Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 06, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ENDOLOGIX INC /DE/ | |
Entity Central Index Key | 0001013606 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 16,787,032 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 9,696 | $ 23,531 |
Restricted cash | 1,200 | 1,200 |
Accounts receivable, net of allowance for doubtful accounts of $669 and $802, respectively | 25,991 | 20,651 |
Other receivables | 337 | 329 |
Inventories | 30,202 | 30,399 |
Prepaid expenses and other current assets | 2,535 | 2,821 |
Total current assets | 69,961 | 78,931 |
Property and equipment, net | 15,236 | 16,033 |
Goodwill | 120,815 | 120,848 |
Other intangible assets, net | 75,302 | 76,163 |
Deposits and other assets | 2,392 | 1,095 |
Operating lease right-of-use assets | 5,787 | 0 |
Total assets | 289,493 | 293,070 |
Current liabilities: | ||
Accounts payable | 14,923 | 10,986 |
Accrued payroll | 13,173 | 14,627 |
Accrued expenses and other current liabilities | 16,057 | 13,314 |
Total current liabilities | 44,153 | 38,927 |
Deferred income taxes | 150 | 150 |
Deferred rent | 0 | 8,065 |
Operating lease liabilities | 11,976 | 0 |
Derivative liabilities | 6,035 | 4,012 |
Other liabilities | 2,317 | 1,992 |
Contingently issuable common stock | 2,000 | 2,200 |
Debt | 203,482 | 198,078 |
Total liabilities | 270,113 | 253,424 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Convertible preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 170,000,000 and 170,000,000 shares authorized, respectively, 10,390,524 and 10,387,926 shares issued, respectively, and 10,347,806 and 10,345,367 shares outstanding, respectively | 10 | 10 |
Treasury stock, at cost, 42,718 and 42,559 shares, respectively | (4,027) | (4,026) |
Additional paid-in capital | 643,150 | 640,789 |
Accumulated deficit | (621,743) | (599,715) |
Accumulated other comprehensive income | 1,990 | 2,588 |
Total stockholders’ equity | 19,380 | 39,646 |
Total liabilities and stockholders’ equity | $ 289,493 | $ 293,070 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 669 | $ 802 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock authorized (in shares) | 170,000,000 | 170,000,000 |
Common stock issued (in shares) | 10,390,524 | 10,387,926 |
Common stock outstanding (in shares) | 10,347,806 | 10,345,367 |
Treasury stock (in shares) | 42,718 | 42,559 |
Convertible Preferred Stock | ||
Convertible preferred stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock authorized (in shares) | 5,000,000 | 5,000,000 |
Convertible preferred stock issued (in shares) | 0 | 0 |
Convertible preferred stock outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 35,606 | $ 42,284 |
Cost of goods sold | 12,407 | 13,958 |
Gross profit | 23,199 | 28,326 |
Operating expenses: | ||
Research and development | 4,787 | 5,499 |
Clinical and regulatory affairs | 3,785 | 3,571 |
Marketing and sales | 16,786 | 21,725 |
General and administrative | 9,416 | 10,369 |
Restructuring costs | 419 | 200 |
Total operating expenses | 35,193 | 41,397 |
Loss from operations | (11,994) | (13,071) |
Other income (expense): | ||
Interest expense | (8,490) | (5,807) |
Other income (expense), net | 318 | 366 |
Change in fair value of contingent consideration related to acquisition | 200 | 1,100 |
Change in fair value of derivative liabilities | (2,023) | 0 |
Loss on debt extinguishment | 0 | (2,270) |
Total other expense, net | (9,995) | (6,611) |
Net loss before income taxes | (21,989) | (19,682) |
Income tax expense | (39) | (85) |
Net loss | (22,028) | (19,767) |
Other comprehensive loss foreign currency translation | (598) | (127) |
Comprehensive loss | $ (22,626) | $ (19,894) |
Basic and diluted net loss per share (in dollars per share) | $ (2.12) | $ (2.36) |
Shares used in computing basic and diluted net loss per share (in shares) | 10,374 | 8,371 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (22,028) | $ (19,767) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | (126) | 152 |
Depreciation and amortization | 1,735 | 1,992 |
Stock-based compensation | 2,361 | 3,021 |
Change in fair value of derivative liabilities | 2,023 | 0 |
Change in fair value of contingent consideration related to acquisition | (200) | (1,100) |
Accretion of interest and amortization of deferred financing costs | 3,554 | 2,622 |
Payable in kind interest expense on term loan facility | 1,943 | 0 |
Non-cash foreign exchange (gain) loss | (400) | (326) |
Loss on debt extinguishment | 0 | 2,270 |
Non-cash lease expense | 53 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable and other receivables | (5,253) | 3,081 |
Inventories | 112 | (784) |
Prepaid expenses and other current assets | (2,367) | 275 |
Accounts payable | 5,378 | 391 |
Accrued payroll | (1,438) | (585) |
Accrued expenses and other liabilities | 995 | (1,116) |
Net cash used in operating activities | (13,658) | (9,874) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (107) | (200) |
Net cash (used in) provided by investing activities | (107) | (200) |
Cash flows from financing activities: | ||
Cash paid for debt extinguishment | 0 | (1,310) |
Net (payments) proceeds from revolving line of credit | 0 | (21) |
Minimum tax withholding paid on behalf of employees for stock-based compensation | (2) | 0 |
Proceeds from exercise of stock options | 0 | 706 |
Net cash provided by financing activities | (2) | (625) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (68) | 187 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (13,835) | (10,512) |
Cash, cash equivalents and restricted cash, beginning of period | 24,731 | 60,599 |
Total cash, cash equivalents and restricted cash, end of period | 10,896 | 50,087 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 2,065 | 2,107 |
Cash paid for income taxes | 88 | 134 |
Cash paid for amounts included in the measurement of operating lease liabilities | 849 | 0 |
Non-cash investing and financing activities: | ||
Acquisition of property and equipment included in accounts payable | $ 59 | $ 147 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Cash Reconciliation) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2016 |
Statement of Cash Flows [Abstract] | |||
Cash and cash equivalents | $ 9,696 | $ 48,020 | $ 48,020 |
Restricted cash | 1,200 | 2,067 | 2,067 |
Total cash, cash equivalents and restricted cash | $ 10,896 | $ 50,087 | $ 50,087 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Accumulated Other Comprehensive Income (Loss) |
Balance at beginning of period (in shares) at Dec. 31, 2017 | 8,386,000 | |||||
Balance at beginning of period at Dec. 31, 2017 | $ 75,062 | $ 8 | $ 594,662 | $ (520,001) | $ (2,942) | $ 3,335 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Exercise of common stock options (in shares) | 265,000 | |||||
Exercise of common stock options | 705 | 705 | ||||
Stock-based compensation expense | 2,143 | 2,143 | ||||
Issuance of restricted stock (in shares) | 88,000 | |||||
Issuance of restricted stock | 0 | |||||
Restricted stock expense | 905 | 905 | ||||
Non-employee restricted stock expense | (27) | (27) | ||||
Net loss | (19,767) | (19,767) | ||||
Other comprehensive loss foreign currency translation | (127) | (127) | ||||
Balance at end of period (in shares) at Mar. 31, 2018 | 8,739,000 | |||||
Balance at end of period at Mar. 31, 2018 | $ 58,894 | $ 8 | 598,388 | (539,768) | (2,942) | 3,208 |
Balance at beginning of period (in shares) at Dec. 31, 2018 | 10,345,367 | 10,388,000 | ||||
Balance at beginning of period at Dec. 31, 2018 | $ 39,646 | $ 10 | 640,789 | (599,715) | (4,026) | 2,588 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock purchased | (1) | (1) | ||||
Stock-based compensation expense | 1,512 | 1,512 | ||||
Issuance of restricted stock (in shares) | 3,000 | |||||
Issuance of restricted stock | 0 | |||||
Restricted stock expense | 849 | 849 | ||||
Net loss | (22,028) | (22,028) | ||||
Other comprehensive loss foreign currency translation | $ (598) | (598) | ||||
Balance at end of period (in shares) at Mar. 31, 2019 | 10,347,806 | 10,391,000 | ||||
Balance at end of period at Mar. 31, 2019 | $ 19,380 | $ 10 | $ 643,150 | $ (621,743) | $ (4,027) | $ 1,990 |
Description of Business, Basis
Description of Business, Basis of Presentation, and Operating Segment | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business, Basis of Presentation, and Operating Segment | Description of Business, Basis of Presentation, and Operating Segment (a) Description of Business Endologix ® , Inc. (the “Company”) is a Delaware corporation with corporate headquarters located in Irvine, California and production facilities located in Irvine, California and Santa Rosa, California. The Company develops, manufactures, markets and sells innovative medical devices for the treatment of aortic disorders. The Company’s products are intended for the minimally-invasive endovascular treatment of abdominal aortic aneurysms (“AAA”). The Company’s AAA products are built on one of two platforms: (i) traditional minimally-invasive endovascular aneurysm repair (“EVAR”); or (ii) endovascular aneurysm sealing (“EVAS”), the Company’s innovative solution for sealing the aneurysm sac while maintaining blood flow. The Company’s current EVAR products include the AFX ® Endovascular AAA System, the VELA ® Proximal Endograft and the Ovation ® Abdominal Stent Graft System. The Company’s current EVAS product is the Nellix ® Endovascular Aneurysm Sealing System (the “Nellix EVAS System”). The Company derives all of its reported revenue from sales of its EVAR and EVAS products (including extensions and accessories) to hospitals and third party distributors. (b) Basis of Presentation The accompanying Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These financial statements include the financial position, results of operations and cash flows of the Company, including its subsidiaries, all of which are wholly-owned. All inter-company accounts and transactions have been eliminated in consolidation. For the three months ended March 31, 2019 and 2018 , there were no related party transactions. The interim financial data as of March 31, 2019 is unaudited and is not necessarily indicative of the results for a full year. In the opinion of the Company’s management, the interim data includes normal and recurring adjustments necessary for a fair presentation of the Company’s financial results for the three months ended March 31, 2019 . Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations relating to interim financial statements. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 , filed with the SEC on April 1, 2019 . (c) Operating Segment The Company has one operating and reporting segment that is focused exclusively on the development, manufacture, marketing and sale of EVAR and EVAS products for the treatment of aortic disorders. For the three months ended March 31, 2019 , all of the Company’s revenue and related expenses were solely attributable to these activities. Substantially all of the Company’s long-lived assets are located in the United States. (d) Reverse Stock Split At a special meeting of stockholders held on February 22, 2019, the Company’s stockholders approved a proposal to amend the Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s issued and outstanding common stock at a ratio not less than 1-for-5 and not greater than 1-for-10 (inclusive), with the exact ratio to be set as a whole number within that range at the discretion of the board of directors before February 22, 2020 without further approval or authorization of our stockholders. On February 26, 2019, the Company’s board of directors approved the reverse stock split at a ratio of 1-for-10. On March 5, 2019, the Company filed a Certificate of Amendment of Amended and Restated Certificate of Incorporation, as Amended (the “Certificate of Amendment”), with the Secretary of State of the State of Delaware to effect the reverse stock split. Unless stated otherwise, all share and per share amounts in this Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2019 have been retroactively adjusted to reflect the reverse stock split. |
Use of Estimates and Summary of
Use of Estimates and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates and Summary of Significant Accounting Policies | tes and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Management evaluates its estimates on an ongoing basis, including those related to: (i) collectibility of customer accounts; (ii) whether the cost of inventories can be recovered; (iii) the value of goodwill and intangible assets; (iv) realization of tax assets and estimates of tax liabilities; (v) likelihood of payment and the value of contingent liabilities; and (vi) the potential outcome of litigation. Such estimates are based on management’s judgment which takes into account historical experience and various assumptions. Nonetheless, actual results may differ from management’s estimates. (b) Summary of Significant Accounting Policies For a complete summary of the Company’s significant accounting policies, please refer to Note 2, “Summary of Significant Accounting Policies,” in Part II, Item 8, of the Company’s 2018 Annual Report on Form 10-K for the year ended December 31, 2018 , filed with the SEC on April 1, 2019 . Except as discussed below, there have been no other material changes to the Company’s significant accounting policies during the three months ended March 31, 2019 . |
Balance Sheet Account Detail
Balance Sheet Account Detail | 3 Months Ended |
Mar. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Account Detail | Balance Sheet Account Detail (a) Property and Equipment Property and equipment consisted of the following: March 31, December 31, Production equipment, molds and office furniture $ 11,451 $ 11,854 Computer hardware and software 8,252 8,235 Leasehold improvements 15,535 15,535 Construction in progress (software and related implementation, production equipment and leasehold improvements) 963 993 Property and equipment, at cost 36,201 36,617 Accumulated depreciation (20,965 ) (20,584 ) Property and equipment, net $ 15,236 $ 16,033 Depreciation expense for property and equipment for the three months ended March 31, 2019 and 2018 was $0.9 million and $1.0 million , respectively. (b) Inventories Inventories consisted of the following: March 31, December 31, Raw materials $ 4,924 $ 4,636 Work-in-process 7,501 6,401 Finished goods 17,777 19,362 Total Inventories $ 30,202 $ 30,399 (c) Goodwill and Other Intangible Assets The change in the carrying amount of goodwill for the three months ended March 31, 2019 was as follows: Balance at December 31, 2018 $ 120,848 Foreign currency translation adjustment (33 ) Balance at March 31, 2019 $ 120,815 Other intangible assets consisted of the following: March 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets: Trademarks and trade names $ 2,708 N/A $ 2,708 $ 2,708 N/A $ 2,708 In-process research and development $ 11,200 N/A 11,200 11,200 N/A 11,200 Total indefinite-lived intangible assets 13,908 13,908 13,908 13,908 Finite-lived intangible assets: Developed technology 67,600 (11,331 ) 56,269 67,600 (10,657 ) 56,943 Customer relationships 7,500 (2,375 ) 5,125 7,500 (2,188 ) 5,312 Total finite-lived intangible assets 75,100 (13,706 ) 61,394 75,100 (12,845 ) 62,255 Other intangible assets, net $ 89,008 $ (13,706 ) $ 75,302 $ 89,008 $ (12,845 ) $ 76,163 Amortization expense for intangible assets for the three months ended March 31, 2019 and 2018 was $0.9 million and $1.0 million , respectively. Estimated amortization expense for the 5 succeeding years and thereafter is as follows: Remainder of 2019 $ 2,584 2020 3,684 2021 4,283 2022 5,628 2023 7,781 Thereafter 37,434 Total $ 61,394 (d) Fair Value Measurements The following fair value hierarchy table presents information about each major category of the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 : March 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities: Contingently issuable common stock (a) $ — $ — $ 2,000 $ 2,000 $ — $ — $ 2,200 $ 2,200 Derivative liabilities (b) — — 6,035 6,035 — — 4,012 4,012 Total financial liabilities $ — $ — $ 8,035 $ 8,035 $ — $ — $ 6,212 $ 6,212 (a) Included in other liabilities in the Condensed Consolidated Balance Sheets. See Note 9 for additional details. (b) See Note 6 for additional details. Changes in the fair value of the Company’s Level 3 liabilities were as follows: Contingently issuable common stock Derivative liabilities Balance at December 31, 2018 $ 2,200 $ 4,012 Additions — — Fair value adjustment (200 ) 2,023 Balance at March 31, 2019 $ 2,000 $ 6,035 (a) See Note 9 for additional details. (b) See Note 6 for additional details. There were no transfers of financial assets or liabilities into or out of Level 3 during the three months ended March 31, 2019 . Financial Instruments Not Recorded at Fair Value on a Recurring Basis The table below summarizes the carrying and fair values of the Company’s long-term debt: March 31, 2019 December 31, 2018 Carrying value Fair value Carrying value Fair value Term loan facility $ 114,701 $ 127,477 $ 117,880 $ 116,916 Convertible senior notes 84,500 57,916 75,917 50,489 Other debt 4,281 1,280 4,281 1,221 $ 203,482 $ 186,673 $ 198,078 $ 168,626 The fair values of the Company’s term loan facility and other debt are determined using Level 3 inputs, while the fair value of the Company’s convertible senior notes is determined using Level 2 inputs. See Note 6 for further details. The carrying value of the Company’s Revolving loan facility approximates fair value. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The table below summarizes the impact of recording stock-based compensation expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss during the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 2018 Cost of goods sold $ 227 $ 236 Operating expenses: Research and development 332 333 Clinical and regulatory affairs 186 176 Marketing and sales 709 1,114 General and administrative 907 1,162 Total operating expenses 2,134 2,785 Total $ 2,361 $ 3,021 |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Because of the net losses in the three months ended March 31, 2019 and 2018 , the following outstanding Company securities, using the treasury stock method, were excluded from the calculations of net loss per share because the effect would have been anti-dilutive: Three Months Ended March 31, 2019 2018 Common stock options — 2,699 Restricted stock awards 2,690 1,181 Restricted stock units 6,578 3,074 Total 9,268 6,954 For purposes of calculating the maximum dilutive impact, it is presumed that the convertible senior notes and Deerfield Warrants (as defined and described in further detail in Note 6 ) will be settled in common stock with the resulting potential common shares included in diluted earnings per share if the effect is more dilutive. The effect of the conversion of the convertible senior notes and Deerfield Warrants is excluded from the calculation of diluted loss per share because the impact of these securities would be anti-dilutive. The potential dilutive effect of these securities is shown in the table below: Three Months Ended March 31, 2019 2018 Convertible senior notes 755,695 1,193,938 2017 Deerfield Warrants 647,001 647,001 2018 Deerfield Warrants 875,001 — The effect of the contingently issuable common stock (see Note 9 ) is excluded from the calculation of basic net loss per share until all necessary conditions for issuance have been satisfied. |
Credit Facilities
Credit Facilities | 3 Months Ended |
Mar. 31, 2019 | |
Line of Credit Facility [Abstract] | |
Credit Facilities | Credit Facilities Long-term debt consisted of the following: March 31, December 31, Term loan facility $ 163,584 $ 161,622 Revolving loan facility — — Convertible senior notes 84,500 84,500 Other debt 4,281 4,281 Debt discounts and deferred financing costs (48,883 ) (52,325 ) Long-term debt, including current portion 203,482 198,078 Less current portion — — Long-term debt $ 203,482 $ 198,078 Deerfield Facility Agreement, as Amended On April 3, 2017 (the “Agreement Date”), the Company entered into a facility agreement with affiliates of Deerfield Management Company, L.P. (collectively, “Deerfield”), pursuant to which Deerfield agreed to loan to the Company up to $120.0 million (the “Term Loan”), subject to the terms and conditions set forth in the facility agreement (the “Facility Agreement”). The Company drew the entire principal amount of the Term Loan on the Agreement Date. Deferred financing costs of $5.1 million were recorded on the Company’s Condensed Consolidated Balance Sheets as a direct reduction of the Term Loan, to be subsequently amortized as interest expense over the effective period of the Term Loan. On August 9, 2018 (the “New Agreement Date”), the Company entered into an amended and restated facility agreement (the “Amended Facility Agreement”) with Deerfield, pursuant to which Deerfield and the Company canceled and extinguished the $40.5 million principal amount of 3.25% Convertible Senior Notes due 2020 (the “3.25% Senior Notes”) held by Deerfield in exchange for an additional $40.5 million of indebtedness under the Amended Facility Agreement (as a last-out waterfall tranche under the Amended Facility Agreement). The Company entered into the Amended Facility Agreement with Deerfield in order to, among other things, allow for the Company’s entry into the New Credit Agreement (as defined in the “Deerfield Revolver” section below) and the transactions contemplated therein. The Amended Facility Agreement amends and restates in its entirety the Company’s Facility Agreement with Deerfield. Any outstanding principal under the Amended Facility Agreement will accrue interest at a rate equal to 5.00% payable in cash and 4.75% payable in kind. The Amended Facility Agreement contains the same operating covenants applicable to the New Credit Agreement. The Company may issue up to a maximum of 252,680 shares of the Company’s common stock to Deerfield pursuant to the Amended Facility Agreement in lieu of paying cash to satisfy a portion of its obligation to pay interest owed to Deerfield. Each share of the Company’s common stock issued to Deerfield in respect of an obligation to pay interest will be valued at 96% of the lesser of the (i) trailing 10-day volume weighted average price per share ending on the last trading date prior to issuance and (ii) the last closing bid price of the Company’s common stock on the last trading date prior to issuance. The Company’s obligations under the Amended Facility Agreement are secured by a first priority security interest in substantially all of the Company’s assets including intellectual property, with the priority of such security interest being pari passu with the security interest granted to Deerfield pursuant to the New Credit Agreement. Pursuant to the Amended Facility Agreement, Deerfield has the right, but not the obligation, to convert a portion of the outstanding principal amount of the loan into shares of the Company’s common stock at 96% of the trailing 3-day volume weighted average price per share on the date of conversion into a maximum of 1,430,001 shares of the Company’s common stock. The first $60.0 million of the principal amount of the loan (or exercise price of the Warrants elected to be paid through a reduction in principal, as described below) converted into the Company’s common stock will be credited first against principal and payable in kind interest payments due in 2021 and then against principal and payable in kind interest payments due in 2022. Any additional amounts will be split between principal and payment in kind interest payments due in 2022 and 2023. The Company also agreed to pay Deerfield a $6.1 million fee upon the termination of the Amended Facility Agreement and to reimburse Deerfield for all reasonable out-of-pocket expenses incurred by Deerfield in connection with the negotiation and documentation of the New Credit Agreement and the Amended Facility Agreement. The Company evaluated the August 9, 2018 transaction to determine whether it represented an extinguishment of previously issued debt instruments. The Company noted in the analysis that the cancellation of 3.25% Senior Notes and the issuance of the last-out waterfall tranche of term loans resulted in the removal of a conversion feature. The Company concluded that the conversion option was not substantive, and the removal of this feature did not trigger extinguishment accounting. Thus, the 3.25% Senior Notes were treated as non-convertible instruments for purposes of the analysis. The restructuring of each of the outstanding instruments were negotiated concurrently and in contemplation of each other, and required that the Company assess the impact of the modifications, replacement instruments, and Warrants on the entire portfolio of term debt instruments (the New Credit Agreement was assessed separately). Under this approach, the Company determined that the lender did not provide a concession in connection with the transactions completed on the New Agreement Date. Pursuant to the guidance in ASU 470-50, “Debt - Modifications and Extinguishments,” the Company determined that the exchange of instruments, the modifications of terms, the issuance of Warrants, and removal of the conversion feature resulted in changes to the debt portfolio that were not substantial. As of the New Agreement Date, the new carrying amount of the Term Loan under the Amended Facility Agreement was $113.1 million , representing a discount of $47.4 million from par value of $160.5 million . The discount was determined based on the fees and consideration paid to Deerfield in connection with the restructuring, the previously deferred but unamortized costs of the original debt, and the unamortized discounts on the original debt. Under modification accounting, fees and consideration paid to the lender in connection with the restructuring should be reflected as an additional debt discount and accreted as an adjustment to interest expense over the remaining term of the modified debt portfolio using the effective interest method. The Warrants issued to Deerfield (see “Deerfield Warrants” section below) were treated as consideration paid to the lender and their associated fair values were treated as an additional debt discount. Likewise, the bifurcated derivative for the share settlement provision in the Amended Facility Agreement, outlined in the disclosures above, was also reflected as a discount. The original discount and deferred fees from the existing debt will continue to be accreted to interest expense throughout the life of the Term Loan via the effective interest method. As of March 31, 2019 , the Company had a carrying amount of $122.2 million , inclusive of deferred financing costs of $4.0 million and interest paid in kind of $3.1 million , related to the Term Loan. As of March 31, 2019 , annual interest expense on the Term Loan will range from $4.2 million to $31.0 million from the New Agreement Date through maturity. Upon a change of control of the Company, if the acquirer satisfies certain conditions set forth in the Amended Facility Agreement, such acquirer may assume the outstanding principal amount under the Amended Facility Agreement without penalty. If such acquirer does not satisfy the conditions set forth in the Amended Facility Agreement, Deerfield may, at its option, require the Company to repay the outstanding principal balance under the Facility Agreement plus, depending on the timing of the change of control transaction, the Company may be required to pay a make-whole premium and will be required to pay a change of control fee. At any time on or after April 2, 2021 (the “First Amortization Date”), the Company has the right to prepay any amounts owed under the Amended Facility Agreement without premium or penalty, unless such prepayment occurs in connection with a change of control of the Company, in which case the Company must pay Deerfield a change of control fee unless such change of control occurs beyond a certain period after the maturity date. At any time prior to the First Amortization Date, any prepayment made by the Company will be subject to a make-whole premium and, if such prepayment occurs in connection with a change of control of the Company, a change of control fee. Any amounts drawn under the Amended Facility Agreement may become immediately due and payable upon customary events of default, as defined in the Amended Facility Agreement, or the consummation of certain change of control transactions, as described above. Deerfield Warrants In connection with the execution of the Facility Agreement and the Amended Facility Agreement, the Company issued warrants to Deerfield (the “2017 Deerfield Warrants” and the “2018 Deerfield Warrants,” respectively; collectively, the “Warrants”) as summarized below: Number of shares of common stock Exercise price 2017 Deerfield Warrants 647,001 $ 92.30 2018 Deerfield Warrants 875,001 $ 47.10 The number of shares of common stock of the Company into which the Warrants are exercisable and the exercise price of the Warrants will be adjusted to reflect any stock splits, recapitalizations or similar adjustments in the number of outstanding shares of common stock of the Company. The 2017 Deerfield Warrants expire on the 7 th anniversary of the Agreement Date. Subject to certain exceptions, the 2017 Deerfield Warrants contain limitations such that the Company may not issue shares of common stock of the Company to Deerfield upon the exercise of the 2017 Deerfield Warrants if such issuance would result in Deerfield beneficially owning in excess of 4.985% of the total number of shares of common stock of the Company then issued and outstanding. The holders of the 2017 Deerfield Warrants may exercise the 2017 Deerfield Warrants for cash, on a cashless basis or through a reduction of an amount of principal outstanding under the Term Loan. In connection with certain major transactions, the holders may have the option to convert the 2017 Deerfield Warrants, in whole or in part, into the right to receive the transaction consideration payable upon consummation of such major transaction in respect of a number of shares of common stock of the Company equal to the Black-Scholes value of the 2017 Deerfield Warrants, as defined therein, and in the case of other major transactions, the holders may have the right to exercise the 2017 Deerfield Warrants, in whole or in part, for a number of shares of common stock of the Company equal to the Black-Scholes value of the 2017 Deerfield Warrants. The Company measured the initial fair value of the shares underlying the 2017 Deerfield Warrants at $14.3 million , net of issuance costs of $0.4 million , and recorded the amount in additional paid-in-capital and as a direct reduction of the Term Loan, to be subsequently amortized as interest expense over the effective period of the Term Loan. The 2018 Deerfield Warrants are exercisable commencing on February 9, 2019, and expire on the 7th anniversary of the New Agreement Date. The holders of the 2018 Deerfield Warrants may exercise the 2018 Deerfield Warrants for cash, on a cashless basis, or by reduction of the principal owed to Deerfield pursuant to the Amended Facility Agreement. The Company measured the initial fair value of the shares underlying the 2018 Deerfield Warrants at $10.3 million , net of issuance costs of $0.1 million , and recorded the amount in additional paid-in-capital and as a direct reduction of the Term Loan, to be subsequently amortized as interest expense over the effective period of the Term Loan. Derivative Liabilities In accordance with Accounting Standards Codification (“ASC”) 815, “Derivatives and Hedging”, and ASC 470, “Debt”, the Company assessed whether any provisions within the Amended Facility Agreement constitute embedded derivatives requiring bifurcation from the host instrument, and assessed the fair values of any such features. The Company determined that the provision allowing the holders to convert a portion of the outstanding principal of the Term Loan into shares of the Company’s common stock at a discount effectively provided the holders with an embedded put option derivative meeting the definition of an “embedded derivative” pursuant to ASC 815. Consequently, the embedded derivative was bifurcated and accounted for separately. The Amended Facility Agreement retained a provision that, upon a change of control of the Company, Deerfield may declare the outstanding principal of the loans to be immediately due and payable in full, together with any accrued and unpaid interest, a “Change of Control” fee, and a specified make-whole amount (prior to prior to the First Amortization Date). This feature remained substantively the same as outlined under the previous Facility Agreement. The Company concluded that this provision continues to meet the definition of a derivative and requires bifurcation and separate accounting pursuant to ASC 815. As of the New Agreement Date, the Company measured the fair value of the above embedded derivatives at $16.4 million and recorded the amount in derivative liabilities in the Condensed Consolidated Balance Sheet. For the three months ended March 31, 2019 , the Company recorded expense of $2.0 million as a fair value adjustment of the derivative liabilities. The primary factor causing the change in the fair value of the derivative liabilities was the decrease in the Company’s stock price from the New Agreement Date. Adjustments to the fair value of the derivative liabilities are recognized within other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Deerfield Revolver On the Agreement Date, the Company entered into a Credit and Security Agreement (the “Credit Agreement”) with Deerfield ELGX Revolver, LLC (“Deerfield Revolver”) pursuant to which the Company could borrow up to the lesser of $50.0 million or its applicable borrowing base (the “Previous Revolver”). The Company recorded $1.2 million in deferred financing costs related to the Previous Revolver and presented these costs as a deferred asset and amortized as interest expense over the term of the Previous Revolver on the Company’s Condensed Consolidated Balance Sheets. Effective January 12, 2018, the Company terminated its Credit Agreement with Deerfield Revolver and paid $1.3 million in termination fees. Additionally, the Company wrote off $1.0 million in unamortized deferred financing costs as of the termination date. The total of $2.3 million was charged to loss on debt extinguishment on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. On the New Agreement Date, the Company entered into a Credit Agreement (the “New Credit Agreement”) with Deerfield Revolver, pursuant to which the Company may borrow up to the lesser of $50.0 million or its applicable borrowing base from time to time prior to April 2, 2022 (the “ABL Facility”). The borrowing base consists of eligible accounts, eligible inventory and eligible equipment. On the New Agreement Date, availability under the ABL Facility was $24.0 million . Any outstanding principal under the ABL Facility will accrue interest at a rate equal to the London Interbank Offered Rate (“LIBOR”) (with a 1% floor) plus 5.50% payable in cash. The interest rate will accrue on a minimum amount of $9.75 million , whether or not such amount is drawn (which amount in excess of the revolver usage accruing interest will not be subject to the unused line fee). The Company is subject to other fees in addition to interest on the outstanding principal amount under the ABL Facility, including a commitment fee of $0.5 million ( $0.2 million payable upon closing, $0.2 million payable on the 1st anniversary of the closing and $0.1 million payable on the 2nd anniversary of the closing), a $1.0 million fee upon the expiration of the ABL Facility, and an early commitment termination or reduction fee of 2.5% in the 1st year, 1.5% in the 2nd year, 0.5% in the 3rd year and 0% thereafter. The Company recorded $0.6 million in deferred financing costs, including the commitment fee, related to the ABL Facility and presented these costs as a deferred asset, to be subsequently amortized as interest expense over the term of the ABL Facility, on the Company’s Condensed Consolidated Balance Sheets. The New Credit Agreement has a $22.5 million minimum global liquidity requirement, net revenue tests, fixed charge coverage, capital expenditure limitations and operating expense tests. No event of default with respect the Company’s financial covenants had been declared as of March 31, 2019 . The New Credit Agreement also contains various representations and warranties, events of default, and affirmative and negative covenants, customary for financings of this type, including reporting requirements, requirements that the Company maintain timely reporting with the SEC and restrictions on the ability of the Company and its subsidiaries to incur additional liens on their assets, incur additional indebtedness and acquire and dispose of assets outside the ordinary course of business. The Company’s obligations under the New Credit Agreement are secured by a first priority security interest in substantially all of the Company’s assets including intellectual property, with the priority of such security interest being pari passu with the security interest granted to Deerfield pursuant to the Company’s Amended Facility Agreement (as described above). As of March 31, 2019 , the Company had no outstanding borrowings and $0.6 million in deferred financing costs relating to the ABL Facility. Assuming the Credit Amendment (as defined in Note 12 below) had been effective as of March 31, 2019 , the remaining borrowings available would have been $22.1 million . 3.25% Convertible Senior Notes due 2020 On November 2, 2015, the Company issued $125.0 million aggregate principal amount of 3.25% Senior Notes in an underwritten public offering. The 3.25% Senior Notes are governed by a base indenture (“Base Indenture”), as amended and supplemented by the second supplemental indenture relating to the 3.25% Senior Notes (the “Second Supplemental Indenture,” and together with the Base Indenture, the “ 3.25% Senior Notes Indenture”), dated as of November 2, 2015, by and between the Company and the Trustee (as defined therein). The 3.25% Senior Notes are senior unsecured obligations and are: senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the 3.25% Senior Notes; equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated, including the 2.25% Senior Notes; effectively junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries. The 3.25% Senior Notes accrue interest at a rate of 3.25% per year, payable semi-annually. The 3.25% Senior Notes mature on November 1, 2020, unless earlier purchased, redeemed or converted into shares of common stock in accordance with the terms of the 3.25% Senior Notes Indenture. On or after November 1, 2018, the Company may redeem for cash all or any portion of the 3.25% Senior Notes, at its option, but only if the closing sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the second trading day immediately preceding the date on which the Company provides notice of redemption, exceeds 130% of the conversion price on each applicable trading day. The redemption date can be no sooner than 30 trading days from the date on which notice of redemption is provided to the holders, during which time, up until 2 trading days prior to the redemption, the holders may elect to convert all or a portion of the 3.25% Senior Notes into shares of the Company’s common stock. The redemption price will equal 100% of the principal amount of the 3.25% Senior Notes to be redeemed, plus accrued and unpaid interest until, but excluding, the redemption date. No sinking fund is provided for the 3.25% Senior Notes. The 3.25% Senior Notes are convertible at the option of the holders: (i) in the calendar quarter following any quarter in which, for at least 20 out of the 30 consecutive trading days (whether or not consecutive) ending on the last day of the quarter, the closing price of the Company’s common stock is more than 130% of the then-current conversion price of the 3.25% Senior Notes; (ii) in the 5 business days following any 5 -day period in which the trading price per $1,000 note was less than 98% of the product of the closing sale price of the Company’s common stock and the current conversion rate; (iii) in the event that the Company has provided notice of redemption, but no later than 2 trading days prior to the Company’s proposed redemption date; or (iv) upon the occurrence of specified corporate events. On or after August 1, 2020 until the close of business on the second scheduled trading day immediately preceding the stated maturity date, holders may surrender their 3.25% Senior Notes for conversion at any time, regardless of the foregoing circumstances. The initial conversion rate of the 3.25% Senior Notes is 8.9431 shares of the Company’s common stock per $1,000 principal amount of the 3.25% Senior Notes, which is equivalent to an initial conversion price of approximately $111.82 per share. The conversion rate is subject to adjustment upon the occurrence of certain specified events. Upon conversion, the Company will at its election pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock. If a fundamental change (as defined in the 3.25% Senior Notes Indenture) occurs prior to the stated maturity date, holders may require the Company to purchase for cash all or any portion of their 3.25% Senior Notes at a fundamental change purchase price equal to 100% of the principal amount of the 3.25% Senior Notes to be purchased, plus accrued and unpaid interest. The 3.25% Senior Notes Indenture contains customary terms and covenants and events of default with respect to the 3.25% Senior Notes. If an event of default (as defined in the 3.25% Senior Notes Indenture) occurs and is continuing, either the Trustee or the holders of at least 25% in aggregate principal amount of the outstanding 3.25% Senior Notes may declare the principal amount of the 3.25% Senior Notes to be due and payable immediately by notice to the Company (with a copy to the Trustee). If an event of default arising out of certain events of bankruptcy, insolvency or reorganization involving the Company or a significant subsidiary (as set forth in the 3.25% Senior Notes Indenture) occurs with respect to the Company, the principal amount of the 3.25% Senior Notes and accrued and unpaid interest, if any, will automatically become immediately due and payable. Upon issuance and through December 31, 2015, the Company was not required to separate the conversion option from the 3.25% Senior Notes under ASC 815, “Derivatives and Hedging”. However, because the Company has the ability to settle the 3.25% Senior Notes in cash, common stock or a combination of cash and common stock, the Company applied the cash conversion guidance contained in ASC 470-20, “Debt With Conversion and other Options”, and accounted for the 3.25% Senior Notes by allocating the issuance proceeds between the liability-classified debt component and a separate equity component attributable to the conversion option. The equity component is classified in stockholders’ equity and the resulting discount on the liability component is accreted such that interest expense equals the Company’s borrowing rate for nonconvertible loan products of similar duration. The separation was performed by first determining the fair value of a similar debt that does not have an associated equity component. That amount was then deducted from the initial proceeds of the 3.25% Senior Notes as a whole to arrive at a residual amount, which was allocated to the conversion feature that is classified as equity. The initial fair value of the indebtedness was $97.8 million resulting in a $27.2 million allocation to the embedded conversion option. The embedded conversion option was recorded in stockholders’ equity and as a debt discount, to be subsequently accreted to interest expense over the term of the 3.25% Senior Notes. Underwriting discounts and commissions and offering expenses totaled $3.7 million and were allocated between the liability and the equity components in proportion to the allocation of proceeds and accounted for as debt issuance costs and equity issuance costs, respectively. As a result, $2.9 million attributable to the indebtedness was recorded as deferred financing costs, to be subsequently amortized as interest expense over the term of the 3.25% Senior Notes, and $0.8 million attributable to the equity component was recorded as a reduction to additional paid-in-capital in stockholders’ equity. As of March 31, 2019 , the Company had outstanding borrowings of $77.7 million , and deferred financing costs of $0.7 million , related to the 3.25% Senior Notes. There were no principal payments due during the term. Annual interest expense on these 3.25% Senior Notes will range from $6.4 million to $7.2 million through maturity. The value of the derivative liabilities was estimated using a “with” and “without” approach utilizing Level 3 inputs. In the “with” scenario, the value of the Senior Notes were estimated in a binomial lattice model that considered all terms of the Senior Notes, including the conversion features, with a range of probabilities and assumptions related to the timing and likelihood of the conversion features being exercised by either the Company or the holders of the Senior Notes. In the “without” scenario the value of the Senior Notes absent the conversion options was estimated. The difference between the values estimated in the “with” and “without” scenarios represents the value of the derivative liabilities. Changes in the value of the derivative liabilities were driven by changes in the Company’s stock price, expected volatility, credit spreads and market yields. Japan Lifeline Co., Ltd. Subordinated Promissory Note On November 20, 2018, the Company issued a subordinated promissory note to Japan Lifeline Co., Ltd. (“JLL”), the Company’s Japanese distributor, pursuant to which the Company converted a $4.3 million refund payable to a note payable (the “JLL Note”). The amount owing under the JLL Note accrues interest at a rate of 2.5% per annum and, subject to the terms of the subordination agreement among the Company, JLL and certain Deerfield entities entered into on November 20, 2018, would become due and payable on the earlier of: (i) December 31, 2023; or (ii) the date the JLL Note is declared due and payable by JLL upon the occurrence of certain events of default. Principal Maturities of Long-term Debt The aggregate principal maturities of long-term debt as of March 31, 2019 are as follows: Term loan facility Convertible senior notes Other debt Total Year ending December 31, 2019 $ — $ — $ — $ — 2020 — 84,500 — 84,500 2021 40,768 — — 40,768 2022 61,408 — — 61,408 2023 61,408 — 4,281 65,689 $ 163,584 $ 84,500 $ 4,281 $ 252,365 |
Revenue Disaggregation
Revenue Disaggregation | 3 Months Ended |
Mar. 31, 2019 | |
Geographic Areas, Revenues from External Customers [Abstract] | |
Revenue Disaggregation | Revenue Disaggregation The Company disaggregated revenue in accordance with the new revenue standard to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. These economic factors are primarily attributable to different geographic regions and the timing of transfer of control of products to customers. Accordingly, sales in which control of the product has passed to the customer at the time of procedure or implant into a patient or at the time of shipment have been bifurcated as “Implant-based” and “Shipment-based” revenue, respectively. The table below includes a reconciliation of disaggregated revenue with the Company’s reportable segment: Three Months Ended March 31, Three Months Ended March 31, 2019 2018 Implant-based Shipment-based Total Implant-based Shipment-based Total United States $ 22,463 $ 323 $ 22,786 $ 28,870 $ 505 $ 29,375 International 3,807 9,013 12,820 5,542 7,367 12,909 Total Revenue $ 26,270 $ 9,336 $ 35,606 $ 34,412 $ 7,872 $ 42,284 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies (a) Leases The Company determines whether an arrangement is a lease at inception. The Company leases facilities located in Irvine, California and Santa Rosa, California and an office located in Rosmalen, the Netherlands. These facility lease agreements require the Company to pay variable operating costs, including property taxes, insurance and maintenance based on costs incurred or actual usage. The Company’s facility leases do not contain any residual value guarantees. In addition, the Company has certain equipment and automobiles under long-term agreements that were not material for the three months ended March 31, 2019 . All facility leases are accounted for as operating leases. A right-of-use asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company's facility leases generally do not provide an implicit rate. The Company’s facility leases have remaining lease terms ranging from less than 1 year to 10 years , some of which include options to extend the lease term for up to five years . For the three months ended March 31, 2019, components of facility lease costs consist of $0.9 million in operating lease expense and $0.2 million in variable lease costs. Maturities of facility lease liabilities by fiscal year for our operating leases are as follows as of March 31, 2019 : Remainder of 2019 $ 2,568 2020 3,524 2021 3,692 2022 3,800 2023 2,889 2024 and thereafter 15,132 Total lease payments $ 31,605 Less: Imputed Interest (17,965 ) Present value of operating lease liabilities $ 13,640 As of March 31, 2019 , the current portion of the Company’s operating lease liabilities was $1.7 million and is classified within accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. As of March 31, 2019 , the weighted-average remaining lease term was 8.4 years and weighted-average discount rate was 22.2% . Disclosures related to periods prior to adopting the new lease guidance Future minimum payments by year under non-cancelable leases with initial terms in excess of 1 year were as follows as of December 31, 2018: 2019 $ 3,807 2020 $ 3,791 2021 $ 3,819 2022 $ 3,871 2023 $ 2,889 2024 and thereafter $ 15,132 Total lease payments $ 33,309 Facilities rent expense in the years ended December 31, 2018 , 2017 and 2016 was $3.4 million , $3.4 million and $3.3 million , respectively. (b) Employment Agreements and Retention Plan The Company has employment agreements with certain of its executive officers under which payment and benefits would become payable in the event of termination by the Company for any reason other than cause, death or disability or termination by the employee for good reason (collectively, an “Involuntary Termination”) prior to, upon or following a change in control of the Company. The severance payment will generally be in a range of 6 to 18 months of the employee’s then current salary for an Involuntary Termination prior to a change in control of the Company, and will generally be in a range of 18 to 24 months of the employee’s then current salary for an Involuntary Termination upon or following a change in control of the Company. (c) Legal Matters The Company is from time to time involved in various claims and legal proceedings of a nature it believes is normal and incidental to a medical device business. These matters may include product liability, intellectual property, employment, and other general claims. Such cases and claims may raise complex factual and legal issues and are subject to many uncertainties, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. The Company accrues for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. The accruals are adjusted periodically as assessments change or as additional information becomes available. Steven M. Ortiz v. Endologix, Inc. On September 9, 2016, former employee Steven M. Ortiz filed a class action lawsuit against the Company in Orange County Superior Court, claiming the Company’s failure to pay all overtime wages owing; failure to provide meal periods and failure to pay meal period premiums; failure to pay all wages owed at time of termination seeking waiting time penalties under Labor Code section 203; failure to provide accurate wage statements; violations of Business and Professions Code section 17200 and alleging claims for penalties under the Private Attorneys General Act of 2004. While the Company contested the allegations asserted in the litigation, a mediation was held on February 24, 2017 at which time the parties agreed to settle the case for $750,000 . The court gave final approval to the settlement agreement and the $750,000 in settlement funds that were deposited with the Class Administrator have been distributed. On July 16, 2018, the court issued an order closing the case. Stockholder Securities Litigation On January 3, 2017 and January 9, 2017, two stockholders purporting to represent a class of persons who purchased the Company’s securities between August 2, 2016 and November 16, 2016, filed lawsuits against the Company and certain of its officers in the United States District Court for the Central District of California (the “District Court”). The lawsuits allege that the Company made materially false and misleading statements and failed to disclose material adverse facts about its business, operational and financial performance, in violation of federal securities laws, relating to United States Food and Drug Administration (the “FDA”) pre-market approval for the Company’s Nellix EVAS System. On May 26, 2017, the plaintiffs filed an amended complaint extending the class period to include persons who purchased the Company’s securities between May 5, 2016 and May 18, 2017 and adding certain factual assertions and allegations regarding the Nellix EVAS System. The plaintiffs sought unspecified monetary damages on behalf of the alleged class, interest, and attorney’s fees and costs of litigation. The first lawsuit, Nguyen v. Endologix, Inc. et al., Case No. 2:17-cv-0017 AB (PLAx) (C.D. Cal.), was consolidated with the second lawsuit, Ahmed v. Endologix, Inc. et al, Case No. 8:17-cv-00061 AB (PLAx) (C.D. Cal.), and lead Nguyen plaintiff filed a consolidated First Amended Complaint. On December 5, 2017, the District Court granted Endologix’s motion to dismiss lead plaintiff’s First Amended Complaint, with leave to amend. On January 9, 2018, lead plaintiff filed a Second Amended Complaint and on March 12, 2018, the Company filed its Motion to Dismiss lead plaintiff’s Second Amended Complaint with prejudice. On September 6, 2018, the District Court dismissed the Second Amended Complaint with prejudice and, on October 5, 2018, lead plaintiff filed a notice of appeal, and on March 15, 2019, lead plaintiff filed its opening brief with the appellate court. In April 2019, we filed our response brief to plaintiff’s appeal. The Company anticipates that the Appellate Court’s hearing on this matter will occur in the fourth quarter of 2019 or early part of 2020. The Company believes these lawsuits are without merit and continues to defend itself vigorously. Stockholder Derivative Litigation As of June 11, 2017, four shareholders have filed derivative lawsuits seeking unspecified monetary damages on behalf of Endologix, the nominal plaintiff, based on allegations substantially similar to those alleged by lead plaintiff in Nguyen. Those actions consist of: Sindlinger v. McDermott et al., Case No. BC662280 (Los Angeles Superior Court); Abraham v. McDermott et al., Case No. 30-2018-00968971-CU-BT-CSC (Orange County Superior Court); and Green v. McDermott et al., Case No. 8:17-cv-01155-AB (PLAx), which has been consolidated with Cocco v. McDermott et al., Case No. 8:17-cv-01183-AB (PLAx) (C.D. Cal.). The Company believes these lawsuits are without merit and continues to defend itself vigorously. SEC Investigation In July 2017, we learned that the SEC issued a Formal Order of Investigation to investigate, among other things, events surrounding the Nellix EVAS System and the prospect of its FDA pre-market approval. On February 5, 2019, we received notification that the SEC staff had concluded its investigation and did not intend to recommend an enforcement action. (d) Product Withdrawal Voluntary Recall of the Nellix EVAS System On January 4, 2019, the Company announced that in order to ensure optimal outcomes for patients, the Nellix EVAS System will, for the foreseeable future, only be available for use at approved centers in a clinical investigation setting with prescreened patients that adhere to the current indications outside of the United States. All cases will be pre-screened by a physician panel and supported by the Company’s clinical specialists to ensure adherence to protocol and use in accordance with current product indications. Compassionate use requests will be reviewed in accordance with the process established by the Company and associated national competent authorities. The existing inventory has been voluntarily recalled. In January 2019, the Company announced that the CE Mark for the Nellix EVAS System had been suspended by its Notified Body following a voluntary recall and field safety notification issued by the Company on January 4, 2019. Suspension of the CE Mark means that the Company may not affix the CE Mark and sell the Nellix EVAS System in the European Union (“EU”) during the term of the suspension. |
Contingently Issuable Common St
Contingently Issuable Common Stock | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Contingently Issuable Common Stock | Contingently Issuable Common Stock On October 27, 2010, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Nepal Acquisition Corporation, a wholly-owned subsidiary of the Company, Nellix, Inc. (“Nellix”), certain of Nellix’s stockholders named therein and Essex Woodlands Health Ventures, Inc., as representative of the former Nellix stockholders. On December 10, 2010 (the “Nellix Closing Date”), the Company completed its acquisition of Nellix. The purchase price consisted of shares of the Company’s common stock issuable as of the Nellix Closing Date. Additional payments, solely in the form of shares of the Company’s common stock will be made upon the achievement of a revenue milestone and a regulatory approval milestone (collectively, the “Nellix Milestones”). Under the Merger Agreement, the ultimate value of the contingently issuable common stock would be determined on the date that each Nellix Milestone is achieved. The number of issuable shares would be established using an applicable per share price, which is subject to a ceiling and/or floor, resulting at the closing of the merger in a potential maximum of approximately 1,020,000 shares issuable upon the achievement of the Nellix Milestones. As of the Closing Date, the fair value of the contingently issuable common stock was estimated to be $ 28.2 million . The Merger Agreement provides that, in addition to the shares of common stock of the Company issued to the former Nellix stockholders at the Nellix Closing Date, if the Company receives approval from the FDA to sell one of Nellix’s products in the United States (the “PMA Milestone”), the Company will issue additional shares of its common stock to the former stockholders of Nellix. The dollar value of the shares of the Company’s common stock to be issued upon achievement of the PMA Milestone will be equal to $15.0 million (less the dollar value of certain cash payments and other deductions). The price per share of the shares of the Company’s common stock to be issued upon achievement of the PMA Milestone is subject to a stock price floor of $45.00 per share but not subject to a stock price ceiling. The value of the contingently issuable common stock is derived using a discounted income approach model, with a range of probabilities and assumptions related to the timing and likelihood of achievement of the PMA Milestone (which include Level 3 inputs and the Company’s stock price (Level 1 input) as of the balance sheet date). These varying probabilities and assumptions and changes in the Company’s stock price have required fair value adjustments of the contingently issuable common stock in periods subsequent to the Nellix Closing Date. The fair value of the contingently issuable common stock will continue to be evaluated on a quarterly basis until milestone achievement occurs, or until the expiration of the “Earn-Out Period,” as defined within the Nellix Merger Agreement. Adjustments to the fair value of the contingently issuable common stock are recognized within other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. See the “Fair Value Measurements” section of Note 3 for further details. As of March 31, 2019 , the fair value of the contingently issuable common stock was presented in non-current liabilities. At March 31, 2019 the Company’s stock price closed at $6.61 per share. Thus, had the PMA Milestone been achieved on March 31, 2019 the contingently issuable common stock would have comprised approximately 333,149 shares (based on the 30 -day average closing stock price ending 5 days prior to the announcement, subjected to the stock price floor of $45.00 per share), representing a value of $2.2 million . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |
Income Taxes | Income Taxes The Company applied an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision for interim periods. The Company recorded a provision for income taxes of $39 thousand and $85 thousand for the three months ended March 31, 2019 and 2018 , respectively. The Company’s ETR was (0.2)% and (0.4)% for the three months ended March 31, 2019 , and 2018 , respectively. The Company’s ETR for the three months ended March 31, 2019 differs from the U.S. federal statutory tax rate of 21% primarily as a result of nondeductible expenses (including the Nellix contingently issuable common stock), state income taxes, foreign income taxes, and the impact of a full valuation allowance on its deferred tax assets. The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that the domestic and foreign deferred tax assets will not be realized. Due to such uncertainties surrounding the realization of the domestic and foreign deferred tax assets, the Company maintained a valuation allowance of $135.2 million against a substantial portion of its deferred tax assets as of March 31, 2019 . If and when the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period(s) such determination is made. |
Restructuring Charges
Restructuring Charges | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Restructuring Charges In the three months ended March 31, 2019 and 2018 , the Company recorded $0.4 million and $0.2 million , respectively, in restructuring costs within operating expenses related to focused reductions of its workforce. The Company began substantially formulating plans around this workforce reduction during the first quarter of 2016 in conjunction with its merger of TriVascular Technologies, Inc. The targeted reductions and other restructuring activities were initiated to provide efficiencies and re-align resources as well as to allow for continued investment in strategic areas and drive growth. In March 2019, the Company continued its restructuring activities including: restructuring certain aspects of its business and operations to re-prioritize its sales and marketing efforts; rationalizing its international presence and related expenses; streamlining its workforce and taking other measures to increase efficiencies; decreasing its cash consumption and decreasing its cost to serve; and refocusing its business on strong execution of its core strategies. The Company determined to streamline and restructure certain of its operations and implement certain management changes. These plans have resulted in significant changes in the composition of the senior management team. As of March 31, 2019 , the Company estimates that it will incur a total of $16.3 million in restructuring charges upon the completion of the plan, of which $16.3 million has already been incurred since the first quarter of 2016. The recognition of restructuring charges requires that the Company make certain judgments and estimates regarding the nature, timing and amount of costs associated with the planned reductions of workforce. At the end of each reporting period, the Company will evaluate the remaining accrued balance to ensure that no excess accruals are retained and the utilization of the provisions are for their intended purpose in accordance with developed plans. The following table reflects the movement of activity of the restructuring reserve for the three months ended March 31, 2019 : One-time termination benefits Accrual balance as of December 31, 2018 $ 562 Restructuring charges 419 Utilization (281 ) Accrual balance as of March 31, 2019 $ 700 The accrual balance as of March 31, 2019 is classified within accrued expenses and other current liabilities on the Company’s Condensed Consolidated Balance Sheet. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Equity Financing On March 31, 2019, the Company entered into a Purchase Agreement (the “ Purchase Agreement ”) with select institutional investors and certain other parties (“ Investors ”), whereby the Company agreed to issue and sell to the Investors, and the Investors agreed to purchase, an aggregate of 7,889,552 shares (the “ Equity Shares ”) of the Company’s common stock (the “ Common Stock ”) at a price per share of $6.61 (the “ Equity Offering Price ”), for an aggregate cash purchase price of approximately $52.15 million (the “ Financing ”). For any Investor whose purchase of the Equity Shares would result in its beneficially owning in excess of 19.99% of the shares (the excess shares, the “ Blocked Shares ”) of the Common Stock outstanding immediately after giving effect to the issuance, in lieu of issuing the Blocked Shares which such Investor would have received, the Company will issue to such Investor a pre-paid warrant to purchase shares of Common Stock equal to the number of Blocked Shares that would have been received (the “ Pre-Paid Warrants ”) for the Equity Offering Price per share. Each Pre-Paid Warrant will be exercisable upon issuance, provided that such exercise does not result in the issuance of Blocked Shares, and will expire ten years from the date of issuance. On April 3, 2019, the Company closed the transactions contemplated by the Purchase Agreement. The Company received gross proceeds of approximately $52.15 million pursuant to the Purchase Agreement. Convertible Note Exchange On March 31, 2019, the Company and two investors holding $73.4 million of the principal amount of the Company’s 3.25% Convertible Senior Notes due 2020 (the “ Holders ”) entered into an Exchange Agreement (the “ Exchange Agreement ”) providing for the exchange of the Holders’ existing notes (the “ Existing Notes ”) for new 5.00% Voluntary Convertible Senior Notes due 2024 (the “ New Voluntary Notes ”) and new 5.00% Mandatory Convertible Senior Notes due 2024 (the “ New Mandatory Notes ”, and together with the New Voluntary Notes, the “ New Notes ”). The exchanging Holders will receive $900 principal amount of New Notes for every $1000 principal amount of Existing Notes plus accrued interest exchanged pursuant to the Exchange Agreement (the “ Exchange ”). The Company will issue $25.0 million of principal amount of the New Mandatory Notes and $42.02 million of principal amount of the New Voluntary Notes to the Holders. The New Notes are being issued in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”) by virtue of Section 4(a)(2) of the Securities Act. On April 3, 2019, the Company closed the transactions contemplated by the Exchange Agreement. The Company exchanged an aggregate principal amount of approximately $73.355 million of principal amount of Existing Notes plus accrued but unpaid interest for an aggregate of $67.02 million of principal of New Notes pursuant to the Exchange Agreement. The New Voluntary Notes and New Mandatory Notes are governed by separate Indentures (respectively, the “ New Voluntary Notes Indenture ” and “ New Mandatory Notes Indenture ”, and collectively, the “ Indentures ”), each dated as of the closing of the Exchange (the “ Closing Date ”), by and between the Company and Wilmington Trust, National Association, as trustee (the “ Trustee ”). The New Notes will accrue interest at a rate of 5.00% per year, payable semi-annually in arrears on April 1 and October 1 of each year, commencing October 1, 2019. The New Notes will mature on the anniversary of the Closing Date in 2024, unless earlier purchased, redeemed or converted in accordance with the terms of the Indenture. The Indentures governing the New Notes will contain customary terms and covenants and events of default. The New Voluntary Notes will be convertible at the option of each Holder into shares of common stock at any time on or after July 1, 2020, but prior to the close of business on the business day immediately preceding January 1, 2024, provided that, except if the Company undergoes a fundamental change (as defined in the New Voluntary Notes Indenture) and for certain other customary circumstances of conversion, each Holder may not convert more than 30% the initial aggregate principal amount of his or her outstanding New Voluntary Notes per calendar quarter (a “ Voluntary Conversion ”). Thereafter, until the close of business on the business day immediately preceding the maturity date, the New Voluntary Notes will be convertible at the option of the holder at any time regardless of the conditions described in this paragraph. The initial conversion rate of the New Voluntary Notes in a Voluntary Conversion is 0.12103 shares of the Company’s common stock per $1.00 principal amount of the New Notes, which is equivalent to an initial conversion price per share equal to 125% of the Equity Offering Price (the “ Voluntary Conversion Price ”). The conversion rate is subject to adjustment upon the occurrence of certain specified events. Except if the Company undergoes a fundamental change (as defined in the New Voluntary Notes Indenture) and for certain other customary circumstances of conversion, in no event prior to the close of business on the business day immediately preceding January 1, 2024 may the New Voluntary Notes be converted in a calendar quarter unless the closing sale price of the Company’s common stock for at least twenty (20) trading days during the period of thirty (30) consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 110% of the Equity Offering (subject to adjustment upon the occurrence of certain specified events) (the “ Voluntary Conversion Threshold ”). The New Mandatory Notes provide for the mandatory conversion (a “ Mandatory Conversion ”) of $1,666,666 of the aggregate principal amount each calendar month for fifteen (15) consecutive months beginning on the calendar month beginning with May 1, 2019, if and only if at the end of the prior calendar month the trailing average volume weighted average price (“ VWAP ”) of the last five ( 5 ) trading days of the prior calendar month is greater than 100% of the Equity Offering Price (the “ Mandatory Conversion Trigger ”). In the event of a Mandatory Conversion, $1,666,666 of the New Mandatory Notes would mandatorily convert at a conversion rate of 0.15129 shares of the Company’s common stock per $1.00 principal amount of the New Notes, which is equivalent to a price per share equal to the Equity Offering Price. The New Mandatory Notes will be convertible at the option of each Holder into shares of common stock at the Voluntary Conversion Price at any time prior to the close of business on the business day immediately preceding January 1, 2024, provided that, except if the Company undergoes a fundamental change (as defined in the New Mandatory Notes Indenture) and for certain other customary circumstances of conversion, each Holder may not convert more than 30% of the initial aggregate principal amount of his or her outstanding New Mandatory Note per calendar quarter, and provided further, that (i) voluntary conversions may be effected only if the Voluntary Conversion Threshold has been achieved and (ii) a voluntary conversion may not take place in the same calendar quarter as a Mandatory Conversion. Thereafter, until the close of business on the business day immediately preceding the maturity date, the New Mandatory Notes will be convertible at the option of the holder at any time regardless of the conditions described in this paragraph. The Indentures provide that in no event may a Holder convert, whether in a Voluntarily Conversion or a Mandatory Conversion or otherwise, into shares of common stock if such conversion would result in the Holder beneficially owning more than 9.5% of the Company’s outstanding common stock. Second Amendment to Facility Agreement On March 31, 2019, the Company amended the Amended Facility Agreement by entering into a Second Amendment to Amended and Restated Facility Agreement and First Amendment to Amended and Restated Guaranty and Security Agreement (the “Facility Amendment”) with Deerfield, dated August 9, 2018, as amended by that certain First Amendment to Amended and Restated Facility Agreement, dated November 20, 2018. The Facility Amendment provides for, among other things, the reduction in the global excess liquidity covenant from $22.5 million to $17.5 million and the reduction of the minimum net revenue financial covenants. In addition, the percentage of the $120.0 million of first out waterfall loans (the “ First Out Waterfall Loans ”) due on April 2, 2021 decreased from 33.33% to 16.67% of the First Out Waterfall Loans outstanding on such date, while the percentage of the remainder of the First Out Waterfall Loans due on April 2, 2022 remained at 50% of the First Out Waterfall Loans outstanding on such date. The Amended Facility Agreement provides for the exchange of the existing notes representing the First Out Waterfall Loans for amended notes (the “ First Out Waterfall Notes ”) that provide that in the event that, in any calendar month beginning April 1, 2019 and ending June 30 2020 (the “ Mandatory Conversion Period ”), if (A)(i) the arithmetic mean of the volume weighted average prices of the Company’s common stock (the “ VWAP ”) on the five ( 5 ) consecutive trading days ending on the 15th calendar day (or, if not a trading day, the first trading day thereafter) (the “ Mandatory Conversion Measurement Date ”) and (ii) the closing price for the Company’s common stock on the Mandatory Conversion Measurement Date, both exceed $6.625 (as may be adjusted to reflect certain events) (the “ Fixed Conversion Price ”) and (B)(i) the VWAP on the five ( 5 ) consecutive trading days ending on (and including) the third (3rd) trading day immediately prior to the Mandatory Conversion Measurement Date (the “ Initial Mandatory Conversion Measurement Date ”) and (ii) the closing price for the Company’s common stock on the Initial Mandatory Conversion Measurement Date both exceed the Fixed Conversion Price, Deerfield shall be obligated to convert $1,666,666 of the principal amount of the loan into shares of common stock at the Fixed Conversion Price, up to a maximum aggregate amount of $25.0 million over the Mandatory Conversion Period. Deerfield also has the option to convert up to an additional $50.0 million of the Company’s outstanding debt (the “ Voluntary Conversion Amount ”) at the greater of the Fixed Conversion Price and 85% of the arithmetic average of the volume weighted average price of the Company’s common stock on each of the fifteen ( 15 ) consecutive trading days prior to the conversion date (the “ 15 Day VWAP ”). The Company has the option to require conversion of the Voluntary Conversion Amount (less the amount of prior voluntary conversions) if the Company’s 15 Day VWAP is greater than 175% of the Fixed Conversion Price. The First Amendment Waterfall Notes also provide that in no event may Deerfield convert any note amounts, whether voluntarily or mandatorily, into shares of common stock if such conversion would result in Deerfield beneficially owning more that 4.985% of the Company’s outstanding common stock. The First Out Waterfall Notes also revises Deerfield’s existing right to convert a portion of the outstanding principal amount of the first-out waterfall loan into a maximum of 1,430,000 shares of the Company’s common stock from the current conversion price of 96% of the arithmetic average of the volume weighted average price of the Company’s common stock on each of the three (3) consecutive trading days prior to the conversion date (the “ 96% VWAP Price ”) to the greater of (i) $6.625 (subject to certain adjustments) or (ii) the 96% VWAP Price. Further, the Facility Amendment also provides, upon the effectiveness, for an increase of $5,000,000 in the amounts payable to the holders of the First Out Waterfall Notes as a fee upon termination (or reduction, or required reduction of the outstanding amounts under the First Out Waterfall Notes to less than $10,000,000 ) under the Amended Facility Agreement and to reimburse Deerfield for all expenses incurred by Deerfield in connection with the negotiation and documentation of the Facility Amendment. Also, the existing right of the Company to satisfy interest payments on the First Out Waterfall Loans with up to 250,000 shares of its common stock has been removed. The Facility Amendment is conditioned upon completion of the Financing with gross proceeds to the Company of at least $40.0 million and the closing of the transactions contemplated by the Exchange Agreement, amongst other conditions. In connection with entry into the Facility Amendment, the Company is amending the Warrants (the “Warrant Amendment”) in order to reduce the exercise price of the Warrants to the Equity Offering Price. All other material terms and conditions of the Warrants remain the same. On April 3, 2019, the Company closed the transactions contemplated by the Exchange Agreement and the terms of the Facility Amendment became effective. The Company has issued the Warrants and the First Out Waterfall Notes contemplated by the Facility Amendment. Second Amendment to Credit Agreement On March 31, 2019, the Company amended the New Credit Agreement by entering into a Second Amendment to Credit Agreement and First Amendment to Guaranty and Security Agreement (the “ Credit Amendmen t”) with Deerfield, dated August 9, 2018, as amended by that certain First Amendment to Credit Agreement, dated November 20, 2018 (as so amended, the “ Credit Agreement ”). The Credit Amendment includes conforming revisions to reflect the changes in the Facility Amendment. In addition, the Credit Amendment extends the maturity date of the New Credit Agreement to the earlier or (i) April 2, 2023 or (ii) the date the loans pursuant to the Facility Agreement have been repaid in full. |
Description of Business, Basi_2
Description of Business, Basis of Presentation, and Operating Segment (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These financial statements include the financial position, results of operations and cash flows of the Company, including its subsidiaries, all of which are wholly-owned. All inter-company accounts and transactions have been eliminated in consolidation. For the three months ended March 31, 2019 and 2018 , there were no related party transactions. The interim financial data as of March 31, 2019 is unaudited and is not necessarily indicative of the results for a full year. In the opinion of the Company’s management, the interim data includes normal and recurring adjustments necessary for a fair presentation of the Company’s financial results for the three months ended March 31, 2019 . Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations relating to interim financial statements. The accompanying Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 , filed with the SEC on April 1, 2019 . |
Operating Segment | Operating Segment The Company has one operating and reporting segment that is focused exclusively on the development, manufacture, marketing and sale of EVAR and EVAS products for the treatment of aortic disorders. For the three months ended March 31, 2019 , all of the Company’s revenue and related expenses were solely attributable to these activities. Substantially all of the Company’s long-lived assets are located in the United States. (d) Reverse Stock Split At a special meeting of stockholders held on February 22, 2019, the Company’s stockholders approved a proposal to amend the Amended and Restated Certificate of Incorporation, as amended, to effect a reverse stock split of the Company’s issued and outstanding common stock at a ratio not less than 1-for-5 and not greater than 1-for-10 (inclusive), with the exact ratio to be set as a whole number within that range at the discretion of the board of directors before February 22, 2020 without further approval or authorization of our stockholders. On February 26, 2019, the Company’s board of directors approved the reverse stock split at a ratio of 1-for-10. On March 5, 2019, the Company filed a Certificate of Amendment of Amended and Restated Certificate of Incorporation, as Amended (the “Certificate of Amendment”), with the Secretary of State of the State of Delaware to effect the reverse stock split. Unless stated otherwise, all share and per share amounts in this Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2019 have been retroactively adjusted to reflect the reverse stock split. |
Use of Estimates | estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the periods presented. Management evaluates its estimates on an ongoing basis, including those related to: (i) collectibility of customer accounts; (ii) whether the cost of inventories can be recovered; (iii) the value of goodwill and intangible assets; (iv) realization of tax assets and estimates of tax liabilities; (v) likelihood of payment and the value of contingent liabilities; and (vi) the potential outcome of litigation. Such estimates are based on management’s judgment which takes into account historical experience and various assumptions. Nonetheless, actual results may differ from management’s estimates. |
Leases | All facility leases are accounted for as operating leases. A right-of-use asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company's facility leases generally do not provide an implicit rate. |
Balance Sheet Account Detail (T
Balance Sheet Account Detail (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Property and Equipment | Property and equipment consisted of the following: March 31, December 31, Production equipment, molds and office furniture $ 11,451 $ 11,854 Computer hardware and software 8,252 8,235 Leasehold improvements 15,535 15,535 Construction in progress (software and related implementation, production equipment and leasehold improvements) 963 993 Property and equipment, at cost 36,201 36,617 Accumulated depreciation (20,965 ) (20,584 ) Property and equipment, net $ 15,236 $ 16,033 |
Schedule of Inventories | Inventories consisted of the following: March 31, December 31, Raw materials $ 4,924 $ 4,636 Work-in-process 7,501 6,401 Finished goods 17,777 19,362 Total Inventories $ 30,202 $ 30,399 |
Schedule of Carrying Amount of Goodwill | The change in the carrying amount of goodwill for the three months ended March 31, 2019 was as follows: Balance at December 31, 2018 $ 120,848 Foreign currency translation adjustment (33 ) Balance at March 31, 2019 $ 120,815 |
Schedule of Goodwill and Intangible Assets | Other intangible assets consisted of the following: March 31, 2019 December 31, 2018 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets: Trademarks and trade names $ 2,708 N/A $ 2,708 $ 2,708 N/A $ 2,708 In-process research and development $ 11,200 N/A 11,200 11,200 N/A 11,200 Total indefinite-lived intangible assets 13,908 13,908 13,908 13,908 Finite-lived intangible assets: Developed technology 67,600 (11,331 ) 56,269 67,600 (10,657 ) 56,943 Customer relationships 7,500 (2,375 ) 5,125 7,500 (2,188 ) 5,312 Total finite-lived intangible assets 75,100 (13,706 ) 61,394 75,100 (12,845 ) 62,255 Other intangible assets, net $ 89,008 $ (13,706 ) $ 75,302 $ 89,008 $ (12,845 ) $ 76,163 |
Schedule of Estimated Amortization Expense | Estimated amortization expense for the 5 succeeding years and thereafter is as follows: Remainder of 2019 $ 2,584 2020 3,684 2021 4,283 2022 5,628 2023 7,781 Thereafter 37,434 Total $ 61,394 |
Schedule of Assets and Liabilities Measured at Fair Value | The following fair value hierarchy table presents information about each major category of the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2019 and December 31, 2018 : March 31, 2019 December 31, 2018 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities: Contingently issuable common stock (a) $ — $ — $ 2,000 $ 2,000 $ — $ — $ 2,200 $ 2,200 Derivative liabilities (b) — — 6,035 6,035 — — 4,012 4,012 Total financial liabilities $ — $ — $ 8,035 $ 8,035 $ — $ — $ 6,212 $ 6,212 (a) Included in other liabilities in the Condensed Consolidated Balance Sheets. See Note 9 for additional details. (b) See Note 6 for additional details. |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Changes in the fair value of the Company’s Level 3 liabilities were as follows: Contingently issuable common stock Derivative liabilities Balance at December 31, 2018 $ 2,200 $ 4,012 Additions — — Fair value adjustment (200 ) 2,023 Balance at March 31, 2019 $ 2,000 $ 6,035 (a) See Note 9 for additional details. (b) See Note 6 for additional details. |
Schedule Of Fair Values And Book Values Of Long-Term Debt | The table below summarizes the carrying and fair values of the Company’s long-term debt: March 31, 2019 December 31, 2018 Carrying value Fair value Carrying value Fair value Term loan facility $ 114,701 $ 127,477 $ 117,880 $ 116,916 Convertible senior notes 84,500 57,916 75,917 50,489 Other debt 4,281 1,280 4,281 1,221 $ 203,482 $ 186,673 $ 198,078 $ 168,626 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation Expense | The table below summarizes the impact of recording stock-based compensation expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss during the three months ended March 31, 2019 and 2018 : Three Months Ended March 31, 2019 2018 Cost of goods sold $ 227 $ 236 Operating expenses: Research and development 332 333 Clinical and regulatory affairs 186 176 Marketing and sales 709 1,114 General and administrative 907 1,162 Total operating expenses 2,134 2,785 Total $ 2,361 $ 3,021 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Loss Per Share | The potential dilutive effect of these securities is shown in the table below: Three Months Ended March 31, 2019 2018 Convertible senior notes 755,695 1,193,938 2017 Deerfield Warrants 647,001 647,001 2018 Deerfield Warrants 875,001 — Because of the net losses in the three months ended March 31, 2019 and 2018 , the following outstanding Company securities, using the treasury stock method, were excluded from the calculations of net loss per share because the effect would have been anti-dilutive: Three Months Ended March 31, 2019 2018 Common stock options — 2,699 Restricted stock awards 2,690 1,181 Restricted stock units 6,578 3,074 Total 9,268 6,954 |
Credit Facilities (Tables)
Credit Facilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Line of Credit Facility [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following: March 31, December 31, Term loan facility $ 163,584 $ 161,622 Revolving loan facility — — Convertible senior notes 84,500 84,500 Other debt 4,281 4,281 Debt discounts and deferred financing costs (48,883 ) (52,325 ) Long-term debt, including current portion 203,482 198,078 Less current portion — — Long-term debt $ 203,482 $ 198,078 |
Summary of Warrants Issued | In connection with the execution of the Facility Agreement and the Amended Facility Agreement, the Company issued warrants to Deerfield (the “2017 Deerfield Warrants” and the “2018 Deerfield Warrants,” respectively; collectively, the “Warrants”) as summarized below: Number of shares of common stock Exercise price 2017 Deerfield Warrants 647,001 $ 92.30 2018 Deerfield Warrants 875,001 $ 47.10 |
Principal Maturities of Long-term Debt | The aggregate principal maturities of long-term debt as of March 31, 2019 are as follows: Term loan facility Convertible senior notes Other debt Total Year ending December 31, 2019 $ — $ — $ — $ — 2020 — 84,500 — 84,500 2021 40,768 — — 40,768 2022 61,408 — — 61,408 2023 61,408 — 4,281 65,689 $ 163,584 $ 84,500 $ 4,281 $ 252,365 |
Revenue Disaggregation (Tables)
Revenue Disaggregation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Geographic Areas, Revenues from External Customers [Abstract] | |
Schedule of Revenue by Geographic Region | The table below includes a reconciliation of disaggregated revenue with the Company’s reportable segment: Three Months Ended March 31, Three Months Ended March 31, 2019 2018 Implant-based Shipment-based Total Implant-based Shipment-based Total United States $ 22,463 $ 323 $ 22,786 $ 28,870 $ 505 $ 29,375 International 3,807 9,013 12,820 5,542 7,367 12,909 Total Revenue $ 26,270 $ 9,336 $ 35,606 $ 34,412 $ 7,872 $ 42,284 7 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease liability maturity | Future minimum payments by year under non-cancelable leases with initial terms in excess of 1 year were as follows as of December 31, 2018: 2019 $ 3,807 2020 $ 3,791 2021 $ 3,819 2022 $ 3,871 2023 $ 2,889 2024 and thereafter $ 15,132 Total lease payments $ 33,309 Maturities of facility lease liabilities by fiscal year for our operating leases are as follows as of March 31, 2019 : Remainder of 2019 $ 2,568 2020 3,524 2021 3,692 2022 3,800 2023 2,889 2024 and thereafter 15,132 Total lease payments $ 31,605 Less: Imputed Interest (17,965 ) Present value of operating lease liabilities $ 13,640 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve | The following table reflects the movement of activity of the restructuring reserve for the three months ended March 31, 2019 : One-time termination benefits Accrual balance as of December 31, 2018 $ 562 Restructuring charges 419 Utilization (281 ) Accrual balance as of March 31, 2019 $ 700 |
Description of Business, Basi_3
Description of Business, Basis of Presentation, and Operating Segment (Details) | Feb. 22, 2019 | Mar. 31, 2019segment |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of operating segments | 1 | |
Number of reportable segments | 1 | |
Minimum | ||
Equity [Line Items] | ||
Stock split conversion ratio | 0.2 | |
Maximum | ||
Equity [Line Items] | ||
Stock split conversion ratio | 0.1 |
Balance Sheet Account Detail (P
Balance Sheet Account Detail (Property and Equipment) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | $ 36,201 | $ 36,617 | |
Accumulated depreciation | (20,965) | (20,584) | |
Property and equipment, net | 15,236 | 16,033 | |
Depreciation expense | 900 | $ 1,000 | |
Production equipment, molds, and office furniture | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | 11,451 | 11,854 | |
Computer hardware and software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | 8,252 | 8,235 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | 15,535 | 15,535 | |
Construction in progress (software and related implementation, production equipment, and leasehold improvements) | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, at cost | $ 963 | $ 993 |
Balance Sheet Account Detail (I
Balance Sheet Account Detail (Inventories) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 4,924 | $ 4,636 |
Work-in-process | 7,501 | 6,401 |
Finished goods | 17,777 | 19,362 |
Total Inventories | $ 30,202 | $ 30,399 |
Balance Sheet Account Detail (C
Balance Sheet Account Detail (Change in Carrying Amount of Goodwill) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2017 | $ 120,848 |
Foreign currency translation adjustment | (33) |
Balance at September 30, 2018 | $ 120,815 |
Balance Sheet Account Detail (O
Balance Sheet Account Detail (Other Intangible Assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Goodwill, Finite-lived, and Indefinite-lived Intangible Assets [Line Items] | ||
Total indefinite-lived intangible assets | $ 13,908 | $ 13,908 |
Total finite-lived intangible assets | 75,100 | 75,100 |
Accumulated amortization | (13,706) | (12,845) |
Total | 61,394 | 62,255 |
Developed technology | ||
Goodwill, Finite-lived, and Indefinite-lived Intangible Assets [Line Items] | ||
Total finite-lived intangible assets | 67,600 | 67,600 |
Accumulated amortization | (11,331) | (10,657) |
Total | 56,269 | 56,943 |
Customer relationships | ||
Goodwill, Finite-lived, and Indefinite-lived Intangible Assets [Line Items] | ||
Total finite-lived intangible assets | 7,500 | 7,500 |
Accumulated amortization | (2,375) | (2,188) |
Total | 5,125 | 5,312 |
Other intangible assets, net | ||
Goodwill, Finite-lived, and Indefinite-lived Intangible Assets [Line Items] | ||
Total finite-lived intangible assets | 89,008 | 89,008 |
Accumulated amortization | (13,706) | (12,845) |
Total | 75,302 | 76,163 |
Trademarks and trade names | ||
Goodwill, Finite-lived, and Indefinite-lived Intangible Assets [Line Items] | ||
Total indefinite-lived intangible assets | 2,708 | 2,708 |
In-process research and development | ||
Goodwill, Finite-lived, and Indefinite-lived Intangible Assets [Line Items] | ||
Total indefinite-lived intangible assets | $ 11,200 | $ 11,200 |
Balance Sheet Account Detail (A
Balance Sheet Account Detail (Amortization) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |||
Amortization expense | $ 900 | $ 1,000 | |
Remainder of 2019 | 2,584 | ||
2020 | 3,684 | ||
2021 | 4,283 | ||
2022 | 5,628 | ||
2023 | 7,781 | ||
Thereafter | 37,434 | ||
Total | $ 61,394 | $ 62,255 |
Balance Sheet Account Detail (F
Balance Sheet Account Detail (Fair Value Measurements) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $ 6,035 | $ 4,012 |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently issuable common stock | 2,000 | 2,200 |
Derivative liabilities | 6,035 | 4,012 |
Total financial liabilities | 8,035 | 6,212 |
Level 1 | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently issuable common stock | 0 | 0 |
Derivative liabilities | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 2 | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently issuable common stock | 0 | 0 |
Derivative liabilities | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 3 | Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently issuable common stock | 2,000 | 2,200 |
Derivative liabilities | 6,035 | 4,012 |
Total financial liabilities | $ 8,035 | $ 6,212 |
Balance Sheet Account Detail _2
Balance Sheet Account Detail (Changes in the Fair Value of Level 3 Liabilities) (Details) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Contingently issuable common stock | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at December 31, 2018 | $ 2,200 |
Additions | 0 |
Fair value adjustment | (200) |
Balance at March 31, 2019 | 2,000 |
Derivative liabilities | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance at December 31, 2018 | 4,012 |
Additions | 0 |
Fair value adjustment | 2,023 |
Balance at March 31, 2019 | $ 6,035 |
Balance Sheet Account Detail _3
Balance Sheet Account Detail (Financial Instruments Not Recorded at Fair Value on a Recurring Basis) (Details) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Carrying value | $ 203,482 | $ 198,078 |
Fair value | 186,673 | 168,626 |
Term loan facility | ||
Debt Instrument [Line Items] | ||
Carrying value | 114,701 | 117,880 |
Fair value | 127,477 | 116,916 |
Convertible senior notes | ||
Debt Instrument [Line Items] | ||
Carrying value | 84,500 | 75,917 |
Fair value | 57,916 | 50,489 |
Other debt | ||
Debt Instrument [Line Items] | ||
Carrying value | 4,281 | 4,281 |
Fair value | $ 1,280 | $ 1,221 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | $ 2,361 | $ 3,021 |
Cost of goods sold | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 227 | 236 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 332 | 333 |
Clinical and regulatory affairs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 186 | 176 |
Marketing and sales | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 709 | 1,114 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | 907 | 1,162 |
Total operating expenses | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated stock-based compensation expense | $ 2,134 | $ 2,785 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Securities Excluded from Calculations of Earnings Per Share Because Impact Would Have Been Anti-Dilutive [Abstract] | ||
Outstanding securities used in calculations (in shares) | 9,268,000 | 6,954,000 |
Potential Dilutive Effect of Securities [Abstract] | ||
Conversion of the Notes (in shares) | 755,695 | 1,193,938 |
2017 Deerfield Warrants | ||
Potential Dilutive Effect of Securities [Abstract] | ||
Conversion of Deerfield Warrants (in shares) | 647,001 | 647,001 |
2018 Deerfield Warrants | ||
Potential Dilutive Effect of Securities [Abstract] | ||
Conversion of Deerfield Warrants (in shares) | 875,001 | 0 |
Common stock options | ||
Securities Excluded from Calculations of Earnings Per Share Because Impact Would Have Been Anti-Dilutive [Abstract] | ||
Outstanding securities used in calculations (in shares) | 0 | 2,699,000 |
Restricted stock awards | ||
Securities Excluded from Calculations of Earnings Per Share Because Impact Would Have Been Anti-Dilutive [Abstract] | ||
Outstanding securities used in calculations (in shares) | 2,690,000 | 1,181,000 |
Restricted stock units | ||
Securities Excluded from Calculations of Earnings Per Share Because Impact Would Have Been Anti-Dilutive [Abstract] | ||
Outstanding securities used in calculations (in shares) | 6,578,000 | 3,074,000 |
Credit Facilities - Schedule of
Credit Facilities - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Line of Credit Facility [Abstract] | ||
Term loan facility | $ 163,584 | $ 161,622 |
Revolving loan facility | 0 | 0 |
Convertible senior notes | 84,500 | 84,500 |
Other debt | 4,281 | 4,281 |
Debt discounts and deferred financing costs | (48,883) | (52,325) |
Long-term debt, including current portion | 203,482 | 198,078 |
Less current portion | 0 | 0 |
Long-term debt | $ 203,482 | $ 198,078 |
Credit Facilities - Narrative (
Credit Facilities - Narrative (Details) | Mar. 31, 2019USD ($) | Aug. 09, 2018USD ($)shares | Jan. 05, 2018USD ($) | Nov. 02, 2015USD ($)$ / shares | Mar. 31, 2019USD ($)day | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Nov. 20, 2018USD ($) | Apr. 03, 2017USD ($) | Dec. 10, 2013 |
Debt Instrument [Line Items] | ||||||||||
Outstanding borrowings relating to revolving loan facility | $ 0 | $ 0 | $ 0 | |||||||
Long-term debt | 252,365,000 | 252,365,000 | ||||||||
Payable in kind interest expense on term loan facility | 1,943,000 | $ 0 | ||||||||
Change in fair value of derivative liabilities | (2,023,000) | 0 | ||||||||
Cash paid for debt extinguishment | 0 | 1,310,000 | ||||||||
Loss on debt extinguishment | 0 | $ 2,270,000 | ||||||||
Commitment fee amount | $ 500,000 | |||||||||
Other debt | 4,281,000 | 4,281,000 | $ 4,281,000 | |||||||
Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 40,500,000 | $ 40,500,000 | ||||||||
Debt instrument, stated interest rate | 3.25% | 3.25% | ||||||||
Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 50,000,000 | |||||||||
Global liquidity requirement | $ 22,500,000 | |||||||||
Remaining borrowing capacity | $ 22,100,000 | 22,100,000 | ||||||||
Term loan facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | 163,584,000 | 163,584,000 | ||||||||
Term loan facility | Facility Agreement, Due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 120,000,000 | |||||||||
Deferred financing costs | 4,000,000 | 4,000,000 | 5,100,000 | |||||||
Long-term debt | 122,200,000 | 122,200,000 | ||||||||
Term loan facility | Amended Facility Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Payable in kind interest expense on term loan facility | 3,100,000 | |||||||||
Term Loan | Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 160,500,000 | 160,500,000 | ||||||||
Outstanding borrowings relating to revolving loan facility | 113,100,000 | 113,100,000 | ||||||||
Debt discount | 47,400,000 | 47,400,000 | ||||||||
Convertible senior notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | 84,500,000 | 84,500,000 | ||||||||
Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 125,000,000 | |||||||||
Debt instrument, stated interest rate | 3.25% | |||||||||
Debt discount | $ 2,900,000 | |||||||||
Deferred financing costs, gross | 700,000 | $ 700,000 | ||||||||
Convertible, threshold consecutive trading days | day | 30 | |||||||||
Holding threshold to declare debt due | 25.00% | |||||||||
Convertible debt, conversion ratio | 8.9431 | |||||||||
Conversion price | $ / shares | $ 111.82 | |||||||||
Redemption price | 100.00% | |||||||||
Fair value disclosure | $ 97,800,000 | |||||||||
Beneficial conversion feature | 27,200,000 | |||||||||
Convertible notes payable | 77,700,000 | $ 77,700,000 | ||||||||
Periodic payment, principal | 0 | |||||||||
Convertible senior notes | Convertible Senior Notes due 2018 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, stated interest rate | 2.25% | |||||||||
Other notes payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Long-term debt | 4,281,000 | 4,281,000 | ||||||||
Minimum | Term loan facility | Facility Agreement, Due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Periodic interest payment | 4,200,000 | |||||||||
Minimum | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Periodic interest payment | 6,400,000 | |||||||||
Maximum | Term loan facility | Facility Agreement, Due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Periodic interest payment | 31,000,000 | |||||||||
Maximum | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Periodic interest payment | $ 7,200,000 | |||||||||
Facility Agreement, Due 2023, Deerfield Warrants | Facility Agreement, Due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Expiration date for warrants | 7 years | |||||||||
Percentage of common stock limiting exercise of warrants | 4.985% | |||||||||
Derivative liabilities | 2018 Deerfield Warrants | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Derivative liabilities | 16,400,000 | |||||||||
Other assets | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt discount | 3,700,000 | |||||||||
Additional Paid-In Capital | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt discount | $ 800,000 | |||||||||
Japan Lifeline Co., Ltd. | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Other debt | $ 4,300,000 | |||||||||
Japan Lifeline Co., Ltd. | Other notes payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, stated interest rate | 2.50% | |||||||||
Closing | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee amount | 200,000 | |||||||||
First Anniversary | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee amount | $ 200,000 | |||||||||
Termination fee | 2.50% | |||||||||
Second Anniversary | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee amount | $ 100,000 | |||||||||
Termination fee | 1.50% | |||||||||
Expiration | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Commitment fee amount | $ 1,000,000 | |||||||||
Third Anniversary | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Termination fee | 0.50% | |||||||||
Thereafter, Fee | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Termination fee | 0.00% | |||||||||
Revolving loan facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Deferred financing costs | 600,000 | $ 600,000 | ||||||||
Debt instrument, stated interest rate | 5.50% | |||||||||
Revolving credit facility, maximum borrowing capacity | $ 24,000,000 | |||||||||
Revolving loan facility | Amended and Restated Facility Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | $ 40,500,000 | |||||||||
Debt instrument, stated interest rate | 5.00% | |||||||||
Interest rate, payable in kind | 4.75% | |||||||||
Maximum shares issuable to satisfy obligation to pay interest owed | shares | 252,680 | |||||||||
Maximum number of shares under mandatory redemption | shares | 1,430,001 | |||||||||
Principal amount of loan converted into stock to credit first against principal and payable in kind interest due 2021 | $ 60,000,000 | |||||||||
Termination fee payable | 6,100,000 | |||||||||
Revolving loan facility | Deerfield ELGX Revolver, LLC | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, face amount | 120,000,000 | $ 120,000,000 | ||||||||
Global liquidity requirement | $ 17,500,000 | $ 22,500,000 | ||||||||
Deferred financing costs, gross | 1,200,000 | |||||||||
Revolving credit facility, maximum borrowing capacity | 50,000,000 | |||||||||
Cash paid for debt extinguishment | $ 1,300,000 | |||||||||
Write off of deferred debt issuance cost | 1,000,000 | |||||||||
Loss on debt extinguishment | $ 2,300,000 | |||||||||
Debt Instrument, Redemption, Period One | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | day | 30 | |||||||||
Debt Instrument, Redemption, Period Two | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | day | 2 | |||||||||
Convertible Condition One | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | day | 20 | |||||||||
Convertible, threshold consecutive trading days | day | 30 | |||||||||
Convertible, threshold percentage of stock price trigger | 130.00% | |||||||||
Convertible Condition Two | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Convertible, threshold percentage of stock price trigger | 98.00% | |||||||||
Convertible, threshold business days | 5 days | |||||||||
Convertible, threshold consecutive business days | 5 days | |||||||||
Convertible Condition Three | Convertible senior notes | Convertible Senior Notes Due 2020 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Threshold trading days | day | 2 | |||||||||
Common Stock | Facility Agreement, Due 2023, Deerfield Warrants | Facility Agreement, Due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of warrants | 14,300,000 | |||||||||
Deferred financing costs, gross | 400,000 | |||||||||
Common Stock | 2018 Deerfield Warrants | Facility Agreement, Due 2023 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Fair value of warrants | 10,300,000 | |||||||||
Deferred financing costs, gross | $ 100,000 | |||||||||
London Interbank Offered Rate (LIBOR) | Revolving loan facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Variable rate | 1.00% | |||||||||
Minimum amount, interest accrued | $ 9,750,000 |
Credit Facilities - Deerfield W
Credit Facilities - Deerfield Warrants (Details) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Common stock issued (in shares) | 10,390,524 | 10,387,926 |
2017 Deerfield Warrants | ||
Debt Instrument [Line Items] | ||
Common stock issued (in shares) | 647,001 | |
Exercise price (usd per share) | $ 92.30 | |
2018 Deerfield Warrants | ||
Debt Instrument [Line Items] | ||
Common stock issued (in shares) | 875,001 | |
Exercise price (usd per share) | $ 47.10 |
Credit Facilities - Principal M
Credit Facilities - Principal Maturities of Long-term Debt (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Debt Instrument [Line Items] | |
2019 | $ 0 |
2020 | 84,500 |
2021 | 40,768 |
2022 | 61,408 |
2023 | 65,689 |
Long-term debt | 252,365 |
Term loan facility | |
Debt Instrument [Line Items] | |
2019 | 0 |
2020 | 0 |
2021 | 40,768 |
2022 | 61,408 |
2023 | 61,408 |
Long-term debt | 163,584 |
Convertible senior notes | |
Debt Instrument [Line Items] | |
2019 | 0 |
2020 | 84,500 |
2021 | 0 |
2022 | 0 |
2023 | 0 |
Long-term debt | 84,500 |
Other debt | |
Debt Instrument [Line Items] | |
2019 | 0 |
2020 | 0 |
2021 | 0 |
2022 | 0 |
2023 | 4,281 |
Long-term debt | $ 4,281 |
Revenue Disaggregation (Details
Revenue Disaggregation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 35,606 | $ 42,284 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 22,786 | 29,375 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 12,820 | 12,909 |
Implant-based | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 26,270 | 34,412 |
Implant-based | United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 22,463 | 28,870 |
Implant-based | International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 3,807 | 5,542 |
Shipment-based | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 9,336 | 7,872 |
Shipment-based | United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 323 | 505 |
Shipment-based | International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 9,013 | $ 7,367 |
Commitments and Contingencies_2
Commitments and Contingencies (Narrative) (Details) $ in Thousands | Feb. 24, 2018USD ($) | Jan. 09, 2017shareholder | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Lessee, Lease, Description [Line Items] | ||||||
Option to extend, term | 5 years | |||||
Rent expense | $ 900 | $ 3,400 | $ 3,400 | $ 3,300 | ||
Variable lease cost | 200 | |||||
Lease liability, current | $ 1,700 | |||||
Weighted-average remaining lease term | 8 years 4 months 24 days | |||||
Weighted-average discount rate | 22.20% | |||||
Settlement awarded to other party | $ 750 | |||||
Number of shareholders in litigation | shareholder | 2 | |||||
Minimum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Term of contract | 1 year | |||||
Severance payment, prior to change in control | 6 months | |||||
Severance payment, period following change in control | 18 months | |||||
Maximum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Term of contract | 10 years | |||||
Severance payment, prior to change in control | 18 months | |||||
Severance payment, period following change in control | 24 months |
Commitments and Contingencies_3
Commitments and Contingencies (Schedule of Operating Lease Maturity) (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Operating Lease Liabilities, Payments Due [Abstract] | |
Remainder of 2019 | $ 2,568 |
2020 | 3,524 |
2021 | 3,692 |
2022 | 3,800 |
2023 | 2,889 |
2024 and thereafter | 15,132 |
Total lease payments | 31,605 |
Less: Imputed Interest | (17,965) |
Present value of operating lease liabilities | $ 13,640 |
Commitments and Contingencies_4
Commitments and Contingencies (Lease Maturities Prior to Adoption of ASC 842) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 3,807 |
2020 | 3,791 |
2021 | 3,819 |
2022 | 3,871 |
2023 | 2,889 |
2024 and thereafter | 15,132 |
Total lease payments | $ 33,309 |
Contingently Issuable Common _2
Contingently Issuable Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 10, 2010 | Mar. 31, 2019 |
Nelix Milestones | ||
Business Acquisition [Line Items] | ||
Number of shares contingently issuable (in shares) | 1,020,000 | |
Estimated fair value of contingent payment | $ 28.2 | |
PMA Milestone | ||
Business Acquisition [Line Items] | ||
Number of shares contingently issuable (in shares) | 333,149 | |
Common shares value | $ 15 | |
Share price (in dollars per share) | $ 45 | |
Closing stock price (in dollars per share) | $ 6.61 | |
Average daily closing stock price | 30 days | |
Days prior to milestone achievement announcement | 5 days | |
Contingent consideration, at fair value hypothetical value | $ 2.2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||
Income tax expense (benefit) | $ 39 | $ 85 | |
Effective income tax rate | (0.20%) | (0.40%) | |
Valuation allowance | $ 135,200 |
Restructuring Charges (Details)
Restructuring Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 39 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | |
Restructuring and Related Activities [Abstract] | |||
Restructuring costs | $ 16,300 | $ 16,300 | |
Restructuring Reserve [Roll Forward] | |||
Accrual, beginning balance | 562 | ||
Restructuring costs | 419 | $ 200 | |
Utilization | (281) | ||
Accrual, ending balance | $ 700 | $ 700 |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 03, 2019USD ($) | Mar. 31, 2019USD ($)dayinvestor$ / sharesshares | Aug. 09, 2018USD ($) | Mar. 29, 2019$ / shares | Dec. 31, 2018shares |
Subsequent Event [Line Items] | |||||
Number of shares issued on transaction | shares | 7,889,552 | ||||
Sale of stock price per share (usd per share) | $ / shares | $ 6.61 | ||||
Investors' ownership | 19.99% | ||||
Number of investors holding notes | investor | 2 | ||||
New Mandatory Note | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | $ 25,000,000 | ||||
New Mandatory Note | Holders | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | 42,020,000 | ||||
Convertible senior notes | |||||
Subsequent Event [Line Items] | |||||
Face value per note, converted amount received by Holders | 900 | ||||
Face amount of each note that is convertible | $ 1,000 | ||||
Convertible senior notes | Convertible Senior Notes Issued November 2015 | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, stated interest rate | 3.25% | ||||
Convertible senior notes | Convertible Senior Notes Issued November 2015 | Two Investors | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | $ 73,400,000 | ||||
Convertible senior notes | Convertible Senior Notes Due 2024 | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, stated interest rate | 5.00% | ||||
Face amount of each note that is convertible | $ 1 | ||||
Maximum Conversion Amount | 30.00% | ||||
Convertible debt, conversion ratio | 0.15129 | ||||
Convertible debt redemption, consecutive trading days threshold | day | 5 | ||||
Convertible debt redemption, percentage of stock price trigger | 100.00% | ||||
Mandatory conversion of shares | $ 1,666,666 | ||||
Voluntary conversion amount | 1,666,666 | ||||
Convertible senior notes | Voluntary Conversion | |||||
Subsequent Event [Line Items] | |||||
Face amount of each note that is convertible | $ 1 | ||||
Convertible debt, conversion ratio | 0.12103 | ||||
Conversion price equity offering price | 125.00% | ||||
Conversion limit on shares, outstanding principal per month | 30.00% | ||||
Convertible debt redemption, percentage of stock price trigger | 110.00% | ||||
Revolving loan facility | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, stated interest rate | 5.50% | ||||
Deerfield ELGX Revolver, LLC | |||||
Subsequent Event [Line Items] | |||||
Maximum equity owned by Investor | 4.985% | ||||
Stock trigger price (usd per share) | $ / shares | $ 6.625 | ||||
Mandatory conversion of shares | $ 1,666,666 | ||||
Voluntary conversion amount | 50,000,000 | ||||
Exit fee upon termination | 5,000,000 | ||||
Commitment reduction | 10,000,000 | ||||
Financing receivable gross | 40,000,000 | ||||
Deerfield ELGX Revolver, LLC | Maximum | |||||
Subsequent Event [Line Items] | |||||
Mandatory conversion of shares | $ 25,000,000 | ||||
Deerfield ELGX Revolver, LLC | Fixed Price Conversion | |||||
Subsequent Event [Line Items] | |||||
VWAP Days | day | 5 | ||||
Deerfield ELGX Revolver, LLC | Voluntary Conversion | |||||
Subsequent Event [Line Items] | |||||
Volume weighted average price rate trigger | 85.00% | ||||
VWAP Days | day | 15 | ||||
Deerfield ELGX Revolver, LLC | Optional Required Voluntary Conversion | |||||
Subsequent Event [Line Items] | |||||
Volume weighted average price rate trigger | 175.00% | ||||
VWAP Days | day | 15 | ||||
Deerfield ELGX Revolver, LLC | Term loan facility | Second Amendment to Facility Agreement | |||||
Subsequent Event [Line Items] | |||||
Maximum number of shares under mandatory redemption | shares | 1,430,000 | ||||
Percentage of market value attributable to principal that is paid with common stock | 96.00% | ||||
Deerfield ELGX Revolver, LLC | Revolving loan facility | |||||
Subsequent Event [Line Items] | |||||
Debt instrument, face amount | $ 120,000,000 | ||||
Global liquidity requirement | $ 17,500,000 | $ 22,500,000 | |||
Waterfall loans due | 16.67% | 33.33% | |||
Remainder of the first out water fall loans | 50.00% | ||||
Optional stock payment for interest removed | shares | 250,000 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Consideration received on transaction | $ 52,150,000 | ||||
Subsequent Event | New Mandatory Note | |||||
Subsequent Event [Line Items] | |||||
Debt Instrument, Increase, Accrued Interest | 67.02 | ||||
Subsequent Event | New Mandatory Note | Holders | |||||
Subsequent Event [Line Items] | |||||
Proceeds from Issuance of Debt | $ 73.355 |