Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2021 | May 04, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38242 | |
Entity Registrant Name | OrthoPediatrics Corp | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1761833 | |
Entity Address, Address Line One | 2850 Frontier Drive | |
Entity Address, City or Town | Warsaw | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 46582 | |
City Area Code | 574 | |
Local Phone Number | 268-6379 | |
Common Stock, $0.00025 par value per share | Common Stock, $0.00025 par value per share | |
Trading Symbol(s) | KIDS | |
Name of each exchange on which registered | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,659,017 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Central Index Key | 0001425450 | |
Current Fiscal Year End Date | --12-31 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS € in Thousands, $ in Thousands | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Current assets: | ||
Cash and cash equivalents | $ 21,426 | $ 28,758 |
Restricted cash | 1,369 | 1,374 |
Short term investments | 55,209 | 55,141 |
Accounts receivable - trade, less allowance for doubtful accounts of $361 and $433, respectively | 16,551 | 17,212 |
Inventories, net | 55,266 | 52,989 |
Notes receivable | 323 | 337 |
Prepaid expenses and other current assets | 1,884 | 2,618 |
Total current assets | 152,028 | 158,429 |
Property and equipment, net | 28,342 | 27,227 |
Other assets: | ||
Amortizable intangible assets, net | 50,901 | 50,284 |
Goodwill | 68,463 | 70,511 |
Other intangible assets | 13,618 | 13,961 |
Total other assets | 132,982 | 134,756 |
Total assets | 313,352 | 320,412 |
Current liabilities: | ||
Accounts payable - trade | 12,009 | 10,038 |
Accrued compensation and benefits | 4,850 | 4,540 |
Accrued legal settlements | 5,250 | 6,342 |
Current portion of long-term debt with affiliate | 132 | 131 |
Current portion of acquisition installment payable | 12,496 | 12,233 |
Other current liabilities | 1,886 | 1,744 |
Total current liabilities | 36,623 | 35,028 |
Long-term liabilities: | ||
Long-term debt with affiliate, net of current portion | 1,011 | 1,044 |
Acquisition installment payable, net of current portion | 13,165 | 12,784 |
Contingent consideration | 34,860 | 30,710 |
Deferred income taxes | 5,233 | 5,755 |
Other long-term liabilities | 315 | 323 |
Total long-term liabilities | 54,584 | 50,616 |
Total liabilities | 91,207 | 85,644 |
Stockholders' equity: | ||
Common stock, $0.00025 par value; 50,000,000 shares authorized; 19,659,412 shares and 19,560,291 shares issued as of March 31, 2021 (unaudited) and December 31, 2020, respectively | 5 | 5 |
Additional paid-in capital | 390,000 | 388,622 |
Accumulated deficit | (172,145) | (161,766) |
Accumulated other comprehensive income | 4,285 | 7,907 |
Total stockholders' equity | 222,145 | 234,768 |
Total liabilities and stockholders' equity | $ 313,352 | $ 320,412 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 361 | $ 433 |
Common stock, par value (in dollars per share) | $ 0.00025 | $ 0.00025 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 19,659,412 | 19,560,291 |
Common stock, shares outstanding (in shares) | 19,659,412 | 19,560,291 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net revenue | $ 21,462 | $ 16,356 |
Cost of revenue | 5,137 | 4,143 |
Gross profit | 16,325 | 12,213 |
Operating expenses: | ||
Sales and marketing | 8,949 | 7,564 |
General and administrative | 12,041 | 7,881 |
Research and development | 1,308 | 1,265 |
Total operating expenses | 22,298 | 16,710 |
Operating loss | (5,973) | (4,497) |
Other expenses: | ||
Interest expense, net | 728 | 379 |
Fair value adjustment of contingent consideration | 4,150 | 0 |
Other (income) expense | (160) | 69 |
Total other expenses | 4,718 | 448 |
Loss before income taxes | (10,691) | (4,945) |
Provision for income taxes (benefit) | (312) | 0 |
Net loss | $ (10,379) | $ (4,945) |
Weighted average common stock - basic (in shares) | 19,200,231 | 16,423,853 |
Weighted average common stock - diluted (in shares) | 19,200,231 | 16,423,853 |
Net loss per share - basic (in dollars per share) | $ (0.54) | $ (0.30) |
Net loss per share - diluted (in dollars per share) | $ (0.54) | $ (0.30) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (10,379) | $ (4,945) |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (3,499) | (1,358) |
Unrealized loss on short-term investments | (123) | 0 |
Other comprehensive loss | (3,622) | (1,358) |
Comprehensive loss | $ (14,001) | $ (6,303) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2019 | $ 142,361 | $ 4 | $ 0 | $ 271,182 | $ (128,822) | $ (3) |
Balance (in shares) at Dec. 31, 2019 | 16,723,128 | 0 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | (4,945) | (4,945) | ||||
Other comprehensive income | (1,358) | (1,358) | ||||
Stock option exercise | 688 | 688 | ||||
Stock option exercise (in shares) | 22,208 | |||||
Restricted stock | 958 | 958 | ||||
Restricted stock (in shares) | 105,710 | |||||
Consideration for Telos acquisition | 1,750 | 1,750 | ||||
Consideration for acquisition (in shares) | 36,628 | |||||
Repurchase of common stock | (187) | $ (187) | ||||
Repurchase of common stock (in shares) | (4,014,000) | |||||
Balance at Mar. 31, 2020 | 139,267 | $ 4 | $ (187) | 274,578 | (133,767) | (1,361) |
Balance (in shares) at Mar. 31, 2020 | 16,887,674 | (4,014,000) | ||||
Balance at Dec. 31, 2020 | $ 234,768 | $ 5 | 388,622 | (161,766) | 7,907 | |
Balance (in shares) at Dec. 31, 2020 | 19,560,291 | 19,560,291 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net loss | $ (10,379) | (10,379) | ||||
Other comprehensive income | (3,622) | (3,622) | ||||
Stock option exercise | 62 | 62 | ||||
Stock option exercise (in shares) | 2,010 | |||||
Restricted stock | 1,316 | 1,316 | ||||
Restricted stock (in shares) | 97,111 | |||||
Balance at Mar. 31, 2021 | $ 222,145 | $ 5 | $ 390,000 | $ (172,145) | $ 4,285 | |
Balance (in shares) at Mar. 31, 2021 | 19,659,412 | 19,659,412 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
OPERATING ACTIVITIES | ||
Net loss | $ (10,379) | $ (4,945) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,539 | 1,375 |
Stock-based compensation | 1,316 | 958 |
Fair value adjustment of contingent consideration | 4,150 | 0 |
Acquisition installment payable | 644 | 0 |
Deferred income taxes | (312) | 0 |
Changes in certain current assets and liabilities: | ||
Accounts receivable - trade | 653 | 760 |
Inventories | (2,508) | (5,096) |
Prepaid expenses and other current assets | 708 | (56) |
Accounts payable - trade | 2,058 | 1,739 |
Accrued legal settlements | (1,092) | 0 |
Accrued expenses and other liabilities | 446 | (1,694) |
Other | (138) | 3 |
Net cash used in operating activities | (1,915) | (6,956) |
INVESTING ACTIVITIES | ||
Acquisition of Telos, net of cash acquired | 0 | (1,670) |
Purchases of licenses | (2,858) | 0 |
Purchases of property and equipment | (2,749) | (3,953) |
Net cash used in investing activities | (5,607) | (5,623) |
FINANCING ACTIVITIES | ||
Payments on debt with affiliate | 0 | (5,000) |
Repurchases of common shares | 0 | (187) |
Proceeds from exercise of stock options | 62 | 688 |
Payments on mortgage notes | (32) | (31) |
Net cash provided by financing activities | 30 | (4,530) |
Effect of exchange rate changes on cash | 155 | 23 |
NET DECREASE IN CASH | (7,337) | (17,086) |
Cash and restricted cash, beginning of year | 30,132 | 72,027 |
Cash and restricted cash, end of period | 22,795 | 54,941 |
SUPPLEMENTAL DISCLOSURES | ||
Cash paid for interest | 15 | 379 |
Transfer of instruments from property and equipment to inventory | 57 | 182 |
Telos | ||
SUPPLEMENTAL DISCLOSURES | ||
Issuance of common shares to acquire Telos | $ 0 | $ 1,750 |
BUSINESS
BUSINESS | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | BUSINESS OrthoPediatrics Corp., a Delaware corporation, is a medical device company committed to designing, developing and marketing anatomically appropriate implants and devices for children with orthopedic conditions, giving pediatric orthopedic surgeons and caregivers the ability to treat children with technologies specifically designed to meet their needs. We sell our specialized products, including PediLoc ® , PediPlates ® , Cannulated Screws, PediFlex TM nail, PediNail TM , PediLoc ® Tibia, ACL Reconstruction System, Locking Cannulated Blade, Locking Proximal Femur, Spica Tables, RESPONSE TM Spine, BandLoc TM , Pediguard, Pediatric Nailing Platform | Femur, Orthex, QuickPack TM and ApiFix ® Mid-C System, to various hospitals and medical facilities throughout the United States and various international markets. We currently use a contract manufacturing model for the manufacturing of implants and related surgical instrumentation. In 2017, we expanded operations and established legal entities in the United Kingdom, Australia and New Zealand, permitting us to sell under an agency model direct to local hospitals in these countries. We began selling direct to Canada in September 2018, Belgium and the Netherlands in January 2019, Italy in March 2020 and Germany, Switzerland and Austria in January 2021. Additionally, in March 2019, we established an operating company in the Netherlands in order to enhance our operations in Europe. On June 4, 2019, we purchased all the issued and outstanding shares of stock of Vilex in Tennessee, Inc. ("Vilex") and all the issued and outstanding units of membership interests in Orthex, LLC ("Orthex") for $60,000 in total consideration. Vilex and Orthex are primarily manufacturers of foot and ankle surgical implants, including cannulated screws, fusion devices, surgical staples and bone plates, as well as Orthex Hexapod technology which is used to treat pediatrics congenital deformities and limb length discrepancies (refer to Note 3). On December 31, 2019, we divested substantially all of the assets relating to Vilex's adult product offerings to a wholly-owned subsidiary of Squadron Capital LLC ("Squadron") in exchange for a $25,000 reduction in a Term Note owed to Squadron in connection with the initial acquisition. As part of the sale, we also executed an exclusive license arrangement with Squadron providing for perpetual access to certain intellectual property and a mutual distribution agreement. On March 9, 2020, we purchased all the issued and outstanding membership interest of Telos Partners, LLC ("Telos") for $3,300 in total consideration. Telos is a boutique regulatory consulting firm formed in Colorado (refer to Note 3). On April 1, 2020, we purchased all the issued and outstanding membership interest of ApiFix, Ltd. ("ApiFix") for (a) $2,000 in cash, and (b) 934,783 shares of the Company's common stock, $0.00025 par value per share, representing approximately $35,000 (based on a closing share price of $37.63 on April 1, 2020. ApiFix, a corporation organized under the laws of Israel, has developed a minimally invasive deformity correction system for patients with Adolescent Idiopathic Scoliosis ("ApiFix System"). In addition, we have also agreed to pay as part of the purchase price the following anniversary payments, subject to certain limitations and adjustments: (i) approximately $13,000 on the second anniversary of the closing date, provided that such payment will be paid earlier if 150 clinical procedures using the ApiFix System are completed in the United States before such anniversary date, (ii) $8,000 on the third anniversary of the closing date; and (iii) $9,000 on the fourth anniversary of the closing date. In addition, to the extent that the product of our revenues from the ApiFix System for the twelve months ended June 30, 2024 multiplied by 2.25 exceeds the anniversary payments actually made for the third and fourth years, we have agreed to pay the selling shareholders a system sales payment in the amount of such excess. The anniversary payments and system sales payment may each be made in cash or cash and common stock (refer to Note 3). On June 10, 2020, we purchased certain intellectual property assets from Band-Lok, LLC, a North Carolina limited liability company ("Band-Lok"), related to its Tether Clamp and Implantation System ("Tether Clamp System") for approximately $3,400 in total consideration. We use the Tether Clamp System in connection with our Bandloc 5.5/6.0 System. We were previously the sole licensee of the purchased assets under a license agreement with Band-Lok. Our largest investor is Squadron, a private investment firm based in Granby, Connecticut. A novel strain of the coronavirus disease ("COVID-19") was first identified in Wuhan, China in December 2019, and the related outbreak was subsequently declared a pandemic by the World Health Organization and a national emergency by the President of the United States. As a result of the pandemic, we have experienced significant business disruption. For example, in preparation for COVID-19-related hospitalizations, various governments, governmental agencies and hospital administrators have instructed hospitals to postpone some elective procedures in both our domestic and international markets to various degrees. As a majority of our products are utilized in elective surgeries or procedures, the deferrals of such surgeries and procedures have had, and may continue to have, a significant negative impact on our business and results of operations. Despite the impact COVID-19 has had on our business, we continue to invest in research and development, invest in our people, and take steps to position ourselves for long-term success. The extent to which COVID-19 may continue to negatively impact the Company's consolidated financial position, results of operations or cash flows is uncertain and will be closely monitored. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of OrthoPediatrics Corp. and its wholly-owned subsidiaries, OrthoPediatrics US Distribution Corp., OrthoPediatrics EU Limited, OrthoPediatrics AUS PTY LTD, OrthoPediatrics NZ Limited, OP EU B.V., OP Netherlands B.V., Orthex, LLC, Telos Partners, LLC and ApiFix, Ltd. (collectively, the “Company,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. Unaudited Interim Condensed Consolidated Financial Statements We have prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020, the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2021 and 2020 and the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 are unaudited and should be read in conjunction with the annual consolidated financial statements as of and for the year ended December 31, 2020 and related notes thereto contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 11, 2021. The financial data and other financial information disclosed in the notes to the accompanying condensed consolidated financial statements are also unaudited. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations thereunder. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2020 and, in management’s opinion, include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of the financial statements for the interim periods. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year or for any other period. The accompanying condensed consolidated financial statements have been prepared assuming our Company will continue as a going concern. We have experienced recurring losses from operations since our inception and had an accumulated deficit of $172,145 and $161,766 as of March 31, 2021 and December 31, 2020, respectively. Management continues to monitor cash flows and liquidity on a regular basis. We believe that our cash balance, including short term investments, at March 31, 2021 and expected cash flows from operations for the next twelve months subsequent to the issuance of the accompanying condensed consolidated financial statements, are sufficient to enable us to maintain current and essential planned operations for more than the next twelve months. Use of Estimates Preparation of the condensed consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as of the date of the condensed consolidated financial statements. By their nature, these judgments are subject to an inherent degree of uncertainty. The impact of the coronavirus disease ("COVID-19") has significantly increased economic and demand uncertainty. We use historical experience and other assumptions as the basis for our judgments and estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in these estimates will be reflected in the condensed consolidated financial statements. Foreign Currency Transactions We currently bill our international stocking distributors in U.S. dollars, resulting in minimal foreign exchange transaction expense. Beginning in the second quarter of 2017, we began selling direct within the United Kingdom, Ireland, Australia and New Zealand and billing using the local currency for each country. We began selling direct to Canada in September 2018, Belgium and the Netherlands in January 2019, Italy in March 2020 and Germany, Switzerland and Austria in January 2021. Additionally, in March 2019, we established an operating company in the Netherlands in order to enhance our operations in Europe. The financial statements of our foreign subsidiaries are accounted for in local functional currencies including and have been translated into U.S. dollars using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Local functional currencies include primarily the Pound Sterling, the Euro, Australian Dollar, Canadian Dollar and Israeli Shekel. Foreign currency translation adjustments have been recorded as a separate component of the condensed consolidated statements of comprehensive loss. Revenue from Contracts with Customers In accordance with ASC 606, " Revenue From Contracts With Customers (ASC 606)", revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from a customer which are subsequently remitted to government authorities. Revenue Recognition – United States Revenue in the United States is generated primarily from the sale of our implants and, to a much lesser extent, from the sale of our instruments. Sales in the United States are primarily to hospital accounts through independent sales agencies. We recognize revenue when our performance obligations under the terms of a contract with our customer are satisfied. This typically occurs when we transfer control of our products to the customers, generally upon implantation or when title passes upon shipment. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase products for their own inventory, and revenue is recognized when the products are shipped and the title and risk of loss passes to the customer. Pricing for each customer is dictated by a unique pricing agreement, which does not generally include rebates or discounts. Revenue Recognition – International Outside of the United States, we sell our products directly to hospitals through independent sales agencies or to independent stocking distributors. Generally, the distributors are allowed to return products, and some are thinly capitalized; however, based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally when title passes upon shipment. Additionally, based on our history of immaterial returns from international customers, we have historically estimated no reserve for returns. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase products for their own inventory, and revenue is recognized when title passes upon shipment. Pricing for each customer is dictated by a unique pricing agreement. Cash, Cash Equivalents and Short Term Investments We maintain cash in bank deposit accounts which, at times, may exceed federally insured limits. To date, we have not experienced any loss in such accounts. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents. The carrying amounts reported in the balance sheets for cash are valued at cost, which approximates fair value. The Company invests in available-for-sale short term investments. The Company has the ability, if necessary, to liquidate without penalty any of its short term investments to meet its liquidity needs in the next twelve months. As such, those investments with contractual maturities greater than one year from the date of purchase are classified as short-term on the accompanying Consolidated Balance Sheets. The company includes unrealized gains or losses in stockholders' equity. If the adjustment to fair value reflects a decline in the value of the investment, the Company considers available information to determine whether the decline is "other than temporary" and, if so, reflects the change on the Consolidated Statements of Operations. Restricted Cash In conjunction with the sale of a business acquired in 2019, $1,250 was placed into a separate escrow account. This cash is reported as restricted cash on the March 31, 2021 and 2020 consolidated balance sheet. These funds will remain restricted until August 31, 2021 at which time, they will be released to the Company subject to no claims related to the purchase. The Company also maintains restricted cash of 100 Euro at its Netherlands entity for potential Italian tenders. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date. Account balances with invoices over 30 days past due are considered delinquent. No interest is charged on past due accounts. Payments of accounts receivable are applied to the specific invoices identified on the customer's remittance advice or, if unspecified, to the customer's account as an unapplied credit. The carrying amount of accounts receivable is reduced by an allowance that reflects management's best estimate of the amounts that will not be collected, determined principally on the basis of historical experience, management's assessment of the collectability of specific customer accounts and the aging of the accounts receivable. All accounts or portions thereof deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for doubtful accounts. Fair Value of Financial Instruments The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other standards require or permit the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels. Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data; and Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. The Company's financial instruments include cash and cash equivalents, short-term investments, accounts receivable, accounts payable, acquisition installment payables, contingent consideration and long-term debt. The carrying amounts of accounts receivable, accounts payable, acquisition installment payables and long-term debt approximate the fair value due to the short-term nature or market rates of these instruments. The company bases the fair value of short-term investments on quoted market prices for identical or comparable assets. Contingent consideration represents the system sales payment the Company is obligated to make. The fair value of the contingent consideration payment is considered a level 3 fair value measurement and was determined with the assistance of an independent valuation specialist at the original issuance date and as of the balance sheet date. See Note 5 for further discussion of financial instruments that carried a fair value on a recurring and nonrecurring basis. Inventories, net Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in-first-out method. Inventories purchased from third parties, which consist of implants and instruments held in our warehouse or with third-party independent sales agencies or distributors, are considered finished goods. We evaluate the carrying value of our inventories in relation to the estimated forecast of product demand, which takes into consideration the life cycle of the product. A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory. The need to maintain substantial levels of inventory impacts our estimates for excess and obsolete inventory. Each of our implant systems are designed to include implantable products that come in different sizes and shapes to accommodate the surgeon’s needs. Typically, a small number of the set components are used in each surgical procedure. Certain components within each set may become obsolete before other components based on the usage patterns. We adjust inventory values, as needed, to reflect these usage patterns and life cycle. In addition, we continue to introduce new products, which may require us to take additional charges for excess and obsolete inventory in the future. Property and Equipment, net Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the assets. When assets are retired or otherwise disposed of, costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations for the period. Maintenance and repairs that prolong or extend the useful life are capitalized, whereas standard maintenance, replacements, and repair costs are expensed as incurred. Instruments are hand-held devices, specifically designed for use with our implants and are used by surgeons during surgery. Instruments deployed within the United States, United Kingdom, Australia, New Zealand, Canada, Belgium, the Netherlands, Italy, Germany, Switzerland and Austria are carried at cost less accumulated depreciation and are recorded in property and equipment, net on the condensed consolidated balance sheets. Sample inventory consists of our implants and instruments, and is maintained to market and promote our products. Sample inventory is carried at cost less accumulated depreciation. Depreciable lives are generally as follows: Building and building improvements 25 to 30 years Furniture and fixtures 5 to 7 years Computer equipment 3 to 5 years Business software 3 years Office and other equipment 5 to 7 years Instruments 5 years Sample inventory 2 years Amortizable Intangible Assets, net Amortizable intangible assets include fees necessary to secure various patents and licenses, including Band-Lok, the value of internally developed software, customer relationships, and non-competition agreements related to the acquisition of Orthex, and customer relationships and non-competition agreements related to the acquisitions of Telos and ApiFix. Amortization is calculated on a straight-line basis over the estimated useful life of the asset. Amortization for patents and licenses commences at the time of patent approval and market launch, respectively. Amortization for assets acquired commences upon acquisition. Intangible assets are amortized over a 3 to 20 year period. Amortizable intangible assets are assessed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. No impairment charges were recorded in any of the periods presented. Goodwill and Other Intangible Assets Our goodwill represents the excess of the cost over the fair value of net assets acquired. The determination of the value of goodwill and intangible assets arising from acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of the reporting unit exceeds its respective fair value. We have indefinite lived tradename assets that are reviewed for impairment annually in the fourth quarter or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by a comparison of the carrying amount to future net undiscounted cash flows expected to be generated by the associated asset. If such assets are determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair market value of the assets. No impairment charges were recorded in any of the periods presented. Acquisition Payable and Contingent Consideration Upon the completion of an acquisition, the Company may record an acquisition installment payable, contingent consideration or both. Both are recorded at their fair values as determined by management with the assistance of an independent valuation specialist at the original issuance date and are adjusted on a recurring basis. Accretion of interest expense attributable to the acquisition installment payable are recorded as a component of interest expense, net. Changes in the fair value of the contingent consideration are included in fair value adjustments of contingent consideration. The amount of expense recorded in interest expense, net and fair value adjustments of contingent consideration for the three months ended March 31, 2021 were $644 and $4,150, respectively. We recorded no interest expense or fair value adjustments for the three months ended March 31, 2020. Cost of Revenue Cost of revenue consists primarily of products purchased from third-party suppliers, excess and obsolete inventory adjustments, inbound freight, and royalties. Our implants and instruments are manufactured to our specifications by third-party suppliers who meet our manufacturer qualifications standards. Our third-party manufacturers are required to meet the standards of the Food and Drug Administration (the “FDA”), and the International Organization for Standardization, as well as other country-specific quality standards. The majority of our implants and instruments are produced in the United States. Sales and Marketing Expenses Sales and marketing expenses primarily consist of commissions to our domestic and select international independent sales agencies and consignment distributors, as well as compensation, commissions, benefits and other related costs for personnel we employ. Commissions and bonuses are generally based on a percentage of sales. Our international independent stocking distributors purchase instrument sets and replenishment stock for resale, and we do not pay commissions or any other sales related costs for international sales to distributors. Advertising Costs Advertising costs consist primarily of print advertising, trade shows, and other related expenses. Advertising costs are expensed as incurred and are recorded as a component of sales and marketing expense. Research and Development Costs Research and development costs are expensed as incurred. Our research and development expenses primarily consist of costs associated with engineering, product development, consulting services, outside prototyping services, outside research activities, materials, development and protection of our intellectual property portfolio, as well as other costs associated with development of our products. Research and development costs also include related personnel and consultants’ compensation expense. Stock-Based Compensation Prior to our Initial Public Offering ("IPO") in October 2017, we maintained an Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) that provided for grants of options and restricted stock to employees, directors and associated third-party representatives of the Company as determined by the Board of Directors. The 2007 Plan had authorized 1,585,000 shares for award. Immediately prior to our IPO, we adopted our 2017 Incentive Award Plan (the "2017 Plan") which replaced the 2007 Plan. The 2017 Plan provides for grants of options and restricted stock to officers, employees, consultants or directors of our Company. The 2017 Plan has authorized 1,789,647 shares for award. Options holders, upon vesting, may purchase common stock at the exercise price, which is the estimated fair value of our common stock on the date of grant. Option grants generally vest immediately or over three years. No stock options were granted in any of the periods presented. Restricted stock may not be transferred prior to the expiration of the restricted period, which is typically three years. The restricted stock that had been granted under the 2007 Plan had restriction periods that generally lasted until the earlier of six years from the date of grant, or an IPO or change in control, as defined in the 2007 Plan. All restricted stock granted prior to May 2014 vested upon our IPO and the remaining grants under the 2007 Plan vested six months after the IPO. We recognize the reversal of stock compensation expense when a restricted stock forfeiture occurs as opposed to estimating future forfeitures. We record the fair value of restricted stock at the grant date. Stock-based compensation is recognized ratably over the requisite service period, which is generally the restriction period for restricted stock. Litigation and Contingencies Accruals for litigation and contingencies are reflected in the condensed consolidated financial statements based on management’s assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount is reasonably estimable. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes foreign currency translation adjustments and unrealized gain (loss) on our short term investments. Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance. We record uncertain tax positions on the bases of a two-step process in which (i) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the positions and (ii) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. “Emerging Growth Company” and "Smaller Reporting Company" Reporting Requirements We qualify as an “emerging growth company” as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002. Section 107 of the JOBS Act also provides that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. In April 2017, the SEC adopted new rules that included an inflation-adjusted threshold in the definition of an emerging growth company. Under the new inflation-adjusted threshold, we would cease to be an emerging growth company on the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion. This is an increase of $70 million from the previous $1 billion threshold. We also qualify as a "smaller reporting company," as such term is defined in Rule 12b-2 under the Exchange Act. To the extent that we continue to qualify as a smaller reporting company, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company. In June 2016, the FASB issued ASU No. 2016-13 " Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" |
BUSINESS COMBINATION
BUSINESS COMBINATION | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATION | BUSINESS COMBINATION ApiFix On April 1, 2020, the Company purchased all the issued and outstanding membership interest of ApiFix for $2,000 in cash, including $344 of cash acquired, 934,783 shares of the Company's common stock, $0.00025 par value per share, representing approximately $35,176 (based on a closing share price of $37.63 on April 1, 2020), approximately $30,000 in anniversary payments, and approximately $41,741 in a system sales payment. The total consideration transferred of $87,379, as calculated after discounting future payments to present value, is preliminary and subject to certain limitations and adjustments. ApiFix, a corporation organized under the laws of Israel, has developed a minimally invasive deformity correction system for patients with Adolescent Idiopathic Scoliosis ("ApiFix System"). The following table reconciles the total consideration transferred after discounting the future payments: Consideration Present Value Cash consideration $ 2,000 $ 2,000 Payment of ApiFix transaction related costs 67 67 Issuance of common stock 35,176 35,176 Anniversary Payments 30,000 22,620 System sales payment 41,741 27,190 Total consideration transferred $ 108,984 $ 87,053 The purchase price allocation set forth herein is preliminary. The following table summarizes the total consideration paid for ApiFix and allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Description Amount Preliminary fair value of estimated total acquisition consideration $ 87,379 Assets Cash 344 Accounts receivable-trade 245 Inventories 685 Prepaid expenses and other current assets 77 Property and equipment 153 Intangible assets 32,150 Other intangible assets 8,640 Operating lease right-of-use asset 104 Total assets 42,398 Liabilities Accounts payable and accrued liabilities 226 Operating lease liabilities 106 Other current liabilities 270 Deferred income taxes 6,487 Total liabilities 7,089 Less: total net assets 35,309 Goodwill $ 52,070 The fair value of identifiable intangible assets were based on valuations using a combination of the income and cost approach. The estimated fair value and useful life of identifiable intangible assets are as follows: Amount Remaining Economic Useful Life Trademarks / Names $ 8,640 Indefinite Patents 31,720 15 years Customer Relationships 230 10 years Non-competition Agreements 200 4 years $ 40,790 The Company is obligated to make anniversary payments of: (i) approximately $13,000 on the second anniversary of the closing date, provided that such payment will be paid earlier if 150 clinical procedures using the ApiFix System are completed in the United States before such anniversary date, (ii) $8,000 on the third anniversary of the closing date; and (iii) $9,000 on the fourth anniversary of the closing date, subject to adjustments. The Company anticipates making the second anniversary payment of $13,000 during the first half of 2021. In addition, to the extent that the product of our revenues from the ApiFix System for the twelve months ended June 30, 2024 multiplied by 2.25 exceeds the anniversary payments actually made for the third and fourth years, we have agreed to pay the selling shareholders a system sales payment in the amount of such excess. The anniversary payments and system sales payment may each be made in cash or cash and common stock, subject to certain limitations; provided that the Company makes the determination with respect to anniversary payments and a representative of the former ApiFix shareholders may make the determination with respect to the system sales payment, if any. The fair value of the contingent consideration payments is considered a Level 3 investment and were determined by an independent valuation specialist at the original issuance date using an option pricing model and a Monte Carlo simulation based on forecast annual revenue, expected volatility and an implied probability of achieving revenue forecasts. The fair value of the payment will continue to be adjusted as additional information becomes available regarding the progress toward achievement of the revenue forecast. Presented below is a summary of the present value of the anniversary payments and system sales payment related to the ApiFix acquisition: April 1, 2020 March 31, 2021 Anniversary Payments: Second Year Payment $ 10,980 $ 12,496 Third Year Payment 5,780 6,520 Fourth Year Payment 5,860 6,645 Total acquisition installment payable 22,620 25,661 Less: current portion of acquisition installment payable 10,980 12,496 Acquisition installment payable, net of current portion 11,640 13,165 System sales payment 27,190 34,860 ApiFix future consideration, net of current portion $ 38,830 $ 48,025 Pre-acquisition revenues and earnings for ApiFix were not material to the condensed consolidated operations. Telos On March 9, 2020, the Company purchased the issued and outstanding membership interest of Telos for $1,750 in cash, including $81 of cash acquired, and 36,628 shares of common stock, $0.00025 par value per share, of the Company. The shares of common stock were valued at $42.81 per share, the Company's closing share price on March 9, 2020. The Company incurred $25 of acquisition-related costs, that are included in general and administrative expenses on the consolidated statements of operations. The purchase price allocation set forth herein is final. The following table summarizes the total consideration paid for Telos and allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Description Amount Fair fair value of total acquisition consideration $ 3,318 Assets Cash 81 Accounts receivable-trade 215 Prepaid expenses and other current assets 38 Property and equipment 10 Intangible assets 950 Other intangible assets $ 210 Total assets 1,504 Liabilities Accounts payable and accrued liabilities 60 Total liabilities 60 Less: total net assets 1,444 Goodwill $ 1,874 The fair value of identifiable intangible assets were based on valuations using a combination of the income and cost approach. The fair value and useful life of identifiable intangible assets are as follows: Amount Remaining Economic Useful Life Trademarks / Names $ 210 Indefinite Customer Relationships 910 10 years Non-competition Agreements 40 5 years $ 1,160 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill Changes in the carrying amount of goodwill for the three months ended March 31, 2021 were as follows: Total Goodwill at January 1, 2021 $ 70,511 Foreign currency translation impact (2,048) Goodwill at March 31, 2021 $ 68,463 Intangible Assets As of March 31, 2021, the balances of amortizable intangible assets were as follows: Weighted-Average Amortization Period Gross Intangible Assets Accumulated Amortization Net Intangible Assets Patents 14.5 years $ 42,103 $ (3,282) $ 38,821 Intellectual Property 10.1 years 8,968 (907) 8,061 License Agreements 6.1 years 5,623 (1,604) 4,019 Total amortizable assets $ 56,694 $ (5,793) $ 50,901 As of December 31, 2020, the balances of amortizable intangible assets were as follows: Weighted-Average Amortization Period Gross Intangible Assets Accumulated Amortization Net Intangible Assets Patents 14.7 years $ 43,363 $ (2,650) $ 40,713 Intellectual Property 10.3 years 8,990 (744) 8,246 License Agreements 2.7 years 2,765 (1,440) 1,325 Total amortizable assets $ 55,118 $ (4,834) $ 50,284 On June 10, 2020, we purchased certain intellectual property assets from Band-Lok, LLC, a North Carolina limited liability company ("Band-Lok"), related to its Tether Clamp and Implantation System ("Tether Clamp System") for $3,394 in total consideration. We use the Tether Clamp System in connection with our Bandloc 5.5/6.0 System. We were previously the sole licensee of the purchased assets under a license agreement with Band-Lok. On March 19, 2021, we recorded a license agreement in the amount of $2,858 in settlement of the Barry legal matter. Additional information regarding this matter can be found in Note 13. Licenses are tied to product launches and do not begin amortizing until the product is launched to the market. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures certain financial assets and liabilities at fair value. The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels. Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data; and Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. The following table summarize the assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020. March 31, 2021 Level 1 Level 2 Level 3 Total Financial Assets Cash Equivalents $ 11,005 $ — $ — $ 11,005 Short term investments Exchange Trade Mutual Funds $ 35,257 $ — $ — $ 35,257 Corporate Bonds $ 10,318 $ — $ — $ 10,318 Treasury Bonds $ 5,265 $ — $ — $ 5,265 Other $ 4,369 $ — $ — 4,369 Financial Liabilities Contingent Consideration $ — $ — $ 34,860 $ 34,860 December 31, 2020 Level 1 Level 2 Level 3 Total Financial Assets Cash Equivalents $ 15,002 $ — $ — $ 15,002 Short term investments Exchange Trade Mutual Funds $ 35,208 $ — $ — $ 35,208 Corporate Bonds $ 9,616 $ — $ — $ 9,616 Treasury Bonds $ 6,520 $ — $ — $ 6,520 Other $ 3,797 $ — $ — $ 3,797 Financial Liabilities Contingent Consideration $ — $ — $ 30,710 $ 30,710 The Company's level 1 assets consist of cash equivalents which are generally comprised of short-term, liquid investments with original maturity of three months or less at inception and other short term investments which are comprised of exchange traded mutual funds and marketable securities with a maturity date greater than 3 months. The Company's Level 3 instruments consist of contingent consideration. The fair value of contingent consideration liabilities assumed in business combinations is recorded as part of the purchase price consideration of the acquisition and is determined using a discounted cash flow model or probability simulation model. The significant inputs of such models are not always observable in the market, such as certain financial metric growth rates, volatility rates, projections associated with the applicable milestone, the interest rate, and the related probabilities and payment structure in the contingent consideration arrangement. The adjustment in the fair value of the contingent consideration payments of $4,150 was recognized as an expense for the three month period ended March 31, 2021, in other expenses on the condensed consolidated statements of operations. An additional $644 was recognized as interest expense for the three month period ended March 31, 2021, on the condensed consolidated statements of operations for the accretion of the acquisition installment payable. The following table summarizes the change in fair value of Level 3 instruments in 2021: Total Balance at January 1, 2021 $ 30,710 Change in fair value of contingent consideration 4,150 Balance at March 31, 2021 $ 34,860 The recurring Level 3 fair value measurements of contingent consideration liabilities associated with commercial sales milestones include the following significant unobservable inputs as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Valuation techniques Discounted cash flow, Monte Carlo Present value discount rate (1) 25.3 % 25.8 % Volatility factor 52.6 % 51.8 % Expected years 3.1 years 3.5 years (1) The present value discount rate includes estimated risk premium. |
DEBT AND CREDIT ARRANGEMENTS
DEBT AND CREDIT ARRANGEMENTS | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT AND CREDIT ARRANGEMENTS | DEBT AND CREDIT ARRANGEMENTS Long-term debt consisted of the following: March 31, 2021 December 31, 2020 Mortgage payable to affiliate 1,143 1,175 Less: current maturities 132 131 Long-term debt with affiliate, net of current maturities $ 1,011 $ 1,044 On December 31, 2017, we entered into a Fourth Amended and Restated Loan and Security Agreement, or the Loan Agreement, with Squadron Capital LLC, or Squadron. Pursuant to the Loan Agreement, which has been amended by a First Amendment dated as of June 4, 2019 and a Second Amendment date as of August 4, 2020 (as so amended, the "Second Amendment Loan Agreement"), Squadron is providing the Company a revolving credit facility in the amount of $25,000. Borrowings under the revolving credit facility are to be made under a First Amended and Restated Revolving Note, dated August 4, 2020 (the "Amended Revolving Note"), payable, jointly and severally, by the Company and each of its subsidiaries party thereto. The Amended Revolving Note will mature at the earlier of: (i) the date on which any person or persons acquire (x) capital stock of the Company possessing the voting power to elect a majority of the Company's Board of Directors (whether by merger, consolidation, reorganization, combination, sale or transfer), or (y) all or substantially all of the Company's assets, determined on a consolidated basis; and (ii) January 1, 2024. The Second Amended Loan Agreement provides for interest only payments, which are payable monthly, with an interest rate equal to the greater of (a) three month LIBOR plus 8.61%, and (b) 10.00%. On January 4, 2020, the Company repaid Squadron $5,000 outstanding under the revolving credit facility in effect at that time and, on July 15, 2020 the Company repaid the $20,000 Term Note A outstanding under the Loan Agreement, together with all unpaid interest and other related amounts payable. The Company does not currently have any borrowings outstanding under the Second Amended Loan Agreement. The Company has agreed to pay Squadron an unused commitment fee in an amount equal to the per annum rate of 0.50% (computed on the basis of a year of 360 days and the actual number of days elapsed) times the daily unused portion of the revolving credit commitment. The unused commitment fee is payable quarterly in arrears and is recorded in interest, net. For the quarter ended March 31, 2021 the unused commitment fee paid to Squadron was $52. Borrowings under the Second Amended Loan Agreement are secured by substantially all of the Company's assets and are unconditionally guaranteed by each of its subsidiaries with the exception of Vilex. There are no traditional financial covenants associated with the Second Amended Loan Agreement. However, there are negative covenants that prohibit us from, among other things, transferring any of our material assets, merging with or acquiring another entity, entering into a transaction that would result in a change of control, incurring additional indebtedness, creating any lien on our property, making investments in third parties and redeeming stock or paying dividends. In connection with the purchase of our office and warehouse space in Warsaw, Indiana in August 2013, we entered into a mortgage note payable to Tawani Enterprises Inc., an affiliate of Squadron. Pursuant to the terms of the mortgage note, we pay Tawani Enterprises Inc. monthly principal and interest installments of $16 with interest compounded at 5% until maturity in 2028, at which time a final payment of remaining principal and interest is due. The mortgage is secured by the related real estate and building. As of December 31, 2020, the mortgage balance was $1,175 of which current principal due of $131 was included in the current portion of long-term debt. At March 31, 2021 the mortgage balance was $1,143 of which current principal of $132 was included in the current portion of long-term debt. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company utilizes an estimated annual effective tax rate to determine its provision or benefit for income taxes for interim periods. The income tax provision or benefit is computed by multiplying the estimated annual effective tax rate by the year-to-date pre-tax book income (loss). For the three months ended March 31, 2021, the income tax benefit was $312 compared to $0 for the three months ended March 31, 2020. Our effective income tax rate was 2.9% and 0% for the three months ended March 31, 2021 and 2020, respectively. Our effective tax rate increased compared to the prior year primarily due to the acquisition of ApiFix in 2020 and the deferred tax liability recorded in the purchase accounting. The deferred tax liability was set up as a result of the amortizing intangible assets recorded in the purchase accounting which generate nondeductible book amortization. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 ("2017 Tax Act"). The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the three or three months ended March 31, 2021. On December 27, 2020 the Consolidated Appropriations Act, 2021 (“CAA”) was signed into law. The CAA included the COVID-related Tax Relief Act of 2020 (“COVID TRA”), which expanded, extended, and clarified selected CARES Act provisions, specifically on Paycheck Protection Program (PPP) loan and Employee Retention Tax Credit, 100% deductibility of business meals purchased from restaurants as well as other tax extenders. The Consolidated Appropriations Act did not have a material impact on the Company’s income tax provision. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Stock Options The fair value for options granted at the time of issuance were estimated at the date of grant using a Black-Scholes options pricing model. Significant assumptions included in the option value model include the fair value of our common stock at the grant date, weighted average volatility, risk-free interest rate, dividend yield and the forfeiture rate. There were no stock options granted in any of the periods presented. Our stock option activity and related information are summarized as follows: Weighted-Average Contractual Terms Options Exercise Price (in Years) Outstanding at January 1, 2021 12,802 $ 30.97 1.6 Exercised (2,010) 30.97 Outstanding at March 31, 2021 10,792 $ 30.97 1.6 Options generally include a time-based vesting schedule permitting the options to vest ratably over three years. At March 31, 2021 and December 31, 2020, all options were fully vested. There was no stock-based compensation expense on stock options for the three months ended March 31, 2021 and 2020, respectively. Restricted Stock Our restricted stock activity and related information are summarized as follows: Weighted-Average Remaining Restricted Contractual Terms Stock (in Years) Outstanding at January 1, 2021 436,730 1.1 Granted 97,537 Forfeited (426) Vested (144,743) Outstanding at March 31, 2021 389,098 1.7 Restricted stock exercisable at March 31, 2021 — At March 31, 2021, there was $11,417 of unrecognized compensation expense remaining related to our service-based restricted stock awards. The unrecognized compensation cost was expected to be recognized over a weighted-average period of 1.7 years or earlier upon an elimination of the restriction period as a result of a change in control event. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE The following is a reconciliation of basic and diluted net loss per share: Three Months Ended March 31, 2021 2020 Net loss $ (10,379) $ (4,945) Weighted average number of shares - basic and diluted 19,200,231 16,423,853 Net loss per share - basic and diluted $ (0.54) $ (0.30) Our basic and diluted net loss per share is computed using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Non-vested restricted stock that includes non-forfeitable rights to dividends are considered participating securities. Because we have incurred a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share. The following contingently issuable and convertible equity shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for all periods presented: Three Months Ended March 31, 2021 2020 Restricted stock 389,098 423,712 Stock options 10,792 40,420 Warrants — 404 Total shares 399,890 464,536 |
BUSINESS SEGMENT
BUSINESS SEGMENT | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENT | BUSINESS SEGMENT Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. We have one operating and reporting segment, OrthoPediatrics Corp., which designs, develops and markets anatomically appropriate implants and devices for children with orthopedic problems. Our chief operating decision-maker, our Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance, accompanied by disaggregated revenue information by product category. We determined that disaggregating revenue into these categories achieves the disclosure objective of illustrating the differences in the nature, timing and uncertainty of our revenue streams. We do not assess the performance of our individual product categories on measures of profit or loss, or other asset-based metrics. Therefore, the information below is presented only for revenue by category and geography. Product sales attributed to a country or region includes product sales to hospitals, physicians and distributors and is based on the final destination where the products are sold. No customers accounted for more than 10% of total product sales for the three months ended March 31, 2021 or 2020. No customer accounted for more than 10% of consolidated accounts receivable as of March 31, 2021 and December 31, 2020. Product sales by source were as follows: Three Months Ended March 31, Product sales by geographic location: 2021 2020 U.S. $ 16,839 $ 13,384 International 4,623 2,972 Total $ 21,462 $ 16,356 Three Months Ended March 31, Product sales by category: 2021 2020 Trauma and deformity $ 14,552 $ 12,210 Scoliosis 5,951 3,711 Sports medicine/other 959 435 Total $ 21,462 $ 16,356 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONSIn addition to the debt and credit agreements and mortgage with Squadron and its affiliate (see Note 6), we currently use Structure Medical, LLC (“Structure Medical”) as one of our suppliers. Structure Medical is affiliated with Squadron and a supplier with which we maintain certain long-term agreements. We made aggregate payments to Structure Medical for inventory purchases of $72 and $1,201 for the three months ended March 31, 2021 and 2020, respectively. On December 31, 2019, the Company divested Vilex for $25,000 to an affiliate of Squadron. In conjunction with the divestiture, the Company also entered into an exclusive perpetual license agreement to permit the purchasers of Vilex the ability to access intellectual property and sell products using the external fixation technology of Orthex, LLC to non-pediatric accounts. We had sales and payments related to inventory purchases to Squadron's affiliate, now known as Vilex, LLC, of $87 and $189, respectively, for the three months ended March 31, 2021. We had sales and payments related to inventory purchases to Vilex, LLC of $386 and $640, respectively, for the three months ended March 31, 2020. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
EMPLOYEE BENEFIT PLAN | EMPLOYEE BENEFIT PLANWe have a defined-contribution plan, OrthoPediatrics 401(k) Retirement Plan (the “401(k) Plan”), which includes a cash or deferral (Section 401(k)) arrangement. The 401(k) Plan covers those employees who meet certain eligibility requirements and elect to participate. Employee contributions are limited to the annual amounts permitted under the Internal Revenue Code. The 401(k) Plan allows us to make a discretionary matching contribution. Discretionary matching contributions are determined annually by management. We have elected to match our employees' 401(k) contributions up to 4% of employees' salary. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Leases At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding right-of-use asset upon lease commencement using a discount rate based on a borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current liabilities or long-term liabilities based upon the length of time associated with the lease payments. The Company records its operating lease right-of-use assets as long-term assets. As of March 31, 2021, the Company has recorded a lease liability of $315 and corresponding right-of-use-asset of $318 on its condensed consolidated balance sheet. Legal Proceedings From time to time, we are involved in various legal proceedings arising in the ordinary course of our business. K2M - Alleged Patent Infringement On January 20, 2017, K2M, Inc. filed suit against us in the United States District Court for the District of Delaware (K2M, Inc. v. OrthoPediatrics Corp. et al., Case No. 1:17-cv-0061) seeking unspecified damages for alleged infringement of U.S. Patent No. 9,532,816. The complaint was amended on August 21, 2017 to add, among other things, a claim of patent infringement regarding U.S. Patent No. 9,655,664. These patents relate to certain instruments used in our RESPONSE™ spine systems, which represent a portion of our total scoliosis portfolio. We have denied these claims and responded with counterclaims seeking declaratory relief that the patents in question are both invalid and not infringed. The parties attended a court-ordered mediation on October 24, 2017, which did not resolve the dispute, but as we move forward with this matter we welcome constructive discussions on a negotiated settlement. Nevertheless, we view our case as particularly strong and will continue to vigorously defend this matter. On June 28, 2018, the United States Patent and Trademark Office's Patent Trial and Appeal Board ("PTAB") instituted limited review concerning whether certain third parties had described the invention of certain of K2M's patent claims before allegedly invented by K2M. On July 10, 2018, the Court stayed the litigation pending the outcome of PTAB's review. On June 4, 2019, PTAB completed its review, finding, among other things, insufficient evidence of such description by the third parties. In early October 2019, the Court orally lifted the stay in federal district court. Thereafter, on November 19, 2019, K2M amended its complaint to add two (2) additional issued patents, to add claims of patent infringement regarding U.S. Patent Nos. 10,285,735 and 10,292,736 (both issued in May 2019). Like before, these newly issued patents relate to certain instruments used in our RESPONSE spine systems. Additionally, we have denied these most recent claims and responded with counterclaims seeking declaratory relief that the subject patents are both invalid and not infringed. Moreover, on November 20, 2019, the Court issued its Scheduling Order, which in part, set a trial date for April 12, 2021. Subsequently, the parties attended a second court-ordered mediation on February 25, 2020, which did not resolve the dispute. Throughout 2021, we have continued settlement negotiations regarding this matter and anticipate that it will be settled in the near term. Because the Company considers a potential settlement to be probable, it previously accrued for the related expense during the fourth quarter of 2020. No material modifications were made to the accrual during the quarter ended March 31, 2021. While the Company considers it probable, no assurance can be given that a final settlement will be reached and, were negotiations to cease, we would vigorously defend the claims asserted against us. Barry - Alleged Patent Infringement On December 30, 2020, Dr. Mark Barry filed suit against us in the United States District Court for the District of Delaware (Barry v. OrthoPediatrics Corp. et al., Case No. 1:20-cv-01786) seeking unspecified damages for alleged infringement of U.S. Patent Nos. 7,670,358; 8,361,121; 9,339,301; 9,668,787; and 9,668,788, which relate to systems and methods concerning derotation of spinal bodies to correct spinal deformities. On March 19, 2021, the parties reached a final settlement, which included the Company entering into a license agreement with Dr. Barry. The license agreement was recorded by the Company in the amount of $2,858, which will be amortized over a period of up to 8 years based upon the number of cases utilizing the related spinal deformity system in a given period. The balance of the amount otherwise paid to Dr. Barry had been previously accrued for during the fourth quarter of 2020 in anticipation of this final settlement. Accrued Legal Settlement Costs As of March 31, 2021, we have an outstanding accrued legal settlement balance of $5,250 related to the potential outcome of outstanding legal matters. Royalties As of March 31, 2021, we are contracted to pay royalties to individuals and entities that provide research and development services, which range from 0.5% to 20% of sales. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Unaudited Interim Consolidated Financial Statements | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of OrthoPediatrics Corp. and its wholly-owned subsidiaries, OrthoPediatrics US Distribution Corp., OrthoPediatrics EU Limited, OrthoPediatrics AUS PTY LTD, OrthoPediatrics NZ Limited, OP EU B.V., OP Netherlands B.V., Orthex, LLC, Telos Partners, LLC and ApiFix, Ltd. (collectively, the “Company,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. Unaudited Interim Condensed Consolidated Financial Statements We have prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020, the condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020, the condensed consolidated statements of comprehensive loss for the three months ended March 31, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2021 and 2020 and the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020 are unaudited and should be read in conjunction with the annual consolidated financial statements as of and for the year ended December 31, 2020 and related notes thereto contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 11, 2021. The financial data and other financial information disclosed in the notes to the accompanying condensed consolidated financial statements are also unaudited. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to applicable rules and regulations thereunder. |
Use of Estimates | Use of EstimatesPreparation of the condensed consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as of the date of the condensed consolidated financial statements. By their nature, these judgments are subject to an inherent degree of uncertainty. The impact of the coronavirus disease ("COVID-19") has significantly increased economic and demand uncertainty. We use historical experience and other assumptions as the basis for our judgments and estimates. Because future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Any changes in these estimates will be reflected in the condensed consolidated financial statements. |
Foreign Currency Transactions | Foreign Currency Transactions We currently bill our international stocking distributors in U.S. dollars, resulting in minimal foreign exchange transaction expense. |
Revenue Recognition - United States and International | Revenue from Contracts with Customers In accordance with ASC 606, " Revenue From Contracts With Customers (ASC 606)", revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, and excludes any sales incentives or taxes collected from a customer which are subsequently remitted to government authorities. Revenue Recognition – United States Revenue in the United States is generated primarily from the sale of our implants and, to a much lesser extent, from the sale of our instruments. Sales in the United States are primarily to hospital accounts through independent sales agencies. We recognize revenue when our performance obligations under the terms of a contract with our customer are satisfied. This typically occurs when we transfer control of our products to the customers, generally upon implantation or when title passes upon shipment. The products are generally consigned to our independent sales agencies, and revenue is recognized when the products are used by or shipped to the hospital for surgeries on a case by case basis. On rare occasions, hospitals purchase products for their own inventory, and revenue is recognized when the products are shipped and the title and risk of loss passes to the customer. Pricing for each customer is dictated by a unique pricing agreement, which does not generally include rebates or discounts. Revenue Recognition – International Outside of the United States, we sell our products directly to hospitals through independent sales agencies or to independent stocking distributors. Generally, the distributors are allowed to return products, and some are thinly capitalized; however, based on a history of reliable collections, we have concluded that a contract exists and revenue should be recognized when we transfer control of our products to the customer, generally when title passes upon shipment. Additionally, based on our history of immaterial returns from international customers, we have historically estimated no reserve for returns. |
Cash and Cash Equivalents | Cash, Cash Equivalents and Short Term Investments We maintain cash in bank deposit accounts which, at times, may exceed federally insured limits. To date, we have not experienced any loss in such accounts. We consider all highly liquid investments with original maturity of three months or less at inception to be cash equivalents. The carrying amounts reported in the balance sheets for cash are valued at cost, which approximates fair value. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are uncollateralized customer obligations due under normal trade terms, generally requiring payment within 30 days from the invoice date. Account balances with invoices over 30 days past due are considered delinquent. No interest is charged on past due accounts. Payments of accounts receivable are applied to the specific invoices identified on the customer's remittance advice or, if unspecified, to the customer's account as an unapplied credit. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The accounting standards related to fair value measurements define fair value and provide a consistent framework for measuring fair value under the authoritative literature. Valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. This guidance only applies when other standards require or permit the fair value measurement of assets and liabilities. The guidance does not expand the use of fair value measurements. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels. Level 1 – Quoted prices in active markets for identical assets or liabilities; Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data; and Level 3 – Significant unobservable inputs that are not corroborated by market data. Generally, these fair value measures are model-based valuation techniques such as discounted cash flows, and are based on the best information available, including our own data. |
Inventories, net | Inventories, net Inventories are stated at the lower of cost or net realizable value, with cost determined using the first-in-first-out method. Inventories purchased from third parties, which consist of implants and instruments held in our warehouse or with third-party independent sales agencies or distributors, are considered finished goods. We evaluate the carrying value of our inventories in relation to the estimated forecast of product demand, which takes into consideration the life cycle of the product. A significant decrease in demand could result in an increase in the amount of excess inventory on hand, which could lead to additional charges for excess and obsolete inventory. The need to maintain substantial levels of inventory impacts our estimates for excess and obsolete inventory. Each of our implant systems are designed to include implantable products that come in different sizes and shapes to accommodate the surgeon’s needs. Typically, a small number of the set components are used in each surgical procedure. Certain components within each set may become obsolete before other components based on the usage patterns. We adjust inventory values, as needed, to reflect these usage patterns and life cycle. |
Property and Equipment, net | Property and Equipment, net Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the assets. When assets are retired or otherwise disposed of, costs and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in operations for the period. Maintenance and repairs that prolong or extend the useful life are capitalized, whereas standard maintenance, replacements, and repair costs are expensed as incurred. Instruments are hand-held devices, specifically designed for use with our implants and are used by surgeons during surgery. Instruments deployed within the United States, United Kingdom, Australia, New Zealand, Canada, Belgium, the Netherlands, Italy, Germany, Switzerland and Austria are carried at cost less accumulated depreciation and are recorded in property and equipment, net on the condensed consolidated balance sheets. Sample inventory consists of our implants and instruments, and is maintained to market and promote our products. Sample inventory is carried at cost less accumulated depreciation. Depreciable lives are generally as follows: Building and building improvements 25 to 30 years Furniture and fixtures 5 to 7 years Computer equipment 3 to 5 years Business software 3 years Office and other equipment 5 to 7 years Instruments 5 years Sample inventory 2 years |
Amortizable Intangible Assets, net | Amortizable Intangible Assets, net Amortizable intangible assets include fees necessary to secure various patents and licenses, including Band-Lok, the value of internally developed software, customer relationships, and non-competition agreements related to the acquisition of Orthex, and customer relationships and non-competition agreements related to the acquisitions of Telos and ApiFix. Amortization is calculated on a straight-line basis over the estimated useful life of the asset. Amortization for patents and licenses commences at the time of patent approval and market launch, respectively. Amortization for assets acquired commences upon acquisition. Intangible assets are amortized over a 3 to 20 year period. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Our goodwill represents the excess of the cost over the fair value of net assets acquired. The determination of the value of goodwill and intangible assets arising from acquisitions requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair value of net tangible and intangible assets acquired. Goodwill is not amortized and is assessed for impairment using fair value measurement techniques on an annual basis or more frequently if facts and circumstances warrant such a review. The goodwill is considered to be impaired if we determine that the carrying value of the reporting unit exceeds its respective fair value. |
Acquisition Payable and Contingent Consideration | Acquisition Payable and Contingent ConsiderationUpon the completion of an acquisition, the Company may record an acquisition installment payable, contingent consideration or both. Both are recorded at their fair values as determined by management with the assistance of an independent valuation specialist at the original issuance date and are adjusted on a recurring basis. Accretion of interest expense attributable to the acquisition installment payable are recorded as a component of interest expense, net. Changes in the fair value of the contingent consideration are included in fair value adjustments of contingent consideration. |
Cost of Revenue | Cost of RevenueCost of revenue consists primarily of products purchased from third-party suppliers, excess and obsolete inventory adjustments, inbound freight, and royalties. Our implants and instruments are manufactured to our specifications by third-party suppliers who meet our manufacturer qualifications standards. Our third-party manufacturers are required to meet the standards of the Food and Drug Administration (the “FDA”), and the International Organization for Standardization, as well as other country-specific quality standards. The majority of our implants and instruments are produced in the United States. |
Sales and Marketing Expenses | Sales and Marketing ExpensesSales and marketing expenses primarily consist of commissions to our domestic and select international independent sales agencies and consignment distributors, as well as compensation, commissions, benefits and other related costs for personnel we employ. Commissions and bonuses are generally based on a percentage of sales. Our international independent stocking distributors purchase instrument sets and replenishment stock for resale, and we do not pay commissions or any other sales related costs for international sales to distributors. |
Advertising Costs | Advertising Costs Advertising costs consist primarily of print advertising, trade shows, and other related expenses. Advertising costs are expensed as incurred and are recorded as a component of sales and marketing expense. |
Research and Development Costs | Research and Development CostsResearch and development costs are expensed as incurred. Our research and development expenses primarily consist of costs associated with engineering, product development, consulting services, outside prototyping services, outside research activities, materials, development and protection of our intellectual property portfolio, as well as other costs associated with development of our products. Research and development costs also include related personnel and consultants’ compensation expense. |
Stock-Based Compensation | Stock-Based Compensation Prior to our Initial Public Offering ("IPO") in October 2017, we maintained an Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”) that provided for grants of options and restricted stock to employees, directors and associated third-party representatives of the Company as determined by the Board of Directors. The 2007 Plan had authorized 1,585,000 shares for award. Immediately prior to our IPO, we adopted our 2017 Incentive Award Plan (the "2017 Plan") which replaced the 2007 Plan. The 2017 Plan provides for grants of options and restricted stock to officers, employees, consultants or directors of our Company. The 2017 Plan has authorized 1,789,647 shares for award. Options holders, upon vesting, may purchase common stock at the exercise price, which is the estimated fair value of our common stock on the date of grant. Option grants generally vest immediately or over three years. No stock options were granted in any of the periods presented. Restricted stock may not be transferred prior to the expiration of the restricted period, which is typically three years. The restricted stock that had been granted under the 2007 Plan had restriction periods that generally lasted until the earlier of six years from the date of grant, or an IPO or change in control, as defined in the 2007 Plan. All restricted stock granted prior to May 2014 vested upon our IPO and the remaining grants under the 2007 Plan vested six months after the IPO. We recognize the reversal of stock compensation expense when a restricted stock forfeiture occurs as opposed to estimating future forfeitures. We record the fair value of restricted stock at the grant date. Stock-based compensation is recognized ratably over the requisite service period, which is generally the restriction period for restricted stock. |
Litigation and Contingencies | Litigation and ContingenciesAccruals for litigation and contingencies are reflected in the condensed consolidated financial statements based on management’s assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount is reasonably estimable. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period. |
Comprehensive Income (Loss) | Comprehensive Income (Loss)Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) includes foreign currency translation adjustments and unrealized gain (loss) on our short term investments. |
Income Taxes | Income Taxes We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence. If we determine that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance. |
"Emerging Growth Company" Reporting Requirements | “Emerging Growth Company” and "Smaller Reporting Company" Reporting Requirements We qualify as an “emerging growth company” as defined in the JOBS Act. For as long as a company is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002. Section 107 of the JOBS Act also provides that an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. In April 2017, the SEC adopted new rules that included an inflation-adjusted threshold in the definition of an emerging growth company. Under the new inflation-adjusted threshold, we would cease to be an emerging growth company on the last day of the fiscal year in which our annual gross revenues exceed $1.07 billion. This is an increase of $70 million from the previous $1 billion threshold. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13 " Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Property and equipment, depreciable lives | Sample inventory is carried at cost less accumulated depreciation. Depreciable lives are generally as follows: Building and building improvements 25 to 30 years Furniture and fixtures 5 to 7 years Computer equipment 3 to 5 years Business software 3 years Office and other equipment 5 to 7 years Instruments 5 years Sample inventory 2 years |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations [Abstract] | |
Schedule of Total Consideration Transferred After Discounting Future Payments | The following table reconciles the total consideration transferred after discounting the future payments: Consideration Present Value Cash consideration $ 2,000 $ 2,000 Payment of ApiFix transaction related costs 67 67 Issuance of common stock 35,176 35,176 Anniversary Payments 30,000 22,620 System sales payment 41,741 27,190 Total consideration transferred $ 108,984 $ 87,053 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the total consideration paid for ApiFix and allocation of purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date (in thousands): Description Amount Preliminary fair value of estimated total acquisition consideration $ 87,379 Assets Cash 344 Accounts receivable-trade 245 Inventories 685 Prepaid expenses and other current assets 77 Property and equipment 153 Intangible assets 32,150 Other intangible assets 8,640 Operating lease right-of-use asset 104 Total assets 42,398 Liabilities Accounts payable and accrued liabilities 226 Operating lease liabilities 106 Other current liabilities 270 Deferred income taxes 6,487 Total liabilities 7,089 Less: total net assets 35,309 Goodwill $ 52,070 Description Amount Fair fair value of total acquisition consideration $ 3,318 Assets Cash 81 Accounts receivable-trade 215 Prepaid expenses and other current assets 38 Property and equipment 10 Intangible assets 950 Other intangible assets $ 210 Total assets 1,504 Liabilities Accounts payable and accrued liabilities 60 Total liabilities 60 Less: total net assets 1,444 Goodwill $ 1,874 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The estimated fair value and useful life of identifiable intangible assets are as follows: Amount Remaining Economic Useful Life Trademarks / Names $ 8,640 Indefinite Patents 31,720 15 years Customer Relationships 230 10 years Non-competition Agreements 200 4 years $ 40,790 The fair value of identifiable intangible assets were based on valuations using a combination of the income and cost approach. The fair value and useful life of identifiable intangible assets are as follows: Amount Remaining Economic Useful Life Trademarks / Names $ 210 Indefinite Customer Relationships 910 10 years Non-competition Agreements 40 5 years $ 1,160 |
Schedule of Indefinite-lived Intangible Assets Acquired as Part of Business Combination | The estimated fair value and useful life of identifiable intangible assets are as follows: Amount Remaining Economic Useful Life Trademarks / Names $ 8,640 Indefinite Patents 31,720 15 years Customer Relationships 230 10 years Non-competition Agreements 200 4 years $ 40,790 The fair value of identifiable intangible assets were based on valuations using a combination of the income and cost approach. The fair value and useful life of identifiable intangible assets are as follows: Amount Remaining Economic Useful Life Trademarks / Names $ 210 Indefinite Customer Relationships 910 10 years Non-competition Agreements 40 5 years $ 1,160 |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration | Presented below is a summary of the present value of the anniversary payments and system sales payment related to the ApiFix acquisition: April 1, 2020 March 31, 2021 Anniversary Payments: Second Year Payment $ 10,980 $ 12,496 Third Year Payment 5,780 6,520 Fourth Year Payment 5,860 6,645 Total acquisition installment payable 22,620 25,661 Less: current portion of acquisition installment payable 10,980 12,496 Acquisition installment payable, net of current portion 11,640 13,165 System sales payment 27,190 34,860 ApiFix future consideration, net of current portion $ 38,830 $ 48,025 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Changes in the carrying amount of goodwill for the three months ended March 31, 2021 were as follows: Total Goodwill at January 1, 2021 $ 70,511 Foreign currency translation impact (2,048) Goodwill at March 31, 2021 $ 68,463 |
Schedule of Finite-Lived Intangible Assets | As of March 31, 2021, the balances of amortizable intangible assets were as follows: Weighted-Average Amortization Period Gross Intangible Assets Accumulated Amortization Net Intangible Assets Patents 14.5 years $ 42,103 $ (3,282) $ 38,821 Intellectual Property 10.1 years 8,968 (907) 8,061 License Agreements 6.1 years 5,623 (1,604) 4,019 Total amortizable assets $ 56,694 $ (5,793) $ 50,901 As of December 31, 2020, the balances of amortizable intangible assets were as follows: Weighted-Average Amortization Period Gross Intangible Assets Accumulated Amortization Net Intangible Assets Patents 14.7 years $ 43,363 $ (2,650) $ 40,713 Intellectual Property 10.3 years 8,990 (744) 8,246 License Agreements 2.7 years 2,765 (1,440) 1,325 Total amortizable assets $ 55,118 $ (4,834) $ 50,284 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarize the assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020. March 31, 2021 Level 1 Level 2 Level 3 Total Financial Assets Cash Equivalents $ 11,005 $ — $ — $ 11,005 Short term investments Exchange Trade Mutual Funds $ 35,257 $ — $ — $ 35,257 Corporate Bonds $ 10,318 $ — $ — $ 10,318 Treasury Bonds $ 5,265 $ — $ — $ 5,265 Other $ 4,369 $ — $ — 4,369 Financial Liabilities Contingent Consideration $ — $ — $ 34,860 $ 34,860 December 31, 2020 Level 1 Level 2 Level 3 Total Financial Assets Cash Equivalents $ 15,002 $ — $ — $ 15,002 Short term investments Exchange Trade Mutual Funds $ 35,208 $ — $ — $ 35,208 Corporate Bonds $ 9,616 $ — $ — $ 9,616 Treasury Bonds $ 6,520 $ — $ — $ 6,520 Other $ 3,797 $ — $ — $ 3,797 Financial Liabilities Contingent Consideration $ — $ — $ 30,710 $ 30,710 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table summarizes the change in fair value of Level 3 instruments in 2021: Total Balance at January 1, 2021 $ 30,710 Change in fair value of contingent consideration 4,150 Balance at March 31, 2021 $ 34,860 |
Fair Value Measurement Inputs and Valuation Techniques | The recurring Level 3 fair value measurements of contingent consideration liabilities associated with commercial sales milestones include the following significant unobservable inputs as of March 31, 2021 and December 31, 2020: March 31, 2021 December 31, 2020 Valuation techniques Discounted cash flow, Monte Carlo Present value discount rate (1) 25.3 % 25.8 % Volatility factor 52.6 % 51.8 % Expected years 3.1 years 3.5 years (1) The present value discount rate includes estimated risk premium. |
DEBT AND CREDIT ARRANGEMENTS (T
DEBT AND CREDIT ARRANGEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consisted of the following: March 31, 2021 December 31, 2020 Mortgage payable to affiliate 1,143 1,175 Less: current maturities 132 131 Long-term debt with affiliate, net of current maturities $ 1,011 $ 1,044 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | Our stock option activity and related information are summarized as follows: Weighted-Average Contractual Terms Options Exercise Price (in Years) Outstanding at January 1, 2021 12,802 $ 30.97 1.6 Exercised (2,010) 30.97 Outstanding at March 31, 2021 10,792 $ 30.97 1.6 |
Schedule of Restricted Stock Activity | Our restricted stock activity and related information are summarized as follows: Weighted-Average Remaining Restricted Contractual Terms Stock (in Years) Outstanding at January 1, 2021 436,730 1.1 Granted 97,537 Forfeited (426) Vested (144,743) Outstanding at March 31, 2021 389,098 1.7 Restricted stock exercisable at March 31, 2021 — |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Reconciliation of basic and diluted net loss per share attributable to common stockholders | The following is a reconciliation of basic and diluted net loss per share: Three Months Ended March 31, 2021 2020 Net loss $ (10,379) $ (4,945) Weighted average number of shares - basic and diluted 19,200,231 16,423,853 Net loss per share - basic and diluted $ (0.54) $ (0.30) |
Schedule of antidilutive securities excluded from computation of net loss per share | The following contingently issuable and convertible equity shares were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for all periods presented: Three Months Ended March 31, 2021 2020 Restricted stock 389,098 423,712 Stock options 10,792 40,420 Warrants — 404 Total shares 399,890 464,536 |
BUSINESS SEGMENT (Tables)
BUSINESS SEGMENT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Product Sales by Geographic Location | Product sales by source were as follows: Three Months Ended March 31, Product sales by geographic location: 2021 2020 U.S. $ 16,839 $ 13,384 International 4,623 2,972 Total $ 21,462 $ 16,356 |
Schedule of Product Sales by Category | Three Months Ended March 31, Product sales by category: 2021 2020 Trauma and deformity $ 14,552 $ 12,210 Scoliosis 5,951 3,711 Sports medicine/other 959 435 Total $ 21,462 $ 16,356 |
BUSINESS (Details)
BUSINESS (Details) | Jun. 10, 2020USD ($) | Apr. 01, 2020USD ($)facility$ / sharesshares | Mar. 09, 2020USD ($)$ / sharesshares | Jun. 04, 2019USD ($) | Mar. 31, 2021USD ($)$ / shares | Dec. 31, 2020$ / shares | Dec. 31, 2019USD ($) |
Business Acquisition | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00025 | $ 0.00025 | |||||
Discontinued Operations, Disposed of by Sale | |||||||
Business Acquisition | |||||||
Divestiture purchase price | $ 25,000,000 | ||||||
Vilex and Orthex | |||||||
Business Acquisition | |||||||
Total consideration | $ 60,000,000 | ||||||
Telos | |||||||
Business Acquisition | |||||||
Total consideration | $ 3,300,000 | ||||||
Cash consideration | $ 1,750,000 | ||||||
Purchase of shares and membership interests in common stock (in shares) | shares | 36,628 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00025 | ||||||
Common stock (in dollars per share) | $ / shares | $ 42.81 | ||||||
ApiFix Ltd | |||||||
Business Acquisition | |||||||
Total consideration | $ 108,984,000 | ||||||
Cash consideration | $ 2,000,000 | $ 2,000,000 | |||||
Purchase of shares and membership interests in common stock (in shares) | shares | 934,783 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00025 | ||||||
Common stock approximate value | $ 35,000,000 | ||||||
Common stock (in dollars per share) | $ / shares | $ 37.63 | ||||||
Number of clinical procedures | facility | 150 | ||||||
Revenue multiplier | 2.25 | ||||||
ApiFix Ltd | Second Anniversary | |||||||
Business Acquisition | |||||||
Subsequent payments | $ 13,000,000 | ||||||
ApiFix Ltd | Third Anniversary | |||||||
Business Acquisition | |||||||
Subsequent payments | 8,000,000 | ||||||
ApiFix Ltd | Fourth Anniversary | |||||||
Business Acquisition | |||||||
Subsequent payments | $ 9,000,000 | ||||||
Band-Lok | |||||||
Business Acquisition | |||||||
Total consideration | $ 3,400,000 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) € in Thousands | 3 Months Ended | ||||
Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2021EUR (€) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations | |||||
Accumulated deficit | $ 172,145,000 | $ 161,766,000 | |||
Restricted cash | 1,369,000 | € 100 | $ 1,374,000 | $ 1,250,000 | |
Impairment charges, indefinite-lived | 0 | $ 0 | |||
Impairment charges, finite-lived | 0 | 0 | |||
Acquisition installment payable | 644,000 | 0 | |||
Fair value adjustment of contingent consideration | $ 4,150,000 | $ 0 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Assets Useful Lives (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Building and building improvements | Minimum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 25 years |
Building and building improvements | Maximum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 30 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 5 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 7 years |
Computer equipment | Minimum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 3 years |
Computer equipment | Maximum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 5 years |
Business software | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 3 years |
Office and other equipment | Minimum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 5 years |
Office and other equipment | Maximum | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 7 years |
Instruments | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 5 years |
Sample inventory | |
Property, Plant and Equipment | |
Depreciable lives (in years) | 2 years |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Amortization Intangible Assets, net (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Minimum | |
Finite-Lived Intangible Assets | |
Intangible asset, useful life (in years) | 3 years |
Maximum | |
Finite-Lived Intangible Assets | |
Intangible asset, useful life (in years) | 20 years |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) - shares | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Options granted (in shares) | 0 | 0 | |
Stock option | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period (in years) | 3 years | ||
Options granted (in shares) | 0 | 0 | |
Stock option | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period (in years) | 3 years | ||
Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period (in years) | 3 years | ||
Restricted stock | Vesting period one | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period (in years) | 6 years | ||
Restricted stock | Vesting period two | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Vesting period (in years) | 6 months | ||
2007 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Shares available for award (in shares) | 1,585,000 | ||
2017 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Shares available for award (in shares) | 1,789,647 |
BUSINESS COMBINATION - ApiFix (
BUSINESS COMBINATION - ApiFix (Details) | Apr. 01, 2020USD ($)facility$ / sharesshares | Mar. 31, 2021USD ($)$ / shares | Dec. 31, 2020$ / shares |
Business Acquisition | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00025 | $ 0.00025 | |
ApiFix Ltd | |||
Business Acquisition | |||
Cash consideration | $ 2,000,000 | $ 2,000,000 | |
Cash acquired | $ 344,000 | ||
Purchase of shares and membership interests in common stock (in shares) | shares | 934,783 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00025 | ||
Issuance of common stock | $ 35,176,000 | 35,176,000 | |
Common stock (in dollars per share) | $ / shares | $ 37.63 | ||
Anniversary Payments | $ 30,000,000 | 30,000,000 | |
System sales payment | 41,741,000 | $ 41,741,000 | |
Preliminary fair value of estimated total acquisition consideration | $ 87,379,000 | ||
Number of clinical procedures | facility | 150 | ||
Revenue multiplier | 2.25 | ||
ApiFix Ltd | Second Anniversary | |||
Business Acquisition | |||
Subsequent payments | $ 13,000,000 | ||
ApiFix Ltd | Third Anniversary | |||
Business Acquisition | |||
Subsequent payments | 8,000,000 | ||
ApiFix Ltd | Fourth Anniversary | |||
Business Acquisition | |||
Subsequent payments | $ 9,000,000 |
BUSINESS COMBINATION - ApiFix C
BUSINESS COMBINATION - ApiFix Consideration (Details) - ApiFix Ltd - USD ($) $ in Thousands | Apr. 01, 2020 | Mar. 31, 2021 |
Business Acquisition | ||
Cash consideration | $ 2,000 | $ 2,000 |
Payment of ApiFix transaction related costs | 67 | |
Issuance of common stock | 35,176 | 35,176 |
Anniversary Payments | 30,000 | 30,000 |
Anniversary Payments, Present Value | 22,620 | |
System sales payment | $ 41,741 | 41,741 |
System Sales Payment, Present Value | 27,190 | |
Total consideration transferred | 108,984 | |
Total Contingent Consideration, Present Value | $ 87,053 |
BUSINESS COMBINATION - Assets a
BUSINESS COMBINATION - Assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Apr. 01, 2020 | Mar. 09, 2020 |
Liabilities | ||||
Goodwill | $ 68,463 | $ 70,511 | ||
ApiFix Ltd | ||||
Business Acquisition | ||||
Preliminary fair value of estimated total acquisition consideration | $ 87,379 | |||
Assets | ||||
Cash | 344 | |||
Accounts receivable-trade | 245 | |||
Inventories | 685 | |||
Prepaid expenses and other current assets | 77 | |||
Property and equipment | 153 | |||
Intangible assets | 32,150 | |||
Other intangible assets | 8,640 | |||
Operating lease right-of-use asset | 104 | |||
Total assets | 42,398 | |||
Liabilities | ||||
Accounts payable and accrued liabilities | 226 | |||
Operating lease liabilities | 106 | |||
Other current liabilities | 270 | |||
Deferred income taxes | 6,487 | |||
Total liabilities | 7,089 | |||
Less: total net assets | 35,309 | |||
Goodwill | $ 52,070 | |||
Telos | ||||
Business Acquisition | ||||
Preliminary fair value of estimated total acquisition consideration | $ 3,318 | |||
Assets | ||||
Cash | 81 | |||
Accounts receivable-trade | 215 | |||
Prepaid expenses and other current assets | 38 | |||
Property and equipment | 10 | |||
Intangible assets | 950 | |||
Other intangible assets | 210 | |||
Total assets | 1,504 | |||
Liabilities | ||||
Accounts payable and accrued liabilities | 60 | |||
Total liabilities | 60 | |||
Less: total net assets | 1,444 | |||
Goodwill | $ 1,874 |
BUSINESS COMBINATION - Estimate
BUSINESS COMBINATION - Estimated fair value and useful life of identifiable intangible assets (Details) - USD ($) $ in Thousands | Apr. 01, 2020 | Mar. 09, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Patents | ||||
Business Acquisition | ||||
Remaining Economic Useful Life (in years) | 14 years 6 months | 14 years 8 months 12 days | ||
ApiFix Ltd | ||||
Business Acquisition | ||||
Fair value of identifiable intangible assets | $ 40,790 | |||
ApiFix Ltd | Patents | ||||
Business Acquisition | ||||
Finite-lived intangible assets acquired | $ 31,720 | |||
Remaining Economic Useful Life (in years) | 15 years | |||
ApiFix Ltd | Customer Relationships | ||||
Business Acquisition | ||||
Finite-lived intangible assets acquired | $ 230 | |||
Remaining Economic Useful Life (in years) | 10 years | |||
ApiFix Ltd | Non-competition Agreements | ||||
Business Acquisition | ||||
Finite-lived intangible assets acquired | $ 200 | |||
Remaining Economic Useful Life (in years) | 4 years | |||
ApiFix Ltd | Trademarks / Names | ||||
Business Acquisition | ||||
Indefinite-lived intangible assets acquired | $ 8,640 | |||
Telos | ||||
Business Acquisition | ||||
Fair value of identifiable intangible assets | $ 1,160 | |||
Telos | Customer Relationships | ||||
Business Acquisition | ||||
Finite-lived intangible assets acquired | $ 910 | |||
Remaining Economic Useful Life (in years) | 10 years | |||
Telos | Non-competition Agreements | ||||
Business Acquisition | ||||
Finite-lived intangible assets acquired | $ 40 | |||
Remaining Economic Useful Life (in years) | 5 years | |||
Telos | Trademarks / Names | ||||
Business Acquisition | ||||
Indefinite-lived intangible assets acquired | $ 210 |
BUSINESS COMBINATION - Summary
BUSINESS COMBINATION - Summary of the Present Value of Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Apr. 01, 2020 |
Business Acquisition | |||
Less: current portion of acquisition installment payable | $ 12,496 | $ 12,233 | |
Acquisition installment payable, net of current portion | 13,165 | 12,784 | |
ApiFix future consideration, net of current portion | 34,860 | $ 30,710 | |
ApiFix Ltd | |||
Business Acquisition | |||
Anniversary payments | 25,661 | $ 22,620 | |
Less: current portion of acquisition installment payable | 12,496 | 10,980 | |
Acquisition installment payable, net of current portion | 13,165 | 11,640 | |
System sales payment | 34,860 | 27,190 | |
ApiFix future consideration, net of current portion | 48,025 | 38,830 | |
ApiFix Ltd | Second Anniversary | |||
Business Acquisition | |||
Anniversary payments | 12,496 | 10,980 | |
ApiFix Ltd | Third Anniversary | |||
Business Acquisition | |||
Anniversary payments | 6,520 | 5,780 | |
ApiFix Ltd | Fourth Anniversary | |||
Business Acquisition | |||
Anniversary payments | $ 6,645 | $ 5,860 |
BUSINESS COMBINATION - Telos (D
BUSINESS COMBINATION - Telos (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 09, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Business Acquisition | |||
Common stock, par value (in dollars per share) | $ 0.00025 | $ 0.00025 | |
Telos | |||
Business Acquisition | |||
Cash consideration | $ 1,750 | ||
Cash acquired | $ 81 | ||
Purchase of shares and membership interests in common stock (in shares) | 36,628 | ||
Common stock, par value (in dollars per share) | $ 0.00025 | ||
Common stock (in dollars per share) | $ 42.81 | ||
Acquisition related costs | $ 25 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Changes in Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Goodwill | |
Goodwill, beginning balance | $ 70,511 |
Foreign currency translation impact | (2,048) |
Goodwill, ending balance | $ 68,463 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Acquired Finite-Lived Intangible Assets | ||
Gross Intangible Assets | $ 56,694 | $ 55,118 |
Accumulated Amortization | (5,793) | (4,834) |
Amortizable intangible assets, net | $ 50,901 | $ 50,284 |
Patents | ||
Acquired Finite-Lived Intangible Assets | ||
Weighted-Average Amortization Period (in years) | 14 years 6 months | 14 years 8 months 12 days |
Gross Intangible Assets | $ 42,103 | $ 43,363 |
Accumulated Amortization | (3,282) | (2,650) |
Amortizable intangible assets, net | $ 38,821 | $ 40,713 |
Intellectual Property | ||
Acquired Finite-Lived Intangible Assets | ||
Weighted-Average Amortization Period (in years) | 10 years 1 month 6 days | 10 years 3 months 18 days |
Gross Intangible Assets | $ 8,968 | $ 8,990 |
Accumulated Amortization | (907) | (744) |
Amortizable intangible assets, net | $ 8,061 | $ 8,246 |
License Agreements | ||
Acquired Finite-Lived Intangible Assets | ||
Weighted-Average Amortization Period (in years) | 6 years 1 month 6 days | 2 years 8 months 12 days |
Gross Intangible Assets | $ 5,623 | $ 2,765 |
Accumulated Amortization | (1,604) | (1,440) |
Amortizable intangible assets, net | $ 4,019 | $ 1,325 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) - USD ($) $ in Thousands | Jun. 10, 2020 | Apr. 01, 2020 | Mar. 09, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Business Acquisition | ||||||
Purchases of licenses | $ 2,858 | $ 0 | ||||
Non-amortizing intangible assets | 13,618 | $ 13,961 | ||||
Trademarks | ||||||
Business Acquisition | ||||||
Non-amortizing intangible assets | $ 13,618 | $ 13,961 | ||||
Trademarks | Telos | ||||||
Business Acquisition | ||||||
Indefinite-lived intangible assets acquired | $ 210 | |||||
Trademarks | ApiFix Ltd | ||||||
Business Acquisition | ||||||
Indefinite-lived intangible assets acquired | $ 8,640 | |||||
Intellectual property | ||||||
Business Acquisition | ||||||
Indefinite-lived intangible assets acquired | $ 3,394 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | ||
Fair value adjustment of contingent consideration | $ 4,150 | $ 0 |
Acquisition installment payable | $ 644 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Schedule of Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Cash Equivalents | $ 11,005 | $ 15,002 |
Contingent Consideration | 34,860 | 30,710 |
Exchange Trade Mutual Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 35,257 | 35,208 |
Corporate Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 10,318 | 9,616 |
Treasury Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 5,265 | 6,520 |
Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 4,369 | 3,797 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Cash Equivalents | 11,005 | 15,002 |
Contingent Consideration | 0 | 0 |
Level 1 | Exchange Trade Mutual Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 35,257 | 35,208 |
Level 1 | Corporate Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 10,318 | 9,616 |
Level 1 | Treasury Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 5,265 | 6,520 |
Level 1 | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 4,369 | 3,797 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Cash Equivalents | 0 | 0 |
Contingent Consideration | 0 | 0 |
Level 2 | Exchange Trade Mutual Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 2 | Corporate Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 2 | Treasury Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 2 | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Cash Equivalents | 0 | 0 |
Contingent Consideration | 34,860 | 30,710 |
Level 3 | Exchange Trade Mutual Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 3 | Corporate Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 3 | Treasury Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | 0 | 0 |
Level 3 | Other | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Short term investments | $ 0 | $ 0 |
FAIR VALUE OF FINANCIAL INSTR_5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Change in Fair Value of Level 3 Instruments (Details) - Level 3 - Contingent Consideration Liability $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Change in fair value of contingent consideration | $ 4,150 |
Fair Value, Recurring | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |
Contingent consideration, beginning balance | 30,710 |
Contingent consideration, ending balance | $ 34,860 |
FAIR VALUE OF FINANCIAL INSTR_6
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair Value Measurements of Contingent Consideration (Details) - Level 3 - Fair Value, Recurring - Discounted cash flow, Monte Carlo | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Expected years | 3 years 1 month 6 days | 3 years 6 months |
Present value discount rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration, measurement input | 25.30% | 25.80% |
Volatility factor | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Contingent consideration, measurement input | 52.60% | 51.80% |
DEBT AND CREDIT ARRANGEMENTS -
DEBT AND CREDIT ARRANGEMENTS - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument | ||
Less: current maturities | $ 132 | $ 131 |
Long-term debt with affiliate, net of current maturities | 1,011 | 1,044 |
Mortgage payable to affiliate | ||
Debt Instrument | ||
Total debt | 1,143 | 1,175 |
Less: current maturities | $ 132 | $ 131 |
DEBT AND CREDIT ARRANGEMENTS _2
DEBT AND CREDIT ARRANGEMENTS - Narrative (Details) - USD ($) | Aug. 04, 2020 | Jul. 15, 2020 | Jan. 04, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Debt Instrument | ||||||
Payments on note with affiliate | $ 0 | $ 5,000,000 | ||||
Current portion of long-term debt with affiliate | 132,000 | $ 131,000 | ||||
Interest expense | 728,000 | 379,000 | ||||
Squadron | ||||||
Debt Instrument | ||||||
Unused commitment fee percentage | 0.50% | |||||
Commitment fee | 52,000 | |||||
Revolving Loan | Squadron | Affiliated Entity | ||||||
Debt Instrument | ||||||
Payments on note with affiliate | $ 5,000,000 | |||||
Second Amended Loan Agreement | Squadron | ||||||
Debt Instrument | ||||||
Debt face amount | $ 25,000,000 | |||||
Interest rate | 10.00% | |||||
Note payable to Squadron | ||||||
Debt Instrument | ||||||
Interest expense | $ 15,000 | $ 551,000 | ||||
Note payable to Squadron | Term Note A | ||||||
Debt Instrument | ||||||
Repayment of loan | $ 20,000,000 | |||||
Mortgage payable to affiliate | ||||||
Debt Instrument | ||||||
Interest rate | 5.00% | |||||
Monthly interest and principal installments | $ 16,000 | |||||
Long-term debt | 1,143,000 | 1,175,000 | ||||
Current portion of long-term debt with affiliate | $ 132,000 | $ 131,000 | ||||
Three month LIBOR | Second Amended Loan Agreement | Squadron | ||||||
Debt Instrument | ||||||
Debt instrument, basis spread on variable rate | 8.61% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Dec. 11, 2018 | May 30, 2014 | |
Income Tax Examination | |||||
Income tax (benefit) expense | $ (312) | $ 0 | |||
Effective income tax rate (percent) | 2.90% | 0.00% | |||
Loss carryforwards | $ 16,905 | ||||
Tax credit carryforward | $ 176 | ||||
Estimated limitation on losses generated prior to ownership change date | $ 16,200 | ||||
Estimated annual limitation of losses | $ 9,736 | $ 1,062 | |||
Increase of estimated annual limitation of first five years | $ 22,430 | ||||
Federal and state | |||||
Income Tax Examination | |||||
Loss carryforwards | 98,918 | ||||
State | |||||
Income Tax Examination | |||||
Loss carryforwards | $ 68,901 |
STOCKHOLDERS' EQUITY - Stock Op
STOCKHOLDERS' EQUITY - Stock Options (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||
Granted (in shares) | 0 | 0 | |
Stock option | |||
Share-based Compensation Arrangement by Share-based Payment Award | |||
Granted (in shares) | 0 | 0 | |
Options | |||
Outstanding at period start (in shares) | 12,802 | ||
Exercised (in shares) | (2,010) | ||
Outstanding at period end (in shares) | 10,792 | 12,802 | |
Weighted-Average Exercise Price | |||
Outstanding at period start, Weighted-Average Exercise Price (in dollars per share) | $ 30.97 | ||
Exercised, Weighted-Average Exercise Price (in dollars per share) | 30.97 | ||
Outstanding at period end, Weighted-Average Exercise Price (in dollars per share) | $ 30.97 | $ 30.97 | |
Contractual Terms (in years) | 1 year 7 months 6 days | 1 year 7 months 6 days | |
Vesting period (in years) | 3 years | ||
Stock-based compensation expense | $ 0 | $ 0 |
STOCKHOLDERS' EQUITY - Restrict
STOCKHOLDERS' EQUITY - Restricted Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | |||
Stock-based compensation | $ 1,316 | $ 958 | |
Restricted stock | |||
Restricted Stock | |||
Outstanding at period start (in shares) | 436,730 | ||
Granted (in shares) | 97,537 | ||
Forfeited (in shares) | (426) | ||
Vested (in shares) | (144,743) | ||
Outstanding at period end (in shares) | 389,098 | 436,730 | |
Weighted-Average Remaining Contractual Terms (in years) | 1 year 8 months 12 days | 1 year 1 month 6 days | |
Restricted stock exercisable (in shares) | 0 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | |||
Unrecognized compensation expense | $ 11,417 | ||
Unrecognized compensation expense, weighted average period of recognition (in years) | 1 year 8 months 12 days | ||
Stock-based compensation | $ 1,316 | $ 958 | |
Vesting period (in years) | 3 years |
NET LOSS PER SHARE - Reconcilia
NET LOSS PER SHARE - Reconciliation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (10,379) | $ (4,945) |
Weighted average common stock - basic (in shares) | 19,200,231 | 16,423,853 |
Weighted average common stock - diluted (in shares) | 19,200,231 | 16,423,853 |
Net loss per share - basic (in dollars per share) | $ (0.54) | $ (0.30) |
Net loss per share - diluted (in dollars per share) | $ (0.54) | $ (0.30) |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Total shares | 399,890 | 464,536 |
Restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Total shares | 389,098 | 423,712 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Total shares | 10,792 | 40,420 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Total shares | 0 | 404 |
BUSINESS SEGMENT - Narrative (D
BUSINESS SEGMENT - Narrative (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
BUSINESS SEGMENT - Schedule of
BUSINESS SEGMENT - Schedule of Revenue by Geographical Location (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues from External Customers and Long-Lived Assets | ||
Net revenue | $ 21,462 | $ 16,356 |
U.S. | ||
Revenues from External Customers and Long-Lived Assets | ||
Net revenue | 16,839 | 13,384 |
International | ||
Revenues from External Customers and Long-Lived Assets | ||
Net revenue | $ 4,623 | $ 2,972 |
BUSINESS SEGMENT - Schedule o_2
BUSINESS SEGMENT - Schedule of Revenue by Category (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Segment Reporting Information | ||
Net revenue | $ 21,462 | $ 16,356 |
Trauma and deformity | ||
Segment Reporting Information | ||
Net revenue | 14,552 | 12,210 |
Scoliosis | ||
Segment Reporting Information | ||
Net revenue | 5,951 | 3,711 |
Sports medicine/other | ||
Segment Reporting Information | ||
Net revenue | $ 959 | $ 435 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021USD ($)supplier | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Discontinued Operations, Disposed of by Sale | |||
Related Party Transaction | |||
Divestiture purchase price | $ 25,000 | ||
Affiliated Entity | |||
Related Party Transaction | |||
Number of related party suppliers | supplier | 1 | ||
Affiliated Entity | Discontinued Operations, Disposed of by Sale | |||
Related Party Transaction | |||
Divestiture purchase price | $ 25,000 | ||
Affiliated Entity | Structure Medical, LLC | |||
Related Party Transaction | |||
Payments to related party | $ 72 | $ 1,201 | |
Affiliated Entity | Vilex | |||
Related Party Transaction | |||
Payments to related party | 189 | 640 | |
Sales to related party | $ 87 | $ 386 |
EMPLOYEE BENEFIT PLAN - Narrati
EMPLOYEE BENEFIT PLAN - Narrative (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Employer contribution as a percentage of employees' salary | 4.00% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | Mar. 19, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Long-term Purchase Commitment | ||||
Operating lease liability | $ 315 | |||
Operating lease right-of-use asset | 318 | |||
Purchases of licenses | 2,858 | $ 0 | ||
Accrued legal settlements | $ 5,250 | $ 6,342 | ||
License Agreements | ||||
Long-term Purchase Commitment | ||||
Purchases of licenses | $ 2,858 | |||
Intangible asset, useful life (in years) | 8 years | |||
Minimum | ||||
Long-term Purchase Commitment | ||||
Intangible asset, useful life (in years) | 3 years | |||
Royalty agreement percentage | 0.50% | |||
Maximum | ||||
Long-term Purchase Commitment | ||||
Intangible asset, useful life (in years) | 20 years | |||
Royalty agreement percentage | 20.00% |