Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 20, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 000-50744 | ||
Entity Registrant Name | NUVASIVE, INC | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 33-0768598 | ||
Entity Address, Address Line One | 12101 Airport Way | ||
Entity Address, City or Town | Broomfield | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80021 | ||
City Area Code | (800) | ||
Local Phone Number | 455-1476 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | NUVA | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2.6 | ||
Entity Common Stock, Shares Outstanding | 52,192,119 | ||
Documents Incorporated by Reference | Part III of this Form 10-K incorporates information by reference to portions of the definitive Proxy Statement for the registrant’s 2023 Annual Meeting of Stockholders, which will be filed with the U.S. Securities and Exchange Commission not- later than 120 days after December 31, 2022. | ||
Entity Central Index Key | 0001142596 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | Ernst & Young LLP |
Auditor Location | San Diego, California |
Auditor Firm ID | 42 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 248,663 | $ 246,091 |
Accounts receivable, net of allowances of $19,601 and $21,064, respectively | 249,373 | 214,398 |
Inventory, net | 338,601 | 315,845 |
Prepaid income taxes | 7,118 | 5,425 |
Prepaid expenses and other current assets | 21,457 | 20,665 |
Total current assets | 865,212 | 802,424 |
Property and equipment, net | 346,510 | 303,664 |
Intangible assets, net | 184,289 | 242,675 |
Goodwill | 639,663 | 633,467 |
Operating lease right-of-use assets | 95,112 | 102,987 |
Deferred tax assets | 68,273 | 48,003 |
Restricted cash and investments | 1,494 | 1,494 |
Other assets | 23,952 | 19,361 |
Total assets | 2,224,505 | 2,154,075 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 120,333 | 115,614 |
Contingent consideration liabilities | 66,975 | 7,986 |
Accrued payroll and related expenses | 58,448 | 66,596 |
Operating lease liabilities | 10,019 | 9,867 |
Income tax liabilities | 12,217 | 828 |
Senior convertible notes | 448,056 | 0 |
Total current liabilities | 716,048 | 200,891 |
Long-term senior convertible notes | 444,202 | 884,984 |
Deferred and other tax liabilities | 13,088 | 3,049 |
Operating lease liabilities | 103,806 | 111,592 |
Contingent consideration liabilities | 63,640 | 139,824 |
Other long-term liabilities | 14,831 | 18,528 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 5,000 shares authorized, none outstanding | 0 | 0 |
Common stock, $0.001 par value; 150,000 shares authorized at December 31, 2022 and December 31, 2021; 58,939 shares issued and 52,134 outstanding at December 31, 2022; 58,469 shares issued and 51,769 outstanding at December 31, 2021 | 63 | 63 |
Additional paid-in capital | 1,469,411 | 1,434,976 |
Accumulated other comprehensive loss | (3,249) | (7,792) |
Retained earnings | 86,115 | 45,708 |
Treasury stock at cost; 6,805 shares and 6,700 shares at December 31, 2022 and December 31, 2021, respectively | (683,450) | (677,748) |
Total equity | 868,890 | 795,207 |
Total liabilities and equity | $ 2,224,505 | $ 2,154,075 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 19,601 | $ 21,064 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 58,939,000 | 58,469,000 |
Common stock, shares outstanding (in shares) | 52,134,000 | 51,769,000 |
Treasury stock at cost, shares (in shares) | 6,805,000 | 6,700,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net sales: | |||
Net sales | $ 1,201,942 | $ 1,138,988 | $ 1,050,582 |
Cost of sales (excluding below amortization of intangible assets): | |||
Cost of sales | 336,507 | 322,278 | 321,631 |
Gross profit | 865,435 | 816,710 | 728,951 |
Operating expenses: | |||
Selling, general and administrative | 634,095 | 610,085 | 547,195 |
Research and development | 98,524 | 92,626 | 79,838 |
Amortization of intangible assets | 49,376 | 57,309 | 51,726 |
Purchase of in-process research and development | 0 | 0 | 1,011 |
Business transition (benefit) costs | (4,976) | 68,719 | 10,878 |
Total operating expenses | 777,019 | 828,739 | 690,648 |
Interest and other expense, net: | |||
Interest income | 2,759 | 160 | 1,472 |
Interest expense | (17,423) | (21,056) | (70,466) |
Other expense, net | (21,430) | (25,459) | (16,854) |
Total interest and other expense, net | (36,094) | (46,355) | (85,848) |
Income (loss) before income taxes | 52,322 | (58,384) | (47,545) |
Income tax (expense) benefit | (11,915) | (5,702) | 10,392 |
Consolidated net income (loss) | $ 40,407 | $ (64,086) | $ (37,153) |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 0.78 | $ (1.24) | $ (0.72) |
Diluted (in dollars per share) | $ 0.76 | $ (1.24) | $ (0.72) |
Weighted average shares outstanding: | |||
Basic (in shares) | 52,009 | 51,589 | 51,416 |
Diluted (in shares) | 57,359 | 51,589 | 51,416 |
Products [Member] | |||
Net sales: | |||
Net sales | $ 1,090,954 | $ 1,034,612 | $ 950,189 |
Cost of sales (excluding below amortization of intangible assets): | |||
Cost of sales | 251,768 | 245,569 | 247,809 |
Services [Member] | |||
Net sales: | |||
Net sales | 110,988 | 104,376 | 100,393 |
Cost of sales (excluding below amortization of intangible assets): | |||
Cost of sales | $ 84,739 | $ 76,709 | $ 73,822 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Consolidated net income (loss) | $ 40,407 | $ (64,086) | $ (37,153) |
Other comprehensive income (loss): | |||
Unrealized (loss) gain on marketable securities, net of tax | 0 | (13) | 13 |
Translation adjustments, net of tax | 4,543 | (194) | 1,820 |
Other comprehensive income (loss): | 4,543 | (207) | 1,833 |
Total consolidated comprehensive income (loss) | $ 44,950 | $ (64,293) | $ (35,320) |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Additional Paid-in Capital [Member] Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Retained Earnings [Member] Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | Treasury Stock [Member] |
Beginning balance (in shares) at Dec. 31, 2019 | 57,525,000 | ||||||||
Beginning balance at Dec. 31, 2019 | $ 915,207 | $ 62 | $ 1,429,854 | $ (9,418) | $ 82,475 | $ (587,766) | |||
Beginning balance (in shares) at Dec. 31, 2019 | (5,380,000) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock under employee and director equity option and purchase plans (in shares) | (420,000) | (104,000) | |||||||
Issuance of common stock under employee and director stock option and purchase plans | 505 | 6,621 | $ (6,116) | ||||||
Stock-based compensation expense | 25,778 | 25,778 | |||||||
Tax benefits related to convertible note issuance | 484 | 484 | |||||||
Shares repurchased (in shares) | (1,085,000) | ||||||||
Shares repurchased | (75,000) | $ (75,000) | |||||||
Sale of warrants | 93,915 | 93,915 | |||||||
Convertible note hedge | (115,592) | (115,592) | |||||||
Equity component of convertible note issuance | 115,559 | 115,559 | |||||||
Debt issuance costs attributable to convertible feature | (1,921) | (1,921) | |||||||
Reclassification of redeemable equity component of senior convertible notes | (4,697) | (4,697) | |||||||
Consolidated net loss | (37,153) | (37,153) | |||||||
Other comprehensive income (loss) | 1,833 | 1,833 | |||||||
Ending balance (in shares) at Dec. 31, 2020 | 57,945,000 | ||||||||
Ending balance at Dec. 31, 2020 | 918,918 | $ 62 | 1,550,001 | (7,585) | 45,322 | $ (668,882) | |||
Ending balance (in shares) at Dec. 31, 2020 | (6,569,000) | ||||||||
Adjustment for modified retrospective adoption of accounting standard at Dec. 31, 2020 | $ (82,689) | $ (147,161) | $ 64,472 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock under employee and director equity option and purchase plans (in shares) | (524,000) | (131,000) | |||||||
Issuance of common stock under employee and director stock option and purchase plans | (2,595) | $ 1 | 6,217 | $ (8,813) | |||||
Stock-based compensation expense | 25,292 | 25,292 | |||||||
Settlement of convertible note hedge (in shares) | (1,000) | ||||||||
Settlement of convertible note hedge | 0 | 53 | (53) | ||||||
Equity component of convertible note settlement (in shares) | 1,000 | ||||||||
Equity component of convertible note settlement | 574 | 574 | |||||||
Consolidated net loss | (64,086) | (64,086) | |||||||
Other comprehensive income (loss) | $ (207) | (207) | |||||||
Ending balance (in shares) at Dec. 31, 2021 | 51,769,000 | 58,469,000 | |||||||
Ending balance at Dec. 31, 2021 | $ 795,207 | $ 63 | 1,434,976 | (7,792) | 45,708 | $ (677,748) | |||
Ending balance (in shares) at Dec. 31, 2021 | (6,700,000) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of common stock under employee and director equity option and purchase plans (in shares) | (470,000) | (105,000) | |||||||
Issuance of common stock under employee and director stock option and purchase plans | 137 | $ 0 | 5,839 | $ (5,702) | |||||
Stock-based compensation expense | 28,596 | 28,596 | |||||||
Consolidated net loss | 40,407 | 40,407 | |||||||
Other comprehensive income (loss) | $ 4,543 | 4,543 | |||||||
Ending balance (in shares) at Dec. 31, 2022 | 52,134,000 | 58,939,000 | |||||||
Ending balance at Dec. 31, 2022 | $ 868,890 | $ 63 | $ 1,469,411 | $ (3,249) | $ 86,115 | $ (683,450) | |||
Ending balance (in shares) at Dec. 31, 2022 | (6,805,000) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities: | |||
Consolidated net income (loss) | $ 40,407 | $ (64,086) | $ (37,153) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 147,033 | 149,524 | 140,937 |
Purchase of in-process research and development | 0 | 0 | 1,011 |
Deferred income taxes | (10,953) | (4,141) | (18,007) |
Amortization of non-cash interest | 7,887 | 8,629 | 48,986 |
Stock-based compensation | 28,596 | 25,292 | 18,145 |
Net loss (gain) on strategic investments | 2,837 | (3,082) | 268 |
Changes in fair value of contingent consideration | (14,712) | 53,404 | 2,327 |
Net loss recognized on change in fair value of derivatives | 0 | 0 | 12,301 |
Net loss from foreign currency adjustment | 18,849 | 28,709 | 4,218 |
Reserves on current assets | (703) | 26,218 | 53,902 |
Other non-cash adjustments | 12,608 | 11,006 | 10,331 |
Changes in operating assets and liabilities, net of effects from acquisitions: | |||
Accounts receivable | (37,177) | (11,694) | 3,030 |
Inventory | (22,649) | (37,020) | (40,765) |
Prepaid expenses and other assets | 4,619 | (3,366) | (4,986) |
Accounts payable and accrued liabilities | (9,870) | 533 | 8,756 |
Accrued payroll and related expenses | (7,407) | 4,132 | (23,654) |
Income taxes | 9,753 | (1,884) | 6,264 |
Net cash provided by operating activities | 169,118 | 182,174 | 185,911 |
Investing activities: | |||
Acquisition of Simplify Medical, net of cash acquired | (750) | (149,463) | 0 |
Payment of contingent consideration for Simplify Medical | 0 | (45,850) | 0 |
Acquisitions and investments | 14,318 | 500 | 0 |
Proceeds from other investments | 0 | 0 | 1,143 |
Purchases of intangible assets | (199) | (1,344) | (3,860) |
Purchases of property and equipment | (139,228) | (111,112) | (105,729) |
Purchases of marketable securities | 0 | 0 | (233,488) |
Proceeds from sales of marketable securities | 0 | 127,023 | 60,000 |
Proceeds from maturities of marketable securities | 0 | 46,000 | 0 |
Other investing activities | (698) | (819) | 0 |
Net cash used in investing activities | (155,193) | (136,065) | (281,934) |
Financing activities: | |||
Proceeds from the issuance of common stock | 5,839 | 6,218 | 6,170 |
Payment of contingent consideration | (6,839) | (3) | (7,053) |
Purchase of treasury stock | (5,702) | (8,813) | (80,665) |
Proceeds from issuance of convertible debt, net of issuance costs | 0 | 0 | 873,848 |
Proceeds from sale of warrants | 0 | 0 | 93,915 |
Purchases of convertible note hedges | 0 | 0 | (147,825) |
Payments upon settlement of senior convertible notes | 0 | (649,426) | 0 |
Other financing activities | (1,888) | (1,325) | (1,734) |
Net cash (used in) provided by financing activities | (8,590) | (653,349) | 736,656 |
Effect of exchange rate changes on cash | (2,763) | (3,538) | 3,202 |
Increase (decrease) in cash, cash equivalents and restricted cash | 2,572 | (610,778) | 643,835 |
Cash, cash equivalents and restricted cash at beginning of period | 247,585 | 858,363 | 214,528 |
Cash, cash equivalents and restricted cash at end of period | 250,157 | 247,585 | 858,363 |
Supplemental cash flow information: | |||
Interest paid | 9,072 | 16,294 | 19,914 |
Income taxes paid | $ 12,174 | $ 11,879 | $ 1,873 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Cash Flows [Abstract] | |||
Cash and cash equivalents | $ 248,663 | $ 246,091 | $ 856,869 |
Restricted cash | 1,494 | 1,494 | 1,494 |
Total cash, cash equivalents and restricted cash reported in the Consolidated Statements of Cash Flows | $ 250,157 | $ 247,585 | $ 858,363 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Significant Accounting Policies | Organization and Significant Accounting Policies Description of Business NuVasive, Inc., or the Company, or NuVasive, was incorporated in Delaware on July 21, 1997, and began commercializing its products in 2001. Since its incorporation in 1997, the Company has grown from a small developer of specialty spinal implants into a global medical technology company delivering procedurally integrated solutions for spine surgery. Underlying the Company’s procedurally integrated solutions for spine surgery are technologies designed to enable better clinical, financial, and operational outcomes, including: • its surgical access instruments, including its integrated split-blade retractor system, designed to enable less-invasive surgical techniques by minimizing soft tissue disruption during spine surgery; • its Advanced Materials Science portfolio of specialized spinal implants, designed to advance spinal fusion by enhancing the osseointegration and biomechanical properties of implant materials, including porous titanium and porous polyetheretherketone; • its fixation systems, designed to facilitate the preservation and restoration of patient alignment, while addressing a vast array of spinal pathologies from an open or less-invasive approach across all spinal procedures; • its cervical total disc replacement, or cTDR, technology, which complements the Company’s portfolio of products and services for cervical spinal fusion surgery and is designed to offer surgeons capabilities across key performance functions—anatomic, physiologic motion, and radiologic design; • its neuromonitoring systems, which use proprietary software-driven nerve detection and avoidance technology, and the Company's intraoperative neuromonitoring, or IONM, services and support; and • its Pulse platform, a software ecosystem that integrates multiple hardware technologies into a single, condensed footprint in the operating room, including: radiation reduction, imaging enhancement, rod bending, navigation, IONM, and spinal alignment tools. In addition, the Company also designs and sells expandable growing rod implant systems for the treatment of early-onset scoliosis that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC. This technology is also the basis for the Company’s Precice line of products which is designed to support complex orthopedic reconstruction, such as trauma and limb length discrepancy. Precice is an intramedullary device that, once implanted, utilizes the MAGEC technology to non-invasively lengthen the femur and tibia. Proposed Merger with Globus Medical On February 8, 2023, the Company entered into an Agreement and Plan of Merger, or the Merger Agreement, with Globus Medical, Inc., or Globus Medical. Refer to Note 12, Subsequent Events, in the Notes to Consolidated Financial Statements included in this Annual Report for further background on the combination. Impact of COVID-19 and Global Macroeconomic Conditions on the Company's Business The COVID-19 pandemic significantly impacted the Company's business and results of operations in fiscal years 2020, 2021 and 2022. At the height of the COVID-19 pandemic, governments implemented extraordinary measures to slow the spread of the virus, which included the mandatory closure of businesses, restrictions on travel and gatherings, quarantine and physical distancing requirements, and vaccine mandates. In addition, many government agencies in conjunction with hospitals and healthcare systems deferred, reduced, or suspended elective surgical procedures due to COVID-19. While certain spine surgeries are deemed essential and certain surgeries, like in cases of trauma, cannot be delayed, the Company experienced a significant reduction in procedural volumes as hospital systems and/or patients deferred spine surgery procedures. While many countries have removed or reduced the restrictions initially implemented in response to COVID-19, the pandemic continues to evolve, and its impact on the Company's business will depend on several factors that are highly uncertain and unpredictable, including, the efficacy and adoption of vaccines and treatments, future resurgences of the virus and its variants, the imposition of government lockdowns, quarantine and physical distancing requirements, patient capacity at hospitals and healthcare systems, the duration and severity of healthcare worker shortages, and the willingness and ability of patients to seek care and treatment due to safety concerns or financial hardship. Additionally, the COVID-19 pandemic and general macroeconomic conditions have led to disruptions in the global supply chain. While the Company has largely been able to mitigate the impact, it has experienced challenges associated with material and component availability for certain product lines, longer shipping and delivery times for raw materials and components, constrained logistics capacity related to the movement of products, availability of skilled labor and increased costs of raw materials, components, labor, and freight and courier services. The Company's net sales and profitability from its foreign operations have also been negatively affected by the unfavorable foreign currency exchange impact of the strengthened U.S. dollar against a number of currencies. Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned or controlled subsidiaries, collectively referred to as either NuVasive or the Company. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the respective parent entity, the Company records the fair value of the non-controlling interest at the acquisition date and classifies the amounts attributable to non-controlling interest separately in equity in the Company's Consolidated Financial Statements. Any subsequent changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates To prepare financial statements in conformity with generally accepted accounting principles, or U.S. GAAP, accepted in the U.S., management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions involve judgments with respect to numerous factors that are difficult to predict. As a result, actual amounts could be materially different from these estimates. Recent Accounting Pronouncements Not Yet Adopted In October 2021, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an entity (acquirer) to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. This update is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company will adopt ASU 2021-08 on January 1, 2023, using a prospective transition method, and does not expect a material impact to its Consolidated Financial Statements. In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This guidance introduces new disclosure requirements to provide investors with information about contractual restrictions, including the nature and remaining duration of such restrictions. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The Company is currently evaluating the impact the standard will have on its Consolidated Financial Statements. Recently Adopted Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), or ASU 2020-06, which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments. The guidance also modifies how certain convertible instruments, that may be settled in cash or shares, impact the calculation of diluted earnings per share. ASU 2020-06 allows for a modified or full retrospective method of transition. This update is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, and early adoption is permitted. The Company early adopted ASU 2020-06 on January 1, 2021, electing the modified transition method that allows for a cumulative-effect adjustment in the period of adoption, and did not restate prior periods. As a result of the adoption, the Company increased its senior convertible debt liabilities and retained earnings on January 1, 2021 by $115.4 million and $64.5 million, respectively, and decreased its deferred tax liabilities and additional paid-in capital by $28.0 million and $147.2 million, respectively. As a result of the adoption of ASU 2020-06, diluted loss per share decreased by $0.54 for the year ended December 31, 2021. See Note 5, Indebtedness, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on the adoption of ASU 2020-06. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying U.S. GAAP on contracts, hedging relationships and other transactions subject to modification due to the expected discontinuance of the London Interbank Offered Rate, or LIBOR, and other reference rate reform changes to ease the potential accounting and financial burdens related to the expected transition in market reference rates. This guidance permits entities to elect not to apply certain modification accounting requirements to contracts affected by reference rate transition, if certain criteria are met. An entity that makes this election would not be required to remeasure modified contracts at the modification date or reassess a previous accounting determination. The guidance was effective upon issuance on March 12, 2020, and can generally be applied through December 31, 2022. On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. The adoption did not have a material impact on the Company’s Consolidated Financial Statements. Revenue Recognition In accordance with Accounting Standards Codification 606 Revenue from Contracts with Customers, or ASC 606, the Company recognizes revenue upon the transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. The principles in ASC 606 are applied using the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). Specifically, revenue from the sale of implants, fixation products and disposables is generally recognized at an amount that reflects the expected consideration upon notice that the Company’s products have been used in a surgical procedure or upon shipment to a third-party customer assuming control of the products. Revenue from IONM services is recognized in the period the service is performed for the amount of consideration expected to be received. Revenue from the sale of surgical instrument sets is generally recognized upon receipt of a purchase order and the subsequent shipment to a customer who assumes control. In certain cases, the Company does offer the ability for customers to lease surgical instrumentation primarily on a non-sales type basis. Revenue from the sale or lease of capital equipment is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement . Selling and leasing of surgical instrument sets and capital equipment represents an immaterial amount of the Company’s total net sales in all periods presented. Revenue associated with products holding rights of return or trade-in are recognized when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, with the exception of contracts that complete within one year or less, in which case the associated costs are expensed as incurred. Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying Consolidated Balance Sheets are presented net of allowances for credit losses. The Company maintains an allowance for credit losses resulting from the inability of its customers, including hospitals, ambulatory surgery centers, and distributors, to make required payments. The allowance for credit losses is calculated quarterly, and is estimated on a region-by-region basis considering a number of factors including age of account balances, collection history, historical account write-offs, third party credit reports, identified trends, current economic conditions, and supportable forecasted economic expectations. The allowance is adjusted on a specific identification basis for certain accounts as well as pooling of accounts with similar characteristics. An increase in the provision for credit losses may be required when the financial condition of the Company’s customers or its collection experience deteriorates. The Company has a diverse customer base and no single customer represented greater than ten percent of net sales or accounts receivable. An increase to the allowance for credit losses results in a corresponding charge to selling, general and administrative expenses. Historically, the Company’s reserves have been adequate to cover cr edit losses. The Company's exposure to credit losses may increase if its customers are adversely affected by changes in healthcare laws, coverage and reimbursement, macroeconomic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors. It is possible that there could be a significant adverse impact from potential adjustments to the carrying amount of trade receivables as customers’ cash flows are impacted by their response to the COVID-19 pandemic and the deferral of elective surgical procedures and other macroeconomic challenges. The following table summarizes the changes in the allowance for credit losses: (in thousands) December 31, 2022 December 31, 2021 Allowance for credit losses at January 1 $ 10,928 $ 9,646 Current-period provision for expected losses 748 2,165 Write-offs charged against the allowance (196) (743) Recoveries of amounts previously written off 31 42 Changes resulting from foreign currency fluctuations (107) (182) Allowance for credit losses at end of period $ 11,404 $ 10,928 In addition, the Company establishes a liability for estimated sales returns and a reserve for price adjustments that are recorded as a reduction to net sales. The liability and reserve are maintained to account for the future product returns and price adjustments of products sold in the current period. Concentration of Credit Risk and Significant Customers Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. The Company has a diverse customer base and no single customer represented greater than ten percent of sales or accounts receivable for any of the periods presented. Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, restricted investments, derivatives, contingent consideration liabilities, accounts receivable, accounts payable, accrued expenses, and Senior Convertible Notes. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the years presented. Cash and Cash Equivalents The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. Inventory, net Net inventory as of December 31, 2022 consisted of $326.1 million of finished goods, $5.8 million of work in progress and $6.7 million of raw materials. Net inventory as of December 31, 2021 consisted of $301.3 million of finished goods, $8.1 million of work in progress and $6.4 million of raw materials. Finished goods primarily consists of specialized implants, fixation products and disposables and are stated at the lower of cost or net realizable value determined by utilizing a standard cost method, which includes capitalized variances, which approximates the weighted average cost. Work in progress and raw materials represent the underlying material, and labor for work in progress, that ultimately yield finished goods upon completion and are recorded at the lower of cost or net realizable value. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. The Company records an inventory reserve for estimated excess and obsolete inventory based upon historical turnover and assumptions about future demand for its products and market conditions, such as product life cycles and timing of the introduction and development of new or enhanced products . The Company’s allograft products have shelf lives ranging from two five One of the Company’s strategic objectives is to continue to rapidly develop and commercialize new products and product enhancements which increases the risk that products will become obsolete prior to the end of their anticipated useful life. The Company’s estimates and assumptions for excess and obsolete inventory are reviewed and updated on a quarterly basis. The estimates the Company uses for demand are also used for near-term capacity planning and inventory purchasing and are consistent with its net sales forecasts. Increases in the reserve for excess and obsolete inventory result in a corresponding charge to cost of sales. For the year ended December 31, 2022 and 2021, the Company recorded a reserve for excess and obsolete inventory of $0.7 million and $25.6 million, respectively. The decrease is attributable to updates to the Company’s estimates and assumptions about future product demand and product life cycles which have been affected by multiple factors, including the COVID-19 pandemic and general market conditions. Additionally, during the third quarter of 2021, the Company made a determination to withdraw certain products manufactured by its NuVasive Specialized Orthopedic, or NSO, subsidiary from the market and discontinue sales of the products. As a result, the Company recorded a charge of $14.2 million . Goodwill and Intangible Assets The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including capitalized in-process research and development, or IPR&D. Intangible assets acquired in a business combination that are used for IPR&D activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired IPR&D over its estimated useful life or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use. Goodwill and IPR&D are not amortized; however, they are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. The goodwill or IPR&D are considered to be impaired if the Company determines that the carrying value of the reporting unit or IPR&D exceeds its respective fair value. The Company performs its goodwill impairment analysis at the reporting unit level, which aligns with the Company’s reporting structure and availability of discrete financial information. The Company performs its annual impairment analysis by either comparing a reporting unit’s estimated fair value to its carrying amount or doing a qualitative assessment of a reporting unit’s fair value from the last quantitative assessment to determine if there is potential impairment. The Company may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit’s estimated fair value was significantly in excess of the carrying value of its net assets and it does not believe there have been significant changes in the reporting unit’s operations that would significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies . Key assumptions for these projections include net sales growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The net sales and margin growth is based on increased sales of new and existing products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products to be commercialized. The Company’s market capitalization is also considered as a part of its analysis. The Company's annual evaluation for impairment of goodwill consists of one reporting unit. In accordance with the Company's policy, the Company completed its most recent annual evaluation for impairment as of October 1, 2022 using the qualitative assessment and determined that no impairment existed. In addition, no indicators of impairment were noted through December 31, 2022 and consequently, no impairment charge was recorded during the year. Intangible assets with a finite life, such as acquired technology, customer relationships, manufacturing know-how, licensed technology, supply agreements and certain trade names and trademarks, are amortized on a straight-line basis over their estimated useful life, ranging from 2 to 17 years. In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors. For technology based intangible assets, the Company considers the expected life cycles of products which incorporate the corresponding technology. Trademarks and trade names that are related to products are assigned lives consistent with the period in which the products bearing each brand are expected to be sold. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. See Note 2, Balance Sheet Details, in the Notes to Consolidated Financial Statements included in this Annual Report for further disclosure on goodwill and intangible assets. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Leased property meeting certain financing lease criteria is capitalized under property and equipment, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under financing leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. Maintenance and repairs are expensed as incurred. The Company reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be recognized when estimated future undiscounted cash flows relating to the asset are less than its carrying amount. An impairment loss is measured as the amount by which the carrying amount of an asset exceeds its fair value. Income Taxes The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets and liabilities are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on the Company’s review, it concluded that it was more likely than not that it would be able to realize the future benefits of its domestic and foreign deferred tax assets, with the exceptions of California, Australia, Brazil, Colombia, Malta and Mexico. This conclusion was based on historical and projected operating performance, as well as the Company’s expectation that its operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets well within the statutory carryover periods, other than those related to the jurisdictions cited above. Due to low state apportionment and the carryforward of net operating losses and sizeable research credits in California, the Company conclu |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Balance Sheet Details | Balance Sheet Details Property and Equipment, net Property and equipment, net, consisted of the following: (in thousands, except years) Useful Life December 31, 2022 2021 Instrument sets 4 $ 556,584 $ 472,247 Machinery and equipment 3 to 7 81,156 73,086 Computer equipment and software 2 to 10 208,477 188,960 Leasehold improvements 2 to 15 40,098 38,987 Furniture and fixtures 3 to 7 8,772 8,941 Building and improvements 5 to 20 23,349 22,681 Land — 1,277 1,277 919,713 806,179 Less: accumulated depreciation and amortization (573,203) (502,515) $ 346,510 $ 303,664 Property and equipment mainly consisted of instrument sets, which are made available to surgeons and hospitals that purchase implants, biologics and disposables for use in individual surgical procedures. Depreciation expense was $90.8 million, $87.5 million, and $85.9 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Capitalized software costs includes both internally developed and purchased computer software. At December 31, 2022 and 2021, the Company had $76.0 million and $67.5 million in unamortized capitalized software costs, respectively. Amortization expense related to capitalized software costs was $12.3 million, $12.2 million and $10.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. Goodwill and Intangible Assets Intangible assets as of December 31, 2022 consisted of the following: (in thousands, except years) Weighted- Gross Accumulated Intangible Intangible assets subject to amortization: Developed technology 11 $ 366,521 $ (241,119) $ 125,402 Patents 10 56,719 (37,420) 19,299 Manufacturing know-how and trade secrets 12 21,364 (21,364) — Trade name and trademarks 9 24,967 (22,124) 2,843 Customer relationships 9 156,681 (122,436) 34,245 Total intangible assets subject to amortization 10 $ 626,252 $ (444,463) $ 181,789 In-process research and development $ 2,500 $ — $ 2,500 Total intangible assets, net $ 628,752 $ (444,463) $ 184,289 Intangible assets as of December 31, 2021 consisted of the following: (in thousands, except years) Weighted- Gross Accumulated Intangible Intangible assets subject to amortization: Developed technology 11 $ 374,457 $ (209,283) $ 165,174 Patents 10 57,783 (31,903) 25,880 Manufacturing know-how and trade secrets 12 21,412 (21,387) 25 Trade name and trademarks 9 25,163 (19,621) 5,542 Customer relationships 9 156,208 (110,154) 46,054 Total intangible assets, net 10 $ 635,023 $ (392,348) $ 242,675 Total expense related to the amortization of intangible assets which is recorded in either cost of sales or operating expenses in the Consolidated Statements of Operations depending on the functional nature of the intangible, was $52.6 million, $60.6 million and $55.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The changes to goodwill are comprised of the following: (in thousands) Gross goodwill $ 641,767 Accumulated impairment loss (8,300) December 31, 2021 633,467 Changes to gross goodwill: Increases recorded related to business combinations 10,550 Changes resulting from foreign currency fluctuations (4,354) 6,196 Gross goodwill 647,963 Accumulated impairment loss (8,300) December 31, 2022 $ 639,663 Total future amortization expense related to intangible assets subject to amortization at December 31, 2022 is set forth in the table below: (in thousands) 2023 $ 27,096 2024 20,846 2025 19,927 2026 15,132 2027 12,374 Thereafter through 2038 86,414 Total future amortization expense $ 181,789 Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, (in thousands) 2022 2021 Accrued expenses $ 70,487 $ 69,054 Accounts payable 20,323 16,192 Distributor commissions payable 11,187 12,546 Other taxes payable 6,998 6,764 Litigation liability 1,931 1,744 Debt interest payable 937 937 Royalties payable 5,337 5,297 Other 3,133 3,080 Accounts payable and accrued liabilities $ 120,333 $ 115,614 |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements Foreign Currency and Derivative Financial Instruments The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities, and average exchange rates during each reporting period for results of operations. Some of the Company’s reporting entities conduct a portion of their business in currencies other than the entity’s functional currency. These transactions give rise to receivables and payables that are denominated in currencies other than the entity’s functional currency. The value of these receivables and payables is subject to changes in currency exchange rates from the point at which the transactions are originated until the settlement in cash. Both realized and unrealized gains and losses in the value of these receivables and payables are included in the determination of net income. Net currency exchange losses, which include gains and losses from derivative instruments, were $18.8 million, $28.7 million and $4.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in other expense, net in the Consolidated Statements of Operations. To manage foreign currency exposure risks, the Company uses derivatives for activities in entities that have short-term intercompany receivables and payables denominated in a currency other than the entity’s functional currency. The fair value is based on a quoted market price (Level 1). As of December 31, 2022, 2021, and 2020 a notional principal amount of $15.0 million, $12.2 million, and $14.0 million, respectively, was outstanding to hedge currency risk relative to foreign receivables and payables. Derivative instrument net gains (losses) on the Company’s forward exchange contracts were $2.2 million, $2.0 million, and $(1.0) million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in other expense, net in the Consolidated Statements of Operations. The fair value of the forward contract exchange derivative instrument asset (liability) was $(0.2) million and de minimis as December 31, 2022 and December 31, 2021, respectively. The derivative instruments are recorded in other current assets or other current liabilities in the Consolidated Balance Sheets commensurate with the nature of the instrument at period end. Fair Value Measurements Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value measurement hierarchy during the periods presented. The fair values of the Company’s assets and liabilities, including cash equivalents, marketable debt and equity securities, restricted investments, derivatives, and contingent consideration are measured at fair value on a recurring basis. The fair value of the securities classified as cash equivalents and marketable equity securities are based on quoted market prices in active markets (Level 1). As of December 31, 2022, the Company held investments in securities classified as cash equivalents and marketable equity securities. Unrealized (losses) gains for marketable equity securities was $(1.5) million for the year ended December 31, 2022, and included in other expense, net in the Consolidated Statement of Operations. As of December 31, 2021, the Company held investments in securities classified as cash equivalents. During the periods presented, the Company did not hold any such investments that were in a significant unrealized loss position and no impairment charges were recorded on such investments. Realized and unrealized gains and losses and interest income related to marketable debt securities were immaterial during all periods presented. The Company’s assets that are measured at fair value were based on the following fair value categories: (in thousands) Total Quoted Price in Significant Other Significant December 31, 2022: Cash equivalents: Money market funds $ 176,344 $ 176,344 $ — $ — Other assets: Marketable equity securities 3,483 3,483 — — Total cash equivalents $ 179,827 $ 179,827 $ — $ — December 31, 2021: Cash equivalents: Money market funds $ 179,451 $ 179,451 $ — $ — Total cash equivalents $ 179,451 $ 179,451 $ — $ — The carrying amounts of certain financial instruments such as cash and cash equivalents, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other current liabilities as of December 31, 2022 and December 31, 2021 approximate their related fair values due to the short-term maturities of these instruments. The fair value of certain financial instruments was measured and classified within Level 1 of the fair value hierarchy based on quoted prices. Certain financial instruments classified within Level 2 of the fair value hierarchy include the types of instruments that trade in markets that are not considered to be active, but are valued based on quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Fair Value of Senior Convertible Notes The fair value, based on a quoted market price (Level 1), of the Company’s outstanding $450.0 million principal amount of Senior Convertible Notes due 2023 at December 31, 2022 and December 31, 2021 was approximately $441.6 million and $450.6 million, respectively. The fair value, based on a quoted market price (Level 1), of the Company’s outstanding $450.0 million principal amount of Senior Convertible Notes due 2025 at December 31, 2022 and December 31, 2021 was approximately $394.9 million and $433.5 million, respectively. See Note 5 , Indebtedness, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on the carrying value of the senior convertible notes . Contingent Consideration Liabilities The fair value of contingent consideration liabilities assumed in business combinations is recorded as part of the purchase price consideration of the acquisition, and is determined using a discounted cash flow The recurring Level 3 fair value measurements of contingent consideration liabilities associated with commercial sales milestones include the following significant unobservable inputs: December 31, 2022 2021 Valuation Techniques Discounted cash flow, probability, Monte Carlo Discounted cash flow, Monte Carlo Discount Rate Range 6.7% - 7.9% 2.7% - 5.8% Weighted Average Discount Rate 7.0% 3.8% Expected Years 2023 - 2028 2021 - 2027 Contingent consideration liabilities were $130.6 million and $147.8 million as of December 31, 2022 and December 31, 2021, respectively, and were recorded in the Consolidated Balance Sheets commensurate with the respective payment terms. The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3): (in thousands) 2022 2021 Beginning balance at January 1 $ 147,810 $ 37,041 Contingent consideration liability recorded upon acquisition 5,550 103,400 Change in fair value measurement (14,712) 53,404 Contingent consideration paid or settled (8,037) (46,006) Changes resulting from foreign currency fluctuations 4 (29) Balance at end of period at December 31 $ 130,615 $ 147,810 During the first quarter of 2021, the Company recorded $103.4 million in contingent consideration liabilities as part of the Simplify Medical acquisition, of which $42.8 million and $60.6 million relate to the regulatory approval and net sales milestones, respectively. In the second quarter of 2021, the Simplify Cervical Disc received approval from the FDA for two-level cervical total disc replacement which resulted in the payment of $45.8 million for the achievement of the regulatory milestone. As a result of the milestone achievement, the Company recorded a $3.0 million increase in the fair value of the contingent consideration liability, which has been recorded within business transition (benefit) costs in the Company’s Consolidated Statements of Operations in the year ended December 31, 2021. For the years ended December 31, 2022 and 2021, the Company (decreased) increased the contingent consideration liability by $(12.2) million, and $47.9 million, respectively, as a result of updates to the Company's forecasted net sales assumptions and significant unobservable inputs. The remaining contingent consideration liabilities for the Simplify Medical acquisition totaled $96.3 million and $108.5 million as of December 31, 2022 and 2021, respectively. The first net sales milestone payment, based on 2022 net sales, is expected to be paid in the first quarter of 2023. Changes in fair value measurement of the contingent consideration liabilities are recorded in the Consolidated Statements of Operations within the business transition (benefit) costs line item. Non-financial assets and liabilities measured on a nonrecurring basis Certain non-financial assets and liabilities are measured at fair value, usually with Level 3 inputs including the discounted cash flow method or cost method, on a nonrecurring basis in accordance with authoritative guidance. These include items such as non-financial assets and liabilities initially measured at fair value in a business combination and non-financial long-lived assets measured at fair value for an impairment assessment. In general, non-financial assets, including goodwill, intangible assets and property and equipment, are measured at fair value when there is an indication of impairment and are recorded at fair value only when any impairment is recognized. The carrying values of the Company’s financing lease obligations approximated their estimated fair value as of December 31, 2022 and December 31, 2021. The (losses) and gains on strategic investments were $(1.3) million, $3.1 million and $(1.5) million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included in other expense, net in the Consolidated Statements of Operations. |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Business Combinations The Company recognizes the assets acquired, liabilities assumed, and any non-controlling interest at fair value at the date of acquisition. Certain acquisitions contain contingent consideration arrangements that require the Company to assess the acquisition date fair value of the contingent consideration liabilities. Such liabilities are recorded as part of the purchase price allocation of the acquisition, with subsequent fair value adjustments to the contingent consideration recorded in the Consolidated Statements of Operations. See Note 4 , Financial Instruments and Fair Value Measurements, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on contingent consideration liabilities. Acquisition of Simplify Medical Pty Limited On February 24, 2021, the Company, through its indirect wholly-owned subsidiary, NuVasive (AUST/NZ) Pty Limited, acquired all of the stock interest in Simplify Medical, a developer of cervical disc technology for cervical total disc replacement procedures. Simplify Medical now operates as a wholly-owned subsidiary of the Company. The Company agreed to make an upfront payment of $150.0 million, subject to customary purchase price adjustments, plus additional future payments contingent upon milestones related to regulatory approval and net sales from products incorporating the Simplify Medical cervical disc technology. In April 2021, the Simplify Cervical Disc received approval from the FDA for two-level cervical total disc replacement, resulting in the Company’s payment of $45.8 million for the achievement of the regulatory milestone. Additional milestone payments, which are uncapped and contingent upon net sales from products incorporating the Simplify Medical cervical disc technology, will become payable in calendar years 2023, 2024 and 2025. The first net sales milestone payment, based on 2022 net sales, is expected be paid in the first quarter of 2023. In connection with the closing, the Company paid $151.0 million, which included additional amounts for customary purchase price adjustments, using available cash on hand. During the third quarter of 2022, the Company made an additional payment of $0.8 million relating to a holdback associated with the acquisition. The allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values is as follows: (in thousands) Cash paid for purchase $ 151,026 Cash 1,563 Accounts receivable 203 Inventory 6,710 Other current assets 568 Property, plant and equipment, net 381 Definite-lived intangible assets: Developed technology 141,700 Patents 19,000 Trade names 3,500 Goodwill 81,125 Other assets 7 Contingent consideration liabilities (103,400) Accounts payable, accrued expenses and other (331) $ 151,026 Goodwill recognized in this transaction is not deductible for tax purposes. Goodwill largely consists of expected net sales synergies resulting from the combination of product portfolios, use of the Company’s existing commercial infrastructure to expand sales of Simplify Medical’s products, and the assembled workforce. The intangible assets acquired are being amortized on a straight-line basis over useful lives of seventeen years, ten years, and fifteen years for developed technology-based intangible assets, patent-related intangible assets, and trade name related intangible assets, respectively. The estimated fair values of the intangible assets acquired were primarily determined using the income approach based on significant inputs that were not observable. In connection with the acquisition, contingent consideration liabilities of $103.4 million were recorded for the potential regulatory and net sales-based milestone payments. The fair value of the contingent liability related to the regulatory milestone payment was determined using the probability approach based on the probability of the approval being achieved as of various periods. The fair value of the contingent liability relating to the net sales-based milestone payments was determined using a Monte Carlo simulation model based on forecasted net sales, volatility factors associated with those forecasted net sales and discount rates. Changes in fair value of the contingent liabilities over the measurement period will be recorded in operating expenses in the Consolidated Statements of Operations. See Note 4, Financial Instruments and Fair Value Measurements, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on contingent consideration liabilities. Acquisition costs of $4.0 million were included as business transition costs in the Consolidated Statements of Operations. The Company’s results of operations for the year ended December 31, 2021 include the operating results of Simplify Medical since the date of acquisition, within the Consolidated Statements of Operations. Net sales of acquired products represent an immaterial amount of the Company’s total net sales for the year ended December 31, 2021. The following table presents the unaudited pro forma results for the years ended December 31, 2021 and December 31, 2020. The unaudited pro forma financial information combines the results of operations of the Company and Simplify Medical as though the companies had been combined as of January 1, 2020. The unaudited pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at such time. The unaudited pro forma results presented include non-recurring adjustments directly attributable to the business combination. The adjustments relating to amortization charges for acquired intangible assets were $1.7 million and $9.1 million for the years ended December 31, 2021 and December 31, 2020, respectively. Adjustments for increased fair value of acquired inventory were $0.4 million for the year ended December 31, 2021. The year ended December 31, 2020 also includes an adjustment of $17.5 million for acquisition related expenses. All periods presented include related tax effects to pre-tax loss. Simplify Medical’s net sales represent an immaterial amount of the combined net sales for the years ended December 31, 2021 and December 31, 2020. The pre-acquisition accounting policies of Simplify Medical were materially similar to the Company. (unaudited) (in thousands, except per share amounts) Years Ended December 31, 2021 2020 Net loss $ (67,630) $ (69,764) Net loss per share: Basic $ (1.31) $ (1.36) Diluted $ (1.31) $ (1.36) The Company has completed an acquisition that was not considered material, individually or collectively, to the overall Consolidated Financial Statements during the year ended December 31, 2022. This acquisitions has been included in the Consolidated Financial Statements from the date of the acquisition. Variable Interest Entities The Company provides IONM services through various subsidiaries, which conduct business as NuVasive Clinical Services. In providing IONM services to surgeons and healthcare facilities across the U.S., the Company maintains contractual relationships with several physician practices, or PCs. In accordance with authoritative guidance, the Company has determined that the PCs are variable interest entities and therefore, the accompanying Consolidated Financial Statements include the accounts of the PCs from the date of acquisition. During the periods presented, the results of the PCs were immaterial to the Company’s financial statements. The creditors of the PCs have claims only to the assets of the PCs, which are not material, and the assets of the PCs are not available to the Company. |
Indebtedness
Indebtedness | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness The carrying values of the Company’s Senior Convertible Notes are as follows: (in thousands) December 31, 2022 December 31, 2021 1.00% Senior Convertible Notes due 2023: Principal amount $ 450,000 $ 450,000 Unamortized debt issuance costs (1,944) (6,543) 448,056 443,457 0.375% Senior Convertible Notes due 2025: Principal amount 450,000 450,000 Unamortized debt issuance costs (5,798) (8,473) 444,202 441,527 Total Senior Convertible Notes $ 892,258 $ 884,984 Less: Current portion $ (448,056) $ — Long-term Senior Convertible Notes $ 444,202 $ 884,984 Year Ended December 31. (in thousands) 2022 2021 2020 Interest expense: Contractual coupon interest $ 6,188 $ 9,234 $ 18,656 Amortization of debt issuance costs 7,274 8,018 7,175 Accretion of the debt discount — — 40,865 Total interest expense recognized on Senior Convertible Notes $ 13,462 $ 17,252 $ 66,696 Effective interest rates: Senior Convertible Notes due 2021 (1) — % 2.9 % 5.8 % Senior Convertible Notes due 2023 (2) 2.0 % 2.0 % 6.8 % Senior Convertible Notes due 2025 (2) 1.0 % 1.0 % 4.9 % (1) Senior Convertible Notes due 2021 settled in full on March 15, 2021. (2) Interest on Senior Convertible Notes due 2023 and 2025 began accruing upon issuance and is payable semi-annually. 1.00% Senior Convertible Notes due 2023 In June 2020, the Company issued $450.0 million principal amount of unsecured Senior Convertible Notes with a stated interest rate of 1.00% and a maturity date of June 1, 2023, or the 2023 Notes. The net proceeds from the offering of the 2023 Notes, after deducting initial purchasers’ discounts and costs directly related to the offering, were approximately $436.7 million. The 2023 Notes were initially required to be settled in cash as the Company did not have sufficient reserved shares. On September 10, 2020, the Company held a Special Meeting of Stockholders and received stockholder approval to amend the Company’s Restated Certificate of Incorporation to increase the number of shares of its common stock authorized for issuance from 120,000,000 shares to 150,000,000 shares. As a result of the increase in the number of shares of the Company’s common stock authorized for issuance, as of September 10, 2020 and as of each of years ended December 31, 2020, 2021 and 2022, respectively, the Company had sufficient reserved shares. The 2023 Notes permit the Company to settle conversions of the 2023 Notes in cash, stock, or a combination thereof, solely at the Company’s discretion, and the Company has elected to settle all conversions in cash. Accordingly, the Company will satisfy the principal amount outstanding and any note conversion value over the principal amount with cash. The initial conversion rate of the 2023 Notes is 11.8778 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $84.19 per share, subject to adjustments. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2023 Notes in connection with such a corporate event in certain circumstances. The Company also entered into transactions for a convertible notes hedge and warrants concurrently with the issuance of the 2023 Notes. At the time of issuance, the cash conversion feature of the 2023 Notes required bifurcation from the 2023 Notes and was initially accounted for as a derivative liability (the "Embedded Conversion Derivative"), which was included in long-term liabilities in the Company’s Consolidated Balance Sheets. The fair value of the 2023 Notes Embedded Conversion Derivative was $57.2 million, and was recorded as the original debt discount for purposes of accounting for the debt component of the 2023 Notes. On September 10, 2020, as a result of the increase in the number of shares of the Company’s common stock authorized for issuance, the Company had sufficient reserved shares to settle conversions of the 2023 Notes in cash, stock, or a combination thereof, and in accordance with authoritative literature, the Embedded Conversion Derivative was marked to fair value and reclassified to stockholders’ equity, which resulted in recognizing $37.3 million in additional paid-in-capital during 2020. The original issue discount was recognized as interest expense using the effective interest method. As of January 1, 2021, the Company early adopted ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), or ASU 2020-06, which removed the requirement of separating the embedded conversion feature classified within stockholders’ equity from the 2023 Notes. Accordingly, the Company reclassified the unamortized debt discount from its additional paid-in capital to its senior convertible notes within long-term liabilities in the Consolidated Balance Sheet. The impact of the adoption of ASU 2020-06 as of January 1, 2021 resulted in an increase in senior convertible notes and retained earnings of $46.8 million and $7.9 million, respectively, and a decrease in deferred tax liabilities and additional paid-in capital by $11.2 million and $43.5 million, respectively. Prior to February 1, 2023, holders could have converted their 2023 Notes only under the following conditions: (a) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (b) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price of the 2023 Notes per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; or (c) upon the occurrence of specified corporate events, as defined in the 2023 Notes. On or after February 1, 2023, until the close of business on the second scheduled trading day immediately preceding June 1, 2023, holders may convert their 2023 Notes at any time, regardless of the foregoing conditions. The Company may not redeem the 2023 Notes prior to the maturity date and no principal payments are due on the 2023 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the 2023 Notes do not contain any financial covenants and do not restrict the Company from conducting significant restructurings, paying dividends or issuing or repurchasing any of its other securities. As of December 31, 2022, the 2023 Notes are included within current liabilities in the Company’s Consolidated Balance Sheet. 2023 Hedge In connection with the sale of the 2023 Notes, the Company entered into privately negotiated call option transactions with certain dealers, which included affiliates of certain of the initial purchasers of the 2023 Notes and other financial institutions, or the 2023 Counterparties, entitling the Company to purchase up to 5,345,010 shares of the Company’s common stock at an initial stock price of $84.19 per share, each of which is subject to adjustment. The 2023 Hedge was initially required to be settled in cash as the Company did not have sufficient reserved shares with respect to the 2023 Notes. As a result, the 2023 Hedge was accounted for as a derivative asset, which was included in long-term assets in the Company’s Consolidated Balance Sheets. The cost of the 2023 Hedge was $69.5 million. On September 10, 2020, as a result of the increase in the number of shares of the Company’s common stock authorized for issuance, the Company had sufficient reserved shares to settle the 2023 Notes, which therefore allows for the 2023 Hedge to be settled in cash, stock, or a combination thereof. In accordance with authoritative literature, the Convertible Note Hedge Derivative was marked to fair value and reclassified to stockholders’ equity, which resulted in recognizing a reduction of $37.3 million in additional paid-in-capital during 2020. The 2023 Hedge will expire on the second scheduled trading day immediately preceding June 1, 2023. The 2023 Hedge is expected to reduce the potential equity dilution upon conversion of the 2023 Notes if the daily volume-weighted average price per share of the Company’s common stock exceeds the strike price of the 2023 Hedge. An assumed exercise of the 2023 Hedge by the Company is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. 2023 Warrants In connection with the sale of the 2023 Notes, the Company sold warrants to the 2023 Counterparties, or the 2023 Warrants, to acquire up to 5,345,010 shares of the Company’s common stock. The 2023 Warrants initially limited the amount of shares the Company was required to reserve for issuance under the 2023 Warrants to an aggregate of 3,093,500 shares of the Company’s common stock, subject to adjustment upon the Company having a sufficient amount of authorized and unissued shares which are not reserved for other transactions. As a result of the Company receiving stockholder approval to increase the number of shares of the Company’s common stock authorized for issuance on September 10, 2020, the Company subsequently entered into amendment agreements with each of the 2023 Counterparties to increase the number of authorized shares of the Company’s common stock required to be reserved under the 2023 Warrants to the aggregate amount of 6,948,512 shares. The 2023 Warrants will expire on various dates from September 2023 through November 2023 and may be settled in net shares or cash, subject to certain conditions. It is the Company’s current intent and policy to settle all conversions in shares of the Company’s common stock. The Company received $46.8 million in cash proceeds from the sale of the 2023 Warrants, which was recorded in additional paid-in-capital. The 2023 Warrants could have a dilutive effect on the Company’s earnings per share to the extent that the price of the Company's common stock during a given measurement period exceeds the strike price of the 2023 Warrants, which is $104.84 per share. The Company uses the treasury share method for assumed conversion of its 2023 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. 0.375% Senior Convertible Notes due 2025 In March 2020, the Company issued $450.0 million principal amount of unsecured Senior Convertible Notes with a stated interest rate of 0.375% and a maturity date of March 15, 2025, or the 2025 Notes. The net proceeds from the offering of the 2025 Notes, after deducting initial purchasers’ discounts and costs directly related to the offering, were approximately $437.0 million. The 2025 Notes may be settled in cash, stock, or a combination thereof, solely at the Company’s discretion. It is the Company's current intent and policy to settle all conversions through combination settlement, which involves satisfying the principal amount outstanding with cash and any note conversion value over the principal amount in shares of the Company’s common stock. The initial conversion rate of the 2025 Notes is 10.7198 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $93.29 per share, subject to adjustments. In addition, following certain corporate events that occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its 2025 Notes in connection with such a corporate event or in connection with such redemption in certain circumstances. The Company also entered into transactions for a convertible notes hedge, or the 2025 Hedge, and warrants, or the 2025 Warrants, concurrently with the issuance of the 2025 Notes. At the time of issuance and in accordance with Accounting Standards Codification Topic 470, the embedded conversion feature of the 2025 Notes required bifurcation from the notes and was initially accounted for as an equity instrument classified to stockholders’ equity, which resulted in recognizing $78.3 million in additional paid-in-capital during 2020. As of January 1, 2021, the Company early adopted ASU 2020-06, which removed the requirement of separating the embedded conversion feature classified within stockholders’ equity from the 2025 Notes. Accordingly, the Company reclassified the unamortized debt discount and corresponding debt issuance costs from its additional paid-in capital to its senior convertible notes within long-term liabilities in the Consolidated Balance Sheet. The impact of the adoption of ASU 2020-06 as of January 1, 2021 resulted in an increase in senior convertible notes and retained earnings of $64.7 million and $8.8 million, respectively, and a decrease in deferred tax liabilities and additional paid-in capital by $15.9 million and $57.6 million, respectively. Prior to September 15, 2024, holders may convert their 2025 Notes only under the following conditions: (a) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (b) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price of the 2025 Notes per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on such trading day; (c) if the Company calls any or all of the 2025 Notes for redemption, at any time prior to the close of business on the second scheduled trading day preceding the redemption date; or (d) upon the occurrence of specified corporate events, as defined in the 2025 Notes. On or after September 15, 2024, until the close of business on the second scheduled trading day immediately preceding March 15, 2025, holders may convert their 2025 Notes at any time, regardless of the foregoing conditions. The Company may not redeem the 2025 Notes prior to March 20, 2023. The Company may redeem the 2025 Notes, at its option, in whole or in part, on or after March 20, 2023 until the close of business on the business day immediately preceding September 15, 2024, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company delivers written notice of a redemption. The redemption price will be equal to 100% of the principal amount of such 2025 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. No principal payments are due on the 2025 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the 2025 Notes do not contain any financial covenants and do not restrict the Company from conducting significant restructurings, paying dividends or issuing or repurchasing any of its other securities. As of December 31, 2022, the Company is unaware of any current events or market conditions that would allow holders to convert the 2025 Notes. 2025 Hedge In connection with the sale of the 2025 Notes, the Company entered into privately negotiated call option transactions with certain dealers, which included affiliates of certain of the initial purchasers of the 2025 Notes and other financial institutions, or the 2025 Counterparties, entitling the Company to purchase up to 4,823,910 shares of the Company’s common stock at an initial stock price of $93.29 per share, each of which is subject to adjustment. The cost of the 2025 Hedge was $78.3 million and accounted for as an equity instrument by recognizing $78.3 million in additional paid-in-capital during 2020. The 2025 Hedge will expire on the second scheduled trading day immediately preceding March 15, 2025. The 2025 Hedge is expected to reduce the potential equity dilution upon conversion of the 2025 Notes if the daily volume-weighted average price per share of the Company’s common stock exceeds the strike price of the 2025 Hedge. An assumed exercise of the 2025 Hedge by the Company is considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. 2025 Warrants The Company sold warrants to the 2025 Counterparties to acquire up to 4,823,910 shares of the Company’s common stock. The 2025 Warrants will expire on various dates from June 2025 through October 2025 and may be settled in net shares or cash, subject to certain conditions. It is the Company’s current intent and policy to settle all conversions in shares of the Company’s common stock. The Company received $47.1 million in cash proceeds from the sale of the 2025 Warrants, which was recorded in additional paid-in-capital. The 2025 Warrants could have a dilutive effect on the Company’s earnings per share to the extent that the price of the Company's common stock during a given measurement period exceeds the strike price of the 2025 Warrants, which is $127.84 per share. The Company uses the treasury share method for assumed conversion of its 2025 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. 2.25% Senior Convertible Notes due 2021 In March 2016, the Company issued $650.0 million principal amount of unsecured Senior Convertible Notes with a stated interest rate of 2.25% and a maturity date of March 15, 2021, or the 2021 Notes. Interest on the 2021 Notes began accruing upon issuance and was payable semi-annually. On March 15, 2021 the Company settled in full the 2021 Notes at their scheduled maturity as further discussed below. The net proceeds from the offering of the 2021 Notes, after deducting initial purchasers' discounts and costs directly related to the offering, were approximately $634.1 million. Prior to September 14, 2020, the 2021 Notes provided for settlement in cash, stock, or a combination thereof, solely at the Company’s discretion. As of September 14, 2020, combination settlement was deemed to have been elected by the Company. The initial conversion rate of the 2021 Notes was 16.7158 shares per $1,000 principal amount, which was equivalent to a conversion price of approximately $59.82 per share, subject to adjustments. The Company also entered into transactions for a convertible notes hedge, or the 2021 Hedge, and warrants, or the 2021 Warrants, concurrently with the issuance of the 2021 Notes. At the time of issuance and in accordance with Accounting Standards Codification Topic 470, the embedded conversion feature of the 2021 Notes required bifurcation from the notes and was accounted for as an equity instrument classified to stockholders’ equity, which resulted in recognizing $84.8 million in additional paid-in-capital during 2016. As of January 1, 2021, the Company early adopted ASU 2020-06, which removed the requirement of separating the embedded conversion feature classified within stockholders’ equity from the 2021 Notes. Accordingly, the Company reclassified the unamortized debt discount and corresponding debt issuance costs from its additional paid-in capital to its senior convertible notes within current liabilities in the Consolidated Balance Sheet. The impact of the adoption of ASU 2020-06 as of January 1, 2021, resulted in an increase in senior convertible notes and retained earnings of $3.9 million and $47.8 million, respectively, and a decrease in deferred tax liabilities and additional paid-in capital by $0.9 million and $46.1 million, respectively. Prior to September 15, 2020, holders could have converted their 2021 Notes only under the following conditions: (a) during any calendar quarter beginning June 30, 2016, if the reported sale price of the Company's common stock for at least 20 days out of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter was greater than 130% of the conversion price on each applicable trading day; (b) during the five business day period in which the trading price of the 2021 Notes fell below 98% of the product of (i) the last reported sale price of the Company's common stock and (ii) the conversion rate on that date; and (c) upon the occurrence of specified corporate events, as defined in the 2021 Notes. From September 15, 2020 and until the close of business on the second scheduled trading day immediately preceding March 15, 2021, holders could have converted their 2021 Notes at any time (regardless of the foregoing circumstances). The Company had the ability to redeem the 2021 Notes, at its option, in whole or in part beginning on March 20, 2019 until the close of business on the business day immediately preceding September 15, 2020 if the last reported sale price of the Company’s common stock had been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company delivers written notice of a redemption. No principal payments were due on the 2021 Notes prior to maturity. Other than restrictions relating to certain fundamental changes and consolidations, mergers or asset sales and customary anti-dilution adjustments, the 2021 Notes did not contain any financial covenants and did not restrict the Company from paying dividends or issuing or repurchasing any of its other securities. 2021 Hedge In connection with the offering of the 2021 Notes, the Company entered into the hedge transaction with the initial purchasers of the 2021 Notes and/or their affiliates, or the 2021 Counterparties, entitling the Company to purchase up to 10,865,270 shares of the Company's common stock at an initial stock price of $59.82 per share, each of which was subject to adjustment. The cost of the 2021 Hedge was $111.2 million and accounted for as an equity instrument by recognizing $111.2 million in additional paid-in-capital during 2016. The 2021 Hedge expired on March 15, 2021 and was put in place to reduce the potential equity dilution upon conversion of the 2021 Notes if the daily volume-weighted average price per share of the Company's common stock exceeded the strike price of the 2021 Hedge. Prior to its expiration, an assumed exercise of the 2021 Hedge by the Company was considered anti-dilutive since the effect of the inclusion would always be anti-dilutive with respect to the calculation of diluted earnings per share. 2021 Warrants The Company sold warrants to the 2021 Counterparties to acquire up to 10,865,270 shares of the Company’s common stock. The 2021 Warrants expired on various dates from June 2021 through December 2021 and could have only been settled in cash or net shares. As of December 31, 2021, all of the warrants expired unexercised. The Company received $44.9 million in cash proceeds from the sale of the 2021 Warrants, which was recorded in additional paid-in-capital. Prior to their expiration and termination, the 2021 Warrants could have had a dilutive effect on the Company's earnings per share to the extent that the price of the Company's common stock during a given measurement period exceeded the strike price of the 2021 Warrants, which was $80.00 per share. The Company used the treasury share method for assumed conversion of the 2021 Warrants to compute the weighted average common shares outstanding for diluted earnings per share. Settlement of the 2021 Notes and 2021 Hedge On March 15, 2021, the 2021 Notes reached maturity and the Company settled in full the 2021 Notes. The Company received conversion notices from the holders of 1.4% of the 2021 Notes, representing $9.1 million outstanding principal amount thereof, or the Conversions. The Company paid an aggregate of $649.4 million in cash for the settlement of the 2021 Notes, which included $640.9 million in satisfaction of the outstanding principal of the 2021 Notes and $8.5 million in cash in connection with the settlement of the Conversions. Additionally, in satisfaction of the Conversions, and pursuant to combination settlement, the Company issued 837 shares of common stock in the aggregate to the holders who elected to convert their outstanding notes. The Company funded the repayment of the outstanding principal amount of the 2021 Notes, accrued interest thereon, and the cash component of the Conversions using available cash on hand. In connection with the settlement of the 2021 Notes, the Company exercised its rights under the convertible note hedge transactions with the 2021 Counterparties on March 15, 2021 and received 842 shares of its own common stock. Revolving Senior Credit Facility In February 2020, the Company entered into a Second Amended and Restated Credit Agreement, or the 2020 Credit Agreement, for a revolving senior credit facility, or the 2020 Facility, which replaced the previous Amended and Restated Credit Agreement the Company had entered into in April 2017. The 2020 Credit Agreement was amended in May 2020 to, among other things, provide additional flexibility in determining the financial covenant leverage ratios for the second and third fiscal quarters of 2020 and to adjust certain margin and benchmark rates used to determine interest under the 2020 Facility. The 2020 Credit Agreement provides for secured revolving loans, multicurrency loan options and letters of credit in an aggregate amount of up to $550.0 million. The 2020 Credit Agreement also contains an expansion feature, which allows the Company to increase the aggregate principal amount of the 2020 Facility provided the Company remains in compliance with the underlying financial covenants on a pro forma basis, including but not limited to, compliance with the consolidated interest coverage ratio and certain consolidated leverage ratios. The 2020 Facility matures in February 2025 (subject to an earlier springing maturity date), and includes a sublimit of $50.0 million for standby letters of credit, a sublimit of $250.0 million for multicurrency borrowings, and a sublimit of $5.0 million for swingline loans. All assets of the Company and its material domestic subsidiaries continue to be pledged as collateral under the 2020 Facility (subject to customary exceptions) pursuant to the terms set forth in the Second Amended and Restated Security and Pledge Agreement executed in favor of the administrative agent by the Company. Each of the Company’s material domestic subsidiaries guarantee the 2020 Facility. In connection with the 2020 Facility, the Company incurred issuance costs which will be amortized over the term of the 2020 Facility. The Company did not carry any outstanding revolving loans under the 2020 Facility as of December 31, 2022 and 2021. Any borrowings under the 2020 Facility are intended to be used by the Company to provide financing for working capital and other general corporate purposes, including potential mergers and acquisitions and to refinance indebtedness. Borrowings under the 2020 Facility bear interest, at the Company’s option, at a rate equal to an applicable margin plus: (a) the applicable Eurocurrency Rate (as defined in the 2020 Credit Agreement), or (b) a base rate determined by reference to the highest of (1) the federal funds effective rate plus 0.50%, (2) the Bank of America prime rate, and (3) the Eurocurrency Rate plus 1.00%. The margin for the 2020 Facility ranges, based on the Company’s consolidated total net leverage ratio, from 0.50% to 1.25% in the case of base rate loans and from 1.50% to 2.25% in the case of Eurocurrency Rate loans. The 2020 Facility includes an unused line fee ranging, based on the Company’s consolidated total net leverage ratio, from 0.35% to 0.50% per annum on the revolving commitment. The 2020 Credit Agreement contains affirmative, negative, permitted acquisition and financial covenants, and events of default customary for financings of this type. The financial covenants require the Company to maintain a consolidated interest coverage ratio and certain consolidated leverage ratios, which are measured on a quarterly basis. The 2020 Facility grants the lenders preferred first priority liens and security interests in capital stock, intercompany debt and all of the present and future property and assets of the Company and each guarantor. The Company is currently in compliance with the 2020 Credit Agreement covenants. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Commitments Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company records the associated lease liability and corresponding right-of-use asset upon commencement of the lease using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current liabilities long-term liabilities property and equipment, net The Company leases office and storage facilities and equipment under various operating and financing lease agreements. The initial terms of these leases range from 1 to 17 years and generally provide for periodic rent increases, and renewal and termination options. The Company’s lease agreements do not contain any material variable lease payments, residual value guarantees or material restrictive covenants. Certain leases require the Company to pay taxes, insurance and maintenance. Payments for the transfer of goods or services such as common area maintenance and utilities represent non-lease components. The Company elected the package of practical expedients and therefore does not separate non-lease components from lease components. The table below summarizes the Company’s right-of-use assets and lease liabilities: (in thousands, except years and rates) December 31, 2022 December 31, 2021 Assets Operating $ 95,112 $ 102,987 Financing 1,893 2,276 Total leased assets $ 97,005 $ 105,263 Liabilities Current: Operating $ 10,019 $ 9,867 Financing 1,084 1,546 Long-term: Operating 103,806 111,592 Financing 872 885 Total lease liabilities $ 115,781 $ 123,890 Supplemental non-cash information: Weighted-average remaining lease term (years) - operating leases 10.9 11.6 Weighted-average remaining lease term (years) - finance leases 2.6 2.1 Weighted-average discount rate - operating leases 5.3 % 5.3 % Weighted-average discount rate - finance leases 3.7 % 4.7 % The table below summarizes the Company’s lease costs, cash payments, and operating lease liabilities arising from obtaining right-of-use assets under its operating and financing lease obligations: (in thousands) December 31, 2022 December 31, 2021 Lease expense: Operating lease expense $ 16,277 $ 16,088 Finance lease expense: Amortization of right-of-use assets 1,698 1,374 Interest expense on lease liabilities 100 112 Total lease expense $ 18,075 $ 17,574 Consolidated Statements of Cash Flows information: Operating cash flows used for operating leases $ 16,599 $ 15,394 Operating cash flows used for financing leases 100 102 Financing cash flows used for financing leases 1,889 1,325 Total cash paid for amounts included in the measurement of lease liabilities $ 18,588 $ 16,821 Supplemental non-cash information: Operating lease liabilities arising from obtaining right-of-use assets $ 3,495 $ 11,871 The Company’s future minimum annual lease payments under operating and financing leases at December 31, 2022 are as follows: (in thousands) Financing Operating 2023 $ 1,139 $ 15,817 2024 599 14,496 2025 254 12,983 2026 48 12,688 2027 4 11,932 Thereafter — 85,155 Total minimum lease payments $ 2,044 $ 153,071 Less: amount representing interest (88) (39,246) Present value of obligations under leases 1,956 113,825 Less: current portion (1,084) (10,019) Long-term lease obligations $ 872 $ 103,806 Licensing and Purchasing Agreements The Company has both minimum and contingent obligations to make payments of up to $67.1 million if specified future events occur or conditions are met as provided in certain net sales based, consulting, purchase and/or product development agreements. Not all of the respective agreements specify milestone payment timelines . Certain payments will be made in a combination of cash and the Company’s common shares as provided in the agreements. Any payments in satisfaction of these obligations are considered either a research and development expense or a cost of sales depending on the nature of the arrangement and are recognized ratably as and if milestones are achieved. Executive Severance Plans The Company has employment contracts with key executives and maintains severance plans that provide for the payment of severance and other benefits if such executives are terminated for reasons other than cause, as defined in those agreements and plans. Certain agreements call for payments that are based on historical compensation, and accordingly, the amount of the contractual commitment will change over time commensurate with the executive’s applicable earnings. At December 31, 2022, future commitments for such key executives were approximately $16.2 million. In certain circumstances, the agreements call for the acceleration of equity vesting. Those figures are not reflected in the above information. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity In October 2017, the Company announced that the Board of Directors approved a share repurchase program authorizing the repurchase of up to $100 million of the Company’s common stock over a three-year period. In February 2020, the Company announced that the Board of Directors approved an increase in the share repurchase authorization from $100 million to $150 million of the Company’s common stock and extended the authorization through December 31, 2021. In March 2020, in connection with the issuance of the 2025 Notes, the Company repurchased approximately 1,085,000 shares of its common stock for $75.0 million. On November 3, 2021, the Board of Directors approved an increase in the share repurchase authorization by $25 million and extended the authorization through December 31, 2022. On November 2, 2022, the Board of Directors approved a one-year extension of the Company’s share repurchase program. Accordingly, as of November 2, 2022, the Company is authorized to repurchase up to $100 million of its common stock through December 31, 2023. Under this program, the Company is authorized to repurchase its shares in open market purchases, privately negotiated purchases or other transactions. The Company did not repurchase any common stock during the year ended December 31, 2022. On September 10, 2020, upon obtaining stockholder approval, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of the Company’s common stock from 120,000,000 shares to 150,000,000 shares. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Comm on Stock There were 150,000,000 shares of common stock authorized for both December 31, 2022 and 2021. Preferred Stock There are 5,000,000 shares of preferred stock authorized and none issued or outstanding at December 31, 2022 and 2021. Stock-based Compensation In March 2014, the Compensation Committee, or the Compensation Committee, of the Board of Directors of the Company adopted the 2014 Equity Incentive Plan of NuVasive, Inc., or the 2014 EIP, replacing the 2004 Amended and Restated Equity Incentive Plan, or the 2004 EIP. The 2004 EIP terminated in February 2014, upon the tenth anniversary of its effective date, and no further awards may be granted or are outstanding under the 2004 EIP as of December 31, 2022. The 2014 EIP provides the Company with the ability to grant various types of equity awards to its workforce (including, without limitation, restricted stock units, or RSUs, performance awards, and deferred stock awards). The 2014 EIP also provides for the issuance of performance RSUs, or PRSUs, to be granted subject to time- and/or performance-based vesting requirements. The 2014 EIP allows for “net share settlement” of certain equity awards whereby, in lieu of (i) making cash payments in satisfaction of the exercise price owed respective to non-qualified stock option awards, or (ii) open market selling award shares to generate cash proceeds for use in satisfaction of statutory tax obligations respective to an award’s settlement or exercise, the company offsets the award shares being settled in a respective transaction by the number of shares of company stock with a value equal to the respective obligation, and, in the case of taxes, making a cash payment to the respective taxing authority on behalf of the employee using Company cash. The net share settlement is accounted for with the cost of any award shares that are net settled being included in treasury stock and reported as a reduction in total equity at the time of settlement. In connection with the acquisition of Ellipse Technologies in February 2016, the Company assumed the Ellipse Technologies, Inc. 2015 Incentive Award Plan and the shares thereunder, subject to an equity exchange adjustment, for future awards by the Company. The compensation cost that has been included in the Consolidated Statements of Operations for the Company’s stock-based compensation plans was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Selling, general and administrative expense $ 22,778 $ 18,924 $ 12,622 Research and development expense 5,620 6,112 5,259 Cost of sales 198 256 264 Stock-based compensation expense before taxes 28,596 25,292 18,145 Related income tax benefits (4,532) (4,391) (3,088) Stock-based compensation expense, net of taxes $ 24,064 $ 20,901 $ 15,057 As of December 31, 2022, there was $22.7 million and $21.5 million of unrecognized compensation expense for RSUs and PRSUs, respectively, which is expected to be recognized over a weighted-average period of approximately 1.8 years and 2.4 years, respectively. In addition, as of December 31, 2022, there was $0.8 million of unrecognized compensation expense for shares expected to be issued under the ESPP which is expected to be recognized through April 2023. There was no unamortized expense for stock options as of December 31, 2022. Restricted Stock Units The total fair value of RSUs that vested during the year ended December 31, 2022, 2021, and 2020 was $13.8 million, $18.0 million and $12.1 million, respectively. Following is a summary of RSU activity for the year ended December 31, 2022: (in thousands, except per share amounts) Number of Weighted Outstanding at December 31, 2021 997 $ 60.91 Granted 483 53.67 Vested (256) 59.14 Forfeited (137) 59.97 Outstanding at December 31, 2022 1,087 $ 58.23 For the majority of RSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to be paid by the Company on behalf of the employees. The total shares withheld related to vested RSUs were approximately 84,000, 91,000, and 71,000, in 2022, 2021, and 2020, respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities related to vesting RSUs were $4.6 million, $6.1 million and $4.1 million in 2022, 2021 and 2020, respectively. Further, within RSUs outstanding at December 31, 2022, there were 118,000 shares issuable pursuant to vested RSUs for which delivery has been deferred by non-employee directors. Performance-Based Restricted Stock Units The Company has granted PRSUs since 2012 for which the ultimate issuance amount is determined by the Company’s Compensation Committee upon its certification of Company performance against a pre-determined matrix, which have included targets for net sales, operating margin, earnings per share and total shareholder return over pre-determined periods of time. Share payout levels range from 0% to 200% depending on the respective terms of an award. Based upon the Company’s actual performance against the performance conditions, approximately 73,000, 105,000 and 61,000 shares of common stock vested pursuant to PRSUs in 2022, 2021 and 2020, respectively. The total fair value of PRSUs vested during 2022, 2021, 2020 and was $3.9 million, $7.1 million and $3.8 million, respectively. Following is a summary of PRSU activity for the year ended December 31, 2022: (in thousands, except per share amounts) Shares Maximum Number Average Grant Outstanding at December 31, 2021 681 941 $ 58.95 Awarded 350 514 52.49 Vested (73) (73) 59.12 Forfeited (121) (240) 58.40 Outstanding at December 31, 2022 837 1,142 $ 56.47 For the majority of PRSUs, shares are issued on the vesting dates net of the amount of shares needed to satisfy statutory tax withholding requirements to be paid by the Company on behalf of the employees. The total shares withheld related to vesting PRSUs were approximately 20,000, 41,000, and 25,000 in 2022, 2021 and 2020 respectively, and were based on the value of the awards on their vesting dates as determined by the Company’s closing stock price. Total payments for the employees’ tax obligations to the taxing authorities related to vesting PRSUs were $1.1 million, $2.8 million, and $1.6 million in 2022, 2021, and 2020, respectively. Stock Options The Company has not granted any stock options since 2011. The stock options previously granted were exercisable for a period of up to ten years after the date of grant. The Company issued approximately 16,000 shares of common stock, before net share settlement, upon the exercise of outstanding stock options during the year ended December 31, 2020. The aggregate intrinsic value of outstanding stock options at December 31, 2020 is based on the Company’s closing stock price on December 31, 2020 of $56.33. Stock option exercises during the year ended December 31, 2020 were primarily all executed with net share settlements, for which the Company did not receive any cash proceeds. The total intrinsic value of stock options exercised was $0.4 million during the year ended December 31, 2020. There were no stock options that vested during the years ended December 31, 2022, 2021 or 2020. As of December 31, 2022 and 2021, the Company did not have any outstanding stock options. Employee Stock Purchase Plan The NuVasive, Inc. 2004 Amended and Restated Employee Stock Purchase Plan, or the ESPP, provides eligible employees with a means of acquiring equity in the Company at a discounted purchase price using their own accumulated payroll deductions. Under the terms of the ESPP, employees can elect to have up to 15% of their annual compensation, up to a maximum of $21,250 per year, withheld to purchase shares of Company common stock for a purchase price equal to 85% of the lower of the fair market value per share (at closing) of Company common stock on (i) the commencement date of the six-month offering period or (ii) the respective purchase date. In the years ended December 31, 2022, 2021 and 2020, 142,000, 153,000, and 136,000 shares, respectively, were purchased under the ESPP. The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2022 2021 2020 ESPP Volatility 40 % 39 % 56 % Expected term (years) 0.5 0.5 0.5 Risk free interest rate 1.7 % 0.1 % 0.5 % Expected dividend yield — % — % — % Common Stock Reserved for Future Issuance The following table summarizes common shares reserved for issuance on exercise or conversion at December 31, 2022: (in thousands) Issued and outstanding RSUs and PRSUs 1,924 Available for issuance under the ESPP 534 Available for future grant 2,889 2023 Notes 7,082 2023 Warrants 6,949 2025 Notes 6,512 2025 Warrants 6,271 Total shares reserved for future issuance 32,161 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Total income (loss) before income taxes summarized by region was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 United States $ 45,037 $ 21,096 $ (45,534) Foreign 7,285 (79,480) (2,011) Total income (loss) before income taxes $ 52,322 $ (58,384) $ (47,545) The income tax provision (benefit) was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Current: Federal $ 26,133 $ 3,607 $ (35) State 4,682 2,989 2,309 Foreign 1,597 3,268 4,675 Total current provision 32,412 9,864 6,949 Deferred: Federal (17,429) (902) (13,800) State (6,129) (6,573) (8,315) Foreign (1,791) (23,040) (3,849) Total deferred provision (25,349) (30,515) (25,964) Changes in tax rate (303) 47 (579) Changes in valuation allowance 5,155 26,306 9,202 Total provision (benefit) $ 11,915 $ 5,702 $ (10,392) The differences between the income tax provision (benefit) at the U.S. federal statutory tax rate and the Company’s effective tax rate were as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Tax provision (benefit) at federal statutory rate $ 10,988 $ (12,261) $ (9,984) Valuation allowance 5,155 26,306 9,202 Compensation expense 2,570 2,153 3,314 Acquisition related charges (551) 1,338 687 State income tax 2,357 979 (1,243) Nondeductible meals and entertainment 247 171 351 Return to provision adjustments (2,737) 116 (881) Change in tax rates (303) 47 (579) Income tax reserves 950 (447) (4,217) Foreign tax rate differences from federal statutory rate 564 (7,166) (1,215) Income tax credits and incentives (7,012) (7,286) (7,155) Other (313) 1,752 1,328 Total provision (benefit) $ 11,915 $ 5,702 $ (10,392) Significant components of the Company’s deferred tax assets and liabilities were as follows: (in thousands) December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 102,383 $ 87,671 Amortization 42,215 66,482 Inventory 40,502 48,244 Lease liability 26,718 28,402 General business and other credit carryforwards 30,111 25,913 Capitalized research and development costs 22,827 — Original issue discount 12,303 22,130 Stock-based compensation 11,692 10,042 Foreign currency exchange gains and losses 12,025 5,967 Other 27,174 28,699 Gross deferred tax assets 327,950 323,550 Less valuation allowance (167,919) (168,409) Net deferred tax assets 160,031 155,141 Deferred tax liabilities: Depreciation (43,815) (46,597) Acquired intangibles (23,848) (34,181) Right-of-use assets (22,211) (23,904) Other (2,338) (3,137) Total deferred tax liabilities (92,212) (107,819) Net deferred tax assets $ 67,819 $ 47,322 The Company consolidates subsidiaries in foreign jurisdictions which use the local currency as their functional currency. Since income taxes for these subsidiaries are assessed in their local currency, deferred tax balances are translated into the Company’s reporting currency and adjusted for changes in the exchange rates over time through the cumulative translation account. During 2021, as a result of the adoption of ASU 2020-06, net decreases in deferred tax liabilities of $28.9 million and valuation allowance of $0.9 million were recorded against stockholders’ equity. Additionally, during 2021, as a result of the Simplify Medical acquisition, the Company recorded an increase in deferred tax assets of $10.7 million and an offsetting increase in valuation allowance of the same amount against goodwill. Accordingly, these changes in deferred tax balances are not reflected in income tax expense and create differences between changes in net deferred tax assets and deferred tax expense for the years presented. The following table summarizes the activity related to the Company’s unrecognized tax benefits: (in thousands) Year Ended December 31, 2022 2021 2020 Gross unrecognized tax benefits at January 1 $ 19,743 $ 18,316 $ 20,328 Increases in tax positions for prior years 488 165 1,758 Increases in tax positions for current year relating to ongoing operations 2,159 2,087 2,159 Decreases in tax positions as a result of a lapse of statute of limitations (44) (769) (5,929) Decreases in tax positions due to settlements with taxing authorities (63) (56) — Gross unrecognized tax benefits at December 31 $ 22,283 $ 19,743 $ 18,316 At December 31, 2022, 2021, and 2020, $20.1 million, $17.8 million, and $16.5 million, respectively, of the Company’s total unrecognized tax benefits, if recognized, would impact the effective income tax rate. In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes, the Company classified uncertain tax positions as non-current income tax liabilities unless expected to be paid in one year. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. For the years ended December 31, 2022, 2021, and 2020, the Company recognized approximately $0.4 million, $0.1 million, and $(0.1) million, respectively, in interest and penalties as income tax (expense) benefit in the Consolidated Statements of Operations. The Company had approximately $0.6 million and $0.1 million accrued for interest and penalties at December 31, 2022 and 2021, respectively, in the Consolidated Balance Sheets. The Company believes there are no significant unrecognized tax positions that are expected to reverse by the end of 2023. The Company is subject to routine compliance reviews on various tax matters around the world in the ordinary course of business. Currently, the only active audits are with the U.S. Internal Revenue Service for 2014 – 2016 tax years, Illinois State for the 2019 tax year, the Netherlands for the 2018 tax year, and Italy for the 2017 tax year. California is subject to examination in all years due to prior year net operating losses and research and development credits. Other major state and foreign jurisdictions remain subject to examination from 2018 and 2017 forward, respectively. The Company made the accounting policy election to treat taxes due on U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income as a current period expense when incurred (the "period cost method"). The Company has $9.0 million of undistributed earnings attributable to operations in its controlled foreign corporations as of December 31, 2022. Additionally, due to recent tax reform in the U.S. and favorable treaties between the U.S. and countries in which its controlled foreign corporations operate, the Company has the ability to repatriate earnings without incurring additional tax liabilities. Accordingly, the Company has not recorded a liability for taxes associated with any future distributions of these undistributed earnings. At December 31, 2022, the Company had $1.6 million, $51.7 million and $292.6 million of federal, state and foreign net operating loss carryforwards, respectively. Federal net operating loss carryforwards begin to expire in 2026, state net operating loss carryforwards begin to expire in 2023, and foreign net operating losses carry forward indefinitely. The Company has California research and development income tax credit carryforwards of $46.8 million. The California credits can be carried forward indefinitely. The Company has foreign tax credit carryforwards of $0.9 million which expire beginning in 2027. Additionally, there are other state tax jobs credit carryforwards of $0.3 million which begin to expire in 2034. Due to the “change of ownership” provision of the Tax Reform Act of 1986, utilization of the Company’s net operating loss and credit carryforwards may be subject to an annual limitation against taxable income in future periods. As a result of any future ownership changes, the annual limitation of loss and credit carryforwards may cause them to expire before ultimately becoming available to reduce future income tax liabilities. |
Business Segment, Product, and
Business Segment, Product, and Geographic Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Business Segment, Product and Geographic Information | Business Segment, Product and Geographic Information The Company operates in one segment based upon the Company’s organizational structure, the way in which the operations and investments are managed and evaluated by the chief operating decision maker, or the CODM, as well as the lack of availability of discrete financial information at a lower level. The Company’s CODM reviews net sales at the product line offering level, and manufacturing, operating income and expenses, and net income at the Company wide level to allocate resources and assess the Company’s overall performance. The Company shares common, centralized support functions, including finance, human resources, legal, information technology, and corporate marketing, all of which report directly to the CODM. Accordingly, decision-making regarding the Company’s overall operating performance and allocation of Company resources is assessed on a consolidated basis. The Company has disclosed the net sales for each of its product line offerings to provide the reader of the financial statements transparency into the operations of the Company. The Company reports under two distinct product lines; spinal hardware and surgical support. The Company’s spinal hardware product line offerings include implants and fixation products. The Company’s surgical support product offerings include IONM services, disposables and biologics, and capital equipment, all of which are used to aid spinal surgery. Net sales by product line was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Spinal hardware $ 909,778 $ 856,556 $ 783,510 Surgical support 292,164 282,432 267,072 Total net sales $ 1,201,942 $ 1,138,988 $ 1,050,582 Net sales and property and equipment, net, by geographic area were as follows: (in thousands) Net Sales Property and Equipment, Net Year Ended December 31, December 31, 2022 2021 2020 2022 2021 United States $ 925,859 $ 876,614 $ 821,824 $ 295,914 $ 256,688 International (excludes Puerto Rico) 276,083 262,374 228,758 50,596 46,976 Total $ 1,201,942 $ 1,138,988 $ 1,050,582 $ 346,510 $ 303,664 |
Contingencies
Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies The Company is subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted from time-to-time. These matters arise in the ordinary course and conduct of the Company’s business and include, for example, commercial, intellectual property, environmental, securities and employment matters. The Company intends to continue to defend itself vigorously in such matters and when warranted, take legal action against others. Furthermore, the Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. An estimated loss contingency is accrued in the Company’s financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Proposed Merger with Globus Medical On February 8, 2023, the Company entered into the Merger Agreement with Globus Medical and Zebra Merger Sub, Inc., a wholly owned subsidiary of Globus Medical, or Merger Sub. The Merger Agreement provides, among other things, that subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into the Company, referred to as the Merger, with the Company surviving the merger as a wholly owned subsidiary of Globus Medical, referred to as the Combination. Under the Merger Agreement, at the effective time of the Merger, or the Effective Time, each share of common stock of the Company issued and outstanding immediately prior to the Effective Time (other than certain excluded shares as described in the Merger Agreement) will be cancelled and converted into the right to receive 0.75 fully paid and non-assessable shares of Class A common stock of Globus Medical, and cash in lieu of fractional shares. The respective obligations of the Company and Globus Medical to consummate the transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver of a number of conditions, including: (1) the adoption of the Merger Agreement by the Company’s stockholders; (2) approval by Globus Medical’s stockholders of the issuance of shares of Globus Medical Class A common stock in connection with the Merger; (3) the absence of any law or order prohibiting consummation of the Merger; (4) Globus Medical’s registration statement on Form S-4 with respect to the Globus Medical Class A common stock to be issued in connection with the Merger having been declared effective by the U.S. Securities and Exchange Commission; (5) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (6) accuracy of the other party’s representations and warranties, subject to certain materiality standards set forth in the Merger Agreement; (7) compliance by the other party in all material respects with such other party’s obligations under the Merger Agreement; and (8) the absence of a material adverse effect on the other party since February 8, 2023. If the Merger Agreement is terminated under specified circumstances, the Company may be required to pay Globus Medical a termination fee of up to $120 million, and if the Merger Agreement is terminated under certain other circumstances, Globus Medical may be required to pay the Company a termination fee of up to $120 million. For additional information related to the Merger Agreement, please refer to our Current Report on Form 8-K filed with the SEC on February 9, 2023 (the “February 9th Form 8-K”). The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement attached as Exhibit 2.1 to the February 9th Form 8-K. Amendment to Bylaws |
Organization and Significant _2
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business NuVasive, Inc., or the Company, or NuVasive, was incorporated in Delaware on July 21, 1997, and began commercializing its products in 2001. Since its incorporation in 1997, the Company has grown from a small developer of specialty spinal implants into a global medical technology company delivering procedurally integrated solutions for spine surgery. Underlying the Company’s procedurally integrated solutions for spine surgery are technologies designed to enable better clinical, financial, and operational outcomes, including: • its surgical access instruments, including its integrated split-blade retractor system, designed to enable less-invasive surgical techniques by minimizing soft tissue disruption during spine surgery; • its Advanced Materials Science portfolio of specialized spinal implants, designed to advance spinal fusion by enhancing the osseointegration and biomechanical properties of implant materials, including porous titanium and porous polyetheretherketone; • its fixation systems, designed to facilitate the preservation and restoration of patient alignment, while addressing a vast array of spinal pathologies from an open or less-invasive approach across all spinal procedures; • its cervical total disc replacement, or cTDR, technology, which complements the Company’s portfolio of products and services for cervical spinal fusion surgery and is designed to offer surgeons capabilities across key performance functions—anatomic, physiologic motion, and radiologic design; • its neuromonitoring systems, which use proprietary software-driven nerve detection and avoidance technology, and the Company's intraoperative neuromonitoring, or IONM, services and support; and • its Pulse platform, a software ecosystem that integrates multiple hardware technologies into a single, condensed footprint in the operating room, including: radiation reduction, imaging enhancement, rod bending, navigation, IONM, and spinal alignment tools. In addition, the Company also designs and sells expandable growing rod implant systems for the treatment of early-onset scoliosis that can be non-invasively lengthened following implantation with precise, incremental adjustments via an external remote controller using magnetic technology called MAGnetic External Control, or MAGEC. This technology is also the basis for the Company’s Precice line of products which is designed to support complex orthopedic reconstruction, such as trauma and limb length discrepancy. Precice is an intramedullary device that, once implanted, utilizes the MAGEC technology to non-invasively lengthen the femur and tibia. Proposed Merger with Globus Medical On February 8, 2023, the Company entered into an Agreement and Plan of Merger, or the Merger Agreement, with Globus Medical, Inc., or Globus Medical. Refer to Note 12, Subsequent Events, in the Notes to Consolidated Financial Statements included in this Annual Report for further background on the combination. Impact of COVID-19 and Global Macroeconomic Conditions on the Company's Business The COVID-19 pandemic significantly impacted the Company's business and results of operations in fiscal years 2020, 2021 and 2022. At the height of the COVID-19 pandemic, governments implemented extraordinary measures to slow the spread of the virus, which included the mandatory closure of businesses, restrictions on travel and gatherings, quarantine and physical distancing requirements, and vaccine mandates. In addition, many government agencies in conjunction with hospitals and healthcare systems deferred, reduced, or suspended elective surgical procedures due to COVID-19. While certain spine surgeries are deemed essential and certain surgeries, like in cases of trauma, cannot be delayed, the Company experienced a significant reduction in procedural volumes as hospital systems and/or patients deferred spine surgery procedures. While many countries have removed or reduced the restrictions initially implemented in response to COVID-19, the pandemic continues to evolve, and its impact on the Company's business will depend on several factors that are highly uncertain and unpredictable, including, the efficacy and adoption of vaccines and treatments, future resurgences of the virus and its variants, the imposition of government lockdowns, quarantine and physical distancing requirements, patient capacity at hospitals and healthcare systems, the duration and severity of healthcare worker shortages, and the willingness and ability of patients to seek care and treatment due to safety concerns or financial hardship. |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company and its majority-owned or controlled subsidiaries, collectively referred to as either NuVasive or the Company. The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the respective parent entity, the Company records the fair value of the non-controlling interest at the acquisition date and classifies the amounts attributable to non-controlling interest separately in equity in the Company's Consolidated Financial Statements. Any subsequent changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates To prepare financial statements in conformity with generally accepted accounting principles, or U.S. GAAP, accepted in the U.S., management must make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions involve judgments with respect to numerous factors that are difficult to predict. As a result, actual amounts could be materially different from these estimates. |
Recently Accounting Pronouncements Not Yet Adopted And Recently Adopted Accounting Standards | Recent Accounting Pronouncements Not Yet Adopted In October 2021, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires an entity (acquirer) to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. This update is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company will adopt ASU 2021-08 on January 1, 2023, using a prospective transition method, and does not expect a material impact to its Consolidated Financial Statements. In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This guidance introduces new disclosure requirements to provide investors with information about contractual restrictions, including the nature and remaining duration of such restrictions. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The amendments should be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. The Company is currently evaluating the impact the standard will have on its Consolidated Financial Statements. Recently Adopted Accounting Standards In August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), or ASU 2020-06, which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments. The guidance also modifies how certain convertible instruments, that may be settled in cash or shares, impact the calculation of diluted earnings per share. ASU 2020-06 allows for a modified or full retrospective method of transition. This update is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, and early adoption is permitted. The Company early adopted ASU 2020-06 on January 1, 2021, electing the modified transition method that allows for a cumulative-effect adjustment in the period of adoption, and did not restate prior periods. As a result of the adoption, the Company increased its senior convertible debt liabilities and retained earnings on January 1, 2021 by $115.4 million and $64.5 million, respectively, and decreased its deferred tax liabilities and additional paid-in capital by $28.0 million and $147.2 million, respectively. As a result of the adoption of ASU 2020-06, diluted loss per share decreased by $0.54 for the year ended December 31, 2021. See Note 5, Indebtedness, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on the adoption of ASU 2020-06. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying U.S. GAAP on contracts, hedging relationships and other transactions subject to modification due to the expected discontinuance of the London Interbank Offered Rate, or LIBOR, and other reference rate reform changes to ease the potential accounting and financial burdens related to the expected transition in market reference rates. This guidance permits entities to elect not to apply certain modification accounting requirements to contracts affected by reference rate transition, if certain criteria are met. An entity that makes this election would not be required to remeasure modified contracts at the modification date or reassess a previous accounting determination. The guidance was effective upon issuance on March 12, 2020, and can generally be applied through December 31, 2022. On December 21, 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022 to December 31, 2024. The adoption did not have a material impact on the Company’s Consolidated Financial Statements. |
Revenue Recognition | Revenue Recognition In accordance with Accounting Standards Codification 606 Revenue from Contracts with Customers, or ASC 606, the Company recognizes revenue upon the transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. The principles in ASC 606 are applied using the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). Specifically, revenue from the sale of implants, fixation products and disposables is generally recognized at an amount that reflects the expected consideration upon notice that the Company’s products have been used in a surgical procedure or upon shipment to a third-party customer assuming control of the products. Revenue from IONM services is recognized in the period the service is performed for the amount of consideration expected to be received. Revenue from the sale of surgical instrument sets is generally recognized upon receipt of a purchase order and the subsequent shipment to a customer who assumes control. In certain cases, the Company does offer the ability for customers to lease surgical instrumentation primarily on a non-sales type basis. Revenue from the sale or lease of capital equipment is recognized when the Company transfers control to the customer, which is generally at the point when acceptance occurs that indicates customer acknowledgment of delivery or installation, depending on the terms of the arrangement . Selling and leasing of surgical instrument sets and capital equipment represents an immaterial amount of the Company’s total net sales in all periods presented. Revenue associated with products holding rights of return or trade-in are recognized when the Company concludes there is not a risk of significant revenue reversal in future periods for the expected consideration in the transaction. Costs incurred by the Company associated with sales contracts with customers are deferred over the performance obligation period and recognized in the same period as the related revenue, with the exception of contracts that complete within one year or less, in which case the associated costs are expensed as incurred. |
Accounts Receivable and Related Valuation Accounts | Accounts Receivable and Related Valuation Accounts Accounts receivable in the accompanying Consolidated Balance Sheets are presented net of allowances for credit losses. The Company maintains an allowance for credit losses resulting from the inability of its customers, including hospitals, ambulatory surgery centers, and distributors, to make required payments. The allowance for credit losses is calculated quarterly, and is estimated on a region-by-region basis considering a number of factors including age of account balances, collection history, historical account write-offs, third party credit reports, identified trends, current economic conditions, and supportable forecasted economic expectations. The allowance is adjusted on a specific identification basis for certain accounts as well as pooling of accounts with similar characteristics. An increase in the provision for credit losses may be required when the financial condition of the Company’s customers or its collection experience deteriorates. The Company has a diverse customer base and no single customer represented greater than ten percent of net sales or accounts receivable. An increase to the allowance for credit losses results in a corresponding charge to selling, general and administrative expenses. Historically, the Company’s reserves have been adequate to cover cr edit losses. The Company's exposure to credit losses may increase if its customers are adversely affected by changes in healthcare laws, coverage and reimbursement, macroeconomic pressures or uncertainty associated with local or global economic recessions, disruption associated with the current COVID-19 pandemic, or other customer-specific factors. It is possible that there could be a significant adverse impact from potential adjustments to the carrying amount of trade receivables as customers’ cash flows are impacted by their response to the COVID-19 pandemic and the deferral of elective surgical procedures and other macroeconomic challenges. The following table summarizes the changes in the allowance for credit losses: (in thousands) December 31, 2022 December 31, 2021 Allowance for credit losses at January 1 $ 10,928 $ 9,646 Current-period provision for expected losses 748 2,165 Write-offs charged against the allowance (196) (743) Recoveries of amounts previously written off 31 42 Changes resulting from foreign currency fluctuations (107) (182) Allowance for credit losses at end of period $ 11,404 $ 10,928 |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant CustomersFinancial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. The Company has a diverse customer base and no single customer represented greater than ten percent of sales or accounts receivable for any of the periods presented. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist principally of cash and cash equivalents, restricted investments, derivatives, contingent consideration liabilities, accounts receivable, accounts payable, accrued expenses, and Senior Convertible Notes. The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following three categories: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments that are readily convertible into cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. |
Inventory, net | Inventory, net Net inventory as of December 31, 2022 consisted of $326.1 million of finished goods, $5.8 million of work in progress and $6.7 million of raw materials. Net inventory as of December 31, 2021 consisted of $301.3 million of finished goods, $8.1 million of work in progress and $6.4 million of raw materials. Finished goods primarily consists of specialized implants, fixation products and disposables and are stated at the lower of cost or net realizable value determined by utilizing a standard cost method, which includes capitalized variances, which approximates the weighted average cost. Work in progress and raw materials represent the underlying material, and labor for work in progress, that ultimately yield finished goods upon completion and are recorded at the lower of cost or net realizable value. The Company reviews the components of its inventory on a periodic basis for excess and obsolescence and adjusts inventory to its net realizable value as necessary. The Company records an inventory reserve for estimated excess and obsolete inventory based upon historical turnover and assumptions about future demand for its products and market conditions, such as product life cycles and timing of the introduction and development of new or enhanced products . The Company’s allograft products have shelf lives ranging from two five One of the Company’s strategic objectives is to continue to rapidly develop and commercialize new products and product enhancements |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The Company’s goodwill represents the excess of the cost over the fair value of net assets acquired from its business combinations. The determination of the value of goodwill and intangible assets arising from business combinations and asset acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of the net tangible and intangible assets acquired, including capitalized in-process research and development, or IPR&D. Intangible assets acquired in a business combination that are used for IPR&D activities are considered indefinite lived until the completion or abandonment of the associated research and development efforts. Upon reaching the end of the relevant research and development project, the Company will amortize the acquired IPR&D over its estimated useful life or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use. Goodwill and IPR&D are not amortized; however, they are assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstance warrant such a review. The goodwill or IPR&D are considered to be impaired if the Company determines that the carrying value of the reporting unit or IPR&D exceeds its respective fair value. The Company performs its goodwill impairment analysis at the reporting unit level, which aligns with the Company’s reporting structure and availability of discrete financial information. The Company performs its annual impairment analysis by either comparing a reporting unit’s estimated fair value to its carrying amount or doing a qualitative assessment of a reporting unit’s fair value from the last quantitative assessment to determine if there is potential impairment. The Company may do a qualitative assessment when the results of the previous quantitative test indicated the reporting unit’s estimated fair value was significantly in excess of the carrying value of its net assets and it does not believe there have been significant changes in the reporting unit’s operations that would significantly decrease its estimated fair value or significantly increase its net assets. If a quantitative assessment is performed the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies . Key assumptions for these projections include net sales growth, future gross and operating margin growth, and its weighted cost of capital and terminal growth rates. The net sales and margin growth is based on increased sales of new and existing products as the Company maintains investments in research and development. Additional assumed value creators may include increased efficiencies from capital spending. The resulting cash flows are discounted using a weighted average cost of capital. Operating mechanisms and requirements to ensure that growth and efficiency assumptions will ultimately be realized are also considered in the evaluation, including timing and probability of regulatory approvals for Company products to be commercialized. The Company’s market capitalization is also considered as a part of its analysis. The Company's annual evaluation for impairment of goodwill consists of one reporting unit. In accordance with the Company's policy, the Company completed its most recent annual evaluation for impairment as of October 1, 2022 using the qualitative assessment and determined that no impairment existed. In addition, no indicators of impairment were noted through December 31, 2022 and consequently, no impairment charge was recorded during the year. Intangible assets with a finite life, such as acquired technology, customer relationships, manufacturing know-how, licensed technology, supply agreements and certain trade names and trademarks, are amortized on a straight-line basis over their estimated useful life, ranging from 2 to 17 years. In determining the useful lives of intangible assets, the Company considers the expected use of the assets and the effects of obsolescence, demand, competition, anticipated technological advances, changes in surgical techniques, market influences and other economic factors. For technology based intangible assets, the Company considers the expected life cycles of products which incorporate the corresponding technology. Trademarks and trade names that are related to products are assigned lives consistent with the period in which the products bearing each brand are expected to be sold. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the technology over the remaining amortization period, the Company reduces the net carrying value of the related intangible asset to fair value and may adjust the remaining amortization period. See Note 2, Balance Sheet Details, in the Notes to Consolidated Financial Statements included in this Annual Report for further disclosure on goodwill and intangible assets. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, ranging from 2 to 20 years. The Company depreciates leasehold improvements over their estimated useful lives or the term of the applicable lease, whichever is shorter. Leased property meeting certain financing lease criteria is capitalized under property and equipment, and the net present value of the related lease payments is recorded as a liability. Amortization of assets under financing leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms. Maintenance and repairs are expensed as incurred. |
Income Taxes | Income Taxes The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. The Company includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Significant judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets and liabilities are expected to be realized. A valuation allowance is established when it is more likely than not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis and includes a review of all available positive and negative evidence. Factors reviewed include projections of pre-tax book income for the foreseeable future, determination of cumulative pre-tax book income after permanent differences, earnings history, and reliability of forecasting. Based on the Company’s review, it concluded that it was more likely than not that it would be able to realize the future benefits of its domestic and foreign deferred tax assets, with the exceptions of California, Australia, Brazil, Colombia, Malta and Mexico. This conclusion was based on historical and projected operating performance, as well as the Company’s expectation that its operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets well within the statutory carryover periods, other than those related to the jurisdictions cited above. Due to low state apportionment and the carryforward of net operating losses and sizeable research credits in California, the Company concluded that it is not more likely than not that it will be able to utilize its California deferred tax assets. Therefore, the Company has maintained a full valuation allowance on its California deferred tax assets as of December 31, 2022. Due to a history of losses and or the lack of certain sources of future taxable income, the Company has established a full valuation allowance against deferred tax assets in Australia, Brazil, Colombia, Malta and Mexico as of December 31, 2022. The Company will continue to assess the need for a valuation allowance on its deferred tax assets by evaluating both positive and negative evidence that may exist. Any adjustment to the net deferred tax asset valuation allowance would be recorded in the statement of operations for the period that the adjustment is determined to be required. See Note 9, Incomes Taxes, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on income taxes. |
Loss Contingencies | Loss Contingencies An estimated loss contingency is accrued and disclosed in the Company’s financial statements if it is probable or disclosed if it is reasonably possible that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it has adequately accrued an amount for contingent liabilities currently in existence. The Company does not accrue amounts for liabilities that it does not believe are probable and only discloses those matters it considers material to its overall financial position. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. The Company is involved in a number of legal actions arising in the normal course of business. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, that could require significant expenditures or result in lost net sales. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed the Company’s current accruals, and it is possible that its cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies. See Note 11, Contingences, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on legal proceedings and investigations. |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss)Other comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Other comprehensive income (loss) includes net of tax, unrealized gains or losses on the Company’s marketable debt securities and foreign currency translation adjustments. |
Research and Development | Research and DevelopmentResearch and development costs are expensed as incurred. To the extent the Company purchases research and development assets with a future alternative use the Company will capitalize and amortize the assets over its useful life. |
Product Shipment Costs | Product Shipment Costs Product shipment costs, included in selling, general and administrative expense in the accompanying Consolidated Statements of Operations, were $37.3 million, $30.9 million, and $27.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. The majority of the Company’s shipping costs are associated with providing instrument sets to hospitals for use in individual surgical procedures. Amounts billed to customers for shipping and handling of products are reflected in net sales and are not material for any period presented. |
Business Transition Costs | Business Transition (Benefit) CostsThe Company incurs certain costs related to acquisition, integration and business transition activities, which include severance, relocation, consulting, leasehold exit costs, third-party merger and acquisition costs, contingent consideration fair value adjustments and other costs directly associated with such activities. Contingent consideration is accrued based on the fair value of the expected payment, and such accruals are subject to increase or decrease based on the assessment of the likelihood that the contingent milestones will be achieved resulting in payment. If an accrual for contingent consideration decreases during a particular period, it results in a reduction of costs during such period, which the Company records as a benefit. |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense for equity-classified awards, principally related to restricted stock units, or RSUs, and performance restricted stock units, or PRSUs, is measured at the grant date based on the estimated fair value of the award. The fair value of equity instruments that are expected to vest is recognized and amortized over the requisite service period. The Company has granted awards with up to five year graded or cliff vesting terms (in each case, with service through the date of vesting being required). No exercise price or other monetary payment is required for receipt of the shares issued in settlement of the respective award; instead, consideration is furnished in the form of the participant’s service to the Company. The fair value of RSUs including PRSUs with pre-defined performance criteria is based on the stock price on the date of grant whereas the expense for PRSUs with pre-defined performance criteria is adjusted with the probability of achievement of such performance criteria at each period end. Stock-based compensation expense is adjusted from the grant date to exclude expense for awards that are expected to be forfeited. The forfeiture estimate is adjusted as necessary through the vesting date so that full compensation cost is recognized only for awards that vest. The Company assesses the reasonableness of the estimated forfeiture rate at least annually, with any change to be made on a cumulative basis in the period the estimated forfeiture rates change. The Company considered its historical experience of pre-vesting forfeitures on awards by each homogenous group of employees as the basis to arrive at its estimated annual pre-vesting forfeiture rates. The Company estimates the fair value of stock options issued under its equity incentive plans and shares issued to employees under its employee stock purchase plan, or ESPP, using a Black-Scholes option-pricing model on the date of grant. The Black-Scholes option-pricing model incorporates various assumptions including expected volatility, expected term and risk-free interest rates. The expected volatility is based on the historical volatility of the Company’s common stock over the most recent period commensurate with the estimated expected term of the Company’s stock options and ESPP offering period which is derived from historical experience. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of grant. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. See Note 8, Stock-Based Compensation, in the Notes to Consolidated Financial Statements included in this Annual Report for further discussion on stock-based compensation. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The Company computes basic net income per share using the weighted-average number of common shares outstanding during the period. Diluted net income per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, unvested RSUs, PRSUs (including those with performance and market conditions), warrants, and the shares to be issued upon the conversion of the Senior Convertible Notes. The contingently issuable shares are included in basic net income per share as of the date that all necessary conditions have been satisfied and are included in the denominator for dilutive calculation for the entire period if such shares would be issuable as of the end of the reporting period assuming the end of the reporting period was the end of the contingency period. Since the Company incurred a net loss in each of the years ended December 31, 2021 and 2020, basic and diluted net loss per share were the same. The following table sets forth the computation of basic and diluted consolidated net income (loss) per share: Year Ended December 31, (in thousands, except per share data) 2022 2021 2020 Numerator: Net income (loss) $ 40,407 $ (64,086) $ (37,153) Interest and debt issuance costs on the 1.00% Senior Convertible Notes due 2023, net of tax $ — $ — $ — Interest and debt issuance costs on the 0.375% Senior Convertible Notes due 2025, net of tax 3,283 — — Net income (loss) for diluted $ 43,690 $ (64,086) $ (37,153) Denominator for basic and diluted net income (loss) per share: Weighted average common shares outstanding for basic 52,009 51,589 51,416 Dilutive potential common stock outstanding: ESPP 3 — — RSUs and PRSUs 523 — — 1.00% Senior Convertible Notes due 2023 — — — 0.375% Senior Convertible Notes due 2025 4,824 — — Weighted average common shares outstanding for diluted 57,359 51,589 51,416 Basic net income (loss) per share $ 0.78 $ (1.24) $ (0.72) Diluted net income (loss) per share $ 0.76 $ (1.24) $ (0.72) The following weighted outstanding common stock equivalents were not included in the calculation of net income (loss) per diluted share because their effects were anti-dilutive: Year Ended December 31, (in thousands) 2022 2021 2020 Stock options, ESPP, RSUs and PRSUs 262 1,022 1,095 Warrants 10,169 17,665 21,034 Senior Convertible Notes 5,345 10,169 21,034 Total 15,776 28,856 43,163 |
Organization and Significant _3
Organization and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Changes in Allowance for Credit Losses | The following table summarizes the changes in the allowance for credit losses: (in thousands) December 31, 2022 December 31, 2021 Allowance for credit losses at January 1 $ 10,928 $ 9,646 Current-period provision for expected losses 748 2,165 Write-offs charged against the allowance (196) (743) Recoveries of amounts previously written off 31 42 Changes resulting from foreign currency fluctuations (107) (182) Allowance for credit losses at end of period $ 11,404 $ 10,928 |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted consolidated net income (loss) per share: Year Ended December 31, (in thousands, except per share data) 2022 2021 2020 Numerator: Net income (loss) $ 40,407 $ (64,086) $ (37,153) Interest and debt issuance costs on the 1.00% Senior Convertible Notes due 2023, net of tax $ — $ — $ — Interest and debt issuance costs on the 0.375% Senior Convertible Notes due 2025, net of tax 3,283 — — Net income (loss) for diluted $ 43,690 $ (64,086) $ (37,153) Denominator for basic and diluted net income (loss) per share: Weighted average common shares outstanding for basic 52,009 51,589 51,416 Dilutive potential common stock outstanding: ESPP 3 — — RSUs and PRSUs 523 — — 1.00% Senior Convertible Notes due 2023 — — — 0.375% Senior Convertible Notes due 2025 4,824 — — Weighted average common shares outstanding for diluted 57,359 51,589 51,416 Basic net income (loss) per share $ 0.78 $ (1.24) $ (0.72) Diluted net income (loss) per share $ 0.76 $ (1.24) $ (0.72) |
Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share | The following weighted outstanding common stock equivalents were not included in the calculation of net income (loss) per diluted share because their effects were anti-dilutive: Year Ended December 31, (in thousands) 2022 2021 2020 Stock options, ESPP, RSUs and PRSUs 262 1,022 1,095 Warrants 10,169 17,665 21,034 Senior Convertible Notes 5,345 10,169 21,034 Total 15,776 28,856 43,163 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information Disclosure [Abstract] | |
Property and Equipment Net | Property and Equipment, net Property and equipment, net, consisted of the following: (in thousands, except years) Useful Life December 31, 2022 2021 Instrument sets 4 $ 556,584 $ 472,247 Machinery and equipment 3 to 7 81,156 73,086 Computer equipment and software 2 to 10 208,477 188,960 Leasehold improvements 2 to 15 40,098 38,987 Furniture and fixtures 3 to 7 8,772 8,941 Building and improvements 5 to 20 23,349 22,681 Land — 1,277 1,277 919,713 806,179 Less: accumulated depreciation and amortization (573,203) (502,515) $ 346,510 $ 303,664 |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Intangible assets as of December 31, 2022 consisted of the following: (in thousands, except years) Weighted- Gross Accumulated Intangible Intangible assets subject to amortization: Developed technology 11 $ 366,521 $ (241,119) $ 125,402 Patents 10 56,719 (37,420) 19,299 Manufacturing know-how and trade secrets 12 21,364 (21,364) — Trade name and trademarks 9 24,967 (22,124) 2,843 Customer relationships 9 156,681 (122,436) 34,245 Total intangible assets subject to amortization 10 $ 626,252 $ (444,463) $ 181,789 In-process research and development $ 2,500 $ — $ 2,500 Total intangible assets, net $ 628,752 $ (444,463) $ 184,289 Intangible assets as of December 31, 2021 consisted of the following: (in thousands, except years) Weighted- Gross Accumulated Intangible Intangible assets subject to amortization: Developed technology 11 $ 374,457 $ (209,283) $ 165,174 Patents 10 57,783 (31,903) 25,880 Manufacturing know-how and trade secrets 12 21,412 (21,387) 25 Trade name and trademarks 9 25,163 (19,621) 5,542 Customer relationships 9 156,208 (110,154) 46,054 Total intangible assets, net 10 $ 635,023 $ (392,348) $ 242,675 |
Changes to Goodwill | The changes to goodwill are comprised of the following: (in thousands) Gross goodwill $ 641,767 Accumulated impairment loss (8,300) December 31, 2021 633,467 Changes to gross goodwill: Increases recorded related to business combinations 10,550 Changes resulting from foreign currency fluctuations (4,354) 6,196 Gross goodwill 647,963 Accumulated impairment loss (8,300) December 31, 2022 $ 639,663 |
Future Amortization Expense Related to Intangible Assets | Total future amortization expense related to intangible assets subject to amortization at December 31, 2022 is set forth in the table below: (in thousands) 2023 $ 27,096 2024 20,846 2025 19,927 2026 15,132 2027 12,374 Thereafter through 2038 86,414 Total future amortization expense $ 181,789 |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities consisted of the following: December 31, (in thousands) 2022 2021 Accrued expenses $ 70,487 $ 69,054 Accounts payable 20,323 16,192 Distributor commissions payable 11,187 12,546 Other taxes payable 6,998 6,764 Litigation liability 1,931 1,744 Debt interest payable 937 937 Royalties payable 5,337 5,297 Other 3,133 3,080 Accounts payable and accrued liabilities $ 120,333 $ 115,614 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis | The Company’s assets that are measured at fair value were based on the following fair value categories: (in thousands) Total Quoted Price in Significant Other Significant December 31, 2022: Cash equivalents: Money market funds $ 176,344 $ 176,344 $ — $ — Other assets: Marketable equity securities 3,483 3,483 — — Total cash equivalents $ 179,827 $ 179,827 $ — $ — December 31, 2021: Cash equivalents: Money market funds $ 179,451 $ 179,451 $ — $ — Total cash equivalents $ 179,451 $ 179,451 $ — $ — |
Schedule of Inputs and Valuation Techniques Used in Recurring Level 3 Fair Value Measurements | The recurring Level 3 fair value measurements of contingent consideration liabilities associated with commercial sales milestones include the following significant unobservable inputs: December 31, 2022 2021 Valuation Techniques Discounted cash flow, probability, Monte Carlo Discounted cash flow, Monte Carlo Discount Rate Range 6.7% - 7.9% 2.7% - 5.8% Weighted Average Discount Rate 7.0% 3.8% Expected Years 2023 - 2028 2021 - 2027 |
Schedule of Fair Value of Liabilities Measured on Recurring Basis Using Unobservable Inputs | The following table sets forth the changes in the estimated fair value of the Company’s liabilities measured on a recurring basis using significant unobservable inputs (Level 3): (in thousands) 2022 2021 Beginning balance at January 1 $ 147,810 $ 37,041 Contingent consideration liability recorded upon acquisition 5,550 103,400 Change in fair value measurement (14,712) 53,404 Contingent consideration paid or settled (8,037) (46,006) Changes resulting from foreign currency fluctuations 4 (29) Balance at end of period at December 31 $ 130,615 $ 147,810 |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Summary of Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed | The allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values is as follows: (in thousands) Cash paid for purchase $ 151,026 Cash 1,563 Accounts receivable 203 Inventory 6,710 Other current assets 568 Property, plant and equipment, net 381 Definite-lived intangible assets: Developed technology 141,700 Patents 19,000 Trade names 3,500 Goodwill 81,125 Other assets 7 Contingent consideration liabilities (103,400) Accounts payable, accrued expenses and other (331) $ 151,026 |
Schedule of Unaudited Pro Forma Information | (unaudited) (in thousands, except per share amounts) Years Ended December 31, 2021 2020 Net loss $ (67,630) $ (69,764) Net loss per share: Basic $ (1.31) $ (1.36) Diluted $ (1.31) $ (1.36) |
Indebtedness (Tables)
Indebtedness (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Carrying Value of Senior Convertible Notes | The carrying values of the Company’s Senior Convertible Notes are as follows: (in thousands) December 31, 2022 December 31, 2021 1.00% Senior Convertible Notes due 2023: Principal amount $ 450,000 $ 450,000 Unamortized debt issuance costs (1,944) (6,543) 448,056 443,457 0.375% Senior Convertible Notes due 2025: Principal amount 450,000 450,000 Unamortized debt issuance costs (5,798) (8,473) 444,202 441,527 Total Senior Convertible Notes $ 892,258 $ 884,984 Less: Current portion $ (448,056) $ — Long-term Senior Convertible Notes $ 444,202 $ 884,984 |
Interest Expense of Convertible Notes | Year Ended December 31. (in thousands) 2022 2021 2020 Interest expense: Contractual coupon interest $ 6,188 $ 9,234 $ 18,656 Amortization of debt issuance costs 7,274 8,018 7,175 Accretion of the debt discount — — 40,865 Total interest expense recognized on Senior Convertible Notes $ 13,462 $ 17,252 $ 66,696 Effective interest rates: Senior Convertible Notes due 2021 (1) — % 2.9 % 5.8 % Senior Convertible Notes due 2023 (2) 2.0 % 2.0 % 6.8 % Senior Convertible Notes due 2025 (2) 1.0 % 1.0 % 4.9 % (1) Senior Convertible Notes due 2021 settled in full on March 15, 2021. (2) Interest on Senior Convertible Notes due 2023 and 2025 began accruing upon issuance and is payable semi-annually. |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Right-of-use Assets and Lease Liabilities | The table below summarizes the Company’s right-of-use assets and lease liabilities: (in thousands, except years and rates) December 31, 2022 December 31, 2021 Assets Operating $ 95,112 $ 102,987 Financing 1,893 2,276 Total leased assets $ 97,005 $ 105,263 Liabilities Current: Operating $ 10,019 $ 9,867 Financing 1,084 1,546 Long-term: Operating 103,806 111,592 Financing 872 885 Total lease liabilities $ 115,781 $ 123,890 Supplemental non-cash information: Weighted-average remaining lease term (years) - operating leases 10.9 11.6 Weighted-average remaining lease term (years) - finance leases 2.6 2.1 Weighted-average discount rate - operating leases 5.3 % 5.3 % Weighted-average discount rate - finance leases 3.7 % 4.7 % |
Lease Costs, Cash Payments and Operating Lease Liabilities Arising From Obtaining Right-of-use Assets under Operating and Financing Lease Obligations | The table below summarizes the Company’s lease costs, cash payments, and operating lease liabilities arising from obtaining right-of-use assets under its operating and financing lease obligations: (in thousands) December 31, 2022 December 31, 2021 Lease expense: Operating lease expense $ 16,277 $ 16,088 Finance lease expense: Amortization of right-of-use assets 1,698 1,374 Interest expense on lease liabilities 100 112 Total lease expense $ 18,075 $ 17,574 Consolidated Statements of Cash Flows information: Operating cash flows used for operating leases $ 16,599 $ 15,394 Operating cash flows used for financing leases 100 102 Financing cash flows used for financing leases 1,889 1,325 Total cash paid for amounts included in the measurement of lease liabilities $ 18,588 $ 16,821 Supplemental non-cash information: Operating lease liabilities arising from obtaining right-of-use assets $ 3,495 $ 11,871 |
Future Minimum Annual Lease Payments under Operating and Financing Leases | The Company’s future minimum annual lease payments under operating and financing leases at December 31, 2022 are as follows: (in thousands) Financing Operating 2023 $ 1,139 $ 15,817 2024 599 14,496 2025 254 12,983 2026 48 12,688 2027 4 11,932 Thereafter — 85,155 Total minimum lease payments $ 2,044 $ 153,071 Less: amount representing interest (88) (39,246) Present value of obligations under leases 1,956 113,825 Less: current portion (1,084) (10,019) Long-term lease obligations $ 872 $ 103,806 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Compensation Costs Included in Consolidated Statement of Operations for All Stock-based Compensation Arrangements | The compensation cost that has been included in the Consolidated Statements of Operations for the Company’s stock-based compensation plans was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Selling, general and administrative expense $ 22,778 $ 18,924 $ 12,622 Research and development expense 5,620 6,112 5,259 Cost of sales 198 256 264 Stock-based compensation expense before taxes 28,596 25,292 18,145 Related income tax benefits (4,532) (4,391) (3,088) Stock-based compensation expense, net of taxes $ 24,064 $ 20,901 $ 15,057 |
Summary of Restricted Stock Units | Following is a summary of RSU activity for the year ended December 31, 2022: (in thousands, except per share amounts) Number of Weighted Outstanding at December 31, 2021 997 $ 60.91 Granted 483 53.67 Vested (256) 59.14 Forfeited (137) 59.97 Outstanding at December 31, 2022 1,087 $ 58.23 |
Schedule of Performance-Based Restricted Stock Units | Following is a summary of PRSU activity for the year ended December 31, 2022: (in thousands, except per share amounts) Shares Maximum Number Average Grant Outstanding at December 31, 2021 681 941 $ 58.95 Awarded 350 514 52.49 Vested (73) (73) 59.12 Forfeited (121) (240) 58.40 Outstanding at December 31, 2022 837 1,142 $ 56.47 |
Weighted Average Assumptions Used to Estimate Fair Value of Stock Options Granted and Stock Purchase Rights under ESPP | The weighted average assumptions used to estimate the fair value of stock options granted and stock purchase rights under the ESPP are as follows: Year Ended December 31, 2022 2021 2020 ESPP Volatility 40 % 39 % 56 % Expected term (years) 0.5 0.5 0.5 Risk free interest rate 1.7 % 0.1 % 0.5 % Expected dividend yield — % — % — % |
Common Stock Reserved for Future Issuance | Common Stock Reserved for Future Issuance The following table summarizes common shares reserved for issuance on exercise or conversion at December 31, 2022: (in thousands) Issued and outstanding RSUs and PRSUs 1,924 Available for issuance under the ESPP 534 Available for future grant 2,889 2023 Notes 7,082 2023 Warrants 6,949 2025 Notes 6,512 2025 Warrants 6,271 Total shares reserved for future issuance 32,161 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Before Income Taxes By Region | Total income (loss) before income taxes summarized by region was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 United States $ 45,037 $ 21,096 $ (45,534) Foreign 7,285 (79,480) (2,011) Total income (loss) before income taxes $ 52,322 $ (58,384) $ (47,545) |
Components of Income Tax Provision (Benefit) | The income tax provision (benefit) was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Current: Federal $ 26,133 $ 3,607 $ (35) State 4,682 2,989 2,309 Foreign 1,597 3,268 4,675 Total current provision 32,412 9,864 6,949 Deferred: Federal (17,429) (902) (13,800) State (6,129) (6,573) (8,315) Foreign (1,791) (23,040) (3,849) Total deferred provision (25,349) (30,515) (25,964) Changes in tax rate (303) 47 (579) Changes in valuation allowance 5,155 26,306 9,202 Total provision (benefit) $ 11,915 $ 5,702 $ (10,392) |
Reconciliation of Income Tax from Statutory Tax Rate to Effective Income Tax Rate | The differences between the income tax provision (benefit) at the U.S. federal statutory tax rate and the Company’s effective tax rate were as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Tax provision (benefit) at federal statutory rate $ 10,988 $ (12,261) $ (9,984) Valuation allowance 5,155 26,306 9,202 Compensation expense 2,570 2,153 3,314 Acquisition related charges (551) 1,338 687 State income tax 2,357 979 (1,243) Nondeductible meals and entertainment 247 171 351 Return to provision adjustments (2,737) 116 (881) Change in tax rates (303) 47 (579) Income tax reserves 950 (447) (4,217) Foreign tax rate differences from federal statutory rate 564 (7,166) (1,215) Income tax credits and incentives (7,012) (7,286) (7,155) Other (313) 1,752 1,328 Total provision (benefit) $ 11,915 $ 5,702 $ (10,392) |
Significant Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities were as follows: (in thousands) December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 102,383 $ 87,671 Amortization 42,215 66,482 Inventory 40,502 48,244 Lease liability 26,718 28,402 General business and other credit carryforwards 30,111 25,913 Capitalized research and development costs 22,827 — Original issue discount 12,303 22,130 Stock-based compensation 11,692 10,042 Foreign currency exchange gains and losses 12,025 5,967 Other 27,174 28,699 Gross deferred tax assets 327,950 323,550 Less valuation allowance (167,919) (168,409) Net deferred tax assets 160,031 155,141 Deferred tax liabilities: Depreciation (43,815) (46,597) Acquired intangibles (23,848) (34,181) Right-of-use assets (22,211) (23,904) Other (2,338) (3,137) Total deferred tax liabilities (92,212) (107,819) Net deferred tax assets $ 67,819 $ 47,322 |
Summary of Unrecognized Tax Benefits | The following table summarizes the activity related to the Company’s unrecognized tax benefits: (in thousands) Year Ended December 31, 2022 2021 2020 Gross unrecognized tax benefits at January 1 $ 19,743 $ 18,316 $ 20,328 Increases in tax positions for prior years 488 165 1,758 Increases in tax positions for current year relating to ongoing operations 2,159 2,087 2,159 Decreases in tax positions as a result of a lapse of statute of limitations (44) (769) (5,929) Decreases in tax positions due to settlements with taxing authorities (63) (56) — Gross unrecognized tax benefits at December 31 $ 22,283 $ 19,743 $ 18,316 |
Business Segment, Product and G
Business Segment, Product and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Net Sales by Product Line | Net sales by product line was as follows: (in thousands) Year Ended December 31, 2022 2021 2020 Spinal hardware $ 909,778 $ 856,556 $ 783,510 Surgical support 292,164 282,432 267,072 Total net sales $ 1,201,942 $ 1,138,988 $ 1,050,582 |
Schedule of Net Sales and Net Property and Equipment by Geographical Area | Net sales and property and equipment, net, by geographic area were as follows: (in thousands) Net Sales Property and Equipment, Net Year Ended December 31, December 31, 2022 2021 2020 2022 2021 United States $ 925,859 $ 876,614 $ 821,824 $ 295,914 $ 256,688 International (excludes Puerto Rico) 276,083 262,374 228,758 50,596 46,976 Total $ 1,201,942 $ 1,138,988 $ 1,050,582 $ 346,510 $ 303,664 |
Organization and Significant _4
Organization and Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 12 Months Ended | ||||
Oct. 01, 2021 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2022 USD ($) segment $ / shares | Dec. 31, 2021 USD ($) $ / shares | Dec. 31, 2020 USD ($) $ / shares | Jan. 01, 2021 USD ($) | |
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Retained earnings | $ 86,115,000 | $ 45,708,000 | ||||
Diluted (in dollars per share) | $ / shares | $ 0.76 | $ (1.24) | $ (0.72) | |||
Inventory, finished goods | $ 326,100,000 | $ 301,300,000 | ||||
Inventory, work in progress | 5,800,000 | 8,100,000 | ||||
Inventory, raw materials | 6,700,000 | 6,400,000 | ||||
Reserve for excess and obsolete inventory | $ 700,000 | 25,600,000 | ||||
Charge recorded due to discontinuation of product sales | $ 14,200,000 | |||||
Number of reportable units | segment | 1 | |||||
Impairment of goodwill and intangible assets | $ 0 | |||||
Translation adjustment functional to reporting currency, net of tax | $ 3,200,000 | 7,800,000 | $ 7,600,000 | |||
Product shipment costs | 336,507,000 | 322,278,000 | 321,631,000 | |||
Business transition costs (recoveries) | $ (4,976,000) | $ 68,719,000 | 10,878,000 | |||
Cumulative Effect, Period of Adoption, Adjustment [Member] | ASU 2020-06 [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Convertible debt liabilities | $ 115,400,000 | |||||
Retained earnings | 64,500,000 | |||||
Deferred tax liabilities | 28,000,000 | |||||
Additional paid in capital | $ 147,200,000 | |||||
Diluted (in dollars per share) | $ / shares | $ (0.54) | |||||
Performance Based Restricted Stock Units (PRSUs) [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Vesting period for the award | 5 years | |||||
2017 and 2016 Acquisitions [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Business transition costs (recoveries) | $ (14,700,000) | $ 53,400,000 | 2,300,000 | |||
Simplify Medical [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Acquisition costs | 4,000,000 | |||||
Product Shipment [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Product shipment costs | $ 37,300,000 | $ 30,900,000 | $ 27,400,000 | |||
Minimum [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Finite-lived intangible assets, useful life | 2 years | |||||
Property and equipment, useful life | 2 years | |||||
Minimum [Member] | Allograft Products | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Inventory, Shelf Life | 2 years | |||||
Maximum [Member] | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Finite-lived intangible assets, useful life | 17 years | |||||
Property and equipment, useful life | 20 years | |||||
Maximum [Member] | Allograft Products | ||||||
Schedule Of Organization And Significant Accounting Policies [Line Items] | ||||||
Inventory, Shelf Life | 5 years |
Organization and Significant _5
Organization and Significant Accounting Policies - Summary of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Allowance for credit losses at January 1 | $ 10,928 | $ 9,646 |
Current-period provision for expected losses | 748 | 2,165 |
Write-offs charged against the allowance | (196) | (743) |
Recoveries of amounts previously written off | 31 | 42 |
Changes resulting from foreign currency fluctuations | (107) | (182) |
Allowance for credit losses at end of period | $ 11,404 | $ 10,928 |
Organization and Significant _6
Organization and Significant Accounting Policies - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | |
Numerator: | |||||
Net income (loss) | $ 40,407 | $ (64,086) | $ (37,153) | ||
Net income (loss) for diluted | $ 43,690 | $ (64,086) | $ (37,153) | ||
Denominator for basic and diluted net income (loss) per share: | |||||
Weighted average common shares outstanding for basic (in shares) | 52,009 | 51,589 | 51,416 | ||
Dilutive potential common stock outstanding: | |||||
Weighted average common shares outstanding for diluted (in shares) | 57,359 | 51,589 | 51,416 | ||
Basic net (loss) income per share (in dollars per share) | $ 0.78 | $ (1.24) | $ (0.72) | ||
Diluted net (loss) income per share (in dollars per share) | $ 0.76 | $ (1.24) | $ (0.72) | ||
Senior Convertible Notes due 2023 [Member] | |||||
Numerator: | |||||
Interest on convertible debt, net of tax | $ 0 | $ 0 | $ 0 | ||
Dilutive potential common stock outstanding: | |||||
Convertible notes (in shares) | 0 | 0 | 0 | ||
Interest rate on convertible notes | 1% | 1% | |||
Senior Convertible Notes due 2025 [Member] | |||||
Numerator: | |||||
Interest on convertible debt, net of tax | $ 3,283 | $ 0 | $ 0 | ||
Dilutive potential common stock outstanding: | |||||
Convertible notes (in shares) | 4,824 | 0 | 0 | ||
Interest rate on convertible notes | 0.375% | 0.375% | |||
Employee Stock [Member] | |||||
Dilutive potential common stock outstanding: | |||||
Incremental common shares from share based payments (in shares) | 3 | 0 | 0 | ||
Restricted Stock Units And Performance Based Restricted Stock Units [Member] | |||||
Dilutive potential common stock outstanding: | |||||
Incremental common shares from share based payments (in shares) | 523 | 0 | 0 |
Organization and Significant _7
Organization and Significant Accounting Policies - Anti-dilutive Common Stock Equivalents Not Included in Calculation of Net Income Per Diluted Share (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 15,776 | 28,856 | 43,163 |
Stock Options E S P P Restricted Stock Units And Performance Restricted Stock Units [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 262 | 1,022 | 1,095 |
Warrant [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 10,169 | 17,665 | 21,034 |
Convertible Debt Securities [Member] | |||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 5,345 | 10,169 | 21,034 |
Balance Sheet Details - Propert
Balance Sheet Details - Property and Equipment Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property and equipment net | ||
Property and equipment, gross | $ 919,713 | $ 806,179 |
Less: accumulated depreciation and amortization | (573,203) | (502,515) |
Property and equipment, net | $ 346,510 | 303,664 |
Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 20 years | |
Instrument sets [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 4 years | |
Property and equipment, gross | $ 556,584 | 472,247 |
Machinery and equipment [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 81,156 | 73,086 |
Machinery and equipment [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 3 years | |
Machinery and equipment [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Computer equipment and software [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 208,477 | 188,960 |
Computer equipment and software [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Computer equipment and software [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 10 years | |
Leasehold improvements [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 40,098 | 38,987 |
Leasehold improvements [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 2 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 15 years | |
Furniture and fixtures [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 8,772 | 8,941 |
Furniture and fixtures [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 3 years | |
Furniture and fixtures [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 7 years | |
Building and improvements [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 23,349 | 22,681 |
Building and improvements [Member] | Minimum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 5 years | |
Building and improvements [Member] | Maximum [Member] | ||
Property and equipment net | ||
Property and equipment, useful life | 20 years | |
Land [Member] | ||
Property and equipment net | ||
Property and equipment, gross | $ 1,277 | $ 1,277 |
Balance Sheet Details - Additio
Balance Sheet Details - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |||
Depreciation expense | $ 90.8 | $ 87.5 | $ 85.9 |
Capitalized internal use software development costs | 76 | 67.5 | |
Capitalized internal use software amortization | 12.3 | 12.2 | 10.4 |
Amortization expense related to intangible assets | $ 52.6 | $ 60.6 | $ 55 |
Balance Sheet Details - Goodwil
Balance Sheet Details - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible assets subject to amortization: | ||
Weighted- Average Amortization Period (in years) | 10 years | 10 years |
Gross Amount | $ 626,252 | $ 635,023 |
Accumulated Amortization | (444,463) | (392,348) |
Intangible Assets, net | 181,789 | 242,675 |
Intangible Assets, Gross (Excluding Goodwill) | 628,752 | |
Intangible assets, net | 184,289 | $ 242,675 |
In Process Research and Development | ||
Intangible assets subject to amortization: | ||
In-process research and development | $ 2,500 | |
Developed Technology [Member] | ||
Intangible assets subject to amortization: | ||
Weighted- Average Amortization Period (in years) | 11 years | 11 years |
Gross Amount | $ 366,521 | $ 374,457 |
Accumulated Amortization | (241,119) | (209,283) |
Intangible Assets, net | $ 125,402 | $ 165,174 |
Patents [Member] | ||
Intangible assets subject to amortization: | ||
Weighted- Average Amortization Period (in years) | 10 years | 10 years |
Gross Amount | $ 56,719 | $ 57,783 |
Accumulated Amortization | (37,420) | (31,903) |
Intangible Assets, net | $ 19,299 | $ 25,880 |
Manufacturing know-how and trade secrets [Member] | ||
Intangible assets subject to amortization: | ||
Weighted- Average Amortization Period (in years) | 12 years | 12 years |
Gross Amount | $ 21,364 | $ 21,412 |
Accumulated Amortization | (21,364) | (21,387) |
Intangible Assets, net | $ 0 | $ 25 |
Trade name and trademarks [Member] | ||
Intangible assets subject to amortization: | ||
Weighted- Average Amortization Period (in years) | 9 years | 9 years |
Gross Amount | $ 24,967 | $ 25,163 |
Accumulated Amortization | (22,124) | (19,621) |
Intangible Assets, net | $ 2,843 | $ 5,542 |
Customer relationships [Member] | ||
Intangible assets subject to amortization: | ||
Weighted- Average Amortization Period (in years) | 9 years | 9 years |
Gross Amount | $ 156,681 | $ 156,208 |
Accumulated Amortization | (122,436) | (110,154) |
Intangible Assets, net | $ 34,245 | $ 46,054 |
Balance Sheet Details - Changes
Balance Sheet Details - Changes to Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Condensed Financial Information Disclosure [Abstract] | ||
Gross goodwill | $ 647,963 | $ 641,767 |
Accumulated impairment loss | (8,300) | (8,300) |
Goodwill | 639,663 | $ 633,467 |
Changes to gross goodwill: | ||
Increases recorded related to business combinations | 10,550 | |
Changes resulting from foreign currency fluctuations | (4,354) | |
Goodwill period increase (decrease) | $ 6,196 |
Balance Sheet Details - Future
Balance Sheet Details - Future Amortization Expense Related to Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Future amortization expense related to intangible assets | ||
2023 | $ 27,096 | |
2024 | 20,846 | |
2025 | 19,927 | |
2026 | 15,132 | |
2027 | 12,374 | |
Thereafter through 2038 | 86,414 | |
Intangible Assets, net | $ 181,789 | $ 242,675 |
Balance Sheet Details - Account
Balance Sheet Details - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Financial Information Disclosure [Abstract] | ||
Accrued expenses | $ 70,487 | $ 69,054 |
Accounts payable | 20,323 | 16,192 |
Distributor commissions payable | 11,187 | 12,546 |
Other taxes payable | 6,998 | 6,764 |
Litigation liability | 1,931 | 1,744 |
Debt interest payable | 937 | 937 |
Royalties payable | 5,337 | 5,297 |
Other | 3,133 | 3,080 |
Accounts payable and accrued liabilities | $ 120,333 | $ 115,614 |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Apr. 30, 2021 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Feb. 24, 2021 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Net currency exchange losses from derivatives instruments | $ 18,800,000 | $ 28,700,000 | $ 4,200,000 | ||||
Net gains (losses) recognized on derivative instruments | 0 | 0 | (12,301,000) | ||||
Unrealized (losses) gains for marketable equity securities | (1,500,000) | ||||||
Contingent consideration liabilities | 66,975,000 | 7,986,000 | |||||
Changes in fair value of contingent consideration | (14,712,000) | 53,404,000 | 2,327,000 | ||||
Net gain on strategic investments | (1,300,000) | 3,100,000 | (1,500,000) | ||||
Simplify Medical [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Regulatory milestone, payment | $ 45,800,000 | ||||||
Contingent consideration liabilities | $ 103,400,000 | ||||||
Contingent Consideration Liabilities [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Contingent consideration liabilities | 130,600,000 | 147,800,000 | |||||
Contingent consideration liabilities upon acquisition | 5,550,000 | 103,400,000 | |||||
Contingent consideration liabilities net sales milestone | (12,200,000) | 47,900,000 | |||||
Contingent Consideration Liabilities [Member] | Simplify Medical Acquisition [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Contingent consideration liabilities upon acquisition | $ 103,400,000 | ||||||
Contingent consideration liabilities regulatory milestone | 42,800,000 | ||||||
Contingent consideration liabilities net sales milestone | $ 60,600,000 | ||||||
Contingent consideration liabilities | 96,300,000 | 108,500,000 | |||||
Contingent Consideration Liabilities [Member] | Simplify Medical [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Regulatory milestone, payment | $ 45,800,000 | ||||||
Changes in fair value of contingent consideration | 3,000,000 | ||||||
Quoted Price in Active Market (Level 1) [Member] | Convertible Notes due 2023 [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Notional principal amount | 450,000,000 | 450,000,000 | |||||
Debt instrument, fair value disclosure | 441,600,000 | 450,600,000 | |||||
Quoted Price in Active Market (Level 1) [Member] | Convertible Notes due 2025 [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Notional principal amount | 450,000,000 | 450,000,000 | |||||
Debt instrument, fair value disclosure | 394,900,000 | 433,500,000 | |||||
Foreign Exchange Forward [Member] | |||||||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||||||
Notional principal amount | 15,000,000 | 12,200,000 | 14,000,000 | ||||
Net gains (losses) recognized on derivative instruments | 2,200,000 | 2,000,000 | $ (1,000,000) | ||||
Derivative assets (liabilities), at fair value, net | $ (200,000) | $ 0 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements - Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Other assets: | ||
Marketable equity securities | $ 3,483 | |
Total cash equivalents | 179,827 | $ 179,451 |
Money Market Funds [Member] | ||
Cash equivalents: | ||
Money market funds | 176,344 | 179,451 |
Quoted Price in Active Market (Level 1) [Member] | ||
Other assets: | ||
Marketable equity securities | 3,483 | |
Total cash equivalents | 179,827 | 179,451 |
Quoted Price in Active Market (Level 1) [Member] | Money Market Funds [Member] | ||
Cash equivalents: | ||
Money market funds | 176,344 | 179,451 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Other assets: | ||
Marketable equity securities | 0 | |
Total cash equivalents | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | Money Market Funds [Member] | ||
Cash equivalents: | ||
Money market funds | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | ||
Other assets: | ||
Marketable equity securities | 0 | |
Total cash equivalents | 0 | 0 |
Significant Unobservable Inputs (Level 3) [Member] | Money Market Funds [Member] | ||
Cash equivalents: | ||
Money market funds | $ 0 | $ 0 |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measurements - Schedule of Recurring Fair Value Measurements of Contingent Consideration Liabilities (Details) - Level 3 [Member] - Commercial Sale Milestone [Member] - Fair Value, Recurring [Member] | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Business Combination, Contingent Consideration, Liability, Valuation Technique [Extensible List] | Valuation Technique, Discounted Cash Flow [Member] | |
Discount Rate [Member] | Minimum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Weighted average measurement input | 0.067 | 0.027 |
Discount Rate [Member] | Maximum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Weighted average measurement input | 0.079 | 0.058 |
Discount Rate [Member] | Weighted Average [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Weighted average measurement input | 0.070 | 0.038 |
Expected Years [Member] | Minimum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Expected Years | 2023 | 2021 |
Expected Years [Member] | Maximum [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Expected Years | 2028 | 2027 |
Financial Instruments and Fai_6
Financial Instruments and Fair Value Measurements - Schedule of Fair Value of Liabilities Measured on Recurring Basis Using Unobservable Inputs (Details) - Contingent Consideration Liabilities [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance at January 1 | $ 147,810 | $ 37,041 |
Contingent consideration liability recorded upon acquisition | 5,550 | 103,400 |
Change in fair value measurement | (14,712) | 53,404 |
Contingent consideration paid or settled | (8,037) | (46,006) |
Changes resulting from foreign currency fluctuations | 4 | (29) |
Balance at end of period at December 31 | $ 130,615 | $ 147,810 |
Business Combination - Addition
Business Combination - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 15, 2021 | Feb. 24, 2021 | Feb. 24, 2021 | Apr. 30, 2021 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Business Acquisition [Line Items] | ||||||||
Payment related to holdback | $ 750 | $ 149,463 | $ 0 | |||||
Maximum [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets useful life | 17 years | |||||||
Senior Convertible Notes due 2021 [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash payments for settlement of conversions | $ 8,500 | 4,000 | ||||||
Simplify Medical [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Upfront payment | $ 150,000 | $ 150,000 | ||||||
Regulatory milestone, payment | $ 45,800 | |||||||
Cash paid for purchase | 151,026 | |||||||
Payment related to holdback | $ 800 | |||||||
Contingent consideration liabilities | $ 103,400 | $ 103,400 | ||||||
Amortization charges for acquired intangible assets | 1,700 | 9,100 | ||||||
Increased fair value of acquired inventory | $ 400 | |||||||
Acquisition related expenses | $ 17,500 | |||||||
Simplify Medical [Member] | Developed Technology [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets useful life | 17 years | |||||||
Simplify Medical [Member] | Patents [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets useful life | 10 years | |||||||
Simplify Medical [Member] | Trade Names [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets useful life | 15 years |
Business Combination - Summary
Business Combination - Summary of Preliminary Allocation of Purchase Price to Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Feb. 24, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Definite-lived intangible assets: | |||
Goodwill | $ 639,663 | $ 633,467 | |
Simplify Medical [Member] | |||
Business Acquisition [Line Items] | |||
Cash paid for purchase | $ 151,026 | ||
Cash | 1,563 | ||
Accounts receivable | 203 | ||
Inventory | 6,710 | ||
Other current assets | 568 | ||
Property, plant and equipment, net | 381 | ||
Definite-lived intangible assets: | |||
Goodwill | 81,125 | ||
Other assets | 7 | ||
Contingent consideration liabilities | (103,400) | ||
Accounts payable, accrued expenses and other | (331) | ||
Purchase price | 151,026 | ||
Patents [Member] | Simplify Medical [Member] | |||
Definite-lived intangible assets: | |||
Definite-lived intangible assets | 19,000 | ||
Trade Names [Member] | Simplify Medical [Member] | |||
Definite-lived intangible assets: | |||
Definite-lived intangible assets | 3,500 | ||
Developed Technology [Member] | Simplify Medical [Member] | |||
Definite-lived intangible assets: | |||
Definite-lived intangible assets | $ 141,700 |
Business Combination - Schedule
Business Combination - Schedule of Unaudited Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Business Combination and Asset Acquisition [Abstract] | ||
Net loss | $ (67,630) | $ (69,764) |
Net loss per share: | ||
Basic (in dollars per share) | $ (1.31) | $ (1.36) |
Diluted (in dollars per share) | $ (1.31) | $ (1.36) |
Indebtedness - Carrying Value o
Indebtedness - Carrying Value of Senior Convertible Notes (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Total Senior Convertible Notes | $ 892,258 | $ 884,984 |
Less: Current portion | (448,056) | 0 |
Long-term Senior Convertible Notes | $ 444,202 | $ 884,984 |
1.00% Senior Convertible Notes [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate on convertible notes | 1% | 1% |
Principal amount | $ 450,000 | $ 450,000 |
Unamortized debt issuance costs | (1,944) | (6,543) |
Total Senior Convertible Notes | $ 448,056 | $ 443,457 |
0.375% Senior Convertible Notes [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate on convertible notes | 0.375% | 0.375% |
Principal amount | $ 450,000 | $ 450,000 |
Unamortized debt issuance costs | (5,798) | (8,473) |
Total Senior Convertible Notes | $ 444,202 | $ 441,527 |
Indebtedness - Interest and Eff
Indebtedness - Interest and Effective Interest Rates (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Interest expense: | |||
Total interest expense recognized on Senior Convertible Notes | $ 17,423 | $ 21,056 | $ 70,466 |
Convertible Notes Payable [Member] | |||
Interest expense: | |||
Contractual coupon interest | 6,188 | 9,234 | 18,656 |
Amortization of debt issuance costs | 7,274 | 8,018 | 7,175 |
Accretion of the debt discount | 0 | 0 | 40,865 |
Total interest expense recognized on Senior Convertible Notes | $ 13,462 | $ 17,252 | $ 66,696 |
Convertible Notes Payable [Member] | Senior Convertible Notes due 2021 [Member] | |||
Effective interest rates: | |||
Effective interest rates | 0% | 2.90% | 5.80% |
Convertible Notes Payable [Member] | Senior Convertible Notes due 2023 [Member] | |||
Effective interest rates: | |||
Effective interest rates | 2% | 2% | 6.80% |
Convertible Notes Payable [Member] | Senior Convertible Notes due 2025 [Member] | |||
Effective interest rates: | |||
Effective interest rates | 1% | 1% | 4.90% |
Indebtedness - Additional Infor
Indebtedness - Additional Information (Details) | 1 Months Ended | 12 Months Ended | ||||||||||
Mar. 15, 2021 USD ($) shares | Jun. 30, 2020 USD ($) d $ / shares shares | Mar. 31, 2020 USD ($) d $ / shares shares | Feb. 29, 2020 USD ($) | Mar. 31, 2016 USD ($) d $ / shares shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) $ / shares | Dec. 31, 2016 USD ($) | Jan. 01, 2021 USD ($) | Sep. 10, 2020 shares | Sep. 09, 2020 shares | |
Debt Instrument [Line Items] | ||||||||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 0 | $ 0 | $ 873,848,000 | |||||||||
Common stock, shares authorized (in shares) | shares | 150,000,000 | 150,000,000 | 150,000,000 | 120,000,000 | ||||||||
Retained earnings | $ 86,115,000 | $ 45,708,000 | ||||||||||
Deferred and other tax liabilities | (13,088,000) | (3,049,000) | ||||||||||
Stock price (in dollars per share) | $ / shares | $ 56.33 | |||||||||||
Cash proceeds from the sale of warrants | 0 | 0 | $ 93,915,000 | |||||||||
Aggregate cash payments for settlement of convertible notes | $ 0 | 0 | 147,825,000 | |||||||||
Revolving Senior Credit Facility [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, maximum borrowing capacity | $ 550,000,000 | |||||||||||
Revolving Senior Credit Facility [Member] | Federal Funds Effective Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility bear interest rate | 0.50% | |||||||||||
Revolving Senior Credit Facility [Member] | Eurocurrency Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility bear interest rate | 1% | |||||||||||
Multicurrency Borrowings [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, maximum borrowing capacity | $ 250,000,000 | |||||||||||
Standby Letters of Credit [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, maximum borrowing capacity | 50,000,000 | |||||||||||
Swing Line Loans [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility, maximum borrowing capacity | $ 5,000,000 | |||||||||||
2021 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash proceeds from the sale of warrants | $ 44,900,000 | |||||||||||
Warrant strike price (in dollars per share) | $ / shares | $ 80 | |||||||||||
2023 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash proceeds from the sale of warrants | $ 46,800,000 | |||||||||||
Warrant strike price (in dollars per share) | $ / shares | $ 104.84 | |||||||||||
2025 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cash proceeds from the sale of warrants | $ 47,100,000 | |||||||||||
Warrant strike price (in dollars per share) | $ / shares | $ 127.84 | |||||||||||
2021 Hedge [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of common stock to be purchased (in shares) | shares | 10,865,270 | |||||||||||
Stock price (in dollars per share) | $ / shares | $ 59.82 | |||||||||||
Cost of hedge transaction | $ 111,200,000 | |||||||||||
Number of common shares received in settlement of convertible note hedge transaction (in shares) | shares | 842 | |||||||||||
2023 Hedge [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Amount reclassified to stockholders' equity | 37,300,000 | |||||||||||
Number of common stock to be purchased (in shares) | shares | 5,345,010 | |||||||||||
Stock price (in dollars per share) | $ / shares | $ 84.19 | |||||||||||
Cost of hedge transaction | $ 69,500,000 | |||||||||||
2025 Hedge [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of common stock to be purchased (in shares) | shares | 4,823,910 | |||||||||||
Stock price (in dollars per share) | $ / shares | $ 93.29 | |||||||||||
Cost of hedge transaction | $ 78,300,000 | |||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Unused line fee | 0.35% | |||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | Eurocurrency Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility bear interest rate | 1.50% | |||||||||||
Minimum [Member] | Revolving Senior Credit Facility [Member] | Base Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility bear interest rate | 0.50% | |||||||||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Unused line fee | 500% | 0.50% | ||||||||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | Eurocurrency Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility bear interest rate | 2.25% | |||||||||||
Maximum [Member] | Revolving Senior Credit Facility [Member] | Base Rate [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Credit facility bear interest rate | 1.25% | |||||||||||
Cumulative Effect, Period of Adoption, Adjustment [Member] | ASU 2020-06 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible debt liabilities | $ 115,400,000 | |||||||||||
Retained earnings | 64,500,000 | |||||||||||
Additional paid in capital | 147,200,000 | |||||||||||
Additional Paid-in Capital [Member] | 2021 Hedge [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cost of hedge transaction | $ 111,200,000 | |||||||||||
Additional Paid-in Capital [Member] | 2025 Hedge [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Cost of hedge transaction | $ 78,300,000 | |||||||||||
Common Stock [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Common stock, shares authorized (in shares) | shares | 150,000,000 | 120,000,000 | ||||||||||
Common Stock [Member] | 2023 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of preferred or common stock into which the warrants is converted (in shares) | shares | 3,093,500 | |||||||||||
Common Stock [Member] | 2023 Warrants [Member] | 2023 Counterparties [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of preferred or common stock into which the warrants is converted (in shares) | shares | 6,948,512 | |||||||||||
Common Stock [Member] | Maximum [Member] | 2021 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of preferred or common stock into which the warrants is converted (in shares) | shares | 10,865,270 | |||||||||||
Common Stock [Member] | Maximum [Member] | 2023 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of preferred or common stock into which the warrants is converted (in shares) | shares | 5,345,010 | |||||||||||
Common Stock [Member] | Maximum [Member] | 2025 Warrants [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Number of preferred or common stock into which the warrants is converted (in shares) | shares | 4,823,910 | |||||||||||
Senior Convertible Notes due 2023 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Interest rate on convertible notes | 1% | 1% | ||||||||||
Principal amount | $ 450,000,000 | |||||||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 436,700,000 | |||||||||||
Initial conversion rate adjustment, shares (in shares per dollar) | 11.8778 | |||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | |||||||||||
Initial conversion price of convertible notes (in dollars per share) | $ / shares | $ 84.19 | |||||||||||
Fair value of embedded conversion derivative | $ 57,200,000 | |||||||||||
Senior Convertible Notes due 2023 [Member] | Debt Instrument, Convertible, Conversion Option Two [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | |||||||||||
Senior Convertible Notes due 2023 [Member] | Minimum [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Percentage of conversion price | 130% | |||||||||||
Senior Convertible Notes due 2023 [Member] | Minimum [Member] | Debt Instrument, Convertible, Conversion Option One [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 20 | |||||||||||
Senior Convertible Notes due 2023 [Member] | Maximum [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Percentage of conversion price | 98% | |||||||||||
Senior Convertible Notes due 2023 [Member] | Maximum [Member] | Debt Instrument, Convertible, Conversion Option One [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 30 | |||||||||||
Senior Convertible Notes due 2023 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | ASU 2020-06 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible debt liabilities | 46,800,000 | |||||||||||
Retained earnings | 7,900,000 | |||||||||||
Deferred and other tax liabilities | (11,200,000) | |||||||||||
Additional paid in capital | (43,500,000) | |||||||||||
Senior Convertible Notes due 2023 [Member] | Additional Paid-in Capital [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Amount reclassified to stockholders' equity | 37,300,000 | |||||||||||
Senior Convertible Notes due 2025 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Interest rate on convertible notes | 0.375% | 0.375% | ||||||||||
Principal amount | $ 450,000,000 | |||||||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 437,000,000 | |||||||||||
Initial conversion rate adjustment, shares (in shares per dollar) | 10.7198 | |||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | |||||||||||
Initial conversion price of convertible notes (in dollars per share) | $ / shares | $ 93.29 | |||||||||||
Percentage of conversion price | 130% | |||||||||||
Debt redemption price percentage | 100% | |||||||||||
Senior Convertible Notes due 2025 [Member] | Debt Instrument, Convertible, Conversion Option Two [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | |||||||||||
Consecutive trading days considered for debt conversion | d | 5 | |||||||||||
Senior Convertible Notes due 2025 [Member] | Minimum [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 20 | |||||||||||
Percentage of conversion price | 130% | |||||||||||
Senior Convertible Notes due 2025 [Member] | Minimum [Member] | Debt Instrument, Convertible, Conversion Option One [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 20 | |||||||||||
Senior Convertible Notes due 2025 [Member] | Maximum [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 30 | |||||||||||
Percentage of conversion price | 98% | |||||||||||
Senior Convertible Notes due 2025 [Member] | Maximum [Member] | Debt Instrument, Convertible, Conversion Option One [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 30 | |||||||||||
Senior Convertible Notes due 2025 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | ASU 2020-06 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible debt liabilities | 64,700,000 | |||||||||||
Retained earnings | 8,800,000 | |||||||||||
Deferred and other tax liabilities | (15,900,000) | |||||||||||
Additional paid in capital | (57,600,000) | |||||||||||
Senior Convertible Notes due 2025 [Member] | Additional Paid-in Capital [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Amount reclassified to stockholders' equity | $ 78,300,000 | |||||||||||
Senior Convertible Notes due 2021 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Interest rate on convertible notes | 2.25% | |||||||||||
Principal amount | $ 650,000,000 | |||||||||||
Proceeds from issuance of convertible debt, net of issuance costs | $ 634,100,000 | |||||||||||
Initial conversion rate adjustment, shares (in shares per dollar) | 16.7158 | |||||||||||
Principal amount of debt considered for conversion rate | $ 1,000 | |||||||||||
Initial conversion price of convertible notes (in dollars per share) | $ / shares | $ 59.82 | |||||||||||
Percentage of conversion notices from notes holders | 1.40% | |||||||||||
Outstanding amount for which conversion notices received | $ 9,100,000 | |||||||||||
Aggregate cash payments for settlement of convertible notes | 649,400,000 | |||||||||||
Cash payments for outstanding principal amount | 640,900,000 | |||||||||||
Cash payments for settlement of conversions | $ 8,500,000 | $ 4,000,000 | ||||||||||
Senior Convertible Notes due 2021 [Member] | Debt Instrument, Convertible, Conversion Option Two [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 5 | |||||||||||
Senior Convertible Notes due 2021 [Member] | Minimum [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 20 | |||||||||||
Percentage of conversion price | 130% | |||||||||||
Senior Convertible Notes due 2021 [Member] | Minimum [Member] | Debt Instrument, Convertible, Conversion Option One [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 20 | |||||||||||
Senior Convertible Notes due 2021 [Member] | Maximum [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 30 | |||||||||||
Percentage of conversion price | 98% | |||||||||||
Senior Convertible Notes due 2021 [Member] | Maximum [Member] | Debt Instrument, Convertible, Conversion Option One [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Consecutive trading days considered for debt conversion | d | 30 | |||||||||||
Senior Convertible Notes due 2021 [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | ASU 2020-06 [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible debt liabilities | 3,900,000 | |||||||||||
Retained earnings | 47,800,000 | |||||||||||
Deferred and other tax liabilities | 900,000 | |||||||||||
Additional paid in capital | $ 46,100,000 | |||||||||||
Senior Convertible Notes due 2021 [Member] | Additional Paid-in Capital [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Amount reclassified to stockholders' equity | $ 84,800,000 | |||||||||||
Senior Convertible Notes due 2021 [Member] | Common Stock [Member] | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Convertible note hedge transactions purchase of common stock (in shares) | shares | 837 |
Commitments - Additional Inform
Commitments - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments And Contingencies Disclosure [Line Items] | ||
Restricted cash and investments for security deposit | $ 1.5 | $ 1.5 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Licensing and Purchasing Agreements [Member] | ||
Commitments And Contingencies Disclosure [Line Items] | ||
Other commitments | $ 67.1 | |
Executive Severance Plans [Member] | ||
Commitments And Contingencies Disclosure [Line Items] | ||
Other commitments | $ 16.2 | |
Minimum [Member] | ||
Commitments And Contingencies Disclosure [Line Items] | ||
Initial terms of lease | 1 year | |
Maximum [Member] | ||
Commitments And Contingencies Disclosure [Line Items] | ||
Initial terms of lease | 17 years |
Commitments - Right-of-use Asse
Commitments - Right-of-use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Operating | $ 95,112 | $ 102,987 |
Financing | 1,893 | 2,276 |
Total leased assets | 97,005 | 105,263 |
Current: | ||
Operating | 10,019 | 9,867 |
Financing | $ 1,084 | $ 1,546 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accounts payable and accrued liabilities | Accounts payable and accrued liabilities |
Long-term: | ||
Operating | $ 103,806 | $ 111,592 |
Financing | $ 872 | $ 885 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other long-term liabilities | Other long-term liabilities |
Total lease liabilities | $ 115,781 | $ 123,890 |
Supplemental non-cash information: | ||
Weighted-average remaining lease term (years) - operating leases | 10 years 10 months 24 days | 11 years 7 months 6 days |
Weighted-average remaining lease term (years) - finance leases | 2 years 7 months 6 days | 2 years 1 month 6 days |
Weighted-average discount rate - operating leases | 5.30% | 5.30% |
Weighted-average discount rate - finance leases | 3.70% | 4.70% |
Commitments - Lease Costs, Cash
Commitments - Lease Costs, Cash Payments and Operating Lease Liabilities Arising From Obtaining Right-of-use Assets under Operating and Financing Lease Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Lease expense: | ||
Operating lease expense | $ 16,277 | $ 16,088 |
Finance lease expense: | ||
Amortization of right-of-use assets | 1,698 | 1,374 |
Interest expense on lease liabilities | 100 | 112 |
Total lease expense | 18,075 | 17,574 |
Consolidated Statements of Cash Flows information: | ||
Operating cash flows used for operating leases | 16,599 | 15,394 |
Operating cash flows used for financing leases | 100 | 102 |
Financing cash flows used for financing leases | 1,889 | 1,325 |
Total cash paid for amounts included in the measurement of lease liabilities | 18,588 | 16,821 |
Supplemental non-cash information: | ||
Operating lease liabilities arising from obtaining right-of-use assets | $ 3,495 | $ 11,871 |
Commitments - Future Minimum An
Commitments - Future Minimum Annual Lease Payments under Capital, Operating and Financing Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Financing Leases | ||
2023 | $ 1,139 | |
2024 | 599 | |
2025 | 254 | |
2026 | 48 | |
2027 | 4 | |
Thereafter | 0 | |
Total minimum lease payments | 2,044 | |
Less: amount representing interest | (88) | |
Present value of obligations under leases | 1,956 | |
Less: current portion | (1,084) | $ (1,546) |
Long-term lease obligations | 872 | 885 |
Operating Leases | ||
2023 | 15,817 | |
2024 | 14,496 | |
2025 | 12,983 | |
2026 | 12,688 | |
2027 | 11,932 | |
Thereafter | 85,155 | |
Total minimum lease payments | 153,071 | |
Less: amount representing interest | (39,246) | |
Present value of obligations under leases | 113,825 | |
Less: current portion | (10,019) | (9,867) |
Operating lease liabilities | $ 103,806 | $ 111,592 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||
Nov. 02, 2022 | Nov. 03, 2021 | Mar. 31, 2020 | Oct. 31, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 10, 2020 | Sep. 09, 2020 | Feb. 29, 2020 | |
Equity Class Of Treasury Stock [Line Items] | |||||||||
Stock repurchase program, extension period | 1 year | ||||||||
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 | 150,000,000 | 120,000,000 | |||||
Common Stock [Member] | |||||||||
Equity Class Of Treasury Stock [Line Items] | |||||||||
Share repurchase program, authorized amount | $ 100,000,000 | $ 100,000,000 | $ 150,000,000 | ||||||
Share repurchase program, period in force | 3 years | ||||||||
Share repurchase program, authorized amount increased | $ 25,000,000 | ||||||||
Common stock, shares authorized (in shares) | 150,000,000 | 120,000,000 | |||||||
Common Stock [Member] | 0.375% Senior Convertible Notes [Member] | |||||||||
Equity Class Of Treasury Stock [Line Items] | |||||||||
Shares repurchased during period (in shares) | 1,085,000 | ||||||||
Shares repurchased during period, value | $ 75,000,000 | ||||||||
Common Stock [Member] | Maximum [Member] | |||||||||
Equity Class Of Treasury Stock [Line Items] | |||||||||
Share repurchase program, authorized amount | $ 100,000,000 | ||||||||
Treasury Stock [Member] | |||||||||
Equity Class Of Treasury Stock [Line Items] | |||||||||
Shares repurchased during period, value | $ 0 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 10, 2020 | Sep. 09, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 | 150,000,000 | 120,000,000 | |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 | |||
Preferred stock, shares issued (in shares) | 0 | 0 | |||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||
Number of common stock issued to exercise stock options (in shares) | 16,000 | ||||
Closing price of stock (in dollars per share) | $ 56.33 | ||||
Proceeds from exercise of stock options | $ 0 | ||||
Total intrinsic value | $ 400,000 | ||||
Total stock options vested (in shares) | 0 | 0 | 0 | ||
Outstanding stock options (in shares) | 0 | 0 | |||
Employee Stock [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 800,000 | ||||
Maximum percentage of annual compensation | 15% | ||||
Maximum amount withheld to purchase shares of the company | 21,250 | ||||
Percentage of issuance price of stock under the stock issuance program | 85% | ||||
ESPP offering period | 6 months | ||||
Number of share purchased under ESPP (in shares) | 142,000 | 153,000 | 136,000 | ||
Restricted Stock Units (RSUs) [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 22,700,000 | ||||
Weighted average contractual term | 1 year 9 months 18 days | ||||
Fair value of restricted stock units vested | $ 13,800,000 | $ 18,000,000 | $ 12,100,000 | ||
Total shares withheld related to statutory tax (in shares) | 84,000 | 91,000 | 71,000 | ||
Payments of employees tax obligations | $ 4,600,000 | $ 6,100,000 | $ 4,100,000 | ||
Shares issuable pursuant to vested RSUs (in shares) | 118,000 | ||||
Vested during the period (in shares) | 256,000 | ||||
Performance Based Restricted Stock Units (PRSUs) [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 21,500,000 | ||||
Weighted average contractual term | 2 years 4 months 24 days | ||||
Fair value of restricted stock units vested | $ 3,900,000 | $ 7,100,000 | $ 3,800,000 | ||
Total shares withheld related to statutory tax (in shares) | 20,000 | 41,000 | 25,000 | ||
Payments of employees tax obligations | $ 1,100,000 | $ 2,800,000 | $ 1,600,000 | ||
Vested during the period (in shares) | 73,000 | 105,000 | 61,000 | ||
Performance Based Restricted Stock Units (PRSUs) [Member] | Minimum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share payout levels | 0% | ||||
Performance Based Restricted Stock Units (PRSUs) [Member] | Maximum [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Share payout levels | 200% | ||||
Stock Options [Member] | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Unrecognized cost related to share-based compensation | $ 0 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Costs Included in Consolidated Statement of Operations for All Stock-based Compensation Arrangements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | $ 28,596 | $ 25,292 | $ 18,145 |
Related income tax benefits | (4,532) | (4,391) | (3,088) |
Stock-based compensation expense, net of taxes | 24,064 | 20,901 | 15,057 |
Selling, General and Administrative Expenses [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | 22,778 | 18,924 | 12,622 |
Research and Development Expense [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | 5,620 | 6,112 | 5,259 |
Cost of Sales [Member] | |||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | |||
Stock-based compensation expense before taxes | $ 198 | $ 256 | $ 264 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Award Activity (Details) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Shares | |
Outstanding at December 31, 2021 (in shares) | shares | 997 |
Granted (in shares) | shares | 483 |
Vested (in shares) | shares | (256) |
Forfeited (in shares) | shares | (137) |
Outstanding at December 31, 2022 (in shares) | shares | 1,087 |
Weighted Average Grant Date Fair Value | |
Beginning balance, average grant date fair value, outstanding (in dollars per share) | $ / shares | $ 60.91 |
Weighted average grant date fair value, granted (in dollars per share) | $ / shares | 53.67 |
Weighted average grant date fair value, vested (in dollars per share) | $ / shares | 59.14 |
Weighted average grant date fair value, forfeited (in dollars per share) | $ / shares | 59.97 |
Ending balance, average grant date fair value, outstanding (in dollars per share) | $ / shares | $ 58.23 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance-Based Restricted Stock Award Activity (Details) - Performance Based Restricted Stock Units (PRSUs) [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Shares | |||
Outstanding at December 31, 2021 (in shares) | 681,000 | ||
Awarded at target (in shares) | 350,000 | ||
Vested (in shares) | (73,000) | (105,000) | (61,000) |
Forfeited (in shares) | (121,000) | ||
Outstanding at December 31, 2022 (in shares) | 837,000 | 681,000 | |
Maximum Number of Shares Eligible to be Issued | |||
Beginning balance, maximum number of shares eligible to be issued, outstanding (in shares) | 941,000 | ||
Awarded at target, maximum number of shares eligible to be issued (in shares) | 514,000 | ||
Vested, maximum number of shares eligible to be issued (in shares) | (73,000) | ||
Forfeited, maximum number of shares eligible to be issued (in shares) | (240,000) | ||
Ending balance, maximum number of shares eligible to be issued, outstanding (in shares) | 1,142,000 | 941,000 | |
Average Grant Date Fair Value | |||
Beginning balance, average grant date fair value, outstanding (in dollars per share) | $ 58.95 | ||
Awarded at target, average grant date fair value (in dollars per share) | 52.49 | ||
Vested, average grant date fair value (in dollars per share) | 59.12 | ||
Forfeited, average grant date fair value (in dollars per share) | 58.40 | ||
Ending balance, average grant date fair value, outstanding (in dollars per share) | $ 56.47 | $ 58.95 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Assumptions Used to Estimate Fair Value of Stock Options Granted and Stock Purchase Rights under ESPP (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
ESPP | |||
Expected dividend yield | 0% | 0% | 0% |
Employee Stock [Member] | |||
ESPP | |||
Volatility | 40% | 39% | 56% |
Expected term (years) | 6 months | 6 months | 6 months |
Risk free interest rate | 1.70% | 0.10% | 0.50% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Reserved for Future Issuance (Details) shares in Thousands | Dec. 31, 2022 shares |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 32,161 |
Restricted Stock Units And Performance Based Restricted Stock Units [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 1,924 |
Available For Future Grant [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 2,889 |
Employee Stock [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 534 |
Senior Convertible Notes Due2023 [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 7,082 |
Senior Convertible Notes Due2025 [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 6,512 |
Senior Convertible Warrants Due2023 [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 6,949 |
Senior Convertible Warrants Due2025 [Member] | |
Debt Instrument [Line Items] | |
Shares reserved for future issuance (in shares) | 6,271 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Before Income Taxes By Region (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summarized details of income before income taxes by region | |||
United States | $ 45,037 | $ 21,096 | $ (45,534) |
Foreign | 7,285 | (79,480) | (2,011) |
Income (loss) before income taxes | $ 52,322 | $ (58,384) | $ (47,545) |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 26,133 | $ 3,607 | $ (35) |
State | 4,682 | 2,989 | 2,309 |
Foreign | 1,597 | 3,268 | 4,675 |
Total current provision | 32,412 | 9,864 | 6,949 |
Deferred: | |||
Federal | (17,429) | (902) | (13,800) |
State | (6,129) | (6,573) | (8,315) |
Foreign | (1,791) | (23,040) | (3,849) |
Total deferred provision | (25,349) | (30,515) | (25,964) |
Changes in tax rate | (303) | 47 | (579) |
Changes in valuation allowance | 5,155 | 26,306 | 9,202 |
Total provision (benefit) | $ 11,915 | $ 5,702 | $ (10,392) |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Income Tax from Statutory Tax Rate to Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Tax provision (benefit) at federal statutory rate | $ 10,988 | $ (12,261) | $ (9,984) |
Valuation allowance | 5,155 | 26,306 | 9,202 |
Compensation expense | 2,570 | 2,153 | 3,314 |
Acquisition related charges | (551) | 1,338 | 687 |
State income tax | 2,357 | 979 | (1,243) |
Nondeductible meals and entertainment | 247 | 171 | 351 |
Return to provision adjustments | (2,737) | 116 | (881) |
Changes in tax rate | (303) | 47 | (579) |
Income tax reserves | 950 | (447) | (4,217) |
Foreign tax rate differences from federal statutory rate | 564 | (7,166) | (1,215) |
Income tax credits and incentives | (7,012) | (7,286) | (7,155) |
Other | (313) | 1,752 | 1,328 |
Total provision (benefit) | $ 11,915 | $ 5,702 | $ (10,392) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 102,383 | $ 87,671 |
Amortization | 42,215 | 66,482 |
Inventory | 40,502 | 48,244 |
Lease liability | 26,718 | 28,402 |
General business and other credit carryforwards | 30,111 | 25,913 |
Capitalized research and development costs | 22,827 | 0 |
Original issue discount | 12,303 | 22,130 |
Stock-based compensation | 11,692 | 10,042 |
Foreign currency exchange gains and losses | 12,025 | 5,967 |
Other | 27,174 | 28,699 |
Gross deferred tax assets | 327,950 | 323,550 |
Less valuation allowance | (167,919) | (168,409) |
Net deferred tax assets | 160,031 | 155,141 |
Deferred tax liabilities: | ||
Depreciation | (43,815) | (46,597) |
Acquired intangibles | (23,848) | (34,181) |
Right-of-use assets | (22,211) | (23,904) |
Other | (2,338) | (3,137) |
Total deferred tax liabilities | (92,212) | (107,819) |
Net deferred tax assets | $ 67,819 | $ 47,322 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes [Line Items] | |||
Unrecognized tax benefits that would impact effective tax | $ 20,100 | $ 17,800 | $ 16,500 |
Income tax, penalties and interest (expense) benefit | 400 | 100 | $ (100) |
Income tax, accrued interest and penalties | 600 | $ 100 | |
Remaining unrecognized tax positions | 0 | ||
Undistributed earnings of foreign subsidiaries | 9,000 | ||
Foreign tax credit carryforwards | 900 | ||
Research and Development [Member] | California Franchise Tax Board [Member] | |||
Income Taxes [Line Items] | |||
Net research and development carryforwards | 46,800 | ||
State Tax Jobs | |||
Income Taxes [Line Items] | |||
Net research and development carryforwards | 300 | ||
Federal Tax Authority [Member] | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | $ 1,600 | ||
Operating loss carryforwards expiration year | 2026 | ||
State and Local Jurisdiction [Member] | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | $ 51,700 | ||
Foreign Tax Authority [Member] | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | 292,600 | ||
ASU 2020-06 [Member] | |||
Income Taxes [Line Items] | |||
Net increase (decrease) in deferred tax assets and liabilities | 28,900 | ||
Decrease in valuation allowance of deferred taxes | 900 | ||
Simplify Medical [Member] | |||
Income Taxes [Line Items] | |||
Net increase (decrease) in deferred tax assets and liabilities | $ 10,700 |
Income Taxes - Summary of Unrec
Income Taxes - Summary of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Gross unrecognized tax benefits at January 1 | $ 19,743 | $ 18,316 | $ 20,328 |
Increases in tax positions for prior years | 488 | 165 | 1,758 |
Increases in tax positions for current year relating to ongoing operations | 2,159 | 2,087 | 2,159 |
Decreases in tax positions as a result of a lapse of statute of limitations | (44) | (769) | (5,929) |
Decreases in tax positions due to settlements with taxing authorities | (63) | (56) | 0 |
Gross unrecognized tax benefits at December 31 | $ 22,283 | $ 19,743 | $ 18,316 |
Business Segment, Product and_2
Business Segment, Product and Geographic Information - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Business Segment, Product and_3
Business Segment, Product and Geographic Information - Schedule of Net Sales by Product Line (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Entity Wide Information Revenue From External Customer [Line Items] | |||
Net sales | $ 1,201,942 | $ 1,138,988 | $ 1,050,582 |
Spinal Hardware [Member] | |||
Entity Wide Information Revenue From External Customer [Line Items] | |||
Net sales | 909,778 | 856,556 | 783,510 |
Surgical Support [Member] | |||
Entity Wide Information Revenue From External Customer [Line Items] | |||
Net sales | $ 292,164 | $ 282,432 | $ 267,072 |
Business Segment, Product and_4
Business Segment, Product and Geographic Information - Schedule of Net Sales and Net Property and Equipment by Geographical Area (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||
Net Sales | $ 1,201,942 | $ 1,138,988 | $ 1,050,582 |
Property and Equipment, Net | 346,510 | 303,664 | |
UNITED STATES [Member] | |||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||
Net Sales | 925,859 | 876,614 | 821,824 |
Property and Equipment, Net | 295,914 | 256,688 | |
Non-US [Member] | |||
Revenues and Net Property and Equipment by Geographical Areas [Line Items] | |||
Net Sales | 276,083 | 262,374 | $ 228,758 |
Property and Equipment, Net | $ 50,596 | $ 46,976 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - Globus Medical $ in Millions | Feb. 08, 2023 USD ($) |
Subsequent Event [Line Items] | |
Termination fee | $ 120 |
Globus Medical | |
Subsequent Event [Line Items] | |
Termination fee | $ 120 |
Common Class A | |
Subsequent Event [Line Items] | |
Merger agreement, exchange ratio | 0.75 |