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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
FORM 10-Q
__________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                to              
Commission file number: 001-36536
__________________________________________________
CAREDX, INC.
(Exact name of registrant as specified in its charter)
__________________________________________________
Delaware94-3316839
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
1 Tower Place
South San Francisco, California 94080
(Address of principal executive offices and zip code)
(415) 287-2300
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
__________________________________________________
Securities registered pursuant to Section 12(b) of the Act
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.001 per shareCDNAThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
There were 52,053,956 shares of the registrant’s Common Stock issued and outstanding as of May 3, 2021.



Table of Contents
CareDx, Inc.
TABLE OF CONTENTS
Page No.
Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020
March 31, 2021 and 2020
March 31, 2021 and 2020

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Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1.    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CareDx, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
March 31, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents$309,324 $134,669 
Marketable securities64,963 90,034 
Accounts receivable43,361 34,624 
Inventory13,721 10,012 
Prepaid and other current assets7,332 3,758 
Total current assets438,701 273,097 
Property and equipment, net11,398 10,704 
Operating leases right-of-use assets18,289 15,228 
Intangible assets, net45,457 44,355 
Goodwill26,109 23,857 
Restricted cash269 270 
Other assets1,000 1,000 
Total assets$541,223 $368,511 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$11,597 $9,653 
Accrued compensation10,495 18,466 
Accrued and other liabilities23,638 20,602 
Refund liability - CMS advance payment (Note 1) 20,496 
Total current liabilities45,730 69,217 
Deferred tax liability945 1,299 
Common stock warrant liability420 447 
Deferred payments for intangible assets3,640 3,560 
Operating lease liability, less current portion18,462 16,069 
Other liabilities480 240 
Total liabilities69,677 90,832 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock: $0.001 par value; 10,000,000 shares authorized at March 31, 2021 and December 31, 2020; no shares issued and outstanding at March 31, 2021 and December 31, 2020
  
Common stock: $0.001 par value; 100,000,000 shares authorized at March 31, 2021 and December 31, 2020; 51,939,121 shares and 49,441,166 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
51 49 
Additional paid-in capital828,308 632,253 
Accumulated other comprehensive loss(3,599)(2,096)
Accumulated deficit(353,214)(352,527)
Total stockholders’ equity471,546 277,679 
Total liabilities and stockholders’ equity$541,223 $368,511 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

Table of Contents
CareDx, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

Three Months Ended March 31,
20212020
Revenue:
Testing services revenue$59,281 $31,442 
Product revenue5,778 4,695 
Digital and other revenue2,341 2,243 
Total revenue67,400 38,380 
Operating expenses:
Cost of testing services16,483 7,928 
Cost of product3,647 3,199 
Cost of digital and other1,449 1,265 
Research and development16,004 10,013 
Sales and marketing15,452 11,723 
General and administrative15,223 10,003 
Total operating expenses68,258 44,131 
Loss from operations(858)(5,751)
Other income (expense):
Interest income, net126 96 
Change in estimated fair value of common stock warrant liability27 (405)
Other expense, net(245)(63)
Total other expense(92)(372)
Loss before income taxes(950)(6,123)
Income tax benefit263 300 
Net loss$(687)$(5,823)
Net loss per share (Note 3):
Basic$(0.01)$(0.14)
Diluted$(0.01)$(0.14)
Weighted-average shares used to compute net loss per share:
Basic51,181,160 42,823,427 
Diluted51,181,160 42,823,427 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Table of Contents
CareDx, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)
(In thousands)

Three Months Ended March 31,
20212020
Net loss$(687)$(5,823)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax(1,503)(1,705)
Net comprehensive loss$(2,190)$(7,528)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5


CareDx, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 202049,441,166 $49 $632,253 $(2,096)$(352,527)$277,679 
Issuance of common shares through public equity offering, net of commissions and offering costs of $12,495
2,211,538 2 188,753 — — 188,755 
Issuance of common stock under ESPP24,052 — 838 — — 838 
RSU settlements, net of shares withheld121,447 — (2,313)— — (2,313)
Issuance of common stock for services1,339 — 96 — — 96 
Issuance of common stock for cash upon exercise of stock options
139,579 — 2,193 — — 2,193 
Employee stock-based compensation expense— — 6,488 — — 6,488 
Foreign currency translation adjustment— — — (1,503)— (1,503)
Net loss— — — — (687)(687)
Balance at March 31, 202151,939,121 $51 $828,308 $(3,599)$(353,214)$471,546 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Table of Contents
CareDx, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share data)
Common StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at December 31, 201942,498,430 $42 $437,976 $(5,205)$(333,813)$99,000 
Issuance of common stock under ESPP38,147 — 699 — — 699 
RSU settlements, net of shares withheld139,552 — (1,507)— — (1,507)
Issuance of common stock for services3,091 — 66 — — 66 
Issuance of common stock for cash upon exercise of stock options
44,861 — 155 — — 155 
Issuance of common stock for cash upon exercise of warrants
295,466 — 6,299 — — 6,299 
Employee stock-based compensation expense— — 4,200 — — 4,200 
Foreign currency translation adjustment— — — (1,705)— (1,705)
Net loss— — — — (5,823)(5,823)
Balance at March 31, 202043,019,547 $42 $447,888 $(6,910)$(339,636)$101,384 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7

Table of Contents
CareDx, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended March 31,
20212020
Operating activities:
Net loss$(687)$(5,823)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation6,547 4,259 
Revaluation of common stock warrant liability to estimated fair value(27)405 
Depreciation and amortization1,950 1,619 
Amortization of right-of-use assets677 612 
Revaluation of contingent consideration to estimated fair value(44)190 
Changes in operating assets and liabilities:
Accounts receivable(8,755)2,346 
Inventory(4,056)(1,343)
Prepaid and other assets(3,628)(545)
Operating leases liabilities, net(320)(344)
Accounts payable1,496 1,757 
Accrued compensation(7,662)(5,914)
Accrued and other liabilities1,661 48 
Refund liability - CMS advance payment(20,496) 
Change in deferred taxes(286)(322)
Net cash used in operating activities(33,630)(3,055)
Investing activities:
Acquisition of business, net of cash acquired(3,543) 
Acquisition of intangible assets(1,200) 
Maturities of marketable securities25,072  
Additions of capital expenditures, net(1,250)(1,704)
Net cash provided by (used in) investing activities19,079 (1,704)
Financing activities:
Proceeds from issuance of common shares in public equity offering, net of issuance costs paid188,715  
Proceeds from issuance of common stock under employee stock purchase plan667 358 
Taxes paid related to net share settlement of restricted stock units(2,313)(1,507)
Proceeds from exercise of warrants 304 
Proceeds from exercise of stock options2,193 155 
Principal payments on finance lease obligations(34)(45)
Net cash provided by (used in) financing activities189,228 (735)
Effect of exchange rate changes on cash and cash equivalents(23)(552)
Net increase (decrease) in cash, cash equivalents and restricted cash174,654 (6,046)
Cash, cash equivalents, and restricted cash at beginning of period134,939 38,479 
Cash, cash equivalents, and restricted cash at end of period$309,593 $32,433 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8

Table of Contents
CareDx, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
CareDx, Inc. (“CareDx” or the “Company”), together with its subsidiaries, is a leading precision medicine company focused on the discovery, development and commercialization of clinically differentiated, high-value diagnostic solutions for transplant patients and caregivers.  The Company’s headquarters are in South San Francisco, California. The primary operations are in Brisbane, California; Omaha, Nebraska; Fremantle, Australia; and Stockholm, Sweden.
The Company’s commercially available testing services consist of AlloSure® Kidney, which is a donor-derived cell-free DNA (“dd-cfDNA”) solution for kidney transplant patients, AlloMap® Heart, which is a gene expression solution for heart transplant patients, and AlloSure® Heart, a dd-cfDNA test which can identify underlying cell injury leading to organ rejection. The Company has initiated several clinical studies to generate data on its existing and planned future testing services. In April 2020, the Company announced its first biopharma research partnership for AlloCell, a surveillance solution that monitors the level of engraftment and persistence of allogeneic cells for patients who have received cell therapy transplants. The Company also offers high-quality products that increase the chance of successful transplants by facilitating a better match between a donor and a recipient of stem cells and organs. In 2019, the Company began providing digital solutions to transplant centers following the acquisitions of Ottr Complete Transplant Management (“Ottr, Inc.”) and XynManagement, Inc. (“XynManagement”), as well as the acquisition of TransChart LLC (“TransChart”).
Testing Services
AlloSure Kidney has been a covered service for Medicare beneficiaries since October 2017. The Medicare reimbursement rate for AlloSure Kidney is currently $2,841. AlloSure Kidney has received positive coverage decisions from Blue Cross Blue Shield (“BCBS”) of South Carolina, BCBS of Kansas City and Capital Health, and is reimbursed by other private payers on a case-by-case basis.
AlloMap Heart has been a covered service for Medicare beneficiaries since January 2006. The Medicare reimbursement rate for AlloMap Heart is currently $3,240. AlloMap Heart has also received positive coverage decisions for reimbursement from many of the largest U.S. private payers, including Aetna, Cigna, Health Care Services Corporation, Humana, Kaiser Foundation Health Plan, Inc. and UnitedHealthcare.
In October 2020, AlloSure Heart received a final Palmetto MolDx Medicare coverage decision for AlloSure Heart. In November 2020, Noridian Healthcare Solutions, the Company's Medicare Administrative contractor, issued a parallel coverage policy granting coverage when used in conjunction with AlloMap Heart, which became effective in December 2020. The Medicare reimbursement rate for AlloSure Heart is currently $2,753.
Clinical Studies
In January 2018, the Company initiated the Kidney Allograft Outcomes AlloSure Kidney Registry study (“K-OAR”), to develop additional data on the clinical utility of AlloSure Kidney for surveillance of kidney transplant recipients. K-OAR is a multicenter, non-blinded, prospective observational cohort study which has enrolled more than 1,700 renal transplant patients who will receive AlloSure Kidney long-term surveillance.
In September 2018, the Company initiated the Surveillance HeartCare™ Outcomes Registry (“SHORE”). SHORE is a prospective, multi-center, observational registry of patients receiving HeartCare for surveillance. HeartCare combines the gene expression profiling technology of AlloMap Heart with the dd-cfDNA analysis of AlloSure® Heart in one surveillance solution.
In February 2019, AlloSure® Lung became available for lung transplant patients through a compassionate use program while the test is undergoing further studies. In June 2020, the Company submitted an AlloSure Lung application to the Palmetto MolDx Technical Assessment program seeking coverage and reimbursement for Medicare beneficiaries.
In September 2019, the Company announced the commencement of the Outcomes of KidneyCare on Renal Allografts (“OKRA”) study, which is an extension of K-OAR. OKRA is a prospective, multi-center, observational, registry of patients receiving KidneyCare for surveillance. KidneyCare combines the dd-cfDNA analysis of AlloSure Kidney with the gene expression profiling technology of AlloMap Kidney and the predictive artificial intelligence technology of KidneyCare iBox developing a multimodality surveillance solution. The Company has not yet made any applications to private payers for reimbursement coverage of AlloMap Kidney or KidneyCare iBox. Enrollment for OKRA was negatively affected by the COVID-19 restrictions during the year 2020, and the study had been delayed by six months; however, the collection of samples are at normal levels as a result of the introduction of RemoTraC. Following the successful implementation of RemoTraC, OKRA is planned to be fully enrolled by the end of 2021. The patients will then be followed for a period of three years with the output of the study due in 2024.
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Products
The Company’s suite of AlloSeq products are commercial next generation sequencing (“NGS”)-based kitted solutions that the Company has developed as a result of its license agreement with Illumina, Inc. (“Illumina”). These products include: AlloSeq™ Tx, a high-resolution Human Leukocyte Antigen (“HLA”) typing solution, AlloSeq™ cfDNA, a surveillance solution designed to measure dd-cfDNA in blood to detect active rejection in transplant recipients, and AlloSeq™ HCT, a solution for chimerism testing for stem cell transplant recipients.
The Company's other HLA typing products include: TruSight HLA, a NGS-based high resolution typing solution; Olerup SSP®, based on the sequence specific primer (“SSP”) technology; and QTYPE®, which uses real-time polymerase chain reaction (“PCR”) methodology, to perform HLA typing at a low to intermediate resolution for samples that require a fast turnaround time.
In March 2021, the Company acquired BFS Molecular S.R.L. (“BFS Molecular”), a software company focused on NGS-based patient testing solutions. BFS Molecular brings extensive software and algorithm development capabilities for NGS transplant surveillance products.
Digital and Other
Following the acquisitions of both Ottr, Inc. and XynManagement, the Company is a leading provider of transplant patient tracking software (“Ottr software”), as well as of transplant quality tracking and waitlist management solutions. Ottr software provides comprehensive solutions for transplant patient management and enables integration with electronic medical record (“EMR”) systems providing patient surveillance management tools and outcomes data to transplant centers. XynManagement provides two unique solutions, XynQAPI software (“XynQAPI”) and XynCare. XynQAPI simplifies transplant quality tracking and Scientific Registry of Transplant Recipients reporting. XynCare includes a team of transplant assistants who maintain regular contact with patients on the waitlist to help prepare for their transplant and maintain eligibility.
In September 2020, the Company launched AlloCare, a mobile app that provides a patient-centric resource for transplant recipients to manage medication adherence, coordinate with Patient Care Managers for AlloSure scheduling and measure health metrics.
In January 2021, the Company acquired TransChart LLC for cash. TransChart provides EMR software to hospitals throughout the U.S. to care for patients who have or may need an organ transplant. As part of its acquisition of TransChart in January 2021, the Company acquired Tx Connect, a cloud-based service that allows nephrologists and dialysis centers to electronically submit referrals to transplant programs, closely follow and assist patients through the transplant waitlist process, and ultimately, through transplantation.
COVID-19 Pandemic
On January 30, 2020, the World Health Organization (the “WHO”) announced a global health emergency because of a new strain of coronavirus (“COVID-19”) originating in Wuhan, China and the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 pandemic, including the impact associated with preventative and precautionary measures that the Company, other businesses and governments are taking, continues to evolve as of the date of this report. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company, but the pandemic may materially affect the Company's financial condition, liquidity and future results of operations.
In the final weeks of March and during April 2020, with hospitals increasingly caring for COVID-19 patients, hospital administrators chose to limit or even defer, non-emergency procedures. Immunosuppressed transplant patients either self-prescribed or were asked to avoid transplant centers and caregiver visits to reduce the risk of contracting COVID-19. As a result, with transplant surveillance visits down, the Company experienced a slowdown in testing services volumes in the final weeks of March and during April 2020. As a response to the COVID-19 pandemic, and to enable immune-compromised transplant patients to continue to have their blood drawn, in late March 2020, the Company launched RemoTraC, a remote home-based blood draw solution using mobile phlebotomy for AlloSure and AlloMap surveillance tests, as well as for other standard monitoring tests. To date, more than 200 transplant centers can offer RemoTraC to their patients and over 7,000 kidney, heart and lung transplant patients have enrolled. Based on existing and new relationships with partners, the Company has established a nationwide network of more than 10,000 mobile phlebotomists. Following the introduction of RemoTraC and with the easing of stay-at-home restrictions and the opening up of many hospitals to non-COVID-19 patients, the Company’s testing services volumes returned to levels consistent with those experienced immediately prior to the COVID-19 pandemic, and through March 31, 2021, volumes continued to be at or above those levels since May 2020.
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In spite of the resurgence of COVID-19 infection rates, which resulted in increased stay-at-home and renewed travel restrictions, the Company did not experience a decrease in testing services volumes. The Company’s product business experienced a reduction in forecasted sales volume throughout the second and third quarters of 2020, as it was unable to undertake onsite discussions and demonstrations of its recently launched NGS products, including AlloSeq Tx 17, which was awarded CE mark authorization in May 2020. The Company's product business maintained normal sales volumes during the fourth quarter of 2020 and continued to maintain normal sales volumes through the first quarter of 2021.
The Company is maintaining its testing, manufacturing, and distribution facilities while implementing specific protocols to reduce contact among employees. In areas where COVID-19 impacts healthcare operations, the Company’s field-based sales and clinical support teams are supporting providers through telephone and online platforms. In August 2020, the state of California released revised criteria for loosening and tightening restrictions on certain activities on generally a county-by-county basis. Under the updated executive orders, San Mateo County, where the Company's laboratory and headquarters are located, continues to be subject to certain restrictions. These orders and others may be further modified, amended and adopted depending upon the COVID-19 transmission rates in our county and state, as well as other factors.
In addition, the Company has created a COVID-19 task force that is responsible for crisis decision making, employee communications, enforcing pre-arrival temperature checking, daily health check-ins and enhanced safety training/protocols in its offices for employees that do not work from home.
Liquidity and Capital Resources
The Company has incurred significant losses and negative cash flows from operations since its inception and had an accumulated deficit of $353.2 million at March 31, 2021. As of March 31, 2021, the Company had cash, cash equivalents and marketable securities of $374.3 million.
CMS Accelerated and Advance Payment Program for Medicare Providers
On March 27, 2020 the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Pursuant to the CARES Act, the Centers for Medicare & Medicaid Services (CMS”) expanded its Accelerated and Advance Payment Program in order to increase cash flow to providers of services and suppliers impacted by the COVID-19 pandemic. CMS is authorized to provide accelerated or advance payments during the period of the public health emergency to any Medicare provider who submitted a request to the appropriate Medicare Administrative Contractor and met the required qualifications. During April 2020, the Company received an advance payment from CMS of approximately $20.5 million, and recorded the payment as Deferred revenue - CMS advance payment on the Company's condensed consolidated balance sheet.
During December 2020, the Company reassessed the Deferred revenue - CMS advance payment and repaid the entire amount in January 2021. The Company recorded the amount as Refund liability - CMS advance payment on the condensed consolidated balance sheet as of December 31, 2020. Refer to Note 8, Balance Sheet Components, for further explanation.
CARES Act Provider Relief Fund for Medicare Providers
Pursuant to the CARES Act, the U.S. Department of Health & Human Services (“HHS”) distributed an initial tranche of $30.0 billion in funds to healthcare providers that received Medicare fee-for-service (FFS”) reimbursements in 2019. These payments to healthcare providers are not loans and will not be required to be repaid. As a condition to receiving these payments, providers must agree to certain terms and conditions and submit sufficient documentation demonstrating that the funds are being used for healthcare-related expenses or lost revenue attributable to the COVID-19 pandemic. Due to the recent enactment of legislation and absence of definitive guidance, there is a high degree of uncertainty around the CARES Act’s implementation and the Company continues to assess the impact on its business. Furthermore, HHS has indicated that it, along with the Office of Inspector General, will be closely monitoring and auditing providers to ensure that recipients comply with the terms and conditions of relief programs and to prevent fraud and abuse. All providers will be subject to civil and criminal penalties for any deliberate omissions, misrepresentations or falsifications of any information given to HHS. Providers will be distributed a portion of the initial $30.0 billion of funds based on their share of total Medicare FFS reimbursements made by the U.S. in 2019. During April 2020, the Company received a payment of approximately $4.8 million representing its portion of the initial tranche of funds, recorded in other income (expense), net on the condensed consolidated statements of operations.
The Company is complying with the key terms and provisions of the CARES Act Provider Relief Fund, which includes, among other things, the requirement that the Company maintain appropriate records and cost documentation. The Company has registered with HHS to submit financial data indicating the use of the funds the Company received pursuant to the CARES Act Provider Relief Fund. The Company will be notified by HHS when the Provider Relief Fund Reporting Portal is open for reporting on the use of Provider Relief Fund payments.
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Underwritten Public Offering of Common Stock
On June 15, 2020, the Company sold 4,492,187 shares of common stock (which included shares sold pursuant to the underwriters’ full exercise of an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of $32.00 per share for aggregate net proceeds of approximately $134.6 million.
Public Offering of Common Stock
On January 25, 2021, the Company sold 1,923,077 shares of its common stock through an underwritten public offering at a public offering price of $91.00 per share. The net proceeds to the Company from the offering were approximately $164.0 million, after deducting underwriting discounts and commissions and offering expenses.
On February 11, 2021, the Company sold 288,461 shares of its common stock pursuant to the full exercise of the overallotment option granted to the underwriters in connection with the offering. The net proceeds to the Company from the full exercise of the underwriters' overallotment option were approximately $24.7 million.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 are reflected below.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and follow the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain notes and other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments that are necessary for a fair statement of the Company’s financial information. The condensed consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements as of that date but does not include all of the financial information required by U.S. GAAP for complete financial statements. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.
Correction to Presentation
The presentation of certain prior period amounts within the accompanying condensed consolidated statements of operations have been corrected, including creating separate line items for the presentation of cost of testing services, cost of product and cost of digital and other, which were previously reported, in aggregate, in total cost of revenue of $12.4 million for the three months ended March 31, 2020. These corrections had no effect on loss from operations, loss before taxes, or net loss. The Company evaluated these corrections, considering both qualitative and quantitative factors, and concluded they are immaterial to previously issued financial statements.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the unaudited condensed consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to transaction price estimates used for testing services revenue; standalone fair value of digital revenue performance obligations; accrued expenses for clinical studies; inventory valuation; the fair value of issued common stock warrants and embedded derivatives; the fair value of assets and liabilities acquired in a business combination or an assets acquisition (including identifiable intangible assets acquired); the fair value of contingent consideration recorded in connection with a business combination; the grant date fair value assumptions used to estimate stock-based compensation expense; income taxes; impairment of long-lived assets and indefinite-lived assets (including goodwill); and legal contingencies. Actual results could differ from those estimates.
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Concentrations of Credit Risk and Other Risks and Uncertainties
For the three months ended March 31, 2021 and 2020, approximately 60% and 53%, respectively, of total revenue was derived from Medicare.
As of March 31, 2021 and December 31, 2020, approximately 31% and 28%, respectively, of accounts receivable was due from Medicare. No other payer or customer represented more than 10% of accounts receivable on either March 31, 2021 or December 31, 2020.
Marketable Securities
The Company considers all highly liquid investments in securities with a maturity of greater than three months at the time of purchase to be marketable securities. As of March 31, 2021, the Company’s marketable securities consisted of corporate debt securities with maturities of greater than three months but less than twelve months at the time of purchase. These marketable securities are classified as current assets on the condensed consolidated balance sheet.
The Company classifies its marketable securities as held-to-maturity at the time of purchase and reevaluates such designation at each balance sheet date. The Company has the positive intent and ability to hold these marketable securities to maturity. Marketable securities are carried at amortized cost and are adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income (expense), net on the condensed consolidated statements of operations. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on marketable securities are included in interest income (expense), net. The cost of securities sold will be determined using specific identification.
Leases
Effective January 1, 2019, the Company adopted Accounting Standard Codification (“ASC”) Topic 842, Leases using the optional transition method and applied the standard only to leases that existed at that date. The Company determines if an arrangement is or contains a lease at contract inception. A right-of-use (“ROU”) asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the condensed consolidated balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the ROU asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet.
The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment.
As of March 31, 2021, the Company’s leases had remaining terms of 0.21 years to 7.92 years, some of which include options to extend the lease term.
Recent Accounting Pronouncements
In October 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-10, Codification Improvements, which contains amendments that improve the consistency of the ASC by including all disclosure guidance in the appropriate Disclosure Section (Section 50). The FASB provided transition guidance for all the amendments in this ASU. The amendments in Sections B and C (Section A has been removed) of this ASU are effective for annual periods beginning after December 15, 2020 for public business entities. Early application of the amendments in this ASU is permitted for public business entities for any annual or interim period for which financial statements have not been issued. The amendments in this ASU should be applied retrospectively. The Company adopted the standard on January 1, 2021. The adoption of the new standard did not have an impact on the Company's condensed consolidated financial statements and disclosures.
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3. NET LOSS PER SHARE
Basic and diluted net loss per share have been computed by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration of common share equivalents as their effect would have been antidilutive.
The following tables set forth the computation of the Company’s basic and diluted net loss per share (in thousands, except shares and per share data):
Three Months Ended March 31,
20212020
Numerator:
Net loss used to compute basic and diluted net loss per share$(687)$(5,823)
Denominator:
Weighted-average shares used to compute basic and diluted net loss per share
51,181,160 42,823,427 
Net loss per share:
Basic and diluted$(0.01)$(0.14)
The following potentially dilutive securities have been excluded from diluted net loss per share as of March 31, 2021 and 2020 because their effect would be antidilutive:
Three Months Ended March 31,
20212020
Shares of common stock subject to outstanding options2,592,281 2,845,862 
Shares of common stock subject to outstanding common stock warrants6,264 49,006 
Restricted stock units1,853,419 1,502,012 
Total common stock equivalents4,451,964 4,396,880 

4. FAIR VALUE MEASUREMENTS
The Company records its financial assets and liabilities at fair value.  The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.  The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
Level 1: Inputs that include quoted prices in active markets for identical assets and 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 sets forth the Company’s financial assets and liabilities, measured at fair value on a recurring basis, as of March 31, 2021 and December 31, 2020 (in thousands):
March 31, 2021
Fair Value Measured Using 
(Level 1)(Level 2)(Level 3)Total Balance
Assets    
Money market funds$280,099 $ $ $280,099 
Liabilities
Common stock warrant liability$ $ $420 $420 

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December 31, 2020
 Fair Value Measured Using 
 (Level 1)(Level 2)(Level 3)Total Balance
Assets    
Money market funds$85,797 $ $ $85,797 
Liabilities
Common stock warrant liability$ $ $447 $447 
The following table presents the issuances, exercises, changes in fair value and reclassifications of the Company’s Level 3 financial instruments that are measured at fair value on a recurring basis (in thousands):
 (Level 3)
 Common Stock Warrant Liability
Balance as of December 31, 2020
$447 
Exercise of warrants 
Change in estimated fair value(27)
Balance as of March 31, 2021
$420 
As of March 31, 2021, the Company had one investment in convertible preferred shares carried at cost. See Note 7, “Goodwill and Intangible Assets”. In the event the Company had to calculate the fair value of this investment, it would be based on Level 3 inputs. This investment is not considered material to the Company's condensed consolidated financial statements.
In determining fair value, the Company uses various valuation approaches within the fair value measurement framework.  The valuation methodologies used for the Company’s instruments measured at fair value and their classification in the valuation hierarchy are summarized below:
Money market funds – Investments in money market funds are classified within Level 1. Money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. At March 31, 2021 and December 31, 2020, money market funds were included as cash and cash equivalents in the condensed consolidated balance sheets.
Marketable securities—Investments in marketable securities are classified within Level 2. The securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly.
Common stock warrant liability – The Company utilizes a binomial-lattice pricing model (the “Monte Carlo Simulation Model”) that involves a market condition simulation to estimate the fair value of the warrants.  The application of the Monte Carlo Simulation Model requires the use of a number of complex assumptions, including the Company’s stock price, expected life of the warrants, stock price volatility determined from the Company’s historical stock prices and stock prices of peer companies in the diagnostics industry, and risk-free rates based on the implied yield currently available in the U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the warrants.  Increases (decreases) in the assumptions discussed above result in a directionally similar impact to the fair value of the common stock warrant liability.
Common Stock Warrant Liability Valuation Assumptions:
March 31, 2021December 31, 2020
Private Placement Common Stock Warrant Liability
Stock Price$68.09 $72.45 
Exercise Price$1.12 $1.12 
Remaining term (in years)2.042.28
Volatility72.00 %73.00 %
Risk-free interest rate0.17 %0.14 %

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5. CASH AND MARKETABLE SECURITIES
Cash, Cash Equivalents and Restricted Cash
A reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets to the amount reported within the condensed consolidated statements of cash flows is shown in the table below (in thousands):
March 31, 2021December 31, 2020March 31, 2020December 31, 2019
Cash and cash equivalents$309,324 $134,669 $32,191 $38,223 
Restricted cash269 270 242 256 
Total cash, cash equivalents, and restricted cash at the end of the period$309,593 $134,939 $32,433 $38,479 
Marketable Securities
All marketable securities were considered held-to-maturity at March 31, 2021 and December 31, 2020. As of March 31, 2021 and December 31, 2020, some of the Company’s marketable securities were in an unrealized loss position. The Company determined that it had the positive intent and ability to hold until maturity all marketable securities that have been in a continuous loss position, thus there was no recognition of any other-than-temporary impairment as of March 31, 2021 and December 31, 2020. All marketable securities with unrealized losses as of each balance sheet date have been in a loss position for less than twelve months.
The amortized cost, gross unrealized holding losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the table below (in thousands):

March 31, 2021
Amortized CostUnrealized Holding LossesFair Value
Short-term marketable securities:
Corporate debt securities$64,963 $(66)$64,897 
Total short-term marketable securities$64,963 $(66)$64,897 

December 31, 2020
Amortized CostUnrealized Holding LossesFair Value
Short-term marketable securities:
Corporate debt securities$90,034 $(136)$89,898 
Total short-term marketable securities$90,034 $(136)$89,898 

Contractual maturities of the short-term marketable securities all mature within one year as of March 31, 2021.
6. BUSINESS COMBINATIONS
TransChart LLC
In January 2021, the Company acquired TransChart for cash. TransChart provides EMR software to hospitals throughout the U.S. to care for patients who have or may need an organ transplant. TransChart builds on the Company's digital offerings, which include Ottr, Inc. transplant electronic medical record software and XynQAPI transplant quality management solutions. As a result of the acquisition, the Company recognized goodwill of $2.3 million and intangible assets of $2.0 million.
The pro forma impact of the TransChart acquisition is not material, and the results of operations of the acquisition have been included in the Company's condensed consolidated statements of operations from the respective acquisition date.
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7. GOODWILL AND INTANGIBLE ASSETS
Goodwill
Goodwill is recorded when the purchase price of an acquisition exceeds the fair value of the net tangible and identified intangible assets acquired.
Goodwill is tested annually for impairment at the reporting unit level during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. There were no indicators of impairment in the three months ended March 31, 2021. The balance of the Company's goodwill as of March 31, 2021 and December 31, 2020 was $26.1 million and $23.9 million, respectively.
Intangible Assets
The following tables present details of the Company’s intangible assets as of March 31, 2021 ($ in thousands):
March 31, 2021
Gross Carrying AmountAccumulated AmortizationForeign Currency TranslationNet Carrying AmountWeighted Average Remaining Useful Life
(In Years)
Intangible assets with finite lives:
Acquired and developed technology$33,569 $(9,692)$(1,262)$22,615 9.0
Customer relationships19,308 (5,015)(953)13,340 10.6
Commercialization rights8,079 (1,241) 6,838 8.4
Trademarks and tradenames2,380 (856)(110)1,414 9.6
Total intangible assets with finite lives$63,336 $(16,804)$(2,325)$44,207 
Acquired in-process technology1,250 — — 1,250 
Total intangible assets$64,586 $(16,804)$(2,325)$45,457 
The following table presents details of the Company’s intangible assets as of December 31, 2020 ($ in thousands):
December 31, 2020
Gross Carrying AmountAccumulated AmortizationForeign Currency TranslationNet Carrying AmountWeighted Average Remaining Useful Life
(In Years)
Intangible assets with finite lives:
Acquired and developed technology$31,209 $(8,991)$(725)$21,493 9.1
Customer relationships18,168 (4,684)(449)13,035 10.9
Commercialization rights8,079 (1,039) 7,040 8.7
Trademarks and tradenames2,360 (804)(19)1,537 9.9
Total intangible assets with finite lives$59,816 $(15,518)$(1,193)$43,105 
Acquired in-process technology1,250 — — 1,250 
Total intangible assets$61,066 $(15,518)$(1,193)$44,355 
Acquisition of Intangible Assets
In June 2020, the Company commercially launched AlloSeq HCT, a NGS solution for chimerism testing for stem cell transplant recipients. This technology has the potential to provide better sensitivity and data analysis compared to current solutions on the market. AlloSeq HCT is included in Acquired and developed technology as of December 31, 2020 and March 31, 2021.
Amortization of Intangible Assets
Amortization expense was $1.3 million and $1.1 million for the three months ended March 31, 2021 and 2020, respectively. For the three months ended March 31, 2021, expenses of $0.3 million, $0.5 million, $0.1 million and $0.4 million were amortized to cost of testing services, cost of product, cost of digital and other and sales and marketing, respectively. For the three months ended March 31, 2020, expenses of $0.3 million, $0.4 million, $0.1 million and $0.3 million were amortized to cost of testing services, cost of product, cost of digital and other and sales and marketing, respectively.
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The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of March 31, 2021 (in thousands):
Years Ending December 31,Cost of Testing ServicesCost of ProductCost of Digital and OtherSales and MarketingTotal
Remainder of 2021$987 $1,430 $323 $1,083 $3,823 
20221,316 1,906 431 1,437 5,090 
20231,316 1,906 431 1,427 5,080 
20241,316 1,906 431 1,427 5,080 
20251,316 1,906 431 1,427 5,080 
Thereafter5,457 5,020 1,622 7,955 20,054 
Total future amortization expense$11,708 $14,074 $3,669 $14,756 $44,207 

8. BALANCE SHEET COMPONENTS
Inventory
Inventory consisted of the following (in thousands):
March 31, 2021December 31, 2020
Finished goods$2,416 $1,702 
Work in progress3,210 2,936 
Raw materials8,095 5,374 
Total inventory$13,721 $10,012 
Accrued and Other Liabilities
Accrued and other liabilities consisted of the following (in thousands):
March 31, 2021December 31, 2020
Deferred revenue$3,522 $3,530 
Clinical studies7,023 6,733 
Deferred payments for intangible assets2,000 2,000 
Short-term lease liability3,126 2,033 
Test sample processing fees505 416 
Accrued royalty1,342 1,072 
Contingent consideration694 738 
Professional fees2,393 1,529 
Other accrued expenses3,033 2,551 
Total accrued and other liabilities$23,638 $20,602 
CMS Accelerated and Advance Payment Program for Medicare Providers
On March 27, 2020, the U.S. government enacted the CARES Act. Pursuant to the CARES Act, CMS expanded its Accelerated and Advance Payment Program in order to increase cash flow to providers of services and suppliers impacted by the COVID-19 pandemic. CMS was authorized to provide accelerated or advance payments during the period of the public health emergency to any Medicare provider who submitted a request to the appropriate Medicare Administrative Contractor and met the required qualifications. During April 2020, the Company received an advance payment from CMS of approximately $20.5 million and recorded the payment as Deferred revenue - CMS advance payment on the Company's condensed consolidated balance sheet.
During December 2020, the Company reassessed the Deferred revenue - CMS advance payment and repaid the entire amount in January 2021. The Company recorded the amount as Refund liability - CMS advance payment on the condensed consolidated balance sheet as of December 31, 2020.
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9. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases its operating and office facilities for various terms under long-term, non-cancelable operating lease agreements in South San Francisco, California; Brisbane, California; West Chester, Pennsylvania; Fremantle, Australia; and Stockholm, Sweden.  The Company also leases equipment under finance lease agreements.
On January 2, 2020, the Company executed the second amendment to the operating lease agreement for the building located at Brisbane, California. The building is mainly utilized for laboratory operations and research and development. The lease was extended for a period of eight years and two months starting on January 1, 2021. The Company had determined that the amendment constituted a lease modification effective January 1, 2020. At the inception of the lease modification, the ROU asset increased by $13.0 million.
The Company's facility leases expire at various dates through 2029. In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.
As of March 31, 2021, the carrying value of the ROU asset was $18.3 million. The related current and non-current liabilities as of March 31, 2021 were $3.1 million and $18.5 million, respectively. The current and non-current lease liabilities are included in accrued and other current liabilities and operating lease liability, less current portion, respectively, in the condensed consolidated balance sheets.
The following table summarizes the lease cost for the three months ended March 31, 2021 and 2020 (in thousands):
Three Months Ended March 31,
20212020
Operating lease cost$1,205 $1,119 
Finance lease cost30 53 
Total lease cost$1,235 $1,172 

Finance lease cost includes interest from the lease liability and amortization of the ROU asset.
Other information:
Weighted-average remaining lease term - Operating leases (in years)6.78
Weighted-average remaining lease term - Finance leases (in years)0.22
Weighted-average discount rate - Operating leases (%)10.5%
Weighted-average discount rate - Finance leases (%)4.8%
Maturities of operating and finance lease liabilities as of March 31, 2021 are as follows (in thousands):
Year Ending December 31,Finance LeasesOperating Leases
Remainder of 2021$34 $3,718 
2022 4,971 
2023 3,724 
2024 3,846 
2025 3,988 
Thereafter 10,256 
Total lease payments34 30,503 
Less imputed interest 8,915 
Present value of future minimum lease payments$34 21,588 
Less operating lease liability, current portion3,126 
Operating lease liability, long-term portion$18,462 
The current portion of obligations under finance leases is included in accrued and other liabilities, and the long-term portion of finance leases is included in other liabilities within the condensed consolidated balance sheets.
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Royalty Commitments
The Board of Trustees of the Leland Stanford Junior University (“Stanford”)
In June 2014, the Company entered into a license agreement with Stanford (the “Stanford License”), which granted the Company an exclusive license to a patent relating to the diagnosis of rejection in organ transplant recipients using dd-cfDNA. Under the terms of the Stanford License, the Company is required to pay an annual license maintenance fee, six milestone payments and royalties in the low single digits of net sales of products incorporating the licensed technology.
Illumina
On May 4, 2018, the Company entered into a license agreement with Illumina (the “Illumina Agreement”). The Illumina Agreement requires the Company to pay royalties in the mid-single to low-double digits on sales of products covered by the Illumina Agreement.
Cibiltech Commitments
Pursuant to that certain license and commercialization agreement that the Company entered into with Cibiltech SAS (“Cibiltech”) effective April 30, 2019, the Company will share an agreed-upon percentage of revenue with Cibiltech, if and when revenues are generated from KidneyCare iBox.  
Other Commitments
Pursuant to the Illumina Agreement, the Company has agreed to minimum purchase commitments of finished products and raw materials from Illumina through 2023.
Litigation and Indemnification Obligations
In response to the Company's false advertising suit filed against Natera Inc. (“Natera”), on April 10, 2019, Natera filed a counterclaim against the Company on February 18, 2020, in the U.S. District Court for the District of Delaware (the “Court”) alleging the Company made false and misleading claims about the performance capabilities of AlloSure. The suit seeks injunctive relief and unspecified monetary relief. On September 30, 2020, Natera requested leave of Court to amend its counterclaims to include additional allegations regarding purportedly false claims the Company made with respect to AlloSure, and the Court granted Natera’s request. Trial is currently scheduled to begin on July 26, 2021.
In addition, in response to the Company's patent infringement suit filed against Natera on March 26, 2019, Natera filed suit against the Company on January 13, 2020 in the Court alleging, among other things, that AlloSure infringes Natera’s U.S. Patent 10,526,658. On March 25, 2020, Natera filed an amendment to the suit alleging, among other things, that AlloSure also infringes Natera’s U.S. Patent 10,597,724. The suit seeks a judgment that the Company has infringed Natera’s patents, an order preliminarily and permanently enjoining the Company from any further infringement of such patents and unspecified damages. The Company intends to defend both of these matters vigorously, and believes that the Company has good and substantial defenses to the claims alleged in the suits, but there is no guarantee that the Company will prevail. The Company has not recorded any liabilities for these suits.
From time to time, the Company may become involved in litigation and other legal actions. The Company estimates the range of liability related to any pending litigation where the amount and range of loss can be estimated. The Company records its best estimate of a loss when the loss is considered probable. Where a liability is probable and there is a range of estimated loss with no best estimate in the range, the Company records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the condensed consolidated financial statements indicates that it is probable that a liability had been incurred at the date of the condensed consolidated financial statements and (ii) the range of loss can be reasonably estimated.
10. 401(K) PLAN
The Company sponsors a 401(k) defined contribution plan covering all U.S. employees under the Internal Revenue Code of 1986, as amended. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. The Company incurred expenses related to contributions to the plan of $0.5 million and $0.3 million for the three months ended March 31, 2021 and 2020, respectively.
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11. WARRANTS
The Company issues common stock warrants in connection with debt or equity financings to lenders, placement agents and investors.  Issued warrants are considered standalone financial instruments and the terms of each warrant are analyzed for equity or liability classification in accordance with U.S. GAAP. Warrants that are classified as liabilities usually have various features that would require net-cash settlement by the Company. Warrants that are not liabilities, derivatives and/or meet the exception criteria are classified as equity. Warrants liabilities are remeasured at fair value at each period end with changes in fair value recorded in the condensed consolidated statements of operations until expired or exercised. Warrants that are classified as equity are valued at their relative fair value on the date of issuance, recorded in additional paid in capital and not remeasured.
In the three months ended March 31, 2021, there were no warrants exercised to purchase shares of common stock for cash proceeds.
In the three months ended March 31, 2020, warrants to purchase approximately 272,000 shares of common stock were exercised for cash payments of $0.3 million. During the three months ended March 31, 2020, a warrant to purchase approximately 34,000 shares of common stock was exercised on a cashless basis and approximately 24,000 shares were issued pursuant to the exercise.
As of March 31, 2021, outstanding warrants to purchase common stock were:
Classified asOriginal TermExercise PriceNumber of Shares Underlying Warrants
Original issue date:
April 2016Liability7 years$1.12 6,264 
6,264 

12. STOCK INCENTIVE PLANS
Stock Options and Restricted Stock Units (“RSU”)
The following table summarizes option and RSU activity under the Company’s 2014 Equity Incentive Plan, 2016 Inducement Equity Incentive Plan, and 2019 Inducement Equity Incentive Plan, and related information:
Shares
Available
for Grant
Stock
Options
Outstanding
Weighted-
Average
Exercise
Price
Number of
RSU Shares
Weighted-
Average
Grant Date
Fair Value
Balance—December 31, 2020672,968 2,670,398 $21.92 1,884,866 $28.42 
Additional shares authorized1,977,647 — — — — 
Common stock awards for services(1,339)— — — — 
RSUs granted(246,379)— — 246,379 82.62 
RSUs vested— — — (207,881)24.06 
Options granted(127,925)127,925 81.06 — — 
Options exercised— (139,579)13.99 — — 
Repurchase of common stock under employee incentive plans74,434 — — — — 
RSUs forfeited69,945 — — (69,945)29.32 
Options forfeited66,213 (66,213)25.70 — — 
Options expired250 (250)22.59 — — 
Balance—March 31, 20212,485,814 2,592,281 $25.17 1,853,419 $36.14 
The total intrinsic value of options exercised was $9.1 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively.
As of March 31, 2021, the total intrinsic value of outstanding RSUs was approximately $126.2 million and there were $50.7 million of unrecognized compensation costs related to RSUs, which are expected to be recognized over a weighted-average period of 1.91 years.
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Options outstanding that have vested and are expected to vest at March 31, 2021 are as follows:
Number of Shares Issued
(In thousands)
Weighted-Average
Exercise Price
Weighted-Average Remaining Contractual Life (Years)Aggregate Intrinsic Value
(In thousands)
Vested1,045 $16.09 6.54$54,318 
Expected to vest1,398 31.91 8.6852,508 
Total2,443 $106,826 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock at March 31, 2021 for stock options that were in-the-money.
The total fair value of options that vested during the three months ended March 31, 2021 was $2.7 million. As of March 31, 2021, there were approximately $25.2 million of unrecognized compensation costs related to stock options, which are expected to be recognized over a weighted-average period of 2.89 years.
2014 Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan (the “ESPP”), under which employees can purchase shares of its common stock based on a percentage of their compensation, but not greater than 15% of their respective earnings; provided, however, an eligible employee’s right to purchase shares of the Company’s common stock may not accrue at a rate which exceeds $25,000 of the fair market value of such shares for each calendar year in which such rights are outstanding. The ESPP has consecutive offering periods of approximately six months in length. The purchase price per share must be equal to the lower of 85% of the fair value of the common stock on the first day of the offering period or on the exercise date.
During the offering period in 2020 that ended on December 31, 2020, 24,052 shares were purchased for aggregate proceeds of $0.8 million from the issuance of shares, which occurred on January 4, 2021.  
Valuation Assumptions
The estimated fair values of employee stock options and ESPP shares were estimated using the Black-Scholes option pricing model based on the following weighted average assumptions:
Three Months Ended March 31,
20212020
Employee stock options
Expected term (in years)6.06.0
Expected volatility77.69%74.00%
Risk-free interest rate0.68%1.35%
Expected dividend yield