7. Thyroid Cytopathology 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 with the specialized pathology practice, Thyroid Cytopathology Partners ("TCP"), 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. Beginning in May 2013, TCP reimburses the Company for a proportionate share of the Company's rent and related operating expense costs for the leased facility. 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 statements of operations and comprehensive loss. All amounts to be received from TCP will be recorded in the same period as the corresponding lease costs. The Company incurred $3.2 million, $1.8 million and $434,000 in cytopathology testing and evaluation services expenses with TCP in the years ended December 31, 2013, 2012 and 2011, respectively. The Company also reimbursed TCP for licensure fees of $137,000 and $83,000 in the years ended December 31, 2012 and 2011, respectively. Beginning in 2013, the Company is no longer obligated to reimburse TCP for licensure fees. Expenses for testing and evaluation services and reimbursed professional licensure fees are included in cost of revenue in the statements of operations and comprehensive loss. The Company's outstanding obligations to TCP for cytopathology testing services were $588,000 and $458,000 as of December 31, 2013 and 2012, respectively, and are included in accounts payable in the Company's balance sheets.
TCP's portion of rent and related operating expense costs for the shared space at the Austin, Texas facility was $49,000 for the year ended December 31, 2013. The reduction to rent expense is included in the Company's cost of revenue in the statements of operations and comprehensive loss. TCP reimbursed the Company $59,000 in 2013 and the resulting excess payment of $10,000 is included in accounts payable in the Company's balance sheet at December 31, 2013.