Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 02, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Eargo, Inc. | |
Entity Central Index Key | 0001719395 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 39,411,069 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | EAR | |
Security Exchange Name | NASDAQ | |
Entity File Number | 001-39616 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-3879804 | |
Entity Address, Address Line One | 2665 North First Street | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | San Jose | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95134 | |
City Area Code | 650 | |
Local Phone Number | 351-7700 | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 88,075 | $ 110,500 |
Accounts receivable, net | 1,156 | 12,547 |
Inventories | 4,953 | 5,712 |
Prepaid expenses and other current assets | 5,058 | 10,873 |
Total current assets | 99,242 | 139,632 |
Operating lease right-of-use assets | 6,337 | 7,165 |
Property and equipment, net | 8,691 | 9,551 |
Intangible assets, net | 1,217 | 1,681 |
Goodwill | 873 | 873 |
Other assets | 210 | 1,209 |
Total assets | 116,570 | 160,111 |
Current liabilities: | ||
Accounts payable | 6,396 | 9,053 |
Accrued expenses | 10,966 | 9,235 |
Sales returns reserve | 1,790 | 13,827 |
Settlement liability | 34,372 | |
Convertible notes | 125,000 | |
Long-term debt, current portion | 3,333 | |
Other current liabilities | 1,902 | 1,813 |
Lease liability, current portion | 665 | 750 |
Total current liabilities | 146,719 | 72,383 |
Lease liability, noncurrent portion | 6,175 | 6,640 |
Long-term debt, noncurrent portion | 11,924 | |
Total liabilities | 152,894 | 90,947 |
Stockholders' equity (deficit): | ||
Preferred stock, $0.0001 par value per share; 5,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; zero shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||
Common stock; $0.0001 par value; 300,000,000 and 110,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively; 39,411,069 and 39,307,093 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 4 | 4 |
Additional paid-in capital | 434,200 | 425,972 |
Accumulated deficit | (470,528) | (356,812) |
Total stockholders' equity (deficit) | (36,324) | 69,164 |
Total liabilities and stockholders' equity (deficit) | $ 116,570 | $ 160,111 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 110,000,000 |
Common stock, shares issued | 39,411,069 | 39,307,093 |
Common stock, shares outstanding | 39,411,069 | 39,307,093 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 7,908 | $ (22,869) | $ 24,331 | $ 22,062 |
Cost of revenue | 6,007 | 7,552 | 16,231 | 20,311 |
Gross profit (loss) | 1,901 | (30,421) | 8,100 | 1,751 |
Operating expenses: | ||||
Research and development | 4,963 | 7,296 | 14,689 | 17,222 |
Sales and marketing | 11,282 | 24,444 | 37,306 | 63,202 |
General and administrative | 11,702 | 16,887 | 43,980 | 32,806 |
Total operating expenses | 27,947 | 48,627 | 95,975 | 113,230 |
Loss from operations | (26,046) | (79,048) | (87,875) | (111,479) |
Other income (expense), net: | ||||
Interest income | 419 | 2 | 480 | 19 |
Interest expense | (269) | (549) | (798) | |
Change in fair value of convertible notes | (25,000) | (25,000) | ||
Loss on extinguishment of debt | (772) | |||
Total other income (expense), net | (24,581) | (267) | (25,841) | (779) |
Loss before income taxes | (50,627) | (79,315) | (113,716) | (112,258) |
Net loss and comprehensive loss | (50,627) | (79,315) | (113,716) | (112,258) |
Net loss attributable to common stockholders, basic and diluted | $ (50,627) | $ (79,315) | $ (113,716) | $ (112,258) |
Net loss per share attributable to common stockholders, basic | $ (1.29) | $ (2.02) | $ (2.89) | $ (2.90) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic | 39,397,347 | 39,195,211 | 39,361,948 | 38,765,151 |
Net loss per share attributable to common stockholders, diluted | $ (1.29) | $ (2.02) | $ (2.89) | $ (2.90) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, diluted | 39,397,347 | 39,195,211 | 39,361,948 | 38,765,151 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance at Dec. 31, 2020 | $ 193,911 | $ 4 | $ 392,965 | $ (199,058) |
Beginning balance, Shares at Dec. 31, 2020 | 38,246,601 | |||
Stock-based compensation | 5,449 | 5,449 | ||
Exercise of stock options | 118 | 118 | ||
Exercise of stock options, Shares | 51,467 | |||
Net loss and comprehensive loss | (13,621) | (13,621) | ||
Ending balance at Mar. 31, 2021 | 185,857 | $ 4 | 398,532 | (212,679) |
Ending balance, Shares at Mar. 31, 2021 | 38,298,068 | |||
Beginning balance at Dec. 31, 2020 | 193,911 | $ 4 | 392,965 | (199,058) |
Beginning balance, Shares at Dec. 31, 2020 | 38,246,601 | |||
Net loss and comprehensive loss | (112,258) | |||
Ending balance at Sep. 30, 2021 | 102,577 | $ 4 | 413,889 | (311,316) |
Ending balance, Shares at Sep. 30, 2021 | 39,270,448 | |||
Beginning balance at Mar. 31, 2021 | 185,857 | $ 4 | 398,532 | (212,679) |
Beginning balance, Shares at Mar. 31, 2021 | 38,298,068 | |||
Stock-based compensation | 5,519 | 5,519 | ||
Exercise of stock options | 1,181 | 1,181 | ||
Exercise of stock options, Shares | 668,760 | |||
Issuance of common stock in connection with employee stock purchase plan | 2,674 | 2,674 | ||
Issuance of common stock in connection with employee stock purchase plan, Shares | 174,743 | |||
Net loss and comprehensive loss | (19,322) | (19,322) | ||
Ending balance at Jun. 30, 2021 | 175,909 | $ 4 | 407,906 | (232,001) |
Ending balance, Shares at Jun. 30, 2021 | 39,141,571 | |||
Stock-based compensation | 5,630 | 5,630 | ||
Exercise of stock options and release of restricted stock units | 353 | 353 | ||
Exercise of stock options and release of restricted stock units, Shares | 128,877 | |||
Net loss and comprehensive loss | (79,315) | (79,315) | ||
Ending balance at Sep. 30, 2021 | 102,577 | $ 4 | 413,889 | (311,316) |
Ending balance, Shares at Sep. 30, 2021 | 39,270,448 | |||
Beginning balance at Dec. 31, 2021 | 69,164 | $ 4 | 425,972 | (356,812) |
Beginning balance, Shares at Dec. 31, 2021 | 39,307,093 | |||
Stock-based compensation | 3,024 | 3,024 | ||
Exercise of stock options | 92 | 92 | ||
Exercise of stock options, Shares | 37,425 | |||
Restricted stock units cash settlement | (69) | (69) | ||
Net loss and comprehensive loss | (30,645) | (30,645) | ||
Ending balance at Mar. 31, 2022 | 41,566 | $ 4 | 429,019 | (387,457) |
Ending balance, Shares at Mar. 31, 2022 | 39,344,518 | |||
Beginning balance at Dec. 31, 2021 | $ 69,164 | $ 4 | 425,972 | (356,812) |
Beginning balance, Shares at Dec. 31, 2021 | 39,307,093 | |||
Exercise of stock options, Shares | 57,946 | |||
Net loss and comprehensive loss | $ (113,716) | |||
Ending balance at Sep. 30, 2022 | (36,324) | $ 4 | 434,200 | (470,528) |
Ending balance, Shares at Sep. 30, 2022 | 39,411,069 | |||
Beginning balance at Mar. 31, 2022 | 41,566 | $ 4 | 429,019 | (387,457) |
Beginning balance, Shares at Mar. 31, 2022 | 39,344,518 | |||
Stock-based compensation | 1,511 | 1,511 | ||
Exercise of stock options and release of restricted stock units | 33 | 33 | ||
Exercise of stock options and release of restricted stock units, Shares | 40,920 | |||
Tax withholdings on settlement of restricted stock units | (22) | (22) | ||
Issuance costs | 600 | 600 | ||
Net loss and comprehensive loss | (32,444) | (32,444) | ||
Ending balance at Jun. 30, 2022 | 11,244 | $ 4 | 431,141 | (419,901) |
Ending balance, Shares at Jun. 30, 2022 | 39,385,438 | |||
Stock-based compensation | 3,057 | 3,057 | ||
Exercise of stock options and release of restricted stock units | 9 | 9 | ||
Exercise of stock options and release of restricted stock units, Shares | 25,631 | |||
Tax withholdings on settlement of restricted stock units | (7) | (7) | ||
Net loss and comprehensive loss | (50,627) | (50,627) | ||
Ending balance at Sep. 30, 2022 | $ (36,324) | $ 4 | $ 434,200 | $ (470,528) |
Ending balance, Shares at Sep. 30, 2022 | 39,411,069 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities: | ||
Net loss | $ (113,716) | $ (112,258) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 4,023 | 2,780 |
Stock-based compensation | 7,592 | 15,850 |
Non-cash interest expense and amortization of debt discount | 209 | 314 |
Debt issuance costs from convertible notes | 5,662 | |
Change in fair value of convertible notes | 25,000 | |
Loss on extinguishment of debt | 772 | |
Non-cash operating lease expense | 828 | 621 |
Bad debt expense | 524 | 9,331 |
Loss on disposal of property and equipment | 155 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 10,867 | (20,498) |
Inventories | 759 | (3,535) |
Prepaid expenses and other current assets | 6,869 | 1,745 |
Other assets | 999 | (148) |
Accounts payable | (2,366) | 5,175 |
Accrued expenses | 1,986 | 639 |
Sales returns reserve | (12,037) | 11,293 |
Settlement liability | (34,372) | 34,372 |
Other current and noncurrent liabilities | 89 | 1,646 |
Deferred revenue | (294) | |
Operating lease liabilities | (550) | (687) |
Net cash used in operating activities | (96,862) | (53,499) |
Investing activities: | ||
Purchases of property and equipment | (2,531) | (708) |
Capitalized software development costs | (296) | (3,428) |
Cash paid for acquisition of business | (2,434) | |
Net cash used in investing activities | (2,827) | (6,570) |
Financing activities: | ||
Proceeds from stock options exercised | 134 | 1,652 |
Debt repayments | (16,238) | |
Proceeds from employee stock purchase plan purchases | 2,674 | |
Proceeds from issuance of convertible notes, net of issuance costs paid to lender | 99,903 | |
Payment of convertible notes issuance costs to third parties | (5,565) | |
Payment of deferred transaction costs | (872) | |
Payment of taxes related to net share settlement of restricted stock units | (29) | |
Restricted stock units settled in cash | (69) | |
Net cash provided by financing activities | 77,264 | 4,326 |
Net decrease in cash and cash equivalents | (22,425) | (55,743) |
Cash and cash equivalents at beginning of period | 110,500 | 212,185 |
Cash and cash equivalents at end of period | 88,075 | 156,442 |
Non-cash investing and financing activities: | ||
Property and equipment and capitalized software costs in accounts payable and accrued liabilities | 229 | 47 |
Deferred transaction costs included in accounts payable | 182 | |
Stock-based compensation included in capitalized software costs | $ 0 | 748 |
Convertible preferred stock issuance costs included in accounts payable | 600 | |
Acquisition liability in accrued liabilities | $ 429 |
Description of Business and Oth
Description of Business and Other Matters | 9 Months Ended |
Sep. 30, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business and Other Matters | 1. Description of business and other matters Eargo, Inc. (the “Company”) is a medical device company dedicated to improving the quality of life of people with hearing loss. The Company’s innovative product and go-to-market approach address the major challenges of traditional hearing aid adoption, including social stigma, accessibility and cost. DOJ investigation and settlement and claims audits On September 21, 2021, the Company was informed that it was the target of a criminal investigation by the U.S. Department of Justice (the “DOJ”) related to insurance reimbursement claims the Company submitted on behalf of its customers covered by various federal employee health plans under the Federal Employee Health Benefits (“FEHB”) program, which is administered by the Office of Personnel Management (the “OPM”). The investigation also pertained to Eargo’s role in customer reimbursement claim submissions to federal employee health plans (collectively, the “DOJ investigation”). Total payments the Company received from the government in relation to claims submitted under the FEHB program, net of any product returns and associated refunds, were approximately $ 44.0 million. Additionally, the third-party payor with whom the Company historically had the largest volume, which is one of the carriers contracted with the OPM under the FEHB program (“largest third-party payor”), conducted an audit of insurance reimbursement claims (“claims”) submitted by the Company (the “Primary Audit”), which included a review of medical records. The Company was informed by the third-party payor conducting the Primary Audit that the DOJ was the principal contact related to the subject matter of the Primary Audit. On January 4, 2022, the DOJ confirmed to the Company that the investigation had been referred to the Civil Division of the DOJ and the U.S. Attorney’s Office for the Northern District of Texas and the criminal investigation was no longer active. On April 29, 2022, the Company entered into a civil settlement agreement with the U.S. government that resolved the DOJ investigation related to the Company’s role in customer reimbursement claim submissions to various federal employee health plans under the FEHB program. The settlement agreement provided for the Company’s payment of approximately $ 34.4 million to the U.S. government and resolved allegations that the Company submitted or caused the submission of claims for payment to the FEHB program using unsupported hearing loss-related diagnostic codes. As discussed further in Note 5, based on the settlement agreement with the U.S. government, the Company recorded a settlement liability of $ 34.4 million as of December 31, 2021. The settlement amount was treated as consideration payable to a customer and was recorded as a reduction of revenue in the third quarter of 2021. On May 2, 2022, the Company paid the settlement amount. From the time the Company learned of the DOJ investigation and until December 8, 2021, the Company continued to process orders for customers with potential insurance benefits (including FEHB program members) but suspended all claims submission activities and offered affected customers ( i.e. , customers using insurance benefits as a method of direct payment for transactions prior to December 8, 2021) the option to return their hearing aids or purchase their hearing aids without the use of their insurance benefits in case their claim was denied or ultimately not submitted by the Company to their insurance plan for payment (the “extended right of return”). The Company determined that customer transactions using insurance benefits as a method of direct payment occurring between September 21, 2021 (when the Company learned of the DOJ investigation) and December 8, 2021 (when the Company temporarily stopped accepting insurance benefits as a method of direct payment) did not meet the criteria for revenue recognition under ASC 606 and, as such, the Company did not recognize revenue for shipments within that timeframe to customers with potential insurance benefits, substantially all of whom were covered under the FEHB program. The Company previously estimated that a majority of customers with unsubmitted claims would choose to return the hearing aid system if their insurance provider denied their claim or the claim was ultimately not submitted by the Company for payment, resulting in an increase in expected product returns from sales transactions that occurred prior to September 21, 2021 and recorded during the year ended December 31, 2021. Returns associated with unsubmitted claims reduce the sales returns reserve, with a corresponding reduction in the related accounts receivable at the time the product is returned. Further, the Company also estimated that, in addition to the customers who chose to return their hearing aid systems, a significant number of customers whose claims were denied by payors or not submitted by the Company for payment may not pay for or return the hearing aid system, resulting in bad debt expense that was recorded during the year ended December 31, 2021. During the three months ended September 30, 2022, the Company made the determination not to seek payment for approximately $ 16.1 million from customers with unsubmitted and unpaid claims. The Company accounted for this decision as a pricing concession ( “ Pricing Concession ” ) and during the three and nine months ended September 30, 2022 recorded a $ 16.1 million reduction to its insurance-related accounts receivable balance along with related reduction to net revenue of $ 11.6 million and the allowance for credit losses balance of $ 4.5 million for such unsubmitted and unpaid claims. Further, the Company simultaneously recorded a decrease in its insurance-related sales return reserve of $ 11.3 million along with a corresponding increase of $ 11.3 million to net revenue for the three and nine months ended September 30, 2022 related to unsubmitted and unpaid claims. These changes resulted in a decrease in net revenue of $ 0.3 million for the three and nine months ended September 30, 2022. In September 2022, the Company resumed accepting insurance benefits as a method of direct payment in certain limited circumstances where there is testing by an independent, licensed healthcare provider to establish medical necessity with supporting clinical documentation. While the Company is continuing to work with third-party payors with the objective of validating and establishing additional processes to support claims that it may submit for reimbursement, the Company may not be able to arrive at acceptable processes or submit future claims in sufficient volume to meaningfully restore or expand the amount of its insurance-based business. Notwithstanding the DOJ settlement, the Company remains subject to prepayment review of claims by its largest third-party payor before any insurance payments are made. Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. The Company has incurred losses and negative cash flows from operations since its inception and management expects to incur additional substantial losses in the foreseeable future. As of September 30, 2022, the Company had cash and cash equivalents of $ 88.1 million and an accumulated deficit of $ 470.5 million. In June 2022, the Company entered into a note purchase agreement (“Note Purchase Agreement”) pursuant to which it agreed to issue and sell up to $ 125.0 million in senior secured convertible notes (the “Notes”) of the Company (the “Note Transaction”), of which $ 100.0 million were issued on June 28, 2022 and will mature in June 2023. Further, the Company’s future operating requirements will be substantial and it will need to raise significant additional resources to fund its operations through equity or debt financing, or some variation thereof. The Company is currently exploring fundraising opportunities to meet these capital requirements, including conducting a rights offering (“Rights Offering”) under the terms of the Note Transaction documents. If the Company is unable to raise additional funding to meet its operational needs, it will be forced to limit or cease its operations . The Note Transaction and Rights Offering are discussed further in Note 6. The Company believes that, without the completion of the Rights Offering or an alternative future financing, its current resources are insufficient to satisfy its obligations as they become due within one year after the date that the financial statements are issued. The negative cash flows and current lack of financial resources of the Company raise substantial doubt as to the Company’s ability to continue as a going concern. Additionally, if the Company is unable to complete the Rights Offering and all of the Notes remain outstanding, it will have insufficient funds to repay the Notes at their maturity without additional capital. These unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainty. Since the announcement of the DOJ investigation, there has been and may continue to be a significant reduction in shipments, revenue and gross margin, which has and could continue to negatively impact the Company’s liquidity and working capital, including by impacting its ability to access additional capital. It is difficult to assess or predict at this time the extent to which the Company is able to validate and establish processes to support the submission of claims for reimbursement to health plans, including those under the FEHB program, and the future impacts of the implementation of an over-the-counter (“OTC”) hearing aid regulatory framework (which may lead insurance providers to take actions limiting the Company’s ability to access insurance coverage). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of significant accounting policies Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting of Eargo, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, include all adjustments of a normal recurring nature necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations and cash flows. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on May 13, 2022. Use of estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying unaudited condensed consolidated financial statements include, but are not limited to, the sales returns reserve, the present value of lease liabilities, the fair value of equity securities, the fair value of financial instruments, the allowance for credit losses, the net realizable value of inventory, the fair value of assets acquired in a business combination, the useful lives of long-lived assets, accrued product warranty reserve, legal and other contingencies, certain other accruals and recoverability of the Company’s net deferred tax assets and the related valuation allowance. Management periodically evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates. Significant accounting policies There have been no significant changes to the accounting policies during the nine months ended September 30, 2022, as compared to the significant accounting policies described in Note 2 of the Notes to Consolidated Financial Statements in the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K, except for the policy titled “Convertible notes - fair value option” below. Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of demand deposit accounts, money market accounts and accounts receivable, including credit card receivables. The Company maintains its cash and cash equivalents, which may, at times, exceed federally insured limits, with financial institutions of high credit standing. As of September 30, 2022, the Company has not experienced any losses on its deposit accounts and money market accounts. As of September 30, 2022, the Company does not believe there is significant financial risk from nonperformance by the issuers of the Company’s deposit accounts and money market accounts. Approximately 93 % of the Company’s gross accounts receivable as of December 31, 2021 were for customers with insurance benefits, substantially all of whom were covered under the FEHB program. Furthermore, approximately 90 % of the Company’s gross accounts receivable as of December 31, 2021 were related to shipments of Eargo hearing aids to customers insured under a single insurance plan whose claims are processed through the Company’s largest third-party payor, which conducted the Primary Audit. The Company remains subject to a prepayment review of claims by the payor who conducted the Primary Audit. Please see caption “DOJ investigation and settlement and claims audits” in Note 1 for more information regarding the DOJ investigation and claims audits. As of September 30, 2022, subsequent to the Pricing Concession, there was no concentration in the Company’s accounts receivable. Convertible notes - fair value option The Company has elected the fair value option to account for the Notes that were issued in June 2022, discussed further in Note 6. The Company recorded the Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss with the exception of changes in fair value due to instrument-specific credit risk, which are recorded as a component of other comprehensive income. Interest expense related to the Notes is included in the changes in fair value. As a result of applying the fair value option, direct costs and fees related to the Notes were not deferred and, therefore, expensed as incurred as a component of general and administrative expenses. Revenue recognition The Company’s revenue is generated from the sale of products (hearing aid systems and related accessories) and services (extended warranties). These products and services are primarily sold directly to customers through the Eargo website and the Company’s sales representatives. Under ASC 606, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by following a five step process: (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. Identify the contract with a customer . The Company generally considers completion of an Eargo sales order (which requires customer acceptance of the Company’s click-through terms and conditions for website sales and authorization of payment through credit card or another form of payment for sales made over the phone) as a customer contract provided that collection is considered probable. For payments that are not made upfront by credit card, the Company assesses insurance eligibility or customer creditworthiness based on credit checks, payment history, and/or other circumstances. For orders involving insurance payors, the Company validates customer eligibility and potential reimbursement amounts prior to shipping the product. If the criteria to establish a contract with a customer is not met, revenue is not recognized in accordance with ASC 606. Identify the performance obligations in the contract . Product performance obligations include hearing aid systems and related accessories and service performance obligations include extended warranty coverage. The Company also offers customers a one-time replacement of certain components of the hearing aid system for a fee (i.e., “loss and damage policy”), which represents an option with material right. However, as the historical redemption rate under the policy has been low, the option is not accounted for as a separate performance obligation. The Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. The Company has elected to treat shipping and handling activities performed after a customer obtains control of products as a fulfillment activity. Determine the transaction price and allocation to performance obligations . The transaction price in the Company’s customer contracts consists of both fixed and variable consideration. Fixed consideration includes amounts to be contractually billed to the customer while variable consideration may include concessions, product returns, discounts, incentives, or other similar items. Variable consideration is estimated based on contractual terms and historical analysis using specific data for the type of consideration being assessed. • Product Returns The Company’s customer contracts include the 45-day right of return that applies to all products and the extended right of return offered for certain shipments involving insurance payors prior to December 8, 2021 (at which time the Company temporarily ceased accepting insurance benefits as a method of direct payment). Please see caption “DOJ investigation and settlement and claims audits” in Note 1 for more information regarding the extended right of return. To estimate product returns, the Company analyzes various factors, including historical return levels, current economic trends, and insurance coverage. Based on this information, the Company reserves a percentage of product sale revenue and accounts for the estimated impact as a reduction in the transaction price. Consideration paid or payable to a customer that is not for a distinct good or service is accounted for as a reduction of the transaction price and recorded as a reduction in revenue in the period it becomes payable. • Concessions Concessions are generally viewed as any post-execution change to the original agreement between the Company and customer that increase the customer’s rights or the Company’s obligations without a commensurate increase to the consideration due the Company. Concessions may take many forms and include, but are not limited to, (i) accepting returns that are not required under the terms of the original arrangement, (ii) reducing the arrangement fee, and (iii) extending the terms of payment. While the Company granted price concession to its customers with unsubmitted and unpaid claims during the three months ended September 30, 2022 (please see caption “DOJ investigation and settlement and claims audits” in Note 1), the Company does not have an established history of providing concessions to its customers and has determined that no adjustments should made to the transaction price in the Company’s ongoing customer arrangements. However, at each reporting period, the Company will re-evaluate the occurrence and level of materiality of concessions and will assess any potential impact on the transaction price accordingly. Allocate the transaction price to the performance obligations in the contract. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to, historical discounting trends for products and services, gross margin objectives, internal costs, competitor pricing strategies, and industry technology lifecycles. Recognize revenue when or as the Company satisfies a performance obligation . Revenue for products (hearing aid systems and related accessories) is recognized at a point in time, which is generally upon shipment provided all other revenue recognition criteria have been met. Contract costs The Company applies the practical expedient to recognize the incremental costs of obtaining a contract as expense when incurred if the amortization period would be one year or less. These incremental costs include processing fees paid to third-party financing vendors, who provide the Company’s customers with the option to finance their purchases. If a customer elects to utilize this service, the Company receives a non-recourse upfront payment for the product sold, less processing fee withheld by the financing vendor. These processing fees are recognized in cost of revenue in the condensed consolidated statements of operations and comprehensive loss as incurred. Recently adopted accounting pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which is intended to simplify the accounting for income taxes. This standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing standards to improve consistent application. The Company adopted this standard in the fiscal year beginning January 1, 2022 . The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which is intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This standard removes the existing guidance in ASC 470-20 that requires companies to account for cash conversion features and beneficial conversion features in equity separately from the host convertible debt or preferred stock. The Company adopted this standard in the fiscal year beginning January 1, 2022 . The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair value measurements The following table summarizes the Company’s financial liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy: September 30, 2022 Level 1 Level 2 Level 3 Total (in thousands) Liabilities: Convertible notes $ — $ — $ 125,000 $ 125,000 There were no financial assets and liabilities outstanding that were remeasured at fair value on a recurring basis as of December 31, 2021. There were no financial assets outstanding that were remeasured at fair value on a recurring basis as of September 30, 2022. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their short-term nature. The fair value option better reflects the underlying economics of the Notes and their embedded features. The fair value of the Notes is determined based on significant inputs not observable in the market, which represents a level 3 measurement within the fair value hierarchy. The fair value of the Notes is estimated as a combination of the Company’s equity, an option on the Company’s equity valued using the Black-Scholes option pricing model, and a short position in a bond valued under the discounted cash flow model. The following table provides a summary of the change in the estimated fair value of the Notes: Total (in thousands) Balance — December 31, 2021 $ — Fair value of convertible notes upon issuance 100,000 Change in fair value of convertible notes 25,000 Balance — September 30, 2022 $ 125,000 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Components | 4. Balance sheet components Inventories Inventories consist primarily of raw materials related to component parts and finished goods. The following is a summary of the Company’s inventories by category: September 30, December 31, 2022 2021 (in thousands) Raw materials $ 493 $ 1,905 Finished goods 4,460 3,807 Total inventories $ 4,953 $ 5,712 Prepaid expenses and other current assets Prepaid expenses and other current assets consist of the following: September 30, December 31, 2022 2021 (in thousands) Advanced payroll deposits $ 140 $ 3,889 Prepaid insurance fees 1,114 2,945 Prepaid marketing costs 297 1,948 Prepaid software subscription 1,036 1,468 Advance to suppliers 1,000 94 Deferred financing costs 1,054 — Other 417 529 Total prepaid expenses and other current assets $ 5,058 $ 10,873 Property and equipment, net Property and equipment, net, consists of the following: September 30, December 31, 2022 2021 (in thousands) Capitalized software $ 11,587 $ 11,569 Tools and lab equipment 5,813 4,712 Furniture and fixtures 1,677 906 Leasehold improvements 993 861 Computer and equipment 482 401 20,552 18,449 Less accumulated depreciation and amortization ( 11,861 ) ( 8,898 ) Total property and equipment, net $ 8,691 $ 9,551 Depreciation and amortization expense for the three months ended September 30, 2022 and 2021 amounted to $ 1.2 million and $ 1.4 million, respectively, which includes amortization of capitalized software costs of $ 0.9 million and $ 0.8 million, respectively. Depreciation and amortization expense for the nine months ended September 30, 2022 and 2021 amounted to $ 3.6 million and $ 2.8 million, respectively, which includes amortization of capitalized software costs of $ 2.7 million and $ 1.2 million, respectively. Intangible assets, net Intangible assets, net consist of the following: September 30, 2022 Gross carrying value Accumulated amortization Net carrying value (in thousands) Developed technologies $ 1,700 $ 531 $ 1,169 Other 290 242 48 Total intangible assets, net $ 1,990 $ 773 $ 1,217 December 31, 2021 Gross carrying value Accumulated amortization Net carrying value (in thousands) Developed technologies $ 1,700 $ 212 $ 1,488 Other 290 97 193 Total intangible assets, net $ 1,990 $ 309 $ 1,681 Amortization expense was $ 0.2 million and $ 0.5 million for the three and nine months ended September 30, 2022, respectively. The following table summarizes estimated future amortization expense of finite-lived intangible assets, net as of September 30, 2022: Amount (in thousands) Remainder of 2022 $ 154 2023 425 2024 425 2025 213 Total $ 1,217 Accrued expenses Accrued expenses consist of the following: September 30, December 31, 2022 2021 (in thousands) Accrued compensation $ 7,066 $ 4,845 Accrued warranty reserve 3,516 4,014 Refunds due to customers 384 376 Total accrued expenses $ 10,966 $ 9,235 Sales returns reserve The sales returns reserve consists of the following activity: Nine months ended September 30, 2022 2021 (in thousands) Sales returns reserve, beginning balance $ 13,827 $ 4,326 Reduction of revenue 11,637 32,612 Decrease related to Pricing Concession ( 11,263 ) — Utilization of sales returns reserve ( 12,411 ) ( 21,319 ) Sales returns reserve, ending balance $ 1,790 $ 15,619 During the three months ended September 30, 2022, as part of the Pricing Concession, the Company recorded a decrease in its insurance-related sales return reserve of $ 11.3 million related to unsubmitted and unpaid claims, which was reflected as a reduction to revenue in the condensed consolidated statement of operations. Please see caption “DOJ investigation and settlement and claims audits” in Note 1. Allowance for credit losses The allowance for credit losses consists of the following activity: Nine months ended September 30, 2022 2021 (in thousands) Allowance for credit losses, beginning balance $ 4,838 $ 1,868 Charged to expense 524 9,331 Accounts written off, net of recoveries ( 5,267 ) ( 6,628 ) Allowance for credit losses, ending balance $ 95 $ 4,571 Accrued warranty reserve The accrued warranty reserve consists of the following activity: Nine months ended September 30, 2022 2021 (in thousands) Accrued warranty reserve, beginning balance $ 4,014 $ 2,390 Charged to cost of revenue 1,632 2,145 Utilization of accrued warranty reserve ( 2,130 ) ( 973 ) Accrued warranty reserve, ending balance $ 3,516 $ 3,562 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 5. Commitments and contingencies Operating leases In September 2021, the Company entered into a lease agreement, as amended, for office and laboratory space located in San Jose, California. The lease commenced in September 2021 and has a 93 -month term with two 60 -month renewal options, which are not reasonably certain of being exercised. The Company also leases office space in Nashville, Tennessee, with a lease term that expires in March 2023. Variable lease payments are primarily comprised of common area maintenance. The right-of-use asset and corresponding lease liability for the Company’s operating leases were estimated using a weighted-average incremental borrowing rate of 7.7 %. The weighted-average remaining lease term is 6.64 years. For the three and nine months ended September 30, 2022, the Company incurred $ 0.4 million and $ 1.2 million of operating lease costs, respectively. Variable lease payments for operating expenses and costs related to short-term leases were $ 0.2 million for the nine months ended September 30, 2022 and were immaterial for the three months ended September 30, 2022. As of September 30, 2022, undiscounted future minimum lease payments due under the non-cancelable operating leases are as follows: Operating (in thousands) Remainder of 2022 $ 367 2023 1,114 2024 1,081 2025 1,331 2026 1,372 Thereafter 3,607 Total minimum future lease payments 8,872 Present value adjustment for minimum lease commitments ( 2,032 ) Total lease liability $ 6,840 Legal and other contingencies The Company is involved in legal proceedings in the ordinary course of its business and may become involved in additional legal proceedings. Other than those listed below, the Company does not believe that any lawsuits or claims currently pending against it, individually or in the aggregate, are material or will have a material adverse effect on its financial condition, results of operations or cash flows. The Company may enter into settlement discussions, and may enter into settlement agreements, if it believes settlement is in the best interest of the Company and its shareholders. Unless stated otherwise, the matters discussed below, if decided adversely or settled by the Company, individually or in the aggregate, may result in a liability material to the Company’s financial condition, results of operations or cash flows. The Company is also subject to review from federal and state taxing authorities in order to validate the amounts of income, sales and/or use taxes which have been claimed and remitted. The Company has estimated exposure and established reserves for its estimated sales tax audit liability. In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products, when used for their intended purposes, infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in any particular claim. DOJ Investigation and Settlement. On September 21, 2021, the Company was informed that it was the target of a criminal investigation by the DOJ related to insurance reimbursement claims the Company submitted on behalf of its customers covered by various federal employee health plans under the FEHB program. The investigation also pertained to the Company’s role in customer reimbursement claim submissions to federal employee health plans. Additionally, the Company was the subject of an ongoing claims audit by an insurance company that was historically the Company’s largest third-party payor and was informed by such insurance company that the DOJ was the principal contact related to the subject matter of the audit. In addition to such audit, the Company has been subject to a number of other audits of insurance reimbursement claims submitted to additional third-party payors. One of these claims audits did not relate to claims submitted under the FEHB program. On January 4, 2022, the DOJ confirmed to the Company that the investigation had been referred to the Civil Division of the DOJ and the U.S. Attorney’s Office for the Northern District of Texas and the criminal investigation was no longer active. On April 29, 2022, the Company entered into a civil settlement agreement with the U.S. government that resolved the DOJ investigation, including allegations that the Company violated the False Claims Act by knowingly submitting or causing the submission of false claims for payment under the FEHB program during the period from February 1, 2021 through September 22, 2021. The settlement agreement provided for the payment by the Company of approximately $ 34.4 million to the U.S. government and resolved allegations that the Company submitted or caused the submission of claims for payment to the FEHB program using unsupported hearing loss-related diagnostic codes. As of December 31, 2021, the Company recorded a $ 34.4 million settlement liability in the condensed consolidated balance sheets in connection with the settlement. The settlement amount was treated as consideration payable to a customer and was recorded as a reduction in revenue in the third quarter of 2021. On May 2, 2022, the Company paid the settlement amount. The settlement of the investigation may not resolve all of the audits of insurance reimbursement claims by additional third-party payors, and additionally the Company remains subject to a prepayment review of claims by the payor who conducted the Primary Audit. The Company intends to continue to work with applicable third-party payors to establish processes to support any claims that it may submit for reimbursement, and there are no guarantees that the Company will be able to arrive at such acceptable processes or submit future claims in sufficient volume to meaningfully restore or expanded its insurance-based business. Securities Class Action. On October 6, 2021, putative shareholder Joseph Fazio filed a purported securities class action against the Company and certain of its officers, captioned Fazio v. Eargo, Inc., et al. , No. 21-cv-07848 (N.D. Cal. Oct. 6, 2021) (the “Fazio Action”). Plaintiff Fazio alleges that certain of the Company’s disclosures about its business, operations, and prospects, including reimbursements from third-party payors, violated federal securities laws. Fazio voluntarily dismissed his complaint on December 6, 2021. On November 4, 2021, putative shareholder Alden Chung filed a purported class action lawsuit substantially similar to the Fazio Action, captioned Chung v. Eargo, Inc., et al. , No. 21-cv-08597 (N.D. Cal. Nov. 4, 2021) (the “Chung Action”). On November 10, 2021, putative shareholder IBEW Local 353 Pension Plan filed a purported class action substantially similar to the Fazio and Chung Actions and also asserting claims under the federal securities laws against current and former members of the Company’s Board of Directors (the “Board of Directors”) and the underwriters of the Company’s October 15, 2020 initial public offering of common stock, captioned IBEW Local 353 Pension Plan v. Eargo, Inc., et al. , No. 21-cv-08747 (N.D. Cal. Nov. 10, 2021) (the “IBEW Action”). These class actions, which seek damages and other relief, were filed in the United States District Court for the Northern District of California. The Fazio and Chung Actions were brought purportedly on behalf of a class of investors who purchased or otherwise acquired Eargo securities between February 25, 2021 and September 22, 2021. The IBEW Local 353 Action was brought purportedly on behalf of a class of investors who purchased or otherwise acquired: (i) Eargo shares in or traceable to the Company’s October 15, 2020 initial public offering of common stock; and/or (ii) shares of Eargo common stock between October 15, 2020 and September 22, 2021. On January 5, 2022, the court consolidated the foregoing class actions (as consolidated, the “Securities Class Action”) under the caption In re Eargo, Inc. Securities Litigation , No. 21-cv-08597-CRB, and appointed IBEW Local 353 Pension Plan and Xiaobin Cai as Lead Plaintiffs and Bernstein Litowitz Berger & Grossmann LLP and Block & Leviton LLP as Lead Counsel. On May 20, 2022, Lead Plaintiffs filed a consolidated amended complaint, which purports to extend the class period through March 2, 2022. Defendants filed a motion to dismiss on July 29, 2022. On September 7, 2022, plaintiffs filed their opposition, and on October 7, 2022, Defendants filed their reply brief in support of their motion to dismiss. A hearing on Defendants’ motion to dismiss is currently scheduled for December 16, 2022. The Company intends to vigorously defend the Securities Class Action and cannot reasonably estimate any loss or range of loss that may arise from the litigation. Accordingly, the Company can provide no assurance as to the scope and outcome of this matter and no assurance as to whether its business, financial position, results of operations, or cash flows will not be materially adversely affected. Derivative Action. On December 3, 2021, putative shareholder Barbara Wolfson filed a derivative complaint purportedly on Eargo’s behalf against members of the Board of Directors and the Company as nominal defendant, captioned Wolfson v. Gormsen , et. al., No. 21-cv-09342 (N.D. Cal. Dec. 3, 2021) (the “ Wolfson Action”). Plaintiff asserts, among other things, that the defendants breached their fiduciary duties by allegedly failing to implement and maintain an effective system of internal controls related to the Company’s financial reporting, public disclosures and compliance with laws, rules and regulations governing the business. Plaintiff purports to assert derivative claims on the Company’s behalf for alleged violations of Section 14(a) of the Securities Exchange Act of 1934, as amended, breach of fiduciary duty, waste of corporate assets, and aiding and abetting. On March 1, 2022, the court entered the parties’ stipulation staying the Wolfson Action until the resolution of the pending motion to dismiss in the Securities Class Action. On June 9, 2022, putative shareholder Brodie Woodward filed a derivative complaint purportedly on Eargo’s behalf against the same defendants as in the Wolfson Action, as well as Juliet Tammenoms Bakker, Adam Laponis, and Geoff Pardo, captioned Woodward v. Gormsen, et al. , No. 22-cv-03419 (N.D. Cal. June 9, 2022) (together with the Wolfson Action, the “Derivative Action”). Plaintiff Woodward asserts substantively similar allegations and causes of action as those asserted in the Wolfson Action. On August 4, 2022, the court granted the parties’ stipulation to consolidate the Derivative Action and to stay the consolidated action until the resolution of the pending motion to dismiss in the Securities Class Action. The defendants intend to vigorously defend the Derivative Action and cannot reasonably estimate any loss or range of loss that may arise from the litigations. Accordingly, the Company can provide no assurance as to the scope and outcome of these matters and no assurance as to whether its business, financial position, results of operations, or cash flows will not be materially adversely affected. Proxy Statement Class Action. On September 14, 2022, putative shareholder Adam C. Wolfe filed a purposed securities class action against members of the Board of Directors and the Company as nominal defendant, captioned Wolfe v. Gormsen, et al. , No. 2022-0812-MTZ (Del. Ch. Sept. 14, 2022) (the “Wolfe Action”). Plaintiff Wolfe asserted, among other things, breaches of fiduciary duty by the Board of Directors in connection with the Note issuance, as well as that the Company’s proxy statement omitted material information concerning the Note issuance. Plaintiff Wolfe sought injunctive relief and attorneys’ fees and costs, among other remedies. Although the Company believes no supplemental disclosures were required under applicable law, to alleviate the costs, risks and uncertainties inherent in litigation, avoid any potential delay in the Company’s annual meeting of stockholders or the Rights Offering and provide additional information to its stockholders, on October 3, 2022, the Company filed a Current Report on Form 8-K to voluntarily supplement its proxy statement disclosures. On October 17, 2022, Plaintiff Wolfe filed a notice of dismissal with the court, which the court granted on October 24, 2022. |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Debt Obligations | 6. Debt obligations 2018 Loan Agreement In June 2018, the Company entered into a Loan and Security Agreement (as subsequently amended, the “2018 Loan Agreement”) with Silicon Valley Bank, as amended in January 2019, May 2020 and September 2020. The Company’s existing subsidiaries were, and any additional future domestic subsidiaries of the Company were required to be, co-borrowers jointly and severally liable under the 2018 Loan Agreement. On June 28, 2022, in connection with the Note Transaction, the Company repaid the outstanding balance of $ 15.0 million, as well as a prepayment fee of $ 0.3 million and a final payment fee of $ 0.9 million, and terminated the 2018 Loan Agreement. In connection with the repayment of the 2018 Loan Agreement, the Company recognized a loss on extinguishment of $ 0.8 million. During the nine months ended September 30, 2022 and 2021, the Company recognized interest expense related to the 2018 Loan Agreement of $ 0.5 million and $ 0.8 million, respectively, which is inclusive of amortization of debt discount. 2022 Convertible Notes On June 24, 2022, the Company entered into the Note Purchase Agreement with an affiliate of Patient Square Capital (together with any subsequent holders of notes under the Note Purchase Agreement, the “Noteholders”) and Drivetrain Agency Services, LLC, as administrative agent and collateral agent. Pursuant to the Note Purchase Agreement, the Company agreed to issue and sell up to $ 125.0 million of Notes. On June 28, 2022, the Company closed the initial issuance of $ 100.0 million of Notes (the “First Tranche Closing”). The Company incurred $ 5.7 million in transaction costs related to the Note Transaction, which were recorded to general and administrative expenses. The Notes mature and will be due in cash at the Repayment Value (as defined below) on the one-year anniversary of the First Tranche Closing, subject to earlier conversion, redemption or repurchase in accordance with their terms (the “Maturity Date”). The “Repayment Value” of any Note on any applicable date means an amount payable such that the annualized return on the initial principal amount, which excludes accrued interest, of the Notes is not less than 12.00 %, or, if greater, an amount equal to 150 % of the initial principal amount of such Note. As of September 30, 2022, based on the outstanding borrowings, the Repayment Value of the Notes was $ 150.0 million. The Notes are senior, secured obligations bearing interest at a rate of 12.00 % per annum, payable quarterly in arrears on the first calendar day of each calendar quarter. Other than on the Maturity Date or any optional redemption date, accrued interest shall be paid in-kind by adding such interest to the outstanding principal of the Notes. The Company may, at its option, repay all (but not a portion) of the Notes outstanding upon three business days’ prior written notice at a price equal to the Repayment Value, and the Note Purchase Agreement does not prohibit the Company from refinancing the Notes with a new equity or debt financing. Upon an event of default, which includes a failure to complete the Rights Offering by December 24, 2022, the violation of certain covenants, and a change in control, the Company can be required to repay the Notes at the Repayment Value. Immediately upon the occurrence and during the continuance of an event of default, the Notes shall bear interest at a rate per annum which is 12.00 % above the rate that is otherwise applicable thereto. Rights offering The Company has agreed to complete a Rights Offering, subject to stockholder approval, for an aggregate of 375.0 million shares of common stock to the Company’s stockholders at an offering price of $ 0.50 per share of common stock. If a Rights Offering is completed within 150 days following the First Tranche Closing, then the Notes will automatically convert into (i) a number of shares of common stock equal to 375.0 million less the number of shares purchased in the Rights Offering by the Company’s stockholders, and (ii) cash in an amount equal to (x) the Repayment Value of Notes outstanding less (y) the Rights Offering Shortfall Amount. The “Rights Offering Shortfall Amount” represents an amount equal to (a) 375.0 million less the number of shares purchased by the Company’s stockholders in the Rights Offering, multiplied by (b) $ 0.50 . If existing stockholders purchase less than 75.0 million shares in the Rights Offering, then the Noteholders have agreed to purchase up to an additional $ 25.0 million of Notes (the “Second Tranche”). If a Rights Offering is completed between 150 days and 180 days following the First Tranche Closing, then the Second Tranche will be issued in full and the Notes will automatically convert into (i) a number of shares of common stock equal to 375.0 million less the number of shares purchased in the Rights Offering by the Company’s stockholders, and (ii) cash in an amount equal to the number of shares purchased by the Company’s stockholders multiplied by $0.50. Covenants and collateral The Notes are collateralized by substantially all the assets of the Company, including intellectual property. The Note Purchase Agreement contains various affirmative and restrictive covenants, including with respect to the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, as well as requiring the Company to maintain a minimum of $ 40.0 million of cash and cash equivalents. The Company was in compliance with all of the covenants as of September 30, 2022 . |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-based Compensation | 7. Stock-based compensation Total stock-based compensation is as follows: Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 (in thousands) Cost of revenue $ 35 $ 104 $ 94 $ 403 Research and development 707 1,584 1,142 3,751 Sales and marketing 642 1,841 1,975 5,595 General and administrative 1,673 1,949 4,381 6,101 Total stock-based compensation $ 3,057 $ 5,478 $ 7,592 $ 15,850 Stock-based compensation recorded to research and development expenses during the nine months ended September 30, 2022 included a decrease in cumulative compensation cost recorded for performance-based restricted stock units of $ 1.1 million as further discussed below. No stock-based compensation costs have been capitalized during the nine months ended September 30, 2022. Stock-based compensation costs capitalized as part of capitalized software costs was $ 0.2 million and $ 0.7 million during the three and nine months ended September 30, 2021, respectively. Equity incentive plans As of September 30, 2022, 4,737,428 shares of common stock were issuable upon the exercise of outstanding awards under the 2010 Equity Incentive Plan. As of September 30, 2022, the Company had reserved 9,307,482 shares of common stock for issuance under the 2020 Equity Incentive Plan (the “2020 Plan”), of which 5,144,707 were available for issuance in connection with grants of future awards. As a result of the uncertainty created by the DOJ investigation and the claims audits, on November 9, 2021, the Company temporarily restricted its employees from selling Company common stock, ceased granting stock option awards and restricted stock units (“RSUs”) that settle solely in Company common stock, suspended its ESPP and paused the settlement of outstanding RSUs, each effective as of November 9, 2021. The Company resumed granting RSUs on March 18, 2022 and RSUs that vested on November 15, 2021 were settled in cash during the first quarter of 2022. All RSUs that vested during the nine months ended September 30, 2022 were settled in shares during the reporting period. The Company resumed granting stock option awards on August 23, 2022. As of September 30, 2022, all outstanding equity awards continue to vest in accordance with their existing vesting schedules. Stock options Stock option activity for the nine months ended September 30, 2022 is set forth below: Number of Weighted Weighted Aggregate (in years) (in thousands) Balance December 31, 2021 5,406,815 $ 4.87 7.88 $ 12,860 Grants 448,830 2.48 Exercises ( 57,946 ) 2.31 Cancelled/forfeited ( 332,577 ) 5.14 Balance September 30, 2022 5,465,122 $ 4.69 6.51 $ 3,160 Vested and exercisable at September 30, 2022 3,571,439 $ 3.70 5.99 $ 3,160 The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2022 and 2021 was $ 1.34 per share and $ 25.94 per share, respectively. The aggregate intrinsic values of options outstanding and vested and exercisable were calculated as the excess of the exercise price of the options over the fair value of the Company’s common stock, if any. As of September 30, 2022, the unrecognized stock-based compensation related to outstanding unvested stock options was $ 7.7 million, which the Company expects to recognize over a remaining weighted-average period of approximately 1.7 years. Restricted stock units RSUs granted under the 2020 Plan represent share-based awards that generally entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s service to the Company terminates prior to the satisfaction of the vesting restrictions. RSU activity for the nine months ended September 30, 2022 is set forth below: Number of Weighted average Balance December 31, 2021 348,451 $ 43.19 RSUs granted 3,221,920 3.32 RSUs vested ( 74,166 ) 46.60 RSUs forfeited ( 217,470 ) 11.21 Balance September 30, 2022 3,278,735 $ 6.02 As of September 30, 2022, total unrecognized stock-based compensatio n related to unvested RSUs was $ 17.9 million, which the Company expects to recognize over a remaining weighted-average period of approximately 3.55 years. Performance-based restricted stock units In June 2021, the Company granted 80,000 RSUs with performance-based vesting conditions that primarily related to the achievement of certain minimum sales of Eargo hearing aid systems and that must be met by December 31, 2022 for the awards to vest. The grant date fair value of the awards was $ 3.0 million, and the Company previously estimated that all vesting conditions were probable of being satisfied through March 31, 2022. As of June 30, 2022, the vesting conditions associated with 75 % of the awards were concluded to be improbable of being satisfied, and the Company recorded a reduction in cumulative compensation cost of $ 1.1 million during the three months then ended. None of these awards have vested or were forfeited and the probability assessment remained unchanged as of September 30, 2022. Employee stock purchase plan As of September 30, 2022, the Company reserved 1,502,310 shares of common stock for issuance under the ESPP, of which 1,327,567 were available for future issuance. The ESPP provides for consecutive, overlapping 24-month offering periods, which are generally divided into four purchase periods of approximately six months. The offering periods are scheduled to start on the first trading day on or after May 16 and November 16 of each year. Contributions under the ESPP are generally limited to a maximum of 15 % of an employee’s eligible compensation. Each offering period consists of four six-month purchase periods. On each purchase date, which falls on the last date of each purchase period, ESPP participants will purchase shares of common stock at a price per share equal to 85 % of the lesser of (1) the fair market value per share of the common stock at the start of the offering period or (2) the fair market value of the common stock on the purchase date. The ESPP was suspended on November 9, 2021, and there were no offering periods in effect through September 30, 2022. |
Net Loss Per Share Attributable
Net Loss Per Share Attributable To Common Stockholders | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share Attributable To Common Stockholders | 8. Net loss per share attributable to common stockholders The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share for the periods presented due to their anti-dilutive effect: Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Common stock options issued and 5,465,122 5,543,234 5,465,122 5,543,234 Restricted stock units 3,358,735 479,665 3,358,735 479,665 Convertible notes 375,000,000 328,625 375,000,000 328,625 Total 383,823,857 6,351,524 383,823,857 6,351,524 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | 9. Subsequent Events In October 2022, the Company amended its Amended and Restated Certificate of Incorporation to increase the number of authorized shares of its common stock to a total of 450,000,000 shares. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting of Eargo, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, include all adjustments of a normal recurring nature necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations and cash flows. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on May 13, 2022. |
Use of Estimates | Use of estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying unaudited condensed consolidated financial statements include, but are not limited to, the sales returns reserve, the present value of lease liabilities, the fair value of equity securities, the fair value of financial instruments, the allowance for credit losses, the net realizable value of inventory, the fair value of assets acquired in a business combination, the useful lives of long-lived assets, accrued product warranty reserve, legal and other contingencies, certain other accruals and recoverability of the Company’s net deferred tax assets and the related valuation allowance. Management periodically evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates. |
Concentration of Credit Risk | Concentration of credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of demand deposit accounts, money market accounts and accounts receivable, including credit card receivables. The Company maintains its cash and cash equivalents, which may, at times, exceed federally insured limits, with financial institutions of high credit standing. As of September 30, 2022, the Company has not experienced any losses on its deposit accounts and money market accounts. As of September 30, 2022, the Company does not believe there is significant financial risk from nonperformance by the issuers of the Company’s deposit accounts and money market accounts. Approximately 93 % of the Company’s gross accounts receivable as of December 31, 2021 were for customers with insurance benefits, substantially all of whom were covered under the FEHB program. Furthermore, approximately 90 % of the Company’s gross accounts receivable as of December 31, 2021 were related to shipments of Eargo hearing aids to customers insured under a single insurance plan whose claims are processed through the Company’s largest third-party payor, which conducted the Primary Audit. The Company remains subject to a prepayment review of claims by the payor who conducted the Primary Audit. Please see caption “DOJ investigation and settlement and claims audits” in Note 1 for more information regarding the DOJ investigation and claims audits. As of September 30, 2022, subsequent to the Pricing Concession, there was no concentration in the Company’s accounts receivable. |
Convertible Notes - Fair Value Option | Convertible notes - fair value option The Company has elected the fair value option to account for the Notes that were issued in June 2022, discussed further in Note 6. The Company recorded the Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss with the exception of changes in fair value due to instrument-specific credit risk, which are recorded as a component of other comprehensive income. Interest expense related to the Notes is included in the changes in fair value. As a result of applying the fair value option, direct costs and fees related to the Notes were not deferred and, therefore, expensed as incurred as a component of general and administrative expenses. |
Revenue Recognition | Revenue recognition The Company’s revenue is generated from the sale of products (hearing aid systems and related accessories) and services (extended warranties). These products and services are primarily sold directly to customers through the Eargo website and the Company’s sales representatives. Under ASC 606, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by following a five step process: (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. Identify the contract with a customer . The Company generally considers completion of an Eargo sales order (which requires customer acceptance of the Company’s click-through terms and conditions for website sales and authorization of payment through credit card or another form of payment for sales made over the phone) as a customer contract provided that collection is considered probable. For payments that are not made upfront by credit card, the Company assesses insurance eligibility or customer creditworthiness based on credit checks, payment history, and/or other circumstances. For orders involving insurance payors, the Company validates customer eligibility and potential reimbursement amounts prior to shipping the product. If the criteria to establish a contract with a customer is not met, revenue is not recognized in accordance with ASC 606. Identify the performance obligations in the contract . Product performance obligations include hearing aid systems and related accessories and service performance obligations include extended warranty coverage. The Company also offers customers a one-time replacement of certain components of the hearing aid system for a fee (i.e., “loss and damage policy”), which represents an option with material right. However, as the historical redemption rate under the policy has been low, the option is not accounted for as a separate performance obligation. The Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. The Company has elected to treat shipping and handling activities performed after a customer obtains control of products as a fulfillment activity. Determine the transaction price and allocation to performance obligations . The transaction price in the Company’s customer contracts consists of both fixed and variable consideration. Fixed consideration includes amounts to be contractually billed to the customer while variable consideration may include concessions, product returns, discounts, incentives, or other similar items. Variable consideration is estimated based on contractual terms and historical analysis using specific data for the type of consideration being assessed. • Product Returns The Company’s customer contracts include the 45-day right of return that applies to all products and the extended right of return offered for certain shipments involving insurance payors prior to December 8, 2021 (at which time the Company temporarily ceased accepting insurance benefits as a method of direct payment). Please see caption “DOJ investigation and settlement and claims audits” in Note 1 for more information regarding the extended right of return. To estimate product returns, the Company analyzes various factors, including historical return levels, current economic trends, and insurance coverage. Based on this information, the Company reserves a percentage of product sale revenue and accounts for the estimated impact as a reduction in the transaction price. Consideration paid or payable to a customer that is not for a distinct good or service is accounted for as a reduction of the transaction price and recorded as a reduction in revenue in the period it becomes payable. • Concessions Concessions are generally viewed as any post-execution change to the original agreement between the Company and customer that increase the customer’s rights or the Company’s obligations without a commensurate increase to the consideration due the Company. Concessions may take many forms and include, but are not limited to, (i) accepting returns that are not required under the terms of the original arrangement, (ii) reducing the arrangement fee, and (iii) extending the terms of payment. While the Company granted price concession to its customers with unsubmitted and unpaid claims during the three months ended September 30, 2022 (please see caption “DOJ investigation and settlement and claims audits” in Note 1), the Company does not have an established history of providing concessions to its customers and has determined that no adjustments should made to the transaction price in the Company’s ongoing customer arrangements. However, at each reporting period, the Company will re-evaluate the occurrence and level of materiality of concessions and will assess any potential impact on the transaction price accordingly. Allocate the transaction price to the performance obligations in the contract. For contracts that contain multiple performance obligations, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. Standalone selling prices are based on multiple factors including, but not limited to, historical discounting trends for products and services, gross margin objectives, internal costs, competitor pricing strategies, and industry technology lifecycles. Recognize revenue when or as the Company satisfies a performance obligation . Revenue for products (hearing aid systems and related accessories) is recognized at a point in time, which is generally upon shipment provided all other revenue recognition criteria have been met. Contract costs The Company applies the practical expedient to recognize the incremental costs of obtaining a contract as expense when incurred if the amortization period would be one year or less. These incremental costs include processing fees paid to third-party financing vendors, who provide the Company’s customers with the option to finance their purchases. If a customer elects to utilize this service, the Company receives a non-recourse upfront payment for the product sold, less processing fee withheld by the financing vendor. These processing fees are recognized in cost of revenue in the condensed consolidated statements of operations and comprehensive loss as incurred. |
Recently Adopted Accounting Pronouncements | Recently adopted accounting pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which is intended to simplify the accounting for income taxes. This standard removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing standards to improve consistent application. The Company adopted this standard in the fiscal year beginning January 1, 2022 . The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which is intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This standard removes the existing guidance in ASC 470-20 that requires companies to account for cash conversion features and beneficial conversion features in equity separately from the host convertible debt or preferred stock. The Company adopted this standard in the fiscal year beginning January 1, 2022 . The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Financial Liabilities Measured at Fair Value on Recurring Basis | The following table summarizes the Company’s financial liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy: September 30, 2022 Level 1 Level 2 Level 3 Total (in thousands) Liabilities: Convertible notes $ — $ — $ 125,000 $ 125,000 |
2022 Convertible Notes | |
Summary of Change in the Estimated Fair Value | The following table provides a summary of the change in the estimated fair value of the Notes: Total (in thousands) Balance — December 31, 2021 $ — Fair value of convertible notes upon issuance 100,000 Change in fair value of convertible notes 25,000 Balance — September 30, 2022 $ 125,000 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Summary of Inventories | Inventories consist primarily of raw materials related to component parts and finished goods. The following is a summary of the Company’s inventories by category: September 30, December 31, 2022 2021 (in thousands) Raw materials $ 493 $ 1,905 Finished goods 4,460 3,807 Total inventories $ 4,953 $ 5,712 |
Summary of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: September 30, December 31, 2022 2021 (in thousands) Advanced payroll deposits $ 140 $ 3,889 Prepaid insurance fees 1,114 2,945 Prepaid marketing costs 297 1,948 Prepaid software subscription 1,036 1,468 Advance to suppliers 1,000 94 Deferred financing costs 1,054 — Other 417 529 Total prepaid expenses and other current assets $ 5,058 $ 10,873 |
Summary of Property And Equipment, Net | Property and equipment, net, consists of the following: September 30, December 31, 2022 2021 (in thousands) Capitalized software $ 11,587 $ 11,569 Tools and lab equipment 5,813 4,712 Furniture and fixtures 1,677 906 Leasehold improvements 993 861 Computer and equipment 482 401 20,552 18,449 Less accumulated depreciation and amortization ( 11,861 ) ( 8,898 ) Total property and equipment, net $ 8,691 $ 9,551 |
Summary of Intangible Assets, Net | Intangible assets, net consist of the following: September 30, 2022 Gross carrying value Accumulated amortization Net carrying value (in thousands) Developed technologies $ 1,700 $ 531 $ 1,169 Other 290 242 48 Total intangible assets, net $ 1,990 $ 773 $ 1,217 December 31, 2021 Gross carrying value Accumulated amortization Net carrying value (in thousands) Developed technologies $ 1,700 $ 212 $ 1,488 Other 290 97 193 Total intangible assets, net $ 1,990 $ 309 $ 1,681 |
Summary of Estimated Future Amortization Expense of Finite-lived Intangible Assets, Net | The following table summarizes estimated future amortization expense of finite-lived intangible assets, net as of September 30, 2022: Amount (in thousands) Remainder of 2022 $ 154 2023 425 2024 425 2025 213 Total $ 1,217 |
Summary of Accrued Expenses | Accrued expenses consist of the following: September 30, December 31, 2022 2021 (in thousands) Accrued compensation $ 7,066 $ 4,845 Accrued warranty reserve 3,516 4,014 Refunds due to customers 384 376 Total accrued expenses $ 10,966 $ 9,235 |
Summary of Sales Returns Reserve | The sales returns reserve consists of the following activity: Nine months ended September 30, 2022 2021 (in thousands) Sales returns reserve, beginning balance $ 13,827 $ 4,326 Reduction of revenue 11,637 32,612 Decrease related to Pricing Concession ( 11,263 ) — Utilization of sales returns reserve ( 12,411 ) ( 21,319 ) Sales returns reserve, ending balance $ 1,790 $ 15,619 |
Summary of Allowance for Credit Losses | The allowance for credit losses consists of the following activity: Nine months ended September 30, 2022 2021 (in thousands) Allowance for credit losses, beginning balance $ 4,838 $ 1,868 Charged to expense 524 9,331 Accounts written off, net of recoveries ( 5,267 ) ( 6,628 ) Allowance for credit losses, ending balance $ 95 $ 4,571 |
Summary of Accrued Warranty Reserve | The accrued warranty reserve consists of the following activity: Nine months ended September 30, 2022 2021 (in thousands) Accrued warranty reserve, beginning balance $ 4,014 $ 2,390 Charged to cost of revenue 1,632 2,145 Utilization of accrued warranty reserve ( 2,130 ) ( 973 ) Accrued warranty reserve, ending balance $ 3,516 $ 3,562 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Undiscounted Future Minimum Lease Payments Due under Non-cancelable Operating Leases | As of September 30, 2022, undiscounted future minimum lease payments due under the non-cancelable operating leases are as follows: Operating (in thousands) Remainder of 2022 $ 367 2023 1,114 2024 1,081 2025 1,331 2026 1,372 Thereafter 3,607 Total minimum future lease payments 8,872 Present value adjustment for minimum lease commitments ( 2,032 ) Total lease liability $ 6,840 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Total Stock-based Compensation | Total stock-based compensation is as follows: Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 (in thousands) Cost of revenue $ 35 $ 104 $ 94 $ 403 Research and development 707 1,584 1,142 3,751 Sales and marketing 642 1,841 1,975 5,595 General and administrative 1,673 1,949 4,381 6,101 Total stock-based compensation $ 3,057 $ 5,478 $ 7,592 $ 15,850 |
Summary of Stock Option Activity | Stock option activity for the nine months ended September 30, 2022 is set forth below: Number of Weighted Weighted Aggregate (in years) (in thousands) Balance December 31, 2021 5,406,815 $ 4.87 7.88 $ 12,860 Grants 448,830 2.48 Exercises ( 57,946 ) 2.31 Cancelled/forfeited ( 332,577 ) 5.14 Balance September 30, 2022 5,465,122 $ 4.69 6.51 $ 3,160 Vested and exercisable at September 30, 2022 3,571,439 $ 3.70 5.99 $ 3,160 |
Schedule of RSU Activity | RSU activity for the nine months ended September 30, 2022 is set forth below: Number of Weighted average Balance December 31, 2021 348,451 $ 43.19 RSUs granted 3,221,920 3.32 RSUs vested ( 74,166 ) 46.60 RSUs forfeited ( 217,470 ) 11.21 Balance September 30, 2022 3,278,735 $ 6.02 |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable To Common Stockholders (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Summary of Outstanding Potentially Dilutive Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share | The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share for the periods presented due to their anti-dilutive effect: Three months ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Common stock options issued and 5,465,122 5,543,234 5,465,122 5,543,234 Restricted stock units 3,358,735 479,665 3,358,735 479,665 Convertible notes 375,000,000 328,625 375,000,000 328,625 Total 383,823,857 6,351,524 383,823,857 6,351,524 |
Description of Business - Addit
Description of Business - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Apr. 29, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Jun. 28, 2022 | Jun. 24, 2022 | Dec. 31, 2021 | Sep. 21, 2021 | |
Description Of Business [Line Items] | ||||||||
Insurance claims received under FEHB program | $ 44,000 | |||||||
Unsubmitted and unpaid claims | $ 16,100 | $ 16,100 | ||||||
Reduction in insurance related accounts receivable | 16,100 | 16,100 | ||||||
Reduction in insurance related revenue from contracts with customer | 11,600 | 11,600 | ||||||
Reduction in insurance related allowance for doubtful accounts receivable | 4,500 | 4,500 | ||||||
Reduction in revenue related to unpaid claims | 11,300 | 11,263 | ||||||
Increase in insurance related revenue from contracts with customer | 11,300 | 11,300 | ||||||
Reduction in net revenue | 300 | 300 | ||||||
Cash and cash equivalents | 88,075 | 88,075 | $ 110,500 | |||||
Accumulated deficit | 470,528 | 470,528 | 356,812 | |||||
Civil Settlement Agreement | ||||||||
Description Of Business [Line Items] | ||||||||
Settlement liability | $ 34,400 | |||||||
Civil Settlement Agreement | U.S. Government | ||||||||
Description Of Business [Line Items] | ||||||||
Settlement Liability | $ 34,400 | |||||||
2022 Convertible Notes | ||||||||
Description Of Business [Line Items] | ||||||||
Cash and cash equivalents | $ 40,000 | $ 40,000 | ||||||
Debt issuance amount | $ 125,000 | |||||||
2022 Convertible Notes | Note Purchase Agreement | ||||||||
Description Of Business [Line Items] | ||||||||
Debt instrument maximum Issuance amount | $ 125,000 | |||||||
Debt issuance amount | $ 100,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2021 | Sep. 30, 2022 | |
ASU 2019-12 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Change In Accounting Principle Accounting Standards Update Adoption Date | Jan. 01, 2022 | |
Change In Accounting Principle Accounting Standards Update Adopted | true | |
Change In Accounting Principle Accounting Standards Update Immaterial Effect | true | |
ASU 2020-06 | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Change In Accounting Principle Accounting Standards Update Adoption Date | Jan. 01, 2022 | |
Change In Accounting Principle Accounting Standards Update Adopted | true | |
Change In Accounting Principle Accounting Standards Update Immaterial Effect | true | |
Accounts Receivable | Credit Concentration Risk | FEHB | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Concentration risk, percentage | 93% | |
Accounts Receivable | Credit Concentration Risk | Eargo Hearing Aids | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Concentration risk, percentage | 90% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Financial Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Liabilities: | ||
Liabilities | $ 0 | |
Fair Value on Recurring Basis | Convertible Notes | ||
Liabilities: | ||
Liabilities | $ 125,000,000 | |
Fair Value on Recurring Basis | Level 3 | Convertible Notes | ||
Liabilities: | ||
Liabilities | $ 125,000,000 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value Disclosures [Abstract] | ||
Financial assets outstanding | $ 0 | $ 0 |
Financial liabilities outstanding | $ 0 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Change in the Estimated Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Change in fair value of convertible notes | $ (25,000) | $ (25,000) |
2022 Convertible Notes | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of convertible notes upon issuance | 100,000 | |
Change in fair value of convertible notes | 25,000 | |
Balance — September 30, 2022 | $ 125,000 | $ 125,000 |
Balance Sheet Components - Summ
Balance Sheet Components - Summary of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 493 | $ 1,905 |
Finished goods | 4,460 | 3,807 |
Total inventories | $ 4,953 | $ 5,712 |
Balance Sheet Components - Su_2
Balance Sheet Components - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Advanced payroll deposits | $ 140 | $ 3,889 |
Prepaid insurance fees | 1,114 | 2,945 |
Prepaid marketing costs | 297 | 1,948 |
Prepaid software subscription | 1,036 | 1,468 |
Advance to suppliers | 1,000 | 94 |
Deferred financing costs | 1,054 | |
Other | 417 | 529 |
Total prepaid expenses and other current assets | $ 5,058 | $ 10,873 |
Balance Sheet Components - Su_3
Balance Sheet Components - Summary of Property And Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | $ 20,552 | $ 18,449 |
Less accumulated depreciation and amortization | (11,861) | (8,898) |
Total property and equipment, net | 8,691 | 9,551 |
Capitalized Software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 11,587 | 11,569 |
Tools and Lab Equipment | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 5,813 | 4,712 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 1,677 | 906 |
Leasehold Improvements | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 993 | 861 |
Computer and Equipment | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | $ 482 | $ 401 |
Balance Sheet Components - Addi
Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Property Plant And Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 1,200 | $ 1,400 | $ 3,600 | $ 2,800 |
Amortization of capitalized software costs | 900 | $ 800 | 2,700 | $ 1,200 |
Amortization expense | 200 | 500 | ||
Reduction in revenue related to unpaid claims | $ 11,300 | $ 11,263 |
Balance Sheet Components - Su_4
Balance Sheet Components - Summary of Intangible Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite Lived Intangible Assets [Line Items] | ||
Gross carrying value | $ 1,990 | $ 1,990 |
Accumulated amortization | 773 | 309 |
Net carrying value | 1,217 | 1,681 |
Developed Technologies | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross carrying value | 1,700 | 1,700 |
Accumulated amortization | 531 | 212 |
Net carrying value | 1,169 | 1,488 |
Other | ||
Finite Lived Intangible Assets [Line Items] | ||
Gross carrying value | 290 | 290 |
Accumulated amortization | 242 | 97 |
Net carrying value | $ 48 | $ 193 |
Balance Sheet Components - Su_5
Balance Sheet Components - Summary of Estimated Future Amortization Expense of Finite-lived Intangible Assets, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Remainder of 2022 | $ 154 | |
2023 | 425 | |
2024 | 425 | |
2025 | 213 | |
Net carrying value | $ 1,217 | $ 1,681 |
Balance Sheet Components - Su_6
Balance Sheet Components - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Accrued compensation | $ 7,066 | $ 4,845 |
Accrued warranty reserve | 3,516 | 4,014 |
Refunds due to customers | 384 | 376 |
Total accrued expenses | $ 10,966 | $ 9,235 |
Balance Sheet Components - Su_7
Balance Sheet Components - Summary of Sales Returns Reserve (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||
Sales returns reserve, beginning balance | $ 13,827 | $ 4,326 | |
Reduction of revenue | 11,637 | 32,612 | |
Decrease related to Pricing Concession | $ (11,300) | (11,263) | |
Utilization of sales returns reserve | (12,411) | (21,319) | |
Sales returns reserve, ending balance | $ 1,790 | $ 1,790 | $ 15,619 |
Balance Sheet Components - Su_8
Balance Sheet Components - Summary of Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Receivables [Abstract] | ||
Allowance for credit losses, beginning balance | $ 4,838 | $ 1,868 |
Charged to expense | 524 | 9,331 |
Accounts written off, net of recoveries | (5,267) | (6,628) |
Allowance for credit losses, ending balance | $ 95 | $ 4,571 |
Balance Sheet Components - Su_9
Balance Sheet Components - Summary of Accrued Warranty Reserve (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Accrued warranty reserve, beginning balance | $ 4,014 | $ 2,390 |
Charged to cost of revenue | 1,632 | 2,145 |
Utilization of accrued warranty reserve | (2,130) | (973) |
Accrued warranty reserve, ending balance | $ 3,516 | $ 3,562 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 29, 2022 USD ($) | Sep. 30, 2021 Option | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Commitments And Contingencies [Line Items] | |||||
Operating lease, term of contract | 93 months | ||||
Operating lease, renewal term | 60 months | ||||
Operating lease number of renewal options | Option | 2 | ||||
ROU asset and operating lease liability, weighted-average incremental borrowing rate | 7.70% | 7.70% | |||
Operating lease, weighted-average remaining lease term | 6 years 7 months 20 days | 6 years 7 months 20 days | |||
Operating lease costs | $ 400 | $ 1,200 | |||
Variable lease payments for operating expenses and costs related to short-term leases | $ 200 | ||||
Settlement liability | $ 34,372 | ||||
Civil Settlement Agreement | |||||
Commitments And Contingencies [Line Items] | |||||
Settlement liability | $ 34,400 | ||||
Civil Settlement Agreement | U.S. Government | |||||
Commitments And Contingencies [Line Items] | |||||
Settlement Liability | $ 34,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Undiscounted Future Minimum Lease Payments Due under Non-cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Remainder of 2022 | $ 367 |
2023 | 1,114 |
2024 | 1,081 |
2025 | 1,331 |
2026 | 1,372 |
Thereafter | 3,607 |
Total minimum future lease payments | 8,872 |
Present value adjustment for minimum lease commitments | (2,032) |
Total lease liability | $ 6,840 |
Debt Obligations - Additional I
Debt Obligations - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Jun. 28, 2022 | Jun. 24, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 772 | |||||
Interest expense | $ 269 | 549 | $ 798 | |||
Cash and cash equivalents | 88,075 | $ 110,500 | ||||
Amendments 2018 Loan Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Repayments on outstanding debt | $ 15,000 | |||||
Prepayment fee | 300 | |||||
Final payment fee | 900 | |||||
Loss on extinguishment of debt | 800 | |||||
Interest expense | 500 | $ 800 | ||||
2022 Convertible Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt issuance amount | $ 125,000 | |||||
Interest rate | 12% | |||||
Increase in interest rate | 12% | |||||
Repayment value of outstanding notes | 150,000 | |||||
Cash and cash equivalents | $ 40,000 | |||||
Covenant compliance | The Company was in compliance with all of the covenants as of September 30, 2022 | |||||
2022 Convertible Notes | Rights Offering | ||||||
Debt Instrument [Line Items] | ||||||
Issuance of shares | 375,000,000 | |||||
Common stock offering price per share | $ 0.50 | |||||
2022 Convertible Notes | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate | 12% | |||||
2022 Convertible Notes | Minimum | Rights Offering | ||||||
Debt Instrument [Line Items] | ||||||
Issuance of shares | 375,000,000 | |||||
2022 Convertible Notes | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Percentage of initial principal amount | 150% | |||||
2022 Convertible Notes | General And Administrative Expense | ||||||
Debt Instrument [Line Items] | ||||||
Note transaction cost incurred | $ 5,700 | |||||
2022 Convertible Notes | First Tranche | ||||||
Debt Instrument [Line Items] | ||||||
Debt issuance amount | $ 100,000 | |||||
2022 Convertible Notes | First Tranche | Rights Offering | ||||||
Debt Instrument [Line Items] | ||||||
Issuance of shares | 375,000,000 | |||||
Common stock offering price per share | $ 0.50 | |||||
2022 Convertible Notes | Second Tranche | Maximum | Rights Offering | ||||||
Debt Instrument [Line Items] | ||||||
Issuance of shares | 75,000,000 | |||||
Additional issuance of shares | 25,000,000 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Total Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 3,057 | $ 5,478 | $ 7,592 | $ 15,850 |
Cost of Revenue | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 35 | 104 | 94 | 403 |
Research and Development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 707 | 1,584 | 1,142 | 3,751 |
Sales and Marketing | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 642 | 1,841 | 1,975 | 5,595 |
General and Administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 1,673 | $ 1,949 | $ 4,381 | $ 6,101 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2021 | Oct. 31, 2020 | Jun. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock-based compensation costs capitalized | $ 200 | $ 0 | $ 748 | |||
Shares of common stock issuable upon exercise of outstanding awards | 3,571,439 | |||||
Options granted | 448,830 | |||||
Weighted-average grant-date fair value of options granted | $ 1.34 | $ 25.94 | ||||
Unrecognized stock-based compensation related to outstanding unvested stock options | $ 7,700 | |||||
Unrecognized stock-based compensation related to outstanding unvested stock options, period of recognition | 1 year 8 months 12 days | |||||
Restricted Stock Units (RSUs) | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Unrecognized stock-based compensation related to outstanding unvested stock options, period of recognition | 3 years 6 months 18 days | |||||
Unrecognized compensation cost related to the RSUs | $ 17,900 | |||||
Number of shares, RSUs granted | 3,221,920 | |||||
Number of shares, RSUs vested | 74,166 | |||||
Number of shares, RSUs forfeited | 217,470 | |||||
Performance-based Restricted Stock Units | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of shares, RSUs granted | 80,000 | |||||
Share-based compensation arrangement by share-based payment award, award vesting rights, percentage | 75% | |||||
Share based cumulative compensation | $ 1,100 | $ 1,100 | ||||
Share-based compensation, options grants in period, grant date fair value | $ 3,000 | |||||
Number of shares, RSUs vested | 0 | |||||
Number of shares, RSUs forfeited | 0 | |||||
2010 Equity Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Shares of common stock issuable upon exercise of outstanding awards | 4,737,428 | |||||
2020 Equity Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Common stock reserved for issuance | 9,307,482 | |||||
Number of shares available for grant | 5,144,707 | |||||
Employee Stock Purchase Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Common stock reserved for issuance | 1,502,310 | |||||
Number of shares available for grant | 1,327,567 | |||||
Employees eligible compensation maximum percentage | 15% | |||||
Purchase shares of common stock at price per share equal to lesser | 85% |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Number of shares, Balance | 5,406,815 | |
Number of shares, Grants | 448,830 | |
Number of shares, Exercises | (57,946) | |
Number of shares, Cancelled/forfeited | (332,577) | |
Number of shares, Balance | 5,465,122 | 5,406,815 |
Number of shares, Vested and exercisable | 3,571,439 | |
Weighted average exercise price, Balance | $ 4.87 | |
Weighted average exercise price, Grants | 2.48 | |
Weighted average exercise price, Exercises | 2.31 | |
Weighted average exercise price, Cancelled/forfeited | 5.14 | |
Weighted average exercise price, Balance | 4.69 | $ 4.87 |
Weighted average exercise price, Vested and exercisable | $ 3.70 | |
Weighted average remaining contractual term, Balance | 6 years 6 months 3 days | 7 years 10 months 17 days |
Weighted average remaining contractual term, Vested and exercisable | 5 years 11 months 26 days | |
Aggregate intrinsic value, Balance | $ 3,160 | $ 12,860 |
Aggregate intrinsic value, Vested and exercisable | $ 3,160 |
Stock-based Compensation - Su_3
Stock-based Compensation - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of shares, Balance | shares | 348,451 |
Number of shares, RSUs granted | shares | 3,221,920 |
Number of shares, RSUs vested | shares | (74,166) |
Number of shares, RSUs forfeited | shares | (217,470) |
Number of shares, Balance | shares | 3,278,735 |
Weighted average grant date fair value per share, Balance | $ / shares | $ 43.19 |
Weighted average grant date fair value per share, RSUs granted | $ / shares | 3.32 |
Weighted average grant date fair value per share, RSUs vested | $ / shares | 46.60 |
Weighted average grant date fair value per share, RSUs forfeited | $ / shares | 11.21 |
Weighted average grant date fair value per share, Balance | $ / shares | $ 6.02 |
Net Loss Per Share Attributab_3
Net Loss Per Share Attributable To Common Stockholders - Summary of Outstanding Potentially Dilutive Common Stock Equivalents Excluded from Calculation of Diluted Net Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 383,823,857 | 6,351,524 | 383,823,857 | 6,351,524 |
Convertible Notes Payable | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 375,000,000 | 328,625 | 375,000,000 | 328,625 |
Common Stock Options Issued and Outstanding | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 5,465,122 | 5,543,234 | 5,465,122 | 5,543,234 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 3,358,735 | 479,665 | 3,358,735 | 479,665 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - shares | Oct. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Subsequent Event [Line Items] | |||
Common stock, shares authorized | 300,000,000 | 110,000,000 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, shares authorized | 450,000,000 |