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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2014	Nov. 01, 2014
Document and Entity Information
Entity Registrant Name	VERACYTE, INC.
Entity Central Index Key	0001384101
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		22,506,605
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

CONDENSED BALANCE SHEETS - USD ($)	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 44,002,000	$ 71,220,000
Accounts receivable, net of allowance of $114 and $107 as of September 30, 2014 and December 31, 2013	1,180,000	1,143,000
Supplies inventory	3,350,000	2,567,000
Prepaid expenses and other current assets	1,711,000	1,477,000
Deferred tax asset	325,000
Restricted cash	100,000
Total current assets	50,668,000	76,407,000
Property and equipment, net	3,792,000	2,952,000
In-process research and development	16,000,000
Goodwill	1,057,000
Restricted cash	118,000	118,000
Other assets	179,000	153,000
Total assets	71,814,000	79,630,000
Current liabilities:
Accounts payable	8,587,000	5,294,000
Accrued liabilities	6,106,000	7,594,000
Deferred Genzyme co-promotion fee	1,897,000	2,500,000
Current portion of long-term debt	1,420,000
Total current liabilities	18,010,000	15,388,000
Long-term debt, net of current portion	3,587,000	4,899,000
Deferred tax liability	325,000
Deferred rent, net of current portion	186,000	286,000
Deferred Genzyme co-promotion fee, net of current portion	1,423,000	2,614,000
Total liabilities	23,531,000	23,187,000
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2014 and December 31, 2013,
Common stock, $0.001 par value; 125,000,000 shares authorized, 22,490,488 and 21,143,313 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	22,000	21,000
Additional paid-in capital	155,141,000	142,071,000
Accumulated deficit	(106,880,000)	(85,649,000)
Total stockholders' equity	48,283,000	56,443,000
Total liabilities and stockholders' equity	$ 71,814,000	$ 79,630,000

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
CONDENSED BALANCE SHEETS
Accounts receivable, allowance (in dollars)	$ 114	$ 107
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	22,490,488	21,143,313
Common stock, shares outstanding	22,490,488	21,143,313
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Revenue	$ 9,838	$ 5,594	$ 25,991	$ 15,046
Operating expenses:
Cost of revenue	4,168	3,132	11,741	9,136
Research and development	2,233	2,028	6,602	5,940
Selling and marketing	5,533	3,291	14,970	8,609
General and administrative	5,715	3,244	13,625	8,772
Total operating expenses	17,649	11,695	46,938	32,457
Loss from operations	(7,811)	(6,101)	(20,947)	(17,411)
Interest expense	(114)	(126)	(338)	(131)
Other income (expense), net	23	(76)	54	(2,146)
Net loss	(7,902)	(6,303)	(21,231)	(19,688)
Comprehensive loss	$ (7,902)	$ (6,303)	$ (21,231)	$ (19,688)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.37)	$ (6.59)	$ (0.99)	$ (22.87)
Shares used to compute net loss per common share, basic and diluted (in shares)	21,648,660	955,890	21,346,565	860,957

CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	Sep. 30, 2014	Sep. 30, 2013
Operating activities
Net loss	$ (21,231)	$ (19,688)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	833	717
Bad debt expense	67	184
Genzyme co-promotion fee amortization	(1,794)	(1,875)
Stock-based compensation	2,402	851
Amortization of debt discount and issuance costs	81	28
Interest on debt balloon payment	60	21
Change in value of preferred stock liability		2,070
Change in value of preferred stock warrant liability		77
Changes in operating assets and liabilities:
Accounts receivable	(104)	(329)
Supplies inventory	(783)	(342)
Prepaid expenses and current other assets	(552)	(2,183)
Other assets	(46)	32
Accounts payable	3,298	3,813
Accrued liabilities and deferred rent	(1,427)	763
Net cash used in operating activities	(19,196)	(15,861)
Investing activities
Purchases of property and equipment	(1,491)	(1,061)
Cash remitted for acquisition, net of cash received	(6,886)
Change in restricted cash	(100)	50
Net cash used in investing activities	(8,477)	(1,011)
Financing activities
Proceeds from the issuance of long-term debt, net of debt issuance costs		4,877
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		12,945
Commissions and issuance costs relating to the initial public offering	(129)
Proceeds from the exercise of common stock options	584	474
Net cash provided by financing activities	455	18,296
Net increase (decrease) in cash and cash equivalents	(27,218)	1,424
Cash and cash equivalents at beginning of period	71,220	14,002
Cash and cash equivalents at end of period	$ 44,002	$ 15,426

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Organization and Summary of Significant Accounting Policies

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Veracyte, Inc. (the “Company”) was incorporated in the state of Delaware on August 15, 2006 as Calderome, Inc. Calderome operated as an incubator until early 2008. On March 4, 2008, the Company changed its name to Veracyte, Inc. Veracyte is a diagnostics company pioneering the field of molecular cytology to improve patient outcomes and lower healthcare costs. The Company specifically targets diseases that often require invasive procedures for an accurate diagnosis - diseases where many healthy patients undergo costly interventions that ultimately prove unnecessary. The Company improves the accuracy of diagnosis at an earlier stage of patient care by deriving clinically actionable genomic information from cytology samples collected in an outpatient setting. The Company’s first commercial solution, the Afirma® Thyroid FNA Analysis, includes as its centerpiece the Gene Expression Classifier (“GEC”). The GEC helps physicians reduce the number of unnecessary surgeries by employing a proprietary 142-gene signature to preoperatively determine whether thyroid nodules previously classified by cytopathology as indeterminate can be reclassified as benign. The Company’s operations are based in South San Francisco, California and Austin, Texas, and it operates in one segment in the United States.

On September 16, 2014, the Company acquired Allegro Diagnostics Corp. (“Allegro”) via a merger with Full Moon Acquisition, Inc. (“Full Moon”), a wholly-owned subsidiary of the Company. Allegro was a privately-held company based in Maynard, Massachusetts, focused on the development of genomic tests to improve the preoperative diagnosis of lung cancer. Allegro merged with Full Moon (“Merger”) with Allegro surviving the Merger as a wholly-owned subsidiary of the Company. See Note 3.

Basis of Presentation

The accompanying interim period condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. The condensed consolidated financial statements include the accounts of the Company and Allegro. All intercompany accounts and transactions have been eliminated in consolidation. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of September 30, 2014, the condensed consolidated statements of operations and comprehensive loss and the condensed consolidated statements of cash flows for the three and nine months ended September 30, 2014 and 2013, are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. The condensed consolidated balance sheet at December 31, 2013 has been derived from audited financial statements. The results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results expected for the full fiscal year or any other period.

The accompanying interim period condensed consolidated financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Use of Estimates

The preparation of the unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates include: revenue recognition; contractual allowances; allowance for doubtful accounts; the useful lives of property and equipment; the recoverability of long-lived assets; the determination of fair value of the Company’s common stock prior to the Company’s initial public offering (“IPO”), stock options, preferred stock liability; income tax uncertainties, including a valuation allowance for deferred tax assets; and contingencies. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions.

Concentrations of Credit Risk and Other Risks and Uncertainties

The Company’s cash and cash equivalents are deposited with one major financial institution in the United States of America. Deposits in this institution may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Several of the components of the Company’s sample collection kit and test reagents are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solution, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results.

The Company is also subject to credit risk from its accounts receivable related to its sales of Afirma. The Company generally does not perform evaluations of customers’ financial condition and generally does not require collateral. All of the Company’s accounts receivables are derived from sales of Afirma in the United States and Canada.

Through September 30, 2014, all of the Company’s revenues are derived from the sale of Afirma. The Company’s solution to date has been delivered primarily to physicians in the United States. The Company’s significant third-party payers and their related revenue as a percentage of total revenue are as follows:

	Nine Months Ended September 30,
	2014	2013
Medicare	26%	33%
Aetna	11%	8%
United Healthcare	17%	17%
	54%	58%

Medicare revenues increased $1.8 million to $6.8 million in the nine months ended September 30, 2014 compared to $5.0 in the corresponding period in 2013. As the number of payers reimbursing for Afirma increases, the percentage of revenue derived from Medicare and other significant third-party payers has changed and will continue to change as a percentage of the Company’s total revenue.

Accounts receivable from Medicare amounted to 82% and 78% of accounts receivable as of September 30, 2014 and December 31, 2013. No other third-party payer represented more than 10% of the Company’s accounts receivable balances for these periods.

Cash and Cash Equivalents

Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of purchase. Cash equivalents consist primarily of amounts invested in money market accounts.

Restricted Cash

The Company reserved $100,000 in cash to cover liabilities associated with the Merger. This restricted cash is included in current assets on the Company’s condensed consolidated balance sheet.

The Company had long-term deposits of $118,000 as of September 30, 2014 and December 31, 2013, restricted from withdrawal and held by a bank in the form of collateral for letters of credit. The balance for each period consists of a letter of credit totaling $118,000 held as security for the lease of the Company’s office space in South San Francisco, California. This restricted cash is included in long-term assets on the Company’s condensed consolidated balance sheets.

Allowance for Doubtful Accounts

The Company estimates an allowance for doubtful accounts against its individual accounts receivable based on estimates of expected reimbursement consistent with historical payment experience in relation to the amounts billed. Bad debt expense is included in general and administrative expense on the Company’s statements of operations and comprehensive loss. Accounts receivable are written off against the allowance when there is substantive evidence that the account will not be paid. If the financial condition of the Company’s customers deteriorates, resulting in an impairment of their ability to make payment, additional allowances may be required.

The balance of allowance for doubtful accounts as of September 30, 2014 and December 31, 2013, including charges to bad debt expense and write-offs, net of recoveries, was as follows:

	September 30, 2014			December 31, 2013
	(In thousands)
Beginning balance	$	107		$	222
Charged to expense	67			109
Write-offs, net of recoveries	(60		)	(224		)
Ending balance	$	114		$	107

Supplies Inventory

Supplies inventory consists of test reagents and other consumables used in the sample collection kits and in cytopathology and GEC test processing and are valued at the lower of cost or market value. Cost is determined using actual costs on a first-in, first-out basis.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and five years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the term of the lease. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the statements of operations and comprehensive loss in the period realized.

Internal-use Software

The Company capitalizes costs incurred in the application development stage to design and implement the software used in the tracking and reporting of laboratory activity. Costs incurred in the development of application software are capitalized and amortized over an estimated useful life of three years on a straight line basis. The total cost, accumulated depreciation and net book value was $775,000, $291,000 and $484,000, respectively, as of September 30, 2014, and was $482,000, $195,000 and $287,000, respectively, as of December 31, 2013, and are included in property and equipment in the Company’s condensed consolidated balance sheets. During the nine months ended September 30, 2014 and 2013, the Company capitalized $293,000 and $211,000, respectively, of software development costs. Amortization expense totaled $32,000 and $96,000 in the three and nine months ended September 30, 2014, respectively, and $36,000 and $74,000 in the three and nine months ended September 30, 2013, respectively.

Business Combination

The Company accounts for acquisitions using the acquisition method of accounting which requires the recognition of tangible and identifiable intangible assets acquired and liabilities assumed at their estimated fair values as of the business combination date. The Company allocates any excess purchase price over the estimated fair value assigned to the net tangible and identifiable intangible assets acquired and liabilities assumed to goodwill. Transaction costs are expensed as incurred in general and administrative expenses. Results of operations and cash flows of acquired companies are included in the Company’s operating results from the date of acquisition.

Goodwill

Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate that it may be impaired. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company has determined that it operates in a single segment and has a single reporting unit associated with the development and commercialization of diagnostic products. In the event the Company determines that it is more likely than not the carrying value of the reporting unit is higher than its fair value, quantitative testing is performed comparing recorded values to estimated fair values. If impairment is present, the impairment loss is measured as the excess of the recorded goodwill over its implied fair value. The Company performs its annual evaluation of goodwill during the fourth quarter of each fiscal year.

Intangible Assets

The Company’s intangible assets are comprised of acquired in-process research and development (“IPR&D”). The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. IPR&D is not amortized but is tested for impairment annually or when events or circumstances indicate that the fair value may be below the carrying value of the asset. If and when development is complete, the associated assets would then be amortized over their estimated useful lives.

Impairment of Long-lived Assets

The Company annually reviews long-lived and indefinite lived assets other than goodwill for impairment or whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company recognizes an impairment loss when the total of estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. There were no impairments for the nine months ended September 30, 2014 and 2013.

Bonus Accruals

The Company accrues for liabilities under discretionary employee and executive bonus plans. These estimated compensation liabilities are based on progress against corporate objectives approved by the Board of Directors, compensation levels of eligible individuals, and target bonus percentage levels. The Board of Directors and the Compensation Committee of the Board of Directors review and evaluate the performance against these objectives and ultimately determine what discretionary payments are made. As of September 30, 2014 and December 31, 2013, the Company accrued $469,000 and $1.1 million, respectively, for liabilities associated with these employee and executive bonus plans which are included in accrued liabilities in the Company’s condensed consolidated balance sheets.

Fair Value of Financial Instruments

The carrying amounts of certain financial instruments including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their relatively short maturities.

Revenue Recognition

The Company’s revenue is generated from the provision of diagnostic services using the Afirma solution. The Company’s service is completed upon the delivery of test results to the prescribing physician which triggers the billing for the service. The Company recognizes revenue related to billings for Medicare and commercial carriers on an accrual basis, net of contractual adjustments, when there is an agreement or a predictable pattern of collectability. Until a contract or agreement has been negotiated with a commercial carrier or governmental program, the Afirma solution may or may not be covered by these entities’ existing reimbursement policies. In addition, patients do not enter into direct agreements with the Company that commit them to pay any portion of the cost of the tests in the event that their insurance declines to reimburse the Company.

For all services performed, the Company considers whether or not the following revenue recognition criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the fee is fixed or determinable; and collectability is reasonably assured.

Persuasive evidence of an arrangement exists and delivery is deemed to have occurred upon delivery of a patient report to the prescribing physician. The assessment of the fixed or determinable nature of the fees charged for diagnostic testing performed and the collectability of those fees require significant judgment by management. Management believes that these two criteria have been met when there is a contracted reimbursement rate and/or a predictable pattern of collectability with individual third-party payers and, accordingly, recognizes revenue upon delivery of the patient report. Some patients have out-of-pocket costs for amounts not covered by their insurance carrier, and the Company may bill the patient directly for these amounts in the form of co-payments and co-insurance in accordance with their insurance carrier and health plans. Some payers may not cover the Company’s GEC as ordered by the prescribing physician under their reimbursement policies. The Company pursues reimbursement from such patients on a case-by-case basis.

In the absence of contracted reimbursement or a predictable pattern and history of collectability, the Company believes that the fee is fixed or determinable and collectability is reasonably assured only upon receipt of third-party payer notification of payment or when cash is received and, accordingly, recognizes revenue at that time.

Cost of Revenue

Cost of revenue is expensed as incurred and includes material and service costs, cytopathology testing services performed by a third-party pathology group, stock-based compensation expense, direct labor costs, equipment and infrastructure expenses associated with testing samples, shipping charges to transport samples, and allocated overhead including rent, information technology, equipment depreciation and utilities.

Research and Development

Research and development costs are charged to operations as incurred. Research and development costs include, but are not limited to, payroll and personnel-related expenses, stock-based compensation expense, prototype materials, laboratory supplies, consulting costs, costs associated with setting up and conducting clinical studies at domestic and international sites, and allocated overhead including rent, information technology, equipment depreciation and utilities.

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. The Company’s assessment of an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit may change as new information becomes available.

Stock-based Compensation

Stock-based compensation expense for equity instruments issued to employees is measured based on the grant-date fair value of the awards. The fair value of each employee stock option is estimated on the date of grant using the Black-Scholes option-pricing model. The Company recognizes compensation costs on a straight-line basis for all employee stock based compensation awards that are expected to vest over the requisite service period of the awards, which is generally the awards’ vesting period. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Equity awards issued to non-employees are valued using the Black-Scholes option-pricing model and are subject to remeasurement as the underlying equity awards vest.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. Potentially dilutive securities consisting of convertible preferred stock and options to purchase common stock are considered to be common stock equivalents and were excluded from the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for the Company in the first quarter of fiscal 2017. The Company has not yet selected a transition method and is currently evaluating the potential effect of the updated standard on its financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU provide guidance on the financial statements presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company adopted this guidance during the first quarter of 2014 and such adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Net Loss Per Common Share

9 Months Ended

Sep. 30, 2014

Net Loss Per Common Share

Net Loss Per Common Share

2. Net Loss Per Common Share

The following table presents the calculation of basic and diluted net loss per common share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except share and per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(7,902	)	$	(6,303	)	$	(21,231	)	$	(19,688	)
Shares used to compute net loss per common share, basic and diluted	21,648,660			955,890			21,346,565			860,957
Net loss per common share, basic and diluted	$	(0.37	)	$	(6.59	)	$	(0.99	)	$	(22.87	)

The following outstanding shares of common stock equivalents have been excluded from diluted net loss per common share for the nine months ended September 30, 2014 and 2013 because their inclusion would be anti-dilutive:

	Nine Months Ended September 30,
	2014	2013
Shares of common stock issuable upon conversion of preferred stock	—	14,997,312
Shares of common stock subject to outstanding options	3,090,577	2,355,579
Warrants to purchase convertible preferred stock	—	24,801
Total shares of common stock equivalents	3,090,577	17,377,692

Business Combination

9 Months Ended

Sep. 30, 2014

Business Combination

Business Combination

3. Business Combination

On September 16, 2014, the Company acquired Allegro via a merger with Full Moon, a wholly-owned subsidiary of the Company. Allegro was a privately-held company based in Maynard, Massachusetts, focused on the development of genomic tests to improve the preoperative diagnosis of lung cancer. Allegro merged with Full Moon with Allegro surviving the Merger as a wholly-owned subsidiary of the Company. At the effective time of the Merger, each share of the common stock of Full Moon issued and outstanding immediately prior to the effective time of the Merger was automatically converted into one share of common stock of Allegro and represented the only outstanding common stock of Allegro at the effective time of the Merger; all previously issued and outstanding shares of common stock of Allegro were canceled. The Series A preferred stock of Allegro issued and outstanding immediately prior to the effective time of the Merger was canceled and automatically converted into the right to receive a total of 964,377 shares of the Company’s common stock and $2.7 million in cash. Outstanding indebtedness of Allegro totaling $4.3 million was settled in cash by the Company on the effective date of the Merger. All outstanding stock options under Allegro’s equity incentive plan were canceled.

The acquisition of Allegro is expected to accelerate the Company’s molecular diagnostics business into the pulmonology diagnostics market. Allegro’s lung cancer test is designed to help physicians determine which patients with lung nodules who have had a non-diagnostic bronchoscopy result are at low risk for cancer and can thus be safely monitored with CT scans rather than undergoing invasive procedures.

The Merger was accounted for using the acquisition method of accounting with the Company treated as the accounting acquirer. The purchase price was preliminarily allocated based on the estimated fair value of the assets acquired and liabilities assumed at the date of the acquisition. The preliminary purchase price allocation is subject to further refinement and may require adjustments, such as adjustments related to working capital, to arrive at the final purchase price allocation. The Company expects the purchase price allocation to be completed within six months of the acquisition date.

The Company incurred approximately $500,000 in acquisition-related costs related to the Merger, which primarily consisted of legal, accounting and valuation-related expenses. In addition, the Company incurred $1.2 million related to transaction bonuses and severance payments to former Allegro employees associated with the Merger. These expenses were recorded in general and administrative expense in the accompanying condensed consolidated statements of operations and comprehensive loss. Total expenses and net loss associated with the acquired Allegro business in the Company’s condensed consolidated statements of operations and comprehensive loss were not separately identifiable due to the integration with the Company’s operations.

The acquisition consideration was comprised of (in thousands):

Stock	$	10,078
Cash	2,725
Payment of outstanding indebtedness	4,290
Total acquisition consideration	$	17,093

The stock consideration of $10.1 million was determined based on the closing price of the Company’s common stock on September 16, 2014 ($10.45 per share).

The fair value of the assets acquired and liabilities assumed at the closing date of the Merger are summarized below (in thousands):


Cash and cash equivalents	$	29
Prepaid expenses	3
Other current assets	13
In-process research and development	16,000
Goodwill	1,057
Accrued liabilities	(9		)
Total net assets acquired	$	17,093

The fair value of IPR&D was determined using the multi-period excess earnings method of the income approach, which estimates the economic benefits of the IPR&D over multiple time periods by identifying the cash flows associated with the use of the asset, based on forecasts prepared by management, and deducting a periodic charge reflecting a fair return for the use of contributory assets. The forecasted cash flows were discounted based on a discount rate of 18.5%. The discount rate represents the Company’s weighted average return on assets and was benchmarked against the internal rate of return and cost of capital of guideline publicly traded companies. The fair value of the IPR&D was capitalized as of the closing date of the Merger and is subsequently accounted for as an indefinite-lived intangible asset, tested for impairment at least annually, until completion or abandonment of the associated research and development efforts. Once complete, amortization of the acquired IPR&D asset into earnings will commence. The Company estimates that the acquired IPR&D asset will have a useful life of less than 20 years after taking into consideration expected use of the asset, legal or regulatory provisions that may limit or extend the life of the asset, as well as the effects of obsolescence and other economic factors.

Goodwill, which represents the purchase price in excess of the fair value of net assets acquired, is not expected to be deductible for income tax purposes. This goodwill is reflective of the value derived from the expected acceleration of the Company’s entry into the pulmonology market.

Pro Forma Financial Information (Unaudited)

The following pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the Merger had occurred as of January 1, 2013 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013

Revenue	$	9,838	$	5,594	$	25,991	$	15,046
Net loss	$	(6,454)	$	(8,218)	$	(20,948)	$	(23,022)

The pro forma results present the combined historical results of operations with adjustments to reflect one-time charges including:

The reversal of costs related to transaction bonuses and other payments to employees and acquisition-related expenses directly related to the Merger of $2.2 million for the three months and the nine months ended September 30, 2014; and

The elimination of interest expense related to Allegro indebtedness of $228,000 and $2.3 million for the three and nine month periods ended September 30, 2014, respectively, and $198,000 and $4.5 million for the three and nine months ended September 30, 2013, respectively.

The pro forma information presented does not purport to present what the actual results would have been had the Merger actually occurred on January 1, 2013, nor is the information intended to project results for any future period.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Accrued Liabilities

9 Months Ended

Sep. 30, 2014

Accrued Liabilities.

Accrued Liabilities

4. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	September 30, 2014		December 31, 2013
Accrued compensation expenses	$	1,482	$	1,962
Accrued Genzyme co-promotion fees	3,211		4,915
Accrued other	1,413		717
Accrued liabilities	$	6,106	$	7,594

Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Measurements

Fair Value Measurements

5. 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. The carrying value of debt approximates its fair value because the interest rate approximates market rates that the Company could obtain for debt with similar terms. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. 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 I: Inputs which include quoted prices in active markets for identical assets and liabilities.

Level II: Inputs other than Level I 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 III: 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 fair value of the Company’s financial assets, which consist only of money market funds, was $42.6 million and $70.0 million as of September 30, 2014 and December 31, 2013, respectively, and are Level I assets as described above.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies

Commitments and Contingencies

6. Commitments and Contingencies

Operating Leases

The Company leases its headquarters and South San Francisco laboratory facilities under a non-cancelable lease agreement that expires March 31, 2016. The Company provided security deposits in the form of irrevocable standby letters of credit secured with restricted cash deposits at the Company’s primary bank. The Company deposited $118,000 in restricted cash accounts as collateral for the lease which is included in restricted cash in the Company’s condensed consolidated balance sheets as of September 30, 2014 and December 31, 2013.

The Company also leases laboratory space in Austin, Texas. The lease expires on July 31, 2018. The Company provided a cash security deposit of $75,000, which is included in other assets in the Company’s balance sheet as of September 30, 2014 and December 31, 2013.

Future minimum lease payments under non-cancelable operating leases as of September 30, 2014 are as follows (in thousands):

Year Ending December 31,	Amount
October through December 31, 2014	$	237
2015	989
2016	413
2017	222
2018	130
Total minimum lease payments	$	1,991

The Company recognizes rent expense on a straight-line basis over the non-cancelable lease period. Facilities rent expense was $213,000 and $214,000 for the three months ended September 30, 2014 and 2013, respectively, and $639,000 and $658,000 for the nine months ended September 30, 2014 and 2013, respectively.

Volume Purchase Agreement

The Company had non-cancelable purchase obligations to contract manufacturers and suppliers for approximately $64,000 at September 30, 2014, all of which is estimated to be payable before December 31, 2014.

Contingencies

From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. The Company believes there is no litigation pending that could have, individually or in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows.

Debt

9 Months Ended

Sep. 30, 2014

Debt

Debt

7. Debt

In June 2013, the Company entered into a loan and security agreement with a financial institution to fund its working capital and other general corporate needs. The agreement provided for term loans of $10.0 million in aggregate. The Company drew down $5.0 million in funds under the agreement in June 2013, and did not draw the remaining $5.0 million on or before the expiration date of March 31, 2014. The carrying value of the debt approximates its fair value because the interest rate approximates market rates that the Company could obtain for debt with similar terms. The Company’s long-term debt obligation is a Level III liability. Level III inputs include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. The Company is required to repay the outstanding principal in 30 equal installments beginning 18 months after the date of the borrowing and is due in full in June 2017. The loan bears interest at a rate of 6.06% per annum. The loan carries prepayment penalties of 2.25% and 1.5% for prepayment within one and two years, respectively, of the loan origination and 0.75% thereafter.

As of September 30, 2014 and December 31, 2013, the net debt obligation was as follows (in thousands):

	September 30, 2014			December 31, 2013
Debt and unpaid accrued end-of-term payment	$	5,102		$	5,042
Unamortized note discount	(95		)	(143		)
Net debt obligation	$	5,007		$	4,899
Current portion of long-term debt	$	1,420		$	—
Long-term debt, net of current portion	$	3,587		$	4,899

The obligation includes an end-of-term payment of $223,000, representing 4.45% of the total outstanding principal balance, which accretes over the life of the loan as interest expense. As a result of the debt discount and the end-of-term payment, the effective interest rate for the loan differs from the contractual rate.

Interest expense on the debt was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Nominal interest	$	78	$	78	$	230	$	81
Amortization of debt discount	16		16		48		17
End of term payment interest	20		20		60		21
Total	$	114	$	114	$	338	$	119

The Company’s obligations under the loan and security agreement are secured by a security interest in substantially all of its assets, excluding its intellectual property and certain other assets. The loan and security agreement contains customary conditions related to borrowing, events of default, and covenants, including covenants limiting the Company’s ability to dispose of assets, undergo a change in control, merge with or acquire other entities, incur debt, incur liens, pay dividends or other distributions to holders of its capital stock, repurchase stock and make investments, in each case subject to certain exceptions. The agreement also allows the lender to call the debt in the event there is a material adverse change in the Company’s business or financial condition. There are no financial covenants in the loan and security agreement.

Convertible Preferred Stock Warrant	9 Months Ended
Convertible Preferred Stock Warrant	Sep. 30, 2014
Convertible Preferred Stock Warrant
Convertible Preferred Stock Warrant	8. Convertible Preferred Stock Warrant In June 2013, in conjunction with the execution of the loan and security agreement, as discussed in Note 7, the Company issued to the lender a warrant to purchase up to 49,602 shares of Series C convertible preferred stock with an exercise price of $7.56 per share. Upon the draw down of the $5.0 million term loan, the related warrant became exercisable for 24,801 shares. In November 2013, in connection with the Company’s IPO, the warrant automatically became exercisable for 24,801 shares of common stock at an exercise price of $7.56 per share. The lender exercised the warrant with respect to 24,801 shares through a cashless exercise in March 2014, resulting in the issuance of 13,739 shares of the Company’s common stock.

Stockholders' Equity (Deficit)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity

Stockholders' Equity

9. Stockholders’ Equity

Common Stock

The Company’s Restated Certificate of Incorporation authorizes the Company to issue 125,000,000 shares of common stock with a par value of $0.001 per share. The holder of each share of common stock shall have one vote for each share of stock. The common stockholders are also entitled to receive dividends whenever funds and assets are legally available and when declared by the Board of Directors, subject to the prior rights of holders of all series of convertible preferred stock outstanding. No dividends have been declared as of September 30, 2014.

As of September 30, 2014 and December 31, 2013, the Company had reserved shares of common stock for issuance as follows:

	September 30, 2014	December 31, 2013
Options issued and outstanding	3,090,577	2,359,287
Options available for grant under stock option plans	1,533,190	1,787,802
Common stock warrants issued and outstanding	—	24,801
Total	4,623,767	4,171,890

Preferred Stock

The Company’s Restated Certificate of Incorporation authorizes the Company to issue 5,000,000 shares of preferred stock with a par value of $0.001 per share. No shares were issued and outstanding at September 30, 2014 or December 31, 2013.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Stock Incentive Plans

9 Months Ended

Sep. 30, 2014

Stock Incentive Plans

Stock Incentive Plans

10. Stock Incentive Plans

The following table summarizes activity under the Company’s stock option plans (aggregate intrinsic value in thousands):

	Shares Available for Grant		Stock Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance - December 31, 2013	1,787,802		2,359,287		$	3.07	7.84	$	26,964
Additional options authorized	845,732		—
Granted	(1,248,342	)	1,248,342		14.47
Canceled	147,998		(147,998	)	8.21
Exercised	—		(369,054	)	1.59
Balance - September 30, 2014	1,533,190		3,090,577		$	7.61	8.06	$	12,370
Options exercisable - September 30, 2014			1,766,445		$	3.19	7.08	$	11,678
Options vested and expected to vest - September 30, 2014			2,948,498		$	7.32	8.00	$	12,296

The aggregate intrinsic value was calculated as the difference between the exercise price of the options to purchase common stock and the fair market value of the Company’s common stock of $9.75 per share as of September 30, 2014.

Outstanding and exercisable stock options at September 30, 2014 are summarized as follows:

	Options Outstanding		Options Vested and Exercisable
Exercise Price	Number	Weighted-Average Remaining Contractual Life (in Years)	Number	Weighted-Average Remaining Contractual Life (in Years)
$0.08	47,750	3.88	47,750	3.88
$0.80	131,514	5.45	131,514	5.45
$2.36	342,267	6.10	333,541	6.10
$2.40	153,469	4.89	139,821	4.69
$2.68	549,014	7.50	520,942	7.50
$4.00	426,514	8.28	390,744	8.28
$6.04	195,082	8.71	165,105	8.71
$7.92	9,000	8.95	2,438	8.95
$10.45	75,000	9.96	—	—
$12.06	22,300	9.95	—	—
$12.12	39,625	9.01	34,590	9.01
$12.64-18.24	1,099,042	9.48	—	—
$0.08-18.24	3,090,577	8.06	1,766,445	7.08

The weighted-average fair value of stock options granted was $9.74 and $3.73 per share for the nine months ended September 30, 2014 and 2013, respectively.

The weighted-average fair value of stock options vested was $2.84 and $2.24 per share for the nine months ended September 30, 2014 and 2013, respectively. The aggregate estimated grant date fair value of employee options to purchase common stock vested during the nine months ended September 30, 2014 and 2013 was $1.1 million and $1.2 million, respectively.

The weighted-average fair value of stock options exercised was $1.06 and $0.98 per share for the nine months ended September 30, 2014 and 2013, respectively. The intrinsic value of stock options exercised was $3.0 million and $3.5 million for the nine months ended September 30, 2014 and 2013, respectively.

Stock-based Compensation

The following table summarizes stock-based compensation expense related to stock options for the three and nine months ended September 30, 2014 and 2013, and are included in the unaudited statements of operations and comprehensive loss as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenue	$	17	$	10	$	40	$	23
Research and development	184		67		446		170
Selling and marketing	200		46		485		123
General and administrative	634		238		1,431		535
Total	$	1,035	$	361	$	2,402	$	851

As of September 30, 2014, the Company had $10.0 million of unrecognized compensation expense related to unvested stock options, which is expected to be recognized over an estimated weighted-average period of 3.2 years.

The estimated grant date fair value of employee stock options was calculated using the Black-Scholes option-pricing model, based on the following assumptions:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Weighted-average volatility	72.84-75.29%	80.57%	72.84-78.54%	80.42 - 81.41%
Weighted-average expected term (years)	6.08	6.08	5.50-6.08	5.0 - 6.08
Risk-free interest rate	1.87-2.04%	2.11%	1.66-2.04%	0.88 - 2.11%
Expected dividend yield	0%	0%	0%	0%

Stock-based compensation related to stock options granted to non-employees is recognized as the stock options are earned. The fair value of the stock options granted is calculated at each reporting date using the Black-Scholes option-pricing model with the following assumptions: expected life is equal to the remaining contractual term of the award as of the measurement date ranging from 8.18 years to 9.01 years as of September 30, 2014 and 7.97 years to 9.18 years as of September 30, 2013; risk free rate is based on the U.S. Treasury Constant Maturity rate with a term similar to the expected life of the option at the measurement date ranging from 2.34% to 2.42% as of September 30, 2014 and 2.22% to 2.47% as of September 30, 2013; expected dividend yield of 0%; and volatilities ranging from 73.24% to 73.96% as of September 30, 2014 and 78.81% to 79.54% as of September 30, 2013.

Genzyme Co-promotion Agreement

9 Months Ended

Sep. 30, 2014

Genzyme Co-promotion Agreement

Genzyme Co-promotion Agreement

11. Genzyme Co-promotion Agreement

In January 2012, the Company and Genzyme Corporation (“Genzyme”) executed a co-promotion agreement for the co-exclusive rights and license to promote and market the Company’s Afirma thyroid diagnostic solution in the United States and in 40 named countries. In exchange, the Company received a $10.0 million upfront co-promotion fee from Genzyme in February 2012. The Company may receive an additional $3.0 million in payments, $600,000 for each country outside of the United States in which the Company obtains marketing authorization and achieves a specified level of reimbursement, for up to five countries. Under the terms of the agreement, Genzyme will receive a percentage of cash receipts that the Company has received related to Afirma as co-promotion fees. The percentage was 50% in 2012, 40% from January 2013 through February 2014, and 32% beginning in March 2014 and thereafter. Genzyme will also spend up to $500,000 for qualifying clinical development activities in countries that require additional testing for approval. This obligation expired in July 2014. The agreement expires in January 2027 and either party may terminate the agreement at any time and with six months prior notice.

On August 12, 2014, the Company signed a binding Letter of Agreement with Genzyme to amend the co-promotion agreement. Under the amendment, the co-promotion fees Genzyme would receive as a percentage of U.S. cash receipts would be reduced from 32% to 15% beginning January 1, 2015, and the earliest either party could terminate the agreement for convenience would be June 30, 2016. The Company entered into an Amended and Restated U.S. Co-Promotion Agreement with Genzyme in November 2014, which will be effective on January 1, 2015. See Note 14. Through August 11, 2014, the Company amortized the $10.0 million upfront co-promotion fee over a four-year period, which was management’s best estimate of the life of the agreement, in part because after that period either party could terminate the agreement without penalty. Effective August 12, 2014, the Company extended the amortization period from January 2016 to June of 2016, the modified earliest period either party may terminate the agreement without penalty. The Company accounted for the change in accounting estimate prospectively.

The Company incurred $3.2 million and $2.3 million in co-promotion expense in the three months ended September 30, 2014 and 2013, respectively, and $8.7 million and $6.0 million in the nine months ended September 30, 2014 and 2013, respectively, which is included in selling and marketing expenses in the condensed consolidated statements of operations and comprehensive loss. The Company’s outstanding obligation to Genzyme totaled $8.7 million and $6.7 million at September 30, 2014 and December 31, 2013, respectively. Of the $8.7 million obligation at September 30, 2014, $5.5 million is included in accounts payable and $3.2 million is included in accrued liabilities in the Company’s condensed consolidated balance sheets. Of the $6.7 million obligation at December 31, 2013, $1.8 million is included in accounts payable and $4.9 million is included in accrued liabilities in the Company’s condensed consolidated balance sheets.

The Company amortized $544,000 and $625,000 of the $10.0 million up-front co-promotion fee in the three months ended September 30, 2014 and 2013, respectively, and $1.8 million and $1.9 million in the nine months ended September 30, 2014 and 2013, respectively, which is reflected as a reduction to selling and marketing expenses in the statements of operations and comprehensive loss. The unamortized balance of the co-promotion fee is reflected on the Company’s condensed consolidated balance sheets as follows (in thousands):

	September 30, 2014		December 31, 2013
Current liabilities:
Deferred Genzyme co-promotion fee	$	1,897	$	2,500
Long-term liabilities:
Deferred Genzyme co-promotion fee, net of current portion	1,423		2,614
Total	$	3,320	$	5,114

Thyroid Cytology Partners	9 Months Ended
Thyroid Cytology Partners	Sep. 30, 2014
Thyroid Cytology Partners.
Thyroid Cytology Partners	12. Thyroid Cytology Partners In 2010, the Company entered into an arrangement with Pathology Resource Consultants, P.A. (“PRC”) to set up and manage a specialized pathology practice to provide testing services to the Company. There is no direct monetary compensation from the Company to PRC as a result of this arrangement. The Company’s service agreement is with the specialized pathology practice, Thyroid Cytopathology Partners (“TCP”), and is effective through December 31, 2015, unless terminated earlier, and renews annually thereafter. Under the service agreement, Veracyte pays TCP based on a fixed price per test schedule, which is reviewed periodically for changes in market pricing. Subsequent to December 2012, an amendment to the service agreement allows TCP to use a portion of Veracyte’s facility in Austin, Texas. The Company does not have an ownership interest in or provide any form of financial or other support to TCP. The Company has concluded that TCP represents a variable interest entity and that the Company is not the primary beneficiary as it does not have the ability to direct the activities that most significantly impact TCP’s economic performance. Therefore, the Company does not consolidate TCP. All amounts paid to TCP under the service agreement are expensed as incurred and included in cost of revenue in the condensed consolidated statements of operations and comprehensive loss. The Company incurred $978,000 and $816,000 in cytopathology testing and evaluation services expenses with TCP in the three months ended September 30, 2014 and 2013, respectively, and $2.8 million and $2.3 million in the nine months ended September 30, 2014 and 2013, respectively. The Company’s outstanding obligations to TCP for cytopathology testing services were $669,000 and $588,000 as of September 30, 2014 and December 31, 2013, respectively, and are included in accounts payable in the Company’s condensed consolidated balance sheets. TCP reimburses the Company for a proportionate share of the Company’s rent and related operating expense costs for the leased facility. TCP’s portion of rent and related operating expense costs for the shared space at the Austin, Texas facility was $22,000 and $63,000 for the three and nine months ended September 30, 2014, respectively, and $16,000 and $20,000 for the three and nine months ended September 30, 2013, respectively, and is included in other income (expense) in the Company’s statements of operations and comprehensive loss.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2014
Income Taxes
Income Taxes	13. Income Taxes The Company did not record a provision or benefit for income taxes during the three and nine months ended September 30, 2014 and 2013, respectively. The Company continues to maintain a valuation allowance for its U.S. federal and state deferred tax assets. At September 30, 2014, the Company had $1.3 million of unrecognized tax benefits, none of which, if recognized, would affect the effective tax rate as most of the unrecognized tax benefit is deferred tax assets currently offset by a valuation allowance. The Company has not recognized any interest and penalties related to uncertain tax positions as part of the income tax provision. The Company files annual income tax returns in the United States only. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular position could require the use of cash. As of September 30, 2014, changes to the Company’s uncertain tax positions in the next twelve months that are reasonably possible are not expected to have a significant impact on the Company’s financial position or results of operations.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2014
Subsequent Events.
Subsequent Events	14. Subsequent Events Amended and Restated Genzyme Co-promotion Agreement On November 7, 2014, the Company entered into an Amended and Restated U.S. Co-Promotion Agreement (“Amended Agreement”) with Genzyme. Under the Amended Agreement, the co-promotion fees Genzyme will receive as a percentage of U.S. cash receipts will be reduced from 32% to 15% beginning January 1, 2015, and the earliest either party can terminate the agreement for convenience is June 30, 2016.

Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Organization and Summary of Significant Accounting Policies

Basis of Presentation

Use of Estimates

Concentrations of Credit Risk and Other Risks and Uncertainties

	Nine Months Ended September 30,
	2014	2013
Medicare	26%	33%
Aetna	11%	8%
United Healthcare	17%	17%
	54%	58%

Cash and Cash Equivalents

Restricted Cash

The Company reserved $100,000 in cash to cover liabilities associated with the Merger. This restricted cash is included in current assets on the Company’s condensed consolidated balance sheet.

Allowance for Doubtful Accounts

The balance of allowance for doubtful accounts as of September 30, 2014 and December 31, 2013, including charges to bad debt expense and write-offs, net of recoveries, was as follows:

	September 30, 2014			December 31, 2013
	(In thousands)
Beginning balance	$	107		$	222
Charged to expense	67			109
Write-offs, net of recoveries	(60		)	(224		)
Ending balance	$	114		$	107

Supplies Inventory

Property and Equipment

Internal-use Software

Business Combinations

Business Combination

Goodwill

Intangible Assets

Impairment of Long-lived Assets

Bonus Accruals

Fair Value of Financial Instruments

Revenue Recognition

Cost of Revenue

Research and Development

Income Taxes

Stock-based Compensation

Equity awards issued to non-employees are valued using the Black-Scholes option-pricing model and are subject to remeasurement as the underlying equity awards vest.

Net Loss per Common Share

Recent Accounting Pronouncements

Organization and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Organization and Summary of Significant Accounting Policies

Schedule of the Company's significant third-party payers and their related revenue as a percentage of total revenue

	Nine Months Ended September 30,
	2014	2013
Medicare	26%	33%
Aetna	11%	8%
United Healthcare	17%	17%
	54%	58%

Schedule of balance of allowance for doubtful accounts, including charges to bad debt expense and write-offs, net of recoveries

	September 30, 2014			December 31, 2013
	(In thousands)
Beginning balance	$	107		$	222
Charged to expense	67			109
Write-offs, net of recoveries	(60		)	(224		)
Ending balance	$	114		$	107

Net Loss Per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Net Loss Per Common Share

Schedule of the calculation of basic and diluted net loss per common share

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net loss	$	(7,902	)	$	(6,303	)	$	(21,231	)	$	(19,688	)
Shares used to compute net loss per common share, basic and diluted	21,648,660			955,890			21,346,565			860,957
Net loss per common share, basic and diluted	$	(0.37	)	$	(6.59	)	$	(0.99	)	$	(22.87	)

Schedule of outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share

	Nine Months Ended September 30,
	2014	2013
Shares of common stock issuable upon conversion of preferred stock	—	14,997,312
Shares of common stock subject to outstanding options	3,090,577	2,355,579
Warrants to purchase convertible preferred stock	—	24,801
Total shares of common stock equivalents	3,090,577	17,377,692

Business Combination (Tables)

9 Months Ended

Sep. 30, 2014

Business Acquisition [Line Items]

Schedule of pro forma financial information as if the Merger had occurred as of January1, 2013

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013

Revenue	$	9,838	$	5,594	$	25,991	$	15,046
Net loss	$	(6,454)	$	(8,218)	$	(20,948)	$	(23,022)

Allegro

Business Acquisition [Line Items]

Schedule of acquisition consideration

The acquisition consideration was comprised of (in thousands):


Stock	$	10,078
Cash	2,725
Payment of outstanding indebtedness	4,290
Total acquisition consideration	$	17,093

Schedule of fair value of assets acquired and liabilities assumed

The fair value of the assets acquired and liabilities assumed at the closing date of the Merger are summarized below (in thousands):


Cash and cash equivalents	$	29
Prepaid expenses	3
Other current assets	13
In-process research and development	16,000
Goodwill	1,057
Accrued liabilities	(9		)
Total net assets acquired	$	17,093

Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Accrued Liabilities.

Schedule of accrued liabilities

Accrued liabilities consist of the following (in thousands):

	September 30, 2014		December 31, 2013
Accrued compensation expenses	$	1,482	$	1,962
Accrued Genzyme co-promotion fees	3,211		4,915
Accrued other	1,413		717
Accrued liabilities	$	6,106	$	7,594

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies

Schedule of future minimum lease payments under non-cancelable operating leases

Future minimum lease payments under non-cancelable operating leases as of September 30, 2014 are as follows (in thousands):

Year Ending December 31,	Amount
October through December 31, 2014	$	237
2015	989
2016	413
2017	222
2018	130
Total minimum lease payments	$	1,991

Debt (Tables)

9 Months Ended

Sep. 30, 2014

Debt

Schedule of net debt obligation

As of September 30, 2014 and December 31, 2013, the net debt obligation was as follows (in thousands):

	September 30, 2014			December 31, 2013
Debt and unpaid accrued end-of-term payment	$	5,102		$	5,042
Unamortized note discount	(95		)	(143		)
Net debt obligation	$	5,007		$	4,899
Current portion of long-term debt	$	1,420		$	—
Long-term debt, net of current portion	$	3,587		$	4,899

Schedule of interest expense on debt

Interest expense on the debt was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Nominal interest	$	78	$	78	$	230	$	81
Amortization of debt discount	16		16		48		17
End of term payment interest	20		20		60		21
Total	$	114	$	114	$	338	$	119

Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity

Schedule of reserved shares of common stock for issuance

	September 30, 2014	December 31, 2013
Options issued and outstanding	3,090,577	2,359,287
Options available for grant under stock option plans	1,533,190	1,787,802
Common stock warrants issued and outstanding	—	24,801
Total	4,623,767	4,171,890

Stock Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2014

Stock incentive plans

Summary of activity under the Company's stock option plans

The following table summarizes activity under the Company’s stock option plans (aggregate intrinsic value in thousands):

	Shares Available for Grant		Stock Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance - December 31, 2013	1,787,802		2,359,287		$	3.07	7.84	$	26,964
Additional options authorized	845,732		—
Granted	(1,248,342	)	1,248,342		14.47
Canceled	147,998		(147,998	)	8.21
Exercised	—		(369,054	)	1.59
Balance - September 30, 2014	1,533,190		3,090,577		$	7.61	8.06	$	12,370
Options exercisable - September 30, 2014			1,766,445		$	3.19	7.08	$	11,678
Options vested and expected to vest - September 30, 2014			2,948,498		$	7.32	8.00	$	12,296

Summary of outstanding and exercisable stock options

	Options Outstanding		Options Vested and Exercisable
Exercise Price	Number	Weighted-Average Remaining Contractual Life (in Years)	Number	Weighted-Average Remaining Contractual Life (in Years)
$0.08	47,750	3.88	47,750	3.88
$0.80	131,514	5.45	131,514	5.45
$2.36	342,267	6.10	333,541	6.10
$2.40	153,469	4.89	139,821	4.69
$2.68	549,014	7.50	520,942	7.50
$4.00	426,514	8.28	390,744	8.28
$6.04	195,082	8.71	165,105	8.71
$7.92	9,000	8.95	2,438	8.95
$10.45	75,000	9.96	—	—
$12.06	22,300	9.95	—	—
$12.12	39,625	9.01	34,590	9.01
$12.64-18.24	1,099,042	9.48	—	—
$0.08-18.24	3,090,577	8.06	1,766,445	7.08

Schedule of assumptions used to calculate estimated grant date fair value of employee stock options using the Black-Scholes option-pricing valuation model

	Three Months Ended September 30,		Nine Months Ended September 30,
	2014	2013	2014	2013
Weighted-average volatility	72.84-75.29%	80.57%	72.84-78.54%	80.42 - 81.41%
Weighted-average expected term (years)	6.08	6.08	5.50-6.08	5.0 - 6.08
Risk-free interest rate	1.87-2.04%	2.11%	1.66-2.04%	0.88 - 2.11%
Expected dividend yield	0%	0%	0%	0%

Stock-based Compensation

Stock incentive plans

Summary of stock based compensation expense related to stock options

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Cost of revenue	$	17	$	10	$	40	$	23
Research and development	184		67		446		170
Selling and marketing	200		46		485		123
General and administrative	634		238		1,431		535
Total	$	1,035	$	361	$	2,402	$	851

Genzyme Co-promotion Agreement (Tables)

9 Months Ended

Sep. 30, 2014

Genzyme Co-promotion Agreement

Schedule of unamortized balance of the co-promotion fee reflected in the Company's condensed balance sheets

The unamortized balance of the co-promotion fee is reflected on the Company’s condensed consolidated balance sheets as follows (in thousands):

	September 30, 2014		December 31, 2013
Current liabilities:
Deferred Genzyme co-promotion fee	$	1,897	$	2,500
Long-term liabilities:
Deferred Genzyme co-promotion fee, net of current portion	1,423		2,614
Total	$	3,320	$	5,114

Organization and Summary of Significant Accounting Policies (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014 USD ($) item	Sep. 30, 2013 USD ($)	Sep. 30, 2014 USD ($) item segment	Sep. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)
Organization and Summary of Significant Accounting Policies
Number of operating segments \| segment			1
Concentrations of Credit Risk and Other Risks and Uncertainties
Number of major financial institutions with which the company's cash and cash equivalents are deposited \| item	1		1
Revenue	$ 9,838,000	$ 5,594,000	$ 25,991,000	$ 15,046,000
Restricted Cash
Long term deposit consisting of letter of credit serving as security for lease	118,000	$ 118,000	118,000	118,000	$ 118,000
Restricted cash	100,000		100,000
Activity of allowance for doubtful accounts
Beginning balance			107,000	222,000	222,000
Charged to expense			67,000	184,000	109,000
Write-offs, net of recoveries			(60,000)		(224,000)
Ending balance	$ 114,000		114,000		$ 107,000
Revenue \| Medicare
Concentrations of Credit Risk and Other Risks and Uncertainties
Increase in revenue			1,800,000
Revenue			$ 6,800,000	$ 5,000,000
Revenue \| Revenue concentration risk
Concentrations of Credit Risk and Other Risks and Uncertainties
Concentrations of credit risk (as a percent)			54.00%	58.00%
Revenue \| Revenue concentration risk \| Medicare
Concentrations of Credit Risk and Other Risks and Uncertainties
Concentrations of credit risk (as a percent)			26.00%	33.00%
Revenue \| Revenue concentration risk \| Aetna
Concentrations of Credit Risk and Other Risks and Uncertainties
Concentrations of credit risk (as a percent)			11.00%	8.00%
Revenue \| Revenue concentration risk \| United Healthcare
Concentrations of Credit Risk and Other Risks and Uncertainties
Concentrations of credit risk (as a percent)			17.00%	17.00%
Accounts receivable \| Gross receivables concentration risk \| Medicare
Concentrations of Credit Risk and Other Risks and Uncertainties
Concentrations of credit risk (as a percent)			82.00%		78.00%

Organization and Summary of Significant Accounting Policies (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Capitalized Computer Software, Net [Abstract]
Net book value	$ 3,792,000		$ 3,792,000		$ 2,952,000
Minimum
Property and Equipment and Internal-use Software
Estimated useful life			3 years
Maximum
Property and Equipment and Internal-use Software
Estimated useful life			5 years
Capitalized software
Capitalized Computer Software, Net [Abstract]
Total cost	775,000		$ 775,000		482,000
Accumulated depreciation	291,000		291,000		195,000
Net book value	484,000		484,000		$ 287,000
Capitalized costs			293,000	$ 211,000
Amortization expense	$ 32,000	$ 36,000	$ 96,000	$ 74,000

Organization and Summary of Significant Accounting Policies (Details 3) - USD ($)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Long-lived Assets
Impairments	$ 0	$ 0
Bonus Accruals
Accrued liabilities associated with employee and executive bonus plans	$ 469,000		$ 1,100,000

Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Calculation of basic and diluted net loss per common share
Net loss	$ (7,902)	$ (6,303)	$ (21,231)	$ (19,688)
Shares used to compute net loss per common share, basic and diluted	21,648,660	955,890	21,346,565	860,957
Net loss per common share, basic and diluted (in dollars per share)	$ (0.37)	$ (6.59)	$ (0.99)	$ (22.87)
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share
Total shares of common stock equivalents (in shares)			3,090,577	17,377,692
Shares of common stock issuable upon conversion of preferred stock
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share
Total shares of common stock equivalents (in shares)				14,997,312
Options
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share
Total shares of common stock equivalents (in shares)			3,090,577	2,355,579
Common Stock Warrants
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share
Total shares of common stock equivalents (in shares)				24,801

Business Combination (Details) - USD ($)		3 Months Ended		9 Months Ended
Business Combination (Details) - USD ($)	Sep. 16, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Fair value of the assets acquired and liabilities assumed:
Goodwill		$ 1,057,000		$ 1,057,000
Pro-Forma Financial Information
Revenue		9,838,000	$ 5,594,000	25,991,000	$ 15,046,000
Net loss		(6,454,000)	(8,218,000)	(20,948,000)	(23,022,000)
Allegro
Business Acquisition [Line Items]
Number of Allegro shares received for each share of common stock issued and outstanding of a wholly-owned subsidiary of the Company	1
Conversion right, number of shares	964,377
Conversion right, cash	$ 2,700,000
Outstanding indebtedness settled in cash	4,300,000
Acquisition-related costs	500,000
Transaction bonuses and severance payments	1,200,000
Acquisition consideration
Stock	10,078,000
Cash	2,725,000
Payment of outstanding indebtedness	4,290,000
Total acquisition consideration	$ 17,093,000
Closing price of Company's common stock	$ 10.45
Fair value of the assets acquired and liabilities assumed:
Cash and cash equivalents	$ 29,000
Prepaid expenses	3,000
Other current assets	13,000
In-process research and development	16,000,000
Goodwill	1,057,000
Accrued liabilities	(9,000)
Total net assets acquired	$ 17,093,000
Discount rate (as a percent)	18.50%
Allegro \| Transaction bonus and other payments to employees and acquisition related costs
Pro-Forma Financial Information
Net loss		2,200,000		2,200,000
Allegro \| Interest expense related to indebtedness of acquired entity
Pro-Forma Financial Information
Net loss		$ 228,000	$ 198,000	$ 2,300,000	$ 4,500,000
Allegro \| IPR&D \| Maximum
Fair value of the assets acquired and liabilities assumed:
Useful life	20 years

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2014	Dec. 31, 2013
Accrued Liabilities.
Accrued compensation expenses	$ 1,482	$ 1,962
Accrued Genzyme co-promotion fees	3,211	4,915
Accrued other	1,413	717
Accrued liabilities	$ 6,106	$ 7,594

Fair Value Measurements (Details) - USD ($) $ in Millions	Sep. 30, 2014	Dec. 31, 2013
Recurring \| Level I \| Money market funds
Fair value measurements
Financial Assets	$ 42.6	$ 70.0

Commitments and Contingencies (Details) - USD ($)	3 Months Ended		9 Months Ended
Commitments and Contingencies (Details) - USD ($)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Operating Leases
Restricted cash as collateral for lease	$ 118,000	$ 118,000	$ 118,000	$ 118,000	$ 118,000
Cash security deposit included in other assets	75,000		75,000		$ 75,000
Future minimum lease payments under non-cancelable operating leases
October through December 31, 2014	237,000		237,000
2015	989,000		989,000
2016	413,000		413,000
2017	222,000		222,000
2018	130,000		130,000
Total minimum lease payments	1,991,000		1,991,000
Facilities rent expense	213,000	$ 214,000	639,000	$ 658,000
Volume Purchase Agreement
Non-cancelable purchase obligations to contract manufacturers and suppliers	64,000		64,000
Estimated amount payable in 2014	$ 64,000		$ 64,000

Debt (Details)	3 Months Ended		6 Months Ended	9 Months Ended
Debt (Details)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Jun. 30, 2013 USD ($) installment	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Mar. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Debt
Amount drawn down			$ 5,000,000
Current portion of long-term debt	$ 1,420,000			$ 1,420,000
Long-term debt, net of current portion	3,587,000			3,587,000			$ 4,899,000
Loan and security agreement
Debt
Maximum borrowing capacity			10,000,000
Term loan
Debt
Amount drawn down			$ 5,000,000
Amount not drawn						$ 5,000,000
Number of installments \| installment			30
Period after which debt is repayable			18 months
Interest rate (as a percent)			6.06%
Prepayment penalties for prepayment within one year of the loan origination (as a percent)			2.25%
Prepayment penalties for prepayment within two years of the loan origination (as a percent)			1.50%
Prepayment penalties for prepayment after two years of the loan origination (as a percent)			0.75%
Debt and unpaid accrued end-of-term payment	5,102,000			5,102,000			5,042,000
Unamortized note discount	(95,000)			(95,000)			(143,000)
Net debt obligation	5,007,000			5,007,000			4,899,000
Current portion of long-term debt	1,420,000			1,420,000
Long-term debt, net of current portion	3,587,000			3,587,000			$ 4,899,000
Amount of end of term payment	223,000			$ 223,000
End of term payment as a percentage of total outstanding principal balance				4.45%
Nominal interest	78,000	$ 78,000		$ 230,000	$ 81,000
Amortization of debt discount	16,000	16,000		48,000	17,000
End of term payment interest	20,000	20,000		60,000	21,000
Total	$ 114,000	$ 114,000		$ 338,000	$ 119,000

Convertible Preferred Stock Warrant (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Mar. 31, 2014	Nov. 30, 2013	Jun. 30, 2013
Convertible preferred stock warrant
Amount drawn down of term loan			$ 5.0
Convertible Preferred Stock Warrants
Convertible preferred stock warrant
Number of shares of preferred stock that can be purchased by each warrant			49,602
Issuance of convertible preferred stock, issue price (in dollars per share)		$ 7.56	$ 7.56
Number of shares for which warrant became exercisable		24,801	24,801
Issuance of common stock on exercise of warrant (in shares)	13,739

Stockholders' Equity (Details)	9 Months Ended
Stockholders' Equity (Details)	Sep. 30, 2014 USD ($) item $ / shares shares	Dec. 31, 2013 $ / shares shares
Stockholders' Equity
Authorized shares of common stock	125,000,000	125,000,000
Par value of shares of common stock (in dollars per share) \| $ / shares	$ 0.001	$ 0.001
Number of votes for each share of stock \| item	1
Dividends declared \| $	$ 0
Options issued and outstanding (in shares)	3,090,577	2,359,287
Options available for grant under stock option plans (in shares)	1,533,190	1,787,802
Common stock warrants issued and outstanding (in shares)		24,801
Shares of common stock reserved for issuance	4,623,767	4,171,890
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value (in dollars per share) \| $ / shares	$ 0.001	$ 0.001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

Stock Incentive Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Shares Available for Grant
Balance at the beginning of the period (in shares)	1,787,802
Additional options authorized (in shares)	845,732
Granted (in shares)	(1,248,342)
Canceled (in shares)	147,998
Balance at the end of the period (in shares)	1,533,190	1,787,802
Stock Options Outstanding
Balance at beginning of the period (in shares)	2,359,287
Granted (in shares)	1,248,342
Canceled (in shares)	(147,998)
Exercised (in shares)	(369,054)
Balance at the end of the period (in shares)	3,090,577	2,359,287
Options exercisable at the end of the period (in shares)	1,766,445
Options vested and expected to vest at the end of the period (in shares)	2,948,498
Weighted Average Exercise Price
Balance at beginning of the period (in dollars per share)	$ 3.07
Granted (in dollars per share)	14.47
Canceled (in dollars per share)	8.21
Exercised (in dollars per share)	1.59
Balance at the end of the period (in dollars per share)	7.61	$ 3.07
Options exercisable at the end of the period (in dollars per share)	3.19
Options vested and expected to vest at the end of the period (in dollars per share)	$ 7.32
Weighted Average Remaining Contractual Life
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2	8 years 22 days	7 years 10 months 2 days
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2	8 years 22 days	7 years 10 months 2 days
Options exercisable at the end of the period	7 years 29 days
Options vested and expected to vest at the end of the period	8 years
Aggregate Intrinsic Value
Balance at the beginning of the period (in dollars)	$ 26,964
Balance at the end of the period (in dollars)	12,370	$ 26,964
Options exercisable at the end of the period (in dollars)	11,678
Options vested and expected to vest at the end of the period (in dollars)	$ 12,296
Additional disclosures
Estimated fair value common stock (in dollars per share)	$ 9.75

Stock Incentive Plans (Details 2)	9 Months Ended
Stock Incentive Plans (Details 2)	Sep. 30, 2014 $ / shares shares
$0.08
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 0.08
Options Outstanding, Number (in shares)	47,750
Options Outstanding, Weighted-Average Remaining Contractual Life	3 years 10 months 17 days
Options Vested and Exercisable, Number (in shares)	47,750
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	3 years 10 months 17 days
$0.80
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 0.80
Options Outstanding, Number (in shares)	131,514
Options Outstanding, Weighted-Average Remaining Contractual Life	5 years 5 months 12 days
Options Vested and Exercisable, Number (in shares)	131,514
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	5 years 5 months 12 days
$2.36
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 2.36
Options Outstanding, Number (in shares)	342,267
Options Outstanding, Weighted-Average Remaining Contractual Life	6 years 1 month 6 days
Options Vested and Exercisable, Number (in shares)	333,541
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	6 years 1 month 6 days
$2.40
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 2.40
Options Outstanding, Number (in shares)	153,469
Options Outstanding, Weighted-Average Remaining Contractual Life	4 years 10 months 21 days
Options Vested and Exercisable, Number (in shares)	139,821
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	4 years 8 months 9 days
$2.68
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 2.68
Options Outstanding, Number (in shares)	549,014
Options Outstanding, Weighted-Average Remaining Contractual Life	7 years 6 months
Options Vested and Exercisable, Number (in shares)	520,942
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	7 years 6 months
$4.00
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 4.00
Options Outstanding, Number (in shares)	426,514
Options Outstanding, Weighted-Average Remaining Contractual Life	8 years 3 months 11 days
Options Vested and Exercisable, Number (in shares)	390,744
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	8 years 3 months 11 days
$6.04
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 6.04
Options Outstanding, Number (in shares)	195,082
Options Outstanding, Weighted-Average Remaining Contractual Life	8 years 8 months 16 days
Options Vested and Exercisable, Number (in shares)	165,105
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	8 years 8 months 16 days
$7.92
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 7.92
Options Outstanding, Number (in shares)	9,000
Options Outstanding, Weighted-Average Remaining Contractual Life	8 years 11 months 12 days
Options Vested and Exercisable, Number (in shares)	2,438
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	8 years 11 months 12 days
$10.45
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 10.45
Options Outstanding, Number (in shares)	75,000
Options Outstanding, Weighted-Average Remaining Contractual Life	9 years 11 months 16 days
$12.06
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 12.06
Options Outstanding, Number (in shares)	22,300
Options Outstanding, Weighted-Average Remaining Contractual Life	9 years 11 months 12 days
$12.12
Outstanding and exercisable stock options
Exercise price (in dollars per share) \| $ / shares	$ 12.12
Options Outstanding, Number (in shares)	39,625
Options Outstanding, Weighted-Average Remaining Contractual Life	9 years 4 days
Options Vested and Exercisable, Number (in shares)	34,590
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	9 years 4 days
$12.64 - 18.24
Outstanding and exercisable stock options
Exercise price, low end of range (in dollars per share) \| $ / shares	$ 12.64
Exercise price, high end of range (in dollars per share) \| $ / shares	$ 18.24
Options Outstanding, Number (in shares)	1,099,042
Options Outstanding, Weighted-Average Remaining Contractual Life	9 years 5 months 23 days
$0.08-18.24
Outstanding and exercisable stock options
Exercise price, low end of range (in dollars per share) \| $ / shares	$ 0.08
Exercise price, high end of range (in dollars per share) \| $ / shares	$ 18.24
Options Outstanding, Number (in shares)	3,090,577
Options Outstanding, Weighted-Average Remaining Contractual Life	8 years 22 days
Options Vested and Exercisable, Number (in shares)	1,766,445
Options Vested and Exercisable, Weighted-Average Remaining Contractual Life	7 years 29 days

Stock Incentive Plans (Details 3) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Stock Incentive Plans
Weighted average fair value of stock options granted (in dollars per share)	$ 9.74	$ 3.73
Weighted average fair value of stock options vested (in dollars per share)	2.84	2.24
Stock incentive plans
Weighted average fair value of stock options exercised (in dollars per share)	$ 1.06	$ 0.98
Intrinsic value of stock options exercised (in dollars)	$ 3.0	$ 3.5
Employee stock options
Stock incentive plans
Aggregate estimated grant date fair value of options to purchase common stock vested (in dollars)	$ 1.1	$ 1.2

Stock Incentive Plans (Details 4) - Stock-based Compensation - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Stock-based compensation
Share-based compensation expense (in dollars)	$ 1,035	$ 361	$ 2,402	$ 851
Unrecognized compensation expense (in dollars)	10,000		$ 10,000
Period over which unrecognized compensation expense expected to be recognized			3 years 2 months 12 days
Cost of revenue
Stock-based compensation
Share-based compensation expense (in dollars)	17	10	$ 40	23
Research and development
Stock-based compensation
Share-based compensation expense (in dollars)	184	67	446	170
Selling and marketing
Stock-based compensation
Share-based compensation expense (in dollars)	200	46	485	123
General and administrative
Stock-based compensation
Share-based compensation expense (in dollars)	$ 634	$ 238	$ 1,431	$ 535

Stock Incentive Plans (Details 5)	3 Months Ended		9 Months Ended
Stock Incentive Plans (Details 5)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Contractual term			7 years 29 days
Stock-based Compensation, employees and directors
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Weighted-average volatility, low end of range (as a percent)	72.84%		72.84%	80.42%
Weighted-average volatility, high end of range (as a percent)	75.29%		78.54%	81.41%
Expected volatility (as a percent)		80.57%
Weighted-average expected term		6 years 29 days
Risk-free interest rate, low end of range (as a percent)	1.87%		1.66%	0.88%
Risk-free interest rate, high end of range (as a percent)	2.04%		2.04%	2.11%
Risk-free interest rate (as a percent)		2.11%
Expected dividend yield (as a percent)	0.00%	0.00%	0.00%	0.00%
Stock-based Compensation, employees and directors \| Minimum
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Weighted-average expected term	6 years 29 days		5 years 6 months	5 years
Stock-based Compensation, employees and directors \| Maximum
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Weighted-average expected term	6 years 29 days		6 years 29 days	6 years 29 days
Stock-based Compensation, non-employees
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Weighted-average volatility, low end of range (as a percent)			73.24%	78.81%
Weighted-average volatility, high end of range (as a percent)			73.96%	79.54%
Risk-free interest rate, low end of range (as a percent)			2.34%	2.22%
Risk-free interest rate, high end of range (as a percent)			2.42%	2.47%
Expected dividend yield (as a percent)			0.00%
Stock-based Compensation, non-employees \| Minimum
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Contractual term			8 years 2 months 5 days	7 years 11 months 19 days
Stock-based Compensation, non-employees \| Maximum
Assumptions used to calculate estimated fair value of stock options using the Black-Scholes option-pricing valuation model
Contractual term			9 years 4 days	9 years 2 months 5 days

Genzyme Co-promotion Agreement (Details)		1 Months Ended		3 Months Ended		9 Months Ended		12 Months Ended	14 Months Ended
Genzyme Co-promotion Agreement (Details)	Aug. 12, 2014	Mar. 31, 2014	Feb. 29, 2012 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2014 USD ($) country	Sep. 30, 2013 USD ($)	Dec. 31, 2012	Feb. 28, 2014	Dec. 31, 2013 USD ($)	Jan. 31, 2012 country
Genzyme Co-promotion Agreement
Amortization of up-front co-promotion fee						$ 1,794,000	$ 1,875,000
Unamortized balance of the co-promotion fee
Deferred Genzyme co-promotion fee				$ 1,897,000		1,897,000				$ 2,500,000
Deferred Genzyme co-promotion fee, net of current portion				1,423,000		1,423,000				2,614,000
Co-promotion agreement \| Genzyme
Genzyme Co-promotion Agreement
Number of countries outside United States in which marketing authorization is obtained \| country											40
Co-promotion fee received from Genzyme			$ 10,000,000
Additional payments that may be received						3,000,000
Additional payments that may be received for each country outside of the United States in which the company obtains marketing authorization and achieves a specified level of reimbursement						600,000
Co-promotion fees as a percentage of cash receipts								50.00%	40.00%
Co-promotion fees as a percentage of cash receipts for remaining periods		32.00%
Maximum amount to be spent by co-promoter for qualifying clinical development activities in countries that require additional testing						$ 500,000
Co-promotion fees as a percentage of cash receipts beginning January 1, 2015	15.00%
Amortization period of co-promotion fee						4 years
Co-promotion expenses				3,200,000	$ 2,300,000	$ 8,700,000	6,000,000
Outstanding obligation to Genzyme				8,700,000		8,700,000				6,700,000
Amortization of up-front co-promotion fee				544,000	$ 625,000	1,800,000	$ 1,900,000
Unamortized balance of the co-promotion fee
Deferred Genzyme co-promotion fee				1,897,000		1,897,000				2,500,000
Deferred Genzyme co-promotion fee, net of current portion				1,423,000		1,423,000				2,614,000
Total				3,320,000		3,320,000				5,114,000
Co-promotion agreement \| Genzyme \| Accounts payable
Genzyme Co-promotion Agreement
Outstanding obligation to Genzyme				5,500,000		5,500,000				1,800,000
Co-promotion agreement \| Genzyme \| Accrued liabilities
Genzyme Co-promotion Agreement
Outstanding obligation to Genzyme				$ 3,200,000		$ 3,200,000				$ 4,900,000
Co-promotion agreement \| Genzyme \| Maximum
Genzyme Co-promotion Agreement
Number of countries outside United States for which additional payments may be received \| country						5

Thyroid Cytology Partners (Details) - USD ($)	3 Months Ended		9 Months Ended
Thyroid Cytology Partners (Details) - USD ($)	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Thyroid Cytology Partners
Outstanding obligations	$ 8,587,000		$ 8,587,000		$ 5,294,000
Thyroid Cytology Partners
Thyroid Cytology Partners
Expenses for cytopathology testing and evaluation services	978,000	$ 816,000	2,800,000	$ 2,300,000
Outstanding obligations	669,000	588,000	669,000	588,000
Reimbursed rent expense included in other income	$ 22,000	$ 16,000	$ 63,000	$ 20,000

Income Taxes (Details) $ in Millions	Sep. 30, 2014 USD ($)
Income Taxes
Unrecognized tax benefit	$ 1.3
Unrecognized tax benefits, which if recognized, would affect the effective tax rate	$ 0.0

Subsequent Events (Details) - Co-promotion agreement - Genzyme			1 Months Ended
	Nov. 07, 2014	Aug. 12, 2014	Mar. 31, 2014
Subsequent Events
Co-promotion fees as a percentage of cash receipts			32.00%
Co-promotion fees as a percentage of cash receipts beginning January 1, 2015		15.00%
Subsequent Events
Subsequent Events
Co-promotion fees as a percentage of cash receipts beginning January 1, 2015	15.00%