Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | ALPHATEC HOLDINGS, INC. | |
Entity Central Index Key | 0001350653 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Trading Symbol | ATEC | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q3 | |
Entity Current Reporting Status | Yes | |
Amendment Flag | false | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 78,425,275 | |
Entity Shell Company | false | |
Entity File Number | 000-52024 | |
Entity Tax Identification Number | 20-2463898 | |
Entity Address, Address Line One | 5818 El Camino Real | |
Entity Address, City or Town | Carlsbad | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92008 | |
City Area Code | 760 | |
Local Phone Number | 431-9286 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common stock, par value $.0001 per share | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash | $ 15,678 | $ 47,113 |
Accounts receivable, net | 24,270 | 16,150 |
Inventories, net | 42,144 | 34,854 |
Prepaid expenses and other current assets | 3,321 | 9,880 |
Withholding tax receivable from Officer | 934 | |
Current assets of discontinued operations | 335 | 321 |
Total current assets | 86,682 | 108,318 |
Property and equipment, net | 27,681 | 19,722 |
Right-of-use asset | 1,530 | 1,860 |
Goodwill | 13,897 | 13,897 |
Intangibles assets, net | 24,283 | 25,605 |
Other assets | 549 | 493 |
Noncurrent assets of discontinued operations | 55 | 53 |
Total assets | 154,677 | 169,948 |
Current liabilities: | ||
Accounts payable | 13,910 | 7,772 |
Accrued expenses | 30,980 | 26,416 |
Current portion of long-term debt | 1,672 | 489 |
Current portion of operating lease liability | 1,208 | 1,314 |
Current liabilities of discontinued operations | 395 | 399 |
Total current liabilities | 48,165 | 36,390 |
Long-term debt, less current portion | 65,764 | 53,448 |
Operating lease liability, less current portion | 56 | 925 |
Other long-term liabilities | 9,038 | 11,951 |
Redeemable preferred stock, $0.0001 par value; 20,000 shares authorized at September 30, 2020 and December 31, 2019; 3,319 shares issued and outstanding at September 30, 2020 and December 31, 2019 | 23,603 | 23,603 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Common stock, $0.0001 par value; 200,000 authorized; 64,752 shares issued and 64,562 outstanding at September 30, 2020, net of 190 unvested shares; and 61,718 shares issued and 61,400 shares outstanding, net of 318 unvested shares at December 31, 2019 | 6 | 6 |
Treasury stock, 2 shares, at cost | (97) | (97) |
Additional paid-in capital | 623,162 | 606,558 |
Shareholder note receivable | (5,000) | (5,000) |
Accumulated other comprehensive income | 1,181 | 1,088 |
Accumulated deficit | (611,201) | (558,924) |
Total stockholders’ equity | 8,051 | 43,631 |
Total liabilities and stockholders’ equity | 154,677 | 169,948 |
Series A Convertible Preferred Stock | ||
Stockholders' equity: | ||
Convertible preferred stock | ||
Series B Convertible Preferred Stock | ||
Stockholders' equity: | ||
Convertible preferred stock |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Redeemable preferred stock, par value (dollars per share) | $ 0.0001 | $ 0.0001 |
Redeemable preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Redeemable preferred stock, shares issued | 3,319,000 | 3,319,000 |
Redeemable preferred stock, shares outstanding | 3,319,000 | 3,319,000 |
Common stock, par value (dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 64,752,000 | 61,718,000 |
Common stock, shares outstanding | 64,562,000 | 61,400,000 |
Common stock, unvested shares | 190,000 | 318,000 |
Treasury stock, shares | 2,000 | 2,000 |
Series A Convertible Preferred Stock | ||
Convertible preferred stock, par value (dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized | 15,000 | 15,000 |
Convertible preferred stock, shares issued | 0 | 0 |
Convertible preferred stock, shares outstanding | 0 | 0 |
Series B Convertible Preferred Stock | ||
Convertible preferred stock, par value (dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized | 45,000 | 45,000 |
Convertible preferred stock, shares issued | 0 | 0 |
Convertible preferred stock, shares outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue: | ||||
Revenue | $ 41,163 | $ 29,201 | $ 100,907 | $ 81,075 |
Cost of revenue | 11,926 | 9,268 | 29,797 | 25,688 |
Gross profit | 29,237 | 19,933 | 71,110 | 55,387 |
Operating expenses: | ||||
Research and development | 4,379 | 3,800 | 11,800 | 10,413 |
Sales, general and administrative | 35,985 | 26,954 | 91,021 | 72,738 |
Litigation-related | 1,560 | 604 | 5,507 | 4,427 |
Amortization of acquired intangible assets | 172 | 172 | 516 | 526 |
Transaction-related | 2 | 4,093 | ||
Restructuring | 60 | |||
Total operating expenses | 42,098 | 31,530 | 112,937 | 88,164 |
Operating loss | (12,861) | (11,597) | (41,827) | (32,777) |
Interest and other expense, net: | ||||
Interest expense, net | (2,762) | (2,919) | (8,668) | (6,947) |
Loss on debt extinguishment | (1,555) | |||
Other expense, net | (6) | (7) | (6) | (19) |
Total interest and other expense, net | (2,768) | (2,926) | (10,229) | (6,966) |
Loss from continuing operations before taxes | (15,629) | (14,523) | (52,056) | (39,743) |
Income tax provision | 40 | 20 | 140 | 122 |
Loss from continuing operations | (15,669) | (14,543) | (52,196) | (39,865) |
Loss from discontinued operations, net of applicable taxes | (24) | (106) | ||
Net loss | $ (15,669) | $ (14,567) | $ (52,196) | $ (39,971) |
Net loss per share, basic and diluted: | ||||
Continuing operations | $ (0.24) | $ (0.26) | $ (0.82) | $ (0.81) |
Discontinued operations | 0 | 0 | 0 | 0 |
Net loss per share, basic and diluted | $ (0.24) | $ (0.26) | $ (0.82) | $ (0.81) |
Shares used in calculating basic and diluted net loss per share | 64,761 | 55,736 | 63,669 | 49,252 |
United States Product | ||||
Revenue: | ||||
Revenue | $ 40,052 | $ 28,051 | $ 97,956 | $ 77,099 |
International Supply Agreement | ||||
Revenue: | ||||
Revenue | $ 1,111 | $ 1,150 | $ 2,951 | $ 3,976 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (15,669) | $ (14,567) | $ (52,196) | $ (39,971) |
Foreign currency translation adjustments related to continuing operations | 18 | (37) | 93 | 56 |
Comprehensive loss | $ (15,651) | $ (14,604) | $ (52,103) | $ (39,915) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Series A Convertible Preferred Stock | Common Stock | Additional paid-in capital | Shareholder note receivable | Treasury stock | Accumulated other comprehensive income (loss) | Accumulated deficit | Accumulated deficitCumulative Effect, Period of Adoption, Adjustment |
Balance at Dec. 31, 2018 | $ 17,574 | $ 4 | $ 523,525 | $ (5,000) | $ (97) | $ 1,064 | $ (501,922) | |||
Balance, shares at Dec. 31, 2018 | 4 | 43,368 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock-based compensation | 1,565 | 1,565 | ||||||||
Distributor equity incentives | 42 | 42 | ||||||||
Distributor equity incentives, shares | 15 | |||||||||
Common stock issued for conversion of Series A preferred stock, shares | (4) | 1,858 | ||||||||
Recognition of beneficial conversion feature - SafeOp Convertible Notes | 242 | 242 | ||||||||
Common stock issued for stock option exercises | 14 | 14 | ||||||||
Common stock issued for stock option exercises, shares | 8 | |||||||||
Common stock issued for vesting of restricted stock awards, net of shares repurchased for tax liability | (183) | (183) | ||||||||
Common stock issued for vesting of restricted stock awards, net of shares repurchased for tax liability, shares | 442 | |||||||||
Issuance of common stock for acquisition of SafeOp - Milestone 2 | 2,889 | 2,889 | ||||||||
Issuance of common stock for acquisition of SafeOp - Milestone 2, shares | 887 | |||||||||
Foreign currency translation adjustments | 75 | 75 | ||||||||
Net loss | (12,968) | (12,968) | ||||||||
Balance at Mar. 31, 2019 | 9,250 | $ 4 | 528,094 | (5,000) | (97) | 1,139 | (514,890) | |||
Balance, shares at Mar. 31, 2019 | 46,578 | |||||||||
Balance at Dec. 31, 2018 | 17,574 | $ 4 | 523,525 | (5,000) | (97) | 1,064 | (501,922) | |||
Balance, shares at Dec. 31, 2018 | 4 | 43,368 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Foreign currency translation adjustments | 56 | |||||||||
Net loss | (39,971) | |||||||||
Balance at Sep. 30, 2019 | 57,654 | $ 6 | 603,518 | (5,000) | (97) | 1,120 | (541,893) | |||
Balance, shares at Sep. 30, 2019 | 60,665 | |||||||||
Balance at Mar. 31, 2019 | 9,250 | $ 4 | 528,094 | (5,000) | (97) | 1,139 | (514,890) | |||
Balance, shares at Mar. 31, 2019 | 46,578 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock-based compensation | 2,140 | 2,140 | ||||||||
Distributor equity incentives | 138 | 138 | ||||||||
Distributor equity incentives, shares | 45 | |||||||||
Common stock issued for warrant exercises | 723 | 723 | ||||||||
Common stock issued for warrant exercises, shares | 255 | |||||||||
Common stock issued for employee stock purchase plan and stock option exercises | 664 | 664 | ||||||||
Common stock issued for employee stock purchase plan and stock option exercises, shares | 278 | |||||||||
Common stock issued for vesting of restricted stock awards, net of shares repurchased for tax liability, shares | 217 | |||||||||
Issuance of common stock warrants | 13,664 | 13,664 | ||||||||
Foreign currency translation adjustments | 18 | 18 | ||||||||
Net loss | (12,436) | (12,436) | ||||||||
Balance at Jun. 30, 2019 | 14,161 | $ 4 | 545,423 | (5,000) | (97) | 1,157 | (527,326) | |||
Balance, shares at Jun. 30, 2019 | 47,373 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock-based compensation | 3,411 | 3,411 | ||||||||
Distributor equity incentives | 40 | 40 | ||||||||
Distributor equity incentives, shares | 15 | |||||||||
Common stock issued for conversion of Series A preferred stock, shares | 97 | |||||||||
Common stock issued for warrant exercises | 600 | 600 | ||||||||
Common stock issued for warrant exercises, shares | 333 | |||||||||
Common stock issued for employee stock purchase plan and stock option exercises | 102 | 102 | ||||||||
Common stock issued for employee stock purchase plan and stock option exercises, shares | 26 | |||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares repurchased for tax liability | (30) | (30) | ||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares repurchased for tax liability, shares | 286 | |||||||||
Issuance of common stock for public offering, net of offering costs | 53,974 | $ 2 | 53,972 | |||||||
Issuance of common stock for public offering, net of offering costs, shares | 12,535 | |||||||||
Foreign currency translation adjustments | (37) | (37) | ||||||||
Net loss | (14,567) | (14,567) | ||||||||
Balance at Sep. 30, 2019 | 57,654 | $ 6 | 603,518 | (5,000) | (97) | 1,120 | (541,893) | |||
Balance, shares at Sep. 30, 2019 | 60,665 | |||||||||
Balance at Dec. 31, 2019 | $ 43,631 | $ (81) | $ 6 | 606,558 | (5,000) | (97) | 1,088 | (558,924) | $ (81) | |
Balance, shares at Dec. 31, 2019 | 61,400 | |||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201908Member | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock-based compensation | $ 3,630 | 3,630 | ||||||||
Distributor equity incentives | 70 | 70 | ||||||||
Common stock issued for warrant exercises | 1,158 | 1,158 | ||||||||
Common stock issued for warrant exercises, shares | 1,390 | |||||||||
Common stock issued for employee stock purchase plan and stock option exercises | 83 | 83 | ||||||||
Common stock issued for employee stock purchase plan and stock option exercises, shares | 76 | |||||||||
Common stock issued for vesting of restricted stock awards, net of shares repurchased for tax liability | (408) | (408) | ||||||||
Common stock issued for vesting of restricted stock awards, net of shares repurchased for tax liability, shares | 394 | |||||||||
Foreign currency translation adjustments | 69 | 69 | ||||||||
Net loss | (20,722) | (20,722) | ||||||||
Balance at Mar. 31, 2020 | 27,430 | $ 6 | 611,091 | (5,000) | (97) | 1,157 | (579,727) | |||
Balance, shares at Mar. 31, 2020 | 63,260 | |||||||||
Balance at Dec. 31, 2019 | 43,631 | $ (81) | $ 6 | 606,558 | (5,000) | (97) | 1,088 | (558,924) | $ (81) | |
Balance, shares at Dec. 31, 2019 | 61,400 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Foreign currency translation adjustments | 93 | |||||||||
Net loss | (52,196) | |||||||||
Balance at Sep. 30, 2020 | 8,051 | $ 6 | 623,162 | (5,000) | (97) | 1,181 | (611,201) | |||
Balance, shares at Sep. 30, 2020 | 64,562 | |||||||||
Balance at Mar. 31, 2020 | 27,430 | $ 6 | 611,091 | (5,000) | (97) | 1,157 | (579,727) | |||
Balance, shares at Mar. 31, 2020 | 63,260 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock-based compensation | 3,608 | 3,608 | ||||||||
Distributor equity incentives | 51 | 51 | ||||||||
Common stock issued for employee stock purchase plan and stock option exercises | 722 | 722 | ||||||||
Common stock issued for employee stock purchase plan and stock option exercises, shares | 202 | |||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares repurchased for tax liability | (164) | (164) | ||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares repurchased for tax liability, shares | 387 | |||||||||
Issuance of common stock warrants | 2,974 | 2,974 | ||||||||
Foreign currency translation adjustments | 6 | 6 | ||||||||
Net loss | (15,805) | (15,805) | ||||||||
Balance at Jun. 30, 2020 | 18,822 | $ 6 | 618,282 | (5,000) | (97) | 1,163 | (595,532) | |||
Balance, shares at Jun. 30, 2020 | 63,849 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Stock-based compensation | 4,761 | 4,761 | ||||||||
Distributor equity incentives | 293 | 293 | ||||||||
Distributor equity incentives, shares | 34 | |||||||||
Common stock issued for conversion of Series A preferred stock, shares | 39 | |||||||||
Common stock issued for warrant exercises, shares | 68 | |||||||||
Common stock issued for employee stock purchase plan and stock option exercises | 70 | 70 | ||||||||
Common stock issued for employee stock purchase plan and stock option exercises, shares | 24 | |||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares repurchased for tax liability | (244) | (244) | ||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares repurchased for tax liability, shares | 548 | |||||||||
Foreign currency translation adjustments | 18 | 18 | ||||||||
Net loss | (15,669) | (15,669) | ||||||||
Balance at Sep. 30, 2020 | $ 8,051 | $ 6 | $ 623,162 | $ (5,000) | $ (97) | $ 1,181 | $ (611,201) | |||
Balance, shares at Sep. 30, 2020 | 64,562 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Statement Of Stockholders Equity [Abstract] | |
Common stock public offering cost | $ 3,689 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities: | ||
Net loss | $ (52,196,000) | $ (39,971,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,804,000 | 5,354,000 |
Stock-based compensation | 12,687,000 | 7,566,000 |
Amortization of debt discount and debt issuance costs | 3,133,000 | 2,332,000 |
Amortization of right-of-use asset | 871,000 | 678,000 |
Provision for doubtful accounts | 79,000 | 190,000 |
Provision for excess and obsolete inventory | 5,429,000 | 6,451,000 |
Deferred income tax benefit | 2,000 | |
Beneficial conversion feature from convertible notes | 242,000 | |
Loss on disposal of instruments | 281,000 | 478,000 |
Accretion to contingent consideration | 289,000 | |
Loss on extinguishment of debt | 1,555,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (8,199,000) | (526,000) |
Inventories, net | (12,720,000) | (10,751,000) |
Prepaid expenses and other current assets | (2,286,000) | 263,000 |
Other assets | (53,000) | 127,000 |
Other long-term assets | (2,864,000) | |
Accounts payable | 4,246,000 | 3,541,000 |
Accrued expenses and other | 4,561,000 | 3,313,000 |
Lease liability | (975,000) | 2,528,000 |
Other long-term liabilities | (3,901,000) | (3,296,000) |
Net cash used in operating activities | (39,684,000) | (24,054,000) |
Investing activities: | ||
Purchases of property and equipment | (12,868,000) | (10,437,000) |
Cash received from sale of assets | 27,000 | |
Net cash used in investing activities | (12,841,000) | (10,437,000) |
Financing activities: | ||
Proceeds from public offering, net | 53,974,000 | |
Proceeds from sale of common stock, net | 1,204,000 | 2,073,000 |
Borrowings under lines of credit | 42,455,000 | 81,723,000 |
Repayments under lines of credit | (56,615,000) | (81,161,000) |
Principal payments on capital lease obligations | (24,000) | (22,000) |
Proceeds from issuance of term debt, net | 34,012,000 | 9,700,000 |
Principal payments on term loan and notes payable | (24,000) | (3,068,000) |
Net cash provided by financing activities | 21,008,000 | 63,219,000 |
Effect of exchange rate changes on cash | 82,000 | 61,000 |
Net (decrease) increase in cash | (31,435,000) | 28,789,000 |
Cash at beginning of period, including discontinued operations | 47,113,000 | 29,054,000 |
Cash at end of period, including discontinued operations | 15,678,000 | 57,843,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 4,931,000 | 4,342,000 |
Cash paid for income taxes | 186,000 | 102,000 |
Supplemental disclosure of noncash investing and financing activities: | ||
Common stock warrants issued with term loan draw | 2,986,000 | 13,664,000 |
Purchases of property and equipment in accounts payable | $ 1,881,000 | 1,297,000 |
SafeOp Surgical, Inc. | ||
Supplemental disclosure of noncash investing and financing activities: | ||
Common stock issued for achievement of SafeOp contingent consideration | $ 2,889,000 |
The Company and Basis of Presen
The Company and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
The Company and Basis of Presentation | 1. The Company and Basis of Presentation The Company Alphatec Holdings, Inc. (the “Company”), through its wholly owned subsidiaries, Alphatec Spine, Inc. (“Alphatec Spine”) and SafeOp Surgical, Inc. (“SafeOp”), designs, develops, and markets technology for the treatment of spinal disorders. The Company markets its products in the U.S. via independent sales agents and a direct sales force. On March 8, 2018, the Company completed its acquisition of SafeOp, pursuant to a reverse triangular merger of SafeOp into a newly created wholly owned subsidiary of the Company, with SafeOp being the surviving corporation and a wholly-owned subsidiary of the Company. On September 1, 2016, the Company completed the sale of its international distribution operations and agreements (collectively, the “International Business”) to Globus Medical Ireland, Ltd., a subsidiary of Globus Medical, Inc., and its affiliated entities (collectively “Globus”). As a result of this transaction, the International Business has been excluded from continuing operations for all periods presented in this Quarterly Report on Form 10-Q and is reported as discontinued operations. See Note 4 for additional information on the divestiture of the International Business. Basis of Presentation The accompanying condensed consolidated balance sheet as of December 31, 2019, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q. Certain information and note disclosures normally included in annual audited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made in this Quarterly Report on Form 10-Q are adequate to make the information not misleading. The unaudited interim condensed consolidated financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the financial position and results of operations for the periods presented. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 that was filed with the SEC on March 17, 2020. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020, or any other future periods. Liquidity The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At each reporting period, the Company evaluates whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date the condensed consolidated financial statements are issued. The Company’s evaluation entails analyzing prospective operating budgets and forecasts for expectations of the Company’s cash needs and comparing those needs to the current cash and cash equivalent balances, and availability under existing credit facilities. The Company’s capital requirements over the next twelve months will depend on many factors, including the ability to achieve anticipated revenue, manage operating expense and the timing of required investments in inventory and instrument sets to support its customers. On October 16, 2020, the Company closed a public offering (the “Offering”) in which it issued and sold a total 13,142,855 shares of its common stock, including overallotment shares, at a price to the public of $8.75 per share. The net proceeds to the Company from the Offering were approximately $107.7 million. The Company’s working capital at September 30, 2020 was $38.5 million (including cash of $15.7 million) which, along with proceeds from the Offering, the Company expects to be able to fund its operations through at least one year subsequent to the date the condensed consolidated financial statements are issued. The COVID-19 Pandemic The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. In late 2019, a novel strain of Coronavirus, COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread globally to all countries, including to the United States. The global spread of the virus has led to unprecedented restrictions on, and disruptions in business and personal activities, which include preventive and precautionary measures that governments, communities, business partners, and the Company have taken and continue to take to manage the impact and mitigate any further spread of the virus. To date, the Company has taken steps to help keep its workforce healthy and safe and is assessing and updating its plans on an ongoing basis, as new information related to the virus and its impact become available. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any further initiatives or programs that the Company may undertake to address financial and operations challenges faced by its customers. As of the date of issuance of these condensed consolidated financial statements, the extent to which the pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain. The Company intends to continue to actively monitor the pandemic and take the necessary and required steps to identify and mitigate any adverse impacts on, or risks to, the Company’s business operations posed by the spread of COVID-19. Reclassification Certain amounts in the condensed consolidated financial statements for the three and nine months ended September 30, 2019 have been reclassified to conform to the current period’s presentation. The adjustment did not impact prior period net loss. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies The Company’s significant accounting policies are described in Note 2 to its audited consolidated financial statements for the year ended December 31, 2019, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 17, 2020. Except as discussed below, these accounting policies have not changed during the nine months ended September 30, 2020. Transaction-related (Credits) Expenses The Company expensed certain costs related to the terminated tender offer for the acquisition of EOS Imaging, which primarily include third-party advisory fees, legal fees and commitment fees related to transaction financing arrangements. Fair Value Measurements T he carrying amount of financial instruments consisting of cash, trade accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued compensation and current portion of long-term debt included in the Company’s condensed consolidated financial statements are reasonable estimates of fair value due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, management believes the fair value of long-term debt approximates its carrying value. Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Level 2: Level 3: The Company does not maintain any financial assets that are considered to be Level 1, Level 2 or Level 3 instruments as of September 30, 2020. During the second quarter of 2019, the Company issued a liability classified equity award to one of its executive officers. The award will be earned over a 4 year vesting period and upon a specific market condition. As the award will be cash settled, it is classified as a liability within Level 3 of the fair value hierarchy as the Company is using a probability-weighted income approach, utilizing significant unobservable inputs including the probability of achieving the specified market condition with the valuation updated at each reporting period. The full fair value of the cash settled award was $1.6 million as of September 30, 2020 and is being recognized ratably as the underlying service period is provided. The following table provides a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2020 (in thousands): Level 3 Liabilities Balance at January 1, 2020 $ 266 Vested portion of liability classified equity award 107 Change in fair value measurement (238 ) Balance at March 31, 2020 $ 135 Vested portion of liability classified equity award 39 Change in fair value measurement 102 Balance at June 30, 2020 $ 276 Vested portion of liability classified equity award 63 Change in fair value measurement 201 Balance at September 30, 2020 $ 540 Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-08, Compensation—Stock Compensation In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), which aligns the accounting for cloud computing implementation costs with that of costs to develop or obtain internal-use software, meaning such costs that are part of the application development stage are capitalized as an asset and amortized over the term of the arrangement, otherwise, such costs are expensed as incurred. It also clarifies the classification of amounts related to capitalized implementation costs in the financial statements. ASC 2018-15 is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company adopted the guidance effective January 1, 2020. It did not have a material impact on the Company’s condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other Recently Issued Accounting Pronouncements The Company has evaluated all recent accounting pronouncements issued by the Financial Accounting Standards Board in the form of Accounting Standards Updates through the date these condensed consolidated financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective that when adopted would have a material impact on the financial statements of the Company. |
Select Condensed Consolidated B
Select Condensed Consolidated Balance Sheet Details | 9 Months Ended |
Sep. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Select Condensed Consolidated Balance Sheet Details | 3. Select Condensed Consolidated Balance Sheet Details Accounts Receivable, net Accounts receivable, net consist of the following (in thousands): September 30, 2020 December 31, 2019 Accounts receivable $ 24,604 $ 16,436 Allowance for doubtful accounts (334 ) (286 ) Accounts receivable, net $ 24,270 $ 16,150 Inventories, net Inventories, net consist of the following (in thousands): September 30, 2020 December 31, 2019 Raw materials $ 5,184 $ 5,822 Work-in-process 1,387 1,578 Finished goods 64,025 51,669 70,596 59,069 Less reserve for excess and obsolete finished goods (28,452 ) (24,215 ) Inventories, net $ 42,144 $ 34,854 Property and Equipment, net Property and equipment, net consist of the following (in thousands, except as indicated): Useful lives (in years) September 30, 2020 December 31, 2019 Surgical instruments 4 $ 67,012 $ 58,502 Machinery and equipment 7 6,562 6,038 Computer equipment 3 4,206 3,594 Office furniture and equipment 5 1,380 1,297 Leasehold improvements various 1,761 1,761 Construction in progress n/a 862 496 81,783 71,688 Less accumulated depreciation and amortization (54,102 ) (51,966 ) Property and equipment, net $ 27,681 $ 19,722 Total depreciation expense was $2.3 million and $6.5 million for the three and nine months ended September 30, 2020, respectively, and $1.8 million and $4.8 million for the three and nine months ended September 30, 2019, respectively. At both September 30, 2020 and December 31, 2019, assets recorded under capital leases of $0.1 million were included in the machinery and equipment balance. Amortization of assets under capital leases is included in depreciation expense. Intangible Assets, net Intangible assets, net consist of the following (in thousands, except as indicated): Remaining Avg. Useful lives (in years) September 30, 2020 December 31, 2019 Developed technology 9 $ 26,976 $ 26,976 Intellectual property — 1,004 1,004 License agreements 1 5,536 5,536 Trademarks and trade names — 792 792 Customer-related 3 7,458 7,458 Distribution network 2 4,027 4,027 In process research and development 19 8,800 8,800 54,593 54,593 Less accumulated amortization (30,310 ) (28,988 ) Intangible assets, net $ 24,283 $ 25,605 Total amortization expense attributed to intangible assets was $0.4 million and $1.3 million for the three and nine months ended September 30, 2020, and $0.2 million and $0.5 million for the three and nine months ended September 30, 2019, respectively. Developed technology and in process research and development intangibles are expected to begin amortizing when the relevant products reach full commercial launch. Future amortization expense related to intangible assets as of September 30, 2020 is as follows (in thousands): Year Ending December 31, Remainder of 2020 $ 537 2021 1,888 2022 1,888 2023 1,888 2024 1,785 Thereafter 16,297 $ 24,283 Accrued Expenses Accrued expenses consist of the following (in thousands): September 30, 2020 December 31, 2019 Commissions and sales milestones $ 6,928 $ 5,299 Payroll and payroll related 8,924 7,949 Litigation settlement obligation - short-term portion 4,400 4,400 Professional fees 2,049 3,945 Royalties 3,284 1,981 Interest 669 155 Other 4,726 2,687 Total accrued expenses $ 30,980 $ 26,416 Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): September 30, 2020 December 31, 2019 Litigation settlement obligation - long-term portion $ 8,126 $ 10,712 Line of credit exit fee — 600 Tax liabilities 373 373 Other 539 266 Other long-term liabilities $ 9,038 $ 11,951 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | 4. Discontinued Operations In connection with the sale of the International Business, the Company entered into a product manufacture and supply agreement (the “Supply Agreement”) with Globus, pursuant to which the Company supplies to Globus certain of its implants and instruments (the “Products”), previously offered for sale by the Company in international markets at agreed-upon prices for a minimum term of three years, with the option for Globus to extend the term for up to two additional twelve month periods subject to Globus meeting specified purchase requirements. During the second quarter of 2020, Globus notified the Company that it will exercise the option to extend the agreement for the second additional twelve-month |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 5. Debt MidCap Facility Agreement On May 29, 2020, the Company repaid in full all amounts outstanding under the Amended Credit Facility with MidCap Funding IV, LLC (“MidCap”). The Company made a final payment of $9.6 million to MidCap, consisting of outstanding principal and accrued interest. All amounts previously recorded as debt issuance costs were recorded as part of loss on debt extinguishment on the Company’s condensed consolidated statement of operations for the nine months ended September 30, 2020. Squadron Credit Agreement On November 6, 2018, the Company closed a $35.0 million Term Loan with Squadron, a provider of debt financing to growing companies in the orthopedic industry. The debt bears interest at LIBOR plus 8% (10.0% as of September 30, 2020 As collateral for the Term Loan, Squadron has a first lien security interest in substantially all assets except for . In connection with the financing, the Company issued initial warrants to Squadron to purchase 845,000 shares of common stock at an exercise price of $3.15 per share. In conjunction with the first draw under the first amendment of the Term Loan, the Company issued to Squadron warrants to purchase an additional 4,838,710 shares of the Company’s common stock at an exercise price of $2.17 per share. utilizing the Monte-Carlo simulation model as described further in Note 10 and are recorded within equity in accordance with authoritative accounting guidance and recorded as a debt discount. The Company accounted for the amendments of the Term Loan as debt modifications with continued amortization of the existing and inclusion of the new debt issuance costs amortized into interest expense utilizing the effective interest rate method. As of September 30, 2020, the debt is recorded at its carrying value of $59.3 million, net of issuance costs of $15.7 million, including all amounts paid to third parties to secure the debt and the fair value of the warrants issued. The total debt discount will be amortized into interest expense through maturity of the debt utilizing the effective interest rate method. Paycheck Protection Loan On April 23, 2020, the Company received the proceeds from a loan in the amount of approximately $4.3 million (the “PPP Loan”) from Silicon Valley Bank, as lender, pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan matures on April 21, 2022 and bears interest at a rate of 1.0% per annum. Commencing August 21, 2021, the Company is required to pay the lender equal monthly payments of principal and interest as required to fully amortize by April 21, 2022 the principal amount outstanding on the PPP Loan as of the date prescribed by guidance issued by U.S. Small Business Administration (“ All or a portion of the PPP Loan may be forgiven by the SBA upon application. The Company submitted its application for forgiveness of the loan in November 2020. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the twenty-four-week period, beginning on the date of loan approval. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 25% of the forgiven amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. In the event the PPP Loan, or any portion thereof, is forgiven pursuant to the PPP, the amount forgiven is applied to outstanding principal. The Company used all of the proceeds from the PPP Loan to retain employees and maintain payroll. Although the Company has applied for loan forgiveness as afforded by the PPP, no assurance can be provided that such loan forgiveness will be granted in whole or in part. As such, the PPP Loan is recorded as long-term debt on the Company’s condensed consolidated balance sheet. Inventory Financing The Company has an Inventory Financing Agreement with a key inventory and instrument components supplier whereby the Company may draw up to $3.0 million for the purchase of inventory to accrue interest at a rate of LIBOR plus 8% subject to a 10% floor and 13% ceiling. All principal will become due and payable upon maturity on November 6, 2023 and all interest will be paid monthly. The obligation outstanding under the Inventory Financing Agreement as of September 30, 2020 was $3.0 million. Principal payments remaining on the Company's debt are as follows as of September 30, 2020 (in thousands): Year Ending December 31, Remainder of 2020 $ 241 2021 2,845 2022 2,949 2023 15,002 2024 12,018 2025 and thereafter 50,000 Total 83,055 Add: capital lease principal payments 77 Less: unamortized debt discount and debt issuance costs (15,696 ) Total 67,436 Less: current portion of long-term debt (1,672 ) Long-term debt, net of current portion $ 65,764 Covenants The Company’s various financing agreements include several event of default provisions, such as payment default, insolvency conditions and a material adverse effect clause, which could cause interest to be charged at a rate which is up to five percentage points above the rate effective immediately before the event of default or result in the lenders’ right to declare all outstanding obligations immediately due and payable. Furthermore, the credit agreements contain various covenants and compliance requirements with governmental regulations and maintenance of insurance, as well as prohibitions against certain specified actions, including acquiring any new equipment financings over a specified amount. The Company was in compliance with the covenants under the financing agreements at September 30, 2020. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Leases On December 4, 2019, the Company entered into a lease agreement for a new headquarters location which will consist of 121,541 square feet of office, engineering, and research and development space in Carlsbad, California. The term of the new lease is currently anticipated to commence during the first quarter of 2021 and terminate November 30, 2030. The Company will recognize a right-of-use (“ROU”) asset and liability upon taking control of the premises, which is currently anticipated to be the lease commencement date. Operating Lease The Company leases its buildings and certain equipment under operating leases which expire on various dates through 2021. Upon the Company’s adoption of ASU 2016-02 , Leases (Topic 842) (“ASC 842”), as of January 1, 2019 the Company recognized a ROU asset and liability for its building lease, assuming a 10.5% discount rate. Any short-term leases defined as twelve months or less or month-to-month leases were excluded and continue to be expensed each month. Total costs associated with these leases for the three and nine months ended September 30, 2020 were immaterial. The Company determines if an arrangement is a lease at inception. The Company has operating leases for its buildings and certain equipment with lease terms of one year to 5.5 years, some of which include options to extend and/or terminate the lease. The exercise of lease renewal options is at the Company’s sole discretion and were not included in the calculation of the Company’s lease liability as the Company is not able to determine without uncertainty if the renewal option will be exercised. The depreciable life of assets and leasehold improvements are limited to the expected term unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any variable lease payments, residual value guarantees or any restrictive covenants. The Company’s ROU asset represents the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date of the lease or the ASC 842 adoption date, whichever is later, based on the present value of lease payments over the lease term. When readily determinable, the Company uses the implicit rate in determining the present value of lease payments, or 10.5% as of the adoption date. When leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date or adoption date, including the lease term. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Future minimum annual lease payments under such leases are as follows as of September 30, 2020 (in thousands): Undiscounted lease payments: Year Ending December 31, Remainder of 2020 $ 372 2021 918 2022 40 Total undiscounted lease payments 1,330 Less: present value adjustment (66 ) Operating lease liability 1,264 Less: current portion of operating lease liability (1,208 ) Operating lease liability, less current portion $ 56 As of September 30, 2020, the Company’s average remaining lease term is 2020 and 2019 . The Company paid $0.4 million and $1.1 million on its operating lease agreements for the three and nine months ended September 30, 2020 , respectively , and $ 0.4 million and $1.0 million on its operating lease agreement for the three and nine months ended September 30, 2019, respectively . Purchase Commitments The Company entered into a distribution agreement with a third-party provider in January 2020 in which the Company is obligated to certain minimum purchase requirements related to inventory and equipment leases. As of September 30, 2020, the minimum purchase commitment required by the Company under the agreement was $3.5 million to be paid over a three-year Litigation The Company is and may become involved in various legal proceedings arising from its business activities. While management is not aware of any litigation matter that in and of itself would have a material adverse impact on the Company’s consolidated results of operations, cash flows or financial position, litigation is inherently unpredictable, and depending on the nature and timing of a proceeding, an unfavorable resolution could materially affect the Company’s future consolidated results of operations, cash flows or financial position in a particular period. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual or disclosure in the Company’s financial statements. An estimated loss contingency is accrued in the Company’s financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments about future events. When evaluating contingencies, the Company may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the presence of complex or novel legal theories, and/or the ongoing discovery and development of information important to the matters. In addition, damage amounts claimed in litigation against the Company may be unsupported, exaggerated, or unrelated to reasonably possible outcomes, and as such are not meaningful indicators of the Company’s potential liability. In February 2018, NuVasive, Inc. filed suit against the Company in the United States District Court for the Southern District of California (NuVasive, Inc. v. Alphatec Holdings, Inc. et al., Case No. 3:18-cv-00347-CAB-MDD (S.D. Cal.)), alleging that certain of the Company’s products (including components of its Battalion™ Lateral System), infringe, or contribute to the infringement of, U.S. Patent Nos. 7,819,801, 8,355,780, 8,439,832, 8,753,270, 9,833,227 (entitled “Surgical access system and related methods”), U.S. Patent No. 8,361,156 (entitled “Systems and methods for spinal fusion”), and U.S. Design Patent Nos. D652,519 (“Dilator”) and D750,252 (“Intervertebral Implant”). NuVasive seeks unspecified monetary damages and an injunction against future purported infringement. In March 2018, the Company moved to dismiss NuVasive’s claims of infringement of its design patents for failure to state a cognizable legal claim. In May 2018, the Court ruled that NuVasive failed to state a plausible claim for infringement of the asserted design patents and dismissed those claims with prejudice. The Company filed its answer, affirmative defenses and counterclaims to NuVasive’s remaining claims in May 2018. Also in March 2018, NuVasive moved for a preliminary injunction. In March 2018, the Court denied that motion without prejudice for failure to comply with the Court’s chambers rules. In April 2018, NuVasive again moved for a preliminary injunction. In July 2018, the Court denied that motion on the grounds that NuVasive failed to establish either likelihood of success on the merits of its claims or that it would suffer irreparable harm absent the injunction. In September 2018, NuVasive filed an Amended Complaint, asserting infringement claims of U.S. Patent Nos. 9,924,859, 9,974,531 and 8,187,334. The Company filed its answer, affirmative defenses and counterclaims to these new claims in October 2018. Also in October 2018, NuVasive moved to dismiss the Company’s counterclaims that NuVasive intentionally had misled the U.S. Patent and Trademark Office as a means of obtaining certain patents asserted against the Company. In January 2019, the Court denied NuVasive’s motion as to all but one of the Company’s counterclaims, but granted the Company leave to amend its counterclaim to cure the dismissal. The Company amended that counterclaim in February 2019 and, that same month, NuVasive again moved to dismiss it. In March 2019, the Court denied NuVasive’s motion. NuVasive filed its Answer to the amended counterclaim in April 2019. In December 2018, the Company filed a petition with the Patent Trial and Appeal Board (“PTAB”) challenging the validity of certain claims of the ’156 and ’334 Patents. In July 2019, PTAB instituted IPR of the validity of asserted claims of the two patents at issue and held a hearing on the matter in April 2020. In July 2020, the PTAB ruled that all challenged claims of the ‘156 Patent were valid (not unpatentable) and ruled that several challenged claims of the ‘334 Patent were invalid, while finding that other challenged claims of the ‘334 Patent were valid. NuVasive and the Company have both appealed the PTAB’s written decision on the matter. The appeals are currently pending before the U.S. Court of Appeals for the Federal Circuit. No briefing or hearing schedule has been set. In January 2020, NuVasive filed a Motion for Partial Summary Judgment of infringement and validity of the ’832, ’780 and ’270 Patents and the Company filed a Motion for Summary Judgment of non-infringement of all asserted claims and of invalidity of the ’832 Patent and for dismissal of NuVasive’s claim for lost profits and its allegations of assignor estoppel. In April 2020, the Court granted NuVasive’s Motion as to the alleged infringement of the ’832 Patent only and denied NuVasive’s Motion in all other respects. Also in April 2020, the Court granted the Company’s Motion as to dismissal of the allegations of assignor estoppel and denied the Company’s Motion in all other respects. Trial is scheduled to take place in June 2021. The Company believes that the allegations lack merit and intends to vigorously defend all claims asserted. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. It is impossible at this time to assess whether the outcome of this proceeding will have a material adverse effect on the Company’s condensed consolidated results of operations, cash flows or financial position. Therefore, in accordance with authoritative accounting guidance, the Company has not recorded any accrual for a contingent liability associated with this legal proceeding based on its belief that a liability, while possible, is not probable and any range of potential future charge cannot be reasonably estimated at this time. Indemnifications In the normal course of business, the Company enters into agreements under which it occasionally indemnifies third parties for intellectual property infringement claims or claims arising from breaches of contract, representations or warranties. In addition, from time to time, the Company provides indemnity protection to third parties for claims relating to past performance arising from undisclosed liabilities, product liabilities, environmental obligations, representations and warranties, and other claims. In these agreements, the scope and amount of remedy, or the period in which claims can be made, may be limited. It is not possible to determine the maximum potential amount of future payments, if any, due under these indemnities due to the conditional nature of the obligations and the unique facts and circumstances involved in each agreement. In October 2017, NuVasive filed a lawsuit in Delaware Chancery Court against Mr. Miles, the Company’s Chairman and CEO, who was a former officer and board member of NuVasive. The Company itself was not initially a named defendant in this lawsuit; however, in June 2018, NuVasive amended its complaint to add the Company as a defendant. As of September 30, 2020 Royalties The Company has entered into various intellectual property agreements requiring the payment of royalties based on the sale of products that utilize such intellectual property. These royalties primarily relate to products sold by Alphatec Spine and are based on fixed fees or calculated either as a percentage of net sales or on a per-unit sold basis. Royalties are included on the accompanying condensed consolidated statements of operations as a component of cost of revenue. As of September 30, 2020, the Company is obligated to pay guaranteed minimum royalty payments under these agreements of approximately $4.5 million through 2024 and beyond. |
Orthotec Settlement
Orthotec Settlement | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Orthotec Settlement | 7. Orthotec Settlement On September 26, 2014, the Company entered into a Settlement and Release Agreement, dated as of August 13, 2014, by and among the Company and its direct subsidiaries, including Alphatec Spine, Inc., Alphatec Holdings International C.V., Scient'x S.A.S. and Surgiview S.A.S.; HealthpointCapital, LLC, HealthpointCapital Partners, L.P., HealthpointCapital Partners II, L.P., John H. Foster and Mortimer Berkowitz III; and Orthotec, LLC and Patrick Bertranou, (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company agreed to pay Orthotec, LLC $49.0 million in cash, including initial cash payments totaling $1.75 million, which the Company previously paid in March 2014, and an additional lump sum payment of $15.75 million, which the Company previously paid in April 2014. The Company agreed to pay the remaining $31.5 million in 28 quarterly installments of $1.1 million and one additional quarterly installment of $0.7 million, commencing October 1, 2014. The payments set forth above are guaranteed by Stipulated Judgments held against the Company, HealthpointCapital Partners, L.P., HealthpointCapital Partners II, L.P., HealthpointCapital, LLC, John H. Foster and Mortimer Berkowitz III and, in the event of a default, will be entered and enforced against these entities and/or individuals in that order. In September 2014, the Company and HealthpointCapital entered into an agreement for joint payment of settlement whereby HealthpointCapital has agreed to contribute $5.0 million to the $49.0 million settlement amount. In October 2020, began its $5.0 million contribution, which will be in the form of quarterly payments. The $5.0 million is classified within stockholders’ equity on the Company’s condensed consolidated balance sheet due to the related party nature with HealthpointCapital and its affiliates. Payments made by Healthpoint Capital will be recorded as a reduction to stockholder’s equity. See Note 1 1 for further information. As of September 30, 2020, the Company has made installment payments in the aggregate of $43.9 million, with a remaining outstanding balance of $13.9 million (including interest). The Company has the right to prepay the amounts due without penalty. In addition, the unpaid balance of the amounts due accrues interest at the rate of 7% per year until paid in full. The accrued but unpaid interest will be paid in quarterly installments of $1.1 million (or the full amount of the accrued but unpaid interest if less than $1.1 million) following the full payment of the $31.5 million in quarterly installments described above. No interest will accrue on the accrued interest. The Settlement Agreement provides for mutual releases of all claims in the Orthotec, LLC v. Surgiview, S.A.S, et al. matter in the Superior Court of California, Los Angeles County and all other related litigation matters involving the Company and its directors and affiliates. A reconciliation of the total net settlement obligation is as follows (in thousands): September 30, 2020 December 31, 2019 Litigation settlement obligation - short-term portion $ 4,400 $ 4,400 Litigation settlement obligation - long-term portion 8,126 10,712 Total 12,526 15,112 Future Interest 1,407 2,121 Total settlement obligation, gross 13,933 17,233 Related party receivable - included in stockholders' equity (5,000 ) (5,000 ) Total settlement obligation, net $ 8,933 $ 12,233 |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 8. Net Loss Per Share Basic earnings per share (“EPS”) is calculated by dividing the net income or loss available to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding for the period and the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, common stock subject to repurchase by the Company, convertible preferred stock, options, convertible notes and warrants are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive. The following table presents the computation of basic and diluted net loss per share for continuing and discontinued operations (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net loss, basic and diluted $ (15,669 ) $ (14,567 ) $ (52,196 ) $ (39,971 ) Denominator: Weighted average common shares outstanding 64,884 56,010 63,845 49,528 Weighted average unvested common shares subject to repurchase (123 ) (274 ) (176 ) (276 ) Weighted average common shares outstanding - basic and diluted 64,761 55,736 63,669 49,252 Net loss per share, basic and diluted: $ (0.24 ) $ (0.26 ) $ (0.82 ) $ (0.81 ) The anti-dilutive securities not included in diluted net As of September 30, 2020 2019 Options to purchase common stock 4,141 4,270 Unvested restricted share awards 8,072 6,755 Series A Convertible Preferred Stock 29 67 Warrants to purchase common stock 25,358 26,739 Total 37,600 37,831 |
Stock Benefit Plans and Equity
Stock Benefit Plans and Equity Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Benefit Plans and Equity Transactions | 9. Stock Benefit Plans and Equity Transactions Stock Benefit Plans On June 17, 2020, the Company’s shareholders approved an amendment to the Company’s 2016 Equity Incentive Award Plan, which increased the shares of Common Stock available for issuance under the Equity Plan by 7,000,000 shares. At September 30, 2020, 4,285,924 shares of common stock remained available for issuance under the 2016 Equity Incentive Award Plan. Salary-to-Equity Conversion Program On April 5, 2020, the Company implemented a voluntary salary-to-equity conversion program for certain employees whose annual payroll costs exceed $100,000, including the Company’s executive officers. The program permitted each participant to make a voluntary election to reduce the participant’s compensation rate through July 11, 2020 from 10% to 75%. In exchange for the compensation reduction, each participant was granted a restricted stock unit from the Company’s 2016 Equity Incentive Plan, equal to the dollar amount of compensation reduction divided by the 30-day volume weighted average price of the Company’s common stock as of close of market on April 3, 2020. The restricted stock units granted under the program fully vested on July 10, 2020. The temporary reduction in compensation to the participants shall not be treated as a reduction in base annual salary rate for purposes of any other benefits plans in which the participants are enrolled or eligible to participate, including in any bonus plans of the Company. As the plan allows for a cash payment of the deferred amount in the event the employee separated from the Company prior to the completion date of the program, the amounts were recorded as a liability instrument through its settlement date with a corresponding fair value update at each reporting period. The full fair value of $0.9 million was reclassified into equity upon settlement of the program and issuance of the common stock. A stock compensation charge of $0.1 million and $0.9 million is recorded for the three and nine months ended September 30, 2020, respectively. Stock-Based Compensation Total stock-based compensation for the three and nine months ended September 30, 2020 is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of revenues $ 139 $ 57 $ 374 $ 113 Research and development 379 227 1,066 543 Sales, general and administrative 4,026 3,319 11,247 6,910 Total $ 4,544 $ 3,603 $ 12,687 $ 7,566 Shares Reserved for Future Issuance As of September 30, 2020, the Company had reserved shares of its common stock for future issuance as follows (in thousands): Stock options outstanding 4,141 Unvested restricted stock award 8,072 Employee stock purchase plan 394 Series A convertible preferred stock 29 Warrants outstanding 25,358 Authorized for future grant under the Distributor and Development Services plans 6,783 Authorized for future grant under the Management Objective Strategic Incentive Plan 345 Authorized for future grant under the Company equity plans 5,190 Total 50,312 Warrants Outstanding 2017 PIPE Warrants The 2017 Common Stock Warrants (the “2017 PIPE Warrants”) have a five-year there were 300,000 and 418,864 2017 PIPE Warrant exercises, for total cash proceeds of $0.6 million and $0.8 million, respectively. 2018 PIPE Warrants The 2018 Common Stock Warrants (the “2018 PIPE Warrants”) have a five-year nine months ended September 30, 2020, there were 1,670,524 2018 PIPE Warrant exercises for total cash proceeds of $0.9 million. During the three and nine months ended September 30, 2019, there were 81,195 and 217,195 2018 PIPE Warrant exercises for total cash proceeds of $0.0 and $0.6 million, respectively. Squadron Warrants As further described in Note 5, during the year ended December 31, 2018, in connection with the initial debt financing with Squadron, the Company issued warrants to purchase 845,000 shares of common stock at an exercise price of $3.15 per share. An additional 4,838,710 warrants were issued at an exercise price of $2.17 per share during the second quarter of 2019, in conjunction with the Company’s draw on the expanded credit facility. In May 2020, an additional 1,075,820 warrants were issued at an exercise price of $4.88 per share in conjunction with the Company’s second amendment to the Squadron debt for total warrants outstanding to Squadron of 6,759,530. The warrants have a seven-year A summary of all outstanding warrants for common stock is as follows: Number of Warrants Strike Price Expiration 2017 PIPE Warrants* 3,255,554 $ 2.02 June 2022 2018 PIPE Warrants 11,527,147 $ 3.50 May 2023 SafeOp Surgical Merger Warrants 2,185,099 $ 3.50 May 2023 2018 Squadron Capital Warrants 845,000 $ 3.15 May 2027 2019 Squadron Capital Warrants 4,838,710 $ 2.17 May 2027 2020 Squadron Capital Warrants 1,075,820 $ 4.88 May 2027 Executive Warrants 1,327,434 $ 5.00 December 2022 Other* 302,812 $ 3.85 Various through May 2023 Total 25,357,576 * Represents weighted average exercise price. All outstanding warrants were deemed to qualify for equity classification under authoritative accounting guidance. 2017 Distributor Inducement Plan and 2017 Development Services Plan Under the 2017 Distributor Inducement Plan, the Company is authorized to grant up to 1,000,000 shares of common stock to third-party distributors whereby, upon the achievement of certain Company sales and/or distribution milestones the Company may grant to a distributor shares of common stock or warrants to purchase shares of common stock. The warrants and restricted stock units issued under the plan are subject to time based or net sales based vesting conditions. As of September 30, 2020, 370,000 warrants were granted, and 51,500 shares of common stock were earned and issued under the 2017 Distributor Inducement Plan. Warrants granted under the plan as of September 30, 2020 were not yet subject to expiration related to any time or sales based vesting conditions. Expense recorded for the plan was $0.3 million and $0.4 million for the three months and nine months ended September 30, 2020, respectively, and $0.1 million and $0.3 million for the three and nine months ended September 30, 2019, respectively. Under the 2017 Development Services Plan, the Company is authorized to grant up to 6,000,000 shares of common stock to third-party individuals or entities whereby, upon the achievement of certain Company financial and commercial revenue milestones, future royalty payments for product and/or intellectual property development work may be paid in either cash or restricted shares of Company common stock at the election of the developer. Each common stock issuance is subject to net sales-based and other vesting provisions and satisfaction of applicable laws and market regulations regarding the issuance of restricted shares to such developers. As of September 30, 2020, the Company has entered Development Services Agreements pursuant to which the Company may grant 5,169,000 shares of restricted common stock under the 2017 Development Services Plan, subject to achievement of the performance criteria and vesting conditions as set forth in such Development Services Agreements. None of the grants are deemed probable of equity election as of September 30, 2020. In addition, no common stock elections or cash payouts have been made under the plan as of September 30, 2020. 2019 Management Objective Strategic Incentive Plan Under the 2019 Management Objective Strategic Incentive Plan, the Company is authorized to grant up to 500,000 shares of common stock to third-party individuals or entities that do not qualify under the Company’s other existing equity plans, with a maximum grant of 50,000 shares per participant. As of September 30, 2020, 130,000 restricted shares and a warrant to purchase up to 25,000 restricted common stock shares have been granted under the 2019 Management Objective Strategic Incentive Plan. Total expense for the plan was $0.1 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes To calculate its interim tax provision, at the end of each interim period the Company estimates the annual effective tax rate and applies that to its ordinary quarterly earnings. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent and temporary differences between book and tax amounts, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes. Intraperiod tax allocation rules require the Company to allocate the provision for income taxes between continuing operations and other categories of earnings, such as discontinued operations. In periods in which the Company has a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, such as discontinued operations, the Company must allocate the tax provision to the other categories of earnings, and then record a related tax benefit in continuing operations. The unrecognized tax benefits at September 30, 2020 and December 31, 2019 were $2.5 million for both periods, with no changes occurring during the year-to-date period. With the information currently available to the Company, it is reasonably possible there will not be a reversal to the tax reserves over the next twelve-month period. The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. The Company is not currently under examination by the Internal Revenue Service, foreign, or state or local tax authorities. For the three months ended September 30, 2020, the Company had an effective tax rate of 0% and recognized an immaterial amount of income tax provision from continuing operations. The Company’s effective tax rate differs from the federal statutory rate of 21% primarily due to the Company’s net loss position. At December 31, 2019, the Company had federal and state net operating loss carryforwards of $205.2 million and $128.2 million, respectively, expiring at various dates beginning in 2019 and continuing through 2039. Net operating losses generated in years ending after December 31, 2017 can be carried forward indefinitely for federal and some state taxes. At December 31, 2019, the Company had state research and development tax credit carryforwards of $3.2 million. The state research and development tax credits do not have an expiration date and may be carried forward indefinitely. Utilization of the net operating loss and tax credit carryforwards may become subject to annual limitations due to ownership change limitations that could occur in the future as provided by Section 382 and 383 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. These ownership changes may limit the amount of the net operating loss and tax credit carryforwards that can be utilized annually to offset future taxable income, if the Company experiences a cumulative change in ownership of more than 50% within a three-year |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions In July 2016, the Company entered into a forbearance agreement with HealthpointCapital, LLC, HealthpointCapital Partners, L.P., and HealthpointCapital Partners II, L.P. (collectively, "HealthpointCapital"), pursuant to which HealthpointCapital, on behalf of the Company, paid $1.0 million of the $1.1 million payment due and payable by the Company to Orthotec on July 1, 2016 and agreed to not exercise its contractual rights to seek an immediate repayment of such amount. Pursuant to this forbearance agreement, the Company repaid this amount in September 2016. The Company and HealthpointCapital also entered into an agreement for joint payment of settlement whereby HealthpointCapital has agreed to contribute $5.0 million to the $49.0 million Orthotec settlement amount. In October 2020, began its $5.0 million contribution, which will be in the form of quarterly payments. During the second quarter of 2018, HealthpointCapital Partners, L.P., and HealthpointCapital Partners II, L.P. distributed its holdings in the Company’s common stock to its limited partners. As a result, the fund is no longer a shareholder of the Company as of September 30, 2020 classified within stockholders’ equity on the Company’s condensed consolidated balance sheets due to the related party nature with HealthpointCapital affiliates. Payments made by HealthpointCapital will be recorded as a reduction to stockholder’s equity. Included on the condensed consolidated balance sheet as of September 30, 2020 is a $0.9 million officer receivable for settlement of a tax liability related to the vesting of restricted common stock. A corresponding liability for the same amount is also included on the condensed consolidated balance sheet within the accrued expenses line item. Subsequent to September 30, 2020, a $0.6 million payment was remitted to settle the tax liability. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | 12. Subsequent Event On October 16, 2020, the Company closed an underwritten public offering (the “Offering”) of a total of 13,142,855 shares of its common stock. The shares were sold pursuant to a underwriting agreement dated October 13, 2020 (the “Underwriting Agreement”), between the Company and Morgan Stanley & Co. LLC and Cowen and Company, LLC, as representative of the several underwriters named therein, at a price to the public of $8.75 per share. The closing of the Offering included the issuance and sale of 1,714,285 shares of the Company’s common stock, included within the total number of shares above, pursuant to the full exercise of the underwriters’ option to purchase additional shares pursuant to the Underwriting Agreement. The net proceeds to the Company from the Offering were approximately $107.7 million, including the net proceeds from the overallotment shares and deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds of the Offering for general corporate purposes, including working capital, capital expenditures and continued research and development with respect to products and technologies. A portion of the net proceeds of the Offering may also be used to fund possible investments in or acquisitions of complementary businesses, products, or technologies. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Transaction-related (Credits) Expenses | Transaction-related (Credits) Expenses The Company expensed certain costs related to the terminated tender offer for the acquisition of EOS Imaging, which primarily include third-party advisory fees, legal fees and commitment fees related to transaction financing arrangements. |
Fair Value Measurements | Fair Value Measurements T he carrying amount of financial instruments consisting of cash, trade accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, accrued compensation and current portion of long-term debt included in the Company’s condensed consolidated financial statements are reasonable estimates of fair value due to their short maturities. Based on the borrowing rates currently available to the Company for loans with similar terms, management believes the fair value of long-term debt approximates its carrying value. Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Level 2: Level 3: The Company does not maintain any financial assets that are considered to be Level 1, Level 2 or Level 3 instruments as of September 30, 2020. During the second quarter of 2019, the Company issued a liability classified equity award to one of its executive officers. The award will be earned over a 4 year vesting period and upon a specific market condition. As the award will be cash settled, it is classified as a liability within Level 3 of the fair value hierarchy as the Company is using a probability-weighted income approach, utilizing significant unobservable inputs including the probability of achieving the specified market condition with the valuation updated at each reporting period. The full fair value of the cash settled award was $1.6 million as of September 30, 2020 and is being recognized ratably as the underlying service period is provided. The following table provides a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2020 (in thousands): Level 3 Liabilities Balance at January 1, 2020 $ 266 Vested portion of liability classified equity award 107 Change in fair value measurement (238 ) Balance at March 31, 2020 $ 135 Vested portion of liability classified equity award 39 Change in fair value measurement 102 Balance at June 30, 2020 $ 276 Vested portion of liability classified equity award 63 Change in fair value measurement 201 Balance at September 30, 2020 $ 540 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In November 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-08, Compensation—Stock Compensation In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40), which aligns the accounting for cloud computing implementation costs with that of costs to develop or obtain internal-use software, meaning such costs that are part of the application development stage are capitalized as an asset and amortized over the term of the arrangement, otherwise, such costs are expensed as incurred. It also clarifies the classification of amounts related to capitalized implementation costs in the financial statements. ASC 2018-15 is effective for annual reporting periods beginning after December 15, 2019, including interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company adopted the guidance effective January 1, 2020. It did not have a material impact on the Company’s condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other Recently Issued Accounting Pronouncements The Company has evaluated all recent accounting pronouncements issued by the Financial Accounting Standards Board in the form of Accounting Standards Updates through the date these condensed consolidated financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective that when adopted would have a material impact on the financial statements of the Company. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Reconciliation of liabilities measured at fair value using significant unobservable inputs | The following table provides a reconciliation of liabilities measured at fair value using significant unobservable inputs (Level 3) for the nine months ended September 30, 2020 (in thousands): Level 3 Liabilities Balance at January 1, 2020 $ 266 Vested portion of liability classified equity award 107 Change in fair value measurement (238 ) Balance at March 31, 2020 $ 135 Vested portion of liability classified equity award 39 Change in fair value measurement 102 Balance at June 30, 2020 $ 276 Vested portion of liability classified equity award 63 Change in fair value measurement 201 Balance at September 30, 2020 $ 540 |
Select Condensed Consolidated_2
Select Condensed Consolidated Balance Sheet Details (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Balance Sheet Related Disclosures [Abstract] | |
Accounts receivable, net | Accounts receivable, net consist of the following (in thousands): September 30, 2020 December 31, 2019 Accounts receivable $ 24,604 $ 16,436 Allowance for doubtful accounts (334 ) (286 ) Accounts receivable, net $ 24,270 $ 16,150 |
Inventories, net | Inventories, net consist of the following (in thousands): September 30, 2020 December 31, 2019 Raw materials $ 5,184 $ 5,822 Work-in-process 1,387 1,578 Finished goods 64,025 51,669 70,596 59,069 Less reserve for excess and obsolete finished goods (28,452 ) (24,215 ) Inventories, net $ 42,144 $ 34,854 |
Property and equipment, net | Property and equipment, net consist of the following (in thousands, except as indicated): Useful lives (in years) September 30, 2020 December 31, 2019 Surgical instruments 4 $ 67,012 $ 58,502 Machinery and equipment 7 6,562 6,038 Computer equipment 3 4,206 3,594 Office furniture and equipment 5 1,380 1,297 Leasehold improvements various 1,761 1,761 Construction in progress n/a 862 496 81,783 71,688 Less accumulated depreciation and amortization (54,102 ) (51,966 ) Property and equipment, net $ 27,681 $ 19,722 |
Intangible assets, net | Intangible assets, net consist of the following (in thousands, except as indicated): Remaining Avg. Useful lives (in years) September 30, 2020 December 31, 2019 Developed technology 9 $ 26,976 $ 26,976 Intellectual property — 1,004 1,004 License agreements 1 5,536 5,536 Trademarks and trade names — 792 792 Customer-related 3 7,458 7,458 Distribution network 2 4,027 4,027 In process research and development 19 8,800 8,800 54,593 54,593 Less accumulated amortization (30,310 ) (28,988 ) Intangible assets, net $ 24,283 $ 25,605 |
Schedule of intangible assets, future expected amortization expense | Developed technology and in process research and development intangibles are expected to begin amortizing when the relevant products reach full commercial launch. Future amortization expense related to intangible assets as of September 30, 2020 is as follows (in thousands): Year Ending December 31, Remainder of 2020 $ 537 2021 1,888 2022 1,888 2023 1,888 2024 1,785 Thereafter 16,297 $ 24,283 |
Accrued expenses | Accrued expenses consist of the following (in thousands): September 30, 2020 December 31, 2019 Commissions and sales milestones $ 6,928 $ 5,299 Payroll and payroll related 8,924 7,949 Litigation settlement obligation - short-term portion 4,400 4,400 Professional fees 2,049 3,945 Royalties 3,284 1,981 Interest 669 155 Other 4,726 2,687 Total accrued expenses $ 30,980 $ 26,416 |
Schedule of Other Long-Term Liabilities | Other long-term liabilities consist of the following (in thousands): September 30, 2020 December 31, 2019 Litigation settlement obligation - long-term portion $ 8,126 $ 10,712 Line of credit exit fee — 600 Tax liabilities 373 373 Other 539 266 Other long-term liabilities $ 9,038 $ 11,951 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Principal Payments Remaining on Debt | Principal payments remaining on the Company's debt are as follows as of September 30, 2020 (in thousands): Year Ending December 31, Remainder of 2020 $ 241 2021 2,845 2022 2,949 2023 15,002 2024 12,018 2025 and thereafter 50,000 Total 83,055 Add: capital lease principal payments 77 Less: unamortized debt discount and debt issuance costs (15,696 ) Total 67,436 Less: current portion of long-term debt (1,672 ) Long-term debt, net of current portion $ 65,764 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future minimum annual lease payments | Future minimum annual lease payments under such leases are as follows as of September 30, 2020 (in thousands): Undiscounted lease payments: Year Ending December 31, Remainder of 2020 $ 372 2021 918 2022 40 Total undiscounted lease payments 1,330 Less: present value adjustment (66 ) Operating lease liability 1,264 Less: current portion of operating lease liability (1,208 ) Operating lease liability, less current portion $ 56 |
Orthotec Settlement (Tables)
Orthotec Settlement (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Reconciliation of Total Net Settlement Obligation | A reconciliation of the total net settlement obligation is as follows (in thousands): September 30, 2020 December 31, 2019 Litigation settlement obligation - short-term portion $ 4,400 $ 4,400 Litigation settlement obligation - long-term portion 8,126 10,712 Total 12,526 15,112 Future Interest 1,407 2,121 Total settlement obligation, gross 13,933 17,233 Related party receivable - included in stockholders' equity (5,000 ) (5,000 ) Total settlement obligation, net $ 8,933 $ 12,233 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Loss Per Share for Continuing and Discontinued Operations | The following table presents the computation of basic and diluted net loss per share for continuing and discontinued operations (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net loss, basic and diluted $ (15,669 ) $ (14,567 ) $ (52,196 ) $ (39,971 ) Denominator: Weighted average common shares outstanding 64,884 56,010 63,845 49,528 Weighted average unvested common shares subject to repurchase (123 ) (274 ) (176 ) (276 ) Weighted average common shares outstanding - basic and diluted 64,761 55,736 63,669 49,252 Net loss per share, basic and diluted: $ (0.24 ) $ (0.26 ) $ (0.82 ) $ (0.81 ) |
Anti-Dilutive Securities Not Included in Diluted Net Loss Per Share | The anti-dilutive securities not included in diluted net As of September 30, 2020 2019 Options to purchase common stock 4,141 4,270 Unvested restricted share awards 8,072 6,755 Series A Convertible Preferred Stock 29 67 Warrants to purchase common stock 25,358 26,739 Total 37,600 37,831 |
Stock Benefit Plans and Equit_2
Stock Benefit Plans and Equity Transactions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Total Stock Based Compensation | Stock-Based Compensation Total stock-based compensation for the three and nine months ended September 30, 2020 is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Cost of revenues $ 139 $ 57 $ 374 $ 113 Research and development 379 227 1,066 543 Sales, general and administrative 4,026 3,319 11,247 6,910 Total $ 4,544 $ 3,603 $ 12,687 $ 7,566 |
Summary of Common Stock Reserved for Future Issuance | As of September 30, 2020, the Company had reserved shares of its common stock for future issuance as follows (in thousands): Stock options outstanding 4,141 Unvested restricted stock award 8,072 Employee stock purchase plan 394 Series A convertible preferred stock 29 Warrants outstanding 25,358 Authorized for future grant under the Distributor and Development Services plans 6,783 Authorized for future grant under the Management Objective Strategic Incentive Plan 345 Authorized for future grant under the Company equity plans 5,190 Total 50,312 |
Summary of All Outstanding Warrants for Common Stock | A summary of all outstanding warrants for common stock is as follows: Number of Warrants Strike Price Expiration 2017 PIPE Warrants* 3,255,554 $ 2.02 June 2022 2018 PIPE Warrants 11,527,147 $ 3.50 May 2023 SafeOp Surgical Merger Warrants 2,185,099 $ 3.50 May 2023 2018 Squadron Capital Warrants 845,000 $ 3.15 May 2027 2019 Squadron Capital Warrants 4,838,710 $ 2.17 May 2027 2020 Squadron Capital Warrants 1,075,820 $ 4.88 May 2027 Executive Warrants 1,327,434 $ 5.00 December 2022 Other* 302,812 $ 3.85 Various through May 2023 Total 25,357,576 * Represents weighted average exercise price. |
The Company and Basis of Pres_2
The Company and Basis of Presentation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 16, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Company And Basis Of Presentation [Line Items] | |||||
Net proceeds from offering | $ 1,204 | $ 2,073 | |||
Working capital | 38,500 | ||||
Cash | $ 15,678 | $ 47,113 | |||
Common Stock | |||||
Company And Basis Of Presentation [Line Items] | |||||
Common stock issued | 12,535,000 | ||||
Underwritten Public Offering | Common Stock | Subsequent Event | |||||
Company And Basis Of Presentation [Line Items] | |||||
Common stock issued | 13,142,855 | ||||
Shares issued price per share | $ 8.75 | ||||
Net proceeds from offering | $ 107,700 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Jan. 01, 2020 | |
ASU No. 2019-08 | ||
Significant Accounting Policies [Line Items] | ||
Cumulative adjustment to accumulated deficit | $ 0.1 | |
Change in accounting principle, Accounting standards update, Adopted [true false] | true | |
Change in accounting principle, Accounting standards update, Adoption date | Jan. 1, 2020 | |
ASU No. 2017-04 | ||
Significant Accounting Policies [Line Items] | ||
Change in accounting principle, Accounting standards update, Adopted [true false] | true | |
Change in accounting principle, Accounting standards update, Adoption date | Jan. 1, 2020 | |
ASU No. 2018-15 | ||
Significant Accounting Policies [Line Items] | ||
Change in accounting principle, Accounting standards update, Adopted [true false] | true | |
Change in accounting principle, Accounting standards update, Adoption date | Jan. 1, 2020 | |
Change in accounting principle, Accounting standards update, Immaterial effect [true false] | true | |
Fair value, inputs, level 3 | ||
Significant Accounting Policies [Line Items] | ||
Vesting period | 4 years | |
Fair value of the cash settled award | $ 1.6 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of Liabilities (Details) - Fair value, inputs, level 3 - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||
Beginning balance | $ 276 | $ 135 | $ 266 |
Vested portion of liability classified equity award | 63 | 39 | 107 |
Change in fair value measurement | 201 | 102 | (238) |
Ending balance | $ 540 | $ 276 | $ 135 |
Select Condensed Consolidated_3
Select Condensed Consolidated Balance Sheet Details - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Accounts receivable | $ 24,604 | $ 16,436 |
Allowance for doubtful accounts | (334) | (286) |
Accounts receivable, net | $ 24,270 | $ 16,150 |
Select Condensed Consolidated_4
Select Condensed Consolidated Balance Sheet Details - Inventories, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 5,184 | $ 5,822 |
Work-in-process | 1,387 | 1,578 |
Finished goods | 64,025 | 51,669 |
Inventory, gross, total | 70,596 | 59,069 |
Less reserve for excess and obsolete finished goods | (28,452) | (24,215) |
Inventories, net | $ 42,144 | $ 34,854 |
Select Condensed Consolidated_5
Select Condensed Consolidated Balance Sheet Details - Property and Equipment, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 81,783 | $ 71,688 |
Less accumulated depreciation and amortization | (54,102) | (51,966) |
Property and equipment, net | $ 27,681 | 19,722 |
Surgical instruments | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 4 years | |
Property and equipment, gross | $ 67,012 | 58,502 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 7 years | |
Property and equipment, gross | $ 6,562 | 6,038 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 3 years | |
Property and equipment, gross | $ 4,206 | 3,594 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 5 years | |
Property and equipment, gross | $ 1,380 | 1,297 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Various useful lives of leasehold improvements | various | |
Property and equipment, gross | $ 1,761 | 1,761 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 862 | $ 496 |
Select Condensed Consolidated_6
Select Condensed Consolidated Balance Sheet Details - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation | $ 2.3 | $ 1.8 | $ 6.5 | $ 4.8 | |
Amortization of intangible assets | 0.4 | $ 0.2 | 1.3 | $ 0.5 | |
Machinery and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Capital leased assets, gross | $ 0.1 | $ 0.1 | $ 0.1 |
Select Condensed Consolidated_7
Select Condensed Consolidated Balance Sheet Details - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross | $ 54,593 | $ 54,593 |
Less accumulated amortization | (30,310) | (28,988) |
Intangible assets, net | $ 24,283 | 25,605 |
Developed technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Useful lives | 9 years | |
Intangible assets, Gross | $ 26,976 | 26,976 |
Intellectual property | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross | $ 1,004 | 1,004 |
License agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Useful lives | 1 year | |
Intangible assets, Gross | $ 5,536 | 5,536 |
Trademarks and trade names | ||
Finite Lived Intangible Assets [Line Items] | ||
Intangible assets, Gross | $ 792 | 792 |
Customer-related | ||
Finite Lived Intangible Assets [Line Items] | ||
Useful lives | 3 years | |
Intangible assets, Gross | $ 7,458 | 7,458 |
Distribution network | ||
Finite Lived Intangible Assets [Line Items] | ||
Useful lives | 2 years | |
Intangible assets, Gross | $ 4,027 | 4,027 |
In process research and development | ||
Finite Lived Intangible Assets [Line Items] | ||
Useful lives | 19 years | |
Intangible assets, Gross | $ 8,800 | $ 8,800 |
Select Condensed Consolidated_8
Select Condensed Consolidated Balance Sheet Details - Schedule of Intangible Assets, Future Expected Amortization Expense (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Balance Sheet Related Disclosures [Abstract] | |
Remainder of 2020 | $ 537 |
2021 | 1,888 |
2022 | 1,888 |
2023 | 1,888 |
2024 | 1,785 |
Thereafter | 16,297 |
Total | $ 24,283 |
Select Condensed Consolidated_9
Select Condensed Consolidated Balance Sheet Details - Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Commissions and sales milestones | $ 6,928 | $ 5,299 |
Payroll and payroll related | 8,924 | 7,949 |
Litigation settlement obligation - short-term portion | 4,400 | 4,400 |
Professional fees | 2,049 | 3,945 |
Royalties | 3,284 | 1,981 |
Interest | 669 | 155 |
Other | 4,726 | 2,687 |
Total accrued expenses | $ 30,980 | $ 26,416 |
Select Condensed Consolidate_10
Select Condensed Consolidated Balance Sheet Details - Schedule of Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Balance Sheet Related Disclosures [Abstract] | ||
Litigation settlement obligation - long-term portion | $ 8,126 | $ 10,712 |
Line of credit exit fee | 600 | |
Tax liabilities | 373 | 373 |
Other | 539 | 266 |
Other long-term liabilities | $ 9,038 | $ 11,951 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) $ in Thousands | Sep. 01, 2016option | Sep. 30, 2020USD ($) | Jun. 30, 2020 | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Contracts revenue | $ 41,163 | $ 29,201 | $ 100,907 | $ 81,075 | ||
Cost of revenues | 11,926 | 9,268 | 29,797 | 25,688 | ||
Supply agreement | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Contracts revenue | 1,100 | 1,200 | 3,000 | 4,000 | ||
Cost of revenues | $ 1,100 | $ 1,100 | $ 2,800 | $ 3,700 | ||
Discontinued operations, disposed of by sale | International Operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Supply commitment term | 3 years | |||||
Supply agreement, number of annual options to extend | option | 2 | |||||
Supply agreement, extended term | 12 months | |||||
Supply agreement, extended period | 2021-08 |
Debt - MidCap Facility Agreemen
Debt - MidCap Facility Agreement (Details) - USD ($) | May 29, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Debt Disclosure [Abstract] | |||
Final settlement under agreement | $ 9,600 | $ 56,615,000 | $ 81,161,000 |
Debt - Squadron Credit Agreemen
Debt - Squadron Credit Agreement (Details) - USD ($) | May 29, 2020 | Nov. 06, 2018 | Sep. 30, 2020 | Jun. 30, 2020 | Apr. 02, 2020 | Jun. 30, 2019 | Mar. 27, 2019 |
Line of Credit Facility [Line Items] | |||||||
Number of warrants outstanding | 25,357,576 | ||||||
Squadron Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Current interest rate | 10.00% | ||||||
Line of credit | $ 10,000,000 | ||||||
Debt instrument, maturity date | 2025-06 | 2025-06 | |||||
Debt instrument, monthly principal payments | $ 1,000,000 | ||||||
Debt carrying amount, net of issuance cost | 59,300,000 | ||||||
Debt issuance costs | $ 15,700,000 | ||||||
Squadron Credit Agreement | Common Stock | |||||||
Line of Credit Facility [Line Items] | |||||||
Number of warrants issued (in shares) | 845,000 | 4,838,710 | |||||
Exercise price of warrants | $ 4.88 | $ 3.15 | $ 2.17 | ||||
Additional warrants issued | 1,075,820 | ||||||
Number of warrants outstanding | 6,759,530 | ||||||
Squadron Credit Agreement | Expanded Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | $ 75,000,000 | ||||||
Additional borrowing capacity | $ 25,000,000 | ||||||
Squadron Credit Agreement | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Current interest rate | 10.00% | ||||||
Squadron Credit Agreement | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Current interest rate | 13.00% | ||||||
Term Loan | Squadron Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Secured debt agreement | $ 35,000,000 | $ 35,000,000 | |||||
Term Loan | Squadron Credit Agreement | Expanded Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | $ 30,000,000 | ||||||
Line of Credit | Squadron Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit | $ 20,000,000 | $ 10,000,000 | |||||
Line of Credit | London Interbank Offered Rate (LIBOR) | Squadron Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate description | LIBOR plus 8% | ||||||
Basis spread | 8.00% |
Debt - Paycheck Protection Loan
Debt - Paycheck Protection Loan (Details) - Paycheck Protection Program Loans | Apr. 23, 2020USD ($) |
Line of Credit Facility [Line Items] | |
Proceeds from loan | $ 4,300 |
Debt instrument, maturity date | Apr. 21, 2022 |
Interest rate | 1.00% |
Debt instrument, Description | Commencing August 21, 2021, the Company is required to pay the lender equal monthly payments of principal and interest as required to fully amortize by April 21, 2022 the principal amount outstanding on the PPP Loan as of the date prescribed by guidance issued by U.S. Small Business Administration (“SBA”). |
Prepayment penalties | $ 0 |
Amount of compensation excluded for payroll costs | $ 100,000 |
Maximum percentage forgiven for non-payroll costs | 25.00% |
Maximum amount of compensation to reduce the forgiveness | $ 100,000 |
Debt - Inventory Financing Agre
Debt - Inventory Financing Agreement (Details) - Inventory Financing Agreement | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity | $ 3,000,000 |
Line of Credit | |
Line of Credit Facility [Line Items] | |
Debt instrument, maturity date | Nov. 6, 2023 |
Debt instrument, frequency of periodic payment | monthly |
Obligation outstanding under inventory financing agreement | $ 3,000,000 |
London Interbank Offered Rate (LIBOR) | Line of Credit | |
Line of Credit Facility [Line Items] | |
Interest rate description | LIBOR plus 8% |
Basis spread | 8.00% |
Floor on interest rate | 10.00% |
Ceiling on interest rate | 13.00% |
Debt - Principal Payments Remai
Debt - Principal Payments Remaining on Debt (Details) $ in Thousands | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2020 | $ 241 |
2021 | 2,845 |
2022 | 2,949 |
2023 | 15,002 |
2024 | 12,018 |
2025 and thereafter | 50,000 |
Total | 83,055 |
Add: capital lease principal payments | 77 |
Less: unamortized debt discount and debt issuance costs | (15,696) |
Total | 67,436 |
Less: current portion of long-term debt | (1,672) |
Long-term debt, net of current portion | $ 65,764 |
Debt - Covenants (Details)
Debt - Covenants (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Line of Credit | Maximum | |
Line of Credit Facility [Line Items] | |
Debt default, interest rate increase | 5.00% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Dec. 04, 2019ft² | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Jan. 01, 2019 |
Loss Contingencies [Line Items] | ||||||
Remaining operating lease term | 1 year 2 months 12 days | |||||
Rent expense | $ 300,000 | $ 300,000 | $ 1,000,000 | $ 1,000,000 | ||
Payments related to operating lease | 400,000 | $ 400,000 | 1,100,000 | $ 1,000,000 | ||
Liability in connection with lawsuit | 0 | 0 | ||||
Alphatec Spine, Inc. | ||||||
Loss Contingencies [Line Items] | ||||||
Guaranteed obligated minimum royalty payments through 2024 and beyond | 4,500,000 | 4,500,000 | ||||
Third-party Provider | ||||||
Loss Contingencies [Line Items] | ||||||
Minimum purchase commitment requirements | $ 3,500,000 | $ 3,500,000 | ||||
Minimum purchase commitment to be paid period | 3 years | |||||
Recognized an ROU asset related to purchase agreement amount | $ 500,000 | |||||
Minimum | ||||||
Loss Contingencies [Line Items] | ||||||
Operating lease term | 1 year | 1 year | ||||
Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Operating lease term | 5 years 6 months | 5 years 6 months | ||||
Building lease | ||||||
Loss Contingencies [Line Items] | ||||||
Area for facility of office, engineering and research and development space | ft² | 121,541 | |||||
Lease agreement commencement term | first quarter of 2021 | |||||
Lease agreement expiry date | Nov. 30, 2030 | |||||
Operating lease discount rate | 10.50% |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Annual Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments And Contingencies Disclosure [Abstract] | ||
Remainder of 2020 | $ 372 | |
2021 | 918 | |
2022 | 40 | |
Total undiscounted lease payments | 1,330 | |
Less: present value adjustment | (66) | |
Operating lease liability | 1,264 | |
Less: current portion of operating lease liability | (1,208) | $ (1,314) |
Operating lease liability, less current portion | $ 56 | $ 925 |
Orthotec Settlement - Additiona
Orthotec Settlement - Additional Information (Details) | Jul. 01, 2016USD ($) | Oct. 01, 2014USD ($) | Aug. 13, 2014USD ($)installment | Oct. 31, 2020USD ($)installment | Sep. 30, 2014USD ($) | Apr. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2020USD ($)installment | Dec. 31, 2019USD ($) |
Loss Contingencies [Line Items] | |||||||||
Settlement amount to be contributed | $ 5,000,000 | $ 5,000,000 | |||||||
Litigation settlement, remaining outstanding balance including interest | 0 | ||||||||
Orthotec LLC, litigation settlement | |||||||||
Loss Contingencies [Line Items] | |||||||||
Judgment assessed by court for (against) company | $ 49,000,000 | ||||||||
Payments of settlement | $ 15,750,000 | $ 1,750,000 | $ 43,900,000 | ||||||
Number of quarterly installments | installment | 28 | 5 | |||||||
Litigation settlement interest, quarterly installments, amount | $ 1,100,000 | ||||||||
Litigation settlement, final installment amount | 700,000 | ||||||||
Litigation settlement, remaining outstanding balance including interest | $ 13,900,000 | ||||||||
Orthotec LLC, litigation settlement | HealthpointCapital, LLC | |||||||||
Loss Contingencies [Line Items] | |||||||||
Judgment assessed by court for (against) company | $ 5,000,000 | ||||||||
Payments of settlement | $ 1,000,000 | 1,100,000 | |||||||
Settlement amount to be contributed | $ 5,000,000 | ||||||||
Subsequent Event | Orthotec LLC, litigation settlement | HealthpointCapital, LLC | |||||||||
Loss Contingencies [Line Items] | |||||||||
Judgment assessed by court for (against) company | $ 5,000,000 | ||||||||
Number of quarterly installments | installment | 5 | ||||||||
Beginning fourth quarter of 2014 | Orthotec LLC, litigation settlement | |||||||||
Loss Contingencies [Line Items] | |||||||||
Settlement amount, remaining balance | $ 31,500,000 | ||||||||
Litigation settlement interest, quarterly installments, amount | $ 1,100,000 | ||||||||
Litigation settlement interest rate | 7.00% | ||||||||
Litigation settlement payments, quarterly payment amount | $ 1,100,000 | ||||||||
Final installment | Orthotec LLC, litigation settlement | |||||||||
Loss Contingencies [Line Items] | |||||||||
Number of quarterly installments | installment | 1 |
Orthotec Settlement - Schedule
Orthotec Settlement - Schedule of Reconciliation of Total Net Settlement Obligation (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Commitments And Contingencies Disclosure [Abstract] | ||
Litigation settlement obligation - short-term portion | $ 4,400 | $ 4,400 |
Litigation settlement obligation - long-term portion | 8,126 | 10,712 |
Total | 12,526 | 15,112 |
Future Interest | 1,407 | 2,121 |
Total settlement obligation, gross | 13,933 | 17,233 |
Related party receivable - included in stockholders' equity | (5,000) | (5,000) |
Total settlement obligation, net | $ 8,933 | $ 12,233 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share for Continuing and Discontinued Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||||||
Net loss, basic and diluted | $ (15,669) | $ (15,805) | $ (20,722) | $ (14,567) | $ (12,436) | $ (12,968) | $ (52,196) | $ (39,971) |
Denominator: | ||||||||
Weighted average common shares outstanding | 64,884 | 56,010 | 63,845 | 49,528 | ||||
Weighted average unvested common shares subject to repurchase | (123) | (274) | (176) | (276) | ||||
Weighted average common shares outstanding - basic and diluted | 64,761 | 55,736 | 63,669 | 49,252 | ||||
Net loss per share, basic and diluted: | $ (0.24) | $ (0.26) | $ (0.82) | $ (0.81) |
Net Loss Per Share - Anti-Dilut
Net Loss Per Share - Anti-Dilutive Securities Not Included in Diluted Net Loss Per Share (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 37,600 | 37,831 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 4,141 | 4,270 |
Unvested restricted share awards | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 8,072 | 6,755 |
Warrants to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 25,358 | 26,739 |
Series A Convertible Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 29 | 67 |
Stock Benefit Plans and Equit_3
Stock Benefit Plans and Equity Transactions - Additional Information (Details) - USD ($) | May 29, 2020 | Apr. 05, 2020 | Jul. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 17, 2020 | Apr. 08, 2020 | Jun. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock compensation charge | $ 100,000 | $ 900,000 | ||||||||||
Warrants outstanding | 25,357,576 | 25,357,576 | ||||||||||
Stock-based compensation | $ 12,687,000 | $ 7,566,000 | ||||||||||
Common Stock | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Common stock issued | 12,535,000 | |||||||||||
2017 PIPE Warrants | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Warrant expiration period | 5 years | |||||||||||
Proceeds from exercise of warrant | $ 600,000 | $ 300,000 | $ 800,000 | |||||||||
Number of warrants exercised | 0 | 300,000 | 125,000 | 418,864 | ||||||||
Warrants outstanding | 3,255,554 | 3,255,554 | ||||||||||
Exercise price of warrants | $ 2.02 | $ 2.02 | ||||||||||
2018 Common Stock Warrants | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Warrant expiration period | 5 years | |||||||||||
Warrants outstanding | 11,527,147 | 11,527,147 | ||||||||||
Exercise price of warrants | $ 3.50 | $ 3.50 | ||||||||||
2018 Common Stock Warrants | 2018 PIPE Warrants | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Proceeds from exercise of warrant | $ 0 | $ 900,000 | $ 600,000 | |||||||||
Number of warrants exercised | 136,000 | 81,195 | 1,670,524 | 217,195 | ||||||||
Warrants outstanding | 11,527,147 | 11,527,147 | ||||||||||
Squadron Capital | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Warrant expiration period | 7 years | |||||||||||
Warrants outstanding | 6,759,530 | 6,759,530 | ||||||||||
Number of warrants issued (in shares) | 1,075,820 | 4,838,710 | 845,000 | |||||||||
Exercise price of warrants | $ 4.88 | $ 2.17 | $ 3.15 | |||||||||
Warrant termination date | May 29, 2027 | |||||||||||
2016 Equity Incentive Plan | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Number of shares available for grant | 4,285,924,000 | 4,285,924,000 | 7,000,000 | |||||||||
Salary-to-Equity Conversion Program | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Vesting date | Jul. 10, 2020 | |||||||||||
Deferred compensation liability | $ 900,000 | $ 900,000 | ||||||||||
Salary-to-Equity Conversion Program | Minimum | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Eligible employee payroll cost for conversion program | $ 100,000 | |||||||||||
Employee voluntary election to reduce compensation rate | 10.00% | |||||||||||
Salary-to-Equity Conversion Program | Maximum | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Employee voluntary election to reduce compensation rate | 75.00% | |||||||||||
2017 Distributor Inducement Plan | Common Stock | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Common stock issued | 51,500 | |||||||||||
Stock-based compensation | $ 300,000 | $ 100,000 | $ 400,000 | $ 300,000 | ||||||||
Number of warrants available to be granted | 370,000 | 370,000 | ||||||||||
2017 Distributor Inducement Plan | Common Stock | Board of Directors Chairman | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share authorized grant of warrants | 1,000,000 | |||||||||||
Two Thousand Seventeen Development Services Plan | Restricted Common Stock | Board of Directors Chairman | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Number of shares available for grant | 5,169,000 | 5,169,000 | ||||||||||
Two Thousand Seventeen Development Services Plan | Common Stock | Board of Directors Chairman | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Number of shares available for grant | 6,000,000 | |||||||||||
Common stock issued | 0 | |||||||||||
2019 Management Objective Strategic Incentive Plan | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Stock-based compensation | $ 100,000 | $ 100,000 | ||||||||||
2019 Management Objective Strategic Incentive Plan | Unvested Restricted Stock Award | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Maximum grant of shares per participant | 25,000 | |||||||||||
Restricted shares granted under the plan | 130,000 | |||||||||||
2019 Management Objective Strategic Incentive Plan | Common Stock | Board of Directors Chairman | ||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||
Share authorized grant of warrants | 500,000 | |||||||||||
Maximum grant of shares per participant | 50,000 |
Stock Benefit Plans and Equit_4
Stock Benefit Plans and Equity Transactions - Summary of Total Stock Based Compensation (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 4,544 | $ 3,603 | $ 12,687 | $ 7,566 |
Cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 139 | 57 | 374 | 113 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 379 | 227 | 1,066 | 543 |
Sales, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 4,026 | $ 3,319 | $ 11,247 | $ 6,910 |
Stock Benefit Plans and Equit_5
Stock Benefit Plans and Equity Transactions - Summary Common Stock Reserved for Future Issuance (Details) shares in Thousands | Sep. 30, 2020shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 50,312 |
Employee Stock Option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 4,141 |
Unvested Restricted Stock Award | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 8,072 |
Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 394 |
Series A Convertible Preferred Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 29 |
Warrants Outstanding | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 25,358 |
Authorized for Future Grant Under the Distributor and Development Services Plans | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 6,783 |
Authorized for Future Grant Under the Management Objective Strategic Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 345 |
Authorized for Future Grant Under the Company Equity Plans | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 5,190 |
Stock Benefit Plans and Equit_6
Stock Benefit Plans and Equity Transactions - Summary of All Outstanding Warrants for Common Stock (Details) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 25,357,576 |
2017 PIPE Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 3,255,554 |
Strike Price | $ / shares | $ 2.02 |
Expiration | June 2022 |
2018 PIPE Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 11,527,147 |
Strike Price | $ / shares | $ 3.50 |
Expiration | May 2023 |
SafeOp Surgical Merger Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 2,185,099 |
Strike Price | $ / shares | $ 3.50 |
Expiration | May 2023 |
2018 Squadron Capital Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 845,000 |
Strike Price | $ / shares | $ 3.15 |
Expiration | May 2027 |
2019 Squadron Capital Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 4,838,710 |
Strike Price | $ / shares | $ 2.17 |
Expiration | May 2027 |
2020 Squadron Capital Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 1,075,820 |
Strike Price | $ / shares | $ 4.88 |
Expiration | May 2027 |
Executive Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 1,327,434 |
Strike Price | $ / shares | $ 5 |
Expiration | December 2022 |
Other Warrants | |
Class Of Warrant Or Right [Line Items] | |
Number of Warrants | 302,812 |
Strike Price | $ / shares | $ 3.85 |
Expiration | Various through May 2023 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Unrecognized tax benefits | $ 2,500,000 | $ 2,500,000 | $ 2,500,000 | |
Changes in unrecognized tax benefits | $ 0 | |||
Effective income tax rate from continuing operations | 0.00% | |||
Federal statutory income tax rate | 21.00% | |||
Operating loss carryforwards state | 205,200,000 | |||
Operating loss carryforwards federal | 128,200,000 | |||
Federal and state net operating loss carryforwards, expiring year | 2039 | |||
State research and development tax credit carryforwards | $ 3,200,000 | |||
Cumulative change in ownership percentage | 50.00% | |||
Period for cumulative change in ownership | 3 years |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) $ in Thousands | Oct. 01, 2020USD ($) | Jul. 01, 2016USD ($) | Aug. 13, 2014USD ($)installment | Oct. 31, 2020USD ($)installment | Sep. 30, 2014USD ($) | Apr. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2020USD ($)installment | Dec. 31, 2019USD ($) |
Related Party Transaction [Line Items] | |||||||||
Settlement amount to be contributed | $ 5,000 | $ 5,000 | |||||||
Withholding tax receivable from officer | 934 | ||||||||
Restricted Stock Units | |||||||||
Related Party Transaction [Line Items] | |||||||||
Withholding tax receivable from officer | 900 | ||||||||
Subsequent Event | Restricted Stock Units | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payment was remitted to settle the tax liability | $ 600 | ||||||||
Orthotec LLC, litigation settlement | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments of settlement | $ 15,750 | $ 1,750 | $ 43,900 | ||||||
Judgment assessed by court for (against) company | $ (49,000) | ||||||||
Number of quarterly installments | installment | 28 | 5 | |||||||
Orthotec LLC, litigation settlement | HealthpointCapital, LLC | |||||||||
Related Party Transaction [Line Items] | |||||||||
Payments of settlement | $ 1,000 | $ 1,100 | |||||||
Judgment assessed by court for (against) company | $ (5,000) | ||||||||
Settlement amount to be contributed | $ 5,000 | ||||||||
Orthotec LLC, litigation settlement | Subsequent Event | HealthpointCapital, LLC | |||||||||
Related Party Transaction [Line Items] | |||||||||
Judgment assessed by court for (against) company | $ (5,000) | ||||||||
Number of quarterly installments | installment | 5 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 16, 2020 | Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 |
Subsequent Event [Line Items] | |||||
Net proceeds from offering | $ 1,204 | $ 2,073 | |||
Common Stock | |||||
Subsequent Event [Line Items] | |||||
Common stock issued | 12,535,000 | ||||
Common stock issued upon exercise of options | 8,000 | ||||
Subsequent Event | Common Stock | Underwritten Public Offering | |||||
Subsequent Event [Line Items] | |||||
Common stock issued | 13,142,855 | ||||
Shares issued price per share | $ 8.75 | ||||
Common stock issued upon exercise of options | 1,714,285 | ||||
Net proceeds from offering | $ 107,700 |