☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A Common Stock, $0.0001 par value | ORGO | Nasdaq Capital Market |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
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Item 1A | 38 | |||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 77,458 | $ | 84,394 | ||||
Restricted cash | 500 | 412 | ||||||
Accounts receivable, net | 72,003 | 56,804 | ||||||
Inventory | 29,721 | 27,799 | ||||||
Prepaid expenses and other current assets | 5,557 | 4,935 | ||||||
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Total current assets | 185,239 | 174,344 | ||||||
Property and equipment, net | 62,431 | 60,068 | ||||||
Intangible assets, net | 29,379 | 30,622 | ||||||
Goodwill | 28,772 | 28,772 | ||||||
Operating lease right-of-use assets, net | 12,706 | — | ||||||
Deferred tax asset, net | 18 | 18 | ||||||
Other assets | 636 | 670 | ||||||
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Total assets | $ | 319,181 | $ | 294,494 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Deferred acquisition consideration | $ | — | $ | 483 | ||||
Current portion of term loan | 16,875 | 16,666 | ||||||
Current portion of finance lease obligations | 3,870 | 3,619 | ||||||
Current portion of operating lease obligations | 4,004 | — | ||||||
Current portion of deferred rent and lease incentive obligation | — | 95 | ||||||
Accounts payable | 23,877 | 23,381 | ||||||
Accrued expenses and other current liabilities | 25,383 | 23,973 | ||||||
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Total current liabilities | 74,009 | 68,217 | ||||||
Line of credit | 10,000 | 10,000 | ||||||
Term loan, net of current portion | 42,876 | 43,044 | ||||||
Deferred acquisition consideration, net of current portion | 1,436 | 1,436 | ||||||
Earnout liability | 3,689 | 3,985 | ||||||
Deferred rent and lease incentive obligation, net of current portion | — | 2,315 | ||||||
Finance lease obligations, net of current portion | 10,516 | 11,442 | ||||||
Operating lease obligations, net of current portion | 11,031 | — | ||||||
Other liabilities | 8,332 | 7,971 | ||||||
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Total liabilities | 161,889 | 148,410 | ||||||
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Commitments and contingencies (Note 18) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | — | — | ||||||
Common stock, $0.0001 par value; 400,000,000 shares authorized; 128,830,803 and 128,460,381 shares issued; 128,102,255 and 127,731,833 shares outstanding at March 31, 2021 and December 31, 2020, respectively. | 13 | 13 | ||||||
Additional paid-in capital | 298,095 | 296,830 | ||||||
Accumulated deficit | (140,816 | ) | (150,759 | ) | ||||
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Total stockholders’ equity | 157,292 | 146,084 | ||||||
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Total liabilities and stockholders’ equity | $ | 319,181 | $ | 294,494 | ||||
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June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 89,790 | $ | 84,394 | ||||
Restricted cash | 517 | 412 | ||||||
Accounts receivable, net | 76,767 | 56,804 | ||||||
Inventory | 28,106 | 27,799 | ||||||
Prepaid expenses and other current assets | 6,583 | 4,935 | ||||||
Total current assets | 201,763 | 174,344 | ||||||
Property and equipment, net | 69,739 | 60,068 | ||||||
Intangible assets, net | 28,136 | 30,622 | ||||||
Goodwill | 28,772 | 28,772 | ||||||
Operating lease right-of-use | 26,531 | — | ||||||
Deferred tax asset, net | 18 | 18 | ||||||
Other assets | 605 | 670 | ||||||
Total assets | $ | 355,564 | $ | 294,494 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Deferred acquisition consideration | $ | — | $ | 483 | ||||
Current portion of term loan | 22,500 | 16,666 | ||||||
Current portion of finance lease obligations | 4,134 | 3,619 | ||||||
Current portion of operating lease obligations | 4,504 | — | ||||||
Current portion of deferred rent and lease incentive obligation | — | 95 | ||||||
Accounts payable | 26,789 | 23,381 | ||||||
Accrued expenses and other current liabilities | 26,618 | 23,973 | ||||||
Total current liabilities | 84,545 | 68,217 | ||||||
Line of credit | 10,000 | 10,000 | ||||||
Term loan, net of current portion | 37,290 | 43,044 | ||||||
Deferred acquisition consideration, net of current portion | 1,436 | 1,436 | ||||||
Earnout liability | 927 | 3,985 | ||||||
Deferred rent and lease incentive obligation, net of current portion | — | 2,315 | ||||||
Finance lease obligations, net of current portion | 9,553 | 11,442 | ||||||
Operating lease obligations, net of current portion | 24,224 | — | ||||||
Other liabilities | 8,667 | 7,971 | ||||||
Total liabilities | 176,642 | 148,410 | ||||||
Commitments and contingencies (Note 18) | 0 | 0 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0ne issued | 0— | 0— | ||||||
Common stock, $0.0001 par value; 400,000,000 shares authorized; 129,011,789 and 128,460,381 shares issued; 128,283,241 and 127,731,833 shares outstanding at June 30, 2021 and December 31, 2020, respectively. | 13 | 13 | ||||||
Additional paid-in capital | 299,038 | 296,830 | ||||||
Accumulated deficit | (120,129 | ) | (150,759 | ) | ||||
Total stockholders’ equity | 178,922 | 146,084 | ||||||
Total liabilities and stockholders’ equity | $ | 355,564 | $ | 294,494 | ||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Net revenue | $ | 102,552 | $ | 61,732 | ||||
Cost of goods sold | 25,495 | 18,793 | ||||||
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Gross profit | 77,057 | 42,939 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 58,232 | 52,613 | ||||||
Research and development | 6,209 | 5,410 | ||||||
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Total operating expenses | 64,441 | 58,023 | ||||||
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Income (loss) from operations | 12,616 | (15,084 | ) | |||||
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Other expense, net: | ||||||||
Interest expense, net | (2,470 | ) | (2,510 | ) | ||||
Gain on settlement of deferred acquisition consideration | — | 1,295 | ||||||
Other income (expense), net | (3 | ) | 21 | |||||
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Total other expense, net | (2,473 | ) | (1,194 | ) | ||||
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Net income (loss) before income taxes | 10,143 | (16,278 | ) | |||||
Income tax expense | (200 | ) | (35 | ) | ||||
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Net income (loss) | $ | 9,943 | $ | (16,313 | ) | |||
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Net income (loss), per share: | ||||||||
Basic | $ | 0.08 | $ | (0.16 | ) | |||
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Diluted | $ | 0.07 | $ | (0.16 | ) | |||
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Weighted-average common shares outstanding | ||||||||
Basic | 127,870,065 | 104,486,924 | ||||||
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Diluted | 133,451,950 | 104,486,924 | ||||||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net revenue | $ | 123,196 | $ | 68,960 | $ | 225,748 | $ | 130,692 | ||||||||
Cost of goods sold | 29,940 | 20,042 | 55,435 | 38,835 | ||||||||||||
Gross profit | 93,256 | 48,918 | 170,313 | 91,857 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 62,349 | 46,502 | 120,581 | 99,115 | ||||||||||||
Research and development | 7,320 | 4,668 | 13,529 | 10,078 | ||||||||||||
Total operating expenses | 69,669 | 51,170 | 134,110 | 109,193 | ||||||||||||
Income (loss) from operations | 23,587 | (2,252 | ) | 36,203 | (17,336 | ) | ||||||||||
Other expense, net: | ||||||||||||||||
Interest expense, net | (2,431 | ) | (2,912 | ) | (4,901 | ) | (5,422 | ) | ||||||||
Gain on settlement of deferred acquisition consideration | — | — | — | 1,295 | ||||||||||||
Other income, net | 18 | 25 | 15 | 46 | ||||||||||||
Total other expense, net | (2,413 | ) | (2,887 | ) | (4,886 | ) | (4,081 | ) | ||||||||
Net income (loss) before income taxes | 21,174 | (5,139 | ) | 31,317 | (21,417 | ) | ||||||||||
Income tax expense | (487 | ) | (27 | ) | (687 | ) | (62 | ) | ||||||||
Net income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Net income (loss), per share: | ||||||||||||||||
Basic | $ | 0.16 | $ | (0.05 | ) | $ | 0.24 | $ | (0.21 | ) | ||||||
Diluted | $ | 0.15 | $ | (0.05 | ) | $ | 0.23 | $ | (0.21 | ) | ||||||
Weighted-average common shares outstanding | ||||||||||||||||
Basic | 128,235,224 | 104,714,725 | 128,053,654 | 104,600,825 | ||||||||||||
Diluted | 133,988,413 | 104,714,725 | 133,721,191 | 104,600,825 | ||||||||||||
Three Months Ended March 31, 2021 | ||||||||||||||||||||
Additional | ||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Total | |||||||||||||||||
Shares | Amount | Capital | Deficit | Stockholders’ Equity | ||||||||||||||||
Balance as of December 31, 2020 (as reported) | 127,731,833 | $ | 13 | $ | 299,129 | $ | (153,058 | ) | $ | 146,084 | ||||||||||
Adjustment due to Private Warrant reclassification | — | — | (2,299 | ) | 2,299 | — | ||||||||||||||
Balance as of December 31, 2020 (as adjusted) | 127,731,833 | 13 | 296,830 | (150,759 | ) | 146,084 | ||||||||||||||
Exercise of stock options | 285,344 | — | 984 | — | 984 | |||||||||||||||
Vesting of RSUs, net of shares surrendered to pay taxes | 85,078 | — | (417 | ) | — | (417 | ) | |||||||||||||
Stock-based compensation expense | — | — | 698 | — | 698 | |||||||||||||||
Net income | — | — | — | 9,943 | 9,943 | |||||||||||||||
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Balance as of March 31, 2021 | 128,102,255 | $ | 13 | $ | 298,095 | $ | (140,816 | ) | $ | 157,292 | ||||||||||
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Three Months Ended March 31, 2020 | ||||||||||||||||||||
Additional | ||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Total | |||||||||||||||||
Shares | Amount | Capital | Deficit | Stockholders’ Equity | ||||||||||||||||
Balance as of December 31, 2019 (as reported) | 104,870,886 | $ | 10 | $ | 226,580 | $ | (171,007 | ) | $ | 55,583 | ||||||||||
Adjustment due to Private Warrant reclassification | — | — | (2,299 | ) | 2,299 | — | ||||||||||||||
Balance as of December 31, 2019 (as adjusted) | 104,870,886 | 10 | 224,281 | (168,708 | ) | 55,583 | ||||||||||||||
Exercise of stock options | 489,129 | 1 | 815 | — | 816 | |||||||||||||||
Stock-based compensation expense | — | — | 209 | — | 209 | |||||||||||||||
Net loss | — | — | — | (16,313 | ) | (16,313 | ) | |||||||||||||
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Balance as of March 31, 2020 (as adjusted) | 105,360,015 | $ | 11 | $ | 225,305 | $ | (185,021 | ) | $ | 40,295 | ||||||||||
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Three and Six Months Ended June 30, 2021 | |||||||||||||||||||||||
Additional | |||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Total | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Stockholders’ Equity | |||||||||||||||||||
Balance as of March 31, 2021 | 128,102,255 | $ | 13 | $ | 298,095 | $ | (140,816 | ) | $ | 157,292 | |||||||||||||
Exercise of stock options | 78,163 | — | 221 | — | 221 | ||||||||||||||||||
Vesting of RSUs, net of shares surrendered to pay taxes | 102,823 | — | (320 | ) | (320 | ) | |||||||||||||||||
Stock-based compensation expense | �� | — | — | 1,042 | — | 1,042 | |||||||||||||||||
Net income | — | — | — | 20,687 | 20,687 | ||||||||||||||||||
Balance as of June 30, 2021 | 128,283,241 | $ | 13 | $ | 299,038 | $ | (120,129 | ) | $ | 178,922 | |||||||||||||
Balance as of December 31, 2020 (as reported) | 127,731,833 | $ | 13 | $ | 299,129 | $ | (153,058 | ) | $ | 146,084 | |||||||||||||
Adjustment due to Private Warrant reclassification | — | — | (2,299 | ) | 2,299 | — | |||||||||||||||||
Balance as of December 31, 2020 (as adjusted) | 127,731,833 | 13 | 296,830 | (150,759 | ) | 146,084 | |||||||||||||||||
Exercise of stock options | 363,507 | — | 1,205 | — | 1,205 | ||||||||||||||||||
Vesting of RSUs, net of shares surrendered to pay taxes | 187,901 | — | (737 | ) | (737 | ) | |||||||||||||||||
Stock-based compensation expense | — | — | 1,740 | — | 1,740 | ||||||||||||||||||
Net income | — | — | — | 30,630 | 30,630 | ||||||||||||||||||
Balance as of June 30, 2021 | 128,283,241 | $ | 13 | $ | 299,038 | $ | (120,129 | ) | $ | 178,922 | |||||||||||||
Three and Six Months Ended June 30, 2020 | |||||||||||||||||||||||
Additional | |||||||||||||||||||||||
Common Stock | Paid-in | Accumulated | Total | ||||||||||||||||||||
Shares | Amount | Capital | Deficit | Stockholders’ Equity | |||||||||||||||||||
Balance as of March 31, 2020 (as reported) | 105,360,015 | $ | 11 | $ | 227,604 | $ | (187,320 | ) | $ | 40,295 | |||||||||||||
Adjustment due to Private Warrant reclassification | — | — | (2,299 | ) | 2,299 | — | |||||||||||||||||
Balance as of March 31, 2020 (as adjusted) | 105,360,015 | 11 | 225,305 | (185,021 | ) | 40,295 | |||||||||||||||||
Exercise of stock options | 57,153 | — | 152 | — | 152 | ||||||||||||||||||
Stock-based compensation expense | — | — | 469 | — | 469 | ||||||||||||||||||
Net loss | — | — | — | (5,166 | ) | (5,166 | ) | ||||||||||||||||
Balance as of June 30, 2020 (as adjusted) | 105,417,168 | $ | 11 | $ | 225,926 | $ | (190,187 | ) | $ | 35,750 | |||||||||||||
Balance as of December 31, 2019 (as reported) | 104,870,886 | $ | 10 | $ | 226,580 | $ | (171,007 | ) | $ | 55,583 | |||||||||||||
Adjustment due to Private Warrant reclassification | — | — | (2,299 | ) | 2,299 | — | |||||||||||||||||
Balance as of December 31, 2019 (as adjusted) | 104,870,886 | 10 | 224,281 | (168,708 | ) | 55,583 | |||||||||||||||||
Exercise of stock options | 546,282 | 1 | 967 | — | 968 | ||||||||||||||||||
Stock-based compensation expense | — | — | 678 | — | 678 | ||||||||||||||||||
Net loss | — | — | — | (21,479 | ) | (21,479 | ) | ||||||||||||||||
Balance as of June 30, 2020 (as adjusted) | 105,417,168 | $ | 11 | $ | 225,926 | $ | (190,187 | ) | $ | 35,750 | |||||||||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 9,943 | $ | (16,313 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 1,010 | 902 | ||||||
Amortization of intangible assets | 1,243 | 817 | ||||||
Amortization of operating lease right-of-use assets | 1,129 | — | ||||||
Non-cash interest expense | 72 | 46 | ||||||
Deferred interest expense | 525 | 470 | ||||||
Deferred rent expense and lease incentive obligation | — | 92 | ||||||
Gain on settlement of deferred acquisition consideration | — | (1,295 | ) | |||||
Recovery of certain notes receivable from related parties | (179 | ) | — | |||||
Provision recorded for sales returns and doubtful accounts | 1,103 | 217 | ||||||
Loss on disposal of property and equipment | 239 | 201 | ||||||
Adjustment for excess and obsolete inventories | 2,290 | 769 | ||||||
Stock-based compensation | 698 | 209 | ||||||
Change in fair value of Earnout liability | (296 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (16,301 | ) | 6,325 | |||||
Inventory | (4,212 | ) | (4,287 | ) | ||||
Prepaid expenses and other current assets | (622 | ) | (2,099 | ) | ||||
Operating leases | (1,210 | ) | — | |||||
Accounts payable | 1,842 | (1,910 | ) | |||||
Accrued expenses and other current liabilities | 1,411 | (1,274 | ) | |||||
Other liabilities | (164 | ) | (153 | ) | ||||
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Net cash used in operating activities | (1,479 | ) | (17,283 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (4,957 | ) | (4,243 | ) | ||||
Proceeds from the repayment of notes receivable from related parties | 179 | — | ||||||
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Net cash used in investing activities | (4,778 | ) | (4,243 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from term loan | — | 10,000 | ||||||
Payments of withholding taxes in connection with RSUs vesting | (417 | ) | — | |||||
Proceeds from the exercise of stock options | 984 | 816 | ||||||
Principal repayments of finance lease obligations | (675 | ) | (544 | ) | ||||
Payment of deferred acquisition consideration | (483 | ) | (2,042 | ) | ||||
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Net cash (used in) provided by financing activities | (591 | ) | 8,230 | |||||
Change in cash and restricted cash | (6,848 | ) | (13,296 | ) | ||||
Cash and restricted cash, beginning of period | 84,806 | 60,370 | ||||||
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Cash and restricted cash, end of period | $ | 77,958 | $ | 47,074 | ||||
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Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 1,937 | $ | 2,244 | ||||
Cash paid for income taxes | $ | — | $ | — | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 306 | $ | 2,942 | ||||
Right-of-use assets obtained through operating lease obligations | $ | 310 | $ | — |
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 30,630 | $ | (21,479 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 2,073 | 1,793 | ||||||
Amortization of intangible assets | 2,486 | 1,633 | ||||||
Amortization of operating lease right-of-use | 2,562 | — | ||||||
Non-cash interest expense | 143 | 103 | ||||||
Deferred interest expense | 1,036 | 1,022 | ||||||
Deferred rent expense | — | 64 | ||||||
Gain on settlement of deferred acquisition consideration | — | (1,295 | ) | |||||
Provision recorded for sales returns and doubtful accounts | 2,158 | 970 | ||||||
Loss on disposal of property and equipment | 239 | 201 | ||||||
Adjustment for excess and obsolete inventories | 4,678 | 1,709 | ||||||
Stock-based compensation | 1,740 | 678 | ||||||
Change in fair value of Earnout liability | (3,058 | ) | — | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (22,122 | ) | (5,727 | ) | ||||
Inventory | (4,984 | ) | (7,353 | ) | ||||
Prepaid expenses and other current assets | (1,649 | ) | (1,302 | ) | ||||
Operating leases | (2,774 | ) | — | |||||
Accounts payable | 716 | 235 | ||||||
Accrued expenses and other current liabilities | 2,646 | 1,266 | ||||||
Other liabilities | (340 | ) | 864 | |||||
Net cash provided by (used in) operating activities | 16,180 | (26,618 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (9,290 | ) | (6,411 | ) | ||||
Proceeds from the repayment of notes receivable from related parties | — | 293 | ||||||
Net cash used in investing activities | (9,290 | ) | (6,118 | ) | ||||
Cash flows from financing activities: | ||||||||
Line of credit borrowings | — | 5,869 | ||||||
Proceeds from term loan | — | 10,000 | ||||||
Payments of withholding taxes in connection with RSUs vesting | (737 | ) | — | |||||
Proceeds from the exercise of stock options | 1,205 | 968 | ||||||
Principal repayments of finance lease obligations | (1,374 | ) | (1,149 | ) | ||||
Payment of deferred acquisition consideration | (483 | ) | (2,568 | ) | ||||
Net cash (used in) provided by financing activities | (1,389 | ) | 13,120 | |||||
Change in cash and restricted cash | 5,501 | (19,616 | ) | |||||
Cash and restricted cash, beginning of period | 84,806 | 60,370 | ||||||
Cash and restricted cash, end of period | $ | 90,307 | $ | 40,754 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 3,836 | $ | 4,626 | ||||
Cash paid for income taxes | $ | 582 | $ | — | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Purchases of property and equipment included in accounts payable and accrued expenses | $ | 4,349 | $ | 4,692 | ||||
Right-of-use | $ | 29,092 | $ | — |
The aggregate consideration amounted to $19,024 as of the Acquisition Date. Total consideration consisted of $6,427 in cash, 2,151,438 shares of the Company’s Class A common stock with a fair value of $8,815, and contingent consideration (the “Earnout”) with an Acquisition Date fair value of $3,782. On the Acquisition Date, the Company paid $5,820 in cash and issued 1,947,953 shares of the Company’s Class A common stock. The remaining consideration of $1,436 was held back (the “Holdback”) and will be paid or issued, as applicable, eighteen months after the Acquisition Date, subject to any offsetting indemnification claims against CPN.
This transaction was accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Assets acquired and liabilities assumed have been recorded at their estimated fair values as of the Acquisition Date. The fair values of intangible assets were based on valuations using various income approaches and methods, such as the multi-period excess earnings method, relief from royalty method, etc., which require the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price over the tangible assets, identifiable intangible assets and assumed liabilities was recorded as goodwill.
Based upon the valuation, the total purchase price allocation was as follows:
Total purchase price | $ | 19,024 | ||||||
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Assets acquired: | ||||||||
Accounts receivable | 1,155 | |||||||
Inventory | 1,230 | |||||||
Prepaid expenses and other current assets | 5 | |||||||
Property and equipment | 85 | |||||||
Intangible assets | 13,570 | |||||||
Other assets | 4 | |||||||
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| |||||||
Total assets acquired | 16,049 | |||||||
Liabilities assumed: | ||||||||
Accounts payable | 27 | |||||||
Accrued expenses and other current liabilities | 231 | |||||||
|
| |||||||
Total liabilities assumed | 258 | |||||||
Total identifiable assets acquired, net | 15,791 | |||||||
|
| |||||||
Goodwill | $ | 3,233 | ||||||
|
|
The purchase price allocation resulted in goodwill of $3,233, which will be deductible for income tax purposes. The resulting amount of goodwill is primarily attributed to expected synergies from cross-sale opportunities and future growth. Intangible assets of $13,570 include customer relationships of $10,690, developed technologies of $2,050, non-competition agreements of $750, and trademarks of $80, which are being amortized on a straight-line basis, over weighted-average useful lives of 10 years, 6 years, 5 years and 1 year, respectively.
At the time of the acquisition, CPN had approximately 30 employees. The results of operations of CPN have been included in the Company’s consolidated financial statements beginning on the Acquisition Date.
For the six months ended June 30, 2021 and 2020, the Company recorded GPO fees of $1,529 and $1,797, respectively, as a direct reduction of revenue.
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Advanced Wound Care | $ | 90,708 | $ | 51,288 | ||||
Surgical & Sports Medicine | 11,844 | 10,444 | ||||||
|
|
|
| |||||
Total net revenue | $ | 102,552 | $ | 61,732 | ||||
|
|
|
|
Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Advanced Wound Care | $ | 111,436 | $ | 59,731 | ||||
Surgical & Sports Medicine | 11,760 | 9,229 | ||||||
Total net revenue | $ | 123,196 | $ | 68,960 | ||||
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Advanced Wound Care | $ | 202,144 | $ | 111,019 | ||||
Surgical & Sports Medicine | 23,604 | 19,673 | ||||||
Total net revenue | $ | 225,748 | $ | 130,692 | ||||
Fair Value Measurements | ||||||||||||||||
as of March 31, 2021 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Earnout liability | $ | — | $ | — | $ | 3,689 | $ | 3,689 | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | — | $ | 3,689 | $ | 3,689 | |||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements | ||||||||||||||||
as of December 31, 2020 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Earnout liability | $ | — | $ | — | $ | 3,985 | $ | 3,985 | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | — | $ | — | $ | 3,985 | $ | 3,985 | |||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements as of June 30, 2021 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Earnout liability | $ | — | $ | — | $ | 927 | $ | 927 | ||||||||
$ | — | $ | — | $ | 927 | $ | 927 | |||||||||
Fair Value Measurements as of December 31, 2020 Using: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities: | ||||||||||||||||
Earnout liability | $ | — | $ | — | $ | 3,985 | $ | 3,985 | ||||||||
$ | — | $ | — | $ | 3,985 | $ | 3,985 | |||||||||
Earnout liability | ||||
Balance as of December 31, 2020 | $ | 3,985 | ||
Change in fair value | (296 | ) | ||
|
| |||
Balance as of March 31, 2021 | $ | 3,689 | ||
|
|
Earnout liability | ||||
Balance as of December 31, 2020 | $ | 3,985 | ||
Change in fair value | (3,058 | ) | ||
Balance as of June 30, 2021 | $ | 927 | ||
March 31 | December 31, | |||||||
2021 | 2020 | |||||||
Accounts receivable | $ | 78,079 | $ | 61,792 | ||||
Less — allowance for sales returns and doubtful accounts | (6,076 | ) | (4,988 | ) | ||||
|
|
|
| |||||
$ | 72,003 | $ | 56,804 | |||||
|
|
|
|
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Accounts receivable | $ | 83,880 | $ | 61,792 | ||||
Less — allowance for sales returns and doubtful accounts | (7,113 | ) | (4,988 | ) | ||||
$ | 76,767 | $ | 56,804 | |||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Balance at beginning of period | $ | 4,988 | $ | 3,049 | ||||
Additions (reductions) | 1,103 | 217 | ||||||
Write-offs | (15 | ) | (62 | ) | ||||
|
|
|
| |||||
Balance at end of period | $ | 6,076 | $ | 3,204 | ||||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Balance at beginning of period | $ | 6,076 | $ | 3,204 | $ | 4,988 | $ | 3,049 | ||||||||
Additions | 1,056 | 753 | 2,158 | 970 | ||||||||||||
Write-offs | (19 | ) | (29 | ) | (33 | ) | (91 | ) | ||||||||
Balance at end of period | $ | 7,113 | $ | 3,928 | $ | 7,113 | $ | 3,928 | ||||||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Raw materials | $ | 11,436 | $ | 10,075 | ||||
Work in process | 764 | 1,305 | ||||||
Finished goods | 17,521 | 16,419 | ||||||
|
|
|
| |||||
$ | 29,721 | $ | 27,799 | |||||
|
|
|
|
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Raw materials | $ | 10,144 | $ | 10,075 | ||||
Work in process | 1,732 | 1,305 | ||||||
Finished goods | 16,230 | 16,419 | ||||||
$ | 28,106 | $ | 27,799 | |||||
March 31, 2021 | December 31, 2020 | |||||||
Prepaid subscriptions | $ | 2,529 | $ | 2,013 | ||||
Prepaid conferences and marketing expenses | 240 | 63 | ||||||
Prepaid deposits | 1,586 | 1,438 | ||||||
Reimbursement of offering expenses | — | 1,009 | ||||||
Other | 1,202 | 412 | ||||||
|
|
|
| |||||
$ | 5,557 | $ | 4,935 | |||||
|
|
|
|
June 30, 2021 | December 31, 2020 | |||||||
Subscriptions | $ | 2,211 | $ | 2,013 | ||||
Conferences and marketing expenses | 921 | 63 | ||||||
Deposits | 1,796 | 1,438 | ||||||
Reimbursement of offering expenses | 0 | 1,009 | ||||||
Other | 1,655 | 412 | ||||||
$ | 6,583 | $ | 4,935 | |||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Leasehold improvements | $ | 39,977 | $ | 39,574 | ||||
Furniture, computers and equipment | 48,792 | 48,236 | ||||||
|
|
|
| |||||
88,769 | 87,810 | |||||||
Accumulated depreciation and amortization | (70,525 | ) | (69,521 | ) | ||||
Construction in progress | 44,187 | 41,779 | ||||||
|
|
|
| |||||
$ | 62,431 | $ | 60,068 | |||||
|
|
|
|
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Leasehold improvements | $ | 48,503 | $ | 39,574 | ||||
Furniture, computers and equipment | 50,221 | 48,236 | ||||||
98,724 | 87,810 | |||||||
Accumulated depreciation and amortization | (71,593 | ) | (69,521 | ) | ||||
Construction in progress | 42,608 | 41,779 | ||||||
$ | 69,739 | $ | 60,068 | |||||
In April 2019, the Company purchased $750 of intangibles related to patent and know-how which were recorded within the developed technology category. The Company paid $250 at the time of the transaction with the remaining purchase price being paid over two years after the transaction closed. As of March 31, 2021, $250 was remaining and was recorded in accrued expenses and other current liabilities on the consolidated balance sheets.
Original | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Developed technology | $ | 32,620 | $ | (15,175 | ) | $ | 17,445 | |||||
Trade names and trademarks | 2,080 | (981 | ) | 1,099 | ||||||||
Customer relationships | 10,690 | (579 | ) | 10,111 | ||||||||
Non-compete agreements | 1,010 | (286 | ) | 724 | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 46,400 | $ | (17,021 | ) | $ | 29,379 | |||||
|
|
|
|
|
|
Original | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Developed technology | $ | 32,620 | $ | (16,020 | ) | $ | 16,600 | |||||
Trade names and trademarks | 2,080 | (1,056 | ) | 1,024 | ||||||||
Customer relationships | 10,690 | (846 | ) | 9,844 | ||||||||
Non-compete agreements | 1,010 | (342 | ) | 668 | ||||||||
Total | $ | 46,400 | $ | (18,264 | ) | $ | 28,136 | |||||
Original | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Developed technology | $ | 32,620 | $ | (14,330 | ) | $ | 18,290 | |||||
Trade names and trademarks | 2,080 | (906 | ) | 1,174 | ||||||||
Customer relationship | 10,690 | (312 | ) | 10,378 | ||||||||
Non-compete agreements | 1,010 | (230 | ) | 780 | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 46,400 | $ | (15,778 | ) | $ | 30,622 | |||||
|
|
|
|
|
|
Original | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Developed technology | $ | 32,620 | $ | (14,330 | ) | $ | 18,290 | |||||
Trade names and trademarks | 2,080 | (906 | ) | 1,174 | ||||||||
Customer relationship | 10,690 | (312 | ) | 10,378 | ||||||||
Non-compete agreements | 1,010 | (230 | ) | 780 | ||||||||
Total | $ | 46,400 | $ | (15,778 | ) | $ | 30,622 | |||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Accrued personnel costs | $ | 20,374 | $ | 18,943 | ||||
Accrued royalties | 2,851 | 2,971 | ||||||
Other | 2,158 | 2,059 | ||||||
|
|
|
| |||||
$ | 25,383 | $ | 23,973 | |||||
|
|
|
|
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Personnel costs | $ | 22,024 | $ | 18,943 | ||||
Royalties | 2,718 | 2,971 | ||||||
Other | 1,876 | 2,059 | ||||||
$ | 26,618 | $ | 23,973 | |||||
Employee | Facility | |||||||
Liability balance as of December 31, 2020 | $ | 618 | $ | — | ||||
Expenses | 910 | 17 | ||||||
Payments | — | — | ||||||
|
|
|
| |||||
Liability balance as of March 31, 2021 | $ | 1,528 | $ | 17 | ||||
|
|
|
|
Employee | Facility | |||||||
Liability balance as of March 31, 2021 | $ | 1,528 | $ | 17 | ||||
Expenses | 853 | 86 | ||||||
Payments | 0 | (74 | ) | |||||
Liability balance as of June 30, 2021 | $ | 2,381 | $ | 29 | ||||
Employee | Facility | |||||||
Liability balance as of December 31, 2020 | $ | 618 | $ | 0 | ||||
Expenses | 1,763 | 103 | ||||||
Payments | 0 | (74 | ) | |||||
Liability balance as of June 30, 2021 | $ | 2,381 | $ | 29 | ||||
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
Line of credit | $ | 10,000 | $ | 10,000 | ||||
|
|
|
| |||||
Term loan | 60,000 | 60,000 | ||||||
Less debt discount and debt issuance cost | (249 | ) | (290 | ) | ||||
Less current maturities | (16,875 | ) | (16,666 | ) | ||||
|
|
|
| |||||
Term loan, net of debt discount, debt issuance cost and current maturities | $ | 42,876 | $ | 43,044 | ||||
|
|
|
|
June 30, 2021 | December 31, 2020 | |||||||
Line of credit | $ | 10,000 | $ | 10,000 | ||||
Term loan | 60,000 | 60,000 | ||||||
Less debt discount and debt issuance cost | (210 | ) | (290 | ) | ||||
Less current maturities | (22,500 | ) | (16,666 | ) | ||||
Term loan, net of debt discount, debt issuance cost and current maturities | $ | 37,290 | $ | 43,044 | ||||
2021 | $ | 11,250 | ||
2022 | 22,500 | |||
2023 | 22,500 | |||
2024 | 13,750 | |||
Total | $ | 70,000 | ||
As of March 31,June 30, 2021 and December 31, 2020, the Company reserved the following shares of Class A common stock for future issuance:
March 31 | December 31, | |||||||
2021 | 2020 | |||||||
Shares reserved for issuance for outstanding options | 7,171,415 | 6,425,040 | ||||||
Shares reserved for issuance for outstanding restricted stock units | 933,214 | 806,048 | ||||||
Shares reserved for issuance for future grants | 5,578,422 | 6,832,649 | ||||||
|
|
|
| |||||
Total shares of authorized common stock reserved for future issuance | 13,683,051 | 14,063,737 | ||||||
|
|
|
|
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Shares reserved for issuance for outstanding options | 7,070,008 | 6,425,040 | ||||||
Shares reserved for issuance for outstanding restricted stock units | 787,023 | 806,048 | ||||||
Shares reserved for issuance for future grants | 5,642,864 | 6,832,649 | ||||||
Total shares of authorized common stock reserved for future issuance | 13,499,895 | 14,063,737 | ||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Unvested at December 31, 2020 | 806,048 | $ | 3.82 | |||||
Granted | 284,708 | 14.33 | ||||||
Vested | (133,811 | ) | 4.04 | |||||
Canceled/Forfeited | (23,731 | ) | 5.95 | |||||
|
|
|
| |||||
Unvested at March 31, 2021 | 933,214 | $ | 6.94 | |||||
|
|
|
|
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Unvested at December 31, 2020 | 806,048 | $ | 3.82 | |||||
Granted | 290,027 | 14.45 | ||||||
Vested | (252,743 | ) | 4.20 | |||||
Canceled/Forfeited | (56,309 | ) | 8.29 | |||||
Unvested at June 30, 2021 | 787,023 | $ | 7.30 | |||||
March 31, | ||||
2021 | ||||
Risk-free interest rate | 0.82 | % | ||
Expected term (in years) | 6.21 | |||
Expected volatility | 39.30 | % | ||
Expected dividend yield | 0.0 | % | ||
Exercise price | $ | 13.54 | ||
Underlying stock price | $ | 13.54 |
June 30, 2021 | June 30, 2020 | |||||||
Risk-free interest rate | 0.82 | % | 0.46 | % | ||||
Expected term (in years) | 6.21 | 6.22 | ||||||
Expected volatility | 39.30 | % | 37.41 | % | ||||
Expected dividend yield | 0.0 | % | 0.0 | % | ||||
Exercise price | $ | 13.54 | $ | 4.04 | ||||
Underlying stock price | $ | 13.54 | $ | 3.36 |
$5.31 and $1.04, respectively.
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | |||||||||||||||
Average | Contractual | Aggregate | ||||||||||||||
Number of | Exercise | Term | Intrinsic | |||||||||||||
Shares | Price | (in years) | Value | |||||||||||||
Outstanding as of December 31, 2020 | 6,620,318 | $ | 2.33 | 5.22 | $ | 34,458 | ||||||||||
Granted | 1,037,099 | 13.54 | ||||||||||||||
Exercised | (480,622 | ) | 2.04 | 4,283 | ||||||||||||
Canceled / forfeited | (5,380 | ) | 4.10 | |||||||||||||
|
| |||||||||||||||
Outstanding as of March 31, 2021 | 7,171,415 | 3.96 | 5.80 | 102,239 | ||||||||||||
|
| |||||||||||||||
Options exercisable as of March 31, 2021 | 4,418,977 | 1.64 | 3.76 | 73,271 | ||||||||||||
|
| |||||||||||||||
Options vested or expected to vest as of March 31, 2021 | 6,588,701 | $ | 3.54 | 5.50 | $ | 96,754 | ||||||||||
|
|
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding as of December 31, 2020 | 6,620,318 | $ | 2.33 | 5.22 | $ | 34,458 | ||||||||||
Granted | 1,037,099 | 13.54 | ||||||||||||||
Exercised | (558,785 | ) | 2.15 | 5,526 | ||||||||||||
Canceled / forfeited | (28,624 | ) | 9.54 | |||||||||||||
Outstanding as of June 30, 2021 | 7,070,008 | 3.95 | 5.56 | 89,543 | ||||||||||||
Options exercisable as of June 30, 2021 | 4,709,080 | 1.83 | 3.91 | 69,665 | ||||||||||||
Options vested or expected to vest as of June 30, 2021 | 6,557,753 | $ | 3.57 | 5.28 | $ | 85,578 | ||||||||||
As of December 31, 2019, there were
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Numerator: | ||||||||
Net Income (loss) | $ | 9,943 | $ | (16,313 | ) | |||
Denominator: | ||||||||
Weighted average common shares outstanding —basic | 127,870,065 | 104,486,924 | ||||||
Dilutive effect of restricted stock units | 527,658 | — | ||||||
Dilutive effect of options | 5,054,227 | — | ||||||
|
|
|
| |||||
Weighted-average common shares outstanding—diluted | 133,451,950 | 104,486,924 | ||||||
Earnings (loss) per share—basic | $ | 0.08 | $ | (0.16 | ) | |||
|
|
|
| |||||
Earnings (loss) per share—diluted | $ | 0.07 | $ | (0.16 | ) | |||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Numerator: | ||||||||||||||||
Net Income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding—basic | 128,235,224 | 104,714,725 | 128,053,654 | 104,600,825 | ||||||||||||
Dilutive effect of restricted stock units | 508,015 | — | 517,837 | — | ||||||||||||
Dilutive effect of options | 5,245,174 | — | 5,149,700 | — | ||||||||||||
Weighted-average common shares outstanding—diluted | 133,988,413 | 104,714,725 | 133,721,191 | 104,600,825 | ||||||||||||
Earnings (loss) per share—basic | $ | 0.16 | $ | (0.05 | ) | $ | 0.24 | $ | (0.21 | ) | ||||||
Earnings (loss) per share—diluted | $ | 0.15 | $ | (0.05 | ) | $ | 0.23 | $ | (0.21 | ) | ||||||
these periods.
Classification | Three Months Ended March 31, 2021 | |||||||
Finance lease | ||||||||
Amortization of right-of-use assets | COGS and SG&A | $ | 299 | |||||
Interest on lease liabilities | Interest Expense | 349 | ||||||
|
| |||||||
Total Finance lease cost | 648 | |||||||
Operating lease cost | COGS, R&D, SG&A | 1,280 | ||||||
Short-term lease cost | COGS, R&D, SG&A | 715 | ||||||
Variable lease cost | COGS, R&D, SG&A | 1,363 | ||||||
|
| |||||||
Total lease cost | $ | 4,006 | ||||||
|
|
Classification | Three Ended June 30, | Six Months Ended June 30, 2021 | ||||||||
Finance lease | ||||||||||
Amortization of right-of-use | COGS and SG&A | $ | 304 | $ | 603 | |||||
Interest on lease liabilities | Interest Expense | 312 | 661 | |||||||
Total Finance lease cost | 616 | 1,264 | ||||||||
Operating lease cost | COGS, R&D, SG&A | 1,735 | 3,015 | |||||||
Short-term lease cost | COGS, R&D, SG&A | 699 | 1,414 | |||||||
Variable lease cost | COGS, R&D, SG&A | 1,086 | 2,449 | |||||||
Total lease cost | $ | 4,136 | $ | 8,142 | ||||||
March 31, 2021 | January 1, 2021 | |||||||
Property and equipment, gross | $ | 22,989 | $ | 22,989 | ||||
Accumulated depreciation | (15,274 | ) | (14,974 | ) | ||||
|
|
|
| |||||
Property and equipment, net | $ | 7,715 | $ | 8,015 | ||||
|
|
|
| |||||
Current portion of finance lease obligations | $ | 3,870 | $ | 3,619 | ||||
Finance lease long-term obligations | 10,516 | 11,442 | ||||||
|
|
|
| |||||
Total finance lease liabilities | $ | 14,386 | $ | 15,061 | ||||
|
|
|
|
June 30, 2021 | January 1, 2021 | |||||||
Property and equipment, gross | $ | 22,989 | $ | 22,989 | ||||
Accumulated depreciation | (15,578 | ) | (14,974 | ) | ||||
Property and equipment, net | $ | 7,411 | $ | 8,015 | ||||
Current portion of finance lease obligations | $ | 4,134 | $ | 3,619 | ||||
Finance lease long-term obligations | 9,553 | 11,442 | ||||||
Total finance lease liabilities | $ | 13,687 | $ | 15,061 | ||||
| ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows for operating leases | ||||
Operating cash flows for finance leases | ||||
Financing cash flows for finance leases | ||||
| ||||
Operating leases | 13,525 | |||
Finance leases | — | |||
| ||||
| ||||
Operating leases | 15,567 | |||
Finance leases | — |
June 30, 2021 | ||||
Weighted-average remaining lease term | ||||
| ||||
Finance leases | ||||
Operating leases | 8.27 | |||
June 30, 2021 | ||||
Weighted-average discount rate | ||||
| ||||
Finance leases | 19.69 | % | ||
Operating leases | % |
Operating leases | Finance leases | |||||||
2021 (remaining 9 months) | $ | 3,785 | $ | 3,588 | ||||
2022 | 2,831 | 4,945 | ||||||
2023 | 2,159 | — | ||||||
2024 | 1,443 | 9,796 | ||||||
2025 | 1,383 | — | ||||||
Thereafter | 5,631 | — | ||||||
|
|
|
| |||||
Total lease payments | 17,232 | 18,329 | ||||||
Less: interest | (2,197 | ) | (3,943 | ) | ||||
|
|
|
| |||||
Total lease liabilities | $ | 15,035 | $ | 14,386 | ||||
|
|
|
|
Operating | Finance leases | |||||||
2021 (remaining 6 months) | $ | 3,319 | $ | 2,390 | ||||
2022 | 4,507 | 4,945 | ||||||
2023 | 3,845 | 0 | ||||||
2024 | 3,177 | 9,782 | ||||||
2025 | 3,164 | 0 | ||||||
Thereafter | 16,341 | 0 | ||||||
Total lease payments | 34,353 | 17,117 | ||||||
Less: interest | (5,625 | ) | (3,430 | ) | ||||
Total lease liabilities | $ | 28,728 | $ | 13,687 | ||||
Ransomware Attack
In August 2020, the Company’s information technology (“IT”) systems were exposed to a ransomware attack, which partially impaired certain IT systems for a short period of time. The Company finished investigating the incident, together with legal counsel and other incident response professionals. The Company did not experience any material loss related to the incident, and substantially all costs incurred were reimbursed by insurance.
force other than ReNu and NuCel which we stopped marketing after May 31, 2021. Refer to further discussion in section “End of Enforcement Grace Period for ReNu and NuCel” below.
Application for the treatment of knee osteoarthritis and, based on favorable feasibility studies, we believe ReNu has potential as a treatment for additional osteoarthritis and tissue regeneration applications. Accordingly, we have decided to focus on clinical development of ReNu and discontinue clinical development of NuCel.
“pass-through “pass-through payment” in addition to the bundled payment amount for a limited period of no more than three years. Our PuraPly and PuraPly AM products were granted pass-through status from launch through December 31, 2017, which created an economic incentive for practitioners to use PuraPly and PuraPly AM over other skin substitutes. As a result, we saw increases in revenue related to these products in 2017. Beginning January 1, 2018, PuraPly AM and PuraPly transitioned to the bundled payment structure for skin substitutes, which provides for
Our U.S. provision for income taxes relates to current tax expense associated with taxable income that could not be offset by state net operating losses. We will utilize net operating losses to offset all of the projected 2021 federal taxable income,income; but have exhausted net operating losses and are subject to limitations in the net operating loss utilization in certain states. The Company hasWe have also recorded a foreign provision for income taxes related to itsour wholly owned Swiss subsidiary.
subsidiary in Switzerland.
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
Net revenue | $ | 102,552 | $ | 61,732 | ||||
Cost of goods sold | 25,495 | 18,793 | ||||||
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| |||||
Gross profit | 77,057 | 42,939 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 58,232 | 52,613 | ||||||
Research and development | 6,209 | 5,410 | ||||||
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| |||||
Total operating expenses | 64,441 | 58,023 | ||||||
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| |||||
Income (loss) from operations | 12,616 | (15,084 | ) | |||||
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| |||||
Other expense, net: | ||||||||
Interest expense, net | (2,470 | ) | (2,510 | ) | ||||
Gain on settlement of deferred acquisition consideration | — | 1,295 | ||||||
Other income (expense), net | (3 | ) | 21 | |||||
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| |||||
Total other expense, net | (2,473 | ) | (1,194 | ) | ||||
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| |||||
Net income (loss) before income taxes | 10,143 | (16,278 | ) | |||||
Income tax expense | (200 | ) | (35 | ) | ||||
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| |||||
Net income (loss) | $ | 9,943 | $ | (16,313 | ) | |||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net revenue | $ | 123,196 | $ | 68,960 | $ | 225,748 | $ | 130,692 | ||||||||
Cost of goods sold | 29,940 | 20,042 | 55,435 | 38,835 | ||||||||||||
Gross profit | 93,256 | 48,918 | 170,313 | 91,857 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 62,349 | 46,502 | 120,581 | 99,115 | ||||||||||||
Research and development | 7,320 | 4,668 | 13,529 | 10,078 | ||||||||||||
Total operating expenses | 69,669 | 51,170 | 134,110 | 109,193 | ||||||||||||
Income (loss) from operations | 23,587 | (2,252 | ) | 36,203 | (17,336 | ) | ||||||||||
Other expense, net: | ||||||||||||||||
Interest expense, net | (2,431 | ) | (2,912 | ) | (4,901 | ) | (5,422 | ) | ||||||||
Gain on settlement of deferred acquisition consideration | — | — | — | 1,295 | ||||||||||||
Other income, net | 18 | 25 | 15 | 46 | ||||||||||||
Total other expense, net | (2,413 | ) | (2,887 | ) | (4,886 | ) | (4,081 | ) | ||||||||
Net income (loss) before income taxes | 21,174 | (5,139 | ) | 31,317 | (21,417 | ) | ||||||||||
Income tax expense | (487 | ) | (27 | ) | (687 | ) | (62 | ) | ||||||||
Net income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net income (loss) | $ | 9,943 | $ | (16,313 | ) | |||
Interest expense, net | 2,470 | 2,510 | ||||||
Income tax expense | 200 | 35 | ||||||
Depreciation | 1,010 | 902 | ||||||
Amortization | 1,243 | 817 | ||||||
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| |||||
EBITDA | 14,866 | (12,049 | ) | |||||
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| |||||
Stock-based compensation expense | 698 | 209 | ||||||
Gain on settlement of deferred acquisition consideration (1) | — | (1,295 | ) | |||||
Recovery of certain notes receivable from related parties (2) | (179 | ) | — | |||||
Change in fair value of Earnout (3) | (296 | ) | — | |||||
Restructuring charge (4) | 927 | — | ||||||
Transaction cost (5) | — | 243 | ||||||
Cancellation fee (6) | — | 1,950 | ||||||
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Adjusted EBITDA | $ | 16,016 | $ | (10,942 | ) | |||
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Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Net income (loss) | $ | 20,687 | $ | (5,166 | ) | $ | 30,630 | $ | (21,479 | ) | ||||||
Interest expense, net | 2,431 | 2,912 | 4,901 | 5,422 | ||||||||||||
Income tax expense | 487 | 27 | 687 | 62 | ||||||||||||
Depreciation | 1,063 | 891 | 2,073 | 1,793 | ||||||||||||
Amortization | 1,243 | 816 | 2,486 | 1,633 | ||||||||||||
EBITDA | 25,911 | (520 | ) | 40,777 | (12,569 | ) | ||||||||||
Stock-based compensation expense | 1,042 | 469 | 1,740 | 678 | ||||||||||||
Gain on settlement of deferred acquisition consideration (1) | — | — | — | (1,295 | ) | |||||||||||
Recovery of certain notes receivable from related parties (2) | — | — | (179 | ) | — | |||||||||||
Change in fair value of Earnout (3) | (2,762 | ) | — | (3,058 | ) | — | ||||||||||
Restructuring charge (4) | 939 | — | 1,866 | — | ||||||||||||
Transaction cost (5) | — | 325 | — | 568 | ||||||||||||
Cancellation fee (6) | — | — | — | 1,950 | ||||||||||||
Adjusted EBITDA | $ | 25,130 | $ | 274 | $ | 41,146 | $ | (10,668 | ) | |||||||
(1) | Amount reflects the gain recognized related to the settlement of the deferred acquisition consideration dispute with the sellers of NuTech Medical in February 2020. See Note “18. Commitments and Contingencies”. |
(2) | Amount reflects the collection of certain notes receivable from related parties previously reserved. See Note “19. Related Party Transactions”. |
(3) |
Amounts reflect the change in the fair value of the Earnout liability in connection with the CPN acquisition. See Note “3. Acquisition”. |
(4) |
Amounts reflect employee retention and |
(5) |
Amounts reflect the legal, advisory and other professional fees incurred |
(6) | Amount reflects the cancellation fee for terminating certain product development and consulting agreements the Company inherited from NuTech Medical. See Note “18. Commitments and Contingencies”. |
Three Months Ended March 31, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Advanced Wound Care | $ | 90,708 | $ | 51,288 | $ | 39,420 | 77 | % | ||||||||
Surgical & Sports Medicine | 11,844 | 10,444 | 1,400 | 13 | % | |||||||||||
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Net revenue | $ | 102,552 | $ | 61,732 | $ | 40,820 | 66 | % | ||||||||
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Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Advanced Wound Care | $ | 111,436 | $ | 59,731 | $ | 51,705 | 87 | % | ||||||||
Surgical & Sports Medicine | 11,760 | 9,229 | 2,531 | 27 | % | |||||||||||
Net revenue | $ | 123,196 | $ | 68,960 | $ | 54,236 | 79 | % | ||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Advanced Wound Care | $ | 202,144 | $ | 111,019 | $ | 91,125 | 82 | % | ||||||||
Surgical & Sports Medicine | 23,604 | 19,673 | 3,931 | 20 | % | |||||||||||
Net revenue | $ | 225,748 | $ | 130,692 | $ | 95,056 | 73 | % | ||||||||
Three Months Ended March 31, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Cost of goods sold | $ | 25,495 | $ | 18,793 | $ | 6,702 | 36 | % | ||||||||
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Gross profit | $ | 77,057 | $ | 42,939 | $ | 34,118 | 79 | % | ||||||||
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Gross profit% | 75 | % | 70 | % |
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Cost of goods sold | $ | 29,940 | $ | 20,042 | $ | 9,898 | 49 | % | ||||||||
Gross profit | $ | 93,256 | $ | 48,918 | $ | 44,338 | 91 | % | ||||||||
Gross profit% | 76 | % | 71 | % | ||||||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Cost of goods sold | $ | 55,435 | $ | 38,835 | $ | 16,600 | 43 | % | ||||||||
Gross profit | $ | 170,313 | $ | 91,857 | $ | 78,456 | 85 | % | ||||||||
Gross profit% | 75 | % | 70 | % |
Three Months Ended March 31, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Research and development | $ | 6,209 | $ | 5,410 | $ | 799 | 15 | % | ||||||||
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Research and development as a percentage of net revenue | 6 | % | 9 | % |
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Research and development | $ | 7,320 | $ | 4,668 | $ | 2,652 | 57 | % | ||||||||
Research and development as a percentage of net revenue | 6 | % | 7 | % |
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Research and development | $ | 13,529 | $ | 10,078 | $ | 3,451 | 34 | % | ||||||||
Research and development as a percentage of net revenue | 6 | % | 8 | % |
Three Months Ended March 31, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
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(in thousands, except for percentages) | ||||||||||||||||
Selling, general and administrative | $ | 58,232 | $ | 52,613 | $ | 5,619 | 11 | % | ||||||||
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| |||||||||
Selling, general and administrative as a percentage of net revenue | 57 | % | 85 | % |
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Selling, general and administrative | $ | 62,349 | $ | 46,502 | $ | 15,847 | 34 | % | ||||||||
Selling, general and administrative as a percentage of net revenue | 51 | % | 67 | % | ||||||||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Selling, general and administrative | $ | 120,581 | $ | 99,115 | $ | 21,466 | 22 | % | ||||||||
Selling, general and administrative as a percentage of net revenue | 53 | % | 76 | % |
Three Months Ended March 31, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Interest expense, net | $ | (2,470 | ) | $ | (2,510 | ) | $ | 40 | (2 | %) | ||||||
Gain on settlement of deferred acquisition consideration | — | 1,295 | (1,295 | ) | 100 | % | ||||||||||
Other income (expense), net | (3 | ) | 21 | (24 | ) | * | * | |||||||||
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| |||||||||
Total other expense, net | $ | (2,473 | ) | $ | (1,194 | ) | $ | (1,279 | ) | 107 | % | |||||
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Other
Three Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Interest expense, net | $ | (2,431 | ) | $ | (2,912 | ) | $ | 481 | (17 | %) | ||||||
Other income (expense), net | 18 | 25 | (7 | ) | (28 | %) | ||||||||||
Total other expense, net | $ | (2,413 | ) | $ | (2,887 | ) | $ | 474 | (16 | %) | ||||||
Six Months Ended June 30, | Change | |||||||||||||||
2021 | 2020 | $ | % | |||||||||||||
(in thousands, except for percentages) | ||||||||||||||||
Interest expense, net | $ | (4,901 | ) | $ | (5,422 | ) | $ | 521 | (10 | %) | ||||||
Gain on settlement of deferred acquisition consideration | — | 1,295 | (1,295 | ) | (100 | %) | ||||||||||
Other income, net | 15 | 46 | (31 | ) | (67 | %) | ||||||||||
Total other expense, net | $ | (4,886 | ) | $ | (4,081 | ) | $ | (805 | ) | 20 | % | |||||
Medical in February 2020.
Three Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | $ | (1,479 | ) | $ | (17,283 | ) | ||
Net cash used in investing activities | (4,778 | ) | (4,243 | ) | ||||
Net cash (used in) provided by financing activities | (591 | ) | 8,230 | |||||
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| |||||
Net change in cash and restricted cash | $ | (6,848 | ) | $ | (13,296 | ) | ||
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Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(in thousands) | ||||||||
Net cash provided by (used in) operating activities | $ | 16,180 | $ | (26,618 | ) | |||
Net cash used in investing activities | (9,290 | ) | (6,118 | ) | ||||
Net cash used in (provided by) financing activities | (1,389 | ) | 13,120 | |||||
Net change in cash and restricted cash | $ | 5,501 | $ | (19,616 | ) | |||
Financing Activities
During the three months ended March 31,June 30, 2021, net cash used byin financing activities was $0.6$1.4 million. This consisted primarily of the payment of finance lease obligations of $0.7$1.4 million, the payment of $0.5 million related to the NuTech Medical deferred acquisition consideration, and the payments of $0.4$0.7 million withholding taxes in connection with stock-based awards. The net cash used by financing activities was partially offset by the $1.0$1.2 million in proceeds from the exercise of common stock options.
2020.
As previously disclosed under “Item 9A. Controls and Procedures” in our Annual Report on FormMarch 31,June 30, 2021. A material weakness is a control deficiency or a combination of control deficiencies that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
reporting.
† | Filed herewith |
* | Management contract or compensatory plan or arrangement |
Dated: | Organogenesis Holdings Inc. | |||||||
(Registrant) | ||||||||
/s/ David Francisco | ||||||||
David Francisco | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
38