) |
|
|
(in thousands) |
|
Segment Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and Research Services |
|
$ |
75,659 |
|
|
$ |
55,204 |
|
|
$ |
140,172 |
|
|
$ |
114,443 |
|
Total Revenue (1) |
|
$ |
75,659 |
|
|
$ |
55,204 |
|
|
$ |
140,172 |
|
|
$ |
114,443 |
|
Segment Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Consumer and Research Services Adjusted EBITDA |
|
$ |
2,324 |
|
|
$ |
(760 |
) |
|
$ |
(14,673 |
) |
|
$ |
(1,265 |
) |
Therapeutics Adjusted EBITDA |
|
|
(18,663 |
) |
|
|
(18,828 |
) |
|
|
(37,128 |
) |
|
|
(37,131 |
) |
Unallocated Corporate |
|
|
(13,316 |
) |
|
|
(10,095 |
) |
|
|
(27,568 |
) |
|
|
(18,563 |
) |
Total Adjusted EBITDA |
|
$ |
(29,655 |
) |
|
$ |
(29,683 |
) |
|
$ |
(79,369 |
) |
|
$ |
(56,959 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net loss to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
$ |
(66,065 |
) |
|
$ |
(16,524 |
) |
|
$ |
(155,597 |
) |
|
$ |
(58,550 |
) |
Adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income) expense, net |
|
|
(1,392 |
) |
|
|
(92 |
) |
|
|
(1,637 |
) |
|
|
(136 |
) |
Other (income) expense, net |
|
|
687 |
|
|
|
(3 |
) |
|
|
1,122 |
|
|
|
(17 |
) |
Change in fair value of warrant liabilities |
|
|
— |
|
|
|
(29,828 |
) |
|
|
— |
|
|
|
(29,294 |
) |
Income tax benefit |
|
|
(1,271 |
) |
|
|
— |
|
|
|
(1,525 |
) |
|
|
— |
|
Depreciation and amortization |
|
|
5,152 |
|
|
|
4,871 |
|
|
|
10,256 |
|
|
|
9,508 |
|
Amortization of acquired intangible assets |
|
|
4,267 |
|
|
|
— |
|
|
|
8,582 |
|
|
|
— |
|
Stock-based compensation expense |
|
|
28,967 |
|
|
|
10,427 |
|
|
|
59,430 |
|
|
|
20,064 |
|
Acquisition-related costs (2) |
|
|
— |
|
|
|
1,466 |
|
|
|
— |
|
|
|
1,466 |
|
Total Adjusted EBITDA |
|
$ |
(29,655 |
) |
|
$ |
(29,683 |
) |
|
$ |
(79,369 |
) |
|
$ |
(56,959 |
) |
(1)There was no Therapeutics revenue for the three and six months ended September 30, 2022 and 2021.
(2)For the three and six months ended September 30, 2021, acquisition-related costs primarily consisted of advisory, legal and consulting fees.
16
Table of Contents
Customers accounting for 10% or more of segment revenues were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Six Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(in thousands, except percentages) |
|
|
(in thousands, except percentages) |
|
Consumer and Research Services Segment Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer C(1) |
|
$ |
17,057 |
|
|
|
23 |
% |
|
$ |
14,935 |
|
|
|
27 |
% |
|
$ |
26,684 |
|
|
|
19 |
% |
|
$ |
23,447 |
|
|
|
20 |
% |
Customer B(2) |
|
$ |
14,925 |
|
|
|
20 |
% |
|
$ |
10,002 |
|
|
|
18 |
% |
|
$ |
23,190 |
|
|
|
17 |
% |
|
$ |
21,212 |
|
|
|
19 |
% |
(1)Customer C revenues are primarily in the United States.
(2)Customer B revenues are in the U.K.
Revenue by geographical region can be found in the revenue recognition disclosures in Note 2, “Summary of Significant Accounting Policies.” Substantially all of the Company’s property and equipment, net of depreciation and amortization, was located in the United States during the periods presented. The reporting segments do not present total assets as they are not reviewed by the CODM when evaluating their performance.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity, and clarifies the guidance on the computation of earnings per share for those financial instruments. The guidance was effective for the Company beginning April 1, 2022, and interim periods therein. The Company adopted ASU 2020-06 as of April 1, 2022, and the adoption did not have a material impact on its consolidated financial statements and related disclosures.
3. Fair Value Measurements
Fair value is defined as the exchange price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy, which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Three levels of inputs may be used to measure fair value:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
|
|
Fair Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
(in thousands) |
|
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
375,000 |
|
|
$ |
375,000 |
|
|
$ |
— |
|
|
$ |
— |
|
Total financial assets |
|
$ |
375,000 |
|
|
$ |
375,000 |
|
|
$ |
— |
|
|
$ |
— |
|
17
Table of Contents
As of the end of fiscal year 2022, on March 31, 2022, the Company did not have any financial instruments that are measured at fair value on a recurring basis.
Cash equivalents consist primarily of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.
4. Variable Interest Entities
The Company determined that the PMCs and Affiliated Pharmacies are variable interest entities (“VIEs”) due to the respective equity holders having nominal capital at risk, and the Company has a variable interest in each of the PMCs and Affiliated Pharmacies. The Company consolidated the PMCs and Affiliated Pharmacies under the VIE model since the Company has the power to direct activities that most significantly impact the VIEs’ economic performance and the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIEs. Under the VIE model, the Company presents the results of operations and the financial position of the VIEs as part of the condensed consolidated financial statements of the Company.
Furthermore, as a direct result of the financial support the Company provides to the VIEs (e.g., loans), the interests held by holders lack economic substance and do not provide them with the ability to participate in the residual profits or losses generated by the VIEs. Therefore, all income and expenses recognized by the VIEs are allocated to the Company’s stockholders.
The aggregate carrying value of total assets and total liabilities included on the condensed consolidated balance sheets for the VIEs after elimination of intercompany transactions were not material as of September 30, 2022 and $11.2 million and $13.3 million, respectively, as of March 31, 2022. Total revenue included on the condensed consolidated statements of operations and comprehensive loss for the VIEs after elimination of intercompany transactions was $10.4 million and $21.1 million, respectively, for the three and six months ended September 30, 2022, respectively. Net income included on the condensed consolidated statements of operations and comprehensive loss was $1.7 million and $2.1 million, respectively, for the three and six months ended September 30, 2022. There were no VIEs during the three and six months ended September 30, 2021.
5. Collaborations
GlaxoSmithKline Agreement
In July 2018, the Company and an affiliate of GlaxoSmithKline plc (“GSK”) entered into a four-year exclusive drug discovery and development collaboration agreement (the “GSK Agreement”) for collaboration on identification and development of therapeutic agents with a unilateral option for GSK to extend the term for an additional year. The Company concluded that GSK is considered a customer. Therefore, the Company has applied the guidance in Topic 606 to account for and present consideration received from GSK related to research services provided by the Company. The Company’s activities under the GSK Agreement, which include reporting, drug target discovery, and joint steering committee participation, represent one combined performance obligation to deliver research services. In addition, the GSK Agreement, along with subsequent amendments, provided GSK the right to include certain identified pre-existing Company programs in the collaboration at GSK’s election, each of which is considered distinct from the research services. The exercise price for the pre-existing program options varied to reflect the respective stage of development of each such program, with up to two such programs being offered for no additional charge. The two programs offered for no additional charge were material rights and therefore also identified as performance obligations within the arrangement.
In addition to cost-sharing during the performance of research services which is recorded within cost of revenue when incurred in the Consumer and Research Services segment, once drug targets have been identified for inclusion in the collaboration, the Company and GSK equally share in the costs of further research, development, and commercialization of identified targets, subject to certain rights of either party to opt-out of funding at certain predetermined development milestones. These cost-sharing charges for costs incurred subsequent to the identification of drug targets have been included in research and development expense on the condensed consolidated statements of operations and comprehensive loss during the period incurred. The Company may also share in the net profits or losses of products that are commercialized pursuant to the collaboration or receive royalties on products which are successfully commercialized.
On January 18, 2022, GSK elected to exercise its option to extend the exclusive target discovery period of the ongoing collaboration with the Company for an additional year to July 2023. On October 5, 2022, the Company received a one-time payment of $50.0 million from GSK in consideration of the exercise of the option pursuant to the GSK Agreement.
18
Table of Contents
The Company recognizes revenue related to the GSK Agreement as the performance obligation is satisfied using an input method to measure progress. The Company believes that actual hours incurred relative to projected hours is the most accurate measurement of progress for the input method. The Company recognized research services revenue related to the GSK Agreement of $14.9 million and $10.0 million during the three months ended September 30, 2022 and 2021, respectively, and $23.2 million and $21.2 million during the six months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and March 31, 2022, the Company had deferred revenue, all of which was current, related to the GSK Agreement of $36.0 million and $9.2 million, respectively. As of September 30, 2022 and March 31, 2022, there was $50.0 million and nil, respectively, receivable related to the GSK Agreement. Cost-sharing amounts incurred subsequent to the identification of targets, included in research and development expenses, were $2.7 million and $5.9 million during the three months ended September 30, 2022 and 2021, respectively, and $6.3 million and $11.9 million during the six months ended September 30, 2022 and 2021, respectively. Cost-sharing amounts incurred prior to the identification of targets included in cost of revenue were $(0.3) million and $(0.2) million during the three months ended September 30, 2022 and 2021, respectively, and $(0.5) million and $0.3 million during the six months ended September 30, 2022 and 2021, respectively. As of September 30, 2022 and March 31, 2022, the Company had $6.4 million and $18.3 million, respectively, related to balances of amounts payable to GSK for reimbursement of shared costs included within accounts payable and accrued expenses and other current liabilities on the condensed consolidated balance sheets. GSK’s affiliate, Glaxo Group Limited, held shares of Class B common stock, representing a 18.4% and 16.3% combined voting power as of September 30, 2022 and March 31, 2022, respectively; therefore, GSK is considered to be a related party.
6. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
March 31, |
|
|
|
2022 |
|
|
2022 |
|
|
|
(in thousands) |
|
Computer and software |
|
$ |
11,374 |
|
|
$ |
10,573 |
|
Laboratory equipment and software |
|
|
51,760 |
|
|
|
51,557 |
|
Furniture and office equipment |
|
|
9,140 |
|
|
|
8,926 |
|
Leasehold improvements |
|
|
40,768 |
|
|
|
40,566 |
|
Capitalized asset retirement obligations |
|
|
853 |
|
|
853 |
|
Property and equipment, gross |
|
|
113,895 |
|
|
|
112,475 |
|
Less: accumulated depreciation and amortization |
|
|
(69,838 |
) |
|
|
(62,624 |
) |
Property and equipment, net |
|
$ |
44,057 |
|
|
$ |
49,851 |
|
Depreciation and amortization expense was $3.9 million and $4.3 million for the three months ended September 30, 2022 and 2021, respectively, and $7.8 million and $8.4 million for the six months ended September 30, 2022 and 2021, respectively.
Internal-Use Software, Net
Internal-use software, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
March 31, |
|
|
|
2022 |
|
|
2022 |
|
|
|
(in thousands) |
|
Capitalized internal-use software |
|
$ |
18,676 |
|
|
$ |
14,804 |
|
Less: accumulated amortization |
|
|
(7,169 |
) |
|
|
(5,169 |
) |
Internal-use software, net |
|
$ |
11,507 |
|
|
$ |
9,635 |
|
The Company capitalized $2.4 million and $1.4 million in internal-use software during the three months ended September 30, 2022 and 2021, respectively, and $4.3 million and $2.2 million in internal-use software during the six months ended September 30, 2022 and 2021, respectively. Impairment to internal-use software was $0.2 million and $0.5 million for the three and six months ended September 30, 2022, respectively. There was no impairment to internal-use software for the three and six months ended September 30, 2021. For the three months ended September 30, 2022 and 2021, amortization expense related to internal-use software was $1.0 million and $0.7 million, respectively, which included approximately $0.3 million and $0.1 million, respectively, of stock-based compensation. For the six months ended September 30, 2022 and 2021, amortization expense related to internal-use software was $2.0 million and $1.3 million, respectively, which included approximately $0.4 million and $0.2 million, respectively, of stock-based compensation expense.
19
Table of Contents
Intangible Assets, Net
Intangible assets, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
|
|
Weighted Average Remaining Useful Life- Years |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|
|
(in thousands, except years) |
|
Customer relationships |
|
|
1.1 |
|
|
$ |
14,900 |
|
|
$ |
(6,829 |
) |
|
$ |
8,071 |
|
Partnerships |
|
|
6.1 |
|
|
|
23,200 |
|
|
|
(3,301 |
) |
|
|
19,899 |
|
Trademark |
|
|
4.1 |
|
|
|
11,000 |
|
|
|
(2,017 |
) |
|
|
8,983 |
|
Developed technology |
|
|
6.1 |
|
|
|
24,100 |
|
|
|
(3,156 |
) |
|
|
20,944 |
|
Non-compete agreements |
|
|
4.1 |
|
|
|
2,800 |
|
|
|
(514 |
) |
|
|
2,286 |
|
Patents |
|
|
6.0 |
|
|
|
5,500 |
|
|
|
(755 |
) |
|
|
4,745 |
|
Total intangible assets |
|
|
|
|
$ |
81,500 |
|
|
$ |
(16,572 |
) |
|
$ |
64,928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
|
|
Weighted Average Remaining Useful Life- Years |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Net Carrying Amount |
|
|
|
(in thousands, except years) |
|
Customer relationships |
|
|
1.6 |
|
|
$ |
14,900 |
|
|
$ |
(3,104 |
) |
|
$ |
11,796 |
|
Partnerships |
|
|
6.6 |
|
|
|
23,200 |
|
|
|
(1,558 |
) |
|
|
21,642 |
|
Trademark |
|
|
4.6 |
|
|
|
11,000 |
|
|
|
(917 |
) |
|
|
10,083 |
|
Developed technology |
|
|
6.6 |
|
|
|
24,100 |
|
|
|
(1,436 |
) |
|
|
22,664 |
|
Non-compete agreements |
|
|
4.6 |
|
|
|
2,800 |
|
|
|
(233 |
) |
|
|
2,567 |
|
Patents |
|
|
6.4 |
|
|
|
5,500 |
|
|
|
(347 |
) |
|
|
5,153 |
|
Total intangible assets |
|
|
|
|
$ |
81,500 |
|
|
$ |
(7,595 |
) |
|
$ |
73,905 |
|
Amortization expense for intangible assets was $4.5 million and $9.0 million for the three and six months ended September 30, 2022, respectively. There was no amortization expense for the three and six months ended September 30, 2021.
Estimated future amortization expense of the identified intangible assets as of September 30, 2022 were as follows:
|
|
|
|
|
|
|
Estimated Amortization |
|
|
|
(in thousands) |
|
Fiscal years ending March 31, |
|
|
|
2023 (Remaining six months) |
|
$ |
9,035 |
|
2024 |
|
|
14,966 |
|
2025 |
|
|
10,621 |
|
2026 |
|
|
10,621 |
|
2027 |
|
|
9,039 |
|
Thereafter |
|
|
10,646 |
|
Total estimated future amortization expense |
|
$ |
64,928 |
|
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Accrued Expense and Other Current Liabilities
Accrued expense and other current liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
March 31, |
|
|
|
2022 |
|
|
2022 |
|
|
|
(in thousands) |
|
Accrued payables |
|
$ |
18,789 |
|
|
$ |
27,654 |
|
Accrued compensation and benefits |
|
|
24,430 |
|
|
|
14,898 |
|
Accrued taxes and other |
|
|
1,201 |
|
|
|
2,036 |
|
Total accrued expenses and other current liabilities |
|
$ |
44,420 |
|
|
$ |
44,588 |
|
7. Leases
The Company’s lease portfolio includes leased offices, dedicated lab facility and storage space, and dedicated data center facility space, with remaining contractual periods from 0.4 years to 8.8 years. For purposes of calculating lease liabilities, lease terms may include options to extend the lease when it is reasonably certain that the Company will exercise those options.
The Company incurred total lease costs of $3.4 million and $3.3 million for the three months ended September 30, 2022 and 2021, respectively, and $6.7 million and $6.8 million for the six months ended September 30, 2022 and 2021, respectively.
As of September 30, 2022, the future minimum lease payments included in the measurement of the Company’s operating lease liabilities were as follows:
|
|
|
|
|
|
|
September 30, |
|
|
|
2022 |
|
|
|
(in thousands) |
|
Fiscal years ending March 31, |
|
|
|
2023 (Remaining six months) |
|
$ |
6,314 |
|
2024 |
|
|
14,934 |
|
2025 |
|
|
14,464 |
|
2026 |
|
|
11,105 |
|
2027 |
|
|
11,348 |
|
Thereafter |
|
|
53,095 |
|
Total future operating lease payments |
|
|
111,260 |
|
Less: imputed interest |
|
|
(29,379 |
) |
Total operating lease liabilities |
|
$ |
81,881 |
|
8. Commitments and Contingencies
Non-cancelable Purchase Obligations
In the normal course of business, the Company enters into non-cancelable purchase commitments for goods or services with various parties. As of September 30, 2022, the Company had a total of $48.2 million in outstanding non-cancelable purchase obligations with a term of 12 months or longer.
21
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