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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2022
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                        to
 Commission File No. 001-36847
 
nvta-20220930_g1.jpg
Invitae Corporation
(Exact name of the registrant as specified in its charter)
 
Delaware27-1701898
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
 1400 16th Street, San Francisco, California 94103
(Address of principal executive offices, Zip Code)
 (415374-7782
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common Stock, $0.0001 par value per share
NVTA
New York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b 2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
Non-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No  
The number of shares of the registrant’s common stock outstanding as of November 4, 2022 was 242,895,615.




TABLE OF CONTENTS
 





PART I — Financial Information
ITEM 1. Condensed Consolidated Financial Statements
INVITAE CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
September 30,
2022
December 31,
2021
Assets  
Current assets:  
Cash and cash equivalents$217,029 $923,250 
Marketable securities368,936 122,121 
Accounts receivable89,130 66,227 
Inventory29,902 33,516 
Prepaid expenses and other current assets24,679 33,691 
Total current assets729,676 1,178,805 
Property and equipment, net113,878 114,714 
Operating lease assets109,971 121,169 
Restricted cash10,027 10,275 
Intangible assets, net1,041,185 1,187,994 
Goodwill 2,283,059 
Other assets21,518 23,551 
Total assets$2,026,255 $4,919,567 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$10,727 $21,127 
Accrued liabilities83,116 106,453 
Operating lease obligations14,199 12,359 
Finance lease obligations5,279 4,156 
Total current liabilities113,321 144,095 
Operating lease obligations, net of current portion138,167 124,369 
Finance lease obligations, net of current portion4,848 5,683 
Debt120,097 113,391 
Convertible senior notes, net1,469,108 1,464,138 
Deferred tax liability9,181 51,696 
Other long-term liabilities12,667 37,797 
Total liabilities1,867,389 1,941,169 
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock24 23 
Accumulated other comprehensive loss(898)(7)
Additional paid-in capital4,889,064 4,701,230 
Accumulated deficit(4,729,324)(1,722,848)
Total stockholders’ equity158,866 2,978,398 
Total liabilities and stockholders’ equity$2,026,255 $4,919,567 
See accompanying notes to unaudited condensed consolidated financial statements.
1



INVITAE CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Revenue:    
Test revenue$128,839 $111,676 $381,518 $322,448 
Other revenue4,697 2,719 12,331 11,880 
Total revenue133,536 114,395 393,849 334,328 
Cost of revenue116,956 87,741 324,412 252,563 
Research and development87,177 97,511 330,559 284,323 
Selling and marketing49,193 55,501 172,086 163,705 
General and administrative44,939 86,820 149,071 197,640 
Asset impairments6,708  2,324,572  
Change in fair value of contingent consideration (19,866)(1,850)(386,836)
Restructuring118,514  118,514  
Total cost and operating expenses423,487 307,707 3,417,364 511,395 
Loss from operations(289,951)(193,312)(3,023,515)(177,067)
Other income, net1,872 3,357 19,637 9,846 
Interest expense(14,145)(14,069)(42,149)(35,869)
Net loss before taxes(302,224)(204,024)(3,046,027)(203,090)
Income tax benefit(1,068)(5,848)(39,551)(29,208)
Net loss$(301,156)$(198,176)$(3,006,476)$(173,882)
Net loss per share, basic and diluted$(1.27)$(0.91)$(12.91)$(0.85)
Shares used in computing net loss per share, basic and diluted237,974 218,384 232,889 205,587 

See accompanying notes to unaudited condensed consolidated financial statements. 
2



INVITAE CORPORATION
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net loss$(301,156)$(198,176)$(3,006,476)$(173,882)
Other comprehensive income (loss):
Unrealized income (loss) on available-for-sale marketable securities, net of tax436 (13)(891)20 
Comprehensive loss$(300,720)$(198,189)$(3,007,367)$(173,862)
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
3



INVITAE CORPORATION
Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)

 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Common stock:
Balance, beginning of period
$24 $20 $23 $19 
Common stock issued
 3 1 4 
Balance, end of period
24 23 24 23 
Accumulated other comprehensive (loss) income:
Balance, beginning of period(1,334)34 (7)1 
Unrealized income (loss) on available-for-sale marketable securities, net of tax436 (13)(891)20 
Balance, end of period(898)21 (898)21 
Additional paid-in capital:
Balance, beginning of period
4,815,383 3,973,479 4,701,230 3,337,120 
Common stock issued in connection with public offering, net
9,658 — 9,658 434,263 
Common stock issued on exercise of stock options, net
33 5,215 630 8,167 
Common stock issued pursuant to exercises of warrants
— — — 1,242 
Common stock issued pursuant to employee stock purchase plan
— — 5,637 6,400 
Common stock and equity awards issued pursuant to acquisitions3,984 620,001 9,253 783,877 
Stock-based compensation expense
60,006 25,702 162,656 128,816 
Reclassification of equity component of convertible senior notes— — — (75,488)
Balance, end of period
4,889,064 4,624,397 4,889,064 4,624,397 
Accumulated deficit:
Balance, beginning of period
(4,428,168)(1,319,548)(1,722,848)(1,360,847)
Cumulative effect of accounting change— — — 17,005 
Net loss(301,156)(198,176)(3,006,476)(173,882)
Balance, end of period
(4,729,324)(1,517,724)(4,729,324)(1,517,724)
Total stockholders' equity
$158,866 $3,106,717 $158,866 $3,106,717 

See accompanying notes to unaudited condensed consolidated financial statements.
4



INVITAE CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 Nine Months Ended September 30,
 20222021
Cash flows from operating activities:  
Net loss$(3,006,476)$(173,882)
Adjustments to reconcile net loss to net cash used in operating activities:
Asset impairments2,324,572  
Losses on asset disposals48,792  
Depreciation and amortization104,726 56,848 
Stock-based compensation164,314 131,768 
Amortization of debt discount and issuance costs11,676 10,352 
Remeasurements of liabilities associated with business combinations(17,516)(396,015)
Benefit from income taxes(39,551)(29,215)
Post-combination expense for acceleration of unvested equity and deferred stock compensation4,980 7,870 
Amortization of premiums and discounts on investment securities603 5,155 
Non-cash lease expense6,832 1,861 
Other536 320 
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable(22,903)(8,900)
Inventory3,614 1,397 
Prepaid expenses and other current assets9,012 (15,273)
Other assets2,740 (2,915)
Accounts payable(6,345)2,581 
Accrued expenses and other long-term liabilities(540)24,151 
Net cash used in operating activities(410,934)(383,897)
Cash flows from investing activities:
Purchases of marketable securities(789,622)(325,957)
Proceeds from maturities of marketable securities541,313 228,043 
Acquisition of businesses, net of cash acquired (239,836)
Purchases of property and equipment(48,385)(35,533)
Other (1,300)
Net cash used in investing activities(296,694)(374,583)
Cash flows from financing activities:
Proceeds from public offerings of common stock, net9,658 434,263 
Proceeds from issuance of common stock6,267 15,810 
Proceeds from issuance of convertible senior notes, net 1,116,427 
Finance lease principal payments(4,184)(2,833)
Settlement of acquisition obligations(10,582)(4,758)
Net cash provided by financing activities1,159 1,558,909 
Net (decrease) increase in cash, cash equivalents and restricted cash(706,469)800,429 
Cash, cash equivalents and restricted cash at beginning of period933,525 131,480 
Cash, cash equivalents and restricted cash at end of period$227,056 $931,909 
Supplemental cash flow information of non-cash investing and financing activities:
Equipment acquired through finance leases$4,472 $7,736 
Purchases of property and equipment in accounts payable and accrued liabilities$2,531 $12,513 
Common stock issued for acquisition of businesses$4,274 $782,477 
Operating lease assets obtained in exchange for lease obligations, net$4,495 $82,138 

See accompanying notes to unaudited condensed consolidated financial statements.
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INVITAE CORPORATION
Notes to Condensed Consolidated Financial Statements

1. Organization and description of business
Invitae Corporation ("Invitae," “the Company," "we," "us," and "our") was incorporated in the State of Delaware on January 13, 2010, as Locus Development, Inc. and we changed our name to Invitae Corporation in 2012. We offer high-quality, comprehensive, affordable genetic testing across multiple clinical areas, including hereditary cancer, precision oncology, women's health, rare diseases and pharmacogenomics. To augment our offering and realize our mission, we have previously acquired multiple assets and businesses that further expanded our test menu and suite of genome management offerings and accelerated our entry into key genomics markets. Invitae operates in one segment.
Strategic realignment
On July 18, 2022, the Company initiated a strategic realignment of our operations and began implementing cost reduction programs to prioritize its core genetic testing and genome management platforms, which was approved by the board of directors of the Company on July 16, 2022. The Company is in the process of implementing initiatives to streamline its product portfolio to focus on its core testing business and programs that drive near-term reductions in cost of revenue to accelerate the Company’s path to positive operating cash flow while completing its genome management platform. See Note 11, "Restructuring" for additional information regarding our strategic realignment.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation. The 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 our Annual Report on Form 10-K for the year ended December 31, 2021. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results expected for the full fiscal year or any other periods.  
2. Summary of significant accounting policies
Principles of consolidation
Our unaudited condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base these estimates on current facts, historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ materially from those judgments, estimates and assumptions. We evaluate our estimates on an ongoing basis.
Prior period reclassifications
We have reclassified certain amounts in prior periods to conform with the current period presentation.
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Concentrations of credit risk and other risks and uncertainties
Financial instruments that potentially subject us to a concentration of credit risk consist of cash, cash equivalents, restricted cash, marketable securities and accounts receivable. Our cash and cash equivalents are primarily held by financial institutions in the United States. Such deposits may exceed federally insured limits.
Cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets are reconciled to the amounts reported in the condensed consolidated statements of cash flows as follows (in thousands):
September 30, 2022September 30, 2021
Cash and cash equivalents$217,029 $921,634 
Restricted cash10,027 10,275 
Total cash, cash equivalents and restricted cash$227,056 $931,909 
Restricted cash serves as the security deposits for the Company's leases.
Fair value of financial instruments
Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts payable, accrued liabilities, finance leases and liabilities associated with business combinations. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued and other current liabilities approximate their current fair value due to the relatively short-term nature of these accounts. Based on borrowing rates available to us, the carrying value of our finance leases approximates their fair values. Liabilities associated with business combinations are recorded at their estimated fair value.
Restructuring resulting from strategic realignment
As a result of implementing our strategic realignment, we incurred restructuring charges comprised of employee separation costs, losses on asset disposals, and other costs. Employee separation costs are comprised of severance, other termination benefit costs, and stock-based compensation expense for the acceleration of stock awards related to workforce reductions. We recognize costs and liabilities associated with exit and disposal activities in accordance with Accounting Standards Codification ("ASC") 420, Exit and Disposal Cost Obligations, and other costs and liabilities associated with postemployment nonretirement benefits in accordance with ASC 712, Postemployment Nonretirement Benefits. Liabilities are based on the estimate of fair value in the period the liabilities are incurred, with subsequent changes to the liability recognized as adjustments in the period of change. We recognize losses on asset disposals in accordance with ASC 360, Impairment or Disposal of Long-Lived Assets. Restructuring charges are recognized as an operating expense within the condensed consolidated statements of operations and related liabilities are recorded within accrued liabilities in the condensed consolidated balance sheets.
Recent accounting pronouncements
We evaluate all Accounting Standards Updates (“ASUs”) issued by the Financial Accounting Standards Board ("FASB") for consideration of their applicability. ASUs not included in the disclosures in this report were assessed and determined to be either not applicable or are not expected to have a material impact in our condensed consolidated financial statements.
Recently issued accounting pronouncements not yet adopted
In October 2021, the FASB issued ASU 2021-08, Business Combinations ("Topic 805"): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments of this ASU require entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with ASC 606 as if it had originated the contracts. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively to all business combinations occurring after the date of adoption. Early adoption is permitted.
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We are currently evaluating the impact this guidance will have in our condensed consolidated financial statements and the timing of adoption.
Recently adopted accounting pronouncements
In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. This new standard is effective for our interim and annual periods beginning January 1, 2022, with early adoption permitted. We elected to adopt the amendments on a modified retrospective basis effective January 1, 2021, which required a cumulative-effect adjustment to retained earnings. The cumulative-effect adjustment resulted in a decrease in accumulated deficit of $17.0 million related to the reversal of the equity component and associated issuance costs as well as adjustment of the related amortization costs of our convertible senior notes due 2024. Reporting periods beginning on or after January 1, 2021 are presented under this new guidance while prior periods have not been adjusted and continue to be reported in accordance with our historic accounting under U.S. GAAP. See Note 8, "Commitments and contingencies" for additional information about our convertible senior notes.
3. Revenue, accounts receivable and deferred revenue
Test revenue is generated from sales of diagnostic tests and precision oncology products to four groups of customers: biopharmaceutical partners, patients who pay directly, patients' insurance carriers, and other business-to-business customers (e.g., hospitals, clinics, medical centers). Test revenue is generated in two ways: through a centralized lab and decentralized through the shipment of reactions to biopharmaceutical partners and other business-to-business customers. We refer to the set of reagents needed to perform a next-generation sequencing test as a "reaction." Amounts billed and collected, and the timing of collections, vary based on the type of payer. Other revenue consists principally of revenue recognized under contracts for biopharmaceutical development services and other collaboration and genome network agreements and is accounted for under the provisions provided in ASC 606.
Our revenue as disaggregated by payer category and revenue subtype is as follows (in thousands):
Three Months Ended September 30, 2022
 PatientBiopharma partnerOther business-to-businessTotal
 InsuranceDirect
Test revenue:
Centralized$80,484 $8,759 $15,455 $12,431 $117,129 
Decentralized  2,070 9,640 11,710 
 Total test revenue80,484 8,759 17,525 22,071 128,839 
Other revenue  3,202 1,495 4,697 
Total revenue$80,484 $8,759 $20,727 $23,566 $133,536 
Three Months Ended September 30, 2021
 PatientBiopharma partnerOther business-to-businessTotal
 InsuranceDirect
Test revenue:
Centralized$69,009 $10,999 $10,390 $12,591 $102,989 
Decentralized  374 8,313 8,687 
 Total test revenue69,009 10,999 10,764 20,904 111,676 
Other revenue  1,774 945 2,719 
Total revenue$69,009 $10,999 $12,538 $21,849 $114,395 
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Nine Months Ended September 30, 2022
 PatientBiopharma partnerOther business-to-businessTotal
 InsuranceDirect
Test revenue:
Centralized$233,354 $31,336 $45,465 $38,737 $348,892 
Decentralized  4,806 27,820 32,626 
 Total test revenue233,354 31,336 50,271 66,557 381,518 
Other revenue  8,395 3,936 12,331 
Total revenue$233,354 $31,336 $58,666 $70,493 $393,849 
Nine Months Ended September 30, 2021
 PatientBiopharma partnerOther business-to-businessTotal
 InsuranceDirect
Test revenue:
Centralized$201,154 $30,471 $29,650 $34,939 $296,214 
Decentralized  1,011 25,223 26,234 
 Total test revenue201,154 30,471 30,661 60,162 322,448 
Other revenue  8,394 3,486 11,880 
Total revenue$201,154 $30,471 $39,055 $63,648 $334,328 
We recognize revenue related to billings based on estimates of the amount that will ultimately be realized. Cash collections for certain tests delivered may differ from rates originally estimated. In subsequent periods, we update our estimate of the amounts recognized for previously delivered tests which resulted in the following increases to revenue and decreases to our net loss from operations and basic and diluted net loss per share (in millions, except per share data):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Revenue$1.1 $4.0 $3.5 $12.0 
Loss from operations$(1.1)$(4.0)$(3.5)$(12.0)
Net loss per share, basic and diluted$0.00 $(0.02)$(0.02)$(0.06)
Impact of COVID-19
We expect the COVID-19 pandemic may continue to impact our business. We have reviewed and adjusted, when necessary, for the impact of COVID-19 on our estimates related to revenue recognition and expected credit losses.
Accounts receivable
The majority of our accounts receivable represents amounts billed to biopharmaceutical partners and other business-to-business customers for test and other revenue recognized, and estimated amounts to be collected from third-party insurance payers for genetic testing revenue recognized. Also included are amounts due under the terms of collaboration and genome network agreements for diagnostic testing and data aggregation reporting services provided and proprietary platform access rights transferred.
We also record unbilled revenue for revenue recognized but yet to be billed for services provided to biopharmaceutical companies related to companion diagnostic development. This contract receivable was $5.1 million and $4.3 million as of September 30, 2022 and December 31, 2021, respectively, and was included in prepaid expenses and other current assets in the condensed consolidated balance sheets.
Deferred revenue
We record a contract liability when cash payments are received or due in advance of our performance related to one or more performance obligations. The deferred revenue balance primarily consists of advanced billings for biopharmaceutical development services, including billings at the initiation of performance-based milestones, and recognized as revenue in the applicable future period when the revenue is earned. Also included
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are prepayments related to our consumer direct channel. During the three and nine months ended September 30, 2022, we recognized revenue of $3.3 million and $4.5 million, respectively, from deferred revenue recorded in prior periods. The current contract liability was $5.7 million and $9.4 million as of September 30, 2022 and December 31, 2021, respectively, and was included in accrued liabilities in the condensed consolidated balance sheets. The long-term contract liability was $0.1 million and $0.7 million as of September 30, 2022 and December 31, 2021, respectively, and was included in other long-term liabilities in the condensed consolidated balance sheets.
Performance obligations
Test and other revenue are generally recognized upon completion of our performance obligation when the customer obtains control of the promised good or service, typically a test report or upon shipment of our precision oncology products or other contractually defined milestone(s). The Company has applied the practical expedient in relation to information about our remaining performance obligations, as we have a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the Company’s performance completed to date. Most remaining performance obligations are primarily related to Personalized Cancer Monitoring ("PCM") services included in test revenue in our condensed consolidated statement of operations and are generally satisfied over one to six months.
4. Business combinations
ArcherDX
In October 2020, we acquired ArcherDX, Inc. ("ArcherDX"), a genomics analysis company democratizing precision oncology. Under the terms of the agreement, we acquired ArcherDX for upfront consideration consisting of 30.0 million shares of our common stock and $325.0 million in cash, plus up to an additional 27.0 million shares of our common stock payable in connection with the achievement of certain milestones. During the three months ended March 31, 2021, Invitae and the sellers of ArcherDX reached an agreement to reduce the purchase price by $1.2 million based on the final acquired net working capital. This adjustment was recorded during the three months ended March 31, 2021 and reduced the contingent consideration liability and goodwill by approximately $1.2 million.
We were required to pay contingent consideration based on achievement of post-closing development and revenue milestones. The material factors that may impact the fair value of the contingent consideration, and therefore the liability, are (i) the estimated number of shares to be issued, (ii) the volatility of our common stock, (iii) the probabilities of achievement of milestones within the timeframes prescribed in the acquisition agreement and (iv) discount rates, all of which are Level 3 inputs not supported by market activity with the exception of the volatility of our common stock. Significant changes in any of these inputs may result in a significant change in fair value, which is estimated at each reporting date. Of the five milestones, one milestone was achieved in November 2020, which resulted in the issuance of 5.0 million shares of our common stock and a cash payment of $1.9 million, and three milestones were achieved or deemed to be achieved during the three months ended June 30, 2021, which resulted in the issuance of 13.8 million shares of our common stock and a cash payment of $3.3 million in July 2021. The remaining milestone is based upon receiving U.S. Food and Drug Administration ("FDA") clearance or approval of a therapy selection in vitro diagnostic ("IVD") product, which per the terms of the acquisition agreement, must be completed by March 31, 2022, subject to certain extensions (the "ArcherDX Final Milestone"). With respect to the ArcherDX Final Milestone, the liability was reduced to nil as of June 30, 2021 from $262.5 million as of March 31, 2021 and $287.7 million as of December 31, 2020, with the offsetting change recorded as changes in fair value of contingent consideration in our condensed consolidated statements of operations. The removal of the liability balance and the associated change in fair value of contingent consideration was a result of our reassessment of the steps necessary to achieve clearance or approval based on FDA feedback received principally in the three months ended June 30, 2021. In April 2022, an agreement was entered into with the previous ArcherDX stockholders to extend the date for achievement of the ArcherDX Final Milestone to March 31, 2023. We currently do not believe that this milestone will be achieved within this timeframe. As such, no liability was recorded as of September 30, 2022.
In connection with the acquisition, we granted awards of common stock to new employees who joined Invitae in connection with our acquisition of ArcherDX that vested upon the achievement of the contingent consideration milestones discussed above and were subject to the employees' continued service with us, unless terminated without cause in which case vesting was only dependent on milestone achievement. As the number of shares that were expected to be issued are fixed, the awards are equity-classified. During the nine months ended September 30, 2022, we recorded stock-based compensation expense of nil related to the ArcherDX milestones. During the nine months ended September 30, 2021, we recorded a net $41.8 million in stock-based compensation expense related to the ArcherDX milestones, which includes $38.5 million related to milestones achieved in prior
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periods, $33.0 million due to an accounting modification of certain awards whereby the employee's continued substantive services were no longer required, offset by a reversal of $29.7 million recognized in prior periods related to the determination that the ArcherDX Final Milestone would not be achieved within the specified timeframe prescribed in the acquisition agreement.
One Codex
In February 2021, we acquired 100% of the interest of Reference Genomics d/b/a One Codex ("One Codex"), a company developing and commercializing products and services relating to microbiome sequencing, analysis and reporting, for upfront consideration consisting of $17.3 million in cash and 1.4 million shares of our common stock, of which approximately 0.2 million shares were subject to a hold-back to satisfy indemnification obligations that may have arisen following the closing. These shares subject to a hold-back were issued to a third-party at the closing date to hold in escrow until the escrow period is complete, and as such were classified as equity. In February 2022, the amounts held back to satisfy indemnification obligations were released in full to the former stockholders.
Disposition
In September 2022, we sold 100% of our interest in One Codex and certain related assets for an immaterial amount of cash proceeds, as part of our strategic realignment plan. The disposition of One Codex was considered to be an asset sale as substantially all of the fair value was concentrated in the developed technology and certain customer relationships. The carrying value of assets sold include developed technology of $19.4 million and customer relationships of $0.4 million. The sale resulted in a loss of approximately $19.8 million during the three and nine months ended September 30, 2022, and is included in restructuring expense in our condensed consolidated statement of operations. See Note 5, "Goodwill and intangible assets" and Note 11, "Restructuring" for additional information.
Concurrently, Invitae and the buyer entered into an agreement whereby we have the option to access the technology sold for at least one year in the form of a software-as-a-service ("SaaS") subscription.
Genosity
In April 2021, we acquired 100% of the fully diluted equity of Genosity Inc. ("Genosity"), a company providing genomic laboratory services, for approximately $196.0 million, consisting of approximately $120.0 million in cash and 1.9 million shares of our common stock. In connection with this transaction, we granted restricted stock units ("RSUs") having a value of up to $5.0 million to certain continuing employees and recognized $0.4 million and $1.3 million in stock-based compensation expense for the three and nine months ended September 30, 2022, respectively. We recognized $0.3 million and $0.5 million in stock-based compensation expense for the three and nine months ended September 30, 2021, respectively.
Pursuant to the terms of the acquisition, we agreed to provide additional shares in the event that our common stock share price decreased after the acquisition, but prior to filing a resale registration statement. At the time of the acquisition, we estimated this provision to be $7.0 million. On filing the resale registration statement during the period ended June 30, 2021, the fair value was $3.2 million and the difference of $3.8 million was recorded in general and administrative expense.
Ciitizen
In September 2021, we acquired 100% of the equity of Ciitizen Corporation ("Ciitizen"), a patient-centric health technology company, for approximately $308.3 million, consisting of approximately $87.4 million in cash and 6.3 million shares of our common stock, of which approximately $10.4 million in cash and 0.8 million shares are subject to a hold-back to satisfy indemnification obligations that may arise following the closing. As of September 30, 2022, the value of the stock payable liability was $0.5 million with the $9.6 million fair value change for the nine months ended September 30, 2022 recorded as income in other income, net. In September 2022, the amounts held back to satisfy indemnification obligations were partially released to the former stockholders. The remaining amounts held back to satisfy indemnification obligations are expected to be released in September 2023. In connection with this transaction, we granted RSUs having a value of up to $246.9 million to certain continuing employees. During the three and nine months ended September 30, 2022, we recorded stock-based compensation expense of $22.2 million and $72.2 million, respectively, primarily in research and development expense. Additionally, we recorded $23.7 million of stock-based compensation expense for both the three and nine months ended September 30, 2022 in restructuring expense related to the acceleration of RSUs for employees who were terminated as part of our strategic realignment. See Note 10, "Stock incentive plans" for additional information.
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During the three and nine months ended September 30, 2021, we recorded stock-based compensation expense of $1.6 million.
5. Goodwill and intangible assets
Goodwill
The changes in the carrying amounts of goodwill were as follows (in thousands):
Balance as of December 31, 2021$2,283,059 
Impairment(2,283,059)
Balance as of September 30, 2022$ 
Intangible assets
The following table presents details of our acquired intangible assets as of September 30, 2022 (in thousands):
September 30, 2022
 
Cost
Accumulated
Amortization
Asset Disposals
Net
Weighted-Average
Useful Life
(In Years)
Customer relationships$41,515 $(16,543)$(359)$24,613 10.8
Developed technology1,174,506 (156,068)(19,426)999,012 10.8
Non-compete agreement286 (286)  0.0
Trade name21,085 (3,525) 17,560 12.0
Patent assets and licenses495 (156)(339) 0.0
Right to develop new technology19,359 (2,474)(16,885) 0.0
 $1,257,246 $(179,052)$(37,009)$1,041,185 10.8
The following table presents details of our acquired intangible assets as of December 31, 2021 (in thousands):
December 31, 2021
 
Cost
Accumulated
Amortization
Net
Weighted-Average
Useful Life
(In Years)
Customer relationships$41,515 $(13,096)$28,419 10.8
Developed technology662,106 (81,902)580,204 10.2
Non-compete agreement286 (286) 0.0
Trade name21,085 (2,207)18,878 12.0
Patent assets and licenses495 (136)359 15.0
Right to develop new technology19,359 (1,613)17,746 15.0
In-process research and development542,388 — 542,388 n/a
 $1,287,234 $(99,240)$1,187,994 10.4
Acquisition-related intangibles included in the above tables are generally finite-lived, other than in-process research and development, which has an indefinite life, and are carried at cost less accumulated amortization. Customer relationships related to our 2017 business combinations are being amortized on an accelerated basis in proportion to estimated cash flows. All other finite-lived acquisition-related intangibles are being amortized on a straight-line basis over their estimated lives, which approximates the pattern in which the economic benefits of the intangible assets are expected to be realized. During the nine months ended September 30, 2022, the Company launched the ArcherDX STRATAFIDE and PCM products resulting in the reclassification of $512.4 million of the related in-process research and development (IPR&D) intangibles to developed technology intangibles, which are finite-lived and amortizable. Amortization expense was $29.6 million and $15.6 million for the three months ended September 30, 2022 and 2021, respectively, and $79.8 million and $41.2 million for the nine months ended September 30, 2022 and 2021, respectively. Amortization expense is recorded in cost of revenue, research and development, and selling and marketing expense.
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As part of the ArcherDX acquisition in October 2020, we acquired intangible assets including core developed technology and the right to develop new technology related to an existing agreement between ArcherDX and a vendor. The core developed technology has several applications, which we intend to continue to leverage in other areas of the business, including PCM. In conjunction with the strategic realignment plan, management decided to exit the IVD product offering in August 2022. During the three and nine months ended September 30, 2022, we wrote-off the remaining carrying value of the right to develop new technology intangible asset of $16.9 million, which is included in restructuring expense in the condensed consolidated statements of operations. See Note 11, "Restructuring" for additional information.
In conjunction with the strategic realignment plan, management also decided to exit the in-vitro fertilization ("IVF") product offering. As a result, we wrote-off a patent licensing agreement intangible asset with a carrying value of $0.3 million included in restructuring expense in the condensed consolidated statements of operations. See Note 11, "Restructuring" for additional information.
See Note 4, "Business combinations" for additional information on the sale of our interest in One Codex and the related disposition of developed technology and customer relationships during the three and nine months ended September 30, 2022.
The following table summarizes our estimated future amortization expense of intangible assets with finite lives as of September 30, 2022 (in thousands):
2022 (remainder of year)$28,636 
2023114,440 
2024114,162 
2025112,408 
2026112,374 
Thereafter559,165 
Total estimated future amortization expense$1,041,185 
In December 2021, we acquired 100% of the equity interest of Stratify Genomics Inc., a cancer risk stratification company, for $29.0 million consisting of 1.0 million shares of common stock, $4.2 million in assumed liabilities, and $8.0 million in cash. We accounted for this transaction as an asset acquisition, as substantially all of the fair value is concentrated in the developed technology acquired. As goodwill is not recorded under an asset acquisition, an $8.7 million deferred tax liability arising from book/tax basis differences increased the value of the assets acquired above the purchase price. As a result, the fair value of the developed technology is $37.5 million, which will be amortized over eight years to cost of revenue. The remaining purchase price of $0.2 million is the fair value of cash and cash equivalents.
In July 2021, we acquired 100% of the equity interest of Medneon LLC, a digital health artificial intelligence company, for $34.1 million consisting of 0.4 million shares of common stock, $