Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | CONFORMIS INC | |
Entity Central Index Key | 1,305,773 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 45,292,573 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 26,547 | $ 37,257 |
Investments | 27,951 | 28,242 |
Accounts receivable, net | 12,599 | 14,675 |
Inventories | 10,577 | 11,720 |
Prepaid expenses and other current assets | 2,516 | 3,954 |
Total current assets | 80,190 | 95,848 |
Property and equipment, net | 16,310 | 15,084 |
Other Assets | ||
Restricted cash | 462 | 300 |
Intangible assets, net | 574 | 746 |
Goodwill | 6,731 | 753 |
Other long-term assets | 18 | 79 |
Total assets | 104,285 | 112,810 |
Current liabilities | ||
Accounts payable | 4,335 | 5,474 |
Accrued expenses | 8,314 | 8,492 |
Deferred revenue | 305 | 305 |
Total current liabilities | 12,954 | 14,271 |
Other long-term liabilities | 652 | 164 |
Deferred tax liabilities | 42 | 0 |
Deferred revenue | 4,091 | 4,320 |
Long-term debt, less debt issuance costs | 29,640 | 0 |
Total liabilities | 47,379 | 18,755 |
Commitments and contingencies | 0 | 0 |
Stockholders’ equity | ||
Preferred stock, $0.00001 par value: Authorized: 5,000,000 shares authorized as of September 30, 2017 and December 31, 2016; no shares issued and outstanding as of September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.00001 par value: Authorized: 200,000,000 shares authorized as of September 30, 2017 and December 31, 2017; 45,292,573 and 43,399,547 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 0 | 0 |
Additional paid-in capital | 484,665 | 476,486 |
Accumulated deficit | (424,963) | (382,930) |
Accumulated other comprehensive (loss) income | (2,796) | 499 |
Total stockholders’ equity | 56,906 | 94,055 |
Total liabilities and stockholders’ equity | $ 104,285 | $ 112,810 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 45,292,573 | 43,399,547 |
Common stock, shares outstanding | 45,292,573 | 43,399,547 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | ||||
Product | $ 18,176 | $ 18,400 | $ 56,601 | $ 57,486 |
Royalty | 249 | 243 | 763 | 740 |
Total revenue | 18,425 | 18,643 | 57,364 | 58,226 |
Cost of revenue | 11,111 | 12,645 | 37,307 | 39,564 |
Gross profit | 7,314 | 5,998 | 20,057 | 18,662 |
Operating expenses | ||||
Sales and marketing | 8,741 | 9,301 | 28,932 | 31,063 |
Research and development | 4,081 | 4,099 | 12,976 | 12,474 |
General and administrative | 7,402 | 5,503 | 22,304 | 17,285 |
Total operating expenses | 20,224 | 18,903 | 64,212 | 60,822 |
Loss from operations | (12,910) | (12,905) | (44,155) | (42,160) |
Other income and expenses | ||||
Interest income | 137 | 127 | 367 | 409 |
Interest expense | (718) | (4) | (1,397) | (104) |
Foreign currency exchange transaction income | 1,099 | 34 | 3,606 | 34 |
Total other income (expenses), net | 518 | 157 | 2,576 | 339 |
Loss before income taxes | (12,392) | (12,748) | (41,579) | (41,821) |
Income tax provision | 80 | 14 | 143 | 27 |
Net loss | $ (12,472) | $ (12,762) | $ (41,722) | $ (41,848) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.29) | $ (0.31) | $ (0.97) | $ (1.01) |
Weighted average common shares outstanding - basic and diluted (in shares) | 43,468,559 | 41,682,244 | 43,182,090 | 41,332,958 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (12,472) | $ (12,762) | $ (41,722) | $ (41,848) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | (1,006) | (167) | (3,286) | (300) |
Change in unrealized gain (loss) on available-for-sale securities, net of tax | 9 | (8) | (9) | 2 |
Comprehensive loss | $ (13,469) | $ (12,937) | $ (45,017) | $ (42,146) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (41,722) | $ (41,848) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization expense | 2,698 | 2,334 |
Amortization of debt discount | 0 | 3 |
Stock-based compensation expense | 4,149 | 3,490 |
Provision for bad debts on trade receivables | 5 | 243 |
Impairment of long-term assets | 805 | 123 |
Non-cash interest expense | 73 | 0 |
Amortization/accretion on investments | 159 | 229 |
Tax effect, unrealized gain/loss on investments | 0 | (1) |
Deferred tax | 42 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,071 | 785 |
Inventories | 1,143 | (235) |
Prepaid expenses and other assets | 1,504 | 212 |
Accounts payable and accrued liabilities | (1,368) | (1,892) |
Deferred royalty revenue | (229) | (229) |
Other long-term liabilities | 488 | (54) |
Net cash used in operating activities | (30,182) | (36,840) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (4,114) | (6,289) |
Business acquisition, net of cash acquired | (5,780) | 0 |
(Decrease)/increase in restricted cash | (162) | 300 |
Purchase of investments | (23,002) | (57,559) |
Maturity of investments | 23,125 | 16,500 |
Net cash used in investing activities | (9,933) | (47,048) |
Cash flows from financing activities: | ||
Proceeds from exercise of common stock options | 2,102 | 2,213 |
Debt issuance costs | (434) | 0 |
Proceeds from issuance of debt | 30,000 | 0 |
Payments on long-term debt | 0 | (224) |
Net proceeds from issuance of common stock | 1,023 | 0 |
Net cash provided by financing activities | 32,691 | 1,989 |
Foreign exchange effect on cash and cash equivalents | (3,286) | (300) |
Decrease in cash and cash equivalents | (10,710) | (82,199) |
Cash and cash equivalents, beginning of period | 37,257 | 117,185 |
Cash and cash equivalents, end of period | 26,547 | 34,986 |
Supplemental information: | ||
Cash paid for income taxes | 230 | 105 |
Cash paid for interest | $ 1,397 | $ 17 |
Non cash investing activities: | ||
Issuance of common stock for business acquisition | 594 | 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation ConforMIS, Inc. and its subsidiaries (the “Company”) is a medical technology company that uses its proprietary iFit Image-to-Implant technology platform to develop, manufacture and sell joint replacement implants that are individually sized and shaped, which the Company refers to as customized, to fit each patient’s unique anatomy. The Company’s proprietary iFit® technology platform is potentially applicable to all major joints. The Company offers a broad line of customized knee implants designed to restore the natural shape of a patient’s knee. The Company was incorporated in Delaware and commenced operations in 2004. The Company introduced its iUni and iDuo in 2007, its iTotal CR in 2011 and its iTotal PS in 2015. The Company has its corporate offices in Billerica, Massachusetts. Liquidity and operations The accompanying Interim Consolidated Financial Statements as of September 30, 2017 and for the three and nine months ended September 30, 2017 and 2016, and related interim information contained within the notes to the Consolidated Financial Statements, have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company's consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. Since the Company’s inception in June 2004, it has financed its operations primarily through private placements of preferred stock, its initial public offering in July 2015, bank debt and convertible debt financings, equipment purchase loans, and product revenue beginning in 2007. The Company has not yet attained profitability and continues to incur operating losses, which adversely impacts the Company's ability to continue as a going concern. At September 30, 2017 , the Company had an accumulated deficit of $425.0 million . As of September 30, 2017 , the Company had cash and cash equivalents, and investments of $54.5 million and $0.5 million in restricted cash allocated to lease deposits. As of December 31, 2016 , the Company had cash and cash equivalents and investments of $65.5 million and $0.3 million in restricted cash allocated to lease deposits. On January 6, 2017, the Company entered into a senior secured $50 million loan and security agreement (the "2017 Secured Loan Agreement") with Oxford Finance LLC ("Oxford"). Through the term loan facility with Oxford, the Company accessed the initial $15 million of borrowings on January 6, 2017 and another $15 million of borrowings on June 30, 2017, with an additional $20 million available, at its option, through June 2018, subject to the satisfaction of certain revenue milestones and customary drawdown conditions. For further information regarding this facility, see “Note L-Debt and Notes Payable-2017 Secured Loan Agreement” to the consolidated financial statements appearing in this Quarterly Report on Form 10-Q. Additionally, in January 2017, the Company filed a shelf registration statement on Form S-3 with the SEC. The shelf registration statement allows the Company to sell from time to time up to $200 million of common stock, preferred stock, debt securities, warrants, or units comprised of any combination of these securities, for its own account in one or more offerings. The shelf registration statement is intended to provide the Company flexibility to conduct sales of its registered securities, subject to market conditions and our future capital needs. The terms of any offering under the shelf registration statement will be established at the time of such offering and will be described in one or more prospectus supplement filed with the SEC prior to the completion of any such offering. On May 10, 2017, the Company filed with the SEC a prospectus supplement (the “Prospectus Supplement”), pursuant to which the Company may issue and sell up to $50 million of its common stock, par value $0.00001 per share (the “Shares”). In connection with the offering, the Company entered into an Equity Distribution Agreement, dated as of May 10, 2017 (the “Distribution Agreement”), with Canaccord Genuity Inc., as sales agent (“Canaccord”). Pursuant to the Distribution Agreement, Canaccord will use commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations, and the rules of The NASDAQ Global Select Market to sell the Shares from time to time, as the Company’s agent. Sales of the Shares, may be made by any method deemed to be an “at-the-market” offering ("ATM") as defined in Rule 415 promulgated under the U.S. Securities Act of 1933, as amended, including sales made directly on or through The NASDAQ Global Select Market, on any other existing trading market for the Shares, or sales to or through a market maker other than on an exchange, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or any other method permitted by law. The Company is not obligated to sell any Shares under the Distribution Agreement. As of September 30, 2017 , the Company has sold 228,946 Shares under the Distribution Agreement resulting in net proceeds of $1.0 million . The Company intends to use the net proceeds of the offering of the Shares for general corporate purposes, which may include research and development costs, sales and marketing costs, clinical studies, manufacturing development, the acquisition or licensing of other businesses or technologies, repayment and refinancing of debt, including the Company’s secured term loan facility, working capital and capital expenditures. The Company anticipates that its principal sources of funds in the future will be revenue generated from the sales of its products, future capital raises through the issuance of equity securities, revenues that may be generated in connection with licensing its intellectual property, and potentially borrowings under our 2017 Secured Loan Agreement. The Company expects that its existing cash and cash equivalents as of September 30, 2017 , including borrowings under its 2017 Secured Loan Agreement, and anticipated revenue from operations, including from projected sales of its products, will enable the Company to fund its operating expenses and capital expenditure requirements and pay its debt service as it becomes due for at least the next 12 months from the date of filing. Management has based this expectation on assumptions that may prove to be wrong, such as the revenue that it expects to generate from the sale of its products and the gross profit the Company expects to generate from those revenues, and it could use its capital resources sooner than we expect. In the event the Company’s resources are not sufficient to fund its operations, the Company may need to engage in equity or debt financings to secure additional funds. The Company may not be able to obtain additional financing on terms favorable to the Company, or at all. Basis of presentation and use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates used in these consolidated financial statements include the valuation of accounts receivable, inventory reserves, intangible valuation, equity instruments, impairment assessments, income tax reserves and related allowances, and the lives of property and equipment. Actual results may differ from those estimates. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Unaudited Interim Financial Information The accompanying Interim Consolidated Financial Statements as of September 30, 2017 and for the three and nine months ended September 30, 2017 and 2016 , and related interim information contained within the notes to the Consolidated Financial Statements are unaudited. These unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of September 30, 2017 , results of operations for the three and nine months ended September 30, 2017 and 2016 , and cash flows for the nine months ended September 30, 2017 and 2016 . The results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full year or any interim period. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Concentrations of credit risk and other risks and uncertainties Financial instruments that subject the Company to credit risk primarily consist of cash, cash equivalents, and accounts receivable. The Company maintains the majority of its cash with accredited financial institutions. The Company and its contract manufacturers rely on sole source suppliers and service providers for certain components. There can be no assurance that a shortage or stoppage of shipments of the materials or components that the Company purchases will not result in a delay in production or adversely affect the Company’s business. The Company is in the process of validating alternate suppliers relative to certain key components, which are expected to be phased in during the coming periods. For the three and nine months ended September 30, 2017 and 2016 , no customer represented greater than 10% of revenue. There were no customers that represented greater than 10% of total gross receivable balance as of September 30, 2017 or December 31, 2016 . Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries including ImaTx, Inc. ("ImaTx"), ConforMIS Europe GmbH, ConforMIS UK Limited and ConforMIS Hong Kong Limited. All material intercompany balances and transactions have been eliminated in consolidation. Cash and cash equivalents The Company considers all highly liquid investment instruments with original maturities of 90 days or less, to be cash equivalents. The Company’s cash equivalents consist of demand deposits , money market accounts, and repurchase agreements on deposit with certain financial institutions, in addition to cash deposits in excess of federally insured limits. Demand deposits are carried at cost which approximates their fair value. Money market accounts are carried at fair value based upon level 1 inputs. Corporate bonds and repurchase agreements are valued using level 2 inputs. See “Note C-Fair Value Measurements” below. The associated risk of concentration is mitigated by banking with credit worthy financial institutions. The Company had $1.8 million and $1.6 million as of September 30, 2017 and December 31, 2016 , respectively, held in foreign bank accounts that are not federally insured. In addition, the Company has recorded restricted cash of $0.5 million and $0.3 million as of September 30, 2017 and December 31, 2016 , respectively. Restricted cash consisted of security provided for lease obligations. Investment securities The Company classifies its investment securities as available-for-sale. Those investments with maturities less than 12 months at the date of purchase are considered short-term investments. Those investments with maturities greater than 12 months at the date of purchase are considered long-term investments. The Company’s investment securities classified as available-for-sale are recorded at fair value based upon quoted market prices at period end. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the security. Premiums (discounts) are amortized (accreted) over the life of the related security using the constant yield method. Dividend and interest income are recognized when earned and reported in other income. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities sold. Fair value of financial instruments Certain of the Company’s financial instruments, including cash and cash equivalents excluding money market funds, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of the short-term maturity. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of the Company’s long-term debt approximates its fair value. Accounts receivable and allowance for doubtful accounts Accounts receivable consist of billed and unbilled amounts due from medical facilities. Upon completion of a procedure, revenue is recognized and an unbilled receivable is recorded. Upon receipt of a purchase order number from a medical facility, a billed receivable is recorded and the unbilled receivable is reversed. As a result, the unbilled receivable balance fluctuates based on the timing of the Company's receipt of purchase order numbers from the medical facilities. In estimating whether accounts receivable can be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for doubtful accounts based on the aging of the underlying invoices, collections experience to date and any specific collection issues that have been identified. The allowance for doubtful accounts is recorded in the period in which revenue is recorded or when collection risk is identified. Inventories Inventories consist of raw materials, work-in-process components and finished goods. Inventories are stated at the lower of cost, determined using the first-in first-out method, or market value. The Company regularly reviews its inventory quantities on hand and related cost and records a provision for any excess or obsolete inventory based on its estimated forecast of product demand and existing product configurations. The Company also reviews its inventory value to determine if it reflects the lower of cost or market, with market determined based on net realizable value. Appropriate consideration is given to inventory items sold at negative gross margins, purchase commitments and other factors in evaluating net realizable value. During the three and nine months ended September 30, 2017 , the Company recognized provisions in cost of revenue of $0.4 million and $2.1 million , respectively, to adjust its inventory value to the lower of cost or market for estimated unused product related to known and potential cancelled cases. During the three and nine months ended September 30, 2016 , $1.1 million and $2.8 million , respectively, was recognized in cost of revenue for estimated unused product. Property and equipment Property and equipment is stated at cost less accumulated depreciation and is depreciated using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over their useful life or the life of the lease, whichever is shorter. Assets capitalized under capital leases are amortized in accordance with the respective class of assets and the amortization is included with depreciation expense. Maintenance and repair costs are expensed as incurred. Business Combinations We include the results of operations of the businesses that we acquire as of the acquisition date. We allocate the purchase price of our acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Intangibles and other long-lived assets Intangible assets consist of developed technology and other intellectual property rights licensed from ImaTx as part of the spin-out transaction in 2004. Intangible assets are carried at cost less accumulated amortization. The Company tests impairment of long-lived assets when events or changes in circumstances indicate that the assets might be impaired. For assets with determinable useful lives, amortization is computed using the straight-line method over the estimated economic lives of the respective intangible assets. Furthermore, periodically the Company assesses whether long-lived assets, including intangible assets, should be tested for recoverability whenever events or circumstances indicate that their carrying value may not be recoverable. The amount of impairment, if any, is measured based on fair value, which is determined using estimated undiscounted cash flows to be generated from such assets or group of assets. If the cash flow estimates or the significant operating assumptions upon which they are based change in the future, the Company may be required to record impairment charges. During the three and nine months ended September 30, 2017 , the Company recognized a $0.8 million impairment charge in General and administrative expense related to the discontinuance of a software capital project. In the three and nine months ended September 30, 2016 , a $0.1 million impairment charge was recognized in connection with certain manufacturing equipment previously purchased that will be returned to the seller in exchange for credit toward a future purchase, which value is less than the book value of the equipment. Goodwill Goodwill relates to amounts that arose in connection with the acquisition of Imaging Therapeutics, Inc. (formerly known as Osteonet.com, renamed ImaTx, Inc.) in 2009 and the acquisition of Broad Peak Manufacturing, LLC in August 2017. The Company tests goodwill at least annually for impairment, or more frequently when events or changes in circumstances indicate that the assets may be impaired. This impairment test is performed annually during the fourth quarter at the reporting unit level. Goodwill may be considered impaired if the carrying value of the reporting unit, including goodwill, exceeds the reporting unit’s fair value. The Company is comprised of one reporting unit. When testing goodwill for impairment, the Company first assesses the qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. This qualitative analysis is used as a basis for determining whether it is necessary to perform the two-step goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test will be performed. If the two-step approach is performed, the Company will estimate fair value of the reporting unit, which is typically estimated using a discounted cash flow approach, and requires the use of assumptions and judgments including estimates of future cash flows and the selection of discount rates. During the nine months ended September 30, 2017 , and 2016 , there were no triggering events which would require an interim goodwill impairment assessment. Revenue recognition Product The Company generates revenue from the sale of customized implants and instruments to medical facilities through the use of a combination of direct sales personnel, independent sales representatives and distributors in the United States, Germany, the United Kingdom, Ireland, Austria, Switzerland, Singapore, Hong Kong and Monaco. Revenue is recognized when all of the following criteria are met: • persuasive evidence of an arrangement exists; • the sales price is fixed or determinable; • collection of the relevant receivable is probable at the time of sale; and • delivery has occurred or services have been rendered. The Company recognizes revenue upon completion of the procedure, which represents satisfaction of the required revenue recognition criteria. Once the revenue recognition criteria have been satisfied the Company does not offer rights of return or price protection and there are no post-delivery obligations. Royalty The Company has accounted for its agreements with Wright Medical Group, Inc. and MicroPort Orthopedics, Inc. under the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification ("ASC") 605-25, Multiple-Element Arrangements and Staff Accounting Bulletin No. 104, Revenue Recognition (ASC 605). In accordance with ASC 605, the Company is required to identify and account for each of the separate units of accounting. The Company identified the relative selling price for each and then allocated the total consideration based on their relative values. Additionally, the Company recognized an initial $5.1 million in aggregate as deferred royalty revenue, which is recognized as royalty revenue ratably through 2031. The on-going royalty from MicroPort is recognized as royalty revenue upon receipt of payment. Shipping and handling costs Amounts invoiced to customers for shipping and handling are classified as revenue. Shipping and handling costs incurred are included in general and administrative expense. Shipping and handling expense was $0.3 million and $0.3 million for the three months ended September 30, 2017 and 2016 , respectively, and was $1.0 million and $1.2 million for the nine months ended September 30, 2017 and 2016 , respectively. Taxes collected from customers and remitted to government authorities The Company’s policy is to present taxes collected from customers and remitted to government authorities on a net basis and not to include tax amounts in revenue. Research and development expense The Company’s research and development costs consist of engineering, product development, quality assurance, clinical and regulatory expense. These costs primarily relate to employee compensation, including salary, benefits and stock-based compensation. The Company also incurs costs related to consulting fees, materials and supplies, and marketing studies, including data management and associated travel expense. Research and development costs are expensed as incurred. Advertising expense Advertising costs are expensed as incurred, which are included in sales and marketing. Advertising expense was $8,000 and $19,000 for the three months ended September 30, 2017 and 2016 , respectively, and was $273,000 and $202,000 for the nine months ended September 30, 2017 and 2016 , respectively. Segment reporting Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated on a regular basis by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company’s chief operating decision-maker is its chief executive officer. The Company’s chief executive officer reviews financial information presented on an aggregate basis for purposes of allocating resources and evaluating financial performance. The Company has one business segment and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the aggregate Company level. Accordingly, in light of the Company’s current product offerings, management has determined that the primary form of internal reporting is aligned with the offering of the ConforMIS customized joint replacement products and that the Company operates as one segment. See “Note O—Segment and Geographic Data”. Comprehensive loss At September 30, 2017 and 2016 , accumulated other comprehensive loss consists of foreign currency translation adjustments and changes in unrealized gain and loss of available-for-sale securities, net of tax. The following table summarizes accumulated beginning and ending balances for each item in Accumulated other comprehensive income (loss). Foreign currency translation adjustments Change in unrealized gain (loss) on available-for-sale securities, net of tax Accumulated other comprehensive income (loss) Balance December 31, 2016 $ 506 $ (7 ) $ 499 Change in period (3,286 ) (9 ) (3,295 ) Balance September 30, 2017 $ (2,780 ) $ (16 ) $ (2,796 ) Foreign currency translation and transactions The assets and liabilities of the Company’s foreign operations are translated into U.S. dollars at current exchange rates at the balance sheet date, and income and expense items are translated at average rates of exchange prevailing during the quarter. Gains and losses realized from transactions denominated in foreign currencies, including intercompany balances not of a long-term investment nature, are included in the consolidated statements of operations. Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. In evaluating the need for a valuation allowance, the Company considers all reasonably available positive and negative evidence, including recent earnings, expectations of future taxable income and the character of that income. In estimating future taxable income, the Company relies upon assumptions and estimates of future activity including the reversal of temporary differences. Presently, the Company believes that a full valuation allowance is required to reduce deferred tax assets to the amount expected to be realized. The tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from these positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company reviews its tax positions on an annual basis and more frequently as facts surrounding tax positions change. Based on these future events, the Company may recognize uncertain tax positions or reverse current uncertain tax positions, the impact of which would affect the consolidated financial statements. The Company has operations in Germany and the United Kingdom. The operating results of these operations will be permanently reinvested in those jurisdictions. As a result, the Company has only provided for income taxes at local rates when required. Accounting Standard Update ("ASU") No. 2016-09, "Compensation - Stock Compensation", was issued and adopted in January 2017. ASU 2016-09 eliminates additional paid in capital ("APIC") pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, modified retrospective adoption of ASU 2016-09 eliminates the requirement that excess tax benefits be realized (i.e., through a reduction in income taxes payable) before we can recognize them and therefore, we have accounted for a cumulative-effect adjustment of $7.7 million during the nine months ended September 30, 2017 to record excess tax benefits. Since the Company has a full valuation allowance on all deferred taxes, this has no impact on retained earnings or the tax position of the Company. The Company is subject to U.S. federal, state, and foreign income taxes. The Company recorded a provision for income taxes of approximately $80,000 and $14,000 for the three months ended September 30, 2017 and 2016 , respectively, and $143,000 and $27,000 for the nine months ended September 30, 2017 and 2016 , respectively. The Company recognizes interest and penalties related to income taxes as a component of income tax expense. As of September 30, 2017 and December 31, 2016 , $19,000 and $13,000 of interest and penalties have been accrued, respectively. Medical device excise tax The Company is subject to the Health Care and Education Reconciliation Act of 2010 (the “Act”), which imposes a tax equal to 2.3% on the sales price of any taxable medical device by a medical device manufacturer, producer or importer of such device. Under the Act, a taxable medical device is any device defined in Section 201(h) of the Federal Food, Drug, and Cosmetic Act, intended for humans, which includes an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which meets certain requirements. The Consolidated Appropriations Act of 2016 includes a two-year moratorium on the medical device excise tax, which moratorium suspended taxes on the sale of a taxable medical device by the manufacturer, producer, or importer of the device during the period beginning on January 1, 2016 and ending on December 31, 2017. As such, the Company did not incur medical device excise tax expense during the three and nine months ended September 30, 2017 and 2016 , respectively. Unless the medical device tax is repealed or the moratorium extended, the Company expects that it will incur expenses associated with the medical device excise tax beginning on January 1, 2018. Stock-based compensation The Company accounts for stock-based compensation in accordance with ASC 718, Stock Based Compensation. ASC 718 requires all stock-based payments to employees and consultants, including grants of stock options, to be recognized in the consolidated statements of operations based on their fair values. The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted and recognizes the compensation expense of stock-based awards on a straight-line basis over the vesting period of the award. The determination of the fair value of stock-based payment awards utilizing the Black-Scholes option pricing model is affected by the stock price, exercise price, and a number of assumptions, including expected volatility of the stock, expected life of the option, risk-free interest rate and expected dividends on the stock. The Company evaluates the assumptions used to value the awards at each grant date and if factors change and different assumptions are utilized, stock-based compensation expense may differ significantly from what has been recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. See “Note N—Stockholders’ Equity” for a summary of the stock option activity under the Company’s stock-based compensation plan. Net loss per share The Company calculates net loss per share in accordance with ASC 260, "Earnings per Share". Basic earnings per share (“EPS”) is calculated by dividing the net income or loss for the period by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income or loss for the period by the weighted average number of common shares outstanding for the period and the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share attributable to stockholders (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except share and per share data) 2017 2016 2017 2016 Numerator: Numerator for basic and diluted loss per share: Net loss $ (12,472 ) $ (12,762 ) $ (41,722 ) $ (41,848 ) Denominator: Denominator for basic loss per share: Weighted average shares 43,468,559 41,682,244 43,182,090 41,332,958 Basic loss per share attributable to ConforMIS, Inc. stockholders $ (0.29 ) $ (0.31 ) $ (0.97 ) $ (1.01 ) Diluted loss per share attributable to ConforMIS, Inc. stockholders $ (0.29 ) $ (0.31 ) $ (0.97 ) $ (1.01 ) The following table sets forth potential shares of common stock equivalents that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Common stock warrants — 18,443 — 42,169 Stock options and restricted stock awards 322,450 1,583,269 466,646 2,068,315 Total 322,450 1,601,712 466,646 2,110,484 Recent accounting pronouncements In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting". This ASU provides clarification on when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. The guidance will be effective the first quarter of 2018, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and expects to adopt this pronouncement commencing in the first quarter of 2018. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles- Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This ASU removes the second step of the two-step test to determine goodwill impairment previously required. Entities will now apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance will be effective the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and expects to adopt this pronouncement commencing the first quarter of 2020. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230) Restricted Cash a consensus of the FASB Emerging Issues Task Force”. The standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows. The guidance will be effective in the first quarter of 2018, with early adoption permitted. The Company evaluated the impact of this pronouncement noting the Company's cash flow disclosure currently reflects ASU No. 2016-18 disclosure requirements. The Company expects to adopt this pronouncement commencing in the first quarter of 2018. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This ASU amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require companies to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under GAAP. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. This ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years; earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. Practical expedients are available for election as a package and if applied consistently to all leases. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and expects to adopt this pronouncement commencing in the first quarter of 2019. In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes", which eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. This guidance is effective for public companies financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2015-17 effective January 1, 2017 on a prospective basis. Since the Company has a full valuation allowance, adoption of ASU 20105-17 had no impact on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-9, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-9 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract, and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB Accounting Standards Codification. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. Companies have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. In March 2016, the FASB issued ASU No 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)", which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. In April 2016, the FASB issued ASU 2016-10, "Identifying Performance Obligations and Licensing" ("ASU 2016-10"). This ASU clarifies two aspects of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606): identifying performance obligations and the licensing implementation guidance". In June 2016, the FASB issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients", which provides guidance for accounting of credit losses affecting the impairment model for most financial assets and certain other instruments. Entities will be required to use a new forward-looking current expected credit loss model for trade and other receivables, held-to-maturity debt securities, loans and other instruments, which will generally lead to an earlier recognition of loss allowances. Entities will recognize losses on available-for-sale debt securities as allowances rather than a reduction in amortized cost of the security while the measurement process of this loss does not change. Disclosure requirements are expanded regarding an entity’s assumptions, models and methods of estimations of the allowance. The Company has begun its assessment process to evaluate the impact, which it expects to complete later in 2017, and expects to adopt this pronouncement and related disclosures commencing in the first quarter of 2018. While the Company continues to evaluate the effect of the standard, adoption of this guidance will require additional disclosure around the Company's revenue recognition in its financial statements. The Company plans to adopt this standard using the modified retrospective approach; however, the Company will continue to evaluate its adoption options as the implementation process continues. The Company has established a cross-functional coordinated implementation team and engaged a third party consultant to assist with the project. The Company has completed the scoping and planning phase of the project, identified and reviewed customer contracts for each of its revenue streams, including royalty revenue, identifying pertinent attributes and |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Fair Value Measurements topic of the FASB Codification establishes a framework for measuring fair value in accordance with US GAAP, clarifies the definition of fair value within that framework and expands disclosures about fair value measurements. This guidance requires disclosure regarding the manner in which fair value is determined for assets and liabilities and establishes a three-tiered value hierarchy into which these assets and liabilities must be grouped, based upon significant levels of inputs as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company's investment policy is consistent with the definition of available-for-sale securities. All investments have been classified within Level 1 or Level 2 of the fair value hierarchy because of the sufficient observable inputs for revaluation. The Company's Level 1 cash and equivalents and investments are valued using quoted prices that are readily and regularly available in the active market. The Company’s Level 2 investments are valued at par value or using third-party pricing sources based on observable inputs, such as quoted prices for similar assets at the measurement date; or other inputs that are observable, either directly or indirectly. The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy and where they are classified on the Consolidated Balance Sheets (in thousands): September 30, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 10,816 $ — $ — $ 10,816 $ 10,816 $ — Level 1 securities: Money market funds 9,731 — — 9,731 9,731 — U.S. treasury bonds 1,251 — (1 ) 1,250 — 1,250 Level 2 securities: Corporate bonds 5,968 — (3 ) 5,965 — 5,965 Agency bond 20,747 — (12 ) 20,735 — 20,736 Repurchase agreement 6,000 — — 6,000 6,000 — Total $ 54,513 $ — $ (16 ) $ 54,497 $ 26,547 $ 27,951 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 8,504 $ — $ — $ 8,504 $ 8,504 $ — Level 1 securities: Money market funds 28,753 — — 28,753 28,753 — Level 2 securities: Corporate bonds 6,701 — (4 ) 6,697 — 6,697 Agency bonds 21,548 — (3 ) 21,545 — 21,545 Total $ 65,506 $ — $ (7 ) $ 65,499 $ 37,257 $ 28,242 (1) Contractual maturity due within one year. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Receivable, Net, Current [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable consisted of the following (in thousands): September 30, December 31, Total receivables $ 13,243 $ 15,356 Allowance for doubtful accounts and returns (644 ) (681 ) Accounts receivable, net $ 12,599 $ 14,675 Accounts receivable included unbilled receivable of $2.2 million and $2.5 million at September 30, 2017 and December 31, 2016 , respectively. Write-offs related to accounts receivable were approximately $18,000 and $34,000 for the three months ended September 30, 2017 and 2016 , respectively, and $29,000 and $34,000 for the nine months ended September 30, 2017 and 2016 , respectively. Summary of allowance for doubtful accounts and returns activity was as follows (in thousands): September 30, December 31, Beginning balance (681 ) (554 ) Provision for bad debts on trade receivables (5 ) (188 ) Other allowances 13 20 Accounts receivable write offs 29 41 Ending balance $ (644 ) $ (681 ) |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): September 30, December 31, Raw Material $ 3,649 $ 3,331 Work in process 1,945 2,530 Finished goods 4,983 5,859 Total Inventories $ 10,577 $ 11,720 At September 30, 2017 and December 31, 2016 , inventories included write-downs of $ 0 and $0.2 million , respectively, related to units affected by the recall and sterilization capacity limitation. |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition On August 9, 2017, the Company completed the purchase of certain assets and assumed certain liabilities of Broad Peak Manufacturing, LLC (BPM), for approximately $6.4 million . Of the total purchase price paid, $5.8 million was in cash and $0.6 million of unregistered shares of common stock. The purchase was treated as a business combination as it met certain criteria stipulated in ASC 805 - Business Combinations. Prior to the acquisition, BPM provided substantially all of the polishing services for the Company’s femoral implant component. We expect the acquisition of the BPM assets will reduce the cost of polishing and improve overall gross margin. The Company completed a preliminary estimate of the BPM purchase price allocation. Of the total purchase price, approximately $2.2 million related to earn out provisions tied to certain employee retention by the Company and achieving certain cost targets that was paid into an escrow account. An additional $0.7 million could be earned by BPM if the actual cost targets are exceeded. Alternatively, the earn out provisions could be paid back to the Company if the employee retention and cost targets are not achieved. The Company's best estimate of the range of possibilities is that none of the consideration in connection with employee retention or cost targets will be returned and that less than $0.1 million of additional consideration will be earned as a result of exceeding the cost targets. These estimates are based on various considerations regarding the employee retention and the streamlined cost structure associated with the polishing processes. The Company will update its estimate of contingent consideration on a quarterly basis. Of the total purchase price of $6.4 million , $0.4 million was attributed to property and equipment, $6.0 million was attributed to goodwill and less than $0.1 million to other net assets acquired. Goodwill is primarily attributable to the future cost savings expected to arise after the acquisition and is deductible for tax purposes. The acquisition of BPM is strategically significant in reducing the manufacturing costs for the Company, however at the time of the acquisition and on September 30, 2017, the Company concluded that historical results of the BPM both individually and in the aggregate, were immaterial to the Company’s consolidated financial results and therefore additional pro-forma disclosures are not presented. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands): Estimated September 30, 2017 December 31, 2016 Equipment 5-7 18,463 16,651 Furniture and fixtures 5-7 954 414 Computer and software 3 7,670 7,027 Leasehold improvements 2-8 1,794 1,294 Total property and equipment 28,881 25,386 Accumulated depreciation (12,571 ) (10,302 ) Property and equipment, net 16,310 15,084 Depreciation expense related to property and equipment was $0.9 million and $0.7 million for the three months ended September 30, 2017 and 2016 , respectively. Depreciation expense related to property and equipment was $2.5 million and $2.1 million for the nine months ended September 30, 2017 and 2016 , respectively. During the three and nine months ended September 30, 2017, the Company recorded an impairment of $0.8 million related to the discontinuance of a software capital project. During the three and nine months ended September 30, 2016 the Company recorded $0.1 million in impairment charges in connection with certain manufacturing equipment previously purchased that was returned to the seller in exchange for a credit toward future purchase, which value is less than the book value of the equipment. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Intangible Assets | Intangible Assets The components of intangible assets consisted of the following (in thousands): Estimated Useful Life (Years) September 30, 2017 December 31, 2016 Developed technology 10 $ 979 $ 979 Accumulated amortization (754 ) (681 ) Developed technology, net 225 298 License agreements 10 1,508 1,508 Accumulated amortization (1,173 ) (1,060 ) License technology, net 335 448 Acquired favorable lease 5 15 — Accumulated amortization (1 ) — Acquired favorable lease, net 14 — Intangible assets, net $ 574 $ 746 The Company recognized amortization expense of $63,000 and $62,000 for the three months ended September 30, 2017 , and 2016 , and $187,000 and $186,000 for the nine months ended September 30, 2017 , and 2016 . The weighted-average remaining life of total amortizable intangible assets is 2.31 years for the developed technology and license agreements and favorable lease asset. The estimated future aggregated amortization expense for intangible assets owned as of September 30, 2017 consisted of the following (in thousands): Amortization expense 2017 (remainder of the year) $ 63 2018 252 2019 252 2020 3 2021 3 2022 1 $ 574 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands): September 30, December 31, Accrued employee compensation $ 4,078 $ 4,037 Deferred rent 110 101 Accrued legal expense 773 710 Accrued consulting expense 42 104 Accrued vendor charges 1,308 1,396 Accrued revenue share expense 857 992 Accrued clinical trial expense 180 256 Accrued other 966 896 $ 8,314 $ 8,492 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases - Real Estate The Company maintains its corporate headquarters in a leased building located in Billerica, Massachusetts. The Company moved its corporate headquarters from Bedford, Massachusetts in April 2017. The Company maintains its manufacturing facility in a leased building located in Wilmington, Massachusetts. The Billerica facility is leased under a long-term, non-cancellable lease that is scheduled to expire in October 2025. The Company leased the Bedford facility under a long-term, non-cancellable sublease that was set to expire in April 2017. In April 2017, the Company and the landlord of the Bedford facility agreed to a holdover of 30 days beyond the lease termination through May 31, 2017, which subsequently expired. On July 25, 2016, the Company entered into an amendment to the Wilmington Lease. Pursuant to the amendment, the Company exercised an option in its current lease to rent an additional 18,223 square feet of space adjacent to the Company’s existing premises. The Company took possession of the additional space in April 2017. The Company has a right to extend the term for one additional five -year period following termination of the lease in March 2022. The initial base rental rate for the additional space is $0.2 million annually, subject to 2% annual increases until the expiration of the initial term. On August 9, 2017, the Company entered into a lease for 4,099 square feet of space in Wallingford, CT which houses its polishing facility. The lease term is five years with the option to extend for two additional years beyond the original term and an additional three years past the first extension term. Rent expense of $0.4 million for the three months ended September 30, 2017 and 2016 , and $1.3 million and $1.1 million for the nine months ended September 30, 2017 and 2016 , respectively, was charged to operations. The Company’s operating lease agreements contain scheduled rent increases, which are being amortized over the terms of the agreements using the straight-line method. License and revenue share agreements Revenue Share Agreements The Company is party to revenue share agreements with certain past and present members of its scientific advisory board under which these advisors agreed to participate on its scientific advisory board and to assist with the development of the Company’s customized implant products and related intellectual property. These agreements provide that the Company will pay the advisor a specified percentage of the Company’s net revenues, ranging from 0.1 % to 1.33% , with respect to the Company’s products on which the advisor made a technical contribution or, in some cases, which the Company covered by a claim of one of its patents on which the advisor is a named inventor. The specific percentage is determined by reference to product classifications set forth in the agreement and is tiered based on the level of net revenues collected by the Company on such product sales. The Company’s payment obligations under these agreements typically expire a fixed number of years after expiration or termination of the agreement, but in some cases expire on a product-by-product basis or expiration of the last to expire of the Company’s patents where the advisor is a named inventor that claims the applicable product. Philipp Lang, M.D., one of the Company’s directors and former Chief Executive Officer, joined the Company’s scientific advisory board in 2004 prior to becoming an employee. The Company first entered into a revenue share agreement with Dr. Lang in 2008 when he became the Company’s Chief Executive Officer. In 2011, the Company entered into an amended and restated revenue share agreement with Dr. Lang. Under this agreement, the specified percentage of the Company’s net revenues payable to Dr. Lang ranges from 0.875% to 1.33% and applies to all of the Company’s current products, including the Company’s iUni, iDuo, iTotal CR, and iTotal PS products, as well as certain other knee, hip and shoulder replacement products and related instrumentation the Company may develop in the future. The Company’s payment obligations under this agreement expire on a product-by-product basis on the last to expire of the Company’s patents on which Dr. Lang is named an inventor that claim the applicable product. These payment obligations survived the termination of Dr. Lang’s employment with the Company. The Company incurred revenue share expense paid to Dr. Lang of $233,000 and $230,000 for the three months ended September 30, 2017 , and 2016 , respectively, and $722,000 and $718,000 for the nine months ended September 30, 2017 , and 2016 , respectively. The Company incurred aggregate revenue share expense including all amounts payable under the Company’s scientific advisory board and Dr. Lang revenue share agreements of $0.9 million during the three months ended September 30, 2017 , representing 4.7% of product revenue, $2.7 million during the nine months ended September 30, 2017 , representing 4.8% of product revenue, $0.9 million during the three months ended September 30, 2016 , representing 4.8% of product revenue, and $2.6 million during the nine months ended September 30, 2016 , representing 4.5% of product revenue. Revenue share expense is included in research and development. See “Note M—Related Party Transactions” for further information regarding the Company’s arrangement with Dr. Lang. Other obligations In the ordinary course of business, the Company is a party to certain non-cancellable contractual obligations typically related to research and development and marketing services. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There have been no contingent liabilities requiring accrual at September 30, 2017 or December 31, 2016 . Legal proceedings In the ordinary course of the Company's business, the Company is subject to litigation, claims and administrative proceedings on a variety of matters, including patent infringement, product liability, securities-related claims, and other claims in the United States and in other countries where the Company sells its products. An estimate of the possible loss or range of loss as a result of any of these matters cannot be made; however, management does not believe that these matters, individually or in the aggregate, are material to its financial condition, results of operations or cash flows. On February 29, 2016, the Company filed a lawsuit against Smith & Nephew, Inc. (“Smith & Nephew”) in the United States District Court for the District of Massachusetts Eastern Division, and the Company amended its complaint on June 13, 2016 (the "Smith & Nephew Lawsuit"). The Smith & Nephew Lawsuit alleges that Smith & Nephew’s Visionaire® patient-specific instrumentation as well as the implants systems used in conjunction with the Visionaire instrumentation infringe nine of the Company's patents, and it requests, among other relief, monetary damages for willful infringement, enhanced damages and a permanent injunction. On May 27, 2016, Smith & Nephew filed its Answer and Counterclaims in response to the Company's lawsuit, which it subsequently amended on July 22, 2016. Smith & Nephew denied that its Visionaire® patient-specific instrumentation as well as the implants systems used in conjunction with the Visionaire instrumentation infringe the patents asserted by the Company in the lawsuit. It also alleged two affirmative defenses: that the Company's asserted patents are invalid and that the Company is barred from relief under the doctrine of laches. In addition, Smith & Nephew asserted a series of counterclaims, including counterclaims seeking declaratory judgments that Smith & Nephew’s accused products do not infringe the Company's patents and that the Company's patents are invalid. Smith & Nephew also alleged that ConforMIS infringes ten patents owned or exclusively licensed by Smith & Nephew: two patents that Smith & Nephew alleges are infringed by the Company's iUni and iDuo products; three patents that Smith & Nephew alleges are infringed by the Company's iTotal products; and five patents that Smith & Nephew licenses from Kinamed, Inc. of Camarillo, California and that it alleges are infringed by the Company's iUni, iDuo and iTotal products. Due to Smith & Nephew’s licensing arrangement with Kinamed, Kinamed was named as a party to the lawsuit. Smith & Nephew and Kinamed requested, among other relief, monetary damages for willful infringement, enhanced damages and a permanent injunction. On March 9, 2017, the Court entered a stipulation of dismissal by the parties that dismissed from the lawsuit eight patents asserted by Smith & Nephew, including the patents involving Kinamed, and two patents asserted by ConforMIS. Between September 21, 2016 and March 1, 2017, Smith & Nephew filed sixteen petitions with the United States Patent & Trademark Office (“USPTO”) requesting Inter Partes Review of the nine patents that the Company asserted against Smith & Nephew in the lawsuit. In its petitions, Smith & Nephew alleged that the Company's patents are obvious in light of certain prior art. As of October 31, 2017, the USPTO decided to institute IPR proceedings with respect to seven of the petitions; decided to deny the requests for IPR with respect to seven of the petitions; and, with respect to the remaining two petitions, decided to institute IPR proceedings for some of the subject patent claims and to deny the requests for the remaining subject patent claims. In total, the USPTO instituted IPR proceedings for some or all of the subject patent claims in six of the patents in the Smith & Nephew lawsuit ( five patents that are currently asserted, and one of the patents that was voluntarily dismissed from the lawsuit), and denied the petitions for all subject claims in three of the patents ( two patents that are currently asserted and one of the patents that was voluntarily dismissed from the lawsuit). Smith & Nephew has filed a request for rehearing of three of the petitions that were denied and a request for reexamination of one of the patents for which an IPR was not instituted. On January 27, 2017, Smith & Nephew filed a motion seeking a stay of the Smith & Nephew Lawsuit until any requested Inter Partes Reviews are resolved, and the Company filed an opposition to that motion. On April 27, 2017, the Court has stayed certain aspects of the proceedings and has indicated that it will make a final decision on the motion to stay after the USPTO has decided more of the petitions for Inter Partes Review. The Company is presently unable to predict the outcome of the motion to stay the proceedings, the requests for rehearing of the IPR petitions, the outcome of the institued IPRs, or the Smith & Nephew Lawsuit. An adverse outcome of some or all of these potential Inter Partes Review proceedings and lawsuit could have a material adverse effect on the Company's business, financial condition or results of operations. The Company is presently unable to predict the outcome of the lawsuit or to reasonably estimate a range of potential losses, if any, related to the lawsuit. Legal costs associated with legal proceedings are accrued as incurred. Indemnifications In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. In accordance with its bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date and the Company has a director and officer insurance policy that enables it to recover a portion of any amounts paid for future claims. |
Debt and Notes Payable
Debt and Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt and Notes Payable | Debt and Notes Payable Long-term debt consisted of the following (in thousands): September 30, 2017 December 31, 2016 Oxford Finance, LLC, Term A Loan 15,000 — Oxford Finance, LLC, Term B Loan 15,000 30,000 — Less debt issuance costs (360 ) — Long-term debt, less debt issuance costs 29,640 — The principal payments due as of September 30, 2017 consisted of the following (in thousands): Principal Payment 2017 (remainder of the year) $ — 2018 — 2019 — 2020 13,750 2021 15,000 2022 1,250 Total $ 30,000 2017 Secured Loan Agreement On January 6, 2017, the Company entered into a senior secured $50 million loan and security agreement with Oxford, the 2017 Secured Loan Agreement. Through the t2017 Secured Loan Agreement, the Company initially accessed $15 million of borrowings, with an additional $15 million of borrowings, (the "Term B Loan"), and $20 million of borrowings, (the "Term C Loan"), available to borrow, at its option, through December 2017 and June 2018, respectively, subject to the satisfaction of certain revenue milestones and customary drawdown conditions. On March 9, 2017, the 2017 Secured Loan Agreement with Oxford was amended to include an additional revenue milestone in order for the Company to drawdown the second and third tranches. On June 30, 2017, the 2017 Secured Loan Agreement was further amended to, among other things, amend the period during which the Company was able to borrow the second term loan under the 2017 Secured Loan Agreement, and also to amend the associated financial covenants of the Company. Amending the 2017 Secured Loan Agreement made the Term B Loan available to the Company through the earlier of (i) June 30, 2017, or (ii) an event of default under the 2017 Secured Loan Agreement. Concurrently, on June 30, 2017, the Company drew down Term B Loan. Except as modified by the amendment, all terms and conditions of the 2017 Secured Loan Agreement remain in full force and effect. The proceeds of the Term B Loan will be used to fund the Company’s ongoing working capital needs. The 2017 Secured Loan Agreement is secured by substantially all of the Company’s personal property other than the Company’s intellectual property. Under the terms of the 2017 Secured Loan Agreement, the Company cannot grant a security interest in its intellectual property to any other party. The term loans under the 2017 Secured Loan Agreement bears interest at a floating annual rate calculated at the greater of 30 day LIBOR or 0.53% , plus 6.47% . The Company is required to make monthly interest only payments in arrears commencing on the second payment date following the funding date of each term loan, and continuing on the payment date of each successive month thereafter through and including the payment date immediately preceding the amortization date of February 1, 2020. Commencing on the amortization date, and continuing on the payment date of each month thereafter, the Company is required to make consecutive equal monthly payments of principal of each term loan, together with accrued interest, in arrears, to Oxford. All unpaid principal, accrued and unpaid interest with respect to each term loan, and a final payment in the amount of 5.0% of the amount of loans advanced, is due and payable in full on the term loan maturity date. The 2017 Secured Loan Agreement has a term of five years and matures on January 1, 2022. At the Company’s option, the Company may prepay all, but not less than all, of the term loans advanced by Oxford under the 2017 Secured Loan Agreement, subject to a prepayment fee and an amount equal to the sum of all outstanding principal of the term loans plus accrued and unpaid interest thereon through the prepayment date, a final payment, plus all other amounts that are due and payable, including Oxford's expenses and interest at the default rate with respect to any past due amounts. The 2017 Secured Loan Agreement also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide Oxford, as collateral agent with the right to exercise remedies against us and the collateral securing the Secured Loan Agreement, including foreclosure against assets securing the 2017 Secured Loan Agreement, including the Company’s cash. These events of default include, among other things, the Company’s failure to pay any amounts due under the 2017 Secured Loan Agreement, a breach of covenants under the 2017 Secured Loan Agreement, including, among other customary debt covenants, achieving certain revenue levels and limiting the amount of cash and cash equivalents held by the Company's foreign subsidiaries, the Company’s insolvency, a material adverse change, the occurrence of any default under certain other indebtedness in an amount greater than $500,000 , one or more judgments against the Company in an amount greater than $500,000 , a material adverse change with respect to any governmental approval and any delisting event. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Vertegen In April 2007, the Company entered into a license agreement with Vertegen, Inc., or Vertegen, which was amended in May 2015 (the “Vertegen Agreement”). Vertegen is an entity that is wholly owned by Dr. Lang, the Company’s former Chief Executive Officer. Under the Vertegen Agreement, Vertegen granted the Company an exclusive, worldwide license under specified Vertegen patent rights and related technology to make, use and sell products and services in the fields of diagnosis and treatment of articular disorders and disorders of the human spine. The company may sublicense the rights licensed to it by Vertegen. The Company is required to use commercially reasonable efforts, at its sole expense, to prosecute the patent applications licensed to the Company by Vertegen. Pursuant to the Vertegen Agreement, the Company is required to pay Vertegen a 6% royalty on net sales of products covered by the patents licensed to the Company by Vertegen, the subject matter of which is directed primarily to spinal implants, and any proceeds from the Company enforcing the patent rights licensed to the Company by Vertegen. Such 6% royalty rate will be reduced to 3% in the United States during the five -year period following the expiration of the last-to-expire applicable patent in the United States and in the rest of the world during the five -year period following the expiration of the last-to-expire patent anywhere in the world. The Company has not sold any products subject to this agreement and has paid no royalties under this agreement. The Company has cumulatively paid approximately $150,000 in expenses as of September 30, 2017 in connection with the filing and prosecution of the patent applications licensed to the Company by Vertegen. The Vertegen Agreement may be terminated by the Company at any time by providing notice to Vertegen. In addition, Vertegen may terminate the Vertegen Agreement in its entirety if the Company is in material breach of the agreement, and the Company fails to cure such breach during a specified period. Revenue share agreements As described in Note K, the Company is a party to certain agreements with advisors to participate as a member of the Company’s scientific advisory board. In September 2011, the Company entered into an amended and restated revenue share agreement with Philipp Lang, M.D., one of the Company’s directors and former Chief Executive Officer, which amended and restated a similar agreement entered into in 2008 when Dr. Lang stepped down as chair of the Company’s scientific advisory board and became the Company’s Chief Executive Officer. This agreement provides that the Company will pay Dr. Lang a specified percentage of its net revenues, ranging from 0.875% to 1.33% , with respect to all of its current and planned products, including the Company’s iUni, iDuo, iTotal CR, and iTotal PS products, as well as certain other knee, hip and shoulder replacement products and related instrumentation the Company may develop in the future. The specific percentage is determined by reference to product classifications set forth in the agreement and is tiered based on the level of net revenues collected by the Company on such product sales. The Company’s payment obligations expire on a product-by-product basis on the last to expire of the Company’s patents on which Dr. Lang is a named inventor that claim the applicable product. These payment obligations survived the termination of Dr. Lang’s employment with the Company. The Company incurred revenue share expense paid to Dr. Lang of $233,000 and $230,000 and for the three months ended September 30, 2017 and 2016 , respectively, and $722,000 and $718,000 for the nine months ended September 30, 2017 and 2016 , respectively. Amendment to employment agreement of Mr. Augusti On September 14, 2017, the Company entered into an amendment (the “Amendment”) of the employment agreement with Mark Augusti, the Company's President and Chief Executive Officer, which was originally effective November 14, 2016 and was previously amended and restated on December 2, 2016. The Amendment was effective as of August 1, 2017 and provided that, through August 1, 2017, the Company would reimburse Mr. Augusti up to an aggregate of $125,000 of relocation expenses that he prior to that date, and, beginning August 2, 2017, the Company will reimburse Mr. Augusti up to $25,000 per calendar quarter for moving and commuting expenses as well as other costs incurred by him or his immediate family in traveling to and from his residence in North Carolina to his temporary residence in Massachusetts, until either Mr. Augusti establishes a principal residence in Massachusetts or the Company's Board of Directors determines in its sole discretion that the payment of such expenses is no longer required. The Amendment further provided that, if we terminate Mr. Augusti for cause, or Mr. Augusti resigns without good reason, prior to November 14, 2017, Mr. August will not be eligible for any unpaid moving and commuting expenses and will be obligated to repay the Company within thirty ( 30 ) days following his separation all moving expenses received by him on or before August 1, 2017. Additionally, the Amendment conforms the original terms of Mr. Augusti’s annual long-term incentive award entitlement to the terms of the grant that was granted to Mr. Augusti by the Company's board of directors in May 2017. This description of the Amendment is qualified in its entirety by reference to the text of the Amendment, a copy of which we have filed as an exhibit to this Quarterly Report on Form 10-Q. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Stockholders’ Equity Common stock Common stockholders are entitled to dividends as and when declared by the board of directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holder of each share of common stock was entitled to one vote. Summary of common stock activity was as follows: Shares Outstanding December 31, 2016 43,399,547 Issuance of common stock - option exercises 530,984 Issuance of restricted common stock 964,000 Issuance of common stock - ATM offering 228,946 Issuance of common stock - BPM acquisition 169,096 Outstanding September 30, 2017 45,292,573 Preferred stock The Company’s Restated Certificate of Incorporation authorizes the Company to issue 5,000,000 shares of preferred stock, $0.00001 par value, all of which is undesignated. No shares were issued and outstanding at September 30, 2017 and December 31, 2016 . Warrants The Company also issued warrants to certain investors and consultants to purchase shares of the Company’s preferred stock and common stock. Based on the Company’s assessment of the warrants granted in 2013 and 2014 relative to ASC 480, Distinguishing Liabilities from Equity , the warrants are classified as equity. No new warrants were issued in the three and nine months ended September 30, 2017 . According to ASC 480, an entity shall classify as a liability any financial instrument, other than an outstanding share, that, at inception, both a) embodies an obligation to repurchase the issuer’s equity shares, or is indexed to such obligation and b) requires or may require the issuer to settle the obligation by transferring assets. The warrants do not contain any provision that requires the Company to repurchase the shares and are not indexed to such an obligation. The warrants also do not require the Company to settle by transferring assets. Common stock warrants The Company also issued warrants to certain investors and consultants to purchase 1,138,424 shares of common stock at an exercise price range of $0.02 to $9.00 per share. Additionally, certain warrants to purchase shares of preferred stock were converted to 564,188 warrants to purchase 564,188 shares of common stock. Warrants to purchase 28,926 and 171,783 shares of common stock were outstanding as of September 30, 2017 and December 31, 2016 , respectively. Outstanding warrants are currently exercisable with varying expiration dates from 2020 through 2024 . At September 30, 2017 and December 31, 2016 , the weighted average warrant exercise price per share for common stock underlying warrants and the weighted average contractual life was as follows: Number of Weighted Weighted Average Remaining Contractual Life Number of Weighted Outstanding December 31, 2016 171,783 $ 7.47 1.62 171,783 $ 7.47 Cancelled/expired (142,857 ) — — (142,857 ) — Outstanding September 30, 2017 28,926 $ 9.80 5.91 28,926 $ 9.80 Stock option plans As of September 30, 2017 , 1,049,411 shares of common stock were available for future issuance under the 2015 Stock Incentive Plan ("2015 Plan"). The 2015 Plan provides for an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2016 and continuing until, and including, the fiscal year ending December 31, 2025, equal to the least of (a) 3,000,000 shares of our common stock, (b) 3% of the number of share of our common stock outstanding on the first day of such fiscal year and (c) an amount determined by the Board. Effective January 1, 2017, an additional 1,301,986 shares of our common stock were added to the 2015 Plan under the terms of this provision. Activity under all stock option plans was as follows: Number of Options Weighted Average Exercise Price per Share Aggregate Intrinsic Value (in Thousands) Outstanding December 31, 2016 3,790,040 $ 6.60 Granted 940,898 5.00 Exercised (530,984 ) 3.96 1,680 Expired (257,984 ) 7.12 Cancelled/Forfeited (75,969 ) 6.98 Outstanding September 30, 2017 3,866,001 $ 6.53 $ 225 Total vested and exercisable 2,738,721 $ 6.61 $ 224 The total fair value of stock options that vested during the three and nine months ended September 30, 2017 was $0.3 million and $1.0 million , respectively. The weighted average remaining contractual term for the total stock options outstanding was 5.84 years as of September 30, 2017 . The weighted average remaining contractual term for the total stock options vested and exercisable was 4.50 years as of September 30, 2017 . Restricted common stock award activity under the plan was as follows: Number of Shares Weighted Average Fair Value Unvested December 31, 2016 911,710 $ 10.18 Granted 1,125,688 4.65 Vested (179,591 ) 8.81 Forfeited (161,688 ) 7.28 Unvested September 30, 2017 1,696,119 $ 6.93 The total fair value of restricted common stock options that vested during the three and nine months ended September 30, 2017 was $0.1 million and $1.6 million , respectively. Stock-based compensation The Company uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using a pricing model is affected by the value of the Company’s common stock as well as assumptions regarding a number of complex and subjective variables. The valuation of the Company’s common stock prior to the IPO was performed with the assistance of an independent third-party valuation firm using a methodology that includes various inputs including the Company’s historical and projected financial results, peer company public data and market metrics, such as risk-free interest and discount rates. As the valuations included unobservable inputs that were primarily based on the Company’s own assumptions, the inputs were considered level 3 inputs within the fair value hierarchy. The fair value of options at date of grant was estimated using the Black-Scholes option pricing model, based on the following assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Risk-free interest rate 2.10% N/A 2.10%-2.14% N/A Expected term (in years) 6.25 N/A 6.02-6.25 N/A Dividend yield —% N/A —% N/A Expected volatility 52.00% N/A 50.59%-52.00% N/A Stock-based compensation expense was $1.4 million for the three months ended September 30, 2017 and 2016 , and $4.1 million and $3.5 million for the nine months ended September 30, 2017 and 2016 , respectively. Stock-based compensation expense was calculated based on awards ultimately expected to vest. To date, the amount of stock-based compensation capitalized as part of inventory was not material. The following is a summary of stock-based compensation expense (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of revenues $ 133 $ 117 $ 348 $ 218 Sales and marketing 130 224 611 950 Research and development 444 405 1,341 1,018 General and administrative 702 703 1,849 1,304 $ 1,409 $ 1,449 $ 4,149 $ 3,490 As of September 30, 2017 , the Company had $3.2 million of total unrecognized compensation expense for options that will be recognized over a weighted average period of 3.18 years . As of September 30, 2017 , the Company had $7.7 million of total unrecognized compensation expense for restricted awards that will be recognized over a weighted average period of 2.68 years . |
Segment and Geographic Data
Segment and Geographic Data | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment and Geographic Data | Segment and Geographic Data The Company operates as one reportable segment as described in Note B to the Consolidated Financial Statements. The countries in which the Company has local revenue generating operations have been combined into the following geographic areas: the United States (including Puerto Rico), Germany and the rest of world, which consists predominately of Europe (including the United Kingdom) and other foreign countries. Sales are attributable to a geographic area based upon the customer’s country of domicile. Net property, plant and equipment are based upon physical location of the assets. Geographic information consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Product Revenue United States $ 15,519 $ 14,946 46,702 44,659 Germany 2,335 3,026 8,728 11,398 Rest of World 322 428 1,171 1,429 $ 18,176 $ 18,400 56,601 57,486 September 30, 2017 December 31, 2016 Property and equipment, net United States $ 16,218 $ 14,972 Germany 92 112 Rest of World — — $ 16,310 $ 15,084 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation and use of estimates | Basis of presentation and use of estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. The most significant estimates used in these consolidated financial statements include the valuation of accounts receivable, inventory reserves, intangible valuation, equity instruments, impairment assessments, income tax reserves and related allowances, and the lives of property and equipment. Actual results may differ from those estimates. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . |
Concentrations of credit risk and other risks and uncertainties | Concentrations of credit risk and other risks and uncertainties Financial instruments that subject the Company to credit risk primarily consist of cash, cash equivalents, and accounts receivable. The Company maintains the majority of its cash with accredited financial institutions. The Company and its contract manufacturers rely on sole source suppliers and service providers for certain components. There can be no assurance that a shortage or stoppage of shipments of the materials or components that the Company purchases will not result in a delay in production or adversely affect the Company’s business. The Company is in the process of validating alternate suppliers relative to certain key components, which are expected to be phased in during the coming periods. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries including ImaTx, Inc. ("ImaTx"), ConforMIS Europe GmbH, ConforMIS UK Limited and ConforMIS Hong Kong Limited. All material intercompany balances and transactions have been eliminated in consolidation. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investment instruments with original maturities of 90 days or less, to be cash equivalents. The Company’s cash equivalents consist of demand deposits , money market accounts, and repurchase agreements on deposit with certain financial institutions, in addition to cash deposits in excess of federally insured limits. Demand deposits are carried at cost which approximates their fair value. Money market accounts are carried at fair value based upon level 1 inputs. Corporate bonds and repurchase agreements are valued using level 2 inputs. See “Note C-Fair Value Measurements” below. The associated risk of concentration is mitigated by banking with credit worthy financial institutions. |
Investment securities | Investment securities The Company classifies its investment securities as available-for-sale. Those investments with maturities less than 12 months at the date of purchase are considered short-term investments. Those investments with maturities greater than 12 months at the date of purchase are considered long-term investments. The Company’s investment securities classified as available-for-sale are recorded at fair value based upon quoted market prices at period end. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the security. Premiums (discounts) are amortized (accreted) over the life of the related security using the constant yield method. Dividend and interest income are recognized when earned and reported in other income. Realized gains and losses are included in earnings and are derived using the specific identification method for determining the cost of securities sold. |
Fair value of financial instruments | Fair value of financial instruments Certain of the Company’s financial instruments, including cash and cash equivalents excluding money market funds, accounts receivable, accounts payable, accrued expenses and other liabilities are carried at cost, which approximates their fair value because of the short-term maturity. Based on borrowing rates currently available to the Company for loans with similar terms, the carrying value of the Company’s long-term debt approximates its fair value. |
Accounts receivable and allowance for doubtful accounts | Accounts receivable and allowance for doubtful accounts Accounts receivable consist of billed and unbilled amounts due from medical facilities. Upon completion of a procedure, revenue is recognized and an unbilled receivable is recorded. Upon receipt of a purchase order number from a medical facility, a billed receivable is recorded and the unbilled receivable is reversed. As a result, the unbilled receivable balance fluctuates based on the timing of the Company's receipt of purchase order numbers from the medical facilities. In estimating whether accounts receivable can be collected, the Company performs evaluations of customers and continuously monitors collections and payments and estimates an allowance for doubtful accounts based on the aging of the underlying invoices, collections experience to date and any specific collection issues that have been identified. The allowance for doubtful accounts is recorded in the period in which revenue is recorded or when collection risk is identified. |
Inventories | Inventories Inventories consist of raw materials, work-in-process components and finished goods. Inventories are stated at the lower of cost, determined using the first-in first-out method, or market value. The Company regularly reviews its inventory quantities on hand and related cost and records a provision for any excess or obsolete inventory based on its estimated forecast of product demand and existing product configurations. The Company also reviews its inventory value to determine if it reflects the lower of cost or market, with market determined based on net realizable value. Appropriate consideration is given to inventory items sold at negative gross margins, purchase commitments and other factors in evaluating net realizable value. |
Property and equipment | Property and equipment Property and equipment is stated at cost less accumulated depreciation and is depreciated using the straight-line method over the estimated useful lives of the respective assets. Leasehold improvements are amortized over their useful life or the life of the lease, whichever is shorter. Assets capitalized under capital leases are amortized in accordance with the respective class of assets and the amortization is included with depreciation expense. Maintenance and repair costs are expensed as incurred. |
Business Combinations | Business Combinations We include the results of operations of the businesses that we acquire as of the acquisition date. We allocate the purchase price of our acquisitions to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. |
Intangibles and other long-lived assets | Intangibles and other long-lived assets Intangible assets consist of developed technology and other intellectual property rights licensed from ImaTx as part of the spin-out transaction in 2004. Intangible assets are carried at cost less accumulated amortization. The Company tests impairment of long-lived assets when events or changes in circumstances indicate that the assets might be impaired. For assets with determinable useful lives, amortization is computed using the straight-line method over the estimated economic lives of the respective intangible assets. Furthermore, periodically the Company assesses whether long-lived assets, including intangible assets, should be tested for recoverability whenever events or circumstances indicate that their carrying value may not be recoverable. The amount of impairment, if any, is measured based on fair value, which is determined using estimated undiscounted cash flows to be generated from such assets or group of assets. If the cash flow estimates or the significant operating assumptions upon which they are based change in the future, the Company may be required to record impairment charges. |
Goodwill | Goodwill Goodwill relates to amounts that arose in connection with the acquisition of Imaging Therapeutics, Inc. (formerly known as Osteonet.com, renamed ImaTx, Inc.) in 2009 and the acquisition of Broad Peak Manufacturing, LLC in August 2017. The Company tests goodwill at least annually for impairment, or more frequently when events or changes in circumstances indicate that the assets may be impaired. This impairment test is performed annually during the fourth quarter at the reporting unit level. Goodwill may be considered impaired if the carrying value of the reporting unit, including goodwill, exceeds the reporting unit’s fair value. The Company is comprised of one reporting unit. When testing goodwill for impairment, the Company first assesses the qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. This qualitative analysis is used as a basis for determining whether it is necessary to perform the two-step goodwill impairment analysis. If the Company determines that it is more likely than not that its fair value is less than its carrying amount, then the two-step goodwill impairment test will be performed. If the two-step approach is performed, the Company will estimate fair value of the reporting unit, which is typically estimated using a discounted cash flow approach, and requires the use of assumptions and judgments including estimates of future cash flows and the selection of discount rates. |
Revenue recognition | Revenue recognition Product The Company generates revenue from the sale of customized implants and instruments to medical facilities through the use of a combination of direct sales personnel, independent sales representatives and distributors in the United States, Germany, the United Kingdom, Ireland, Austria, Switzerland, Singapore, Hong Kong and Monaco. Revenue is recognized when all of the following criteria are met: • persuasive evidence of an arrangement exists; • the sales price is fixed or determinable; • collection of the relevant receivable is probable at the time of sale; and • delivery has occurred or services have been rendered. The Company recognizes revenue upon completion of the procedure, which represents satisfaction of the required revenue recognition criteria. Once the revenue recognition criteria have been satisfied the Company does not offer rights of return or price protection and there are no post-delivery obligations. Royalty The Company has accounted for its agreements with Wright Medical Group, Inc. and MicroPort Orthopedics, Inc. under the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification ("ASC") 605-25, Multiple-Element Arrangements and Staff Accounting Bulletin No. 104, Revenue Recognition (ASC 605). In accordance with ASC 605, the Company is required to identify and account for each of the separate units of accounting. The Company identified the relative selling price for each and then allocated the total consideration based on their relative values. |
Shipping and handling costs | Shipping and handling costs Amounts invoiced to customers for shipping and handling are classified as revenue. Shipping and handling costs incurred are included in general and administrative expense. |
Taxes collected from customers and remitted to government authorities | Taxes collected from customers and remitted to government authorities The Company’s policy is to present taxes collected from customers and remitted to government authorities on a net basis and not to include tax amounts in revenue. |
Research and development expense | Research and development expense The Company’s research and development costs consist of engineering, product development, quality assurance, clinical and regulatory expense. These costs primarily relate to employee compensation, including salary, benefits and stock-based compensation. The Company also incurs costs related to consulting fees, materials and supplies, and marketing studies, including data management and associated travel expense. Research and development costs are expensed as incurred. |
Advertising expense | Advertising expense Advertising costs are expensed as incurred, which are included in sales and marketing. |
Segment reporting | Segment reporting Operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated on a regular basis by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources to an individual segment and in assessing performance of the segment. The Company’s chief operating decision-maker is its chief executive officer. The Company’s chief executive officer reviews financial information presented on an aggregate basis for purposes of allocating resources and evaluating financial performance. The Company has one business segment and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the aggregate Company level. Accordingly, in light of the Company’s current product offerings, management has determined that the primary form of internal reporting is aligned with the offering of the ConforMIS customized joint replacement products and that the Company operates as one segment. See “Note O—Segment and Geographic Data”. |
Comprehensive loss | Comprehensive loss At September 30, 2017 and 2016 , accumulated other comprehensive loss consists of foreign currency translation adjustments and changes in unrealized gain and loss of available-for-sale securities, net of tax. |
Foreign currency translation and transactions | Foreign currency translation and transactions The assets and liabilities of the Company’s foreign operations are translated into U.S. dollars at current exchange rates at the balance sheet date, and income and expense items are translated at average rates of exchange prevailing during the quarter. Gains and losses realized from transactions denominated in foreign currencies, including intercompany balances not of a long-term investment nature, are included in the consolidated statements of operations. |
Income taxes | Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. In evaluating the need for a valuation allowance, the Company considers all reasonably available positive and negative evidence, including recent earnings, expectations of future taxable income and the character of that income. In estimating future taxable income, the Company relies upon assumptions and estimates of future activity including the reversal of temporary differences. Presently, the Company believes that a full valuation allowance is required to reduce deferred tax assets to the amount expected to be realized. The tax benefit from an uncertain tax position is only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from these positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company reviews its tax positions on an annual basis and more frequently as facts surrounding tax positions change. Based on these future events, the Company may recognize uncertain tax positions or reverse current uncertain tax positions, the impact of which would affect the consolidated financial statements. The Company has operations in Germany and the United Kingdom. The operating results of these operations will be permanently reinvested in those jurisdictions. As a result, the Company has only provided for income taxes at local rates when required. Accounting Standard Update ("ASU") No. 2016-09, "Compensation - Stock Compensation", was issued and adopted in January 2017. ASU 2016-09 eliminates additional paid in capital ("APIC") pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, modified retrospective adoption of ASU 2016-09 eliminates the requirement that excess tax benefits be realized (i.e., through a reduction in income taxes payable) before we can recognize them and therefore, we have accounted for a cumulative-effect adjustment of $7.7 million during the nine months ended September 30, 2017 to record excess tax benefits. Since the Company has a full valuation allowance on all deferred taxes, this has no impact on retained earnings or the tax position of the Company. |
Medical device excise tax | Medical device excise tax The Company is subject to the Health Care and Education Reconciliation Act of 2010 (the “Act”), which imposes a tax equal to 2.3% on the sales price of any taxable medical device by a medical device manufacturer, producer or importer of such device. Under the Act, a taxable medical device is any device defined in Section 201(h) of the Federal Food, Drug, and Cosmetic Act, intended for humans, which includes an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which meets certain requirements. The Consolidated Appropriations Act of 2016 includes a two-year moratorium on the medical device excise tax, which moratorium suspended taxes on the sale of a taxable medical device by the manufacturer, producer, or importer of the device during the period beginning on January 1, 2016 and ending on December 31, 2017. |
Stock-based compensation | Stock-based compensation The Company accounts for stock-based compensation in accordance with ASC 718, Stock Based Compensation. ASC 718 requires all stock-based payments to employees and consultants, including grants of stock options, to be recognized in the consolidated statements of operations based on their fair values. The Company uses the Black-Scholes option pricing model to determine the weighted-average fair value of options granted and recognizes the compensation expense of stock-based awards on a straight-line basis over the vesting period of the award. The determination of the fair value of stock-based payment awards utilizing the Black-Scholes option pricing model is affected by the stock price, exercise price, and a number of assumptions, including expected volatility of the stock, expected life of the option, risk-free interest rate and expected dividends on the stock. The Company evaluates the assumptions used to value the awards at each grant date and if factors change and different assumptions are utilized, stock-based compensation expense may differ significantly from what has been recorded in the past. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. See “Note N—Stockholders’ Equity” for a summary of the stock option activity under the Company’s stock-based compensation plan. |
Net loss per share | Net loss per share The Company calculates net loss per share in accordance with ASC 260, "Earnings per Share". Basic earnings per share (“EPS”) is calculated by dividing the net income or loss for the period by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted EPS is computed by dividing the net income or loss for the period by the weighted average number of common shares outstanding for the period and the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury stock method. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2017, the FASB issued ASU No. 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting". This ASU provides clarification on when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. The guidance will be effective the first quarter of 2018, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and expects to adopt this pronouncement commencing in the first quarter of 2018. In January 2017, the FASB issued ASU No. 2017-04, "Intangibles- Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This ASU removes the second step of the two-step test to determine goodwill impairment previously required. Entities will now apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The guidance will be effective the first quarter of 2020, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and expects to adopt this pronouncement commencing the first quarter of 2020. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230) Restricted Cash a consensus of the FASB Emerging Issues Task Force”. The standard requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows. The guidance will be effective in the first quarter of 2018, with early adoption permitted. The Company evaluated the impact of this pronouncement noting the Company's cash flow disclosure currently reflects ASU No. 2016-18 disclosure requirements. The Company expects to adopt this pronouncement commencing in the first quarter of 2018. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)." This ASU amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require companies to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under GAAP. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. This ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years; earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. Practical expedients are available for election as a package and if applied consistently to all leases. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and expects to adopt this pronouncement commencing in the first quarter of 2019. In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes", which eliminates the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. This guidance is effective for public companies financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted ASU 2015-17 effective January 1, 2017 on a prospective basis. Since the Company has a full valuation allowance, adoption of ASU 20105-17 had no impact on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-9, “Revenue from Contracts with Customers (Topic 606)”. ASU 2014-9 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract, and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB Accounting Standards Codification. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. Companies have the option of using either a full retrospective or a modified retrospective approach to adopt the guidance. In March 2016, the FASB issued ASU No 2016-08, "Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)", which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. In April 2016, the FASB issued ASU 2016-10, "Identifying Performance Obligations and Licensing" ("ASU 2016-10"). This ASU clarifies two aspects of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606): identifying performance obligations and the licensing implementation guidance". In June 2016, the FASB issued ASU No. 2016-12, "Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients", which provides guidance for accounting of credit losses affecting the impairment model for most financial assets and certain other instruments. Entities will be required to use a new forward-looking current expected credit loss model for trade and other receivables, held-to-maturity debt securities, loans and other instruments, which will generally lead to an earlier recognition of loss allowances. Entities will recognize losses on available-for-sale debt securities as allowances rather than a reduction in amortized cost of the security while the measurement process of this loss does not change. Disclosure requirements are expanded regarding an entity’s assumptions, models and methods of estimations of the allowance. The Company has begun its assessment process to evaluate the impact, which it expects to complete later in 2017, and expects to adopt this pronouncement and related disclosures commencing in the first quarter of 2018. While the Company continues to evaluate the effect of the standard, adoption of this guidance will require additional disclosure around the Company's revenue recognition in its financial statements. The Company plans to adopt this standard using the modified retrospective approach; however, the Company will continue to evaluate its adoption options as the implementation process continues. The Company has established a cross-functional coordinated implementation team and engaged a third party consultant to assist with the project. The Company has completed the scoping and planning phase of the project, identified and reviewed customer contracts for each of its revenue streams, including royalty revenue, identifying pertinent attributes and is now in the process of evaluating the results of those reviews relative to the new standard. Based on the results of the procedures completed to date, the Company does not expect a material impact on its consolidated financial statements with regards to revenue recognized from the sale of its product to customers. The Company expects that, based on its preliminarily assessment, certain royalty revenue associated with the 2015 license agreements with Wright Medical and MicroPort in 2015 may be accelerated upon the adoption of this new standard. The Company is also in the process of evaluating changes to its processes and internal controls, as necessary, to meet the requirements. At this point in the process, the Company has not yet fully determined if the adoption of the new standard will have a material impact on its consolidated financial statements. Change in accounting policy regarding share-based compensation Effective January 1, 2017, the Company elected to change its accounting policy to recognize forfeitures as they occur in accordance with ASU 2016-09, "Compensation - Stock Compensation". Historically, the Company recognized share-based compensation net of estimated forfeitures over the vesting period of the respective grant. The new forfeiture policy election was adopted using a modified retrospective approach with a cumulative effect adjustment of $0.3 million to accumulated deficit and an offset to APIC as of January 1, 2017. ASU No. 2016-09, "Compensation - Stock Compensation", was issued and adopted in January 2017. ASU 2016-09 eliminates APIC pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, modified retrospective adoption of ASU 2016-09 eliminates the requirement that excess tax benefits be realized (i.e., through a reduction in income taxes payable) before we can recognize them and therefore, we have accounted for a cumulative-effect adjustment of $7.7 million during the quarter ended September 30, 2017 to record excess tax benefits. Since the Company has a full valuation allowance on all deferred taxes, this has no impact on retained earnings or the tax position of the Company. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of accumulated other comprehensive income (loss) | The following table summarizes accumulated beginning and ending balances for each item in Accumulated other comprehensive income (loss). Foreign currency translation adjustments Change in unrealized gain (loss) on available-for-sale securities, net of tax Accumulated other comprehensive income (loss) Balance December 31, 2016 $ 506 $ (7 ) $ 499 Change in period (3,286 ) (9 ) (3,295 ) Balance September 30, 2017 $ (2,780 ) $ (16 ) $ (2,796 ) |
Schedule of computation of basic and diluted earnings per share attributable to stockholders | The following table sets forth the computation of basic and diluted earnings per share attributable to stockholders (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, (in thousands, except share and per share data) 2017 2016 2017 2016 Numerator: Numerator for basic and diluted loss per share: Net loss $ (12,472 ) $ (12,762 ) $ (41,722 ) $ (41,848 ) Denominator: Denominator for basic loss per share: Weighted average shares 43,468,559 41,682,244 43,182,090 41,332,958 Basic loss per share attributable to ConforMIS, Inc. stockholders $ (0.29 ) $ (0.31 ) $ (0.97 ) $ (1.01 ) Diluted loss per share attributable to ConforMIS, Inc. stockholders $ (0.29 ) $ (0.31 ) $ (0.97 ) $ (1.01 ) |
Schedule of potential shares of common stock equivalents that are antidilutive and not included in the calculation of diluted net loss per share | The following table sets forth potential shares of common stock equivalents that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Common stock warrants — 18,443 — 42,169 Stock options and restricted stock awards 322,450 1,583,269 466,646 2,068,315 Total 322,450 1,601,712 466,646 2,110,484 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes, by major security type, the Company's assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy and where they are classified on the Consolidated Balance Sheets (in thousands): September 30, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 10,816 $ — $ — $ 10,816 $ 10,816 $ — Level 1 securities: Money market funds 9,731 — — 9,731 9,731 — U.S. treasury bonds 1,251 — (1 ) 1,250 — 1,250 Level 2 securities: Corporate bonds 5,968 — (3 ) 5,965 — 5,965 Agency bond 20,747 — (12 ) 20,735 — 20,736 Repurchase agreement 6,000 — — 6,000 6,000 — Total $ 54,513 $ — $ (16 ) $ 54,497 $ 26,547 $ 27,951 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 8,504 $ — $ — $ 8,504 $ 8,504 $ — Level 1 securities: Money market funds 28,753 — — 28,753 28,753 — Level 2 securities: Corporate bonds 6,701 — (4 ) 6,697 — 6,697 Agency bonds 21,548 — (3 ) 21,545 — 21,545 Total $ 65,506 $ — $ (7 ) $ 65,499 $ 37,257 $ 28,242 (1) Contractual maturity due within one year. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounts Receivable, Net, Current [Abstract] | |
Schedule of accounts receivable | Accounts receivable consisted of the following (in thousands): September 30, December 31, Total receivables $ 13,243 $ 15,356 Allowance for doubtful accounts and returns (644 ) (681 ) Accounts receivable, net $ 12,599 $ 14,675 |
Allowance for doubtful accounts receivable | Summary of allowance for doubtful accounts and returns activity was as follows (in thousands): September 30, December 31, Beginning balance (681 ) (554 ) Provision for bad debts on trade receivables (5 ) (188 ) Other allowances 13 20 Accounts receivable write offs 29 41 Ending balance $ (644 ) $ (681 ) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consisted of the following (in thousands): September 30, December 31, Raw Material $ 3,649 $ 3,331 Work in process 1,945 2,530 Finished goods 4,983 5,859 Total Inventories $ 10,577 $ 11,720 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following (in thousands): Estimated September 30, 2017 December 31, 2016 Equipment 5-7 18,463 16,651 Furniture and fixtures 5-7 954 414 Computer and software 3 7,670 7,027 Leasehold improvements 2-8 1,794 1,294 Total property and equipment 28,881 25,386 Accumulated depreciation (12,571 ) (10,302 ) Property and equipment, net 16,310 15,084 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Components of intangible assets | The components of intangible assets consisted of the following (in thousands): Estimated Useful Life (Years) September 30, 2017 December 31, 2016 Developed technology 10 $ 979 $ 979 Accumulated amortization (754 ) (681 ) Developed technology, net 225 298 License agreements 10 1,508 1,508 Accumulated amortization (1,173 ) (1,060 ) License technology, net 335 448 Acquired favorable lease 5 15 — Accumulated amortization (1 ) — Acquired favorable lease, net 14 — Intangible assets, net $ 574 $ 746 |
Schedule of estimated future aggregated amortization expense | The estimated future aggregated amortization expense for intangible assets owned as of September 30, 2017 consisted of the following (in thousands): Amortization expense 2017 (remainder of the year) $ 63 2018 252 2019 252 2020 3 2021 3 2022 1 $ 574 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): September 30, December 31, Accrued employee compensation $ 4,078 $ 4,037 Deferred rent 110 101 Accrued legal expense 773 710 Accrued consulting expense 42 104 Accrued vendor charges 1,308 1,396 Accrued revenue share expense 857 992 Accrued clinical trial expense 180 256 Accrued other 966 896 $ 8,314 $ 8,492 |
Debt and Notes Payable (Tables)
Debt and Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long term debt | Long-term debt consisted of the following (in thousands): September 30, 2017 December 31, 2016 Oxford Finance, LLC, Term A Loan 15,000 — Oxford Finance, LLC, Term B Loan 15,000 30,000 — Less debt issuance costs (360 ) — Long-term debt, less debt issuance costs 29,640 — |
Schedule of principal payments due | The principal payments due as of September 30, 2017 consisted of the following (in thousands): Principal Payment 2017 (remainder of the year) $ — 2018 — 2019 — 2020 13,750 2021 15,000 2022 1,250 Total $ 30,000 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of common stock activity | Summary of common stock activity was as follows: Shares Outstanding December 31, 2016 43,399,547 Issuance of common stock - option exercises 530,984 Issuance of restricted common stock 964,000 Issuance of common stock - ATM offering 228,946 Issuance of common stock - BPM acquisition 169,096 Outstanding September 30, 2017 45,292,573 |
Range of warrant prices per share for shares under warrants and the weighted average contractual life | At September 30, 2017 and December 31, 2016 , the weighted average warrant exercise price per share for common stock underlying warrants and the weighted average contractual life was as follows: Number of Weighted Weighted Average Remaining Contractual Life Number of Weighted Outstanding December 31, 2016 171,783 $ 7.47 1.62 171,783 $ 7.47 Cancelled/expired (142,857 ) — — (142,857 ) — Outstanding September 30, 2017 28,926 $ 9.80 5.91 28,926 $ 9.80 |
Schedule of activity under all stock option plans | Activity under all stock option plans was as follows: Number of Options Weighted Average Exercise Price per Share Aggregate Intrinsic Value (in Thousands) Outstanding December 31, 2016 3,790,040 $ 6.60 Granted 940,898 5.00 Exercised (530,984 ) 3.96 1,680 Expired (257,984 ) 7.12 Cancelled/Forfeited (75,969 ) 6.98 Outstanding September 30, 2017 3,866,001 $ 6.53 $ 225 Total vested and exercisable 2,738,721 $ 6.61 $ 224 |
Schedule of restricted stock award activity under the plan | Restricted common stock award activity under the plan was as follows: Number of Shares Weighted Average Fair Value Unvested December 31, 2016 911,710 $ 10.18 Granted 1,125,688 4.65 Vested (179,591 ) 8.81 Forfeited (161,688 ) 7.28 Unvested September 30, 2017 1,696,119 $ 6.93 |
Assumptions used to estimate the fair value of options at date of grant | The fair value of options at date of grant was estimated using the Black-Scholes option pricing model, based on the following assumptions: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Risk-free interest rate 2.10% N/A 2.10%-2.14% N/A Expected term (in years) 6.25 N/A 6.02-6.25 N/A Dividend yield —% N/A —% N/A Expected volatility 52.00% N/A 50.59%-52.00% N/A |
Summary of stock-based compensation | The following is a summary of stock-based compensation expense (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of revenues $ 133 $ 117 $ 348 $ 218 Sales and marketing 130 224 611 950 Research and development 444 405 1,341 1,018 General and administrative 702 703 1,849 1,304 $ 1,409 $ 1,449 $ 4,149 $ 3,490 |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of revenue by geographic information | Geographic information consisted of the following (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Product Revenue United States $ 15,519 $ 14,946 46,702 44,659 Germany 2,335 3,026 8,728 11,398 Rest of World 322 428 1,171 1,429 $ 18,176 $ 18,400 56,601 57,486 |
Schedule of property, plant and equipment by geographic information | September 30, 2017 December 31, 2016 Property and equipment, net United States $ 16,218 $ 14,972 Germany 92 112 Rest of World — — $ 16,310 $ 15,084 |
Organization and Basis of Pre32
Organization and Basis of Presentation (Details) - USD ($) | May 10, 2017 | Jan. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2017 | Jan. 06, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||
Accumulated deficit | $ (424,963,000) | $ (382,930,000) | |||||
Cash and cash equivalents and investments | 54,500,000 | 65,500,000 | |||||
Restricted cash | $ 500,000 | $ 300,000 | |||||
Line of Credit Facility [Line Items] | |||||||
Amount of equity able to raise | $ 200,000,000 | ||||||
Maximum offering price | $ 50,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||||
Number of shares sold (in shares) | 228,946 | ||||||
Net proceeds from issuance of common stock | $ 1,023,000 | $ 0 | |||||
Equity Distribution Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Number of shares sold (in shares) | 228,946 | ||||||
Net proceeds from issuance of common stock | $ 1,000,000 | ||||||
Term loan | 2017 Secured Loan Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Term loan | 2017 Secured Loan Agreement | Oxford Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | $ 15,000,000 | ||||||
Term loan | 2017 Secured Loan Agreement | Oxford Term Loan B | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | 15,000,000 | $ 15,000,000 | |||||
Term loan | 2017 Secured Loan Agreement | Oxford Term Loan C | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum borrowing capacity | $ 20,000,000 | $ 20,000,000 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Concentration Risk) (Details) - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Customer Concentration Risk, Revenue | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, number of customers | 0 | 0 | 0 | 0 | |
Credit Concentration Risk, Accounts Receivable | |||||
Concentration Risk [Line Items] | |||||
Concentration risk, number of customers | 0 | 0 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies (Cash and Cash Equivalents, Inventories, Intangibles and Other Long-Lived Assets, and Goodwill) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Cash and cash equivalents | |||||
Cash held in foreign bank accounts | $ 1,800 | $ 1,800 | $ 1,600 | ||
Restricted cash | 500 | 500 | $ 300 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of revenue | 11,111 | $ 12,645 | 37,307 | $ 39,564 | |
Impairment charges | 800 | 100 | $ 800 | 100 | |
Goodwill | |||||
Number of reporting units for goodwill testing | segment | 1 | ||||
Improper Classification of Cost of Revenue | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Cost of revenue | $ 400 | $ 1,100 | $ 2,100 | $ 2,800 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Revenue Recognition) (Details) $ in Millions | 1 Months Ended |
Apr. 30, 2015USD ($) | |
Worldwide license agreement | Wright Medical and MicroPort | |
Revenue recognition | |
Deferred royalty revenue | $ 5.1 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Expenses and Net Loss Per Share) (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2017USD ($)segment$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Dec. 31, 2016USD ($) | |
Shipping and handling costs | |||||
Shipping and handling expense | $ 300,000 | $ 300,000 | $ 1,000,000 | $ 1,200,000 | |
Advertising expense | |||||
Advertising expense | 8,000 | 19,000 | $ 273,000 | 202,000 | |
Segment reporting | |||||
Number of operating segments | segment | 1 | ||||
Income taxes | |||||
Income tax provision | 80,000 | 14,000 | $ 143,000 | 27,000 | |
Interest and penalties accrued | 19,000 | $ 19,000 | $ 13,000 | ||
Medical device excise tax | |||||
Excise tax on sales (as a percent) | 2.30% | ||||
Medical device excise tax expense | 0 | 0 | $ 0 | 0 | |
Numerator for basic and diluted loss per share: | |||||
Net loss | $ (12,472,000) | $ (12,762,000) | $ (41,722,000) | $ (41,848,000) | |
Denominator for basic loss per share: | |||||
Weighted average shares | shares | 43,468,559 | 41,682,244 | 43,182,090 | 41,332,958 | |
Basic loss per share attributable to ConforMIS, Inc. stockholders (in dollars per share) | $ / shares | $ (0.29) | $ (0.31) | $ (0.97) | $ (1.01) | |
Diluted loss per share attributable to ConforMIS, Inc. stockholders (in dollars per share) | $ / shares | $ (0.29) | $ (0.31) | $ (0.97) | $ (1.01) | |
Accounting Standards Update 2016-09, Excess Tax Benefit Component | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative-effect adjustment | $ 7,700,000 | $ 7,700,000 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | $ 94,055 |
Change in period | (3,295) |
Ending balance | 56,906 |
Foreign currency translation adjustments | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | 506 |
Change in period | (3,286) |
Ending balance | (2,780) |
Change in unrealized gain (loss) on available-for-sale securities, net of tax | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | (7) |
Change in period | (9) |
Ending balance | (16) |
Accumulated other comprehensive income (loss) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |
Beginning balance | 499 |
Ending balance | $ (2,796) |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Anti-dilutive shares not included in the calculation of diluted net loss per share (in shares) | 322,450 | 1,601,712 | 466,646 | 2,110,484 |
Warrants | Common stock warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Anti-dilutive shares not included in the calculation of diluted net loss per share (in shares) | 0 | 18,443 | 0 | 42,169 |
Equity options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Anti-dilutive shares not included in the calculation of diluted net loss per share (in shares) | 322,450 | 1,583,269 | 466,646 | 2,068,315 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Change in Accounting Policy Regarding Share-based Compensation) (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Accounting Standards Update 2016-09, Excess Tax Benefit Component | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative-effect adjustment | $ 7.7 | |
Retained Earnings | Accounting Standards Update 2016-09, Forfeiture Rate Component | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative-effect adjustment | $ (0.3) | |
Additional Paid-in Capital | Accounting Standards Update 2016-09, Forfeiture Rate Component | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative-effect adjustment | $ 0.3 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash | $ 10,816 | $ 8,504 |
Cash and cash equivalents | 10,816 | 8,504 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (16) | (7) |
Total, Amortized Costs | 54,513 | 65,506 |
Total, Fair Value | 54,497 | 65,499 |
Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 10,816 | 8,504 |
Total, Fair Value | 26,547 | 37,257 |
Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Total, Fair Value | 27,951 | 28,242 |
Level 1 securities | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 9,731 | 28,753 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 9,731 | 28,753 |
Level 1 securities | Money market funds | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 9,731 | 28,753 |
Level 1 securities | Money market funds | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | 0 |
Level 1 securities | U.S. treasury bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 1,251 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (1) | |
Estimated Fair Value | 1,250 | |
Level 1 securities | U.S. treasury bonds | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | |
Level 1 securities | U.S. treasury bonds | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 1,250 | |
Level 2 securities | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 5,968 | 6,701 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (3) | (4) |
Estimated Fair Value | 5,965 | 6,697 |
Level 2 securities | Corporate bonds | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | 0 |
Level 2 securities | Corporate bonds | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 5,965 | 6,697 |
Level 2 securities | Agency bond | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 20,747 | 21,548 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (12) | (3) |
Estimated Fair Value | 20,735 | 21,545 |
Level 2 securities | Agency bond | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | 0 |
Level 2 securities | Agency bond | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 20,736 | $ 21,545 |
Level 2 securities | Repurchase agreement | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 6,000 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | 6,000 | |
Level 2 securities | Repurchase agreement | Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 6,000 | |
Level 2 securities | Repurchase agreement | Short-term investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | $ 0 |
Accounts Receivable (Schedule o
Accounts Receivable (Schedule of Accounts Receivable) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accounts Receivable, Net, Current [Abstract] | |||||
Total receivables | $ 13,243 | $ 13,243 | $ 15,356 | ||
Allowance for doubtful accounts and returns | (644) | (644) | (681) | ||
Accounts receivable, net | 12,599 | 12,599 | 14,675 | ||
Unbilled receivable | 2,200 | 2,200 | 2,500 | ||
Accounts receivable write offs | $ 18 | $ 34 | $ 29 | $ 34 | $ 41 |
Accounts Receivable (Allowance
Accounts Receivable (Allowance For Doubtful Accounts Receivable) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||||
Beginning balance | $ (681) | $ (554) | $ (554) | ||
Provision for bad debts on trade receivables | (5) | (243) | (188) | ||
Other allowances | 13 | 20 | |||
Accounts receivable write offs | $ 18 | $ 34 | 29 | $ 34 | 41 |
Ending balance | $ (644) | $ (644) | $ (681) |
Inventories (Details)
Inventories (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | ||
Raw Material | $ 3,649,000 | $ 3,331,000 |
Work in process | 1,945,000 | 2,530,000 |
Finished goods | 4,983,000 | 5,859,000 |
Total Inventories | 10,577,000 | 11,720,000 |
Inventories write-downs | $ 0 | $ 200,000 |
Acquisition (Details)
Acquisition (Details) - USD ($) | Aug. 09, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | |||
Purchase price attributable to goodwill | $ 6,731,000 | $ 753,000 | |
Broad Peak Manufacturing, LLC (BPM) | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 6,400,000 | ||
Purchase price, cash | 5,800,000 | ||
Purchase price, unregistered shares of common stock | 600,000 | ||
Amount paid into escrow account | 2,200,000 | ||
Potential additional consideration that could be earned if actual cost targets are exceeded | 700,000 | ||
Estimated amount of consideration expected to be returned | 0 | ||
Estimated amount of additional consideration expected to be earned (less than) | 100,000 | ||
Purchase price attributable to property and equipment | 400,000 | ||
Purchase price attributable to goodwill | 6,000,000 | ||
Purchase price attributable to other net assets acquired (less than) | $ 100,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Property and equipment | |||||
Total property and equipment | $ 28,881 | $ 28,881 | $ 25,386 | ||
Accumulated depreciation | (12,571) | (12,571) | (10,302) | ||
Property and equipment, net | 16,310 | 16,310 | 15,084 | ||
Depreciation expense | 900 | $ 700 | 2,500 | $ 2,100 | |
Impairment charges | 800 | $ 100 | 800 | $ 100 | |
Equipment | |||||
Property and equipment | |||||
Total property and equipment | 18,463 | $ 18,463 | 16,651 | ||
Equipment | Minimum | |||||
Property and equipment | |||||
Estimated useful life | 5 years | ||||
Equipment | Maximum | |||||
Property and equipment | |||||
Estimated useful life | 7 years | ||||
Furniture and fixtures | |||||
Property and equipment | |||||
Total property and equipment | 954 | $ 954 | 414 | ||
Furniture and fixtures | Minimum | |||||
Property and equipment | |||||
Estimated useful life | 5 years | ||||
Furniture and fixtures | Maximum | |||||
Property and equipment | |||||
Estimated useful life | 7 years | ||||
Computer and software | |||||
Property and equipment | |||||
Total property and equipment | 7,670 | $ 7,670 | 7,027 | ||
Estimated useful life | 3 years | ||||
Leasehold improvements | |||||
Property and equipment | |||||
Total property and equipment | $ 1,794 | $ 1,794 | $ 1,294 | ||
Leasehold improvements | Minimum | |||||
Property and equipment | |||||
Estimated useful life | 2 years | ||||
Leasehold improvements | Maximum | |||||
Property and equipment | |||||
Estimated useful life | 7 years |
Intangible Assets (Schedule of
Intangible Assets (Schedule of Finite-Lived Intangible Assets) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Intangible assets | |||||
Intangible assets, net | $ 574 | $ 574 | $ 746 | ||
Estimated useful life | |||||
Amortization expense | 63 | $ 62 | $ 187 | $ 186 | |
Weighted Average | |||||
Intangible assets | |||||
Estimated useful life | 2 years 3 months 22 days | ||||
Developed technology | |||||
Intangible assets | |||||
Total intangible assets | 979 | $ 979 | 979 | ||
Accumulated amortization | (754) | (754) | (681) | ||
Intangible assets, net | 225 | $ 225 | 298 | ||
Estimated useful life | 10 years | ||||
License agreements | |||||
Intangible assets | |||||
Total intangible assets | 1,508 | $ 1,508 | 1,508 | ||
Accumulated amortization | (1,173) | (1,173) | (1,060) | ||
Intangible assets, net | 335 | $ 335 | 448 | ||
Estimated useful life | 10 years | ||||
Acquired favorable lease | |||||
Intangible assets | |||||
Total intangible assets | 15 | $ 15 | 0 | ||
Accumulated amortization | (1) | (1) | 0 | ||
Intangible assets, net | $ 14 | $ 14 | $ 0 | ||
Estimated useful life | 5 years |
Intangible Assets (Schedule o47
Intangible Assets (Schedule of Future Amortization) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Estimated future amortization expense for intangible assets | ||
2017 (remainder of the year) | $ 63 | |
2,018 | 252 | |
2,019 | 252 | |
2,020 | 3 | |
2,021 | 3 | |
2,022 | 1 | |
Intangible assets, net | $ 574 | $ 746 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued employee compensation | $ 4,078 | $ 4,037 |
Deferred rent | 110 | 101 |
Accrued legal expense | 773 | 710 |
Accrued consulting expense | 42 | 104 |
Accrued vendor charges | 1,308 | 1,396 |
Accrued revenue share expense | 857 | 992 |
Accrued clinical trial expense | 180 | 256 |
Accrued other | 966 | 896 |
Total | $ 8,314 | $ 8,492 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Oct. 31, 2017patentpetition | Aug. 09, 2017ft² | Mar. 09, 2017patent | Jul. 25, 2016USD ($)ft²extension | May 27, 2016defensepatent | Feb. 29, 2016patent | Apr. 30, 2017 | Sep. 30, 2011 | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Mar. 01, 2017patentpetition | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2011 |
License and revenue share agreements | ||||||||||||||
Rent expense | $ | $ 400 | $ 400 | $ 1,300 | $ 1,100 | ||||||||||
Number of Companys patents allegedly infringed upon | 9 | |||||||||||||
Number of affirmative defenses alleged | defense | 2 | |||||||||||||
Number of patents allegedly infringed | 10 | |||||||||||||
Number of patents dismissed from lawsuit, asserted by Smith & Nephew | 8 | |||||||||||||
Number of patents asserted by ConforMIS dismissed from lawsuit | 2 | |||||||||||||
Number of petitions filed for Intere Partes Review | petition | 16 | |||||||||||||
Number of patents included in petition requesting Inter Partes Review | 9 | |||||||||||||
iUni and iDuo | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Number of patents allegedly infringed | 2 | |||||||||||||
iTotal | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Number of patents allegedly infringed | 3 | |||||||||||||
iUni, iDuo, and iTotal | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Number of patents allegedly infringed | 5 | |||||||||||||
Revenue share agreements | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Revenue share expense | $ | $ 900 | $ 900 | $ 2,700 | $ 2,600 | ||||||||||
Revenue share expense as a percentage of product revenues | 4.70% | 4.80% | 4.80% | 4.50% | ||||||||||
Revenue share agreements | Members of scientific advisory board | Minimum | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 0.10% | |||||||||||||
Revenue share agreements | Members of scientific advisory board | Maximum | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 1.33% | |||||||||||||
Revenue share agreements | Dr. Philipp Lang | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Revenue share expense | $ | $ 233 | $ 230 | $ 722 | $ 718 | ||||||||||
Revenue share agreements | Dr. Philipp Lang | Minimum | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 0.875% | 0.875% | ||||||||||||
Revenue share agreements | Dr. Philipp Lang | Maximum | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 1.33% | 1.33% | ||||||||||||
Billerica Lease [Member] | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Period of hold over beyond lease termination date | 30 days | |||||||||||||
Wilmington Lease | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Additional leased area (square feet) | ft² | 18,223 | |||||||||||||
Number of renewal options | extension | 1 | |||||||||||||
Renewal term | 5 years | |||||||||||||
Initial base rental rate | $ | $ 200 | |||||||||||||
Annual increase in initial base rental rate | 2.00% | |||||||||||||
Wallingford Lease | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Additional leased area (square feet) | ft² | 4,099 | |||||||||||||
Renewal term | 5 years | |||||||||||||
Additional option to extend, renewal term | 2 years | |||||||||||||
Additional option to extend past first extension term, renewal term | 3 years | |||||||||||||
Subsequent Event [Member] | ||||||||||||||
License and revenue share agreements | ||||||||||||||
Number of petitions requesting Inter Partes Review, IPR proceedings instituted | petition | 7 | |||||||||||||
Number of petitions requesting Inter Partes Review, IPR requests denied | petition | 7 | |||||||||||||
Number of petitions requesting Inter Partes Review, decided to institute IPR proceedings for some patents and deny requests for remaining patents | petition | 2 | |||||||||||||
Petitions requesting Inter Partes Review, granted, number of patents | 6 | |||||||||||||
Petitions requesting Inter Partes Review, granted, number of patents currently asserted | 5 | |||||||||||||
Petitions requesting Inter Partes Review, granted, number of patents voluntarily dismissed from lawsuit | 1 | |||||||||||||
Petitions requesting Inter Partes Review, denied, number of patents | 3 | |||||||||||||
Petitions requesting Inter Partes Review, denied, number of patents currently asserted | 2 | |||||||||||||
Petitions requesting Inter Partes Review, denied, number of patents voluntarily dismissed from lawsuit | 1 | |||||||||||||
Number of petitions requesting Inter Parts Review, denied and requesting rehearing | petition | 3 | |||||||||||||
Petitions requesting Inter Partes Review, denied and requesting reexamination, number of patents | 1 |
Debt and Notes Payable (Schedul
Debt and Notes Payable (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt and Notes Payable | ||
Long-term debt, before deducting debt issuance costs | $ 30,000 | $ 0 |
Less debt issuance costs | (360) | 0 |
Long-term debt, less debt issuance costs | 29,640 | 0 |
Principal payments due | ||
2017 (remainder of the year) | 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 13,750 | |
2,021 | 15,000 | |
2,022 | 1,250 | |
Total | 30,000 | 0 |
Oxford Finance L L C | Oxford Finance, LLC, Term A Loan | Term loan | ||
Debt and Notes Payable | ||
Long-term debt, before deducting debt issuance costs | 15,000 | 0 |
Principal payments due | ||
Total | 15,000 | 0 |
Oxford Finance L L C | Oxford Finance, LLC, Term B Loan | Term loan | ||
Debt and Notes Payable | ||
Long-term debt, before deducting debt issuance costs | 15,000 | |
Principal payments due | ||
Total | $ 15,000 |
Debt and Notes Payable (Details
Debt and Notes Payable (Details) - 2017 Secured Loan Agreement - Term loan - USD ($) | Jan. 06, 2017 | Sep. 30, 2017 | Jun. 30, 2017 |
Credit facility | |||
Maximum borrowing capacity | $ 50,000,000 | ||
Margin rate (as a percent) | 0.53% | ||
Final payment, percent of amount of loans advanced | 5.00% | ||
Credit facility term | 5 years | ||
Additional interest rate if event of default occurs (as a percent) | 5.00% | ||
Event of default, threshold amount | $ 500,000 | ||
LIBOR | |||
Credit facility | |||
Margin rate (as a percent) | 6.47% | ||
Oxford Term Loan | |||
Credit facility | |||
Maximum borrowing capacity | $ 15,000,000 | ||
Amount drawn down | $ 15,000,000 | ||
Oxford Term Loan B | |||
Credit facility | |||
Maximum borrowing capacity | $ 15,000,000 | $ 15,000,000 | |
Oxford Term Loan C | |||
Credit facility | |||
Maximum borrowing capacity | $ 20,000,000 | $ 20,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Sep. 14, 2017 | Sep. 30, 2011 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2011 | Sep. 30, 2017 |
Revenue share agreements | ||||||||
Related Party Transaction | ||||||||
Revenue share expense | $ 900,000 | $ 900,000 | $ 2,700,000 | $ 2,600,000 | ||||
Affiliate | Vertegen | License agreement | ||||||||
Related Party Transaction | ||||||||
Initial royalty rate on net sales of products under the agreement (as a percent) | 6.00% | 6.00% | 6.00% | |||||
Reduced royalty rate on net sales of products following expiration of patents (as a percent) | 3.00% | 3.00% | 3.00% | |||||
Royalty payments | $ 0 | |||||||
Expenses in connection with preparation of patent applications | $ 150,000 | |||||||
Affiliate | Vertegen | License agreement | United States | ||||||||
Related Party Transaction | ||||||||
Period for reduced royalty rate | 5 years | |||||||
Affiliate | Vertegen | License agreement | Rest of World | ||||||||
Related Party Transaction | ||||||||
Period for reduced royalty rate | 5 years | |||||||
Dr. Philipp Lang | Revenue share agreements | ||||||||
Related Party Transaction | ||||||||
Revenue share expense | $ 233,000 | $ 230,000 | $ 722,000 | $ 718,000 | ||||
Dr. Philipp Lang | Revenue share agreements | Minimum | ||||||||
Related Party Transaction | ||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 0.875% | 0.875% | ||||||
Dr. Philipp Lang | Revenue share agreements | Maximum | ||||||||
Related Party Transaction | ||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 1.33% | 1.33% | ||||||
Mark Augusti | Amendment to Employment Agreement, Reimbursement of Relocation Expenses Incurred | ||||||||
Related Party Transaction | ||||||||
Maximum reimbursement expense | $ 125,000 | |||||||
Mark Augusti | Amendment to Employment Agreement, Quarterly Reimbursement of Moving, Commuting, and Other Travel Expenses | ||||||||
Related Party Transaction | ||||||||
Maximum reimbursement expense | $ 25,000 | |||||||
Mark Augusti | Amendment to Employment Agreement, Obligation to Repay Moving Expenses Upon Separation From Company [Member] | ||||||||
Related Party Transaction | ||||||||
Obligation to repay all moving expenses received on or before August 1, 2017 if terminated or resigned without good reason, period following separation | 30 days |
Stockholders' Equity (Common St
Stockholders' Equity (Common Stock) | 9 Months Ended |
Sep. 30, 2017USD ($)voteshares | |
Stockholders' Equity Note [Abstract] | |
Common stock dividends declared to date | $ | $ 0 |
Number of votes per share of common stock | vote | 1 |
Common Stock Activity | |
Common stock, shares outstanding, beginning balance (in shares) | 43,399,547 |
Issuance of common stock - option exercises (in shares) | 530,984 |
Issuance of restricted common stock (in shares) | 964,000 |
Issuance of common stock - ATM offering (in shares) | 228,946 |
Issuance of common stock - BPM acquisition (in shares) | 169,096 |
Common stock, shares outstanding, ending balance (in shares) | 45,292,573 |
Stockholders' Equity (Preferred
Stockholders' Equity (Preferred Stock) (Details) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders' Equity Note [Abstract] | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Stockholders' Equity (Warrants
Stockholders' Equity (Warrants and Common Stock Warrants) (Details) - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Preferred stock warrants | |||
Warrants | |||
Number of warrants, outstanding (in shares) | 0 | 0 | |
Number of Warrants | |||
Outstanding at end of period (in shares) | 0 | ||
Common stock warrants | |||
Warrants | |||
Number of warrants, outstanding (in shares) | 171,783 | 171,783 | 28,926 |
Warrants issued to date (in shares) | 1,138,424 | ||
Common stock warrants issued in replacement of preferred stock warrants (in shares) | 564,188 | ||
Number of Warrants | |||
Outstanding at beginning of period (in shares) | 171,783 | ||
Cancelled/expired (in shares) | (142,857) | ||
Outstanding at end of period (in shares) | 28,926 | 171,783 | |
Weighted Average Exercise Price Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 7.47 | ||
Cancelled/expired (in dollars per share) | 0 | ||
Outstanding at end of period (in dollars per share) | $ 9.80 | $ 7.47 | |
Weighted Average Remaining Contractual Life | |||
Weighted average remaining contractual life, outstanding (in years) | 5 years 10 months 28 days | 1 year 7 months 13 days | |
Number of Warrants Exercisable | |||
Outstanding at beginning of period (in shares) | 171,783 | ||
Cancelled/expired (in shares) | (142,857) | ||
Outstanding at end of period (in shares) | 28,926 | 171,783 | |
Weighted Average Price Per Share | |||
Outstanding at beginning of period (in dollars per share) | $ 9.80 | $ 7.47 | $ 9.80 |
Cancelled/expired (in dollars per share) | 0 | ||
Outstanding at end of period (in dollars per share) | $ 9.80 | $ 7.47 | |
Common stock warrants | Minimum | |||
Warrants | |||
Exercise price of warrants or rights issued to date (in dollars per share) | 0.02 | ||
Common stock warrants | Maximum | |||
Warrants | |||
Exercise price of warrants or rights issued to date (in dollars per share) | $ 9 |
Stockholders' Equity (Stock Opt
Stockholders' Equity (Stock Option Plans) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | |||
Weighted average grant date fair value, vested | $ 300 | $ 1,000 | |
Weighted average remaining contractual term, outstanding | 5 years 10 months 2 days | ||
Weighted average remaining contractual term, vested and exercisable | 4 years 6 months | ||
Stock options | |||
Number of Options | |||
Balance outstanding at the beginning of the period (in shares) | 3,790,040 | ||
Granted (in shares) | 940,898 | ||
Exercised (in shares) | (530,984) | ||
Expired (in shares) | (257,984) | ||
Cancelled/Forfeited (in shares) | (75,969) | ||
Balance outstanding at the end of the period (in shares) | 3,866,001 | 3,866,001 | |
Total vested and exercisable (in shares) | 2,738,721 | 2,738,721 | |
Weighted Average Exercise Price per Share | |||
Balance at the beginning of the period (in dollars per share) | $ 6.60 | ||
Granted (in dollars per shares) | 5 | ||
Exercised (in dollars per share) | 3.96 | ||
Expired (in dollars per share) | 7.12 | ||
Cancelled/Forfeited (in dollars per share) | 6.98 | ||
Balance at the end of the period (in dollars per share) | $ 6.53 | 6.53 | |
Total vested and exercisable (in dollars per share) | $ 6.61 | $ 6.61 | |
Aggregate Intrinsic Value (in Thousands) | |||
Exercised | $ 1,680 | ||
Outstanding at end of the period | $ 225 | 225 | |
Total vested and exercisable | 224 | 224 | |
Restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | |||
Weighted average grant date fair value, vested | $ 100 | $ 1,600 | |
Number of Shares | |||
Unvested beginning of period (in shares) | 911,710 | ||
Granted (in shares) | 1,125,688 | ||
Vested (in shares) | (179,591) | ||
Forfeited (in shares) | (161,688) | ||
Unvested end of period (in shares) | 1,696,119 | 1,696,119 | |
Weighted Average Fair Value | |||
Unvested beginning of period (in dollars per share) | $ 10.18 | ||
Granted (in dollars per share) | 4.65 | ||
Vested (in dollars per share) | 8.81 | ||
Forfeited (in dollars per share) | 7.28 | ||
Unvested end of period (in dollars per share) | $ 6.93 | $ 6.93 | |
2015 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock available for future issuance (in shares) | 1,049,411 | 1,049,411 | 1,301,986 |
Additional shares authorized, maximum annual amount (in shares) | 3,000,000 | 3,000,000 | |
Additional shares authorized, maximum annual percentage | 3.00% | 3.00% |
Stockholders' Equity (Stock-bas
Stockholders' Equity (Stock-based Compensation) (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Assumptions used to estimate the fair value of options at date of grant | |
Risk-free interest rate | 2.10% |
Risk-free interest rate, minimum | 2.10% |
Risk-free interest rate, maximum | 2.14% |
Expected term (in years) | 6 years 3 months |
Dividend yield | 0.00% |
Expected volatility | 52.00% |
Expected volatility, maximum | 50.59% |
Expected volatility, minimum | 52.00% |
Minimum | |
Assumptions used to estimate the fair value of options at date of grant | |
Expected term (in years) | 6 years 7 days |
Maximum | |
Assumptions used to estimate the fair value of options at date of grant | |
Expected term (in years) | 6 years 3 months |
Stockholders' Equity (Stock-b58
Stockholders' Equity (Stock-based Compensation Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based compensation | ||||
Stock-based compensation expense | $ 1,409 | $ 1,449 | $ 4,149 | $ 3,490 |
Stock options | ||||
Share-based compensation | ||||
Unrecognized compensation expense | 3,200 | $ 3,200 | ||
Period for unrecognized compensation expense to be recognized | 3 years 2 months 5 days | |||
Restricted stock awards | ||||
Share-based compensation | ||||
Unrecognized compensation expense | $ 7,700 | $ 7,700 | ||
Period for unrecognized compensation expense to be recognized | 2 years 8 months 5 days |
Stockholders' Equity (Summary o
Stockholders' Equity (Summary of Stock-based Compensation) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based compensation | ||||
Stock-based compensation expense | $ 1,409 | $ 1,449 | $ 4,149 | $ 3,490 |
Cost of revenues | ||||
Share-based compensation | ||||
Stock-based compensation expense | 133 | 117 | 348 | 218 |
Sales and marketing | ||||
Share-based compensation | ||||
Stock-based compensation expense | 130 | 224 | 611 | 950 |
Research and development | ||||
Share-based compensation | ||||
Stock-based compensation expense | 444 | 405 | 1,341 | 1,018 |
General and administrative | ||||
Share-based compensation | ||||
Stock-based compensation expense | $ 702 | $ 703 | $ 1,849 | $ 1,304 |
Segment and Geographic Data (De
Segment and Geographic Data (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)segment | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting [Abstract] | |||||
Number of reportable segments | segment | 1 | ||||
Geographic information for Product Revenue and Property and equipment, net | |||||
Product revenue | $ 18,176 | $ 18,400 | $ 56,601 | $ 57,486 | |
Property and equipment, net | 16,310 | 16,310 | $ 15,084 | ||
United States | |||||
Geographic information for Product Revenue and Property and equipment, net | |||||
Product revenue | 15,519 | 14,946 | 46,702 | 44,659 | |
Property and equipment, net | 16,218 | 16,218 | 14,972 | ||
Germany | |||||
Geographic information for Product Revenue and Property and equipment, net | |||||
Product revenue | 2,335 | 3,026 | 8,728 | 11,398 | |
Property and equipment, net | 92 | 92 | 112 | ||
Rest of World | |||||
Geographic information for Product Revenue and Property and equipment, net | |||||
Product revenue | 322 | $ 428 | 1,171 | $ 1,429 | |
Property and equipment, net | $ 0 | $ 0 | $ 0 |