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Genomic Health Inc. Message Board

  • rortiz23 rortiz23 Mar 9, 2006 6:42 PM Flag

    Revenue recognition

    who are the external auditors for GHDX?
    Can anyone tell me what GAAP principle they use to recognize revenue?

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    • GHDX has previously reported that over 200 third party insurance carriers cover their test. They do not specify the level of coverage though.

      The most recent news is on Medicare which previously never covered the test.

      For all others, they follow the process you detail which is to fight denials whenever they occur.

    • I was under the impression that med insurance did not cover this test. Claim originally turned down, appeal twice and lo and behold, the carrier will cover it. Considering that the test might save the insurance company forty grand in chemo costs, I expect that more insurers will be covering this in the future.

    • it seems there a bunch of shorts on this message board,otherwise they would not be here bad mouthing ghdx

    • This is a crock of shite. Typical FDA running interference for the chosen few.

    • "I think there is a lot more in common with Correlogic than you do. Quest and Lab Corp planned to sell Ovacheck under CLIA. Gutman stopped it because their was unique software involved which he determined to be a medical device."


      You have actually identified the difference without even recognizing it. Correlogic sold OvaCheck to Quest and LabCorp for them to offer the service. The fact that the software was sold by Correlogic makes them a "manufacturer" in the eyes of the FDA. Manufacturers are thus responsible for complying with FDA rules.

      Conversely, if Quest and LabCorp develop a "homebrew" test, which they commonly do (CF, HIV Resistance, various ID tests, etc), those tests are ONLY offered as services and are NOT controlled by FDA.

      The delineation is when you sell something to someone else who then offers a test/service using that product...that is within FDA jurisdiction.

      Everything else is right...Quest gets their own test and GHDX will fade quickly. Cost structure would kill them if price goes down. At current prices, they are not able to profit, let alone a 50% cut. And that is giving GHDX the benefit of the doubt that they can retain their volume.

    • I have never looked into your first question so can;t help there.

      For revenue, they have choosen to recognize product revenue as the payment is recieved. This is a more conservative approach for a service under GAAP rules.

      Since they are offering a service, they would be well within the rules to report revenue at the time the service is completed. But with the time it can take to get payed and the potential variation between the bill amount and the amount reimbursed on an individual payer level, recognizing at the time of service would just create a substaintial amount of explaining for the mgmt team.

 
GHDX
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