SIENTRA, INC., 10-Q filed on 8/9/2019
Quarterly Report
v3.19.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 01, 2019
Document And Entity Information [Abstract]    
Entity Registrant Name Sientra, Inc.  
Entity Central Index Key 0001551693  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Ex Transition Period true  
Entity Common Stock, Shares Outstanding   49,291,645
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q2  
Trading Symbol SIEN  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity File Number 001-36709  
Entity Tax Identification Number 205551000  
Entity Address, Address Line One 420 South Fairview Avenue  
Entity Address, Address Line Two Suite 200  
Entity Address, City or Town Santa Barbara  
Entity Address, State or Province California  
Entity Address, Postal Zip Code 93117  
City Area Code 805  
Local Phone Number 562-3500  
v3.19.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 146,088 $ 86,899
Accounts receivable, net of allowances of $3,185 and $2,428 at June 30, 2019 and December 31, 2018, respectively 23,887 22,527
Inventories, net 29,864 24,085
Prepaid expenses and other current assets 4,017 2,612
Total current assets 203,856 136,123
Property and equipment, net 3,686 2,536
Goodwill 4,878 12,507
Other intangible assets, net 10,290 16,495
Other assets 23,235 698
Total assets 245,945 168,359
Current liabilities:    
Current portion of long-term debt 18,144 6,866
Accounts payable 14,600 13,184
Accrued and other current liabilities 36,280 27,697
Legal settlement payable   410
Customer deposits 11,579 9,936
Sales return liability 7,020 6,048
Total current liabilities 87,623 64,141
Long-term debt 20,938 27,883
Deferred and contingent consideration 364 6,481
Warranty reserve and other long-term liabilities 21,847 2,976
Total liabilities 130,772 101,481
Commitments and contingencies (Note 14)
Stockholders’ equity:    
Preferred stock, $0.01 par value – Authorized 10,000,000 shares; none issued or outstanding
Common stock, $0.01 par value — Authorized 200,000,000 shares; issued 49,350,266 and 28,701,494 and outstanding 49,277,539 and 28,628,767 shares at June 30, 2019 and December 31, 2018 respectively 493 286
Additional paid-in capital 541,175 428,949
Treasury stock, at cost (72,727 shares at June 30, 2019 and December 31, 2018) (260) (260)
Accumulated deficit (426,235) (362,097)
Total stockholders’ equity 115,173 66,878
Total liabilities and stockholders’ equity $ 245,945 $ 168,359
v3.19.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Statement Of Financial Position [Abstract]    
Accounts receivable, allowances (in dollars) $ 3,185 $ 2,428
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 49,350,266 28,701,494
Common stock, shares outstanding 49,277,539 28,628,767
Treasury stock, shares 72,727 72,727
v3.19.2
Condensed Consolidated Statements of Operations - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Net sales $ 20,525,000 $ 17,554,000 $ 38,077,000 $ 32,229,000
Cost of goods sold 7,813,000 6,660,000 14,287,000 12,756,000
Gross profit 12,712,000 10,894,000 23,790,000 19,473,000
Operating expenses:        
Sales and marketing 21,918,000 15,477,000 42,319,000 30,733,000
Research and development 3,270,000 2,301,000 6,325,000 5,052,000
General and administrative 11,814,000 10,014,000 25,289,000 19,514,000
Goodwill and other intangible impairment 12,674,000   12,674,000  
Total operating expenses 49,676,000 27,792,000 86,607,000 55,299,000
Loss from operations (36,964,000) (16,898,000) (62,817,000) (35,826,000)
Other income (expense), net:        
Interest income 269,000 40,000 573,000 80,000
Interest expense (982,000) (867,000) (1,932,000) (1,521,000)
Other income (expense), net 23,000 (303,000) 38,000 (184,000)
Total other income (expense), net (690,000) (1,130,000) (1,321,000) (1,625,000)
Loss before income taxes (37,654,000) (18,028,000) (64,138,000) (37,451,000)
Income tax (benefit) expense 0 0 0 0
Net loss $ (37,654,000) $ (18,028,000) $ (64,138,000) $ (37,451,000)
Basic and diluted net loss per share attributable to common stockholders $ (1.10) $ (0.73) $ (2.02) $ (1.69)
Weighted average outstanding common shares used for net loss per share attributable to common stockholders:        
Basic and diluted 34,290,073 24,761,117 31,709,067 22,202,565
v3.19.2
Condensed Consolidated Statement of Stockholders' Equity - USD ($)
$ in Thousands
Total
Common stock
Treasury stock
Additional paid-in capital
Accumulated deficit
Balance, beginning of year at Dec. 31, 2017 $ 27,623 $ 194 $ (260) $ 307,159 $ (279,470)
Balance, beginning of year (in shares) at Dec. 31, 2017   19,474,702 72,727    
Stock-based compensation 2,548     2,548  
Employee stock purchase program (ESPP) 391 $ 1   390  
Employee stock purchase program (ESPP) (in shares)   62,491      
Vested restricted stock   $ 3   (3)  
Vested restricted stock (in shares)   271,936      
Shares withheld for tax obligations on vested RSUs (1,296) $ (1)   (1,295)  
Shares withheld for tax obligations on vested RSUs, shares   (92,760)      
Net loss (19,423)       (19,423)
Balance, end of year at Mar. 31, 2018 9,843 $ 197 $ (260) 308,799 (298,893)
Balance, end of year (in shares) at Mar. 31, 2018   19,716,369 72,727    
Balance, beginning of year at Dec. 31, 2017 27,623 $ 194 $ (260) 307,159 (279,470)
Balance, beginning of year (in shares) at Dec. 31, 2017   19,474,702 72,727    
Net loss (37,451)        
Balance, end of year at Jun. 30, 2018 102,914 $ 284 $ (260) 419,811 (316,921)
Balance, end of year (in shares) at Jun. 30, 2018   28,390,271 72,727    
Balance, beginning of year at Mar. 31, 2018 9,843 $ 197 $ (260) 308,799 (298,893)
Balance, beginning of year (in shares) at Mar. 31, 2018   19,716,369 72,727    
Proceeds from follow-on offering, net of costs 107,551 $ 85   107,466  
Proceeds from follow-on offering, net of costs (in shares)   8,518,519      
Stock-based compensation 3,138     3,138  
Stock option exercises 410 $ 1   409  
Stock option exercises (in shares)   61,203      
Vested restricted stock   $ 1   (1)  
Vested restricted stock (in shares)   94,180      
Net loss (18,028)       (18,028)
Balance, end of year at Jun. 30, 2018 102,914 $ 284 $ (260) 419,811 (316,921)
Balance, end of year (in shares) at Jun. 30, 2018   28,390,271 72,727    
Balance, beginning of year at Dec. 31, 2018 66,878 $ 286 $ (260) 428,949 (362,097)
Balance, beginning of year (in shares) at Dec. 31, 2018   28,701,494 72,727    
Stock-based compensation 3,772     3,772  
Stock option exercises 106     106  
Stock option exercises (in shares)   45,453      
Employee stock purchase program (ESPP) 683 $ 1   682  
Employee stock purchase program (ESPP) (in shares)   68,899      
Vested restricted stock   $ 7   (7)  
Vested restricted stock (in shares)   671,245      
Shares withheld for tax obligations on vested RSUs (2,725) $ (2)   (2,723)  
Shares withheld for tax obligations on vested RSUs, shares   (212,714)      
Net loss (26,484)       (26,484)
Balance, end of year at Mar. 31, 2019 42,230 $ 292 $ (260) 430,779 (388,581)
Balance, end of year (in shares) at Mar. 31, 2019   29,274,377 72,727    
Balance, beginning of year at Dec. 31, 2018 66,878 $ 286 $ (260) 428,949 (362,097)
Balance, beginning of year (in shares) at Dec. 31, 2018   28,701,494 72,727    
Net loss (64,138)        
Balance, end of year at Jun. 30, 2019 115,173 $ 493 $ (260) 541,175 (426,235)
Balance, end of year (in shares) at Jun. 30, 2019   49,350,266 72,727    
Balance, beginning of year at Mar. 31, 2019 42,230 $ 292 $ (260) 430,779 (388,581)
Balance, beginning of year (in shares) at Mar. 31, 2019   29,274,377 72,727    
Proceeds from follow-on offering, net of costs 107,734 $ 200   107,534  
Proceeds from follow-on offering, net of costs (in shares)   20,000,000      
Stock-based compensation 2,963     2,963  
Vested restricted stock   $ 1   (1)  
Vested restricted stock (in shares)   88,454      
Shares withheld for tax obligations on vested RSUs (100)     (100)  
Shares withheld for tax obligations on vested RSUs, shares   (12,565)      
Net loss (37,654)       (37,654)
Balance, end of year at Jun. 30, 2019 $ 115,173 $ 493 $ (260) $ 541,175 $ (426,235)
Balance, end of year (in shares) at Jun. 30, 2019   49,350,266 72,727    
v3.19.2
Condensed Consolidated Statements of Cash Flows
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
Jun. 30, 2018
USD ($)
Cash flows from operating activities:    
Net loss $ (64,138) $ (37,451)
Adjustments to reconcile net loss to net cash used in operating activities:    
Goodwill impairment 7,629  
Intangible asset impairment 5,045  
Depreciation and amortization 1,725 1,700
Provision for doubtful accounts 845 489
Provision for warranties 674 572
Provision for inventory 790 709
Amortization of acquired inventory step-up   106
Amortization of right-of-use assets 2,356  
Lease liability accretion 927  
Change in fair value of warrants (110) 164
Change in fair value of deferred consideration 9 18
Change in fair value of contingent consideration 289 1,708
Change in deferred revenue 270 (161)
Amortization of debt discount and issuance costs 99 85
Stock-based compensation expense 6,611 5,686
Loss on disposal of property and equipment 20  
Payments of contingent consideration liability in excess of acquisition-date fair value (630)  
Changes in assets and liabilities:    
Accounts receivable (2,206) (6,343)
Inventories (6,445) (2,405)
Prepaid expenses, other current assets and other assets (1,435) (2,518)
Insurance recovery receivable   33
Accounts payable 2,256 4,230
Accrued and other liabilities (5,416) 1,643
Legal settlement payable (410) (1,000)
Customer deposits 1,643 602
Sales return liability 972 976
Net cash used in operating activities (48,630) (31,157)
Cash flows from investing activities:    
Purchase of property and equipment (2,056) (160)
Net cash used in investing activities (2,056) (160)
Cash flows from financing activities:    
Net proceeds from issuance of common stock 108,028 107,850
Proceeds from exercise of stock options 106 410
Proceeds from issuance of common stock under ESPP 683 391
Tax payments related to shares withheld for vested restricted stock units (RSUs) (2,825) (1,297)
Gross borrowings under the Term Loan   10,000
Gross borrowings under the Revolving Loan 8,436 12,109
Repayment of the Revolving Loan (4,183) (12,109)
Payments of contingent consideration up to acquisition-date fair value (370)  
Deferred financing costs   (6)
Net cash provided by financing activities 109,875 117,348
Net increase in cash, cash equivalents and restricted cash 59,189 86,031
Cash, cash equivalents and restricted cash at:    
Beginning of period 87,242 26,931
End of period 146,431 112,962
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets    
Cash and cash equivalents 146,088 112,619
Restricted cash included in other assets $ 343 $ 343
Restricted Cash Noncurrent Asset Statement Of Financial Position Extensible List us-gaap:OtherNoncurrentAssetsMember us-gaap:OtherNoncurrentAssetsMember
End of period $ 146,431 $ 112,962
Supplemental disclosure of cash flow information:    
Interest paid 1,831 1,347
Supplemental disclosure of non-cash investing and financing activities:    
Property and equipment in accounts payable and accrued liabilities (339) 1,741
Deferred follow-on offering costs in accounts payable and accrued liabilities $ 294 $ 299
v3.19.2
Formation and Business of the Company
6 Months Ended
Jun. 30, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]  
Formation and Business of the Company

1.

Formation and Business of the Company

 

a.

Formation

Sientra, Inc. (“Sientra”, the “Company,” “we,” “our” or “us”), was incorporated in the State of Delaware on August 29, 2003 under the name Juliet Medical, Inc. and subsequently changed its name to Sientra, Inc. in April 2007. The Company acquired substantially all the assets of Silimed, Inc. on April 4, 2007. The purpose of the acquisition was to acquire the rights to the silicone breast implant clinical trials, related product specifications and pre-market approval, or PMA, assets. Following this acquisition, the Company focused on completing the clinical trials to gain FDA approval to offer its silicone gel breast implants in the United States.

In March 2012, the Company announced it had received approval from the FDA for its portfolio of silicone gel breast implants, and in the second quarter of 2012 the Company began commercialization efforts to sell its products in the United States. The Company, based in Santa Barbara, California, is a medical aesthetics company that focuses on serving board-certified plastic surgeons and offers a portfolio of silicone shaped and round breast implants, scar management, tissue expanders, and body contouring products.

In November 2014, the Company completed an initial public offering, or IPO, and its common stock is listed on the Nasdaq Stock Exchange under the symbol “SIEN.”

 

 

b.

Regulatory Review of Vesta Manufacturing

The Company has engaged Vesta Intermediate Funding, Inc., or Vesta, a Lubrizol Lifesciences company, for the manufacture and supply of the Company’s breast implants. On March 14, 2017, the Company announced it had submitted a site-change pre-market approval, or PMA, supplement to the FDA for the manufacture of the Company’s PMA-approved breast implants at the Vesta manufacturing facility. On January 30, 2018, the Company announced the FDA has granted approval of the site-change supplement for the Company’s contract manufacturer, Vesta, to manufacture its silicone gel breast implants.  In support of the move to the Vesta manufacturing facility, the Company also implemented new manufacturing process improvements which, in consultation with the FDA, required three (3) additional PMA submissions.  In addition to approving the manufacturing site-change PMA supplement, the FDA approved the Company’s three (3) process enhancement submissions on January 10, 2018, January 19, 2018 and April 17, 2018.

 

c.

Follow-On Offering

 

On May 7, 2018, the Company completed an underwritten follow-on public offering of 7,407,408 shares of its common stock at $13.50 per share, as well as 1,111,111 additional shares of its common stock pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds to the Company were approximately $107.6 million after deducting underwriting discounts and commissions of $6.9 million and offering expenses of approximately $0.5 million.

 

On June 7, 2019, the Company completed an underwritten follow-on public offering of 17,391,305 shares of its common stock at $5.75 per share, as well as 2,608,695 additional shares of its common stock pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds to the Company were approximately $107.7 million after deducting underwriting discounts and commissions of $6.9 million and offering expenses of approximately $0.4 million.

 

 

v3.19.2
Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2.

Summary of Significant Accounting Policies

 

a.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC.  Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial reporting. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 14, 2019, or the Annual Report. The results for the three and six months ended June 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, any other interim periods, or any future year or period.

 

b.

Liquidity

Since the Company’s inception, it has incurred significant net operating losses and the Company anticipates that losses will continue in the near term.  The Company expects its operating expenses will continue to grow as they expand operations.  The Company will need to generate significant net sales to achieve profitability. To date, the Company has funded operations primarily with proceeds from the sales of preferred stock, borrowings under term loans, sales of products since 2012, and the proceeds from the sale of common stock in public offerings.

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business.  As of June 30, 2019, the Company had cash and cash equivalents of $146.1 million. Since inception, the Company has incurred recurring losses from operations and cash outflows from operating activities. The continuation of the Company as a going concern is dependent upon many factors including liquidity and the ability to raise capital. The Company received FDA approval of their PMA supplement on April 17, 2018 and was then able to access a $10.0 million term loan pursuant to an amendment to the credit agreement with MidCap Financial Trust, or MidCap. In addition, in February 2018, the Company entered into an At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, as sales agent pursuant to which the Company may sell, from time to time, through Stifel, shares of our common stock having an aggregate gross offering price of up to $50.0 million. As of June 30, 2019, the Company has not sold any common stock pursuant to the sales agreement. Further, on May 7, 2018 and June 7, 2019, the Company completed public offerings of its common stock, raising approximately $107.6 million and $107.7 million, respectively, in net proceeds after deducting underwriting discounts and commissions and other offering expenses.

On July 1, 2019, the Company entered into certain credit agreements with Midcap Financial Trust pursuant to which the Company repaid its existing indebtedness under its Loan Agreement and the outstanding commitment fee was cancelled. See Note 15 – Subsequent Events for further discussion.

The Company believes that its cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months. To fund ongoing operating and capital needs, the Company may need to raise additional capital in the future through the sale of equity securities and incremental debt financing.  

 

c.

Use of Estimates

The preparation of the condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

d.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

 

In February 2016, the FASB issued Accounting Standards Update, or ASU, 2016-02, Leases (Topic 842). This ASU requires a company to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption was permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, amending certain aspects of the new leasing standard. The amendment allowed an additional optional transition method whereby an entity records a cumulative effect adjustment to opening retained earnings in the year of adoption without restating prior periods. The Company adopted Topic 842 on January 1, 2019 electing the package of practical expedients permitted under the transition guidance, which allowed the Company to carry forward the historical lease classification, the assessment on whether a contract is or contains a lease, and the initial direct costs for any leases that exist prior to adoption of the new standard. The Company has not restated prior periods under the optional transition method. The adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of right-of-use assets of approximately $22.7 million, lease liabilities of approximately $22.9 million and no cumulative-effect adjustment on retained earnings on its Condensed Consolidated Balance Sheets. Refer to Note 9 - Leases for further details.

 

In February 2018, the FASB issued ASU 2018-02, Income Taxes (Topic 740), which allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. Tax Cuts and Jobs Act to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted ASC 2018-02 and elected to not reclassify the income tax effects under ASU 2018-02, as it does not have a material impact on the condensed consolidated financial statements.

 

 

e.

Reclassifications

 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

v3.19.2
Revenue
6 Months Ended
Jun. 30, 2019
Revenue From Contract With Customer [Abstract]  
Revenue

3.

Revenue

Revenue Recognition

The Company generates revenue primarily through the sale and delivery of promised goods or services to customers and recognizes revenue when control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. Performance obligations typically include the delivery of promised products, such as breast implants, tissue expanders, BIOCORNEUM, miraDry Systems and bioTips, along with service-type warranties and deliverables under certain marketing programs. Other deliverables are sometimes promised, but are ancillary and insignificant in the context of the contract as a whole. Sales prices are documented in the executed sales contract, purchase order or order acknowledgement prior to the transfer of control to the customer. Customers may enter into a separate extended service agreement to purchase an extended warranty for miraDry products from the Company whereby the payment is due at the inception of the agreement. Typical payment terms are 30 days for Breast Products and direct sales of consumable miraDry products, and tend to be longer for capital sales of miraDry Systems and sales to miraDry distributors, but do not extend beyond one year. For delivery of promised products, control transfers and revenue is recognized upon shipment, unless the contractual arrangement requires transfer of control when products reach their destination, for which revenue is recognized once the product arrives at its destination. Revenue for extended service agreements are recognized ratably over the term of the agreements.

For Breast Products, with the exception of the Company’s BIOCORNEUM scar management products, the Company allows for the return of products from customers within six months after the original sale, which is accounted for as variable consideration. Reserves are established for anticipated sales returns based on the expected amount calculated with historical experience, recent gross sales and any notification of pending returns. The estimated sales return is recorded as a reduction of revenue and as a sales return liability in the same period revenue is recognized. Actual sales returns in any future period are inherently uncertain and thus may differ from the estimates. If actual sales returns differ significantly from the estimates, an adjustment to revenue in the current or subsequent period would be recorded. The Company has established an allowance for sales returns of $7.0 million and $6.0 million as of June 30, 2019 and December 31, 2018 respectively, recorded as “sales return liability” on the condensed consolidated balance sheets.

The following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Sales return liability

 

Balance as of December 31, 2018

 

$

6,048

 

Addition to reserve for sales activity

 

 

47,178

 

Actual returns

 

 

(46,895

)

Change in estimate of sales returns

 

 

689

 

Balance as of June 30, 2019

 

$

7,020

 

 

For Breast Products, a portion of the Company’s revenue is generated from the sale of consigned inventory of breast implants maintained at doctor, hospital, and clinic locations. For these products, revenue is recognized at the time the Company is notified by the customer that the product has been implanted, not when the consigned products are delivered to the customer’s location.

For miraDry, in addition to domestic and international direct sales, the Company leverages a distributor network for selling the miraDry System internationally. The Company recognizes revenue when control of the goods or services is transferred to the distributors. Standard terms in both direct sales agreements (domestic and international), and international distributor agreements do not allow for trial periods, right of return, refunds, payment contingent on obtaining financing or other terms that could impact the customer’s payment obligation.

Arrangements with Multiple Performance Obligations

The Company has determined that the delivery of each unit of product in the Company’s revenue contracts with customers is a separate performance obligation. The Company’s revenue contracts may include multiple products or services, each of which is considered a separate performance obligation. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on observable prices or using an expected cost plus margin approach when an observable price is not available. The Company invoices customers once products are shipped or delivered to customers depending on the negotiated shipping terms.

The Company introduced its Platinum20 Limited Warranty Program, or Platinum20, in May 2018 on all OPUS breast implants implanted in the United States or Puerto Rico on or after May 1, 2018.  Platinum20 provides for financial assistance for revision surgeries and no-charge contralateral replacement implants upon the occurrence of certain qualifying events. The Company considers Platinum20 to have an assurance warranty component and a service warranty component. The assurance component is recorded as a warranty liability at the time of sale (as discussed in Note 6). The Company considers the service warranty component as an additional performance obligation and defers revenue at the time of sale based on the relative estimated selling price, by estimating a standalone selling price using the expected cost plus margin approach for the performance obligation. Inputs into the expected cost plus margin approach include historical incidence rates, estimated replacement costs, estimated financial assistance payouts and an estimated margin. The liability for unsatisfied performance obligations under the service warranty as of June 30, 2019 and December 31, 2018 was $0.7 million and $0.4 million respectively. The short-term obligation related to the service warranty was $0.3 million and $0.2 million as of June 30, 2019 and December 31, 2018, respectively, and is included in “accrued and other current liabilities” on the condensed consolidated balance sheets. The long-term obligation related to the service warranty was $0.4 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, and is included in “warranty reserve and other long-term liabilities” on the condensed consolidated balance sheets. The performance obligation is satisfied at the time that Platinum20 benefits are provided and are expected to be satisfied over the following 6 to 24 month period for financial assistance and 20 years for product replacement. Revenue recognized for the service warranty performance obligations for the three and six months ended June 30, 2019 was immaterial.

Practical Expedients and Policy Election

The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.

The Company does not adjust accounts receivable for the effects of any significant financing components as customer payment terms are shorter than one year.

The Company has elected to account for shipping and handling activities performed after a customer obtains control of the products as activities to fulfill the promise to transfer the products to the customer. Shipping and handling activities are largely provided to customers free of charge for the Breast Products segment. The associated costs were $0.9 million and $0.6 million for the six months ended June 30, 2019 and 2018 respectively. The associated costs were $0.5 million and $0.3 million for the three months ended June 30, 2019 and 2018 respectively. These costs are viewed as part of the Company’s sales and marketing programs and are recorded as a component of sales and marketing expense in the condensed consolidated statement of operations as an accounting policy election. For the miraDry segment, shipping and handling charges are typically billed to customers and recorded as revenue. The shipping and handling costs incurred are recorded as a component of cost of goods sold in the condensed consolidated statement of operations. The associated costs were $0.3 million and $0.2 million for the six months ended June 30, 2019 and 2018 respectively. The associated costs were $0.2 million and $0.1 million for the three months ended June 30, 2019 and 2018 respectively.

v3.19.2
Fair Value of Financial Instruments
6 Months Ended
Jun. 30, 2019
Financial Instruments Owned At Fair Value [Abstract]  
Fair Value of Financial Instruments

4.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, customer deposits and sales return liability are reasonable estimates of their fair value because of the short maturity of these items. The fair value of the common stock warrant liability and contingent consideration are discussed in Note 5. The fair value of the debt is based on the amount of future cash flows associated with the instrument discounted using the Company’s estimated market rate. As of June 30, 2019, the carrying value of the long-term debt was not materially different from the fair value.

v3.19.2
Fair Value Measurements
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements

5.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 

Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

Level 2 — Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

 

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s common stock warrant liabilities are carried at fair value determined according to the fair value hierarchy described above. The Company has utilized an option pricing valuation model to determine the fair value of its outstanding common stock warrant liabilities. The inputs to the model include fair value of the common stock related to the warrant, exercise price of the warrant, expected term, expected volatility, risk-free interest rate and dividend yield.  The warrants are valued using the fair value of common stock as of the measurement date. The Company historically has been a private company and lacks company-specific historical and implied volatility information of its stock. Therefore, it estimates its expected stock volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company has estimated a 0% dividend yield based on the expected dividend yield and the fact that the Company has never paid or declared dividends. As several significant inputs are not observable, the overall fair value measurement of the warrants is classified as Level 3.

The Company assessed the fair value of the contingent consideration for future royalty payments related to the acquisition of BIOCORNEUM and the contingent consideration for the future milestone payments related to the acquisition of miraDry using a Monte-Carlo simulation model. Significant assumptions used in the measurement include future net sales for a defined term and the risk-adjusted discount rate associated with the business. As the inputs are not observable, the overall fair value measurement of the contingent consideration is classified as Level 3.

The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

 

 

 

Fair Value Measurements as of

 

 

 

June 30, 2019 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

 

 

 

 

4

 

 

 

4

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

13,136

 

 

 

13,136

 

 

 

$

 

 

 

 

 

 

13,140

 

 

 

13,140

 

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2018 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

 

 

 

 

113

 

 

 

113

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

13,847

 

 

 

13,847

 

 

 

$

 

 

 

 

 

 

13,960

 

 

 

13,960

 

 

The liability for common stock warrants and the current portion of contingent consideration is included in “accrued and other current liabilities” and the long-term liabilities for the contingent consideration are included in “deferred and contingent consideration” in the condensed consolidated balance sheet. The following table provides a rollforward of the aggregate fair values of the Company’s common stock warrants and contingent consideration for which fair value is determined by Level 3 inputs (in thousands):  

 

Warrant Liability

 

 

 

 

Balance, December 31, 2018

 

$

113

 

Change in fair value of warrant liability

 

 

(109

)

Balance, June 30, 2019

 

$

4

 

Contingent Consideration Liability

 

 

 

 

Balance, December 31, 2018

 

$

13,847

 

Payments of contingent consideration

 

 

(1,000

)

Change in fair value of contingent consideration

 

 

289

 

Balance, June 30, 2019

 

$

13,136

 

 

The Company recognizes changes in the fair value of the warrants in “other income (expense), net” in the condensed consolidated statement of operations and changes in contingent consideration are recognized in “general and administrative” expense in the condensed consolidated statement of operations.

v3.19.2
Product Warranties
6 Months Ended
Jun. 30, 2019
Product Warranties Disclosures [Abstract]  
Product Warranties

 

6.

Product Warranties

The Company offers a product replacement and limited warranty program for the Company’s silicone gel breast implants, and a product warranty for the Company’s miraDry Systems and consumable bioTips. For silicone gel breast implant surgeries occurring prior to May 1, 2018, the Company provides lifetime replacement implants and up to $3,600 in financial assistance for revision surgeries, for covered rupture events that occur within ten years of the surgery date. The Company introduced its Platinum20 Limited Warranty Program in May 2018, covering OPUS silicone gel breast implants implanted in the United States or Puerto Rico on or after May 1, 2018. The Company considers the program to have an assurance warranty component and a service warranty component. The service warranty component is discussed in Note 3 above. The assurance component is related to the lifetime no-charge contralateral replacement implants and up to $5,000 in financial assistance for revision surgeries, for covered rupture events that occur within twenty years of the surgery date.  Under the miraDry warranty, the Company provides a standard product warranty for the miraDry System and bioTips, which the Company considers an assurance-type warranty.

The following table provides a rollforward of the accrued warranties (in thousands):

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Beginning balance as of January 1

 

$

1,395

 

 

$

1,642

 

Warranty costs incurred during the period

 

 

(423

)

 

 

(231

)

Changes in accrual related to warranties issued during the period

 

 

651

 

 

 

568

 

Changes in accrual related to pre-existing warranties

 

 

23

 

 

 

4

 

Balance as of June 30

 

$

1,646

 

 

$

1,983

 

 

 

v3.19.2
Net Loss Per Share
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
Net Loss Per Share

7.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is computed by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding, to the extent they are dilutive. Potential common shares consist of shares issuable upon the exercise of stock options and warrants (using the treasury stock method). Dilutive net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive.

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss (in thousands)

 

$

 

(37,654

)

 

$

 

(18,028

)

 

$

(64,138

)

 

$

(37,451

)

Weighted average common shares outstanding, basic

   and diluted

 

 

 

34,290,073

 

 

 

 

24,761,117

 

 

 

31,709,067

 

 

 

22,202,565

 

Net loss per share attributable to common stockholders

 

$

 

(1.10

)

 

$

 

(0.73

)

 

$

(2.02

)

 

$

(1.69

)

 

The Company excluded the following potentially dilutive securities, outstanding as of June 30, 2019 and 2018, from the computation of diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2019 and 2018 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

Stock options to purchase common stock

 

 

1,069,167

 

 

 

2,011,503

 

Warrants for the purchase of common stock

 

 

47,710

 

 

 

47,710

 

 

 

 

1,116,877

 

 

 

2,059,213

 

v3.19.2
Balance Sheet Components
6 Months Ended
Jun. 30, 2019
Balance Sheet Related Disclosures [Abstract]  
Balance Sheet Components

8.

Balance Sheet Components

 

a.

Allowance for Doubtful Accounts

 

The Company has established an allowance for doubtful accounts of $3.2 million and $2.4 million as of June 30, 2019 and December 31, 2018, respectively, recorded net against accounts receivable in the balance sheet.

 

b.

Inventories

Inventories, net consist of the following (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Raw materials

 

$

3,272

 

 

$

2,147

 

Work in progress

 

 

2,322

 

 

 

2,110

 

Finished goods

 

 

22,502

 

 

 

18,335

 

Finished goods - right of return

 

 

1,768

 

 

 

1,493

 

 

 

$

29,864

 

 

$

24,085

 

 

 

c.

Property and Equipment

Property and equipment, net consist of the following (in thousands): 

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Leasehold improvements

 

$

418

 

 

$

402

 

Manufacturing equipment and toolings

 

 

2,979

 

 

 

1,928

 

Computer equipment

 

 

911

 

 

 

682

 

Software

 

 

1,274

 

 

 

1,039

 

Office equipment

 

 

117

 

 

 

156

 

Furniture and fixtures

 

 

1,031

 

 

 

826

 

 

 

 

6,730

 

 

 

5,033

 

Less accumulated depreciation

 

 

(3,044

)

 

 

(2,497

)

 

 

$

3,686

 

 

$

2,536

 

 

Depreciation expense for both the three months ended June 30, 2019 and 2018 was $0.3 million. Depreciation expense for both the six months ended June 30, 2019 and 2018 was $0.6 million.

 

Under the terms of the manufacturing agreement with Vesta, upon the commencement of Contract Year One (as defined in the agreement) which occurred following FDA-approval of all submissions related to the site-change PMA supplement for the Vesta manufacturing facility, Vesta was obligated to purchase the manufacturing equipment and tooling that Sientra had originally purchased for the manufacture of Sientra’s breast implant inventory at Vesta’s manufacturing facility. Vesta repurchased the equipment with a net book value of $2.7 million in the third quarter of 2018 through a reduction in the Company’s accounts payable balance owed to Vesta.

 

d.

Goodwill and Other Intangible Assets, net

 

The Company has determined that it has two reporting units, Breast Products and miraDry, and evaluates goodwill for impairment at least annually on October 1st and whenever circumstances suggest that goodwill may be impaired. As of June 30, 2019 and December 31, 2018 the miraDry reporting unit had a negative carrying value.

The changes in the carrying amount of goodwill during the six months ended June 30, 2019 were as follows (in thousands):

 

 

 

Breast Products

 

 

miraDry

 

 

Total

 

Balances as of December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

19,156

 

 

$

7,629

 

 

$

26,785

 

Accumulated impairment losses

 

 

(14,278

)

 

 

 

 

 

(14,278

)

Goodwill, net

 

$

4,878

 

 

$

7,629

 

 

$

12,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

19,156

 

 

$

7,629

 

 

$

26,785

 

Accumulated impairment losses

 

 

(14,278

)

 

 

(7,629

)

 

 

(21,907

)

Goodwill, net

 

$

4,878

 

 

$

 

 

$

4,878

 

 

In the second quarter of 2019, the Company noted a decline in actual and forecasted earnings for the miraDry reporting unit in comparison to forecasted earnings determined in prior periods. Based on this evaluation, the Company determined that the carrying value of the miraDry reporting unit more likely than not exceeded its estimated fair value. As a result, the Company performed a quantitative analysis to compare the fair value of the reporting unit to its carrying amount.

 

The Company’s fair value analysis of goodwill utilizes the income approach, which requires the use of estimates about a reporting unit’s future revenues and free cash flows, discount rates, terminal value and enterprise value to determine the estimated fair value. The Company’s future revenues and free cash flow assumptions are determined based upon actual results giving effect to management’s expected changes in operating results in future years. The enterprise value, discount rates and terminal value are based upon market participant assumptions using a defined peer group.

 

After performing the impairment test as of June 30, 2019 the Company determined that the carrying value of its miraDry reporting unit exceeded its estimated fair value using the income approach, as described above, by an amount that indicated a full impairment of the carrying value of goodwill. Consequently, the Company recorded a non-cash goodwill impairment charge of $7.6 million in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2019.

 

The components of the Company’s other intangible assets consist of the following (in thousands):

 

 

 

Average

 

 

 

 

 

 

Amortization

 

 

June 30, 2019

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

11

 

 

$

9,540

 

 

$

(2,978

)

 

$

6,562

 

Trade names - finite life

 

 

14

 

 

 

2,000

 

 

 

(222

)

 

 

1,778

 

Developed technology

 

 

13

 

 

 

1,500

 

 

 

 

 

 

1,500

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Total definite-lived intangible assets

 

 

 

 

 

$

15,503

 

 

$

(5,663

)

 

$

9,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

December 31, 2018

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

11

 

 

$

11,240

 

 

$

(3,486

)

 

$

7,754

 

Trade names - finite life

 

 

14

 

 

 

5,800

 

 

 

(541

)

 

 

5,259

 

Developed technology

 

 

15

 

 

 

3,000

 

 

 

(338

)

 

 

2,662

 

Distributor relationships

 

 

9

 

 

 

500

 

 

 

(130

)

 

 

370

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Total definite-lived intangible assets

 

 

 

 

 

$

23,003

 

 

$

(6,958

)

 

$

16,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

 

In connection with the circumstances leading to the impairment of goodwill for the miraDry reporting unit, the Company performed a test of recoverability of the intangible assets in the miraDry reporting unit by comparing the carrying amount of the intangible assets to the future undiscounted cash flows the assets are expected to generate. As the future undiscounted cash flows attributable to the intangible assets were less than the carrying value, the Company performed a quantitative analysis to compare the fair value of the intangible assets in the reporting unit to their carrying amount.

 

The Company’s fair value analysis of intangible assets utilizes methods under various income approaches. The Company values its customer relationships using an excess earnings method, which assumes the value of the asset is the discounted cash flow using estimates of future cash flow derived from existing customers. Similarly, distributor relationships are valued using a distributor method, which assumes the value of the asset is the discounted cash flow using estimates of future cash flow derived from existing distributors. Tradenames and developed technology are valued using a relief from royalty method, which assumes the value of the asset is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the asset and instead licensed the asset from another company.

 

After performing the impairment test as of June 30, 2019, the Company determined that the carrying values of all of the intangible assets in the miraDry reporting unit exceeded their estimated fair values. Consequently, the Company recorded non-cash impairment charges of $0.4 million for customer relationships, $0.3 million for distributor relationships, $3.3 million for tradenames, and $1.0 million for developed technology within goodwill and other intangible impairment in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2019.

 

Intangibles amortization expense for both the three months ended June 30, 2019 and 2018 was $0.6 million. Intangibles amortization expense for both the six months ended June 30, 2019 and 2018 was $1.2 million. The following table summarizes the estimated amortization expense relating to the Company's definite-lived intangible assets as of June 30, 2019 (in thousands):

 

 

 

Amortization

 

Period

 

Expense

 

Remainder of 2019

 

$

1,022

 

2020

 

 

1,554

 

2021

 

 

1,305

 

2022

 

 

1,122

 

2023

 

 

975

 

Thereafter

 

 

3,862

 

 

 

$

9,840

 

 

 

e.

Accrued and Other Current Liabilities

Accrued and other current liabilities consist of the following (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Payroll and related expenses

 

$

4,927

 

 

$

6,466

 

Accrued commissions

 

 

3,606

 

 

 

5,321

 

Accrued equipment

 

 

721

 

 

 

18

 

Deferred and contingent consideration, current portion

 

 

13,060

 

 

 

7,645

 

Audit, consulting and legal fees

 

 

2,044

 

 

 

703

 

Accrued sales and marketing expenses

 

 

1,642

 

 

 

1,374

 

Operating lease liabilities

 

 

4,896

 

 

 

 

Finance lease liabilities

 

 

42

 

 

 

 

Other

 

 

5,342

 

 

 

6,170

 

 

 

$

36,280

 

 

$

27,697

 

v3.19.2
Leases
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Leases

9.

Leases

 

The Company leases certain office space, warehouses, distribution facilities and office equipment. The Company also has embedded leases of manufacturing facilities and equipment associated with the Company’s manufacturing contracts. The Company determines if an arrangement contains a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset.

 

Operating and finance lease right-of-use, or ROU, assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. The Company determines its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. The ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. As of June 30, 2019, the Company has included a five-year renewal option in the lease term for one operating lease as it was concluded that it is reasonably certain that the Company will exercise the option. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. The Company’s lease agreements generally do not contain material residual value guarantees or material restrictive covenants.

 

The Company’s leases of office space, warehouses and distribution facilities are treated as operating leases and often contain lease and non-lease components. The Company has elected to account for these lease and non-lease components separately. Non-lease components for these assets are primarily comprised of common-area maintenance, utilities, and real estate taxes that are passed on from the lessor in proportion to the space leased by the Company, and are recognized in operating expenses in the period in which the obligation for those payments was incurred. Lease cost for these operating leases is recognized on a straight-line basis over the lease term in operating expenses.

 

The Company’s embedded leases of manufacturing facilities and equipment are treated as operating leases and often contain lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component. There may be variability in future lease payments as the amount of the non-lease components is based on the costs of manufacturing and is dependent on the amount and types of units produced. The Company reduces the operating lease liability when the inventory is purchased.

 

The Company’s leases of office equipment are accounted for as finance leases as they meet one or more of the five finance lease classification criteria. Lease cost for these finance leases is comprised of amortization of the ROU asset and interest expense which are recognized in operating expenses and other income (expense), net.

 

Components of lease expense were as follows:

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Lease Cost

 

Classification

 

2019

 

 

2019

 

Operating lease cost

 

Operating expenses

 

$

386

 

 

$

766

 

Operating lease cost

 

Inventory

 

 

1,248

 

 

 

2,495

 

Total operating lease cost

 

 

 

 

 

$

1,634

 

 

$

3,261

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Operating expenses

 

 

11

 

 

 

20

 

Interest on lease liabilities

 

Other income (expense), net

 

 

1

 

 

 

2

 

Total finance lease cost

 

 

 

 

 

$

12

 

 

$

22

 

Variable lease cost

 

Inventory

 

 

2,297

 

 

 

4,595

 

Total lease cost

 

 

 

 

 

$

3,943

 

 

$

7,878

 

 

Short-term lease expense for the three and six months ended June 30, 2019 was not material.

 

Supplemental cash flow information related to operating and finance leases for the six months ended June 30, 2019 was as follows (in thousands):

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

Operating cash outflows from operating leases

 

$

2,954

 

Operating cash outflows from finance leases

 

 

22

 

Right-of-use assets obtained in exchange for new lease obligations:

 

 

 

 

Operating leases

 

$

24,779

 

Finance leases

 

 

119

 

 

Supplemental balance sheet information, as of June 30, 2019, related to operating and finance leases was as follows (in thousands, except lease term and discount rate):

 

 

 

June 30,

 

 

 

2019

 

Reported as:

 

 

 

 

Other assets

 

 

 

 

Operating lease right-of-use assets

 

$

22,443

 

Finance lease right-of-use assets

 

 

100

 

Total right-of use assets

 

$

22,543

 

Accrued and other current liabilities

 

 

 

 

Operating lease liabilities

 

$

4,896

 

Finance lease liabilities

 

 

42

 

Warranty reserve and other long-term liabilities

 

 

 

 

Operating lease liabilities

 

 

18,058

 

Finance lease liabilities

 

 

55

 

Total lease liabilities

 

$

23,051

 

Weighted average remaining lease term (years)

 

 

 

 

Operating leases

 

 

4

 

Finance leases

 

 

2

 

Weighted average discount rate

 

 

 

 

Operating leases

 

 

8.08

%

Finance leases

 

 

4.21

%

 

As of June 30, 2019, maturities of the Company’s operating and finance lease liabilities are as follows (in thousands):

 

Period

 

Operating leases

 

 

Finance leases

 

 

Total

 

Remainder of 2019

 

$

3,303

 

 

$

23

 

 

$

3,326

 

2020

 

 

6,639

 

 

 

43

 

 

 

6,682

 

2021

 

 

6,672

 

 

 

36

 

 

 

6,708

 

2022

 

 

6,405

 

 

 

 

 

 

6,405

 

2023

 

 

3,083

 

 

 

 

 

 

3,083

 

2024 and thereafter

 

 

964

 

 

 

 

 

 

964

 

Total lease payments

 

$

27,066

 

 

$

102

 

 

$

27,168

 

Less imputed interest

 

 

4,112

 

 

 

5

 

 

 

4,117

 

Total operating lease liabilities

 

$

22,954

 

 

$

97

 

 

$

23,051

 

 

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancellable leases as of December 31, 2018 was as follows (in thousands):

 

Year Ended December 31:

 

 

 

 

2019

 

$

1,325

 

2020

 

 

1,134

 

2021

 

 

1,060

 

2022

 

 

947

 

2023 and thereafter

 

 

1,557

 

 

 

$

6,023

 

 

The table above does not include the minimum purchase obligations of approximately $21.6 million over the five years following December 31, 2018 under the Company’s contracts with its manufacturers which upon adoption of ASU 2016-02 on January 1, 2019 were accounted for as operating lease ROU assets and lease liabilities.

v3.19.2
Long-Term Debt and Revolving Loan
6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Long-Term Debt and Revolving Loan

10.

Long-Term Debt and Revolving Loan

 

On July 25, 2017, the Company entered into a Credit and Security Agreement, or the Term Loan Credit Agreement, and a Credit and Security Agreement, or the Revolving Credit Agreement with MidCap, and, together with the Term Loan Credit Agreement, the Credit Agreements, which replaced the Company’s then-existing Silicon Valley Bank Loan Agreement, or the SVB Loan Agreement.

 

Under the terms of the Term Loan Credit Agreement, as of July 25, 2017, MidCap funded $25.0 million to the Company, or the Closing Date Term Loan. MidCap also made available to the Company until March 31, 2018, a $10.0 million term loan, or the March 2018 Term Loan, subject to the satisfaction of certain conditions, including FDA certifications of the manufacturing facility operated by Vesta, and an additional $5.0 million term loan, subject to the satisfaction of certain conditions, including evidence that the Company’s Net Revenue for the past 12 months was greater than or equal to $75.0 million, as defined in the Term Loan Credit Agreement, collectively the Term Loans.  On April 18, 2018, the Company amended the Term Loan Credit Agreement pursuant to which the parties agreed to adjust the date by which the Company must obtain FDA approval of its PMA supplement in order to access the March 2018 Term Loan until April 30, 2018. In April 2018, upon FDA approval of the Company’s PMA supplement, MidCap funded the $10.0 million March Term Loan. Under the Revolving Credit Agreement, MidCap made available to the Company a revolving line of credit, or the Revolving Loan.  The amount of loans available to be drawn is based on a borrowing base equal to 85% of the net collectible value of eligible accounts receivable plus 40% of eligible finished goods inventory, or the Borrowing Base, provided that availability from eligible finished goods inventory does not exceed 20% of the Borrowing Base. The Company used a portion of the $25.0 million of proceeds from the Closing Date Term Loan to repay in full the Company’s then-existing indebtedness under its SVB Loan Agreement and to pay fees and expenses in connection with the foregoing and the Company intends to use the remainder of the proceeds for general corporate purposes.

 

Any indebtedness under the Term Loan Credit Agreement bears interest at a floating per annum rate equal to the LIBOR as reported by MidCap with a floor of 1.00%, which as of June 30, 2019 was 2.44%, plus 7.50%. The Term Loans have a scheduled maturity date of December 1, 2021, or the Maturity Date. Subject to an election to delay principal payments, the Company made monthly payments of accrued interest under the Term Loans from the funding date of the Term Loans, until December 31, 2018, to be followed by monthly installments of principal and interest through the Maturity Date. Under the terms of the Term Loan Credit Agreement, the Company had the option to extend the interest only period an additional six months to June 30, 2019 as long as the Company remained in compliance with the Term Loan Agreement. The Company has elected to extend the interest only period through June 30, 2019. The Company may prepay all of the Term Loans prior to its maturity date provided the Company pays MidCap a prepayment fee. The Company paid an origination fee of 0.50% of the Term Loans total amount of $40.0 million on the closing date. As of June 30, 2019, there was $35.0 million outstanding related to the Term Loans. As of June 30, 2019, the unamortized debt issuance costs on the Term Loans was approximately $0.1 million current portion and approximately $0.1 million long-term portion and are included as a reduction to debt on the condensed consolidated balance sheet.

 

Any indebtedness under the Revolving Credit Agreement bears interest at a floating per annum rate equal to the LIBOR as reported by MidCap with a floor of 1.00%, plus 4.50%. The Company may make and repay borrowings from time to time under the Revolving Credit Agreement until the maturity of the facility on December 1, 2021. The Company is required to pay an annual collateral management fee of 0.50% on the outstanding balance, and an annual unused line fee of 0.50% of the average unused portion. The Company paid an origination fee of 0.50% of the Revolving Loan amount of $10.0 million on the closing date. The Company classifies the amounts borrowed under the Revolving Loan as short term because it is the Company's intention to use the line of credit to borrow and pay back funds over short periods of time. As of June 30, 2019, there were $4.3 million borrowings outstanding under the Revolving Loan. As of June 30, 2019, the unamortized debt issuance costs related to the Revolving Loan was approximately $0.1 million and was included in other long-term assets on the condensed consolidated balance sheet.

 

The amortization of debt issuance costs for the three months ended June 30, 2019 and 2018 was $43,000 and $34,000, respectively. The amortization of debt issuance costs for both the six months ended June 30, 2019 and 2018 was $0.1 million and was included in interest expense in the condensed consolidated statements of operations.

The Credit Agreements include customary affirmative and restrictive covenants and representations and warranties, including a financial covenant for minimum revenues, a financial covenant for minimum cash requirements, a covenant against the occurrence of a “change in control,” financial reporting obligations, and certain limitations on indebtedness, liens, investments, distributions, collateral, mergers or acquisitions, taxes, and deposit accounts. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% may be applied to any outstanding principal balances, and MidCap may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Credit Agreements. The Company’s obligations under the Credit Agreements are secured by a security interest in substantially all of The Company’s assets.

 

Future Principal Payments of Debt

 

The future schedule of principal payments for the outstanding Term Loans as of June 30, 2019 was as follows (in thousands):

 

Fiscal Year

 

 

 

 

Remainder of 2019

 

$

7,000

 

2020

 

 

14,000

 

2021

 

 

14,000

 

2022

 

 

 

2023

 

 

 

Thereafter

 

 

 

Total

 

$

35,000

 

 

On July 1, 2019, the Company entered into certain credit agreements with Midcap Financial Trust pursuant to which the Company repaid its existing indebtedness under its Credit Agreements and the outstanding commitment fee was cancelled. See Note 15 – Subsequent Events for further discussion.

 

v3.19.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stockholders' Equity

11.

Stockholders’ Equity

 

a.

Authorized Stock

The Company’s Amended and Restated Certificate of Incorporation authorizes the Company to issue 210,000,000 shares of common and preferred stock, consisting of 200,000,000 shares of common stock with $0.01 par value and 10,000,000 shares of preferred stock with $0.01 par value. As of June 30, 2019 and December 31, 2018, the Company had no preferred stock issued or outstanding.

 

b.

Common Stock Warrants

On January 17, 2013, the Company entered into a Loan and Security Agreement, or the Original Term Loan Agreement, with Oxford Finance, LLC, or Oxford. On June 30, 2014, the Company entered into an Amended and Restated Loan and Security Agreement, or the Amended Term Loan Agreement, with Oxford. In connection with the Original Term Loan Agreement and the Amended Term Loan Agreement, the Company issued to Oxford (i) seven-year warrants in January 2013 to purchase shares of the Company’s common stock with a value equal to 3.0% of the tranche A, B and C term loans amounts and (ii) seven-year warrants in June 2014 to purchase shares of the Company’s common stock with a value equal to 2.5% of the tranche D term loan amount. The warrants have an exercise price per share of $14.671. As of June 30, 2019, there were warrants to purchase an aggregate of 47,710 shares of common stock outstanding.

 

c.

Stock Option Plans

In April 2007, the Company adopted the 2007 Equity Incentive Plan, or the 2007 Plan. The 2007 Plan provides for the granting of stock options to employees, directors and consultants of the Company. Options granted under the 2007 Plan may either be incentive stock options or nonstatutory stock options. Incentive stock options, or ISOs, may be granted only to Company employees. Nonstatutory stock options, or NSOs, may be granted to all eligible recipients. A total of 1,690,448 shares of the Company’s common stock were initially reserved for issuance under the 2007 Plan.

The Company’s board of directors adopted the 2014 Equity Incentive Plan, or 2014 Plan, in July 2014, and the stockholders approved the 2014 Plan in October 2014. The 2014 Plan became effective upon completion of the IPO on November 3, 2014, at which time the Company ceased granting awards under the 2007 Plan. Under the 2014 Plan, the Company may issue ISOs, NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards and other forms of stock awards, or collectively, stock awards, all of which may be granted to employees, including officers, non-employee directors and consultants of the Company and their affiliates. ISOs may be granted only to employees.  A total of 1,027,500 shares of common stock were initially reserved for issuance under the 2014 Plan, subject to certain annual increases. As of June 30, 2019, a total of 475,954 shares of the Company’s common stock were available for issuance under the 2014 Plan.

Pursuant to a board-approved Inducement Plan, the Company may issue NSOs and restricted stock unit awards, or collectively, stock awards, all of which may only be granted to new employees of the Company and their affiliates in accordance with NASDAQ Stock Market Rule 5635(c)(4) as an inducement material to such individuals entering into employment with the Company.  As of June 30, 2019, inducement grants for 1,108,278 shares of common stock have been awarded, and 320,538 shares of common stock were available for future issuance under the Inducement Plan.

Options under the 2007 Plan and the 2014 Plan may be granted for periods of up to ten years as determined by the Company’s board of directors, provided, however, that (i) the exercise price of an ISO shall not be less than 100% of the estimated fair value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a more than 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. An NSO has no such exercise price limitations. NSOs under the Inducement Plan may be granted for periods of up to ten years as determined by the board of directors, provided, the exercise price will not be less than 100% of the estimated fair value of the shares on the date of grant.  Options generally vest with 25% of the grant vesting on the first anniversary and the balance vesting monthly on a straight-lined basis over the requisite service period of three additional years for the award. Additionally, options have been granted to certain key executives that vest upon achievement of performance conditions based on performance targets as defined by the board of directors, which have included net sales targets and defined corporate objectives over the performance period with possible payout ranging from 0% to 100% of the target award. Compensation expense is recognized on a straight-lined basis over the vesting term of one year based upon the probable performance target that will be met. The vesting provisions of individual options may vary but provide for vesting of at least 25% per year.

The following summarizes all option activity under the 2007 Plan, 2014 Plan and Inducement Plan:

 

 

 

 

 

 

 

Weighted

 

 

Weighted

average

 

 

 

 

 

 

 

average

 

 

remaining

 

 

 

Option

 

 

exercise

 

 

contractual

 

 

 

Shares

 

 

price

 

 

term (years)

 

Balances at December 31, 2018

 

 

1,953,334

 

 

$

7.42

 

 

 

6.30

 

Exercised

 

 

(45,453

)

 

 

2.34

 

 

 

 

 

Balances at June 30, 2019

 

 

1,907,881

 

 

$

7.54

 

 

 

5.96

 

 

 

For stock-based awards the Company recognizes compensation expense based on the grant date fair value using the Black-Scholes option valuation model. Stock-based compensation expense related to stock options was $0.1 million and $0.4 million for the three months ended June 30, 2019 and 2018, respectively. Stock-based compensation expense related to stock options was $0.4 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively. As of June 30, 2019, there was $0.3 million of unrecognized compensation costs related to stock options. The expense is recorded within the operating expense components in the condensed consolidated statement of operations based on the recipients receiving the awards. These costs are expected to be recognized over a weighted average period of approximately 1 year.

 

d.

Restricted Stock Units

The Company has issued restricted stock unit awards, or RSUs, under the 2014 Plan and the Inducement Plan. The RSUs issued to employees generally vest on a straight-line basis annually over a 3-year requisite service period. RSUs issued to non-employees generally vest either monthly or annually over the service term.  

Activity related to RSUs is set forth below:

 

 

 

 

 

 

 

Weighted

average

 

 

 

Number

 

 

grant date

 

 

 

of shares

 

 

fair value

 

Balances at December 31, 2018

 

 

2,141,350

 

 

$

13.27

 

Granted

 

 

1,198,845

 

 

 

8.21

 

Vested

 

 

(759,699

)

 

 

11.77

 

Forfeited

 

 

(182,317

)

 

 

16.22

 

Balances at June 30, 2019

 

 

2,398,179

 

 

$

10.99

 

 

Stock-based compensation expense for RSUs for the three months ended June 30, 2019 and 2018 was $2.7 million and $2.6 million, respectively. Stock-based compensation expense for RSUs for the six months ended June 30, 2019 and 2018 was $6.0 million and $4.6 million, respectively. As of June 30, 2019, there was $20.4 million of total unrecognized compensation costs related to non-vested RSU awards. The cost is expected to be recognized over a weighted average period of approximately 2 years.

 

e.

Employee Stock Purchase Plan

The Company’s board of directors adopted the 2014 Employee Stock Purchase Plan, or ESPP, in July 2014, and the stockholders approved the ESPP in October 2014. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for offering periods not to exceed 27 months, and each offering period will include purchase periods, which will be the approximately six-month period commencing with one exercise date and ending with the next exercise date. Employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase date.  A total of 255,500 shares of common stock were initially reserved for issuance under the ESPP, subject to certain annual increases.     

During the six months ended June 30, 2019, employees purchased 68,899 shares of common stock at a weighted average price of $9.91 per share. As of June 30, 2019, the number of shares of common stock available for future issuance was 761,344.

The Company estimated the fair value of employee stock purchase rights using the Black-Scholes model. Stock-based compensation expense related to the ESPP was $0.1 million for both the three months ended June 30, 2019 and 2018. Stock-based compensation expense related to the ESPP was $0.3 million for both the six months ended June 30, 2019 and 2018.

 

f.

Significant Modifications

During the six months ended June 30, 2019 the Company entered into a consulting agreement with one former employee that resulted in the modification of their existing equity awards. During the six months ended June 30, 2019 the Company recognized $0.4 million in incremental compensation cost resulting from this modification.

v3.19.2
Income Taxes
6 Months Ended
Jun. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

12.

Income Taxes

The Company operates in several tax jurisdictions and is subject to taxes in each jurisdiction in which it conducts business. To date, the Company has incurred cumulative net losses and maintains a full valuation allowance on its net deferred tax assets due to the uncertainty surrounding realization of such assets. The Company had no tax expense for the three and six months ended June 30, 2019 and 2018.

v3.19.2
Segment Information
6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Segment Information

13.

Segment Information

 

Reportable Segments

 

The Company has two reportable segments: Breast Products and miraDry. The Breast Products segment focuses on sales of silicone gel breast implants, tissue expanders and scar management products under the brands Opus, AlloX2, Dermaspan, Softspan and BIOCORNEUM. The miraDry segment focuses on sales of the miraDry System, consisting of a console and a handheld device which uses consumable single-use bioTips. These segments align with the Company’s principal target markets.  

 

The Company’s Chief Operating Decision Maker, or CODM, assesses the performance of each segment and allocates resources to those segments based on net sales and operating income (loss). Operating income (loss) by segment includes items that are directly attributable to each segment, including sales and marketing functions, as well as finance, information technology, human resources, legal and related corporate infrastructure costs, along with certain benefit-related expenses.  There are no unallocated expenses for the two segments.

 

The following tables present the net sales, net operating loss and net assets by reportable segment for the periods presented (in thousands):

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

11,194

 

 

$

9,412

 

 

$

20,944

 

 

$

17,954

 

miraDry

 

 

9,331

 

 

 

8,142

 

 

 

17,133

 

 

 

14,275

 

Total net sales

 

$

20,525

 

 

$

17,554

 

 

$

38,077

 

 

$

32,229

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

(12,202

)

 

$

(12,444

)

 

$

(26,236

)

 

$

(25,238

)

miraDry

 

 

(24,762

)

 

 

(4,454

)

 

 

(36,581

)

 

 

(10,588

)

Total loss from operations

 

$

(36,964

)

 

$

(16,898

)

 

$

(62,817

)

 

$

(35,826

)

 

 

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

 

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

 

 

 

 

$

212,234

 

 

$

130,149

 

miraDry

 

 

 

 

 

 

33,711

 

 

 

38,210

 

Total assets

 

 

 

 

 

$

245,945

 

 

$

168,359

 

 

v3.19.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2019
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

14.

Commitments and Contingencies

 

The Company is subject to claims and assessment from time to time in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

 

miraDry Class Action Litigation

 

On August 3, 2017, a lawsuit styled as a verified class action on the part of the former stockholders of miraDry was filed in the Court of Chancery for the State of Delaware against the former board of directors of miraDry, or the Defendants, alleging breach of their fiduciary duties in connection with the Company’s acquisition of miraDry.  On August 30, 2017, the Defendants moved to dismiss the verified class action complaint for failure to state a claim upon which relief can be granted.  On November 11, 2017 the parties notified the Court that they had reached an agreement to settle the matter pending completion of confirmatory discovery regarding the fairness of the settlement and obtaining approval from the court.  Following a hearing, the Delaware Chancery Court approved the proposed settlement terms on January 15, 2019, with a modification to the amount of attorneys’ fees awarded to the plaintiffs’ attorneys. Under the terms of the settlement, in exchange for a full and final settlement and release of all claims, the Defendants (and/or their indemnitors and/or insurers) paid a settlement consideration of $0.4 million. The miraDry Merger Agreement contained a holdback amount expected to be used for the settlement and associated costs of the miraDry Class Action litigation. The holdback amount has been used to offset $0.6 million of legal fees and $0.4 million was included in “legal settlement payable” on the consolidated balance sheet as of December 31, 2018. The legal settlement of $0.4 million was paid during the first quarter of 2019.

v3.19.2
Subsequent Events
6 Months Ended
Jun. 30, 2019
Subsequent Events [Abstract]  
Subsequent Events

15.

Subsequent Events

Term Loan Credit Agreement and Revolving Credit Agreement

On July 1, 2019 the Company entered into the Restated Term Loan Credit Agreement with MidCap Financial Trust as the agent and lender, and additional lenders thereto from time to time (the “Restated Term Loan”), which restates its existing Credit and Security Agreement, dated July 25, 2017. The Restated Term Loan Credit Agreement provides for (i) a $35 million term loan facility drawn at signing, (ii) a $5 million term loan facility drawn at signing, (iii) at any time after September 30, 2020 to December 31, 2020, a $10.0 million term loan facility (subject to the satisfaction of certain conditions, including evidence that the Company’s Net Revenue for the past 12 months was greater than or equal to $100.0 million), and (iv) until December 31, 2020 and upon the consent of Agent and the lenders following a request from the Company, an additional $15.0 million term loan facility (altogether, the “Restated Term Loan”). To date, the Company has drawn $40 million on the loan. The Restated Term Loan matures on July 1, 2024 and carries an interest rate of LIBOR plus 7.50%. The Company will make monthly payments of accrued interest under the Restated Term Loan from the funding date of the Restated Term Loan, until July 31, 2021, to be followed by monthly installments of principal and interest through the Maturity Date of July 1, 2024. The Company may prepay all of the Restated Term Loan prior to its maturity date provided the Company pays MidCap a prepayment fee. Net proceeds from the Restated Term Loan were used to repay the $35 million outstanding balance related to the Term Loans.

Also on July 1, 2019, Sientra entered into an Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the Company, the lenders party thereto from time to time, and MidCap Financial Trust (the “Agent”) (the “Restated Revolving Credit Agreement”). The Restated Revolving Credit Agreement provides for, among other things, a revolving loan of up to $10.0 million (the “Restated Revolving Loan”). The amount of loans available to be drawn under the Revolving Credit Agreement is based on a borrowing base equal to 85% of the net collectible value of eligible accounts receivable plus 40% of eligible finished goods inventory, or the Borrowing Base, provided that availability from eligible finished goods inventory does not exceed 20% of the Borrowing Base. The Restated Revolving Loan carries an interest rate of LIBOR plus 4.50%. The Borrowers may make (subject to the applicable borrowing base at the time) and repay borrowings from time to time under the Revolving Credit Agreement until the maturity of the facility on July 1, 2024. Immediately prior to the effectiveness of the Restated Revolving Credit Agreement, the Company converted the $4.3 million outstanding borrowings under the Revolving Loan into the Restated Revolving Loan.

The Credit Agreements include customary affirmative and restrictive covenants and representations and warranties, including a financial covenant for minimum revenues, a financial covenant for minimum cash requirements, a covenant against the occurrence of a “change in control,” financial reporting obligations, and certain limitations on indebtedness, liens, investments, distributions, collateral, mergers or acquisitions, taxes, and deposit accounts. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% may be applied to any outstanding principal balances, and MidCap may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Credit Agreements.

The obligations under each Credit Agreement are guaranteed by the Company and the Company’s existing and subsequently acquired or formed direct and indirect subsidiaries (other than certain foreign subsidiaries). The obligations under the Credit Agreements are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in (i) all tangible and intangible assets of the Borrowers and the guarantors, except for certain customary excluded property, and (ii) all of the capital stock owned by the Company and guarantors thereunder (limited, in the case of the stock of certain non-U.S. subsidiaries of the Company, to 65% of the capital stock of such subsidiaries).

v3.19.2
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation

 

a.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC.  Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial reporting. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 14, 2019, or the Annual Report. The results for the three and six months ended June 30, 2019 are not necessarily indicative of results to be expected for the year ending December 31, 2019, any other interim periods, or any future year or period.

Liquidity

 

b.

Liquidity

Since the Company’s inception, it has incurred significant net operating losses and the Company anticipates that losses will continue in the near term.  The Company expects its operating expenses will continue to grow as they expand operations.  The Company will need to generate significant net sales to achieve profitability. To date, the Company has funded operations primarily with proceeds from the sales of preferred stock, borrowings under term loans, sales of products since 2012, and the proceeds from the sale of common stock in public offerings.

 

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business.  As of June 30, 2019, the Company had cash and cash equivalents of $146.1 million. Since inception, the Company has incurred recurring losses from operations and cash outflows from operating activities. The continuation of the Company as a going concern is dependent upon many factors including liquidity and the ability to raise capital. The Company received FDA approval of their PMA supplement on April 17, 2018 and was then able to access a $10.0 million term loan pursuant to an amendment to the credit agreement with MidCap Financial Trust, or MidCap. In addition, in February 2018, the Company entered into an At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, as sales agent pursuant to which the Company may sell, from time to time, through Stifel, shares of our common stock having an aggregate gross offering price of up to $50.0 million. As of June 30, 2019, the Company has not sold any common stock pursuant to the sales agreement. Further, on May 7, 2018 and June 7, 2019, the Company completed public offerings of its common stock, raising approximately $107.6 million and $107.7 million, respectively, in net proceeds after deducting underwriting discounts and commissions and other offering expenses.

On July 1, 2019, the Company entered into certain credit agreements with Midcap Financial Trust pursuant to which the Company repaid its existing indebtedness under its Loan Agreement and the outstanding commitment fee was cancelled. See Note 15 – Subsequent Events for further discussion.

The Company believes that its cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months. To fund ongoing operating and capital needs, the Company may need to raise additional capital in the future through the sale of equity securities and incremental debt financing.  

Use of Estimates

 

c.

Use of Estimates

The preparation of the condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Recent Accounting Pronouncements

 

d.

Recent Accounting Pronouncements

Recently Adopted Accounting Standards

 

In February 2016, the FASB issued Accounting Standards Update, or ASU, 2016-02, Leases (Topic 842). This ASU requires a company to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption was permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, amending certain aspects of the new leasing standard. The amendment allowed an additional optional transition method whereby an entity records a cumulative effect adjustment to opening retained earnings in the year of adoption without restating prior periods. The Company adopted Topic 842 on January 1, 2019 electing the package of practical expedients permitted under the transition guidance, which allowed the Company to carry forward the historical lease classification, the assessment on whether a contract is or contains a lease, and the initial direct costs for any leases that exist prior to adoption of the new standard. The Company has not restated prior periods under the optional transition method. The adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of right-of-use assets of approximately $22.7 million, lease liabilities of approximately $22.9 million and no cumulative-effect adjustment on retained earnings on its Condensed Consolidated Balance Sheets. Refer to Note 9 - Leases for further details.

 

In February 2018, the FASB issued ASU 2018-02, Income Taxes (Topic 740), which allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. Tax Cuts and Jobs Act to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. The Company adopted ASC 2018-02 and elected to not reclassify the income tax effects under ASU 2018-02, as it does not have a material impact on the condensed consolidated financial statements.

Reclassifications

 

e.

Reclassifications

 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Revenue Recognition

Revenue Recognition

The Company generates revenue primarily through the sale and delivery of promised goods or services to customers and recognizes revenue when control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. Performance obligations typically include the delivery of promised products, such as breast implants, tissue expanders, BIOCORNEUM, miraDry Systems and bioTips, along with service-type warranties and deliverables under certain marketing programs. Other deliverables are sometimes promised, but are ancillary and insignificant in the context of the contract as a whole. Sales prices are documented in the executed sales contract, purchase order or order acknowledgement prior to the transfer of control to the customer. Customers may enter into a separate extended service agreement to purchase an extended warranty for miraDry products from the Company whereby the payment is due at the inception of the agreement. Typical payment terms are 30 days for Breast Products and direct sales of consumable miraDry products, and tend to be longer for capital sales of miraDry Systems and sales to miraDry distributors, but do not extend beyond one year. For delivery of promised products, control transfers and revenue is recognized upon shipment, unless the contractual arrangement requires transfer of control when products reach their destination, for which revenue is recognized once the product arrives at its destination. Revenue for extended service agreements are recognized ratably over the term of the agreements.

For Breast Products, with the exception of the Company’s BIOCORNEUM scar management products, the Company allows for the return of products from customers within six months after the original sale, which is accounted for as variable consideration. Reserves are established for anticipated sales returns based on the expected amount calculated with historical experience, recent gross sales and any notification of pending returns. The estimated sales return is recorded as a reduction of revenue and as a sales return liability in the same period revenue is recognized. Actual sales returns in any future period are inherently uncertain and thus may differ from the estimates. If actual sales returns differ significantly from the estimates, an adjustment to revenue in the current or subsequent period would be recorded. The Company has established an allowance for sales returns of $7.0 million and $6.0 million as of June 30, 2019 and December 31, 2018 respectively, recorded as “sales return liability” on the condensed consolidated balance sheets.

The following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Sales return liability

 

Balance as of December 31, 2018

 

$

6,048

 

Addition to reserve for sales activity

 

 

47,178

 

Actual returns

 

 

(46,895

)

Change in estimate of sales returns

 

 

689

 

Balance as of June 30, 2019

 

$

7,020

 

 

For Breast Products, a portion of the Company’s revenue is generated from the sale of consigned inventory of breast implants maintained at doctor, hospital, and clinic locations. For these products, revenue is recognized at the time the Company is notified by the customer that the product has been implanted, not when the consigned products are delivered to the customer’s location.

For miraDry, in addition to domestic and international direct sales, the Company leverages a distributor network for selling the miraDry System internationally. The Company recognizes revenue when control of the goods or services is transferred to the distributors. Standard terms in both direct sales agreements (domestic and international), and international distributor agreements do not allow for trial periods, right of return, refunds, payment contingent on obtaining financing or other terms that could impact the customer’s payment obligation.

Arrangements with Multiple Performance Obligations

The Company has determined that the delivery of each unit of product in the Company’s revenue contracts with customers is a separate performance obligation. The Company’s revenue contracts may include multiple products or services, each of which is considered a separate performance obligation. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on observable prices or using an expected cost plus margin approach when an observable price is not available. The Company invoices customers once products are shipped or delivered to customers depending on the negotiated shipping terms.

The Company introduced its Platinum20 Limited Warranty Program, or Platinum20, in May 2018 on all OPUS breast implants implanted in the United States or Puerto Rico on or after May 1, 2018.  Platinum20 provides for financial assistance for revision surgeries and no-charge contralateral replacement implants upon the occurrence of certain qualifying events. The Company considers Platinum20 to have an assurance warranty component and a service warranty component. The assurance component is recorded as a warranty liability at the time of sale (as discussed in Note 6). The Company considers the service warranty component as an additional performance obligation and defers revenue at the time of sale based on the relative estimated selling price, by estimating a standalone selling price using the expected cost plus margin approach for the performance obligation. Inputs into the expected cost plus margin approach include historical incidence rates, estimated replacement costs, estimated financial assistance payouts and an estimated margin. The liability for unsatisfied performance obligations under the service warranty as of June 30, 2019 and December 31, 2018 was $0.7 million and $0.4 million respectively. The short-term obligation related to the service warranty was $0.3 million and $0.2 million as of June 30, 2019 and December 31, 2018, respectively, and is included in “accrued and other current liabilities” on the condensed consolidated balance sheets. The long-term obligation related to the service warranty was $0.4 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, and is included in “warranty reserve and other long-term liabilities” on the condensed consolidated balance sheets. The performance obligation is satisfied at the time that Platinum20 benefits are provided and are expected to be satisfied over the following 6 to 24 month period for financial assistance and 20 years for product replacement. Revenue recognized for the service warranty performance obligations for the three and six months ended June 30, 2019 was immaterial.

Practical Expedients and Policy Election

The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.

The Company does not adjust accounts receivable for the effects of any significant financing components as customer payment terms are shorter than one year.

The Company has elected to account for shipping and handling activities performed after a customer obtains control of the products as activities to fulfill the promise to transfer the products to the customer. Shipping and handling activities are largely provided to customers free of charge for the Breast Products segment. The associated costs were $0.9 million and $0.6 million for the six months ended June 30, 2019 and 2018 respectively. The associated costs were $0.5 million and $0.3 million for the three months ended June 30, 2019 and 2018 respectively. These costs are viewed as part of the Company’s sales and marketing programs and are recorded as a component of sales and marketing expense in the condensed consolidated statement of operations as an accounting policy election. For the miraDry segment, shipping and handling charges are typically billed to customers and recorded as revenue. The shipping and handling costs incurred are recorded as a component of cost of goods sold in the condensed consolidated statement of operations. The associated costs were $0.3 million and $0.2 million for the six months ended June 30, 2019 and 2018 respectively. The associated costs were $0.2 million and $0.1 million for the three months ended June 30, 2019 and 2018 respectively.

Leases Leases

The Company leases certain office space, warehouses, distribution facilities and office equipment. The Company also has embedded leases of manufacturing facilities and equipment associated with the Company’s manufacturing contracts. The Company determines if an arrangement contains a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset.

 

Operating and finance lease right-of-use, or ROU, assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. The Company determines its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. The ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. As of June 30, 2019, the Company has included a five-year renewal option in the lease term for one operating lease as it was concluded that it is reasonably certain that the Company will exercise the option. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. The Company’s lease agreements generally do not contain material residual value guarantees or material restrictive covenants.

 

The Company’s leases of office space, warehouses and distribution facilities are treated as operating leases and often contain lease and non-lease components. The Company has elected to account for these lease and non-lease components separately. Non-lease components for these assets are primarily comprised of common-area maintenance, utilities, and real estate taxes that are passed on from the lessor in proportion to the space leased by the Company, and are recognized in operating expenses in the period in which the obligation for those payments was incurred. Lease cost for these operating leases is recognized on a straight-line basis over the lease term in operating expenses.

 

The Company’s embedded leases of manufacturing facilities and equipment are treated as operating leases and often contain lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component. There may be variability in future lease payments as the amount of the non-lease components is based on the costs of manufacturing and is dependent on the amount and types of units produced. The Company reduces the operating lease liability when the inventory is purchased.

 

The Company’s leases of office equipment are accounted for as finance leases as they meet one or more of the five finance lease classification criteria. Lease cost for these finance leases is comprised of amortization of the ROU asset and interest expense which are recognized in operating expenses and other income (expense), net.

v3.19.2
Revenue (Tables)
6 Months Ended
Jun. 30, 2019
Revenue Recognition [Abstract]  
Schedule of Rollforward of Sales Return Liability

The following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Sales return liability

 

Balance as of December 31, 2018

 

$

6,048

 

Addition to reserve for sales activity

 

 

47,178

 

Actual returns

 

 

(46,895

)

Change in estimate of sales returns

 

 

689

 

Balance as of June 30, 2019

 

$

7,020

 

 

v3.19.2
Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Schedule of Company's Liabilities that are Measured at Fair Value on a Recurring Basis

The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

 

 

 

Fair Value Measurements as of

 

 

 

June 30, 2019 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

 

 

 

 

4

 

 

 

4

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

13,136

 

 

 

13,136

 

 

 

$

 

 

 

 

 

 

13,140

 

 

 

13,140

 

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2018 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

 

 

 

 

113

 

 

 

113

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

13,847

 

 

 

13,847

 

 

 

$

 

 

 

 

 

 

13,960

 

 

 

13,960

 

Schedule of Aggregate Fair Values of the Company's Common Stock Warrants and Contingent Consideration for which Fair Value is Determined by Level 3 Inputs The following table provides a rollforward of the aggregate fair values of the Company’s common stock warrants and contingent consideration for which fair value is determined by Level 3 inputs (in thousands):

 

Warrant Liability

 

 

 

 

Balance, December 31, 2018

 

$

113

 

Change in fair value of warrant liability

 

 

(109

)

Balance, June 30, 2019

 

$

4

 

Contingent Consideration Liability

 

 

 

 

Balance, December 31, 2018

 

$

13,847

 

Payments of contingent consideration

 

 

(1,000

)

Change in fair value of contingent consideration

 

 

289

 

Balance, June 30, 2019

 

$

13,136

 

v3.19.2
Product Warranties (Tables)
6 Months Ended
Jun. 30, 2019
Product Warranties Disclosures [Abstract]  
Schedule of rollforward of the accrued warranties

The following table provides a rollforward of the accrued warranties (in thousands):

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Beginning balance as of January 1

 

$

1,395

 

 

$

1,642

 

Warranty costs incurred during the period

 

 

(423

)

 

 

(231

)

Changes in accrual related to warranties issued during the period

 

 

651

 

 

 

568

 

Changes in accrual related to pre-existing warranties

 

 

23

 

 

 

4

 

Balance as of June 30

 

$

1,646

 

 

$

1,983

 

v3.19.2
Net Loss Per Share (Tables)
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
Schedule of net loss per share, basic and diluted

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss (in thousands)

 

$

 

(37,654

)

 

$

 

(18,028

)

 

$

(64,138

)

 

$

(37,451

)

Weighted average common shares outstanding, basic

   and diluted

 

 

 

34,290,073

 

 

 

 

24,761,117

 

 

 

31,709,067

 

 

 

22,202,565

 

Net loss per share attributable to common stockholders

 

$

 

(1.10

)

 

$

 

(0.73

)

 

$

(2.02

)

 

$

(1.69

)

Schedule of potentially dilutive securities excluded from the computation of diluted net loss per share attributable to common stockholders

The Company excluded the following potentially dilutive securities, outstanding as of June 30, 2019 and 2018, from the computation of diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2019 and 2018 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

June 30,

 

 

 

2019

 

 

2018

 

Stock options to purchase common stock

 

 

1,069,167

 

 

 

2,011,503

 

Warrants for the purchase of common stock

 

 

47,710

 

 

 

47,710

 

 

 

 

1,116,877

 

 

 

2,059,213

 

v3.19.2
Balance Sheet Components (Tables)
6 Months Ended
Jun. 30, 2019
Balance Sheet Related Disclosures [Abstract]  
Schedule of inventories, net

Inventories, net consist of the following (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Raw materials

 

$

3,272

 

 

$

2,147

 

Work in progress

 

 

2,322

 

 

 

2,110

 

Finished goods

 

 

22,502

 

 

 

18,335

 

Finished goods - right of return

 

 

1,768

 

 

 

1,493

 

 

 

$

29,864

 

 

$

24,085

 

Schedule of property and equipment, net

Property and equipment, net consist of the following (in thousands): 

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Leasehold improvements

 

$

418

 

 

$

402

 

Manufacturing equipment and toolings

 

 

2,979

 

 

 

1,928

 

Computer equipment

 

 

911

 

 

 

682

 

Software

 

 

1,274

 

 

 

1,039

 

Office equipment

 

 

117

 

 

 

156

 

Furniture and fixtures

 

 

1,031

 

 

 

826

 

 

 

 

6,730

 

 

 

5,033

 

Less accumulated depreciation

 

 

(3,044

)

 

 

(2,497

)

 

 

$

3,686

 

 

$

2,536

 

Schedule of changes in carrying amount of goodwill

The changes in the carrying amount of goodwill during the six months ended June 30, 2019 were as follows (in thousands):

 

 

 

Breast Products

 

 

miraDry

 

 

Total

 

Balances as of December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

19,156

 

 

$

7,629

 

 

$

26,785

 

Accumulated impairment losses

 

 

(14,278

)

 

 

 

 

 

(14,278

)

Goodwill, net

 

$

4,878

 

 

$

7,629

 

 

$

12,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

19,156

 

 

$

7,629

 

 

$

26,785

 

Accumulated impairment losses

 

 

(14,278

)

 

 

(7,629

)

 

 

(21,907

)

Goodwill, net

 

$

4,878

 

 

$

 

 

$

4,878

 

Schedule of intangible assets

 

The components of the Company’s other intangible assets consist of the following (in thousands):

 

 

 

Average

 

 

 

 

 

 

Amortization

 

 

June 30, 2019

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

11

 

 

$

9,540

 

 

$

(2,978

)

 

$

6,562

 

Trade names - finite life

 

 

14

 

 

 

2,000

 

 

 

(222

)

 

 

1,778

 

Developed technology

 

 

13

 

 

 

1,500

 

 

 

 

 

 

1,500

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Total definite-lived intangible assets

 

 

 

 

 

$

15,503

 

 

$

(5,663

)

 

$

9,840

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

December 31, 2018

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

11

 

 

$

11,240

 

 

$

(3,486

)

 

$

7,754

 

Trade names - finite life

 

 

14

 

 

 

5,800

 

 

 

(541

)

 

 

5,259

 

Developed technology

 

 

15

 

 

 

3,000

 

 

 

(338

)

 

 

2,662

 

Distributor relationships

 

 

9

 

 

 

500

 

 

 

(130

)

 

 

370

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Total definite-lived intangible assets

 

 

 

 

 

$

23,003

 

 

$

(6,958

)

 

$

16,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

Schedule of estimated amortization expense The following table summarizes the estimated amortization expense relating to the Company's definite-lived intangible assets as of June 30, 2019 (in thousands):

 

 

 

Amortization

 

Period

 

Expense

 

Remainder of 2019

 

$

1,022

 

2020

 

 

1,554

 

2021

 

 

1,305

 

2022

 

 

1,122

 

2023

 

 

975

 

Thereafter

 

 

3,862

 

 

 

$

9,840

 

Schedule of accrued and other current liabilities

Accrued and other current liabilities consist of the following (in thousands):

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Payroll and related expenses

 

$

4,927

 

 

$

6,466

 

Accrued commissions

 

 

3,606

 

 

 

5,321

 

Accrued equipment

 

 

721

 

 

 

18

 

Deferred and contingent consideration, current portion

 

 

13,060

 

 

 

7,645

 

Audit, consulting and legal fees

 

 

2,044

 

 

 

703

 

Accrued sales and marketing expenses

 

 

1,642

 

 

 

1,374

 

Operating lease liabilities

 

 

4,896

 

 

 

 

Finance lease liabilities

 

 

42

 

 

 

 

Other

 

 

5,342

 

 

 

6,170

 

 

 

$

36,280

 

 

$

27,697

 

v3.19.2
Leases (Tables)
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Components of Lease Expense

 

Components of lease expense were as follows:

 

 

 

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Lease Cost

 

Classification

 

2019

 

 

2019

 

Operating lease cost

 

Operating expenses

 

$

386

 

 

$

766

 

Operating lease cost

 

Inventory

 

 

1,248

 

 

 

2,495

 

Total operating lease cost

 

 

 

 

 

$

1,634

 

 

$

3,261

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Operating expenses

 

 

11

 

 

 

20

 

Interest on lease liabilities

 

Other income (expense), net

 

 

1

 

 

 

2

 

Total finance lease cost

 

 

 

 

 

$

12

 

 

$

22

 

Variable lease cost

 

Inventory

 

 

2,297

 

 

 

4,595

 

Total lease cost

 

 

 

 

 

$

3,943

 

 

$

7,878

 

 

Supplemental Cash Flow Information Related to Operating and Finance Leases

 

Supplemental cash flow information related to operating and finance leases for the six months ended June 30, 2019 was as follows (in thousands):

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

Operating cash outflows from operating leases

 

$

2,954

 

Operating cash outflows from finance leases

 

 

22

 

Right-of-use assets obtained in exchange for new lease obligations:

 

 

 

 

Operating leases

 

$

24,779

 

Finance leases

 

 

119

 

Supplemental Balance Sheet Information Related to Operating and Finance Leases

 

Supplemental balance sheet information, as of June 30, 2019, related to operating and finance leases was as follows (in thousands, except lease term and discount rate):

 

 

 

June 30,

 

 

 

2019

 

Reported as:

 

 

 

 

Other assets

 

 

 

 

Operating lease right-of-use assets

 

$

22,443

 

Finance lease right-of-use assets

 

 

100

 

Total right-of use assets

 

$

22,543

 

Accrued and other current liabilities

 

 

 

 

Operating lease liabilities

 

$

4,896

 

Finance lease liabilities

 

 

42

 

Warranty reserve and other long-term liabilities

 

 

 

 

Operating lease liabilities

 

 

18,058

 

Finance lease liabilities

 

 

55

 

Total lease liabilities

 

$

23,051

 

Weighted average remaining lease term (years)

 

 

 

 

Operating leases

 

 

4

 

Finance leases

 

 

2

 

Weighted average discount rate

 

 

 

 

Operating leases

 

 

8.08

%

Finance leases

 

 

4.21

%

Maturities of Operating and Finance Lease Liabilities

 

As of June 30, 2019, maturities of the Company’s operating and finance lease liabilities are as follows (in thousands):

 

Period

 

Operating leases

 

 

Finance leases

 

 

Total

 

Remainder of 2019

 

$

3,303

 

 

$

23

 

 

$

3,326

 

2020

 

 

6,639

 

 

 

43

 

 

 

6,682

 

2021

 

 

6,672

 

 

 

36

 

 

 

6,708

 

2022

 

 

6,405

 

 

 

 

 

 

6,405

 

2023

 

 

3,083

 

 

 

 

 

 

3,083

 

2024 and thereafter

 

 

964

 

 

 

 

 

 

964

 

Total lease payments

 

$

27,066

 

 

$

102

 

 

$

27,168

 

Less imputed interest

 

 

4,112

 

 

 

5

 

 

 

4,117

 

Total operating lease liabilities

 

$

22,954

 

 

$

97

 

 

$

23,051

 

 

Schedule of Future Minimum Lease Payments under Non-cancelable Operating Leases

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancellable leases as of December 31, 2018 was as follows (in thousands):

 

Year Ended December 31:

 

 

 

 

2019

 

$

1,325

 

2020

 

 

1,134

 

2021

 

 

1,060

 

2022

 

 

947

 

2023 and thereafter

 

 

1,557

 

 

 

$

6,023

 

v3.19.2
Long-Term Debt and Revolving Loan (Tables)
6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Schedule of Future Principal Payments for Outstanding Term Loans

 

The future schedule of principal payments for the outstanding Term Loans as of June 30, 2019 was as follows (in thousands):

 

Fiscal Year

 

 

 

 

Remainder of 2019

 

$

7,000

 

2020

 

 

14,000

 

2021

 

 

14,000

 

2022

 

 

 

2023

 

 

 

Thereafter

 

 

 

Total

 

$

35,000

 

v3.19.2
Stockholders' Equity (Tables)
6 Months Ended
Jun. 30, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Summary of option activity

The following summarizes all option activity under the 2007 Plan, 2014 Plan and Inducement Plan:

 

 

 

 

 

 

 

Weighted

 

 

Weighted

average

 

 

 

 

 

 

 

average

 

 

remaining

 

 

 

Option

 

 

exercise

 

 

contractual

 

 

 

Shares

 

 

price

 

 

term (years)

 

Balances at December 31, 2018

 

 

1,953,334

 

 

$

7.42

 

 

 

6.30

 

Exercised

 

 

(45,453

)

 

 

2.34

 

 

 

 

 

Balances at June 30, 2019

 

 

1,907,881

 

 

$

7.54

 

 

 

5.96

 

 

Summary of RSUs activity

Activity related to RSUs is set forth below:

 

 

 

 

 

 

 

Weighted

average

 

 

 

Number

 

 

grant date

 

 

 

of shares

 

 

fair value

 

Balances at December 31, 2018

 

 

2,141,350

 

 

$

13.27

 

Granted

 

 

1,198,845

 

 

 

8.21

 

Vested

 

 

(759,699

)

 

 

11.77

 

Forfeited

 

 

(182,317

)

 

 

16.22

 

Balances at June 30, 2019

 

 

2,398,179

 

 

$

10.99

 

 

v3.19.2
Segment Information (Tables)
6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Summary of Net Sales, Net Operating Loss and Net Assets by Reportable Segment

The following tables present the net sales, net operating loss and net assets by reportable segment for the periods presented (in thousands):

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

11,194

 

 

$

9,412

 

 

$

20,944

 

 

$

17,954

 

miraDry

 

 

9,331

 

 

 

8,142

 

 

 

17,133

 

 

 

14,275

 

Total net sales

 

$

20,525

 

 

$

17,554

 

 

$

38,077

 

 

$

32,229

 

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

(12,202

)

 

$

(12,444

)

 

$

(26,236

)

 

$

(25,238

)

miraDry

 

 

(24,762

)

 

 

(4,454

)

 

 

(36,581

)

 

 

(10,588

)

Total loss from operations

 

$

(36,964

)

 

$

(16,898

)

 

$

(62,817

)

 

$

(35,826

)

 

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

 

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

 

 

 

 

$

212,234

 

 

$

130,149

 

miraDry

 

 

 

 

 

 

33,711

 

 

 

38,210

 

Total assets

 

 

 

 

 

$

245,945

 

 

$

168,359

 

 

v3.19.2
Formation and Business of the Company (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended
Jun. 07, 2019
May 07, 2018
Jun. 30, 2019
Jun. 30, 2018
Formation And Business Of Company [Line Items]        
Proceeds from the issuance of common stock, net of underwriting discounts, commissions and offering expenses $ 107.7 $ 107.6    
Common stock        
Formation And Business Of Company [Line Items]        
Shares issued in follow-on public offering     20,000,000 8,518,519
Underwritten Follow-On Offering | Common stock        
Formation And Business Of Company [Line Items]        
Shares issued in follow-on public offering 17,391,305 7,407,408    
Public offering price (in dollars per share) $ 5.75 $ 13.50    
Additional shares granted to underwriters 2,608,695 1,111,111    
Proceeds from the issuance of common stock, net of underwriting discounts, commissions and offering expenses $ 107.7 $ 107.6    
Payment of underwriting discounts and commissions and offering expenses 6.9 6.9    
Offering expenses $ 0.4 $ 0.5    
v3.19.2
Summary of Significant Accounting Policies (Details) - USD ($)
1 Months Ended
Jun. 07, 2019
Jan. 01, 2019
May 07, 2018
Feb. 28, 2018
Jun. 30, 2019
Dec. 31, 2018
Jun. 30, 2018
Apr. 30, 2018
Apr. 17, 2018
Summary Of Significant Accounting Policies [Line Items]                  
Cash and cash equivalents         $ 146,088,000 $ 86,899,000 $ 112,619,000    
Common stock, shares issued         49,350,266 28,701,494      
Proceeds from the issuance of common stock, net of underwriting discounts, commissions and offering expenses $ 107,700,000   $ 107,600,000            
Right-of-use asset         $ 22,443,000        
Lease, liabilities         $ 22,954,000        
ASU 2016-02                  
Summary Of Significant Accounting Policies [Line Items]                  
Cumulative effect adjustment   $ 0              
Right-of-use asset   22,700,000              
Lease, liabilities   $ 22,900,000              
At-The-Market Equity Offering Sales Agreement                  
Summary Of Significant Accounting Policies [Line Items]                  
Common stock, shares issued         0        
Maximum                  
Summary Of Significant Accounting Policies [Line Items]                  
Aggregate gross offering price       $ 50,000,000          
March Two Thousand Eighteen Term Loan                  
Summary Of Significant Accounting Policies [Line Items]                  
Loan amount outstanding               $ 10,000,000 $ 10,000,000
v3.19.2
Revenue (Details 1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-07-01
Jun. 30, 2019
Product Replacement  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 20 years
Maximum | Financial Assistance  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 24 months
Minimum | Financial Assistance  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 6 months
Breast Products and Consumable miraDry products | Maximum  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 30 days
MiraDry Systems | Maximum  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 1 year
v3.19.2
Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Revenue From Contracts With Customers [Line Items]          
Period for sales return     6 months    
Allowance for sales returns $ 7,000   $ 7,000   $ 6,000
Liability for service warranty 700   $ 700   400
Revenue, practical expedient, incremental cost of obtaining contract     true    
Revenue, practical expedient, significant financing component     true    
Shipping and handling costs 7,813 $ 6,660 $ 14,287 $ 12,756  
Breast Products | Sales and marketing expense          
Revenue From Contracts With Customers [Line Items]          
Shipping and handling costs $ 500 $ 300 $ 900 $ 600  
Type of Cost, Good or Service [Extensible List] us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember  
miraDry | Cost of goods sold          
Revenue From Contracts With Customers [Line Items]          
Shipping and handling costs $ 200 $ 100 $ 300 $ 200  
Type of Cost, Good or Service [Extensible List] us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember  
Accrued and Other Current Liabilities          
Revenue From Contracts With Customers [Line Items]          
Short-term obligation $ 300   $ 300   200
Warranty Reserve and Other Long-term Liabilities          
Revenue From Contracts With Customers [Line Items]          
Long-term obligation $ 400   $ 400   $ 300
v3.19.2
Revenue (Schedule of Rollforward of Sales Return Liability) (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
Revenue Recognition [Abstract]  
Balance as of December 31, 2018 $ 6,048
Addition to reserve for sales activity 47,178
Actual returns (46,895)
Change in estimate of sales returns 689
Balance as of June 30, 2019 $ 7,020
v3.19.2
Fair Value Measurements (Details)
Jun. 30, 2019
Estimated Dividend Yield  
Fair Value Measurements  
Measurement input 0.00
v3.19.2
Fair Value Measurements - Schedule of Company's Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - Recurring - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Fair Value Measurements    
Fair value liability $ 13,140 $ 13,960
Warrants    
Fair Value Measurements    
Fair value liability 4 113
Contingent Consideration Liability    
Fair Value Measurements    
Fair value liability 13,136 13,847
Level 3    
Fair Value Measurements    
Fair value liability 13,140 13,960
Level 3 | Warrants    
Fair Value Measurements    
Fair value liability 4 113
Level 3 | Contingent Consideration Liability    
Fair Value Measurements    
Fair value liability $ 13,136 $ 13,847
v3.19.2
Fair Value Measurements - Schedule of Aggregate Fair Values of the Company's Common Stock Warrants and Contingent Consideration for which Fair Value is Determined by Level 3 Inputs (Details) - Level 3 - Recurring
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
Warrants  
Fair values of the Company's liabilities determined by Level 3 inputs  
Balance at beginning of the period $ 113
Change in fair value (109)
Balance at the end of the period 4
Contingent Consideration Liability  
Fair values of the Company's liabilities determined by Level 3 inputs  
Balance at beginning of the period 13,847
Payments of contingent consideration (1,000)
Change in fair value 289
Balance at the end of the period $ 13,136
v3.19.2
Product Warranties (Details) - USD ($)
6 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Jun. 30, 2018
Dec. 31, 2017
Product Warranty Liability [Line Items]        
Replacement implants and revision surgery financial assistance under limited warranty program $ 1,646,000 $ 1,395,000 $ 1,983,000 $ 1,642,000
Implants occurring prior to May 1, 2018        
Product Warranty Liability [Line Items]        
Period to claim financial assistance under limited warranty program 10 years      
Implants occurring prior to May 1, 2018 | Maximum        
Product Warranty Liability [Line Items]        
Replacement implants and revision surgery financial assistance under limited warranty program $ 3,600      
Implants occurring on or after May 1, 2018        
Product Warranty Liability [Line Items]        
Period to claim financial assistance under limited warranty program 20 years      
Implants occurring on or after May 1, 2018 | Maximum        
Product Warranty Liability [Line Items]        
Replacement implants and revision surgery financial assistance under limited warranty program $ 5,000      
v3.19.2
Product Warranties - Schedule of rollforward of the accrued warranties (Details) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Product Warranties Disclosures [Abstract]    
Beginning balance $ 1,395 $ 1,642
Warranty costs incurred during the period (423) (231)
Changes in accrual related to warranties issued during the period 651 568
Changes in accrual related to pre-existing warranties 23 4
Ending Balance $ 1,646 $ 1,983
v3.19.2
Net Loss Per Share - Schedule of Net Loss Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Mar. 31, 2019
Jun. 30, 2018
Mar. 31, 2018
Jun. 30, 2019
Jun. 30, 2018
Earnings Per Share [Abstract]            
Net loss $ (37,654) $ (26,484) $ (18,028) $ (19,423) $ (64,138) $ (37,451)
Weighted average common shares outstanding, basic and diluted 34,290,073   24,761,117   31,709,067 22,202,565
Net loss per share attributable to common stockholders $ (1.10)   $ (0.73)   $ (2.02) $ (1.69)
v3.19.2
Net Loss Per Share - Schedule of Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - shares
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Potentially dilutive securities    
Potentially dilutive securities 1,116,877 2,059,213
Stock options to purchase common stock    
Potentially dilutive securities    
Potentially dilutive securities 1,069,167 2,011,503
Warrants for the purchase of common stock    
Potentially dilutive securities    
Potentially dilutive securities 47,710 47,710
v3.19.2
Balance Sheet Components (Allowance) (Details) - USD ($)
$ in Millions
Jun. 30, 2019
Dec. 31, 2018
Balance Sheet Related Disclosures [Abstract]    
Allowance for doubtful accounts $ 3.2 $ 2.4
v3.19.2
Balance Sheet Components (Inventories) (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Balance Sheet Related Disclosures [Abstract]    
Raw materials $ 3,272 $ 2,147
Work in progress 2,322 2,110
Finished goods 22,502 18,335
Finished goods - right of return 1,768 1,493
Inventory, net $ 29,864 $ 24,085
v3.19.2
Balance Sheet Components (PPE) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Sep. 30, 2018
Property Plant And Equipment [Line Items]            
Property and equipment, gross $ 6,730   $ 6,730   $ 5,033  
Less accumulated depreciation (3,044)   (3,044)   (2,497)  
Property and equipment, net 3,686   3,686   2,536  
Depreciation expense 300 $ 300 600 $ 600    
Repurchase equipment           $ 2,700
Leasehold improvements            
Property Plant And Equipment [Line Items]            
Property and equipment, gross 418   418   402  
Manufacturing equipment and toolings            
Property Plant And Equipment [Line Items]            
Property and equipment, gross 2,979   2,979   1,928  
Computer equipment            
Property Plant And Equipment [Line Items]            
Property and equipment, gross 911   911   682  
Software            
Property Plant And Equipment [Line Items]            
Property and equipment, gross 1,274   1,274   1,039  
Office equipment            
Property Plant And Equipment [Line Items]            
Property and equipment, gross 117   117   156  
Furniture and fixtures            
Property Plant And Equipment [Line Items]            
Property and equipment, gross $ 1,031   $ 1,031   $ 826  
v3.19.2
Balance Sheet Components (Goodwill and Intangibles) (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Goodwill and intangible assets          
Goodwill $ 26,785   $ 26,785   $ 26,785
Accumulated impairment losses (21,907)   (21,907)   (14,278)
Goodwill, net 4,878   4,878   12,507
Goodwill impairment charge     7,629    
Other intangible assets          
Gross Carrying Amount 15,503   15,503   23,003
Accumulated Amortization (5,663)   (5,663)   (6,958)
Intangible Assets, net 9,840   9,840   16,045
Indefinite-lived intangible assets 450   450   450
Intangibles amortization expense 600 $ 600 1,200 $ 1,200  
Estimated amortization expense          
Remainder of 2019 1,022   1,022    
2020 1,554   1,554    
2021 1,305   1,305    
2022 1,122   1,122    
2023 975   975    
Thereafter 3,862   3,862    
Total amortization 9,840   9,840    
Trade name          
Other intangible assets          
Indefinite-lived intangible assets 450   $ 450   $ 450
Acquired FDA non-gel product approval          
Other intangible assets          
Average Amortization Period     11 years   11 years
Gross Carrying Amount 1,713   $ 1,713   $ 1,713
Accumulated Amortization (1,713)   $ (1,713)   $ (1,713)
Customer relationships          
Other intangible assets          
Average Amortization Period     11 years   11 years
Gross Carrying Amount 9,540   $ 9,540   $ 11,240
Accumulated Amortization (2,978)   (2,978)   (3,486)
Intangible Assets, net 6,562   6,562   $ 7,754
Goodwill impairment charge 400   $ 400    
Trade name          
Other intangible assets          
Average Amortization Period     14 years   14 years
Gross Carrying Amount 2,000   $ 2,000   $ 5,800
Accumulated Amortization (222)   (222)   (541)
Intangible Assets, net 1,778   1,778   $ 5,259
Goodwill impairment charge 3,300   $ 3,300    
Developed technology          
Other intangible assets          
Average Amortization Period     13 years   15 years
Gross Carrying Amount 1,500   $ 1,500   $ 3,000
Accumulated Amortization         (338)
Intangible Assets, net 1,500   1,500   $ 2,662
Goodwill impairment charge 1,000   1,000    
Distributor relationships          
Other intangible assets          
Average Amortization Period         9 years
Gross Carrying Amount         $ 500
Accumulated Amortization         (130)
Intangible Assets, net         $ 370
Goodwill impairment charge 300   $ 300    
Regulatory approvals          
Other intangible assets          
Average Amortization Period     1 year   1 year
Gross Carrying Amount 670   $ 670   $ 670
Accumulated Amortization (670)   $ (670)   $ (670)
Non-compete agreement          
Other intangible assets          
Average Amortization Period     2 years   2 years
Gross Carrying Amount 80   $ 80   $ 80
Accumulated Amortization (80)   (80)   (80)
Breast Products          
Goodwill and intangible assets          
Goodwill 19,156   19,156   19,156
Accumulated impairment losses (14,278)   (14,278)   (14,278)
Goodwill, net 4,878   4,878   4,878
miraDry          
Goodwill and intangible assets          
Goodwill 7,629   7,629   7,629
Accumulated impairment losses (7,629)   (7,629)    
Goodwill, net         $ 7,629
Goodwill impairment charge $ 7,600   $ 7,600    
v3.19.2
Balance Sheet Components (Accrued liabilities) (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Accrued and other current liabilities    
Payroll and related expenses $ 4,927 $ 6,466
Accrued commissions 3,606 5,321
Accrued equipment 721 18
Deferred and contingent consideration, current portion 13,060 7,645
Audit, consulting and legal fees 2,044 703
Accrued sales and marketing expenses 1,642 $ 1,374
Operating lease liabilities $ 4,896  
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Finance lease liabilities $ 42  
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Other $ 5,342 $ 6,170
Total $ 36,280 $ 27,697
v3.19.2
Leases (Details)
$ in Millions
6 Months Ended
Jun. 30, 2019
OperatingLease
Dec. 31, 2018
USD ($)
Lessee Disclosure [Abstract]    
Renewal term of lease 5 years  
Number of operating lease, renewable | OperatingLease 1  
Purchase obligation under manufacturing contract for 2019   $ 21.6
Purchase obligation under manufacturing contract for 2020   21.6
Purchase obligation under manufacturing contract for 2021   21.6
Purchase obligation under manufacturing contract for 2022   21.6
Purchase obligation under manufacturing contract for 2023   $ 21.6
v3.19.2
Leases - Components of Lease Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Lessee Lease Description [Line Items]    
Total operating lease cost $ 1,634 $ 3,261
Finance lease cost    
Total finance lease cost 12 22
Total lease cost 3,943 7,878
Inventory    
Lessee Lease Description [Line Items]    
Total operating lease cost 1,248 2,495
Finance lease cost    
Variable lease cost 2,297 4,595
Operating Expenses    
Lessee Lease Description [Line Items]    
Total operating lease cost 386 766
Finance lease cost    
Amortization of right-of-use assets 11 20
Other Income (Expense), Net    
Finance lease cost    
Interest on lease liabilities $ 1 $ 2
v3.19.2
Leases - Supplemental Cash Flow Information Related to Operating and Finance Leases (Details)
$ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash outflows from operating leases $ 2,954
Operating cash outflows from finance leases 22
Right-of-use assets obtained in exchange for new lease obligations:  
Operating leases 24,779
Finance leases $ 119
v3.19.2
Leases - Supplemental Balance Sheet Information Related to Operating and Finance Leases (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Assets And Liabilities Lessee [Abstract]    
Operating lease right-of-use assets $ 22,443  
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] us-gaap:OtherAssetsMember  
Finance lease right-of-use assets $ 100  
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] us-gaap:OtherAssetsMember  
Total right-of use assets $ 22,543  
Operating lease liabilities $ 4,896  
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Finance lease liabilities $ 42  
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Operating lease liabilities $ 18,058  
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] sien:WarrantyReserveAndOtherLongTermLiabilitiesMember  
Finance lease liabilities $ 55  
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] sien:WarrantyReserveAndOtherLongTermLiabilitiesMember  
Total lease liabilities $ 23,051  
Weighted average remaining lease term (years)    
Operating leases 4 years  
Finance leases 2 years  
Weighted average discount rate    
Operating leases 8.08%  
Finance leases 4.21%  
v3.19.2
Leases - Maturities of Operating and Finance Lease Liabilities (Details)
$ in Thousands
Jun. 30, 2019
USD ($)
Operating Lease Liabilities, Payments Due [Abstract]  
Operating leases, Remainder of 2019 $ 3,303
Operating leases, 2020 6,639
Operating leases, 2021 6,672
Operating leases, 2022 6,405
Operating leases, 2023 3,083
Operating leases, 2024 and thereafter 964
Total operating lease payments 27,066
Less imputed interest, Operating leases 4,112
Total operating lease liabilities 22,954
Finance Lease Liabilities, Payments, Due [Abstract]  
Finance leases, Remainder of 2019 23
Finance leases, 2020 43
Finance leases, 2021 36
Total finance lease payments 102
Less imputed interest, Finance leases 5
Total finance lease liabilities 97
Lessee Lease Liability Payments Due [Abstract]  
Remainder of 2019 3,326
2020 6,682
2021 6,708
2022 6,405
2023 3,083
2024 and thereafter 964
Total lease payments 27,168
Less imputed interest 4,117
Total lease liabilities $ 23,051
v3.19.2
Leases - Schedule of Future Minimum Lease Payments under Non-cancelable Operating Leases (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Lessee Disclosure [Abstract]  
2019 $ 1,325
2020 1,134
2021 1,060
2022 947
2023 and thereafter 1,557
Total $ 6,023
v3.19.2
Long-Term Debt and Revolving Loan (Details) - USD ($)
3 Months Ended 6 Months Ended
Apr. 18, 2018
Jul. 25, 2017
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Apr. 30, 2018
Apr. 17, 2018
Line Of Credit Facility [Line Items]                
Credit and security agreement entered date   Jul. 25, 2017            
Amortization of debt issuance costs     $ 43,000 $ 34,000 $ 100,000 $ 100,000    
Additional interest (as a percent)   5.00%            
Term Loan Credit Agreement                
Line Of Credit Facility [Line Items]                
Amount funded by MidCap under agreement   $ 25,000,000            
Lines of credit facility available date Apr. 30, 2018 Mar. 31, 2018            
Loan amount outstanding   $ 40,000,000 35,000,000   35,000,000      
Debt scheduled maturity date   Dec. 01, 2021            
Origination fee (as a percent)   0.50%            
Unamortized debt issuance costs on term loan, current portion     100,000   100,000      
Unamortized debt issuance costs on term loan, long-term portion     100,000   $ 100,000      
Term Loan Credit Agreement | London Interbank Offered Rate (LIBOR)                
Line Of Credit Facility [Line Items]                
Spread on variable rate basis (as a percent)         7.50%      
Debt Instrument Reference Rate         2.44%      
Term Loan Credit Agreement | Minimum | London Interbank Offered Rate (LIBOR)                
Line Of Credit Facility [Line Items]                
Debt instrument, interest rate floor   1.00%            
March Two Thousand Eighteen Term Loan                
Line Of Credit Facility [Line Items]                
Line of Credit Facility, Remaining Borrowing Capacity   $ 10,000,000            
Loan amount outstanding             $ 10,000,000 $ 10,000,000
Additional Term Loan                
Line Of Credit Facility [Line Items]                
Line of Credit Facility, Remaining Borrowing Capacity   5,000,000            
Minimum revenue required to satisfy additional term loan facility   75,000,000            
Revolving Credit Agreement                
Line Of Credit Facility [Line Items]                
Loan amount outstanding   $ 10,000,000 4,300,000   $ 4,300,000      
Borrowing base of accounts receivable (as a percent)   85.00%            
Borrowing base of finished goods inventory (as a percent)   40.00%            
Debt scheduled maturity date   Dec. 01, 2021            
Origination fee (as a percent)   0.50%            
Annual collateral management fee (as a percent)   0.50%            
Annual unused line fee of average unused portion (as a percent)   0.50%            
Revolving Credit Agreement | Other Long-Term Assets                
Line Of Credit Facility [Line Items]                
Unamortized debt issuance costs on term loan, long-term portion     $ 100,000   $ 100,000      
Revolving Credit Agreement | London Interbank Offered Rate (LIBOR)                
Line Of Credit Facility [Line Items]                
Spread on variable rate basis (as a percent)   4.50%            
Revolving Credit Agreement | Maximum                
Line Of Credit Facility [Line Items]                
Borrowing base availability from finished goods inventory (as a percent)   20.00%            
Revolving Credit Agreement | Minimum | London Interbank Offered Rate (LIBOR)                
Line Of Credit Facility [Line Items]                
Debt instrument, interest rate floor   1.00%            
v3.19.2
Long-Term Debt and Revolving Loan (Schedule of Future Principal Payments for Outstanding Term Loans) (Details) - Term Loans
$ in Thousands
Jun. 30, 2019
USD ($)
Line Of Credit Facility [Line Items]  
Remainder of 2019 $ 7,000
2020 14,000
2021 14,000
Total $ 35,000
v3.19.2
Stockholders' Equity (Details) - $ / shares
Jun. 30, 2019
Dec. 31, 2018
Stock other disclosures    
Common and preferred stock, shares authorized 210,000,000 210,000,000
Common stock, shares authorized 200,000,000 200,000,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
v3.19.2
Stockholders' Equity (Warrants) (Details) - $ / shares
1 Months Ended
Jan. 17, 2013
Jun. 30, 2014
Jun. 30, 2019
Common Stock Warrants      
Aggregate number of common shares to purchase     47,710
Oxford Finance, LLC      
Common Stock Warrants      
Exercise price (in dollars per share) $ 14.671 $ 14.671  
Tranche A, B and C loans | Oxford Finance, LLC      
Common Stock Warrants      
Warrant term 7 years    
Percentage of term loan amounts 3.00%    
Tranche D term loan | Oxford Finance, LLC      
Common Stock Warrants      
Warrant term   7 years  
Percentage of term loan amounts   2.50%  
v3.19.2
Stockholders' Equity (Options) (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Nov. 03, 2014
Apr. 30, 2007
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Number of shares available for future grants 761,344   761,344        
Stock options              
Number of options              
Balance at the beginning of period (in shares)     1,953,334        
Options exercised (in shares)     (45,453)        
Balance at the end of the period (in shares) 1,907,881   1,907,881   1,953,334    
Weighted average exercise price              
Balance at the beginning of period (in dollars per share)     $ 7.42        
Options exercised (in dollars per share)     2.34        
Balance at the end of period (in dollars per share) $ 7.54   $ 7.54   $ 7.42    
Additional information              
Weighted average remaining contractual term     5 years 11 months 15 days   6 years 3 months 18 days    
Stock-based compensation expense $ 0.1 $ 0.4 $ 0.4 $ 0.8      
Unrecognized compensation costs (in dollars) $ 0.3   $ 0.3        
Weighted average period over which unrecognized compensation costs are expected to be recognized     1 year        
2007 Plan              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Common stock initially reserved for issuance (in shares)             1,690,448
2014 Plan              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Common stock initially reserved for issuance (in shares)           1,027,500  
Number of shares available for future grants 475,954   475,954        
Inducement Plan              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Number of shares available for future grants 320,538   320,538        
Number of shares awarded     1,108,278        
Grant period of stock awards     10 years        
Number of additional years of requisite service period     3 years        
Vesting period     1 year        
Inducement Plan | On the first anniversary              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Vesting percentage     25.00%        
Inducement Plan | Minimum              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Purchase price of awards expressed as a percentage of fair value of shares on the date of grant     100.00%        
Percentage of possible payouts of the target award     0.00%        
Inducement Plan | Minimum | Individual options              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Vesting percentage     25.00%        
Inducement Plan | Maximum              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Percentage of possible payouts of the target award     100.00%        
2007 Plan and 2014 Plan | Stock options              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Grant period of stock awards     10 years        
2007 Plan and 2014 Plan | Stock options | Minimum              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Purchase price of awards expressed as a percentage of fair value of shares on the date of grant     100.00%        
Percentage of voting power owned by shareholder 10.00%   10.00%        
2007 Plan and 2014 Plan | Stock options | Maximum              
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]              
Purchase price of awards expressed as a percentage of fair value of shares on the date of grant     110.00%        
v3.19.2
Stockholders' Equity (Restricted Stock) (Details) - Restricted stock units - 2014 Plan - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Stockholders' Equity, other disclosures        
Requisite service period, annually     3 years  
Stock-based compensation expense $ 2.7 $ 2.6 $ 6.0 $ 4.6
Unrecognized compensation costs (in dollars) $ 20.4   $ 20.4  
Weighted average period over which unrecognized compensation costs are expected to be recognized     2 years  
Number of shares        
Balance at beginning of the period     2,141,350  
Granted     1,198,845  
Vested     (759,699)  
Forfeited     (182,317)  
Balance at end of the period 2,398,179   2,398,179  
Weighted average grant date fair value        
Balance at beginning of the period     $ 13.27  
Granted     8.21  
Vested     11.77  
Forfeited     16.22  
Balance at end of the period $ 10.99   $ 10.99  
v3.19.2
Stockholders' Equity (Stock Purchase) (Details) - USD ($)
$ / shares in Units, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Oct. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]          
Number of shares available for future grants 761,344   761,344    
2014 Employee Stock Purchase Plan          
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]          
Purchase period of offering     6 months    
Rate of purchase price of stock on fair value (as a percent)     85.00%    
Purchases under the award     68,899    
Weighted Average purchase price $ 9.91   $ 9.91    
Stock-based compensation expense $ 0.1 $ 0.1 $ 0.3 $ 0.3  
Incremental compensation cost       $ 0.4  
2014 Employee Stock Purchase Plan | Maximum          
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]          
Discount rate on the value of shares through payroll deductions (as a percent)     15.00%    
Expiration period of each offering     27 months    
Number of shares reserved for future issuance         255,500
v3.19.2
Income Taxes (Details) - USD ($)
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Tax Disclosure [Abstract]        
Tax expense $ 0 $ 0 $ 0 $ 0
v3.19.2
Segment Information (Details)
6 Months Ended
Jun. 30, 2019
USD ($)
Segment
Segment Reporting [Abstract]  
Number of reportable segments | Segment 2
Segments unallocated expenses | $ $ 0
v3.19.2
Segment Information - Summary of Net Sales and Net Operating Loss by Reportable Segment (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Segment Reporting Information [Line Items]          
Total net sales $ 20,525 $ 17,554 $ 38,077 $ 32,229  
Total loss from operations (36,964) (16,898) (62,817) (35,826)  
Total assets 245,945   245,945   $ 168,359
Breast Products          
Segment Reporting Information [Line Items]          
Total net sales 11,194 9,412 20,944 17,954  
Total loss from operations (12,202) (12,444) (26,236) (25,238)  
Total assets 212,234   212,234   130,149
miraDry          
Segment Reporting Information [Line Items]          
Total net sales 9,331 8,142 17,133 14,275  
Total loss from operations (24,762) $ (4,454) (36,581) $ (10,588)  
Total assets $ 33,711   $ 33,711   $ 38,210
v3.19.2
Commitments and Contingencies (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Nov. 11, 2017
Mar. 31, 2019
Dec. 31, 2018
Contingencies      
Loss contingency paid     $ 410
miraDry Class Action Litigation      
Contingencies      
Amount of Defendants (and/or their indemnitors and/or insurers) agreed to pay settlement consideration $ 400    
Legal settlement     600
Loss contingency paid     $ 400
Legal settlement paid   $ 400  
v3.19.2
Subsequent Events - Additional Information (Details) - USD ($)
Jul. 01, 2019
Jul. 25, 2017
Dec. 31, 2020
Subsequent Event [Line Items]      
Credit and security agreement entered date   Jul. 25, 2017  
Additional interest (as a percent)   5.00%  
Subsequent Event      
Subsequent Event [Line Items]      
Investment company, contributed capital to committed capital ratio 65.00%    
Restated Term Loan Credit Agreement | Subsequent Event      
Subsequent Event [Line Items]      
Credit and security agreement entered date Jul. 01, 2019    
Line of Credit Facility, Remaining Borrowing Capacity $ 35,000,000    
Loan amount outstanding $ 40,000,000    
Debt scheduled maturity date Jul. 01, 2024    
Repayment of outstanding balance related to term loans $ 35,000,000    
Restated Term Loan Credit Agreement | London Interbank Offered Rate (LIBOR) | Subsequent Event      
Subsequent Event [Line Items]      
Spread on variable rate basis (as a percent) 7.50%    
Restated Term Loan Credit Agreement | Scenario, Forecast      
Subsequent Event [Line Items]      
Line of Credit Facility, Remaining Borrowing Capacity     $ 10,000,000
Additional Term Loan      
Subsequent Event [Line Items]      
Line of Credit Facility, Remaining Borrowing Capacity   $ 5,000,000  
Minimum revenue required to satisfy additional term loan facility   $ 75,000,000  
Additional Term Loan | Subsequent Event      
Subsequent Event [Line Items]      
Line of Credit Facility, Remaining Borrowing Capacity $ 5,000,000    
Minimum revenue required to satisfy additional term loan facility 100,000,000    
Additional Term Loan | Scenario, Forecast      
Subsequent Event [Line Items]      
Line of Credit Facility, Remaining Borrowing Capacity     $ 15,000,000
Restated Credit and Security Agreement | Subsequent Event      
Subsequent Event [Line Items]      
Loan amount outstanding $ 10,000,000    
Debt scheduled maturity date Jul. 01, 2024    
Borrowing base of accounts receivable (as a percent) 85.00%    
Borrowing base of finished goods inventory (as a percent) 40.00%    
Additional interest (as a percent) 5.00%    
Restated Credit and Security Agreement | Subsequent Event | Maximum      
Subsequent Event [Line Items]      
Borrowing base availability from finished goods inventory (as a percent) 20.00%    
Restated Credit and Security Agreement | London Interbank Offered Rate (LIBOR) | Subsequent Event      
Subsequent Event [Line Items]      
Spread on variable rate basis (as a percent) 4.50%    
Restated Revolving Loan | Subsequent Event      
Subsequent Event [Line Items]      
Loan amount outstanding $ 4,300,000