Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 28, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | CONFORMIS INC | ||
Entity Central Index Key | 0001305773 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Emerging Growth Company | true | ||
Entity Transition Period | true | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 67,916,658 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 63,366,909 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 16,380 | $ 18,348 |
Investments | 7,245 | 26,880 |
Accounts receivable, net | 13,244 | 13,200 |
Royalty receivable | 145 | 0 |
Inventories | 9,534 | 9,184 |
Prepaid expenses and other current assets | 1,408 | 2,246 |
Total current assets | 47,956 | 69,858 |
Property and equipment, net | 14,439 | 16,514 |
Other Assets | ||
Restricted cash | 462 | 462 |
Intangible assets, net | 109 | 210 |
Goodwill | 0 | 6,731 |
Other long-term assets | 17 | 23 |
Total assets | 62,983 | 93,798 |
Current liabilities | ||
Accounts payable | 3,445 | 4,891 |
Accrued expenses | 7,930 | 7,720 |
Deferred revenue | 0 | 305 |
Total current liabilities | 11,375 | 12,916 |
Other long-term liabilities | 616 | 651 |
Deferred tax liabilities | 0 | 37 |
Deferred revenue | 0 | 4,014 |
Long-term debt, less debt issuance costs | 14,792 | 29,667 |
Total liabilities | 26,783 | 47,285 |
Commitments and contingencies | 0 | 0 |
Stockholders’ equity | ||
Preferred stock, $0.00001 par value: | 0 | 0 |
Common stock, $0.00001 par value: | 1 | 0 |
Additional paid-in capital | 513,336 | 486,570 |
Accumulated deficit | (475,667) | (436,821) |
Accumulated other comprehensive loss | (1,470) | (3,236) |
Total stockholders’ equity | 36,200 | 46,513 |
Total liabilities and stockholders’ equity | $ 62,983 | $ 93,798 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
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 | 65,290,879 | 45,528,519 |
Common stock, shares outstanding | 65,290,879 | 45,528,519 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | $ 89,789 | $ 78,115 | $ 79,899 |
Cost of revenue | 41,304 | 49,301 | 53,192 |
Gross profit | 48,485 | 28,814 | 26,707 |
Operating expenses | |||
Sales and marketing | 38,955 | 38,788 | 41,086 |
Research and development | 16,869 | 17,136 | 16,608 |
General and administrative | 24,622 | 28,737 | 25,157 |
Goodwill impairment | 6,731 | 0 | 0 |
Total operating expenses | 87,177 | 84,661 | 82,851 |
Loss from operations | (38,692) | (55,847) | (56,144) |
Other income and expenses | |||
Interest income | 659 | 491 | 487 |
Interest expense | (3,356) | (2,119) | (138) |
Foreign currency transaction income (loss) | (1,915) | 4,057 | (1,607) |
Other income (expense) | 0 | 0 | (123) |
Total other income (expenses), net | (4,612) | 2,429 | (1,381) |
Loss before income taxes | (43,304) | (53,418) | (57,525) |
Income tax provision | 61 | 162 | 63 |
Net loss | $ (43,365) | $ (53,580) | $ (57,588) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.74) | $ (1.24) | $ (1.39) |
Weighted average common shares outstanding - basic and diluted (in shares) | 58,886,333 | 43,343,459 | 41,521,629 |
Product | |||
Revenue | $ 78,627 | $ 77,100 | $ 78,921 |
Royalty | |||
Revenue | $ 11,162 | $ 1,015 | $ 978 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (43,365) | $ (53,580) | $ (57,588) |
Other comprehensive income (loss) | |||
Foreign currency translation adjustments | 1,733 | (3,709) | 1,027 |
Change in unrealized gain (loss) on available-for-sale securities, net of tax | 33 | (26) | (7) |
Comprehensive loss | $ (41,599) | $ (57,315) | $ (56,568) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholder's Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated other comprehensive income (loss) | Restricted stock awardsCommon Stock | Secondary Offering | Secondary OfferingCommon Stock | Secondary OfferingAdditional Paid-in Capital | At The Market Offering | At The Market OfferingCommon Stock | At The Market OfferingAdditional Paid-in Capital |
Beginning balance (in shares) at Dec. 31, 2015 | 41,110,127 | |||||||||||
Beginning balance at Dec. 31, 2015 | $ 141,212 | $ 0 | $ 467,075 | $ (325,342) | $ (521) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock, exercised options (in shares) | 1,467,692 | |||||||||||
Issuance of common stock—option exercise | 4,087 | 4,087 | ||||||||||
Stock issued during period, shares, new issues (in shares) | 804,019 | |||||||||||
Issuance of common stock - warrants exercised (in shares) | 17,709 | |||||||||||
Compensation expense related to issued stock options and restricted stock awards | 5,324 | 5,324 | ||||||||||
Net loss | (57,588) | (57,588) | ||||||||||
Other comprehensive income | $ 1,020 | 1,020 | ||||||||||
Ending balance (in shares) at Dec. 31, 2016 | 43,399,547 | 43,399,547 | ||||||||||
Ending balance at Dec. 31, 2016 | $ 94,055 | $ 0 | 476,486 | (382,930) | 499 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock, exercised options (in shares) | 535,734 | |||||||||||
Issuance of common stock—option exercise | $ 2,108 | 2,108 | ||||||||||
Stock issued during period, shares, new issues (in shares) | 228,946 | 1,195,196 | 228,946 | |||||||||
Stock issued during period, value, new issues | $ 1,023 | $ 1,023 | ||||||||||
Issuance of common stock for acquisitions (in shares) | 169,096 | |||||||||||
Issuance of common stock— Broad Peak Manufacturing, LLC acquisition | $ 594 | 594 | ||||||||||
Compensation expense related to issued stock options and restricted stock awards | 6,048 | 6,048 | ||||||||||
Net loss | (53,580) | (53,580) | ||||||||||
Other comprehensive income | $ (3,735) | (3,735) | ||||||||||
Ending balance (in shares) at Dec. 31, 2017 | 45,528,519 | 45,528,519 | ||||||||||
Ending balance at Dec. 31, 2017 | $ 46,513 | $ 0 | 486,570 | (436,821) | (3,236) | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of common stock, exercised options (in shares) | 80,000 | |||||||||||
Issuance of common stock—option exercise | $ 112 | 112 | ||||||||||
Stock issued during period, shares, new issues (in shares) | 556,334 | 1,516,295 | 15,333,333 | 15,333,333 | 556,334 | |||||||
Stock issued during period, value, new issues | $ 21,325 | $ 1 | $ 21,324 | $ 456 | $ 456 | |||||||
Issuance of common stock for acquisitions (in shares) | 2,276,398 | 2,276,398 | ||||||||||
Issuance of common stock - Lincoln Park Capital Fund, LLC | $ 988 | 988 | ||||||||||
Compensation expense related to issued stock options and restricted stock awards | 3,886 | 3,886 | ||||||||||
Net loss | (43,365) | (43,365) | ||||||||||
Other comprehensive income | $ 1,766 | 1,766 | ||||||||||
Ending balance (in shares) at Dec. 31, 2018 | 65,290,879 | 65,290,879 | ||||||||||
Ending balance at Dec. 31, 2018 | $ 36,200 | $ 1 | $ 513,336 | $ (475,667) | $ (1,470) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities | |||
Net loss | $ (43,365) | $ (53,580) | $ (57,588) |
Adjustments to reconcile net loss to net cash used by operating activities: | |||
Depreciation and amortization expense | 4,122 | 3,669 | 3,153 |
Amortization of debt discount | 0 | 0 | 7 |
Stock-based compensation expense | 3,886 | 6,048 | 5,324 |
Provision for bad debts on trade receivables | (72) | (15) | 188 |
Goodwill impairment | 6,731 | 0 | 0 |
Impairment of long term assets | 2,433 | 1,113 | 123 |
Disposal of long term assets | (4) | 0 | 16 |
Non-cash interest expense | 125 | 100 | 0 |
Amortization/accretion on investments | (18) | 202 | 315 |
Deferred tax | (37) | 37 | 0 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 28 | 1,490 | 4 |
Royalty receivable | 55 | 0 | 0 |
Inventories | (350) | 2,535 | (200) |
Prepaid expenses and other assets | 529 | 1,770 | (1,550) |
Accounts payable and accrued liabilities | (1,011) | (1,406) | 1,437 |
Deferred royalty revenue | 0 | (306) | (305) |
Other long-term liabilities | (34) | 487 | (56) |
Net cash used in operating activities | (26,982) | (37,856) | (49,132) |
Cash flows from investing activities: | |||
Acquisition of property and equipment | (4,059) | (5,233) | (7,161) |
Business acquisition, net of cash acquired | 0 | (5,780) | 0 |
(Increase) decrease in restricted cash | 0 | (162) | 300 |
Purchase of investments | (27,430) | (30,991) | (65,614) |
Maturity of investments | 47,115 | 32,125 | 37,050 |
Net cash provided/(used) in investing activities | 15,626 | (10,041) | (35,425) |
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 112 | 2,108 | 4,087 |
Debt issuance costs | 0 | (434) | 0 |
Proceeds from issuance of debt | 0 | 30,000 | 0 |
Payments on long-term debt | (15,000) | 0 | (485) |
Debt prepayment fee | (225) | 0 | 0 |
Net proceeds from issuance of common stock | 22,768 | 1,023 | 0 |
Net cash provided by financing activities | 7,655 | 32,697 | 3,602 |
Foreign exchange effect on cash and cash equivalents | 1,733 | (3,709) | 1,027 |
Decrease in cash and cash equivalents | (1,968) | (18,909) | (79,928) |
Cash and cash equivalents, beginning of period | 18,348 | 37,257 | 117,185 |
Cash and cash equivalents, end of period | 16,380 | 18,348 | 37,257 |
Supplemental information: | |||
Cash paid for interest | 2,837 | 1,449 | 48 |
Noncash investing and financing activities | |||
Issuance of common stock for business acquisition | 0 | 594 | 0 |
Issuance of common stock for equity financing | $ 77 | $ 0 | $ 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
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, its iTotal PS in 2015, and its Conformis Hip System in 2018 through a limited commercial launch. The Company has its corporate offices in Billerica, Massachusetts. These consolidated financial statements and related notes 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. Liquidity and operations 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 and secondary public offering in January 2018, patent licenses, 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 and negative operating cash flows, which adversely impacts the Company's ability to continue as a going concern. At December 31, 2018 , the Company had an accumulated deficit of $475.7 million . At December 31, 2018 , the Company had cash and cash equivalents and investments of $23.6 million and $0.5 million in restricted cash allocated to a lease deposit. On January 6, 2017, the Company entered into the 2017 Secured Loan Agreement with Oxford, and accessed $15 million of borrowings under Term Loan A at closing and an additional $15 million of borrowings under Term Loan B on June 30, 2017. The Company was unable to access an additional $20 million potentially available to borrow through June 2018 due to a failure to satisfy certain revenue milestones and customary drawdown conditions. Pursuant to a fifth amendment to the 2017 Secured Loan Agreement, or the Fifth Amendment, on December 13, 2018, the Company pre-paid $15 million aggregate principal amount of the $30 million outstanding principal amount, as a pro rata portion of the Term A Loan and Term B Loan, together with accrued and unpaid interest thereon and a pro rata prepayment fee. The Company used short-term investment maturities and cash and cash equivalents to fund this prepayment. The Fifth Amendment also reduced the revenue milestones through December 31, 2019. New minimum revenue milestones, based on product revenue projections, are to be established prior to the start of 2020 and prior to the start of each fiscal year thereafter by the mutual agreement of Oxford and the Company. If the Company is not able to agree with Oxford on new minimum revenue milestones for 2020 or a fiscal year thereafter, the Company must refinance the 2017 Secured Loan Agreement by March 31, 2020 or that next fiscal year, and if the Company fails to refinance the 2017 Secured Loan Agreement, the Company must notify Oxford of such default and Oxford would be permitted to exercise remedies against us and its assets in respect of such event of default, including taking control of our cash and commencing foreclosure proceedings on our other assets. The initial principal payment on the 2017 Secured Loan Agreement is due on February 1, 2020. We intend to refinance the 2017 Secured Loan Agreement before the interest only period ends and the principal repayments begin in January 2020. We may not be able to refinance or obtain additional financing on terms favorable to us, or at all. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted. The terms of these future equity or debt securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders or involve negative covenants that restrict our ability to take specific actions, such as incurring additional debt or making capital expenditures. If we are unable to refinance the 2017 Secured Loan Agreement before the interest only period ends or shortly thereafter, then we will be required to make principal repayments beginning in January 2020 which will require us to raise additional capital through the sale of equity and the ownership interest of our stockholders will be diluted. For further information regarding this facility, see “Note K-Debt and Notes Payable-2017 Secured Loan Agreement” in the financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. In January 2017, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on May 9, 2017 (the "Shelf Registration Statement"). 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. On May 10, 2017, the Company filed with the SEC a prospectus supplement (the “Prospectus Supplement”) for the sale and issuance of up to $50 million of its common stock and entered into a Distribution Agreement ("Distribution Agreement") with Canaccord Genuity, Inc. , or Canaccord, pursuant to which Canaccord agreed to sell shares of the Company's common stock from time to time, as our agent, in an “at-the-market” offering ("ATM") as defined in Rule 415 promulgated under the U.S. Securities Act of 1933, as amended. The Company is not obligated to sell any shares under the Distribution Agreement. As of December 31, 2018 , the Company has sold 785,280 Shares under the Distribution Agreement resulting in net proceeds of $1.5 million . On January 29, 2018, the Company closed an offering of its common stock off of its shelf registration statement and issued and sold 15,333,333 shares of its common stock (including 2,000,000 shares of common stock issued in connection with the exercise in full by the underwriters of their over-allotment option) at a public offering price of $1.50 per share, for aggregate net proceeds of approximately $21.3 million . The Company used the net proceeds of the offering of the shares for general corporate purposes, which included 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. In addition, the Smith & Nephew settlement and license agreement, discussed in Note J-Commitments and Contingencies, Legal proceedings, provided the Company with $10.5 million of royalty revenue for the year ended December 31, 2018. On December 17, 2018, the Company entered into a stock purchase agreement with Lincoln Park Capital ("LPC" and the "LPC Agreements"). Upon entering the LPC Agreements, the Company sold 1,921,968 shares of common stock for $ 1.0 million to LPC, representing a premium of 110% to the previous day's closing price. As consideration for LPC’s commitment to purchase shares of common stock under the LPC Agreements, Conformis has issued 354,430 shares to LPC. The Company has the right at its sole discretion to sell to LPC up to $20.0 million worth of shares over a 36 -month period subject to the terms of the LPC Agreements. Conformis will control the timing of any sales to LPC and LPC will be obligated to make purchases to Conformis common stock upon receipt of requests from Conformis in accordance with the terms of the agreements. There are no upper limits to the price per share LPC may pay to purchase the up to $20.0 million worth of common stock subject to the Agreements, and the purchase price of the shares will be based on the then prevailing market prices of the Company’s shares at the time of each sale to LPC as described in the LPC Agreements, provided that LPC will not be obligated to make purchases of our common stock pursuant to receipt of a request from us on any business day on which the last closing trade price of our common stock on the Nasdaq Capital Market (or alternative national exchange in accordance with the LPC Agreements) is below a floor price of $0.25 per share . No warrants, derivatives, financial or business covenants are associated with the LPC Agreements and LPC has agreed not to cause or engage in any manner whatsoever, any direct or indirect short selling or hedging of shares of the Company’s common stock. The LPC Agreements may be terminated by the Company at any time, at its sole discretion, without any cost or penalty. The Company expects that its existing cash and cash equivalents and investments as of December 31, 2018 , anticipated revenue from operations, and the ability to issue equity to LPC will enable the Company to fund its operating expenses and capital expenditure requirements and 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, the gross profit the Company expects to generate from that revenue, the reduction in operating expenses beginning in 2019, and it could use its capital resources sooner than we expect. The Company anticipates that its principal sources of funds in the future will be revenue generated from the sales of its products, potential future capital raises through the issuance of equity or other securities, potential debt financings, and revenue that may be generated in connection with licensing its intellectual property. When the Company needs additional equity or debt financing proceeds to fund its operations, whether within the next 12 months or later, 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 revenue recognition, accounts receivable valuation, inventory reserves, goodwill valuation, intangible valuation, purchase accounting, impairment assessments, equity instruments, stock compensation, income tax reserves and related allowances, and the lives of property and equipment. Actual results may differ from those estimates. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note B—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. On an on-going basis, the Company validates alternate suppliers relative to certain key components as needed. For the years ended December 31, 2018 , 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 at December 31, 2018 and 2017 . Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries including ImaTx, Inc., or ImaTx, ConforMIS Europe GmbH, ConforMIS UK Limited, ConforMIS Hong Kong Limited, and Conformis Cares LLC. All 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 when purchased, 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. 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 $1.1 million as of December 31, 2018 and $2.2 million as of December 31, 2017 held in foreign bank accounts, that was not federally insured. In addition, the Company has recorded restricted cash of $0.5 million as of December 31, 2018 and 2017 . 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. The carrying value of the debt approximates fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments. Accounts receivable and allowance for doubtful accounts Accounts receivable consist of billed and unbilled amounts due from medical facilities. Upon completion of a procedure and revenue is recognized and an unbilled receivable is recorded. Under ASC 606, an enforceable contract is met either at or prior to the procedure being performed. 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 net realizable 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 based on net realizable value. Appropriate consideration is given to inventory items sold at negative gross margin, purchase commitments and other factors in evaluating net realizable value. During the years ended December 31, 2018 , 2017 and 2016 , the Company recognized provisions of $1.9 million , $2.6 million and $3.5 million , respectively, to adjust its inventory value to the lower of cost or net realizable value for estimated unused product related to known and potential cancelled cases, which is included in cost of revenue. 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 and purchase accounting The Company includes the results of operations of the businesses that it acquires as of the applicable acquisition date. The purchase price of the acquisition is allocated 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. Goodwill Goodwill relates to amounts that arose in connection with the acquisition of ImaTx, Inc. in 2009 and the acquisition of BPM 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 one-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 one-step goodwill impairment test will be performed. During the three months ended September 30, 2018, the Company's qualitative analysis indicated a triggering event required a step one analysis to determine the fair value of the reporting unit for the period ended September 30, 2018. The Company's drop in market capitalization and decrease in cash flow position were indicators of impairment. The Company determined the fair value of the reporting unit using the combination of its market capitalization, income approach, and the merger and acquisition method concluding that the fair value of the reporting unit is less than the carrying amount in excess of Goodwill, therefore fully impairing Goodwill. During the year ended December 31, 2017 , there were no triggering events which would require goodwill impairment assessment. The changes in the carrying amount of goodwill are as follows: December 31, 2018 December 31, 2017 Beginning Balance 6,731 753 Acquired — 5,978 Impairment (6,731 ) — Ending Balance — 6,731 Intangibles and other long-lived assets Intangible assets consist of developed technology acquired as part of the ImaTx spin-out transaction in 2004 and a favorable lease asset from the Broad Peak Manufacturing, LLC, or BPM, acquisition in August 2017. 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. To evaluate for impairment, the Company compares the undiscounted cash flows to be generated from such assets or groups of assets to the carrying value. If the undiscounted cash flows are less than the carrying value, the amount of impairment is measured based on fair value. 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. In 2018 , the Company recognized $2.4 million in impairment charges, comprised of $1.9 million related to unused manufacturing equipment abandoned in July, $0.3 million related to the expiration of a credit towards a purchase of certain manufacturing equipment, and the remaining $0.2 million impairment charges relate primarily to the discontinuance of software applications. In 2017, the Company recognized $1.1 million in impairment charges of which $0.8 million related to the discontinuance of a software capital project and $0.3 million related to intellectual property rights licensed as part of the ImaTx spin-out transaction in 2004. In 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. Impairment charges are included in General and administrative expense. Revenue recognition The Company adopted ASU No. 2014-9, “Revenue from Contracts with Customers (ASC 606)” as of January 1, 2018. Based on the Company's assessment, generally revenue recognition from the sale of its products to customers effectively remains unaffected by the adoption of ASC 606. The assessment of the royalty revenue associated with the Company's 2015 license agreements previously entered into with Wright Medical Group Inc. and MicroPort Orthopedics, Inc. was affected by the adoption of ASC 606. Previously, under ASC 605, the Company recognized an initial $5.1 million , in aggregate, as deferred royalty revenue under these agreements, to be recognized ratably through 2027 and 2031 for Wright Medical Group Inc. and MicroPort Orthopedics, Inc., respectively. The Company's analysis of these contracts indicated that under ASC 606 the licenses are functional and thus revenue would have been recognized in full on the execution date. Further the ongoing royalty from MicroPort was previously recognized as royalty revenue upon receipt of payment. Under ASC 606, royalty is recognized in the period the sale occurred. The Company elected to apply the adoption of ASC 606 using the modified retrospective method for contracts that were not complete as of December 31, 2017, resulting in an adjustment to the 2018 opening balance of accumulated deficit to recognize the deferred royalty revenue immediately. Comparative information has not been restated and continues to be reported under the accounting policy in effect for those periods, including ASC 605, Revenue Recognition. The following table summarizes the balance sheet adjustments upon adoption of ASC 606 (in thousands): As Reported December 31, 2017 Balance at January 1, 2018 ASC 606 Adjustment Current Assets Royalty receivable $ — $ 200 $ 200 (1) Current liabilities Deferred revenue 305 — (305 ) (2) Long-term liabilities Deferred revenue 4,014 — (4,014 ) (2) Stockholders' equity Accumulated deficit (436,821 ) (432,302 ) (4,519 ) (1),(2) (1) MicroPort sales-based royalty recognized in period earned under Topic 606, previously recognized when cash received and amortization of deferred royalty revenue. (2) Wright Medical and MicroPort royalty deferred and recognized ratably through 2027 and 2031, respectively, under Topic 605, recognized in full at contract inception date under Topic 606. The following table summarizes the effect of ASC 606 on the Company's consolidated financial statements as of December 31, 2018 (in thousands, except per share amounts): Balance Sheet As Reported Pro-forma (1) Effect Current Assets Royalty receivable $ 145 $ — $ 145 (2) Current liabilities Deferred revenue — 305 (305 ) (3) Long-term liabilities Deferred revenue — 3,709 (3,709 ) (3) Stockholders' equity Accumulated deficit (475,667 ) (471,507 ) 4,160 (2),(3) Statement of Operations As Reported Pro-forma (1) Effect Revenue Royalty $ 11,162 $ 11,521 $ (359 ) (2),(3) Net Loss (43,365 ) (43,006 ) (359 ) (2),(3) Net loss per share - basic and diluted $ (0.74 ) $ (0.73 ) $ (0.01 ) Statement of Cash Flows As Reported Pro-forma (1) Effect Cash flows form operating activities: Net loss $ (43,365 ) $ (43,006 ) $ (359 ) (2),(3) Changes in operating assets and liabilities (26,982 ) (27,341 ) 359 (2),(3) (1) Pro-forma balances without adoption of ASC 606. (2) Effect relates to MicroPort sales-based royalty recognized in period earned under Topic 606, previously recognized when cash received and amortization of deferred royalty revenue. (3) Effect relates to Wright Medical and MicroPort royalty deferred and recognized ratably through 2027 and 2031, respectively, under Topic 605, recognized in full at contract inception date under Topic 606. Revenue Recognition Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2018. Payment is typically due between 30 - 60 days from invoice. To the extent that the transaction price includes variable consideration, such as prompt-pay discounts or rebates, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Actual amounts of consideration ultimately received may differ from the Company's estimates. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on observable prices or a cost-plus margin approach when one is not available. Revenue is recognized at the time the related performance obligation is satisfied by transferring control of a promised good or service to a customer. The Company's performance obligations are satisfied at the same time, typically upon surgery, therefore, product revenue is recognized at a point in time upon completion of the surgery. Since the Company does not have contracts that extend beyond a duration of one year, there is no transaction price related to performance obligations that have not been satisfied. Certain customer contracts include terms that allow the Company to bill for orders that are cancelled after the product is manufactured and could result in revenue recognition over time. However, the impact of applying over time revenue recognition was deemed immaterial. The Company does not have any contract assets or liabilities with customers. Unconditional rights to consideration are reported as receivables. Incidental items that are immaterial in the context of the contract are recognized as expense. Disaggregation of Revenue See " Note O—Segment and Geographic Data " for disaggregated product revenue by geography. Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from rebates that are offered within contracts between the Company and some of its customers. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The following table summarizes activity for rebate allowance reserve for the year ended December 31, 2018 (in thousands): December 31, 2018 Beginning Balance $ 119 Provision related to current period sales 129 Adjustment related to prior period sales 40 Payments or credits issued to customer (192 ) Ending Balance $ 96 Costs to Obtain and Fulfill a Contract The Company currently expenses commissions paid for obtaining product sales. Sales commissions are paid following the manufacture and implementation of the implant. Due to the period being less than one year, the Company will apply the practical expedient, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in sales and marketing expense. Further, the Company incurs costs to buy, build, replenish, restock, sterilize and replace the reusable instrumentation trays associated with the sale of its products and services. The reusable instrument trays are not contract specific and are used for multiple contracts and customers, therefore does not meet the criteria to capitalize. Shipping and handling costs Shipping and handling activities prior to the transfer of control to the customer (e.g. when control transfers after delivery) are considered fulfillment activities, and not performance obligations. 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 $1.6 million , $1.4 million and $1.6 million for the years ended December 31, 2018 , 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 $0.7 million for the year ended December 31, 2018 , $0.4 million for the year ended December 31, 2017 and $0.3 million for the year ended December 31, 2016 . 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 December 31, 2018 and 2017 , 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) (in thousands): 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, 2017 $ (3,203 ) $ (33 ) $ (3,236 ) Change in period 1,733 33 1,766 Balance December 31, 2018 $ (1,470 ) $ — $ (1,470 ) 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 year. Net translation gains and losses are recorded in Accumulated other comprehensive (loss) income. 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, until July 1,2017, 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 the Company can recognize them and therefore, it has accounted for a cumulative-effect adjustment of $7.7 million during the year ended December 31, 2018 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. On December 22, 2017, H.R. 1, known as the Tax Cuts and Jobs Act, was signed into law, which includes a broad range of topics affecting corporations – including corporate tax rates, business deductions and international provisions. The effect of the tax law changes has been recognized in the Company's December 31, 2018 financial statements. Medical device excise tax The Company has been 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 for the years ended December 31, 2018 , 2017 , and 2016 . On January 22, 2018, legislation was passed that suspends the medical device excise tax for sales in 2018 and 2019. The tax is not scheduled to take effect again until sales on or after January 1, 2020. It is unclear at this time if the suspension will be further extended, and we are currently subject to the tax after December 31, 2019. 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. Forfeitures are accounted for as they occur. 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): Years Ended December 31, (in thousands, except share and per share data) 2018 2017 2016 Numerator: Numerator for basic and diluted loss per share: Net loss $ (43,365 ) $ (53,580 ) $ (57,588 ) Denominator: Denominator for basic loss per share: Weighted average shares 58,886,333 43,343,459 41,521,629 Basic loss per share attributable to Conformis, Inc. stockholders $ (0.74 ) $ (1.24 ) $ (1.39 ) Diluted loss per share attributable to Conformis, Inc. stockholders $ (0.74 ) $ (1.24 ) $ (1.39 ) 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: Years Ended December 31, 2018 2017 2016 Common stock warrants — — 34,709 Stock options 55,346 365,105 1,959,030 Total 55,346 365,105 1 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
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 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): December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 9,837 $ — $ — $ 9,837 $ 9,837 $ — Level 1 securities: Money market funds 1,046 — — 1,046 1,046 — U.S. treasury bonds 10,494 — — 10,494 5,497 4,997 Level 2 securities: Corporate bonds 1,249 — — 1,249 — 1,249 Commercial paper 999 — — 999 — 999 Total $ 23,625 $ — $ — $ 23,625 $ 16,380 $ 7,245 December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 9,849 $ — $ — $ 9,849 $ 9,849 $ — Level 1 securities: Money market funds 3,499 — — 3,499 3,499 — U.S. treasury bonds 9,243 — (4 ) 9,239 — 9,239 Level 2 securities: Corporate bonds 4,935 — (6 ) 4,929 — 4,929 Commercial paper — — — — — 12,712 Agency bonds 12,734 — (22 ) 12,712 — — Repurchase agreement $ 5,000 $ — $ — $ 5,000 $ 5,000 Total $ 45,260 $ — $ (32 ) $ 45,228 $ 18,348 $ 26,880 (1) Contractual maturity due within one year. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net, Current [Abstract] | |
Accounts Receivable | Accounts Receivable Accounts receivable consisted of the following (in thousands): December 31, December 31, Total receivables $ 13,634 $ 13,835 Allowance for doubtful accounts and returns (390 ) (635 ) Accounts receivable, net $ 13,244 $ 13,200 Accounts receivable included unbilled receivable of $2.2 million and $1.4 million for the years ended December 31, 2018 and 2017 . Write-offs related to accounts receivable were approximately $115,000 , $92,000 , and $41,000 for the years ended December 31, 2018 , 2017 , and 2016 , respectively. Summary of allowance for doubtful accounts and returns activity was as follows (in thousands): December 31, 2018 December 31, 2017 Beginning balance $ (635 ) $ (681 ) Provision for bad debts on trade receivables 72 15 Other allowances 58 (61 ) Accounts receivable write offs 115 92 Ending balance $ (390 ) $ (635 ) |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following (in thousands): December 31, December 31, Raw Material $ 4,498 $ 2,905 Work in process 1,518 1,718 Finished goods 3,518 4,561 Total Inventories $ 9,534 $ 9,184 |
Acquistion
Acquistion | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Acquistion | Acquisition On August 9, 2017, the Company completed the purchase of certain assets and assumed certain liabilities of Broad Peak Manufacturing, LLC, or 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. The Company expects the acquisition of the BPM assets will reduce the cost of polishing and improve overall gross margin. The Company completed 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. On August 16, 2018, $910,000 related to employee retention was released from the escrow account, and on September 21, 2018, $1.3 million related to the earn out was released from the escrow account which satisfied the earn out provisions. 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. During the quarter ended September 30, 2018, the Company fully impaired goodwill recognized in the BPM acquisition. Refer to " Note B—Summary of Significant Accounting Policies " for more information on Goodwill impairment. The acquisition of BPM is strategically significant in reducing the manufacturing costs for the Company, however at the time of the acquisition and on December 31, 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 | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands): Estimated Useful Life (Years) December 31, December 31, Equipment 5-7 $ 18,602 $ 19,331 Furniture and fixtures 5-7 954 955 Computer and software 3 8,783 7,877 Leasehold improvements 3-7 1,978 1,830 Reusable instruments 5 1,573 — Total property and equipment 31,890 29,993 Accumulated depreciation (17,451 ) (13,479 ) Property and equipment, net $ 14,439 $ 16,514 During the first quarter of 2018, the Company substantially completed the reusable instrumentation tray design and commenced capitalization. Depreciation expense related to property and equipment was $4.0 million , $3.4 million and $2.9 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. In 2018 , the Company recognized $2.4 million in impairment charges, comprised of $1.9 million related to unused manufacturing equipment abandoned in July, $0.3 million related to the expiration of a credit towards a purchase of certain manufacturing equipment, and the remaining $0.2 million impairment charges relate primarily to the discontinuance of software applications. In 2017, the Company recognized $1.1 million in impairment charges of which $0.8 million related to the discontinuance of a software capital project and $0.3 million related to intellectual property rights licensed as part of the ImaTx spin-out transaction in 2004. In 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. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
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) December 31, 2018 December 31, 2017 Developed technology 10 $ 979 $ 979 Accumulated amortization (881 ) (783 ) Developed technology, net 98 196 Acquired favorable lease 5 15 15 Accumulated amortization (4 ) (1 ) Acquired favorable lease, net 11 14 Intangible assets, net $ 109 $ 210 The Company recognized amortization expense of $0.1 million , $0.2 million , and $0.2 million in the years ended December 31, 2018 , 2017 and 2016 . The weighted-average remaining life of total amortizable intangible assets is 1.3 years for the developed technology and favorable lease asset. In the year ended December 31, 2017, the Company recorded an impairment charge of $0.3 million in general and administration expense in connection with the termination of the license agreements. See “ Note B—Summary of Significant Accounting Policies ” to the financial statements in this Annual Report on Form 10-K for a full description of the impairment charges related to intellectual property rights licensed as part of the ImaTx spin-out transaction in 2004. The estimated future aggregated amortization expense for intangible assets owned as of December 31, 2018 consisted of the following (in thousands): Amortization expense 2019 $ 101 2020 3 2021 3 2022 2 $ 109 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses consisted of the following (in thousands): December 31, 2018 December 31, 2017 Accrued employee compensation $ 3,138 $ 2,989 Deferred rent 132 115 Accrued legal expense 215 1,231 Accrued consulting expense 84 115 Accrued vendor charges 1,441 912 Accrued revenue share expense 1,134 968 Accrued clinical trial expense 549 196 Accrued other 1,237 1,194 $ 7,930 $ 7,720 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note J—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 facilities in leased buildings located in Wilmington, Massachusetts and Wallingford, Connecticut. The Billerica facility is leased under a long-term, non-cancellable lease that is scheduled to expire in October 2025. The Company has a right to extend the term for two successive five year terms following the termination of the lease. The Company leases its Wilmington, Massachusetts facility under a long-term, non-cancellable lease that commenced in April 2015 and will expire in July 2022 (the "Wilmington Lease"). The Company also rents a satellite facility under short-term non-cancellable operating lease. 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 July 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, Connecticut which houses the polishing and passivation processes. 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. The future minimum rental payments under the Company’s non-cancellable operating leases for real estate as of December 31, 2018 were as follows (in thousands): Year Minimum lease Payments 2019 $ 1,558 2020 1,595 2021 1,633 2022 1,397 2023-2025 2,939 $ 9,122 Rent expense of $1.5 million , $1.7 million , and $1.5 million for the years ended December 31, 2018 , 2017 , and 2016 , respectively, and was charged to operations. The Company’s real estate operating lease agreements contain scheduled rent increases, which are being amortized over the terms of the agreements using the straight-line method. Deferred rent was $0.7 million , $0.8 million , and $0.3 million as of December 31, 2018 , 2017 , and 2016 , respectively. Deferred rent is included in accrued expenses and other long-term liabilities. 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 revenue, 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 may be tiered based on the level of net revenue 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 has claims covering the applicable product. Philipp Lang, M.D., our former Chief Executive Officer and former director, 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 revenue 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, iTotal PS, and Conformis Hip System 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 has a claim covering the applicable product. These payment obligations survived the termination of Dr. Lang’s employment with the Company. We have raised concerns with Dr. Lang relating to this revenue share agreement and have been seeking to enter into discussion with Dr. Lang concerning the scope of this agreement. In October of 2018, we requested that Dr. Lang provide consulting services as permitted under Dr. Lang’s revenue share agreement. However, he failed to respond to such request and, as a result, beginning in the fourth quarter of 2018, the revenue share percentage rate owed to Dr. Lang has been reduced by 50% within the scope of his agreement. The Company incurred revenue share expense for Dr. Lang of $0.7 million , $1.0 million and $1.0 million for the years ended December 31, 2018 , 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 $3.1 million during the year ended December 31, 2018 , representing 4.0% of product revenue, $3.7 million during the year ended December 31, 2017 , representing 4.8% of product revenue, and $3.5 million during the year ended December 31, 2016 , representing 4.4% of product revenue. Revenue share expense is included in research and development. See “ Note L—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 product royalty and research and development. 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. The following table summarizes the Company's contractual obligations as of the year ended December 31, 2018 (in thousands): Payment Due by Period Total Less than 1 year Years 1 to 3 Years 3 to 5 After 5 years Contractual Obligations (1)(2) $ 1,355 $ 526 $ 650 $ 179 $ — (1) Represents amounts payable under our product royalty agreement, operating leases for office equipment, automobile leases, and a software development collaboration project with a remaining term in excess of one year. (2) This table does not include: (a) revenue share obligations to past and present members of our scientific advisory board and one of our directors, as the amounts of such payments are not known with certainty; and (b) contracts that are entered into in the ordinary course of business that are not material in the aggregate in any period presented above. See "—Revenue share agreements" for a description of our revenue share arrangements. There have been no contingent liabilities requiring accrual at December 31, 2018 or December 31, 2017 . Legal proceedings In the ordinary course of the Company's business, the Company is subject to routine risk of 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. 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 implant systems used in conjunction with the Visionaire instrumentation infringe nine of the Company's patents, and it requested, 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 implant 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 the Company infringed ten patents owned or exclusively licensed by Smith & Nephew: two of those patents Smith & Nephew alleges are infringed by the Company's iUni and iDuo products; three of those patents Smith & Nephew alleges are infringed by the Company's iTotal products; and five of those patents Smith & Nephew licenses from Kinamed, Inc. of Camarillo, California and alleged 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 the Company. With the dismissal of all claims involving Kinamed's patents, Kinamed was no longer a party to the lawsuit. On January 27, 2017, Smith & Nephew filed a motion seeking a stay of the Smith & Nephew Lawsuit until any requested IPRs (defined and described below) were resolved. On April 27, 2017, the Court stayed certain aspects of the proceedings and indicated that it would make a final decision on the motion to stay after the USPTO has decided more of the petitions for Inter Partes Review (“IPR”). Between September 21, 2016 and March 1, 2017, Smith & Nephew filed sixteen petitions with the United States Patent & Trademark Office (“USPTO”) requesting IPRs 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 were 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 ("Subject Patent Claims"). On April 24, 2018, the Supreme Court of the United States issued its ruling in SAS Institute, Inc. v. Iancu (the “SAS Decision”) which held that the IPR proceedings cannot be instituted in part and denied in part. In response to the SAS Decision and guidance from the USPTO, the Patent Trial and Appeal Board (“PTAB”) issued an order on April 27, 2018 including the Subject Patent Claims within the prior instituted IPR proceedings. In total, the USPTO instituted IPR proceedings for claims in six of the patents in the Smith & Nephew lawsuit ( five patents that were currently asserted, and one of the patents that was voluntarily dismissed from the lawsuit), and denied the petitions for claims in three of the patents ( two patents that were currently asserted and one of the patents that was voluntarily dismissed from the lawsuit). Smith & Nephew filed requests for rehearing of three of the petitions that were denied and the PTAB denied those requests. Smith & Nephew filed requests with the USPTO for reexamination of two of the patents for which IPR proceedings were not instituted and the USPTO granted those requests for reexamination. On August 7, 2018 and October 2, 2018, the USPTO ruled in the Company's favor on both reexamination proceedings finding the claims patentable in both patents. Between December 18, 2017 and April 18, 2018, IPR hearings were held for the six patents for which IPR proceedings were instituted. On March 26, 2018, the USPTO issued its first ruling holding that the Company's U.S. Patent No. 9,055,953 (the “’953 Patent”) is invalid over prior art. On April 19, 2018, the USPTO issued its second ruling holding that the Company's U.S. Patent No. 9,216,025 (the “‘025 Patent”) is invalid over prior art. Following a grant by the U.S. Court of Appeals for the Federal Circuit (the “Federal Circuit”) of the Company's request for consolidation, the Company filed an opening brief on October 1, 2018, appealing the PTAB’s rulings on the ‘953 Patent and the ‘025 patent. On June 11, 2018, the USPTO issued its third ruling holding that a subset of claims in the Company's U.S. Patent No. 7,981,158 (the “‘158 Patent”) are invalid over prior art. On June 12, 2018, the USPTO issued its fourth ruling holding that a subset of claims in the Company's U.S. Patent No. 8,551,169 (the “‘169 Patent”) are invalid over prior art. The ’953 Patent is not part of the lawsuit having been voluntarily dismissed on March 9, 2017. The ‘025, ‘169 and ‘158 Patents were part of the lawsuit. On September 26, 2018, the PTAB terminated the remaining IPR proceedings in response to a joint motion to terminate filed by the Company and Smith & Nephew pursuant to the Settlement and License Agreement (defined and described below). On September 14, 2018, the Company and Smith & Nephew entered into a Settlement and License Agreement (the “Settlement and License Agreement”) including terms for resolving all of the parties’ existing patent disputes. The Settlement and License Agreement includes terms for dismissal of all outstanding litigation, prohibitions against commencement of litigation with respect to existing product lines, and Smith & Nephew agreed to cease their opposition to certain of the Company's patents currently in IPR proceedings. Pursuant to the Settlement and License Agreement, the Company granted to Smith & Nephew (i) a fully paid-up, non-exclusive, worldwide license to certain patents for the exploitation of patient-specific instrumentation for use with off-the-shelf knee implants, (ii) a royalty-bearing, non-exclusive, worldwide license to certain patents in the event Smith & Nephew commercializes patient-specific instrumentation for use with off-the-shelf implants other than knee implants, and (iii) a fully paid-up, non-exclusive, worldwide license to certain other patents for exploitation of off-the-shelf implants. Also pursuant to the Settlement and License Agreement, Smith & Nephew granted to the Company a fully paid-up, non-exclusive, worldwide license to certain patents for the exploitation of patient-specific implants and paid the Company $10.5 million . The Company is not required to make a payment to Smith & Nephew. The foregoing description is qualified in its entirety by reference to the text of the Settlement and License Agreement filed as exhibit 10.1 to the Company's quarterly report on Form 10-Q for the period ended September 30, 2018. 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 | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt and Notes Payable | Debt and Notes Payable Long-term debt consisted of the following (in thousands): December 31, 2018 December 31, 2017 Term A Loan $ 7,500 $ 15,000 Term B Loan 7,500 15,000 15,000 30,000 Less unamortized debt issuance costs (208 ) (333 ) Long-term debt, less debt issuance costs $ 14,792 $ 29,667 Principal payments due as of December 31, 2018 consisted of the following (in thousands): Principal 2019 $ — 2020 6,875 2021 7,500 2022 625 Total $ 15,000 2017 Secured Loan Agreement On January 6, 2017, the Company entered into the 2017 Secured Loan Agreement with Oxford and accessed $15 million under Term Loan A at closing and an additional $15 million of borrowings under the Term B Loan on June 30, 2017. On July 31, 2018, the Company and Oxford entered into a fourth amendment to the 2017 Secured Loan Agreement, or the Fourth Amendment, with Oxford. The Fourth Amendment added the requirement that the Company maintain at least $10 million in cash collateral and required liens on the Company's copyrights, trademarks and patents. Pursuant to the Fourth Amendment, the Company also agreed to pay Oxford a fee of $1 million within 30 days of consummation of a sale of the Company, if such sale occurs prior to the first anniversary of the Company's full repayment of obligations under the 2017 Secured Loan Agreement. In addition, the Fourth Amendment amended the Company's financial covenants, including increasing of the revenue covenant beginning in January 2019. On December 13, 2018, the Company entered into a fifth amendment to the 2017 Secured Loan Agreement, or the Fifth Amendment, with Oxford, and pursuant to the Fifth Amendment, the Company pre-paid $15 million aggregate principal amount of the $30 million outstanding principal amount, as a pro rata portion of the Term A Loan and Term B Loan, together with accrued and unpaid interest thereon and a pro rata prepayment fee. Under the Fifth Amendment, the Company's cash collateral requirements was reduced to $5 million . The Fifth Amendment also reduced the revenue milestones through December 31, 2019. New minimum revenue milestones, based on product revenue projections, are to be established prior to the start of 2020 and prior to the start of each fiscal year thereafter by the mutual agreement of Oxford and the Company. If the Company is not able to agree with Oxford on new minimum revenue milestones for 2020 or a fiscal year thereafter, the Company will have to refinance the 2017 Secured Loan Agreement by March 31, 2020 or that next fiscal year, and if the Company fails to refinance the 2017 Secured Loan Agreement, the Company must notify Oxford of such default and Oxford would be permitted to exercise remedies against the Company and our assets in respect of such event of default, including taking control of our cash and commencing foreclosure proceedings on our other assets. As of December 31, 2018, the Company was not in breach of covenants under the credit facility. 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 Company intends to refinance the 2017 Secured Loan Agreement before the interest only period ends and the principal repayments begin in January 2020. The Company may not be able to refinance or obtain additional financing on terms favorable to the Company, or at all. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted. The terms of these future equity or debt securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders or involve negative covenants that restrict the Company's ability to take specific actions, such as incurring additional debt or making capital expenditures. If the Company is unable to refinance the 2017 Secured Loan Agreement before the interest only period ends or shortly thereafter, then the Company will be required to make principal repayments beginning in January 2020 which will require the Company to raise additional capital through the sale of equity and the ownership interest of our stockholders will be diluted. 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. As of December 31, 2018 , the Company was not in breach of covenants under the Amended 2017 Secured Loan Agreement. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note L—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 $175,000 , $150,000 , and $150,000 in expenses in connection with the filing and prosecution of the patent applications licensed to the Company by Vertegen for the years ended December 31, 2018 , 2017 , and 2016 respectively. 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 J—Commitments and Contingencies ", 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., former Chief Executive Officer and director, 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 our net revenue, ranging from 0.875 % to 1.33 %, with respect to all of our current and planned products, including the Company’s iUni, iDuo, iTotal CR, iTotal PS, and Conformis Hip System 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 revenue 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 include a claim covering the applicable product. These payment obligations survived the termination of Dr. Lang’s employment with the Company. We have raised concerns with Dr. Lang relating to this revenue share agreement and have been seeking to enter into discussions with Dr. Lang concerning the scope of this agreement. In October of 2018, the Company requested that Dr. Lang provide consulting services as permitted under Dr. Lang’s revenue share agreement. However, he failed to respond to such request and, as a result, beginning in the fourth quarter of 2018, the revenue share percentage rate owed to Dr. Lang has been reduced by 50% within the scope of his agreement. The Company incurred revenue share expense for Dr. Lang of $0.7 million , $1.0 million and $1.0 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
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. Summary of common stock activity was as follows: Shares Outstanding December 31, 2016 43,399,547 Issuance of common stock - option & warrant exercises 535,734 Issuance of restricted common stock 1,195,196 Issuance of common stock - ATM offering 228,946 Issuance of common stock - BPM acquisition 169,096 Outstanding December 31, 2017 45,528,519 Issuance of common stock - option exercises 80,000 Issuance of restricted common stock 1,516,295 Issuance of common stock - ATM offering 556,334 Issuance of common stock - LPC offering 2,276,398 Issuance of common stock - 2018 offering 15,333,333 Outstanding December 31, 2018 65,290,879 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 December 31, 2018 and December 31, 2017 . Demand registration rights In conjunction with the IPO, the Company entered into an Amended and Restated Information and Registration Rights Agreement effective June 29, 2015 (the “Registration Rights Agreement”), which provided, among other things, registration rights to certain investors that had held the Company's preferred stock prior to the IPO. Subject to specified limitations set forth in a registration rights agreement, at any time, the holders of at least 25% of the then outstanding registrable shares may at any time demand in writing that the Company register all or a portion of the registrable shares under the Securities Act on a Form other than Form S-3 for an offering of at least 20% of the then outstanding registrable shares or a lesser percentage of the then outstanding registrable shares provided that it is reasonably anticipated that the aggregate offering price would exceed $20 million . The Company is not obligated to file a registration statement pursuant to these rights on more than two occasions. Additionally, after such time as the Company became eligible to use Form S-3, subject to specified limitations set forth in the registration rights agreement, the holders of at least 25% of the then outstanding registrable shares became able to at any time demand in writing that the Company register all or a portion of the registrable shares under the Securities Act on Form S-3 for an offering of at least 25% of the then outstanding registrable shares having an anticipated aggregate offering price to the public, net of selling expenses, of at least $5 million (a “Resale Registration Statement”). The Company is not obligated to effect a registration pursuant to a Resale Registration Statement on more than one occasion. Incidental registration rights If, the Company proposes to file a registration statement in connection with a public offering of its common stock, subject to certain exceptions, the holders of registrable shares are entitled to notice of registration and, subject to specified exceptions, including market conditions, the Company will be required, upon the holder’s request, to register their then held registrable shares. 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 warrants were issued in the years ended December 31, 2018 and 2017 . All warrants were exercisable immediately upon issuance. Common stock warrants The Company also issued warrants to certain investors and consultants to purchase shares of common stock. Warrants to purchase 28,926 shares of common stock were outstanding as of December 31, 2018 and December 31, 2017 . Outstanding warrants are currently exercisable with varying exercise expiration dates from 2020 through 2024. Summary of common stock warrant activity was as follows: Number of Warrants Weighted Average Exercise Price Per Share Number of Warrants Exercisable Weighted Average Price Per Share Weighted Average Contractual Life Outstanding December 31, 2016 171,783 $ 7.47 171,783 $ 7.47 1.62 Cancelled/expired (142,857 ) 7.00 (142,857 ) 7.00 — Outstanding December 31, 2017 28,926 $ 9.80 28,926 $ 9.80 5.66 Outstanding December 31, 2018 28,926 $ 9.80 28,926 $ 9.80 4.66 Stock option plans In June 2004, the Company authorized the adoption of the 2004 Stock Option and Incentive Plan (the “2004 Plan”). Under the 2004 Plan, options were granted to persons who were, at the time of grant, employees, officers, or directors of, or consultants or advisors to, the Company. The 2004 Plan provided for the granting of non-statutory options, incentive options, stock bonuses, and rights to acquire restricted stock. The option price at the date of grant was determined by the Board of Directors and, in the case of incentive options, could not be less than the fair market value of the common stock at the date of grant, as determined by the Board of Directors. Options granted under the 2004 Plan generally vest over a period of four years and are set to expire ten years from the date of grant. In February 2011, the Company terminated the 2004 Plan and all options outstanding under it were transferred to the 2011 Stock Option/Stock Issuance Plan (the “2011 Plan”). In February 2011, the Company authorized the adoption of the 2011 Plan. The 2011 Plan is divided into two separate equity programs, Option Grant Program and Stock Issuance Program. Per the 2011 Plan, options can be granted to persons who are, at the time, employees, officers, or directors of, or consultants or advisors to, the Company. The 2011 Plan provides for the granting of non-statutory options, incentive options and common stock. The price at the date of grant is determined by the Board of Directors and, in the case of incentive options and common stock, cannot be less than the fair market value of the common stock at the date of grant, as determined by the Board of Directors. Options granted under the 2011 Plan generally vest over a period of four years and expire ten years from the date of grant. In June 2015, the Company terminated the 2011 Plan and all options outstanding under it were transferred to the 2015 Stock Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares of our common stock that will be reserved for issuance under the 2015 Plan is the sum of: (1) 2,000,000 ; plus (2) the number of shares equal to the sum of the number of shares of our common stock then available for issuance under the 2011 Plan and the number of shares of our common stock subject to outstanding awards under the 2011 Plan or under the 2004 Plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right; plus (3) 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 shares of our common stock outstanding on the first day of such fiscal year and (c) an amount determined by the Board. Our employees, officers, directors, consultants and advisors will be eligible to receive awards under the 2015 Plan. Incentive stock options, however, may only be granted to our employees. Options and restricted stock awards granted under the 2015 Plan generally vest over a period of four years and expire ten years from the date of grant. As of December 31, 2018 , 1,572,828 shares of common stock were available for future issuance under the 2015 Plan. 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, 2015 5,248,329 $ 5.56 $ 61,741 Granted 179,178 8.78 Exercised (1,467,692 ) 2.78 $ 8,219 Expired (81,251 ) 9.70 Cancelled/Forfeited (88,524 ) 9.93 Outstanding December 31, 2016 3,790,040 $ 6.60 $ 8,547 Granted 963,350 4.95 Exercised (535,734 ) 3.94 1,688 Expired (466,210 ) 7.17 Cancelled/Forfeited (123,451 ) 6.54 Outstanding December 31, 2017 3,627,995 $ 6.48 $ 96 Granted 165,219 1.36 Exercised (80,000 ) 1.40 1,688 Expired (589,051 ) 5.91 Cancelled/Forfeited (247,964 ) 5.10 Outstanding December 31, 2018 2,876,199 $ 6.57 $ — Total vested and exercisable 2,320,263 $ 7.05 $ — The total fair value of stock options that vested during the year ended December 31, 2018 was $1.1 million . The weighted average remaining contractual term for the total stock options outstanding was 4.68 years at December 31, 2018 . The weighted average remaining contractual term for the total stock options vested and exercisable was 3.75 years at December 31, 2018 . Restricted common stock award activity under the plan was as follows: Number of Shares Weighted Average Fair Value Unvested December 31, 2015 174,530 $ 22.31 Granted 873,589 8.61 Vested (66,839 ) 17.72 Forfeited (69,570 ) 11.83 Unvested December 31, 2016 911,710 10.32 Granted 1,421,364 4.20 Vested (767,785 ) 7.11 Forfeited (226,168 ) 7.36 Unvested December 31, 2017 1,339,121 $ 6.06 Granted 2,485,565 1.34 Vested (382,044 ) 6.49 Forfeited (969,270 ) 3.00 Unvested December 31, 2018 2,473,372 $ 2.45 The total fair value of restricted common stock awards that vested during the year ended December 31, 2018 was $ 2.5 million . 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. 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 weighted average fair value of options granted was $0.73 for the year ended December 31, 2018 , $2.49 for the year ended December 31, 2017 and $4.46 for the year ended December 31, 2016 . The fair value of options at date of grant was estimated using the Black-Scholes option pricing model, based on the following assumptions: Years Ended December 31, 2018 2017 2016 Risk-free interest rate 2.75% - 2.90% 2.10% - 2.30% 1.98% Expected term (in years) 6.25 6.02 - 6.25 6.25 Dividend yield —% —% —% Expected volatility 53.00% - 56.00% 51.00% - 53.00% 51.00% Risk-free interest rate. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. Expected term. The expected term of stock options represents the period the stock options are expected to remain outstanding and is based on the “SEC Shortcut Approach” as defined in “Share-Based Payment” (SAB 107) ASC 718-10-S99, “Compensation—Stock Compensation—Overall—SEC Materials ,” which is the midpoint between the vesting date and the end of the contractual term. With certain stock option grants, the exercise price may exceed the fair value of the common stock. In these instances, the Company adjusts the expected term accordingly. Dividend yield. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model. Expected volatility. Expected volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. The Company does not have sufficient history of market prices of its common stock as it is a newly public company. Therefore, the Company estimates volatility using historical volatilities of similar public entities. Forfeitures. 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". Prior to this election, the Company recognized share-based compensation net of estimated forfeitures over the vesting period of the respective grant. Stock-based compensation expense was $3.9 million , $6.0 million and $5.3 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. Stock-based compensation expense was recognized ratably over the period with forfeitures accounted for in the period in which they occurred. 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): Years Ended December 31, 2018 2017 2016 Cost of revenue $ 333 $ 441 $ 333 Sales and marketing 501 919 1,197 Research and development 1,029 1,920 1,466 General and administrative 2,023 2,768 2,328 $ 3,886 $ 6,048 $ 5,324 At December 31, 2018 , the Company had $1.2 million of total unrecognized compensation expense for options that will be recognized over a weighted average period of 2.51 years. At December 31, 2018 , the Company had $4.5 million of total unrecognized compensation expense for restricted awards recognized over a weighted average period of 2.65 years. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company files U.S. federal and state tax returns as well as foreign income tax returns. The Company has accumulated significant losses since its inception in 2004. For financial reporting purposes, loss before income taxes for the years ended December 31, 2018 , 2017 and 2016 includes the following components (in thousands): Years ended December 31, 2018 2017 2016 Loss before income taxes: U.S. $ (38,219 ) $ (53,274 ) $ (51,576 ) Non‑U.S. (5,085 ) (144 ) (5,949 ) $ (43,304 ) $ (53,418 ) $ (57,525 ) Significant components of the provision for income taxes for the years ended December 31, 2018 , 2017 and 2016 were as follows (in thousands): Years ended December 31, 2018 2017 2016 Current: Federal $ — $ — $ — State — — — Foreign 98 125 63 98 125 63 Deferred: Federal (37 ) 37 — State — — — Foreign — — — (37 ) 37 — Total $ 61 $ 162 $ 63 The Company accounts for income taxes under FASB ASC 740 Accounting for Income Taxes . Deferred tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A reconciliation of the income tax benefit at the statutory federal income tax rate as reflected in the financial statements was as follows: Years ended December 31, 2018 2017 2016 Tax at U.S. statutory rate (21.00 )% (34.00 )% (34.00 )% State taxes, net of federal benefits (3.48 ) (3.12 ) (2.70 ) Permanent items 1.03 1.96 0.42 Tax credit (2.27 ) (1.35 ) (1.06 ) Change in valuation allowance (198.36 ) (54.85 ) 33.95 Foreign rate differential (1.21 ) (0.17 ) 1.04 Rate change (0.09 ) 90.78 (0.06 ) Uncertain tax positions 0.22 0.41 2.06 NQ Stock option expirations & forfeitures 1.29 — — Federal NOL limitation 196.32 — — State NOL limitation 25.72 — — Deferred revenue - ASC 606 implementation adjustment 2.49 — — Other (0.52 ) 0.64 0.46 0.14 % 0.30 % 0.11 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes Significant components of the Company’s deferred tax assets (liabilities) consisted of the following (in thousands): Years ended December 31, 2018 2017 Deferred tax assets: Federal and state net operating loss carryforwards $ 644 $ 90,437 Foreign net operating loss carryforwards 2,687 2,561 Accrued expenses 99 157 Credits 7,038 6,055 Deferred revenue — 1,068 Intangibles 1,350 — Stock compensation expense 1,917 1,805 Other 3,151 2,111 Total deferred tax assets 16,886 104,194 Valuation allowance (16,064 ) (103,430 ) Net deferred tax assets 822 764 Deferred tax liabilities: Fixed assets (822 ) (664 ) Intangibles — (134 ) Other — (3 ) Net deferred tax liabilities (822 ) (801 ) Net deferred tax liabilities $ — $ (37 ) A valuation allowance is required to reduce the deferred tax assets reported if, based on weight of evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of all of the evidence, both positive and negative, the Company determined that a $16.1 million valuation allowance at December 31, 2018 was necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation allowance for the current year was $87.4 million . The Company provided a valuation allowance for the full amount of its net deferred tax asset for all periods because realization of any future tax benefit cannot be sufficiently assured as the Company does not expect income in the near term. At December 31, 2018 , the Company had approximately $403.6 million of federal net operating loss carryforwards and approximately $219.2 million of state net operating loss carryforwards that if not utilized, will begin to expire in 2020 for federal tax purposes and continue to expire at various dates starting for state tax purposes. The utilization of such net operating loss carryforwards and realization of tax benefits in future years depends predominantly upon having taxable income. The limitations under Section 382 for Federal and State are $345.8 million and $11.1 million as of December 31, 2018 . The limitations may reduce the amount of federal and state NOLs and credits of $403.6 million and $219.2 million , respectively, that can be utilized to offset future taxable income and tax. Utilization of the NOLs and credits may be subject to a substantial annual limitation due to ownership change limitations that have occurred or that could occur in the future, as required by Section 382 and Section 383 of the Code. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three‑year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. The Company underwent an ownership change in January 2018 and as a result the Company is subject to an annual limitation of approximately $1.4 million . The Company also had foreign net operating losses of approximately $30.5 million as of December 31, 2018 , which may be available to offset future income recognized in the Federal Republic of Germany and the United Kingdom. The net operating losses in Germany and the United Kingdom have indefinite carryforward periods. The Company has adopted the accounting guidance related to uncertainty in income taxes. The total liability for unrecognized income tax benefits was approximately $6.8 million as of December 31, 2018 , $5.1 million as of December 31, 2017 and $4.9 million of December 31, 2016 . Of the total liability at December 31, 2018 and 2017 , $6.4 million and $4.9 million , respectively, were netted against deferred tax assets. The Company recognizes interest accrued and penalties, if applicable, related to unrecognized tax benefits in income tax expense. The Company does not expect any significant changes in the next 12 months. The reconciliation below summarizes the Company's unrecognized tax benefits for the respective periods. These amounts primarily relate to transactions between the Company and its foreign subsidiaries, including accrued interest. Years ended December 31, 2018 2017 2016 Unrecognized tax benefits beginning of year $ 5,136 $ 4,918 $ 3,730 Gross change for current year positions 1,628 219 1,187 Unrecognized tax benefits end of the year $ 6,764 $ 5,136 $ 4,918 As of December 31, 2018 , the Company was open to examination in the U.S. federal and certain state jurisdictions for all of the Company’s tax years since the net operating losses may potentially be utilized in future years to reduce taxable income. The Company has been audited in Germany through 2015. The net operating loss carryforward from periods prior to 2015 may be utilized against taxable income in future periods and the net operating loss carryforward can be challenged at that time. At December 31, 2018 , foreign earnings, which were not significant, have been retained indefinitely by foreign subsidiary companies for reinvestment; therefore, no provision has been made for income taxes that would be payable upon the distribution of such earnings, and it would not be practicable to determine the amount of the related unrecognized deferred income tax liability. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company could be subject to immaterial withholding taxes payable to the various foreign countries. 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 the Company can recognize them and therefore, it has accounted for a cumulative-effect adjustment of $7.7 million during the twelve months ended December 31, 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. On December 22, 2017, H.R.1., known as the Tax Cuts and Jobs Act, was signed into law. The new law did not have a significant impact on the Company’s consolidated financial statements for the year ended December 31, 2017. However, the reduction of the U.S. federal corporate tax rate from 35% to 21% resulted in increases to the amounts reflected in “(Benefit from) provision for income taxes attributable to valuation allowances” and “Rate change” in the Company’s tax reconciliation table above for the year ended December 31, 2017 compared to the year ended December 31, 2016. The change in the U.S. federal corporate tax rate, which was effective January 1, 2018, is also reflected in the Company’s deferred tax table above. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118's ("SAB 118") to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of H.R.1. The Company recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The Company did not record any adjustments in the year ended December 31, 2018 to these provisional amounts that were material to its financial statements. As of December 31, 2018, the Company’s accounting treatment is complete. |
Segment and Geographic Data
Segment and Geographic Data | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment and Geographic Data | Note O—Segment and Geographic Data The Company operates as one reportable segment as described in " Note B—Summary of Significant Accounting Policies " 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 the world, which consists of Europe predominately (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): Years Ended December 31, 2018 2017 2016 Product Revenue United States $ 68,057 $ 64,307 $ 62,366 Germany 9,007 11,296 14,701 Rest of World 1,563 1,497 1,854 $ 78,627 $ 77,100 $ 78,921 December 31, 2018 2017 Property and equipment, net United States $ 14,367 $ 16,424 Rest of World 72 90 $ 14,439 $ 16,514 |
Employee Savings Plan
Employee Savings Plan | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Compensation and Employee Benefit Plans | Employee Savings Plan We have established an employee savings plan pursuant to Section 401(k) of the Internal Revenue Code. The plan allows participating employees to deposit into tax deferred investment accounts up to 80% of eligible earnings, subject to annual limits. We make contributions to the plan in an amount equal to 50% of elective deferrals on up to 5% of the participant’s eligible earnings. We contributed approximately $561,000 , $457,000 and $478,000 to the plan during the years ended December 31, 2018 , 2017 and 2016 , respectively. |
Selected Quarterly Financial In
Selected Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Selected Quarterly Financial Information | Selected Quarterly Financial Information (Unaudited) Three Months Ended December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018 Total revenue $ 22,049 $ 28,984 $ 19,100 $ 19,656 Gross profit 10,868 19,719 9,111 8,787 Net loss (9,870 ) (7,437 ) (14,057 ) (12,001 ) Net loss per share - basic and diluted $ (0.16 ) $ (0.12 ) $ (0.24 ) $ (0.22 ) Three Months Ended December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 Total revenue $ 20,751 $ 18,425 $ 18,484 $ 20,455 Gross profit 8,757 7,314 6,248 6,494 Net loss (11,858 ) (12,472 ) (12,090 ) (17,160 ) Net loss per share - basic and diluted $ (0.27 ) $ (0.29 ) $ (0.28 ) $ (0.4 ) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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 revenue recognition, accounts receivable valuation, inventory reserves, goodwill valuation, intangible valuation, purchase accounting, impairment assessments, equity instruments, stock compensation, income tax reserves and related allowances, and the lives of property and equipment. Actual results may differ from those estimates. |
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. On an on-going basis, the Company validates alternate suppliers relative to certain key components as needed. For the years ended December 31, 2018 , 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 at December 31, 2018 and 2017 . |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries including ImaTx, Inc., or ImaTx, ConforMIS Europe GmbH, ConforMIS UK Limited, ConforMIS Hong Kong Limited, and Conformis Cares LLC. All 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 when purchased, 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. 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. The carrying value of the debt approximates fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments. |
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 and revenue is recognized and an unbilled receivable is recorded. Under ASC 606, an enforceable contract is met either at or prior to the procedure being performed. 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 net realizable 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 based on net realizable value. Appropriate consideration is given to inventory items sold at negative gross margin, 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 and purchase accounting | Business combinations and purchase accounting The Company includes the results of operations of the businesses that it acquires as of the applicable acquisition date. The purchase price of the acquisition is allocated 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. |
Goodwill | Goodwill Goodwill relates to amounts that arose in connection with the acquisition of ImaTx, Inc. in 2009 and the acquisition of BPM 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 one-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 one-step goodwill impairment test will be performed. During the three months ended September 30, 2018, the Company's qualitative analysis indicated a triggering event required a step one analysis to determine the fair value of the reporting unit for the period ended September 30, 2018. The Company's drop in market capitalization and decrease in cash flow position were indicators of impairment. The Company determined the fair value of the reporting unit using the combination of its market capitalization, income approach, and the merger and acquisition method concluding that the fair value of the reporting unit is less than the carrying amount in excess of Goodwill, therefore fully impairing Goodwill. |
Intangibles and other long-lived assets | Intangibles and other long-lived assets Intangible assets consist of developed technology acquired as part of the ImaTx spin-out transaction in 2004 and a favorable lease asset from the Broad Peak Manufacturing, LLC, or BPM, acquisition in August 2017. 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. To evaluate for impairment, the Company compares the undiscounted cash flows to be generated from such assets or groups of assets to the carrying value. If the undiscounted cash flows are less than the carrying value, the amount of impairment is measured based on fair value. 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. In 2018 , the Company recognized $2.4 million in impairment charges, comprised of $1.9 million related to unused manufacturing equipment abandoned in July, $0.3 million related to the expiration of a credit towards a purchase of certain manufacturing equipment, and the remaining $0.2 million impairment charges relate primarily to the discontinuance of software applications. In 2017, the Company recognized $1.1 million in impairment charges of which $0.8 million related to the discontinuance of a software capital project and $0.3 million related to intellectual property rights licensed as part of the ImaTx spin-out transaction in 2004. In 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. Impairment charges are included in General and administrative expense. |
Revenue recognition | Revenue recognition The Company adopted ASU No. 2014-9, “Revenue from Contracts with Customers (ASC 606)” as of January 1, 2018. Based on the Company's assessment, generally revenue recognition from the sale of its products to customers effectively remains unaffected by the adoption of ASC 606. The assessment of the royalty revenue associated with the Company's 2015 license agreements previously entered into with Wright Medical Group Inc. and MicroPort Orthopedics, Inc. was affected by the adoption of ASC 606. Previously, under ASC 605, the Company recognized an initial $5.1 million , in aggregate, as deferred royalty revenue under these agreements, to be recognized ratably through 2027 and 2031 for Wright Medical Group Inc. and MicroPort Orthopedics, Inc., respectively. The Company's analysis of these contracts indicated that under ASC 606 the licenses are functional and thus revenue would have been recognized in full on the execution date. Further the ongoing royalty from MicroPort was previously recognized as royalty revenue upon receipt of payment. Under ASC 606, royalty is recognized in the period the sale occurred. The Company elected to apply the adoption of ASC 606 using the modified retrospective method for contracts that were not complete as of December 31, 2017, resulting in an adjustment to the 2018 opening balance of accumulated deficit to recognize the deferred royalty revenue immediately. Comparative information has not been restated and continues to be reported under the accounting policy in effect for those periods, including ASC 605, Revenue Recognition. The following table summarizes the balance sheet adjustments upon adoption of ASC 606 (in thousands): As Reported December 31, 2017 Balance at January 1, 2018 ASC 606 Adjustment Current Assets Royalty receivable $ — $ 200 $ 200 (1) Current liabilities Deferred revenue 305 — (305 ) (2) Long-term liabilities Deferred revenue 4,014 — (4,014 ) (2) Stockholders' equity Accumulated deficit (436,821 ) (432,302 ) (4,519 ) (1),(2) (1) MicroPort sales-based royalty recognized in period earned under Topic 606, previously recognized when cash received and amortization of deferred royalty revenue. (2) Wright Medical and MicroPort royalty deferred and recognized ratably through 2027 and 2031, respectively, under Topic 605, recognized in full at contract inception date under Topic 606. The following table summarizes the effect of ASC 606 on the Company's consolidated financial statements as of December 31, 2018 (in thousands, except per share amounts): Balance Sheet As Reported Pro-forma (1) Effect Current Assets Royalty receivable $ 145 $ — $ 145 (2) Current liabilities Deferred revenue — 305 (305 ) (3) Long-term liabilities Deferred revenue — 3,709 (3,709 ) (3) Stockholders' equity Accumulated deficit (475,667 ) (471,507 ) 4,160 (2),(3) Statement of Operations As Reported Pro-forma (1) Effect Revenue Royalty $ 11,162 $ 11,521 $ (359 ) (2),(3) Net Loss (43,365 ) (43,006 ) (359 ) (2),(3) Net loss per share - basic and diluted $ (0.74 ) $ (0.73 ) $ (0.01 ) Statement of Cash Flows As Reported Pro-forma (1) Effect Cash flows form operating activities: Net loss $ (43,365 ) $ (43,006 ) $ (359 ) (2),(3) Changes in operating assets and liabilities (26,982 ) (27,341 ) 359 (2),(3) (1) Pro-forma balances without adoption of ASC 606. (2) Effect relates to MicroPort sales-based royalty recognized in period earned under Topic 606, previously recognized when cash received and amortization of deferred royalty revenue. (3) Effect relates to Wright Medical and MicroPort royalty deferred and recognized ratably through 2027 and 2031, respectively, under Topic 605, recognized in full at contract inception date under Topic 606. Revenue Recognition Revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of December 31, 2018. Payment is typically due between 30 - 60 days from invoice. To the extent that the transaction price includes variable consideration, such as prompt-pay discounts or rebates, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value to which the Company expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Actual amounts of consideration ultimately received may differ from the Company's estimates. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on observable prices or a cost-plus margin approach when one is not available. Revenue is recognized at the time the related performance obligation is satisfied by transferring control of a promised good or service to a customer. The Company's performance obligations are satisfied at the same time, typically upon surgery, therefore, product revenue is recognized at a point in time upon completion of the surgery. Since the Company does not have contracts that extend beyond a duration of one year, there is no transaction price related to performance obligations that have not been satisfied. Certain customer contracts include terms that allow the Company to bill for orders that are cancelled after the product is manufactured and could result in revenue recognition over time. However, the impact of applying over time revenue recognition was deemed immaterial. The Company does not have any contract assets or liabilities with customers. Unconditional rights to consideration are reported as receivables. Incidental items that are immaterial in the context of the contract are recognized as expense. Disaggregation of Revenue See " Note O—Segment and Geographic Data " for disaggregated product revenue by geography. Variable Consideration Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from rebates that are offered within contracts between the Company and some of its customers. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. The following table summarizes activity for rebate allowance reserve for the year ended December 31, 2018 (in thousands): December 31, 2018 Beginning Balance $ 119 Provision related to current period sales 129 Adjustment related to prior period sales 40 Payments or credits issued to customer (192 ) Ending Balance $ 96 Costs to Obtain and Fulfill a Contract The Company currently expenses commissions paid for obtaining product sales. Sales commissions are paid following the manufacture and implementation of the implant. Due to the period being less than one year, the Company will apply the practical expedient, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in sales and marketing expense. Further, the Company incurs costs to buy, build, replenish, restock, sterilize and replace the reusable instrumentation trays associated with the sale of its products and services. The reusable instrument trays are not contract specific and are used for multiple contracts and customers, therefore does not meet the criteria to capitalize. Shipping and handling costs Shipping and handling activities prior to the transfer of control to the customer (e.g. when control transfers after delivery) are considered fulfillment activities, and not performance obligations. 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 $1.6 million , $1.4 million and $1.6 million for the years ended December 31, 2018 , 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 | 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 December 31, 2018 and 2017 , 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 year. Net translation gains and losses are recorded in Accumulated other comprehensive (loss) income. 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, until July 1,2017, 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 the Company can recognize them and therefore, it has accounted for a cumulative-effect adjustment of $7.7 million during the year ended December 31, 2018 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. On December 22, 2017, H.R. 1, known as the Tax Cuts and Jobs Act, was signed into law, which includes a broad range of topics affecting corporations – including corporate tax rates, business deductions and international provisions. The effect of the tax law changes has been recognized in the Company's December 31, 2018 financial statements. |
Medical device excise tax | Medical device excise tax The Company has been 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 for the years ended December 31, 2018 , 2017 , and 2016 . On January 22, 2018, legislation was passed that suspends the medical device excise tax for sales in 2018 and 2019. The tax is not scheduled to take effect again until sales on or after January 1, 2020. It is unclear at this time if the suspension will be further extended, and we are currently subject to the tax after December 31, 2019. |
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. Forfeitures are accounted for as they occur. |
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 August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract". Under the new guidance, implementation costs should be evaluated for capitalization using the same approach as implementation costs associated with internal-use software and should be expensed over the term of the hosting arrangement, including any reasonably certain renewal periods. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. Prospective adoption for eligible costs incurred on or after the date of adoption or retrospective adoption are permitted. The Company does not expect the adoption of ASU 2018-15 will have a material impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement". This ASU modifies disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods. Early adoption is permitted for any eliminated or modified disclosures. The Company does not expect the adoption of ASU 2018-13 will have a material impact on its consolidated financial statements. In July 2018, the FASB issued ASU No. 2018-09, "Codification Improvements". This ASU makes amendments to multiple codification Topics and the transition and effective date is based on the facts and circumstances of each amendment. Many of the amendments in this ASU have transition guidance with effective dates for annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of the pronouncement on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, "Improvements to Nonemployee Share-Based Payment Accounting." This ASU supersedes Subtopic 505-50, "Equity - Equity-Based Payments to Non-Employees" and expands on the scope of Topic 718, "Compensation - Stock Compensation", to include share-based payments issued to nonemployees for goods or services. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption is permitted. The Company does not expect the adoption of ASU 2018-07 will have a material impact on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Credit Losses (Topic 326)." ASU 2016-13 requires that financial assets measured at amortized cost, such as trade receivables, be represented net of expected credit losses, which may be estimated based on relevant information such as historical experience, current conditions, and future expectation for each pool of similar financial asset. The new guidance requires enhanced disclosures related to trade receivables and associated credit losses. The guidance is effective beginning January 1, 2020. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements. 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. In July 2018, the FASB issued ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements" which allows entities the option not to recast the comparative periods presented when transitioning to Topic 842. The Company has completed its assessment to evaluate the impact on its consolidated financial statements. The Company will adopt this pronouncement and related disclosures commencing in the first quarter of 2019. The Company will elect the 'package of practical expedients' and carry over our prior conclusions about lease identification, lease classification and initial direct costs. The Company expects that, based on its assessment, the most significant effect will relate to the recognition of new right of use assets and lease liabilities in a range of approximately $7 million to $8 million related to the Company's real estate operating leases on the Balance Sheet. The Company has also completed its evaluation of changes to its processes and internal controls, as necessary, to meet the requirements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill are as follows: December 31, 2018 December 31, 2017 Beginning Balance 6,731 753 Acquired — 5,978 Impairment (6,731 ) — Ending Balance — 6,731 |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The following table summarizes the effect of ASC 606 on the Company's consolidated financial statements as of December 31, 2018 (in thousands, except per share amounts): Balance Sheet As Reported Pro-forma (1) Effect Current Assets Royalty receivable $ 145 $ — $ 145 (2) Current liabilities Deferred revenue — 305 (305 ) (3) Long-term liabilities Deferred revenue — 3,709 (3,709 ) (3) Stockholders' equity Accumulated deficit (475,667 ) (471,507 ) 4,160 (2),(3) Statement of Operations As Reported Pro-forma (1) Effect Revenue Royalty $ 11,162 $ 11,521 $ (359 ) (2),(3) Net Loss (43,365 ) (43,006 ) (359 ) (2),(3) Net loss per share - basic and diluted $ (0.74 ) $ (0.73 ) $ (0.01 ) Statement of Cash Flows As Reported Pro-forma (1) Effect Cash flows form operating activities: Net loss $ (43,365 ) $ (43,006 ) $ (359 ) (2),(3) Changes in operating assets and liabilities (26,982 ) (27,341 ) 359 (2),(3) (1) Pro-forma balances without adoption of ASC 606. (2) Effect relates to MicroPort sales-based royalty recognized in period earned under Topic 606, previously recognized when cash received and amortization of deferred royalty revenue. (3) Effect relates to Wright Medical and MicroPort royalty deferred and recognized ratably through 2027 and 2031, respectively, under Topic 605, recognized in full at contract inception date under Topic 606. The following table summarizes the balance sheet adjustments upon adoption of ASC 606 (in thousands): As Reported December 31, 2017 Balance at January 1, 2018 ASC 606 Adjustment Current Assets Royalty receivable $ — $ 200 $ 200 (1) Current liabilities Deferred revenue 305 — (305 ) (2) Long-term liabilities Deferred revenue 4,014 — (4,014 ) (2) Stockholders' equity Accumulated deficit (436,821 ) (432,302 ) (4,519 ) (1),(2) (1) MicroPort sales-based royalty recognized in period earned under Topic 606, previously recognized when cash received and amortization of deferred royalty revenue. (2) Wright Medical and MicroPort royalty deferred and recognized ratably through 2027 and 2031, respectively, under Topic 605, recognized in full at contract inception date under Topic 606. |
Contract with Customer, Asset and Liability | The following table summarizes activity for rebate allowance reserve for the year ended December 31, 2018 (in thousands): December 31, 2018 Beginning Balance $ 119 Provision related to current period sales 129 Adjustment related to prior period sales 40 Payments or credits issued to customer (192 ) Ending Balance $ 96 |
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) (in thousands): 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, 2017 $ (3,203 ) $ (33 ) $ (3,236 ) Change in period 1,733 33 1,766 Balance December 31, 2018 $ (1,470 ) $ — $ (1,470 ) |
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): Years Ended December 31, (in thousands, except share and per share data) 2018 2017 2016 Numerator: Numerator for basic and diluted loss per share: Net loss $ (43,365 ) $ (53,580 ) $ (57,588 ) Denominator: Denominator for basic loss per share: Weighted average shares 58,886,333 43,343,459 41,521,629 Basic loss per share attributable to Conformis, Inc. stockholders $ (0.74 ) $ (1.24 ) $ (1.39 ) Diluted loss per share attributable to Conformis, Inc. stockholders $ (0.74 ) $ (1.24 ) $ (1.39 ) |
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: Years Ended December 31, 2018 2017 2016 Common stock warrants — — 34,709 Stock options 55,346 365,105 1,959,030 Total 55,346 365,105 1,993,739 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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): December 31, 2018 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 9,837 $ — $ — $ 9,837 $ 9,837 $ — Level 1 securities: Money market funds 1,046 — — 1,046 1,046 — U.S. treasury bonds 10,494 — — 10,494 5,497 4,997 Level 2 securities: Corporate bonds 1,249 — — 1,249 — 1,249 Commercial paper 999 — — 999 — 999 Total $ 23,625 $ — $ — $ 23,625 $ 16,380 $ 7,245 December 31, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Cash and cash equivalents Short-term (1) investments Cash $ 9,849 $ — $ — $ 9,849 $ 9,849 $ — Level 1 securities: Money market funds 3,499 — — 3,499 3,499 — U.S. treasury bonds 9,243 — (4 ) 9,239 — 9,239 Level 2 securities: Corporate bonds 4,935 — (6 ) 4,929 — 4,929 Commercial paper — — — — — 12,712 Agency bonds 12,734 — (22 ) 12,712 — — Repurchase agreement $ 5,000 $ — $ — $ 5,000 $ 5,000 Total $ 45,260 $ — $ (32 ) $ 45,228 $ 18,348 $ 26,880 (1) Contractual maturity due within one year. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts Receivable, Net, Current [Abstract] | |
Schedule of accounts receivable | Accounts receivable consisted of the following (in thousands): December 31, December 31, Total receivables $ 13,634 $ 13,835 Allowance for doubtful accounts and returns (390 ) (635 ) Accounts receivable, net $ 13,244 $ 13,200 |
Allowance for doubtful accounts receivable | Summary of allowance for doubtful accounts and returns activity was as follows (in thousands): December 31, 2018 December 31, 2017 Beginning balance $ (635 ) $ (681 ) Provision for bad debts on trade receivables 72 15 Other allowances 58 (61 ) Accounts receivable write offs 115 92 Ending balance $ (390 ) $ (635 ) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consisted of the following (in thousands): December 31, December 31, Raw Material $ 4,498 $ 2,905 Work in process 1,518 1,718 Finished goods 3,518 4,561 Total Inventories $ 9,534 $ 9,184 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following (in thousands): Estimated Useful Life (Years) December 31, December 31, Equipment 5-7 $ 18,602 $ 19,331 Furniture and fixtures 5-7 954 955 Computer and software 3 8,783 7,877 Leasehold improvements 3-7 1,978 1,830 Reusable instruments 5 1,573 — Total property and equipment 31,890 29,993 Accumulated depreciation (17,451 ) (13,479 ) Property and equipment, net $ 14,439 $ 16,514 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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) December 31, 2018 December 31, 2017 Developed technology 10 $ 979 $ 979 Accumulated amortization (881 ) (783 ) Developed technology, net 98 196 Acquired favorable lease 5 15 15 Accumulated amortization (4 ) (1 ) Acquired favorable lease, net 11 14 Intangible assets, net $ 109 $ 210 |
Schedule of estimated future aggregated amortization expense | The estimated future aggregated amortization expense for intangible assets owned as of December 31, 2018 consisted of the following (in thousands): Amortization expense 2019 $ 101 2020 3 2021 3 2022 2 $ 109 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Liabilities and Other Liabilities [Abstract] | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): December 31, 2018 December 31, 2017 Accrued employee compensation $ 3,138 $ 2,989 Deferred rent 132 115 Accrued legal expense 215 1,231 Accrued consulting expense 84 115 Accrued vendor charges 1,441 912 Accrued revenue share expense 1,134 968 Accrued clinical trial expense 549 196 Accrued other 1,237 1,194 $ 7,930 $ 7,720 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum rental payments under the entity's non-cancellable operating leases | The future minimum rental payments under the Company’s non-cancellable operating leases for real estate as of December 31, 2018 were as follows (in thousands): Year Minimum lease Payments 2019 $ 1,558 2020 1,595 2021 1,633 2022 1,397 2023-2025 2,939 $ 9,122 |
Contractual obligation, fiscal year maturity schedule | The following table summarizes the Company's contractual obligations as of the year ended December 31, 2018 (in thousands): Payment Due by Period Total Less than 1 year Years 1 to 3 Years 3 to 5 After 5 years Contractual Obligations (1)(2) $ 1,355 $ 526 $ 650 $ 179 $ — (1) Represents amounts payable under our product royalty agreement, operating leases for office equipment, automobile leases, and a software development collaboration project with a remaining term in excess of one year. (2) This table does not include: (a) revenue share obligations to past and present members of our scientific advisory board and one of our directors, as the amounts of such payments are not known with certainty; and (b) contracts that are entered into in the ordinary course of business that are not material in the aggregate in any period presented above. See "—Revenue share agreements" for a description of our revenue share arrangements. |
Debt and Notes Payable (Tables)
Debt and Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long term debt | Long-term debt consisted of the following (in thousands): December 31, 2018 December 31, 2017 Term A Loan $ 7,500 $ 15,000 Term B Loan 7,500 15,000 15,000 30,000 Less unamortized debt issuance costs (208 ) (333 ) Long-term debt, less debt issuance costs $ 14,792 $ 29,667 |
Schedule of maturities of long-term debt | Principal payments due as of December 31, 2018 consisted of the following (in thousands): Principal 2019 $ — 2020 6,875 2021 7,500 2022 625 Total $ 15,000 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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 & warrant exercises 535,734 Issuance of restricted common stock 1,195,196 Issuance of common stock - ATM offering 228,946 Issuance of common stock - BPM acquisition 169,096 Outstanding December 31, 2017 45,528,519 Issuance of common stock - option exercises 80,000 Issuance of restricted common stock 1,516,295 Issuance of common stock - ATM offering 556,334 Issuance of common stock - LPC offering 2,276,398 Issuance of common stock - 2018 offering 15,333,333 Outstanding December 31, 2018 65,290,879 |
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, 2015 5,248,329 $ 5.56 $ 61,741 Granted 179,178 8.78 Exercised (1,467,692 ) 2.78 $ 8,219 Expired (81,251 ) 9.70 Cancelled/Forfeited (88,524 ) 9.93 Outstanding December 31, 2016 3,790,040 $ 6.60 $ 8,547 Granted 963,350 4.95 Exercised (535,734 ) 3.94 1,688 Expired (466,210 ) 7.17 Cancelled/Forfeited (123,451 ) 6.54 Outstanding December 31, 2017 3,627,995 $ 6.48 $ 96 Granted 165,219 1.36 Exercised (80,000 ) 1.40 1,688 Expired (589,051 ) 5.91 Cancelled/Forfeited (247,964 ) 5.10 Outstanding December 31, 2018 2,876,199 $ 6.57 $ — Total vested and exercisable 2,320,263 $ 7.05 $ — |
Schedule of restricted common stock award activity | Restricted common stock award activity under the plan was as follows: Number of Shares Weighted Average Fair Value Unvested December 31, 2015 174,530 $ 22.31 Granted 873,589 8.61 Vested (66,839 ) 17.72 Forfeited (69,570 ) 11.83 Unvested December 31, 2016 911,710 10.32 Granted 1,421,364 4.20 Vested (767,785 ) 7.11 Forfeited (226,168 ) 7.36 Unvested December 31, 2017 1,339,121 $ 6.06 Granted 2,485,565 1.34 Vested (382,044 ) 6.49 Forfeited (969,270 ) 3.00 Unvested December 31, 2018 2,473,372 $ 2.45 |
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: Years Ended December 31, 2018 2017 2016 Risk-free interest rate 2.75% - 2.90% 2.10% - 2.30% 1.98% Expected term (in years) 6.25 6.02 - 6.25 6.25 Dividend yield —% —% —% Expected volatility 53.00% - 56.00% 51.00% - 53.00% 51.00% |
Summary of stock-based compensation expense | The following is a summary of stock-based compensation expense (in thousands): Years Ended December 31, 2018 2017 2016 Cost of revenue $ 333 $ 441 $ 333 Sales and marketing 501 919 1,197 Research and development 1,029 1,920 1,466 General and administrative 2,023 2,768 2,328 $ 3,886 $ 6,048 $ 5,324 |
Common stock warrants | |
Summary of stock warrant activity | Summary of common stock warrant activity was as follows: Number of Warrants Weighted Average Exercise Price Per Share Number of Warrants Exercisable Weighted Average Price Per Share Weighted Average Contractual Life Outstanding December 31, 2016 171,783 $ 7.47 171,783 $ 7.47 1.62 Cancelled/expired (142,857 ) 7.00 (142,857 ) 7.00 — Outstanding December 31, 2017 28,926 $ 9.80 28,926 $ 9.80 5.66 Outstanding December 31, 2018 28,926 $ 9.80 28,926 $ 9.80 4.66 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of income before income tax, domestic and foreign | For financial reporting purposes, loss before income taxes for the years ended December 31, 2018 , 2017 and 2016 includes the following components (in thousands): Years ended December 31, 2018 2017 2016 Loss before income taxes: U.S. $ (38,219 ) $ (53,274 ) $ (51,576 ) Non‑U.S. (5,085 ) (144 ) (5,949 ) $ (43,304 ) $ (53,418 ) $ (57,525 ) |
Schedule of components of income tax expense (benefit) | Significant components of the provision for income taxes for the years ended December 31, 2018 , 2017 and 2016 were as follows (in thousands): Years ended December 31, 2018 2017 2016 Current: Federal $ — $ — $ — State — — — Foreign 98 125 63 98 125 63 Deferred: Federal (37 ) 37 — State — — — Foreign — — — (37 ) 37 — Total $ 61 $ 162 $ 63 |
Schedule of effective income tax rate reconciliation | A reconciliation of the income tax benefit at the statutory federal income tax rate as reflected in the financial statements was as follows: Years ended December 31, 2018 2017 2016 Tax at U.S. statutory rate (21.00 )% (34.00 )% (34.00 )% State taxes, net of federal benefits (3.48 ) (3.12 ) (2.70 ) Permanent items 1.03 1.96 0.42 Tax credit (2.27 ) (1.35 ) (1.06 ) Change in valuation allowance (198.36 ) (54.85 ) 33.95 Foreign rate differential (1.21 ) (0.17 ) 1.04 Rate change (0.09 ) 90.78 (0.06 ) Uncertain tax positions 0.22 0.41 2.06 NQ Stock option expirations & forfeitures 1.29 — — Federal NOL limitation 196.32 — — State NOL limitation 25.72 — — Deferred revenue - ASC 606 implementation adjustment 2.49 — — Other (0.52 ) 0.64 0.46 0.14 % 0.30 % 0.11 % |
Schedule of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets (liabilities) consisted of the following (in thousands): Years ended December 31, 2018 2017 Deferred tax assets: Federal and state net operating loss carryforwards $ 644 $ 90,437 Foreign net operating loss carryforwards 2,687 2,561 Accrued expenses 99 157 Credits 7,038 6,055 Deferred revenue — 1,068 Intangibles 1,350 — Stock compensation expense 1,917 1,805 Other 3,151 2,111 Total deferred tax assets 16,886 104,194 Valuation allowance (16,064 ) (103,430 ) Net deferred tax assets 822 764 Deferred tax liabilities: Fixed assets (822 ) (664 ) Intangibles — (134 ) Other — (3 ) Net deferred tax liabilities (822 ) (801 ) Net deferred tax liabilities $ — $ (37 ) |
Schedule of unrecognized tax benefits | Years ended December 31, 2018 2017 2016 Unrecognized tax benefits beginning of year $ 5,136 $ 4,918 $ 3,730 Gross change for current year positions 1,628 219 1,187 Unrecognized tax benefits end of the year $ 6,764 $ 5,136 $ 4,918 |
Segment and Geographic Data (Ta
Segment and Geographic Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of revenue by geographic information | Geographic information consisted of the following (in thousands): Years Ended December 31, 2018 2017 2016 Product Revenue United States $ 68,057 $ 64,307 $ 62,366 Germany 9,007 11,296 14,701 Rest of World 1,563 1,497 1,854 $ 78,627 $ 77,100 $ 78,921 |
Schedule of property, plant and equipment by geographic information | December 31, 2018 2017 Property and equipment, net United States $ 14,367 $ 16,424 Rest of World 72 90 $ 14,439 $ 16,514 |
Selected Quarterly Financial _2
Selected Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | Three Months Ended December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 Total revenue $ 20,751 $ 18,425 $ 18,484 $ 20,455 Gross profit 8,757 7,314 6,248 6,494 Net loss (11,858 ) (12,472 ) (12,090 ) (17,160 ) Net loss per share - basic and diluted $ (0.27 ) $ (0.29 ) $ (0.28 ) $ (0.4 ) |
Organization and Basis of Pre_2
Organization and Basis of Presentation - Liquidity (Details) - USD ($) | Dec. 13, 2018 | Jan. 06, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | Sep. 30, 2017 |
Liquidity and operations | |||||||
Accumulated deficit | $ (475,667,000) | $ (436,821,000) | $ (432,302,000) | ||||
Cash, cash equivalents and investments | 23,600,000 | ||||||
Restricted cash | 500,000 | 500,000 | |||||
Repayments on long-term debt | $ 15,000,000 | $ 0 | $ 485,000 | ||||
2017 Secured Loan Agreement | Term loan | |||||||
Liquidity and operations | |||||||
Repayments on long-term debt | $ 15,000,000 | ||||||
Aggregate principal amount | $ 30,000,000 | ||||||
Events of default, additional interest rate | 5.00% | ||||||
Events of default, threshold amount | $ 500,000 | ||||||
2017 Secured Loan Agreement | Term loan | Oxford Term Loan | |||||||
Liquidity and operations | |||||||
Maximum amount committed by the lenders under the loan and security agreement | 15,000,000 | ||||||
2017 Secured Loan Agreement | Term loan | Term B Loan | |||||||
Liquidity and operations | |||||||
Maximum amount committed by the lenders under the loan and security agreement | 15,000,000 | $ 15,000,000 | |||||
2017 Secured Loan Agreement | Term loan | Oxford Term Loan C | |||||||
Liquidity and operations | |||||||
Maximum amount committed by the lenders under the loan and security agreement | $ 20,000,000 |
Organization and Basis of Pre_3
Organization and Basis of Presentation - Litigation and Sale of Stock (Details) - USD ($) | Dec. 17, 2018 | Sep. 14, 2018 | Jan. 29, 2018 | May 10, 2017 | Jan. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Class of Stock [Line Items] | ||||||||
Amount of equity able to raise | $ 200,000,000 | |||||||
Maximum offering price | $ 50,000,000 | |||||||
Issuance of common stock (in shares) | 556,334 | 228,946 | ||||||
Net proceeds from issuance of common stock | $ 22,768,000 | $ 1,023,000 | $ 0 | |||||
Sale of stock (in dollars per share) | $ 1.50 | |||||||
Equity Distribution Agreement | ||||||||
Class of Stock [Line Items] | ||||||||
Issuance of common stock (in shares) | 785,280 | |||||||
Net proceeds from issuance of common stock | $ 1,500,000 | |||||||
Shelf Registration Statement | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued (in shares) | 15,333,333 | |||||||
Sale of stock net proceeds | $ 21,300,000 | |||||||
Over-Allotment Option | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued (in shares) | 2,000,000 | |||||||
LPC Agreements | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued (in shares) | 1,921,968 | |||||||
Sale of stock net proceeds | $ 1,000,000 | |||||||
Premium on previous day's closing price | 110.00% | |||||||
Purchase period | 36 months | |||||||
LPC Agreements Consideration for Commitment to Purchase Shares | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued (in shares) | 354,430 | |||||||
Smith & Nephew | ||||||||
Class of Stock [Line Items] | ||||||||
Proceeds from legal settlements | $ 10,500,000 | |||||||
Maximum | LPC Agreements | ||||||||
Class of Stock [Line Items] | ||||||||
Value of stock to be sold | $ 20,000,000 | |||||||
Minimum | LPC Agreements | ||||||||
Class of Stock [Line Items] | ||||||||
Sale of stock (in dollars per share) | $ 0.25 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Concentration RIsk) (Details) - customer | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentration risk, number of customers | 0 | 0 | 0 |
Customer Concentration Risk | |||
Concentration Risk [Line Items] | |||
Concentration risk, number of customers | 0 | 0 | 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Cash and Cash Equivalents and Asset Impairment Charges) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Accounting Policies [Abstract] | |||
Cash held in foreign bank accounts | $ 1,100 | $ 2,200 | |
Restricted cash | 500 | 500 | |
Asset Impairment Charges [Abstract] | |||
Impairment of long term assets | $ 2,433 | $ 1,113 | $ 123 |
Number of reporting units for goodwill testing | segment | 1 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Inventories) (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | |||
Inventory adjustments | $ 1.9 | $ 2.6 | $ 3.5 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill [Roll Forward] | |||
Beginning Balance | $ 6,731 | $ 753 | |
Acquired | 0 | 5,978 | |
Impairment | (6,731) | 0 | $ 0 |
Ending Balance | $ 0 | $ 6,731 | $ 753 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible assets | |||
Impairment of long term assets | $ 2,433 | $ 1,113 | $ 123 |
License agreements | |||
Intangible assets | |||
Asset impairment charges | 300 | ||
Impairment of intangible assets | 300 | ||
Equipment | |||
Intangible assets | |||
Impairment of long term assets | 1,900 | ||
Credit for Purchase of Equipment | |||
Intangible assets | |||
Impairment of long term assets | 300 | ||
Software and Software Development Costs | |||
Intangible assets | |||
Asset impairment charges | $ 200 | $ 800 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Revenue Recognition) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 30, 2015 | |
Worldwide license agreement | Wright Medical and MicroPort | ||||
Disaggregation of Revenue [Line Items] | ||||
Deferred royalty revenue | $ 5.1 | |||
Shipping and Handling | ||||
Shipping and handling costs | ||||
Shipping and handling expenses | $ 1.6 | $ 1.4 | $ 1.6 | |
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract with customer payment period | 30 days | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract with customer payment period | 60 days |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Impact of Topic 606 on Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Current Assets | ||||||||||||
Royalty receivable | $ 145 | $ 0 | $ 145 | $ 0 | $ 200 | |||||||
Current liabilities | ||||||||||||
Deferred revenue | 0 | 305 | 0 | 305 | 0 | |||||||
Long-term liabilities | ||||||||||||
Deferred revenue | 0 | 4,014 | 0 | 4,014 | 0 | |||||||
Stockholders' equity | ||||||||||||
Accumulated deficit | (475,667) | (436,821) | (475,667) | (436,821) | (432,302) | |||||||
Revenue | 22,049 | $ 28,984 | $ 19,100 | $ 19,656 | 20,751 | $ 18,425 | $ 18,484 | $ 20,455 | 89,789 | 78,115 | $ 79,899 | |
Net loss | $ (9,870) | $ (7,437) | $ (14,057) | $ (12,001) | $ (11,858) | $ (12,472) | $ (12,090) | $ (17,160) | $ (43,365) | $ (53,580) | $ (57,588) | |
Net loss per share - basic and diluted (in dollars per share) | $ (0.16) | $ (0.12) | $ (0.24) | $ (0.22) | $ (0.27) | $ (0.29) | $ (0.28) | $ (0.40) | $ (0.74) | $ (1.24) | $ (1.39) | |
Net cash used in operating activities | $ (26,982) | $ (37,856) | $ (49,132) | |||||||||
Change in Contract with Customer, Liability [Abstract] | ||||||||||||
Beginning Balance | $ 119 | 119 | ||||||||||
Provision related to current period sales | 129 | |||||||||||
Adjustment related to prior period sales | 40 | |||||||||||
Payments or credits issued to customer | (192) | |||||||||||
Ending Balance | $ 96 | $ 119 | 96 | 119 | ||||||||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||||||||||
Current Assets | ||||||||||||
Royalty receivable | 0 | 0 | 0 | 0 | ||||||||
Current liabilities | ||||||||||||
Deferred revenue | 305 | 305 | 305 | 305 | ||||||||
Long-term liabilities | ||||||||||||
Deferred revenue | 3,709 | 4,014 | 3,709 | 4,014 | ||||||||
Stockholders' equity | ||||||||||||
Accumulated deficit | (471,507) | $ (436,821) | (471,507) | (436,821) | ||||||||
Net loss | $ (43,006) | |||||||||||
Net loss per share - basic and diluted (in dollars per share) | $ (0.73) | |||||||||||
Net cash used in operating activities | $ (27,341) | |||||||||||
Accounting Standards Update 2014-09 | ASC 606 Adjustment | ||||||||||||
Current Assets | ||||||||||||
Royalty receivable | 145 | 145 | 200 | |||||||||
Current liabilities | ||||||||||||
Deferred revenue | (305) | (305) | (305) | |||||||||
Long-term liabilities | ||||||||||||
Deferred revenue | (3,709) | (3,709) | (4,014) | |||||||||
Stockholders' equity | ||||||||||||
Accumulated deficit | $ 4,160 | 4,160 | $ (4,519) | |||||||||
Net loss | $ (359) | |||||||||||
Net loss per share - basic and diluted (in dollars per share) | $ (0.01) | |||||||||||
Net cash used in operating activities | $ 359 | |||||||||||
Royalty | ||||||||||||
Stockholders' equity | ||||||||||||
Revenue | 11,162 | $ 1,015 | $ 978 | |||||||||
Royalty | Calculated under Revenue Guidance in Effect before Topic 606 | ||||||||||||
Stockholders' equity | ||||||||||||
Revenue | 11,521 | |||||||||||
Royalty | Accounting Standards Update 2014-09 | ASC 606 Adjustment | ||||||||||||
Stockholders' equity | ||||||||||||
Revenue | $ (359) |
Summary of Significant Accou_11
Summary of Significant Accounting Policies (Expenses and Net Loss Per Share) (Details) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | |
Advertising expense | |||||||||||
Advertising expense | $ 700,000 | $ 400,000 | $ 300,000 | ||||||||
Segment reporting | |||||||||||
Number of operating segments | segment | 1 | ||||||||||
Medical device excise tax | |||||||||||
Excise tax on sales (as a percent) | 2.30% | ||||||||||
Medical device excise tax expense | $ 0 | 0 | 0 | ||||||||
Numerator for basic and diluted loss per share: | |||||||||||
Net loss | $ (9,870,000) | $ (7,437,000) | $ (14,057,000) | $ (12,001,000) | $ (11,858,000) | $ (12,472,000) | $ (12,090,000) | $ (17,160,000) | $ (43,365,000) | $ (53,580,000) | $ (57,588,000) |
Denominator for basic loss per share: | |||||||||||
Weighted average shares | shares | 58,886,333 | 43,343,459 | 41,521,629 | ||||||||
Basic loss per share attributable to ConforMIS, Inc. stockholders (in dollars per share) | $ / shares | $ (0.74) | $ (1.24) | $ (1.39) | ||||||||
Diluted loss per share attributable to ConforMIS, Inc. stockholders (in dollars per share) | $ / shares | $ (0.74) | $ (1.24) | $ (1.39) |
Summary of Significant Accou_12
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Schedule of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | $ 46,513 | $ 94,055 | $ 141,212 |
Change in period | 1,766 | (3,735) | 1,020 |
Ending balance | 36,200 | 46,513 | 94,055 |
Foreign currency translation adjustments | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (3,203) | ||
Change in period | 1,733 | ||
Ending balance | (1,470) | (3,203) | |
Change in unrealized gain (loss) on available-for-sale securities, net of tax | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (33) | ||
Change in period | 33 | ||
Ending balance | 0 | (33) | |
Accumulated other comprehensive income (loss) | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning balance | (3,236) | 499 | (521) |
Change in period | 1,766 | (3,735) | 1,020 |
Ending balance | $ (1,470) | $ (3,236) | $ 499 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive shares not included in the calculation of diluted net loss per share | 55,346 | 365,105 | 1,993,739 |
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 | 0 | 0 | 34,709 |
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 | 55,346 | 365,105 | 1,959,030 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies (Adoption of New Accounting Standards) (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Jan. 01, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of new accounting principle in period of adoption | $ (4,519) | $ 0 | |||
Deferred Tax Asset | Accounting Standards Update 2016-09 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Cumulative effect of new accounting principle in period of adoption | $ 7,700 | $ 7,700 | |||
Minimum | Scenario, Forecast | Subsequent Event | Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Right-of-use asset | $ 7,000 | ||||
Lease liability | 7,000 | ||||
Maximum | Scenario, Forecast | Subsequent Event | Accounting Standards Update 2016-02 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Right-of-use asset | 8,000 | ||||
Lease liability | $ 8,000 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash | $ 9,837 | $ 9,849 |
Cash and cash equivalents | 9,837 | 9,849 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (32) |
Total, Amortized Costs | 23,625 | 45,260 |
Total, Fair Value | 23,625 | 45,228 |
Cash and cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 9,837 | 9,849 |
Total, Fair Value | 16,380 | 18,348 |
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 | 7,245 | 26,880 |
Money market funds | Level 1 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 1,046 | 3,499 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 1,046 | 3,499 |
Money market funds | Cash and cash equivalents | Level 1 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 1,046 | 3,499 |
Money market funds | Short-term investments | Level 1 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | 0 |
U.S. treasury bonds | Level 1 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 10,494 | 9,243 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (4) |
Estimated Fair Value | 10,494 | 9,239 |
U.S. treasury bonds | Cash and cash equivalents | Level 1 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 5,497 | 0 |
U.S. treasury bonds | Short-term investments | Level 1 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 4,997 | 9,239 |
Corporate bonds | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 1,249 | 4,935 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (6) |
Estimated Fair Value | 1,249 | 4,929 |
Corporate bonds | Cash and cash equivalents | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | 0 |
Corporate bonds | Short-term investments | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 1,249 | 4,929 |
Commercial paper | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 999 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 999 | 0 |
Commercial paper | Cash and cash equivalents | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | 0 |
Commercial paper | Short-term investments | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | $ 999 | 12,712 |
Agency bond | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 12,734 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (22) | |
Estimated Fair Value | 12,712 | |
Agency bond | Cash and cash equivalents | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | |
Agency bond | Short-term investments | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | 0 | |
Repurchase agreement | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Amortized Cost | 5,000 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | 0 | |
Estimated Fair Value | 5,000 | |
Repurchase agreement | Cash and cash equivalents | Level 2 securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Estimated Fair Value | $ 5,000 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts Receivable, Net, Current [Abstract] | |||
Total receivables | $ 13,634 | $ 13,835 | |
Allowance for doubtful accounts and returns | (390) | (635) | |
Accounts receivable, net | 13,244 | 13,200 | |
Unbilled receivable | 2,200 | 1,400 | |
Accounts receivable write offs | $ 115 | $ 92 | $ 41 |
Accounts Receivable (Details 2)
Accounts Receivable (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance For Doubtful Accounts Receivable [Line Items] | |||
Beginning balance | $ (635) | $ (681) | |
Accounts receivable write offs | 115 | 92 | $ 41 |
Ending balance | (390) | (635) | $ (681) |
Trade Accounts Receivable | |||
Allowance For Doubtful Accounts Receivable [Line Items] | |||
Provision for bad debts on trade receivables | 72 | 15 | |
Other Receivable | |||
Allowance For Doubtful Accounts Receivable [Line Items] | |||
Other allowances | $ 58 | $ (61) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw Material | $ 4,498 | $ 2,905 |
Work in process | 1,518 | 1,718 |
Finished goods | 3,518 | 4,561 |
Total Inventories | $ 9,534 | $ 9,184 |
Acquisition (Details)
Acquisition (Details) - USD ($) $ in Thousands | Sep. 21, 2018 | Aug. 16, 2018 | Aug. 09, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||||
Purchase price attributable to goodwill | $ 0 | $ 6,731 | $ 753 | |||
Broad Peak Manufacturing, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Purchase price | $ 6,400 | |||||
Purchase price, cash | 5,800 | |||||
Purchase price, unregistered shares of common stock | 600 | |||||
Amount paid into escrow account | 2,200 | |||||
Potential additional consideration that could be earned if actual cost targets are exceeded | 700 | |||||
Consideration released from escrow | $ 1,300 | $ 910 | ||||
Purchase price attributable to property and equipment | 400 | |||||
Purchase price attributable to goodwill | 6,000 | |||||
Purchase price attributable to other net assets acquired (less than) | $ 100 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property and equipment | |||
Total property and equipment | $ 31,890 | $ 29,993 | |
Accumulated depreciation | (17,451) | (13,479) | |
Property and equipment, net | 14,439 | 16,514 | |
Depreciation expense | 4,000 | 3,400 | $ 2,900 |
Impairment of long term assets | 2,433 | 1,113 | $ 123 |
Equipment | |||
Property and equipment | |||
Total property and equipment | 18,602 | 19,331 | |
Impairment of long term assets | $ 1,900 | ||
Equipment | Minimum | |||
Property and equipment | |||
Estimated useful life | 5 years | ||
Equipment | Maximum | |||
Property and equipment | |||
Estimated useful life | 7 years | ||
Credit for Purchase of Equipment | |||
Property and equipment | |||
Impairment of long term assets | $ 300 | ||
Furniture and fixtures | |||
Property and equipment | |||
Total property and equipment | $ 954 | 955 | |
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 | |||
Estimated useful life | 3 years | ||
Total property and equipment | $ 8,783 | 7,877 | |
Leasehold improvements | |||
Property and equipment | |||
Total property and equipment | $ 1,978 | 1,830 | |
Leasehold improvements | Minimum | |||
Property and equipment | |||
Estimated useful life | 2 years | ||
Leasehold improvements | Maximum | |||
Property and equipment | |||
Estimated useful life | 8 years | ||
Software and Software Development Costs | |||
Property and equipment | |||
Asset impairment charges | $ 200 | 800 | |
Reusable instruments | |||
Property and equipment | |||
Estimated useful life | 5 years | ||
Total property and equipment | $ 1,573 | 0 | |
License agreements | |||
Property and equipment | |||
Asset impairment charges | $ 300 | ||
Impairment of intangible assets | $ 300 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Intangible assets | |||
Intangible assets, net | $ 109 | $ 210 | |
Amortization expense | $ 100 | 200 | $ 200 |
Weighted Average | |||
Intangible assets | |||
Estimated useful life | 1 year 3 months 4 days | ||
Developed technology | |||
Intangible assets | |||
Total intangible assets | $ 979 | 979 | |
Accumulated amortization | (881) | (783) | |
Intangible assets, net | $ 98 | 196 | |
Estimated useful life | 10 years | ||
Acquired favorable lease | |||
Intangible assets | |||
Total intangible assets | $ 15 | 15 | |
Accumulated amortization | (4) | (1) | |
Intangible assets, net | $ 11 | $ 14 | |
Estimated useful life | 5 years | ||
License agreements | |||
Intangible assets | |||
Asset impairment charges | $ 300 |
Intangible Assets (Details 2)
Intangible Assets (Details 2) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Estimated future amortization expense for intangible assets | ||
2019 | $ 101 | |
2020 | 3 | |
2021 | 3 | |
2022 | 2 | |
Intangible assets, net | $ 109 | $ 210 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Accrued Liabilities and Other Liabilities [Abstract] | ||
Accrued employee compensation | $ 3,138 | $ 2,989 |
Deferred rent | 132 | 115 |
Accrued legal expense | 215 | 1,231 |
Accrued consulting expense | 84 | 115 |
Accrued vendor charges | 1,441 | 912 |
Accrued revenue share expense | 1,134 | 968 |
Accrued clinical trial expense | 549 | 196 |
Accrued other | 1,237 | 1,194 |
Total | $ 7,930 | $ 7,720 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2019 | $ 1,558 | ||
2020 | 1,595 | ||
2021 | 1,633 | ||
2022 | 1,397 | ||
2023-2025 | 2,939 | ||
Total | 9,122 | ||
Rent expense | 1,500 | $ 1,700 | $ 1,500 |
Deferred rent | $ 700 | $ 800 | $ 300 |
Commitments and Contingencies_3
Commitments and Contingencies (Details 2) $ in Millions | Sep. 14, 2018USD ($) | Oct. 31, 2017patentpetition | Aug. 09, 2017ft² | Mar. 09, 2017patent | Jul. 25, 2016USD ($)ft²extension | May 27, 2016defensepatent | Feb. 29, 2016patent | Sep. 30, 2011 | Dec. 31, 2018 | Mar. 01, 2017patentpetition | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
License and revenue share agreements | |||||||||||||
Renewal term | 5 years | ||||||||||||
Additional leased area (square feet) | ft² | 18,223 | ||||||||||||
Rent expense | $ | $ 0.2 | ||||||||||||
Number of renewal options | extension | 1 | ||||||||||||
Annual increase in initial base rental rate | 2.00% | ||||||||||||
Number of Company's patents allegedly infringed upon | 9 | ||||||||||||
Number of affirmative defenses alleged | defense | 2 | ||||||||||||
Number of patents allegedly infringed | 10 | ||||||||||||
Number of petitions filed requesting Inter Partes Review | petition | 16 | ||||||||||||
Number of patents included in petition requesting Inter Partes Review | 9 | ||||||||||||
Patents dismissed from lawsuit | 2 | ||||||||||||
Number of petitions requesting inter partes review granted | petition | 7 | ||||||||||||
Number of petitions requesting inter partes review denied | petition | 7 | ||||||||||||
Number of petitions requesting inter partes review partially granted and denied | petition | 2 | ||||||||||||
Petitions granted number of patents | 6 | ||||||||||||
Number of patents remaining in lawsuit | 5 | ||||||||||||
Number of patents no longer in lawsuit | 1 | ||||||||||||
Petitions denied, number of patents | 3 | ||||||||||||
Number of patents remaining in lawsuit | 2 | ||||||||||||
Number of patents no longer in lawsuit | 1 | ||||||||||||
Number of petitions denied and requesting rehearing | petition | 3 | ||||||||||||
Petitions denied request for reexamination, number of patents | 2 | ||||||||||||
Revenue share agreements | |||||||||||||
License and revenue share agreements | |||||||||||||
Revenue share expense | $ | $ 3.1 | $ 3.7 | $ 3.5 | ||||||||||
Revenue share expense as a percentage of product revenues | 4.00% | 4.80% | 4.40% | ||||||||||
Members of scientific advisory board | Revenue share agreements | Minimum | |||||||||||||
License and revenue share agreements | |||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 10.00% | ||||||||||||
Members of scientific advisory board | Revenue share agreements | Maximum | |||||||||||||
License and revenue share agreements | |||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 133.00% | ||||||||||||
Dr. Philipp Lang | Revenue share agreements | |||||||||||||
License and revenue share agreements | |||||||||||||
Reduction in required payment | 50.00% | ||||||||||||
Revenue share expense | $ | $ 0.7 | $ 1 | $ 1 | ||||||||||
Dr. Philipp Lang | Revenue share agreements | Minimum | |||||||||||||
License and revenue share agreements | |||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 87.50% | ||||||||||||
Dr. Philipp Lang | Revenue share agreements | Maximum | |||||||||||||
License and revenue share agreements | |||||||||||||
Required payment to related party from net revenues of current and planned products (as a percent) | 133.00% | ||||||||||||
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 | 8 | 5 | |||||||||||
Wallingford Lease | |||||||||||||
License and revenue share agreements | |||||||||||||
Renewal term | 5 years | ||||||||||||
Additional leased area (square feet) | ft² | 4,099 | ||||||||||||
Additional extension option renewal term | 2 years | ||||||||||||
Additional extension option past first extension term | 3 years | ||||||||||||
Smith & Nephew | |||||||||||||
License and revenue share agreements | |||||||||||||
Proceeds from legal settlements | $ | $ 10.5 |
Commitments and Contingencies_4
Commitments and Contingencies (Details 3) $ in Thousands | Dec. 31, 2018USD ($) |
Contractual Obligation, Fiscal Year Maturity [Abstract] | |
Other commitment | $ 1,355 |
Other commitment due in next twelve months | 526 |
Other commitment due in second and third year | 650 |
Other commitment due in fourth and fifth year | 179 |
Other commitment due thereafter | $ 0 |
Debt and Notes Payable (Schedul
Debt and Notes Payable (Schedule of Long Term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt and Notes Payable | ||
Long-term debt gross | $ 15,000 | $ 30,000 |
Amortized debt issuance costs | (208) | (333) |
Long-term debt, less debt issuance costs | 14,792 | 29,667 |
Oxford Finance L L C | Term loan | Term A Loan | ||
Debt and Notes Payable | ||
Long-term debt gross | 7,500 | 15,000 |
Oxford Finance L L C | Term loan | Term B Loan | ||
Debt and Notes Payable | ||
Long-term debt gross | $ 7,500 | $ 15,000 |
Debt and Notes Payable (Maturit
Debt and Notes Payable (Maturities of Long Term Debt) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
2019 | $ 0 | |
2020 | 6,875 | |
2021 | 7,500 | |
2022 | 625 | |
Total | $ 15,000 | $ 30,000 |
Debt and Notes Payable (Details
Debt and Notes Payable (Details) - USD ($) | Dec. 13, 2018 | Jul. 31, 2018 | Jan. 06, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 |
Credit facility | |||||||
Repayments on long-term debt | $ 15,000,000 | $ 0 | $ 485,000 | ||||
2017 Secured Loan Agreement | Term loan | |||||||
Credit facility | |||||||
Repayments on long-term debt | $ 15,000,000 | ||||||
Aggregate principal amount | 30,000,000 | ||||||
Credit facility term | 5 years | ||||||
Basis spread on variable rate | 0.53% | ||||||
Final payment, percent of amount of loans advanced | 5.00% | ||||||
Events of default, additional interest rate | 5.00% | ||||||
Events of default, threshold amount | $ 500,000 | ||||||
2017 Secured Loan Agreement | Term loan | Oxford Term Loan | |||||||
Credit facility | |||||||
Amount drawn down | 15,000,000 | ||||||
Maximum amount committed by the lenders under the loan and security agreement | 15,000,000 | ||||||
Fee due upon sale of company | $ 1,000,000 | ||||||
Fee payment period | 30 days | ||||||
2017 Secured Loan Agreement | Term loan | Term B Loan | |||||||
Credit facility | |||||||
Maximum amount committed by the lenders under the loan and security agreement | $ 15,000,000 | $ 15,000,000 | |||||
LIBOR | 2017 Secured Loan Agreement | Term loan | |||||||
Credit facility | |||||||
Basis spread on variable rate | 6.47% | ||||||
Minimum | 2017 Secured Loan Agreement | Term loan | Oxford Term Loan | |||||||
Credit facility | |||||||
Cash collateral requirement | $ 5,000,000 | $ 10,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2011 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue share agreements | |||||
Related Party Transaction | |||||
Revenue share expense | $ 3,100,000 | $ 3,700,000 | $ 3,500,000 | ||
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% | |||
Reduced royalty rate on net sales of products following expiration of patents (as a percent) | 3.00% | 3.00% | |||
Royalty payments | $ 0 | ||||
Expenses in connection with preparation of patent applications | $ 175,000 | 150,000 | 150,000 | ||
Affiliate | Vertegen | License agreement | United States | |||||
Related Party Transaction | |||||
Period for reduced royalty rate | 5 years | ||||
Dr. Philipp Lang | Revenue share agreements | |||||
Related Party Transaction | |||||
Reduction in required payment | 50.00% | ||||
Revenue share expense | $ 700,000 | $ 1,000,000 | $ 1,000,000 | ||
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) | 87.50% | ||||
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) | 133.00% |
Stockholders' Equity (Details T
Stockholders' Equity (Details Textual) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jul. 07, 2015 | |
Common stock | ||||
Common stock dividends declared to date | $ 0 | |||
Beginning balance (in shares) | 45,528,519 | 43,399,547 | ||
Issuance of common stock - option & warrant exercises (in shares) | 80,000 | 535,734 | ||
Issuance of restricted common stock (in shares) | 1,516,295 | 1,195,196 | ||
Issuance of common stock (in shares) | 556,334 | 228,946 | ||
Issuance of common stock for acquisitions (in shares) | 2,276,398 | |||
Issuance of common stock - preferred stock conversion to common stock | 169,096 | |||
Ending balance (in shares) | 65,290,879 | 45,528,519 | 43,399,547 | |
Preferred stock | ||||
Preferred stock, shares authorized | 5,000,000 | 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 | ||
Common Stock | ||||
Common stock | ||||
Beginning balance (in shares) | 45,528,519 | 43,399,547 | 41,110,127 | |
Issuance of common stock for acquisitions (in shares) | 2,276,398 | |||
Ending balance (in shares) | 65,290,879 | 45,528,519 | 43,399,547 | |
Preferred stock | ||||
Preferred stock, par value (in dollars per share) | $ 0.00001 | |||
Secondary Offering | ||||
Common stock | ||||
Issuance of common stock (in shares) | 15,333,333 | |||
Secondary Offering | Common Stock | ||||
Common stock | ||||
Issuance of common stock (in shares) | 15,333,333 |
Stockholders' Equity (Demand Re
Stockholders' Equity (Demand Registration RIghts) (Details) $ in Millions | Dec. 31, 2018USD ($)occasion |
Registration Rights Agreement, Other Than Form S-3 | |
Demand registration rights | |
Minimum ownership of outstanding shares for holders to exercise demand registration rights (as a percent) | 25.00% |
Minimum offering relative to outstanding shares to trigger demand registration rights (as a percent) | 20.00% |
Minimum aggregate offering price to trigger demand registration rights | $ | $ 20 |
Maximum number of registration statements under demand registration rights | occasion | 2 |
Registration Rights Agreement, Form S-3 | |
Demand registration rights | |
Minimum ownership of outstanding shares for holders to exercise demand registration rights (as a percent) | 25.00% |
Minimum offering relative to outstanding shares to trigger demand registration rights (as a percent) | 25.00% |
Minimum aggregate offering price to trigger demand registration rights | $ | $ 5 |
Maximum number of registration statements under demand registration rights | occasion | 1 |
Stockholders' Equity (Class of
Stockholders' Equity (Class of Warrant or Right) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Preferred stock warrants | Series C convertible preferred stock | |||
Stock warrant activity | |||
Number of warrants, outstanding at beginning of period (in shares) | 0 | ||
Number of warrants, outstanding at end of period (in shares) | 0 | 0 | |
Common stock warrants | |||
Stock warrant activity | |||
Number of warrants, outstanding at beginning of period (in shares) | 28,926 | 171,783 | |
Number of warrants, cancelled/expired (in shares) | (142,857) | ||
Number of warrants, outstanding at end of period (in shares) | 28,926 | 28,926 | 171,783 |
Weighted average exercise price, outstanding at beginning of period | $ 9.80 | $ 7.47 | |
Weighted average exercise price, cancelled/expired (in dollars per share) | 7 | ||
Weighted average exercise price, outstanding at end of period | $ 9.80 | $ 9.80 | $ 7.47 |
Number of exercisable warrants, outstanding at beginning of period (in shares) | 28,926 | 171,783 | |
Number of exercisable warrants, canceled/expired (in shares) | (142,857) | ||
Number of exercisable warrants, outstanding at end of period (in shares) | 28,926 | 28,926 | 171,783 |
Weighted average price, outstanding at beginning of period (in dollars per share) | $ 9.80 | $ 7.47 | |
Weighted average price, cancelled/expired (in dollars per share) | 7 | ||
Weighted average price, outstanding at end of period (in dollars per share) | $ 9.80 | $ 9.80 | $ 7.47 |
Weighted average contractual life | 4 years 7 months 28 days | 5 years 7 months 28 days | 1 year 7 months 13 days |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule of Share-based Compensation Arrangements by Share-based Payment Award) (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Jun. 30, 2015 | May 31, 2015program | Feb. 28, 2011 | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Aggregate Intrinsic Value | |||||||
Balance outstanding at the beginning of the period | $ | $ 96 | $ 8,547 | $ 61,741 | ||||
Exercised | $ | 1,688 | 1,688 | 8,219 | ||||
Total vested and exercisable | $ | $ 0 | ||||||
Balance outstanding at the end of the period | $ | 96 | $ 8,547 | $ 61,741 | $ 0 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest [Abstract] | |||||||
Weighted average grant date fair value, vested | $ | $ 1,100 | ||||||
Weighted average remaining contractual term, vested and exercisable | 4 years 8 months 5 days | ||||||
Weighted average remaining contractual term, outstanding | 3 years 9 months | ||||||
Stock options | |||||||
Number of Options | |||||||
Balance outstanding at the beginning of the period (in shares) | 3,627,995 | 3,790,040 | 5,248,329 | ||||
Granted (in shares) | 165,219 | 963,350 | 179,178 | ||||
Exercised (in shares) | (80,000) | (535,734) | (1,467,692) | ||||
Expired (in shares) | (589,051) | (466,210) | (81,251) | ||||
Cancelled/Forfeited (in shares) | (247,964) | (123,451) | (88,524) | ||||
Balance outstanding at the end of the period (in shares) | 2,876,199 | 3,627,995 | 3,790,040 | ||||
Total vested and exercisable (in shares) | 2,320,263 | ||||||
Weighted Average Exercise Price per Share | |||||||
Balance at the beginning of the period (in dollars per share) | $ / shares | $ 6.48 | $ 6.60 | $ 5.56 | ||||
Granted (in dollars per shares) | $ / shares | 1.36 | 4.95 | 8.78 | ||||
Exercised (in dollars per share) | $ / shares | 1.40 | 3.94 | 2.78 | ||||
Expired (in dollars per share) | $ / shares | 5.91 | 7.17 | 9.70 | ||||
Cancelled/Forfeited (in dollars per share) | $ / shares | 5.10 | 6.54 | 9.93 | ||||
Balance at the end of the period (in dollars per share) | $ / shares | $ 6.57 | $ 6.48 | $ 6.60 | ||||
Total vested and exercisable | $ / shares | $ 7.05 | ||||||
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 | $ | $ 2,500 | ||||||
2004 Plan | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Expiration period | 10 years | ||||||
2011 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of equity programs | program | 2 | ||||||
2011 Plan | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Expiration period | 10 years | ||||||
2015 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock reserved for issuance, before transfers and annual increases (in shares) | 2,000,000 | ||||||
Maximum annual increase in common stock available for issuance (in shares) | 3,000,000 | ||||||
Maximum annual increase in common stock available for issuance (as a percent) | 3.00% | ||||||
Common stock available for future issuance (in shares) | 1,572,828 | ||||||
2015 Plan | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Expiration period | 10 years |
Stockholders' Equity (Schedul_2
Stockholders' Equity (Schedule of Restricted Common Stock Award Activity) (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted Average Fair Value | |||
Weighted average grant date fair value, vested | $ 1.1 | ||
Restricted stock awards | |||
Number of Shares | |||
Unvested beginning of period (in shares) | 1,339,121 | 911,710 | 174,530 |
Granted (in shares) | 2,485,565 | 1,421,364 | 873,589 |
Vested (in shares) | (382,044) | (767,785) | (66,839) |
Forfeited (in shares) | (969,270) | (226,168) | (69,570) |
Unvested end of period (in shares) | 2,473,372 | 1,339,121 | 911,710 |
Weighted Average Fair Value | |||
Unvested beginning of period (in dollars per share) | $ 6.06 | $ 10.32 | $ 22.31 |
Granted (in dollars per share) | 1.34 | 4.20 | 8.61 |
Vested (in dollars per share) | 6.49 | 7.11 | 17.72 |
Forfeited (in dollars per share) | 3 | 7.36 | 11.83 |
Unvested end of period (in dollars per share) | $ 2.45 | $ 6.06 | $ 10.32 |
Weighted average grant date fair value, vested | $ 2.5 |
Stockholders' Equity (Fair Valu
Stockholders' Equity (Fair Value of Options at Date of Grant) (Details) - Stock options - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Weighted average fair value of options granted | $ 0.73 | $ 2.49 | $ 4.46 |
Assumptions used to estimate the fair value of options at date of grant | |||
Risk-free interest rate, minimum (as a percent) | 2.75% | 2.10% | 1.98% |
Risk-free interest rate, maximum (as a percent) | 2.90% | 2.30% | |
Expected term | 6 years 7 days | ||
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility (as a percent) | 51.00% | ||
Minimum | |||
Assumptions used to estimate the fair value of options at date of grant | |||
Expected term | 6 years 3 months | 6 years 3 months | |
Expected volatility (as a percent) | 53.00% | 51.00% | |
Maximum | |||
Assumptions used to estimate the fair value of options at date of grant | |||
Expected term | 6 years 3 months | ||
Expected volatility (as a percent) | 56.00% | 53.00% |
Stockholders' Equity (Schedul_3
Stockholders' Equity (Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based compensation | |||
Stock-based compensation expense | $ 3,886 | $ 6,048 | $ 5,324 |
Unrecognized compensation expense | $ 1,200 | ||
Period for unrecognized compensation expense to be recognized | 2 years 6 months 4 days | ||
Cost of revenues | |||
Share-based compensation | |||
Stock-based compensation expense | $ 333 | 441 | 333 |
Sales and marketing | |||
Share-based compensation | |||
Stock-based compensation expense | 501 | 919 | 1,197 |
Research and development | |||
Share-based compensation | |||
Stock-based compensation expense | 1,029 | 1,920 | 1,466 |
General and administrative | |||
Share-based compensation | |||
Stock-based compensation expense | 2,023 | $ 2,768 | $ 2,328 |
Restricted stock awards | |||
Share-based compensation | |||
Unrecognized compensation expense | $ 4,500 | ||
Period for unrecognized compensation expense to be recognized | 2 years 7 months 24 days |
Income Taxes (Schedule of Incom
Income Taxes (Schedule of Income Before Income Tax, Domestic and Foreign) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Loss before income taxes: | |||
U.S. | $ (38,219) | $ (53,274) | $ (51,576) |
Non‑U.S. | (5,085) | (144) | (5,949) |
Loss before income taxes | $ (43,304) | $ (53,418) | $ (57,525) |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 0 | 0 | 0 |
Foreign | 98 | 125 | 63 |
Total current tax expense (benefit) | 98 | 125 | 63 |
Deferred: | |||
Federal | (37) | 37 | 0 |
State | 0 | 0 | 0 |
Foreign | 0 | 0 | 0 |
Total deferred tax expense (benefit) | (37) | 37 | 0 |
Total | $ 61 | $ 162 | $ 63 |
Tax at U.S. statutory rate | (21.00%) | (34.00%) | (34.00%) |
State taxes, net of federal benefits | (3.48%) | (3.12%) | (2.70%) |
Permanent items | 1.03% | 1.96% | 0.42% |
Tax credit | (2.27%) | (1.35%) | (1.06%) |
Change in valuation allowance | (198.36%) | (54.85%) | 33.95% |
Foreign rate differential | (1.21%) | (0.17%) | 1.04% |
Rate change | (0.09%) | 90.78% | (0.06%) |
Uncertain tax positions | 0.22% | 0.41% | 2.06% |
NQ Stock option expirations & forfeitures | 1.29% | (0.00%) | (0.00%) |
Federal NOL limitation | 196.32% | (0.00%) | (0.00%) |
State NOL limitation | 25.72% | (0.00%) | (0.00%) |
Deferred revenue - ASC 606 implementation adjustment | 2.49% | (0.00%) | (0.00%) |
Other | (0.52%) | 0.64% | 0.46% |
Effective income tax rate | 0.14% | 0.30% | 0.11% |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Federal and state net operating loss carryforwards | $ 644 | $ 90,437 |
Foreign net operating loss carryforwards | 2,687 | 2,561 |
Accrued expenses | 99 | 157 |
Credits | 7,038 | 6,055 |
Deferred revenue | 0 | 1,068 |
Intangibles | 1,350 | 0 |
Stock compensation expense | 1,917 | 1,805 |
Other | 3,151 | 2,111 |
Total deferred tax assets | 16,886 | 104,194 |
Valuation allowance | (16,064) | (103,430) |
Net deferred tax assets | 822 | 764 |
Deferred tax liabilities: | ||
Fixed assets | (822) | (664) |
Intangibles | 0 | (134) |
Other | 0 | (3) |
Net deferred tax liabilities | (822) | (801) |
Net deferred tax liabilities | $ 0 | $ (37) |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Jan. 01, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | ||||||
Valuation allowance | $ 16,064,000 | $ 103,430,000 | ||||
Decrease in valuation allowance | 87,400,000 | |||||
Operating loss carryforwards annual limitation | 1,400,000 | |||||
Unrecognized tax benefits | 6,764,000 | 5,136,000 | $ 4,918,000 | $ 3,730,000 | ||
Unrecognized tax benefits, amount netted against deferred tax assets | 6,400,000 | 4,900,000 | ||||
Cumulative effect of new accounting principle in period of adoption | $ (4,519,000) | $ 0 | ||||
Decrease in deferred tax assets due to change in tax rate | 48,500,000 | |||||
Decrease in deferred tax asset valuation allowance due to change in tax rate | 48,500,000 | |||||
Net impact of change in tax rate on deferred tax assets | 0 | |||||
Transition tax on foreign earnings | 0 | |||||
Domestic Tax Authority | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Operating loss carryforwards | 403,600,000 | |||||
Operating loss carryforwards section 382 limitation | 345,800,000 | |||||
State and Local Jurisdiction | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Operating loss carryforwards | 219,200,000 | |||||
Operating loss carryforwards section 382 limitation | 11,100,000 | |||||
Germany | Foreign Tax Authority | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Operating loss carryforwards | 30,500,000 | |||||
Accounting Standards Update 2016-09 | Deferred Tax Asset | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Cumulative effect of new accounting principle in period of adoption | $ 7,700,000 | 7,700,000 | ||||
Accounting Standards Update 2016-09 | Valuation Allowance of Deferred Tax Assets | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Cumulative effect of new accounting principle in period of adoption | (7,700,000) | |||||
Retained Earnings | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Cumulative effect of new accounting principle in period of adoption | $ (4,519,000) | $ 311,000 | ||||
Retained Earnings | Accounting Standards Update 2016-09 | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Cumulative effect of new accounting principle in period of adoption | $ 0 |
Income Taxes (Schedule of Unrec
Income Taxes (Schedule of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefits beginning of year | $ 1,628 | $ 219 | $ 1,187 |
Gross change for current year positions | 5,136 | 4,918 | 3,730 |
Decrease for prior period positions | $ 6,764 | $ 5,136 | $ 4,918 |
Segment and Geographic Data (De
Segment and Geographic Data (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting [Abstract] | |||||||||||
Number of reportable segments | segment | 1 | ||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Revenue | $ 22,049 | $ 28,984 | $ 19,100 | $ 19,656 | $ 20,751 | $ 18,425 | $ 18,484 | $ 20,455 | $ 89,789 | $ 78,115 | $ 79,899 |
Property and equipment, net | 14,439 | 16,514 | 14,439 | 16,514 | |||||||
United States | |||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Property and equipment, net | 14,367 | 16,424 | 14,367 | 16,424 | |||||||
Rest of World | |||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Property and equipment, net | $ 72 | $ 90 | 72 | 90 | |||||||
Product | |||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Revenue | 78,627 | 77,100 | 78,921 | ||||||||
Product | United States | |||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Revenue | 68,057 | 64,307 | 62,366 | ||||||||
Product | Germany | |||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Revenue | 9,007 | 11,296 | 14,701 | ||||||||
Product | Rest of World | |||||||||||
Geographic information for Product Revenue and Property and equipment, net | |||||||||||
Revenue | $ 1,563 | $ 1,497 | $ 1,854 |
Employee Savings Plan (Details)
Employee Savings Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Maximum annual contributions per employee, percent | 80.00% | ||
Employer matching contribution, percent of match | 50.00% | ||
Employer matching contribution, percent of employees' gross pay | 5.00% | ||
Employer discretionary contribution amount | $ 561 | $ 457 | $ 478 |
Selected Quarterly Financial _3
Selected Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 22,049 | $ 28,984 | $ 19,100 | $ 19,656 | $ 20,751 | $ 18,425 | $ 18,484 | $ 20,455 | $ 89,789 | $ 78,115 | $ 79,899 |
Gross profit | 10,868 | 19,719 | 9,111 | 8,787 | 8,757 | 7,314 | 6,248 | 6,494 | 48,485 | 28,814 | 26,707 |
Net loss | $ (9,870) | $ (7,437) | $ (14,057) | $ (12,001) | $ (11,858) | $ (12,472) | $ (12,090) | $ (17,160) | $ (43,365) | $ (53,580) | $ (57,588) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.16) | $ (0.12) | $ (0.24) | $ (0.22) | $ (0.27) | $ (0.29) | $ (0.28) | $ (0.40) | $ (0.74) | $ (1.24) | $ (1.39) |
Uncategorized Items - cfms-2018
Label | Element | Value |
Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 311,000 |