Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 23, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37918 | |
Entity Registrant Name | iRhythm Technologies, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-8149544 | |
Entity Address, Address Line One | 699 8th Street Suite 600 | |
Entity Address, City or Town | San Francisco, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94103 | |
City Area Code | 415 | |
Local Phone Number | 632-5700 | |
Title of 12(b) Security | Common Stock, Par Value $0.001 Per Share | |
Trading Symbol | IRTC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,650,758 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001388658 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 47,478 | $ 78,832 |
Marketable securities | 110,995 | 134,312 |
Accounts receivable, net | 50,067 | 49,918 |
Inventory | 13,648 | 15,155 |
Prepaid expenses and other current assets | 12,104 | 10,555 |
Total current assets | 234,292 | 288,772 |
Property and equipment, net | 96,668 | 75,670 |
Operating lease right-of-use assets | 60,899 | 60,666 |
Goodwill | 862 | 862 |
Other assets | 47,048 | 22,252 |
Total assets | 439,769 | 448,222 |
Current liabilities: | ||
Accounts payable | 7,212 | 7,517 |
Accrued liabilities | 76,631 | 65,497 |
Deferred revenue | 3,383 | 3,051 |
Operating lease liabilities, current portion | 15,065 | 13,031 |
Total current liabilities | 102,291 | 89,096 |
Debt, noncurrent portion | 34,946 | 34,935 |
Other noncurrent liabilities | 1,013 | 1,307 |
Operating lease liabilities, noncurrent portion | 81,724 | 83,072 |
Total liabilities | 219,974 | 208,410 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value - 5,000 shares authorized; none issued and outstanding at September 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock, $0.001 par value - 100,000 shares authorized; 30,633 shares at September 30, 2023 and 30,193 at December 31, 2022 issued and outstanding | 31 | 28 |
Additional paid-in capital | 826,686 | 762,380 |
Accumulated other comprehensive loss | (15) | (396) |
Accumulated deficit | (606,907) | (522,200) |
Total stockholders’ equity | 219,795 | 239,812 |
Total liabilities and stockholders’ equity | $ 439,769 | $ 448,222 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 30,633,000 | 30,193,000 |
Common stock, shares outstanding (in shares) | 30,633,000 | 30,193,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 124,604,000 | $ 103,875,000 | $ 360,170,000 | $ 298,304,000 |
Cost of revenue | 42,130,000 | 32,954,000 | 115,790,000 | 95,379,000 |
Gross profit | 82,474,000 | 70,921,000 | 244,380,000 | 202,925,000 |
Operating expenses: | ||||
Research and development | 16,309,000 | 11,448,000 | 44,828,000 | 33,935,000 |
Selling, general and administrative | 93,768,000 | 80,559,000 | 285,531,000 | 235,468,000 |
Impairment and restructuring charges | 0 | 0 | 0 | 26,608,000 |
Total operating expenses | 110,077,000 | 92,007,000 | 330,359,000 | 296,011,000 |
Loss from operations | (27,603,000) | (21,086,000) | (85,979,000) | (93,086,000) |
Interest expense | (927,000) | (614,000) | (2,709,000) | (3,125,000) |
Interest and other income, net | 1,609,000 | 365,000 | 4,476,000 | 450,000 |
Loss before income taxes | (26,921,000) | (21,335,000) | (84,212,000) | (95,761,000) |
Income tax provision | 195,000 | 116,000 | 495,000 | 196,000 |
Net loss | $ (27,116,000) | $ (21,451,000) | $ (84,707,000) | $ (95,957,000) |
Net loss per common share, basic (in USD per share) | $ (0.89) | $ (0.71) | $ (2.78) | $ (3.22) |
Net loss per common share, diluted (in USD per share) | $ (0.89) | $ (0.71) | $ (2.78) | $ (3.22) |
Weighted-average shares, basic (in shares) | 30,607 | 30,055 | 30,470 | 29,837 |
Weighted-average shares, diluted (in shares) | 30,607 | 30,055 | 30,470 | 29,837 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (27,116) | $ (21,451) | $ (84,707) | $ (95,957) |
Other comprehensive income (loss): | ||||
Net change in unrealized gains (losses) from marketable securities | 63 | (98) | 351 | (620) |
Cumulative translation adjustment | 74 | 0 | 30 | 0 |
Comprehensive loss | $ (26,979) | $ (21,549) | $ (84,326) | $ (96,577) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (84,707) | $ (95,957) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 11,434 | 9,930 |
Stock-based compensation | 53,358 | 41,946 |
Amortization of premium and accretion of discounts, net | (3,627) | 216 |
Provision for doubtful accounts and contractual allowances | 51,655 | 43,778 |
Amortization of operating lease right-of-use assets | 4,243 | 4,865 |
Impairment charges | 0 | 23,164 |
Other | (366) | 230 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (51,804) | (57,882) |
Inventory | 1,885 | (4,375) |
Prepaid expenses and other current assets | (1,549) | 2,367 |
Other assets | (21,796) | (4,099) |
Accounts payable | (305) | (3,105) |
Accrued liabilities | 10,910 | 8,072 |
Deferred revenue | 332 | (46) |
Operating lease liabilities | (3,792) | (4,692) |
Net cash used in operating activities | (34,129) | (35,588) |
Cash flows from investing activities | ||
Purchases of property and equipment | (26,907) | (22,737) |
Purchases of marketable securities | (109,202) | (137,548) |
Sales of marketable securities | 0 | 34,965 |
Maturities of marketable securities | 136,500 | 81,000 |
Purchase of strategic investment | (3,000) | 0 |
Net cash used in investing activities | (2,609) | (44,320) |
Cash flows from financing activities | ||
Payment of loans | 0 | (21,389) |
Proceeds from term loan | 0 | 35,000 |
Proceeds from issuance of common stock in connection with employee equity incentive plans | 5,352 | 10,034 |
Payments of issuance costs for long-term debt | 0 | (77) |
Net cash provided by financing activities | 5,352 | 23,568 |
Effect of exchange rate changes | 32 | 0 |
Net decrease in cash and cash equivalents | (31,354) | (56,340) |
Cash and cash equivalents, beginning of period | 78,832 | 127,562 |
Cash and cash equivalents, end of period | 47,478 | 71,222 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 2,186 | 2,676 |
Cash taxes paid | 794 | 0 |
Cash received from tenant improvement allowances | 1,603 | 0 |
Non-cash investing and financing activities: | ||
Property and equipment included in accounts payable and accrued liabilities | 89 | 1,179 |
Right-of-use assets obtained in exchange for operating lease liabilities | 4,520 | 7,666 |
Capitalized stock-based compensation in property and equipment | $ 5,596 | $ 4,306 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2021 | 29,494 | ||||
Beginning balance at Dec. 31, 2021 | $ 279,515 | $ 27 | $ 685,594 | $ (406,045) | $ (61) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 275 | ||||
Issuance of common stock in connection with employee equity incentive plans, net | 1,076 | 1,076 | |||
Stock-based compensation | 15,152 | 15,152 | |||
Net loss | (50,609) | (50,609) | |||
Net change in unrealized gains (losses) from marketable securities | (292) | (292) | |||
Ending balance (in shares) at Mar. 31, 2022 | 29,769 | ||||
Ending balance at Mar. 31, 2022 | 244,842 | $ 27 | 701,822 | (456,654) | (353) |
Beginning balance (in shares) at Dec. 31, 2021 | 29,494 | ||||
Beginning balance at Dec. 31, 2021 | 279,515 | $ 27 | 685,594 | (406,045) | (61) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (95,957) | ||||
Net change in unrealized gains (losses) from marketable securities | (620) | ||||
Cumulative translation adjustment | 0 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 30,094 | ||||
Ending balance at Sep. 30, 2022 | 239,224 | $ 28 | 741,879 | (502,002) | (681) |
Beginning balance (in shares) at Mar. 31, 2022 | 29,769 | ||||
Beginning balance at Mar. 31, 2022 | 244,842 | $ 27 | 701,822 | (456,654) | (353) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 195 | ||||
Issuance of common stock in connection with employee equity incentive plans, net | 7,296 | $ 1 | 7,295 | ||
Stock-based compensation | 16,631 | 16,631 | |||
Net loss | (23,897) | (23,897) | |||
Net change in unrealized gains (losses) from marketable securities | (230) | (230) | |||
Ending balance (in shares) at Jun. 30, 2022 | 29,964 | ||||
Ending balance at Jun. 30, 2022 | 244,642 | $ 28 | 725,748 | (480,551) | (583) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 131 | ||||
Issuance of common stock in connection with employee equity incentive plans, net | 1,662 | 1,662 | |||
Stock-based compensation | 14,469 | 14,469 | |||
Net loss | (21,451) | (21,451) | |||
Net change in unrealized gains (losses) from marketable securities | (98) | (98) | |||
Cumulative translation adjustment | 0 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 30,094 | ||||
Ending balance at Sep. 30, 2022 | $ 239,224 | $ 28 | 741,879 | (502,002) | (681) |
Beginning balance (in shares) at Dec. 31, 2022 | 30,193 | 30,193 | |||
Beginning balance at Dec. 31, 2022 | $ 239,812 | $ 28 | 762,380 | (522,200) | (396) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 270 | ||||
Issuance of common stock in connection with employee equity incentive plans, net | 905 | $ 2 | 903 | ||
Stock-based compensation | 19,899 | 19,899 | |||
Net loss | (39,109) | (39,109) | |||
Net change in unrealized gains (losses) from marketable securities | 327 | 327 | |||
Ending balance (in shares) at Mar. 31, 2023 | 30,463 | ||||
Ending balance at Mar. 31, 2023 | $ 221,834 | $ 30 | 783,182 | (561,309) | (69) |
Beginning balance (in shares) at Dec. 31, 2022 | 30,193 | 30,193 | |||
Beginning balance at Dec. 31, 2022 | $ 239,812 | $ 28 | 762,380 | (522,200) | (396) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 21 | ||||
Net loss | $ (84,707) | ||||
Net change in unrealized gains (losses) from marketable securities | 351 | ||||
Cumulative translation adjustment | $ 30 | ||||
Ending balance (in shares) at Sep. 30, 2023 | 30,633 | 30,633 | |||
Ending balance at Sep. 30, 2023 | $ 219,795 | $ 31 | 826,686 | (606,907) | (15) |
Beginning balance (in shares) at Mar. 31, 2023 | 30,463 | ||||
Beginning balance at Mar. 31, 2023 | 221,834 | $ 30 | 783,182 | (561,309) | (69) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 87 | ||||
Issuance of common stock in connection with employee equity incentive plans, net | 4,383 | 4,383 | |||
Stock-based compensation | 16,227 | 16,227 | |||
Net loss | (18,482) | (18,482) | |||
Net change in unrealized gains (losses) from marketable securities | (39) | (39) | |||
Cumulative translation adjustment | (44) | (44) | |||
Ending balance (in shares) at Jun. 30, 2023 | 30,550 | ||||
Ending balance at Jun. 30, 2023 | 223,879 | $ 30 | 803,792 | (579,791) | (152) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock in connection with employee equity incentive plans, net (in shares) | 83 | ||||
Issuance of common stock in connection with employee equity incentive plans, net | 67 | $ 1 | 66 | ||
Stock-based compensation | 22,828 | 22,828 | |||
Net loss | (27,116) | (27,116) | |||
Net change in unrealized gains (losses) from marketable securities | 63 | 63 | |||
Cumulative translation adjustment | $ 74 | 74 | |||
Ending balance (in shares) at Sep. 30, 2023 | 30,633 | 30,633 | |||
Ending balance at Sep. 30, 2023 | $ 219,795 | $ 31 | $ 826,686 | $ (606,907) | $ (15) |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | ORGANIZATION AND DESCRIPTION OF BUSINESS iRhythm Technologies, Inc. (the “Company”) was incorporated in the state of Delaware in September 2006. The Company is a leading digital healthcare company that creates trusted solutions that detect, predict, and prevent disease. The Company's principal business is the design, development, and commercialization of device-based technology to provide remote cardiac monitoring services that it believes allow clinicians to diagnose certain arrhythmias quicker and with greater efficiency than other services that rely on traditional technology. Since first receiving clearance from the U.S. Food and Drug Administration (“FDA”) for the Company's technology in 2009, the Company has supported physician and patient use of its technology and provided remote cardiac monitoring services from its Medicare-enrolled independent diagnostic testing facilities (“IDTFs”) and its qualified technicians. The Company has provided the Zio remote cardiac monitoring services, including extended Holter, traditional Holter, and mobile cardiac telemetry (“MCT”) monitoring services (“Zio Services”), using the Zio Systems. The Company is headquartered in San Francisco, California, which also serves as a clinical center. The Company has additional clinical centers in Deerfield, Illinois and Houston, Texas and a manufacturing facility in Cypress, California. The Company formed wholly owned subsidiaries in the United Kingdom in March 2016, in Singapore in June 2021, in Japan in June 2022 and in the Philippines in February 2023. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of September 30, 2023, and related disclosures, have been derived from the audited consolidated financial statements at that date but do not include all of the information required by GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s unaudited condensed consolidated financial information. The results of operations for the three and nine months ended September 30, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other interim period or for any other future year. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 23, 2023. Risks and Uncertainties Macroeconomic Factors and Supply Chain Constraints The Company’s operations and performance may vary based on worldwide economic and political conditions, which have been adversely impacted by continued global economic uncertainty, political instability, and military hostilities in multiple geographies including ongoing geopolitical conflicts, such as the war in Ukraine and conflict in Israel, domestic and global inflationary trends, interest rate volatility, uncertainty with respect to the federal budget, instability in the global banking system, global supply shortages, and a tightening labor market. A severe or prolonged economic downturn or period of global political instability could drive hospitals and other healthcare professionals to tighten budgets and curtail spending, which could in turn negatively impact rates at which physicians prescribe the Company’s Zio Services. In addition, higher unemployment rates or reductions in employer-provided benefits plans could result in fewer commercially insured patients, resulting in a reduction in the Company’s margins and impairing the ability of uninsured patients to make timely payments. A weak or declining economy could also strain the Company’s suppliers, possibly resulting in supply delays and disruptions. There is also a risk that one or more of the Company’s current service providers, suppliers, or other partners may not survive such difficult economic times, which could directly affect the Company’s ability to attain its goals on schedule and on budget. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. The Company cannot predict the timing, strength, or duration of an economic downturn, instability, or recovery, whether worldwide, in the United States, or within its industry. The Company’s remote work arrangements and decision to pursue a sublease for its San Francisco headquarters resulted in an impairment of its right-of-use ("ROU") asset and related leasehold improvements and furniture and fixtures during the nine months ended September 30, 2022. As the Company continues to evaluate its real estate footprint, the Company may incur additional impairment charges related to real property lease agreements. The Company is continuously reviewing its liquidity and anticipated capital requirements. The Company believes it will have adequate liquidity over the next 12 months to operate its business and to meet its cash requirements. As of September 30, 2023, the Company is in compliance with its debt covenants. Reimbursement The Company receives revenue for the Zio Services primarily from third-party payors, which include commercial payors and government agencies, such as the Centers for Medicare & Medicaid Services (“CMS”). Third-party payors require the Company to identify the service for which it is seeking reimbursement by using a Current Procedural Terminology (“CPT”) code set maintained by the American Medical Association. These CPT codes are subject to periodic change and update, which will impact the reimbursement rates for the Company’s Zio Services. CMS updates the reimbursement rates for diagnostic tests performed by IDTFs annually via the Medicare Physician Fee Schedule, and effective January 1, 2023, CMS established national payment rates for the CPT codes the Company uses to report the long-term Holter monitoring services it performs with its Zio XT System: CPT codes 93247 (for wear-time of greater than 7 days and up to 15 days) and 93243 (for wear-time of greater than 48 hours and up to 7 days). Based on the relative value units CMS assigned to CPT codes 93247 and 93243, the national reimbursement rates for these services in 2023 are $243.65 and $231.79, respectively, and range from $247.59 to $334.46 and $235.54 to $318.17 for the Company’s Medicare-enrolled IDTF locations in Deerfield, Illinois, Houston, Texas, and San Francisco, California, when considering the geographic practice cost index for these locations. On August 7, 2023, CMS published the calendar year 2024 Medicare Physician Fee Schedule proposed rule, which includes rates for the CPT codes the Company uses to seek reimbursement for its services. Based on the proposed rule, the Company believes the 2024 proposed national payment rates may be, on average, approximately 5% lower than the 2023 rates for services, when excluding impacts from the geographic practice cost index for the Company’s IDTF locations noted above. As of November 1, 2023, the final Medicare Physician Fee Schedule has not been released by CMS for calendar year 2024. Because remote cardiac monitoring technology, including the Zio System, are rapidly evolving, there is a continuing risk that relative value units assigned, and reimbursement rates set, by CMS may not adequately reflect the value and expense of this technology and related monitoring services, and the Company cannot provide certainty that CMS will not reduce these rates in the future, which would adversely affect the Company’s financial results. Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contractual allowances, allowance for doubtful accounts, the useful lives of property and equipment, the recoverability of long-lived assets, including the estimated usage of the printed circuit board assemblies (“PCBAs”), the incremental borrowing rate for operating leases, accounting for income taxes, impairment of ROU assets, and various inputs used in estimating stock-based compensation. Actual results may differ from those estimates. Accounts Receivable, Allowance for Doubtful Accounts and Contractual Allowances Accounts receivable includes amounts due to the Company from healthcare institutions, third-party payors, and government payors and their related patients, as a result of the Company's normal business activities. Accounts receivable is reported on the unaudited condensed consolidated balance sheets net of an estimated allowance for doubtful accounts and contractual allowances. The Company establishes an allowance for doubtful accounts for estimated uncollectible receivables based on its assessment of the collectability of customer accounts and recognizes the provision as a component of selling, general and administrative expenses. The Company records a provision for contractual allowances based on the estimated differences between contracted amounts and expected collection rates for services performed. Such provisions are based on the Company's historical experience and are reported as a reduction of revenue. The Company regularly reviews the allowances by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The following table presents the changes in the allowance for doubtful accounts (in thousands): Nine Months Ended September 30, 2023 Year Ended December 31, 2022 Nine Months Ended September 30, 2022 Balance, beginning of period $ 18,475 $ 14,012 $ 14,012 Provision for doubtful accounts 12,595 17,191 12,244 Write-offs, net of recoveries and other adjustments (11,659) (12,728) 17 Balance, end of period $ 19,411 $ 18,475 $ 26,273 The following table presents the changes in the contractual allowance (in thousands): Nine Months Ended September 30, 2023 Year Ended December 31, 2022 Nine Months Ended September 30, 2022 Balance, beginning of period $ 41,389 $ 31,274 $ 31,274 Add: provision for contractual adjustments 39,060 41,158 31,534 Less: contractual adjustments (32,072) (31,043) (259) Balance, end of period $ 48,377 $ 41,389 $ 62,549 Concentrations of Risk Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. Cash balances are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds. The Company invests in a variety of financial instruments, such as, but not limited to, U.S. government securities, corporate notes, commercial paper and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many geographies. The Company does not require collateral. The Company records an allowance for doubtful accounts based on the assessment of the collectability of customer accounts, considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. CMS accounted for approximately 25% of the Company's revenue for the three and nine months ended September 30, 2023, and 26% and 24% of the Company's revenue for the three and nine months ended September 30, 2022, respectively. CMS accounted for 22% of accounts receivable at September 30, 2023 and December 31, 2022. Inflationary Risk The Company continuously monitors the effects of inflationary factors, such as increases in cost of goods sold and selling and operating expenses, which may adversely affect its results of operations. Specifically, the Company may experience inflationary pressure affecting freight costs, the cost of the components for the Company’s Zio Services, overhead costs relating to maintenance of the Company’s facilities, and in the wages paid to its employees due to challenging labor market conditions. Competitive and regulatory conditions may restrict the Company’s ability to fully recover these costs through price increases. As a result, it may be difficult to fully offset the impact of persistent inflation. The Company’s inability or failure to do so could have a material adverse effect on its business, financial condition and results of operations or cause the Company to need to obtain additional capital earlier than anticipated in the future. Supply Risk The Company relies on single-source vendors to supply some of its disposable housings, instruments and other materials used to manufacture the Zio patches and the adhesive that binds the Zio patch to a patient’s body. These components and materials are critical, and there could be a considerable delay in finding alternative sources of supply. A global semiconductor supply shortage is having wide-ranging effects across multiple industries. The supply shortage has impacted multiple suppliers that provide the PCBAs to the Company. The semiconductor supply shortage may have an impact on the Company until global supply is sufficient for global demand. Revenue Recognition The Company has developed a proprietary system that combines an FDA-cleared wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data, with a proprietary cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias. In addition, the Company has received CE-mark and UKCA certification for Zio XT System and ZEUS algorithm. The Company currently offers three Zio System options—the Zio XT System, the Zio AT System, and the Zio Monitor System. The Zio XT System is a prescription-only, remote ECG monitoring system that consists of the Zio XT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio XT patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm. The final step in the Zio Services is the delivery of an electronic Zio report to the prescribing physician with a summary of findings. The Company’s Zio XT services are generally billable when the Zio report is issued to the physician. The Zio Monitor System is the next generation of the Zio XT System, and is a prescription-only, remote ECG monitoring system that consists of the Zio Monitor patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm. The Company’s Zio Monitor services are generally billable when the Zio report is issued to the physician. The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of the Zio AT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, but which also incorporates the Zio AT wireless gateway that provides connectivity between the patch and the ZEUS System during the patient wear period. The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT patch application and collects and transmits data from the Zio AT patch to the cloud via a LTE protocol. The Zio AT service revenue is recognized under two performance obligations — the patient wear period and delivery of electronic Zio reports. The Company recognizes as revenue the amount of consideration to which it expects to be entitled in exchange for performing the service. The consideration the Company is entitled to varies by payor portfolio, as further defined below, and includes estimates that require significant judgment by management. A unique aspect of healthcare is the involvement of multiple parties to the service transaction. In addition to the patient, often a third-party payor, for example a commercial or governmental payor or healthcare institution, will pay the Company for some or all of the service on the patient’s behalf. Separate contractual arrangements exist between the Company and third-party payors that establish amounts the third-party payor will pay on behalf of a patient for covered services rendered. A small portion of the Company’s transactions are covered by third-party payors with whom there is neither a contractual agreement nor an established amount that the third-party payor will pay. In determining the collectability and transaction price for its service, the Company considers factors such as insurance claims which are adjudicated as allowable under the applicable policy and payment history from both payors and patient out-of-pocket costs, payor coverage, whether there is a contract between the payor or healthcare institution and the Company, historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments. Certain of these factors are forms of variable consideration which are only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. A summary of the payment arrangements with third-party payors and healthcare institutions is as follows: • Contracted third-party payors – The Company has contracts with negotiated prices for services provided to patients with commercial healthcare insurance coverage. • CMS – The Company has received IDTF approval from regional Medicare Administrative Contractors and will receive reimbursement per the relevant CPT code rates for the services rendered to the patient covered by CMS. • Healthcare institutions – Healthcare institutions are typically hospitals or physician practices in which the Company has negotiated amounts for its monitoring services, including certain governmental agencies such as the Veterans Administration and Department of Defense. • Non-contracted third-party payors – Non-contracted commercial and government payors often reimburse out-of-network rates provided under the relevant CPT codes on a case-by-case basis. The transaction price used for determining revenue recognition is based on factors including an average of the Company’s historical collection experience for its non-contracted services. This rate is reviewed at least quarterly. The Company is utilizing the portfolio approach practical expedient under Accounting Standard Codification ("ASC") 606, Revenue from Contracts with Customers, whereby services provided under each of the above payor types form a separate portfolio. The Company accounts for the contracts within each portfolio as a collective group, rather than individual contracts. Based on history with these portfolios and the similar nature and characteristics of the patients within each portfolio, the Company has concluded that the financial statement effects are not materially different than if accounting for revenue on a contract-by-contract basis. For contracted and CMS portfolios, the Company recognizes revenue, net of contractual allowances, and recognizes an allowance for doubtful accounts for uncollectible patient accounts receivable. The transaction price is determined based on negotiated rates, and the Company has historical experience of collecting substantially all of these contracted rates. These contracts also impose a number of obligations regarding billing and other matters, and the Company’s noncompliance with a material term of such contracts may result in a denial of the claim. The Company accounts for denied claims as a form of variable consideration that is included as a reduction to the transaction price recognized as revenue. The Company makes estimates around the amount of denied claims within a reporting period, a process that requires management judgment. The estimated denied claims are based on historical information, and judgement includes the historical period utilized. The Company monitors the estimated denied claims against the latest available information, and subsequent changes to the estimated denied claims are recorded as an adjustment to revenue in the periods during which such changes occur. Delays in claims submissions could lead to an increase in denials if the Company misses the payors’ filing deadlines, which could result in a reduction in the Company’s receipt of payments. Historical cash collection indicates that it is probable that substantially all of the transaction price, less the estimate of denied claims, will be received. Contracted payors may require that the Company bills patient co-payments and deductibles and from time to time the Company may not be able to collect such amounts due to credit risk. The Company provides for estimates of uncollectible patient accounts receivable, based upon historical experience where judgment includes the historical period utilized, at the time revenue is recognized, with such provisions presented as bad debt expense within the selling, general and administrative line item of the consolidated statements of operations. Adjustments to these estimates for actual experience are also recorded as an adjustment to bad debt expense. For healthcare institutions, the transaction price is determined based on negotiated rates, and the Company has historical experience collecting substantially all of these contracted rates. Historical cash collections indicate that it is probable that substantially all of the transaction price will be received. As such, the Company is not providing an implicit price concession but, rather, has chosen to accept the risk of default, and any subsequent uncollected amounts are recorded as bad debt expense to selling, general and administrative expense in the consolidated statements of operations. For non-contracted portfolios, the Company provides an implicit price concession due to the lack of a contracted rate with the underlying payor. As a result, the Company estimates the transaction price based on historical cash collections utilizing the expected value method. All subsequent changes to the transaction price are recorded as adjustments to revenue. Stock-Based Compensation The Company measures the estimated fair values of its restricted stock units (“RSUs”) based on the closing price of the Company's stock on the grant date. For performance-based restricted stock units (“PRSUs”), the Company estimates the fair value based on the closing price of its stock on the grant date and, if the award includes a market condition, a Monte Carlo simulation model. In addition, for PRSUs, the Company applies a probability assessment to determine the probable achievement of the performance-based metrics. Stock-based compensation expense is recognized over the requisite service period using the straight-line method and is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, the Company's stock-based compensation is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For restricted stock, the compensation cost for these awards is based on the closing price of the Company’s common stock on the date of grant, and is recognized as compensation expense on a straight-line basis over the requisite service period. The Company recognizes compensation expense related to its 2016 Employee Stock Purchase Plan (“ESPP”) based on the fair value at each enrollment date of the offering period using the Black-Scholes-Merton option-pricing model value. The stock-based compensation is reduced by the estimated forfeiture and is expensed on a straight-line basis over the offering period. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Disaggregation of Revenue The Company disaggregates revenue from contracts with customers by payor type. The Company believes these categories aggregate the payor types by nature, amount, timing and uncertainty of its revenue streams. Disaggregated revenue by payor type and major service line for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands, except percentages): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue Contracted third-party payors $ 67,336 54% $ 56,016 54% $ 196,566 55% $ 163,218 55% Centers for Medicare and Medicaid 31,006 25% 27,253 26% 88,369 25% 72,074 24% Healthcare institutions 18,065 14% 14,883 14% 52,060 14% 45,632 15% Non-contracted third-party payors 8,197 7% 5,723 6% 23,175 6% 17,380 6% Total $ 124,604 $ 103,875 $ 360,170 $ 298,304 Revenue generated from the United States comprised substantially all of the Company's revenue. No other country comprised 10% or greater of the Company's revenue during each of the three and nine months ended September 30, 2023 and 2022. Contract Liabilities ASC 606, Revenue from Contracts with Customers, requires an entity to present a revenue contract as a contract liability when the Company has an obligation to transfer goods or services to a customer for which the Company has received consideration from the customer, or an amount of consideration from the customer is due and unconditional (whichever is earlier). Certain of the Company’s customers pay the Company directly for the Zio XT service upon shipment of devices. Such advance payments are contract liabilities and are recorded as revenue when Zio reports are delivered to the healthcare provider. During the nine months ended September 30, 2023, $3.0 million relating to the contract liability balance at the beginning of 2023 was recognized as revenue. During the nine months ended September 30, 2022, $3.0 million relating to the contract liability balance at the beginning of 2022 was recognized as revenue. The advance payments liability was $3.4 million as of September 30, 2023. Contract Costs Under ASC 340, Other Assets and Deferred Costs ("ASC 340"), the incremental costs of obtaining a contract with a customer are recognized as an asset. Incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. |
CASH EQUIVALENTS AND MARKETABLE
CASH EQUIVALENTS AND MARKETABLE SECURITIES | 9 Months Ended |
Sep. 30, 2023 | |
Cash Equivalents And Investments [Abstract] | |
CASH EQUIVALENTS AND MARKETABLE SECURITIES | CASH EQUIVALENTS AND MARKETABLE SECURITIES The fair value of cash equivalents and marketable securities as of September 30, 2023 and December 31, 2022, were as follows (in thousands): September 30, 2023 Amortized Gross Unrealized Fair Value Gains Losses Money market funds $ 17,440 $ — $ — $ 17,440 U.S. government securities 111,038 3 (46) 110,995 Total cash equivalents and marketable securities $ 128,478 $ 3 $ (46) $ 128,435 Classified as: Cash equivalents $ 17,440 Marketable securities 110,995 Total cash equivalents and marketable securities $ 128,435 December 31, 2022 Amortized Gross Unrealized Fair Value Gains Losses Money market funds $ 24,263 $ — $ — $ 24,263 U.S. government securities 134,709 12 (409) 134,312 Total cash equivalents and marketable securities $ 158,972 $ 12 $ (409) $ 158,575 Classified as: Cash equivalents $ 24,263 Marketable securities 134,312 Total cash equivalents and marketable securities $ 158,575 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1 —Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 —Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 —Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The U.S. government securities are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. The Company's interest-bearing obligation is classified as Level 2. As of September 30, 2023 the fair value of the Company’s outstanding interest-bearing obligation approximated the carrying value of $34.9 million. As of December 31, 2022, the fair value of the Company’s outstanding interest-bearing obligation approximated the carrying value of $34.9 million. The Company holds a strategic investment that it does not measure at fair value on a recurring basis. The carrying value of this investment is $3.0 million as of September 30, 2023. The Company includes this investment in other assets in its unaudited condensed consolidated balance sheets. The Company had no transfers between levels of the fair value hierarchy of its assets measured at fair value. The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands): September 30, 2023 Level 1 Level 2 Level 3 Total Assets Money market funds $ 17,440 $ — $ — $ 17,440 U.S. government securities — 110,995 — 110,995 Total $ 17,440 $ 110,995 $ — $ 128,435 December 31, 2022 Level 1 Level 2 Level 3 Total Assets Money market funds $ 24,263 $ — $ — $ 24,263 U.S. government securities — 134,312 — 134,312 Total $ 24,263 $ 134,312 $ — $ 158,575 |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BALANCE SHEET DETAILS | BALANCE SHEET DETAILS Inventory Inventory consisted of the following (in thousands): September 30, 2023 December 31, 2022 Raw materials and work-in-process $ 5,962 $ 9,338 Finished goods 7,686 5,817 Total $ 13,648 $ 15,155 Other Assets Other assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 PCBAs $ 37,980 $ 18,599 Cloud computing arrangements 5,223 2,523 Strategic investment 3,000 — Other 845 1,130 Total $ 47,048 $ 22,252 The Company reuses PCBAs in each wearable Zio XT patch, Zio AT patch, and Zio Monitor patch, as well as the wireless gateway used in conjunction with the Zio AT patch. As PCBAs are used in a wearable Zio XT patch, Zio AT patch, or Zio Monitor patch, a portion of the cost of the PCBA is recorded as a cost of revenue. The PCBAs are charged over a period beyond one year. Charges to cost of revenue were $2.4 million and $5.4 million for the three and nine months ended September 30, 2023, respectively, and $1.3 million and $3.8 million for the three and nine months ended September 30, 2022, respectively. During the nine months ended September 30, 2023, PCBAs increased by $19.4 million primarily related to the expanded launch of the Zio Monitor System, as well as additional needs for the Zio XT and Zio AT patches. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): September 30, 2023 December 31, 2022 Laboratory and manufacturing equipment $ 5,729 $ 4,911 Computer equipment and software 2,448 2,315 Furniture and fixtures 4,198 4,119 Leasehold improvements 23,533 23,144 Internal-use software 60,001 44,877 Internal-use software in development 37,482 28,069 Construction in progress 9,655 3,451 Total property and equipment, gross 143,046 110,886 Less: accumulated depreciation and amortization (46,378) (35,216) Total property and equipment, net $ 96,668 $ 75,670 Depreciation and amortization expense was $4.1 million and $11.4 million for the three and nine months ended September 30, 2023, respectively, and $3.4 million and $9.9 million for the three and nine September 30, 2022, respectively, of which amortization related to internal-use software, was $3.1 million and $8.6 million, for the three and nine months ended September 30, 2023, respectively, and $2.5 million and $7.2 million for the three and nine months ended September 30, 2022, respectively. During the three and nine months ended September 30, 2023, internal-use software, both in service and in development, increased by $7.8 million and $24.5 million, respectively. This increase related to enhancements in the Company’s core technology, products and services and artificial intelligence, as well as investment in future technology, such as the Zio Monitor System, the Company's new biosensor technology platform, and the clinically-integrated ZEUS System for the Zio Watch. Accrued Liabilities Accrued liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Accrued payroll and related expenses $ 38,458 $ 34,752 Accrued vacation 10,050 8,608 Accrued expenses 13,811 7,006 Claims payable 5,295 4,464 Accrued employee share purchase plan contributions 2,863 1,045 Accrued income and sales taxes 3,071 2,388 Accrued professional services fees 3,083 7,234 Total accrued liabilities $ 76,631 $ 65,497 During the year ended December 31, 2022 and the nine months ended September 30, 2023, the Company has incurred expenses in connection with efforts to further globalize its operational footprint and expects to continue to incur such expenses through mid-2024. Included above in accrued payroll and related expenses as of September 30, 2023, were $4.0 million of costs related to globalization. |
IMPAIRMENT AND RESTRUCTURING CH
IMPAIRMENT AND RESTRUCTURING CHARGES | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
IMPAIRMENT AND RESTRUCTURING CHARGES | IMPAIRMENT AND RESTRUCTURING CHARGES During the three and nine months ended September 30, 2023, there were no impairment and restructuring charges. In February 2022, the Company's board of directors (the “Board”) approved a restructuring plan ("Restructuring Plan") to allow it to effectively and efficiently scale its business, which resulted in severance and other employment related costs $3.4 million during the nine months ended September 30, 2022. Also in February 2022, the Board approved reducing the Company's leased space for its headquarters in San Francisco, California, by a total amount of leased square footage of approximately 50%. As a result, the Company recognized an impairment of its ROU asset and related leasehold improvements and furniture and fixtures in the amount of $23.2 million during the nine months ended September 30, 2022. The Company's restructuring and impairment charges are described below (in thousands): Nine Months Ended Restructuring charges $ 3,444 Impairment charges 23,164 Total $ 26,608 The Company did not record any impairment charges during the nine months ended September 30, 2023. For further details, please refer to Note 7, Impairment and Restructuring, included in the financial statements accompanying the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Restructuring The following table provides a summary of changes in the restructuring liabilities associated with the Restructuring Plan (in thousands): December 31, 2022 Charges Cash Payments September 30, 2023 Employee severance $ 394 $ — $ (394) $ — Total $ 394 $ — $ (394) $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Purchase Commitments The Company is party to various purchase arrangements related to its manufacturing and research and development activities. During the nine months ended September 30, 2023, there were no material changes to purchase commitments from those disclosed in Note 8, Commitments and Contingencies, included in the financial statements accompanying the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Leases The Company leases office, manufacturing, and clinical centers under non-cancelable operating leases which expire on various dates through 2033. These leases generally contain scheduled rent increases or escalation clauses and renewal options. Operating lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The operating lease ROU assets also include any lease payments made to the lessor at or before the commencement date as well as variable lease payments which are based on a consumer price index. The Company is also subject to variable lease payments related to janitorial services and electricity which are not included in the operating lease ROU asset as they are based on actual usage. The Company recognizes operating lease expenses, generally on a straight-line basis over the lease period. In July 2023, the Company entered into an approximately seven-year facility lease in San Diego, California, as corporate office space. The Company leased approximately 8,300 square feet. The lease provides an option to extend the term of the lease for one five-year period beyond the initial term, which the Company is not reasonably certain to exercise and therefore was not considered in determining the ROU assets and lease liabilities balance. Total lease payments approximate $4.6 million as of the lease commencement date. In August 2023, the Company entered into a five-year facility lease in Manila, Philippines, in order to further globalize the Company's operational footprint as a business service center. The Company leased approximately 24,000 square feet. The lease provides an option to extend the term of the lease for two periods of five years beyond the initial term, which the Company is not reasonably certain to exercise and therefore was not considered in determining the ROU assets and lease liabilities balance. Total lease payments approximate $2.1 million as of the lease commencement date. Contractual obligations under operating lease liabilities were as follows (in thousands): Year Ending December 31: 2023 (remainder of the year) $ 5,497 2024 21,803 2025 21,577 2026 21,304 2027 20,873 Thereafter 38,658 Total lease payments 129,712 Less: imputed interest (32,923) Total lease liabilities $ 96,789 Legal Proceedings From time to time, the Company is involved in claims and legal proceedings or investigations, that arise in the ordinary course of business. Such matters could have an adverse impact on the Company's reputation, business, and financial condition and divert the attention of its management from the operation of the Company's business. These matters are subject to many uncertainties and outcomes that are not predictable. On February 1, 2021, a putative class action lawsuit was filed in the United States District Court for the Northern District of California (the "Court") alleging that the Company and its former Chief Executive Officer, Kevin M. King, violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 promulgated thereunder ("Securities Class Action Lawsuit"). On August 2, 2021, the lead plaintiff filed an amended complaint, and filed a further amended complaint on September 24, 2021. The amended complaint names as defendants, in addition to the Company and Mr. King, its former Chief Executive Officer, Michael J. Coyle, and former Chief Financial Officer and former Chief Operating Officer, Douglas J. Devine. The purported class in the amended complaint includes all persons who purchased or acquired the Company's common stock between August 4, 2020 and July 13, 2021, and seeks unspecified damages purportedly sustained by the class. On October 27, 2021, the Company filed a motion to dismiss, which the Court granted on March 31, 2022, entering judgment in favor of the Company and the other defendants. On April 29, 2022, the original named plaintiff appealed to the Ninth Circuit Court of Appeals. On October 11, 2023, after briefing by the parties and oral argument, the Ninth Circuit dismissed the appeal for lack of jurisdiction. The appellant has stated that he intends to file a petition for rehearing en banc. The Company believes the above securities class action lawsuit to be without merit and plans to continue to defend itself vigorously. On March 26, 2021, the Company received a grand jury subpoena from the U.S. Attorney’s Office for the Northern District of California requesting information related to communications with FDA and the Company's products and services. On September 14, 2021, the Company received a second subpoena requesting additional information. On April 4, 2023, the Company received a Subpoena Duces Tecum from the Consumer Protection Branch, Civil Division of the U.S. Department of Justice, requesting production of various documents regarding the Company’s products and services. The Company is cooperating fully on these matters. Development Agreement On September 3, 2019, the Company entered into a Development Collaboration Agreement with Verily Life Sciences LLC, an Alphabet company (“VLS”) and Verily Ireland Limited (“VIL” and together with VLS, “Verily”) (such Development Collaboration Agreement, as amended by Amendment No. 1 dated April 26, 2021 and Amendment No.2 dated January 24, 2022, the “Development Agreement”). The Development Agreement involves joint development and production of intellectual property between the Company and Verily. Each participant has primary responsibility for certain aspects of development and approval, with all processes to be performed at each respective party’s own cost. Costs incurred by the Company in connection with the Development Agreement will be expensed as research and development expense in accordance with ASC 730, Research and Development. The Company and Verily will develop certain next-generation atrial fibrillation (“Afib”) screening, detection, or monitoring products pursuant to the Development Agreement, which products will involve combining Verily's and the Company’s technology platforms and capabilities. Under the terms of the Development Agreement, the Company paid Verily an upfront fee of $5.0 million in 2019. In addition, the Company agreed to make additional cash payments to Verily up to an aggregate of $12.75 million in milestone payments upon achievement of various development and regulatory milestones over the term of the Development Agreement. The Company has achieved milestones tied to payments totaling $11.0 million through September 30, 2023, and, subject to achievement of specified milestones, anticipate making additional milestone payments of $1.75 million into 2024. The Development Agreement provides each party with licenses to use certain intellectual property of the other party for development activities in the field of Afib screening, detection, or monitoring. Ownership of developed intellectual property will be allocated to the Company or Verily depending on the subject matter of the underlying developed intellectual property, and, for certain subject matter, shall be jointly owned. Indemnifications In the ordinary course of business, the Company enters into agreements pursuant to which it agrees to indemnify customers, vendors, lessors, business partners, and other parties with respect to certain matters, including losses arising out of the breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. Pursuant to such agreements, the Company may indemnify, hold harmless and defend an indemnified party for losses suffered or incurred by the indemnified party. Some of the provisions will limit losses to those arising from third-party actions. In some cases, the indemnification will continue after the termination of the agreement. The maximum potential amount of future payments the Company could be required to make under these provisions is not determinable. The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by applicable law. The Company currently has directors’ and officers’ insurance. The Company has never incurred material costs to defend lawsuits or settle claims related to these indemnification provisions, and believes that the estimated fair value of these indemnification obligations is not material and it has not accrued any amounts for these obligations. |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT In October 2018, the Company entered into the Third Amended and Restated Loan and Security Agreement (“SVB Loan Agreement”) with Silicon Valley Bank (“SVB”). Under the SVB Loan Agreement, the Company had borrowed $35.0 million and had made repayments through March 2022, at which time the outstanding balance was $18.5 million. On March 28, 2022, the Company entered into a Second Amendment (“2022 Amendment”) to its SVB Loan Agreement which provided for a term loans facility in the aggregate principal amount of up to $75.0 million (the “2022 Term Loans”), of which $35.0 million was borrowed at closing and a portion of the proceeds was used to pay in full the outstanding balance of $18.5 million under the SVB Loan Agreement. The remaining $40.0 million of 2022 Term Loans may be borrowed from time to time at the Company’s option, in increments of at least $10.0 million, through December 31, 2023. The Company will pay interest only on the 2022 Term Loans until April 1, 2025, when it will commence repaying the 2022 Term Loans in 24 equal consecutive monthly installments, with all obligations under the 2022 Term Loans maturing on March 1, 2027. Interest charged on the 2022 Term Loans will accrue at a floating per annum rate equal to the greater of: (A) the Prime Rate plus 0.25%; and (B) 3.5%. The Company is also required to pay fees on any prepayment of the 2022 Term Loans, ranging from 1.0% to 3.0% depending on the date of prepayment, and a final payment equal to 5.0% of the principal amount of the 2022 Term Loans drawn. Once repaid or prepaid, the 2022 Term Loans may not be reborrowed. The Company accounted for the refinancing as an extinguishment of the original loans and paid a fee of $1.8 million, which was included in interest expense on the unaudited condensed consolidated statement of operations and recorded the 2022 Term Loans, net of issuance costs. The issuance costs on the new loans are amortized over the term of the loan. The 2022 Amendment also amended the terms of the revolving credit line under the SVB Loan Agreement, which provided for an aggregate principal amount of $25.0 million, to: (i) extend the maturity date from August 1, 2023 to March 1, 2027, (ii) increase the letters of credit sublimit to $15.0 million and (iii) increase the cash management services sublimit to $15.0 million. Interest charged on the principal amount outstanding under the revolving credit line accrues at a floating per annum rate equal to the greater of (A) the Prime Rate plus 0.25% and (B) 3.5%. The Company is required to pay an annual fee equal to 0.15% of the revolving credit line. As of September 30, 2023, no loans were outstanding under the revolving credit line and the Company had used $8.4 million in letters of credit. The 2022 Amendment also amended the SVB Loan Agreement to require the Company to comply, as of the last day of each fiscal quarter, with a quick ratio of at least 1.0 to 1.15 or minimum adjusted EBITDA trailing 6 months of at least $15.0 million. As of March 27, 2023, in connection with the closure of SVB by the California Department of Financial Protection and Innovation and the Federal Deposit Insurance Corporation, First-Citizens Bank & Trust Company assumed all of SVB’s deposits and loans. The Company continues to have access to the revolving credit line and letters of credit available pursuant to the SVB Loan Agreement and was in compliance with its loan covenants as of September 30, 2023. Future minimum payments Contractual obligations for the 2022 Term Loans comprise principal and interest payments as follows (in thousands): Year Ending December 31, 2023 (remainder of the year) $ 774 2024 3,114 2025 15,841 2026 18,728 2027 4,440 Total 42,897 Less: Amount representing interest (7,897) Less: Debt issuance costs (54) Principal payments $ 34,946 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe Company recorded a tax provision related to its U.S. state taxes and the U.K. subsidiary during the three and nine months ended September 30, 2023 and 2022. Due to the uncertainties surrounding the realization of the U.S. deferred tax assets through future taxable income, the Company has provided a full valuation allowance and, therefore, no benefit has been recognized for the net operating loss carryforwards and other deferred tax assets. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Common Stock The Company’s amended and restated certificate of incorporation dated October 25, 2016, as amended, authorizes the Company to issue 100,000,000 shares of common stock with a par value of $0.001 per share and 5,000,000 shares of preferred stock with a par value of $0.001 per share. The holders of common stock are entitled to receive dividends whenever funds and assets are legally available and when declared by the Board, subject to the prior rights of holders of all series of convertible preferred stock outstanding. No dividends were declared through September 30, 2023. The Company had reserved shares of common stock for issuance as follows (in thousands): September 30, 2023 December 31, 2022 Options issued and outstanding 307 328 Unvested RSUs and PRSUs 1 2,747 2,026 Shares available for grant under future stock plans 6,728 7,823 Shares available for future issuance 9,782 10,177 1 PRSUs are based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. |
EQUITY INCENTIVE PLAN AND STOCK
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION | EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION A summary of awards available for grant under the Company’s 2016 Equity Incentive Plan is as follows (in thousands): Shares Available for Grant Balance as of December 31, 2022 7,823 Awards granted 1 (1,317) Awards forfeited 1 222 Balance as of September 30, 2023 6,728 1 Awards granted and forfeited include PRSUs, which are based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. Restricted Stock Units and Performance-Based Restricted Stock Units The fair value of RSUs and PRSUs are based on the Company’s closing stock price on the date of grant. The fair value of market based PRSUs were estimated at the date of grant using the Monte-Carlo option pricing model. A summary is as follows (in thousands, except weighted average grant date fair value): Restricted Stock Units Performance Based Restricted Stock Units and Market-Based Units Shares Underlying RSUs Weighted Average Grant Date Fair Value Shares Underlying PRSUs 1 Weighted Average Grant Date Fair Value Balance as of December 31, 2022 1,465 $ 111.16 561 $ 120.22 Granted 853 116.49 464 124.56 Vested (349) 118.30 (24) 107.05 Forfeited (129) 119.60 (93) 127.04 Balance as of September 30, 2023 1,839 $ 111.69 908 $ 122.09 1 Based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. As of September 30, 2023, there was total unamortized compensation costs of $142.3 million, net of estimated forfeitures, related to unrecognized RSU expense, which the Company expects to recognize over a weighted average remaining period of 1.9 years. Aggregate intrinsic value of the RSUs was $173.4 million as of September 30, 2023. As of September 30, 2023, there was total unamortized compensation costs of $41.9 million, net of estimated forfeitures, related to unrecognized PRSU expense, which the Company expects to recognize over a weighted average remaining period of 2.3 years. Aggregate intrinsic value of the PRSUs was $85.6 million as of September 30, 2023. PRSUs and Market-based RSUs The Company grants PRSUs to its key executives. PRSUs can be earned in accordance with the performance equity program for each respective grant. For further details on PRSUs granted in 2022 and prior years, please refer to Note 13, Equity Incentive Plans , in the financial statements accompanying the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In February 2023, the Company granted PRSUs (“February 2023 awards”) to be earned based on the CAGR calculated between fiscal year 2025's and fiscal year 2022's annual unit volume and measuring a minimum performance threshold of 15% to earn 50.0% of target, and a maximum threshold of 25% achieved to earn 200.0% of target. These February 2023 awards are subject to the recipient's continued employment through the vesting date of March 15, 2026. In addition, in February 2023, the Company granted market-based PRSUs to senior executive officers. These PRSUs to be earned will be based on the CAGR calculated between fiscal year 2025 and fiscal year 2022 annual unit volume and measuring performance thresholds mentioned above, as well as a comparison of the S&P Healthcare Index to the Company's Total Shareholder Return (“TSR”). The grant date fair value of the TSR was based on the expected term of 2.9 years, interest risk free rate of 4.5%, implied volatility of 83.8% and no dividend yield. These February 2023 awards are subject to the senior executive officers continued employment through the vesting date of March 15, 2026. In August 2023, the Company granted market-based retention PRSUs ("August 2023 awards") to its Chief Executive Officer, other senior executive officers, and other members of the Company’s management team. The purpose of the performance-based awards was tied to several important long-term operational objectives, including to: (i) create stability among the leadership team, (ii) retain other critical talent and (iii) drive achievement of strategic objectives while the Company transforms and scales its business model. The performance period of the August 2023 awards will be measured between July 1, 2023 and June 30, 2026, with Company results subject to adjustment by the Company’s TSR as compared to the TSR of the S&P Healthcare Index. The grant date fair value of the TSR was based on the expected term of 2.9 years, interest risk free rate of 4.4%, implied volatility of 80.1% and no dividend yield. The August 2023 awards are subject to the continued employment of the recipients through the vesting date of August 7, 2026. Options The following table summarizes stock option activity during the nine months ended September 30, 2023 (in thousands, except weighted average exercise price per share and years): Options Outstanding Options Weighted- Weighted- Aggregate Balance as of December 31, 2022 328 $ 43.00 4.43 $ 16,635 Options exercised (21) 53.03 Balance as of September 30, 2023 307 42.32 3.66 15,964 Options exercisable – September 30, 2023 307 $ 42.32 3.66 $ 15,964 There have been no options granted since December 31, 2019. As of September 30, 2023, the options were fully vested. Employee Stock Purchase Plan In October 2016, the Board and stockholders approved the ESPP. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for 12 month offering periods that contain two six-month purchase periods. At the end of each purchase period, employees purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the purchase period. During the nine months ended September 30, 2023, approximately 46 thousand shares of the Company's common stock were issued to employees participating in the ESPP and approximately 2.2 million share s of the Company’s common stock remained available for issuance under the ESPP. For the offering period which started on June 1, 2023, the assumptions included the expected term ranging from 0.5 year to 1.0 year, expected volatility ranging from 48.8% to 59.2%, risk-free interest rate ranging from 5.1% to 5.4% and dividend yield of 0.0%. During the nine months ended September 30, 2023 there were no material changes to the ESPP from those described in Note 13, Equity Incentive Plans , included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. As of September 30, 2023, the Company had $3.2 million of unrecognized compensation expense related to ESPP subscriptions that will be recognized over a weighted average period of 0.5 years. Stock-Based Compensation Expense The following table summarizes the total stock-based compensation expense included in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 1,236 $ 618 $ 2,584 $ 1,540 Research and development 3,370 1,717 7,912 4,841 Selling, general and administrative 16,402 10,610 42,862 35,565 Total stock-based compensation expense $ 21,008 $ 12,945 $ 53,358 $ 41,946 |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE As the Company had net losses for the three and nine months ended September 30, 2023 and 2022, all potential common shares were determined to be anti-dilutive. The following table sets forth the computation of the basic and diluted net loss per share during the three and nine months ended September 30, 2023 and 2022 (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net loss $ (27,116) $ (21,451) $ (84,707) $ (95,957) Denominator: Weighted-average shares used to compute net loss per common share, basic and diluted 30,607 30,055 30,470 29,837 Net loss per common share, basic and diluted $ (0.89) $ (0.71) $ (2.78) $ (3.22) The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the three and nine months ended September 30, 2023 and 2022 because their inclusion would be anti-dilutive (in thousands): Three and Nine Months Ended September 30, 2023 2022 Options to purchase common stock 307 330 RSUs and PRSUs 1 unvested 2,747 2,077 Total 3,054 2,407 1 PRSUs are based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net Income (Loss) | $ (27,116) | $ (18,482) | $ (39,109) | $ (21,451) | $ (23,897) | $ (50,609) | $ (84,707) | $ (95,957) |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of September 30, 2023, and related disclosures, have been derived from the audited consolidated financial statements at that date but do not include all of the information required by GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s unaudited condensed consolidated financial information. The results of operations for the three and nine months ended September 30, 2023, are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any other interim period or for any other future year. |
Risks and Uncertainties | Risks and Uncertainties Macroeconomic Factors and Supply Chain Constraints The Company’s operations and performance may vary based on worldwide economic and political conditions, which have been adversely impacted by continued global economic uncertainty, political instability, and military hostilities in multiple geographies including ongoing geopolitical conflicts, such as the war in Ukraine and conflict in Israel, domestic and global inflationary trends, interest rate volatility, uncertainty with respect to the federal budget, instability in the global banking system, global supply shortages, and a tightening labor market. A severe or prolonged economic downturn or period of global political instability could drive hospitals and other healthcare professionals to tighten budgets and curtail spending, which could in turn negatively impact rates at which physicians prescribe the Company’s Zio Services. In addition, higher unemployment rates or reductions in employer-provided benefits plans could result in fewer commercially insured patients, resulting in a reduction in the Company’s margins and impairing the ability of uninsured patients to make timely payments. A weak or declining economy could also strain the Company’s suppliers, possibly resulting in supply delays and disruptions. There is also a risk that one or more of the Company’s current service providers, suppliers, or other partners may not survive such difficult economic times, which could directly affect the Company’s ability to attain its goals on schedule and on budget. If the current equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. The Company cannot predict the timing, strength, or duration of an economic downturn, instability, or recovery, whether worldwide, in the United States, or within its industry. The Company’s remote work arrangements and decision to pursue a sublease for its San Francisco headquarters resulted in an impairment of its right-of-use ("ROU") asset and related leasehold improvements and furniture and fixtures during the nine months ended September 30, 2022. As the Company continues to evaluate its real estate footprint, the Company may incur additional impairment charges related to real property lease agreements. The Company is continuously reviewing its liquidity and anticipated capital requirements. The Company believes it will have adequate liquidity over the next 12 months to operate its business and to meet its cash requirements. As of September 30, 2023, the Company is in compliance with its debt covenants. Reimbursement The Company receives revenue for the Zio Services primarily from third-party payors, which include commercial payors and government agencies, such as the Centers for Medicare & Medicaid Services (“CMS”). Third-party payors require the Company to identify the service for which it is seeking reimbursement by using a Current Procedural Terminology (“CPT”) code set maintained by the American Medical Association. These CPT codes are subject to periodic change and update, which will impact the reimbursement rates for the Company’s Zio Services. CMS updates the reimbursement rates for diagnostic tests performed by IDTFs annually via the Medicare Physician Fee Schedule, and effective January 1, 2023, CMS established national payment rates for the CPT codes the Company uses to report the long-term Holter monitoring services it performs with its Zio XT System: CPT codes 93247 (for wear-time of greater than 7 days and up to 15 days) and 93243 (for wear-time of greater than 48 hours and up to 7 days). Based on the relative value units CMS assigned to CPT codes 93247 and 93243, the national reimbursement rates for these services in 2023 are $243.65 and $231.79, respectively, and range from $247.59 to $334.46 and $235.54 to $318.17 for the Company’s Medicare-enrolled IDTF locations in Deerfield, Illinois, Houston, Texas, and San Francisco, California, when considering the geographic practice cost index for these locations. On August 7, 2023, CMS published the calendar year 2024 Medicare Physician Fee Schedule proposed rule, which includes rates for the CPT codes the Company uses to seek reimbursement for its services. Based on the proposed rule, the Company believes the 2024 proposed national payment rates may be, on average, approximately 5% lower than the 2023 rates for services, when excluding impacts from the geographic practice cost index for the Company’s IDTF locations noted above. As of November 1, 2023, the final Medicare Physician Fee Schedule has not been released by CMS for calendar year 2024. Because remote cardiac monitoring technology, including the Zio System, are rapidly evolving, there is a continuing risk that relative value units assigned, and reimbursement rates set, by CMS may not adequately reflect the value and expense of this technology and related monitoring services, and the Company cannot provide certainty that CMS will not reduce these rates in the future, which would adversely affect the Company’s financial results. |
Use of Estimates | Use of Estimates The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, contractual allowances, allowance for doubtful accounts, the useful lives of property and equipment, the recoverability of long-lived assets, including the estimated usage of the printed circuit board assemblies (“PCBAs”), the incremental borrowing rate for operating leases, accounting for income taxes, impairment of ROU assets, and various inputs used in estimating stock-based compensation. Actual results may differ from those estimates. |
Accounts Receivable, Allowance for Doubtful Accounts and Contractual Allowances | Accounts Receivable, Allowance for Doubtful Accounts and Contractual Allowances Accounts receivable includes amounts due to the Company from healthcare institutions, third-party payors, and government payors and their related patients, as a result of the Company's normal business activities. Accounts receivable is reported on the unaudited condensed consolidated balance sheets net of an estimated allowance for doubtful accounts and contractual allowances. The Company establishes an allowance for doubtful accounts for estimated uncollectible receivables based on its assessment of the collectability of customer accounts and recognizes the provision as a component of selling, general and administrative expenses. The Company records a provision for contractual allowances based on the estimated differences between contracted amounts and expected collection rates for services performed. Such provisions are based on the Company's historical experience and are reported as a reduction of revenue. The Company regularly reviews the allowances by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. |
Concentrations of Risk | Concentrations of Risk Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, investments and accounts receivable. Cash balances are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds. The Company invests in a variety of financial instruments, such as, but not limited to, U.S. government securities, corporate notes, commercial paper and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments. |
Inflationary Risk | Inflationary Risk The Company continuously monitors the effects of inflationary factors, such as increases in cost of goods sold and selling and operating expenses, which may adversely affect its results of operations. Specifically, the Company may experience inflationary pressure affecting freight costs, the cost of the components for the Company’s Zio Services, overhead costs relating to maintenance of the Company’s facilities, and in the wages paid to its employees due to challenging labor market conditions. Competitive and regulatory conditions may restrict the Company’s ability to fully recover these costs through price increases. As a result, it may be difficult to fully offset the impact of persistent inflation. The Company’s inability or failure to do so could have a material adverse effect on its business, financial condition and results of operations or cause the Company to need to obtain additional capital earlier than anticipated in the future. |
Supply Risk | Supply Risk The Company relies on single-source vendors to supply some of its disposable housings, instruments and other materials used to manufacture the Zio patches and the adhesive that binds the Zio patch to a patient’s body. These components and materials are critical, and there could be a considerable delay in finding alternative sources of supply. A global semiconductor supply shortage is having wide-ranging effects across multiple industries. The supply shortage has impacted multiple suppliers that provide the PCBAs to the Company. The semiconductor supply shortage may have an impact on the Company until global supply is sufficient for global demand. |
Revenue Recognition | Revenue Recognition The Company has developed a proprietary system that combines an FDA-cleared wire-free, patch-based, 14-day wearable biosensor that continuously records ECG data, with a proprietary cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias. In addition, the Company has received CE-mark and UKCA certification for Zio XT System and ZEUS algorithm. The Company currently offers three Zio System options—the Zio XT System, the Zio AT System, and the Zio Monitor System. The Zio XT System is a prescription-only, remote ECG monitoring system that consists of the Zio XT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio XT patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm. The final step in the Zio Services is the delivery of an electronic Zio report to the prescribing physician with a summary of findings. The Company’s Zio XT services are generally billable when the Zio report is issued to the physician. The Zio Monitor System is the next generation of the Zio XT System, and is a prescription-only, remote ECG monitoring system that consists of the Zio Monitor patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, which supports the capture and analysis of ECG data recorded by the Zio Monitor patch at the end of the wear period, including specific arrhythmia events detected by the ZEUS algorithm. The Company’s Zio Monitor services are generally billable when the Zio report is issued to the physician. The Zio AT System is a prescription-only, remote ECG monitoring system that similarly consists of the Zio AT patch that records the electric signal from the heart continuously for up to 14 days and the ZEUS System, but which also incorporates the Zio AT wireless gateway that provides connectivity between the patch and the ZEUS System during the patient wear period. The wireless gateway, slightly larger than a smart phone, is provided to the patient at the time of Zio AT patch application and collects and transmits data from the Zio AT patch to the cloud via a LTE protocol. The Zio AT service revenue is recognized under two performance obligations — the patient wear period and delivery of electronic Zio reports. The Company recognizes as revenue the amount of consideration to which it expects to be entitled in exchange for performing the service. The consideration the Company is entitled to varies by payor portfolio, as further defined below, and includes estimates that require significant judgment by management. A unique aspect of healthcare is the involvement of multiple parties to the service transaction. In addition to the patient, often a third-party payor, for example a commercial or governmental payor or healthcare institution, will pay the Company for some or all of the service on the patient’s behalf. Separate contractual arrangements exist between the Company and third-party payors that establish amounts the third-party payor will pay on behalf of a patient for covered services rendered. A small portion of the Company’s transactions are covered by third-party payors with whom there is neither a contractual agreement nor an established amount that the third-party payor will pay. In determining the collectability and transaction price for its service, the Company considers factors such as insurance claims which are adjudicated as allowable under the applicable policy and payment history from both payors and patient out-of-pocket costs, payor coverage, whether there is a contract between the payor or healthcare institution and the Company, historical amount received for the service, and any current developments or changes that could impact reimbursement and healthcare institution payments. Certain of these factors are forms of variable consideration which are only included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. A summary of the payment arrangements with third-party payors and healthcare institutions is as follows: • Contracted third-party payors – The Company has contracts with negotiated prices for services provided to patients with commercial healthcare insurance coverage. • CMS – The Company has received IDTF approval from regional Medicare Administrative Contractors and will receive reimbursement per the relevant CPT code rates for the services rendered to the patient covered by CMS. • Healthcare institutions – Healthcare institutions are typically hospitals or physician practices in which the Company has negotiated amounts for its monitoring services, including certain governmental agencies such as the Veterans Administration and Department of Defense. • Non-contracted third-party payors – Non-contracted commercial and government payors often reimburse out-of-network rates provided under the relevant CPT codes on a case-by-case basis. The transaction price used for determining revenue recognition is based on factors including an average of the Company’s historical collection experience for its non-contracted services. This rate is reviewed at least quarterly. The Company is utilizing the portfolio approach practical expedient under Accounting Standard Codification ("ASC") 606, Revenue from Contracts with Customers, whereby services provided under each of the above payor types form a separate portfolio. The Company accounts for the contracts within each portfolio as a collective group, rather than individual contracts. Based on history with these portfolios and the similar nature and characteristics of the patients within each portfolio, the Company has concluded that the financial statement effects are not materially different than if accounting for revenue on a contract-by-contract basis. For contracted and CMS portfolios, the Company recognizes revenue, net of contractual allowances, and recognizes an allowance for doubtful accounts for uncollectible patient accounts receivable. The transaction price is determined based on negotiated rates, and the Company has historical experience of collecting substantially all of these contracted rates. These contracts also impose a number of obligations regarding billing and other matters, and the Company’s noncompliance with a material term of such contracts may result in a denial of the claim. The Company accounts for denied claims as a form of variable consideration that is included as a reduction to the transaction price recognized as revenue. The Company makes estimates around the amount of denied claims within a reporting period, a process that requires management judgment. The estimated denied claims are based on historical information, and judgement includes the historical period utilized. The Company monitors the estimated denied claims against the latest available information, and subsequent changes to the estimated denied claims are recorded as an adjustment to revenue in the periods during which such changes occur. Delays in claims submissions could lead to an increase in denials if the Company misses the payors’ filing deadlines, which could result in a reduction in the Company’s receipt of payments. Historical cash collection indicates that it is probable that substantially all of the transaction price, less the estimate of denied claims, will be received. Contracted payors may require that the Company bills patient co-payments and deductibles and from time to time the Company may not be able to collect such amounts due to credit risk. The Company provides for estimates of uncollectible patient accounts receivable, based upon historical experience where judgment includes the historical period utilized, at the time revenue is recognized, with such provisions presented as bad debt expense within the selling, general and administrative line item of the consolidated statements of operations. Adjustments to these estimates for actual experience are also recorded as an adjustment to bad debt expense. For healthcare institutions, the transaction price is determined based on negotiated rates, and the Company has historical experience collecting substantially all of these contracted rates. Historical cash collections indicate that it is probable that substantially all of the transaction price will be received. As such, the Company is not providing an implicit price concession but, rather, has chosen to accept the risk of default, and any subsequent uncollected amounts are recorded as bad debt expense to selling, general and administrative expense in the consolidated statements of operations. For non-contracted portfolios, the Company provides an implicit price concession due to the lack of a contracted rate with the underlying payor. As a result, the Company estimates the transaction price based on historical cash collections utilizing the expected value method. All subsequent changes to the transaction price are recorded as adjustments to revenue. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the estimated fair values of its restricted stock units (“RSUs”) based on the closing price of the Company's stock on the grant date. For performance-based restricted stock units (“PRSUs”), the Company estimates the fair value based on the closing price of its stock on the grant date and, if the award includes a market condition, a Monte Carlo simulation model. In addition, for PRSUs, the Company applies a probability assessment to determine the probable achievement of the performance-based metrics. Stock-based compensation expense is recognized over the requisite service period using the straight-line method and is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, the Company's stock-based compensation is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For restricted stock, the compensation cost for these awards is based on the closing price of the Company’s common stock on the date of grant, and is recognized as compensation expense on a straight-line basis over the requisite service period. The Company recognizes compensation expense related to its 2016 Employee Stock Purchase Plan (“ESPP”) based on the fair value at each enrollment date of the offering period using the Black-Scholes-Merton option-pricing model value. The stock-based compensation is reduced by the estimated forfeiture and is expensed on a straight-line basis over the offering period. |
Contract Liabilities | Contract Liabilities ASC 606, Revenue from Contracts with Customers, requires an entity to present a revenue contract as a contract liability when the Company has an obligation to transfer goods or services to a customer for which the Company has received consideration from the customer, or an amount of consideration from the customer is due and unconditional (whichever is earlier). |
Contract Costs | Contract Costs Under ASC 340, Other Assets and Deferred Costs ("ASC 340"), the incremental costs of obtaining a contract with a customer are recognized as an asset. Incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Changes in Allowance for Doubtful Accounts | The following table presents the changes in the allowance for doubtful accounts (in thousands): Nine Months Ended September 30, 2023 Year Ended December 31, 2022 Nine Months Ended September 30, 2022 Balance, beginning of period $ 18,475 $ 14,012 $ 14,012 Provision for doubtful accounts 12,595 17,191 12,244 Write-offs, net of recoveries and other adjustments (11,659) (12,728) 17 Balance, end of period $ 19,411 $ 18,475 $ 26,273 |
Schedule of Changes in Contractual Allowance | The following table presents the changes in the contractual allowance (in thousands): Nine Months Ended September 30, 2023 Year Ended December 31, 2022 Nine Months Ended September 30, 2022 Balance, beginning of period $ 41,389 $ 31,274 $ 31,274 Add: provision for contractual adjustments 39,060 41,158 31,534 Less: contractual adjustments (32,072) (31,043) (259) Balance, end of period $ 48,377 $ 41,389 $ 62,549 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregated Revenue by Payor Type and Major Service | Disaggregated revenue by payor type and major service line for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands, except percentages): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Amount % of Revenue Amount % of Revenue Amount % of Revenue Amount % of Revenue Contracted third-party payors $ 67,336 54% $ 56,016 54% $ 196,566 55% $ 163,218 55% Centers for Medicare and Medicaid 31,006 25% 27,253 26% 88,369 25% 72,074 24% Healthcare institutions 18,065 14% 14,883 14% 52,060 14% 45,632 15% Non-contracted third-party payors 8,197 7% 5,723 6% 23,175 6% 17,380 6% Total $ 124,604 $ 103,875 $ 360,170 $ 298,304 |
CASH EQUIVALENTS AND MARKETAB_2
CASH EQUIVALENTS AND MARKETABLE SECURITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Cash Equivalents And Investments [Abstract] | |
Schedule of Cash Equivalents and Marketable Securities | The fair value of cash equivalents and marketable securities as of September 30, 2023 and December 31, 2022, were as follows (in thousands): September 30, 2023 Amortized Gross Unrealized Fair Value Gains Losses Money market funds $ 17,440 $ — $ — $ 17,440 U.S. government securities 111,038 3 (46) 110,995 Total cash equivalents and marketable securities $ 128,478 $ 3 $ (46) $ 128,435 Classified as: Cash equivalents $ 17,440 Marketable securities 110,995 Total cash equivalents and marketable securities $ 128,435 December 31, 2022 Amortized Gross Unrealized Fair Value Gains Losses Money market funds $ 24,263 $ — $ — $ 24,263 U.S. government securities 134,709 12 (409) 134,312 Total cash equivalents and marketable securities $ 158,972 $ 12 $ (409) $ 158,575 Classified as: Cash equivalents $ 24,263 Marketable securities 134,312 Total cash equivalents and marketable securities $ 158,575 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Company's Financial Assets and Liabilities | The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands): September 30, 2023 Level 1 Level 2 Level 3 Total Assets Money market funds $ 17,440 $ — $ — $ 17,440 U.S. government securities — 110,995 — 110,995 Total $ 17,440 $ 110,995 $ — $ 128,435 December 31, 2022 Level 1 Level 2 Level 3 Total Assets Money market funds $ 24,263 $ — $ — $ 24,263 U.S. government securities — 134,312 — 134,312 Total $ 24,263 $ 134,312 $ — $ 158,575 |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventory Components | Inventory consisted of the following (in thousands): September 30, 2023 December 31, 2022 Raw materials and work-in-process $ 5,962 $ 9,338 Finished goods 7,686 5,817 Total $ 13,648 $ 15,155 |
Schedule of Other Assets | Other assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 PCBAs $ 37,980 $ 18,599 Cloud computing arrangements 5,223 2,523 Strategic investment 3,000 — Other 845 1,130 Total $ 47,048 $ 22,252 |
Schedule of Property and Equipment, Net Components | Property and equipment, net consisted of the following (in thousands): September 30, 2023 December 31, 2022 Laboratory and manufacturing equipment $ 5,729 $ 4,911 Computer equipment and software 2,448 2,315 Furniture and fixtures 4,198 4,119 Leasehold improvements 23,533 23,144 Internal-use software 60,001 44,877 Internal-use software in development 37,482 28,069 Construction in progress 9,655 3,451 Total property and equipment, gross 143,046 110,886 Less: accumulated depreciation and amortization (46,378) (35,216) Total property and equipment, net $ 96,668 $ 75,670 |
Schedule of Accrued Liabilities Components | Accrued liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Accrued payroll and related expenses $ 38,458 $ 34,752 Accrued vacation 10,050 8,608 Accrued expenses 13,811 7,006 Claims payable 5,295 4,464 Accrued employee share purchase plan contributions 2,863 1,045 Accrued income and sales taxes 3,071 2,388 Accrued professional services fees 3,083 7,234 Total accrued liabilities $ 76,631 $ 65,497 |
IMPAIRMENT AND RESTRUCTURING _2
IMPAIRMENT AND RESTRUCTURING CHARGES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Changes in the Restructuring Liabilities | The Company's restructuring and impairment charges are described below (in thousands): Nine Months Ended Restructuring charges $ 3,444 Impairment charges 23,164 Total $ 26,608 The following table provides a summary of changes in the restructuring liabilities associated with the Restructuring Plan (in thousands): December 31, 2022 Charges Cash Payments September 30, 2023 Employee severance $ 394 $ — $ (394) $ — Total $ 394 $ — $ (394) $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | Contractual obligations under operating lease liabilities were as follows (in thousands): Year Ending December 31: 2023 (remainder of the year) $ 5,497 2024 21,803 2025 21,577 2026 21,304 2027 20,873 Thereafter 38,658 Total lease payments 129,712 Less: imputed interest (32,923) Total lease liabilities $ 96,789 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Future Minimum Payments | Contractual obligations for the 2022 Term Loans comprise principal and interest payments as follows (in thousands): Year Ending December 31, 2023 (remainder of the year) $ 774 2024 3,114 2025 15,841 2026 18,728 2027 4,440 Total 42,897 Less: Amount representing interest (7,897) Less: Debt issuance costs (54) Principal payments $ 34,946 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Common Stock Shares Reserved for Future Issuance | The Company had reserved shares of common stock for issuance as follows (in thousands): September 30, 2023 December 31, 2022 Options issued and outstanding 307 328 Unvested RSUs and PRSUs 1 2,747 2,026 Shares available for grant under future stock plans 6,728 7,823 Shares available for future issuance 9,782 10,177 1 PRSUs are based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. |
EQUITY INCENTIVE PLAN AND STO_2
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-Based Awards Available for Grant Under 2016 Plan | A summary of awards available for grant under the Company’s 2016 Equity Incentive Plan is as follows (in thousands): Shares Available for Grant Balance as of December 31, 2022 7,823 Awards granted 1 (1,317) Awards forfeited 1 222 Balance as of September 30, 2023 6,728 1 Awards granted and forfeited include PRSUs, which are based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. |
Schedule of Restricted Stock Units, Activity | The fair value of market based PRSUs were estimated at the date of grant using the Monte-Carlo option pricing model. A summary is as follows (in thousands, except weighted average grant date fair value): Restricted Stock Units Performance Based Restricted Stock Units and Market-Based Units Shares Underlying RSUs Weighted Average Grant Date Fair Value Shares Underlying PRSUs 1 Weighted Average Grant Date Fair Value Balance as of December 31, 2022 1,465 $ 111.16 561 $ 120.22 Granted 853 116.49 464 124.56 Vested (349) 118.30 (24) 107.05 Forfeited (129) 119.60 (93) 127.04 Balance as of September 30, 2023 1,839 $ 111.69 908 $ 122.09 1 Based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. |
Schedule of Stock Option Activity Under 2006 and 2016 Plans | The following table summarizes stock option activity during the nine months ended September 30, 2023 (in thousands, except weighted average exercise price per share and years): Options Outstanding Options Weighted- Weighted- Aggregate Balance as of December 31, 2022 328 $ 43.00 4.43 $ 16,635 Options exercised (21) 53.03 Balance as of September 30, 2023 307 42.32 3.66 15,964 Options exercisable – September 30, 2023 307 $ 42.32 3.66 $ 15,964 |
Schedule of Total Stock-Based Compensation Expense Included in Statements of Operations and Comprehensive Loss | The following table summarizes the total stock-based compensation expense included in the unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 1,236 $ 618 $ 2,584 $ 1,540 Research and development 3,370 1,717 7,912 4,841 Selling, general and administrative 16,402 10,610 42,862 35,565 Total stock-based compensation expense $ 21,008 $ 12,945 $ 53,358 $ 41,946 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Net Loss per Share | The following table sets forth the computation of the basic and diluted net loss per share during the three and nine months ended September 30, 2023 and 2022 (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net loss $ (27,116) $ (21,451) $ (84,707) $ (95,957) Denominator: Weighted-average shares used to compute net loss per common share, basic and diluted 30,607 30,055 30,470 29,837 Net loss per common share, basic and diluted $ (0.89) $ (0.71) $ (2.78) $ (3.22) |
Schedule of Anti-dilutive Securities Excluded from Diluted Net Loss per Common Share | The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per common share for the three and nine months ended September 30, 2023 and 2022 because their inclusion would be anti-dilutive (in thousands): Three and Nine Months Ended September 30, 2023 2022 Options to purchase common stock 307 330 RSUs and PRSUs 1 unvested 2,747 2,077 Total 3,054 2,407 1 PRSUs are based on the maximum number of PRSUs in the key executive grant agreements. The actual number of PRSUs granted will be based on company performance criteria and relative Total Shareholder Return, as discussed in Note 12, Equity Incentive Plan and Stock-Based Compensation. |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 performanceObligation system_option | Sep. 30, 2022 | Sep. 30, 2023 performanceObligation system_option | Sep. 30, 2022 | Dec. 31, 2022 | Jan. 01, 2023 USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Proposed national payments rates | 0.05 | |||||
Number of Zio system options | system_option | 3 | 3 | ||||
Number of performance obligations | performanceObligation | 2 | 2 | ||||
Federal Government Agencies | Revenue | Customer Concentration Risk | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Concentration of credit risk (as a percent) | 25% | 26% | 25% | 24% | ||
Federal Government Agencies | Accounts Receivable | Accounts Receivable Concentration Risk | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Concentration of credit risk (as a percent) | 22% | 22% | ||||
Product And Services Zio X T Service Code93247 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Reimbursement rate | $ 243.65 | |||||
Product And Services Zio X T Service Code93247 | Minimum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated reimbursement rate | 247.59 | |||||
Product And Services Zio X T Service Code93247 | Maximum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated reimbursement rate | 334.46 | |||||
Product And Services Zio X T Service Code93243 | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Reimbursement rate | 231.79 | |||||
Product And Services Zio X T Service Code93243 | Minimum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated reimbursement rate | 235.54 | |||||
Product And Services Zio X T Service Code93243 | Maximum | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Estimated reimbursement rate | $ 318.17 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Changes in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Change In The Allowance For Doubtful Accounts | |||
Balance, beginning of period | $ 18,475 | $ 14,012 | $ 14,012 |
Provision for doubtful accounts | 12,595 | 12,244 | 17,191 |
Write-offs, net of recoveries and other adjustments | (11,659) | 17 | (12,728) |
Balance, end of period | $ 19,411 | $ 26,273 | $ 18,475 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Changes in Contractual Allowance (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Changes In The Contractual Allowance | |||
Balance, beginning of period | $ 41,389 | $ 31,274 | $ 31,274 |
Add: provision for contractual adjustments | 39,060 | 31,534 | 41,158 |
Less: contractual adjustments | (32,072) | (259) | (31,043) |
Balance, end of period | $ 48,377 | $ 62,549 | $ 41,389 |
REVENUE - Schedule of Disaggreg
REVENUE - Schedule of Disaggregated Revenue by Payor Type and Major Service (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 124,604 | $ 103,875 | $ 360,170 | $ 298,304 |
Contracted third-party payors | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 67,336 | $ 56,016 | $ 196,566 | $ 163,218 |
Contracted third-party payors | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration of credit risk (as a percent) | 54% | 54% | 55% | 55% |
Centers for Medicare and Medicaid | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 31,006 | $ 27,253 | $ 88,369 | $ 72,074 |
Centers for Medicare and Medicaid | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration of credit risk (as a percent) | 25% | 26% | 25% | 24% |
Healthcare institutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 18,065 | $ 14,883 | $ 52,060 | $ 45,632 |
Healthcare institutions | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration of credit risk (as a percent) | 14% | 14% | 14% | 15% |
Non-contracted third-party payors | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue, net | $ 8,197 | $ 5,723 | $ 23,175 | $ 17,380 |
Non-contracted third-party payors | Revenue | Product Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Concentration of credit risk (as a percent) | 7% | 6% | 6% | 6% |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |||
Contract liability balance, revenue recognized | $ 3,000 | $ 3,000 | |
Deferred revenue | $ 3,383 | $ 3,051 |
CASH EQUIVALENTS AND MARKETAB_3
CASH EQUIVALENTS AND MARKETABLE SECURITIES - Schedule of Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 128,478 | $ 158,972 |
Gains | 3 | 12 |
Losses | (46) | (409) |
Fair Value | 128,435 | 158,575 |
Cash Equivalents And Available-for-sale Classified As Investments | ||
Cash equivalents | 17,440 | 24,263 |
Marketable securities | 110,995 | 134,312 |
Total cash equivalents and marketable securities | 128,435 | 158,575 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 17,440 | 24,263 |
Gains | 0 | 0 |
Losses | 0 | 0 |
Fair Value | 17,440 | 24,263 |
U.S. government securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 111,038 | 134,709 |
Gains | 3 | 12 |
Losses | (46) | (409) |
Fair Value | $ 110,995 | $ 134,312 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Strategic investment | $ 3,000 | $ 0 |
Carrying amount | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Outstanding interest-bearing obligations | $ 34,900 | $ 34,900 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Fair Value of Company's Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | $ 128,435 | $ 158,575 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 17,440 | 24,263 |
U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 110,995 | 134,312 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 17,440 | 24,263 |
Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 17,440 | 24,263 |
Level 1 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 110,995 | 134,312 |
Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 0 | 0 |
Level 2 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 110,995 | 134,312 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 0 | 0 |
Level 3 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | 0 | 0 |
Level 3 | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Financial assets | $ 0 | $ 0 |
BALANCE SHEET DETAILS - Schedul
BALANCE SHEET DETAILS - Schedule of Inventory Components (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials and work-in-process | $ 5,962 | $ 9,338 |
Finished goods | 7,686 | 5,817 |
Total | $ 13,648 | $ 15,155 |
BALANCE SHEET DETAILS- Schedule
BALANCE SHEET DETAILS- Schedule of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
PCBAs | $ 37,980 | $ 18,599 |
Cloud computing arrangements | 5,223 | 2,523 |
Strategic investment | 3,000 | 0 |
Other | 845 | 1,130 |
Total | $ 47,048 | $ 22,252 |
BALANCE SHEET DETAILS - Narrati
BALANCE SHEET DETAILS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Inventory [Line Items] | ||||
Increase in asset purchase | $ 19.4 | |||
Printed circuit board assemblies | ||||
Inventory [Line Items] | ||||
Useful life | 1 year | 1 year | ||
Amortization | $ 2.4 | $ 1.3 | $ 5.4 | $ 3.8 |
BALANCE SHEET DETAILS - Sched_2
BALANCE SHEET DETAILS - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | $ 143,046 | $ 143,046 | $ 110,886 | ||
Less: accumulated depreciation and amortization | (46,378) | (46,378) | (35,216) | ||
Total property and equipment, net | 96,668 | 96,668 | 75,670 | ||
Depreciation and amortization expense | 4,100 | $ 3,400 | 11,400 | $ 9,900 | |
Increase in internal use software | 7,800 | 24,500 | |||
Laboratory and manufacturing equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | 5,729 | 5,729 | 4,911 | ||
Computer equipment and software | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | 2,448 | 2,448 | 2,315 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | 4,198 | 4,198 | 4,119 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | 23,533 | 23,533 | 23,144 | ||
Internal-use software | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | 60,001 | 60,001 | 44,877 | ||
Amortization | 3,100 | $ 2,500 | 8,600 | $ 7,200 | |
Internal-use software in development | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | 37,482 | 37,482 | 28,069 | ||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment, gross | $ 9,655 | $ 9,655 | $ 3,451 |
BALANCE SHEET DETAILS - Sched_3
BALANCE SHEET DETAILS - Schedule of Accrued Liabilities Components (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued payroll and related expenses | $ 38,458 | $ 34,752 |
Accrued vacation | 10,050 | 8,608 |
Accrued expenses | 13,811 | 7,006 |
Claims payable | 5,295 | 4,464 |
Accrued employee share purchase plan contributions | 2,863 | 1,045 |
Accrued income and sales taxes | 3,071 | 2,388 |
Accrued professional services fees | 3,083 | 7,234 |
Total accrued liabilities | 76,631 | $ 65,497 |
Increase to accrued payroll and related expenses | $ 4,000 |
IMPAIRMENT AND RESTRUCTURING _3
IMPAIRMENT AND RESTRUCTURING CHARGES - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||||
Impairment and restructuring charges | $ 0 | $ 0 | $ 0 | $ 26,608,000 | |
Restructuring charges | 3,444,000 | ||||
Reduction to leased square footage (percent) | 50% | ||||
Impairment charges | 0 | 23,164,000 | |||
2022 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | 0 | ||||
Employee severance | 2022 Restructuring Plan | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring charges | $ 0 | $ 3,400,000 |
IMPAIRMENT AND RESTRUCTURING _4
IMPAIRMENT AND RESTRUCTURING CHARGES - Schedule of Restructuring and Impairment Charges (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring and Related Activities [Abstract] | ||||
Restructuring charges | $ 3,444,000 | |||
Impairment charges | $ 0 | 23,164,000 | ||
Total | $ 0 | $ 0 | $ 0 | $ 26,608,000 |
IMPAIRMENT AND RESTRUCTURING _5
IMPAIRMENT AND RESTRUCTURING CHARGES - Schedule of Changes in Restructuring Liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Restructuring Reserve [Roll Forward] | ||
Charges | $ 3,444 | |
2022 Restructuring Plan | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | $ 394 | |
Charges | 0 | |
Cash Payments | (394) | |
Restructuring reserve, ending balance | 0 | |
Employee severance | 2022 Restructuring Plan | ||
Restructuring Reserve [Roll Forward] | ||
Restructuring reserve, beginning balance | 394 | |
Charges | 0 | $ 3,400 |
Cash Payments | (394) | |
Restructuring reserve, ending balance | $ 0 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) $ in Thousands | 1 Months Ended | ||||
Aug. 31, 2023 USD ($) sqft lease_period | Jul. 31, 2023 USD ($) sqft lease_period | Sep. 30, 2023 USD ($) | Dec. 31, 2019 USD ($) | Sep. 03, 2019 USD ($) | |
Lessee, Lease, Description [Line Items] | |||||
Number of lease facility years | 5 years | 7 years | |||
Operating lease rentable area | sqft | 24,000 | 8,300 | |||
Number of lease periods | lease_period | 2 | 1 | |||
Lease option to extend initial term | 5 years | 5 years | |||
Total lease payments | $ 2,100 | $ 4,600 | $ 129,712 | ||
Verily Life Sciences LLC | |||||
Lessee, Lease, Description [Line Items] | |||||
Upfront fee related to development agreement | $ 5,000 | ||||
Additional aggregate milestone payments related to development agreement | $ 12,750 | ||||
Collaboration agreement milestone payments | 11,000 | ||||
Collaboration agreement, additional milestone payments, between 2022 and early 2023 | $ 1,750 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Aug. 31, 2023 | Jul. 31, 2023 |
Commitments and Contingencies Disclosure [Abstract] | |||
2023 (remainder of the year) | $ 5,497 | ||
2024 | 21,803 | ||
2025 | 21,577 | ||
2026 | 21,304 | ||
2027 | 20,873 | ||
Thereafter | 38,658 | ||
Total lease payments | 129,712 | $ 2,100 | $ 4,600 |
Less: imputed interest | (32,923) | ||
Total lease liabilities | $ 96,789 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) | 1 Months Ended | 9 Months Ended | |||
Mar. 28, 2022 USD ($) payment_installment | Oct. 31, 2018 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | $ 0 | $ 35,000,000 | |||
Debt issuance costs, net | 1,800,000 | ||||
2022 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, covenant compliance, amount | $ 15,000,000 | ||||
2022 Term Loan | Minimum | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, covenant, quick ratio | 100% | ||||
2022 Term Loan | Maximum | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, covenant, quick ratio | 115% | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 25,000,000 | ||||
Letter of Credit | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | 15,000,000 | ||||
Cash Management Services | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 15,000,000 | ||||
Third Amended and Restated SVB Loan Agreement | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs, net | 54,000 | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | $ 35,000,000 | ||||
Amount outstanding under revolving credit line | $ 18,500,000 | ||||
Commitment fee percentage | 5% | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | Minimum | |||||
Debt Instrument [Line Items] | |||||
Commitment fee percentage | 1% | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | Maximum | |||||
Debt Instrument [Line Items] | |||||
Commitment fee percentage | 3% | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | Prime rate | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate (in percentage) | 3.50% | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | 2022 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 75,000,000 | ||||
Proceeds from line of credit | 35,000,000 | ||||
Line of credit facility, remaining borrowing capacity | 40,000,000 | ||||
Term loan borrowed installments | $ 10,000,000 | ||||
Repayment consecutive monthly installments | payment_installment | 24 | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | 2022 Term Loan | Prime rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate spread (as a percent) | 0.25% | ||||
Third Amended and Restated SVB Loan Agreement | SVB Term Loan | 2018 Term Loan | |||||
Debt Instrument [Line Items] | |||||
Repayment of long-term line of credit | $ 18,500,000 | ||||
Third Amended and Restated SVB Loan Agreement | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Amount outstanding under revolving credit line | 0 | ||||
Commitment fee percentage | 0.15% | ||||
Letters of credit | $ 8,400,000 | ||||
Third Amended and Restated SVB Loan Agreement | Revolving Credit Facility | Prime rate | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate (in percentage) | 3.50% | ||||
Third Amended and Restated SVB Loan Agreement | Revolving Credit Facility | 2022 Term Loan | Prime rate | |||||
Debt Instrument [Line Items] | |||||
Interest rate spread (as a percent) | 0.25% |
DEBT - Schedule of Future Minim
DEBT - Schedule of Future Minimum Payments (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Debt Instrument [Line Items] | |
Less: Debt issuance costs | $ (1,800) |
Third Amended and Restated SVB Loan Agreement | |
Debt Instrument [Line Items] | |
2023 (remainder of the year) | 774 |
2024 | 3,114 |
2025 | 15,841 |
2026 | 18,728 |
2027 | 4,440 |
Total | 42,897 |
Less: Amount representing interest | (7,897) |
Less: Debt issuance costs | (54) |
Principal payments | $ 34,946 |
INCOME TAXES (Details)
INCOME TAXES (Details) | Sep. 30, 2023 USD ($) |
Income Tax Disclosure [Abstract] | |
Benefit recognized for net operating loss carryforwards | $ 0 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Dividends declared | $ 0 |
STOCKHOLDERS' EQUITY - Schedule
STOCKHOLDERS' EQUITY - Schedule of Common Stock Shares Reserved for Future Issuance (Details) - shares shares in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Class of Stock [Line Items] | ||
Shares available for future issuance (in shares) | 9,782 | 10,177 |
Options issued and outstanding | ||
Class of Stock [Line Items] | ||
Shares available for future issuance (in shares) | 307 | 328 |
Unvested RSUs and PRSUs | ||
Class of Stock [Line Items] | ||
Shares available for future issuance (in shares) | 2,747 | 2,026 |
Shares available for grant under future stock plans | ||
Class of Stock [Line Items] | ||
Shares available for future issuance (in shares) | 6,728 | 7,823 |
EQUITY INCENTIVE PLAN AND STO_3
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Schedule of Share-Based Awards Available for Grant Under 2016 Plan (Details) - 2016 Plan shares in Thousands | 9 Months Ended |
Sep. 30, 2023 shares | |
Options Outstanding | |
Beginning balance (in shares) | 7,823 |
Awards granted (in shares) | (1,317) |
Awards forfeited (in shares) | 222 |
Ending balance (in shares) | 6,728 |
EQUITY INCENTIVE PLAN AND STO_4
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Schedule of Restricted Stock Units, Activity (Details) shares in Thousands | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Restricted Stock Units | |
Shares Underlying RSUs | |
Beginning balance (in shares) | shares | 1,465 |
Granted (in shares) | shares | 853 |
Vested (in shares) | shares | (349) |
Forfeited (in shares) | shares | (129) |
Ending balance (in shares) | shares | 1,839 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in USD per share) | $ / shares | $ 111.16 |
Granted (in USD per share) | $ / shares | 116.49 |
Vested (in USD per share) | $ / shares | 118.30 |
Forfeited (in USD per share) | $ / shares | 119.60 |
Ending balance (in USD per share) | $ / shares | $ 111.69 |
Performance Based Restricted Stock Units and Market-Based Units | |
Shares Underlying RSUs | |
Beginning balance (in shares) | shares | 561 |
Granted (in shares) | shares | 464 |
Vested (in shares) | shares | (24) |
Forfeited (in shares) | shares | (93) |
Ending balance (in shares) | shares | 908 |
Weighted Average Grant Date Fair Value | |
Beginning balance (in USD per share) | $ / shares | $ 120.22 |
Granted (in USD per share) | $ / shares | 124.56 |
Vested (in USD per share) | $ / shares | 107.05 |
Forfeited (in USD per share) | $ / shares | 127.04 |
Ending balance (in USD per share) | $ / shares | $ 122.09 |
EQUITY INCENTIVE PLAN AND STO_5
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | 45 Months Ended | |
Aug. 31, 2023 | Feb. 28, 2023 | Sep. 30, 2023 | Sep. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted in period (shares) | 0 | |||
Unvested RSUs and PRSUs 1 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unamortized compensation costs, net of estimated forfeitures related to restricted stock unit and performance share | $ 142.3 | $ 142.3 | ||
Unamortized compensation costs related to unvested stock options, expected period of recognition (in years) | 1 year 10 months 24 days | |||
Intrinsic value of equity other than options nonvested | $ 173.4 | 173.4 | ||
Performance Based Restricted Stock Units ("PRSU") | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total unamortized compensation costs, net of estimated forfeitures related to restricted stock unit and performance share | $ 41.9 | 41.9 | ||
Unamortized compensation costs related to unvested stock options, expected period of recognition (in years) | 2 years 3 months 18 days | |||
Intrinsic value of equity other than options nonvested | $ 85.6 | $ 85.6 | ||
Expected term (in years) | 2 years 10 months 24 days | 2 years 10 months 24 days | ||
Risk-free interest rate | 4.40% | 4.50% | ||
Expected volatility | 80.10% | 83.80% | ||
Dividend yield | 0% | 0% | ||
Performance Based Restricted Stock Units ("PRSU") | 2023 Awards | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance threshold (in percentage) | 15% | |||
Performance Based Restricted Stock Units ("PRSU") | 2023 Awards | Minimum | Awarded February 2023 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target to be earned at performance threshold (in percentage) | 50% | |||
Performance Based Restricted Stock Units ("PRSU") | 2023 Awards | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance threshold (in percentage) | 25% | |||
Performance Based Restricted Stock Units ("PRSU") | 2023 Awards | Maximum | Awarded February 2023 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Performance target to be earned at performance threshold (in percentage) | 200% |
EQUITY INCENTIVE PLAN AND STO_6
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Schedule of Stock Option Activity Under 2006 and 2016 Plans (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
Options Outstanding | ||
Beginning balance (in shares) | shares | 328 | |
Options exercised (in shares) | shares | (21) | |
Ending balance (in shares) | shares | 307 | 328 |
Options exercisable (in shares) | shares | 307 | |
Weighted- Average Exercise Price Per Share | ||
Beginning balance (in USD per share) | $ / shares | $ 43 | |
Options exercised (in USD per share) | $ / shares | 53.03 | |
Ending balance (in USD per share) | $ / shares | 42.32 | $ 43 |
Options exercisable (in USD per share) | $ / shares | $ 42.32 | |
Weighted- Average Remaining Contractual Life (years) | ||
Weighted-average remaining contractual life for options outstanding (in years) | 3 years 7 months 28 days | 4 years 5 months 4 days |
Weighted-average remaining contractual life for options exercisable (in years) | 3 years 7 months 28 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value of options outstanding | $ | $ 15,964 | $ 16,635 |
Aggregate intrinsic value of options exercisable | $ | $ 15,964 |
EQUITY INCENTIVE PLAN AND STO_7
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Employee Stock Purchase Plan (Details) shares in Thousands, $ in Millions | 1 Months Ended | 9 Months Ended | ||
Jun. 01, 2023 | Oct. 31, 2016 purchase_period | Sep. 30, 2023 USD ($) shares | Dec. 31, 2022 shares | |
Subsidiary, Sale of Stock [Line Items] | ||||
Shares available for future issuance (in shares) | 9,782 | 10,177 | ||
ESPP | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock issued to employees (in shares) | 46 | |||
Employee Stock Purchase Plan | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Percentage of payroll deductions of eligible compensation | 15% | |||
Percentage of common stock fair market value available for employee purchase | 85% | |||
Shares available for future issuance (in shares) | 2,200 | |||
Total unamortized compensation costs, net of estimated forfeitures related to unvested stock options | $ | $ 3.2 | |||
Unamortized compensation costs related to unvested stock options, expected period of recognition (in years) | 6 months | |||
Employee Stock Purchase Plan | ESPP | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Offering period (in months) | 12 months | |||
Number of purchase period | purchase_period | 2 | |||
Purchase period (in months) | 6 months | |||
Expected minimum volatility (as a percent) | 48.80% | |||
Expected maximum volatility (as a percent) | 59.20% | |||
Risk-free interest rate, minimum (as a percent) | 5.10% | |||
Risk-free interest rate, maximum (as a percent) | 5.40% | |||
Dividend yield | 0% | |||
Employee Stock Purchase Plan | ESPP | Minimum | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Expected term (in years) | 6 months | |||
Employee Stock Purchase Plan | ESPP | Maximum | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Expected term (in years) | 1 year |
EQUITY INCENTIVE PLAN AND STO_8
EQUITY INCENTIVE PLAN AND STOCK-BASED COMPENSATION - Schedule of Total Stock-Based Compensation Expense Included in Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 21,008 | $ 12,945 | $ 53,358 | $ 41,946 |
Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 1,236 | 618 | 2,584 | 1,540 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 3,370 | 1,717 | 7,912 | 4,841 |
Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 16,402 | $ 10,610 | $ 42,862 | $ 35,565 |
NET LOSS PER SHARE - Schedule o
NET LOSS PER SHARE - Schedule of Computation of Basic and Diluted Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||||||
Net loss | $ (27,116) | $ (18,482) | $ (39,109) | $ (21,451) | $ (23,897) | $ (50,609) | $ (84,707) | $ (95,957) |
Denominator: | ||||||||
Weighted-average shares used to compute net loss per common share, basic (in shares) | 30,607 | 30,055 | 30,470 | 29,837 | ||||
Weighted-average shares used to compute net loss per common share, diluted (in shares) | 30,607 | 30,055 | 30,470 | 29,837 | ||||
Net loss per common share, basic (in USD per share) | $ (0.89) | $ (0.71) | $ (2.78) | $ (3.22) | ||||
Net loss per common share, diluted (in USD per share) | $ (0.89) | $ (0.71) | $ (2.78) | $ (3.22) |
NET LOSS PER SHARE - Schedule_2
NET LOSS PER SHARE - Schedule of Anti-dilutive Securities Excluded from Diluted Net Loss per Common Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss (in shares) | 3,054 | 2,407 | 3,054 | 2,407 |
Options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss (in shares) | 307 | 330 | 307 | 330 |
RSUs and PRSUs unvested | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities excluded from diluted net loss (in shares) | 2,747 | 2,077 | 2,747 | 2,077 |