Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Accelerate Diagnostics, Inc (727207) 10-Q published on May 09, 2019 at 5:55 pm
Reporting Period: Mar 30, 2019
The Company accounts for leases in accordance with ASC 842, Leases, which was adopted on January 1, 2019. We determine if an arrangement is or contains a lease and the type of lease at inception. The Company classifies leases as finance leases (lessee) or sales-type leases (lessor) when there is either a transfer of ownership of the underlying asset by the end of the lease term, the lease contains an option to purchase the asset that we are reasonably certain will be exercised, the lease term is for the major part of the remaining economic life of the asset, the present value of the lease payments and any residual value guarantee equals or substantially exceeds all the fair value of the asset, or the asset is of such a specialized nature that it will have no alternative use to the lessor at the end of the lease term. Payments contingent on future events (i.e. based on usage) are considered variable and excluded from lease payments for the purposes of classification and initial measurement. Several of our leases include
Operating leases are included in right-of-use (“ROU”) assets and operating lease liabilities within our condensed consolidated balance sheets. These assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and their related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Typically, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments. We use the implicit rate when readily determinable. ROU assets are net of lease payments made and exclude lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term, which may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. As of adoption of ASC 842 and as of March 31, 2019, the Company was not party to finance lease arrangements.
The Company leases instruments to customers under “reagent rental” agreements, under which the customer agrees to purchase consumable products over a stated term, typically five years or less, for a volume-based price that includes an embedded rental for the instruments. When collectibility is probable, that amount is recognized as income at lease commencement for sales-type leases and on a straight-line basis over the term for operating leases, which typically include a termination without cause or penalty provision given a short notice period.
The net investment in sales-type leases, where we are the lessor, is a component of other current assets and other non-current assets in our condensed consolidated balance sheet. As of March 31, 2019 the total net investment in leases was $0.5 million. The following presents maturities of lease receivables under sales-type leases which we are the lessor as of March 31, 2019 (in thousands):
The net cash used in operating activities was $19.5 million and $16.1 million for the three months ended March 31, 2019 and 2018, respectively. Net cash used in operating activities was primarily the result of net losses offset by equity-based compensation and amortization of debt discount and issuance costs. These losses are the result of continued investments in research and development, sales and marketing, along with other factors. Increased current assets and decreased current liabilities increased cash used in operating activities for the three months ended March 31, 2019 compared to the prior year period. Non-cash equity-based compensation also decreased for the three months ended March 31, 2019 compared to the prior year period, which further increased net cash used in operating activities for the current period.