Cancer Genetics, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Revenue and Accounts Receivable

Revenue and Accounts Receivable

6 Months Ended

Jun. 30, 2017

Revenue by service type for the three and six months ended June 30, 2017 and 2016 is comprised of the following (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Biopharma Services	$	3,288	$	4,219	7,007		$	7,569
Clinical Services	3,053		2,542		6,007		4,998
Discovery Services	263		240		556		502
	$	6,604	$	7,001	$	13,570	$	13,069

Accounts receivable by service type at June 30, 2017 and December 31, 2016 consists of the following (in thousands):



	June 30, 2017			December 31, 2016
Biopharma Services	$	2,588		$	3,683
Clinical Services	11,783			8,972
Discovery Services	407			480
Allowance for doubtful accounts	(1,623		)	(1,387		)
	$	13,155		$	11,748



Allowance for Doubtful Accounts (in thousands)
Balance, December 31, 2016	$	1,387
Bad debt expense	236
Balance, June 30, 2017	$	1,623

Revenue for Biopharma Services are customized solutions for patient stratification and treatment selection through an extensive suite of DNA-based testing services. Clinical Services are tests performed to provide information on diagnosis, prognosis and theranosis of cancers to guide patient management. These tests can be billed to Medicare, another third party insurer or the referring community hospital or other healthcare facility. Discovery Services are services that provide the tools and testing methods for companies and researchers seeking to identify new DNA-based biomarkers for disease. The breakdown of our Clinical Services revenue (as a percent of total revenue) is as follows:



	Three Months Ended June 30,		Six Months Ended June 30,
	2017	2016	2017	2016
Medicare	16%	12%	15%	13%
Other insurers	24%	17%	23%	19%
Other healthcare facilities	6%	7%	6%	6%
	46%	36%	44%	38%

We have historically derived a significant portion of our revenue from a limited number of test ordering sites, although the test ordering sites that generate a significant portion of our revenue have changed from period to period. Test ordering sites account for all of our Clinical Services along with a portion of the Biopharma Services revenue. Our test ordering sites are largely hospitals, cancer centers, reference laboratories, physician offices and biopharmaceutical companies. Oncologists and pathologists at these sites order the tests on behalf of the needs of their oncology patients or as part of a clinical trial sponsored by a biopharmaceutical company in which the patient is being enrolled. We generally do not have formal, long-term written agreements with such test ordering sites, and, as a result, we may lose a significant test ordering site at any time.

The top five test ordering sites during the three months ended June 30, 2017 and 2016 accounted for approximately 45% and 40% of our testing volumes, respectively. During the three months ended June 30, 2017, there was one biopharmaceutical company which accounted for approximately 12% of our total revenue. During the three months ended June 30, 2016, there were two biopharmaceutical companies which accounted for approximately 15% and 11% of our total revenue, respectively.

The top five test ordering sites during the six months ended June 30, 2017 and 2016 accounted for approximately 39% and 38% of our testing volumes, respectively. During the six months ended June 30, 2017, there was one biopharmaceutical company which accounted for approximately 11% of our total revenue. During the six months ended June 30, 2016, there were two biopharmaceutical companies which accounted for approximately 13% and 11% of our total revenue, respectively.