Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 03, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | TACTILE SYSTEMS TECHNOLOGY INC | |
Entity Central Index Key | 1,027,838 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 18,074,207 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 25,313 | $ 23,968 |
Marketable securities | 15,928 | 19,944 |
Accounts receivable, net | 14,209 | 17,623 |
Inventories | 14,656 | 11,040 |
Income taxes receivable | 3,947 | 2,119 |
Prepaid expenses and other current assets | 1,116 | 2,178 |
Total current assets | 75,169 | 76,872 |
Property and equipment, net | 3,912 | 3,776 |
Other assets | ||
Patent costs, net | 2,157 | 2,218 |
Medicare accounts receivable, long-term | 2,971 | 2,718 |
Deferred income taxes | 2,664 | 2,662 |
Other non-current assets | 200 | 201 |
Total other assets | 7,992 | 7,799 |
Total assets | 87,073 | 88,447 |
Current liabilities | ||
Accounts payable | 5,234 | 4,253 |
Accrued payroll and related taxes | 4,856 | 6,706 |
Accrued expenses | 2,031 | 2,598 |
Future product royalties | 15 | 17 |
Other current liabilities | 603 | 945 |
Total current liabilities | 12,739 | 14,519 |
Long-term liabilities | ||
Accrued warranty reserve, long-term | 1,172 | 1,141 |
Total liabilities | 13,911 | 15,660 |
Commitments and Contingencies (see Note 8) | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding as of March 31, 2018 and December 31, 2017 | ||
Common stock, $0.001 par value, 300,000,000 shares authorized; 18,062,795 shares issued and 18,036,709 shares outstanding as of March 31, 2018; 17,872,465 shares issued and 17,846,379 shares outstanding as of December 31, 2017 | 18 | 18 |
Additional paid-in capital | 70,655 | 70,224 |
Retained earnings | 3,032 | 3,082 |
Accumulated other comprehensive loss | (50) | (44) |
Less: treasury stock, at cost — 26,086 shares as of March 31, 2018 and December 31, 2017 | (493) | (493) |
Total stockholders’ equity | 73,162 | 72,787 |
Total liabilities and stockholders’ equity | $ 87,073 | $ 88,447 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares authorized | 300,000,000 | 300,000,000 |
Common Stock, Shares, Issued | 18,062,795 | 17,872,465 |
Common Stock, Shares, Outstanding | 18,036,709 | 17,846,379 |
Treasury stock (in shares) | 26,086 | 26,086 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statements of Operations | ||
Revenues, net | $ 26,848 | $ 19,850 |
Cost of goods sold | 7,309 | 5,624 |
Gross profit | 19,539 | 14,226 |
Operating expenses | ||
Sales and marketing | 12,557 | 10,166 |
Research and development | 1,437 | 1,118 |
Reimbursement, general and administrative | 7,372 | 5,874 |
Total operating expenses | 21,366 | 17,158 |
Loss from operations | (1,827) | (2,932) |
Other income | 91 | 55 |
Loss before income taxes | (1,736) | (2,877) |
Income tax benefit | (1,686) | (1,373) |
Net loss | $ (50) | $ (1,504) |
Net loss per common share | ||
Basic (in dollars per share) | $ 0 | $ (0.09) |
Diluted (in dollars per share) | $ 0 | $ (0.09) |
Weighted-average common shares used to compute net loss per common share | ||
Basic (in shares) | 17,996,672 | 16,878,443 |
Diluted (in shares) | 17,996,672 | 16,878,443 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net loss | $ (50) | $ (1,504) |
Other comprehensive loss | ||
Unrealized loss on available-for-sale securities | (7) | (13) |
Income tax related to items of other comprehensive loss | 1 | 6 |
Total other comprehensive loss | (6) | (7) |
Comprehensive loss | $ (56) | $ (1,511) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands | Common Stock | Additional Paid In Capital. | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Balances at the beginning at Dec. 31, 2016 | $ 17 | $ 62,406 | $ (2,773) | $ (11) | $ 59,639 | |
Balances at the beginning (in shares) at Dec. 31, 2016 | 16,833,737 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 957 | 957 | ||||
Exercise of common stock options and warrants and vesting of restricted stock units | 100 | 100 | ||||
Exercise of common stock options and warrants and vesting of restricted stock units (in shares) | 75,417 | |||||
Taxes paid for net share settlement of restricted stock units | (14) | (14) | ||||
Comprehensive loss for the period | (1,504) | (7) | (1,511) | |||
Balances at the end at Mar. 31, 2017 | $ 17 | 63,449 | (4,277) | (18) | 59,171 | |
Balances at the end (in shares) at Mar. 31, 2017 | 16,909,154 | |||||
Balances at the beginning at Dec. 31, 2017 | $ 18 | 70,224 | 3,082 | (44) | $ (493) | 72,787 |
Balances at the beginning (in shares) at Dec. 31, 2017 | 17,846,379 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 1,481 | 1,481 | ||||
Exercise of common stock options and warrants and vesting of restricted stock units | 138 | 138 | ||||
Exercise of common stock options and warrants and vesting of restricted stock units (in shares) | 230,532 | |||||
Taxes paid for net share settlement of restricted stock units | (1,188) | (1,188) | ||||
Taxes paid for net share settlement of restricted stock units | (40,202) | |||||
Comprehensive loss for the period | (50) | (6) | (56) | |||
Balances at the end at Mar. 31, 2018 | $ 18 | $ 70,655 | $ 3,032 | $ (50) | $ (493) | $ 73,162 |
Balances at the end (in shares) at Mar. 31, 2018 | 18,036,709 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (50) | $ (1,504) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 463 | 298 |
Stock-based compensation expense | 1,481 | 957 |
Change in allowance for doubtful accounts | (198) | (330) |
Changes in assets and liabilities: | ||
Accounts receivable | 3,612 | 4,044 |
Inventories | (3,616) | (379) |
Income taxes | (1,828) | (1,378) |
Prepaid expenses and other assets | 63 | 197 |
Medicare accounts receivable – long-term | (253) | (46) |
Accounts payable | 885 | (533) |
Accrued payroll and related taxes | (1,850) | (1,806) |
Accrued expenses and other liabilities | (880) | 183 |
Future product royalties | (2) | (19) |
Net cash used in operating activities | (2,173) | (316) |
Cash flows from investing activities | ||
Proceeds from sales and maturities of marketable securities | 5,000 | 1,000 |
Purchases of marketable securities | (10,049) | |
Purchases of property and equipment | (432) | (700) |
Patent costs | (8) | |
Net cash provided by (used in) investing activities | 4,568 | (9,757) |
Cash flows from financing activities | ||
Taxes paid for net share settlement of restricted stock units | (1,188) | (14) |
Proceeds from exercise of common stock options and warrants | 138 | 100 |
Net cash (used in) provided by financing activities | (1,050) | 86 |
Net change in cash and cash equivalents | 1,345 | (9,987) |
Cash and cash equivalents – beginning of period | 23,968 | 30,701 |
Cash and cash equivalents – end of period | 25,313 | 20,714 |
Supplemental cash flow disclosure | ||
Cash paid for taxes | 284 | 5 |
Capital expenditures incurred but not yet paid | $ 96 | $ 238 |
Nature of Business and Operatio
Nature of Business and Operations | 3 Months Ended |
Mar. 31, 2018 | |
Nature of Business and Operations | |
Nature of Business and Operations | Note 1. Nature of Business and Operations Tactile Systems Technology, Inc. (“we,” “us,” and “our”) is the sole manufacturer and distributor of the Flexitouch and Entre systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition, and the Actitouch system, a medical device used to treat venous leg ulcers and chronic venous insufficiency. We provide our products for use in the home and sell them through vascular, wound and lymphedema clinics throughout the United States. We do business as “Tactile Medical.” We were originally incorporated in Minnesota under the name Tactile Systems Technology, Inc. on January 30, 1995. During 2006, we established a merger corporation and subsequently, on July 21, 2006, merged with and into this merger corporation, resulting in us being reincorporated as a Delaware corporation. The resulting corporation assumed the name Tactile Systems Technology, Inc. In September 2013, we began doing business as “Tactile Medical.” In connection with preparing for our initial public offering, our board of directors and stockholders approved a 1-for-2.820044 reverse stock split of our capital stock. The reverse stock split became effective in June 2016. On August 2, 2016 we closed the initial public offering of our common stock, which resulted in the sale of 4,120,000 shares of our common stock at a public offering price of $10.00 per share. We received net proceeds from the initial public offering of approximately $35.4 million, after deducting underwriting discounts and approximately $2.9 million of transaction expenses. In connection with the closing of the initial public offering, all of our outstanding redeemable convertible preferred stock automatically converted to common stock on August 2, 2016. At August 2, 2016, we did not have any redeemable convertible preferred stock issued or outstanding. Our business is affected by seasonality. In the first quarter of each year, when most patients have started a new insurance year and have not yet met their annual out-of-pocket payment obligations, we experience substantially reduced demand for our products. We typically experience higher sales in the third and fourth quarters as a result of patients having paid their annual insurance deductibles in full, thereby reducing their out-of-pocket costs for our products, and because patients often spend the remaining balances in their healthcare flexible spending accounts at that time. This seasonality applies only to purchases of our products by patients covered by commercial insurance and is not relevant to Medicare, Medicaid, or the Veterans Administration, as those payers do not have plans that include patient deductibles for purchases of our products. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Basis of Presentation | |
Basis of Presentation | Note 2. Basis of Presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. We have reclassified certain prior year amounts to conform to the current year’s presentation. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, or for any other interim period or for any future year. The condensed consolidated interim financial statements 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, 2017. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities. JOBS Act Accounting Election As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We have elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Significant Accounting Policies During the three months ended March 31, 2018 there were no material changes in our significant accounting policies. See Note 3 - “Summary of Significant Accounting Policies” to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 for information regarding our significant accounting policies. Recent Accounting Pronouncements We are an “emerging growth company” as defined by the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, as a result, our financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers .” The new section will replace Section 605, “ Revenue Recognition ,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between U.S. practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The updated guidance is effective for interim and annual reporting periods beginning on or after December 15, 2018 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. Prior to adoption of the new guidance, we will evaluate the anticipated impact of the adoption of this updated guidance on our consolidated financial statements, using external technical resources to assist us in performing this assessment prior to December 31, 2018. In February 2016, the FASB issued ASU 2016-02, “ Leases ” (Topic 842), which supersedes the existing guidance for lease accounting, “ Leases” (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2019 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial adoption, with an option to elect to use certain transition relief. We plan to further evaluate the anticipated impact of the adoption of this ASU on our consolidated financial statements in future periods. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments — Credit Losses ,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU is effective for interim and annual periods beginning after December 15, 2020 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. Therefore, we plan to further evaluate the anticipated impact of the adoption of this ASU on our consolidated financial statements in future periods. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230) — Classification of Certain Cash Receipts and Cash Payments ,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2018 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. We do not anticipate any material impact on our consolidated financial statements in future periods as a result of the adoption of this ASU. |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2018 | |
Marketable Securities | |
Marketable Securities | Note 4. Marketable Securities Our investments in marketable securities, all of which have original contractual maturities of 12 to 25 months, are classified as available-for-sale and consist of the following: As of March 31, 2018 Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 10,998 $ — $ 53 $ 10,945 Corporate debt securities and certificates of deposit 5,007 — 24 4,983 Marketable securities $ 16,005 $ — $ 77 $ 15,928 As of December 31, 2017 Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 11,997 $ — $ 56 $ 11,941 Corporate debt securities and certificates of deposit 8,017 — 14 8,003 Marketable securities $ 20,014 $ — $ 70 $ 19,944 Unrealized losses and fair value of securities available for sale aggregated by investment category and the length of time the securities were in a continuous loss position were as follows: As of March 31, 2018 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 3,972 $ 27 $ 6,973 $ 26 $ 10,945 $ 53 Corporate debt securities and certificates of deposit 3,988 20 995 4 4,983 24 Marketable securities $ 7,960 $ 47 $ 7,968 $ 30 $ 15,928 $ 77 As of December 31, 2017 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 5,974 $ 25 $ 5,967 $ 31 $ 11,941 $ 56 Corporate debt securities and certificates of deposit 7,005 13 998 1 8,003 14 Marketable securities $ 12,979 $ 38 $ 6,965 $ 32 $ 19,944 $ 70 |
Patent Costs, Net
Patent Costs, Net | 3 Months Ended |
Mar. 31, 2018 | |
Patent Costs, Net | |
Patent Costs, Net | Note 5. Patent Costs, Net Our patents, all of which are subject to amortization, are summarized as follows: As of As of (In thousands) March 31, 2018 December 31, 2017 Patents $ 3,537 $ 3,536 Less: accumulated amortization (1,380) (1,318) Net patents $ 2,157 $ 2,218 Amortization expense was $0.1 million for each of the three months ended March 31, 2018 and 2017. Future amortization expenses are expected as follows: (In thousands) 2018 (April 1 - December 31) $ 187 2019 249 2020 249 2021 249 2022 249 Thereafter 974 Total $ 2,157 The weighted-average remaining amortization period for these patents was nine years as of March 31, 2018. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses | |
Accrued Expenses | Note 6. Accrued Expenses Accrued expenses consisted of the following: As of As of (In thousands) March 31, 2018 December 31, 2017 Accrued taxes $ 101 $ 1,070 Warranty 648 531 Travel and business 558 453 Legal and consulting 486 317 Deferred rent 169 173 Clinical studies 27 15 Other 42 39 Total $ 2,031 $ 2,598 |
Line of Credit - Bank
Line of Credit - Bank | 3 Months Ended |
Mar. 31, 2018 | |
Line of Credit — Bank | |
Line of Credit — Bank | Note 7. Line of Credit — Bank At March 31, 2017 we had a $2.0 million line of credit with a bank that bore interest based on the prime rate. There was no outstanding balance on the line of credit as of March 31, 201 7 . The line of credit expired on May 11, 2017, and there was no outstanding balance on the line as of that date. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Lease Obligations In March 2008, we entered into a non-cancelable operating lease agreement for building space for our corporate headquarters that provides for monthly rent, real estate taxes and operating expenses. This lease was subsequently extended to July 31, 2021. In July 2016, we entered into a non-cancelable operating lease agreement for building space to accommodate the relocation of our manufacturing, quality, and research and development functions. This lease agreement extends through November 2021 and provides for monthly rent, real estate taxes and operating expenses. Rent expense was $0.3 million for each of the three months ended March 31, 2018 and 2017. In July 2016, we entered into a fleet vehicle lease program for certain members of our field sales organization. At March 31, 2018, we had 12 vehicles with future lease obligations under this program. We also have operating lease agreements for certain computer and office equipment that expire in 2020. The leases provide an option to purchase the related equipment at fair market value at the end of the lease. Future base minimum lease payments for all lease obligations are expected to be as follows for the years ending December 31: Computer/Office Fleet Vehicle (In thousands) Buildings Equipment Program Total 2018 (April 1 - December 31) $ 583 $ 46 $ 57 $ 686 2019 799 51 3 853 2020 801 34 — 835 2021 526 — — 526 Thereafter — — — — Total $ 2,709 $ 131 $ 60 $ 2,900 Major Vendors We had purchases from two major vendors that accounted for 33% of our total purchases for the three months ended March 31, 2018. We had purchases from three major vendors that accounted for 35% of our total purchases for the three months ended March 31, 2017. Purchase Commitments We issued purchase orders in 2017 totaling $10.7 million for items that we expect to receive between April and December of 2018. Employment Agreements We have entered into employment agreements with certain of our officers. The agreements provide for payment of severance ranging from 9 to 15 months of then-current annualized base salary in the event of termination by us without cause or by the employee for good reason or, in the case of two of the officers, death, disability, or as a result of a qualifying termination after a change in control. The agreements also provide for payment of an amount equal to 9 to 15 months of the then-current annual target bonus in the event of termination by us without cause or by the employee for good reason, or, in the case of two of the officers, death, disability, or as a result of a qualifying termination after a change in control. In addition, the agreements provide for the vesting of certain equity compensation through the date of termination in the event of termination by us without cause or by the employee for good reason. Retirement Plan We maintain a 401(k) retirement plan for our employees in which eligible employees can contribute a percentage of their pre-tax compensation. We may also make discretionary contributions to the 401(k) plan. We made contributions of $53,000 and $45,000 for the three months ended March 31, 2018 and 2017, respectively. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity | |
Stockholders' Equity | Note 9. Stockholders' Equity We completed an initial public offering of our common stock on August 2, 2016, in which we sold 4,120,000 shares of our common stock at a public offering price of $10.00 per share. Immediately prior to the completion of the initial public offering, all then-outstanding shares of our Series A and Series B preferred stock were converted into 5,924,453 shares of our common stock. Our Series A preferred stock converted to common stock at a ratio of 1-for-1.03 and our Series B preferred stock converted to common stock at a ratio of 1-for-1. In addition, immediately prior to the completion of the initial public offering, we issued 2,354,323 additional shares of our common stock that our Series A and Series B preferred stockholders were entitled to receive in connection with the conversion of the preferred stock, and we issued 956,842 shares of our common stock to pay accrued dividends on our Series B preferred stock. We also paid $8.2 million in cumulative accrued dividends to our Series A convertible preferred stockholders in connection with the initial public offering, including $0.1 million of dividends paid to the holders of the common restricted shares. Stock-Based Compensation Our 2016 Equity Incentive Plan (the “2016 Plan”) authorizes us to grant stock options, stock appreciation rights, restricted stock, stock units and other stock-based awards to employees, non-employee directors and certain consultants and advisors. There were up to 4,800,000 shares of our common stock initially reserved for issuance pursuant to the 2016 Plan. The 2016 Plan provides that the number of shares reserved and available for issuance under the 2016 Plan will automatically increase annually on January 1 of each calendar year, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the lesser of: (a) 5% of the number of common shares of stock outstanding as of December 31 of the immediately preceding calendar year, or (b) 2,500,000 shares; provided, however, that our Board of Directors may determine that any annual increase be a lesser number. In addition, all awards granted under our 2007 Omnibus Stock Plan and our 2003 Stock Option Plan that were outstanding when the 2016 Plan became effective and that are forfeited, expire, are cancelled, are settled for cash or otherwise not issued, will become available for issuance under the 2016 Plan. Effective January 1, 2017, 841,686 shares were added to the 2016 Plan, as available for issuance thereunder, pursuant to the automatic increase feature of the 2016 Plan. Effective January 1, 2018, 892,318 shares were added to the 2016 Plan, as available for issuance thereunder, pursuant to the automatic increase feature of the 2016 Plan. As of March 31, 2018, 5,234,358 shares were available for future grant pursuant to the 2016 Plan. Upon adoption and approval of the 2016 Plan, all of our previous equity incentive compensation plans were terminated. However, existing awards under those plans continue to vest in accordance with the original vesting schedules and will expire at the end of their original terms. We recorded stock-based compensation expense of $1.5 million and $1.0 million for the three months ended March 31, 2018 and 2017, respectively. This expense was allocated as follows: Three Months Ended March 31, (In thousands) 2018 2017 Cost of goods sold $ 40 $ 49 Sales and marketing expenses 652 315 Research and development expenses 69 23 Reimbursement, general and administrative expenses 720 570 Total stock-based compensation expense $ 1,481 $ 957 Stock Options Stock options issued to participants other than non-employees vest over three or four years and typically have a contractual term of seven or ten years. Annually, stock options are granted to our non-employee directors on the date of the annual meeting of stockholders and vest in full on the earlier of one year after the date of grant or on the date of the next year’s annual meeting of stockholders. These options have a contractual term of seven years. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for stock options was $0.5 million and $0.2 million for the three months ended March 31, 2018 and 2017, respectively. At March 31, 2018, there was approximately $5.0 million of total unrecognized pre-tax stock option expense under our equity compensation plans, which is expected to be recognized on a straight-line basis over a weighted-average period of 3.2 years. Stock option activity for the three months ended March 31, 2018 is summarized as follows: Weighted- Weighted- Average Average Aggregate Options Exercise Price Remaining Intrinsic (In thousands except share, per share and years data) Outstanding Per Share 1 Contractual Life Value 2 Balance at December 31, 2017 1,487,720 $ 8.41 6.2 years $ 29,611 Granted 88,243 $ 32.36 Exercised (116,177) $ 1.19 $ 3,351 Forfeited (14,697) $ 19.02 Balance at March 31, 2018 1,445,089 $ 10.35 6.3 years $ 31,065 Options exercisable at March 31, 2018 906,063 $ 2.75 4.9 years $ 26,321 (1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. Options exercisable of 1,338,155 as of March 31, 2017 had a weighted average exercise price of $1.07 per share. Stock-Settled Restricted Stock Units We have granted both time-based and performance-based stock-settled restricted stock units to certain participants under the 2016 Plan. Time-based stock-settled restricted stock units granted under the 2016 Plan vest over one to three years. These awards are stock-settled with common shares. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for time-based stock-settled restricted stock units was $0.8 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was approximately $6.6 million of total unrecognized pre-tax compensation expense related to outstanding time-based stock-settled restricted stock units that is expected to be recognized over a weighted-average period of 2.3 years. Our time-based stock-settled restricted stock unit activity for the three months ended March 31, 2018 was as follows: Weighted- Average Grant Aggregate Units Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2017 441,507 $ 16.38 $ 12,795 Granted 77,794 $ 32.36 Vested (114,905) $ 12.00 Cancelled (9,350) $ 24.24 Balance at March 31, 2018 395,046 $ 20.61 $ 12,562 Deferred and unissued at March 31, 2018 (2) 2,763 $ 24.37 $ 88 (1) The aggregate intrinsic value of stock-settled restricted stock units outstanding was based on our closing stock price on the last trading day of the period. (2) For the three months ended March 31, 2018, there were 550 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the directors’ termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of March 31, 2018, there were 2,763 outstanding restricted stock units that had been previously granted to non-employee directors in lieu of their quarterly director retainer payments. These restricted stock units are not included in the “Balance at March 31, 2018” line in the table above because they are fully vested. In February 2018, we granted 67,982 performance-based stock-settled restricted stock units (“PSUs”), which represents the target number of PSUs under these awards, to certain participants under the 2016 Plan. These PSUs have both performance-based and time-based vesting features. The PSUs will be earned if and to the extent performance goals based on revenue and adjusted EBITDA are achieved in 2019. The number of PSUs earned will depend on the level at which the performance targets are achieved, and can range from 50% of target if threshold performance is achieved and up to 150% of target if maximum performance is achieved. One third of the earned PSUs will vest on the date the Compensation and Organization Committee certifies the number of PSUs earned, and the remaining two thirds of the earned PSUs will vest on the first anniversary of that certification date. All earned and vested PSUs will be settled in shares of common stock. Stock-based compensation expense included in our Condensed Consolidated Statements of Operations for PSUs was $72,517 and $0 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was $2.1 million of total unrecognized pre-tax compensation expense related to the PSUs that is expected to be recognized over a weighted average period of 2.9 years. Employee Stock Purchase Plan Our employee stock purchase plan (“ESPP”), which was approved by our Board of Directors on April 27, 2016 and by our stockholders on June 20, 2016, allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all our employees and employees of participating subsidiaries. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85% of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The plan provides for six-month purchase periods, beginning on May 16 and November 16 of each calendar year. A total of 1.6 million shares of common stock were initially reserved for issuance under the ESPP, and this share reserve will automatically be supplemented each January 1, commencing in 2017 and ending on and including January 1, 2026, by an amount equal to the least of (1) 1% of the shares of our common stock outstanding on the immediately preceding December 31, (2) 500,000 shares or (3) such lesser amount as our Board of Directors may determine. Effective January 1, 2018, 178,463 shares were added to the ESPP, as available for issuance thereunder, pursuant to the automatic increase feature of the plan. As of March 31, 2018, 1,639,668 shares were available for future issuance under the ESPP. We recognized $0.2 million in stock-based compensation expense associated with the ESPP in each of the three months ended March 31, 2018 and 2017. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | Note 10. Income Taxes We record our interim provision for income taxes by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. We recorded an income tax benefit of $1.7 million and $1.4 million for the three months ended March 31, 2018 and 2017, respectively. The effective tax rate for the three months ended March 31, 2018 was a benefit of 97.1%, compared to a benefit of 47.7% for the three months ended March 31, 2017. The primary driver of the change in the effective tax rate was an increase in the tax benefits related to tax-deductible stock-based compensation activity, as well as a decrease in the quarterly book loss as compared to the same prior year period. Significant tax deductions included benefits with respect to the vesting of restricted stock units, exercises of non-qualified stock options, and disqualifying dispositions of incentive stock options and ESPP shares. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the “more likely than not” threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. As of March 31, 2018 we had an unrecognized tax benefit ("UTB") with respect to state income taxes of approximately $88,000. The UTB represents tax, interest, and penalties related to un-filed and unpaid income taxes in several state jurisdictions. We are currently pursuing actions to settle these outstanding liabilities. To date, we have settled a significant portion of our outstanding liabilities through voluntary settlements with various state taxing authorities. We are currently under examination by the Internal Revenue Service for our 2016 federal tax return. We are not currently under examination by any other taxing jurisdictions. In the event of any future tax assessments, we have elected to record the income taxes and any related interest and penalties as income tax expense on our statement of operations. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Net Loss Per Share | |
Net Income (Loss) Per Share Attributable to Common Stockholders | Note 11. Net Loss Per Share The following table sets forth the computation of our basic and diluted net loss: Three Months Ended March 31, (In thousands, except share and per share data) 2018 2017 Net loss $ (50) $ (1,504) Weighted-average shares outstanding 17,996,672 16,878,443 Effect of restricted stock units, common stock options, warrants, and employee stock purchase plan shares — — Weighted-average shares used to compute diluted net loss per share 17,996,672 16,878,443 Net loss per share - Basic $ $ (0.09) Net loss per share - Diluted $ $ (0.09) The following common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive: Three Months Ended March 31, 2018 2017 Restricted stock units 395,046 449,963 Common stock options 1,445,089 1,784,951 Employee stock purchase plan 68,114 — Total 1,908,249 2,234,914 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | Note 12. Fair Value Measurements We determine the fair value of our assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. We use a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1). The next highest priority is based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in non-active markets or other observable inputs (Level 2). The lowest priority is given to unobservable inputs (Level 3). The following provides information regarding fair value measurements for our cash equivalents and marketable securities as of March 31, 2018 and December 31, 2017 according to the three-level fair value hierarchy: As of March 31, 2018 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 19,335 $ — $ — $ 19,335 U.S. government and agency obligations — 10,945 — 10,945 Corporate debt securities — 4,983 — 4,983 Total $ 19,335 $ 15,928 $ — $ 35,263 As of December 31, 2017 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 9,212 $ — $ — $ 9,212 U.S. government and agency obligations 1,000 10,941 — 11,941 Corporate debt securities — 8,003 — 8,003 Total $ 10,212 $ 18,944 $ — $ 29,156 During the three months ended March 31, 2018, there were no transfers within the three-level hierarchy. A significant transfer is recognized when the inputs used to value a security have been changed, which merits a transfer between the disclosed levels of the valuation hierarchy. The fair values for our money market mutual funds, U.S. government and agency obligations and corporate debt securities are determined based on valuations provided by external investment managers who obtain them from a variety of industry standard data providers. The carrying amounts of financial instruments such as cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses and other liabilities approximate their related fair values due to the short-term maturities of these items. Non-financial assets, such as equipment and leasehold improvements, and intangible assets are subject to non-recurring fair value measurements if they are deemed impaired. We had no re-measurements of non-financial assets to fair value in the three months ended March 31, 2018. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. We have reclassified certain prior year amounts to conform to the current year’s presentation. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, or for any other interim period or for any future year. The condensed consolidated interim financial statements 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, 2017. |
Principles of Consolidation | Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Tactile Systems Technology, Inc. and its wholly owned subsidiary, Swelling Solutions, Inc. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Comprehensive Income | Comprehensive Income Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Our comprehensive income represents net income adjusted for unrealized gains and losses on available-for-sale marketable securities. |
JOBS Act Accounting Election | JOBS Act Accounting Election As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We have elected to take advantage of the extended transition period for adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements We are an “emerging growth company” as defined by the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, (the “Securities Act”), for complying with new or revised accounting standards. In other words, an emerging growth company can selectively delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, as a result, our financial statements may not be comparable to the financial statements of issuers that are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies. Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers .” The new section will replace Section 605, “ Revenue Recognition ,” and creates modifications to various other revenue accounting standards for specialized transactions and industries. The section is intended to conform revenue accounting principles with a concurrently issued International Financial Reporting Standards to reconcile previously differing treatment between U.S. practices and those of the rest of the world and to enhance disclosures related to disaggregated revenue information. The updated guidance is effective for interim and annual reporting periods beginning on or after December 15, 2018 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. Prior to adoption of the new guidance, we will evaluate the anticipated impact of the adoption of this updated guidance on our consolidated financial statements, using external technical resources to assist us in performing this assessment prior to December 31, 2018. In February 2016, the FASB issued ASU 2016-02, “ Leases ” (Topic 842), which supersedes the existing guidance for lease accounting, “ Leases” (Topic 840). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are effective for interim and annual periods beginning after December 15, 2019 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after, the date of initial adoption, with an option to elect to use certain transition relief. We plan to further evaluate the anticipated impact of the adoption of this ASU on our consolidated financial statements in future periods. In June 2016, the FASB issued ASU No. 2016-13, “ Financial Instruments — Credit Losses ,” to require the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The ASU is effective for interim and annual periods beginning after December 15, 2020 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. Therefore, we plan to further evaluate the anticipated impact of the adoption of this ASU on our consolidated financial statements in future periods. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows (Topic 230) — Classification of Certain Cash Receipts and Cash Payments ,” to provide clarity on how certain cash receipt and cash payment transactions are presented and classified within the statement of cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2018 for private companies; this effective date is applicable to us due to the JOBS Act exemption described above. We do not anticipate any material impact on our consolidated financial statements in future periods as a result of the adoption of this ASU. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Marketable Securities | |
Schedule of marketable securities | As of March 31, 2018 Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 10,998 $ — $ 53 $ 10,945 Corporate debt securities and certificates of deposit 5,007 — 24 4,983 Marketable securities $ 16,005 $ — $ 77 $ 15,928 As of December 31, 2017 Unrealized Fair (In thousands) Cost Gains Losses Value U.S. government and agency obligations $ 11,997 $ — $ 56 $ 11,941 Corporate debt securities and certificates of deposit 8,017 — 14 8,003 Marketable securities $ 20,014 $ — $ 70 $ 19,944 |
Schedule of unrealized losses on investment | As of March 31, 2018 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 3,972 $ 27 $ 6,973 $ 26 $ 10,945 $ 53 Corporate debt securities and certificates of deposit 3,988 20 995 4 4,983 24 Marketable securities $ 7,960 $ 47 $ 7,968 $ 30 $ 15,928 $ 77 As of December 31, 2017 Less than 12 months 12 months or more Total Fair Unrealized Fair Unrealized Fair Unrealized (In thousands) Value Losses Value Losses Value Losses U.S. government and agency obligations $ 5,974 $ 25 $ 5,967 $ 31 $ 11,941 $ 56 Corporate debt securities and certificates of deposit 7,005 13 998 1 8,003 14 Marketable securities $ 12,979 $ 38 $ 6,965 $ 32 $ 19,944 $ 70 |
Patent Costs, Net (Tables)
Patent Costs, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Patent Costs, Net | |
Schedule of finite lived intangible assets | As of As of (In thousands) March 31, 2018 December 31, 2017 Patents $ 3,537 $ 3,536 Less: accumulated amortization (1,380) (1,318) Net patents $ 2,157 $ 2,218 |
Schedule of future amortization expense | (In thousands) 2018 (April 1 - December 31) $ 187 2019 249 2020 249 2021 249 2022 249 Thereafter 974 Total $ 2,157 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses | |
Schedule of Accrued Expenses | As of As of (In thousands) March 31, 2018 December 31, 2017 Accrued taxes $ 101 $ 1,070 Warranty 648 531 Travel and business 558 453 Legal and consulting 486 317 Deferred rent 169 173 Clinical studies 27 15 Other 42 39 Total $ 2,031 $ 2,598 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies | |
Schedule of future minimum lease payments | Computer/Office Fleet Vehicle (In thousands) Buildings Equipment Program Total 2018 (April 1 - December 31) $ 583 $ 46 $ 57 $ 686 2019 799 51 3 853 2020 801 34 — 835 2021 526 — — 526 Thereafter — — — — Total $ 2,709 $ 131 $ 60 $ 2,900 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity | |
Schedule of allocation of stock-based compensation expense | Three Months Ended March 31, (In thousands) 2018 2017 Cost of goods sold $ 40 $ 49 Sales and marketing expenses 652 315 Research and development expenses 69 23 Reimbursement, general and administrative expenses 720 570 Total stock-based compensation expense $ 1,481 $ 957 |
Schedule of stock option activity | Weighted- Weighted- Average Average Aggregate Options Exercise Price Remaining Intrinsic (In thousands except share, per share and years data) Outstanding Per Share 1 Contractual Life Value 2 Balance at December 31, 2017 1,487,720 $ 8.41 6.2 years $ 29,611 Granted 88,243 $ 32.36 Exercised (116,177) $ 1.19 $ 3,351 Forfeited (14,697) $ 19.02 Balance at March 31, 2018 1,445,089 $ 10.35 6.3 years $ 31,065 Options exercisable at March 31, 2018 906,063 $ 2.75 4.9 years $ 26,321 (1) The exercise price of each option granted during the period shown was equal to the market price of the underlying stock on the date of grant. (2) The aggregate intrinsic value of options exercised represents the difference between the exercise price of the option and the closing stock price of our common stock on the date of exercise. The aggregate intrinsic value of options outstanding represents the difference between the exercise price of the option and the closing stock price of our common stock on the last trading day of the period. |
Schedule of stock-settled restricted stock unit activity | Weighted- Average Grant Aggregate Units Date Fair Value Intrinsic (In thousands except unit and per unit data) Outstanding Per Unit Value (1) Balance at December 31, 2017 441,507 $ 16.38 $ 12,795 Granted 77,794 $ 32.36 Vested (114,905) $ 12.00 Cancelled (9,350) $ 24.24 Balance at March 31, 2018 395,046 $ 20.61 $ 12,562 Deferred and unissued at March 31, 2018 (2) 2,763 $ 24.37 $ 88 (1) The aggregate intrinsic value of stock-settled restricted stock units outstanding was based on our closing stock price on the last trading day of the period. (2) For the three months ended March 31, 2018, there were 550 restricted stock units granted to non-employee directors in lieu of their quarterly cash retainer payments. These restricted stock units were fully vested upon grant and represent the right to receive one share of common stock, per unit, upon the earlier of the directors’ termination of service as a director of ours or the occurrence of a change of control of us. These restricted stock units are included in the “Granted” line in the table above and are also included in the “Vested” line in the table above due to their being fully vested upon grant. As of March 31, 2018, there were 2,763 outstanding restricted stock units that had been previously granted to non-employee directors in lieu of their quarterly director retainer payments. These restricted stock units are not included in the “Balance at March 31, 2018” line in the table above because they are fully vested. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Net Loss Per Share | |
Schedule of computation of the basic and diluted net income (loss) per share | Three Months Ended March 31, (In thousands, except share and per share data) 2018 2017 Net loss $ (50) $ (1,504) Weighted-average shares outstanding 17,996,672 16,878,443 Effect of restricted stock units, common stock options, warrants, and employee stock purchase plan shares — — Weighted-average shares used to compute diluted net loss per share 17,996,672 16,878,443 Net loss per share - Basic $ $ (0.09) Net loss per share - Diluted $ $ (0.09) |
Schedule of potentially dilutive securities outstanding | Three Months Ended March 31, 2018 2017 Restricted stock units 395,046 449,963 Common stock options 1,445,089 1,784,951 Employee stock purchase plan 68,114 — Total 1,908,249 2,234,914 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Schedule of fair value measurements for marketable securities | As of March 31, 2018 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 19,335 $ — $ — $ 19,335 U.S. government and agency obligations — 10,945 — 10,945 Corporate debt securities — 4,983 — 4,983 Total $ 19,335 $ 15,928 $ — $ 35,263 As of December 31, 2017 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Assets Inputs Inputs (In thousands) (Level 1) (Level 2) (Level 3) Total Recurring Fair Value Measurements: Money market mutual funds $ 9,212 $ — $ — $ 9,212 U.S. government and agency obligations 1,000 10,941 — 11,941 Corporate debt securities — 8,003 — 8,003 Total $ 10,212 $ 18,944 $ — $ 29,156 |
Nature of Business and Operat28
Nature of Business and Operations (Details) $ / shares in Units, $ in Millions | Aug. 02, 2016USD ($)$ / sharesshares | Jun. 30, 2016 |
Subsidiary, Sale of Stock | ||
Reverse stock split ratio | 0.354604396 | |
IPO | ||
Subsidiary, Sale of Stock | ||
Number of shares of common stock sold | shares | 4,120,000 | |
IPO price per share (in dollars per share) | $ / shares | $ 10 | |
Proceeds from IPO | $ 35.4 | |
Expense Relating To Initial Public Offering | $ 2.9 |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Marketable Securities | ||
Cost | $ 16,005 | $ 20,014 |
Unrealized Losses | 77 | 70 |
Fair Value | 15,928 | 19,944 |
Fair value less than 12 months | 7,960 | 12,979 |
Unrealized losses, less than 12 months | 47 | 38 |
Fair value, 12 months or more | 7,968 | 6,965 |
Unrealized losses, 12 months or more | 30 | 32 |
Fair value, Total | 15,928 | 19,944 |
Unrealized loss, Total | $ 77 | 70 |
Minimum | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Contractual maturities of marketable securities | 12 months | |
Maximum | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Contractual maturities of marketable securities | 25 months | |
U.S. government and agency obligations | ||
Marketable Securities | ||
Cost | $ 10,998 | 11,997 |
Unrealized Losses | 53 | 56 |
Fair Value | 10,945 | 11,941 |
Fair value less than 12 months | 3,972 | 5,974 |
Unrealized losses, less than 12 months | 27 | 25 |
Fair value, 12 months or more | 6,973 | 5,967 |
Unrealized losses, 12 months or more | 26 | 31 |
Fair value, Total | 10,945 | 11,941 |
Unrealized loss, Total | 53 | 56 |
Corporate debt securities | ||
Marketable Securities | ||
Cost | 5,007 | 8,017 |
Unrealized Losses | 24 | 14 |
Fair Value | 4,983 | 8,003 |
Fair value less than 12 months | 3,988 | 7,005 |
Unrealized losses, less than 12 months | 20 | 13 |
Fair value, 12 months or more | 995 | 998 |
Unrealized losses, 12 months or more | 4 | 1 |
Fair value, Total | 4,983 | 8,003 |
Unrealized loss, Total | $ 24 | $ 14 |
Patent Costs, Net (Details)
Patent Costs, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Finite-Lived Intangible Assets | |||
Amortization expense | $ 100 | $ 100 | |
Future Amortization | |||
Weighted average remaining amortization period | 9 years | ||
Patents | |||
Finite-Lived Intangible Assets | |||
Patents | $ 3,537 | $ 3,536 | |
Less: accumulated amortization | (1,380) | (1,318) | |
Net patents | 2,157 | $ 2,218 | |
Future Amortization | |||
2018 (April 1 - December 31) | 187 | ||
2,019 | 249 | ||
2,020 | 249 | ||
2,021 | 249 | ||
2,022 | 249 | ||
Thereafter | $ 974 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses | ||
Accrued taxes | $ 101 | $ 1,070 |
Warranty | 648 | 531 |
Travel and business | 558 | 453 |
Legal and consulting | 486 | 317 |
Deferred rent | 169 | 173 |
Clinical studies | 27 | 15 |
Other | 42 | 39 |
Total | $ 2,031 | $ 2,598 |
Line of Credit - Bank (Details)
Line of Credit - Bank (Details) - Line of Credit - USD ($) $ in Thousands | May 11, 2017 | Mar. 31, 2017 |
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity | $ 2,000 | |
Outstanding line of credit | $ 0 | $ 0 |
Commitments and Contingencies33
Commitments and Contingencies (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018USD ($)item | Mar. 31, 2017USD ($) | |
Operating Leased Assets [Line Items] | ||
Rent expense | $ 300 | $ 300 |
Number of leased vehicles | item | 12 | |
2018 (April 1 - December 31) | $ 686 | |
2,019 | 853 | |
2,020 | 835 | |
2,021 | 526 | |
Total | 2,900 | |
Building | ||
Operating Leased Assets [Line Items] | ||
2018 (April 1 - December 31) | 583 | |
2,019 | 799 | |
2,020 | 801 | |
2,021 | 526 | |
Total | 2,709 | |
Computer/Office Equipment | ||
Operating Leased Assets [Line Items] | ||
2018 (April 1 - December 31) | 46 | |
2,019 | 51 | |
2,020 | 34 | |
Total | 131 | |
Fleet Car Program | ||
Operating Leased Assets [Line Items] | ||
2018 (April 1 - December 31) | 57 | |
2,019 | 3 | |
Total | $ 60 |
Commitments and Contingencies -
Commitments and Contingencies - Major Vendors (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2018USD ($)item | Mar. 31, 2017item | |
Concentration Risk [Line Items] | ||
Number of vendors | item | 2 | 3 |
Purchase commitments | ||
Purchase commitments | $ | $ 10.7 | |
Purchases | Vendor | ||
Concentration Risk [Line Items] | ||
Accounts Receivable (in percentage) | 33.00% | 35.00% |
Commitments and Contingencies35
Commitments and Contingencies - Deferred Compensation (Details) | 3 Months Ended |
Mar. 31, 2018item | |
Minimum | |
Deferred Compensation Arrangement with Individual, Share-based Payments | |
Severance term (in months) | 9 months |
Number of months of bonus payable | 9 months |
Maximum | |
Deferred Compensation Arrangement with Individual, Share-based Payments | |
Severance term (in months) | 15 months |
Number of months of bonus payable | 15 months |
Certain Officers | |
Deferred Compensation Arrangement with Individual, Share-based Payments | |
Number of officers | 2 |
Commitments and Contingencies36
Commitments and Contingencies - Retirement Plan (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
401(k) | ||
Defined Contribution Plan Disclosure | ||
Discretionary contributions | $ 53,000 | $ 45,000 |
Stockholders' Equity - Series A
Stockholders' Equity - Series A & B Preferred Stock (Details) $ / shares in Units, $ in Millions | Aug. 02, 2016USD ($)$ / sharesshares |
Preferred stock | |
Conversion of preferred stock to common stock (in shares) | 5,924,453 |
Number of new stock issued relating to the IPO that Series A and Series B preferred stockholders are entitled to receive | 2,354,323 |
IPO | |
Preferred stock | |
Number of shares of common stock sold | 4,120,000 |
Share price (in dollars per share) | $ / shares | $ 10 |
Series B Preferred Stock | |
Preferred stock | |
Preferred stock to common stock conversion ratio | 1 |
Number of new stock issued to pay accrued stock dividends relating to initial offering price | 956,842 |
Series A Preferred Stock | |
Preferred stock | |
Accrued Cumulative Dividends | $ | $ 8.2 |
Payment of dividends | $ | $ 0.1 |
Stockholders' Equity - Stock-Ba
Stockholders' Equity - Stock-Based Compensation General Information (Details) | Mar. 31, 2018shares |
2016 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares authorized | 4,800,000 |
Stockholders' Equity - Stock-39
Stockholders' Equity - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock-based compensation | ||||
Compensation expense | $ 1,481 | $ 957 | ||
Cost of goods sold | ||||
Stock-based compensation | ||||
Compensation expense | 40 | 49 | ||
Sales and marketing | ||||
Stock-based compensation | ||||
Compensation expense | 652 | 315 | ||
Research and development | ||||
Stock-based compensation | ||||
Compensation expense | 69 | 23 | ||
Reimbursement, general and administrative | ||||
Stock-based compensation | ||||
Compensation expense | $ 720 | $ 570 | ||
2016 Plan | ||||
Stock-based compensation | ||||
Shares available for future issuance | 5,234,358 | |||
Automatic annual increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent) | 5.00% | |||
Automatic annual increase to the number of shares reserved and available for issuance | 2,500,000 | |||
Increase in number of shares reserved and available for issuance | 892,318 | 841,686 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options and Restricted Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Feb. 28, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation, general disclosures | ||||||
Stock-based compensation expense | $ 1,481,000 | $ 957,000 | ||||
Common stock options | ||||||
Stock-based compensation, general disclosures | ||||||
Term (in years) | 7 years | |||||
Stock-based compensation expense | $ 500,000 | $ 200,000 | ||||
Total unrecognized pre-tax compensation expense related to nonvested stock option awards | $ 5,000,000 | |||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 3 years 2 months 12 days | |||||
Options | ||||||
Outstanding at beginning of period | 1,487,720 | |||||
Granted | 88,243 | |||||
Exercised | (116,177) | |||||
Forfeited | (14,697) | |||||
Outstanding at end of period | 1,445,089 | 1,487,720 | ||||
Weighted Average Exercise Price ($/share) | ||||||
Outstanding at beginning of period | $ 8.41 | |||||
Granted | 32.36 | |||||
Exercised | 1.19 | |||||
Forfeited | 19.02 | |||||
Outstanding at end of period | $ 10.35 | $ 8.41 | ||||
Other information | ||||||
Options exercisable Number of Exercisable | 1,338,155 | 906,063 | ||||
Options exercisable, weighted-average exercise price | $ 1.07 | $ 2.75 | ||||
Weighted average remaining contractual life (in years) | 6 years 3 months 18 days | 6 years 2 months 12 days | ||||
Exercisable options, weighted-average remaining contractual life | 4 years 10 months 24 days | |||||
Options outstanding | $ 31,065,000 | $ 29,611,000 | ||||
Options exercisable | $ 26,321,000 | |||||
Exercised | $ 3,351,000 | |||||
Restricted stock unit awards, Average Intrinsic Value | ||||||
Number of option outstanding | 1,487,720 | 1,487,720 | 1,445,089 | 1,487,720 | ||
Weighted average remaining contractual life (in years) | 6 years 3 months 18 days | 6 years 2 months 12 days | ||||
Options Outstanding, weighted average exercise price | $ 8.41 | $ 8.41 | $ 10.35 | $ 8.41 | ||
Options exercisable Number of Exercisable | 1,338,155 | 906,063 | ||||
Options exercisable, weighted-average exercise price | $ 1.07 | $ 2.75 | ||||
Common stock options | Minimum | ||||||
Stock-based compensation, general disclosures | ||||||
Vesting period (in years) | 3 years | |||||
Term (in years) | 7 years | |||||
Common stock options | Maximum | ||||||
Stock-based compensation, general disclosures | ||||||
Vesting period (in years) | 4 years | |||||
Term (in years) | 10 years | |||||
Restricted Stock Units | ||||||
Stock-based compensation, general disclosures | ||||||
Stock-based compensation expense | $ 72,517,000 | $ 0 | ||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 10 months 24 days | |||||
Total unrecognized pre-tax compensation expense related to awards | $ 2,100,000 | |||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | ||||||
Restricted stock unit awards outstanding at the beginning of the period (in shares) | 441,507 | |||||
Granted (in shares) | 77,794 | |||||
Vested (in shares) | (114,905) | |||||
Cancelled (in shares) | (9,350) | |||||
Restricted stock unit awards outstanding at the end of the period (in shares) | 395,046 | 441,507 | ||||
Number of share of common stock that restricted stock unit has the right to convert to | 1 | |||||
Weighted Average Grant Date Fair Value Per Share | ||||||
Restricted stock unit awards outstanding at the beginning of the period (in dollars per share) | $ 16.38 | |||||
Granted (in dollars per share) | 32.36 | |||||
Vested (in dollars per share) | 12 | |||||
Cancelled (in dollars per share) | 24.24 | |||||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ 20.61 | $ 16.38 | ||||
Restricted stock unit awards, Average Intrinsic Value | ||||||
Restricted stock unit awards, Average Intrinsic Value | $ 12,562,000 | $ 12,795,000 | ||||
Restricted Stock Units | Non-employee Directors | ||||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | ||||||
Granted (in shares) | 550 | |||||
Restricted stock unit awards outstanding at the end of the period (in shares) | 2,763 | |||||
Number of granted and vested restricted stock units | 2,763 | |||||
Weighted Average Grant Date Fair Value Per Share | ||||||
Restricted stock unit awards outstanding at the end of the period (in dollars per share) | $ 24.37 | |||||
Restricted stock unit awards, Average Intrinsic Value | ||||||
Restricted stock unit awards, Average Intrinsic Value | $ 88,000 | |||||
Tranche one | Restricted Stock Units | ||||||
Stock-based compensation, general disclosures | ||||||
Compensation arrangement | 33.33% | |||||
Tranche two | Restricted Stock Units | ||||||
Stock-based compensation, general disclosures | ||||||
Compensation arrangement | 66.67% | |||||
2016 Plan | Restricted Stock Units | ||||||
Stock-based compensation, general disclosures | ||||||
Stock-based compensation expense | $ 800,000 | $ 500,000 | ||||
Weighted-average period over which unrecognized compensation cost is expected to be recognized | 2 years 3 months 18 days | |||||
Total unrecognized pre-tax compensation expense related to awards | $ 6,600,000 | |||||
2016 Plan | Restricted Stock Units | Minimum | ||||||
Stock-based compensation, general disclosures | ||||||
Vesting period (in years) | 1 year | |||||
2016 Plan | Restricted Stock Units | Maximum | ||||||
Stock-based compensation, general disclosures | ||||||
Vesting period (in years) | 3 years | |||||
2016 Plan | Performance-based stock-settled restricted stock units | ||||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | ||||||
Granted (in shares) | 67,982 | |||||
2016 Plan | Performance-based stock-settled restricted stock units | Minimum | ||||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | ||||||
Percentage to earn or vest the performance-based stock-settled restricted stock units | $ 50 | $ 50 | ||||
2016 Plan | Performance-based stock-settled restricted stock units | Maximum | ||||||
Number of Stock-Settled Restricted Stock Unit Awards Outstanding | ||||||
Percentage to earn or vest the performance-based stock-settled restricted stock units | $ 150 |
Stockholders' Equity - Employee
Stockholders' Equity - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Apr. 27, 2017 |
Class of Stock [Line Items] | ||||
Stock-based compensation expense | $ 1,481 | $ 957 | ||
Employee Stock Purchase Plan | ||||
Class of Stock [Line Items] | ||||
Purchase price of common stock under plan (as a percent) | 85.00% | |||
Offering period (in months) | 6 months | |||
Incremental share increase (as a percent) | 1.00% | |||
Incremental share increase (in shares) | 500,000 | |||
Increase in number of shares reserved and available for issuance | 178,463 | |||
Shares reserved | 1,639,668 | 1,600,000 | ||
Stock-based compensation expense | $ 200 | 200 | ||
Restricted Stock Units | ||||
Class of Stock [Line Items] | ||||
Stock-based compensation expense | 72,517 | $ 0 | ||
Unrecognized stock-based compensation expense, Restricted stock | $ 2,100 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Tax Line Items | ||
Income tax benefit | $ 1,686 | $ 1,373 |
Effective Income Tax Rate Reconciliation, Percent | ||
Effective rate (as percent) | 97.10% | 47.70% |
State | ||
Effective Income Tax Rate Reconciliation, Percent | ||
Unrecognized tax benefits | $ 88 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net Loss Per Share | ||
Net loss | $ (50) | $ (1,504) |
Weighted-average shares outstanding | 17,996,672 | 16,878,443 |
Weighted-average shares used to compute diluted net loss per share | 17,996,672 | 16,878,443 |
Net loss per share - Basic | $ 0 | $ (0.09) |
Net loss per share - Diluted | $ 0 | $ (0.09) |
Net Income (Loss) Per Share Att
Net Income (Loss) Per Share Attributable to Common Stockholders (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 1,908,249 | 2,234,914 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 395,046 | 449,963 |
Employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 68,114 | |
Common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 1,445,089 | 1,784,951 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value Measurements | ||
Available for sale debt securities | $ 15,928 | $ 19,944 |
Amount of transfers of marketable securities within the three level hierarchy | 0 | |
U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 10,945 | 11,941 |
Corporate debt securities | ||
Fair Value Measurements | ||
Available for sale debt securities | 4,983 | 8,003 |
Recurring | ||
Fair Value Measurements | ||
Available for sale debt securities | 35,263 | 29,156 |
Recurring | Money market mutual funds | ||
Fair Value Measurements | ||
Marketable securities | 19,335 | 9,212 |
Recurring | U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 10,945 | 11,941 |
Recurring | Corporate debt securities | ||
Fair Value Measurements | ||
Available for sale debt securities | 4,983 | 8,003 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Measurements | ||
Available for sale debt securities | 19,335 | 10,212 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market mutual funds | ||
Fair Value Measurements | ||
Marketable securities | 19,335 | 9,212 |
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 1,000 | |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Available for sale debt securities | 15,928 | 18,944 |
Recurring | Significant Other Observable Inputs (Level 2) | U.S. government and agency obligations | ||
Fair Value Measurements | ||
Available for sale debt securities | 10,945 | 10,941 |
Recurring | Significant Other Observable Inputs (Level 2) | Corporate debt securities | ||
Fair Value Measurements | ||
Available for sale debt securities | $ 4,983 | $ 8,003 |