Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 01, 2021 | |
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, 2021 | |
Document Fiscal Year Focus | 2021 | |
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 | 99,293,042 | |
Entity Shell Company | false | |
Entity File Number | 000-52024 | |
Entity Tax Identification Number | 20-2463898 | |
Entity Address, Address Line One | 1950 Camino Vida Roble | |
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, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 223,868 | $ 107,765 |
Accounts receivable, net | 33,676 | 23,527 |
Inventories | 92,509 | 46,001 |
Prepaid expenses and other current assets | 7,109 | 5,439 |
Withholding tax receivable from Officer | 1,076 | |
Current assets of discontinued operations | 352 | |
Total current assets | 357,162 | 184,160 |
Property and equipment, net | 77,214 | 36,670 |
Right-of-use asset | 26,647 | 1,177 |
Goodwill | 44,335 | 13,897 |
Intangible assets, net | 88,840 | 24,720 |
Other assets | 3,910 | 541 |
Noncurrent assets of discontinued operations | 58 | |
Total assets | 598,108 | 261,223 |
Current liabilities: | ||
Accounts payable | 29,438 | 17,599 |
Accrued expenses and other current liabilities | 43,985 | 35,264 |
Contract liability | 16,670 | |
Short-term debt | 6,119 | 4,167 |
Current portion of operating lease liability | 3,859 | 885 |
Current liabilities of discontinued operations | 397 | |
Total current liabilities | 100,071 | 58,312 |
Long-term debt | 320,974 | 37,999 |
Operating lease liability, less current portion | 24,951 | 41 |
Other long-term liabilities | 16,752 | 11,388 |
Commitments and contingencies (Note 7) | ||
Redeemable preferred stock, $0.0001 par value; 20,000 shares authorized at September 30, 2021 and December 31, 2020; 3,319 shares issued and outstanding at September 30, 2021 and December 31, 2020 | 23,603 | 23,603 |
Stockholders' equity: | ||
Common stock, $0.0001 par value; 200,000 authorized; 99,190 shares issued and 99,101 shares outstanding at September 30, 2021; and 82,294 shares issued and 82,104 shares outstanding at December 31, 2020 | 10 | 8 |
Treasury stock, 1,808 shares at September 30, 2021 and 2 shares at December 31, 2020 | (25,097) | (97) |
Additional paid-in capital | 883,296 | 770,764 |
Shareholder note receivable | (700) | (4,000) |
Accumulated other comprehensive income | (3,614) | 1,204 |
Accumulated deficit | (742,138) | (637,999) |
Total stockholders’ equity | 111,757 | 129,880 |
Total liabilities and stockholders’ equity | $ 598,108 | $ 261,223 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Statement Of Financial Position [Abstract] | ||
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 | 99,190,000 | 82,294,000 |
Common stock, shares outstanding | 99,101,000 | 82,104,000 |
Treasury stock, shares | 1,808,000 | 2,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Revenue | $ 62,880 | $ 41,163 | $ 169,250 | $ 100,907 |
Cost of revenue | 23,266 | 11,926 | 56,713 | 29,797 |
Gross profit | 39,614 | 29,237 | 112,537 | 71,110 |
Operating expenses: | ||||
Research and development | 9,391 | 4,984 | 23,031 | 13,390 |
Sales, general and administrative | 61,494 | 35,380 | 162,578 | 89,431 |
Litigation-related expenses | 1,209 | 1,560 | 5,711 | 5,507 |
Amortization of acquired intangible assets | 2,012 | 172 | 3,392 | 516 |
Transaction-related expenses | 373 | 2 | 6,156 | 4,093 |
Restructuring expenses | 256 | 1,587 | ||
Total operating expenses | 74,735 | 42,098 | 202,455 | 112,937 |
Operating loss | (35,121) | (12,861) | (89,918) | (41,827) |
Interest and other expense, net: | ||||
Interest expense, net | (1,272) | (2,762) | (5,604) | (8,668) |
Loss on debt extinguishment, net | (7,434) | (7,434) | (1,555) | |
Other income (expense), net | 886 | (6) | (1,020) | (6) |
Total interest and other expense, net | (7,820) | (2,768) | (14,058) | (10,229) |
Net loss before taxes | (42,941) | (15,629) | (103,976) | (52,056) |
Income tax provision | 90 | 40 | 163 | 140 |
Net loss | $ (43,031) | $ (15,669) | $ (104,139) | $ (52,196) |
Net loss per share, basic and diluted | $ (0.43) | $ (0.24) | $ (1.09) | $ (0.82) |
Weighted average shares outstanding, basic and diluted | 99,571 | 64,761 | 95,204 | 63,669 |
Products and Services | ||||
Revenue: | ||||
Revenue | $ 62,735 | $ 40,052 | $ 168,336 | $ 97,956 |
International Supply Agreement | ||||
Revenue: | ||||
Revenue | $ 145 | $ 1,111 | $ 914 | $ 2,951 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (43,031) | $ (15,669) | $ (104,139) | $ (52,196) |
Foreign currency translation adjustments | (3,463) | 18 | (4,818) | 93 |
Comprehensive loss | $ (46,494) | $ (15,651) | $ (108,957) | $ (52,103) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | 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, 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 stock option exercises | 83 | 83 | |||||||
Common stock issued for stock option exercises, shares | 76 | ||||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld for tax liability | (408) | (408) | |||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld 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 restricted stock awards, net of shares withheld for tax liability | (164) | (164) | |||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld for tax liability, shares | 387 | ||||||||
Issuance of common stock warrants, net | 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 | |||||||
Common stock issued for conversion of Series A preferred stock, shares | 39 | ||||||||
Distributor equity incentives | 293 | 293 | |||||||
Common stock issued for warrant exercises, shares | 68 | ||||||||
Common stock issued for stock option exercises | 70 | 70 | |||||||
Common stock issued for stock option exercises, shares | 24 | ||||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld for tax liability | (244) | (244) | |||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld for tax liability, shares | 582 | ||||||||
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 | ||||||||
Balance at Dec. 31, 2020 | 129,880 | $ 8 | 770,764 | (4,000) | (97) | 1,204 | (637,999) | ||
Balance, shares at Dec. 31, 2020 | 82,104 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation | 3,889 | 3,889 | |||||||
Distributor equity incentives | 129 | 129 | |||||||
Common stock issued for warrant exercises | 756 | 756 | |||||||
Common stock issued for warrant exercises, shares | 2,019 | ||||||||
Common stock issued for stock option exercises | 210 | 210 | |||||||
Common stock issued for stock option exercises, shares | 69 | ||||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld for tax liability | (1,717) | (1,717) | |||||||
Common stock issued for vesting of restricted stock awards, net of shares withheld for tax liability, shares | 379 | ||||||||
Shareholder note receivable | 1,100 | 1,100 | |||||||
Foreign currency translation adjustments | (3,052) | (3,052) | |||||||
Net loss | (22,903) | (22,903) | |||||||
Balance at Mar. 31, 2021 | 108,292 | $ 8 | 774,031 | (2,900) | (97) | (1,848) | (660,902) | ||
Balance, shares at Mar. 31, 2021 | 84,571 | ||||||||
Balance at Dec. 31, 2020 | 129,880 | $ 8 | 770,764 | (4,000) | (97) | 1,204 | (637,999) | ||
Balance, shares at Dec. 31, 2020 | 82,104 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Foreign currency translation adjustments | (4,818) | ||||||||
Net loss | (104,139) | ||||||||
Balance at Sep. 30, 2021 | 111,757 | $ 10 | 883,296 | (700) | (25,097) | (3,614) | (742,138) | ||
Balance, shares at Sep. 30, 2021 | 99,101 | ||||||||
Balance at Mar. 31, 2021 | 108,292 | $ 8 | 774,031 | (2,900) | (97) | (1,848) | (660,902) | ||
Balance, shares at Mar. 31, 2021 | 84,571 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation | 11,187 | 11,187 | |||||||
Distributor equity incentives | 94 | 94 | |||||||
Common stock issued for employee stock purchase plan and stock option exercises | 1,479 | 1,479 | |||||||
Common stock issued for employee stock purchase plan and stock option exercises, shares | 356 | ||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares withheld for tax liability | (5,687) | (5,687) | |||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares withheld for tax liability, shares | 1,125 | ||||||||
Common stock issued for warrant exercises | 1,729 | 1,729 | |||||||
Common stock issued for warrant exercises, shares | 1,576 | ||||||||
Issuance of common stock for public offering, net of offering costs | 131,828 | $ 2 | 131,826 | ||||||
Issuance of common stock for public offering, net of offering costs, shares | 12,421 | ||||||||
Shareholder note receivable | 1,100 | 1,100 | |||||||
Foreign currency translation adjustments | 1,697 | 1,697 | |||||||
Net loss | (38,205) | (38,205) | |||||||
Balance at Jun. 30, 2021 | 213,514 | $ 10 | 914,659 | (1,800) | (97) | (151) | (699,107) | ||
Balance, shares at Jun. 30, 2021 | 100,049 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock-based compensation | 10,299 | 10,299 | |||||||
Distributor equity incentives | 799 | 799 | |||||||
Distributor equity incentives, shares | 65 | ||||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares withheld for tax liability | (3,844) | (3,844) | |||||||
Common stock issued for vesting of performance and restricted stock awards, net of shares withheld for tax liability, shares | 293 | ||||||||
Common stock issued for warrant exercises | 731 | 731 | |||||||
Common stock issued for warrant exercises, shares | 331 | ||||||||
Common stock issued for stock option exercises | 518 | 518 | |||||||
Common stock issued for stock option exercises, shares | 169 | ||||||||
Shareholder note receivable | 1,100 | 1,100 | |||||||
Repurchase of common stock | (25,000) | (25,000) | |||||||
Repurchase of common stock, shares | (1,806) | ||||||||
Purchase of Capped Call | (39,866) | (39,866) | |||||||
Foreign currency translation adjustments | (3,463) | (3,463) | |||||||
Net loss | (43,031) | (43,031) | |||||||
Balance at Sep. 30, 2021 | $ 111,757 | $ 10 | $ 883,296 | $ (700) | $ (25,097) | $ (3,614) | $ (742,138) | ||
Balance, shares at Sep. 30, 2021 | 99,101 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Jun. 30, 2021USD ($) | |
Statement Of Stockholders Equity [Abstract] | |
Common stock public offering cost | $ 6,200 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating activities: | ||
Net loss | $ (104,139) | $ (52,196) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 17,986 | 7,804 |
Stock-based compensation | 26,724 | 12,687 |
Amortization of debt issuance costs | 1,589 | 3,133 |
Amortization of right-of-use assets | 2,730 | 871 |
Provision for excess and obsolete inventory | 6,842 | 5,429 |
Loss on disposal of instruments | 969 | 281 |
Loss on extinguishment of debt, net | 7,434 | 1,555 |
Other | 861 | 79 |
Changes in operating assets and liabilities, net of effects of acquisition: | ||
Accounts receivable | (1,417) | (8,199) |
Inventories | (23,817) | (12,720) |
Prepaid expenses and other current assets | 4,815 | (2,286) |
Other assets | 69 | (53) |
Accounts payable | (298) | 4,246 |
Accrued expenses and other current liabilities | (3,343) | 4,561 |
Lease liability | 168 | (975) |
Other long-term liabilities | 4,251 | (3,901) |
Net cash used in operating activities | (58,576) | (39,684) |
Investing activities: | ||
Purchase of property and equipment | (48,946) | (12,868) |
Acquisition of business, net of cash acquired | (62,133) | |
Cash paid for investments | (3,000) | |
Cash received from sale of assets | 27 | |
Settlement of forward contract | (2,589) | |
Net cash used in investing activities | (137,765) | (12,841) |
Financing activities: | ||
Proceeds from public offering | 131,828 | |
Proceeds from issuance of convertible notes | 316,250 | |
Payment of debt issuance costs | (10,028) | |
Net cash (paid) received from common stock exercises | (5,825) | 1,204 |
Borrowings under lines of credit | 42,455 | |
Repayments under lines of credit | (56,615) | |
Purchase of capped calls | (39,866) | |
Repurchase of common stock | (25,000) | |
Proceeds from issuance of term debt, net | 34,012 | |
Repayment of Squadron Medical term loan | (45,000) | |
Repayment of Inventory Financing Agreement | (8,088) | |
Other | (1,818) | (48) |
Net cash provided by financing activities | 312,453 | 21,008 |
Effect of exchange rate changes on cash | (9) | 82 |
Net increase (decrease) in cash | 116,103 | (31,435) |
Cash at beginning of period | 107,765 | 47,113 |
Cash at end of period | 223,868 | 15,678 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 4,297 | 4,931 |
Cash paid for income taxes | 225 | 186 |
Supplemental disclosure of noncash activities: | ||
Common stock issued with term loan draw | 2,986 | |
PPP Loan Forgiveness | 4,271 | |
Purchases of property and equipment in accounts payable | 4,459 | $ 1,881 |
Recognition of lease liability | 23,403 | |
OCEANE | ||
Investing activities: | ||
Acquisition of business, net of cash acquired | $ (21,097) |
The Company and Basis of Presen
The Company and Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
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”), SafeOp Surgical, Inc. (“SafeOp”), and EOS imaging S.A. (“EOS”), is a medical technology company that designs, develops, and markets technology for the treatment of spinal disorders associated with disease and degeneration, congenital deformities, and trauma. The Company markets its products in the U.S. and internationally via independent sales agents and a direct sales force. On September 1, 2016, the Company completed the sale of its previous international distribution operations and agreements to Globus Medical Ireland, Ltd., a subsidiary of Globus Medical, Inc., and its affiliated entities (collectively “Globus”). As a result of this transaction, the previous international distribution transactions are reported as discontinued operations in the condensed consolidated financial statements. See Note 5 for additional information on the divestiture of the previous international distribution business. Recent Developments On May 13, 2021, the Company acquired a controlling interest in EOS, pursuant to the Tender Offer Agreement (the “Tender Offer Agreement”) it entered into on December 16, 2020, and in June 2021 purchased the remaining issued and outstanding ordinary shares for a 100% interest in EOS. is a global medical device company that designs, develops and markets innovative, low dose 2D/3D full body and weight-bearing imaging, rapid 3D modeling of EOS patient X-ray images, web-based patient-specific surgical planning, and integration of surgical plan into the operating room that collectively bridge the entire spectrum of care from imaging to post-operative assessment capabilities for orthopedic surgery. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All intercompany balances and transactions have been eliminated during consolidation. The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Pursuant to these rules and regulations, the Company has condensed or omitted certain information and footnotes it normally includes in its annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). 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, 2020, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 that was filed with the SEC on March 5, 2021. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other future periods. The COVID-19 Pandemic In 2020, a novel strain of Coronavirus, which causes COVID-19, was identified and declared by the World Health Organization to be a pandemic. The virus causing COVID-19 has since rapidly spread across the global to all countries, including to the United States. To slow the spread of COVID-19, governments have implemented measures, which include the mandatory closure of businesses, and restrictions on travel. In addition, many government agencies in conjunction with hospitals and healthcare systems have, to varying degrees, deferred or suspended elective surgical procedures. While certain spine surgeries are deemed essential and certain surgeries cannot be delayed, the Company has seen and may continue to see a reduction in procedural volumes as hospital systems and/or patients elect to defer spine surgery procedures and hospital systems experience staffing shortages. The cumulative effect of these disruptions had an impact on the Company’s business during the year ended December 31, 2020 and the nine months ended September 30, 2021, and it is not possible to accurately predict the length or severity of the COVID-19 pandemic or the timing for a broad and sustained resumption of elective surgical procedures. The COVID-19 pandemic continues to evolve and its full impact on the Company’s business will depend on several factors that are uncertain and unpredictable, including, the efficacy and adoption of vaccines, future resurgences of the virus and its variants, the speed at which government restrictions are lifted or enacted, and patient capacity at hospitals and healthcare systems. Reclassification Certain amounts in the condensed consolidated financial statements for the three and nine months ended September 30, 2020 have been reclassified to conform to the current period’s presentation. These reclassifications were immaterial and had no impact on previously reported results of operations or accumulated deficit. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
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, 2020, which are included in the Company’s Annual Report on Form 10-K that was filed with the SEC on March 5, 2021. Except as discussed below, these accounting policies have not changed during the nine months ended September 30, 2021. Use of Estimates To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Valuation of Goodwill Goodwill represents the excess of the cost over the fair value of net assets acquired from the Company’s business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized; however, it is assessed for impairment using fair value measurement techniques on October 1 st Valuation of Intangible Assets Intangible assets are comprised primarily of purchased technology, customer relationships, and trade names. The Company make significant judgments in relation to the valuation of intangible assets resulting from business combinations and asset acquisitions. Intangible assets are generally amortized on a straight-line basis over their estimated useful lives of 3 to 10 years. The useful lives and related amortization expense is based on the period of time the Company estimates the assets will generate net sales or otherwise be used. The Company also periodically review the lives assigned to intangible assets to ensure that its initial estimates do not exceed any revised estimated periods from which the Company expects to realize cash flows from the technologies. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in reported results would increase. The Company evaluates intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. Significant judgment is required in the forecasts of future operating results that are used in the discounted cash flow valuation models. It is possible that plans may change and estimates used may prove to be inaccurate. If actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, the Company could incur additional impairment charges. Revenue Recognition The Company recognizes revenue from product sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Sales are derived primarily from the sale of spinal implant products to hospitals and medical centers through direct sales representatives and independent distributor agents, and with the acquisition of EOS, includes imaging equipment and related services. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of products to customers, either upon shipment of the product or delivery of the product to the customer depending on the shipping terms, or when the products are used in a surgical procedure (implanted in a patient). Revenue from the sale of imaging equipment is recognized as each distinct performance obligation is fulfilled and control transfers to the customer, beginning with shipment or delivery, depending on the terms. Revenue from other distinct performance obligations, such as maintenance on imaging equipment, training services, and other imaging related services, is recognized in the period the service is performed, and makes up less than 10% of the Company’s total revenue. Revenue is measured based on the amount of consideration expected to be received in exchange for the transfer of the goods or services specified in the contract with each customer. In certain cases, the Company does offer the ability for customers to lease its imaging equipment primarily on a non-sales type basis, but such arrangements are immaterial to total revenue in the periods presented. The Company generally does not allow returns of products that have been delivered and will recognize such revenue when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, except for contracts that complete within one year or less, in which case the associated costs are expensed as incurred. Payment terms for sales to customers may vary but are commensurate with the general business practices in the country of sale. To the extent that the transaction price includes variable consideration, such as discounts, rebates, and customer payment penalties, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available, including historical, current, and forecasted information. The Company records a contract liability, or deferred revenue, when it has an obligation to provide a product or service to the customer and payment is received or due in advance of its performance. When the Company sells a product or service with a future performance obligation, revenue is deferred on the unfulfilled performance obligation and recognized over the related performance period. Generally, the Company does not have observable evidence of the standalone selling price related to its future service obligations; therefore, the Company estimates the selling price using an expected cost plus a margin approach. The transaction price is allocated using the relative standalone selling price method. The use of alternative estimates could result in a different amount of revenue deferral. The Company had current and non-current contract liability balances totaling $16.7 million and $2.7 million, respectively, as of September 30, 2021. The non-current contract liability balance is included in other long-term liabilities on the condensed consolidated balance sheets. The Company recognized $4.8 million and $8.2 million of revenue from its contract liabilities during the three and nine months ended September 30, 2021, respectively. The opening and closing balances of the Company’s contract liability are as follows: Balance at January 1, 2021 $ — Contract liability assumed from EOS 21,196 Payments received 6,354 Revenue recognized (8,169 ) Balance at September 30, 2021 $ 19,381 Fair Value Measurements T he carrying amount of financial instruments consisting of cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and short-term debt included in the Company’s condensed consolidated financial statements are reasonable estimates of fair value due to their short maturities. Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table presents information related to the Company’s liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 (in thousands): September 30, 2021 Liabilities: Level 1 Level 2 Level 3 Total Liability classified equity award (1) $ — — 3,366 $ 3,366 Foreign currency forward contract — 279 — 279 Total $ — 279 3,366 $ 3,645 December 31, 2020 Liabilities: Level 1 Level 2 Level 3 Total Liability classified equity award (1) $ — — 4,108 $ 4,108 Foreign currency forward contract — 878 — 878 Total $ — 878 4,108 $ 4,986 (1) A portion of this award is being accreted over the requisite service period. The amount in the above table includes the fair value of the vested and unvested portion of the award. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the periods presented. On March 16, 2021, the Company entered into two foreign currency forward contracts, with a settlement date of December 31, 2021, and with a notional amount of $8.0 million total, $4.0 million each (€6.7 million total and €3.3 million each), to mitigate the foreign currency exchange risk related to its EOS subsidiary. The contracts are not designated as hedging instruments. The Company classified the derivative liabilities within Level 2 of the fair value hierarchy as observable inputs are available for the full term of the derivative instruments. The fair value of the forward contracts was developed using a market approach based on publicly available market yield curves and the term of the contracts. The Company recognized a nominal loss from the change in fair value of the contracts during the nine months ended September 30, 2021. The loss on the change in fair value of the contracts was recorded as other expense on the condensed consolidated statement of operations. On December 18, 2020, the Company entered into a foreign currency forward contract, with a notional amount of $ 117.9 million (€ million) to mitigate the foreign currency exchange risk related to th e Tender Offer Agreement, denominated in Euros. The contract was not designated as a hedging instrument. The Company classified the derivative liability within Level 2 of the fair value hierarchy as observable inputs were available for the full term of the derivative instrument. The fair value of the forward contract was developed using a market approach based on publicly available market yield curves and the term of the contract. On March 2, 2021, the foreign currency forward contract was settled for $ 115.3 million ( € 95.6 million) . The C ompany recognized a $ million loss from the change in fair value of the contract during the nine months ended September 30 , 2021. The loss on the contract settlement was recorded as other expense on the condensed consolidated statement of operations and the cash settlement is included in investing activities in the condensed consolidated statement of cash flows for the nine months ended September 30 , 2021. 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 settled in cash, 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 award was $3.4 million as of September 30, 2021 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 three and nine months ended September 30, 2021 (in thousands): Level 3 Liabilities Balance at January 1, 2021 $ 1,668 Vested portion of liability classified equity award 258 Change in fair value measurement 199 Balance at March 31, 2021 $ 2,125 Vested portion of liability classified equity award 283 Change in fair value measurement (68 ) Balance at June 30, 2021 $ 2,340 Vested portion of liability classified equity award 275 Change in fair value measurement (617 ) Balance at September 30, 2021 $ 1,998 Fair Value of Long-term Debt The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2026 at September 30, 2021 was approximately $306.8 million. The fair value based on a quoted market price (Level 1), of the Company’s outstanding OCEANE at September 30, 2021 was approximately $14.4 million. See Note 6 for further information. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In August 2020, the FASB issued Accounting Standard Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) (“ ”) Recently Issued Accounting Pronouncements In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations [Abstract] | |
Business Combination | 3. Business Combination The Company recognizes assets acquired, liabilities assumed, and any noncontrolling interest at fair value at the date of acquisition. On December 16, 2020, the Company entered into the Tender Offer Agreement with EOS, pursuant to which the Company agreed to commence a public tender offer (the “Offer”) to purchase all of the issued and outstanding ordinary shares, nominal value €0.01 per share (collectively, the “EOS Shares”) for a cash offer of €2.45 per EOS Share, and outstanding convertible bonds of EOS (“OCEANEs”) for a cash offer of €7.01 per OCEANE, which included accrued but unpaid interest. On May 13, 2021 (the “Initial Offer Period”), the Company substantially completed the Offer, pursuant to which the Company purchased 59% of the issued and outstanding EOS Shares and 53% of the OCEANEs for $66.5 million in cash pursuant to the Offer. In addition, prior to the closing of the Initial Offer Period, the Company had also acquired 30% of the issued and outstanding EOS Shares and 4% of the OCEANEs on the open market for $25.0 million in cash. After the completion of the Initial Offer Period, the Company held a controlling financial interest in EOS representing 89% of issued and outstanding EOS Shares and 57% of OCEANEs, equal to approximately 80% of the capital and voting rights of EOS on a fully diluted basis. The Offer was reopened on May 17, 2021 to purchase the remaining EOS Shares for $8.5 million, ultimately resulting in the acquisition of 100% of EOS Shares and 57% of the OCEANEs as of June 2, 2021. As of June 2, 2021, the total cash paid to acquire 100% of the EOS Shares and 57% of the OCEANEs was $100.0 million. EOS, which now operates as a wholly owned subsidiary of the Company, is a global medical device company that designs, develops and markets innovative, low dose 2D/3D full body and weight-bearing imaging, rapid 3D modeling of EOS patient X-ray images, web-based patient-specific surgical planning, and integration of surgical plan into the operating room that collectively bridge the entire spectrum of care from imaging to post-operative assessment capabilities for orthopedic surgery. The Company plans to integrate this technology into its procedural approach to spine surgery to better inform and better achieve spinal alignment objectives in surgery. The Company is still in the process of finalizing the purchase price allocation given the timing of the acquisition and the size and scope of the assets and liabilities subject to valuation. While the Company does not expect material changes in the outcome of the valuation, certain assumptions and findings that were in place at the date of acquisition may result in changes in the purchase price allocation. The allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values were as follows: (in thousands) As of May 13, 2021 Cash paid for purchase of EOS shares in Initial Offer Period $ 46,908 Cash paid for purchase of OCEANEs in Initial Offer Period 19,620 Total cash paid in Initial Offer Period 66,528 Fair value of investment in EOS shares held before the Initial Offer Period 23,549 Fair value of investment in OCEANEs held before the Initial Offer Period 1,477 Total fair value of investment in EOS held before the Initial Offer Period 25,026 Fair value of noncontrolling interest acquired subsequent to Initial Offer Period 8,454 $ 100,008 Cash $ 16,778 Accounts receivable 9,083 Inventory 26,531 Other current assets 4,422 Property, plant and equipment, net 1,650 Right-of-use asset 4,341 Goodwill 31,822 Definite-lived intangible assets: Developed technology 56,000 Customer relationships 9,500 Trade names 6,000 Other noncurrent assets 395 Contract liabilities 21,196 Long-term debt 15,297 Other liabilities assumed 30,021 Total identifiable net assets $ 100,008 The cash paid for the purchase of EOS exceeded the fair value of the net tangible and identifiable intangible assets acquired as part of the acquisition. As a result, the Company recorded goodwill in connection with the acquisition. Goodwill primarily consists of expected revenue synergies resulting from the combination of product portfolios and cost synergies related to elimination of redundant facilities and functions associated with the combined entity. Goodwill recognized in this transaction is not deductible for tax purposes. The intangible assets acquired will be amortized on a straight-line basis over useful lives of ten years, seven years and ten years for technology-based, customer-related, and trade name related intangible assets, respectively. The estimated fair values of the intangible assets acquired were primarily determined using the income approach based on significant inputs that were not observable in the market. Acquisition related costs of $5.8 million were recognized during the nine months ended September 30, 2021, as transaction-related expenses on the condensed consolidated statements of operations. No such costs were recognized during the three months ended September 30, 2021. The Company’s results of operations for the three months ended September 30, 2021 included the operating results of EOS of $11.1 million of revenue and a net loss of $6.2 million in the condensed consolidated statement of operations. The Company’s results of operations for the nine months ended September 30, 2021 included the operating results of EOS since the date of acquisition, of $17.2 million of revenue and a net loss of $13.6 million in the condensed consolidated statement of operations. The following table presents the unaudited pro forma results for the three and nine months ended September 30, 2021 and 2020, which combines the historical results of operations of the Company and its wholly owned subsidiaries as though the companies had been combined as of January 1, 2020. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that may have been achieved if the acquisition had taken place at such time. The unaudited pro forma results presented include non-recurring adjustments directly attributable to the business combination, including $3.1 million in amortization charges for acquired intangible assets, a $2.0 million adjustment related to the increased fair value of acquired inventory and $14.1 million in acquisition related expenses. The unaudited pro forma results include IFRS to U.S. GAAP adjustments for EOS historical results and adjustments for accounting policy alignment, which were materially similar to the Company. Any differences in accounting policies were adjusted to reflect the accounting policies of the Company in the unaudited pro forma results presented. Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2021 2020 2021 2020 Total revenue $ 62,880 $ 48,552 $ 178,393 $ 119,077 Net loss (43,031 ) (21,681 ) (101,739 ) (80,373 ) Net loss per share, basic and diluted $ (0.43 ) $ (0.33 ) $ (1.07 ) $ (1.26 ) |
Select Condensed Consolidated B
Select Condensed Consolidated Balance Sheets Details | 9 Months Ended |
Sep. 30, 2021 | |
Balance Sheet Related Disclosures [Abstract] | |
Select Condensed Consolidated Balance Sheets Details | 4. Select Condensed Consolidated Balance Sheets Details Accounts Receivable, net Accounts receivable, net consist of the following (in thousands): September 30, 2021 December 31, 2020 Accounts receivable $ 34,545 $ 23,887 Allowance for doubtful accounts (869 ) (360 ) Accounts receivable, net $ 33,676 $ 23,527 Inventories Inventories consist of the following (in thousands): September 30, 2021 December 31, 2020 Raw materials $ 16,120 $ 6,064 Work-in-process 3,883 1,982 Finished goods 110,531 67,892 130,534 75,938 Less: reserve for excess and obsolete inventories (38,025 ) (29,937 ) Inventories $ 92,509 $ 46,001 Property and Equipment, net Property and equipment, net consist of the following (in thousands, except as indicated): Useful lives (in years) September 30, 2021 December 31, 2020 Surgical instruments 4 $ 120,092 $ 76,669 Machinery and equipment 7 14,249 6,562 Computer equipment 3 5,588 4,206 Office furniture and equipment 5 3,756 1,380 Leasehold improvements various 1,558 1,761 Construction in progress n/a 2,374 2,738 147,617 93,316 Less: accumulated depreciation and amortization (70,403 ) (56,646 ) Property and equipment, net $ 77,214 $ 36,670 Total depreciation expense was $5.3 million and $13.8 million for the three and nine months ended September 30, 2021, respectively, and $2.3 million and $6.5 million for the three and nine months ended September 30, 2020, respectively. 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, 2021 December 31, 2020 Developed product technology 12 $ 75,240 $ 35,376 License agreements 7 473 5,536 Trademarks and trade names 10 5,858 792 Customer-related 5 14,930 7,458 Distribution network 3 2,413 4,027 In process research and development 7 1,128 1,278 Total gross amount $ 100,042 $ 54,467 Less: accumulated amortization (11,202 ) (29,747 ) Intangible assets, net $ 88,840 $ 24,720 During the three months ended September 30, 2021, in connection with the expiration of the Supply Agreement with Globus, defined below, the Company wrote off $32.6 million in fully amortized intangible assets. During the nine months ended September 30, 2021, in connection with the Company’s acquisition of EOS, as further described in Note 3, the Company recorded additions to definite-lived intangible assets and goodwill in the amount of $71.5 million and $31.8 million, respectively. Total amortization expense attributed to intangible assets was $2.3 million and $4.2 million for the three and nine months ended September 30, 2021, respectively, and $0.4 million and $1.3 million for the three and nine months ended September 30, 2020, respectively. The Company recognized a $0.2 million impairment loss related to certain intellectual property within sales, general and administrative expense on its condensed consolidated statement of operations for the nine months ended September 30, 2021. In process research and development intangibles begin amortizing when the relevant products reach full commercial launch. Future amortization expense related to intangible assets is as follows (in thousands): Year Ending December 31, Remainder of 2021 $ 2,365 2022 9,425 2023 9,425 2024 9,322 2025 8,737 Thereafter 49,566 $ 88,840 Accrued Expenses Accrued expenses consist of the following (in thousands): September 30, 2021 December 31, 2020 Commissions $ 8,232 $ 7,038 Payroll and payroll related 16,888 13,552 Litigation settlement obligation - short-term portion 4,000 4,000 Professional fees 2,286 3,551 Royalties 2,234 2,293 Interest 915 619 Administration fees 1,556 442 Other 7,874 3,769 Total accrued expenses $ 43,985 $ 35,264 Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): September 30, 2021 December 31, 2020 Litigation settlement obligation - long-term portion $ 4,547 $ 7,634 Tax liabilities 2,891 373 Royalties 3,236 1,678 Contract liability 2,711 — Other 3,367 1,703 Other long-term liabilities $ 16,752 $ 11,388 |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2021 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | 5. Discontinued Operations In connection with the sale of the previous international distribution business, the Company entered into a product manufacture and supply agreement (the “Supply Agreement”) with Globus, pursuant to which the Company supplied to Globus certain of its implants and instruments, 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. The Supply Agreement expired and terminated on August 31, 2021 and all associated discontinued operations balances were removed from the condensed consolidated balance sheets ended September 30, 2021. In accordance with authoritative guidance, sales to Globus were reported under continuing operations as the Company ha d continuing involvement under the Supply Agreement. The Company recorded $ million and $ millio n in both revenue and cost of revenue from the Supply Agreement in continuing operations for the three and nine months ended September 30, 2021 , respectively . The Company recorded $ 1.1 million in both revenue and cost of revenue from the Supply Agreement in continuing operations for the three months ended September 30, 2020, and $ million in revenue and $ 2.8 million cost of revenue from the Supply Agreement in continuing operations for the nine months ended September 30, 2020 . |
Debt
Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt 0.75% Senior Convertible Notes due 2026 In August 2021, the Company issued $316.3 million aggregate principal amount of unsecured Senior Convertible Senior Notes (the "2026 Notes") with a stated interest rate of 0.75% and a maturity date of August 1, 2026 payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2022 and the repayment of the outstanding term loan with Squadron Medical and outstanding obligation under the Inventory Financing Agreement, as below. The 2026 Notes are convertible into shares of the Company’s common stock based upon an initial conversion rate of 54.5316 shares of the Company’s common stock per $1,000 principal amount of 2026 Notes (equivalent to an initial conversion price of approximately $18.34 per share). The conversion rate will be subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of the Company’s common stock. Based on the terms of the 2026 Notes, when a conversion notice is received, the Company has the option to pay or deliver cash, shares of the Company’s common stock, or a combination thereof. The 2026 Notes are classified as long-term debt on the condensed consolidated balances sheet as of September 30, 2021. Holders of the Convertible Notes have the right to convert their notes in certain circumstances and during specified periods. Prior to the close of business on the business day immediately preceding February 2, 2026, holders may convert all or a portion of their 2026 Notes only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2021, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5 consecutive business days immediately after any 10 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. As of September 30, 2021, none of the conditions permitting the holders of the 2026 Notes to convert have been met. The 2026 Notes are redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after August 6, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest, if any, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for a specified period of time. In addition, calling any note for redemption will constitute a “make-whole fundamental change” with respect to that note, in which case the conversion rate applicable to the conversion of that note will be increased in certain circumstances if such note is converted after it is called for redemption. If a fundamental change occurs prior to the maturity date, holders may require the Company to repurchase all or a portion of their 2026 Notes for cash at a price equal to 100% of the principal amount of the 2026 Notes plus accrued and unpaid interest. No principal payments are otherwise due on the 2026 Notes prior to maturity. The Company recorded the full principal amount of the 2026 Notes as a long-term liability net of deferred issuance costs. The annual effective interest rate for the 2026 Notes is 1.4%. Total interest expense for the 2026 Notes was $0.6 million during the three and nine months ended September 30, 2021. The Company uses the if-converted method for assumed conversion of the 2026 Notes to compute the weighted-average shares of common stock outstanding for diluted earnings per share, if applicable. The outstanding principal amount and carrying value of the 2026 Notes consist of the following (in thousands): September 30, 2021 Principal $ 316,250 Unamortized debt issuance costs (9,751 ) Net carrying value $ 306,499 Capped Call Transactions In connection with the offering of the 2026 Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution and/or offset the cash payments the Company is required to make in excess of the principal amount of the 2026 Notes upon conversion of the 2026 Notes in the event that the market price per share of the Company’s common stock is greater than the strike price of the Capped Call Transactions with such reduction and/or offset subject to a cap. The Capped Call Transactions have an initial cap price of $27.68 per share of the Company’s common stock, which represents a premium of 100% over the last reported sale price of the Company’s common stock on August 5, 2021, and is subject to certain adjustments under the terms of the Capped Call Transactions. Collectively, the Capped Call Transactions cover, initially, the number of shares of the Company’s common stock underlying the 2026 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2026 Notes. The Capped Call Transactions are separate transactions and are not part of the terms of the 2026 Notes and will not affect any holder’s rights under the notes. Holders of the 2026 Notes will not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions meet all of the applicable criteria for equity classification and, as a result, the related $39.9 million cost was recorded as a reduction to additional paid-in capital on the Company’s condensed consolidated statements of shareholders’ equity. OCEANE Convertible Bonds On May 31, 2018, EOS issued 4,344,651 OCEANE convertible bonds, denominated in Euros, due May 2023 for aggregate gross proceeds of $34.3 million (€29.5 million). The OCEANEs are unsecured obligations of EOS, rank equally with all other unsecured and unsubordinated obligations of EOS, and pay interest at a rate equal to 6% per year, payable semiannually in arrears on May 31 and November 30 of each year, beginning November 30, 2018. Unless either earlier converted or repurchased, the OCEANEs will mature on May 31, 2023. Interest expense was $0.3 million and $0.4 million for the three and nine months ended September 30, 2021, respectively, since the date of acquisition. As discussed in Note 3, in connection with the Offer to acquire EOS, the Company purchased 2,486,135 OCEANE convertible bonds, and as such, 1,858,516 OCEANE convertible bonds with a principal amount of $15.3 million (€12.6 million) remained outstanding at the time of acquisition. The OCEANEs are convertible by their holders into new EOS Shares or exchangeable for existing EOS Shares, at the Company’s option, at an initial conversion rate of one share per OCEANE, and the initial conversion rate is subject to customary anti-dilution adjustments. The OCEANEs are convertible at any time until the seventh business day prior to maturity or seventh business day prior to an earlier redemption of the OCEANE. If the number of shares calculated is not a whole number, the holder may request allocation of either the whole number of shares immediately below the number and receive an amount in cash equal to the remaining fractional share value, or the whole number of shares immediately above the number and pay an amount in cash equal to the remaining fractional share value. Holders of the OCEANEs have the option to convert all or any portion of such OCEANEs, regardless of any conditions, at any time until the close of seventh business day immediately preceding the maturity date. EOS has a right to redeem all of the OCEANEs at its option any time after June 20, 2021 at a cash redemption price equal to the par value of the OCEANEs plus accrued and unpaid interest if the product of the volume-weighted - average price of the shares and the conversion ratio as specified in the agreement in effect on each trading day exceeds 150 % of the par value of each OCEANE on each of at least twenty consecutive trading days during any forty consecutive trading days, if EOS redeems the OCEANEs when the number of OCEANEs outstanding is 15 % or less of the number of OCEANEs originally issued, or the occurrence of a tender or exchange offer. As a result of the Company’s acquisition of EOS, the OCEANEs are now convertible into new shares of EOS, as a wholly-owned subsidiary of the Company. OCEANE holders can redeem the notes upon the occurrence of an event of default or upon the occurrence of a change of control. In July 2021, in connection with the change of control , holders of 25,971 OCEANEs chose to redeem their bonds for approximately $ 0.2 million (€ 0.2 million) . The carrying value of the outstanding OCEANEs was $14.4 million (€12.5 million) as of September 30, 2021 . Other Debt Agreements In January and April 2021, prior to the acquisition, EOS obtained two loan agreements, denominated in Euros, under French state sponsored COVID-19 relief initiatives (PGE – pret garanti par l’etat). Each loan contains a 12-month term and 90% of the principal balance of each loan is state guaranteed. The cost of the state guaranty is 0.25% of the loan amount, and the loan carries an interest-free rate from the commercial banks (€3,266,667) and a 1.75% interest from the lender (€1,450,000). The loan capital and loan guaranty costs are payable in full at the end of the 12-month term or the loan may be extended up to 5 additional years. If the Company choses to extend the debt, the election must be made by the Company between months 8 and 11 of the 12-month term. The extension will carry an interest rate at the banks’ refinancing cost, to be applied from year 2 to year 6 and an increased state guaranty cost (50 to 200 bps, as per a scale with company size and extension year). The Company has recorded the debt as short-term debt on the Company’s condensed consolidated balance sheets. The outstanding obligation under each loan as of September 30, 2021 is $0.5 million and $5.0 million (€0.4 million and €4.3 million). Principal payments remaining on the Company's debt are as follows as of September 30, 2021 (in thousands): Remainder of 2021 $ 276 2022 5,849 2023 14,451 2024 18 2025 — Thereafter 316,250 Total 336,844 Less: unamortized debt discount and debt issuance costs (9,751 ) Total 327,093 Less: short-term debt (6,119 ) Long-term debt $ 320,974 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 Company used all of the proceeds from the PPP Loan to retain employees and maintain payroll. 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 the loan approval. In July 2021, the Company received confirmation from the SBA that the entire PPP Loan was forgiven and recorded a gain on debt extinguishment of $4.3 million, which is included in loss on debt extinguishment, net, on the condensed consolidated statements of operations for the three and nine months ended September 30, 2021. Squadron Medical Credit Agreement On November 6, 2018, the Company entered into a term loan with Squadron Medical Finance Solutions, LLC (“Squadron Medical”), a provider of debt financing to growing companies in the orthopedic industry. The term loan was subsequently amended on March 27, 2019, May 29, 2020 and December 16, 2020 to expand the availability of additional term loans, extend the maturity, remove all financial covenant requirements and, in the December 16, 2020 amendment, incorporate a debt exchange. On August 10, 2021, the Company repaid all obligations under the term loan, which consisted of the $45.0 million outstanding principal and $0.2 million accrued interest. As a result of the early termination of the term loan with Squadron Medical, the Company recorded a loss on debt extinguishment associated with the unamortized debt issuance costs of $11.7 million, for the three and nine months ended September 30, 2021. In connection with the initial 2018 term loan and subsequent amendments, the Company issued an aggregate of 6,759,530 warrants to Squadron Medical and a participant lender. See Note 11 for further information on the warrants issued. Inventory Financing Agreement In November 2018, the Company entered into an Inventory Financing Agreement with a key inventory and instrument components supplier whereby the Company was originally permitted to draw up to $3.0 million for the purchase of inventory. In November 2020 and May 2021, the Company amended the Inventory Financing Agreement with the supplier to increase the available draw to $6.0 million and then to $9.0 million for the purchase of inventory. On August 10, 2021, the Company terminated and repaid all obligations under the Inventory Financing Agreement, which consisted of $8.1 million outstanding principal and $0.1 million accrued interest. 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”), including the outstanding balance of $9.6 million, which consisted of outstanding principal and accrued interest. As a result of the early termination of the Credit Facility with MidCap, the Company recorded a loss on debt extinguishment in its condensed consolidated statements of operations for the period ended September 30, 2020. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Leases The Company determines if an arrangement is a lease at inception by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. The Company recognizes right-of-use assets (“ROU assets”) and lease liabilities for office buildings and certain equipment with lease terms of 1 year to 10 years, some of which include options to extend and/or terminate the leases. 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 short-term leases is immaterial to all periods presented. The Company aggregates all lease and non-lease components for each class of underlying assets into a single lease component and variable charges for common area maintenance and other variable costs are recognized as expense as incurred. Total variable costs associated with leases for the three and nine months ended September 30, 2021 were immaterial. The Company had an immaterial amount of financing leases as of September 30, 2021, which is included in property and equipment, net, and accrued expenses and other current liabilities, on the condensed consolidated balance sheets. Operating Lease The Company occupies approximately 121,541 square feet of office, engineering, and research and development space in Carlsbad, California. On December 4, 2019, the Company entered into a new 10-year operating lease that commenced on February 1, 2021 and will terminate on January 31, 2031, subject to two sixty-month options to renew which were not reasonably certain to be exercised. The Company recognized a $21.1 million ROU asset and $21.5 million lease liability on the condensed consolidated balance sheet upon taking control of the premises on the lease commencement date. Base rent under the building lease for the first twelve months of the term will be $0.2 million per month subject to full abatement during months two through ten, and thereafter will increase annually by 3.0% throughout the remainder of the lease. On April 9, 2021, the Company entered into a new 7-year operating lease agreement for a new distribution center which consists of approximately 75,643 square feet of office and warehouse space in Memphis, Tennessee. The term of the new lease commenced on May 1, 2021 and will terminate on May 1, 2028, subject to two thirty-six-month options to renew which were not reasonably certain to be exercised. The Company recognized a $1.7 million ROU asset and lease liability upon taking control of the premises on the lease commencement date. Base rent under the new building lease will be commensurate with the Company’s proportionate share of occupancy of the new building and will increase annually by 3.0% throughout the remainder of the lease. With the acquisition of EOS, the Company assumed its ROU assets and lease liabilities in the amount of $4.3 million. EOS occupies its main office in Paris, France. The EOS office in Paris, France is a 10-year operating lease that commenced in 2019 and will terminate in September 2028. Base rent under the lease is approximately $0.6 million per year. Future minimum annual lease payments for all operating leases of the Company are as follows as of September 30, 2021 (in thousands): Remainder of 2021 $ 784 2022 4,413 2023 4,621 2024 4,635 2025 4,602 Thereafter 22,574 Total undiscounted lease payments 41,629 Less: imputed interest (12,819 ) Operating lease liability 28,810 Less: current portion of operating lease liability (3,859 ) Operating lease liability, less current portion $ 24,951 The Company’s weighted-average remaining lease term and weighted-average discount rate as of September 30, 2021 and December 31, 2020 are as follows: September 30, 2021 December 31, 2020 Weighted-average remaining lease term (years) 8.8 0.7 Weighted-average discount rate 8.5 % 10.5 % Information related to the Company’s operating leases is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Rent expense $ 1,156 $ 331 $ 3,358 $ 989 Cash paid for amounts included in measurement of lease liabilities $ 393 $ 373 $ 1,268 $ 1,113 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, 2021, the minimum purchase commitment required by the Company under the agreement was to be paid over a three-year With the acquisition of EOS, the company assumed its inventory purchase commitment agreement with a third-party supplier . EOS is obligated to certain minimum purchase commitment requirements through December 2025 . As of September 30, 2021, the remaining minimum purchase commitment required by EO S under the agreement was $ million . 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 consolidated financial statements. An estimated loss contingency is accrued in the Company’s consolidated 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. 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, after a hearing on the matter in June 2018, the Court denied that motion on the grounds that NuVasive failed to establish either likelihood of success on the merits or that it would suffer irreparable harm absent injunction. In September 2018, NuVasive filed an Amended Complaint, asserting additional 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 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 counterclaim, but granted the Company leave to amend that counterclaim to cure 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 Inter Partes Review 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 valid. NuVasive and the Company have both appealed the PTAB’s written decision on the matter. The Company filed its Principal Brief on February 8, 2021. NuVasive filed its Principal Brief on April 21, 2021. The appeals are currently pending before the U.S. Court of Appeals for the Federal Circuit. 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. In November 2020, NuVasive filed a Motion to Strike the Company’s Invalidity Contentions concerning the ’156 and ’334 Implant Patents. In April 2021, the Court denied NuVasive’s motion. In January 2021, NuVasive filed a Motion for Partial Summary Judgment of infringement and validity of the ’156 and ’334 Implant Patents and the Company filed a Motion for Summary Judgment of invalidity of those same patents. These motions were argued to the Court on June 29, 2021. On August 31, 2021, the Court denied NuVasive’s motion and granted the Company’s motion for summary judgment of invalidity of the ’156 Patent. On September 24, 2021, NuVasive elected not to proceed with its remaining claims for the ’334 Patent, ’780 Patent, ’270 Patent, ’227 Patent, and ’859 Patent. Trial on the remaining patents (’801 Patent, ’832 Patent, and ’531 Patent) has been set to begin December 8, 2021. The Company believes that the allegations described hereto lack merit and intends to vigorously defend all claims asserted. The Company would record a liability in the consolidated 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 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 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, on June 28, 2018, NuVasive amended its complaint to add the Company as a defendant. On October 12, 2018, the Delaware Court ordered that NuVasive begin advancing legal fees for Mr. Miles’ defense in the lawsuit, as well as Mr. Miles’ legal fees incurred in pursuing advancement of his fees, pursuant to an indemnification agreement between NuVasive and Mr. Miles. As of September 30, 2021, the Company has not recorded any liability on the condensed consolidated balance sheet related to this matter. 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 are 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. |
Orthotec Settlement
Orthotec Settlement | 9 Months Ended |
Sep. 30, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Orthotec Settlement | 8. 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, HealthpointCapital began its $5.0 million contribution, which will be in the form of five quarterly payments of varying amounts. The remaining $0.7 million receivable from HealthpointCapital, LLC as of September 30, 2021 continues to be classified within stockholders’ equity on the Company’s condensed consolidated balance sheet due to the related party nature with HealthpointCapital affiliates. Payments made by HealthpointCapital are recorded as a reduction to stockholder’s equity. See Note 13 for further information. As of September 30, 2021, the Company has made installment payments in the aggregate of $48.3 million, with a remaining outstanding balance of $9.2 million (including interest), which is included in accrued expenses and other current liabilities and other long-term liabilities on the condensed consolidated balance sheets. The Company has the right to prepay the amounts due without penalty. In addition, the unpaid balance of the principal amount due accrues interest at the rate of 7% per year until the balance is 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 additional 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, 2021 December 31, 2020 Litigation settlement obligation - short-term portion $ 4,000 $ 4,000 Litigation settlement obligation - long-term portion 4,547 7,634 Total 8,547 11,634 Future interest 618 1,199 Total settlement obligation, gross 9,165 12,833 Related party receivable - included in stockholders' equity (700 ) (4,000 ) Total settlement obligation, net $ 8,465 $ 8,833 |
Business Segment and Geographic
Business Segment and Geographic Information | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Business Segment and Geographic Information | 9. Business Segment and Geographic Information The Company operates in one segment based upon the Company’s organizational structure, the way in which the operations and investments are managed and evaluated by the chief operating decision maker (“CODM”) as well as the lack of available discrete financial information at a level lower than the consolidated level. The Company shares common, centralized support functions which report directly to the CODM and decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. Net revenue and property, plant and equipment, net, by geographic region were as follows: Revenue Property and equipment, net Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, (in thousands) 2021 2020 2021 2020 2021 2020 United States $ 55,865 $ 40,052 $ 158,875 $ 97,956 $ 76,074 $ 36,670 International 7,015 1,111 10,375 2,951 1,140 — Total $ 62,880 $ 41,163 $ 169,250 $ 100,907 $ 77,214 $ 36,670 |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | 10. Net Loss Per Share Basic net loss per share 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. Diluted net loss per share attributable to common stockholders is calculated by dividing net loss available to common stockholders by the diluted weighted-average number of common shares outstanding for the period. The following table presents the computation of basic and diluted net loss per share (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net loss, basic and diluted $ (43,031 ) $ (15,669 ) $ (104,139 ) $ (52,196 ) Denominator: Weighted average common shares outstanding, basic and diluted 99,571 64,761 95,204 63,669 Net loss per share, basic and diluted: $ (0.43 ) $ (0.24 ) $ (1.09 ) $ (0.82 ) The anti-dilutive securities not included in diluted net As of September 30, 2021 2020 Series A Convertible Preferred Stock 29 29 Options to purchase common stock and employee stock purchase plan 3,524 4,141 Unvested restricted share awards 8,733 8,072 Warrants to purchase common stock 20,214 25,358 Convertible notes 17,246 — Total 49,746 37,600 |
Stock-Benefit Plans and Equity
Stock-Benefit Plans and Equity Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Benefit Plans and Equity Transactions | 11. Stock-Benefit Plans and Equity Transactions Share Repurchase On August 3, 2021, the Company’s Board of Directors authorized the Company to repurchase an aggregate of up to $25.0 million of shares of the Company’s common stock. On August 10, 2021 the Company repurchased 1,806,358 shares of its common stock for approximately $25.0 million Stock Benefit Plans On June 17, 2020, the Company’s shareholders approved an amendment to the Company’s 2016 Equity Incentive Award Plan (the “2016 Equity Plan”), which increased the amount of shares of common stock available for issuance under the 2016 Equity Plan by 7,000,000 shares. At September 30, 2021, 4,058,165 shares of common stock were available for issuance under the 2016 Equity Incentive Award Plan. In 2007, the Company adopted the Alphatec Holdings, Inc. 2007 Amended and Restated Employee Stock Purchase Plan (the “ESPP”), which was first amended in May 2017. On June 16, 2021, the Company’s shareholders approved a second amendment to the ESPP which increased the amount of shares of common stock available for purchase under the ESPP by 500,000 shares. The ESPP provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 20% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to 85% of the lower of the fair market value per share (at closing) of Company common stock on (i) the commencement date of the six-month offering period or (ii) the respective purchase date. At September 30, 2021, 662,036 shares of common stock were available for purchase under the ESPP. Stock-Based Compensation Total stock-based compensation for the periods presented were as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Cost of revenue $ 310 $ 139 $ 489 $ 374 Research and development 1,440 528 2,602 1,482 Sales, general and administrative 9,004 3,877 23,633 10,831 Total $ 10,754 $ 4,544 $ 26,724 $ 12,687 Shares Reserved for Future Issuance As of September 30, 2021, the Company’s shares of common stock reserved for future issuance were as follows (in thousands): Stock options outstanding 3,457 Unvested restricted stock award 8,733 Employee stock purchase plan 662 Series A convertible preferred stock 29 Convertible notes 17,246 Warrants outstanding 20,214 Authorized for future grant under the Distributor and Development Services plans 735 Authorized for future grant under the Management Objective Strategic Incentive Plan 365 Authorized for future grant under the Company equity plans 4,058 Total 55,499 Warrants Outstanding 2017 PIPE Warrants The 2017 Common Stock Warrants (the “2017 PIPE Warrants”) have a five-year 2018 PIPE Warrants The 2018 Common Stock Warrants (the “2018 PIPE Warrants”) have a five-year SafeOp Surgical Merger Warrants In conjunction with the Company’s 2018 acquisition of SafeOp, the Company issued warrants to purchase 2,200,000 shares of common stock at an exercise price of $3.50 per share, which have a five-year Squadron Medical Warrants During the year ended December 31, 2018, in connection with the initial debt financing with Squadron Medical and a participant lender, 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 Medical debt for total warrants outstanding to Squadron Medical and the participant lender of 6,759,530. In conjunction with the second amendment, the expiration dates for all existing warrants were extended to May 29, 2027 to align all outstanding warrant expiration dates. In accordance with authoritative accounting guidance, the warrants qualified for equity treatment upon issuance and were recorded as a debt discount to the face of the debt liability based on fair value to be amortized into interest expense over the life of the debt agreement. The fair value assigned to the warrant amendment was also allocated as a debt issuance cost and amortized into interest expense. As the warrants provide for partial price protection that allow for a reduction in the price in the event of a lower per share priced issuance, the warrants were valued utilizing a Monte Carlo simulation that considers the probabilities of future financings. The Monte Carlo model simulates the present value of the potential outcomes of future stock prices of the Company over the seven-year life of the warrants. The projection of stock prices is based on the risk-free rate of return and the volatility of the stock price of the Company and correlates future equity raises based on the probabilities provided. No Squadron Medical Warrants have been exercised as of September 30, 2021. Executive Warrants In December 2017 the Company issued warrants to Mr. Patrick S. Miles, the Company’s Chairman and Chief Executive Officer, to purchase 1,327,434 shares of the Company’s common stock for $5.00 per share (the “Executive Warrants”). The warrants have a five-year A summary of all outstanding warrants for common stock as of September 30, 2021 were as follows: Number of Warrants Strike Price Expiration 2017 PIPE Warrants 2,312,000 $ 2.00 June 2022 2018 PIPE Warrants 8,498,569 $ 3.50 May 2023 SafeOp Surgical Merger Warrants 1,194,943 $ 3.50 May 2023 2018 Squadron Medical Warrants 845,000 $ 3.15 May 2027 2019 Squadron Medical Warrants 4,838,710 $ 2.17 May 2027 2020 Squadron Medical Warrants 1,075,820 $ 4.88 May 2027 Executive Warrants 1,327,434 $ 5.00 December 2022 Other ( 1) 121,562 $ 2.87 Various through May 2023 Total 20,214,038 (1) Weighted-average strike price. All outstanding warrants were deemed to qualify for equity classification under authoritative accounting guidance. 2017 Distributor Inducement 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, 2021, 575,000 warrants and 380,500 shares of restricted common stock have been granted under the 2017 Distributor Inducement Plan. As of September 30, 2021, 195,000 warrants and 136,100 restricted stock units have been earned or issued under the plan. Warrants granted under the plan as of September 30, 2021 were not yet subject to expiration related to any time or sales-based vesting conditions. 2017 Development Services Plan Under the 2017 Development Services Plan, the Company is authorized to grant up to 7,000,000 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. The Company has entered into Development Services Agreements pursuant to which the Company has granted 6,934,000 shares of restricted common stock under the 2017 Development Services Plan, subject to achievement of the performance criteria and vesting conditions set forth in such Development Services Agreements. The Company recognizes stock-based compensation once the achievement of the performance criteria and vesting conditions are deemed probable. 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, 2021, 122,500 restricted shares and a warrant to purchase up to 12,500 restricted common stock shares have been granted under the 2019 Management Objective Strategic Incentive Plan. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes To calculate its interim tax provision, at the end of each interim period the Company estimates the annual effective tax rate, adjusted for discrete items arising in that quarter, and applies that rate to its ordinary quarterly earnings. 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. The Company’s effective tax rate from continuing operations was (.21%) and (.16%) for the three and nine months ended September 30, 2021, respectively, and (.26%) |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. 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 making its $5.0 million contribution, which is in the form of quarterly payments. As of September 30, 2021 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. The remaining $0.7 million receivable from HealthpointCapital continues to be classified within stockholders’ equity on the Company’s condensed consolidated balance sheets due to the related party nature with HealthpointCapital affiliates. Payments to be received from HealthpointCapital are recorded as a reduction to stockholder’s equity In November 2018, the Company entered into a Term Loan and Financing agreement with affiliates of Squadron Capital, LLC. The Term Loan was amended in March 2019, May 2020, and December 2020, and was subsequently paid in full on August 10, 2021. Squadron Capital, LLC was a lead investor in the private placement of shares of the Company’s common stock that was closed on March 1, 2021. David Pelizzon, President and Director of Squadron Capital, LLC, currently serves on the Company’s Board of Directors. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Valuation of Goodwill | Valuation of Goodwill Goodwill represents the excess of the cost over the fair value of net assets acquired from the Company’s business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired. Goodwill is not amortized; however, it is assessed for impairment using fair value measurement techniques on October 1 st |
Valuation of Intangible Assets | Valuation of Intangible Assets Intangible assets are comprised primarily of purchased technology, customer relationships, and trade names. The Company make significant judgments in relation to the valuation of intangible assets resulting from business combinations and asset acquisitions. Intangible assets are generally amortized on a straight-line basis over their estimated useful lives of 3 to 10 years. The useful lives and related amortization expense is based on the period of time the Company estimates the assets will generate net sales or otherwise be used. The Company also periodically review the lives assigned to intangible assets to ensure that its initial estimates do not exceed any revised estimated periods from which the Company expects to realize cash flows from the technologies. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in reported results would increase. The Company evaluates intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. Significant judgment is required in the forecasts of future operating results that are used in the discounted cash flow valuation models. It is possible that plans may change and estimates used may prove to be inaccurate. If actual results, or the plans and estimates used in future impairment analyses, are lower than the original estimates used to assess the recoverability of these assets, the Company could incur additional impairment charges. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from product sales in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”). This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Sales are derived primarily from the sale of spinal implant products to hospitals and medical centers through direct sales representatives and independent distributor agents, and with the acquisition of EOS, includes imaging equipment and related services. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of products to customers, either upon shipment of the product or delivery of the product to the customer depending on the shipping terms, or when the products are used in a surgical procedure (implanted in a patient). Revenue from the sale of imaging equipment is recognized as each distinct performance obligation is fulfilled and control transfers to the customer, beginning with shipment or delivery, depending on the terms. Revenue from other distinct performance obligations, such as maintenance on imaging equipment, training services, and other imaging related services, is recognized in the period the service is performed, and makes up less than 10% of the Company’s total revenue. Revenue is measured based on the amount of consideration expected to be received in exchange for the transfer of the goods or services specified in the contract with each customer. In certain cases, the Company does offer the ability for customers to lease its imaging equipment primarily on a non-sales type basis, but such arrangements are immaterial to total revenue in the periods presented. The Company generally does not allow returns of products that have been delivered and will recognize such revenue when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, except for contracts that complete within one year or less, in which case the associated costs are expensed as incurred. Payment terms for sales to customers may vary but are commensurate with the general business practices in the country of sale. To the extent that the transaction price includes variable consideration, such as discounts, rebates, and customer payment penalties, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available, including historical, current, and forecasted information. The Company records a contract liability, or deferred revenue, when it has an obligation to provide a product or service to the customer and payment is received or due in advance of its performance. When the Company sells a product or service with a future performance obligation, revenue is deferred on the unfulfilled performance obligation and recognized over the related performance period. Generally, the Company does not have observable evidence of the standalone selling price related to its future service obligations; therefore, the Company estimates the selling price using an expected cost plus a margin approach. The transaction price is allocated using the relative standalone selling price method. The use of alternative estimates could result in a different amount of revenue deferral. The Company had current and non-current contract liability balances totaling $16.7 million and $2.7 million, respectively, as of September 30, 2021. The non-current contract liability balance is included in other long-term liabilities on the condensed consolidated balance sheets. The Company recognized $4.8 million and $8.2 million of revenue from its contract liabilities during the three and nine months ended September 30, 2021, respectively. The opening and closing balances of the Company’s contract liability are as follows: Balance at January 1, 2021 $ — Contract liability assumed from EOS 21,196 Payments received 6,354 Revenue recognized (8,169 ) Balance at September 30, 2021 $ 19,381 |
Fair Value Measurements | Fair Value Measurements T he carrying amount of financial instruments consisting of cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, and short-term debt included in the Company’s condensed consolidated financial statements are reasonable estimates of fair value due to their short maturities. Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table presents information related to the Company’s liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 (in thousands): September 30, 2021 Liabilities: Level 1 Level 2 Level 3 Total Liability classified equity award (1) $ — — 3,366 $ 3,366 Foreign currency forward contract — 279 — 279 Total $ — 279 3,366 $ 3,645 December 31, 2020 Liabilities: Level 1 Level 2 Level 3 Total Liability classified equity award (1) $ — — 4,108 $ 4,108 Foreign currency forward contract — 878 — 878 Total $ — 878 4,108 $ 4,986 (1) A portion of this award is being accreted over the requisite service period. The amount in the above table includes the fair value of the vested and unvested portion of the award. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the periods presented. On March 16, 2021, the Company entered into two foreign currency forward contracts, with a settlement date of December 31, 2021, and with a notional amount of $8.0 million total, $4.0 million each (€6.7 million total and €3.3 million each), to mitigate the foreign currency exchange risk related to its EOS subsidiary. The contracts are not designated as hedging instruments. The Company classified the derivative liabilities within Level 2 of the fair value hierarchy as observable inputs are available for the full term of the derivative instruments. The fair value of the forward contracts was developed using a market approach based on publicly available market yield curves and the term of the contracts. The Company recognized a nominal loss from the change in fair value of the contracts during the nine months ended September 30, 2021. The loss on the change in fair value of the contracts was recorded as other expense on the condensed consolidated statement of operations. On December 18, 2020, the Company entered into a foreign currency forward contract, with a notional amount of $ 117.9 million (€ million) to mitigate the foreign currency exchange risk related to th e Tender Offer Agreement, denominated in Euros. The contract was not designated as a hedging instrument. The Company classified the derivative liability within Level 2 of the fair value hierarchy as observable inputs were available for the full term of the derivative instrument. The fair value of the forward contract was developed using a market approach based on publicly available market yield curves and the term of the contract. On March 2, 2021, the foreign currency forward contract was settled for $ 115.3 million ( € 95.6 million) . The C ompany recognized a $ million loss from the change in fair value of the contract during the nine months ended September 30 , 2021. The loss on the contract settlement was recorded as other expense on the condensed consolidated statement of operations and the cash settlement is included in investing activities in the condensed consolidated statement of cash flows for the nine months ended September 30 , 2021. 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 settled in cash, 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 award was $3.4 million as of September 30, 2021 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 three and nine months ended September 30, 2021 (in thousands): Level 3 Liabilities Balance at January 1, 2021 $ 1,668 Vested portion of liability classified equity award 258 Change in fair value measurement 199 Balance at March 31, 2021 $ 2,125 Vested portion of liability classified equity award 283 Change in fair value measurement (68 ) Balance at June 30, 2021 $ 2,340 Vested portion of liability classified equity award 275 Change in fair value measurement (617 ) Balance at September 30, 2021 $ 1,998 Fair Value of Long-term Debt The fair value, based on a quoted market price (Level 1), of the Company’s outstanding Senior Convertible Notes due 2026 at September 30, 2021 was approximately $306.8 million. The fair value based on a quoted market price (Level 1), of the Company’s outstanding OCEANE at September 30, 2021 was approximately $14.4 million. See Note 6 for further information. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In August 2020, the FASB issued Accounting Standard Update (“ASU”) No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) (“ ”) Recently Issued Accounting Pronouncements In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Opening and Closing Balances of Company's Contract Liability | The opening and closing balances of the Company’s contract liability are as follows: Balance at January 1, 2021 $ — Contract liability assumed from EOS 21,196 Payments received 6,354 Revenue recognized (8,169 ) Balance at September 30, 2021 $ 19,381 |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents information related to the Company’s liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 (in thousands): September 30, 2021 Liabilities: Level 1 Level 2 Level 3 Total Liability classified equity award (1) $ — — 3,366 $ 3,366 Foreign currency forward contract — 279 — 279 Total $ — 279 3,366 $ 3,645 December 31, 2020 Liabilities: Level 1 Level 2 Level 3 Total Liability classified equity award (1) $ — — 4,108 $ 4,108 Foreign currency forward contract — 878 — 878 Total $ — 878 4,108 $ 4,986 (1) A portion of this award is being accreted over the requisite service period. The amount in the above table includes the fair value of the vested and unvested portion of the award. |
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 three and nine months ended September 30, 2021 (in thousands): Level 3 Liabilities Balance at January 1, 2021 $ 1,668 Vested portion of liability classified equity award 258 Change in fair value measurement 199 Balance at March 31, 2021 $ 2,125 Vested portion of liability classified equity award 283 Change in fair value measurement (68 ) Balance at June 30, 2021 $ 2,340 Vested portion of liability classified equity award 275 Change in fair value measurement (617 ) Balance at September 30, 2021 $ 1,998 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combinations [Abstract] | |
Schedule of Allocation of Purchase Price to Assets Acquired and Liabilities Assumed Based on Fair Values | The allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values were as follows: (in thousands) As of May 13, 2021 Cash paid for purchase of EOS shares in Initial Offer Period $ 46,908 Cash paid for purchase of OCEANEs in Initial Offer Period 19,620 Total cash paid in Initial Offer Period 66,528 Fair value of investment in EOS shares held before the Initial Offer Period 23,549 Fair value of investment in OCEANEs held before the Initial Offer Period 1,477 Total fair value of investment in EOS held before the Initial Offer Period 25,026 Fair value of noncontrolling interest acquired subsequent to Initial Offer Period 8,454 $ 100,008 Cash $ 16,778 Accounts receivable 9,083 Inventory 26,531 Other current assets 4,422 Property, plant and equipment, net 1,650 Right-of-use asset 4,341 Goodwill 31,822 Definite-lived intangible assets: Developed technology 56,000 Customer relationships 9,500 Trade names 6,000 Other noncurrent assets 395 Contract liabilities 21,196 Long-term debt 15,297 Other liabilities assumed 30,021 Total identifiable net assets $ 100,008 |
Schedule of Unaudited Pro Forma Results | The unaudited pro forma results include IFRS to U.S. GAAP adjustments for EOS historical results and adjustments for accounting policy alignment, which were materially similar to the Company. Any differences in accounting policies were adjusted to reflect the accounting policies of the Company in the unaudited pro forma results presented. Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except per share amounts) 2021 2020 2021 2020 Total revenue $ 62,880 $ 48,552 $ 178,393 $ 119,077 Net loss (43,031 ) (21,681 ) (101,739 ) (80,373 ) Net loss per share, basic and diluted $ (0.43 ) $ (0.33 ) $ (1.07 ) $ (1.26 ) |
Select Condensed Consolidated_2
Select Condensed Consolidated Balance Sheets Details (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Balance Sheet Related Disclosures [Abstract] | |
Accounts receivable, net | Accounts receivable, net consist of the following (in thousands): September 30, 2021 December 31, 2020 Accounts receivable $ 34,545 $ 23,887 Allowance for doubtful accounts (869 ) (360 ) Accounts receivable, net $ 33,676 $ 23,527 |
Inventories | Inventories consist of the following (in thousands): September 30, 2021 December 31, 2020 Raw materials $ 16,120 $ 6,064 Work-in-process 3,883 1,982 Finished goods 110,531 67,892 130,534 75,938 Less: reserve for excess and obsolete inventories (38,025 ) (29,937 ) Inventories $ 92,509 $ 46,001 |
Property and equipment, net | Property and equipment, net consist of the following (in thousands, except as indicated): Useful lives (in years) September 30, 2021 December 31, 2020 Surgical instruments 4 $ 120,092 $ 76,669 Machinery and equipment 7 14,249 6,562 Computer equipment 3 5,588 4,206 Office furniture and equipment 5 3,756 1,380 Leasehold improvements various 1,558 1,761 Construction in progress n/a 2,374 2,738 147,617 93,316 Less: accumulated depreciation and amortization (70,403 ) (56,646 ) Property and equipment, net $ 77,214 $ 36,670 |
Intangible assets, net | Intangible assets, net consist of the following (in thousands, except as indicated): Remaining Avg. Useful lives (in years) September 30, 2021 December 31, 2020 Developed product technology 12 $ 75,240 $ 35,376 License agreements 7 473 5,536 Trademarks and trade names 10 5,858 792 Customer-related 5 14,930 7,458 Distribution network 3 2,413 4,027 In process research and development 7 1,128 1,278 Total gross amount $ 100,042 $ 54,467 Less: accumulated amortization (11,202 ) (29,747 ) Intangible assets, net $ 88,840 $ 24,720 |
Schedule of intangible assets, future expected amortization expense | Future amortization expense related to intangible assets is as follows (in thousands) Year Ending December 31, Remainder of 2021 $ 2,365 2022 9,425 2023 9,425 2024 9,322 2025 8,737 Thereafter 49,566 $ 88,840 |
Accrued expenses | Accrued expenses consist of the following (in thousands): September 30, 2021 December 31, 2020 Commissions $ 8,232 $ 7,038 Payroll and payroll related 16,888 13,552 Litigation settlement obligation - short-term portion 4,000 4,000 Professional fees 2,286 3,551 Royalties 2,234 2,293 Interest 915 619 Administration fees 1,556 442 Other 7,874 3,769 Total accrued expenses $ 43,985 $ 35,264 |
Schedule of Other Long-Term Liabilities | Other long-term liabilities consist of the following (in thousands): September 30, 2021 December 31, 2020 Litigation settlement obligation - long-term portion $ 4,547 $ 7,634 Tax liabilities 2,891 373 Royalties 3,236 1,678 Contract liability 2,711 — Other 3,367 1,703 Other long-term liabilities $ 16,752 $ 11,388 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Outstanding Principal Amount and Carrying Value of Notes | The outstanding principal amount and carrying value of the 2026 Notes consist of the following (in thousands): September 30, 2021 Principal $ 316,250 Unamortized debt issuance costs (9,751 ) Net carrying value $ 306,499 |
Principal Payments on Debt | Principal payments remaining on the Company's debt are as follows as of September 30, 2021 (in thousands): Remainder of 2021 $ 276 2022 5,849 2023 14,451 2024 18 2025 — Thereafter 316,250 Total 336,844 Less: unamortized debt discount and debt issuance costs (9,751 ) Total 327,093 Less: short-term debt (6,119 ) Long-term debt $ 320,974 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future minimum annual lease payments | Future minimum annual lease payments for all operating leases of the Company are as follows as of September 30, 2021 (in thousands): Remainder of 2021 $ 784 2022 4,413 2023 4,621 2024 4,635 2025 4,602 Thereafter 22,574 Total undiscounted lease payments 41,629 Less: imputed interest (12,819 ) Operating lease liability 28,810 Less: current portion of operating lease liability (3,859 ) Operating lease liability, less current portion $ 24,951 |
Summary of Weighted-Average Remaining Lease Term and Discount Rate | The Company’s weighted-average remaining lease term and weighted-average discount rate as of September 30, 2021 and December 31, 2020 are as follows: September 30, 2021 December 31, 2020 Weighted-average remaining lease term (years) 8.8 0.7 Weighted-average discount rate 8.5 % 10.5 % |
Summary of Operating Leases | Information related to the Company’s operating leases is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Rent expense $ 1,156 $ 331 $ 3,358 $ 989 Cash paid for amounts included in measurement of lease liabilities $ 393 $ 373 $ 1,268 $ 1,113 |
Orthotec Settlement (Tables)
Orthotec Settlement (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
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, 2021 December 31, 2020 Litigation settlement obligation - short-term portion $ 4,000 $ 4,000 Litigation settlement obligation - long-term portion 4,547 7,634 Total 8,547 11,634 Future interest 618 1,199 Total settlement obligation, gross 9,165 12,833 Related party receivable - included in stockholders' equity (700 ) (4,000 ) Total settlement obligation, net $ 8,465 $ 8,833 |
Business Segment and Geograph_2
Business Segment and Geographic Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Net Revenue and Property, Plant and Equipment, Net, by Geographic Region | Net revenue and property, plant and equipment, net, by geographic region were as follows: Revenue Property and equipment, net Three Months Ended September 30, Nine Months Ended September 30, September 30, December 31, (in thousands) 2021 2020 2021 2020 2021 2020 United States $ 55,865 $ 40,052 $ 158,875 $ 97,956 $ 76,074 $ 36,670 International 7,015 1,111 10,375 2,951 1,140 — Total $ 62,880 $ 41,163 $ 169,250 $ 100,907 $ 77,214 $ 36,670 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Loss Per Share | The following table presents the computation of basic and diluted net loss per share (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net loss, basic and diluted $ (43,031 ) $ (15,669 ) $ (104,139 ) $ (52,196 ) Denominator: Weighted average common shares outstanding, basic and diluted 99,571 64,761 95,204 63,669 Net loss per share, basic and diluted: $ (0.43 ) $ (0.24 ) $ (1.09 ) $ (0.82 ) |
Anti-Dilutive Securities Not Included in Diluted Net Loss Per Share | The anti-dilutive securities not included in diluted net As of September 30, 2021 2020 Series A Convertible Preferred Stock 29 29 Options to purchase common stock and employee stock purchase plan 3,524 4,141 Unvested restricted share awards 8,733 8,072 Warrants to purchase common stock 20,214 25,358 Convertible notes 17,246 — Total 49,746 37,600 |
Stock-Benefit Plans and Equit_2
Stock-Benefit Plans and Equity Transactions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Total Stock Based Compensation | Stock-Based Compensation Total stock-based compensation for the periods presented were as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Cost of revenue $ 310 $ 139 $ 489 $ 374 Research and development 1,440 528 2,602 1,482 Sales, general and administrative 9,004 3,877 23,633 10,831 Total $ 10,754 $ 4,544 $ 26,724 $ 12,687 |
Summary of Common Stock Reserved for Future Issuance | As of September 30, 2021, the Company’s shares of common stock reserved for future issuance were as follows (in thousands): Stock options outstanding 3,457 Unvested restricted stock award 8,733 Employee stock purchase plan 662 Series A convertible preferred stock 29 Convertible notes 17,246 Warrants outstanding 20,214 Authorized for future grant under the Distributor and Development Services plans 735 Authorized for future grant under the Management Objective Strategic Incentive Plan 365 Authorized for future grant under the Company equity plans 4,058 Total 55,499 |
Summary of All Outstanding Warrants for Common Stock | A summary of all outstanding warrants for common stock as of September 30, 2021 were as follows: Number of Warrants Strike Price Expiration 2017 PIPE Warrants 2,312,000 $ 2.00 June 2022 2018 PIPE Warrants 8,498,569 $ 3.50 May 2023 SafeOp Surgical Merger Warrants 1,194,943 $ 3.50 May 2023 2018 Squadron Medical Warrants 845,000 $ 3.15 May 2027 2019 Squadron Medical Warrants 4,838,710 $ 2.17 May 2027 2020 Squadron Medical Warrants 1,075,820 $ 4.88 May 2027 Executive Warrants 1,327,434 $ 5.00 December 2022 Other ( 1) 121,562 $ 2.87 Various through May 2023 Total 20,214,038 (1) Weighted-average strike price. |
The Company and Basis of Pres_2
The Company and Basis of Presentation - Additional Information (Details) | Jun. 02, 2021 |
Tender Offer Agreement | EOS Imaging S.A. | |
Company And Basis Of Presentation [Line Items] | |
Percentage of interest acquired | 100.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands, € in Millions | Mar. 02, 2021USD ($) | Mar. 02, 2021EUR (€) | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | Mar. 16, 2021USD ($)Contract | Mar. 16, 2021EUR (€)Contract | Dec. 18, 2020USD ($) | Dec. 18, 2020EUR (€) |
Significant Accounting Policies [Line Items] | ||||||||
Contract liability, current | $ 16,670 | $ 16,670 | ||||||
Contract liability, non-current | 2,711 | 2,711 | ||||||
Revenue from contract liabilities | $ 4,800 | $ 8,169 | ||||||
ASU No. 2020-06 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Change in accounting principle accounting standards update adopted [true false] | true | true | ||||||
Change in accounting principle accounting standards update adoption date | Jan. 1, 2021 | Jan. 1, 2021 | ||||||
Change in accounting principle accounting standards update immaterial effect [true false] | true | true | ||||||
Fair value, inputs, level 2 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Number of foreign currency forward contracts entered | Contract | 2 | 2 | ||||||
Foreign currency forward settlement date | Dec. 31, 2021 | |||||||
Notional amount of foreign currency forward contracts | $ 8,000 | € 6.7 | $ 117,900 | € 95.6 | ||||
Notional amount of each foreign currency forward contract | $ 4,000 | € 3.3 | ||||||
Foreign currency forward contract settled | $ 115,300 | € 95.6 | ||||||
Foreign currency forward contract loss recognized | $ 1,700 | |||||||
Fair value, inputs, level 3 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Vesting period | 4 years | |||||||
Fair value of the cash settled award | $ 3,400 | $ 3,400 | ||||||
Fair value, inputs, level 1 | OCEANE Convertible Bonds | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Fair value of long-term debt | 14,400 | 14,400 | ||||||
Fair value, inputs, level 1 | Senior Convertible Notes due 2026 | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Fair value of long-term debt | $ 306,800 | $ 306,800 | ||||||
Debt maturity year | 2026 | |||||||
Maximum | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives | 10 years | |||||||
Percentage of revenue from other distinct performance obligations of total revenue | 10.00% | |||||||
Minimum | ||||||||
Significant Accounting Policies [Line Items] | ||||||||
Estimated useful lives | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Opening and Closing Balances of Company's Contract Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||
Contract liability assumed from EOS | $ 21,196 | |
Payments received | 6,354 | |
Revenue recognized | $ (4,800) | (8,169) |
Balance at September 30, 2021 | $ 19,381 | $ 19,381 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | $ 3,645 | $ 4,986 |
Liability Classified Equity Award | ||
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | 3,366 | 4,108 |
Foreign Currency Forward Contract | ||
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | 279 | 878 |
Level 2 | ||
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | 279 | 878 |
Level 2 | Foreign Currency Forward Contract | ||
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | 279 | 878 |
Level 3 | ||
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | 3,366 | 4,108 |
Level 3 | Liability Classified Equity Award | ||
Liabilities: | ||
Liabilities measured at fair value on a recurring basis | $ 3,366 | $ 4,108 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Reconciliation of Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Details) - Fair value, inputs, level 3 - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Roll Forward] | |||
Beginning balance | $ 2,340 | $ 2,125 | $ 1,668 |
Vested portion of liability classified equity award | 275 | 283 | 258 |
Change in fair value measurement | (617) | (68) | 199 |
Ending balance | $ 1,998 | $ 2,340 | $ 2,125 |
Business Combination - Addition
Business Combination - Additional Information (Details) $ in Thousands | Jun. 02, 2021USD ($) | May 17, 2021USD ($) | May 13, 2021USD ($) | May 12, 2021USD ($) | Sep. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 16, 2020€ / shares |
Business Acquisition [Line Items] | |||||||||||||
Transaction-related expenses | $ 373 | $ 2 | $ 6,156 | $ 4,093 | |||||||||
Net loss | 43,031 | $ 38,205 | $ 22,903 | 15,669 | $ 15,805 | $ 20,722 | 104,139 | 52,196 | |||||
Amortization of acquired intangible assets | 2,012 | $ 172 | 3,392 | $ 516 | |||||||||
EOS Imaging S.A. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Purchase price | $ 100,008 | ||||||||||||
Purchase price in cash | 66,528 | ||||||||||||
Transaction-related expenses | 14,100 | ||||||||||||
Revenue | 11,100 | 17,200 | |||||||||||
Net loss | 6,200 | 13,600 | |||||||||||
Amortization of acquired intangible assets | 3,100 | ||||||||||||
Adjustment related to increased fair value of acquired inventory | 2,000 | ||||||||||||
EOS Imaging S.A. | Transaction Related Expenses | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Transaction-related expenses | $ 0 | $ 5,800 | |||||||||||
EOS Imaging S.A. | Technology-Based Intangible Assets | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated useful lives | 10 years | ||||||||||||
EOS Imaging S.A. | Trade Name Related Intangible Assets | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated useful lives | 10 years | ||||||||||||
EOS Imaging S.A. | Customer Related Intangible Assets | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Estimated useful lives | 7 years | ||||||||||||
EOS Imaging S.A. | EOS Share | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Purchase price in cash | 46,908 | ||||||||||||
EOS Imaging S.A. | OCEANEs | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Purchase price in cash | 19,620 | ||||||||||||
Tender Offer Agreement | EOS Imaging S.A. | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Share price | € / shares | € 0.01 | ||||||||||||
Business acquisition ownership percentage acquired | 100.00% | ||||||||||||
Purchase price | $ 100,000 | $ 8,500 | $ 66,500 | ||||||||||
Purchase price in cash | $ 25,000 | ||||||||||||
Ownership percentage on share capital and voting rights | 80.00% | ||||||||||||
Tender Offer Agreement | EOS Imaging S.A. | EOS Share | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Tender offer price | € / shares | 2.45 | ||||||||||||
Business acquisition ownership percentage acquired | 100.00% | 59.00% | |||||||||||
Ownership percentage on share capital prior to initial offer period | 30.00% | ||||||||||||
Ownership percentage on share capital after initial offer period | 89.00% | ||||||||||||
Tender Offer Agreement | EOS Imaging S.A. | OCEANEs | |||||||||||||
Business Acquisition [Line Items] | |||||||||||||
Tender offer price | € / shares | € 7.01 | ||||||||||||
Business acquisition ownership percentage acquired | 57.00% | 53.00% | |||||||||||
Ownership percentage on share capital prior to initial offer period | 4.00% | ||||||||||||
Ownership percentage on share capital after initial offer period | 57.00% |
Business Combination - Schedule
Business Combination - Schedule of Allocation of Purchase Price to Assets Acquired and Liabilities Assumed Based on Fair Values (Details) - USD ($) $ in Thousands | May 13, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | |||
Goodwill | $ 44,335 | $ 13,897 | |
EOS Imaging S.A. | |||
Business Acquisition [Line Items] | |||
Total cash paid in Initial Offer Period | $ 66,528 | ||
Total fair value of investment in EOS held before the Initial Offer Period | 25,026 | ||
Fair value of noncontrolling interest acquired subsequent to Initial Offer Period | 8,454 | ||
Purchase price | 100,008 | ||
Cash | 16,778 | ||
Accounts receivable | 9,083 | ||
Inventory | 26,531 | ||
Other current assets | 4,422 | ||
Property, plant and equipment, net | 1,650 | ||
Right-of-use asset | 4,341 | ||
Goodwill | 31,822 | ||
Definite-lived intangible assets: | |||
Other noncurrent assets | 395 | ||
Contract liabilities | 21,196 | ||
Long-term debt | 15,297 | ||
Other liabilities assumed | 30,021 | ||
Total identifiable net assets | 100,008 | ||
EOS Imaging S.A. | Developed Technology | |||
Definite-lived intangible assets: | |||
Definite-lived intangible assets: | 56,000 | ||
EOS Imaging S.A. | Customer Relationships | |||
Definite-lived intangible assets: | |||
Definite-lived intangible assets: | 9,500 | ||
EOS Imaging S.A. | Trade Name Related Intangible Assets | |||
Definite-lived intangible assets: | |||
Definite-lived intangible assets: | 6,000 | ||
EOS Imaging S.A. | EOS Share | |||
Business Acquisition [Line Items] | |||
Total cash paid in Initial Offer Period | 46,908 | ||
Total fair value of investment in EOS held before the Initial Offer Period | 23,549 | ||
EOS Imaging S.A. | OCEANEs | |||
Business Acquisition [Line Items] | |||
Total cash paid in Initial Offer Period | 19,620 | ||
Total fair value of investment in EOS held before the Initial Offer Period | $ 1,477 |
Business Combination - Summary
Business Combination - Summary of Unaudited Proforma Results (Details) - EOS Imaging S.A. - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Business Acquisition [Line Items] | ||||
Total revenue | $ 62,880 | $ 48,552 | $ 178,393 | $ 119,077 |
Net loss | $ (43,031) | $ (21,681) | $ (101,739) | $ (80,373) |
Net loss per share, basic and diluted | $ (0.43) | $ (0.33) | $ (1.07) | $ (1.26) |
Select Condensed Consolidated_3
Select Condensed Consolidated Balance Sheets Details - Accounts Receivable, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Balance Sheet Related Disclosures [Abstract] | ||
Accounts receivable | $ 34,545 | $ 23,887 |
Allowance for doubtful accounts | (869) | (360) |
Accounts receivable, net | $ 33,676 | $ 23,527 |
Select Condensed Consolidated_4
Select Condensed Consolidated Balance Sheets Details - Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 16,120 | $ 6,064 |
Work-in-process | 3,883 | 1,982 |
Finished goods | 110,531 | 67,892 |
Inventory, gross, total | 130,534 | 75,938 |
Less: reserve for excess and obsolete inventories | (38,025) | (29,937) |
Inventories | $ 92,509 | $ 46,001 |
Select Condensed Consolidated_5
Select Condensed Consolidated Balance Sheets Details - Property and Equipment, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 147,617 | $ 93,316 |
Less: accumulated depreciation and amortization | (70,403) | (56,646) |
Property and equipment, net | $ 77,214 | 36,670 |
Surgical instruments | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 4 years | |
Property and equipment, gross | $ 120,092 | 76,669 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 7 years | |
Property and equipment, gross | $ 14,249 | 6,562 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 3 years | |
Property and equipment, gross | $ 5,588 | 4,206 |
Office furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Useful lives | 5 years | |
Property and equipment, gross | $ 3,756 | 1,380 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Various useful lives of leasehold improvements | various | |
Property and equipment, gross | $ 1,558 | 1,761 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,374 | $ 2,738 |
Select Condensed Consolidated_6
Select Condensed Consolidated Balance Sheets Details - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Balance Sheet Related Disclosures [Line Items] | ||||
Depreciation | $ 5,300 | $ 2,300 | $ 13,800 | $ 6,500 |
Amortization of intangible assets | 2,012 | 172 | 3,392 | 516 |
Additions to definite-lived intangible assets | 71,500 | |||
Additions to goodwill | 31,800 | |||
Amortization of intangible assets | $ 2,300 | $ 400 | 4,200 | $ 1,300 |
Intellectual Property | Sales, General and Administrative Expense | ||||
Balance Sheet Related Disclosures [Line Items] | ||||
Asset impairment loss | 200 | |||
Globus | ||||
Balance Sheet Related Disclosures [Line Items] | ||||
Amortization of intangible assets | $ 32,600 |
Select Condensed Consolidated_7
Select Condensed Consolidated Balance Sheets Details - Intangible Assets, Net (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 100,042 | $ 54,467 |
Less: accumulated amortization | (11,202) | (29,747) |
Intangible assets, net | 88,840 | 24,720 |
Developed product technology | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 75,240 | 35,376 |
Useful lives | 12 years | |
License agreements | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 473 | 5,536 |
Useful lives | 7 years | |
Trademarks and trade names | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 5,858 | 792 |
Useful lives | 10 years | |
Customer-related | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 14,930 | 7,458 |
Useful lives | 5 years | |
Distribution network | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 2,413 | 4,027 |
Useful lives | 3 years | |
In process research and development | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross amount | $ 1,128 | $ 1,278 |
Useful lives | 7 years |
Select Condensed Consolidated_8
Select Condensed Consolidated Balance Sheets Details - Schedule of Intangible Assets, Future Expected Amortization Expense (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Balance Sheet Related Disclosures [Abstract] | |
Remainder of 2021 | $ 2,365 |
2022 | 9,425 |
2023 | 9,425 |
2024 | 9,322 |
2025 | 8,737 |
Thereafter | 49,566 |
Total | $ 88,840 |
Select Condensed Consolidated_9
Select Condensed Consolidated Balance Sheets Details - Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Balance Sheet Related Disclosures [Abstract] | ||
Commissions | $ 8,232 | $ 7,038 |
Payroll and payroll related | 16,888 | 13,552 |
Litigation settlement obligation - short-term portion | 4,000 | 4,000 |
Professional fees | 2,286 | 3,551 |
Royalties | 2,234 | 2,293 |
Interest | 915 | 619 |
Administration fees | 1,556 | 442 |
Other | 7,874 | 3,769 |
Total accrued expenses | $ 43,985 | $ 35,264 |
Select Condensed Consolidate_10
Select Condensed Consolidated Balance Sheets Details - Schedule of Other Long-Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Balance Sheet Related Disclosures [Abstract] | ||
Litigation settlement obligation - long-term portion | $ 4,547 | $ 7,634 |
Tax liabilities | 2,891 | 373 |
Royalties | 3,236 | 1,678 |
Contract liability, non-current | 2,711 | |
Other | 3,367 | 1,703 |
Other long-term liabilities | $ 16,752 | $ 11,388 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) $ in Thousands | Sep. 01, 2016option | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020 | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Contracts revenue | $ 62,880 | $ 41,163 | $ 169,250 | $ 100,907 | ||
Cost of revenues | 23,266 | 11,926 | 56,713 | 29,797 | ||
Supply agreement | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Contracts revenue | 100 | 1,100 | 900 | 3,000 | ||
Cost of revenues | $ 100 | $ 1,100 | $ 900 | $ 2,800 | ||
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, expired and terminated date | Aug. 31, 2021 |
Debt - 0.75% Senior Convertible
Debt - 0.75% Senior Convertible Notes due 2026 (Details) - 0.75% Senior Convertible Notes due 2026 | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Aug. 31, 2021USD ($)$ / sharesshares | Dec. 31, 2021Day | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($)Day | |
Line Of Credit Facility [Line Items] | ||||
Aggregate principal amount of debt | $ 316,300,000 | |||
Interest rate | 0.75% | |||
Debt instrument, maturity date | Aug. 1, 2026 | |||
Debt instrument, frequency of periodic payment | semi-annually | |||
Debt instrument, Date of first payment | Feb. 1, 2022 | |||
Net proceeds | $ 306,200,000 | |||
Payment terms | The 2026 Notes began accruing interest immediately and is payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2022 | |||
Debt instrument covenant description | The 2026 Notes do not contain any financial covenants | |||
Initial conversion rate | shares | 54.5316 | |||
Debt instrument converted principal amount | $ 1,000 | |||
Conversion price per share | $ / shares | $ 18.34 | |||
Consecutive trading days | Day | 10 | |||
Threshold percentage of par value trigger | 130.00% | 98.00% | ||
Number of conversion price, consecutive business days | Day | 5 | |||
Debt instrument converted principal amount | $ 1,000,000 | |||
Debt conversion start date | Feb. 2, 2026 | |||
Convertible notes redemption start date | Aug. 6, 2024 | |||
Convertible notes, redemption price percentage | 100.00% | |||
Principal payments due | $ 0 | |||
Effective interest rate | 1.40% | 1.40% | ||
Total interest expenses | $ 600,000 | $ 600,000 | ||
Scenario Forecast | ||||
Line Of Credit Facility [Line Items] | ||||
Consecutive trading days | Day | 30 | |||
Scenario Forecast | Minimum | ||||
Line Of Credit Facility [Line Items] | ||||
Threshold trading days | Day | 20 | |||
Scenario Forecast | Maximum | ||||
Line Of Credit Facility [Line Items] | ||||
Threshold percentage of par value trigger | 130.00% |
Debt - Outstanding Principal Am
Debt - Outstanding Principal Amount and Carrying Value of Notes (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Debt Disclosure [Abstract] | |
Principal | $ 316,250 |
Unamortized debt issuance costs | (9,751) |
Net carrying value | $ 306,499 |
Debt - Capped Call Transactions
Debt - Capped Call Transactions (Details) - 0.75% Senior Convertible Notes due 2026 - Capped Call Transactions $ in Millions | Aug. 05, 2021USD ($)$ / shares |
Debt Instrument [Line Items] | |
Initial cap price | $ / shares | 27.68 |
Percentage of premium over last reported sale price of common stock | 100.00% |
Cost of capped call transactions | $ 39.9 |
Reduction to additional paid-in capital | $ 39.9 |
Debt - OCEANE Convertible Bonds
Debt - OCEANE Convertible Bonds (Details) $ in Thousands, € in Millions | Jun. 20, 2021Day | May 31, 2018USD ($)ConvertibleBondshares | May 31, 2018EUR (€)ConvertibleBondshares | Jul. 31, 2021USD ($)shares | Jul. 31, 2021EUR (€)shares | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2021EUR (€) | May 31, 2018EUR (€)shares |
Debt Instrument [Line Items] | |||||||||
Carrying value of OCEANEs | $ | $ 316,250 | $ 316,250 | |||||||
OCEANE Convertible Bonds | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument redemption | 25,971 | 25,971 | |||||||
Debt instrument redemption amount | $ 200 | € 0.2 | |||||||
Carrying value of OCEANEs | 14,400 | $ 14,400 | € 12.5 | ||||||
OCEANE Convertible Bonds | EOS Imaging S.A. | |||||||||
Debt Instrument [Line Items] | |||||||||
Number of OCEANE convertible bonds issued | ConvertibleBond | 4,344,651 | 4,344,651 | |||||||
Aggregate gross proceeds | $ 34,300 | € 29.5 | |||||||
Interest rate | 6.00% | 6.00% | |||||||
Payment terms | The OCEANEs are unsecured obligations of EOS, rank equally with all other unsecured and unsubordinated obligations of EOS, and pay interest at a rate equal to 6% per year, payable semiannually in arrears on May 31 and November 30 of each year, beginning November 30, 2018 | ||||||||
Debt instrument, frequency of periodic payment | semiannually | semiannually | |||||||
Debt instrument, Date of first payment | Nov. 30, 2018 | Nov. 30, 2018 | |||||||
Debt instrument, maturity date | May 31, 2023 | May 31, 2023 | |||||||
Interest expense | $ | $ 300 | $ 400 | |||||||
Debt instrument purchased | 2,486,135 | 2,486,135 | |||||||
Debt instrument outstanding | 1,858,516 | 1,858,516 | |||||||
Aggregate principal amount of debt | $ 15,300 | € 12.6 | |||||||
Initial conversion rate | 1 | 1 | |||||||
Threshold percentage of par value trigger | 150.00% | ||||||||
Consecutive trading days | Day | 40 | ||||||||
Threshold percentage of debt instrument outstanding | 15.00% | ||||||||
OCEANE Convertible Bonds | EOS Imaging S.A. | Minimum | |||||||||
Debt Instrument [Line Items] | |||||||||
Consecutive trading days | Day | 20 |
Debt - Other Debt Agreements (D
Debt - Other Debt Agreements (Details) - EOS Imaging S.A. $ in Millions | 4 Months Ended | 9 Months Ended | |
Apr. 30, 2021EUR (€)Agreement | Sep. 30, 2021USD ($) | Sep. 30, 2021EUR (€) | |
Line Of Credit Facility [Line Items] | |||
Number of loan agreements | Agreement | 2 | ||
Debt instrument term | 12 months | ||
Percentage of principal state guaranteed | 90.00% | ||
Percentage of cost of state guaranty | 0.25% | ||
Debt instrument interest-free rate amount | € 3,266,667 | ||
Effective interest rate | 1.75% | ||
Debt instrument interest rate amount | € 1,450,000 | ||
Line of credit facility description | The loan capital and loan guaranty costs are payable in full at the end of the 12-month term or the loan may be extended up to 5 additional years. If the Company choses to extend the debt, the election must be made by the Company between months 8 and 11 of the 12-month term. | ||
Line of credit facility extension description | The extension will carry an interest rate at the banks’ refinancing cost, to be applied from year 2 to year 6 and an increased state guaranty cost (50 to 200 bps, as per a scale with company size and extension year). | ||
Loan One | |||
Line Of Credit Facility [Line Items] | |||
Outstanding loan obligation | $ 0.5 | € 400,000 | |
Loan Two | |||
Line Of Credit Facility [Line Items] | |||
Outstanding loan obligation | $ 5 | € 4,300,000 | |
Maximum | |||
Line Of Credit Facility [Line Items] | |||
Debt instrument loan extended additional period | 5 years |
Debt - Principal Payments on De
Debt - Principal Payments on Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Remainder of 2021 | $ 276 | |
2022 | 5,849 | |
2023 | 14,451 | |
2024 | 18 | |
Thereafter | 316,250 | |
Total | 336,844 | |
Less: unamortized debt discount and debt issuance costs | (9,751) | |
Total | 327,093 | |
Less: short-term debt | (6,119) | $ (4,167) |
Long-term debt | $ 320,974 | $ 37,999 |
Debt - Paycheck Protection Loan
Debt - Paycheck Protection Loan (Details) - USD ($) $ in Thousands | Apr. 23, 2020 | Jul. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Line Of Credit Facility [Line Items] | |||||
Gain (loss) on debt extinguishment | $ (7,434) | $ (7,434) | $ (1,555) | ||
Paycheck Protection Program Loans | |||||
Line Of Credit Facility [Line Items] | |||||
Proceeds from loan | $ 4,300 | ||||
Debt forgiveness | $ 4,300 | ||||
Gain (loss) on debt extinguishment | $ 4,300 |
Debt - Squadron Medical Credit
Debt - Squadron Medical Credit Agreement (Details) - USD ($) $ in Thousands | Aug. 10, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Line Of Credit Facility [Line Items] | ||||
Gain (loss) on debt extinguishment | $ (7,434) | $ (7,434) | $ (1,555) | |
Number of warrants outstanding | 20,214,038 | 20,214,038 | ||
Squadron Medical Credit Agreement | ||||
Line Of Credit Facility [Line Items] | ||||
Repaid of outstanding principal | $ 45,000 | |||
Accrued interest | $ 200 | |||
Gain (loss) on debt extinguishment | $ (11,700) | $ (11,700) | ||
Squadron Medical Credit Agreement | Common Stock | Participant Lender | ||||
Line Of Credit Facility [Line Items] | ||||
Number of warrants outstanding | 6,759,530 | 6,759,530 |
Debt - Inventory Financing Agre
Debt - Inventory Financing Agreement (Details) - Inventory Financing Agreement - USD ($) | Aug. 10, 2021 | Sep. 30, 2021 | May 31, 2021 | Nov. 30, 2020 | Nov. 30, 2018 |
Line Of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 6,000,000 | $ 6,000,000 | $ 3,000,000 | ||
Current availability | $ 9,000,000 | ||||
Repaid of outstanding principal | $ 8,100,000 | ||||
Accrued interest | $ 100,000 |
Debt - MidCap Facility Agreemen
Debt - MidCap Facility Agreement (Details) - USD ($) $ in Thousands | May 29, 2020 | Sep. 30, 2020 |
Debt Disclosure [Abstract] | ||
Final settlement under agreement | $ 9,600 | $ 56,615 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | May 13, 2021USD ($) | Apr. 09, 2021USD ($)ft² | Dec. 04, 2019USD ($)ft² | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Loss Contingencies [Line Items] | ||||||||
Lessee operating lease, description | The Company recognizes right-of-use assets (“ROU assets”) and lease liabilities for office buildings and certain equipment with lease terms of 1 year to 10 years, some of which include options to extend and/or terminate the leases. 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 short-term leases is immaterial to all periods presented. | |||||||
Right-of-use asset | $ 26,647,000 | $ 26,647,000 | $ 1,177,000 | |||||
Lease Liability | 28,810,000 | 28,810,000 | ||||||
Liability in connection with lawsuit | 0 | 0 | ||||||
Third-party Provider | ||||||||
Loss Contingencies [Line Items] | ||||||||
Minimum purchase commitment requirements | 1,000,000 | $ 1,000,000 | ||||||
Minimum purchase commitment to be paid period | 3 years | |||||||
Recognized an ROU asset related to agreement amount | $ 1,100,000 | |||||||
Rent expense pertaining to assets | 200,000 | $ 100,000 | 400,000 | $ 100,000 | ||||
Leased assets within agreement | $ 600,000 | $ 600,000 | ||||||
EOS Imaging S.A. | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease term | 10 years | |||||||
Right-of-use asset | $ 4,300,000 | |||||||
Lease Liability | $ 4,300,000 | |||||||
Lease commencement year | 2019 | |||||||
Lease termination date | 2028-09 | |||||||
Base rent | $ 600,000 | |||||||
EOS Imaging S.A. | Inventory Purchase | Third-party Supplier | ||||||||
Loss Contingencies [Line Items] | ||||||||
Minimum purchase commitment requirements period month and year | 2025-12 | |||||||
Remaining minimum purchase commitment required | $ 26,400,000 | |||||||
Building lease | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease term | 7 years | 10 years | ||||||
Area for facility of office, engineering and research and development space | ft² | 75,643 | 121,541 | ||||||
Lease agreement commencement date | May 1, 2021 | Feb. 1, 2021 | ||||||
Lease agreement expiry date | May 1, 2028 | Jan. 31, 2031 | ||||||
Lease renewal term | 236 months | 260 months | ||||||
Right-of-use asset | $ 1,700,000 | $ 21,100,000 | ||||||
Lease Liability | $ 21,500,000 | |||||||
Beginning and end of abatement period | full abatement during months two through ten | |||||||
Annual increase in base rent | 3.00% | 3.00% | ||||||
Building lease | First year | ||||||||
Loss Contingencies [Line Items] | ||||||||
Lease base rent payment per month | $ 200,000 | |||||||
Minimum | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease term | 1 year | 1 year | ||||||
Minimum | Building lease | First year | ||||||||
Loss Contingencies [Line Items] | ||||||||
Abatement period | 2 months | |||||||
Maximum | ||||||||
Loss Contingencies [Line Items] | ||||||||
Operating lease term | 10 years | 10 years | ||||||
Maximum | Building lease | First year | ||||||||
Loss Contingencies [Line Items] | ||||||||
Abatement period | 10 months |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Annual Lease Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments And Contingencies Disclosure [Abstract] | ||
Remainder of 2021 | $ 784 | |
2022 | 4,413 | |
2023 | 4,621 | |
2024 | 4,635 | |
2025 | 4,602 | |
Thereafter | 22,574 | |
Total undiscounted lease payments | 41,629 | |
Less: imputed interest | (12,819) | |
Operating lease liability | 28,810 | |
Less: current portion of operating lease liability | (3,859) | $ (885) |
Operating lease liability, less current portion | $ 24,951 | $ 41 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Weighted-Average Remaining Lease Term and Discount Rate (Details) | Sep. 30, 2021 | Dec. 31, 2020 |
Commitments And Contingencies Disclosure [Abstract] | ||
Weighted-average remaining lease term (years) | 8 years 9 months 18 days | 8 months 12 days |
Weighted-average discount rate | 8.50% | 10.50% |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Operating Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | ||||
Rent expense | $ 1,156 | $ 331 | $ 3,358 | $ 989 |
Cash paid for amounts included in measurement of lease liabilities | $ 393 | $ 373 | $ 1,268 | $ 1,113 |
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 ($) | Sep. 30, 2021USD ($)installment |
Loss Contingencies [Line Items] | ||||||||
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 | $ 48,300,000 | |||||
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 | $ 9,200,000 | |||||||
Orthotec LLC, litigation settlement | HealthpointCapital, LLC | ||||||||
Loss Contingencies [Line Items] | ||||||||
Judgment assessed by court for (against) company | $ 5,000,000 | $ 5,000,000 | ||||||
Payments of settlement | $ 1,000,000 | 1,100,000 | ||||||
Number of quarterly installments | installment | 5 | |||||||
Contribution amount to be paid by other party | $ 5,000,000 | $ 5,000,000 | ||||||
Remaining receivable | $ 700,000 | |||||||
Beginning Fourth Quarter of 2014 | Orthotec LLC, litigation settlement | ||||||||
Loss Contingencies [Line Items] | ||||||||
Litigation settlement, full amount to be paid in quarterly installments | $ 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, 2021 | Dec. 31, 2020 |
Commitments And Contingencies Disclosure [Abstract] | ||
Litigation settlement obligation - short-term portion | $ 4,000 | $ 4,000 |
Litigation settlement obligation - long-term portion | 4,547 | 7,634 |
Total | 8,547 | 11,634 |
Future interest | 618 | 1,199 |
Total settlement obligation, gross | 9,165 | 12,833 |
Related party receivable - included in stockholders' equity | (700) | (4,000) |
Total settlement obligation, net | $ 8,465 | $ 8,833 |
Business Segment and Geograph_3
Business Segment and Geographic Information - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2021segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Business Segment and Geograph_4
Business Segment and Geographic Information - Schedule of Net Revenue and Property, Plant and Equipment, Net, by Geographic Region (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Revenue | $ 62,880 | $ 41,163 | $ 169,250 | $ 100,907 | |
Property and equipment, net | 77,214 | 77,214 | $ 36,670 | ||
United States | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Revenue | 55,865 | 40,052 | 158,875 | 97,956 | |
Property and equipment, net | 76,074 | 76,074 | $ 36,670 | ||
International | |||||
Revenues From External Customers And Long Lived Assets [Line Items] | |||||
Revenue | 7,015 | $ 1,111 | 10,375 | $ 2,951 | |
Property and equipment, net | $ 1,140 | $ 1,140 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | ||||||||
Net loss, basic and diluted | $ (43,031) | $ (38,205) | $ (22,903) | $ (15,669) | $ (15,805) | $ (20,722) | $ (104,139) | $ (52,196) |
Denominator: | ||||||||
Weighted average shares outstanding, basic and diluted | 99,571 | 64,761 | 95,204 | 63,669 | ||||
Net loss per share, basic and diluted: | $ (0.43) | $ (0.24) | $ (1.09) | $ (0.82) |
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, 2021 | Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 49,746 | 37,600 |
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 | 29 |
Options to purchase common stock and employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 3,524 | 4,141 |
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) | 8,733 | 8,072 |
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) | 20,214 | 25,358 |
Convertible Notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities not included in diluted net loss per share (in shares) | 17,246 |
Stock-Benefit Plans and Equit_3
Stock-Benefit Plans and Equity Transactions - Additional Information (Details) - USD ($) | Aug. 03, 2021 | Jun. 16, 2021 | Jul. 31, 2019 | Dec. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2017 | Jun. 17, 2020 | May 09, 2020 | Apr. 08, 2020 | Jun. 30, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Warrants outstanding | 20,214,038 | 20,214,038 | ||||||||||||
Stock-based compensation | $ 26,724,000 | $ 12,687,000 | ||||||||||||
Mr. Miles | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Warrant expiration period | 5 years | |||||||||||||
Number of warrants exercised | 0 | |||||||||||||
Number of warrants issued (in shares) | 1,327,434 | 1,327,434 | ||||||||||||
Exercise price of warrants | $ 5 | $ 5 | ||||||||||||
Stock-based compensation | $ 1,400,000 | |||||||||||||
Safe Op Surgical Inc | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Warrant expiration period | 5 years | |||||||||||||
Proceeds from exercise of warrant | $ 100,000 | |||||||||||||
Number of warrants exercised | 0 | 14,583 | 969,932 | 14,583 | ||||||||||
Warrants outstanding | 1,194,943 | 1,194,943 | ||||||||||||
Number of warrants issued (in shares) | 2,200,000 | 2,200,000 | ||||||||||||
Exercise price of warrants | $ 3.50 | $ 3.50 | ||||||||||||
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 | $ 1,600,000 | $ 300,000 | |||||||||||
Number of warrants exercised | 275,000 | 0 | 795,000 | 125,000 | ||||||||||
Warrants outstanding | 2,312,000 | 2,312,000 | ||||||||||||
Exercise price of warrants | $ 2 | $ 2 | ||||||||||||
2018 Common Stock Warrants | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Warrant expiration period | 5 years | |||||||||||||
Proceeds from exercise of warrant | $ 100,000 | $ 1,500,000 | $ 900,000 | |||||||||||
Number of warrants exercised | 40,000 | 136,000 | 2,881,116 | 1,670,524 | ||||||||||
Warrants outstanding | 8,498,569 | 8,498,569 | ||||||||||||
Exercise price of warrants | $ 3.50 | $ 3.50 | ||||||||||||
Squadron Medical | Participant Lender | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of warrants exercised | 0 | |||||||||||||
Warrants outstanding | 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 | |||||||||||
Warrants And Rights Outstanding Maturity Date | May 29, 2027 | |||||||||||||
ESPP | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of shares available for grant | 500,000 | 662,036 | 662,036 | |||||||||||
Maximum percentage opt to have on compensation | 20.00% | |||||||||||||
Maximum percentage opt to have on compensation | $ 21,250 | |||||||||||||
Common stock purchase price percentage | 85.00% | |||||||||||||
2016 Equity Incentive Plan | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of shares available for grant | 4,058,165 | 4,058,165 | 7,000,000 | |||||||||||
2017 Distributor Inducement Plan | Common Stock | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of warrants issued (in shares) | 195,000 | 195,000 | ||||||||||||
Number of warrants available to be granted | 575,000 | 575,000 | ||||||||||||
2017 Distributor Inducement Plan | Board of Directors Chairman | Common Stock | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Share authorized grant of common stock | 1,000,000 | 1,000,000 | ||||||||||||
2017 Distributor Inducement Plan | Restricted Common Stock | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted shares granted under the plan | 380,500 | |||||||||||||
Number of stock units issued | 136,100 | |||||||||||||
2017 Development Services Plan | Board of Directors Chairman | Common Stock | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of shares available for grant | 7,000,000 | |||||||||||||
2017 Development Services Plan | Restricted Common Stock | Board of Directors Chairman | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted shares granted under the plan | 6,934,000 | |||||||||||||
2019 Management Objective Strategic Incentive Plan | Board of Directors Chairman | Common Stock | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Share authorized grant of common stock | 500,000 | |||||||||||||
Maximum grant of shares per participant | 50,000 | |||||||||||||
2019 Management Objective Strategic Incentive Plan | Unvested Restricted Stock Award | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Restricted shares granted under the plan | 122,500 | |||||||||||||
2019 Management Objective Strategic Incentive Plan | Unvested Restricted Stock Award | Common Stock | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Number of common stock shares available for purchase under the plan | 12,500 | 12,500 | ||||||||||||
0.75% Convertible Senior Notes | ||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||
Share repurchase, authorized amount | $ 25,000,000 | |||||||||||||
Number of shares repurchased | 1,806,358 | |||||||||||||
Aggregate price of repurchased shares | $ 25,000,000 |
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, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 10,754 | $ 4,544 | $ 26,724 | $ 12,687 |
Cost of revenues | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 310 | 139 | 489 | 374 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 1,440 | 528 | 2,602 | 1,482 |
Sales, general and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 9,004 | $ 3,877 | $ 23,633 | $ 10,831 |
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, 2021shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 55,499 |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 3,457 |
Unvested Restricted Stock Award | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 8,733 |
ESPP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 662 |
Series A Convertible Preferred Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 29 |
Convertible Notes | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 17,246 |
Warrants Outstanding | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common stock reserved for future issuance | 20,214 |
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 | 735 |
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 | 365 |
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 | 4,058 |
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, 2021$ / sharesshares | ||
Class Of Warrant Or Right [Line Items] | ||
Number of Warrants | 20,214,038 | |
2017 PIPE Warrants | ||
Class Of Warrant Or Right [Line Items] | ||
Number of Warrants | 2,312,000 | |
Strike Price | $ / shares | $ 2 | |
Expiration | June 2022 | |
2018 PIPE Warrants | ||
Class Of Warrant Or Right [Line Items] | ||
Number of Warrants | 8,498,569 | |
Strike Price | $ / shares | $ 3.50 | |
Expiration | May 2023 | |
SafeOp Surgical Merger Warrants | ||
Class Of Warrant Or Right [Line Items] | ||
Number of Warrants | 1,194,943 | |
Strike Price | $ / shares | $ 3.50 | |
Expiration | May 2023 | |
2018 Squadron Medical Warrants | ||
Class Of Warrant Or Right [Line Items] | ||
Number of Warrants | 845,000 | |
Strike Price | $ / shares | $ 3.15 | |
Expiration | May 2027 | |
2019 Squadron Medical Warrants | ||
Class Of Warrant Or Right [Line Items] | ||
Number of Warrants | 4,838,710 | |
Strike Price | $ / shares | $ 2.17 | |
Expiration | May 2027 | |
2020 Squadron Medical 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 | 121,562 | [1] |
Strike Price | $ / shares | $ 2.87 | [1] |
Expiration | Various through May 2023 | [1] |
[1] | Weighted-average strike price. |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate from continuing operations | (0.21%) | (0.26%) | (0.16%) | (0.26%) |
Federal statutory income tax rate | 21.00% |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) $ in Thousands | Jul. 01, 2016USD ($) | Aug. 13, 2014USD ($)installment | Oct. 31, 2020USD ($)installment | Sep. 30, 2014USD ($) | Apr. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2021USD ($)installment | Dec. 31, 2020USD ($) |
Related Party Transaction [Line Items] | ||||||||
Remaining settlement amount to be contributed | $ 700 | $ 4,000 | ||||||
Orthotec LLC, litigation settlement | ||||||||
Related Party Transaction [Line Items] | ||||||||
Payments of settlement | $ 15,750 | $ 1,750 | $ 48,300 | |||||
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) | $ (5,000) | ||||||
Number of quarterly installments | installment | 5 | |||||||
Number of litigation settlement payment due | installment | 1 | |||||||
Litigation settlement amount awarded due to other party | $ 700 | |||||||
Remaining settlement amount to be contributed | $ 700 |