Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | May 01, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-38468 | |
Entity Registrant Name | Inspire Medical Systems, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1377674 | |
Entity Address, Address Line One | 5500 Wayzata Blvd. | |
Entity Address, Address Line Two | Suite 1600 | |
Entity Address, City or Town | Golden Valley | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55416 | |
City Area Code | 844 | |
Local Phone Number | 672-4357 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | INSP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 29,711,048 | |
Entity Central Index Key | 0001609550 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 175,416 | $ 185,537 |
Investments, short-term | 265,945 | 274,838 |
Accounts receivable, net of allowance for credit losses of $256 and $1,648, respectively | 72,333 | 89,884 |
Inventories, net | 48,974 | 33,885 |
Prepaid expenses and other current assets | 9,546 | 9,595 |
Total current assets | 572,214 | 593,739 |
Investments, long-term | 27,803 | 9,143 |
Property and equipment, net | 52,281 | 39,984 |
Operating lease right-of-use assets | 22,248 | 22,667 |
Other non-current assets | 11,296 | 11,278 |
Total assets | 685,842 | 676,811 |
Current liabilities: | ||
Accounts payable | 43,802 | 38,839 |
Accrued expenses | 28,370 | 39,266 |
Total current liabilities | 72,172 | 78,105 |
Operating lease liabilities, non-current portion | 24,500 | 24,846 |
Other non-current liabilities | 146 | 1,346 |
Total liabilities | 96,818 | 104,297 |
Stockholders' equity: | ||
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common Stock, $0.001 par value per share; 200,000,000 shares authorized; 29,676,095 and 29,560,464 issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 30 | 30 |
Additional paid-in capital | 944,298 | 917,107 |
Accumulated other comprehensive income | 124 | 800 |
Accumulated deficit | (355,428) | (345,423) |
Total stockholders' equity | 589,024 | 572,514 |
Total liabilities and stockholders' equity | $ 685,842 | $ 676,811 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Allowance for credit loss | $ 256 | $ 1,648 |
Preferred shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred shares, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred shares, issued (in shares) | 0 | 0 |
Preferred shares, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 29,676,095 | 29,560,464 |
Common stock, outstanding (in shares) | 29,676,095 | 29,560,464 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Revenue | $ 164,010 | $ 127,897 |
Cost of goods sold | 24,757 | 19,888 |
Gross profit | 139,253 | 108,009 |
Operating expenses: | ||
Research and development | 28,850 | 25,519 |
Selling, general and administrative | 125,621 | 101,988 |
Total operating expenses | 154,471 | 127,507 |
Operating loss | (15,218) | (19,498) |
Other (income) expense: | ||
Interest and dividend income | (5,923) | (4,273) |
Other expense (income), net | 60 | (17) |
Total other income | (5,863) | (4,290) |
Loss before income taxes | (9,355) | (15,208) |
Income taxes | 650 | 216 |
Net loss | (10,005) | (15,424) |
Other comprehensive loss: | ||
Foreign currency translation (loss) gain | (134) | 105 |
Unrealized (loss) gain on investments | (542) | 13 |
Total comprehensive loss | $ (10,681) | $ (15,306) |
Net loss per share, basic (in dollars per share) | $ (0.34) | $ (0.53) |
Net loss per share, diluted (in dollars per share) | $ (0.34) | $ (0.53) |
Weighted average common shares used to compute net loss per share, basic (in shares) | 29,615,166 | 29,089,950 |
Weighted average common shares used to compute net loss per share, diluted (in shares) | 29,615,166 | 29,089,950 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2022 | 29,008,368 | ||||
Beginning balance at Dec. 31, 2022 | $ 496,008 | $ 29 | $ 820,335 | $ (86) | $ (324,270) |
Stockholders' Equity [Roll Forward] | |||||
Stock options exercised (in shares) | 142,167 | ||||
Stock options exercised | 7,377 | 7,377 | |||
Vesting of restricted stock units (in shares) | 18,852 | ||||
Shares held for tax withholdings (in shares) | (6,750) | ||||
Shares held for tax withholdings | (1,746) | (1,746) | |||
Issuance of common stock (in shares) | 364 | ||||
Issuance of common stock | 90 | 90 | |||
Stock-based compensation expense | 18,225 | 18,225 | |||
Other comprehensive (loss) income | 118 | 118 | |||
Net loss | (15,424) | (15,424) | |||
Ending balance (in shares) at Mar. 31, 2023 | 29,163,001 | ||||
Ending balance at Mar. 31, 2023 | $ 504,648 | $ 29 | 844,281 | 32 | (339,694) |
Beginning balance (in shares) at Dec. 31, 2023 | 29,560,464 | 29,560,464 | |||
Beginning balance at Dec. 31, 2023 | $ 572,514 | $ 30 | 917,107 | 800 | (345,423) |
Stockholders' Equity [Roll Forward] | |||||
Stock options exercised (in shares) | 88,310 | 88,276 | |||
Stock options exercised | $ 3,616 | 3,616 | |||
Vesting of restricted stock units (in shares) | 41,185 | ||||
Shares held for tax withholdings (in shares) | (14,373) | ||||
Shares held for tax withholdings | (2,848) | (2,848) | |||
Issuance of common stock (in shares) | 543 | ||||
Issuance of common stock | 101 | 101 | |||
Stock-based compensation expense | 26,322 | 26,322 | |||
Other comprehensive (loss) income | (676) | (676) | |||
Net loss | $ (10,005) | (10,005) | |||
Ending balance (in shares) at Mar. 31, 2024 | 29,676,095 | 29,676,095 | |||
Ending balance at Mar. 31, 2024 | $ 589,024 | $ 30 | $ 944,298 | $ 124 | $ (355,428) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Operating activities | ||
Net loss | $ (10,005) | $ (15,424) |
Adjustments to reconcile net loss: | ||
Depreciation and amortization | 839 | 593 |
Accretion of investment discount | (2,469) | (1) |
Non-cash lease expense | 418 | 265 |
Stock-based compensation expense | 26,322 | 18,225 |
Non-cash stock issuance for services rendered | 101 | 90 |
Provision (benefit) for estimated credit losses | (1,392) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 18,962 | 1,489 |
Inventories | (15,089) | (3,777) |
Prepaid expenses and other current assets | 13 | (579) |
Accounts payable | 3,558 | 8,390 |
Accrued expenses and other liabilities | (12,398) | (10,615) |
Net cash provided by (used in) operating activities | 8,860 | (1,344) |
Investing activities | ||
Purchases of property and equipment | (11,696) | (3,753) |
Purchases of investments | (55,739) | 0 |
Proceeds from sales or maturities of investments | 47,900 | 0 |
Net cash used in investing activities | (19,535) | (3,753) |
Financing activities | ||
Proceeds from the exercise of stock options | 3,616 | 7,377 |
Payment of taxes on net share settlement of equity awards | (2,848) | (1,746) |
Net cash provided by financing activities | 768 | 5,631 |
Effect of exchange rate on cash | (214) | 6 |
(Decrease) increase in cash and cash equivalents | (10,121) | 540 |
Cash and cash equivalents at beginning of period | 185,537 | 441,592 |
Cash and cash equivalents at end of period | 175,416 | 442,132 |
Supplemental cash flow information | ||
Property and equipment included in accounts payable and accrued expenses | $ 5,458 | $ 2,577 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Description of Business Inspire Medical Systems, Inc. is a medical technology company focused on the development and commercialization of innovative, minimally invasive solutions for patients with obstructive sleep apnea ("OSA"). Our proprietary Inspire system is the first and only United States ("U.S.") Food and Drug Administration ("FDA") approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. Inspire therapy received premarket approval ("PMA") from the FDA in 2014 and has been commercially available in certain European markets since 2011 and certain Asia Pacific markets since 2021. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial reporting and as required by the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, the results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. All intercompany accounts and transactions have been eliminated in consolidation. For a complete discussion of our significant accounting policies and other information, the unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Cash and Cash Equivalents We consider all highly liquid securities, readily convertible to cash, that have original maturities of 90 days or less from the date of purchase to be cash equivalents. Cash is carried at cost, which approximates fair value, and cash equivalents, which consist of money market funds, are stated at fair value. Foreign Currency Our functional and reporting currency is the U.S. dollar. Our subsidiaries have functional currency in Euro and Yen. The consolidated financial statements are translated to U.S. dollars. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Sales and expenses denominated in foreign currencies are translated at exchange rates in effect on the date of the transaction. Foreign currency transaction gains and losses and the impacts of foreign currency remeasurement are recognized in other expense, net in the consolidated statements of operations and comprehensive loss. For the three-month periods ended March 31, 2024 and 2023, we recognized $0.1 million and $0.0 million of loss, net, respectively. Any unrealized gains and losses due to translation adjustments are included in accumulated other comprehensive income (loss) within stockholders' equity in the consolidated balance sheets. We had $0.1 million and $0.2 million of unrecognized gain in our accumulated other comprehensive income (loss) balance as of March 31, 2024 and December 31, 2023, respectively. Investments Our investments are classified as available-for-sale and consisted of the following: March 31, 2024 Amortized Unrealized Gross Aggregate Cost Gains Losses Fair Value Short-Term: Commercial paper $ 5,402 $ — $ (8) $ 5,394 Corporate debt securities 28,719 26 — 28,745 Certificates of deposit 7,643 6 (2) 7,647 U.S. treasury debt securities 224,085 76 (2) 224,159 Short-term investments $ 265,849 $ 108 $ (12) $ 265,945 Long-Term: Corporate debt securities $ 1,166 $ 5 $ — $ 1,171 Certificates of deposit 2,994 6 — 3,000 Asset-backed securities 911 — (1) 910 U.S. treasury debt securities 22,801 — (79) 22,722 Long-term investments $ 27,872 $ 11 $ (80) $ 27,803 December 31, 2023 Amortized Unrealized Gross Aggregate Cost Gains Losses Fair Value Short-Term: Commercial paper $ 2,950 $ 1 $ — $ 2,951 Corporate debt securities 30,154 61 — 30,215 Certificates of deposit 2,953 15 — 2,968 U.S. treasury debt securities 238,237 467 — 238,704 Short-term investments $ 274,294 $ 544 $ — $ 274,838 Long-Term: Corporate debt securities $ 3,109 $ 13 $ — $ 3,122 Asset-backed securities 1,170 1 — 1,171 U.S. treasury debt securities 4,838 12 — 4,850 Long-term investments $ 9,117 $ 26 $ — $ 9,143 Investments are classified as available-for-sale and are reported at their estimated fair market values which are based on quoted, active or inactive market prices when available. Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive loss within stockholders' equity. We had $0.0 million and $0.6 million of unrecognized gain in our accumulated other comprehensive income (loss) balance at March 31, 2024 and December 31, 2023, respectively. Any realized gains and losses are calculated on the specific identification method and reported net in other expense, net in the consolidated statements of operations and comprehensive loss. For both of the three months ended March 31, 2024 and 2023, we recognized $0 of realized gain or loss. As of March 31, 2024 and December 31, 2023, we had no investments with a contractual maturity of greater than three years. Currently, we do not intend to sell the investments, and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. We do not consider those investments to be other-than-temporarily impaired as of March 31, 2024. Each reporting period, we evaluate whether declines in fair value below carrying value are due to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs. Expected credit losses, not to exceed the amount of the unrealized loss, are recorded as an allowance through other expense, net in the consolidated statements of operations and comprehensive loss. The total allowance for credit losses was $0 at both March 31, 2024 and December 31, 2023. Fair Value of Financial Instruments We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: Level 1: Observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2: Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions. We classify instruments within Level 1 if quoted prices are available in active markets for identical assets, which include our money market funds and U.S. treasury securities. We classify instruments in Level 2 if the instruments are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or an income approach, such as a discounted cash flow pricing model that calculates values from observable inputs such as quoted interest rates, yield curves and other observable market information. These instruments include our commercial paper, certificates of deposit, corporate debt securities and asset-backed securities. The available-for-sale securities are held by a custodian who obtains investment prices from a third-party pricing provider that uses standard inputs (observable in the market) to models which vary by asset class. The following tables set forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of March 31, 2024 and December 31, 2023. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value Measurements as of March 31, 2024 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 141,547 $ 141,547 $ — $ — Total cash equivalents 141,547 141,547 — — Investments: Commercial paper 5,394 — 5,394 — Corporate debt securities 29,916 — 29,916 — Certificates of deposit 10,647 — 10,647 — Asset-backed securities 910 — 910 — U.S. government securities 246,881 246,881 — — Total investments 293,748 246,881 46,867 — Total cash equivalents and investments $ 435,295 $ 388,428 $ 46,867 $ — Fair Value Measurements as of December 31, 2023 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 146,217 $ 146,217 $ — $ — Total cash equivalents 146,217 146,217 — — Investments: Commercial paper 2,951 — 2,951 — Corporate debt securities 33,337 — 33,337 — Certificates of deposit 2,968 — 2,968 — Asset-backed securities 1,171 — 1,171 — U.S. government securities 243,554 243,554 — — Total investments 283,981 243,554 40,427 — Total cash equivalents and investments $ 430,198 $ 389,771 $ 40,427 $ — There were no transfers between levels during the periods ended March 31, 2024 and December 31, 2023. Concentration of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash equivalents, investments, and accounts receivable. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. Our investment policy limits investments to certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. We place restrictions on maturities and concentration by type and issuer. We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the consolidated balance sheets. However, as of March 31, 2024 and December 31, 2023, we limited our credit risk associated with cash equivalents by placing investments with banks we believe are highly creditworthy. We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base. We generally do not require collateral, and losses on accounts receivable have historically not been significant. Accounts Receivable and Allowance for Expected Credit Losses Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the general standard being net 30 days. Collateral or any other security to support payment of these receivables generally is not required. Each reporting period, we estimate the credit loss related to accounts receivable based on a migration analysis of accounts grouped by individual receivables delinquency status and apply our historic loss rate adjusted for management's assumption of future market conditions. Any change in the allowance from new receivables acquired or changes due to credit deterioration on previously existing receivables is recorded in selling, general and administrative expenses. Write-offs of receivables considered uncollectible are deducted from the allowance. Specific accounts receivable are written-off once a determination is made that the amount is uncollectible. The write-off is recorded in the period in which the account receivable is deemed uncollectible. Recoveries are recognized when received and as a direct credit to earnings or as a reduction to the allowance for credit losses (which would indirectly reduce the loss by decreasing bad debt expense). The following table presents the changes in the allowance for credit losses related to accounts receivable: Three Months Ended March 31, 2024 2023 Balance at beginning of period $ 1,648 $ 36 Charges (credits) to the allowance, net 76 — Accounts written off, net of recoveries (1,468) — Balance at the end of the period $ 256 $ 36 The increase in accounts written off, net of recoveries during the three months ended March 31, 2024 related primarily to accounts receivable with two healthcare systems. Inventories Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis and consisted of the following: March 31, 2024 December 31, 2023 Raw materials $ 8,303 $ 6,115 Finished goods 40,671 27,770 Total inventories, net of reserves $ 48,974 $ 33,885 We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized. The balance of inventory related to our next generation Inspire system was $2.6 million and $0.9 million as of March 31, 2024 and December 31, 2023, respectively. We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, incur charges to write down inventories to their net realizable value. The determination of a reserve for excess and obsolete inventory involves management exercising judgment to determine the required reserve, considering future demand, product life cycles, introduction of new products, and current market conditions. The reserve for excess and obsolete inventory was $3.1 million and $2.4 million as of March 31, 2024 and December 31, 2023, respectively. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following: March 31, 2024 December 31, 2023 Computer equipment and software $ 4,267 $ 2,601 Manufacturing equipment 7,845 7,245 Other equipment 1,353 1,842 Leasehold improvements 2,356 2,356 Construction in process 44,570 33,211 Property and equipment, cost 60,391 47,255 Less: accumulated depreciation and amortization (8,110) (7,271) Property and equipment, net $ 52,281 $ 39,984 Construction in process is comprised primarily of production equipment. Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three Strategic Investments For equity securities without readily determinable fair values, we have elected the measurement alternative under which we measure these investments at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. These securities are presented within other non-current assets on the consolidated balance sheets. The balance of equity securities without readily determinable fair values was $10.4 million as of both March 31, 2024 and December 31, 2023, respectively. There were no adjustments to the carrying amount during either of the three months ended March 31, 2024 or 2023. Impairment of Long-lived Assets Long-lived assets consist primarily of property and equipment, operating lease right-of-use assets, and strategic investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that an asset be tested for possible impairment, we compare the undiscounted cash flows expected to be generated by the asset to the carrying amount of the asset. If the carrying amount of the asset is not recoverable on an undiscounted cash flow basis, we determine the fair value of the asset and recognize an impairment loss to the extent the carrying amount of the asset exceeds its fair value. We determine fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. Our cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors. We did not record any impairment charges on long-lived assets during either of the three months ended March 31, 2024 or 2023. Accrued Expenses Accrued expenses consisted of the following: March 31, 2024 December 31, 2023 Payroll related $ 20,956 $ 33,875 Product warranty liability 1,388 1,100 Other accrued expenses 6,026 4,291 Total accrued expenses $ 28,370 $ 39,266 The following table shows the changes in our estimated product warranty liability accrual, included in accrued liabilities: Three Months Ended March 31, 2024 2023 Balance at beginning of period $ 1,100 $ 920 Provisions for warranty 535 132 Settlements of warranty claims (247) (311) Balance at the end of the period $ 1,388 $ 741 Revenue Recognition We derive our revenue from sales of our products in the U.S. and internationally. Customers are primarily comprised of hospitals and ambulatory surgery centers, with distributors being used in certain international locations where we do not have a direct commercial presence. Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms. Our standard shipping terms are free on board shipping point, unless the customer requests that control and title to the inventory transfer upon delivery. In those cases where shipping and handling costs are billed to customers, we classify the amounts billed as a component of cost of goods sold. Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Variable consideration related to certain customer sales incentives is estimated based on the amounts expected to be paid based on the agreement with the customer using probability assessments. We offer customers a limited right of return for our product in case of non-conformity or performance issues. We estimate the amount of our product sales that may be returned by our customers based on historical sales and returns. As our historical product returns to date have been immaterial, we have not recorded a reduction in revenue related to variable consideration for product returns. See Note 7 for disaggregated revenue by geographic area. Cost of Goods Sold Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers. The overhead costs include the cost of material procurement, depreciation expense for production equipment, and operations supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel. Research and Development Research and development expenses consist primarily of product development, clinical and regulatory affairs, quality assurance, consulting services, and other costs associated with products and technologies in development. These expenses include employee compensation, including stock-based compensation, supplies, materials, prelaunch inventory, consulting, and travel expenses related to research and development programs. Clinical expenses include clinical study design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical studies. We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized. Stock-Based Compensation We maintain an equity incentive plan to provide lon g-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of restricted stock units ("RSUs"), performance stock units ("PSUs"), and non-statutory and incentive stock options to employees, and RSUs, PSUs, and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan ("ESPP") which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. We recognize equity-based compensation expense for awards of equity instruments based on the grant date fair value of those awards as expense in the consolidated statements of operations and comprehensive loss. We estimate the fair value of stock options using the Black-Scholes option pricing model and the fair value of RSUs and PSUs is equal to the closing price of our common stock on the grant date. The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model. Stock-based compensation expense is recognized on a straight-line basis over the vesting term for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs. We account for award forfeitures as they occur. Advertising Expenses We expense the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $25.6 million and $23.6 million during the three months ended March 31, 2024 and 2023, respectively. Leases Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses, and operating lease liabilities – non-current portion in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments, and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on our consolidated balance sheets. Income Taxes We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As we have historically incurred operating losses, we have recorded a full valuation allowance against our net deferred tax assets, and there is no provision for income taxes other than minimal state and foreign taxes, which includes a foreign tax provision relating to uncertain tax positions. Our policy is to record interest and penalties expense related to uncertain tax positions as other expense in the consolidated statements of operations and comprehensive loss. Comprehensive Income (Loss) Comprehensive income (loss) consists of net loss and changes in unrealized gains and losses due to interest rate fluctuations and other external factors on investments classified as available-for-sale, and foreign currency translation adjustments. Accumulated other comprehensive income is presented in the accompanying consolidated balance sheets as a component of stockholders' equity. Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all potentially dilutive shares consisting of outstanding stock options, unvested RSUs and PSUs, and shares issuable under our employee stock purchase plan were antidilutive in those periods. Recent Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The standard requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. This authoritative guidance will be effective for us in fiscal 2025 for annual periods and in the first quarter of fiscal 2026 for interim periods, with early adoption permitted. We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The amendments in ASU 2023-09 are effective for us in fiscal 2025, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We are evaluating the impact of the standard on our income tax disclosures. In March 2024, the SEC issued climate-related disclosure rules that will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. As a large accelerated filer, we may be required to begin complying with climate-related disclosures as early as with respect to the fiscal year beginning in 2025. We are in the process of analyzing the impact of the rules on our related disclosures. We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | Leases We lease office space for our corporate headquarters under a non-cancelable operating lease. The corporate office leases were amended in May 2023 to increase the total space leased to approximately 106,000 square feet and to extend the noncancellable lease term through May 31, 2035. We entered into an additional warehouse and office space lease for our corporate headquarters under a non-cancelable operating lease in August 2023. This space includes approximately 22,000 square feet and a noncancellable lease term through May 31, 2035. Each lease includes options to renew for up to two additional periods of five years each at the then-prevailing market rates. The exercises of the lease renewal options are at our sole discretion and were not included in the lease term for the calculation of the ROU assets and lease liabilities as of the lease modification date as they were not reasonably certain of exercise. In March 2024, we entered into an amendment on our additional warehouse and office space lease which is expected to commence in January 2025. This amendment provides for approximately 18,000 square feet of additional space and follows the lease term and renewal options in the original lease described above. In addition to base rent in these leases, we also pay our proportionate share of the operating expenses, as defined in the leases. These payments are made monthly and adjusted annually to reflect actual charges incurred for operating expenses, such as common area maintenance, taxes, and insurance. The following table presents the lease balances within the consolidated balance sheets: March 31, 2024 December 31, 2023 Right-of-use assets: Operating lease right-of-use assets $ 22,248 $ 22,667 Operating lease liabilities: Operating lease liabilities, non-current portion $ 24,500 $ 24,846 As of March 31, 2024, the remaining lease terms were 11.2 years and the weighted average discount rate was 4.9%. The operating cash outflows from our operating leases were $0.6 million and $0.4 million for the three-month periods ended March 31, 2024 and 2023, respectively. |
Employee Retirement Plan
Employee Retirement Plan | 3 Months Ended |
Mar. 31, 2024 | |
Retirement Benefits [Abstract] | |
Employee Retirement Plan | Employee Retirement Plan We sponsor a defined contribution employee retirement plan covering all of our full-time employees. The plan allows eligible employees to defer a portion of their eligible compensation up to the maximum allowed by IRS Regulations. We make voluntary matching contributions of 50% of the first 6% of each participating employee's contribution, up to 3% of eligible earnings. Our match contributions are made to funds designated by the participant, none of which are based on Inspire common stock. Our matching contributions to the plan totaled $1.5 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation As of March 31, 2024, there were 4,879,073 shares reserved for issuance under our equity incentive plan, of which 1,538,340 shares were available for issuance. Stock-based compensation expense is recognized on a straight-line basis over the vesting term for stock options and RSUs, and over the performance period based on the probability of achieving the performance objectives for PSUs, and is reduced by actual forfeitures as they occur. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock-based awards. Stock Options Options are granted with an exercise price, which is equal to the closing price of our stock on the date of grant. Stock options include a four The fair value per share of options is estimated on the date of grant using the Black-Scholes option pricing model. Option Value and Assumptions Three Months Ended March 31, 2024 2023 Weighted average fair value $124.70 $151.88 Assumptions: Expected term (years) 6.25 6.25 Expected volatility 59.0 - 59.4% 57.2 - 57.4% Risk-free interest rate 3.95 - 4.28% 3.55 - 4.07% Expected dividend yield 0.0% 0.0% Expected Term — Due to our limited amount of historical exercise, forfeiture, and expiration activity, we have opted to use the "simplified method" for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting terms and the original contractual term of the option. We will continue to analyze our expected term assumption as more historical data becomes available. Expected Volatility — During the three months ended March 31, 2024, we based expected volatility on the historic volatility of our common stock. In prior periods, due to our limited company specific historical and implied volatility data, we incorporated our historical stock trading volatility with those of a group of similar companies that are publicly traded for the calculation of volatility. When selecting this peer group, we generally selected companies with comparable characteristics, including enterprise value, stages of clinical development, risk profiles, position within the industry, and those with historical share price information sufficient to meet the expected life of the stock-based awards. Risk-Free Interest Rate — The risk-free rate assumption is based on the U.S. government Treasury instruments with maturities similar to the expected term of our stock options. Expected Dividend Yield — The expected dividend assumption is based on our history of not paying dividends and our expectation that we will not declare dividends for the foreseeable future. Stock Option Activity Options Weighted Average Weighted Average Aggregate Intrinsic Outstanding at December 31, 2023 2,447,141 $ 152.17 7.0 $160,691 Granted 158,438 $ 196.92 Exercised (88,310) $ 41.03 $13,707 Forfeited/expired (15,696) $ 225.17 Outstanding at March 31, 2024 2,501,573 $ 158.47 7.0 $166,795 Exercisable at March 31, 2024 1,636,818 $ 122.86 6.1 $157,645 The aggregate intrinsic value of options exercised is the difference between the estimated fair market value of our common stock at the date of exercise and the exercise price for those options. The aggregate intrinsic value of outstanding options is the difference between the closing price as of the date outstanding and the exercise price of the underlying stock options. As of March 31, 2024, the amount of unearned stock-based compensation to be expensed from now through the year 2028 related to unvested stock options is $105.9 million, which we expect to recognize over a weighted average period of 2.5 years. Restricted Stock Units RSUs are share awards that entitle the holder to receive freely tradable shares of our common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s service terminates prior to the release of the vesting restrictions. The RSUs granted to employees include three one Restricted Stock Units Weighted Average Aggregate Intrinsic Value (in thousands) Unvested at December 31, 2023 201,070 $ 235.47 $ 40,904 Granted 405,239 $ 195.73 Vested (41,185) $ 247.56 $ 8,157 Forfeited (10,510) $ 207.74 Unvested at March 31, 2024 554,614 $ 206.06 $ 119,126 The aggregate intrinsic value of unvested RSUs was based on our closing stock price on the last trading day of the period. The aggregate intrinsic value of vested RSUs was based on our closing stock price on the date of vest. As of March 31, 2024, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2027 related to unvested RSUs was $103.4 million which we expect to recognize over a weighted average period of 2.6 years. Performance Stock Units During 2022, 2023, and 2024, we granted PSUs to officers and key employees. The number of PSUs that will ultimately be earned is based on our performance relative to pre-established goals for the three three A summary of PSUs and related information is as follows: Performance Stock Units Weighted Average Aggregate Intrinsic Value (in thousands) Unvested at December 31, 2023 168,969 $ 248.19 $ 34,373 Granted 166,110 $ 194.87 Forfeited (2,278) $ 263.16 Unvested at March 31, 2024 332,801 $ 221.47 $ 71,482 The fair value of the PSUs is equal to the closing price of our common stock on the grant date. The aggregate intrinsic value of unvested PSUs was based on our closing stock price on the last trading day of the period. As of March 31, 2024, there was $51.1 million of unrecognized stock-based compensation expense related to outstanding PSUs that is expected to be recognized over a weighted-average period of approximately 2.2 years. Employee Stock Purchase Plan |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes At both March 31, 2024 and December 31, 2023, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position. We recorded income tax expense of $0.7 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. Income tax expense consists of minimal state and foreign income taxes in both of the three-month periods ended March 31, 2024 and 2023. As of December 31, 2023, our gross federal net operating loss carryforwards were $226.1 million, which will expire at various dates beginning in 2034. In addition, net operating loss carryforwards for state income tax purposes of $173.5 million that include net operating losses will begin to expire in 2024. We also have gross research and development credit carryforwards of $14.7 million as of December 31, 2023, which will expire at various dates beginning in 2033. Utilization of the net operating loss carryforwards and research and development ("R&D") credit carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 and Section 383 of the Code and similar state provisions. During 2023, we finalized a detailed analysis to determine whether an ownership change has occurred through December 31, 2022, and if a limitation exists. It was determined that December 11, 2018 was the only date that we experienced an ownership change. The study concluded that none of the $126.5 million of federal net operating losses nor the $1.7 million of federal R&D credits that were accumulated on December 11, 2018 will expire unused solely due to the limitations under Sections 382 and 383 of the Code. We are in the process of updating the analysis through December 31, 2023. Although unexpected, if we experienced an ownership change during 2023 or 2024, the timing of our ability to utilize the tax attributes may be affected. Realization of the deferred tax assets is dependent upon the generation of future taxable income, if any, the amount and timing of which are uncertain. Based on available objective evidence and cumulative losses, we believe it is more likely than not that the deferred tax assets are not recognizable and will not be recognizable until we have sufficient book income. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. We had $0.1 million of tax payable on unrecognized tax positions as of both March 31, 2024 and December 31, 2023. We file income tax returns in the applicable jurisdictions. The 2020 to 2022 tax years remain open to examination by the major taxing authorities to which we are subject. We do not expect a significant change to our unrecognized tax positions over the next 12 months. |
Segment Reporting and Revenue D
Segment Reporting and Revenue Disaggregation | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Segment Reporting and Revenue Disaggregation | Segment Reporting and Revenue Disaggregation We operate our business as one operating segment. An operating segment is defined as a component of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. We sell our Inspire system to hospitals and ambulatory surgery centers in the U.S. and in select countries in Europe and Japan through a direct sales organization, and in Singapore and Hong Kong through distributors. Revenue by geographic region is as follows: Three Months Ended March 31, 2024 2023 United States $ 155,771 $ 124,485 All other countries 8,239 3,412 Total revenue $ 164,010 $ 127,897 Long-lived tangible assets by geographic location were as follows: March 31, 2024 December 31, 2023 United States $ 52,099 $ 39,916 All other countries 182 68 Total long-lived tangible assets $ 52,281 $ 39,984 |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all of the following potentially dilutive shares were antidilutive in those periods. The following common stock-based awards were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive: March 31, 2024 2023 Common stock options outstanding 2,501,573 2,818,389 Unvested restricted stock units 554,614 179,374 Shares issuable under the ESPP 5,872 5,136 Total 3,062,059 3,002,899 |
Related Party Transaction
Related Party Transaction | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | Related Party Transaction In December 2023, we entered into an agreement with an entity controlled by our Chief Executive Officer (the "Entity"), pursuant to which we agreed to share the costs of a corporate suite at a sports and entertainment venue (the "Venue") (the “Suite”) (the “Cost Sharing Agreement”). In August 2023, the Entity entered into an agreement with the Venue, pursuant to which the Entity acquired certain rights to use the Suite for specified sporting and other events at the Venue through August 2026. Pursuant to this agreement, the Entity agreed to pay $0.2 million per year, with each year beginning September 1 and ending August 31, and the fee increasing by 5% for each succeeding year. Under the Cost Sharing Agreement, we will reimburse the Entity 50% of the cost of the Suite in exchange for the right to use the Suite for 50% of the specified events at the Venue through August 2026. |
Commitment and Contingencies
Commitment and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Inspire and two of its executive officers were named as defendants in a purported federal securities law class action filed in the United States District Court for the District of Minnesota, captioned City of Hollywood Firefighters’ Pension Fund v. Inspire Medical Systems, Inc., et. al. , Court File No. 0:23-cv-03884. The plaintiff filed an amended complaint on April 19, 2024, which alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5, which alleged violations relate to certain prior disclosures of Inspire about the effectiveness of a program intended to help certain customers establish independence in seeking prior authorization from payors for our Inspire therapy. The plaintiff seeks to represent a class of shareholders who purchased or otherwise acquired Inspire common stock between May 3, 2023 and November 7, 2023. The plaintiff seeks damages and other relief, including attorneys' fees and costs. The defendants intend to vigorously defend this lawsuit. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net loss | $ (10,005) | $ (15,424) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial reporting and as required by the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, the results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. All intercompany accounts and transactions have been eliminated in consolidation. For a complete discussion of our significant accounting policies and other information, the unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid securities, readily convertible to cash, that have original maturities of 90 days or less from the date of purchase to be cash equivalents. Cash is carried at cost, which approximates fair value, and cash equivalents, which consist of money market funds, are stated at fair value. |
Foreign Currency | Foreign Currency Our functional and reporting currency is the U.S. dollar. Our subsidiaries have functional currency in Euro and Yen. The consolidated financial statements are translated to U.S. dollars. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Sales and expenses denominated in foreign currencies are translated at exchange rates in effect on the date of the transaction. Foreign currency transaction gains and losses and the impacts of foreign currency remeasurement are recognized in other expense, net in the consolidated statements of operations and comprehensive loss. For the three-month periods ended March 31, 2024 and 2023, we recognized $0.1 million and $0.0 million of loss, net, respectively. Any unrealized gains and losses due to translation adjustments are included in accumulated other comprehensive income (loss) within stockholders' equity in the consolidated balance sheets. We had $0.1 million and $0.2 million of unrecognized gain in our accumulated other comprehensive income (loss) balance as of March 31, 2024 and December 31, 2023, respectively. |
Investments | Investments are classified as available-for-sale and are reported at their estimated fair market values which are based on quoted, active or inactive market prices when available. Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive loss within stockholders' equity. We had $0.0 million and $0.6 million of unrecognized gain in our accumulated other comprehensive income (loss) balance at March 31, 2024 and December 31, 2023, respectively. Any realized gains and losses are calculated on the specific identification method and reported net in other expense, net in the consolidated statements of operations and comprehensive loss. For both of the three months ended March 31, 2024 and 2023, we recognized $0 of realized gain or loss. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash equivalents, investments, and accounts receivable. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits at certain of these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. Our investment policy limits investments to certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. We place restrictions on maturities and concentration by type and issuer. We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the consolidated balance sheets. However, as of March 31, 2024 and December 31, 2023, we limited our credit risk associated with cash equivalents by placing investments with banks we believe are highly creditworthy. We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base. We generally do not require collateral, and losses on accounts receivable have historically not been significant. |
Accounts Receivable and Allowance for Expected Credit Losses | Accounts Receivable and Allowance for Expected Credit Losses Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the general standard being net 30 days. Collateral or any other security to support payment of these receivables generally is not required. Each reporting period, we estimate the credit loss related to accounts receivable based on a migration analysis of accounts grouped by individual receivables delinquency status and apply our historic loss rate adjusted for management's assumption of future market conditions. Any change in the allowance from new receivables acquired or changes due to credit deterioration on previously existing receivables is recorded in selling, general and administrative expenses. Write-offs of receivables considered uncollectible are deducted from the allowance. Specific accounts receivable are written-off once a determination is made that the amount is uncollectible. The write-off is recorded in the period in which the account receivable is deemed uncollectible. Recoveries are recognized when received and as a direct credit to earnings or as a reduction to the allowance for credit losses (which would indirectly reduce the loss by decreasing bad debt expense). |
Inventories | We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized. The balance of inventory related to our next generation Inspire system was $2.6 million and $0.9 million as of March 31, 2024 and December 31, 2023, respectively. |
Property and Equipment | Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three |
Strategic Investments | Strategic Investments |
Impairment of Long-lived Assets | Impairment of Long-lived Assets |
Revenue Recognition | Revenue Recognition We derive our revenue from sales of our products in the U.S. and internationally. Customers are primarily comprised of hospitals and ambulatory surgery centers, with distributors being used in certain international locations where we do not have a direct commercial presence. Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms. Our standard shipping terms are free on board shipping point, unless the customer requests that control and title to the inventory transfer upon delivery. In those cases where shipping and handling costs are billed to customers, we classify the amounts billed as a component of cost of goods sold. Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Variable consideration related to certain customer sales incentives is estimated based on the amounts expected to be paid based on the agreement with the customer using probability assessments. We offer customers a limited right of return for our product in case of non-conformity or performance issues. We estimate the amount of our product sales that may be returned by our customers based on historical sales and returns. As our historical product returns to date have been immaterial, we have not recorded a reduction in revenue related to variable consideration for product returns. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, warranty replacement costs, as well as distribution-related expenses such as logistics and shipping costs, net of shipping costs charged to customers. The overhead costs include the cost of material procurement, depreciation expense for production equipment, and operations supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel. |
Research and Development | Research and Development Research and development expenses consist primarily of product development, clinical and regulatory affairs, quality assurance, consulting services, and other costs associated with products and technologies in development. These expenses include employee compensation, including stock-based compensation, supplies, materials, prelaunch inventory, consulting, and travel expenses related to research and development programs. Clinical expenses include clinical study design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical studies. We expense prelaunch inventory as research and development expense in the period incurred unless objective and persuasive evidence exists that regulatory approval and subsequent commercialization of a product candidate is probable and where we also expect the future economic benefit from the sales of the product candidate to be realized. |
Stock-Based Compensation | Stock-Based Compensation We maintain an equity incentive plan to provide lon g-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of restricted stock units ("RSUs"), performance stock units ("PSUs"), and non-statutory and incentive stock options to employees, and RSUs, PSUs, and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan ("ESPP") which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. We recognize equity-based compensation expense for awards of equity instruments based on the grant date fair value of those awards as expense in the consolidated statements of operations and comprehensive loss. We estimate the fair value of stock options using the Black-Scholes option pricing model and the fair value of RSUs and PSUs is equal to the closing price of our common stock on the grant date. The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model. Stock-based compensation expense is recognized on a straight-line basis over the vesting term for stock options and RSUs, and over the vesting and performance period based on the probability of achieving the performance objectives for PSUs. We account for award forfeitures as they occur. |
Advertising Expenses | Advertising Expenses |
Leases | Leases Operating leases are included in operating lease right-of-use ("ROU") assets, accrued expenses, and operating lease liabilities – non-current portion in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments, and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on our consolidated balance sheets. |
Income Taxes | Income Taxes We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As we have historically incurred operating losses, we have recorded a full valuation allowance against our net deferred tax assets, and there is no provision for income taxes other than minimal state and foreign taxes, which includes a foreign tax provision relating to uncertain tax positions. Our policy is to record interest and penalties expense related to uncertain tax positions as other expense in the consolidated statements of operations and comprehensive loss. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of net loss and changes in unrealized gains and losses due to interest rate fluctuations and other external factors on investments classified as available-for-sale, and foreign currency translation adjustments. Accumulated other comprehensive income is presented in the accompanying consolidated balance sheets as a component of stockholders' equity. |
Loss Per Share | Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share as all potentially dilutive shares consisting of outstanding stock options, unvested RSUs and PSUs, and shares issuable under our employee stock purchase plan were antidilutive in those periods. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The standard requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. This authoritative guidance will be effective for us in fiscal 2025 for annual periods and in the first quarter of fiscal 2026 for interim periods, with early adoption permitted. We are currently evaluating the effect of this new guidance on our consolidated financial statements and disclosures. In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The amendments in ASU 2023-09 are effective for us in fiscal 2025, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We are evaluating the impact of the standard on our income tax disclosures. In March 2024, the SEC issued climate-related disclosure rules that will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. As a large accelerated filer, we may be required to begin complying with climate-related disclosures as early as with respect to the fiscal year beginning in 2025. We are in the process of analyzing the impact of the rules on our related disclosures. We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Components of Investments Available-for-sale | Our investments are classified as available-for-sale and consisted of the following: March 31, 2024 Amortized Unrealized Gross Aggregate Cost Gains Losses Fair Value Short-Term: Commercial paper $ 5,402 $ — $ (8) $ 5,394 Corporate debt securities 28,719 26 — 28,745 Certificates of deposit 7,643 6 (2) 7,647 U.S. treasury debt securities 224,085 76 (2) 224,159 Short-term investments $ 265,849 $ 108 $ (12) $ 265,945 Long-Term: Corporate debt securities $ 1,166 $ 5 $ — $ 1,171 Certificates of deposit 2,994 6 — 3,000 Asset-backed securities 911 — (1) 910 U.S. treasury debt securities 22,801 — (79) 22,722 Long-term investments $ 27,872 $ 11 $ (80) $ 27,803 December 31, 2023 Amortized Unrealized Gross Aggregate Cost Gains Losses Fair Value Short-Term: Commercial paper $ 2,950 $ 1 $ — $ 2,951 Corporate debt securities 30,154 61 — 30,215 Certificates of deposit 2,953 15 — 2,968 U.S. treasury debt securities 238,237 467 — 238,704 Short-term investments $ 274,294 $ 544 $ — $ 274,838 Long-Term: Corporate debt securities $ 3,109 $ 13 $ — $ 3,122 Asset-backed securities 1,170 1 — 1,171 U.S. treasury debt securities 4,838 12 — 4,850 Long-term investments $ 9,117 $ 26 $ — $ 9,143 |
Schedule of assets and liabilities measured at fair value on a recurring basis | Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value Measurements as of March 31, 2024 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 141,547 $ 141,547 $ — $ — Total cash equivalents 141,547 141,547 — — Investments: Commercial paper 5,394 — 5,394 — Corporate debt securities 29,916 — 29,916 — Certificates of deposit 10,647 — 10,647 — Asset-backed securities 910 — 910 — U.S. government securities 246,881 246,881 — — Total investments 293,748 246,881 46,867 — Total cash equivalents and investments $ 435,295 $ 388,428 $ 46,867 $ — Fair Value Measurements as of December 31, 2023 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 146,217 $ 146,217 $ — $ — Total cash equivalents 146,217 146,217 — — Investments: Commercial paper 2,951 — 2,951 — Corporate debt securities 33,337 — 33,337 — Certificates of deposit 2,968 — 2,968 — Asset-backed securities 1,171 — 1,171 — U.S. government securities 243,554 243,554 — — Total investments 283,981 243,554 40,427 — Total cash equivalents and investments $ 430,198 $ 389,771 $ 40,427 $ — |
Schedule of changes in allowance for credit losses | The following table presents the changes in the allowance for credit losses related to accounts receivable: Three Months Ended March 31, 2024 2023 Balance at beginning of period $ 1,648 $ 36 Charges (credits) to the allowance, net 76 — Accounts written off, net of recoveries (1,468) — Balance at the end of the period $ 256 $ 36 |
Schedule of inventory | Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis and consisted of the following: March 31, 2024 December 31, 2023 Raw materials $ 8,303 $ 6,115 Finished goods 40,671 27,770 Total inventories, net of reserves $ 48,974 $ 33,885 |
Schedule of property and equipment | Property and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following: March 31, 2024 December 31, 2023 Computer equipment and software $ 4,267 $ 2,601 Manufacturing equipment 7,845 7,245 Other equipment 1,353 1,842 Leasehold improvements 2,356 2,356 Construction in process 44,570 33,211 Property and equipment, cost 60,391 47,255 Less: accumulated depreciation and amortization (8,110) (7,271) Property and equipment, net $ 52,281 $ 39,984 |
Schedule of accrued expenses | Accrued expenses consisted of the following: March 31, 2024 December 31, 2023 Payroll related $ 20,956 $ 33,875 Product warranty liability 1,388 1,100 Other accrued expenses 6,026 4,291 Total accrued expenses $ 28,370 $ 39,266 |
Schedule of product warranty liability | The following table shows the changes in our estimated product warranty liability accrual, included in accrued liabilities: Three Months Ended March 31, 2024 2023 Balance at beginning of period $ 1,100 $ 920 Provisions for warranty 535 132 Settlements of warranty claims (247) (311) Balance at the end of the period $ 1,388 $ 741 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Lease Balances within the Balance Sheets | The following table presents the lease balances within the consolidated balance sheets: March 31, 2024 December 31, 2023 Right-of-use assets: Operating lease right-of-use assets $ 22,248 $ 22,667 Operating lease liabilities: Operating lease liabilities, non-current portion $ 24,500 $ 24,846 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of weighted average assumptions for fair value of options granted | The fair value per share of options is estimated on the date of grant using the Black-Scholes option pricing model. Option Value and Assumptions Three Months Ended March 31, 2024 2023 Weighted average fair value $124.70 $151.88 Assumptions: Expected term (years) 6.25 6.25 Expected volatility 59.0 - 59.4% 57.2 - 57.4% Risk-free interest rate 3.95 - 4.28% 3.55 - 4.07% Expected dividend yield 0.0% 0.0% |
Summary of the company's stock option activity and related information | Stock Option Activity Options Weighted Average Weighted Average Aggregate Intrinsic Outstanding at December 31, 2023 2,447,141 $ 152.17 7.0 $160,691 Granted 158,438 $ 196.92 Exercised (88,310) $ 41.03 $13,707 Forfeited/expired (15,696) $ 225.17 Outstanding at March 31, 2024 2,501,573 $ 158.47 7.0 $166,795 Exercisable at March 31, 2024 1,636,818 $ 122.86 6.1 $157,645 |
Schedule of restricted stock units activity | The fair value of the RSUs is equal to the closing price of our common stock on the grant date. A summary of RSUs and related information is as follows: Restricted Stock Units Weighted Average Aggregate Intrinsic Value (in thousands) Unvested at December 31, 2023 201,070 $ 235.47 $ 40,904 Granted 405,239 $ 195.73 Vested (41,185) $ 247.56 $ 8,157 Forfeited (10,510) $ 207.74 Unvested at March 31, 2024 554,614 $ 206.06 $ 119,126 |
Summary of PSU's and related information | A summary of PSUs and related information is as follows: Performance Stock Units Weighted Average Aggregate Intrinsic Value (in thousands) Unvested at December 31, 2023 168,969 $ 248.19 $ 34,373 Granted 166,110 $ 194.87 Forfeited (2,278) $ 263.16 Unvested at March 31, 2024 332,801 $ 221.47 $ 71,482 |
Segment Reporting and Revenue_2
Segment Reporting and Revenue Disaggregation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Region | Revenue by geographic region is as follows: Three Months Ended March 31, 2024 2023 United States $ 155,771 $ 124,485 All other countries 8,239 3,412 Total revenue $ 164,010 $ 127,897 |
Long-Lived Assets by Geographic Areas | Long-lived tangible assets by geographic location were as follows: March 31, 2024 December 31, 2023 United States $ 52,099 $ 39,916 All other countries 182 68 Total long-lived tangible assets $ 52,281 $ 39,984 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Dilutive Securities Excluded from Computations of Diluted Weighted Average Shares Outstanding | The following common stock-based awards were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive: March 31, 2024 2023 Common stock options outstanding 2,501,573 2,818,389 Unvested restricted stock units 554,614 179,374 Shares issuable under the ESPP 5,872 5,136 Total 3,062,059 3,002,899 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounting Policies [Abstract] | ||
Foreign currency loss, net | $ 0.1 | $ 0 |
Foreign currency gains included in accumulated other comprehensive loss | $ (0.1) | $ (0.2) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Components of Investments Classified as Available-for-Sale (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Short-Term: | ||
Amortized Cost | $ 265,849 | $ 274,294 |
Aggregate Fair Value | 265,945 | 274,838 |
Long-Term: | ||
Amortized Cost | 27,872 | 9,117 |
Aggregate Fair Value | 27,803 | 9,143 |
Short-term | ||
Short-Term: | ||
Unrealized Gross Gains | 108 | 544 |
Unrealized Gross Losses | (12) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 108 | 544 |
Unrealized Gross Losses | (12) | 0 |
Long-term | ||
Short-Term: | ||
Unrealized Gross Gains | 11 | 26 |
Unrealized Gross Losses | (80) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 11 | 26 |
Unrealized Gross Losses | (80) | 0 |
Commercial paper | ||
Short-Term: | ||
Amortized Cost | 5,402 | 2,950 |
Aggregate Fair Value | 5,394 | 2,951 |
Commercial paper | Short-term | ||
Short-Term: | ||
Unrealized Gross Gains | 0 | 1 |
Unrealized Gross Losses | (8) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 0 | 1 |
Unrealized Gross Losses | (8) | 0 |
Corporate debt securities | ||
Short-Term: | ||
Amortized Cost | 28,719 | 30,154 |
Aggregate Fair Value | 28,745 | 30,215 |
Long-Term: | ||
Amortized Cost | 1,166 | 3,109 |
Aggregate Fair Value | 1,171 | 3,122 |
Corporate debt securities | Short-term | ||
Short-Term: | ||
Unrealized Gross Gains | 26 | 61 |
Unrealized Gross Losses | 0 | 0 |
Long-Term: | ||
Unrealized Gross Gains | 26 | 61 |
Unrealized Gross Losses | 0 | 0 |
Corporate debt securities | Long-term | ||
Short-Term: | ||
Unrealized Gross Gains | 5 | 13 |
Unrealized Gross Losses | 0 | 0 |
Long-Term: | ||
Unrealized Gross Gains | 5 | 13 |
Unrealized Gross Losses | 0 | 0 |
Certificates of deposit | ||
Short-Term: | ||
Amortized Cost | 7,643 | 2,953 |
Aggregate Fair Value | 7,647 | 2,968 |
Certificates of deposit | Short-term | ||
Short-Term: | ||
Unrealized Gross Gains | 6 | 15 |
Unrealized Gross Losses | (2) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 6 | 15 |
Unrealized Gross Losses | (2) | 0 |
U.S. treasury debt securities | ||
Short-Term: | ||
Amortized Cost | 224,085 | 238,237 |
Aggregate Fair Value | 224,159 | 238,704 |
Long-Term: | ||
Amortized Cost | 22,801 | 4,838 |
Aggregate Fair Value | 22,722 | 4,850 |
U.S. treasury debt securities | Short-term | ||
Short-Term: | ||
Unrealized Gross Gains | 76 | 467 |
Unrealized Gross Losses | (2) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 76 | 467 |
Unrealized Gross Losses | (2) | 0 |
U.S. treasury debt securities | Long-term | ||
Short-Term: | ||
Unrealized Gross Gains | 0 | 12 |
Unrealized Gross Losses | (79) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 0 | 12 |
Unrealized Gross Losses | (79) | 0 |
Certificates of deposit | ||
Long-Term: | ||
Amortized Cost | 2,994 | |
Aggregate Fair Value | 3,000 | |
Certificates of deposit | Long-term | ||
Short-Term: | ||
Unrealized Gross Gains | 6 | |
Unrealized Gross Losses | 0 | |
Long-Term: | ||
Unrealized Gross Gains | 6 | |
Unrealized Gross Losses | 0 | |
Asset-backed securities | ||
Long-Term: | ||
Amortized Cost | 911 | 1,170 |
Aggregate Fair Value | 910 | 1,171 |
Asset-backed securities | Long-term | ||
Short-Term: | ||
Unrealized Gross Gains | 0 | 1 |
Unrealized Gross Losses | (1) | 0 |
Long-Term: | ||
Unrealized Gross Gains | 0 | 1 |
Unrealized Gross Losses | $ (1) | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Investments (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Accounting Policies [Abstract] | |||
Unrecognized loss in accumulated other comprehensive income (loss) | $ 0 | $ (600,000) | |
Realized losses | 0 | $ 0 | |
Investments with maturity greater than one year | 0 | $ 0 | |
Allowance for credit losses | $ 0 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) - Recurring basis - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Cash equivalents: | ||
Total cash equivalents | $ 141,547 | $ 146,217 |
Investments: | ||
Total investments | 293,748 | 283,981 |
Total cash equivalents and investments | 435,295 | 430,198 |
Commercial paper | ||
Investments: | ||
Total investments | 5,394 | 2,951 |
Corporate debt securities | ||
Investments: | ||
Total investments | 29,916 | 33,337 |
Certificates of deposit | ||
Investments: | ||
Total investments | 10,647 | 2,968 |
Asset-backed securities | ||
Investments: | ||
Total investments | 910 | 1,171 |
U.S. government securities | ||
Investments: | ||
Total investments | 246,881 | 243,554 |
Money market funds | ||
Cash equivalents: | ||
Total cash equivalents | 141,547 | 146,217 |
Level 1 | ||
Cash equivalents: | ||
Total cash equivalents | 141,547 | 146,217 |
Investments: | ||
Total investments | 246,881 | 243,554 |
Total cash equivalents and investments | 388,428 | 389,771 |
Level 1 | Commercial paper | ||
Investments: | ||
Total investments | 0 | 0 |
Level 1 | Corporate debt securities | ||
Investments: | ||
Total investments | 0 | 0 |
Level 1 | Certificates of deposit | ||
Investments: | ||
Total investments | 0 | 0 |
Level 1 | Asset-backed securities | ||
Investments: | ||
Total investments | 0 | 0 |
Level 1 | U.S. government securities | ||
Investments: | ||
Total investments | 246,881 | 243,554 |
Level 1 | Money market funds | ||
Cash equivalents: | ||
Total cash equivalents | 141,547 | 146,217 |
Level 2 | ||
Cash equivalents: | ||
Total cash equivalents | 0 | 0 |
Investments: | ||
Total investments | 46,867 | 40,427 |
Total cash equivalents and investments | 46,867 | 40,427 |
Level 2 | Commercial paper | ||
Investments: | ||
Total investments | 5,394 | 2,951 |
Level 2 | Corporate debt securities | ||
Investments: | ||
Total investments | 29,916 | 33,337 |
Level 2 | Certificates of deposit | ||
Investments: | ||
Total investments | 10,647 | 2,968 |
Level 2 | Asset-backed securities | ||
Investments: | ||
Total investments | 910 | 1,171 |
Level 2 | U.S. government securities | ||
Investments: | ||
Total investments | 0 | 0 |
Level 2 | Money market funds | ||
Cash equivalents: | ||
Total cash equivalents | 0 | 0 |
Level 3 | ||
Cash equivalents: | ||
Total cash equivalents | 0 | 0 |
Investments: | ||
Total investments | 0 | 0 |
Total cash equivalents and investments | 0 | 0 |
Level 3 | Commercial paper | ||
Investments: | ||
Total investments | 0 | 0 |
Level 3 | Corporate debt securities | ||
Investments: | ||
Total investments | 0 | 0 |
Level 3 | Certificates of deposit | ||
Investments: | ||
Total investments | 0 | 0 |
Level 3 | Asset-backed securities | ||
Investments: | ||
Total investments | 0 | 0 |
Level 3 | U.S. government securities | ||
Investments: | ||
Total investments | 0 | 0 |
Level 3 | Money market funds | ||
Cash equivalents: | ||
Total cash equivalents | $ 0 | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Changes in the Allowance for Credit Losses Related to Accounts Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 1,648 | $ 36 |
Charges (credits) to the allowance, net | 76 | 0 |
Accounts written off, net of recoveries | (1,468) | 0 |
Balance at end of period | $ 256 | $ 36 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accounting Policies [Abstract] | ||
Raw materials | $ 8,303 | $ 6,115 |
Finished goods | 40,671 | 27,770 |
Total inventories, net of reserves | 48,974 | 33,885 |
Next generation pre-launch research and development inventory | 2,600 | 900 |
Reserve for excess and obsolete inventory | $ 3,100 | $ 2,400 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Property and Equipment | |||
Property and equipment, cost | $ 60,391 | $ 47,255 | |
Less: accumulated depreciation and amortization | (8,110) | (7,271) | |
Property and equipment, net | 52,281 | 39,984 | |
Depreciation and amortization expenses | 800 | $ 600 | |
Computer equipment and software | |||
Property and Equipment | |||
Property and equipment, cost | 4,267 | 2,601 | |
Manufacturing equipment | |||
Property and Equipment | |||
Property and equipment, cost | 7,845 | 7,245 | |
Other equipment | |||
Property and Equipment | |||
Property and equipment, cost | 1,353 | 1,842 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, cost | 2,356 | 2,356 | |
Construction in process | |||
Property and Equipment | |||
Property and equipment, cost | $ 44,570 | $ 33,211 | |
Minimum | |||
Property and Equipment | |||
Estimated useful lives | 3 years | ||
Maximum | |||
Property and Equipment | |||
Estimated useful lives | 5 years |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Strategic Investments (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Dec. 31, 2023 |
Accounting Policies [Abstract] | ||
Equity securities without readily determinable fair value | $ 10.4 | $ 10.4 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Impairment of Long-lived Assets (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Accounting Policies [Abstract] | ||
Impairment charges | $ 0 | $ 0 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accounting Policies [Abstract] | ||
Payroll related | $ 20,956 | $ 33,875 |
Product warranty liability | 1,388 | 1,100 |
Other accrued expenses | 6,026 | 4,291 |
Total accrued expenses | $ 28,370 | $ 39,266 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Product Warranty Accrual (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 1,100 | $ 920 |
Provisions for warranty | 535 | 132 |
Settlements of warranty claims | (247) | (311) |
Balance at the end of the period | $ 1,388 | $ 741 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Advertising Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Advertising Expenses | ||
Advertising expenses | $ 25.6 | $ 23.6 |
Leases - Narrative (Details)
Leases - Narrative (Details) ft² in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | ||
Aug. 31, 2023 ft² renewal_option | May 31, 2023 ft² renewal_option | Mar. 31, 2024 USD ($) ft² | Mar. 31, 2023 USD ($) | |
Leases [Abstract] | ||||
Operating lease, office space (square feet) | ft² | 22 | 106 | 18 | |
Number of renewal options | renewal_option | 2 | 2 | ||
Renewal term | 5 years | 5 years | ||
Remaining lease term | 11 years 2 months 12 days | |||
Discount rate | 4.90% | |||
Operating lease payments | $ | $ 0.6 | $ 0.4 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Right-of-use assets: | ||
Operating lease right-of-use assets | $ 22,248 | $ 22,667 |
Operating lease liabilities: | ||
Operating lease liabilities, non-current portion | $ 24,500 | $ 24,846 |
Employee Retirement Plan (Detai
Employee Retirement Plan (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Retirement Benefits [Abstract] | ||
Employer matching contribution, percent of employees' contribution | 50% | |
Employee contribution, maximum eligible for employer match, percent | 6% | |
Employer matching contribution, percent of employees' earnings | 3% | |
Employer matching contribution | $ 1.5 | $ 1.2 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) installment shares | |
Stock Options | |
Unearned stock-based compensation | $ | $ 105.9 |
Weighted average recognition period | 2 years 6 months |
Options | |
Stock Options | |
Service period | 4 years |
Contractual life of stock options | 10 years |
Options | Maximum | |
Stock Options | |
Vesting annual installments | installment | 3 |
Options | Directors | Minimum | |
Stock Options | |
Vesting annual installments | installment | 1 |
Options | Vesting after first year of service | |
Stock Options | |
Percentage of shares to vest | 25% |
Options | Vesting in years two through four | |
Stock Options | |
Vesting period | 36 months |
Restricted Stock Units (RSUs) | |
Stock Options | |
Unearned stock-based compensation | $ | $ 103.4 |
Weighted average recognition period | 2 years 7 months 6 days |
Restricted Stock Units (RSUs) | Minimum | |
Stock Options | |
Service period | 3 years |
Restricted Stock Units (RSUs) | Maximum | |
Stock Options | |
Service period | 4 years |
Restricted Stock Units (RSUs) | Directors | Minimum | |
Stock Options | |
Service period | 1 year |
Restricted Stock Units (RSUs) | Directors | Maximum | |
Stock Options | |
Service period | 3 years |
Equity Incentive Plan | |
Stock Options | |
Shares authorized (in shares) | shares | 4,879,073 |
Number of shares available for future awards (in shares) | shares | 1,538,340 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used to Calculate Fair Value of Options (Details) - Options - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Weighted average assumptions | ||
Weighted average fair value (in dollars per share) | $ 124.70 | $ 151.88 |
Expected term (years) | 6 years 3 months | |
Expected dividend yield | 0% | 0% |
Minimum | ||
Weighted average assumptions | ||
Expected term (years) | 6 years 3 months | |
Expected volatility | 59% | 57.20% |
Risk-free interest rate | 3.95% | 3.55% |
Maximum | ||
Weighted average assumptions | ||
Expected volatility | 59.40% | 57.40% |
Risk-free interest rate | 4.28% | 4.07% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Options | ||
Outstanding at beginning of the year (in shares) | 2,447,141 | |
Granted (in shares) | 158,438 | |
Exercised (in shares) | (88,310) | |
Forfeited/expired (in shares) | (15,696) | |
Outstanding at ending of the year (in shares) | 2,501,573 | 2,447,141 |
Exercisable (in shares) | 1,636,818 | |
Weighted Average Exercise Price | ||
Outstanding, beginning of the period (in dollars per share) | $ 152.17 | |
Granted (in dollars per share) | 196.92 | |
Exercised (in dollars per share) | 41.03 | |
Forfeited/expired (in dollars per share) | 225.17 | |
Outstanding, end of the period (in dollars per share) | 158.47 | $ 152.17 |
Exercisable (in dollars per share) | $ 122.86 | |
Weighted Average Remaining Contractual Term (years) | ||
Outstanding | 7 years | 7 years |
Exercisable | 6 years 1 month 6 days | |
Aggregate Intrinsic Value | ||
Outstanding, beginning of period | $ 166,795 | $ 160,691 |
Exercised | 13,707 | |
Outstanding, end of period | 166,795 | $ 160,691 |
Exercisable at end of period | $ 157,645 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) $ / shares shares | |
Restricted Stock Units | |
Forfeited (in shares) | shares | (2,278) |
Weighted Average Grant Date Fair Value | |
Forfeited (in dollars per share) | $ / shares | $ 263.16 |
Restricted Stock Units (RSUs) | |
Restricted Stock Units | |
Unvested at beginning of period (in shares) | shares | 201,070 |
Granted (in shares) | shares | 405,239 |
Vested (in shares) | shares | (41,185) |
Forfeited (in shares) | shares | (10,510) |
Unvested at end of period (in shares) | shares | 554,614 |
Weighted Average Grant Date Fair Value | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 235.47 |
Granted (in dollars per share) | $ / shares | 195.73 |
Vested (in dollars per share) | $ / shares | 247.56 |
Forfeited (in dollars per share) | $ / shares | 207.74 |
Unvested at end of period (in dollars per share) | $ / shares | $ 206.06 |
Aggregate Intrinsic Value | |
Unvested at beginning of period | $ | $ 40,904 |
Vested | $ | 8,157 |
Unvested at end of period | $ | $ 119,126 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Stock Units (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) $ / shares shares | |
Restricted Stock Units | |
Forfeited (in shares) | shares | (2,278) |
Weighted Average Grant Date Fair Value | |
Forfeited (in dollars per share) | $ / shares | $ 263.16 |
Aggregate Intrinsic Value | |
Unearned stock-based compensation | $ | $ 105,900 |
Weighted average recognition period | 2 years 6 months |
Performance stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Revenue goal, performance period | 3 years |
Restricted Stock Units | |
Unvested at beginning of period (in shares) | shares | 168,969 |
Granted (in shares) | shares | 166,110 |
Unvested at end of period (in shares) | shares | 332,801 |
Weighted Average Grant Date Fair Value | |
Unvested at beginning of period (in dollars per share) | $ / shares | $ 248.19 |
Granted (in dollars per share) | $ / shares | 194.87 |
Unvested at end of period (in dollars per share) | $ / shares | $ 221.47 |
Aggregate Intrinsic Value | |
Unvested at beginning of period | $ | $ 34,373 |
Unvested at end of period | $ | 71,482 |
Unearned stock-based compensation | $ | $ 51,100 |
Weighted average recognition period | 2 years 2 months 12 days |
Performance stock units | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance target, percentage | 0% |
Performance stock units | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance target, percentage | 200% |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan | 3 Months Ended |
Mar. 31, 2024 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Employee stock purchase plan, percent | 85% |
Number of shares reserved for issuance (in shares) | 1,248,131 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 11, 2018 | |
Operating Loss Carryforwards [Line Items] | ||||
Income tax expense | $ 650,000 | $ 216,000 | $ 200,000 | |
Significant change to unrecognized tax benefits over the next 12 months | 0 | |||
Unrecognized tax benefits | $ 100,000 | 100,000 | ||
R&D credit | ||||
Operating Loss Carryforwards [Line Items] | ||||
Credit carryforwards | 14,700,000 | $ 1,700,000 | ||
Federal | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 226,100,000 | $ 126,500,000 | ||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 173,500,000 |
Segment Reporting and Revenue_3
Segment Reporting and Revenue Disaggregation - Revenue by Geographic Region (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) segment | Mar. 31, 2023 USD ($) | |
Segment Reporting [Abstract] | ||
Number of operating segments | segment | 1 | |
Revenue by Geographic Region | ||
Revenue | $ 164,010 | $ 127,897 |
United States | ||
Revenue by Geographic Region | ||
Revenue | 155,771 | 124,485 |
All other countries | ||
Revenue by Geographic Region | ||
Revenue | $ 8,239 | $ 3,412 |
Segment Reporting and Revenue_4
Segment Reporting and Revenue Disaggregation - Long-lived Tangible Assets by Geographic Location (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Revenue by Geographic Region | ||
Property and equipment, net | $ 52,281 | $ 39,984 |
United States | ||
Revenue by Geographic Region | ||
Property and equipment, net | 52,099 | 39,916 |
All other countries | ||
Revenue by Geographic Region | ||
Property and equipment, net | $ 182 | $ 68 |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 3,062,059 | 3,002,899 |
Common stock options outstanding | ||
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 2,501,573 | 2,818,389 |
Unvested restricted stock units | ||
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 554,614 | 179,374 |
Shares issuable under the ESPP | ||
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 5,872 | 5,136 |
Related Party Transaction (Deta
Related Party Transaction (Details) - Related Party $ in Millions | 1 Months Ended |
Dec. 31, 2023 USD ($) | |
Related Party Transaction [Line Items] | |
Cost Sharing Agreement, for corporate suite annual amount due from other party | $ 0.2 |
Cost Sharing Agreement, corporate suite annual fee increase, percentage | 5% |
Cost Sharing Agreement, reimbursement payable in exchange for use, of suite, percent | 50% |
Cost Sharing Agreement, right to use suite, percentage | 50% |