Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 02, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | htwr | |
Entity Registrant Name | HeartWare International, Inc. | |
Entity Central Index Key | 1,389,072 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 17,540,557 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 113,256 | $ 175,047 |
Short-term investments | 74,952 | 68,531 |
Accounts receivable, net | 29,472 | 35,570 |
Inventories | 43,407 | 39,947 |
Prepaid expenses and other current assets | 6,905 | 2,868 |
Total current assets | 267,992 | 321,963 |
Property, plant and equipment, net | 14,602 | 15,098 |
Goodwill | 61,282 | 61,233 |
In-process research and development | 10,800 | 10,800 |
Other intangible assets, net | 12,970 | 13,045 |
Long-term investments and other assets | 63,668 | 31,464 |
Total assets | 431,314 | 453,603 |
Current liabilities: | ||
Accounts payable | 13,709 | 15,249 |
Other accrued liabilities | 35,521 | 45,889 |
Total current liabilities | 49,230 | 61,138 |
Convertible senior notes, net | 189,572 | 187,089 |
Contingent liabilities - See Note 4 | 12,910 | 12,330 |
Other long-term liabilities | $ 4,035 | $ 4,554 |
Commitments and contingencies - See Note 12 | ||
Stockholders' equity: | ||
Preferred stock - $.001 par value; 5,000 shares authorized; no shares issued and outstanding at March 31, 2016 and December 31, 2015 | ||
Common stock - $.001 par value; 50,000 shares authorized; 17,536 and 17,405 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | $ 18 | $ 17 |
Additional paid-in capital | 622,606 | 618,219 |
Accumulated deficit | (438,959) | (421,499) |
Accumulated other comprehensive loss: | ||
Cumulative translation adjustments | (8,063) | (8,085) |
Unrealized loss on investments | (35) | (160) |
Total accumulated other comprehensive loss | (8,098) | (8,245) |
Total stockholders' equity | 175,567 | 188,492 |
Total liabilities and stockholders' equity | $ 431,314 | $ 453,603 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 17,536,000 | 17,405,000 |
Common stock, shares outstanding | 17,536,000 | 17,405,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Revenue, net | $ 55,074 | $ 70,021 |
Cost of revenue | 23,021 | 22,040 |
Gross profit | 32,053 | 47,981 |
Operating expenses: | ||
Selling, general and administrative | 21,474 | 21,929 |
Research and development | 25,221 | 31,267 |
Change in fair value of contingent consideration | 580 | 2,100 |
Total operating expenses | 47,275 | 55,296 |
Loss from operations | (15,222) | (7,315) |
Other income (expense): | ||
Foreign exchange (loss) gain | 920 | (3,697) |
Interest expense | (3,740) | (3,437) |
Investment income, net | 725 | 146 |
Other, net | 5 | |
Loss before income taxes | (17,312) | (14,303) |
Provision for income taxes | 147 | 232 |
Net loss | $ (17,459) | $ (14,535) |
Net loss per common share-basic and diluted | $ (1) | $ (0.85) |
Weighted average shares outstanding-basic and diluted | 17,462 | 17,193 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (17,459) | $ (14,535) |
Other comprehensive income (loss) | ||
Foreign currency translation adjustments | 23 | (254) |
Unrealized (loss) gain on investments | 124 | (245) |
Comprehensive loss | $ (17,312) | $ (15,034) |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) shares in Thousands, $ in Thousands | Total | Common Shares [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] |
Beginning balance at Dec. 31, 2015 | $ 188,492 | $ 17 | $ 618,219 | $ (421,499) | $ (8,245) |
Beginning balance, Shares at Dec. 31, 2015 | 17,405 | ||||
Issuance of common stock pursuant to share-based awards | 1 | $ 1 | |||
Issuance of common stock pursuant to share-based awards, Shares | 131 | ||||
Share-based compensation | 4,387 | 4,387 | |||
Net loss | (17,459) | (17,459) | |||
Other comprehensive income (loss) | 147 | 147 | |||
Ending balance at Mar. 31, 2016 | $ 175,567 | $ 18 | $ 622,606 | $ (438,959) | $ (8,098) |
Ending balance, Shares at Mar. 31, 2016 | 17,536 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) | Mar. 31, 2016$ / shares |
Common Shares, par value | $ 0.001 |
Common Shares [Member] | |
Common Shares, par value | $ 0.001 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (17,459) | $ (14,535) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of property, plant and equipment | 1,609 | 1,710 |
Amortization of intangible assets | 467 | 508 |
Impairment of fixed assets | 0 | 1,118 |
Share-based compensation expense | 4,387 | 5,976 |
Amortization of premium on investments | 237 | 300 |
Amortization of discount on convertible senior notes | 2,321 | 2,068 |
Amortization of deferred financing costs | 162 | 111 |
Change in fair value of contingent consideration | 580 | 2,100 |
Other | (144) | (6) |
Change in operating assets and liabilities: | ||
Accounts receivable | 6,670 | (105) |
Inventories | (3,154) | (99) |
Prepaid expenses and other current assets | (4,002) | (1,445) |
Other non-current assets | (951) | (337) |
Accounts payable | (1,565) | (2,625) |
Accrued interest on convertible senior notes | 1,257 | 1,258 |
Other accrued liabilities | (12,084) | (3,662) |
Other long-term liabilities | (519) | (124) |
Net cash used in operating activities | (22,188) | (7,789) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of investments | (9,977) | |
Maturities of investments | 3,445 | 5,000 |
Additions to property, plant and equipment, net | (918) | (720) |
Additions to patents | (392) | (486) |
Investment in unconsolidated investee | (31,000) | |
Cash received from security deposits | 178 | 294 |
Net cash provided by (used in) investing activities | (38,664) | 4,088 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 0 | 31 |
Net cash provided by financing activities | 31 | |
Effect of exchange rate changes on cash and cash equivalents | (939) | 3,249 |
DECREASE IN CASH AND CASH EQUIVALENTS | (61,791) | (421) |
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD | 175,047 | 102,946 |
CASH AND CASH EQUIVALENTS-END OF PERIOD | $ 113,256 | $ 102,525 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 1. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements for HeartWare International, Inc. (“we,” “our,” “us,” “HeartWare,” the “HeartWare Group” or the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting of interim financial information. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The accompanying condensed consolidated balance sheet as of December 31, 2015 has been derived from our audited financial statements. The unaudited condensed consolidated statements of operations and cash flows for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for any future period or for the year ending December 31, 2016. The preparation of our unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments (consisting of only normally recurring adjustments) necessary to present fairly the financial position and results of operations as of the dates and for the periods presented. New Accounting Standards Standards Pending Implementation In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02, Leases Leases Leases In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Implemented Standards In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis In January 2015, the FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. In the period ended March 31, 2016, management reassessed certain inventory policies based on recent trends, including sales, usage and forecasted usage of specific inventory items. As a result, we now expect that certain inventory could be held beyond one year. As of March 31, 2016, approximately $7.4 million of inventory was classified as non-current inventory and included within other assets on the accompanying consolidated balance sheet. To reflect the result of this change, for consistency we reclassified approximately $7.7 million of inventory as of December 31, 2015 from current assets to non-current and included within other assets on the consolidated balance sheet. Corresponding reclassifications have also been made to the Consolidated Condensed Statement of Cash Flows for the periods ended March 31, 2015 and 2016, to reflect the gross purchases and sales of these assets as a component of other non-current assets. This change in classification does not affect previously reported cash flows from operations or from financing activities in the Consolidated Condensed Statement of Cash Flows, and had no effect on the previously reported Consolidated Condensed Statement of Operations for any period. |
Liquidity
Liquidity | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Liquidity | Note 2. Liquidity We have funded our operations primarily through product revenue, the issuance of shares of our common stock and the issuance of convertible notes. At March 31, 2016, we had approximately $189.2 million of cash, cash equivalents and available-for-sale investments. Our cash, cash equivalents and available-for-sale investments are expected to be used primarily to fund our ongoing operations including expanding our sales and marketing capabilities on a global basis; research and development (including clinical trials) of new and existing products, components and accessories; regulatory and other compliance functions; acquisition of, and investment in, third-party technologies; as well as for general working capital. We believe our cash, cash equivalents and available-for-sale investment balances are sufficient to support our planned operations for at least the next twelve months. The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplate continuation of the Company as a going concern. We have incurred substantial losses from operations since our inception, and losses have continued through March 31, 2016. At March 31, 2016, we had an accumulated deficit of approximately $439.0 million. |
Balance Sheet Information
Balance Sheet Information | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Information | Note 3. Balance Sheet Information Accounts Receivable Accounts receivable consists of amounts due from the sale of our HeartWare Ventricular Assist System (the “HVAD System”) to our customers, which include hospitals, health research institutions and medical device distributors. We grant credit to customers in the normal course of business, but generally do not require collateral or any other security to support credit sales. Our receivables are geographically dispersed, with a significant portion from customers located in Europe and other foreign countries. We had one customer with an accounts receivable balance representing approximately 25% and 17% of our total accounts receivable at March 31, 2016 and December 31, 2015, respectively. A portion of this account receivable was classified as long-term as of March 31, 2016 and December 31, 2015 in accordance with our payment terms with this customer. We maintain allowances for doubtful accounts for estimated losses that may result from an inability to collect payments owed to us for product sales. We regularly review the allowance by considering factors such as historical experience, the age of the accounts receivable balances and local economic conditions that may affect a customer’s ability to pay. Account balances are charged off against the allowance after appropriate collection efforts have been exhausted and we feel it is probable that the receivable will not be recovered. The following table summarizes the change in our allowance for doubtful accounts for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 676 $ 671 Reversal of expense (154 ) (26 ) Charge-offs — — Ending balance $ 522 $ 645 As of March 31, 2016 and December 31, 2015, we recorded customer sales allowances of $92,000 and $81,000, respectively. Inventories, net Components of inventories are as follows: March 31, December 31, 2016 2015 (in thousands) Raw material $ 15,090 $ 17,940 Work-in-process 9,243 8,858 Finished goods 19,074 13,149 $ 43,407 $ 39,947 Finished goods inventories includes inventory held on consignment at customer sites of approximately $9.1 million at March 31, 2016 and $6.2 million at December 31, 2015. The increase in consignment inventory as of March 31, 2016 is due to pre-shipment of batteries to execute a field action announced in September 2015 ( see Accrued Field Action Costs for more information). Property, Plant and Equipment, Net Property, plant and equipment, net consists of the following: Estimated March 31, December 31, Useful Lives 2016 2015 (in thousands) Machinery and equipment 1.5 to 7 years $ 22,557 $ 21,785 Leasehold improvements 3 to 10 years 8,901 8,891 Office equipment, furniture and fixtures 5 to 7 years 2,105 2,105 Purchased software 1 to 7 years 7,796 7,575 41,359 40,356 Less: accumulated depreciation (26,757 ) (25,258 ) $ 14,602 $ 15,098 Long-Term Investment and Other Assets Long-term investments consist of the following: March 31, December 31, 2016 2015 (in thousands) Investment in Valtech Cardio, Ltd. $ 48,960 $ 17,620 Long-term inventory 7,367 7,739 Long-term receivables 3,953 2,539 Security deposits 2,408 2,586 Other assets 980 980 $ 63,668 $ 31,464 Valtech Cardio, Ltd. As of March 31, 2016, we have invested approximately $48.0 million in Valtech Cardio, Ltd (“Valtech”), an early-stage, privately held company headquartered in Or Yehuda, Israel specializing in the development of devices for mitral and tricuspid valve repair and replacement. Our investment is carried in long-term investments and other assets and consists of the following: March 31, December 31, 2016 2015 (in thousands) Preferred Stock $ 10,495 $ 10,495 Convertible Promissory Notes Receivable, due July 10, 2017 8,222 7,125 Convertible Promissory Notes Receivable, due February 1, 2019 30,243 — $ 48,960 $ 17,620 In October 2013, we invested $10 million in Valtech in the form of a convertible promissory note with an interest rate of 6% per annum (the “2013 Note”), which, along with net accrued interest, has since been converted to Valtech equity pursuant to the terms of the 2013 Note. In July 2015, we invested an additional $5 million in Valtech in the form of a convertible promissory note with an interest rate of 6% per annum. On September 1, 2015, we entered into a Business Combination Agreement (the “BCA”) by and among the Company, Valtech, HW Global, Inc. (“Holdco”), HW Merger Sub, Inc., Valor Merger Sub Ltd. and Valor Shareholder Representative, LLC, pursuant to which we and Valtech proposed to effect a strategic combination of our respective businesses under Holdco, subject to certain closing conditions. Effective January 28, 2016, we terminated the BCA pursuant to the terms of the BCA by delivering written notice to the other parties. After entering into the BCA and pursuant to the terms of the BCA, we loaned Valtech an aggregate principal amount of $3 million in interim funding at an interest rate of 6% per annum in $1 million increments in each of November 2015, December 2015 and January 2016. In connection with the termination provisions of the BCA, we loaned Valtech an additional $30 million on February 1, 2016 also in the form of a convertible promissory note with an interest rate of 6% per annum. We have no current contractual obligations to further fund Valtech. Upon maturity, each of the convertible promissory notes become due and payable in cash or Valtech preferred stock, at the option of Valtech, pursuant to terms of the convertible promissory notes. If the convertible promissory notes become due and payable upon an event of default (as defined in the notes), we determine whether the notes are paid in cash or Valtech preferred stock. Our investment in Valtech was deemed to be realizable as of March 31, 2016. The fair value of this investment has not been estimated as of March 31, 2016 and December 31, 2015 as no impairment indicators were identified. Other Accrued Liabilities Other accrued liabilities consist of the following: March 31, December 31, 2016 2015 (in thousands) Accrued payroll and other employee costs $ 7,589 $ 14,068 Accrued field action 7,552 8,503 Accrued warranty 5,893 6,116 Accrued material purchases 2,486 4,107 Accrued professional fees 2,002 2,685 Accrued research and development costs 1,744 2,191 Accrued restructuring costs 1,796 1,955 Accrued VAT 1,144 1,238 Other accrued expenses 5,315 5,026 $ 35,521 $ 45,889 Accrued payroll and other employee costs Accrued payroll and other employee costs included estimated year-end employee bonuses of approximately $2.2 million and $8.0 million at March 31, 2016 and December 31, 2015, respectively. Accrued Warranty Certain patient accessories sold with the HVAD System are covered by a limited warranty ranging from one to two years. Estimated warranty obligations are recorded as an expense when the related revenue is recognized and are included in cost of revenue on our condensed consolidated statements of operations. Factors that affect the estimated warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim, and vendor-supported warranty programs. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary. The amount of the liability recorded is equal to the estimated costs to repair or otherwise satisfy claims made by customers. The following table summarizes the change in our warranty liability for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 6,116 $ 4,685 Accrual for warranty expense 371 785 Warranty costs incurred during the period (594 ) (655 ) Ending balance $ 5,893 $ 4,815 Accrued Field Action Costs The costs to repair or replace products associated with field actions and voluntary service campaigns are recorded when they are determined to be probable and reasonably estimable as a cost of revenue. Costs associated with field actions are not included in our warranty liability. The following table summarizes the change in field action liability for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 8,503 $ 1,888 Accrual for field action costs 3,492 505 Field action costs incurred during the period (4,443 ) (1,305 ) Ending balance $ 7,552 $ 1,088 In February 2015, we expanded a 2013 voluntary field safety corrective action, by initiating a voluntary medical device recall of certain older controllers distributed in the U.S. during the ADVANCE and ENDURANCE clinical trial periods. The action had been initiated in certain foreign markets around the end of 2014. The affected controllers exhibit a higher susceptibility to electrostatic discharge than newer, commercial controllers. This recall was ongoing as of March 31, 2016. In September 2015, we announced planned field actions to replace certain older AC adapters in use outside the United States and older batteries with new, more reliably designed product improvements. We also announced plans to implement a controller software update intended to improve controller performance reliability. These actions began on January 7, 2016 following requisite regulatory approvals. Recall costs incurred during the three months ended March 31, 2016 were associated with these actions. The accrued field action liability as of March 31, 2016 includes an allowance of $2.3 million related to the anticipated replacement of certain controllers based upon the potential for the power or driveline connectors to become loose. The Company’s estimated liability for replacements is based upon assumptions which it considers reasonable in light of known circumstances. During the quarter ended March 31, 2016, the Company recorded charges of $3.5 million related to the above mentioned field actions. Accrued Restructuring Costs The following table summarizes changes in our accrued restructuring costs for the three months ended March 31, 2016: Facility Leases (in thousands) Beginning balance $ 1,955 Restructuring charges — Payments (179 ) Adjustments to estimated obligations — Change in fair value 20 Ending balance $ 1,796 The restructuring obligations reflected above resulted from the closure of CircuLite’s former headquarters in Teaneck, New Jersey, which we ceased to occupy in 2014. The Teaneck operating lease runs September 2020. In connection with this action, we recorded a $1.7 million liability equal to the estimated fair value of the remaining lease obligation as of the cease-use date. The fair value of the remaining liability is remeasured at the estimated fair value at each reporting period. In the three months ended March 31, 2015, this liability was increased by $0.5 million as a result of a change in our estimated sublease start date ( see In the three months ended March 31, 2016 the change in fair value is associated with accretion of the liability due to the effect of the passage of time on the fair value measurement. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 4. Fair Value Measurements FASB ASC 820 – Fair Value Measurements and Disclosures, FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows: Level 1 – Quoted prices for identical instruments in active markets. Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 – Instruments with primarily unobservable value drivers. We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. There were no transfers between Level 1, Level 2 and Level 3 during the three months ended March 31, 2016 or 2015. The carrying amounts reported on our condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities approximate their fair value based on the short-term maturity of these instruments. Investments are considered available-for-sale as of March 31, 2016 and December 31, 2015 and are carried at fair value. The following tables represent the fair value of our financial assets and financial liabilities measured at fair value on a recurring basis and which level was used in the fair value hierarchy at the respective dates. Fair Value Measurements at the Reporting Date Using Carrying Fair Value Value Level 1 Level 2 Level 3 (in thousands) As of March 31, 2016 Assets Short-term investments $ 74,952 $ 74,952 $ — $ 74,952 $ — Long-term investments 980 980 — 980 — Liabilities Convertible senior notes 189,572 (1) 175,438 — 175,438 — Contingent consideration 12,910 12,910 — — 12,910 Royalties 934 934 — — 934 Lease exit costs 1,796 1,796 — — 1,796 Fair Value Measurements at the Reporting Date Using Carrying Fair Value Value Level 1 Level 2 Level 3 (in thousands) As of December 31, 2015 Assets Short-term investments $ 68,531 $ 68,531 $ — $ 68,531 $ — Long-term investments 980 980 — 980 — Liabilities Convertible senior notes 187,089 (1) 200,351 — 200,351 — Contingent consideration 12,330 12,330 — — 12,330 Royalties 918 918 — — 918 Lease exit costs 1,955 1,955 — — 1,955 (1) The carrying amount of our convertible senior notes is net of unamortized discount and deferred financing costs. See Our Level 2 financial assets and liabilities include available-for-sale investments and our convertible senior notes. The fair value of our available-for-sale investments and our convertible senior notes was determined using quoted prices (including trade data) for the instruments in markets that are not active. The fair value of our convertible senior notes is presented for disclosure purposes only. Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques, and at least one significant model assumption or input is unobservable. Our Level 3 financial liabilities include the following: • Contingent consideration • Royalties • Lease exit costs The following table summarizes the change in fair value, as determined by Level 3 inputs, of the contingent consideration for the three months ended March 31, 2016: Contingent (in thousands) Beginning balance $ 12,330 Payments — Change in fair value 580 Ending balance $ 12,910 The change in the fair value of the contingent consideration in the three months ended March 31, 2016 resulting from accretion of the liability due to the effect of the passage of time on the fair value measurement. Adjustments associated with the change in fair value of contingent consideration are presented on a separate line item on our condensed consolidated statements of operations. Potential valuation adjustments will be made in future accounting periods as additional information becomes available, including, among other items, progress toward developing the CircuLite System, as well as revenue and milestone targets as compared to our current projections, with the impact of these adjustments being recorded in our condensed consolidated statements of operations. The following table summarizes the change in fair value, as determined by Level 3 inputs, of the royalties for the three months ended March 31, 2016: Royalties (in thousands) Beginning balance $ 918 Payments (0 ) Change in fair value 16 Ending balance $ 934 The expense associated with the change in fair value of the royalty payment obligations is included in research and development expenses on our condensed consolidated statements of operations. The following table summarizes the change in fair value, as determined by Level 3 inputs, of the lease exit costs for the three months ended March 31, 2016: Lease Exit (in thousands) Beginning balance $ 1,955 Adjustments 0 Payments (179 ) Change in fair value 20 Ending balance $ 1,796 The expense associated with changes in the fair value of the lease exit costs is included in selling, general and administrative expenses on our consolidated statements of operations. The change in the fair value of the lease exit costs in the three months ended March 31, 2016 resulting from accretion of the liability due to the effect of the passage of time on the fair value measurement. Potential valuation adjustments will be made in future accounting periods as additional information becomes available, including our ability to sublease the facility in a timely manner and obtain a rate equivalent to our estimated sublease rate, with the impact of these adjustments being recorded in our condensed consolidated statements of operations. The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of March 31, 2016: Valuation Methodology Significant Weighted Average (range, if applicable) Contingent consideration Probability weighted income approach Milestone dates 2020 to 2023 Discount rate 17.0% to 24.0% Probability of occurrence 50% Royalties Discounted cash flow Discount rate 4.8% to 7.8% Lease exit costs Discounted cash flow Sublease start date March 1, 2017 Sublease rate $ 22.00/square foot Discount rate 3.5% Assets That Are Measured at Fair Value on a Nonrecurring Basis Non-marketable equity investments and non-financial assets such as intangible assets, goodwill and property, plant, and equipment, are evaluated for impairment annually or when indicators of impairment exist and are measured at fair value only if an impairment charge is recorded. In the three months ended March 31, 2016 and 2015, we recorded impairment charges of zero and $1.1 million related to certain property, plant, and equipment. See |
Investments
Investments | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Note 5. Investments We have cash investment policies that limit investments to investment-grade-rated securities. At March 31, 2016 and December 31, 2015, all of our investments were classified as available-for-sale and carried at fair value. At March 31, 2016 and December 31, 2015, our short-term and long-term investments had maturity dates of less than twenty-four months. The amortized cost and fair value of our investments, with gross unrealized gains and losses, were as follows: Gross Gross Amortized Unrealized Unrealized Aggregate Cost Basis Gains Losses Fair Value (in thousands) At March 31, 2016 Short-term investments: Corporate debt $ 32,492 $ 0 $ (31 ) $ 32,461 U.S. government agency debt 30,000 2 (6 ) 29,996 Certificates of deposit 12,495 — — 12,495 Total short-term investments $ 74,987 $ 2 $ (37 ) $ 74,952 Long-term investments: Certificates of deposit $ 980 $ — $ — $ 980 Total long-term investments $ 980 $ — $ — $ 980 Gross Gross Amortized Unrealized Unrealized Aggregate Cost Basis Gains Losses Fair Value (in thousands) At December 31, 2015 Short-term investments: Corporate debt $ 32,666 $ — $ (100 ) $ 32,566 U.S. government agency debt 25,000 — (60 ) 24,940 Certificates of deposit 11,025 — — 11,025 Total short-term investments $ 68,691 $ — $ (160 ) $ 68,531 Long-term investments: Certificates of deposit $ 980 $ — $ — $ 980 Total long-term investments $ 980 $ — $ — $ 980 For the three months ended March 31, 2016 and 2015, we did not have any realized gains or losses on our investments. At March 31, 2016 and December 31, 2015, the number of available-for-sale investments that had been in a continuous loss position for more than twelve months was twelve and thirteen, respectively. As of March 31, 2016, a total of six individual securities had been in an unrealized loss position for twelve months or less and the losses were determined to be temporary. We regularly review our investment portfolio to determine if any security is other-than-temporarily impaired, which would require us to record an impairment charge in the period any such determination is made. In making this judgment, we evaluate, among other things, the duration and extent to which the fair value of a security has been less than its amortized cost, the financial condition of the issuer, the time to maturity of the investment and our intent to sell the security prior to maturity where we would not be able to recover its amortized cost basis. |
Goodwill, In-Process Research a
Goodwill, In-Process Research and Development and Other Intangible Assets, Net | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, In-Process Research and Development and Other Intangible Assets, Net | Note 6. Goodwill, In-Process Research and Development and Other Intangible Assets, Net Goodwill The carrying amount of goodwill and the change in the balance for the three months ended March 31, 2016 and 2015 is as follows: 2016 2015 (in thousands) Beginning balance $ 61,233 $ 61,390 Additions — — Impairment — — Foreign currency translation impact 49 (167 ) Ending balance $ 61,282 $ 61,223 In-Process Research and Development The carrying value of our in-process research and development assets, which relate to the development and potential commercialization of certain acquired technologies, consisted of the following at March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 (in thousands) CircuLite System technology $ 10,800 $ 10,800 In-process research and development has an indefinite life. At the time the economic life becomes determinable (upon project completion or abandonment) the amount will be amortized over its expected remaining life. Other Intangible Assets Other intangible assets, net consisted of the following: March 31, 2016 December 31, 2015 (in thousands) Patents $ 7,816 $ 7,424 Purchased intangible assets Acquired technology rights 9,925 9,925 17,741 17,349 Less: Accumulated amortization – Patents (1,691 ) (1,551 ) Less: Accumulated amortization – Purchased intangible assets (3,080 ) (2,753 ) $ 12,970 $ 13,045 Our other intangible assets are amortized using the straight-line method over their estimated useful lives as follows: Patents 15 years Purchased intangible assets Acquired technology rights 6 to 16 years Amortization expense was $0.5 million for each of the three months ended March 31, 2016 and 2015. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Note 7. Debt At March 31, 2016 and December 31, 2015, we had outstanding convertible debt as follows: March 31, 2016 December 31, 2015 (in thousands) Principal amount of the 3.5% convertible senior notes, due 2017 $ 42,471 $ 42,471 Deferred financing costs (3,527 ) (3,652 ) Unamortized discount (5,305 ) (5,994 ) $ 33,639 $ 32,825 Equity component $ 7,629 $ 7,629 Principal amount of the 1.75% convertible senior notes, due 2021 $ 202,366 $ 202,366 Deferred financing costs (285 ) (321 ) Unamortized discount (46,149 ) (47,781 ) $ 155,932 $ 154,264 Equity component $ 47,400 $ 47,400 Interest expense related to our convertible debt consisted of contractual interest due on the principal amount, amortization of the discount and amortization of the portion of the deferred financing costs allocated to the long-term debt component and was included in interest expense in our condensed consolidated statements of operations. For the three months ended March 31, 2016 and 2015, interest expense related to our convertible debt was as follows: Three Months Ended March 31, 2016 2015 (in thousands) Coupon rate $ 1,257 $ 1,258 Amortization of discount 2,321 2,068 Amortization of deferred financing costs 162 111 $ 3,740 $ 3,437 3.5% Convertible Senior Notes On December 15, 2010, we completed the sale of 3.5% convertible senior notes due December 15, 2017, unless earlier repurchased by us or converted (the “2017 Notes”) for an aggregate principal amount of $143.75 million, pursuant to the terms of an indenture dated December 15, 2010 (the “Indenture”) and a supplemental indenture (the “First Supplemental Indenture”), both filed with the SEC as exhibits to our Current Report on Form 8-K on December 15, 2010. The 2017 Notes are senior unsecured obligations of the Company. The 2017 Notes bear interest at a rate of 3.5% per annum, payable semi-annually in arrears on June 15 and December 15 of each year. In May 2015, we entered into separate, privately negotiated, exchange agreements (the “Exchange”) with certain holders of our outstanding 2017 Notes. The general terms of exchange agreements were filed with the SEC on May 7, 2015 as an exhibit to our Current Report on Form 8-K. Pursuant to these agreements, we exchanged $101.3 million aggregate principal amount of the 2017 Notes for $118.2 million principal amount of 1.75% convertible senior notes due 2021 (see further discussion below). We did not receive any proceeds related to the Exchange. Pursuant to the terms of the Indenture and First Supplemental Indenture, the 2017 Notes are convertible at an initial conversion rate of 10 shares of our common stock per $1,000 principal amount of 2017 Notes, which corresponds to an initial conversion price of $100.00 per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events. The 2017 Notes mature on December 15, 2017, unless earlier repurchased by us or converted. Prior to June 15, 2017, holders may convert their 2017 Notes at their option only upon satisfaction of one or more of the conditions specified in the Indenture relating to the (i) sale price of our common stock, (ii) the trading price per $1,000 principal amount of 2017 Notes or (iii) specified corporate events. On or after June 15, 2017, until the close of business of the business day immediately preceding the date the 2017 Notes mature, holders may convert their 2017 Notes at any time, regardless of whether any of the foregoing conditions have been met. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination thereof, at our election. Based on the initial conversion rate of 10 shares of our common stock per $1,000 principal amount of 2017 Notes, which corresponds to an initial conversion price of $100.00 per share of our common stock, the number of shares issuable upon conversion of the 2017 Notes is 424,710. The value of these shares, based on the closing price of our common stock on March 31, 2016 of $31.42 per share, was approximately $13.3 million. The fair value of our 2017 Notes as presented in Note 4 was $38.2 million at March 31, 2016. 1.75% Convertible Senior Notes In May 2015, we issued $84.2 million principal amount of 1.75% convertible senior notes due December 15, 2021 (the “2021 Notes”), unless earlier repurchased, redeemed or converted (the “2021 Notes”) pursuant to the terms of the Indenture and a second supplemental indenture (the “Second Supplemental Indenture”), which was filed with the SEC on May 19, 2015 as an exhibit to our Current Report on from 8-K. Combined with the 2021 Notes issued in connection with the Exchange described above, the aggregate principal amount issued under the 2021 Notes was $202.4 million. The Exchange resulted in the retirement of outstanding 2017 Notes with a carrying value of $83.1 million, the write-off of unamortized debt issuance costs of $1.0 million and settlement of $10.7 million related to the conversion feature embedded in the 2017 Notes. The 2021 Notes offered in the Exchange had a fair value of $88.0 million, which resulted in a loss on extinguishment of debt of $16.6 million in the three months ended June 30, 2015. The net proceeds from the issuance of the 2021 Notes amounted to $75.5 million, net of deferred issuance costs paid as of September 30, 2015. In connection with the issuance of the 2021 Notes, we incurred costs of approximately $5.2 million. The 2021 Notes are senior unsecured obligations of the Company and bear interest at a rate of 1.75% per annum, payable semi-annually in arrears on June 15 and December 15 of each year. Pursuant to the terms of the Indenture and the Second Supplemental Indenture, the 2021 Notes are convertible at an initial conversion rate of 10 shares of our common stock per $1,000 principal amount of 2021 Notes, which corresponds to an initial conversion price of $100.00 per share of our common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events. The 2021 Notes mature on December 15, 2021 unless earlier repurchased, redeemed or converted. Prior to the close of business on the business day immediately preceding June 15, 2021, holders may convert their 2021 Notes at their option only under the following circumstances: (i) sale price of our common stock, (ii) the trading price per $1,000 principal amount of 2017 Notes or (iii) specified corporate events, or (iv) if we call the 2021 Notes for redemption, until the close of business on the business day immediately preceding the redemption date. On or after June 15, 2021 until the close of business on the scheduled trading day immediately preceding the maturity date, holders may convert their 2021 Notes at any time, regardless of whether any of the foregoing conditions has been met. Based on the initial conversion rate of 10 shares of our common stock per $1,000 principal amount of 2021 Notes, which corresponds to an initial conversion price of $100.00 per share of our common stock, the number of shares issuable upon conversion of the 2021 Notes is 2,023,660. The value of these shares, based on the closing price of our common stock on March 31, 2016 of $31.42 per share, was approximately $63.6 million. The fair value of our 2021 Notes as presented in Note 4 was $137.2 million at March 31, 2016. Accounting for Debt Transactions In accordance with accounting guidance for debt with conversion and other options, we separately account for the liability and equity components of the Convertible Notes by allocating the proceeds between the liability component and the embedded conversion option, or equity component, due to our ability to settle the Convertible Notes in cash, common stock or a combination of cash and common stock, at our option. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected our non-convertible debt borrowing rate for similar debt. The equity component of the Convertible Notes was recognized as a debt discount and represents the difference between the proceeds from the issuance of the Convertible Notes and the fair value of the liability of the Convertible Notes on their respective dates of issuance. The excess of the principal amount of the liability component over its carrying amount, or debt discount, is amortized to interest expense using the effective interest method over the life of the Convertible Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Additionally, we allocated the costs related to the issuance of the Convertible Notes on the same percentage as the long-term debt and equity components, such that a portion of the costs is allocated to the long-term component and the equity component included in additional paid-in-capital. These deferred financing costs are being amortized to interest expense over the life of the Convertible Notes using the effective interest method. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Note 8. Stockholders’ Equity On January 30, 2014, we filed a shelf registration statement with the SEC on Form S-3. This shelf registration statement allows us to offer and sell from time to time, in one or more series or issuances and on terms that we will determine at the time of the offering any combination and amount of the securities described in the prospectus contained in the registration statement or in the prospectus supplement filed with respect to a particular offering. An aggregate of 530,816 shares of our common stock were registered for issuance pursuant to various prospectus filings on January 30, 2014 in connection with our acquisition of CircuLite. As of March 31, 2016, there remained 248,872 shares of our common stock reserved for potential issuance in connection with future contingent milestone payments under the terms of the merger agreement. In the three months ended March 31, 2016, we issued 131,031 shares of our common stock upon the vesting of restricted stock units pursuant to stockholder approved equity plans. There were no options exercised during this period. In the three months ended March 31, 2015, we issued an aggregate of 1,429 shares of our common stock upon the exercise of stock options and an aggregate of 88,184 shares of our common stock upon the vesting of restricted stock units. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 9. Share-Based Compensation We allocate share-based compensation expense to cost of revenue, selling, general and administrative expense and research and development expense based on the award holder’s employment function. For the three months ended March 31, 2016 and 2015, we recorded share-based compensation expense as follows: Three Months Ended March 31, 2016 2015 (in thousands) Cost of revenue $ 495 $ 438 Selling, general and administrative 2,653 3,449 Research and development 1,239 2,089 $ 4,387 $ 5,976 Deferred tax benefits attributed to our share-based compensation expense are not recognized in the accompanying condensed consolidated financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets. We receive a tax deduction for certain stock option exercises during the period the options are exercised, and for the vesting of restricted stock units during the period the restricted stock units vest. For stock options, the amount of the tax deduction is generally for the excess of the fair market value of our shares of common stock over the exercise price of the stock options at the date of exercise. For restricted stock units, the amount of the tax deduction is generally for the fair market value of our shares of common stock at the vesting date. Excess tax benefits are not included in the accompanying condensed consolidated financial statements because we are in a net operating loss position and a full valuation allowance is maintained for all net deferred tax assets. Equity Plans We have issued share-based awards to employees, non-executive directors and outside consultants through various approved plans and outside of any formal plan. New shares are issued upon the exercise of share-based awards. Upon receipt of stockholder approval on May 31, 2012, we adopted the HeartWare International, Inc. 2012 Incentive Award Plan (“2012 Plan”). The 2012 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock, restricted stock units, performance awards, dividend equivalent rights, deferred stock, deferred stock units, stock payments and stock appreciation rights (collectively referred to as “Awards”), to our directors, employees and consultants. At our 2015 Annual Meeting of Stockholders held on June 4, 2015, our stockholders approved an amendment to the 2012 Plan to increase the number of shares of our common stock available for issuance by 1.1 million shares. Under the terms of the 2012 Plan, as amended, the total number of shares of our common stock reserved for issuance under Awards is 2,475,000, provided that the total number of shares of our common stock that may be issued pursuant to “Full Value Awards” (Awards other than options, stock appreciation rights or other Awards for which the holder pays the intrinsic value existing as of the date of grant whether directly or by forgoing a right to receive a payment from the Company) is 2,375,000. As of March 31, 2016, 407,969 shares have been issued upon vesting of Awards issued under the 2012 Plan and Awards with respect to 911,349 shares were issued and outstanding under the 2012 Plan. Subsequent to adoption of the 2012 Plan, no new Awards will be granted under our prior plans. Any outstanding Awards under the prior plans will continue to be subject to the terms and conditions of the plan under which they were granted. Stock Options Each option allows the holder to subscribe for, and be issued, one share of our common stock at a specified price, which is generally the quoted market price of our common stock on the date the option is issued. Options generally vest on a pro-rata basis on each anniversary of the issuance date within three or four years of the date the option is issued. Options may be exercised after they have vested and prior to the specified expiry date provided applicable exercise conditions are met, if any. The expiry date can be for periods of up to ten years from the date the option is issued. The fair value of each option is estimated on the date of grant using the Black-Scholes option pricing model based on the assumptions established at that time. In the three months ended March 31, 2016 and 2015, we issued 149,940 and zero stock options, respectively. Information related to options granted under all of our plans at March 31, 2016 and activity in the three months then ended is as follows (certain amounts in U.S.$ were converted from AU$ at the then period-end spot rate): Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Life Value (in thousands) Price (Years) (in thousands) Outstanding at December 31, 2015 111 $ 49.20 Granted 150 33.49 Exercised — — Forfeited (10 ) 51.28 Expired — — Outstanding at March 31, 2016 251 39.63 7.21 $ 332 Exercisable at March 31, 2016 92 43.75 2.77 $ 332 The aggregate intrinsic values at March 31, 2016 noted in the table above represent the number of in-the-money options outstanding or exercisable multiplied by the closing price of our common stock traded on NASDAQ less the weighted-average exercise price at period end. The total intrinsic value of options exercised in the three months ended March 31, 2016 and 2015 was zero and approximately $0.1 million, respectively. Cash received from options exercised in the three months ended March 31, 2016 and 2015 was zero and $31,000, respectively. At March 31, 2016, there was approximately $2.1 million of unrecognized compensation expense, net of estimated forfeitures, related to non-vested options. This expense is expected to be recognized over a weighted-average period of 1.8 years. Restricted Stock Units Each restricted stock unit (“RSU”) represents a contingent right to receive one share of our common stock. RSUs generally vest on a pro-rata basis on each anniversary of the issuance date over three or four years or vest in accordance with performance-based criteria. The RSUs with performance-based vesting criteria vest in one or more tranches contingent upon the achievement of predetermined milestones related to the development of our products, the achievement of certain prescribed clinical and regulatory objectives, the achievement of specific financial performance measures or similar metrics. There is no consideration payable on the vesting of RSUs issued under the plans. Upon vesting, the RSUs are exercised automatically and settled in shares of our common stock. Information related to RSUs at March 31, 2016 and activity in the three months then ended is as follows: Weighted- Average Remaining Number of Contractual Aggregate Units Life Intrinsic Value (in thousands) (Years) (in thousands) Outstanding at December 31, 2015 623 Granted 296 Vested/Exercised (131 ) Forfeited (42 ) Expired — Outstanding at March 31, 2016 746 1.93 $ 23,426 The aggregate intrinsic value at March 31, 2016 noted in the table above represents the closing price of our common stock traded on NASDAQ multiplied by the number of RSUs outstanding. At March 31, 2016, 112,522 of the RSUs outstanding were subject to performance-based vesting criteria as described above. The total intrinsic value of RSUs vested in the three months ended March 31, 2016 and 2015 was approximately $4.4 million and $7.9 million, respectively. The fair value of each RSU award equals the closing price of our common stock on the date of grant. The weighted-average grant date fair value per share of RSUs granted in the three months ended March 31, 2016 and 2015 was $33.47 and $89.53, respectively. At March 31, 2016, we had approximately $25.6 million of unrecognized compensation expense related to non-vested RSU awards, net of estimated forfeitures. This expense is expected to be recognized over a weighted-average period of 2.0 years. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Note 10. Net Loss Per Share Basic net loss per common share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding for each respective period. Diluted net loss per common share adjusts basic net loss per common share for the dilutive effects of share-based awards as determined under the treasury stock method, our convertible senior notes as determined under the if-converted method, and other potentially dilutive instruments only in the periods in which the effect is dilutive. Due to our net loss for all periods presented, all potentially dilutive instruments were excluded because their inclusion would have been anti-dilutive. The following instruments have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive. Three Months Ended March 31, Common shares issuable upon: 2016 2015 (in thousands) Conversion of convertible senior notes 2,448 1,438 Exercise or vesting of share-based awards 997 879 |
Business Segment, Geographic Ar
Business Segment, Geographic Areas and Major Customers | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segment, Geographic Areas and Major Customers | Note 11. Business Segment, Geographic Areas and Major Customers For financial reporting purposes, we have one reportable segment which designs, manufactures and markets medical devices for the treatment of advanced heart failure. Products are distributed to customers located in the United States through our clinical trials and as commercial products, as commercial products to customers in Europe and other countries and under special access in certain other countries. Product sales attributed to a country or region are based on the location of the customer to whom the products are sold. Long-lived assets are primarily held in the United States. Product sales by geographic location were as follows: Three Months Ended March 31, 2016 2015 (in thousands) United States $ 33,348 $ 42,189 Germany 10,673 12,741 International, excluding Germany 11,053 15,091 $ 55,074 $ 70,021 As a significant portion of our revenue is generated outside of the United States, we are dependent on favorable economic and regulatory environments for our products in Europe and other countries outside of the United States. For the three months ended March 31, 2016 and 2015, no customer exceeded 10% of product sales individually. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12. Commitments and Contingencies We received a warning letter from the FDA, dated June 2, 2014, following an inspection of our Miami Lakes, Florida facility conducted in January 2014. The FDA letter cited four categories for us to address: (1) procedures for validating device design, including device labeling; (2) procedures for implementing corrective and preventive action (“CAPA”); (3) maintaining records related to investigations; and (4) validation of computer software used as part of production or quality systems. The warning letter did not require any action by physicians or patients and did not restrict use of our devices. We sent the FDA our initial response to the warning letter within the required fifteen business days of receipt and committed to undertaking certain quality system improvements and providing the FDA with periodic updates. Since 2014 and continuing in 2016, we implemented systemic changes and organizational enhancements to address the four warning letter items and related quality systems. We have established teams to review and address the items cited by the FDA and have engaged external subject matter experts to assist in assessment and remediation efforts. As we continue to evaluate our quality systems, it is possible that we may need to take additional actions including the possibility of voluntary product recalls when necessary to ensure patient safety and effective performance of the HVAD System. At March 31, 2016, we had purchase order commitments of approximately $46.6 million related to product costs, supplies, services and property, plant and equipment purchases. Many of our materials and supplies require long lead times. Our purchase order commitments reflect materials that may be received up to one year from the date of order. In addition, we have entered into employment agreements with all of our executive officers. These contracts do not have a fixed term and are constructed on an at-will basis. Some of these contracts provide executives with the right to receive certain additional payments and benefits if their employment is terminated including after a change of control, as defined in these agreements. From time to time we invest in certain development-stage entities in connection with research activities. Certain contingent milestone payments in connection with these arrangements have not been accrued in the accompanying condensed consolidated financial statements as the amounts are indeterminate at this time. The taxation and customs requirements, together with other applicable laws and regulations of certain foreign jurisdictions, can be inherently complex and subject to differing interpretation by local authorities. We are subject to the risk that either we have misinterpreted applicable laws and regulations, or that foreign authorities may take inconsistent, unclear or changing positions on local law, customs practices or rules. In the event that we have misinterpreted any of the above, or that foreign authorities take positions contrary to ours, we may incur liabilities that may differ materially from the amounts accrued in the accompanying condensed consolidated financial statements. Contingent Consideration and Milestone Payments In December 2013, we acquired CircuLite using a combination of cash, stock and post-acquisition milestone and royalty payments. The post-acquisition payments are payable based upon the achievement of CircuLite related revenue and certain specified performance milestones over periods ranging from 8-10 years subsequent to the acquisition date. The maximum amount of the aggregate post-acquisition payments could be $300 million. As of March 31, 2016, the fair value of the contingent consideration was estimated to be $12.9 million ( see License and Development Agreements From time to time, we license rights to technology or intellectual property from third parties. These licenses may require us to make upfront payments as well as development or other payments upon successful completion of preclinical, clinical, regulatory or revenue milestones. In addition, these agreements may require us to pay royalties on sales of products arising from the licensed technology or intellectual property. Because the achievement of these milestones is not reasonably estimable, we have not recorded a liability in the accompanying consolidated financial statements for any of these contingencies. Litigation From time to time we may be involved in litigation or other contingencies arising in the ordinary course of business. Except as set forth below, based on the information presently available, management believes there are no contingencies, claims or actions, pending or threatened, the ultimate resolution of which will have a material adverse effect on our financial position, liquidity or results of operations. On January 22, 2016, the St. Paul Teachers’ Retirement Fund Association filed a putative class action complaint (the “Complaint”) in the United States District Court for the Southern District of New York on behalf of all persons and entities who purchased or otherwise acquired shares of the Company from June 10, 2014 through January 11, 2016 (the “Class Period”). The Complaint claims that the Company and two of our executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements about, among other things, the Company’s response to the June 2014 FDA warning letter, the development of the MVAD System and the acquisition of Valtech. The Complaint claims that the disclosure of the purportedly false and misleading statements caused the price of the Company’s stock to drop, and seeks to recover damages on behalf of all purchasers or acquirers of the Company’s stock during the Class Period. The Company intends to vigorously defend itself against these claims. Because of the many questions of fact and law that may arise, the outcome of this legal proceeding is uncertain at this point. As a result we cannot reasonably estimate a range of loss for this action and accordingly have not accrued any liability associated with this action. In accordance with FASB ASC 450 , Contingencies |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. Subsequent Events We have evaluated events and transactions that occurred subsequent to March 31, 2016 through the date the financial statements were issued, for potential recognition or disclosure in the accompanying condensed consolidated financial statements. We did not identify any events or transactions that should be recognized or disclosed in the accompanying condensed consolidated financial statements. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited interim condensed consolidated financial statements for HeartWare International, Inc. (“we,” “our,” “us,” “HeartWare,” the “HeartWare Group” or the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting of interim financial information. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted. Accordingly, these statements do not include all the disclosures normally required by U.S. GAAP for annual financial statements and should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this report and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The accompanying condensed consolidated balance sheet as of December 31, 2015 has been derived from our audited financial statements. The unaudited condensed consolidated statements of operations and cash flows for the three months ended March 31, 2016 are not necessarily indicative of the results to be expected for any future period or for the year ending December 31, 2016. |
Accounting Estimates | The preparation of our unaudited interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. |
New Accounting Standards | New Accounting Standards Standards Pending Implementation In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting In February 2016, the FASB issued ASU 2016-02, Leases Leases Leases In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Implemented Standards In April 2015, the FASB issued ASU 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis In January 2015, the FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. In the period ended March 31, 2016, management reassessed certain inventory policies based on recent trends, including sales, usage and forecasted usage of specific inventory items. As a result, we now expect that certain inventory could be held beyond one year. As of March 31, 2016, approximately $7.4 million of inventory was classified as non-current inventory and included within other assets on the accompanying consolidated balance sheet. To reflect the result of this change, for consistency we reclassified approximately $7.7 million of inventory as of December 31, 2015 from current assets to non-current and included within other assets on the consolidated balance sheet. Corresponding reclassifications have also been made to the Consolidated Condensed Statement of Cash Flows for the periods ended March 31, 2015 and 2016, to reflect the gross purchases and sales of these assets as a component of other non-current assets. This change in classification does not affect previously reported cash flows from operations or from financing activities in the Consolidated Condensed Statement of Cash Flows, and had no effect on the previously reported Consolidated Condensed Statement of Operations for any period. |
Accounts Receivable | Accounts Receivable Accounts receivable consists of amounts due from the sale of our HeartWare Ventricular Assist System (the “HVAD System”) to our customers, which include hospitals, health research institutions and medical device distributors. We grant credit to customers in the normal course of business, but generally do not require collateral or any other security to support credit sales. Our receivables are geographically dispersed, with a significant portion from customers located in Europe and other foreign countries. We had one customer with an accounts receivable balance representing approximately 25% and 17% of our total accounts receivable at March 31, 2016 and December 31, 2015, respectively. A portion of this account receivable was classified as long-term as of March 31, 2016 and December 31, 2015 in accordance with our payment terms with this customer. We maintain allowances for doubtful accounts for estimated losses that may result from an inability to collect payments owed to us for product sales. We regularly review the allowance by considering factors such as historical experience, the age of the accounts receivable balances and local economic conditions that may affect a customer’s ability to pay. Account balances are charged off against the allowance after appropriate collection efforts have been exhausted and we feel it is probable that the receivable will not be recovered. The following table summarizes the change in our allowance for doubtful accounts for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 676 $ 671 Reversal of expense (154 ) (26 ) Charge-offs — — Ending balance $ 522 $ 645 As of March 31, 2016 and December 31, 2015, we recorded customer sales allowances of $92,000 and $81,000, respectively. |
Inventories, net | Inventories, net Components of inventories are as follows: March 31, December 31, 2016 2015 (in thousands) Raw material $ 15,090 $ 17,940 Work-in-process 9,243 8,858 Finished goods 19,074 13,149 $ 43,407 $ 39,947 Finished goods inventories includes inventory held on consignment at customer sites of approximately $9.1 million at March 31, 2016 and $6.2 million at December 31, 2015. The increase in consignment inventory as of March 31, 2016 is due to pre-shipment of batteries to execute a field action announced in September 2015 ( see Accrued Field Action Costs for more information). |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment, net consists of the following: Estimated March 31, December 31, Useful Lives 2016 2015 (in thousands) Machinery and equipment 1.5 to 7 years $ 22,557 $ 21,785 Leasehold improvements 3 to 10 years 8,901 8,891 Office equipment, furniture and fixtures 5 to 7 years 2,105 2,105 Purchased software 1 to 7 years 7,796 7,575 41,359 40,356 Less: accumulated depreciation (26,757 ) (25,258 ) $ 14,602 $ 15,098 |
Long-Term Investment and Other Assets | Long-Term Investment and Other Assets Long-term investments consist of the following: March 31, December 31, 2016 2015 (in thousands) Investment in Valtech Cardio, Ltd. $ 48,960 $ 17,620 Long-term inventory 7,367 7,739 Long-term receivables 3,953 2,539 Security deposits 2,408 2,586 Other assets 980 980 $ 63,668 $ 31,464 Valtech Cardio, Ltd. As of March 31, 2016, we have invested approximately $48.0 million in Valtech Cardio, Ltd (“Valtech”), an early-stage, privately held company headquartered in Or Yehuda, Israel specializing in the development of devices for mitral and tricuspid valve repair and replacement. Our investment is carried in long-term investments and other assets and consists of the following: March 31, December 31, 2016 2015 (in thousands) Preferred Stock $ 10,495 $ 10,495 Convertible Promissory Notes Receivable, due July 10, 2017 8,222 7,125 Convertible Promissory Notes Receivable, due February 1, 2019 30,243 — $ 48,960 $ 17,620 In October 2013, we invested $10 million in Valtech in the form of a convertible promissory note with an interest rate of 6% per annum (the “2013 Note”), which, along with net accrued interest, has since been converted to Valtech equity pursuant to the terms of the 2013 Note. In July 2015, we invested an additional $5 million in Valtech in the form of a convertible promissory note with an interest rate of 6% per annum. On September 1, 2015, we entered into a Business Combination Agreement (the “BCA”) by and among the Company, Valtech, HW Global, Inc. (“Holdco”), HW Merger Sub, Inc., Valor Merger Sub Ltd. and Valor Shareholder Representative, LLC, pursuant to which we and Valtech proposed to effect a strategic combination of our respective businesses under Holdco, subject to certain closing conditions. Effective January 28, 2016, we terminated the BCA pursuant to the terms of the BCA by delivering written notice to the other parties. After entering into the BCA and pursuant to the terms of the BCA, we loaned Valtech an aggregate principal amount of $3 million in interim funding at an interest rate of 6% per annum in $1 million increments in each of November 2015, December 2015 and January 2016. In connection with the termination provisions of the BCA, we loaned Valtech an additional $30 million on February 1, 2016 also in the form of a convertible promissory note with an interest rate of 6% per annum. We have no current contractual obligations to further fund Valtech. Upon maturity, each of the convertible promissory notes become due and payable in cash or Valtech preferred stock, at the option of Valtech, pursuant to terms of the convertible promissory notes. If the convertible promissory notes become due and payable upon an event of default (as defined in the notes), we determine whether the notes are paid in cash or Valtech preferred stock. Our investment in Valtech was deemed to be realizable as of March 31, 2016. The fair value of this investment has not been estimated as of March 31, 2016 and December 31, 2015 as no impairment indicators were identified. |
Accrued Warranty | Accrued Warranty Certain patient accessories sold with the HVAD System are covered by a limited warranty ranging from one to two years. Estimated warranty obligations are recorded as an expense when the related revenue is recognized and are included in cost of revenue on our condensed consolidated statements of operations. Factors that affect the estimated warranty liability include the number of units sold, historical and anticipated rates of warranty claims, cost per claim, and vendor-supported warranty programs. We periodically assess the adequacy of our recorded warranty liabilities and adjust the amounts as necessary. The amount of the liability recorded is equal to the estimated costs to repair or otherwise satisfy claims made by customers. |
Contingencies | In accordance with FASB ASC 450 , Contingencies |
Balance Sheet Information (Tabl
Balance Sheet Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Change in Allowance for Doubtful Accounts | The following table summarizes the change in our allowance for doubtful accounts for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 676 $ 671 Reversal of expense (154 ) (26 ) Charge-offs — — Ending balance $ 522 $ 645 |
Components of Inventories | Components of inventories are as follows: March 31, December 31, 2016 2015 (in thousands) Raw material $ 15,090 $ 17,940 Work-in-process 9,243 8,858 Finished goods 19,074 13,149 $ 43,407 $ 39,947 |
Summary of Property, Plant and Equipment, Net | Property, plant and equipment, net consists of the following: Estimated March 31, December 31, Useful Lives 2016 2015 (in thousands) Machinery and equipment 1.5 to 7 years $ 22,557 $ 21,785 Leasehold improvements 3 to 10 years 8,901 8,891 Office equipment, furniture and fixtures 5 to 7 years 2,105 2,105 Purchased software 1 to 7 years 7,796 7,575 41,359 40,356 Less: accumulated depreciation (26,757 ) (25,258 ) $ 14,602 $ 15,098 |
Summary of Long-term Investments | Long-term investments consist of the following: March 31, December 31, 2016 2015 (in thousands) Investment in Valtech Cardio, Ltd. $ 48,960 $ 17,620 Long-term inventory 7,367 7,739 Long-term receivables 3,953 2,539 Security deposits 2,408 2,586 Other assets 980 980 $ 63,668 $ 31,464 |
Summary of Long-term Investments and Other Assets | Our investment is carried in long-term investments and other assets and consists of the following: March 31, December 31, 2016 2015 (in thousands) Preferred Stock $ 10,495 $ 10,495 Convertible Promissory Notes Receivable, due July 10, 2017 8,222 7,125 Convertible Promissory Notes Receivable, due February 1, 2019 30,243 — $ 48,960 $ 17,620 |
Summary of Other Accrued Liabilities | Other accrued liabilities consist of the following: March 31, December 31, 2016 2015 (in thousands) Accrued payroll and other employee costs $ 7,589 $ 14,068 Accrued field action 7,552 8,503 Accrued warranty 5,893 6,116 Accrued material purchases 2,486 4,107 Accrued professional fees 2,002 2,685 Accrued research and development costs 1,744 2,191 Accrued restructuring costs 1,796 1,955 Accrued VAT 1,144 1,238 Other accrued expenses 5,315 5,026 $ 35,521 $ 45,889 |
Summary of Changes in Warranty Liability | The following table summarizes the change in our warranty liability for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 6,116 $ 4,685 Accrual for warranty expense 371 785 Warranty costs incurred during the period (594 ) (655 ) Ending balance $ 5,893 $ 4,815 |
Summary of Changes in Field Action Liability | The following table summarizes the change in field action liability for the three months ended March 31, 2016 and 2015: 2016 2015 (in thousands) Beginning balance $ 8,503 $ 1,888 Accrual for field action costs 3,492 505 Field action costs incurred during the period (4,443 ) (1,305 ) Ending balance $ 7,552 $ 1,088 |
Summary of Changes in Accrued Restructuring Costs | The following table summarizes changes in our accrued restructuring costs for the three months ended March 31, 2016: Facility Leases (in thousands) Beginning balance $ 1,955 Restructuring charges — Payments (179 ) Adjustments to estimated obligations — Change in fair value 20 Ending balance $ 1,796 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis | The following tables represent the fair value of our financial assets and financial liabilities measured at fair value on a recurring basis and which level was used in the fair value hierarchy at the respective dates. Fair Value Measurements at the Reporting Date Using Carrying Fair Value Value Level 1 Level 2 Level 3 (in thousands) As of March 31, 2016 Assets Short-term investments $ 74,952 $ 74,952 $ — $ 74,952 $ — Long-term investments 980 980 — 980 — Liabilities Convertible senior notes 189,572 (1) 175,438 — 175,438 — Contingent consideration 12,910 12,910 — — 12,910 Royalties 934 934 — — 934 Lease exit costs 1,796 1,796 — — 1,796 Fair Value Measurements at the Reporting Date Using Carrying Fair Value Value Level 1 Level 2 Level 3 (in thousands) As of December 31, 2015 Assets Short-term investments $ 68,531 $ 68,531 $ — $ 68,531 $ — Long-term investments 980 980 — 980 — Liabilities Convertible senior notes 187,089 (1) 200,351 — 200,351 — Contingent consideration 12,330 12,330 — — 12,330 Royalties 918 918 — — 918 Lease exit costs 1,955 1,955 — — 1,955 (1) The carrying amount of our convertible senior notes is net of unamortized discount and deferred financing costs. See |
Summary of Change in Fair Value of Contingent Consideration as Determined by Level 3 Inputs | The following table summarizes the change in fair value, as determined by Level 3 inputs, of the contingent consideration for the three months ended March 31, 2016: Contingent (in thousands) Beginning balance $ 12,330 Payments — Change in fair value 580 Ending balance $ 12,910 |
Summary of Change in Fair Value of Royalties as Determined by Level 3 Inputs | The following table summarizes the change in fair value, as determined by Level 3 inputs, of the royalties for the three months ended March 31, 2016: Royalties (in thousands) Beginning balance $ 918 Payments (0 ) Change in fair value 16 Ending balance $ 934 |
Summary of Change in Fair Value of Lease Exit Costs as Determined by Level 3 Inputs | The following table summarizes the change in fair value, as determined by Level 3 inputs, of the lease exit costs for the three months ended March 31, 2016: Lease Exit (in thousands) Beginning balance $ 1,955 Adjustments 0 Payments (179 ) Change in fair value 20 Ending balance $ 1,796 |
Schedule of Quantitative Information for Level 3 Fair Value Measurements | The following table presents quantitative information about the inputs and valuation methodologies used for our fair value measurements classified in Level 3 of the fair value hierarchy as of March 31, 2016: Valuation Methodology Significant Weighted Average (range, if applicable) Contingent consideration Probability weighted income approach Milestone dates 2020 to 2023 Discount rate 17.0% to 24.0% Probability of occurrence 50% Royalties Discounted cash flow Discount rate 4.8% to 7.8% Lease exit costs Discounted cash flow Sublease start date March 1, 2017 Sublease rate $ 22.00/square foot Discount rate 3.5% |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of Amortized Cost and Fair Value of Investments | The amortized cost and fair value of our investments, with gross unrealized gains and losses, were as follows: Gross Gross Amortized Unrealized Unrealized Aggregate Cost Basis Gains Losses Fair Value (in thousands) At March 31, 2016 Short-term investments: Corporate debt $ 32,492 $ 0 $ (31 ) $ 32,461 U.S. government agency debt 30,000 2 (6 ) 29,996 Certificates of deposit 12,495 — — 12,495 Total short-term investments $ 74,987 $ 2 $ (37 ) $ 74,952 Long-term investments: Certificates of deposit $ 980 $ — $ — $ 980 Total long-term investments $ 980 $ — $ — $ 980 Gross Gross Amortized Unrealized Unrealized Aggregate Cost Basis Gains Losses Fair Value (in thousands) At December 31, 2015 Short-term investments: Corporate debt $ 32,666 $ — $ (100 ) $ 32,566 U.S. government agency debt 25,000 — (60 ) 24,940 Certificates of deposit 11,025 — — 11,025 Total short-term investments $ 68,691 $ — $ (160 ) $ 68,531 Long-term investments: Certificates of deposit $ 980 $ — $ — $ 980 Total long-term investments $ 980 $ — $ — $ 980 |
Goodwill, In-Process Research26
Goodwill, In-Process Research and Development and Other Intangible Assets, Net (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Carrying Amount of Goodwill and Change in Balance | The carrying amount of goodwill and the change in the balance for the three months ended March 31, 2016 and 2015 is as follows: 2016 2015 (in thousands) Beginning balance $ 61,233 $ 61,390 Additions — — Impairment — — Foreign currency translation impact 49 (167 ) Ending balance $ 61,282 $ 61,223 |
Summary of Carrying Value of In-Process Research and Development Assets | The carrying value of our in-process research and development assets, which relate to the development and potential commercialization of certain acquired technologies, consisted of the following at March 31, 2016 and December 31, 2015: March 31, 2016 December 31, 2015 (in thousands) CircuLite System technology $ 10,800 $ 10,800 |
Summary of Other Intangible Assets | Other intangible assets, net consisted of the following: March 31, 2016 December 31, 2015 (in thousands) Patents $ 7,816 $ 7,424 Purchased intangible assets Acquired technology rights 9,925 9,925 17,741 17,349 Less: Accumulated amortization – Patents (1,691 ) (1,551 ) Less: Accumulated amortization – Purchased intangible assets (3,080 ) (2,753 ) $ 12,970 $ 13,045 |
Estimated Useful Lives of Intangible Assets | Our other intangible assets are amortized using the straight-line method over their estimated useful lives as follows: Patents 15 years Purchased intangible assets Acquired technology rights 6 to 16 years |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Outstanding Convertible Debt | At March 31, 2016 and December 31, 2015, we had outstanding convertible debt as follows: March 31, 2016 December 31, 2015 (in thousands) Principal amount of the 3.5% convertible senior notes, due 2017 $ 42,471 $ 42,471 Deferred financing costs (3,527 ) (3,652 ) Unamortized discount (5,305 ) (5,994 ) $ 33,639 $ 32,825 Equity component $ 7,629 $ 7,629 Principal amount of the 1.75% convertible senior notes, due 2021 $ 202,366 $ 202,366 Deferred financing costs (285 ) (321 ) Unamortized discount (46,149 ) (47,781 ) $ 155,932 $ 154,264 Equity component $ 47,400 $ 47,400 |
Summary of Interest Expense Related to Convertible Debt | For the three months ended March 31, 2016 and 2015, interest expense related to our convertible debt was as follows: Three Months Ended March 31, 2016 2015 (in thousands) Coupon rate $ 1,257 $ 1,258 Amortization of discount 2,321 2,068 Amortization of deferred financing costs 162 111 $ 3,740 $ 3,437 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Allocation of Share-Based Compensation Expense | For the three months ended March 31, 2016 and 2015, we recorded share-based compensation expense as follows: Three Months Ended March 31, 2016 2015 (in thousands) Cost of revenue $ 495 $ 438 Selling, general and administrative 2,653 3,449 Research and development 1,239 2,089 $ 4,387 $ 5,976 |
Summary of Options Granted under All Plans | Information related to options granted under all of our plans at March 31, 2016 and activity in the three months then ended is as follows (certain amounts in U.S.$ were converted from AU$ at the then period-end spot rate): Weighted Weighted Average Aggregate Number of Average Remaining Intrinsic Options Exercise Contractual Life Value (in thousands) Price (Years) (in thousands) Outstanding at December 31, 2015 111 $ 49.20 Granted 150 33.49 Exercised — — Forfeited (10 ) 51.28 Expired — — Outstanding at March 31, 2016 251 39.63 7.21 $ 332 Exercisable at March 31, 2016 92 43.75 2.77 $ 332 |
Summary of RSU's | Information related to RSUs at March 31, 2016 and activity in the three months then ended is as follows: Weighted- Average Remaining Number of Contractual Aggregate Units Life Intrinsic Value (in thousands) (Years) (in thousands) Outstanding at December 31, 2015 623 Granted 296 Vested/Exercised (131 ) Forfeited (42 ) Expired — Outstanding at March 31, 2016 746 1.93 $ 23,426 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Anti-Dilutive Securities Excluded from Computation of Earnings Per Share | The following instruments have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive. Three Months Ended March 31, Common shares issuable upon: 2016 2015 (in thousands) Conversion of convertible senior notes 2,448 1,438 Exercise or vesting of share-based awards 997 879 |
Business Segment, Geographic 30
Business Segment, Geographic Areas and Major Customers (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Product Sales by Geographic Location | Product sales by geographic location were as follows: Three Months Ended March 31, 2016 2015 (in thousands) United States $ 33,348 $ 42,189 Germany 10,673 12,741 International, excluding Germany 11,053 15,091 $ 55,074 $ 70,021 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Basis Of Presentation [Line Items] | ||
Debt issuance costs | $ 3.8 | $ 4 |
Other Assets [Member] | ||
Basis Of Presentation [Line Items] | ||
Reclassification of inventory as non current inventory | $ 7.4 | $ 7.7 |
Liquidity - Additional Informat
Liquidity - Additional Information (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Liquidity [Abstract] | ||
Cash, cash equivalents and investments | $ 189,200 | |
Accumulated deficit | $ (438,959) | $ (421,499) |
Balance Sheet Information - Add
Balance Sheet Information - Additional Information (Detail) | Feb. 01, 2016USD ($) | Jul. 31, 2015USD ($) | Oct. 31, 2013USD ($) | Mar. 31, 2016USD ($)Customer | Mar. 31, 2014USD ($) | Dec. 31, 2015USD ($) | Jan. 31, 2016USD ($) | Nov. 30, 2015USD ($) | Mar. 31, 2015USD ($) |
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||||
Percentage of account receivables by customers | 25.00% | 17.00% | |||||||
Recorded customer sales allowances | $ 92,000 | $ 81,000 | |||||||
Inventory held on consignment | 9,100,000 | 6,200,000 | |||||||
Long-term investment, amount | $ 63,668,000 | 31,464,000 | |||||||
Long-term investment, interest rate | 6.00% | ||||||||
Aggregate principal amount of convertible promissory note | $ 3,000,000 | 1,000,000 | $ 1,000,000 | $ 1,000,000 | |||||
Bonuses included in accrued payroll and other employee costs | 2,200,000 | $ 8,000,000 | |||||||
Allowance for anticipated replacement | 2,300,000 | ||||||||
Charges incurred for anticipated replacement | 3,500,000 | ||||||||
Facility Closing [Member] | |||||||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||||
Remaining lease payments | $ 500,000 | ||||||||
Lease liability | $ 1,700,000 | ||||||||
Lease expiration month year | 2020-09 | ||||||||
Valtech Cardio, Ltd [Member] | |||||||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||||
Long-term investment, interest rate | 6.00% | ||||||||
Additional convertible loans issued | $ 30,000,000 | ||||||||
Convertible Promissory Notes [Member] | Valtech Cardio, Ltd [Member] | |||||||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||||
Long-term investment, amount | $ 5,000,000 | $ 10,000,000 | $ 48,000,000 | ||||||
Long-term investment, interest rate | 6.00% | 6.00% | |||||||
Accounts Receivable [Member] | |||||||||
Condensed Balance Sheet Statements, Captions [Line Items] | |||||||||
Number of customers having account receivable balance | Customer | 1 |
Balance Sheet Information - Sum
Balance Sheet Information - Summary of Change in Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 676 | $ 671 |
Reversal of expense | (154) | (26) |
Charge-offs | 0 | 0 |
Ending balance | $ 522 | $ 645 |
Balance Sheet Information - Com
Balance Sheet Information - Components of Inventories (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 15,090 | $ 17,940 |
Work-in-process | 9,243 | 8,858 |
Finished goods | 19,074 | 13,149 |
Inventory, total | $ 43,407 | $ 39,947 |
Balance Sheet Information - S36
Balance Sheet Information - Summary of Property, Plant and Equipment, Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 41,359 | $ 40,356 |
Less: accumulated depreciation | (26,757) | (25,258) |
Property, plant and equipment, net | 14,602 | 15,098 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 22,557 | $ 21,785 |
Machinery and Equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 1 year 6 months | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 7 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 8,901 | $ 8,891 |
Leasehold Improvements [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 3 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 10 years | |
Office Equipment, Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 2,105 | $ 2,105 |
Office Equipment, Furniture and Fixtures [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 5 years | |
Office Equipment, Furniture and Fixtures [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 7 years | |
Purchased Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 7,796 | $ 7,575 |
Purchased Software [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 1 year | |
Purchased Software [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, estimated useful lives | 7 years |
Balance Sheet Information - S37
Balance Sheet Information - Summary of Long-term Investments (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Long-term inventory | $ 7,367 | $ 7,739 |
Long-term receivables | 3,953 | 2,539 |
Security deposits | 2,408 | 2,586 |
Other assets | 980 | 980 |
Long-term investments | 63,668 | 31,464 |
Valtech Cardio, Ltd [Member] | ||
Schedule of Investments [Line Items] | ||
Long-term investments | $ 48,960 | $ 17,620 |
Balance Sheet Information - S38
Balance Sheet Information - Summary of Long-term Investments and Other Assets (Detail) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Investments [Line Items] | ||
Preferred Stock | 10,495 | 10,495 |
Long-term investments and other assets | $ 63,668 | $ 31,464 |
Convertible Promissory Notes Receivable, Due July 10, 2017 [Member] | ||
Schedule of Investments [Line Items] | ||
Convertible Promissory Notes Receivable | 8,222 | $ 7,125 |
Convertible Promissory Notes Receivable, Due February 1, 2019 [Member] | ||
Schedule of Investments [Line Items] | ||
Convertible Promissory Notes Receivable | $ 30,243 |
Balance Sheet Information - S39
Balance Sheet Information - Summary of Long-term Investments and Other Assets (Parenthetical) (Detail) | 3 Months Ended |
Mar. 31, 2016 | |
Convertible Promissory Notes Receivable, Due July 10, 2017 [Member] | |
Schedule of Investments [Line Items] | |
Convertible Promissory Notes Receivable, Due date | Jul. 10, 2017 |
Convertible Promissory Notes Receivable, Due February 1, 2019 [Member] | |
Schedule of Investments [Line Items] | |
Convertible Promissory Notes Receivable, Due date | Feb. 1, 2019 |
Balance Sheet Information - S40
Balance Sheet Information - Summary of Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||||
Accrued payroll and other employee costs | $ 7,589 | $ 14,068 | ||
Accrued field action | 7,552 | 8,503 | $ 1,088 | $ 1,888 |
Accrued warranty | 5,893 | 6,116 | $ 4,815 | $ 4,685 |
Accrued material purchases | 2,486 | 4,107 | ||
Accrued professional fees | 2,002 | 2,685 | ||
Accrued research and development costs | 1,744 | 2,191 | ||
Accrued restructuring costs | 1,796 | 1,955 | ||
Accrued VAT | 1,144 | 1,238 | ||
Other accrued expenses | 5,315 | 5,026 | ||
Total other accrued liabilities | $ 35,521 | $ 45,889 |
Balance Sheet Information - S41
Balance Sheet Information - Summary of Changes in Warranty Liability (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 6,116 | $ 4,685 |
Accrual for warranty expense | 371 | 785 |
Warranty costs incurred during the period | (594) | (655) |
Ending balance | $ 5,893 | $ 4,815 |
Balance Sheet Information - S42
Balance Sheet Information - Summary of Changes in Field Action Liability (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accounting Policies [Abstract] | ||
Beginning balance | $ 8,503 | $ 1,888 |
Accrual for field action costs | 3,492 | 505 |
Field action costs incurred during the period | (4,443) | (1,305) |
Ending balance | $ 7,552 | $ 1,088 |
Balance Sheet Information - S43
Balance Sheet Information - Summary of Changes in Accrued Restructuring Costs (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance | $ 1,955 |
Ending balance | 1,796 |
Facility Leases [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance | 1,955 |
Restructuring charges | 0 |
Payments | (179) |
Adjustments to estimated obligations | 0 |
Change in fair value | 20 |
Ending balance | $ 1,796 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Transfer between level 1, Level 2, Level 3 | $ 0 | $ 0 |
Impairment charges | $ 0 | $ 1,118,000 |
World Heart Corporation [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Period for royalty payment obligations | 14 years |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | $ 74,952 | $ 68,531 |
Convertible senior notes | 189,572 | 187,089 |
Contingent consideration | 12,910 | 12,330 |
Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 74,952 | 68,531 |
Long-term investments | 980 | 980 |
Convertible senior notes | 175,438 | 200,351 |
Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Contingent consideration | 12,910 | 12,330 |
Royalties | 934 | 918 |
Lease exit costs | 1,796 | 1,955 |
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 74,952 | 68,531 |
Long-term investments | 980 | 980 |
Convertible senior notes | 189,572 | 187,089 |
Contingent consideration | 12,910 | 12,330 |
Royalties | 934 | 918 |
Lease exit costs | 1,796 | 1,955 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments | 74,952 | 68,531 |
Long-term investments | 980 | 980 |
Convertible senior notes | 175,438 | 200,351 |
Contingent consideration | 12,910 | 12,330 |
Royalties | 934 | 918 |
Lease exit costs | $ 1,796 | $ 1,955 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Change in Fair Value of Contingent Consideration as Determined by Level 3 Inputs (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Beginning balance | $ 12,330 | |
Change in fair value | 580 | $ 2,100 |
Ending balance | 12,910 | |
Level 3 [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Beginning balance | 12,330 | |
Payments | 0 | |
Change in fair value | 580 | |
Ending balance | $ 12,910 |
Fair Value Measurements - Sum47
Fair Value Measurements - Summary of Change in Fair Value of Royalties as Determined by Level 3 Inputs (Detail) - Level 3 [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning balance | $ 918 |
Payments | 0 |
Change in fair value | 16 |
Ending balance | $ 934 |
Fair Value Measurements - Sum48
Fair Value Measurements - Summary of Change in Fair Value of Lease Exit Costs as Determined by Level 3 Inputs (Detail) - Level 3 [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Beginning balance | $ 1,955 |
Adjustments | 0 |
Payments | (179) |
Change in fair value | 20 |
Ending balance | $ 1,796 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Quantitative Information for Level 3 Fair Value Measurements (Detail) - Level 3 [Member] | 3 Months Ended |
Mar. 31, 2016$ / ft² | |
Contingent Consideration [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Probability of occurrence | 50.00% |
Contingent Consideration [Member] | Minimum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Discount rate | 17.00% |
Contingent Consideration [Member] | Minimum [Member] | Probability Weighted Income Approach [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Milestone dates | 2,020 |
Contingent Consideration [Member] | Maximum [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Discount rate | 24.00% |
Contingent Consideration [Member] | Maximum [Member] | Probability Weighted Income Approach [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Milestone dates | 2,023 |
Royalties [Member] | Minimum [Member] | Discounted Cash Flow [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Discount rate | 4.80% |
Royalties [Member] | Maximum [Member] | Discounted Cash Flow [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Discount rate | 7.80% |
Lease Exit Costs [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Sublease rate | 22 |
Discount rate | 3.50% |
Lease Exit Costs [Member] | Discounted Cash Flow [Member] | |
Fair Value Inputs, Liabilities, Quantitative Information [Line Items] | |
Sublease start date | Mar. 1, 2017 |
Investments - Additional Inform
Investments - Additional Information (Detail) | 3 Months Ended | ||
Mar. 31, 2016USD ($)InvestmentSecurities | Mar. 31, 2015USD ($) | Dec. 31, 2015Investment | |
Schedule of Available-for-sale Securities [Line Items] | |||
Realized gains (losses) on investments | $ | $ 0 | $ 0 | |
Number of available-for-sale investments in a continuous loss position for more than twelve months | Investment | 12 | 13 | |
Number of individual investment securities in unrealized loss position | Securities | 6 | ||
Short-term Investments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment maturity date description at Dec. 31, 2015 and current period | Less than twenty-four months | ||
Long-term Investments [Member] | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Investment maturity date description at Dec. 31, 2015 and current period | Less than twenty-four months |
Investments - Summary of Amorti
Investments - Summary of Amortized Cost and Fair Value of Investments (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Short-term Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | $ 74,987 | $ 68,691 |
Gross Unrealized Gains | 2 | |
Gross Unrealized Losses | (37) | (160) |
Aggregate Fair Value | 74,952 | 68,531 |
Short-term Investments [Member] | Corporate Debt [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 32,492 | 32,666 |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (31) | (100) |
Aggregate Fair Value | 32,461 | 32,566 |
Short-term Investments [Member] | U.S. Government Agency Debt [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 30,000 | 25,000 |
Gross Unrealized Gains | 2 | |
Gross Unrealized Losses | (6) | (60) |
Aggregate Fair Value | 29,996 | 24,940 |
Short-term Investments [Member] | Certificates of Deposit [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 12,495 | 11,025 |
Aggregate Fair Value | 12,495 | 11,025 |
Long-term Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 980 | 980 |
Aggregate Fair Value | 980 | 980 |
Long-term Investments [Member] | Certificates of Deposit [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost Basis | 980 | 980 |
Aggregate Fair Value | $ 980 | $ 980 |
Goodwill, In-Process Research52
Goodwill, In-Process Research and Development and Other Intangible Assets, Net - Summary of Carrying Amount of Goodwill and Change in Balance (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Intangible Liability Disclosure [Abstract] | ||
Beginning balance | $ 61,233 | $ 61,390 |
Additions | 0 | 0 |
Impairment | 0 | 0 |
Foreign currency translation impact | 49 | (167) |
Ending balance | $ 61,282 | $ 61,223 |
Goodwill, In-Process Research53
Goodwill, In-Process Research and Development and Other Intangible Assets, Net - Summary of Carrying Value of In-Process Research and Development Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Intangible Liability Disclosure [Abstract] | ||
Carrying value of in-process research and development assets | $ 10,800 | $ 10,800 |
Goodwill, In-Process Research54
Goodwill, In-Process Research and Development and Other Intangible Assets, Net - Summary of Other Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | $ 17,741 | $ 17,349 |
Purchased intangible assets | ||
Other intangible assets | 17,741 | 17,349 |
Other intangible assets, net | 12,970 | 13,045 |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | 7,816 | 7,424 |
Purchased intangible assets | ||
Other intangible assets | 7,816 | 7,424 |
Less: Accumulated amortization | (1,691) | (1,551) |
Acquired Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Other intangible assets | 9,925 | 9,925 |
Purchased intangible assets | ||
Other intangible assets | 9,925 | 9,925 |
Purchased Intangible Assets [Member] | ||
Purchased intangible assets | ||
Less: Accumulated amortization | $ (3,080) | $ (2,753) |
Goodwill, In-Process Research55
Goodwill, In-Process Research and Development and Other Intangible Assets, Net - Estimated Useful Lives of Intangible Assets (Detail) | 3 Months Ended |
Mar. 31, 2016 | |
Patents [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 15 years |
Minimum [Member] | Acquired Technology Rights [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 6 years |
Maximum [Member] | Acquired Technology Rights [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful lives | 16 years |
Goodwill, In-Process Research56
Goodwill, In-Process Research and Development and Other Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of intangible assets | $ 467 | $ 508 |
Debt - Summary of Outstanding C
Debt - Summary of Outstanding Convertible Debt (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Jan. 31, 2016 | Dec. 31, 2015 | Nov. 30, 2015 | May. 31, 2015 | Dec. 15, 2010 |
Debt Instrument [Line Items] | ||||||
Principal amount | $ 3,000 | $ 1,000 | $ 1,000 | $ 1,000 | ||
Net carrying amount | 189,572 | 187,089 | ||||
3.5% Convertible Senior Notes, Due 2017 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | $ 143,750 | |||||
1.75% Convertible Senior Notes, Due 2021 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | 202,400 | $ 84,200 | ||||
Convertible Senior Notes [Member] | 3.5% Convertible Senior Notes, Due 2017 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | 42,471 | 42,471 | ||||
Deferred financing costs | (3,527) | (3,652) | ||||
Unamortized discount | (5,305) | (5,994) | ||||
Net carrying amount | 33,639 | 32,825 | ||||
Equity component | 7,629 | 7,629 | ||||
Convertible Senior Notes [Member] | 1.75% Convertible Senior Notes, Due 2021 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Principal amount | 202,366 | 202,366 | ||||
Deferred financing costs | (285) | (321) | ||||
Unamortized discount | (46,149) | (47,781) | ||||
Net carrying amount | 155,932 | 154,264 | ||||
Equity component | $ 47,400 | $ 47,400 |
Debt - Summary of Outstanding58
Debt - Summary of Outstanding Convertible Debt (Parenthetical) (Detail) | Mar. 31, 2016 | Dec. 31, 2015 | May. 31, 2015 | Dec. 15, 2010 |
3.5% Convertible Senior Notes, Due 2017 [Member] | ||||
Debt Instrument [Line Items] | ||||
Coupon rate | 3.50% | 3.50% | ||
3.5% Convertible Senior Notes, Due 2017 [Member] | Convertible Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Coupon rate | 3.50% | 3.50% | ||
1.75% Convertible Senior Notes, Due 2021 [Member] | ||||
Debt Instrument [Line Items] | ||||
Coupon rate | 1.75% | |||
1.75% Convertible Senior Notes, Due 2021 [Member] | Convertible Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Coupon rate | 1.75% | 1.75% |
Debt - Summary of Interest Expe
Debt - Summary of Interest Expense Related to Convertible Debt (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Debt Disclosure [Abstract] | ||
Coupon rate | $ 1,257 | $ 1,258 |
Amortization of discount | 2,321 | 2,068 |
Amortization of deferred financing costs | 162 | 111 |
Convertible Notes interest expense, Net | $ 3,740 | $ 3,437 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 | May. 31, 2015 | Mar. 31, 2016 | Jun. 30, 2015 | Sep. 30, 2015 | Jan. 31, 2016 | Nov. 30, 2015 | Dec. 15, 2010 |
Debt Instrument [Line Items] | |||||||||
Aggregate principal amount of convertible senior notes | $ 3,000,000 | $ 1,000,000 | $ 3,000,000 | $ 1,000,000 | $ 1,000,000 | ||||
Debt issuance costs | $ 3,800,000 | $ 4,000,000 | |||||||
3.5% Convertible Senior Notes, Due 2017 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Coupon rate | 3.50% | 3.50% | 3.50% | ||||||
Aggregate principal amount of convertible senior notes | $ 143,750,000 | ||||||||
Payable semi-annually in arrear | June 15 and December 15 | ||||||||
Debt instrument aggregate principal amount | $ 101,300,000 | ||||||||
Convertible value of instrument for convertible debt | $ 13,300,000 | ||||||||
Conversion rate of shares | 10 | ||||||||
Principal amount of Convertible Notes | $ 1,000 | ||||||||
Initial conversion price | $ 100 | $ 100 | |||||||
Number of shares issuable upon conversion of the Convertible Notes | 424,710 | ||||||||
Fair value of Convertible Notes | $ 38,200,000 | $ 38,200,000 | |||||||
3.5% Convertible Senior Notes, Due 2017 [Member] | Common Shares [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Closing price | $ 31.42 | $ 31.42 | |||||||
3.5% Convertible Senior Notes, Due 2017 [Member] | Convertible Senior Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Coupon rate | 3.50% | 3.50% | 3.50% | ||||||
Aggregate principal amount of convertible senior notes | $ 42,471,000 | $ 42,471,000 | $ 42,471,000 | ||||||
1.75% Convertible Senior Notes, Due 2021 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Coupon rate | 1.75% | ||||||||
Aggregate principal amount of convertible senior notes | $ 202,400,000 | $ 84,200,000 | $ 202,400,000 | ||||||
Payable semi-annually in arrear | June 15 and December 15 | ||||||||
Convertible value of instrument for convertible debt | $ 118,200,000 | $ 63,600,000 | |||||||
Conversion rate of shares | 10 | ||||||||
Principal amount of Convertible Notes | $ 1,000 | ||||||||
Initial conversion price | $ 100 | $ 100 | |||||||
Number of shares issuable upon conversion of the Convertible Notes | 2,023,660 | ||||||||
Fair value of Convertible Notes | $ 137,200,000 | $ 137,200,000 | |||||||
Maturity of convertible senior notes | Dec. 15, 2021 | ||||||||
Debt instrument carrying amount | $ 83,100,000 | ||||||||
Write off of debt issuance costs | 1,000,000 | ||||||||
Debt instrument settlement amount related to conversion feature | $ 10,700,000 | ||||||||
Debt instrument, exchange agreement fair value | $ 88,000,000 | ||||||||
Loss on extinguishment of long-term debt | $ 16,600,000 | ||||||||
Proceeds from issuance of convertible debt | $ 75,500,000 | ||||||||
Debt issuance costs | $ 5,200,000 | ||||||||
1.75% Convertible Senior Notes, Due 2021 [Member] | Common Shares [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Closing price | $ 31.42 | $ 31.42 | |||||||
1.75% Convertible Senior Notes, Due 2021 [Member] | Convertible Senior Notes [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Coupon rate | 1.75% | 1.75% | 1.75% | ||||||
Aggregate principal amount of convertible senior notes | $ 202,366,000 | $ 202,366,000 | $ 202,366,000 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - shares | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Jan. 30, 2014 | |
Stock Option [Member] | |||
Schedule Of Stockholders Equity [Line Items] | |||
Common stock issued upon the exercise of stock options | 0 | 1,429 | |
Restricted Stock Units (RSUs) [Member] | |||
Schedule Of Stockholders Equity [Line Items] | |||
Common stock upon the vesting of restricted stock units | 131,031 | 88,184 | |
CircuLite [Member] | |||
Schedule Of Stockholders Equity [Line Items] | |||
Shares registered for issuance for acquisition | 530,816 | ||
Shares reserved in connection with future contingent milestone payments | 248,872 |
Share-Based Compensation - Allo
Share-Based Compensation - Allocation of Share-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Recorded share-based compensation expense | $ 4,387 | $ 5,976 |
Cost of Revenue [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Recorded share-based compensation expense | 495 | 438 |
Selling, General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Recorded share-based compensation expense | 2,653 | 3,449 |
Research and Development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Recorded share-based compensation expense | $ 1,239 | $ 2,089 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Jun. 04, 2015 | May. 31, 2012 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Option expiry period | 10 years | ||||
Proceeds from exercise of stock options | $ 0 | $ 31 | |||
2012 Plan Award [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved for issuance under 2012 incentive award plan | 2,475,000 | ||||
Share issued upon vesting of Awards | 407,969 | ||||
Stock options issued | 911,349 | ||||
Stock options outstanding | 911,349 | ||||
Increase in number of shares available for issuance | 1,100,000 | ||||
Full Value Awards [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved for issuance under 2012 incentive award plan | 2,375,000 | ||||
Stock Option [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share issued upon vesting of Awards | 0 | 1,429 | |||
Stock options issued | 149,940 | 0 | |||
Stock options outstanding | 251,000 | 111,000 | |||
Performance based option vesting period | 4 years | ||||
Aggregate Intrinsic value options | $ 0 | $ 100 | |||
Unrecognized compensation expense related to non-vested option awards | $ 2,100 | ||||
Expected weighted average period of recognition for Unrecognized Share-based compensation | 1 year 9 months 18 days | ||||
Restricted Stock Units (RSUs) [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense related to non-vested option awards | $ 25,600 | ||||
Expected weighted average period of recognition for Unrecognized Share-based compensation | 2 years | ||||
Contingent right to receive share of common stock | 1 | ||||
RSU's outstanding | 112,522 | ||||
Restricted stock units vested intrinsic value | $ 4,400 | $ 7,900 | |||
Weighted average grant date fair value per share other than option | $ 33.47 | $ 89.53 | |||
Restricted Stock Units (RSUs) [Member] | Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance based option vesting period | 3 years | ||||
Restricted Stock Units (RSUs) [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Performance based option vesting period | 4 years |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Options Granted under All Plans (Detail) - Stock Option [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Number of Options | ||
Outstanding, Beginning Balance | 111,000 | |
Granted | 149,940 | 0 |
Exercised | 0 | (1,429) |
Forfeited | (10,000) | |
Expired | 0 | |
Outstanding, Ending Balance | 251,000 | |
Exercisable, Ending Balance | 92,000 | |
Weighted Average Exercise Price | ||
Outstanding, Beginning Balance | $ 49.20 | |
Granted | 33.49 | |
Exercised | 0 | |
Forfeited | 51.28 | |
Expired | 0 | |
Outstanding, Ending Balance | 39.63 | |
Exercisable, Ending Balance | $ 43.75 | |
Weighted Average Remaining Contractual Life | ||
Weighted average remaining contractual life, outstanding | 7 years 2 months 16 days | |
Weighted average remaining contractual life, exercisable | 2 years 9 months 7 days | |
Aggregate Intrinsic Value | ||
Aggregate intrinsic value, outstanding | $ 332 | |
Aggregate intrinsic value, exercisable | $ 332 |
Share-Based Compensation - Su65
Share-Based Compensation - Summary of RSU's (Detail) - Restricted Stock Units (RSUs) [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Number of Restricted Stock Units | ||
Outstanding, Beginning Balance | 623,000 | |
Granted | 296,000 | |
Vested/Exercised | (131,031) | (88,184) |
Forfeited | (42,000) | |
Expired | 0 | |
Outstanding, Ending Balance | 746,000 | |
Weighted Average Remaining Contractual Life | ||
Outstanding, Ending Balance | 1 year 11 months 5 days | |
Aggregate Intrinsic Value | ||
Outstanding, Ending Balance | $ 23,426 |
Net Loss Per Share - Anti-Dilut
Net Loss Per Share - Anti-Dilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Convertible Promissory Notes [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded | 2,448 | 1,438 |
Stock Compensation Plan [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities excluded | 997 | 879 |
Business Segment, Geographic 67
Business Segment, Geographic Areas and Major Customers - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2016CustomerSegment | Mar. 31, 2015Customer | |
Segment Reporting [Abstract] | ||
Number of reportable segments | Segment | 1 | |
Number of customers exceeding ten percent of sales | Customer | 0 | 0 |
Percentage of minimum product sales | 10.00% | 10.00% |
Business Segment, Geographic 68
Business Segment, Geographic Areas and Major Customers - Product Sales by Geographic Location (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue, net | $ 55,074 | $ 70,021 |
United States [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue, net | 33,348 | 42,189 |
Germany [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue, net | 10,673 | 12,741 |
International, Excluding Germany [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenue, net | $ 11,053 | $ 15,091 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Commitments And Contingencies [Line Items] | ||
Purchase order commitments | Approximately $46.6 million | |
Purchase order commitments | $ 46,600,000 | |
Maximum period for purchase order commitments | 1 year | |
Contingent consideration | $ 12,910,000 | $ 12,330,000 |
Minimum [Member] | ||
Commitments And Contingencies [Line Items] | ||
Performance milestone payment term | 8 years | |
Maximum [Member] | ||
Commitments And Contingencies [Line Items] | ||
Performance milestone payment term | 10 years | |
Aggregate milestone payment | $ 300,000,000 |