Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 16, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Eargo, Inc. | ||
Entity Central Index Key | 0001719395 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 | 20,741,841 | ||
Entity Public Float | $ 22,580,118 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Trading Symbol | EAR | ||
Security Exchange Name | NASDAQ | ||
Entity File Number | 001-39616 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 27-3879804 | ||
Entity Address, Address Line One | 2665 North First Street | ||
Entity Address, Address Line Two | Suite 300 | ||
Entity Address, City or Town | San Jose | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 95134 | ||
City Area Code | 650 | ||
Local Phone Number | 351-7700 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
ICFR Auditor Attestation Flag | false | ||
Documents Incorporated by Reference | Portions of the Registrant’s definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed electronically pursuant to Regulation 14A not later than 120 days after the end of the fiscal year ended December 31, 2022, are incorporated herein by reference in Part III. | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Firm ID | 34 | ||
Auditor Location | San Jose, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 101,238 | $ 110,500 |
Accounts receivable, net | 1,910 | 12,547 |
Inventories | 5,036 | 5,712 |
Prepaid expenses and other current assets | 7,846 | 10,873 |
Total current assets | 116,030 | 139,632 |
Operating lease right-of-use assets | 5,765 | 7,165 |
Property and equipment, net | 7,441 | 9,551 |
Intangible assets, net | 1,063 | 1,681 |
Goodwill | 873 | 873 |
Other assets | 906 | 1,209 |
Total assets | 132,078 | 160,111 |
Current liabilities: | ||
Accounts payable | 6,504 | 9,053 |
Accrued expenses | 12,715 | 9,235 |
Sales returns reserves | 3,942 | 13,827 |
Settlement liability | 34,372 | |
Long-term debt, current portion | 3,333 | |
Other current liabilities | 1,462 | 1,813 |
Lease liability, current portion | 628 | 750 |
Total current liabilities | 25,251 | 72,383 |
Lease liability, noncurrent portion | 5,973 | 6,640 |
Long-term debt, noncurrent portion | 11,924 | |
Total liabilities | 31,224 | 90,947 |
Stockholders’ equity (deficit): | ||
Common stock; $0.0001 par value; 450,000,000 and 110,000,000 shares authorized as of December 31, 2022 and December 31, 2021, respectively; 20,726,965 and 1,965,347 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 2 | |
Additional paid in capital | 615,151 | 425,976 |
Accumulated deficit | (514,299) | (356,812) |
Total stockholders' equity | 100,854 | 69,164 |
Total liabilities and stockholders' equity | $ 132,078 | $ 160,111 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 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 | 450,000,000 | 110,000,000 |
Common stock, shares issued | 20,726,965 | 1,965,347 |
Common stock, shares outstanding | 20,726,965 | 1,965,347 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Revenue, net | $ 37,248 | $ 32,122 | $ 69,154 |
Cost of revenue | 22,988 | 27,956 | 21,873 |
Gross profit | 14,260 | 4,166 | 47,281 |
Operating expenses: | |||
Research and development | 18,813 | 25,232 | 12,045 |
Sales and marketing | 52,947 | 85,759 | 49,525 |
General and administrative | 54,259 | 49,882 | 20,582 |
Total operating expenses | 126,019 | 160,873 | 82,152 |
Loss from operations | (111,759) | (156,707) | (34,871) |
Other income (expense), net: | |||
Interest income | 1,196 | 21 | 37 |
Interest expense | (549) | (1,068) | (1,920) |
Other income (expense), net | (1,474) | ||
Change in fair value of convertible notes | (45,503) | (1,471) | |
Loss on extinguishment of debt | (772) | (1,627) | |
Total other income (expense), net | (45,628) | (1,047) | (4,984) |
Loss before income taxes | (157,387) | (157,754) | (39,855) |
Income tax provision | 100 | 0 | 0 |
Net loss and comprehensive loss | (157,487) | (157,754) | (39,855) |
Gain on extinguishment of Series C and Series C-1 convertible preferred stock | 9,840 | ||
Net loss attributable to common stockholders, basic and diluted | $ (157,487) | $ (157,754) | $ (30,015) |
Net loss per share attributable to common stockholders, basic | $ (39.68) | $ (81.11) | $ (76.10) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic | 3,968,432 | 1,944,857 | 394,405 |
Net loss per share attributable to common stockholders, diluted | $ (39.68) | $ (81.11) | $ (76.10) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, diluted | 3,968,432 | 1,944,857 | 394,405 |
Consolidated Statements of Conv
Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Preferred Stock Convertible Preferred Stock | Preferred Stock Series E Convertible Preferred Stock |
Beginning balance at Dec. 31, 2019 | $ (156,103) | $ 3,100 | $ (159,203) | $ 152,880 | ||
Beginning balance, Shares at Dec. 31, 2019 | 13,297 | 591,290 | ||||
Issuance of convertible preferred stock, net of issuance costs | $ 67,267 | |||||
Issuance of convertible preferred stock, net of issuance costs, Shares | 525,696 | |||||
Issuance of convertible preferred stock, upon extinguishment of convertible notes | $ 12,818 | |||||
Issuance of convertible preferred stock, upon extinguishment of convertible notes, Shares | 94,477 | |||||
Gain on extinguishment of Series C and Series C-1 convertible preferred stock | 9,840 | 9,840 | $ (9,840) | |||
Conversion of convertible preferred stock to common stock upon initial public offering, Shares | 1,409,819 | (1,211,463) | ||||
Conversion of convertible preferred stock to common stock upon initial public offering | 223,125 | 223,125 | $ (223,125) | |||
Conversion of convertible preferred stock warrants to common stock warrants upon initial public offering | 1,931 | 1,931 | ||||
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costsand and rights offering | 148,502 | 148,502 | ||||
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costsand and rights offering, Shares | 451,481 | |||||
Exercise of common stock warrants, Shares | 5,389 | |||||
Stock-based compensation | 5,292 | 5,292 | ||||
Exercise of stock options | 1,179 | 1,179 | ||||
Exercise of stock options, Shares | 32,340 | |||||
Net loss and comprehensive loss | (39,855) | (39,855) | ||||
Ending balance at Dec. 31, 2020 | 193,911 | 392,969 | (199,058) | |||
Ending balance, Shares at Dec. 31, 2020 | 1,912,326 | |||||
Stock-based compensation | 28,609 | 28,609 | ||||
Exercise of stock options and release of restricted stock units | 1,724 | 1,724 | ||||
Exercise of stock options and release of restricted stock units, Shares | 44,284 | |||||
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 | 8,737 | |||||
Net loss and comprehensive loss | (157,754) | (157,754) | ||||
Ending balance at Dec. 31, 2021 | 69,164 | 425,976 | (356,812) | |||
Ending balance, Shares at Dec. 31, 2021 | 1,965,347 | |||||
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costsand and rights offering | 27,598 | 27,598 | ||||
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costsand and rights offering, Shares | 2,928,701 | |||||
Stock-based compensation | 9,965 | 9,965 | ||||
Exercise of stock options and release of restricted stock units | 65 | 65 | ||||
Exercise of stock options and release of restricted stock units, Shares | 11,618 | |||||
Tax withholdings on settlement of restricted stock units | (29) | (29) | ||||
Issuance costs | $ 600 | 600 | ||||
Exercise of stock options, Shares | 3,026 | |||||
Conversion of convertible notes | $ 150,978 | $ 2 | 150,976 | |||
Conversion of convertible notes, Shares | 15,821,299 | |||||
Net loss and comprehensive loss | (157,487) | (157,487) | ||||
Ending balance at Dec. 31, 2022 | $ 100,854 | $ 2 | $ 615,151 | $ (514,299) | ||
Ending balance, Shares at Dec. 31, 2022 | 20,726,965 |
Consolidated Statements of Co_2
Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2020 | |
Net of underwriting discounts and commissions and other offering costs and rights offering | $ 1,689 | |
Initial Public Offering | ||
Net of underwriting discounts and commissions and other offering costs and rights offering | $ 14,031 | |
Series E Convertible Preferred Stock | ||
Convertible preferred stock, issuance costs | $ 4,056 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities: | |||
Net loss | $ (157,487,000) | $ (157,754,000) | $ (39,855,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 5,458,000 | 4,202,000 | 2,525,000 |
Stock-based compensation | 9,965,000 | 27,731,000 | 5,089,000 |
Non-cash interest expense and amortization of debt discount | 209,000 | 420,000 | 1,513,000 |
Debt issuance costs from convertible notes | 5,742,000 | ||
Change in fair value of convertible notes | 45,503,000 | 1,471,000 | |
Loss on extinguishment of debt | 772,000 | 1,627,000 | |
Non-cash operating lease expense | 1,050,000 | 1,063,000 | 1,128,000 |
Bad debt expense | 713,000 | 9,615,000 | 2,352,000 |
Loss on disposal of property and equipment | 155,000 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 9,924,000 | (18,369,000) | (4,094,000) |
Inventories | 676,000 | (2,973,000) | 141,000 |
Prepaid expenses and other noncurrent and current assets | 4,277,000 | (7,383,000) | (1,636,000) |
Accounts payable | (2,794,000) | 3,130,000 | 187,000 |
Accrued expenses | 3,735,000 | (368,000) | 3,900,000 |
Sales returns reserve | (9,885,000) | 9,501,000 | 567,000 |
Settlement liability | (34,372,000) | 34,372,000 | |
Other current and noncurrent liabilities | (351,000) | (946,000) | 240,000 |
Operating lease liabilities | (439,000) | (852,000) | (1,196,000) |
Net cash used in operating activities | (117,304,000) | (98,456,000) | (26,041,000) |
Investing activities: | |||
Purchases of property and equipment | (2,791,000) | (882,000) | (1,624,000) |
Capitalized software development costs | (296,000) | (3,842,000) | (3,455,000) |
Cash paid for acquisition of business | (2,863,000) | ||
Net cash used in investing activities | (3,087,000) | (7,587,000) | (5,079,000) |
Financing activities: | |||
Proceeds from issuance of convertible notes, net of issuance costs | 105,378,000 | 10,053,000 | |
Payment of convertible notes issuance costs to third parties | (5,645,000) | ||
Proceeds from issuance of common stock upon rights offering, net of issuance costs | 27,598,000 | ||
Proceeds from issuance of convertible notes, net of issuance costs | 67,867,000 | ||
Proceeds from debt financing | 15,000,000 | ||
Debt repayments | (16,238,000) | (12,720,000) | |
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs | (40,000) | 148,542,000 | |
Proceeds from PPP loan | 4,574,000 | ||
Repayment of PPP loan | (4,574,000) | ||
Proceeds from stock options exercised | 134,000 | 1,724,000 | 1,179,000 |
Proceeds from employee stock purchase plan purchases | 2,674,000 | ||
Payment of taxes related to net share settlement of restricted stock units | (29,000) | ||
Restricted stock units settled in cash | (69,000) | ||
Net cash provided by financing activities | 111,129,000 | 4,358,000 | 229,921,000 |
Net decrease in cash and cash equivalents | (9,262,000) | (101,685,000) | 198,801,000 |
Cash and cash equivalents at beginning of period | 110,500,000 | 212,185,000 | 13,384,000 |
Cash and cash equivalents at end of period | 101,238,000 | 110,500,000 | 212,185,000 |
Supplemental disclosure of cash flow information: | |||
Cash paid for taxes | 124,000 | 107,000 | 63,000 |
Cash paid for interest | 396,000 | 646,000 | 398,000 |
Non-cash operating activities: | |||
Lease liability obtained in exchange for right-of-use asset | 7,046,000 | 2,392,000 | |
Non-cash investing and financing activities: | |||
Property and equipment and capitalized software costs in accounts payable and accrued liabilities | 357,000 | 393,000 | |
Stock-based compensation included in capitalized software costs | 0 | 878,000 | 203,000 |
Convertible preferred stock issuance costs included in accounts payable | $ 600,000 | 600,000 | |
Common stock issued on conversion of convertible preferred stock upon initial public offering | 223,125,000 | ||
Common stock issued upon conversion of convertible notes | $ 150,978,000 | ||
Conversion of convertible preferred stock warrants to common stock warrants and related reclassification of convertible preferred stock warrant liability to additional paid in capital | 1,931,000 | ||
Offering costs in accounts payable and accrued liabilities | 40,000 | ||
Series E Convertible Preferred Stock | Convertible Preferred Stock | |||
Non-cash investing and financing activities: | |||
Issuance of Series E convertible preferred stock upon extinguishment of convertible notes | $ 12,818,000 |
Description of Business and Oth
Description of Business and Other Matters | 12 Months Ended |
Dec. 31, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Description of Business and Other Matters | Note 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. Reverse stock split In January 2023, the Company effected a reverse split of shares of the Company’ s common stock on a 1-for- 20 basis (the “Reverse Stock Split”). The Company ’ s common stock began trading on a post-split basis on January 18, 2023. The number of authorized shares of the common stock was not adjusted as a result of the Reverse Stock Split. All share and per share data in these consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. The shares of common stock retain a par value of $ 0.0001 per share. Accordingly, an amount equal to the par value of the decreased shares resulting from the Reverse Stock Split was reclassified from common stock to additional paid-in capital. 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 claims for reimbursement 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 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, as subject to the DOJ investigation, 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 claims for reimbursement (“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 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 6, 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”). From December 8, 2021 until September 15, 2022, the Company did not accept insurance benefits as a method of direct payment. 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 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 would not pay for or return the hearing aid system, resulting in bad debt expense that was recorded during the year ended December 31, 2021. In September 2022, the Company made the determination not to seek payment for approximately $ 16.1 million from customers with unsubmitted and unpaid claims which was accounted for as a pricing concession (the “ Pricing Concession ” ). During the year ended December 31, 2022, the Company 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 an 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 year ended December 31, 2022 related to unsubmitted and unpaid claims. These changes resulted in a decrease in net revenue of $ 0.3 million for the year ended December 31, 2022. Liquidity and going concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 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 December 31, 2022, the Company had cash and cash equivalents of $ 101.2 million and an accumulated deficit of $ 514.3 million. In June 2022, the Company entered into a note purchase agreement (“Note Purchase Agreement”) with an affiliate of Patient Square Capital (the “PSC Stockholder ”) 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 in senior secured convertible notes (the “Notes”) of the Company, convertible into shares of common stock (the “Note Transaction”), of which the Company issued $ 100.0 million in June 2022 and $ 5.5 million in November 2022 . In November 2022, the Company completed a rights offering for up to 18,750,000 newly issued shares of common stock (“Rights Offering”), as required under the terms of the Note Transaction documents and raised $ 27.6 million in net proceeds from existing investors. Subsequent to the Rights Offering, the outstanding Notes converted into 15,821,299 shares of the Company ’ s common stock (the “Conversion Shares”) . The Note Transaction and Rights Offering are discussed further in Note 8. 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 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 additional 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). The Company believes that without an alternative future financing, its current resources are insufficient to satisfy its obligations as they become due within one year after the date that these consolidated 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. If the Company is unable to raise additional funding to meet its operational needs, it will be forced to limit or cease its operations . These 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of significant accounting policies Basis of presentation and principles of consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Eargo, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of estimates The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying 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. Cash and cash equivalents Cash and cash equivalents include amounts deposited in financial institutions regulated by the Federal Deposit Insurance Corporation (the “FDIC”) as well as short-term, highly liquid investments with original maturities of three months or less from the purchase date; cash equivalents consist primarily of amounts invested in money market accounts. The FDIC insures cash deposits of up to $ 250,000 . The Company regularly maintains cash balances in deposit accounts in excess of the FDIC insured limits. Additionally, the Company’s cash equivalents are held in accordance with cash sweep arrangements with financial institutions, which amounts are invested in money market accounts that are neither included on the balance sheets of such financial institutions nor insured by the FDIC. According to such cash sweep arrangements, the Company believes it should be recognized by the FDIC as the owner of assets in the event of financial institution’s failure, such as the March 10, 2023 closure of Silicon Valley Bank. 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. Through December 31, 2022, the Company has not experienced any losses on its deposit accounts and money market accounts. As of December 31, 2022, the Company does not believe there is a 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 December 31, 2022, subsequent to the Pricing Concession, there was no credit risk concentration in the Company’s accounts receivable. Fair value measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. The Company measures fair value based on a three-level hierarchy of inputs, of which the first two are considered observable and the last unobservable. Unobservable inputs reflect the Company’s own assumptions about current market conditions. The Company maximizes the use of observable inputs, where available, and minimizes the use of unobservable inputs when measuring fair value. The three-level hierarchy of inputs is as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying amounts reflected in the 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. Refer to Note 3 for discussion of certain other financial instruments. Convertible notes - fair value option The Company has elected the fair value option to account for the Notes that were issued in June 2022 and remeasured the underlying liability through the Notes conversion in November 2022, as further disclosed in Notes 3 and 8. At issuance, the Company recorded the Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the 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. Accounts receivable, net Accounts receivable represents amounts due from third-party institutions for credit card and debit card transactions and trade accounts receivable. Trade accounts receivable are primarily insurance claims receivable amounts due from customers, which includes third-party payors and end-users. Accounts receivable are recorded net of an allowance for expected credit losses. The Company’s expected loss allowance for receivables is based on its historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of its customers. Specific allowance amounts are established to record the appropriate allowance for customers that have an identified risk of default. General allowance amounts are established based upon an assessment of expected credit losses for receivables by aging category. Accounts receivable balances are written off when they are determined to be uncollectible. Inventories Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. Inventory consists of purchased components for producing hearing aid products and accessories and finished goods. Provisions for slow-moving, excess or obsolete inventories are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans or quality issues. Property and equipment, net Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally three to five years . Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheets and any resulting gain or loss is reflected in operations in the period realized. Repairs and maintenance are expensed as incurred. Capitalized software development costs The Company capitalizes software purchased for internal use and qualified costs incurred in connection with the development of internal use software. Purchased software consists of software products and licenses, which are amortized over the lesser of their estimated useful life or the contractual term. Internally developed software costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external direct costs of the development are capitalized until the software is substantially complete and ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality. Internal use software is amortized on a straight-line basis over its estimated useful life, generally three years . Post-implementation activities including training and maintenance are expensed as incurred. Capitalized costs less accumulated amortization are recorded as a component of property and equipment, net on the consolidated balance sheets. Goodwill, finite-lived acquired intangible assets, and impairment Goodwill represents the excess of the purchase price paid over the fair value of tangible and identifiable intangible net assets acquired in business combinations. In November of each fiscal year, or more frequently if indicators of impairment exist, management performs a review to determine if the carrying value of goodwill is impaired. Impairment testing is performed at the reporting unit level. The Company’s intangible assets consist of intangible assets acquired in a business combination. These assets are amortized using the straight-line method over their estimated useful lives ranging from one to four years reflecting the period in which the economic benefits of the assets are expected to be realized. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or group of assets may not be fully recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and the current and noncurrent portions of the operating lease liability are included as operating lease liabilities in the Company’s consolidated balance sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized based on the present value of lease payments over the lease term at the commencement date of the lease. Right-of-use assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less any lease incentive received. As the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Product warranty The Company provides a one-year or two-year limited warranty on its hearing aid products and accrues for the estimated future costs of repair or replacement upon shipment of the original product based upon current and historical information for the cost to repair or replace the product. Product warranty reserve is recorded as a component of accrued expenses in the consolidated balance sheets and the related expense is recorded as a component of cost of revenue in the consolidated statements of operations and comprehensive loss. Revenue recognition The Company’s revenue is generated from the sale of products (hearing aid systems and related accessories) and services (extended warranties). Revenue is recognized when promised goods or services are transferred to end-use customers, distributors, or retail partners 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. 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 general 45-day right of return that applies to all products and the extended right of return offered for certain shipments to direct plan access customers involving certain insurance payors. 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 a price concession to its customers with unsubmitted and unpaid claims during the year ended December 31, 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, for 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. Revenue for services (extended warranty) is recognized over time on a ratable basis over the warranty period. The Company does not have material contract liabilities related to unsatisfied performance obligations as of December 31, 2022 and 2021. 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 consolidated statements of operations and comprehensive loss as incurred. Cost of revenue Cost of revenue consists of expenses relating to the cost of finished goods, freight, personnel costs, consumables, product warranty costs, transaction fees (including processing fees paid to third-party financing vendors), reserves for excess and obsolete inventory, depreciation and amortization, and related overhead. Research and development Research and development expenses consist of personnel costs, travel expenses, tools, prototype materials and product certification and are charged to expense as incurred. Sales and marketing Sales and marketing expenses consist of personnel costs, travel expenses, consulting fees, public relations costs, direct marketing, advertising and promotional expenses and allocated facility overhead costs. The Company recorded advertising costs, which are expensed as incurred, of $ 19.3 million, $ 41.9 million and $ 23.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. Stock-based compensation The Company accounts for stock-based awards at fair value. The fair value of restricted stock units (“RSUs”) is equal to the closing price of the Company’s common stock on the grant date. The fair value of stock options and purchase rights under an employee stock purchase plan are estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the underlying common stock is the closing price of the Company’s common stock for grants awarded subsequent to the Company’s IPO. The expected volatility is derived from the historical stock volatilities of comparable peer public companies within the Company’s industry that are considered to be comparable to the Company’s business over a period equivalent to the expected term of the awards due to limited trading history of the Company’s common stock. The expected term for employee option grants is determined using the simplified method due to a lack of sufficient data points. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is zero as the Company has not paid nor does it anticipate paying any dividends on its common stock in the foreseeable future. For stock-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date is the date of grant and the expense is recognized on a straight-line basis over the requisite service period. For stock-based awards with performance-based vesting conditions, the expense is recognized over the vesting period using the accelerated attribution method. The Company accounts for forfeitures as they occur. Income taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Financial statement effects of uncertain tax positions are recognized when it is more-likely-than-not that the position will be sustained upon examination. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as one operating and reportable segment, with all operations in the United States. Employee benefit plan The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. There have been no employer contributions under this plan to date. Net loss per share attributable to common stockholders The Company follows the two-class method when computing net loss per share in periods in which shares that meet the definition of participating securities are outstanding. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive securities. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents of potentially dilutive securities outstanding for the period. Potentially dilutive securities are not assumed to have been issued if their effect is anti-dilutive. Recently adopted accounting pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), 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 adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 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) (“ASU 2020-06”), which is intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This standard removes the existing guidance in Subtopic 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 adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . ASU 2022-03 clarifies that contractual sales restrictions are not considered in measuring an equity security at fair value and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Recent accounting pronouncements not yet adopted The Company does not believe that any recently issued accounting pronouncements and other authoritative guidance with the effective dates in the future will have material impact to its financial position or results of operations when implemented. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 3. Fair value measurements There were no financial assets and liabilities outstanding that were remeasured at fair value on a recurring basis as of December 31, 2022 and 2021. The carrying amounts reflected in the 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 of the Notes was determined based on significant inputs not observable in the market, which represents a level 3 measurement within the fair value hierarchy. Prior to the closing of the Rights Offering, the fair value of the Notes was 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 conversion date fair value of the Notes was estimated based on the closing price of the Company's common stock adjusted for the impact of certain legal restrictions on the Conversion Shares (see Note 8). The following table provides a summary of the changes in the estimated fair value of the Notes: Amount (in thousands) Balance — December 31, 2021 $ — Fair value of convertible notes upon issuance 105,475 Change in fair value of convertible notes 45,503 Conversion of convertible notes ( 150,978 ) Balance — December 31, 2022 $ — |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Components | Note 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: December 31, 2022 2021 (in thousands) Raw materials $ 410 $ 1,905 Finished goods 4,626 3,807 Total inventories $ 5,036 $ 5,712 Prepaid expenses and other current assets Prepaid expenses and other current assets consist of the following: December 31, 2022 2021 (in thousands) Advances to suppliers $ 2,000 $ 95 Marketing costs 1,709 1,948 Payroll advances 1,686 3,889 Software subscriptions 1,553 1,468 Product launch fee 252 — Insurance costs 78 2,945 Other 568 528 Total prepaid expenses and other current assets $ 7,846 $ 10,873 Property and equipment, net Property and equipment, net, consists of the following: December 31, 2022 2021 (in thousands) Capitalized software $ 11,579 $ 11,569 Tools and lab equipment 5,087 4,712 Furniture and fixtures 2,440 906 Leasehold improvements 993 861 Computer and equipment 482 401 20,581 18,449 Less accumulated depreciation and amortization ( 13,140 ) ( 8,898 ) Total property and equipment, net $ 7,441 $ 9,551 Depreciation and amortization expense for the years ended December 31, 2022, 2021 and 2020 is $ 4.8 million, $ 4.2 million and $ 2.5 million, respectively, which includes amortization of capitalized software costs of $ 3.5 million, $ 2.1 million and $ 0.8 million, respectively. Accrued expenses Accrued expenses consist of the following: December 31, 2022 2021 (in thousands) Accrued compensation $ 8,070 $ 4,845 Accrued warranty reserve 3,765 4,014 Refunds due to customers 580 376 Other accrued expenses 300 — Total accrued expenses $ 12,715 $ 9,235 Sales returns reserve The sales returns reserve consists of the following activity: Year ended December 31, 2022 2021 2020 (in thousands) Sales returns reserve, beginning balance $ 13,827 $ 4,326 $ 3,759 Reduction of revenue 18,240 37,674 22,676 Decrease related to Pricing Concession ( 11,263 ) — — Utilization of sales returns reserve ( 16,862 ) ( 28,173 ) ( 22,109 ) Sales returns reserve, ending balance $ 3,942 $ 13,827 $ 4,326 During the year ended December 31, 2022, as part of the Pricing Concession, the Company recorded a decrease in its insurance-related sales return reserve liability of $ 11.3 million related to unsubmitted and unpaid claims, which was recorded against revenue in the 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: Year ended December 31, 2022 2021 2020 (in thousands) Allowance for credit losses, beginning balance $ 4,838 $ 1,868 $ 225 Charged to expense 713 9,615 2,352 Accounts written off, net of recoveries ( 5,393 ) ( 6,645 ) ( 709 ) Allowance for credit losses, ending balance $ 158 $ 4,838 $ 1,868 Accrued warranty reserve The accrued warranty reserve consists of the following activity: Year ended December 31, 2022 2021 2020 (in thousands) Accrued warranty reserve, beginning balance $ 4,014 $ 2,390 $ 450 Charged to cost of revenue 2,607 3,229 3,178 Utilization of accrued warranty reserve ( 2,856 ) ( 1,605 ) ( 1,238 ) Accrued warranty reserve, ending balance $ 3,765 $ 4,014 $ 2,390 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Acquisitions | Note 5. Acquisitions In June 2021, the Company completed the purchase of certain web-based hearing screening technology assets (“Clementine”) for $ 2.9 million in cash, all of which has been paid as of December 31, 2021. This purchase was accounted for as a business combination. Clementine offers remote audiology solutions and self-administered hearing screen technology to consumers across digital and in-person settings with an online tool. The Company believes that integrating this technology with the Company’s telecare infrastructure has the potential to further advance its core mission of making it easier for consumers to assess their hearing, consult with hearing professionals, and purchase Eargo hearing devices more conveniently. The table below presents the purchase price allocation: Amount (in thousands) Goodwill $ 873 Intangible assets 1,990 Total fair value of consideration $ 2,863 The intangible assets acquired in the Clementine acquisition are comprised primarily of developed technologies and have a weighted-average amortization period of 3.6 years as of the date of the acquisition. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6. Commitments and contingencies Operating leases The Company has entered into non-cancelable operating leases for its offices. These leases generally contain scheduled rent increases and renewal options, which are not included in the determination of lease term unless the Company is reasonably certain that the renewal option would be exercised. San Jose lease In September 2021, the Company entered into a lease agreement, as amended, for approximately 30,000 square feet of office and laboratory space located in San Jose, California, which the Company has used as its headquarters since early 2022. 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 recorded a right-of-use asset of $ 6.9 million and lease liability of $ 6.8 million as of commencement of the lease. Nashville lease In February 2021, the Company amended the operating lease for its Nashville, Tennessee office to extend the term of the initial lease through March 2023 and reduce the size of office space leased. This extension was accounted for as a lease modification and the Company recorded an increase to the right-of-use asset and lease liability of $ 0.4 million at the time of the amendment. Operating lease summary As of December 31, 2022, the Company recorded an aggregate right-of-use asset of $ 5.8 million and an aggregate lease liability of $ 6.6 million in the accompanying consolidated balance sheet. These balances were initially estimated using a weighted-average incremental borrowing rate of 7.7 %. The weighted-average remaining lease term is 6.4 years as of December 31, 2022. During the years ended December 31, 2022, 2021 and 2020, the Company incurred $ 1.6 million, $ 1.5 million and $ 1.3 million, respectively, in operating lease costs. Variable lease payments for operating expenses and costs related to short-term leases were immaterial for the years ended December 31, 2021 and 2020. For the years ended December 31, 2022, 2021 and 2020, net cash paid for amounts included in the measurement of operating lease liabilities was $ 1.1 million, $ 1.4 million and $ 1.2 million, respectively. As of December 31, 2022, undiscounted future minimum lease payments due under the non-cancelable operating leases are as follows: Amount (in thousands) 2023 $ 1,114 2024 1,081 2025 1,331 2026 1,372 2027 1,413 Thereafter 2,193 Total minimum future lease payments 8,504 Present value adjustment for minimum lease commitments ( 1,903 ) Total lease liability $ 6,601 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 claims for reimbursement 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 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 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 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 claims audits initiated by various 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 reimbursement 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 purported to extend the class period through March 2, 2022. Defendants filed a motion to dismiss on July 29, 2022. The Court granted the defendants’ motion to dismiss on February 14, 2023. Plaintiffs filed a second amended complaint on March 16, 2023. Defendants plan to file a second motion to dismiss. 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 the Company’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 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 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. On March 15, 2023, the parties agreed that the Company would pay $ 249,500 to Plaintiff Wolfe’s counsel in full satisfaction of Plaintiff Wolfe’s claim for attorneys’ fees and expenses in the Wolfe Action. The court was not asked to review, and did not pass judgment on, the payment of the attorneys’ fees and expenses or their reasonableness. As of December 31, 2022, the Company recorded a settlement liability in such amount in the consolidated balance sheets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 7. Goodwill and intangible assets Goodwill The Company recorded goodwill of $ 0.9 million during the year ended December 31, 2021 related to the Clementine acquisition (Note 5). There was no impairment of goodwill during the years ended December 31, 2022 and 2021. Intangible assets, net Intangible assets, net consist of the following: December 31, 2022 Gross carrying value Accumulated amortization Net carrying value (in thousands) Developed technologies $ 1,700 $ 637 $ 1,063 Other 290 290 — Total intangible assets, net $ 1,990 $ 927 $ 1,063 Amortization expense was $ 0.6 million and $ 0.3 million for the years ended December 31, 2022 and 2021. There was no impairment of intangible assets during the years ended December 31, 2022 and 2021. The following table summarizes the estimated future amortization expense of intangible assets, net as of December 31, 2022: Amount (in thousands) 2023 $ 425 2024 425 2025 213 Total $ 1,063 |
Rights Offering and debt obliga
Rights Offering and debt obligations | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Rights Offering and debt obligations | Note 8. Rights Offering and debt obligations Note Purchase Agreement and Rights Offering First Tranche Closing On June 24, 2022, the Company entered into the Note Purchase Agreement with the PSC Stockholder 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 “First Tranche Closing”), the Company closed the initial issuance of $ 100.0 million of Notes (the “First Tranche Notes”). As a result of applying the fair value option, direct costs and fees related to the Notes of $ 5.7 million were expensed as incurred to general and administrative expenses. The maturity date of the Notes was expected on the one-year anniversary of the First Tranche Closing, subject to earlier conversion, redemption or repurchase as provided by their terms. Rights Offering In October 2022, the Company’ s stockholders approved the Rights Offering for an aggregate of 18,750,000 shares of common stock to the Company’s stockholders at a fixed offering price of $ 10.00 per share of common stock. On November 23, 2022, the Company completed the Rights Offering and existing shareholders subscribed to purchase 2,928,701 shares of the Company ’ s common stock resulting in net proceeds of $ 27.6 million to the Company. Second Tranche Closing Pursuant to the Note Purchase Agreement, the noteholders agreed to purchase up to an additional $ 25.0 million of Notes if the Company completed the Rights Offering within 150 days from the First Tranche Closing and the Company ’ s existing stockholders subscribed to purchase less than 3,750,000 shares. On November 23, 2022, following the completion the Rights Offering, the Company issued an additional $ 5.5 million of the aggregate principal amount of the Notes (the “Second Tranche Notes”). Issuance of Conversion Shares On November 23, 2022, the First Tranche Notes converted into 15,000,000 shares of the Company ’ s common stock. On November 25, 2022, the Second Tranche Notes converted into 821,299 shares of the Company ’ s common stock. Following the conversion, the PSC Stockholder beneficially owned the Conversion Shares representing approximately 76.3 % of the Company ’ s common stock (“Change in Control”). The estimated fair value of the Conversion Shares of $ 151.0 million was based on the closing prices of the Company ’s common stock on the conversion dates adjusted for the impact of certain legal restrictions on the Conversion Shares. 2018 Loan Agreement In June 2018, the Company entered into a Loan and Security Agreement (the “2018 Loan Agreement”) with Silicon Valley Bank. Under the terms of the 2018 Loan Agreement, Silicon Valley Bank made available to the Company term loans in an aggregate principal amount of $ 12.5 million and the Company borrowed $ 7.0 million in 2018. 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. In January 2019, the Company executed the First Amendment to the Loan and Security Agreement, which extended the interest-only period for all borrowings under the agreement until January 2020. In June 2019, the Company borrowed an additional $ 5.0 million to increase the total principal balance to $ 12.0 million. In connection with the June 2019 borrowing, the Company issued Silicon Valley Bank warrants to purchase 14,999 shares of Series C convertible preferred stock. In May 2020, the Company executed the Second Amendment to its Loan and Security Agreement, which deferred the principal payments due between May 2020 and July 2020 such that the deferred amounts will be repaid in equal monthly payments that started in August 2020 through the scheduled maturity of the loan in June 2022. The amendment was accounted for as a modification. In September 2020, the Company executed the Third Amendment to the Loan and Security Agreement (the “Third Amendment”), under which Silicon Valley Bank made available to the Company additional term loans in an aggregate principal amount of $ 20.0 million through December 31, 2020. The Company borrowed $ 15.0 million in September 2020 and used $ 10.2 million of the proceeds to repay the outstanding balance of $ 9.5 million and final payment fee of $ 0.7 million, or 6.0 % of the original aggregate principal amount, on the existing term loan. The Company’s ability to borrow any additional principal under the Third Amendment expired unused on December 31, 2020. Subsequent to the Third Amendment, the term loan had a maturity date in September 2024 with interest-only monthly payments until January 2022, which was extended to July 2022 upon the completion of the Company’s IPO in October 2020. The term loan included an interest at a per annum rate equal to the Wall Street Journal prime rate plus 1.0 % and a final payment fee equal to 6.25 % of the original aggregate principal amount. In connection with the execution of the Third Amendment, the Company issued Silicon Valley Bank a warrant to purchase 53,487 shares of Series E convertible preferred stock. The amendment was accounted for as a modification. In June 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. The Company had no outstanding debt as of December 31, 2022. The balance of the term loans as of December 31, 2021 is as follows: December 31, 2021 (in thousands) Principal value of long-term debt $ 15,000 Net of debt discount and accretion of final payment 257 Long-term debt, current and noncurrent 15,257 Less: Long-term debt, current portion ( 3,333 ) Long-term debt, noncurrent portion $ 11,924 During the years ended December 31, 2022, 2021 and 2020, for the 2018 Loan Agreement, the Company recognized interest expense of $ 0.5 million, $ 1.1 million, and $ 1.0 million which is inclusive of amortization of debt discount. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-based Compensation | Note 9. Stock-based compensation Total stock-based compensation is as follows: Year ended December 31, 2022 2021 2020 (in thousands) Cost of revenue $ 126 $ 738 $ 60 Research and development 1,039 6,939 822 Sales and marketing 2,720 11,213 1,629 General and administrative 6,080 8,841 2,578 Total stock-based compensation $ 9,965 $ 27,731 $ 5,089 Stock-based compensation costs capitalized as part of capitalized software costs was $ 0.9 million and $ 0.2 million during the years ended December 31, 2021 and 2020. No stock-based compensation costs were capitalized during the year ended December 31, 2022. Equity incentive plans In November 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”) under which the Board had the authority to issue stock options to employees, directors and consultants. In October 2020, the Company’s board of directors and stockholders adopted and approved the 2020 Incentive Award Plan, (the “2020 Plan”) and 2020 Employee Stock Purchase Plan (the “ESPP”). The Company’s 2010 Plan was terminated in connection with the IPO and no further grants will be made under the 2010 Plan from the date that the 2020 Plan became effective. As of December 31, 2022, 231,437 shares of common stock are issuable upon the exercise of outstanding awards under the 2010 Plan. As of December 31, 2022, the Company had reserved 471,015 shares of common stock for issuance under the 2020 Plan, of which 205,926 shares 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. RSUs that vested on November 15, 2021 were settled in cash during the first quarter of 2022. All RSUs that vested during the year ended December 31, 2022 were settled in shares during the reporting period. The Company resumed granting stock option awards on August 23, 2022. As of December 31, 2022, all outstanding equity awards continue to vest in accordance with their existing vesting schedules. The Board of Directors also determined to suspend the non-employee director compensation program with respect to the option awards that would otherwise have been awarded to non-employee directors automatically on the date of the Company’s annual meeting of stockholders held on November 9, 2021. All equity awards that are currently outstanding continue to vest in accordance with their existing vesting schedules. During the third quarter of 2022 the Board of Directors resumed the practice of granting equity awards to non-employee directors. In November 2022, subsequent to the Change in Control, the Company recorded $ 0.3 million in stock-based compensation related to the accelerated vesting of the outstanding common stock options held by certain members of the Board of Directors pursuant to their original terms. Stock options Stock option activity for the year ended December 31, 2022 is set forth below: Number of Weighted Weighted Aggregate (in years) (in thousands) Balance December 31, 2021 270,195 $ 97.36 7.88 $ 12,860 Grants 64,391 26.62 Exercises ( 3,026 ) 44.42 Cancelled or forfeited ( 22,245 ) 112.23 Balance December 31, 2022 309,315 $ 82.08 5.60 $ — Vested and exercisable as of December 31, 2022 213,131 $ 70.51 5.33 $ — The weighted-average grant-date fair value of options granted during the years ended December 31, 2022, 2021 and 2020 were $ 14.65 , $ 494.40 and $ 64.40 per share, respectively. The aggregate intrinsic values of options outstanding and vested and exercisable were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock. The intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 0.1 million, $ 32.4 million and $ 5.0 million, respectively. As of December 31, 2022, total unrecognized stock-based compensation related to outstanding unvested stock options was $ 6.2 million, which the Company expects to recognize over a remaining weighted-average period of 1.9 years. The estimated grant-date fair value of the Company’s stock options was calculated using the Black-Scholes option pricing model, based on the following assumptions: Year ended December 31, Valuation assumptions: 2022 2021 2020 Expected volatility 59 % - 60 % 53 %- 57 % 60 %- 71 % Expected term 5.2 - 5.8 years 5.8 - 6.7 years 5.1 - 7.0 years Risk-free interest rate 3.18 % - 4.01 % 0.62 %- 1.11 % 0.23 %- 1.20 % Dividend yield — — — Restricted stock units Restricted stock units (“RSUs”) granted under the 2020 Plan are share 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 release of the vesting restrictions. RSU activity for the year ended December 31, 2022 is set forth below: Number of Weighted average Balance December 31, 2021 17,458 $ 866.76 RSUs granted 181,995 59.59 RSUs vested ( 9,992 ) 495.48 RSUs forfeited ( 13,398 ) 232.09 Balance December 31, 2022 176,063 $ 101.76 As of December 31, 2022, there was $ 16.0 million of total unrecognized compensation cost related to the RSUs that is expected to be recognized over a weighted-average period of 3.4 years. Performance-based restricted stock units In June 2021, the Company granted 4,000 RSUs with performance-based vesting conditions that primarily related to the achievement of certain minimum sales of Eargo hearing aid systems and that were required to be met on or before December 31, 2022 for the awards to vest. The grant date fair value of the awards was $ 3.0 million. The Company previously estimated that all vesting conditions were probable of being satisfied as of March 31, 2022. Subsequently, the performance-based vesting conditions became improbable of being satisfied, and the Company recorded a reduction in cumulative compensation cost of $ 1.8 million during the year ended December 31, 2022. T hese awards remained unvested and were forfeited as of December 31, 2022. Employee stock purchase plan As of December 31, 2022, the Company reserved 75,115 shares of common stock for issuance under the ESPP, of which 66,378 shares were available for future issuance. The ESPP was suspended on November 9, 2021, and there were no offering periods in effect through December 31, 2022. 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, with exception of the first offering period which commenced on October 16, 2020, the first trading day after the effective date of the Company’s registration statement. 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 fair value of the ESPP shares is estimated using the Black-Scholes option pricing model, based on the following assumptions for the offering period that started in May 2021: Year ended December 31, Valuation assumptions: 2021 Expected volatility 44 %- 57 % Expected term 0.5 - 2.0 years Risk-free interest rate 0.04 %- 0.16 % Dividend yield — Subsequent to the suspension of the ESPP on November 9, 2021, all outstanding participant contribution amounts of $ 2.2 million were refunded to participants during the fourth quarter of 2021 and all future purchases under the current offering periods were cancelled. The Company accounted for the suspension of the ESPP as a cancellation of the ESPP and recognized $ 9.0 million of stock-based compensation in the fourth quarter of 2021 primarily as a result of the suspension. The Company recorded an aggregate of $ 17.4 million of stock-based compensation related to the ESPP for the year ended December 31, 2021, which includes the amounts recorded upon the suspension of the ESPP. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10. Income taxes For the year ended December 31, 2022, the Company recorded an income tax expense of $ 0.1 million. The Company did no t record an income tax provision for the years ended December 31, 2021 and 2020 due to its history of operating losses. All loss before income taxes was generated in the United States for the years ended December 31, 2022, 2021 and 2020. Reconciliation of the statutory federal income tax to the Company’s effective tax is as follows: December 31, 2022 2021 2020 (in thousands) Income tax provision at statutory rate $ ( 33,011 ) $ ( 33,128 ) $ ( 8,370 ) State income taxes, net of federal benefit ( 3,280 ) ( 3,104 ) ( 826 ) Change in valuation allowance 22,731 37,792 8,720 Stock-based compensation 101 ( 716 ) ( 621 ) Convertible debt 9,556 — — Research and development tax credits 2,439 ( 1,210 ) ( 1,442 ) Change in fair value of warrants 10 21 326 Derivative liability and extinguishment of debt — — 545 Return-to-provision adjustments 318 308 1,261 Other 1,236 37 407 Total current income tax provision $ 100 $ — $ — The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets are as follows: December 31, 2022 2021 2020 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 91,036 $ 62,322 $ 35,943 Research and development credits 3,077 5,120 3,910 Accruals and reserves 3,067 13,597 2,986 Lease liability 1,574 1,690 — Stock-based compensation 2,559 565 589 Interest expense carryforward 60 — — Research and development capitalization 3,695 — — Total deferred tax assets 105,068 83,294 43,428 Valuation allowance ( 102,957 ) ( 80,226 ) ( 42,435 ) Deferred tax assets after valuation allowance 2,111 3,068 993 Deferred tax liabilities: Depreciation and amortization ( 736 ) ( 1,429 ) ( 993 ) Right-of-use asset ( 1,375 ) ( 1,639 ) — Total deferred tax liabilities ( 2,111 ) ( 3,068 ) ( 993 ) Net deferred tax assets $ — $ — $ — Due to the uncertainties surrounding the realization of deferred assets through future income, the Company has established a full valuation allowance against its deferred tax assets and, therefore, no benefit has been recognized for the net operating loss and other deferred tax assets. The valuation allowance increased by $ 22.7 million, $ 37.8 million, and $ 8.7 million during the years ending December 31, 2022, 2021, and 2020. Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes, effective January 1, 2022. The mandatory capitalization requirement increases the Company’s deferred tax assets offset by a full valuation allowance. As of December 31, 2022, the Company had federal net operating loss carryforwards of approximately $ 374.7 million, of which $ 26.7 million begin to expire in the year 2030 and $ 348.0 million will carry over indefinitely. The Company also has state net operating loss carryovers of approximately $ 156.1 million available to reduce future taxable income, if any. The state carryforwards begin to expire beginning in the year 2030 . As of December 31, 2022, the Company had research and development credits carryovers for federal income tax purposes of approximately $ 0.1 million which expire beginning in the year 2031 . The Company also has state research and development credit carryforwards of approximately $ 4.3 million as of December 31, 2022, which do not expire. Utilization of the net operating loss and credit carryforwards will be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of the net operating loss carryforwards before utilization. In the event the Company has had a change of ownership, utilization of the carryforwards could be restricted. The Company’s net operating loss deferred tax asset was reduced from the prior year as a result of limitation on the utilization of net operating loss carryforwards subject to the Internal Revenue Code Section 382. Uncertain tax positions A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: December 31, 2022 2021 2020 (in thousands) Beginning balance $ 2,194 $ 1,676 $ 1,058 Increases (decreases) related to current year tax positions ( 875 ) 518 618 Ending balance $ 1,319 $ 2,194 $ 1,676 If recognized, gross unrecognized tax benefits would not have an impact on the Company’s effective tax rate due to the Company’s full valuation allowance position. While it is often difficult to predict the final outcome of any particular uncertain tax position, the Company does not believe that the amount of gross unrecognized tax benefits will change significantly in the next twelve months. The Company’s income tax returns for all tax years remain open to examination by federal and state taxing authorities due to the taxing authorities’ ability to adjust operating loss carryforwards. The Company has elected to recognize interest and penalties related to uncertain tax positions as a component of the income tax provision. No such expenses were incurred in the years ended December 31, 2022, 2021 and 2020. The Company has no t made any accruals for payment of interest related to unrecognized tax benefits. |
Net Loss Per Share Attributable
Net Loss Per Share Attributable To Common Stockholders | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share Attributable To Common Stockholders | Note 11. 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: Year ended December 31, 2022 2021 2020 Common stock options issued and 309,315 270,195 323,442 Restricted stock units 176,063 21,458 413 Shares issuable pursuant to ESPP — — 893 Total 485,378 291,653 324,748 The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders: Year ended December 31, 2022 2021 2020 (in thousands, except share and per share amounts) Numerator: Net loss $ ( 157,487 ) $ ( 157,754 ) $ ( 39,855 ) Gain on extinguishment of Series C and Series — — 9,840 Net loss attributable to common stockholders, $ ( 157,487 ) $ ( 157,754 ) $ ( 30,015 ) Denominator: Weighted-average shares used in computing net 3,968,432 1,944,857 394,405 Net loss per share attributable to common $ ( 39.68 ) $ ( 81.11 ) $ ( 76.10 ) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent events Reverse stock split On January 11, 2023, the Company announced that the Board had approved the Reverse Stock Split, and on January 17, 2023, the Reverse Stock Split was effected. The Company’s common stock began trading on a split-adjusted basis on January 18, 2023. The number of authorized shares and par values of the common stock were not adjusted as a result of this amendment. Nashville office space lease In January 2023, the Company entered into a lease agreement for approximately 17,572 square feet of office space located in Nashville, Tennessee. The initial term of the lease is 76 months commencing on the later of April 1, 2023 or the date of substantial completion of certain tenant improvements. The Company will have the right to extend the lease term once for additional 5 years. Total noncancelable lease payments are $ 3.1 million under the lease. The Company has an option to apply the tenant improvement allowance of $ 0.9 million against the lease payments. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The consolidated financial statements include the accounts of Eargo, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of estimates The preparation of 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made in the accompanying 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. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents include amounts deposited in financial institutions regulated by the Federal Deposit Insurance Corporation (the “FDIC”) as well as short-term, highly liquid investments with original maturities of three months or less from the purchase date; cash equivalents consist primarily of amounts invested in money market accounts. The FDIC insures cash deposits of up to $ 250,000 . The Company regularly maintains cash balances in deposit accounts in excess of the FDIC insured limits. Additionally, the Company’s cash equivalents are held in accordance with cash sweep arrangements with financial institutions, which amounts are invested in money market accounts that are neither included on the balance sheets of such financial institutions nor insured by the FDIC. According to such cash sweep arrangements, the Company believes it should be recognized by the FDIC as the owner of assets in the event of financial institution’s failure, such as the March 10, 2023 closure of Silicon Valley Bank. |
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. Through December 31, 2022, the Company has not experienced any losses on its deposit accounts and money market accounts. As of December 31, 2022, the Company does not believe there is a 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 December 31, 2022, subsequent to the Pricing Concession, there was no credit risk concentration in the Company’s accounts receivable. |
Fair Value Measurement | Fair value measurement Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date. The Company measures fair value based on a three-level hierarchy of inputs, of which the first two are considered observable and the last unobservable. Unobservable inputs reflect the Company’s own assumptions about current market conditions. The Company maximizes the use of observable inputs, where available, and minimizes the use of unobservable inputs when measuring fair value. The three-level hierarchy of inputs is as follows: Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The carrying amounts reflected in the 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. Refer to Note 3 for discussion of certain other financial instruments. |
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 and remeasured the underlying liability through the Notes conversion in November 2022, as further disclosed in Notes 3 and 8. At issuance, the Company recorded the Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the 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. |
Accounts Receivable, Net | Accounts receivable, net Accounts receivable represents amounts due from third-party institutions for credit card and debit card transactions and trade accounts receivable. Trade accounts receivable are primarily insurance claims receivable amounts due from customers, which includes third-party payors and end-users. Accounts receivable are recorded net of an allowance for expected credit losses. The Company’s expected loss allowance for receivables is based on its historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of its customers. Specific allowance amounts are established to record the appropriate allowance for customers that have an identified risk of default. General allowance amounts are established based upon an assessment of expected credit losses for receivables by aging category. Accounts receivable balances are written off when they are determined to be uncollectible. |
Inventories | Inventories Inventories are stated at the lower of standard cost (which approximates actual cost on a first-in, first-out basis) or net realizable value. Inventory consists of purchased components for producing hearing aid products and accessories and finished goods. Provisions for slow-moving, excess or obsolete inventories are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans or quality issues. |
Property and Equipment, Net | Property and equipment, net Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally three to five years . Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheets and any resulting gain or loss is reflected in operations in the period realized. Repairs and maintenance are expensed as incurred. |
Capitalized Software Development Costs | Capitalized software development costs The Company capitalizes software purchased for internal use and qualified costs incurred in connection with the development of internal use software. Purchased software consists of software products and licenses, which are amortized over the lesser of their estimated useful life or the contractual term. Internally developed software costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, internal and external direct costs of the development are capitalized until the software is substantially complete and ready for its intended use. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable that the expenditure will result in additional functionality. Internal use software is amortized on a straight-line basis over its estimated useful life, generally three years . Post-implementation activities including training and maintenance are expensed as incurred. Capitalized costs less accumulated amortization are recorded as a component of property and equipment, net on the consolidated balance sheets. |
Goodwill, Finite-Lived Acquired Intangible Assets, and Impairment | Goodwill, finite-lived acquired intangible assets, and impairment Goodwill represents the excess of the purchase price paid over the fair value of tangible and identifiable intangible net assets acquired in business combinations. In November of each fiscal year, or more frequently if indicators of impairment exist, management performs a review to determine if the carrying value of goodwill is impaired. Impairment testing is performed at the reporting unit level. The Company’s intangible assets consist of intangible assets acquired in a business combination. These assets are amortized using the straight-line method over their estimated useful lives ranging from one to four years reflecting the period in which the economic benefits of the assets are expected to be realized. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or group of assets may not be fully recoverable. Recoverability is measured by comparing the carrying amount to the future net undiscounted cash flows which the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. |
Leases | Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets and the current and noncurrent portions of the operating lease liability are included as operating lease liabilities in the Company’s consolidated balance sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized based on the present value of lease payments over the lease term at the commencement date of the lease. Right-of-use assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less any lease incentive received. As the Company’s leases do not provide an implicit interest rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. |
Product Warranty | Product warranty The Company provides a one-year or two-year limited warranty on its hearing aid products and accrues for the estimated future costs of repair or replacement upon shipment of the original product based upon current and historical information for the cost to repair or replace the product. Product warranty reserve is recorded as a component of accrued expenses in the consolidated balance sheets and the related expense is recorded as a component of cost of revenue in the consolidated statements of operations and comprehensive loss. |
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). Revenue is recognized when promised goods or services are transferred to end-use customers, distributors, or retail partners 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. 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 general 45-day right of return that applies to all products and the extended right of return offered for certain shipments to direct plan access customers involving certain insurance payors. 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 a price concession to its customers with unsubmitted and unpaid claims during the year ended December 31, 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, for 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. Revenue for services (extended warranty) is recognized over time on a ratable basis over the warranty period. The Company does not have material contract liabilities related to unsatisfied performance obligations as of December 31, 2022 and 2021. 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 consolidated statements of operations and comprehensive loss as incurred. |
Cost of Revenue | Cost of revenue Cost of revenue consists of expenses relating to the cost of finished goods, freight, personnel costs, consumables, product warranty costs, transaction fees (including processing fees paid to third-party financing vendors), reserves for excess and obsolete inventory, depreciation and amortization, and related overhead. |
Research and Development | Research and development Research and development expenses consist of personnel costs, travel expenses, tools, prototype materials and product certification and are charged to expense as incurred. |
Sales and Marketing | Sales and marketing Sales and marketing expenses consist of personnel costs, travel expenses, consulting fees, public relations costs, direct marketing, advertising and promotional expenses and allocated facility overhead costs. The Company recorded advertising costs, which are expensed as incurred, of $ 19.3 million, $ 41.9 million and $ 23.6 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Stock-based compensation | Stock-based compensation The Company accounts for stock-based awards at fair value. The fair value of restricted stock units (“RSUs”) is equal to the closing price of the Company’s common stock on the grant date. The fair value of stock options and purchase rights under an employee stock purchase plan are estimated on the date of grant using the Black-Scholes option-pricing model. The fair value of the underlying common stock is the closing price of the Company’s common stock for grants awarded subsequent to the Company’s IPO. The expected volatility is derived from the historical stock volatilities of comparable peer public companies within the Company’s industry that are considered to be comparable to the Company’s business over a period equivalent to the expected term of the awards due to limited trading history of the Company’s common stock. The expected term for employee option grants is determined using the simplified method due to a lack of sufficient data points. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is zero as the Company has not paid nor does it anticipate paying any dividends on its common stock in the foreseeable future. For stock-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date is the date of grant and the expense is recognized on a straight-line basis over the requisite service period. For stock-based awards with performance-based vesting conditions, the expense is recognized over the vesting period using the accelerated attribution method. The Company accounts for forfeitures as they occur. |
Income Taxes | Income taxes The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Financial statement effects of uncertain tax positions are recognized when it is more-likely-than-not that the position will be sustained upon examination. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. |
Segments | Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. To date, the Company has viewed its operations and manages its business as one operating and reportable segment, with all operations in the United States. |
Employee Benefit Plan | Employee benefit plan The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. There have been no employer contributions under this plan to date. |
Net Loss per Share Attributable To Common Stockholders | Net loss per share attributable to common stockholders The Company follows the two-class method when computing net loss per share in periods in which shares that meet the definition of participating securities are outstanding. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive securities. Diluted net loss attributable to common stockholders is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents of potentially dilutive securities outstanding for the period. Potentially dilutive securities are not assumed to have been issued if their effect is anti-dilutive. |
Recently Adopted and Recent Accounting Pronouncements Not Yet Adopted | Recently adopted accounting pronouncements In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), 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 adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 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) (“ASU 2020-06”), which is intended to simplify the accounting for convertible debt instruments and convertible preferred stock. This standard removes the existing guidance in Subtopic 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 adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . ASU 2022-03 clarifies that contractual sales restrictions are not considered in measuring an equity security at fair value and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Recent accounting pronouncements not yet adopted The Company does not believe that any recently issued accounting pronouncements and other authoritative guidance with the effective dates in the future will have material impact to its financial position or results of operations when implemented. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
2022 Convertible Notes | |
Summary of Change in the Estimated Fair Value | The following table provides a summary of the changes in the estimated fair value of the Notes: Amount (in thousands) Balance — December 31, 2021 $ — Fair value of convertible notes upon issuance 105,475 Change in fair value of convertible notes 45,503 Conversion of convertible notes ( 150,978 ) Balance — December 31, 2022 $ — |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 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: December 31, 2022 2021 (in thousands) Raw materials $ 410 $ 1,905 Finished goods 4,626 3,807 Total inventories $ 5,036 $ 5,712 |
Summary of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: December 31, 2022 2021 (in thousands) Advances to suppliers $ 2,000 $ 95 Marketing costs 1,709 1,948 Payroll advances 1,686 3,889 Software subscriptions 1,553 1,468 Product launch fee 252 — Insurance costs 78 2,945 Other 568 528 Total prepaid expenses and other current assets $ 7,846 $ 10,873 |
Summary of Property And Equipment, Net | Property and equipment, net, consists of the following: December 31, 2022 2021 (in thousands) Capitalized software $ 11,579 $ 11,569 Tools and lab equipment 5,087 4,712 Furniture and fixtures 2,440 906 Leasehold improvements 993 861 Computer and equipment 482 401 20,581 18,449 Less accumulated depreciation and amortization ( 13,140 ) ( 8,898 ) Total property and equipment, net $ 7,441 $ 9,551 |
Summary of Accrued Expenses | Accrued expenses consist of the following: December 31, 2022 2021 (in thousands) Accrued compensation $ 8,070 $ 4,845 Accrued warranty reserve 3,765 4,014 Refunds due to customers 580 376 Other accrued expenses 300 — Total accrued expenses $ 12,715 $ 9,235 |
Summary of Sales Returns Reserve | The sales returns reserve consists of the following activity: Year ended December 31, 2022 2021 2020 (in thousands) Sales returns reserve, beginning balance $ 13,827 $ 4,326 $ 3,759 Reduction of revenue 18,240 37,674 22,676 Decrease related to Pricing Concession ( 11,263 ) — — Utilization of sales returns reserve ( 16,862 ) ( 28,173 ) ( 22,109 ) Sales returns reserve, ending balance $ 3,942 $ 13,827 $ 4,326 |
Summary of Allowance for Credit Losses | The allowance for credit losses consists of the following activity: Year ended December 31, 2022 2021 2020 (in thousands) Allowance for credit losses, beginning balance $ 4,838 $ 1,868 $ 225 Charged to expense 713 9,615 2,352 Accounts written off, net of recoveries ( 5,393 ) ( 6,645 ) ( 709 ) Allowance for credit losses, ending balance $ 158 $ 4,838 $ 1,868 |
Summary of Accrued Warranty Reserve | The accrued warranty reserve consists of the following activity: Year ended December 31, 2022 2021 2020 (in thousands) Accrued warranty reserve, beginning balance $ 4,014 $ 2,390 $ 450 Charged to cost of revenue 2,607 3,229 3,178 Utilization of accrued warranty reserve ( 2,856 ) ( 1,605 ) ( 1,238 ) Accrued warranty reserve, ending balance $ 3,765 $ 4,014 $ 2,390 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Summary of Preliminary Purchase Price Allocation for Acquisition | The table below presents the purchase price allocation: Amount (in thousands) Goodwill $ 873 Intangible assets 1,990 Total fair value of consideration $ 2,863 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Undiscounted Future Minimum Lease Payments Due under Non-cancelable Operating Leases | As of December 31, 2022, undiscounted future minimum lease payments due under the non-cancelable operating leases are as follows: Amount (in thousands) 2023 $ 1,114 2024 1,081 2025 1,331 2026 1,372 2027 1,413 Thereafter 2,193 Total minimum future lease payments 8,504 Present value adjustment for minimum lease commitments ( 1,903 ) Total lease liability $ 6,601 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets, Net | Intangible assets, net consist of the following: December 31, 2022 Gross carrying value Accumulated amortization Net carrying value (in thousands) Developed technologies $ 1,700 $ 637 $ 1,063 Other 290 290 — Total intangible assets, net $ 1,990 $ 927 $ 1,063 |
Summary of Estimated Future Amortization Expense of Finite-lived Intangible Assets, Net | The following table summarizes the estimated future amortization expense of intangible assets, net as of December 31, 2022: Amount (in thousands) 2023 $ 425 2024 425 2025 213 Total $ 1,063 |
Rights Offering and debt obli_2
Rights Offering and debt obligations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Balance of Term Loan | The Company had no outstanding debt as of December 31, 2022. The balance of the term loans as of December 31, 2021 is as follows: December 31, 2021 (in thousands) Principal value of long-term debt $ 15,000 Net of debt discount and accretion of final payment 257 Long-term debt, current and noncurrent 15,257 Less: Long-term debt, current portion ( 3,333 ) Long-term debt, noncurrent portion $ 11,924 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Total Stock-based Compensation | Total stock-based compensation is as follows: Year ended December 31, 2022 2021 2020 (in thousands) Cost of revenue $ 126 $ 738 $ 60 Research and development 1,039 6,939 822 Sales and marketing 2,720 11,213 1,629 General and administrative 6,080 8,841 2,578 Total stock-based compensation $ 9,965 $ 27,731 $ 5,089 |
Summary of Stock Option Activity | Stock option activity for the year ended December 31, 2022 is set forth below: Number of Weighted Weighted Aggregate (in years) (in thousands) Balance December 31, 2021 270,195 $ 97.36 7.88 $ 12,860 Grants 64,391 26.62 Exercises ( 3,026 ) 44.42 Cancelled or forfeited ( 22,245 ) 112.23 Balance December 31, 2022 309,315 $ 82.08 5.60 $ — Vested and exercisable as of December 31, 2022 213,131 $ 70.51 5.33 $ — |
Assumptions used in Estimating Grant-Date Fair Value of Stock-based Awards Using Black-Scholes Option Pricing Model | The estimated grant-date fair value of the Company’s stock options was calculated using the Black-Scholes option pricing model, based on the following assumptions: Year ended December 31, Valuation assumptions: 2022 2021 2020 Expected volatility 59 % - 60 % 53 %- 57 % 60 %- 71 % Expected term 5.2 - 5.8 years 5.8 - 6.7 years 5.1 - 7.0 years Risk-free interest rate 3.18 % - 4.01 % 0.62 %- 1.11 % 0.23 %- 1.20 % Dividend yield — — — |
Schedule of RSU Activity | RSU activity for the year ended December 31, 2022 is set forth below: Number of Weighted average Balance December 31, 2021 17,458 $ 866.76 RSUs granted 181,995 59.59 RSUs vested ( 9,992 ) 495.48 RSUs forfeited ( 13,398 ) 232.09 Balance December 31, 2022 176,063 $ 101.76 |
Fair Value of ESPP Shares Estimated Using Black-Scholes Option Pricing Model | The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model, based on the following assumptions for the offering period that started in May 2021: Year ended December 31, Valuation assumptions: 2021 Expected volatility 44 %- 57 % Expected term 0.5 - 2.0 years Risk-free interest rate 0.04 %- 0.16 % Dividend yield — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of Statutory Federal Income Tax to Effective Tax | Reconciliation of the statutory federal income tax to the Company’s effective tax is as follows: December 31, 2022 2021 2020 (in thousands) Income tax provision at statutory rate $ ( 33,011 ) $ ( 33,128 ) $ ( 8,370 ) State income taxes, net of federal benefit ( 3,280 ) ( 3,104 ) ( 826 ) Change in valuation allowance 22,731 37,792 8,720 Stock-based compensation 101 ( 716 ) ( 621 ) Convertible debt 9,556 — — Research and development tax credits 2,439 ( 1,210 ) ( 1,442 ) Change in fair value of warrants 10 21 326 Derivative liability and extinguishment of debt — — 545 Return-to-provision adjustments 318 308 1,261 Other 1,236 37 407 Total current income tax provision $ 100 $ — $ — |
Schedule of Tax Effects of Temporary Differences and Carryforwards of Significant Portions of Deferred Tax Assets | The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets are as follows: December 31, 2022 2021 2020 (in thousands) Deferred tax assets: Net operating loss carryforwards $ 91,036 $ 62,322 $ 35,943 Research and development credits 3,077 5,120 3,910 Accruals and reserves 3,067 13,597 2,986 Lease liability 1,574 1,690 — Stock-based compensation 2,559 565 589 Interest expense carryforward 60 — — Research and development capitalization 3,695 — — Total deferred tax assets 105,068 83,294 43,428 Valuation allowance ( 102,957 ) ( 80,226 ) ( 42,435 ) Deferred tax assets after valuation allowance 2,111 3,068 993 Deferred tax liabilities: Depreciation and amortization ( 736 ) ( 1,429 ) ( 993 ) Right-of-use asset ( 1,375 ) ( 1,639 ) — Total deferred tax liabilities ( 2,111 ) ( 3,068 ) ( 993 ) Net deferred tax assets $ — $ — $ — |
Schedule of Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: December 31, 2022 2021 2020 (in thousands) Beginning balance $ 2,194 $ 1,676 $ 1,058 Increases (decreases) related to current year tax positions ( 875 ) 518 618 Ending balance $ 1,319 $ 2,194 $ 1,676 |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable To Common Stockholders (Tables) | 12 Months Ended |
Dec. 31, 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: Year ended December 31, 2022 2021 2020 Common stock options issued and 309,315 270,195 323,442 Restricted stock units 176,063 21,458 413 Shares issuable pursuant to ESPP — — 893 Total 485,378 291,653 324,748 |
Computation of Basic And Diluted Net Loss Per Share Attributable to Common Stockholders | The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders: Year ended December 31, 2022 2021 2020 (in thousands, except share and per share amounts) Numerator: Net loss $ ( 157,487 ) $ ( 157,754 ) $ ( 39,855 ) Gain on extinguishment of Series C and Series — — 9,840 Net loss attributable to common stockholders, $ ( 157,487 ) $ ( 157,754 ) $ ( 30,015 ) Denominator: Weighted-average shares used in computing net 3,968,432 1,944,857 394,405 Net loss per share attributable to common $ ( 39.68 ) $ ( 81.11 ) $ ( 76.10 ) |
Description of Business - Addit
Description of Business - Additional Information (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||
Nov. 23, 2022 USD ($) | Jan. 31, 2023 | Nov. 30, 2022 USD ($) shares | Oct. 31, 2022 shares | Sep. 30, 2022 USD ($) | Apr. 29, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2020 shares | Jan. 01, 2023 $ / shares | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) $ / shares | Sep. 21, 2021 USD ($) | |
Description Of Business [Line Items] | ||||||||||||
Reverse stock split description | 1-for-20 basis | |||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||||
Insurance claims received under FEHB program | $ 44,000 | |||||||||||
Unsubmitted and unpaid claims | $ 16,100 | |||||||||||
Reduction in insurance related accounts receivable | $ 16,100 | |||||||||||
Reduction in insurance related revenue from contracts with customer | 11,600 | |||||||||||
Reduction in net revenue | 300 | |||||||||||
Reduction in insurance related allowance for doubtful accounts receivable | 4,500 | |||||||||||
Reduction in revenue related to unpaid claims | 11,263 | |||||||||||
Increase in insurance related revenue from contracts with customer | 11,300 | |||||||||||
Proceeds from issuance of common stock | 27,598 | |||||||||||
Cash and cash equivalents | 101,238 | $ 110,500 | ||||||||||
Accumulated deficit | $ 514,299 | 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 | Note Purchase Agreement | ||||||||||||
Description Of Business [Line Items] | ||||||||||||
Debt instrument maximum Issuance amount | $ 125,000 | |||||||||||
Aggregate principal amount | $ 5,500 | $ 100,000 | ||||||||||
Rights | ||||||||||||
Description Of Business [Line Items] | ||||||||||||
Proceeds from issuance of common stock | $ 27,600 | $ 27,600 | ||||||||||
Rights | 2022 Convertible Notes | Note Purchase Agreement | ||||||||||||
Description Of Business [Line Items] | ||||||||||||
Issuance of shares | shares | 18,750,000 | |||||||||||
Subsequent Event [Member] | ||||||||||||
Description Of Business [Line Items] | ||||||||||||
Reverse stock split description | On January 11, 2023, the Company announced that the Board had approved the Reverse Stock Split, and on January 17, 2023, the Reverse Stock Split was effected. The Company’s common stock began trading on a split-adjusted basis on January 18, 2023. The number of authorized shares and par values of the common stock were not adjusted as a result of this amendment. | |||||||||||
Common stock, par value | $ / shares | $ 0.0001 | |||||||||||
Reverse stock split ratio | 0.20 | |||||||||||
Common Stock | ||||||||||||
Description Of Business [Line Items] | ||||||||||||
Issuance of shares | shares | 2,928,701 | 451,481 | ||||||||||
Conversion of convertible notes, Shares | shares | 15,821,299 | |||||||||||
Common Stock | Rights | ||||||||||||
Description Of Business [Line Items] | ||||||||||||
Issuance of shares | shares | 18,750,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) Segmant | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Product warranty limited warranty period | 1 year | ||
Advertising costs | $ 19,300 | $ 41,900 | $ 23,600 |
Number of operating segment | Segmant | 1 | ||
Number of reportable segment | Segmant | 1 | ||
Employee benefit plan, employer contributions | $ 0 | ||
ASU 2019-12 | |||
Summary Of Significant Accounting Policies [Line Items] | |||
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, immaterial effect | true | ||
ASU 2022-03 | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Change in accounting principle, accounting standards update, immaterial effect | true | ||
Internal Use Software | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Finite-lived intangible asset, useful life | 3 years | ||
Minimum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Estimated useful life of property and equipment | 3 years | ||
Finite-lived intangible asset, useful life | 1 year | ||
Maximum | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Estimated useful life of property and equipment | 5 years | ||
Finite-lived intangible asset, useful life | 4 years | ||
Cash, FDIC insured amount | $ 250,000 | ||
Accounts Receivable | Credit Concentration Risk | Eargo Hearing Aids | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 90% | ||
Accounts Receivable | Credit Concentration Risk | FEHB | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 93% |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value Disclosures [Abstract] | ||
Financial assets outstanding | $ 0 | $ 0 |
Financial liabilities outstanding | $ 0 | $ 0 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Change in the Estimated Fair Value (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2020 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Change in fair value of convertible notes | $ (45,503) | $ (1,471) |
Conversion of convertible notes | (150,978) | |
2022 Convertible Notes | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair value of convertible notes upon issuance | 105,475 | |
Change in fair value of convertible notes | 45,503 | |
Conversion of convertible notes | $ (150,978) |
Balance Sheet Components - Summ
Balance Sheet Components - Summary of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 410 | $ 1,905 |
Finished goods | 4,626 | 3,807 |
Total inventories | $ 5,036 | $ 5,712 |
Balance Sheet Components - Su_2
Balance Sheet Components - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Advances to suppliers | $ 2,000 | $ 95 |
Marketing costs | 1,709 | 1,948 |
Payroll advances | 1,686 | 3,889 |
Software subscriptions | 1,553 | 1,468 |
Product launch fee | 252 | 0 |
Insurance costs | 78 | 2,945 |
Other | 568 | 528 |
Total prepaid expenses and other current assets | $ 7,846 | $ 10,873 |
Balance Sheet Components - Su_3
Balance Sheet Components - Summary of Property And Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | $ 20,581 | $ 18,449 |
Less accumulated depreciation and amortization | (13,140) | (8,898) |
Total property and equipment, net | 7,441 | 9,551 |
Capitalized Software | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 11,579 | 11,569 |
Tools and Lab Equipment | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 5,087 | 4,712 |
Furniture and Fixtures | ||
Property Plant And Equipment [Line Items] | ||
Total property and equipment, gross | 2,440 | 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 | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property Plant And Equipment [Line Items] | |||
Depreciation and amortization expense | $ 4,800 | $ 4,200 | $ 2,500 |
Amortization of capitalized software costs | 3,500 | $ 2,100 | $ 800 |
Reduction in revenue related to unpaid claims | $ 11,263 |
Balance Sheet Components - Su_4
Balance Sheet Components - Summary of Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Accrued compensation | $ 8,070 | $ 4,845 |
Accrued warranty reserve | 3,765 | 4,014 |
Refunds due to customers | 580 | 376 |
Other accrued expenses | 300 | |
Total accrued expenses | $ 12,715 | $ 9,235 |
Balance Sheet Components - Su_5
Balance Sheet Components - Summary of Sales Returns Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||
Sales returns reserve, beginning balance | $ 13,827 | $ 4,326 | $ 3,759 |
Charged to revenue | 18,240 | 37,674 | 22,676 |
Decrease related to Pricing Concession | (11,263) | ||
Utilization of sales returns reserve | (16,862) | (28,173) | (22,109) |
Sales returns reserve, ending balance | $ 3,942 | $ 13,827 | $ 4,326 |
Balance Sheet Components - Su_6
Balance Sheet Components - Summary of Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | |||
Allowance for credit losses, beginning balance | $ 4,838 | $ 1,868 | $ 225 |
Charged to expense | 713 | 9,615 | 2,352 |
Accounts written off, net of recoveries | (5,393) | (6,645) | (709) |
Allowance for credit losses, ending balance | $ 158 | $ 4,838 | $ 1,868 |
Balance Sheet Components - Su_7
Balance Sheet Components - Summary of Accrued Warranty Reserve (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||
Accrued warranty reserve, beginning balance | $ 4,014 | $ 2,390 | $ 450 |
Charged to cost of revenue | 2,607 | 3,229 | 3,178 |
Utilization of accrued warranty reserve | (2,856) | (1,605) | (1,238) |
Accrued warranty reserve, ending balance | $ 3,765 | $ 4,014 | $ 2,390 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - Clementine - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | ||
Cash acquired | $ 2.9 | |
Developed Technologies | ||
Business Acquisition [Line Items] | ||
Acquired intangible assets, weighted average amortization period | 3 years 7 months 6 days |
Acquisitions - Summary of Preli
Acquisitions - Summary of Preliminary Purchase Price Allocation for Acquisition (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||
Goodwill | $ 873 | $ 873 |
Clementine | ||
Business Acquisition [Line Items] | ||
Goodwill | 873 | |
Intangible assets | 1,990 | |
Total fair value of consideration | $ 2,863 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | 1 Months Ended | 12 Months Ended | ||||||
Apr. 29, 2022 USD ($) | Sep. 30, 2021 USD ($) Option Squarefeet | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Mar. 15, 2023 USD ($) | Jan. 31, 2023 | Feb. 28, 2021 USD ($) | |
Commitments And Contingencies [Line Items] | ||||||||
Operating lease liabilities | $ 6,800,000 | $ 6,601,000 | ||||||
Operating lease right-of-use assets | $ 6,900,000 | 5,765,000 | $ 7,165,000 | |||||
Lease liability, current portion | $ 628,000 | 750,000 | ||||||
ROU asset and operating lease liability, weighted-average incremental borrowing rate | 7.70% | |||||||
Operating lease, weighted-average remaining lease term | 6 years 4 months 24 days | |||||||
Operating lease costs | $ 1,600,000 | 1,500,000 | $ 1,300,000 | |||||
Cash paid for operating lease liabilities | $ 1,100,000 | 1,400,000 | $ 1,200,000 | |||||
Settlement liability | 34,372,000 | |||||||
Subsequent Event | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Operating lease, term of contract | 76 years | |||||||
Operating lease, renewal term | 5 years | |||||||
Settlement liability | $ 249,500 | |||||||
Civil Settlement Agreement | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Settlement liability | $ 34,400,000 | |||||||
Civil Settlement Agreement | U.S. Government | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Settlement Liability | $ 34,400,000 | |||||||
Nashville, Tennessee | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Operating lease liabilities | $ 400,000 | |||||||
Operating lease right-of-use assets | $ 400,000 | |||||||
San jose, California | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Number of square feet of office space leased | Squarefeet | 30,000 | |||||||
Operating lease, term of contract | 93 months | |||||||
Operating lease, renewal term | 60 months | |||||||
Operating lease number of renewal options | Option | 2 | |||||||
Operating lease, description | 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. |
Commitments and Contingencies_2
Commitments and Contingencies - Schedule of Undiscounted Future Minimum Lease Payments Due under Non-cancelable Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2021 |
Commitments And Contingencies Disclosure [Abstract] | ||
2023 | $ 1,114 | |
2024 | 1,081 | |
2025 | 1,331 | |
2026 | 1,372 | |
2027 | 1,413 | |
Thereafter | 2,193 | |
Total minimum future lease payments | 8,504 | |
Present value adjustment for minimum lease commitments | (1,903) | |
Total lease liability | $ 6,601 | $ 6,800 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Summary of Intangible Assets, Net (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying value | $ 1,990 |
Accumulated amortization | 927 |
Net carrying value | 1,063 |
Developed Technologies | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying value | 1,700 |
Accumulated amortization | 637 |
Net carrying value | 1,063 |
Other | |
Finite-Lived Intangible Assets [Line Items] | |
Gross carrying value | 290 |
Accumulated amortization | $ 290 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 873,000 | $ 873,000 |
Impairment of goodwill | 0 | 0 |
Amortization expense | 600,000 | 300,000 |
Impairments of intangible assets | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Estimated Future Amortization Expense of Finite-lived Intangible Assets, Net (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 | $ 425 |
2024 | 425 |
2025 | 213 |
Net carrying value | $ 1,063 |
Rights Offering and debt obli_3
Rights Offering and debt obligations - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||||||||
Nov. 25, 2022 | Nov. 23, 2022 | Dec. 31, 2018 | Nov. 30, 2022 | Oct. 31, 2022 | Jun. 30, 2022 | Sep. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 28, 2022 | Jun. 24, 2022 | Sep. 30, 2021 | Jun. 30, 2018 | |
Debt Instrument [Line Items] | |||||||||||||||
Net proceeds from issuance of common stock | $ 27,598,000 | ||||||||||||||
Conversion shares, fair value | 150,978,000 | ||||||||||||||
Principal value | $ 15,000,000 | ||||||||||||||
Debt, final payment as percentage of original aggregate principal amount | 6% | ||||||||||||||
Interest expense | 549,000 | 1,068,000 | $ 1,920,000 | ||||||||||||
Outstanding debt | 0 | 15,257,000 | |||||||||||||
Loss on extinguishment of debt | $ 772,000 | $ 1,627,000 | |||||||||||||
Common Stock | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Issuance of shares | 2,928,701 | 451,481 | |||||||||||||
Converstion of common stock | 1,409,819 | ||||||||||||||
PSC beneficially owned the conversion shares percentage | 76.30% | ||||||||||||||
Conversion shares, fair value | $ 151,000,000 | $ 2,000 | |||||||||||||
Common Stock | First Tranche | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Converstion of common stock | 15,000,000 | ||||||||||||||
Common Stock | Second Tranche | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Converstion of common stock | 821,299 | ||||||||||||||
2018 Loan Agreement | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Aggregate principal amount | $ 12,500,000 | ||||||||||||||
Proceeds from debt financing | $ 7,000,000 | ||||||||||||||
Amendments 2018 Loan Agreement | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Aggregate principal amount | $ 20,000,000 | ||||||||||||||
Proceeds from debt financing | $ 15,000,000 | $ 5,000,000 | |||||||||||||
Principal value | $ 12,000,000 | ||||||||||||||
Repayments on outstanding debt | $ 15,000,000 | 10,200,000 | |||||||||||||
Prepayment fee | 300 | ||||||||||||||
Final payment fee | 900,000 | 9,500,000 | |||||||||||||
Payments on existing term loan | $ 700,000 | ||||||||||||||
Debt, final payment as percentage of original aggregate principal amount | 6.25% | ||||||||||||||
Interest expense | 500,000 | $ 1,100,000 | $ 1,000,000 | ||||||||||||
Loss on extinguishment of debt | $ (800,000) | ||||||||||||||
Amendments 2018 Loan Agreement | Series C Convertible Preferred Stock | Silicon Valley Bank | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Warrants issued to purchase shares of convertible preferred stock | 14,999 | ||||||||||||||
Amendments 2018 Loan Agreement | Series E Convertible Preferred Stock | Silicon Valley Bank | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Warrants issued to purchase shares of convertible preferred stock | 53,487 | ||||||||||||||
Amendments 2018 Loan Agreement | Wall Street Journal Prime Rate | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Term loans, interest rate | 1% | ||||||||||||||
2022 Convertible Notes | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Conversion shares, fair value | 150,978,000 | ||||||||||||||
2022 Convertible Notes | First Tranche | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Aggregate principal amount | $ 100,000,000 | $ 125,000,000 | |||||||||||||
2022 Convertible Notes | Second Tranche | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Aggregate principal amount | $ 5,500,000 | 25,000,000 | |||||||||||||
2022 Convertible Notes | General and Administrative | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Gain (Loss) on Repurchase of Debt Instrument | $ 5,700,000 | ||||||||||||||
Rights Offering | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Common stock offering price per share | $ 10 | ||||||||||||||
Common stock subscribed shares | 2,928,701 | ||||||||||||||
Net proceeds from issuance of common stock | $ 27,600,000 | $ 27,600,000 | |||||||||||||
Rights Offering | Second Tranche | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Common stock subscribed shares | 3,750,000 | ||||||||||||||
Rights Offering | Common Stock | |||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||
Issuance of shares | 18,750,000 |
Rights Offering and debt obli_4
Rights Offering and debt obligations - Schedule of Balance of Term Loan (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Principal value | $ 15,000 | |
Net of debt discount and accretion of final payment | 257 | |
Long-term debt, current and noncurrent | $ 0 | 15,257 |
Less: Long-term debt, current portion | (3,333) | |
Long-term debt, noncurrent portion | $ 11,924 |
Convertible Preferred Stock - A
Convertible Preferred Stock - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | |
Temporary Equity [Line Items] | |||
Common stock, shares authorized | 450,000,000 | 110,000,000 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Preferred Stock Shares Authorized | 5,000,000 | 5,000,000 | |
Preferred stock, par value | $ 0.0001 | $ 0.0001 | |
Proceeds from issuance of convertible notes, net of issuance costs | $ 67,867 |
Stock-based Compensation - Summ
Stock-based Compensation - Summary of Total Stock-based Compensation (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 300 | $ 9,965 | $ 27,731 | $ 5,089 |
Cost of Revenue | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 126 | 738 | 60 | |
Research and Development | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 1,039 | 6,939 | 822 | |
Sales and Marketing | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | 2,720 | 11,213 | 1,629 | |
General and Administrative | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation | $ 6,080 | $ 8,841 | $ 2,578 |
Stock-based Compensation - Addi
Stock-based Compensation - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||
Nov. 09, 2021 | Nov. 30, 2022 | Jun. 30, 2021 | Oct. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Stock-based compensation costs capitalized | $ 0 | $ 878,000 | $ 203,000 | ||||
Shares of common stock issuable upon exercise of outstanding awards | 213,131 | ||||||
Total stock-based compensation | $ 300,000 | $ 9,965,000 | $ 27,731,000 | $ 5,089,000 | |||
Weighted-average grant-date fair value of options granted | $ 14.65 | $ 494.40 | $ 64.40 | ||||
Options, exercised, intrinsic value | $ 32,400,000 | ||||||
Unrecognized stock-based compensation related to outstanding unvested stock options | $ 6,200,000 | ||||||
Unrecognized stock-based compensation related to outstanding unvested stock options, period of recognition | 1 year 10 months 24 days | ||||||
2020 Equity Incentive Plan | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Common stock reserved for issuance | 471,015 | ||||||
Number of shares available for grant | 205,926 | ||||||
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 | 231,437 | ||||||
2020 Employee Stock Purchase Plan | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Total stock-based compensation | $ 9,000,000 | $ 17,400,000 | |||||
Employees eligible compensation maximum percentage | 15% | ||||||
Share based compensation arrangement by share based payment award equity instruments refund amount | $ 2,200,000 | ||||||
Employee Stock Purchase Plan | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Common stock reserved for issuance | 75,115 | ||||||
Number of shares available for grant | 66,378 | ||||||
Purchase shares of common stock at price per share equal to lesser | 85% | ||||||
Stock Option Repricing | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Total stock-based compensation | $ 100,000 | $ 5,000,000 | |||||
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 | $ 16,000,000 | ||||||
Unrecognized stock-based compensation related to outstanding unvested stock options, period of recognition | 3 years 4 months 24 days | ||||||
Number of shares, RSUs granted | 181,995 | ||||||
Number of shares, RSUs vested | (9,992) | ||||||
Number of shares, RSUs forfeited | (13,398) | ||||||
Performance-based Restricted Stock Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Share-based compensation, options grants in period, grant date fair value | $ 3,000,000 | ||||||
Number of shares, RSUs granted | 4,000 | ||||||
Share Based Cumulative Compensation | $ 1,800,000 |
Stock-based Compensation - Su_2
Stock-based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Number of shares, Balance | 270,195 | |
Number of shares, Grants | 64,391 | |
Number of shares, Exercises | (3,026) | |
Number of shares, Cancelled/forfeited | (22,245) | |
Number of shares, Balance | 309,315 | 270,195 |
Number of shares, Vested and exercisable | 213,131 | |
Weighted average exercise price, Balance | $ 97.36 | |
Weighted average exercise price, Grants | 26.62 | |
Weighted average exercise price, Exercises | 44.42 | |
Weighted average exercise price, Cancelled/forfeited | 112.23 | |
Weighted average exercise price, Balance | 82.08 | $ 97.36 |
Weighted average exercise price, Vested and exercisable | $ 70.51 | |
Weighted average remaining contractual term, Balance | 5 years 7 months 6 days | 7 years 10 months 17 days |
Weighted average remaining contractual term, Vested and exercisable | 5 years 3 months 29 days | |
Aggregate intrinsic value, Balance | $ 12,860 |
Stock-based Compensation - Assu
Stock-based Compensation - Assumptions used in Estimating Grant-Date Fair Value of Stock-based Awards Using Black-Scholes Option Pricing Model (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Valuation assumptions: | |||
Expected volatility, Minimum | 59% | 53% | 60% |
Expected volatility, Maximum | 60% | 57% | 71% |
Risk-free interest rate, Minimum | 3.18% | 0.62% | 0.23% |
Risk-free interest rate, Maximum | 4.01% | 1.11% | 1.20% |
Minimum | |||
Valuation assumptions: | |||
Expected term | 5 years 2 months 12 days | 5 years 9 months 18 days | 5 years 1 month 6 days |
Maximum | |||
Valuation assumptions: | |||
Expected term | 5 years 9 months 18 days | 6 years 8 months 12 days | 7 years |
Stock-based compensation - Su_3
Stock-based compensation - Summary of RSU Activity (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Number of shares, Balance | shares | 17,458 |
Number of shares, RSUs granted | shares | 181,995 |
Number of shares, RSUs vested | shares | (9,992) |
Number of shares, RSUs forfeited | shares | (13,398) |
Number of shares, Balance | shares | 176,063 |
Weighted average grant date fair value per share, Balance | $ / shares | $ 866.76 |
Weighted average grant date fair value per share, RSUs granted | $ / shares | 59.59 |
Weighted average grant date fair value per share, RSUs vested | $ / shares | 495.48 |
Weighted average grant date fair value per share, RSUs forfeited | $ / shares | 232.09 |
Weighted average grant date fair value per share, Balance | $ / shares | $ 101.76 |
Stock-based Compensation - As_2
Stock-based Compensation - Assumptions Used in Estimated Fair Value of 2020 Employee Stock Purchase Plan Using Black-Scholes Option Pricing Model (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | |||
Expected volatility, Minimum | 59% | 53% | 60% |
Expected volatility, Maximum | 60% | 57% | 71% |
Risk-free interest rate, Minimum | 3.18% | 0.62% | 0.23% |
Risk-free interest rate, Maximum | 4.01% | 1.11% | 1.20% |
2020 Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | |||
Expected volatility, Minimum | 44% | ||
Expected volatility, Maximum | 57% | ||
Risk-free interest rate, Minimum | 0.04% | ||
Risk-free interest rate, Maximum | 0.16% | ||
Minimum | |||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | |||
Expected term | 5 years 2 months 12 days | 5 years 9 months 18 days | 5 years 1 month 6 days |
Minimum | 2020 Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | |||
Expected term | 6 months | ||
Maximum | |||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | |||
Expected term | 5 years 9 months 18 days | 6 years 8 months 12 days | 7 years |
Maximum | 2020 Employee Stock Purchase Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions And Methodology [Abstract] | |||
Expected term | 2 years |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Income tax provision | $ 100,000 | $ 0 | $ 0 |
Increase in valuation allowance | 22,700,000 | 37,800,000 | 8,700,000 |
Unrecognized tax benefits interest and penalties related to uncertain tax position | 0 | $ 0 | $ 0 |
Accrual for payment of interest related to unrecognized tax benefits | 0 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 374,700,000 | ||
Operating loss carryforwards expiration year | 2030 | ||
Net operating loss carryforwards, indefinitely | $ 348,000,000 | ||
Net operating loss carryforwards, within expiration year | 26,700,000 | ||
Federal | Research and Development Credits Carryovers | |||
Operating Loss Carryforwards [Line Items] | |||
Tax credit carryforward amount | $ 100,000 | ||
Tax credit carryforward expiration year | 2031 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 156,100,000 | ||
Operating loss carryforwards expiration year | 2030 | ||
State | Research and Development Credits Carryovers | |||
Operating Loss Carryforwards [Line Items] | |||
Tax credit carryforward amount | $ 4,300,000 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Statutory Federal Income Tax to Effective Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Income tax provision at statutory rate | $ (33,011) | $ (33,128) | $ (8,370) |
State income taxes, net of federal benefit | (3,280) | (3,104) | (826) |
Change in valuation allowance | 22,731 | 37,792 | 8,720 |
Stock-based compensation | 101 | (716) | (621) |
Convertible debt | 9,556 | ||
Research and development tax credits | 2,439 | (1,210) | (1,442) |
Change in fair value of warrants | 10 | 21 | 326 |
Derivative liability and extinguishment of debt | 545 | ||
Return-to-provision adjustments | 318 | 308 | 1,261 |
Other | 1,236 | 37 | 407 |
Total current income tax provision | $ 100 | $ 0 | $ 0 |
Income Taxes - Schedule of Tax
Income Taxes - Schedule of Tax Effects of Temporary Differences and Carryforwards of Significant Portions of Deferred Tax Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 91,036 | $ 62,322 | $ 35,943 |
Research and development credits | 3,077 | 5,120 | 3,910 |
Accruals and reserves | 3,067 | 13,597 | 2,986 |
Lease liability | 1,574 | 1,690 | |
Stock-based compensation | 2,559 | 565 | 589 |
Interest expense carryforward | 60 | ||
Research and development capitalization | 3,695 | ||
Total deferred tax assets | 105,068 | 83,294 | 43,428 |
Valuation allowance | (102,957) | (80,226) | (42,435) |
Deferred tax assets after valuation allowance | 2,111 | 3,068 | 993 |
Deferred tax liabilities: | |||
Depreciation and amortization | (736) | (1,429) | (993) |
Right-of-use asset | (1,375) | (1,639) | |
Total deferred tax liabilities | (2,111) | (3,068) | (993) |
Net deferred tax assets | $ 0 | $ 0 | $ 0 |
Income Taxes - Schedule of Re_2
Income Taxes - Schedule of Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Beginning balance | $ 2,194 | $ 1,676 | $ 1,058 |
Changes related to current year tax positions | (875) | ||
Changes related to current year tax positions | 518 | 618 | |
Ending balance | $ 1,319 | $ 2,194 | $ 1,676 |
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 | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 485,378 | 291,653 | 324,748 |
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 | 309,315 | 270,195 | 323,442 |
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 | 176,063 | 21,458 | 413 |
Shares Issuable Pursuant to ESPP | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from calculation of diluted net loss per share | 893 |
Net Loss Per Share Attributab_4
Net Loss Per Share Attributable To Common Stockholders - Computation of Basic And Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net loss | $ (157,487) | $ (157,754) | $ (39,855) |
Gain on extinguishment of Series C and Series C-1 convertible preferred stock | 9,840 | ||
Net loss attributable to common stockholders, basic and diluted | $ (157,487) | $ (157,754) | $ (30,015) |
Denominator: | |||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic | 3,968,432 | 1,944,857 | 394,405 |
Weighted-average shares used in computing net loss per share attributable to common stockholders, diluted | 3,968,432 | 1,944,857 | 394,405 |
Net loss per share attributable to common stockholders, basic | $ (39.68) | $ (81.11) | $ (76.10) |
Net loss per share attributable to common stockholders, diluted | $ (39.68) | $ (81.11) | $ (76.10) |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) $ in Millions | 1 Months Ended | 12 Months Ended | 76 Months Ended | ||
Jan. 31, 2023 USD ($) ft² | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jul. 31, 2029 USD ($) | |
Subsequent Event [Line Items] | |||||
Reverse stock split description | 1-for-20 basis | ||||
Total noncancelable lease payments | $ 1.1 | $ 1.4 | $ 1.2 | ||
Forecast | |||||
Subsequent Event [Line Items] | |||||
Total noncancelable lease payments | $ 3.1 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Reverse stock split description | On January 11, 2023, the Company announced that the Board had approved the Reverse Stock Split, and on January 17, 2023, the Reverse Stock Split was effected. The Company’s common stock began trading on a split-adjusted basis on January 18, 2023. The number of authorized shares and par values of the common stock were not adjusted as a result of this amendment. | ||||
Area of Land | ft² | 17,572 | ||||
Operating lease, term of contract | 76 years | ||||
Operating lease, renewal term | 5 years | ||||
Tenant Improvement Allowance | $ 0.9 |