SIENTRA, INC., 10-K filed on 3/11/2021
Annual Report
v3.20.4
Document and Entity Information - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Mar. 05, 2021
Jun. 30, 2020
Cover [Abstract]      
Entity Registrant Name SIENTRA, INC.    
Entity Central Index Key 0001551693    
Document Type 10-K    
Document Period End Date Dec. 31, 2020    
Amendment Flag false    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Non-accelerated Filer    
Entity Shell Company false    
ICFR Auditor Attestation Flag false    
Entity Small Business true    
Entity Emerging Growth Company false    
Entity Public Float     $ 188,807,000
Entity Common Stock, Shares Outstanding   57,273,356  
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Trading Symbol SIEN    
Title of 12(b) Security Common Stock, par value $0.01 per share    
Security Exchange Name NASDAQ    
Entity File Number 001-36709    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 20-5551000    
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 CA    
Entity Address, Postal Zip Code 93117    
City Area Code 805    
Local Phone Number 562-3500    
Document Annual Report true    
Document Transition Report false    
Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement relating to its 2020 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. Such Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

   
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 54,967 $ 87,608
Accounts receivable, net of allowances of $4,464 and $3,835 at December 31, 2020 and December 31, 2019, respectively 23,503 27,548
Inventories, net 48,648 39,612
Prepaid expenses and other current assets 2,154 2,489
Total current assets 129,272 157,257
Property and equipment, net 13,106 12,314
Goodwill 9,202 9,202
Other intangible assets, net 9,387 17,390
Other assets 8,011 8,241
Total assets 168,978 204,404
Current liabilities:    
Current portion of long-term debt 4,670 6,508
Accounts payable 6,504 9,352
Accrued and other current liabilities 32,389 32,551
Customer deposits 17,905 13,943
Sales return liability 9,192 8,116
Total current liabilities 70,660 70,470
Long-term debt 60,500 38,248
Derivative liability 26,570  
Deferred and contingent consideration 2,350 5,177
Warranty reserve and other long-term liabilities 9,455 8,627
Total liabilities 169,535 122,522
Commitments and contingencies (Note 12)
Stockholders’ equity (deficit):    
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 50,712,151 and 49,612,907 and outstanding 50,639,424 and 49,540,180 shares at December 31, 2020 and December 31, 2019, respectively 506 495
Additional paid-in capital 558,059 550,562
Treasury stock, at cost (72,727 shares at December 31, 2020 and December 31, 2019) (260) (260)
Accumulated deficit (558,862) (468,915)
Total stockholders’ equity (deficit) (557) 81,882
Total liabilities and stockholders’ equity (deficit) $ 168,978 $ 204,404
v3.20.4
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Statement Of Financial Position [Abstract]    
Accounts receivable, allowances (in dollars) $ 4,464 $ 3,835
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 50,712,151 49,612,907
Common stock, shares outstanding 50,639,424 49,540,180
Treasury stock, shares 72,727 72,727
v3.20.4
Consolidated Statements of Operations - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]      
Net sales $ 71,241 $ 83,699 $ 68,126
Cost of goods sold 32,302 33,012 26,822
Gross profit 38,939 50,687 41,304
Operating expenses:      
Sales and marketing 52,553 80,189 67,715
Research and development 10,311 13,537 10,945
General and administrative 38,191 46,771 42,418
Restructuring 1,762 1,083  
Impairment 6,432 12,674  
Total operating expenses 109,249 154,254 121,078
Loss from operations (70,310) (103,567) (79,774)
Other income (expense), net:      
Interest income 206 1,406 532
Interest expense (9,451) (4,568) (3,428)
Change in fair value of derivative liability (10,470)    
Other income (expense), net 111 (55) 39
Total other income (expense), net (19,604) (3,217) (2,857)
Loss before income taxes (89,914) (106,784) (82,631)
Income tax 33 34 (4)
Net loss $ (89,947) $ (106,818) $ (82,627)
Basic and diluted net loss per share attributable to common stockholders $ (1.79) $ (2.63) $ (3.25)
Weighted average outstanding common shares used for net loss per share attributable to common stockholders:      
Basic and diluted 50,233,175 40,654,272 25,402,241
v3.20.4
Consolidated Statements of Stockholders' Equity (Deficit) - 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    
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      
Employee stock-based compensation expense 13,824     13,824  
Stock option exercises 1,149 $ 1   1,148  
Stock option exercises (in shares)   147,463      
Employee stock purchase program (ESPP) 993 $ 2   991  
Employee stock purchase program (ESPP) (in shares)   145,616      
Vested restricted stock   $ 5   (5)  
Vested restricted stock (in shares)   523,257      
Shares withheld for tax obligations on vested RSUs (1,635) $ (1)   (1,634)  
Shares withheld for tax obligations on vested RSUs, shares   (108,063)      
Net loss (82,627)       (82,627)
Balance, end of year at Dec. 31, 2018 66,878 $ 286 $ (260) 428,949 (362,097)
Balance, end of year (in shares) at Dec. 31, 2018   28,701,494 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      
Employee stock-based compensation expense 12,655     12,655  
Stock option exercises 125     125  
Stock option exercises (in shares)   51,451      
Employee stock purchase program (ESPP) 1,216 $ 1   1,215  
Employee stock purchase program (ESPP) (in shares)   175,624      
Vested restricted stock   $ 10   (10)  
Vested restricted stock (in shares)   944,467      
Shares withheld for tax obligations on vested RSUs (3,064) $ (2)   (3,062)  
Shares withheld for tax obligations on vested RSUs, shares   (260,129)      
Equity contingent consideration 3,156     3,156  
Net loss (106,818)       (106,818)
Balance, end of year at Dec. 31, 2019 81,882 $ 495 $ (260) 550,562 (468,915)
Balance, end of year (in shares) at Dec. 31, 2019   49,612,907 72,727    
Proceeds from follow-on offering, net of costs 263     263  
Proceeds from follow-on offering, net of costs (in shares)   37,000      
Employee stock-based compensation expense 8,171     8,171  
Stock option exercises 29     29  
Stock option exercises (in shares)   9,817      
Employee stock purchase program (ESPP) 836 $ 2   834  
Employee stock purchase program (ESPP) (in shares)   203,728      
Vested restricted stock   $ 12   (12)  
Vested restricted stock (in shares)   1,150,707      
Shares withheld for tax obligations on vested RSUs (1,791) $ (3)   (1,788)  
Shares withheld for tax obligations on vested RSUs, shares   (302,008)      
Net loss (89,947)       (89,947)
Balance, end of year at Dec. 31, 2020 $ (557) $ 506 $ (260) $ 558,059 $ (558,862)
Balance, end of year (in shares) at Dec. 31, 2020   50,712,151 72,727    
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities:      
Net loss $ (89,947) $ (106,818) $ (82,627)
Adjustments to reconcile net loss to net cash used in operating activities      
Impairment 6,432 12,674  
Depreciation and amortization 4,094 3,524 3,321
Provision for doubtful accounts 4,423 2,298 2,043
Provision for warranties 1,271 929 325
Provision for inventory 3,601 2,626 955
Fair value adjustments to derivative liability 10,470    
Fair value adjustments of other liabilities held at fair value 96 969 2,447
Amortization of debt discount and issuance costs 4,347 359 174
Stock-based compensation expense 8,344 12,478 13,824
Payments of contingent consideration liability in excess of acquisition-date fair value   (1,968) (320)
Other non-cash adjustments 375 290 90
Changes in operating assets and liabilities:      
Accounts receivable (378) (7,320) (14,094)
Inventories (12,808) (10,921) (4,144)
Prepaid expenses, other current assets and other assets 935 (8,513) (1,263)
Accounts payable, accrueds, and other liabilities (6,420) 6,694 17,014
Customer deposits 3,961 4,008 4,513
Sales return liability 1,077 2,068 2,142
Legal settlement payable   (410) (590)
Net cash used in operating activities (60,127) (87,033) (56,190)
Cash flows from investing activities:      
Purchase of property and equipment (4,037) (4,071) (855)
Business acquisitions, net of cash and restricted cash acquired   (17,943)  
Net cash used in investing activities (4,037) (22,014) (855)
Cash flows from financing activities:      
Proceeds from option exercises and employee stock purchase plan 865 1,341 2,142
Net proceeds from issuance of common stock 263 107,734 107,551
Payments related to tax witholding on vested restricted stock units (RSUs) (1,791) (3,064) (1,635)
Gross borrowings under the Term Loan   5,000 10,000
Repayments under the Term Loan (25,000)    
Repayment of the Revolving Loan (6,508) (15,788) (12,109)
Net proceeds from issuance of the Convertible Note 60,000    
Payments of contingent consideration up to acquisition-date fair value   (5,766) (680)
Deferred financing costs (2,958) (1,997) (22)
Net cash provided by financing activities 31,523 109,756 117,356
Net increase (decrease) in cash, cash equivalents and restricted cash (32,641) 709 60,311
Cash, cash equivalents and restricted cash at:      
Beginning of period 87,951 87,242 26,931
End of period 55,310 87,951 87,242
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets      
Cash and cash equivalents 54,967 87,608 86,899
Restricted cash included in other assets 343 $ 343 $ 343
Restricted Cash Noncurrent Asset Statement Of Financial Position Extensible List   us-gaap:OtherNoncurrentAssetsMember us-gaap:OtherNoncurrentAssetsMember
End of period 55,310 $ 87,951 $ 87,242
Supplemental disclosure of cash flow information:      
Interest paid 4,198 4,089 3,120
Supplemental disclosure of non-cash investing and financing activities:      
Property and equipment in accounts payable and accrued liabilities 413 745 679
Acquisition of business, deferred and contingent consideration obligations at fair value   9,063  
Non-cash deferred consideration settlement     1,000
Non-cash settlement of assets held for sale in accounts payable     2,674
Revolving Loan      
Cash flows from financing activities:      
Gross borrowings   $ 22,296 $ 12,109
Paycheck Protection Program      
Cash flows from financing activities:      
Gross borrowings $ 6,652    
v3.20.4
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

(1) Summary of Significant Accounting Policies

(a)

Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities which are subject to significant judgment and use of estimates include the allowance for doubtful accounts, sales return liability, provision for warranties, valuation of inventories, recoverability of long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and finite lived intangible assets, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with stock-based compensation and other equity instruments.

(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 decrease with the change in the miraDry business strategy, but 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 and the convertible note, sales of products since 2012, and the proceeds from the sale of common stock in public offerings. 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.

Debt financing

On July 25, 2017, the Company entered into the Existing Credit Agreements with Midcap. On July 1, 2019, the Company entered into certain credit agreements with Midcap Financial Trust pursuant to which the Company repaid their existing indebtedness under the Existing Credit Agreements and the outstanding commitment fee was cancelled. Further, on May 11, 2020 and February 5, 2021, the Company amended certain credit agreements with Midcap Financial Trust.

 

On March 11, 2020, the Company entered into a facility agreement with Deerfield Partners, L.P., issuing $60.0 million in principal amount of 4.0% unsecured and subordinated convertible notes upon the terms and conditions set forth in the facility agreement.

 

In April 2020, the Company was granted a loan of $6.7 million under the Paycheck Protection Program of the CARES Act, or the PPP Loan, all or a portion of which may be forgiven dependent on the use of proceeds. The PPP Loan matures on April 20, 2022 and bears interest at a rate of 1.0% per annum. All or a portion of the PPP Loan may be forgiven upon submission of documentation of expenditures in accordance with certain specified requirements. The Company sought and obtained the PPP Loan due to the immediate and continued impact of the COVID-19 pandemic on revenues and prospects. The PPP Loan has allowed the Company to satisfy payroll obligations without a material reduction in pay for employees or a material headcount reduction, other than the reductions in the previously announced organizational efficiency initiative.

See Note 7 to the consolidated financial statements for a full description of our long-term debt, revolving line of credit, convertible note, and PPP loan.

Equity financing

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 its common stock having an aggregate gross offering price of up to $50.0 million. As of December 31, 2020, the Company has sold 37,000 shares of its common stock pursuant to the sales agreement.

 

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

 

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

 

At December 31, 2020, the Company had cash and cash equivalents of $55.0 million. The accompanying 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. The Company believes that its cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months.

(c)

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist primarily of cash in checking accounts and interest-bearing money market accounts.

(d)

Concentration of Credit and Supplier Risks

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company’s cash and cash equivalents are deposited in demand accounts at financial institutions that management believes are creditworthy. The Company is exposed to credit risk in the event of default by these financial institutions for cash and cash equivalents in excess of amounts insured by the Federal Deposit Insurance Corporation, or FDIC. Management believes that the Company’s investments in cash and cash equivalents are financially sound and have minimal credit risk and the Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company relies on a limited number of third-party manufacturers for the manufacturing and supply of its products. This could result in the Company not being able to acquire the inventory needed to meet customer demand, which would result in possible loss of sales and affect operating results adversely.

(e)

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, contingent consideration, and the convertible feature related to the convertible note are discussed in Note 1(f) below. The fair value of the debt is based on the amount of future cash flows associated with the instrument discounted using the Company’s market rate. As of December 31, 2020, the carrying value of the long-term debt was not materially different from the fair value. As of December 31, 2020, the carrying value and fair value of the convertible note were as follows (in thousands):

 

 

 

December 31, 2020

 

 

 

Carrying Value

 

 

Fair Value

 

Convertible note

 

$

44,436

 

 

$

37,580

 

The convertible note is carried on the consolidated balance sheets at amortized cost. The fair value is estimated using a discounted cash flow analysis with a yield derived from a calibrated binomial lattice model as of the convertible note issuance date and adjusted for market movements thereafter. The market for trading of the convertible note is not considered to be an active market and therefore the estimate of fair value is based on Level 2 inputs.

(f)

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.

(g)

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight‑line method over the estimated useful life of the asset, generally three to fifteen years. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the related asset. Upon retirement or sale of an asset, the cost and related accumulated depreciation or amortization are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred.

(h)    Leases

 

The Company leases certain office space, warehouses, distribution facilities, manufacturing 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. 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, distribution facilities and manufacturing 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.

(i)

Goodwill and Other Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets of purchased businesses. Goodwill is not amortized, but instead is subject to impairment tests on at least an annual basis and whenever circumstances suggest that goodwill may be impaired. After the acquisition of miraDry, management began evaluating the Company as two reporting units, Breast Products and miraDry. The Company’s annual test for impairment is performed as of October 1 of each fiscal year. The Company makes a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount from the qualitative assessment, the Company performs a quantitative analysis to compare the fair value of the reporting unit to its carrying amount. The Company recognizes impairment charges for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The Company’s fair value analysis of goodwill utilizes the income approach and market approach, which requires the use of estimates about a reporting unit’s future revenues and free cash flows, market multiples, enterprise value, control risk premiums, 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 market multiples, enterprise value, control risk premiums, discount rates and terminal value are based upon market participant assumptions using a defined peer group. Changes in these assumptions can materially affect these estimates. Thus, to the extent the market changes, discount rates increase significantly or the Company does not meet its projected performance, the Company could recognize impairments, and such impairments could be material.

In the second quarter of 2019, the Company recorded a full impairment of goodwill in the miraDry reporting unit after performing a quantitative analysis. Refer to Note 5(a) for further details.  

Indefinite-lived intangible assets

The Company tests indefinite-lived intangible assets for impairment on at least an annual basis and whenever circumstances suggest the assets may be impaired. The Company’s annual test for impairment is performed as of October 1 of each fiscal year. If indicators of impairment are present, the Company evaluates the carrying value of the intangible assets in relation to estimates of future undiscounted cash flows. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to the difference. The Company also evaluates the remaining useful life of an indefinite-lived intangible asset to determine whether events and circumstances continue to support an indefinite useful life. For the years ended December 31, 2020, 2019, and 2018, the Company did not record any indefinite-lived intangible assets impairment charges.

Finite-lived intangible assets

The intangible assets are amortized to the consolidated statement of operations based on estimated cash flows generated from the intangible asset over its estimated life. Each fiscal year the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstance warrant a revision to the remaining periods of amortization. Judgments about the recoverability of purchased finite‑lived intangible assets are made whenever events or changes in circumstance indicate that impairment may exist. Recoverability of finite‑lived intangible assets is measured by comparison of the carrying amount of the asset group to the future undiscounted cash flows the asset group is expected to generate. If the sum of the future undiscounted cash flows is less than the carrying value, the Company will evaluate whether the fair value of each asset in the asset group exceeds its respective carrying value. If the fair value of any asset in the asset group is determined to be less than its carrying value, then the Company will recognize an impairment loss based on the excess of the carrying amount over the asset’s respective fair value.

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 future cash flows derived from existing customers and requires the use of customer attrition rates and discount rates to determine the estimated fair value. The future revenues and free cash flow from existing customers are determined based upon actual results giving effect to management’s expected changes in operating results in future years. The attrition rate is based on average historical levels of customer attrition and the discount rate is based upon market participant assumptions using a defined peer group. 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. This method requires the use of royalty rates which are determined based on comparable third-party license agreements involving similar assets and discount rates similar to the above to determine the estimated fair value.

In the second quarter of 2019, the Company recorded a partial impairment of intangible assets in the miraDry reporting unit after performing a quantitative analysis and subsequently recorded a full impairment in the first quarter of 2020. Refer to Note 5(b) for further details.  

(j)

Impairment of Tangible Long‑Lived Assets

The Company’s management routinely considers whether indicators of impairment of long‑lived assets are present. If such indicators are present, management determines whether the sum of the estimated undiscounted cash flows attributable to the asset group in question is less than their carrying value. If less, the Company will recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals or other methods. If the assets determined to be impaired are to be held and used, the Company will recognize an impairment charge to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset’s carrying value. The fair value of the asset will then become the asset’s new carrying value.

(k)

Business Combinations

Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date in the financial statements. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill. Liability-classified contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date and remeasured at their fair values each subsequent reporting period until the related contingencies are resolved. The resulting changes in fair values are recorded in earnings. Equity-classified contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date and are not subsequently remeasured each reporting period unless the obligation becomes reclassified as a liability. The subsequent settlement of the obligation is accounted for within equity.

(l)

Segment Reporting

Reportable segments represent components for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, who has been identified as the Chief Operating Decision Maker, or CODM, as defined by authoritative guidance on segment reporting, in determining howe to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. Based on the financial information presented to and reviewed by the CODM, the Company has determined that it has two reportable segments: Breast Products and miraDry.

(m)

Revenue Recognition

The Company generates revenue primarily through the sale and delivery of promised goods or services to customers. Sales prices are documented in the executed sales contract, purchase order or order acknowledgement prior to the transfer of control to the customer. 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.

Revenue contracts may include multiple products or services, each of which is considered a separate performance obligation. 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. Other deliverables are sometimes promised but are ancillary and insignificant in the context of the contract as a whole. Revenue is allocated to each performance obligation based on its relative standalone selling price. The Company determines standalone selling prices based on observable prices for all performance obligations with the exception of the service-type warranty under the Platinum20 Limited Warranty Program, or Platinum20.

The Company introduced 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 1(t)). The Company considers the service warranty component as an additional performance obligation and defers revenue at the time of sale 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 December 31, 2020 were as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2020

 

Balance as of December 31, 2019

 

$

1,596

 

Additions and adjustments

 

 

2,137

 

Revenue recognized

 

 

(1,115

)

Balance as of December 31, 2020

 

$

2,618

 

Revenue for service warranties are recognized ratably over the term of the agreements. Specifically for Platinum20, the performance obligation is satisfied at the time that the benefits are provided and are expected to be satisfied over the following 3 to 24 month period for financial assistance and 20 years for product replacement.

 

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. 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.

Sales Return Liability

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. A sales return liability is established based on estimated returns using relevant historical experience taking into consideration recent gross sales and notifications of pending returns, as adjusted for changes in recent industry events and trends. The estimated sales returns are 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 following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Beginning balance

 

$

8,116

 

 

$

6,048

 

Addition to reserve for sales activity

 

 

118,508

 

 

 

105,496

 

Actual returns

 

 

(117,407

)

 

 

(104,148

)

Change in estimate of sales returns

 

 

(25

)

 

 

720

 

Ending balance

 

$

9,192

 

 

$

8,116

 

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. For the Breast Products

segment, shipping and handling activities are largely provided to customers free of charge. The associated costs were $2.9 million, $1.9 million and $1.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. These costs are viewed as part of the Company’s marketing programs and are recorded as a component of sales and marketing expense in the 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 consolidated statement of operations. The associated costs were $0.3 million, $0.7 million, and $0.4 million for the years ended December 31, 2020, 2019, and 2018, respectively.

(n)

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability to collect from some of its customers. The allowances for doubtful accounts are based on the analysis of historical bad debts, customer credit‑worthiness, past transaction history with the customer, and current economic trends. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances may be required.

(o)

Inventories and Cost of Goods Sold

Inventories represent raw materials, work in process and finished goods that are recorded at the lower of cost or market on a first‑in, first‑out basis, or FIFO. The Company recognizes the cost of inventory transferred to the customer in cost of goods sold when revenue is recognized. Further, the Company periodically assesses the recoverability of all inventories to determine whether adjustments for impairment or obsolescence are required. The Company evaluates the remaining shelf life and other general obsolescence and impairment criteria in assessing the recoverability of the Company’s inventory.

(p)

Income Taxes

The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

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. However, the Company has deferred tax liabilities that cannot be considered sources of income to support the realization of the deferred tax assets, and has provided for tax expense (or benefit) and a corresponding deferred tax liability.

The Company accounts for uncertain tax positions in accordance with Account Standards Codification, or ASC, 740‑10, Accounting for Uncertainty in Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of tax benefit might change as new information becomes available.

(q)

Research and Development Expenditures

Research and development costs are charged to operating expenses as incurred. Research and development, or R&D, primarily consist of clinical expenses, regulatory expenses, product development, consulting services, outside research activities, quality control and other costs associated with the development of the Company’s products and compliance with Good Clinical Practices, or GCP, requirements. R&D expenses also include related personnel and consultant compensation and stock-based compensation expense.

(r)

Advertising

Expenses related to advertising are charged to sales and marketing expense as incurred. Advertising costs were $3.6 million, $6.1 million and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

(s)

Stock‑Based Compensation

The Company applies the fair value provisions of ASC 718, Compensation — Stock Compensation, or ASC 718. ASC 718 requires the recognition of compensation expense, using a fair‑value based method, for costs related to all employee share‑based payments, including stock options, restricted stock units, and the employee stock purchase plan. In the absence of an observable market price for an award, ASC 718 requires companies to estimate the fair value of share‑based payment awards on the date of grant using an option‑pricing model. We estimate the fair value of our stock‑based awards to employees and directors using the Black‑Scholes option pricing model. The grant date fair value of a stock‑based award is recognized as an expense over the requisite service period of the award on a straight‑line basis. In addition, we use the Monte-Carlo simulation option-pricing model to determine the fair value of market-based awards. The Monte-Carlo simulation option-pricing model uses the same input assumptions as the Black-Scholes model; however, it also further incorporates into the fair-value determination the possibility that the market condition may not be satisfied. Compensation costs related to these awards are recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

The option-pricing models require the input of subjective assumptions, including the risk‑free interest rate, expected dividend yield, expected volatility and expected term, among other inputs. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock‑based compensation expense could be materially different in the future. These assumptions are estimated as follows:

 

Risk‑free interest rate—The risk‑free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.

 

Dividend yield—The Company has never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company utilized an expected dividend yield of zero.

 

Expected volatility—In the prior years, the Company utilized median historic price volatilities and implied volatilities of comparable public companies due to a lack of significant trading history for the Company’s own common stock. In the current year, the Company estimated its expected stock volatility based on company-specific historical and implied volatility information of its stock as sufficient historical information has become available.

 

Expected term—The expected term represents the period that our stock‑based awards are expected to be outstanding. The Company utilizes the simplified method to estimate the expected term.

 

(t)

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 1(m) 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.

 

(u)

Net Loss Per Share

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Net loss (in thousands)

 

$

(89,947

)

 

$

(106,818

)

 

$

(82,627

)

Weighted average common shares outstanding, basic and diluted

 

 

50,233,175

 

 

 

40,654,272

 

 

 

25,402,241

 

Net loss per share attributable to common stockholders

 

$

(1.79

)

 

$

(2.63

)

 

$

(3.25

)

 

The Company excluded the following potentially dilutive securities, outstanding as of December 31, 2020, 2019 and 2018 from the computation of diluted net loss per share attributable to common stockholders for the years ended December 31, 2020, 2019 and 2018 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Stock options to purchase common stock

 

 

2,559,558

 

 

 

1,967,367

 

 

 

1,625,778

 

Warrants for the purchase of common stock

 

 

17,040

 

 

 

47,710

 

 

 

47,710

 

Equity contingent consideration

 

 

607,442

 

 

 

 

 

 

 

Stock issuable upon conversion of convertible note

 

 

19,733,352

 

 

 

 

 

 

 

 

 

 

22,917,392

 

 

 

2,015,077

 

 

 

1,673,488

 

 

The Company uses the if-converted method for calculating any potential dilutive effects of the convertible note. The Company did not adjust the net loss for the year ended December 31, 2020 to eliminate any interest expense or gain/loss for the derivative liability related to the note in the computation of diluted loss per share, as the effects would be anti-dilutive.

 

(v)

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 consolidated balance sheets.

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendment modifies, removes, and adds certain disclosure requirements on fair value measurements. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption was permitted. The Company adopted the applicable amendments within ASU 2018-13 prospectively in the first quarter of 2020 and there was no material impact on its consolidated financial statements from the adoption.

 

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendment. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption was permitted. The Company adopted ASU 2018-15 prospectively in the first quarter of 2020 and there was no material impact on its consolidated financial statements from the adoption.

 

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment eliminates certain accounting models and simplifies the accounting for convertible instruments and enhances disclosures for convertible instruments and earnings per share. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact that adoption of the standard will have on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment provides optional expedients and exceptions for contract modifications that replace a reference rate affected by reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022, and entities may elect to apply by Topic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is currently evaluating the impact the election of the optional expedient will have on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendment removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. The amendment also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact that adoption of the standard will have on the consolidated financial statements.

 

 

(w)     Risks and Uncertainties

 

The rapid, global spread of COVID-19 has resulted in significant economic uncertainty, significant declines in business and consumer confidence and global demand in the non-essential healthcare industry (among others), a global economic slowdown, and could lead to a global recession. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, and employee-related amounts, will depend on future developments that are highly uncertain. The Company continues to monitor and assess new information related to the COVID-19 pandemic, the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

 

As an aesthetics company, surgical procedures involving the Company’s breast and miraDry products are susceptible to local and national government restrictions, such as social distancing, “shelter in place” orders and business closures, due to the economic and logistical impacts these measures have on consumer demand as well as the practitioners’ ability to administer such procedures. The inability or limited ability to perform such non-emergency procedures significantly harmed the Company’s revenues during the second quarter of 2020 and continued to harm the Company’s revenues during the third and fourth quarter of 2020. While some states have lifted certain restrictions on non-emergency procedures, the Company will likely continue to experience future harm to its revenues while existing or new restrictions remain in place.

 

Further, the spread of COVID-19 has caused the Company to modify workforce practices, and the Company may take further actions determined to be in the best interests of the Company’s employees or as required by governments. In addition, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that this can lead to a local and/or global economic recession, which may result in further harm to the aesthetics market. Such economic disruption could adversely affect the Company’s business. The continued spread of COVID-19, or another infectious disease, could also result in delays or disruptions in the Company’s supply chain or adversely affect the Company’s manufacturing facilities and personnel. Further, trade and/or national security protection policies may be adjusted as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic.

 

The estimates used for, but not limited to, determining the collectability of accounts receivable, fair value of long-lived assets and goodwill, and sales returns liability required could be impacted by the pandemic. While the full impact of COVID-19 is unknown at this time, the Company has made appropriate estimates based on the facts and circumstances available as of the reporting date. These estimates may change as new events occur and additional information is obtained.

 

(x)

Reclassifications

 

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

v3.20.4
Restructuring
12 Months Ended
Dec. 31, 2020
Restructuring And Related Activities [Abstract]  
Restructuring

(2) Restructuring

 

On November 6, 2019, the Board of Directors of the Company approved an organizational efficiency initiative (the “Plan”) designed to reduce spending and simplify operations. Under the Plan, the Company implemented numerous initiatives to reduce spending, including closing the Santa Clara offices of miraDry, Inc. and consolidating a number of business support services via a shared services organization at the Company’s Santa Barbara headquarters. As of December 31, 2020, the Company has completed its restructuring plan, incurred cumulative restructuring charges to date, and does not anticipate incurring restructuring charges in connection with this Plan in future periods.

 

Under the Plan, the Company reduced its workforce by terminating approximately 60 employees. As a result, the Company incurred total charges of $2.3 million in connection with one-time employee termination costs, retention costs and other benefits. In addition, the Company incurred $0.5 million related to duplicate operating costs and other associated costs. In total, the Plan incurred charges of $2.8 million, excluding non-cash charges.

 

The following table details the activity of liabilities related to the Plan included in "Accrued and other current liabilities" in the consolidated balance sheet as of December 31, 2020 (amounts in thousands):

 

 

 

Severance costs

 

 

Other associated costs

 

 

Duplicate operating costs

 

Balance at December 31, 2019

 

$

894

 

 

$

 

 

$

 

Costs charged to expense

 

 

1,380

 

 

 

208

 

 

 

174

 

Costs paid or otherwise settled

 

 

(2,274

)

 

 

(208

)

 

 

(174

)

Balance at December 31, 2020

 

$

 

 

$

 

 

$

 

 

The following table details the charges by reportable segment, recorded in "Restructuring" under operating expenses in the consolidated statements of operations for the year ended December 31, 2020 by segment (amounts in thousands):

 

 

 

Year Ended

 

 

Year Ended

 

 

Cumulative Restructuring

 

 

 

December 31, 2019

 

 

December 31, 2020

 

 

Charges

 

Breast Products

 

$

499

 

 

$

390

 

 

$

889

 

miraDry

 

 

584

 

 

 

1,372

 

 

 

1,956

 

Total

 

$

1,083

 

 

$

1,762

 

 

$

2,845

 

 

 

 

 

v3.20.4
Acquisitions
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
Acquisitions

(3) Acquisitions

 

Acquisition of certain assets from Vesta Intermediate Funding, Inc.

On November 7, 2019, the Company entered into an Asset Purchase Agreement with Vesta Intermediate Funding, Inc., pursuant to which the Company purchased certain assets and obtained a non-exclusive, royalty-free, perpetual, irrevocable, assignable, sublicensable, and worldwide license to certain intellectual property owned by Vesta. In consideration of the acquisition, the Company paid $14.0 million in cash on the closing date and $5.1 million for additional inventory. The Company will pay an additional $3.2 million and $3.0 million in cash on November 7, 2021 and November 7, 2023, respectively. In addition, in the event the closing price of the Company’s common stock equals or exceeds a certain agreed upon price target, or the First Milestone Price Target, on any date through November 7, 2023, the Company will issue Vesta 303,721 shares of common stock within five business days of such date and in the event the closing price of the Company’s common stock equals or exceeds a second agreed upon price target, or the Second Milestone Price Target, on any date through November 7, 2023, the Company will issue Vesta 303,721 shares of common stock within five business days of such date. The Company will use its commercially reasonable efforts to file and maintain a resale registration statement registering the resale of the milestone shares. The transaction, which closed on November 7, 2019, or the Acquisition Date, will allow the Company to achieve a greater degree of vertical integration, obtaining direct control of breast implant manufacturing and product development activities and generating production-related cost synergies.

The acquired set of activities, which includes all the inputs, processes, and outputs related to the manufacturing of the Company’s gel breast implants, was determined to meet the definition of a business as outlined in ASC 805. In connection with the acquisition, the Company recorded $2.6 million of professional fees for the year ended December 31, 2019, which are included in general and administrative expense. The aggregate acquisition date fair value of the consideration transferred was approximately $27.0 million, consisting of the following (in thousands):

 

 

 

Fair Value

 

Cash consideration at Acquisition Date

 

$

14,000

 

Deferred consideration

 

 

4,737

 

Equity contingent consideration

 

 

3,156

 

Purchase price for additional inventory purchase

 

 

5,113

 

Total purchase consideration

 

$

27,006

 

 

The Company funded the cash consideration amount with cash on hand. The deferred consideration represents the fair value of the additional cash to be paid on the second and fourth anniversaries following the closing date. The equity contingent consideration represents Vesta’s contractual right to receive potential future consideration in the form of shares of Sientra common stock upon achievement of certain price milestones of the Company’s common stock (the First and Second Milestone Price Targets). The fair value of the equity contingent consideration at the acquisition date was determined using a Monte-Carlo simulation model. The inputs include the Company’s closing stock price as of the valuation date, Company-specific historical equity volatility, and the risk-free rate. Equity contingent consideration was determined to be equity classified and is therefore not subsequently remeasured each reporting period unless the obligation becomes reclassified as a liability, and subsequent settlement of the obligation will be accounted for within equity. The additional inventory purchase represents cash paid for inventory and ordering supplies needed to support the acquired manufacturing process, at cost in accordance with the Transition Services Agreement. As of December 31, 2019, $3.9 million of the additional inventory purchase was funded with cash on hand, and the remaining $1.2 million is included in “Accrued and other current liabilities” on the consolidated balance sheet.

In accordance with ASC 805, the Company has recorded the acquired assets (including identifiable intangible assets) and liabilities assumed at their respective fair value. The allocation of the total purchase price is as follows (in thousands):

 

 

November 7,

 

 

 

2019

 

Inventories

 

$

7,138

 

Property and equipment

 

 

7,304

 

Goodwill

 

 

4,324

 

Intangible assets

 

 

8,240

 

Net assets acquired

 

$

27,006

 

 

Goodwill was allocated to the Breast Products reportable segment. The goodwill recognized is attributable primarily to the assembled workforce and additional market opportunities and is deductible for tax purposes.

The intangible assets consist of intellectual property related to manufacturing know-how. The intellectual property has an estimated useful life of 19 years and is amortized using an accelerated method of 95% of the benefit realized.

The Company retained an independent third-party appraiser to assist management in its valuation and the purchase price has been finalized.

Prior to its acquisition, the Company had engaged Vesta for the manufacture and supply of the Company’s breast implants. In connection with the acquisition, the Company entered into a Termination and Release Agreement with Vesta, effectively terminating the existing manufacturing agreement between the Company and Vesta. The Company evaluated the settlement of the pre-existing relationship under the provisions of ASC 805 and recognized no gain or loss as a result of the termination.

The results of the acquired business have been included in the consolidated financial statements from November 7, 2019 through December 31, 2020 and have been included in the Breast Products segment. Disclosure of pro forma combined revenue have not been presented because the effect of the acquisition had no impact on the Company’s revenue. Disclosure of pro forma combined earnings have not been presented because it is impracticable to do so due to a variety of limitations, including a lack of readily available historical GAAP financial statements.

v3.20.4
Balance Sheet Components
12 Months Ended
Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]  
Balance Sheet Components

(4) Balance Sheet Components

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

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Raw materials

 

$

7,138

 

 

$

8,095

 

Work in progress

 

 

12,303

 

 

 

5,543

 

Finished goods

 

 

25,791

 

 

 

23,893

 

Finished goods - right of return

 

 

3,416

 

 

 

2,081

 

 

 

$

48,648

 

 

$

39,612

 

At December 31, 2020 and 2019, approximately $5.7 million and $2.7 million, respectively, of the Company’s Breast Products segment inventory was held on consignment at doctors’ offices, clinics, and hospitals. The value and quantity at any one location is not significant.

 

 

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

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Leasehold improvements

 

$

2,857

 

 

$

2,841

 

Manufacturing equipment and toolings

 

 

9,289

 

 

 

8,175

 

Computer equipment

 

 

2,776

 

 

 

1,250

 

Software

 

 

3,546

 

 

 

2,602

 

Office equipment

 

 

167

 

 

 

111

 

Furniture and fixtures

 

 

1,193

 

 

 

1,144

 

 

 

 

19,828

 

 

 

16,123

 

Less accumulated depreciation

 

 

(6,722

)

 

 

(3,809

)

 

 

$

13,106

 

 

$

12,314

 

 

Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $2.5 million, $1.2 million and $1.1 million, respectively. There have been no impairments recorded during the years ended December 31, 2020, 2019 and 2018.

 

Under the terms of the Asset Purchase Agreement with Vesta entered into on November 7, 2019, the Company acquired $7.3 million of fixed assets, including leasehold improvements of $2.4 million, manufacturing equipment of $4.4 million, and capitalized software of $0.5 million. Refer further to Note 3.  

Accrued and other current liabilities consist of the following:

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Payroll and related expenses

 

$

3,524

 

 

$

6,789

 

Accrued severance

 

 

2,900

 

 

 

894

 

Accrued commissions

 

 

5,561

 

 

 

4,984

 

Accrued manufacturing

 

 

225

 

 

 

2,616

 

Deferred and contingent consideration, current portion

 

 

10,146

 

 

 

6,830

 

Audit, consulting and legal fees

 

 

48

 

 

 

630

 

Accrued sales and marketing expenses

 

 

445

 

 

 

1,109

 

Lease liabilities

 

 

1,588

 

 

 

1,299

 

Other

 

 

7,952

 

 

 

7,400

 

 

 

$

32,389

 

 

$

32,551

 

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

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Balance as of January 1

 

$

1,562

 

 

$

1,395

 

Warranty costs incurred during the period

 

 

(832

)

 

 

(762

)

Changes in accrual related to warranties issued during the period

 

 

1,200

 

 

 

1,138

 

Changes in accrual related to pre-existing warranties

 

 

71

 

 

 

(209

)

Balance as of December 31

 

$

2,001

 

 

$

1,562

 

As of December 31, 2020, $1.9 million is included in “Warranty reserve and other long-term liabilities”, and $0.1 million is included in “Accrued and other current liabilities”. As of  December 31, 2019, $1.4 million is included in “Warranty reserve and other long-term liabilities”, and $0.2 million is included in “Accrued and other current liabilities”.

Liabilities measured at fair value

Common stock warrants

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 estimates its expected stock volatility based on company-specific historical and implied volatility information of its stock. 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.

Contingent consideration

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. The contingent consideration related to the acquisition of BIOCORNEUM consists of royalty obligations based on future net sales for a defined term, beginning in 2024. The significant assumption utilized in the fair value measurement was the discount rate, which was 21.0%. The contingent consideration for future milestone payments related to the acquisition of miraDry is based on the timing of achievement of target net sales, which is estimated based on an internal management forecast. The significant assumption utilized in the fair value measurement was the miraDry company discount rate, which was 11.2%. As these inputs are not observable, the overall fair value measurement of the contingent consideration is classified as Level 3.

Derivative liability

The Company assesses on a quarterly basis the fair value of the derivative liability associated with the conversion feature in the convertible note due in 2025. The conversion feature was bifurcated and recorded as a derivative liability on the consolidated balance sheet with a corresponding discount at the date of issuance that is netted against the principal amount of the note. The Company utilizes a binomial lattice method to determine the fair value of the conversion feature, which utilizes inputs including the common stock price, volatility of common stock, the risk-free interest rate and the probability of conversion to common shares at the Base Conversion Rate in the event of a major transaction (e.g. a change in control). As the probability of conversion is a significant unobservable input, the overall fair value measurement of the conversion feature 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 December 31, 2020 and 2019 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2020 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

$

 

 

$

 

 

$

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

7,026

 

 

 

7,026

 

Liability for derivative

 

 

 

 

 

 

 

 

26,570

 

 

 

26,570

 

 

 

$

 

 

$

 

 

$

33,596

 

 

$

33,596

 

 

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2019 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

$

 

 

$

38

 

 

$

38

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

6,891

 

 

 

6,891

 

 

 

$

 

 

$

 

 

$

6,929

 

 

$

6,929

 

 

The following table provides a rollforward of the aggregate fair values of the Company’s liabilities for which fair value is determined by Level 3 inputs (in thousands):

 

 

 

Warrant liability

 

 

Contingent consideration liability

 

 

Derivative liability

 

Balance, December 31, 2019

 

$

38

 

 

$

6,891

 

 

$

 

Additions

 

 

 

 

 

 

 

 

16,100

 

Change in fair value

 

 

(38

)

 

 

135

 

 

 

10,470

 

Balance, December 31, 2020

 

$

 

 

$

7,026

 

 

$

26,570

 

 

The liability for the current portion of contingent consideration is included in “accrued and other current liabilities” and the long-term portion is included in “deferred and contingent consideration” in the consolidated balance sheets. The liability for the conversion feature related to the convertible note is included in “derivative liability” in the consolidated balance sheets.

 

The Company recognizes changes in the fair value of the derivative liability in “change in fair value of derivative liability” in the consolidated statement of operations and changes in the contingent consideration are recognized in “general and administrative” expense in the consolidated statement of operations.

 

v3.20.4
Goodwill and Other Intangible Assets, net
12 Months Ended
Dec. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets, net

(5) Goodwill and Other Intangible Assets, net

(a)

Goodwill

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.

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.

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 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 during the second quarter ended June 30, 2019, which is reflected in the consolidated statement of operations for the year ended December 31, 2019. For the year ended December 31, 2018, the Company did not record any goodwill impairment charges.

In the current year, the Company performed a qualitative analysis for the goodwill in the Breast Products reporting unit on the annual impairment testing date of October 1, 2020. The Company determined the fair value of the reporting unit was more likely than not greater than its carrying value and did not record any goodwill impairment charges.

As of December 31, 2020, the Breast Products reporting unit had a negative carrying value. As of December 31, 2019 the miraDry reporting unit had a negative carrying value. The changes in the carrying amount of goodwill during the years ended December 31, 2020 and 2019 were as follows (in thousands):

 

 

 

Breast

Products

 

 

miraDry

 

 

Total

 

Balances as of December 31, 2018

 

$

19,156

 

 

$

7,629

 

 

$

26,785

 

Accumulated impairment losses

 

 

(14,278

)

 

 

(7,629

)

 

 

(21,907

)

Goodwill acquired (Note 3)

 

 

4,324

 

 

 

 

 

 

4,324

 

Balances as of December 31, 2019

 

$

9,202

 

 

$

 

 

$

9,202

 

Goodwill acquired

 

 

 

 

 

 

 

 

 

Balances as of December 31, 2020

 

$

9,202

 

 

$

 

 

$

9,202

 

(b)

Other Intangible Assets

In connection with the circumstances leading to the impairment of goodwill for the miraDry reporting unit, in the second quarter of 2019 the Company performed a test of recoverability of the intangible assets in the miraDry reporting unit by comparing the carrying amount of the asset group to the future undiscounted cash flows the assets are expected to generate. As the future undiscounted cash flows attributable to the asset group 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.

After performing a quantitative impairment analysis 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 during the second quarter ended June 30, 2019, which is reflected in “Impairment” in the consolidated statement of operations for the year ended December 31, 2019. For the year ended December 31, 2018, the Company did not record any goodwill impairment charges.

Further, in the first quarter of 2020, the Company noted a decline in actual and forecasted earnings for the miraDry reporting unit due to the impacts and uncertainty surrounding the COVID-19 pandemic. As a result, the Company performed a test of recoverability and determined that the future undiscounted cash flows attributable to the asset group were less than the carrying value.

After performing a quantitative impairment analysis as of March 31, 2020, the Company determined that the carrying values of all of the remaining intangible assets in the miraDry reporting unit exceeded their estimated fair values. Consequently, the Company recorded total non-cash impairment charges of $1.1 million for trade names, $1.4 million for developed technology, and $3.9 million for customer relationships within “Impairment” in the accompanying consolidated statement of operations for the year ended December 31, 2020.

As of December 31, 2020, the remaining carrying value of the intangible assets are entirely associated with the Breast Products segment. For those assets, the Company performed a qualitative analysis on the annual impairment testing date of October 1, 2020. The Company determined the fair value of the intangible assets was more likely than not greater than its carrying value and did not record any impairment charges.

The components of the Company’s other intangible assets consist of the following definite-lived and indefinite-lived assets (in thousands):

 

 

 

Average

 

 

 

 

 

 

Amortization

 

 

December 31, 2020

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

10

 

 

$

4,940

 

 

$

(3,856

)

 

$

1,084

 

Trade names - finite life

 

 

12

 

 

 

800

 

 

 

(322

)

 

 

478

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(865

)

 

 

7,375

 

Total definite-lived intangible assets

 

 

 

 

 

$

16,443

 

 

$

(7,506

)

 

$

8,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

December 31, 2019

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

11

 

 

$

9,540

 

 

$

(3,846

)

 

$

5,694

 

Trade names - finite life

 

 

14

 

 

 

2,000

 

 

 

(292

)

 

 

1,708

 

Developed technology

 

 

13

 

 

 

1,500

 

 

 

(84

)

 

 

1,416

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(118

)

 

 

8,122

 

Total definite-lived intangible assets

 

 

 

 

 

$

23,743

 

 

$

(6,803

)

 

$

16,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

 

Amortization expense for the year ended December 31, 2020, 2019 and 2018 was $1.6 million, $2.3 million and $2.3 million, respectively. The following table summarizes the estimated amortization expense relating to the Company's intangible assets as of December 31, 2020 (in thousands):

 

 

 

Amortization

 

Period

 

Expense

 

2021

 

$

1,221

 

2022

 

 

1,163

 

2023

 

 

1,092

 

2024

 

 

948

 

2025

 

 

805

 

Thereafter

 

 

3,708

 

 

 

$

8,937

 

 

v3.20.4
Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases

(6) Leases

 

Components of lease expense were as follows:

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

Lease Cost

 

Classification

 

2020

 

 

2019

 

Operating lease cost

 

Operating expenses

 

$

1,698

 

 

$

1,550

 

Operating lease cost

 

Inventory

 

 

488

 

 

 

4,206

 

Total operating lease cost

 

 

 

$

2,186

 

 

$

5,756

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Operating expenses

 

 

41

 

 

 

41

 

Amortization of right-of-use assets

 

Inventory

 

 

36

 

 

 

 

Interest on lease liabilities

 

Other income (expense), net

 

 

10

 

 

 

4

 

Total finance lease cost

 

 

 

$

87

 

 

$

45

 

Variable lease cost

 

Inventory

 

 

 

 

 

10,568

 

Total lease cost

 

 

 

$

2,273

 

 

$

16,369

 

 

Short-term lease expense for the years ended December 31, 2020 and 2019 were immaterial.

 

Supplemental cash flow information related to operating and finance leases was as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

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

 

 

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

1,758

 

 

$

5,419

 

Operating cash outflows from finance leases

 

 

85

 

 

 

44

 

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

 

 

 

 

 

 

 

 

Operating leases

 

$

1,242

 

 

$

8,667

 

Finance leases

 

 

157

 

 

 

117

 

 

 

 

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

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Reported as:

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

7,176

 

 

$

7,494

 

Finance lease right-of-use assets

 

 

158

 

 

 

78

 

Total right-of use assets

 

$

7,334

 

 

$

7,572

 

Accrued and other current liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities

 

$

1,504

 

 

$

1,259

 

Finance lease liabilities

 

 

84

 

 

 

40

 

Warranty reserve and other long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities

 

 

5,946

 

 

 

6,434

 

Finance lease liabilities

 

 

77

 

 

 

35

 

Total lease liabilities

 

$

7,611

 

 

$

7,768

 

Weighted average remaining lease term (years)

 

 

 

 

 

 

 

 

Operating leases

 

 

5

 

 

 

5

 

Finance leases

 

 

2

 

 

 

2

 

Weighted average discount rate

 

 

 

 

 

 

 

 

Operating leases

 

 

7.75

%

 

 

7.45

%

Finance leases

 

 

6.15

%

 

 

4.06

%

 

During the fourth quarter of 2019, the Company included a four-year renewal option in the lease term for one operating lease as it was concluded that it was reasonably certain that the Company will exercise the option.

 

As of December 31, 2020, maturities of the Company’s operating and finance lease liabilities are as follows (in thousands):

 

Period

 

Operating leases

 

 

Finance leases

 

 

Total

 

2021

 

$

2,095

 

 

$

89

 

 

$

2,184

 

2022

 

 

1,920

 

 

 

53

 

 

 

1,973

 

2023

 

 

1,968

 

 

 

28

 

 

 

1,996

 

2024

 

 

1,507

 

 

 

1

 

 

 

1,508

 

2025

 

 

579

 

 

 

 

 

 

579

 

2026 and thereafter

 

 

955

 

 

 

 

 

 

955

 

Total lease payments

 

$

9,024

 

 

$

171

 

 

$

9,195

 

Less imputed interest

 

 

1,574

 

 

 

10

 

 

 

1,584

 

Total operating lease liabilities

 

$

7,450

 

 

$

161

 

 

$

7,611

 

 

v3.20.4
Debt
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Debt

(7) Debt

 

Term Loan and Revolving Loan

 

On July 25, 2017, the Company entered into a Term Loan Credit and Security Agreement and a Revolving Loan Credit and Security Agreement with MidCap Financial Trust (“MidCap”), which replaced the Company’s prior Silicon Valley Bank Loan Agreement. Both agreements were amended and restated on July 1, 2019 and further amended on November 7, 2019 (as so amended, the “Restated Term Loan Agreement” and the “Restated Revolving Credit Agreement” and, together, the “Credit Agreements”).

 

The Restated Term Loan Agreement provided for the following tranches: (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 the agent and the lenders following a request from the Company, an additional $15.0 million term loan facility. The 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 from the funding date until July 31, 2021, to be followed by monthly installments of principal and interest through the maturity date. The Company may prepay some or all of the principal prior to its maturity date provided the Company pays MidCap a prepayment fee. The loan provided that the Company shall pay an exit fee equal to 5.0% of the aggregate amount of all term loans funded to the Company.

 

On May 11, 2020, the Company entered into the Second Amendment to Amended and Restated Credit and Security Agreement (Term Loan), by and among the Company, certain of the Company’s subsidiaries, the lenders party thereto and MidCap Financial Trust as agent (the “Term Amendment”). The Term Amendment provided for, among other things, the prepayment by the Company of $25.0 million of outstanding principal, $0.1 million of accrued interest, and $1.25 million in prepaid exit fees with the parties agreeing to waive the prepayment fee with respect to these amounts. The Term Amendment increased the tranche 3 commitment amount from $10.0 million to $15.0 million, extended the tranche 3 termination date from December 31, 2020 to June 30, 2021, and amended certain conditions upon which the tranche 3 commitment can be withdrawn, including evidence that the Company’s net revenue for the past six months was greater than or equal to $30.0 million. In addition, the Term Amendment amended certain financial requirements including reducing the Company’s minimum unrestricted cash amount from $20.0 million to $5.0 million and amended certain minimum net revenue requirements. Further, the monthly minimum net revenue requirements were revised to be calculated on a trailing three-month basis.

 

On February 5, 2021, the Company entered into a Second Amended and Restated Credit and Security Agreement (Term Loan), by and among the Company, certain of the Company’s subsidiaries, the lenders party thereto from time to time and MidCap Financial Trust, as administrative agent and collateral agent (“Agent”) (the “Restated Term Loan Agreement”). The Restated Term Loan Agreement amends and restates the Company’s existing Amended and Restated Credit and Security Agreement, dated as of July 1, 2019. Pursuant to the Restated Term Loan Agreement, tranche 3 commitments were reduced from $15 million to $1 million and were advanced on the effective date of the Restated Term Loan Agreement and the remaining unfunded tranche of $15 million was revised to two $5 million tranche commitments, with tranche 4 availability commencing on July 1, 2021 and tranche 5 availability commencing July 1, 2022. The parties agreed to extend the last day of the interest only period for all tranches from July 31, 2021 in the Existing Term Loan Agreement to December 31, 2022 in the Restated Term Loan Agreement. The Restated Term Loan Agreement contains certain minimum net revenue requirements based on the Company’s 12-month trailing net revenue, as well as certain minimum unrestricted cash requirements that increase upon the funding of the tranche 4 and tranche 5 loans. The exit fee was modified to apply to only to the amount of any tranche 4 and 5 loans advanced. Finally, in connection with the Restated Term Loan Agreement, the Company agreed to pay an amendment fee of $750,000.

 

As of December 31, 2020, there was $15.0 million of outstanding principal. $12.9 million is included in “Long-term debt” and $2.1 million is included in “Current portion of long-term debt” on the consolidated balance sheets. $0.9 million of unamortized debt issuance costs is included in “Long-term debt”, and $0.7 million of unamortized debt issuance costs is included in “Current portion of long-term debt”. In addition, an exit fee payable of $0.8 million is also included in “Long-term debt”.

 

The Restated Revolving Credit Agreement provides for, among other things, a revolving loan of up to $10.0 million. 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 revolving loan carries an interest rate of LIBOR plus 4.50%. The Company may make (subject to the applicable borrowing base at the time) and repay borrowings from time to time until the maturity of the facility on July 1, 2024.

 

 

On May 11, 2020, the Company entered into the Second Amendment to Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the Company, certain of the Company’s subsidiaries, the lenders party thereto and MidCap Financial Trust as agent (the “Revolving Amendment”). The Revolving Amendment includes conforming changes to reflect the changes in the Term Amendment. In addition, the Revolving Amendment reduces the borrowing base by the portion of the eligible inventory previously included in the calculation.

 

Also on February 5, 2021, Sientra entered into a Third Amendment to Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the Company, the lenders party thereto from time to time, and the Agent (the “Revolving Loan Amendment”). The Revolving Loan Amendment modified the Net Revenue requirement in a manner consistent with the modification under the Restated Term Loan Agreement. In addition, the Revolving Loan Amendment made other conforming changes to the Restated Term Loan Agreement.

 

As of December 31, 2020, there were no borrowings outstanding and $2.9 million available under the Revolving Loan. As of December 31, 2020, the unamortized debt issuance costs related to the Revolving Loan was approximately $0.1 million and was included in “Other assets” on the consolidated balance sheets.

 

The amortization of debt issuance costs on the Term Loan and Revolving Loan for the years ended December 31, 2020, 2019, and 2018 was $0.9 million, $0.4 million, and $0.2 million, respectively, and was included in interest expense in the 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.

 

Convertible Note

 

On March 11, 2020, the Company issued $60.0 million of unsecured and subordinated convertible notes with an interest rate of 4.00% (“Note”) to Deerfield Partners, L.P.(“Holder”) in order to fund ongoing operations. The Note matures on March 11, 2025, subject to earlier conversion by the option of the Holder at any time in whole or in part into common shares of the Company, for a period up to five years. Upon conversion by the Holder, the Company shall deliver, shares of the Company’s common stock at a conversion rate of 14,634 per $1,000 principal amount of the Note (which represents an initial conversion rate price of $4.10), or the Base Conversion Rate, in each case subject to customary anti-dilution adjustments. In addition to the typical anti-dilution adjustment, the Note also provides the Holder with additional consideration (“Make-Whole Provision”) beyond the settlement of the conversion obligation, in the event of a major transaction prior to maturity (e.g. a change in control). Upon conversion by the Holder in the event of a major transaction, the Company shall deliver, either cash, shares of the Company’s common stock or a combination of cash and common stock at the Base Conversion rate plus the additional consideration from the Make-Whole Provision. The $60.0 million principal amount of the Note is not payable until the maturity date of March 11, 2025, unless converted to equity earlier. The Company will pay interest in cash on the Note at 4.00% per annum, quarterly from July 1, 2020.

 

The Convertible Note is convertible at any time at the option of Deerfield, provided that Deerfield is prohibited from converting the Convertible Note into shares of Common Stock if, as a result of such conversion, the Holder (together with certain affiliates and “group” members) would beneficially own more than 4.985% of the total number of shares of Common Stock then issued and outstanding. Pursuant to the Convertible Note, Deerfield has the option to demand repayment of all outstanding principal, and any unpaid interest accrued thereon, in connection with a Major Transaction (as defined in the Convertible Note), which shall include, among others, any acquisition or other change of control of the Company; the sale or transfer of assets of the Company equal to more than 50% of the Enterprise Value (as defined in the Convertible Note) of the Company; a liquidation, bankruptcy or other dissolution of the Company; or if at any time shares of the Company’s common stock are not listed on an Eligible Market (as defined in the Convertible Note). The Convertible Note is subject to specified events of default, the occurrence of

which would entitle Deerfield to immediately demand repayment of all outstanding principal and accrued interest on the Convertible Note. Such events of default include, among others, failure to make any payment under the Convertible Note when due, failure to observe or perform any covenant under the Deerfield Facility Agreement or the other transaction documents related thereto (subject to a standard cure period), the failure of the Company to be able to pay debts as they come due, the commencement of bankruptcy or insolvency proceedings against the Company, a material judgement levied against the Company and a material default by the Company under the Convertible Note.

 

The conversion features in the outstanding convertible debt instrument are accounted for as a free-standing embedded derivative bifurcated from the principal balance of the Note, as (1) the conversion features are not clearly and closely related to the debt instrument and are not considered to be indexed to the Company’s equity, (2) the conversion features standing alone meet the definition of a derivative, and (3) the Note is not remeasured at fair value each reporting period with changes in fair value recorded in the consolidated statement of operations.

 

The initial embedded derivative liability of $16.1 million was recorded as a non-current liability on the consolidated balance sheet and is remeasured to fair value at each balance sheet date with a resulting non-cash gain or loss related to the change in the fair value being charged to earnings (loss). As of December 31, 2020, the fair value of the derivative liability was $26.6 million. A corresponding debt discount to the initial embedded derivative liability of $16.1 million and issuance costs of $1.5 million were recorded on the issuance date and is netted against the principal amount of the Note. As of December 31, 2020, the unamortized debt discount and issuance costs were $15.6 million. The Company will amortize the debt discount and debt issuance costs to interest expense under the effective interest method over the term of the Note, at a resulting effective interest rate of approximately 12%. For the year ended December 31, 2020, the amortization of the convertible debt discount and issuance costs were $2.2 million and were included in interest expense in the consolidated statements of operations.

 

In connection with the Deerfield Financing, the Company also entered into a Subordination Agreement, by and among Deerfield, the Company, MiraDry Holdings, Inc., MiraDry, Inc. and MiraDry International, Inc. and MidCap Funding IV Trust, pursuant to which the parties thereto agreed that the obligations of the Company to Deerfield under the Deerfield Facility Agreement and under the Convertible Note shall be subordinate to the Company’s obligations to MidCap Funding IV Trust, as agent for the financial institutions party to that certain Amended and Restated Credit and Security Agreement (Revolving Loan) dated as of July 1, 2019, which agreement the Company, MiraDry Holdings, Inc., MiraDry, Inc. and MiraDry International, Inc. and MidCap Funding IV Trust are a party to.

 

Registration Rights Agreement

 

In connection with the Deerfield Facility Agreement, on March 11, 2020, the Company and Deerfield entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company filed with the SEC a Registration Statement on Form S-3 as required to effect a registration of the Common Stock issued or issuable upon conversion of or pursuant to the Convertible Note (the “Registrable Securities”), covering the resale of the Registrable Securities and such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of or otherwise pursuant to the Convertible Note to prevent dilution resulting from certain corporate actions.

 

CARES Act

 

On April 20, 2020, the Company was granted a loan of $6.7 million under the Paycheck Protection Program of the CARES Act, or the PPP Loan, from Silicon Valley Bank, or the Lender. The PPP Loan matures on April 20, 2022, or the Maturity Date, and bears interest at a rate of 1.0% per annum. Under the terms of the PPP Loan, the Company will make no payments until the date which forgiveness of the PPP Loan is determined, which can be up to 10 months following the end of the covered period (which is defined as 24 weeks from the date of the loan), or the Deferral Period. Commencing one month after the expiration of the Deferral Period, and continuing on the same day of each month until the Maturity Date, the Company will pay to Lender monthly payments of principal and interest, in an amount required to fully amortize the principal amount outstanding on the PPP Loan on the last day of the Deferral Period by the Maturity Date. As of December 31, 2020, $3.3 million is recorded in “Long-term debt” and $3.3 million is recorded in “Current portion of long-term debt” on the Company’s consolidated balance sheets.

 

All or a portion of the PPP Loan may be forgiven upon submission of documentation of expenditures in accordance with certain specified requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the 24-week period beginning on the date of loan approval. Not more than 40% of the forgiven amount may be for non-payroll costs. The amount of the PPP Loan eligible to be forgiven will be reduced if the Company’s full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. The Company will be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, in accordance with the amortization schedule described above. The Company has elected to account for the PPP loan in accordance with ASC 470 – Debt, and any forgiveness of the loan will be treated as a gain on extinguishment within the consolidated statement of operations.

 

Future Principal Payments of Debt

 

The future schedule of principal and exit fee payments for all outstanding debt as of December 31, 2020 was as follows (in thousands):

 

Fiscal Year

 

 

 

 

2021

 

$

5,409

 

2022

 

 

8,326

 

2023

 

 

5,000

 

2024

 

 

3,667

 

2025

 

 

60,000

 

Total

 

$

82,402

 

 

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

(8) Income Taxes

The provision for income tax consists of the following:

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Federal

 

$

12

 

 

$

9

 

 

$

2

 

State

 

 

10

 

 

 

9

 

 

 

(10

)

Foreign

 

 

11

 

 

 

16

 

 

 

4

 

Total income tax (benefit) expense

 

$

33

 

 

$

34

 

 

$

(4

)

 

Actual income tax expense differs from that obtained by applying the statutory federal income tax rate of 21% in 2020, 2019, and 2018, respectively, to income before income taxes as follows: (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Tax at federal statutory rate

 

$

(18,882

)

 

$

(22,424

)

 

$

(17,353

)

State, net of federal benefit

 

 

(2,372

)

 

 

(2,109

)

 

 

(5,999

)

Permanent items

 

 

2,282

 

 

 

857

 

 

 

338

 

Benefit state rate change

 

 

20

 

 

 

337

 

 

 

60

 

Other

 

 

2,984

 

 

 

368

 

 

 

(103

)

Goodwill impairment

 

 

 

 

 

1,602

 

 

 

 

Change in valuation allowance

 

 

16,001

 

 

 

21,403

 

 

 

23,053

 

 

 

$

33

 

 

$

34

 

 

$

(4

)

 

 

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are as follows (in thousands):

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Net operating loss carryforwards

 

$

113,374

 

 

$

99,759

 

Research and development credits

 

 

2,121

 

 

 

3,626

 

Lease liabilities

 

 

1,861

 

 

 

1,902

 

Derivative liability

 

 

6,495

 

 

 

 

Accruals and reserves

 

 

10,175

 

 

 

9,636

 

Intangibles

 

 

3,053

 

 

 

5,330

 

 

 

 

137,079

 

 

 

120,253

 

Less valuation allowance

 

 

(131,309

)

 

 

(115,307

)

Total deferred tax assets

 

$

5,770

 

 

$

4,946

 

 

 

 

 

 

 

 

 

 

Depreciation

 

$

(276

)

 

$

(40

)

Convertible debt discount

 

 

(3,440

)

 

 

 

Right-of-use assets

 

 

(1,793

)

 

 

(1,854

)

Intangibles - deferred tax liability

 

 

(333

)

 

 

(3,102

)

Total deferred tax liabilities

 

 

(5,842

)

 

 

(4,996

)

Net deferred taxes

 

$

(72

)

 

$

(50

)

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Generally, the ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. Based on all the relevant factors, a valuation allowance of $131.3 million has been established against deferred tax assets as of December 31, 2020 as management determined that it is more likely than not that sufficient taxable income will not be generated to realize these temporary differences.

 

As of December 31, 2020, the Company had net operating loss carryforwards for federal income tax purposes of approximately $445.1 million, of which approximately $217.4 million can be carried forward indefinitely and the remaining net operating loss carryforwards begin expiring in 2027, if not utilized. In addition, the Company had net operating loss carryforwards for state income tax purposes of approximately $306.2 million, of which approximately $26.2 million can be carried forward indefinitely and the remaining net operating loss carryforwards began expiring in 2021. It is possible that the Company will not generate taxable income in time to use these NOLs before their expiration. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change ”, the corporation's ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. In general, an “ownership change” occurs if there is a cumulative change in a loss corporation’s ownership by 5% shareholders that exceeds 50 percentage points over a rolling three-year period.

As of December 31, 2020, the Company had research and development credit carryforwards of approximately $30,000 and $2.7 million available to reduce future taxable income, income, if any, for federal and California state income tax purposes, respectively. The federal credit carryforwards begin expiring in 2029 and the state credits carryforward indefinitely.

At December 31, 2020, the Company had unrecognized tax benefits of approximately $0.6 million associated with the research and development credits. The decrease in the unrecognized tax benefits of $0.5 million relates to the elimination of federal R&D credit carryforwards that cannot be used due to ownership changes that were reported during 2020. The decrease in the unrecognized tax benefits has no impact on the Company’s financial statements due to the valuation allowance on deferred tax assets. The Company does not anticipate that total unrecognized net tax benefits will significantly change over the next twelve months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

 

Ending balance at December 31, 2018

 

$

1,076

 

Additions based on tax positions taken in the current year

 

 

40

 

Ending balance at December 31, 2019

 

 

1,116

 

Additions based on tax positions taken in the current year

 

 

10

 

Decreases based on tax positions taken in the prior year

 

 

(507

)

Ending balance at December 31, 2020

 

$

619

 

 

It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other (income) expense and interest expense, respectively, as necessary. There was no interest expense or penalties related to unrecognized tax benefits recorded through December 31, 2020.

The Company files U.S. federal and state income tax returns in jurisdictions with varying statute of limitations.  In general, the Company’s federal tax returns for 2017 to 2019 and state tax returns for 2016 to 2019 remain open for examination by the federal and state tax authorities, including net operating loss carryforwards to those years.

v3.20.4
Employee Benefit Plans
12 Months Ended
Dec. 31, 2020
Compensation And Retirement Disclosure [Abstract]  
Employee Benefit Plans

(9)   Employee Benefit Plans

In September 2016, the Company adopted a Section 401(k) Retirement Savings Plan for the benefit of eligible employees. All employees become eligible to participate in the plan the first of the month following their hire date and may contribute their pretax or after–tax salary, up to the Internal Revenue Service annual contribution limit. The Company makes contributions to the 401(k) plan under a safe harbor provision, whereby the Company contributes 3% of each participating employee’s annual compensation. The Company contributions vest immediately. The Company contributed and included in operating expense $0.7 million for each of the years ended December 31, 2020, 2019, and 2018.

v3.20.4
Stockholders' Equity
12 Months Ended
Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stockholders' Equity

(10) 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 December 31, 2020, 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 the 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 loan 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. The warrants within tranche A expired on January 17, 2020, the warrants within tranche B expired on August 1, 2020, and the warrants within tranche C expired on December 13, 2020. As of December 31, 2020, there were warrants within tranche D to purchase an aggregate of 17,040 shares of common stock outstanding.

(c)

Stock Option Plans

In April 2007, the Company adopted the 2007 Equity Incentive Plan, or 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 reserved for issuance under the 2007 Plan.

As of December 31, 2020, pursuant to the 2007 Plan, there were 269,295 options outstanding and no shares of common stock available for future grants.

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 December 31, 2020, pursuant to the 2014 Plan, there were 6,692,279 shares of common stock reserved and 299,947 shares of common stock available for future grants.

Pursuant to a board-approved Inducement Plan, the Company may issue NSOs and restricted stock unit awards 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 December 31, 2020, inducement grants for 1,476,106 shares of common stock have been awarded, and 937,591 shares of common stock were reserved 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 be not 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 (year)

 

Balances at December 31, 2018

 

 

1,953,334

 

 

$

7.42

 

 

 

6.30

 

Exercised

 

 

(51,451

)

 

 

2.44

 

 

 

 

 

Forfeited

 

 

(21,037

)

 

 

19.39

 

 

 

 

 

Balances at December 31, 2019

 

 

1,880,846

 

 

$

7.42

 

 

 

5.48

 

Granted

 

 

600,000

 

 

 

3.58

 

 

 

 

 

Exercised

 

 

(9,817

)

 

 

2.89

 

 

 

 

 

Forfeited

 

 

(511,528

)

 

 

8.87

 

 

 

 

 

Balances at December 31, 2020

 

 

1,959,501

 

 

$

4.79

 

 

 

5.92

 

Vested and expected to vest at December 31, 2020

 

 

1,959,501

 

 

 

 

 

 

 

 

 

Vested and exercisable at December 31, 2020

 

 

1,359,558

 

 

 

 

 

 

 

8.53

 

 

 

The weighted average grant date fair value of stock options granted to employees and directors during the year ended December 31, 2020 was $3.58 per share. There were no stock options granted during the years ended December 31, 2019 and 2018. Stock-based compensation expense for stock options for the years ended December 31, 2020, 2019 and 2018 was $0.1 million, $0.6 million and $1.6 million, respectively. Tax benefits arising from the disposition of certain shares issued upon exercise of stock options within two years of the date of grant or within one year of the date of exercise by the option holder, or Disqualifying Dispositions, provide the Company with a tax deduction equal to the difference between the exercise price and the fair market value of the stock on the date of exercise. As of December 31, 2020 there was $2.1 million of unrecognized compensation cost related to stock options granted under the plans. The expense is recorded within the operating expense components in the consolidated statement of operations based on the employees receiving the awards.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised was $14,000, $0.6 million, and $2.0 million during the years ended December 31, 2020, 2019 and 2018, respectively.

The following table presents the weighted‑average assumptions used to estimate the fair value of options granted during the periods presented:

 

 

 

Year Ended December 31,

Stock Options

 

2020

 

2019

 

2018

Expected term (in years)

 

6.50

 

 

Expected volatility

 

82.65%

 

 

Risk-free interest rate

 

0.27%

 

 

Dividend yield

 

 

 

The expected term of employee stock options, risk‑free interest rate and volatility represents the weighted average, based on grant date period which the stock options are expected to remain outstanding. The Company utilizes the simplified method to estimate the expected term of the options pursuant to ASC Subtopic 718‑10 for all option grants to employees. The Company estimates its expected stock volatility based on company-specific historical and implied volatility information of its stock. The risk‑free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected term of the option. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future. The Company records forfeitures when they occur.

For purposes of financial accounting for stock‑based compensation, the Company has determined the fair values of its options based in part on the work of a third‑party valuation specialist. The determination of stock‑based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If the Company had made different assumptions, its stock‑based compensation expense, and its net loss could have been significantly different.

(d)

Restricted Stock Units

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

 

 

1,407,768

 

 

 

8.02

 

Vested

 

 

(944,467

)

 

 

10.56

 

Forfeited

 

 

(371,695

)

 

 

7.99

 

Balances at December 31, 2019

 

 

2,232,956

 

 

$

11.99

 

Granted

 

 

3,070,430

 

 

 

4.77

 

Vested

 

 

(1,150,707

)

 

 

10.06

 

Forfeited

 

 

(1,058,889

)

 

 

7.82

 

Balances at December 31, 2020

 

 

3,093,790

 

 

$

6.97

 

 

  

The weighted average grant date fair value of RSUs granted to employees and directors during the years ended December 31, 2020, 2019 and 2018 was $4.77, $8.02, and $14.38 per share, respectively. Stock-based compensation expense for RSUs for the years ended December 31, 2020, 2019 and 2018 was $7.5 million, $11.3 million and $11.7 million, respectively. As of December 31, 2020, there was $11.5 million total unrecognized compensation cost related to non-vested RSU awards. The cost is expected to be recognized over a weighted average period of 1.88 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 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, except that the first offering period commenced on the first trading day following the effective date of the Company’s registration statement.  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 exercise date.  A total of 255,500 shares of common stock were initially reserved for issuance under the ESPP.  The number of shares available for sale under the ESPP will be increased annually on the first day of each fiscal year, equal to the lesser of i) 1% of the total outstanding shares of the Company’s common stock as of the last day of the immediately preceding fiscal year; ii) 3,000,000 shares of common stock, or iii) such lesser amount as determined by the board of directors.

As of December 31, 2020, the number of shares of common stock reserved for issuance under the ESPP was 1,746,258. During the year ended December 31, 2020, employees purchased 203,728 shares under the ESPP at a weighted average exercise price of $4.11 per share. During the year ended December 31, 2019, employees purchased 175,624 shares under the ESPP at a weighted average exercise price of $6.93 per share. As of December 31, 2020, the number of shares of common stock available for future issuance under the ESPP was 946,292. Stock-based compensation related to the ESPP for the years ended December 31, 2020, 2019 and 2018 was $0.6 million, $0.8 million, and $0.6 million, respectively.

 

 

The following table presents the weighted-average assumptions used to estimate the fair value of the stock purchase rights granted under the employee stock purchase plan:

 

 

 

Year Ended December 31,

ESPP

 

2020

 

2019

 

2018

Expected term (in years)

 

 

0.50

 

 

to

 

2.00

 

 

 

 

0.50

 

 

to

 

2.00

 

 

 

 

0.50

 

 

to

 

2.00

 

 

Expected volatility

 

68

 

%

to

139

 

%

 

69

 

%

to

77

 

%

 

36

 

%

to

42

 

%

Risk-free interest rate

 

0.14

 

%

to

1.57

 

%

 

1.87

 

%

to

2.06

 

%

 

1.27

 

%

to

 

3.03

 

%

Dividend yield

 

 

 

 

(f)

Significant modifications

There were no material modifications of equity awards during the years ended December 31, 2020, 2019, and 2018.

v3.20.4
Segment Reporting and Geographic Information
12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Segment Reporting and Geographic Information

(11) Segment Reporting and Geographic Information

 

(a)

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 Sientra, AlloX2, Dermaspan, Softspan and BIOCORNEUM. The miraDry segment, which was acquired in 2017, includes 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. On November 7, 2019, the Company acquired Vesta. See Note 3 – Acquisitions for additional details. Vesta has been included in the consolidated results of operations as of the acquisition date and financial performance of the acquired business is reported in the Breast Products segment.

 

The Company’s 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):

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

54,997

 

 

$

46,363

 

 

$

37,016

 

miraDry

 

 

16,244

 

 

 

37,336

 

 

 

31,110

 

Total net sales

 

$

71,241

 

 

$

83,699

 

 

$

68,126

 

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

(46,521

)

 

$

(50,175

)

 

$

(53,047

)

miraDry

 

 

(23,789

)

 

 

(53,392

)

 

 

(26,727

)

Total loss from operations

 

$

(70,310

)

 

$

(103,567

)

 

$

(79,774

)

 

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Breast Products

 

$

151,059

 

 

$

169,613

 

miraDry

 

 

17,919

 

 

 

34,791

 

Total assets

 

$

168,978

 

 

$

204,404

 

 

(b)

Geographic Information

Net sales are attributed to geographic areas based on where the Company’s products are shipped. The following table presents the net sales by geographical region for the periods presented (in thousands):

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

United States

 

$

58,752

 

 

$

62,277

 

 

$

49,975

 

International

 

 

12,489

 

 

 

21,422

 

 

 

18,151

 

Total net sales

 

$

71,241

 

 

$

83,699

 

 

$

68,126

 

 

v3.20.4
Commitments and Contingencies
12 Months Ended
Dec. 31, 2020
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

(12) Commitments and Contingencies

The Company is subject to claims and assessments 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.

Product Liability Litigation

On October 7, 2019, a lawsuit was filed in the Superior Court of the State of California against the Company and Silimed Industria de Implantes Ltda. (the Company’s former contract manufacturer). The lawsuit alleges that the Company’s textured breast implants caused certain of the plaintiffs to develop a condition known as breast implant associated anaplastic large cell lymphoma (“BIA-ALCL”), and that the Company is liable to the Plaintiffs based on claims for strict liability (failure to warn), strict liability (defective manufacture), negligence and loss of consortium. The Company intends to vigorously defend itself in this lawsuit. Given the nature of this case, the Company is unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

On September 23, 2020, a lawsuit was filed in the Eastern District of Tennessee against the Company. The lawsuit alleges that the Company’s textured breast implants caused certain of the plaintiffs to develop a condition known as breast implant associated anaplastic large cell lymphoma (“BIA-ALCL”), and that the Company is liable to the plaintiffs based on claims for negligence, strict liability (manufacturing defects), strict liability (failure to warn), breach of express and implied warranties, and punitive damages. No response has been filed to the complaint at presented. The Company intends to vigorously defend itself in this lawsuit. Given the nature of this case, the Company is unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

v3.20.4
Summary of Quarterly Financial Information (Unaudited)
12 Months Ended
Dec. 31, 2020
Selected Quarterly Financial Information [Abstract]  
Summary of Quarterly Financial Information (Unaudited)

(13) Summary of Quarterly Financial Information (Unaudited)

The following tables set forth our unaudited quarterly statements of operations data and our key metrics for each of the eight quarters ended December 31, 2020. We have prepared the quarterly data on a consistent basis with the audited financial statements included in this report. In the opinion of management, the financial information reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of this data. This information should be read in conjunction with the audited financial statements and related notes included elsewhere in this report. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.

 

 

 

Quarter Ended

 

2020

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

 

 

(in thousands, except share data)

 

Net sales

 

$

16,932

 

 

$

12,448

 

 

$

19,217

 

 

$

22,644

 

Gross profit

 

 

10,140

 

 

 

6,898

 

 

 

10,826

 

 

 

11,075

 

Net loss

 

 

(28,612

)

 

 

(34,277

)

 

 

(5,821

)

 

 

(21,237

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.57

)

 

$

(0.68

)

 

$

(0.12

)

 

$

(0.42

)

 

 

 

Quarter Ended

 

2019

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

 

 

(in thousands, except share data)

 

Net sales

 

$

17,552

 

 

$

20,525

 

 

$

22,412

 

 

$

23,210

 

Gross profit

 

 

11,078

 

 

 

12,712

 

 

 

12,658

 

 

 

14,239

 

Net loss

 

 

(26,484

)

 

 

(37,654

)

 

 

(22,433

)

 

 

(20,247

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.91

)

 

$

(1.10

)

 

$

(0.45

)

 

$

(0.41

)

 

v3.20.4
Subsequent Events
12 Months Ended
Dec. 31, 2020
Subsequent Events [Abstract]  
Subsequent Events

(14) Subsequent Events

Debt amendment

On February 5, 2021, the Company entered into a Second Amended and Restated Credit and Security Agreement (Term Loan), by and among the Company, certain of the Company’s wholly-owned subsidiaries (together with Sientra, the “Borrowers”), the lenders party thereto from time to time and MidCap Financial Trust, as administrative agent and collateral agent (“Agent”) (the “Restated Term Loan Agreement”). The Restated Term Loan Agreement amends and restates the Company’s existing Amended and Restated Credit and Security Agreement (Term Loan), dated as of July 1, 2019. Refer to Note 7 – Debt for further details.

Also on February 5, 2021, the Company entered in to a Third Amendment to Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the Borrowers, the lenders party thereto from time to time, and the Agent (the “Revolving Loan Amendment”). The Revolving Loan Amendment modified the Net Revenue (as defined therein) requirement in a manner consistent with the modification under the Restated Term Loan Agreement. In addition, the Revolving Loan Amendment made other conforming changes to the Restated Term Loan Agreement. Refer to Note 7 – Debt for further details.

Follow-on public offering

On February 8, 2021, the Company completed a follow on public offering of 5,410,628 shares of common stock at $6.75 per share, as well as 811,594 additional shares of common stock pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds were approximately $39.1 million after deducting underwriting discounts and commissions of approximately $2.2 million and offering expenses of approximately $0.4 million.

v3.20.4
Summary of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Basis of Presentation and Use of Estimates

(a)

Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets and liabilities which are subject to significant judgment and use of estimates include the allowance for doubtful accounts, sales return liability, provision for warranties, valuation of inventories, recoverability of long-lived assets, valuation allowances with respect to deferred tax assets, useful lives associated with property and equipment and finite lived intangible assets, and the valuation and assumptions underlying stock-based compensation and other equity instruments. On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities. In addition, the Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with stock-based compensation and other equity instruments.

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 decrease with the change in the miraDry business strategy, but 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 and the convertible note, sales of products since 2012, and the proceeds from the sale of common stock in public offerings. 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.

Debt financing

On July 25, 2017, the Company entered into the Existing Credit Agreements with Midcap. On July 1, 2019, the Company entered into certain credit agreements with Midcap Financial Trust pursuant to which the Company repaid their existing indebtedness under the Existing Credit Agreements and the outstanding commitment fee was cancelled. Further, on May 11, 2020 and February 5, 2021, the Company amended certain credit agreements with Midcap Financial Trust.

 

On March 11, 2020, the Company entered into a facility agreement with Deerfield Partners, L.P., issuing $60.0 million in principal amount of 4.0% unsecured and subordinated convertible notes upon the terms and conditions set forth in the facility agreement.

 

In April 2020, the Company was granted a loan of $6.7 million under the Paycheck Protection Program of the CARES Act, or the PPP Loan, all or a portion of which may be forgiven dependent on the use of proceeds. The PPP Loan matures on April 20, 2022 and bears interest at a rate of 1.0% per annum. All or a portion of the PPP Loan may be forgiven upon submission of documentation of expenditures in accordance with certain specified requirements. The Company sought and obtained the PPP Loan due to the immediate and continued impact of the COVID-19 pandemic on revenues and prospects. The PPP Loan has allowed the Company to satisfy payroll obligations without a material reduction in pay for employees or a material headcount reduction, other than the reductions in the previously announced organizational efficiency initiative.

See Note 7 to the consolidated financial statements for a full description of our long-term debt, revolving line of credit, convertible note, and PPP loan.

Equity financing

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 its common stock having an aggregate gross offering price of up to $50.0 million. As of December 31, 2020, the Company has sold 37,000 shares of its common stock pursuant to the sales agreement.

 

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

 

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

 

At December 31, 2020, the Company had cash and cash equivalents of $55.0 million. The accompanying 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. The Company believes that its cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months.

Cash and Cash Equivalents

(c)

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist primarily of cash in checking accounts and interest-bearing money market accounts.

Concentration of Credit and Supplier Risks

(d)

Concentration of Credit and Supplier Risks

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company’s cash and cash equivalents are deposited in demand accounts at financial institutions that management believes are creditworthy. The Company is exposed to credit risk in the event of default by these financial institutions for cash and cash equivalents in excess of amounts insured by the Federal Deposit Insurance Corporation, or FDIC. Management believes that the Company’s investments in cash and cash equivalents are financially sound and have minimal credit risk and the Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company relies on a limited number of third-party manufacturers for the manufacturing and supply of its products. This could result in the Company not being able to acquire the inventory needed to meet customer demand, which would result in possible loss of sales and affect operating results adversely.

Fair Value of Financial Instruments

(e)

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, contingent consideration, and the convertible feature related to the convertible note are discussed in Note 1(f) below. The fair value of the debt is based on the amount of future cash flows associated with the instrument discounted using the Company’s market rate. As of December 31, 2020, the carrying value of the long-term debt was not materially different from the fair value. As of December 31, 2020, the carrying value and fair value of the convertible note were as follows (in thousands):

 

 

 

December 31, 2020

 

 

 

Carrying Value

 

 

Fair Value

 

Convertible note

 

$

44,436

 

 

$

37,580

 

The convertible note is carried on the consolidated balance sheets at amortized cost. The fair value is estimated using a discounted cash flow analysis with a yield derived from a calibrated binomial lattice model as of the convertible note issuance date and adjusted for market movements thereafter. The market for trading of the convertible note is not considered to be an active market and therefore the estimate of fair value is based on Level 2 inputs.

Fair Value Measurements

(f)

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.

Property and Equipment

(g)

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight‑line method over the estimated useful life of the asset, generally three to fifteen years. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the related asset. Upon retirement or sale of an asset, the cost and related accumulated depreciation or amortization are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operations in the period realized. Maintenance and repairs are charged to operations as incurred.

Leases

(h)    Leases

 

The Company leases certain office space, warehouses, distribution facilities, manufacturing 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. 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, distribution facilities and manufacturing 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.

Goodwill and Other Intangible Assets

(i)

Goodwill and Other Intangible Assets

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net assets of purchased businesses. Goodwill is not amortized, but instead is subject to impairment tests on at least an annual basis and whenever circumstances suggest that goodwill may be impaired. After the acquisition of miraDry, management began evaluating the Company as two reporting units, Breast Products and miraDry. The Company’s annual test for impairment is performed as of October 1 of each fiscal year. The Company makes a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount from the qualitative assessment, the Company performs a quantitative analysis to compare the fair value of the reporting unit to its carrying amount. The Company recognizes impairment charges for the amount by which the carrying amount exceeds the reporting unit’s fair value.

The Company’s fair value analysis of goodwill utilizes the income approach and market approach, which requires the use of estimates about a reporting unit’s future revenues and free cash flows, market multiples, enterprise value, control risk premiums, 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 market multiples, enterprise value, control risk premiums, discount rates and terminal value are based upon market participant assumptions using a defined peer group. Changes in these assumptions can materially affect these estimates. Thus, to the extent the market changes, discount rates increase significantly or the Company does not meet its projected performance, the Company could recognize impairments, and such impairments could be material.

In the second quarter of 2019, the Company recorded a full impairment of goodwill in the miraDry reporting unit after performing a quantitative analysis. Refer to Note 5(a) for further details.  

Indefinite-lived intangible assets

The Company tests indefinite-lived intangible assets for impairment on at least an annual basis and whenever circumstances suggest the assets may be impaired. The Company’s annual test for impairment is performed as of October 1 of each fiscal year. If indicators of impairment are present, the Company evaluates the carrying value of the intangible assets in relation to estimates of future undiscounted cash flows. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to the difference. The Company also evaluates the remaining useful life of an indefinite-lived intangible asset to determine whether events and circumstances continue to support an indefinite useful life. For the years ended December 31, 2020, 2019, and 2018, the Company did not record any indefinite-lived intangible assets impairment charges.

Finite-lived intangible assets

The intangible assets are amortized to the consolidated statement of operations based on estimated cash flows generated from the intangible asset over its estimated life. Each fiscal year the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstance warrant a revision to the remaining periods of amortization. Judgments about the recoverability of purchased finite‑lived intangible assets are made whenever events or changes in circumstance indicate that impairment may exist. Recoverability of finite‑lived intangible assets is measured by comparison of the carrying amount of the asset group to the future undiscounted cash flows the asset group is expected to generate. If the sum of the future undiscounted cash flows is less than the carrying value, the Company will evaluate whether the fair value of each asset in the asset group exceeds its respective carrying value. If the fair value of any asset in the asset group is determined to be less than its carrying value, then the Company will recognize an impairment loss based on the excess of the carrying amount over the asset’s respective fair value.

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 future cash flows derived from existing customers and requires the use of customer attrition rates and discount rates to determine the estimated fair value. The future revenues and free cash flow from existing customers are determined based upon actual results giving effect to management’s expected changes in operating results in future years. The attrition rate is based on average historical levels of customer attrition and the discount rate is based upon market participant assumptions using a defined peer group. 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. This method requires the use of royalty rates which are determined based on comparable third-party license agreements involving similar assets and discount rates similar to the above to determine the estimated fair value.

In the second quarter of 2019, the Company recorded a partial impairment of intangible assets in the miraDry reporting unit after performing a quantitative analysis and subsequently recorded a full impairment in the first quarter of 2020. Refer to Note 5(b) for further details.  

Impairment of Tangible Long Lived Assets

(j)

Impairment of Tangible Long‑Lived Assets

The Company’s management routinely considers whether indicators of impairment of long‑lived assets are present. If such indicators are present, management determines whether the sum of the estimated undiscounted cash flows attributable to the asset group in question is less than their carrying value. If less, the Company will recognize an impairment loss based on the excess of the carrying amount of the assets over their respective fair values. Fair value is determined by discounted future cash flows, appraisals or other methods. If the assets determined to be impaired are to be held and used, the Company will recognize an impairment charge to the extent the present value of anticipated net cash flows attributable to the asset are less than the asset’s carrying value. The fair value of the asset will then become the asset’s new carrying value.

Business Combinations

(k)

Business Combinations

Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method, assets acquired and liabilities assumed are recorded at their respective fair values as of the acquisition date in the financial statements. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill. Liability-classified contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date and remeasured at their fair values each subsequent reporting period until the related contingencies are resolved. The resulting changes in fair values are recorded in earnings. Equity-classified contingent consideration obligations incurred in connection with a business combination are recorded at their fair values on the acquisition date and are not subsequently remeasured each reporting period unless the obligation becomes reclassified as a liability. The subsequent settlement of the obligation is accounted for within equity.

Segment Reporting

(l)

Segment Reporting

Reportable segments represent components for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, who has been identified as the Chief Operating Decision Maker, or CODM, as defined by authoritative guidance on segment reporting, in determining howe to allocate resources and evaluate performance. The segments are determined based on several factors, including client base, homogeneity of products, technology, delivery channels and similar economic characteristics. Based on the financial information presented to and reviewed by the CODM, the Company has determined that it has two reportable segments: Breast Products and miraDry.

Revenue Recognition

(m)

Revenue Recognition

The Company generates revenue primarily through the sale and delivery of promised goods or services to customers. Sales prices are documented in the executed sales contract, purchase order or order acknowledgement prior to the transfer of control to the customer. 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.

Revenue contracts may include multiple products or services, each of which is considered a separate performance obligation. 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. Other deliverables are sometimes promised but are ancillary and insignificant in the context of the contract as a whole. Revenue is allocated to each performance obligation based on its relative standalone selling price. The Company determines standalone selling prices based on observable prices for all performance obligations with the exception of the service-type warranty under the Platinum20 Limited Warranty Program, or Platinum20.

The Company introduced 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 1(t)). The Company considers the service warranty component as an additional performance obligation and defers revenue at the time of sale 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 December 31, 2020 were as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2020

 

Balance as of December 31, 2019

 

$

1,596

 

Additions and adjustments

 

 

2,137

 

Revenue recognized

 

 

(1,115

)

Balance as of December 31, 2020

 

$

2,618

 

Revenue for service warranties are recognized ratably over the term of the agreements. Specifically for Platinum20, the performance obligation is satisfied at the time that the benefits are provided and are expected to be satisfied over the following 3 to 24 month period for financial assistance and 20 years for product replacement.

 

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. 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.

Sales Return Liability

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. A sales return liability is established based on estimated returns using relevant historical experience taking into consideration recent gross sales and notifications of pending returns, as adjusted for changes in recent industry events and trends. The estimated sales returns are 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 following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Beginning balance

 

$

8,116

 

 

$

6,048

 

Addition to reserve for sales activity

 

 

118,508

 

 

 

105,496

 

Actual returns

 

 

(117,407

)

 

 

(104,148

)

Change in estimate of sales returns

 

 

(25

)

 

 

720

 

Ending balance

 

$

9,192

 

 

$

8,116

 

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. For the Breast Products

segment, shipping and handling activities are largely provided to customers free of charge. The associated costs were $2.9 million, $1.9 million and $1.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. These costs are viewed as part of the Company’s marketing programs and are recorded as a component of sales and marketing expense in the 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 consolidated statement of operations. The associated costs were $0.3 million, $0.7 million, and $0.4 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

(n)

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability to collect from some of its customers. The allowances for doubtful accounts are based on the analysis of historical bad debts, customer credit‑worthiness, past transaction history with the customer, and current economic trends. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances may be required.

Inventories and Cost of Goods Sold

(o)

Inventories and Cost of Goods Sold

Inventories represent raw materials, work in process and finished goods that are recorded at the lower of cost or market on a first‑in, first‑out basis, or FIFO. The Company recognizes the cost of inventory transferred to the customer in cost of goods sold when revenue is recognized. Further, the Company periodically assesses the recoverability of all inventories to determine whether adjustments for impairment or obsolescence are required. The Company evaluates the remaining shelf life and other general obsolescence and impairment criteria in assessing the recoverability of the Company’s inventory.

Income Taxes

(p)

Income Taxes

The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized.

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. However, the Company has deferred tax liabilities that cannot be considered sources of income to support the realization of the deferred tax assets, and has provided for tax expense (or benefit) and a corresponding deferred tax liability.

The Company accounts for uncertain tax positions in accordance with Account Standards Codification, or ASC, 740‑10, Accounting for Uncertainty in Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of tax benefit might change as new information becomes available.

Research and Development Expenditures

(q)

Research and Development Expenditures

Research and development costs are charged to operating expenses as incurred. Research and development, or R&D, primarily consist of clinical expenses, regulatory expenses, product development, consulting services, outside research activities, quality control and other costs associated with the development of the Company’s products and compliance with Good Clinical Practices, or GCP, requirements. R&D expenses also include related personnel and consultant compensation and stock-based compensation expense.

Advertising

(r)

Advertising

Expenses related to advertising are charged to sales and marketing expense as incurred. Advertising costs were $3.6 million, $6.1 million and $1.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Stock-Based Compensation

(s)

Stock‑Based Compensation

The Company applies the fair value provisions of ASC 718, Compensation — Stock Compensation, or ASC 718. ASC 718 requires the recognition of compensation expense, using a fair‑value based method, for costs related to all employee share‑based payments, including stock options, restricted stock units, and the employee stock purchase plan. In the absence of an observable market price for an award, ASC 718 requires companies to estimate the fair value of share‑based payment awards on the date of grant using an option‑pricing model. We estimate the fair value of our stock‑based awards to employees and directors using the Black‑Scholes option pricing model. The grant date fair value of a stock‑based award is recognized as an expense over the requisite service period of the award on a straight‑line basis. In addition, we use the Monte-Carlo simulation option-pricing model to determine the fair value of market-based awards. The Monte-Carlo simulation option-pricing model uses the same input assumptions as the Black-Scholes model; however, it also further incorporates into the fair-value determination the possibility that the market condition may not be satisfied. Compensation costs related to these awards are recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

The option-pricing models require the input of subjective assumptions, including the risk‑free interest rate, expected dividend yield, expected volatility and expected term, among other inputs. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock‑based compensation expense could be materially different in the future. These assumptions are estimated as follows:

 

Risk‑free interest rate—The risk‑free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.

 

Dividend yield—The Company has never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, the Company utilized an expected dividend yield of zero.

 

Expected volatility—In the prior years, the Company utilized median historic price volatilities and implied volatilities of comparable public companies due to a lack of significant trading history for the Company’s own common stock. In the current year, the Company estimated its expected stock volatility based on company-specific historical and implied volatility information of its stock as sufficient historical information has become available.

 

Expected term—The expected term represents the period that our stock‑based awards are expected to be outstanding. The Company utilizes the simplified method to estimate the expected term.

Product Warranties

 

(t)

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 1(m) 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.

Net Loss Per Share

(u)

Net Loss Per Share

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Net loss (in thousands)

 

$

(89,947

)

 

$

(106,818

)

 

$

(82,627

)

Weighted average common shares outstanding, basic and diluted

 

 

50,233,175

 

 

 

40,654,272

 

 

 

25,402,241

 

Net loss per share attributable to common stockholders

 

$

(1.79

)

 

$

(2.63

)

 

$

(3.25

)

 

The Company excluded the following potentially dilutive securities, outstanding as of December 31, 2020, 2019 and 2018 from the computation of diluted net loss per share attributable to common stockholders for the years ended December 31, 2020, 2019 and 2018 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Stock options to purchase common stock

 

 

2,559,558

 

 

 

1,967,367

 

 

 

1,625,778

 

Warrants for the purchase of common stock

 

 

17,040

 

 

 

47,710

 

 

 

47,710

 

Equity contingent consideration

 

 

607,442

 

 

 

 

 

 

 

Stock issuable upon conversion of convertible note

 

 

19,733,352

 

 

 

 

 

 

 

 

 

 

22,917,392

 

 

 

2,015,077

 

 

 

1,673,488

 

 

The Company uses the if-converted method for calculating any potential dilutive effects of the convertible note. The Company did not adjust the net loss for the year ended December 31, 2020 to eliminate any interest expense or gain/loss for the derivative liability related to the note in the computation of diluted loss per share, as the effects would be anti-dilutive.

Recent Accounting Pronouncements

(v)

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 consolidated balance sheets.

 

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendment modifies, removes, and adds certain disclosure requirements on fair value measurements. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption was permitted. The Company adopted the applicable amendments within ASU 2018-13 prospectively in the first quarter of 2020 and there was no material impact on its consolidated financial statements from the adoption.

 

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendment. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption was permitted. The Company adopted ASU 2018-15 prospectively in the first quarter of 2020 and there was no material impact on its consolidated financial statements from the adoption.

 

Recently Issued Accounting Standards

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment eliminates certain accounting models and simplifies the accounting for convertible instruments and enhances disclosures for convertible instruments and earnings per share. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023 including interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact that adoption of the standard will have on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment provides optional expedients and exceptions for contract modifications that replace a reference rate affected by reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022, and entities may elect to apply by Topic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is currently evaluating the impact the election of the optional expedient will have on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendment removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. The amendment also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact that adoption of the standard will have on the consolidated financial statements.

Risks and Uncertainties

(w)     Risks and Uncertainties

 

The rapid, global spread of COVID-19 has resulted in significant economic uncertainty, significant declines in business and consumer confidence and global demand in the non-essential healthcare industry (among others), a global economic slowdown, and could lead to a global recession. The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, and employee-related amounts, will depend on future developments that are highly uncertain. The Company continues to monitor and assess new information related to the COVID-19 pandemic, the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

 

As an aesthetics company, surgical procedures involving the Company’s breast and miraDry products are susceptible to local and national government restrictions, such as social distancing, “shelter in place” orders and business closures, due to the economic and logistical impacts these measures have on consumer demand as well as the practitioners’ ability to administer such procedures. The inability or limited ability to perform such non-emergency procedures significantly harmed the Company’s revenues during the second quarter of 2020 and continued to harm the Company’s revenues during the third and fourth quarter of 2020. While some states have lifted certain restrictions on non-emergency procedures, the Company will likely continue to experience future harm to its revenues while existing or new restrictions remain in place.

 

Further, the spread of COVID-19 has caused the Company to modify workforce practices, and the Company may take further actions determined to be in the best interests of the Company’s employees or as required by governments. In addition, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that this can lead to a local and/or global economic recession, which may result in further harm to the aesthetics market. Such economic disruption could adversely affect the Company’s business. The continued spread of COVID-19, or another infectious disease, could also result in delays or disruptions in the Company’s supply chain or adversely affect the Company’s manufacturing facilities and personnel. Further, trade and/or national security protection policies may be adjusted as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic.

 

The estimates used for, but not limited to, determining the collectability of accounts receivable, fair value of long-lived assets and goodwill, and sales returns liability required could be impacted by the pandemic. While the full impact of COVID-19 is unknown at this time, the Company has made appropriate estimates based on the facts and circumstances available as of the reporting date. These estimates may change as new events occur and additional information is obtained.

Reclassifications

 

(x)

Reclassifications

 

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

v3.20.4
Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Schedule of Carrying Value and Fair Value of Convertible Note As of December 31, 2020, the carrying value and fair value of the convertible note were as follows (in thousands):

 

 

 

December 31, 2020

 

 

 

Carrying Value

 

 

Fair Value

 

Convertible note

 

$

44,436

 

 

$

37,580

 

Schedule of Liability for Unsatisfied Performance Obligations Under Service Warranty

The liability for unsatisfied performance obligations under the service warranty as of December 31, 2020 were as follows (in thousands):

 

 

Year Ended December 31,

 

 

 

2020

 

Balance as of December 31, 2019

 

$

1,596

 

Additions and adjustments

 

 

2,137

 

Revenue recognized

 

 

(1,115

)

Balance as of December 31, 2020

 

$

2,618

 

Schedule of Rollforward of Sales Return Liability The following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Beginning balance

 

$

8,116

 

 

$

6,048

 

Addition to reserve for sales activity

 

 

118,508

 

 

 

105,496

 

Actual returns

 

 

(117,407

)

 

 

(104,148

)

Change in estimate of sales returns

 

 

(25

)

 

 

720

 

Ending balance

 

$

9,192

 

 

$

8,116

 

Schedule of net loss per share, basic and diluted

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Net loss (in thousands)

 

$

(89,947

)

 

$

(106,818

)

 

$

(82,627

)

Weighted average common shares outstanding, basic and diluted

 

 

50,233,175

 

 

 

40,654,272

 

 

 

25,402,241

 

Net loss per share attributable to common stockholders

 

$

(1.79

)

 

$

(2.63

)

 

$

(3.25

)

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 December 31, 2020, 2019 and 2018 from the computation of diluted net loss per share attributable to common stockholders for the years ended December 31, 2020, 2019 and 2018 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Stock options to purchase common stock

 

 

2,559,558

 

 

 

1,967,367

 

 

 

1,625,778

 

Warrants for the purchase of common stock

 

 

17,040

 

 

 

47,710

 

 

 

47,710

 

Equity contingent consideration

 

 

607,442

 

 

 

 

 

 

 

Stock issuable upon conversion of convertible note

 

 

19,733,352

 

 

 

 

 

 

 

 

 

 

22,917,392

 

 

 

2,015,077

 

 

 

1,673,488

 

v3.20.4
Restructuring (Tables)
12 Months Ended
Dec. 31, 2020
Restructuring And Related Activities [Abstract]  
Summary of Liabilities Related to Plan Included in Accrued and Other Current Liabilities in Consolidated Balance Sheet

The following table details the activity of liabilities related to the Plan included in "Accrued and other current liabilities" in the consolidated balance sheet as of December 31, 2020 (amounts in thousands):

 

 

 

Severance costs

 

 

Other associated costs

 

 

Duplicate operating costs

 

Balance at December 31, 2019

 

$

894

 

 

$

 

 

$

 

Costs charged to expense

 

 

1,380

 

 

 

208

 

 

 

174

 

Costs paid or otherwise settled

 

 

(2,274

)

 

 

(208

)

 

 

(174

)

Balance at December 31, 2020

 

$

 

 

$

 

 

$

 

Schedule of Charges by Reportable Segment, Recorded in Restructuring Costs Under Operating Expenses in Consolidated Statements of Operations

The following table details the charges by reportable segment, recorded in "Restructuring" under operating expenses in the consolidated statements of operations for the year ended December 31, 2020 by segment (amounts in thousands):

 

 

Year Ended

 

 

Year Ended

 

 

Cumulative Restructuring

 

 

 

December 31, 2019

 

 

December 31, 2020

 

 

Charges

 

Breast Products

 

$

499

 

 

$

390

 

 

$

889

 

miraDry

 

 

584

 

 

 

1,372

 

 

 

1,956

 

Total

 

$

1,083

 

 

$

1,762

 

 

$

2,845

 

 

v3.20.4
Acquisitions (Tables) - Vesta Intermediate Funding, Inc
12 Months Ended
Dec. 31, 2020
Business Acquisition [Line Items]  
Schedule of Aggregate Preliminary Acquisition Date Fair Value of Consideration Transferred The aggregate acquisition date fair value of the consideration transferred was approximately $27.0 million, consisting of the following (in thousands):

 

 

Fair Value

 

Cash consideration at Acquisition Date

 

$

14,000

 

Deferred consideration

 

 

4,737

 

Equity contingent consideration

 

 

3,156

 

Purchase price for additional inventory purchase

 

 

5,113

 

Total purchase consideration

 

$

27,006

 

Schedule of Allocation of the Fair Value of the Consideration Transferred by Major Class

In accordance with ASC 805, the Company has recorded the acquired assets (including identifiable intangible assets) and liabilities assumed at their respective fair value. The allocation of the total purchase price is as follows (in thousands):

 

 

November 7,

 

 

 

2019

 

Inventories

 

$

7,138

 

Property and equipment

 

 

7,304

 

Goodwill

 

 

4,324

 

Intangible assets

 

 

8,240

 

Net assets acquired

 

$

27,006

 

v3.20.4
Balance Sheet Components (Tables)
12 Months Ended
Dec. 31, 2020
Balance Sheet Related Disclosures [Abstract]  
Schedule of inventories, net

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

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Raw materials

 

$

7,138

 

 

$

8,095

 

Work in progress

 

 

12,303

 

 

 

5,543

 

Finished goods

 

 

25,791

 

 

 

23,893

 

Finished goods - right of return

 

 

3,416

 

 

 

2,081

 

 

 

$

48,648

 

 

$

39,612

 

Schedule of property and equipment, net

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

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Leasehold improvements

 

$

2,857

 

 

$

2,841

 

Manufacturing equipment and toolings

 

 

9,289

 

 

 

8,175

 

Computer equipment

 

 

2,776

 

 

 

1,250

 

Software

 

 

3,546

 

 

 

2,602

 

Office equipment

 

 

167

 

 

 

111

 

Furniture and fixtures

 

 

1,193

 

 

 

1,144

 

 

 

 

19,828

 

 

 

16,123

 

Less accumulated depreciation

 

 

(6,722

)

 

 

(3,809

)

 

 

$

13,106

 

 

$

12,314

 

 

Schedule of accrued and other current liabilities

Accrued and other current liabilities consist of the following:

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Payroll and related expenses

 

$

3,524

 

 

$

6,789

 

Accrued severance

 

 

2,900

 

 

 

894

 

Accrued commissions

 

 

5,561

 

 

 

4,984

 

Accrued manufacturing

 

 

225

 

 

 

2,616

 

Deferred and contingent consideration, current portion

 

 

10,146

 

 

 

6,830

 

Audit, consulting and legal fees

 

 

48

 

 

 

630

 

Accrued sales and marketing expenses

 

 

445

 

 

 

1,109

 

Lease liabilities

 

 

1,588

 

 

 

1,299

 

Other

 

 

7,952

 

 

 

7,400

 

 

 

$

32,389

 

 

$

32,551

 

Schedule of rollforward of the accrued warranties

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

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

Balance as of January 1

 

$

1,562

 

 

$

1,395

 

Warranty costs incurred during the period

 

 

(832

)

 

 

(762

)

Changes in accrual related to warranties issued during the period

 

 

1,200

 

 

 

1,138

 

Changes in accrual related to pre-existing warranties

 

 

71

 

 

 

(209

)

Balance as of December 31

 

$

2,001

 

 

$

1,562

 

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 December 31, 2020 and 2019 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2020 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

$

 

 

$

 

 

$

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

7,026

 

 

 

7,026

 

Liability for derivative

 

 

 

 

 

 

 

 

26,570

 

 

 

26,570

 

 

 

$

 

 

$

 

 

$

33,596

 

 

$

33,596

 

 

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2019 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liability for common stock warrants

 

$

 

 

$

 

 

$

38

 

 

$

38

 

Liability for contingent consideration

 

 

 

 

 

 

 

 

6,891

 

 

 

6,891

 

 

 

$

 

 

$

 

 

$

6,929

 

 

$

6,929

 

 

Schedule of Aggregate Fair Values of Company's Liabilities 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 liabilities for which fair value is determined by Level 3 inputs (in thousands):

 

 

 

Warrant liability

 

 

Contingent consideration liability

 

 

Derivative liability

 

Balance, December 31, 2019

 

$

38

 

 

$

6,891

 

 

$

 

Additions

 

 

 

 

 

 

 

 

16,100

 

Change in fair value

 

 

(38

)

 

 

135

 

 

 

10,470

 

Balance, December 31, 2020

 

$

 

 

$

7,026

 

 

$

26,570

 

 

v3.20.4
Goodwill and Other Intangible Assets, net (Tables)
12 Months Ended
Dec. 31, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Schedule of Changes in Carrying Amount of Goodwill The changes in the carrying amount of goodwill during the years ended December 31, 2020 and 2019 were as follows (in thousands):

 

 

Breast

Products

 

 

miraDry

 

 

Total

 

Balances as of December 31, 2018

 

$

19,156

 

 

$

7,629

 

 

$

26,785

 

Accumulated impairment losses

 

 

(14,278

)

 

 

(7,629

)

 

 

(21,907

)

Goodwill acquired (Note 3)

 

 

4,324

 

 

 

 

 

 

4,324

 

Balances as of December 31, 2019

 

$

9,202

 

 

$

 

 

$

9,202

 

Goodwill acquired

 

 

 

 

 

 

 

 

 

Balances as of December 31, 2020

 

$

9,202

 

 

$

 

 

$

9,202

 

Schedule of Other Intangible assets

The components of the Company’s other intangible assets consist of the following definite-lived and indefinite-lived assets (in thousands):

 

 

 

Average

 

 

 

 

 

 

Amortization

 

 

December 31, 2020

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

10

 

 

$

4,940

 

 

$

(3,856

)

 

$

1,084

 

Trade names - finite life

 

 

12

 

 

 

800

 

 

 

(322

)

 

 

478

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(865

)

 

 

7,375

 

Total definite-lived intangible assets

 

 

 

 

 

$

16,443

 

 

$

(7,506

)

 

$

8,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade names - indefinite life

 

 

 

 

450

 

 

 

 

 

 

450

 

Total indefinite-lived intangible assets

 

 

 

 

 

$

450

 

 

$

 

 

$

450

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

December 31, 2019

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

11

 

 

$

9,540

 

 

$

(3,846

)

 

$

5,694

 

Trade names - finite life

 

 

14

 

 

 

2,000

 

 

 

(292

)

 

 

1,708

 

Developed technology

 

 

13

 

 

 

1,500

 

 

 

(84

)

 

 

1,416

 

Non-compete agreement

 

 

2

 

 

 

80

 

 

 

(80

)

 

 

 

Regulatory approvals

 

 

1

 

 

 

670

 

 

 

(670

)

 

 

 

Acquired FDA non-gel product approval

 

 

11

 

 

 

1,713

 

 

 

(1,713

)

 

 

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(118

)

 

 

8,122

 

Total definite-lived intangible assets

 

 

 

 

 

$

23,743

 

 

$

(6,803

)

 

$

16,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 intangible assets as of December 31, 2020 (in thousands):

 

 

Amortization

 

Period

 

Expense

 

2021

 

$

1,221

 

2022

 

 

1,163

 

2023

 

 

1,092

 

2024

 

 

948

 

2025

 

 

805

 

Thereafter

 

 

3,708

 

 

 

$

8,937

 

 

v3.20.4
Leases (Tables)
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Components of Lease Expense

Components of lease expense were as follows:

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

Lease Cost

 

Classification

 

2020

 

 

2019

 

Operating lease cost

 

Operating expenses

 

$

1,698

 

 

$

1,550

 

Operating lease cost

 

Inventory

 

 

488

 

 

 

4,206

 

Total operating lease cost

 

 

 

$

2,186

 

 

$

5,756

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Operating expenses

 

 

41

 

 

 

41

 

Amortization of right-of-use assets

 

Inventory

 

 

36

 

 

 

 

Interest on lease liabilities

 

Other income (expense), net

 

 

10

 

 

 

4

 

Total finance lease cost

 

 

 

$

87

 

 

$

45

 

Variable lease cost

 

Inventory

 

 

 

 

 

10,568

 

Total lease cost

 

 

 

$

2,273

 

 

$

16,369

 

Supplemental Cash Flow Information Related to Operating and Finance Leases

Supplemental cash flow information related to operating and finance leases was as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

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

 

 

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

1,758

 

 

$

5,419

 

Operating cash outflows from finance leases

 

 

85

 

 

 

44

 

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

 

 

 

 

 

 

 

 

Operating leases

 

$

1,242

 

 

$

8,667

 

Finance leases

 

 

157

 

 

 

117

 

Supplemental Balance Sheet Information Related to Operating and Finance Leases

 

 

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

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Reported as:

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

7,176

 

 

$

7,494

 

Finance lease right-of-use assets

 

 

158

 

 

 

78

 

Total right-of use assets

 

$

7,334

 

 

$

7,572

 

Accrued and other current liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities

 

$

1,504

 

 

$

1,259

 

Finance lease liabilities

 

 

84

 

 

 

40

 

Warranty reserve and other long-term liabilities

 

 

 

 

 

 

 

 

Operating lease liabilities

 

 

5,946

 

 

 

6,434

 

Finance lease liabilities

 

 

77

 

 

 

35

 

Total lease liabilities

 

$

7,611

 

 

$

7,768

 

Weighted average remaining lease term (years)

 

 

 

 

 

 

 

 

Operating leases

 

 

5

 

 

 

5

 

Finance leases

 

 

2

 

 

 

2

 

Weighted average discount rate

 

 

 

 

 

 

 

 

Operating leases

 

 

7.75

%

 

 

7.45

%

Finance leases

 

 

6.15

%

 

 

4.06

%

Maturities of Operating and Finance Lease Liabilities

As of December 31, 2020, maturities of the Company’s operating and finance lease liabilities are as follows (in thousands):

 

Period

 

Operating leases

 

 

Finance leases

 

 

Total

 

2021

 

$

2,095

 

 

$

89

 

 

$

2,184

 

2022

 

 

1,920

 

 

 

53

 

 

 

1,973

 

2023

 

 

1,968

 

 

 

28

 

 

 

1,996

 

2024

 

 

1,507

 

 

 

1

 

 

 

1,508

 

2025

 

 

579

 

 

 

 

 

 

579

 

2026 and thereafter

 

 

955

 

 

 

 

 

 

955

 

Total lease payments

 

$

9,024

 

 

$

171

 

 

$

9,195

 

Less imputed interest

 

 

1,574

 

 

 

10

 

 

 

1,584

 

Total operating lease liabilities

 

$

7,450

 

 

$

161

 

 

$

7,611

 

v3.20.4
Debt (Tables)
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Schedule of Future Principal and Exit Fee Payments for Outstanding Debt

The future schedule of principal and exit fee payments for all outstanding debt as of December 31, 2020 was as follows (in thousands):

 

Fiscal Year

 

 

 

 

2021

 

$

5,409

 

2022

 

 

8,326

 

2023

 

 

5,000

 

2024

 

 

3,667

 

2025

 

 

60,000

 

Total

 

$

82,402

 

 

v3.20.4
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Schedule of Provision for Income Tax

The provision for income tax consists of the following:

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Federal

 

$

12

 

 

$

9

 

 

$

2

 

State

 

 

10

 

 

 

9

 

 

 

(10

)

Foreign

 

 

11

 

 

 

16

 

 

 

4

 

Total income tax (benefit) expense

 

$

33

 

 

$

34

 

 

$

(4

)

Schedule of Reconciliation of Actual Income Tax Expense Obtained by Applying Statutory Federal Income Tax Rate

Actual income tax expense differs from that obtained by applying the statutory federal income tax rate of 21% in 2020, 2019, and 2018, respectively, to income before income taxes as follows: (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Tax at federal statutory rate

 

$

(18,882

)

 

$

(22,424

)

 

$

(17,353

)

State, net of federal benefit

 

 

(2,372

)

 

 

(2,109

)

 

 

(5,999

)

Permanent items

 

 

2,282

 

 

 

857

 

 

 

338

 

Benefit state rate change

 

 

20

 

 

 

337

 

 

 

60

 

Other

 

 

2,984

 

 

 

368

 

 

 

(103

)

Goodwill impairment

 

 

 

 

 

1,602

 

 

 

 

Change in valuation allowance

 

 

16,001

 

 

 

21,403

 

 

 

23,053

 

 

 

$

33

 

 

$

34

 

 

$

(4

)

Schedule of Tax Effects of Temporary Differences and Carryforwards that Give Rise to Significant Portions of Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets and liabilities are as follows (in thousands):

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

Net operating loss carryforwards

 

$

113,374

 

 

$

99,759

 

Research and development credits

 

 

2,121

 

 

 

3,626

 

Lease liabilities

 

 

1,861

 

 

 

1,902

 

Derivative liability

 

 

6,495

 

 

 

 

Accruals and reserves

 

 

10,175

 

 

 

9,636

 

Intangibles

 

 

3,053

 

 

 

5,330

 

 

 

 

137,079

 

 

 

120,253

 

Less valuation allowance

 

 

(131,309

)

 

 

(115,307

)

Total deferred tax assets

 

$

5,770

 

 

$

4,946

 

 

 

 

 

 

 

 

 

 

Depreciation

 

$

(276

)

 

$

(40

)

Convertible debt discount

 

 

(3,440

)

 

 

 

Right-of-use assets

 

 

(1,793

)

 

 

(1,854

)

Intangibles - deferred tax liability

 

 

(333

)

 

 

(3,102

)

Total deferred tax liabilities

 

 

(5,842

)

 

 

(4,996

)

Net deferred taxes

 

$

(72

)

 

$

(50

)

 

Schedule of Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

 

Ending balance at December 31, 2018

 

$

1,076

 

Additions based on tax positions taken in the current year

 

 

40

 

Ending balance at December 31, 2019

 

 

1,116

 

Additions based on tax positions taken in the current year

 

 

10

 

Decreases based on tax positions taken in the prior year

 

 

(507

)

Ending balance at December 31, 2020

 

$

619

 

v3.20.4
Stockholders' Equity (Tables)
12 Months Ended
Dec. 31, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]  
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 (year)

 

Balances at December 31, 2018

 

 

1,953,334

 

 

$

7.42

 

 

 

6.30

 

Exercised

 

 

(51,451

)

 

 

2.44

 

 

 

 

 

Forfeited

 

 

(21,037

)

 

 

19.39

 

 

 

 

 

Balances at December 31, 2019

 

 

1,880,846

 

 

$

7.42

 

 

 

5.48

 

Granted

 

 

600,000

 

 

 

3.58

 

 

 

 

 

Exercised

 

 

(9,817

)

 

 

2.89

 

 

 

 

 

Forfeited

 

 

(511,528

)

 

 

8.87

 

 

 

 

 

Balances at December 31, 2020

 

 

1,959,501

 

 

$

4.79

 

 

 

5.92

 

Vested and expected to vest at December 31, 2020

 

 

1,959,501

 

 

 

 

 

 

 

 

 

Vested and exercisable at December 31, 2020

 

 

1,359,558

 

 

 

 

 

 

 

8.53

 

 

 

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

 

 

1,407,768

 

 

 

8.02

 

Vested

 

 

(944,467

)

 

 

10.56

 

Forfeited

 

 

(371,695

)

 

 

7.99

 

Balances at December 31, 2019

 

 

2,232,956

 

 

$

11.99

 

Granted

 

 

3,070,430

 

 

 

4.77

 

Vested

 

 

(1,150,707

)

 

 

10.06

 

Forfeited

 

 

(1,058,889

)

 

 

7.82

 

Balances at December 31, 2020

 

 

3,093,790

 

 

$

6.97

 

 

Stock Option  
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]  
Schedule of Fair Value of Employee Stock Options Estimated Using Black-Scholes Option Valuation Model

The following table presents the weighted‑average assumptions used to estimate the fair value of options granted during the periods presented:

 

 

 

Year Ended December 31,

Stock Options

 

2020

 

2019

 

2018

Expected term (in years)

 

6.50

 

 

Expected volatility

 

82.65%

 

 

Risk-free interest rate

 

0.27%

 

 

Dividend yield

 

 

 

Employee Stock Purchase Plan  
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]  
Schedule of Fair Value of Employee Stock Options Estimated Using Black-Scholes Option Valuation Model

The following table presents the weighted-average assumptions used to estimate the fair value of the stock purchase rights granted under the employee stock purchase plan:

 

 

 

Year Ended December 31,

ESPP

 

2020

 

2019

 

2018

Expected term (in years)

 

 

0.50

 

 

to

 

2.00

 

 

 

 

0.50

 

 

to

 

2.00

 

 

 

 

0.50

 

 

to

 

2.00

 

 

Expected volatility

 

68

 

%

to

139

 

%

 

69

 

%

to

77

 

%

 

36

 

%

to

42

 

%

Risk-free interest rate

 

0.14

 

%

to

1.57

 

%

 

1.87

 

%

to

2.06

 

%

 

1.27

 

%

to

 

3.03

 

%

Dividend yield

 

 

 

 

v3.20.4
Segment Reporting and Geographic Information (Tables)
12 Months Ended
Dec. 31, 2020
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):

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

54,997

 

 

$

46,363

 

 

$

37,016

 

miraDry

 

 

16,244

 

 

 

37,336

 

 

 

31,110

 

Total net sales

 

$

71,241

 

 

$

83,699

 

 

$

68,126

 

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Loss from operations

 

 

 

 

 

 

 

 

 

 

 

 

Breast Products

 

$

(46,521

)

 

$

(50,175

)

 

$

(53,047

)

miraDry

 

 

(23,789

)

 

 

(53,392

)

 

 

(26,727

)

Total loss from operations

 

$

(70,310

)

 

$

(103,567

)

 

$

(79,774

)

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Breast Products

 

$

151,059

 

 

$

169,613

 

miraDry

 

 

17,919

 

 

 

34,791

 

Total assets

 

$

168,978

 

 

$

204,404

 

Summary of Net Sales by Geographical Regions The following table presents the net sales by geographical region for the periods presented (in thousands):

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

United States

 

$

58,752

 

 

$

62,277

 

 

$

49,975

 

International

 

 

12,489

 

 

 

21,422

 

 

 

18,151

 

Total net sales

 

$

71,241

 

 

$

83,699

 

 

$

68,126

 

 

v3.20.4
Summary of Quarterly Financial Information (Unaudited) (Tables)
12 Months Ended
Dec. 31, 2020
Selected Quarterly Financial Information [Abstract]  
Summary of Quarterly Financial Information (Unaudited)

 

 

 

Quarter Ended

 

2020

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

 

 

(in thousands, except share data)

 

Net sales

 

$

16,932

 

 

$

12,448

 

 

$

19,217

 

 

$

22,644

 

Gross profit

 

 

10,140

 

 

 

6,898

 

 

 

10,826

 

 

 

11,075

 

Net loss

 

 

(28,612

)

 

 

(34,277

)

 

 

(5,821

)

 

 

(21,237

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.57

)

 

$

(0.68

)

 

$

(0.12

)

 

$

(0.42

)

 

 

 

Quarter Ended

 

2019

 

March 31

 

 

June 30

 

 

September 30

 

 

December 31

 

 

 

(in thousands, except share data)

 

Net sales

 

$

17,552

 

 

$

20,525

 

 

$

22,412

 

 

$

23,210

 

Gross profit

 

 

11,078

 

 

 

12,712

 

 

 

12,658

 

 

 

14,239

 

Net loss

 

 

(26,484

)

 

 

(37,654

)

 

 

(22,433

)

 

 

(20,247

)

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.91

)

 

$

(1.10

)

 

$

(0.45

)

 

$

(0.41

)

v3.20.4
Summary of Significant Accounting Policies (Details)
1 Months Ended 12 Months Ended
Apr. 20, 2020
USD ($)
Jun. 07, 2019
USD ($)
$ / shares
shares
Jan. 01, 2019
USD ($)
May 07, 2018
USD ($)
$ / shares
shares
Apr. 20, 2020
USD ($)
Dec. 31, 2020
USD ($)
ReportingUnit
Segment
shares
Dec. 31, 2019
USD ($)
shares
Dec. 31, 2018
USD ($)
shares
Mar. 11, 2020
USD ($)
Summary Of Significant Accounting Policies [Line Items]                  
Common stock, shares issued | shares           50,712,151 49,612,907    
Cash and cash equivalents           $ 54,967,000 $ 87,608,000 $ 86,899,000  
Segment Information                  
Number of reporting units | ReportingUnit           2      
Number of reportable segments | Segment           2      
Indefinite-lived intangible assets impairment charges           $ 0 0 0  
Replacement implants and revision surgery financial assistance under limited warranty program           2,001,000 1,562,000 $ 1,395,000  
Right-of-use asset           7,176,000 $ 7,494,000    
Lease, liabilities           $ 7,450,000      
ASU 2016-02                  
Segment Information                  
Cumulative effect adjustment     $ 0            
Right-of-use asset     22,700,000            
Lease, liabilities     $ 22,900,000            
Silicone Gel Breast Implant Surgeries Occurring Prior to May 1, 2018                  
Segment Information                  
Period to claim financial assistance under limited warranty program           10 years      
Silicone Gel Breast Implants Occurring on or after May 1, 2018                  
Segment Information                  
Period to claim financial assistance under limited warranty program           20 years      
Common stock                  
Summary Of Significant Accounting Policies [Line Items]                  
Proceeds from follow-on offering, net of costs (in shares) | shares           37,000 20,000,000 8,518,519  
Underwritten Follow-On Offering | Common stock                  
Summary Of Significant Accounting Policies [Line Items]                  
Proceeds from follow-on offering, net of costs (in shares) | shares   17,391,305   7,407,408          
Public offering price (in dollars per share) | $ / shares   $ 5.75   $ 13.50          
Additional shares granted to underwriters | shares   2,608,695   1,111,111          
Proceeds from the issuance of common stock, net of underwriting discounts, commissions and offering expenses   $ 107,700,000   $ 107,600,000          
Payment of underwriting discounts and commissions and offering expenses   6,900,000   6,900,000          
Offering expenses   $ 400,000   $ 500,000          
Maximum | Silicone Gel Breast Implant Surgeries Occurring Prior to May 1, 2018                  
Segment Information                  
Replacement implants and revision surgery financial assistance under limited warranty program           $ 3,600      
Maximum | Silicone Gel Breast Implants Occurring on or after May 1, 2018                  
Segment Information                  
Replacement implants and revision surgery financial assistance under limited warranty program           $ 5,000      
Paycheck Protection Program                  
Summary Of Significant Accounting Policies [Line Items]                  
Debt instrument principal $ 6,700,000       $ 6,700,000        
Debt instrument interest rate 1.00%       1.00%        
Debt maturity date Apr. 20, 2022       Apr. 20, 2022        
At-The-Market Equity Offering Sales Agreement                  
Summary Of Significant Accounting Policies [Line Items]                  
Common stock, shares issued | shares           37,000,000      
At-The-Market Equity Offering Sales Agreement | Maximum                  
Summary Of Significant Accounting Policies [Line Items]                  
Aggregate gross offering price           $ 50,000,000.0      
Deerfield Facility Agreement                  
Summary Of Significant Accounting Policies [Line Items]                  
Debt instrument principal                 $ 60,000,000.0
Debt instrument interest rate                 4.00%
v3.20.4
Summary of Significant Accounting Policies - Schedule of Carrying Value and Fair Value of Convertible Note (Details) - Convertible Note
$ in Thousands
Dec. 31, 2020
USD ($)
Debt Instrument [Line Items]  
Carrying Value $ 44,436
Fair Value $ 37,580
v3.20.4
Summary of Significant Accounting Policies (PPE and Revenue) (Details) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Property, Plant and Equipment      
Period for sales return 6 months    
Revenue, practical expedient, incremental cost of obtaining contract true    
Revenue, practical expedient, significant financing component true    
Shipping and handling costs $ 32,302,000 $ 33,012,000 $ 26,822,000
Advertising      
Advertising costs 3,600,000 6,100,000 1,300,000
Breast Products | Sales and marketing expense      
Property, Plant and Equipment      
Shipping and handling costs $ 2,900,000 $ 1,900,000 $ 1,300,000
Type of Cost, Good or Service [Extensible List] us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember
miraDry | Cost of goods sold      
Property, Plant and Equipment      
Shipping and handling costs $ 300,000 $ 700,000 $ 0.4
Type of Cost, Good or Service [Extensible List] us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember us-gaap:ShippingAndHandlingMember
Minimum      
Property, Plant and Equipment      
Estimated useful life of asset 3 years    
Percentage of largest amount of tax benefit of settled uncertain tax position 50.00%    
Maximum      
Property, Plant and Equipment      
Estimated useful life of asset 15 years    
v3.20.4
Summary of Significant Accounting Policies (PPE and Revenue) (Details 1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01
Dec. 31, 2020
Breast Products and Consumable miraDry products  
Summary Of Significant Accounting Policies [Line Items]  
Performance obligation satisfying period 30 days
Product Replacement  
Summary Of Significant Accounting Policies [Line Items]  
Performance obligation satisfying period 20 years
Maximum | MiraDry Systems  
Summary Of Significant Accounting Policies [Line Items]  
Performance obligation satisfying period 1 year
Maximum | Financial Service  
Summary Of Significant Accounting Policies [Line Items]  
Performance obligation satisfying period 24 months
Minimum | Financial Service  
Summary Of Significant Accounting Policies [Line Items]  
Performance obligation satisfying period 3 months
v3.20.4
Summary of Significant Accounting Policies - Schedule of Liability for Unsatisfied Performance Obligations Under Service Warranty (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2020
USD ($)
Change In Contract With Customer Liability [Abstract]  
Balance as of December 31, 2019 $ 1,596
Additions and adjustments 2,137
Revenue recognized (1,115)
Balance as of December 31, 2020 $ 2,618
v3.20.4
Summary of Significant Accounting Policies - Schedule of Rollforward of Sales Return Liability (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Revenue Recognition [Abstract]    
Beginning balance $ 8,116 $ 6,048
Addition to reserve for sales activity 118,508 105,496
Actual returns (117,407) (104,148)
Change in estimate of sales returns (25) 720
Ending balance $ 9,192 $ 8,116
v3.20.4
Summary of Significant Accounting Policies - Schedule of Net Loss Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Accounting Policies [Abstract]                      
Net loss $ (21,237) $ (5,821) $ (34,277) $ (28,612) $ (20,247) $ (22,433) $ (37,654) $ (26,484) $ (89,947) $ (106,818) $ (82,627)
Weighted average common shares outstanding, basic and diluted                 50,233,175 40,654,272 25,402,241
Net loss per share attributable to common stockholders $ (0.42) $ (0.12) $ (0.68) $ (0.57) $ (0.41) $ (0.45) $ (1.10) $ (0.91) $ (1.79) $ (2.63) $ (3.25)
v3.20.4
Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - shares
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Potentially dilutive securities      
Potentially dilutive securities 22,917,392 2,015,077 1,673,488
Stock options to purchase common stock      
Potentially dilutive securities      
Potentially dilutive securities 2,559,558 1,967,367 1,625,778
Warrants for the purchase of common stock      
Potentially dilutive securities      
Potentially dilutive securities 17,040 47,710 47,710
Equity contingent consideration      
Potentially dilutive securities      
Potentially dilutive securities 607,442    
Stock issuable upon conversion of convertible note      
Potentially dilutive securities      
Potentially dilutive securities 19,733,352    
v3.20.4
Restructuring (Details)
$ in Millions
Nov. 06, 2019
USD ($)
Employee
Organizational Efficiency Initiative  
Restructuring Cost And Reserve [Line Items]  
Restructuring and related, expected cost $ 2.8
miraDry's Santa Clara  
Restructuring Cost And Reserve [Line Items]  
Restructuring and related activities, description Under the Plan, the Company reduced its workforce by terminating approximately 60 employees.
Restructuring charges estimated incur period | Employee 60
One Time Employee Termination Costs Retention Costs And Other Benefits | Organizational Efficiency Initiative  
Restructuring Cost And Reserve [Line Items]  
Restructuring and related, expected cost $ 2.3
Duplicate Operating Costs | Organizational Efficiency Initiative  
Restructuring Cost And Reserve [Line Items]  
Restructuring and related, expected cost $ 0.5
v3.20.4
Restructuring - Summary of Liabilities Related to Plan Included in Accrued and Other Current Liabilities in Consolidated Balance Sheet (Details) - USD ($)
$ in Thousands
12 Months Ended 14 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2020
Restructuring Cost And Reserve [Line Items]      
Costs charged to expense $ 1,762 $ 1,083 $ 2,845
Severance Costs      
Restructuring Cost And Reserve [Line Items]      
Balance at December 31, 2019 894    
Costs charged to expense 1,380    
Costs paid or otherwise settled (2,274)    
Balance at December 31, 2020   $ 894  
Other Associated Costs      
Restructuring Cost And Reserve [Line Items]      
Costs charged to expense 208    
Costs paid or otherwise settled (208)    
Duplicate Operating Costs      
Restructuring Cost And Reserve [Line Items]      
Costs charged to expense 174    
Costs paid or otherwise settled $ (174)    
v3.20.4
Restructuring - Schedule of Charges by Reportable Segment, Recorded in Restructuring Costs Under Operating Expenses in Consolidated Statements of Operations (Details) - USD ($)
$ in Thousands
12 Months Ended 14 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2020
Restructuring Cost And Reserve [Line Items]      
Total $ 1,762 $ 1,083 $ 2,845
Breast Products      
Restructuring Cost And Reserve [Line Items]      
Total 390 499 889
miraDry      
Restructuring Cost And Reserve [Line Items]      
Total $ 1,372 $ 584 $ 1,956
v3.20.4
Acquisitions (Details) - Vesta Intermediate Funding, Inc - USD ($)
$ in Thousands
12 Months Ended
Nov. 07, 2023
Nov. 07, 2019
Dec. 31, 2019
Nov. 07, 2021
Business Acquisition [Line Items]        
Payment to acquire business   $ 14,000    
Purchase price for additional inventory purchase   5,113    
Fair value of consideration transferred   $ 27,006    
Purchase price for additional inventory funded amount     $ 3,900  
Intellectual Property        
Business Acquisition [Line Items]        
Estimated useful life   19 years    
Percentage of benefit realized using accelerated method   95.00%    
Accrued and Other Current Liabilities        
Business Acquisition [Line Items]        
Purchase price for additional inventory remaining amount     1,200  
General & administrative expense        
Business Acquisition [Line Items]        
Professional fees     $ 2,600  
Scenario Forecast        
Business Acquisition [Line Items]        
Contingent consideration liability $ 3,000     $ 3,200
Scenario Forecast | First Milestone Price Target        
Business Acquisition [Line Items]        
Stock issued during period, shares 303,721      
Number of days within which additional shares will be issued 5 days      
Scenario Forecast | Second Milestone Price Target        
Business Acquisition [Line Items]        
Stock issued during period, shares 303,721      
Number of days within which additional shares will be issued 5 days      
v3.20.4
Acquisitions - Schedule of Aggregate Preliminary Acquisition Date Fair Value of Consideration Transferred (Details) - Vesta Intermediate Funding, Inc
$ in Thousands
Nov. 07, 2019
USD ($)
Business Acquisition [Line Items]  
Cash consideration at Acquisition Date $ 14,000
Deferred consideration 4,737
Equity contingent consideration 3,156
Purchase price for additional inventory purchase 5,113
Total purchase consideration $ 27,006
v3.20.4
Acquisitions - Schedule of Allocation of the Fair Value of the Consideration Transferred by Major Class (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Nov. 07, 2019
Dec. 31, 2018
Fair value of the assets acquired        
Goodwill $ 9,202 $ 9,202   $ 26,785
Vesta Intermediate Funding, Inc        
Fair value of the assets acquired        
Inventories     $ 7,138  
Property and equipment     7,304  
Goodwill     4,324  
Intangible assets     8,240  
Liabilities assumed:        
Net assets acquired     $ 27,006  
v3.20.4
Balance Sheet Components (Inventories) (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Inventory [Line Items]    
Raw materials $ 7,138 $ 8,095
Work in progress 12,303 5,543
Finished goods 25,791 23,893
Finished goods - right of return 3,416 2,081
Inventory, net 48,648 39,612
Breast Products    
Inventory [Line Items]    
Inventory held on consignment at doctors' offices, clinics, and hospitals $ 5,700 $ 2,700
v3.20.4
Balance Sheet Components (PPE) (Details) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Nov. 07, 2019
Property Plant And Equipment [Line Items]        
Property and equipment, gross $ 19,828,000 $ 16,123,000    
Less accumulated depreciation (6,722,000) (3,809,000)    
Property and equipment, net 13,106,000 12,314,000    
Depreciation expense 2,500,000 1,200,000 $ 1,100,000  
Impairments 0 0 $ 0  
Vesta Intermediate Funding, Inc        
Property Plant And Equipment [Line Items]        
Fixed assets acquired       $ 7,304,000
Leasehold improvements        
Property Plant And Equipment [Line Items]        
Property and equipment, gross 2,857,000 2,841,000    
Leasehold improvements | Vesta Intermediate Funding, Inc        
Property Plant And Equipment [Line Items]        
Fixed assets acquired       2,400,000
Manufacturing equipment and toolings        
Property Plant And Equipment [Line Items]        
Property and equipment, gross 9,289,000 8,175,000    
Computer equipment        
Property Plant And Equipment [Line Items]        
Property and equipment, gross 2,776,000 1,250,000    
Software        
Property Plant And Equipment [Line Items]        
Property and equipment, gross 3,546,000 2,602,000    
Office equipment        
Property Plant And Equipment [Line Items]        
Property and equipment, gross 167,000 111,000    
Furniture and fixtures        
Property Plant And Equipment [Line Items]        
Property and equipment, gross $ 1,193,000 $ 1,144,000    
Manufacturing Equipment | Vesta Intermediate Funding, Inc        
Property Plant And Equipment [Line Items]        
Fixed assets acquired       4,400,000
Capitalized Software | Vesta Intermediate Funding, Inc        
Property Plant And Equipment [Line Items]        
Fixed assets acquired       $ 500,000
v3.20.4
Balance Sheet Components (Accrued liabilities) (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Accrued and other current liabilities    
Payroll and related expenses $ 3,524 $ 6,789
Accrued severance 2,900 894
Accrued commissions 5,561 4,984
Accrued manufacturing 225 2,616
Deferred and contingent consideration, current portion 10,146 6,830
Audit, consulting and legal fees 48 630
Accrued sales and marketing expenses 445 1,109
Lease liabilities $ 1,588 $ 1,299
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Other $ 7,952 $ 7,400
Total $ 32,389 $ 32,551
v3.20.4
Balance Sheet Components - Schedule of rollforward of the accrued warranties (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]    
Beginning Balance $ 1,562 $ 1,395
Warranty costs incurred during the period (832) (762)
Changes in accrual related to warranties issued during the period 1,200 1,138
Changes in accrual related to pre-existing warranties 71 (209)
Ending Balance $ 2,001 $ 1,562
v3.20.4
Balance Sheet Components (Accrued Warranties) (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Product Warranty Liability [Line Items]      
Replacement implants and revision surgery financial assistance under limited warranty program $ 2,001 $ 1,562 $ 1,395
Warranty Reserve and Other Long-term Liabilities      
Product Warranty Liability [Line Items]      
Replacement implants and revision surgery financial assistance under limited warranty program 1,900 1,400  
Accrued and Other Current Liabilities      
Product Warranty Liability [Line Items]      
Replacement implants and revision surgery financial assistance under limited warranty program $ 100 $ 200  
v3.20.4
Balance Sheet Components (Liabilities measured at fair value) (Details)
12 Months Ended
Dec. 31, 2020
Estimated Dividend Yield  
Fair Value Measurements  
Measurement input 0
Measurement Input, Discount Rate | BIOCORNEUM | Future Royalty Payments  
Fair Value Measurements  
Fair value measurement discount rate 21.00%
Measurement Input, Discount Rate | miraDry | Future Milestone Payments  
Fair Value Measurements  
Fair value measurement discount rate 11.20%
v3.20.4
Balance Sheet Components - Schedule of Company's Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - Recurring - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Fair Value Measurements    
Fair value liability $ 33,596 $ 6,929
Warrants    
Fair Value Measurements    
Fair value liability   38
Contingent Consideration Liability    
Fair Value Measurements    
Fair value liability 7,026 6,891
Derivative Liability    
Fair Value Measurements    
Fair value liability 26,570  
Level 3    
Fair Value Measurements    
Fair value liability 33,596 6,929
Level 3 | Warrants    
Fair Value Measurements    
Fair value liability   38
Level 3 | Contingent Consideration Liability    
Fair Value Measurements    
Fair value liability 7,026 $ 6,891
Level 3 | Derivative Liability    
Fair Value Measurements    
Fair value liability $ 26,570  
v3.20.4
Balance Sheet Components - Schedule of Aggregate Fair Values of Company's Liabilities for which Fair Value is Determined by Level 3 Inputs (Details) - Level 3 - Recurring
$ in Thousands
12 Months Ended
Dec. 31, 2020
USD ($)
Warrants  
Fair Value Measurements  
Balance at beginning of the period $ 38
Change in fair value (38)
Contingent Consideration Liability  
Fair Value Measurements  
Balance at beginning of the period 6,891
Change in fair value 135
Balance at the end of the period 7,026
Derivative Liability  
Fair Value Measurements  
Additions 16,100
Change in fair value 10,470
Balance at the end of the period $ 26,570
v3.20.4
Goodwill and Other Intangible Assets, net (Details)
3 Months Ended 12 Months Ended
Jun. 30, 2019
USD ($)
Dec. 31, 2020
USD ($)
ReportingUnit
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Finite Lived Intangible Assets [Line Items]        
Number of reporting units | ReportingUnit   2    
Goodwill impairment charge       $ 0
Non-cash impairment charges   $ 6,432,000 $ 12,674,000  
Other intangible assets        
Amortization expense   1,600,000 $ 2,300,000 2,300,000
Customer relationships        
Finite Lived Intangible Assets [Line Items]        
Non-cash impairment charges $ 400,000 3,900,000    
Distributor relationships        
Finite Lived Intangible Assets [Line Items]        
Non-cash impairment charges 300,000      
Trade name        
Finite Lived Intangible Assets [Line Items]        
Non-cash impairment charges 3,300,000 1,100,000    
Developed technology        
Finite Lived Intangible Assets [Line Items]        
Non-cash impairment charges 1,000,000.0 1,400,000    
miraDry        
Finite Lived Intangible Assets [Line Items]        
Goodwill impairment charge $ 7,600,000     $ 0
Breast Products        
Finite Lived Intangible Assets [Line Items]        
Goodwill impairment charge   0    
Non-cash impairment charges   $ 0    
v3.20.4
Goodwill and Other Intangible Assets, net - Schedule of Changes in Carrying Amount of Goodwill (Details)
$ in Thousands
12 Months Ended
Dec. 31, 2019
USD ($)
Goodwill and intangible assets  
Goodwill, beginning balance $ 26,785
Accumulated impairment losses (21,907)
Goodwill acquired 4,324
Goodwill, ending balance 9,202
Breast Products  
Goodwill and intangible assets  
Goodwill, beginning balance 19,156
Accumulated impairment losses (14,278)
Goodwill acquired 4,324
Goodwill, ending balance 9,202
miraDry  
Goodwill and intangible assets  
Goodwill, beginning balance 7,629
Accumulated impairment losses $ (7,629)
v3.20.4
Goodwill and Other Intangible Assets, net - Components of Other Intangible Assets (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Other intangible assets    
Gross Carrying Amount $ 16,443 $ 23,743
Accumulated Amortization (7,506) (6,803)
Intangible Assets, net 8,937 16,940
Indefinite-lived intangible assets 450 450
Trade name    
Other intangible assets    
Indefinite-lived intangible assets $ 450 $ 450
Customer relationships    
Other intangible assets    
Average Amortization Period 10 years 11 years
Gross Carrying Amount $ 4,940 $ 9,540
Accumulated Amortization (3,856) (3,846)
Intangible Assets, net $ 1,084 $ 5,694
Trade name    
Other intangible assets    
Average Amortization Period 12 years 14 years
Gross Carrying Amount $ 800 $ 2,000
Accumulated Amortization (322) (292)
Intangible Assets, net $ 478 $ 1,708
Non-compete agreement    
Other intangible assets    
Average Amortization Period 2 years 2 years
Gross Carrying Amount $ 80 $ 80
Accumulated Amortization $ (80) $ (80)
Regulatory approvals    
Other intangible assets    
Average Amortization Period 1 year 1 year
Gross Carrying Amount $ 670 $ 670
Accumulated Amortization $ (670) $ (670)
Acquired FDA non-gel product approval    
Other intangible assets    
Average Amortization Period 11 years 11 years
Gross Carrying Amount $ 1,713 $ 1,713
Accumulated Amortization $ (1,713) $ (1,713)
Manufacturing know-how    
Other intangible assets    
Average Amortization Period 19 years 19 years
Gross Carrying Amount $ 8,240 $ 8,240
Accumulated Amortization (865) (118)
Intangible Assets, net $ 7,375 $ 8,122
Developed technology    
Other intangible assets    
Average Amortization Period   13 years
Gross Carrying Amount   $ 1,500
Accumulated Amortization   (84)
Intangible Assets, net   $ 1,416
v3.20.4
Goodwill and Other Intangible Assets, net - Schedule of Estimated Amortization Expense (Details)
$ in Thousands
Dec. 31, 2020
USD ($)
Estimated amortization expense  
2021 $ 1,221
2022 1,163
2023 1,092
2024 948
2025 805
Thereafter 3,708
Total amortization $ 8,937
v3.20.4
Leases - Components of Lease Expense (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Lessee Lease Description [Line Items]    
Total operating lease cost $ 2,186 $ 5,756
Finance lease cost    
Total finance lease cost 87 45
Total lease cost 2,273 16,369
Inventory    
Lessee Lease Description [Line Items]    
Total operating lease cost 488 4,206
Finance lease cost    
Amortization of right-of-use assets 36  
Variable lease cost   10,568
Operating Expenses    
Lessee Lease Description [Line Items]    
Total operating lease cost 1,698 1,550
Finance lease cost    
Amortization of right-of-use assets 41 41
Other Income (Expense), Net    
Finance lease cost    
Interest on lease liabilities $ 10 $ 4
v3.20.4
Leases (Details)
3 Months Ended
Dec. 31, 2019
OperatingLease
Lessee Disclosure [Abstract]  
Renewal term of lease 4 years
Number of operating lease, renewable 1
v3.20.4
Leases - Supplemental Cash Flow Information Related to Operating and Finance Leases (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash outflows from operating leases $ 1,758 $ 5,419
Operating cash outflows from finance leases 85 44
Right-of-use assets obtained in exchange for lease obligations:    
Operating leases 1,242 8,667
Finance leases $ 157 $ 117
v3.20.4
Leases - Supplemental Balance Sheet Information Related to Operating and Finance Leases (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Assets And Liabilities Lessee [Abstract]    
Operating lease right-of-use assets $ 7,176 $ 7,494
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] us-gaap:OtherAssetsMember us-gaap:OtherAssetsMember
Finance lease right-of-use assets $ 158 $ 78
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] us-gaap:OtherAssetsMember us-gaap:OtherAssetsMember
Total right-of use assets $ 7,334 $ 7,572
Operating lease liabilities $ 1,504 $ 1,259
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Finance lease liabilities $ 84 $ 40
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] sien:AccruedAndOtherCurrentLiabilitiesMember sien:AccruedAndOtherCurrentLiabilitiesMember
Operating lease liabilities $ 5,946 $ 6,434
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] sien:WarrantyReserveAndOtherLongTermLiabilitiesMember sien:WarrantyReserveAndOtherLongTermLiabilitiesMember
Finance lease liabilities $ 77 $ 35
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] sien:WarrantyReserveAndOtherLongTermLiabilitiesMember sien:WarrantyReserveAndOtherLongTermLiabilitiesMember
Total lease liabilities $ 7,611 $ 7,768
Weighted average remaining lease term (years)    
Operating leases 5 years 5 years
Finance leases 2 years 2 years
Weighted average discount rate    
Operating leases 7.75% 7.45%
Finance leases 6.15% 4.06%
v3.20.4
Leases - Maturities of Operating and Finance Lease Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Operating Lease Liabilities, Payments Due [Abstract]    
Operating leases, 2021 $ 2,095  
Operating leases, 2022 1,920  
Operating leases, 2023 1,968  
Operating leases, 2024 1,507  
Operating leases, 2025 579  
Operating leases, 2026 and thereafter 955  
Total operating lease payments 9,024  
Less imputed interest, Operating leases 1,574  
Total operating lease liabilities 7,450  
Finance Lease Liabilities, Payments, Due [Abstract]    
Finance leases, 2021 89  
Finance leases, 2022 53  
Finance leases, 2023 28  
Finance leases, 2024 1  
Total finance lease payments 171  
Less imputed interest, Finance leases 10  
Total finance lease liabilities 161  
Lessee Lease Liability Payments Due [Abstract]    
2021 2,184  
2022 1,973  
2023 1,996  
2024 1,508  
2025 579  
2026 and thereafter 955  
Total lease payments 9,195  
Less imputed interest 1,584  
Total lease liabilities $ 7,611 $ 7,768
v3.20.4
Debt (Details)
1 Months Ended 12 Months Ended
Feb. 05, 2021
USD ($)
Tranche
May 11, 2020
USD ($)
Apr. 20, 2020
USD ($)
Mar. 11, 2020
USD ($)
$ / shares
Nov. 07, 2019
Jul. 01, 2019
USD ($)
Jul. 25, 2017
Apr. 20, 2020
USD ($)
Dec. 31, 2020
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Jul. 01, 2022
USD ($)
Jul. 01, 2021
USD ($)
Jul. 01, 2020
May 10, 2020
USD ($)
Line Of Credit Facility [Line Items]                              
Term loan credit and security agreement entered date             Jul. 25, 2017                
Current portion of long-term debt                 $ 4,670,000 $ 6,508,000          
Borrowing base of finished goods inventory (as a percent)           40.00%                  
Borrowing base availability from finished goods inventory (as a percent)           20.00%                  
Additional interest (as a percent)             5.00%                
Fair value of derivative liability                 26,570,000            
Amortization of debt issuance costs and discounts                 4,347,000 359,000 $ 174,000        
Long-term debt                 $ 60,500,000 38,248,000          
Paycheck Protection Program                              
Line Of Credit Facility [Line Items]                              
Debt maturity date     Apr. 20, 2022         Apr. 20, 2022              
Debt instrument interest rate     1.00%         1.00%              
Debt instrument principal     $ 6,700,000         $ 6,700,000              
Debt instrument, payment terms                 Company will make no payments until the date which forgiveness of the PPP Loan is determined, which can be up to 10 months following the end of the covered period (which is defined as 24 weeks from the date of the loan), or the Deferral Period. Commencing one month after the expiration of the Deferral Period, and continuing on the same day of each month until the Maturity Date, the Company will pay to Lender monthly payments of principal and interest, in an amount required to fully amortize the principal amount outstanding on the PPP Loan on the last day of the Deferral Period by the Maturity Date.            
Salary amount which loan forgiven     $ 100,000                        
Convertible Note                              
Line Of Credit Facility [Line Items]                              
Carrying Value                 $ 44,436,000            
Maximum | Paycheck Protection Program                              
Line Of Credit Facility [Line Items]                              
Percentage of forgiven amount for non-payroll costs     40.00%                        
Minimum | Paycheck Protection Program                              
Line Of Credit Facility [Line Items]                              
Percentage of salary reduction     25.00%                        
Long-term Debt | Paycheck Protection Program                              
Line Of Credit Facility [Line Items]                              
Current portion of long-term debt                 3,300,000            
Long-term debt                 3,300,000            
Term Loan Credit and Security Agreement and Revolving Loan Credit and Security Agreement                              
Line Of Credit Facility [Line Items]                              
Agreements amended and restated date           Jul. 01, 2019                  
Restated Term Loan Agreement                              
Line Of Credit Facility [Line Items]                              
Agreements amended date         Nov. 07, 2019                    
Line of credit facility, remaining borrowing capacity           $ 35,000,000     10,000,000.0            
Debt maturity date           Jul. 01, 2024                  
Exit fee percentage to aggregate amount of all term loans funded           5.00%                  
Periodic commitment amount   $ 15,000,000                          
Loan amount outstanding                 15,000,000.0            
Loan amount outstanding, long term debt                 12,900,000            
Loan amount outstanding, long term debt current                 2,100,000            
Unamortized debt issuance costs                 900,000            
Current portion of long-term debt                 700,000            
Line of credit exit fee payables                 800,000            
Restated Term Loan Agreement | Subsequent Event                              
Line Of Credit Facility [Line Items]                              
Line of credit facility, remaining borrowing capacity $ 15,000,000                            
Periodic commitment amount $ 1,000,000                            
Unfunded tranche revised number | Tranche 2                            
Debt instrument amendment fee $ 750,000                            
Restated Term Loan Agreement | Tranche 4 | Scenario Forecast                              
Line Of Credit Facility [Line Items]                              
Periodic commitment amount                         $ 5,000,000    
Restated Term Loan Agreement | Tranche 5 | Scenario Forecast                              
Line Of Credit Facility [Line Items]                              
Periodic commitment amount                       $ 5,000,000      
Restated Term Loan Agreement | London Interbank Offered Rate (LIBOR)                              
Line Of Credit Facility [Line Items]                              
Spread on variable rate basis (as a percent)           7.50%                  
Additional Term Loan                              
Line Of Credit Facility [Line Items]                              
Line of credit facility, remaining borrowing capacity           $ 5,000,000     15,000,000.0            
Minimum revenue required to satisfy additional term loan facility           $ 100,000,000.0                  
Term Amendment                              
Line Of Credit Facility [Line Items]                              
Prepaid principal amount   25,000,000.0                          
Accrued interest prepaid   100,000                          
Prepaid exit fee   1,250,000                          
Minimum unrestricted cash amount   5,000,000.0                         $ 20,000,000.0
Term Amendment | Tranche 3                              
Line Of Credit Facility [Line Items]                              
Minimum revenue required to satisfy additional term loan facility   30,000,000.0                          
Periodic commitment amount   $ 15,000,000.0                         $ 10,000,000.0
Revolving Loan                              
Line Of Credit Facility [Line Items]                              
Debt maturity date           Jul. 01, 2024                  
Loan amount outstanding                 0            
Borrowing base of accounts receivable (as a percent)           85.00%                  
Loan amount available                 2,900,000            
Revolving Loan | Maximum                              
Line Of Credit Facility [Line Items]                              
Loan amount outstanding           $ 10,000,000.0                  
Revolving Loan | Other Assets                              
Line Of Credit Facility [Line Items]                              
Unamortized debt issuance costs                 100,000            
Revolving Loan | London Interbank Offered Rate (LIBOR)                              
Line Of Credit Facility [Line Items]                              
Spread on variable rate basis (as a percent)           4.50%                  
Term Loan and Revolving Loan                              
Line Of Credit Facility [Line Items]                              
Amortization of debt issuance costs                 $ 900,000 $ 400,000 $ 200,000        
Deerfield Facility Agreement                              
Line Of Credit Facility [Line Items]                              
Debt instrument interest rate       4.00%                      
Debt instrument principal       $ 60,000,000.0                      
Deerfield Facility Agreement | Convertible Note                              
Line Of Credit Facility [Line Items]                              
Term loan credit and security agreement entered date       Mar. 11, 2020                      
Debt maturity date       Mar. 11, 2025                      
Carrying Value       $ 60,000,000.0                      
Debt instrument interest rate       4.00%         12.00%         4.00%  
Debt instrument conversion rate per principal amount       14,634                      
Debt instrument principal amount per conversion unit       $ 1,000                      
Debt instrument conversion price | $ / shares       $ 4.10                      
Debt instrument principal       $ 60,000,000.0                      
Minimum percentage of number of shares of common stock owned by conversion of debt instrument       4.985%                      
Minimum percentage of change in ownership percentage entitling lender to demand repayment of all outstanding debt       50.00%                      
Debt instrument, call feature                 Deerfield has the option to demand repayment of all outstanding principal, and any unpaid interest accrued thereon, in connection with a Major Transaction (as defined in the Convertible Note), which shall include, among others, any acquisition or other change of control of the Company; the sale or transfer of assets of the Company equal to more than 50% of the Enterprise Value (as defined in the Convertible Note) of the Company; a liquidation, bankruptcy or other dissolution of the Company; or if at any time shares of the Company’s common stock are not listed on an Eligible Market (as defined in the Convertible Note). The Convertible Note is subject to specified events of default, the occurrence of which would entitle Deerfield to immediately demand repayment of all outstanding principal and accrued interest on the Convertible Note. Such events of default include, among others, failure to make any payment under the Convertible Note when due, failure to observe or perform any covenant under the Deerfield Facility Agreement or the other transaction documents related thereto (subject to a standard cure period), the failure of the Company to be able to pay debts as they come due, the commencement of bankruptcy or insolvency proceedings against the Company, a material judgement levied against the Company and a material default by the Company under the Convertible Note.            
Embedded derivative liability                 $ 16,100,000            
Fair value of derivative liability                 26,600,000            
Debt discount on initial embedded derivative liability       $ 16,100,000                      
Debt issuance costs       $ 1,500,000                      
Unamortized debt discount and issuance costs                 15,600,000            
Amortization of debt issuance costs and discounts                 $ 2,200,000            
Amended and restated credit and security agreement date                 Jul. 01, 2019            
v3.20.4
Debt (Schedule of Future Principal and Exit Fee Payments of Outstanding Debt) (Details)
$ in Thousands
Dec. 31, 2020
USD ($)
Debt Disclosure [Abstract]  
2021 $ 5,409
2022 8,326
2023 5,000
2024 3,667
2025 60,000
Total $ 82,402
v3.20.4
Income Taxes - Schedule of Provision for Income Tax (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Income Tax Disclosure [Abstract]      
Federal $ 12 $ 9 $ 2
State 10 9 (10)
Foreign 11 16 4
Income tax (benefit) expense $ 33 $ 34 $ (4)
v3.20.4
Income Taxes (Details) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statutory federal income tax rate      
Statutory federal income tax rate (as a percent) 21.00% 21.00% 21.00%
Deferred tax assets:      
Valuation allowance against deferred tax assets $ 131,309,000 $ 115,307,000  
Tax Credit Carryforwards      
Unrecognized tax benefits 619,000 $ 1,116,000 $ 1,076,000
Impact of unrecognized tax benefit on financial statements 0    
Unrecognized Tax Benefits Penalties and Interest      
Interest expense or penalties related to unrecognized tax benefits 0    
Research and development      
Tax Credit Carryforwards      
Unrecognized tax benefits 600,000    
Federal      
Deferred tax assets:      
Net operating loss carryforwards 445,100,000    
Net operating loss carryforwards, not subject to expiration $ 217,400,000    
Net operating loss carryforwards, expiration year 2027    
Federal | Minimum [Member]      
Income Tax Uncertainties [Abstract]      
Tax years 2017    
Federal | Maximum      
Income Tax Uncertainties [Abstract]      
Tax years 2019    
Federal | Research and development      
Tax Credit Carryforwards      
Tax credit carryforwards $ 30,000    
Tax credit carryforwards, expiration year 2029    
Unrecognized tax benefit decreased amount $ 500,000    
State      
Deferred tax assets:      
Net operating loss carryforwards 306,200,000    
Net operating loss carryforwards, not subject to expiration $ 26,200,000    
Net operating loss carryforwards, expiration year 2021    
State | Minimum [Member]      
Income Tax Uncertainties [Abstract]      
Tax years 2016    
State | Maximum      
Income Tax Uncertainties [Abstract]      
Tax years 2019    
State | Research and development      
Tax Credit Carryforwards      
Tax credit carryforwards $ 2,700,000    
v3.20.4
Income Taxes - Schedule of Reconciliation of Actual Income Tax Expense Obtained by Applying Statutory Federal Income Tax Rate (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Reconciliation of actual income tax expense obtained by applying the statutory federal income tax rate      
Tax at federal statutory rate $ (18,882) $ (22,424) $ (17,353)
State, net of federal benefit (2,372) (2,109) (5,999)
Permanent items 2,282 857 338
Benefit state rate change 20 337 60
Other 2,984 368 (103)
Goodwill impairment   1,602  
Change in valuation allowance 16,001 21,403 23,053
Income tax (benefit) expense $ 33 $ 34 $ (4)
v3.20.4
Income Taxes - Schedule of Tax Effects of Temporary Differences and Carryforwards that Give Rise to Significant Portions of Deferred Tax Assets and Liabilities (Details) - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Deferred tax assets and liabilities    
Net operating loss carryforwards $ 113,374 $ 99,759
Research and development credits 2,121 3,626
Lease liabilities 1,861 1,902
Derivative liability 6,495  
Accruals and reserves 10,175 9,636
Intangibles 3,053 5,330
Gross deferred tax assets 137,079 120,253
Less valuation allowance (131,309) (115,307)
Total deferred tax assets 5,770 4,946
Depreciation (276) (40)
Convertible debt discount (3,440)  
Right-of-use assets (1,793) (1,854)
Intangibles - deferred tax liability (333) (3,102)
Total deferred tax liabilities (5,842) (4,996)
Net deferred taxes $ (72) $ (50)
v3.20.4
Income Taxes - Schedule of Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Reconciliation of the beginning and ending amount of unrecognized tax benefits    
Balance at beginning of the period $ 1,116 $ 1,076
Additions based on tax positions taken in the current year 10 40
Decreases based on tax positions taken in the prior year (507)  
Balance at end of the period $ 619 $ 1,116
v3.20.4
Employee Benefit Plans (Details) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Compensation And Retirement Disclosure [Abstract]      
Company contribution (as a percent) 3.00%    
Company contribution $ 0.7 $ 0.7 $ 0.7
v3.20.4
Stockholders' Equity (Details) - $ / shares
Dec. 31, 2020
Dec. 31, 2019
Stock other disclosures    
Common and preferred stock, shares authorized 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
v3.20.4
Stockholders' Equity (Warrants) (Details) - $ / shares
1 Months Ended
Jan. 17, 2013
Jun. 30, 2014
Dec. 31, 2020
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      
Common Stock Warrants      
Aggregate number of common shares to purchase     17,040
Tranche D term loan | Oxford Finance, LLC      
Common Stock Warrants      
Warrant term   7 years  
Percentage of term loan amounts   2.50%  
v3.20.4
Stockholders' Equity (Options) (Details) - USD ($)
$ / shares in Units, $ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2020
Nov. 03, 2014
Apr. 30, 2007
Stock options            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Balance at the end of the period (in shares) 1,959,501 1,880,846 1,953,334 1,959,501    
Number of options            
Balance at the beginning of period (in shares) 1,880,846 1,953,334        
Options exercised (in shares) (9,817) (51,451)        
Options forfeited (in shares) (511,528) (21,037)        
Balance at the end of the period (in shares) 1,959,501 1,880,846 1,953,334      
Options granted (in shares) 600,000 0 0      
Number of options vested and expected to vest (in shares)       1,959,501    
Number of options vested and exercisable (in shares)       1,359,558    
Weighted average exercise price            
Balance at the beginning of period (in dollars per share) $ 7.42 $ 7.42        
Options exercised (in dollars per share) 2.89 2.44        
Options forfeited (in dollars per share) 8.87 19.39        
Balance at the end of period (in dollars per share) 4.79 $ 7.42 $ 7.42      
Options granted (in dollars per share) $ 3.58          
Additional information            
Weighted average remaining contractual term 5 years 11 months 1 day 5 years 5 months 23 days 6 years 3 months 18 days      
Weighted average remaining contractual term, vested and exercisable 8 years 6 months 10 days          
Options granted (in shares) 600,000 0 0      
Weighted average grant date fair value (in dollars per share) $ 3.58          
Stock-based compensation expense $ 0.1 $ 0.6 $ 1.6      
Number of years from the date of grant for tax benefits 2 years          
Number of years from the date of exercise for tax benefits 1 year          
Unrecognized compensation costs (in dollars)       $ 2.1    
Aggregate intrinsic value (in dollars) $ 14,000.0 $ 0.6 $ 2.0      
Stock Option            
Assumptions used to estimate the fair value of stock options            
Expected term (in years) 10 years 3 days          
Expected volatility 82.65%          
Risk-free interest rate 0.27%          
2007 Plan            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Common stock reserved for issuance (in shares)           1,690,448,000
Balance at the end of the period (in shares) 269,295,000     269,295,000    
Number of shares available for future grants       0    
Number of options            
Balance at the end of the period (in shares) 269,295,000          
2014 Plan            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Common stock reserved for issuance (in shares)       6,692,279,000 1,027,500,000  
Number of shares available for future grants       299,947,000    
Inducement Plan            
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]            
Number of shares available for future grants       937,591,000    
Number of shares awarded 1,476,106,000          
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 [Member]            
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 [Member] | 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 [Member]            
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%    
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%          
v3.20.4
Stockholders' Equity (Restricted Stock) (Details) - Restricted stock units - 2014 Plan - USD ($)
$ / shares in Units, $ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Stockholders' Equity, other disclosures      
Requisite service period, annually 3 years    
Granted $ 4.77 $ 8.02 $ 14.38
Stock-based compensation expense $ 7.5 $ 11.3 $ 11.7
Unrecognized compensation costs (in dollars) $ 11.5    
Weighted average period over which unrecognized compensation costs are expected to be recognized 1 year 10 months 17 days    
Number of shares      
Balance at beginning of the period 2,232,956 2,141,350  
Granted 3,070,430 1,407,768  
Vested (1,150,707) (944,467)  
Forfeited (1,058,889) (371,695)  
Balance at end of the period 3,093,790 2,232,956 2,141,350
Weighted average grant date fair value      
Balance at beginning of the period $ 11.99 $ 13.27  
Granted 4.77 8.02 $ 14.38
Vested 10.06 10.56  
Forfeited 7.82 7.99  
Balance at end of the period $ 6.97 $ 11.99 $ 13.27
v3.20.4
Stockholders' Equity (Stock Purchase) (Details) - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Oct. 31, 2014
Employee Stock Purchase Plan        
Assumptions used to estimate the fair value of stock options        
Expected volatility, minimum (as a percent) 68.00% 69.00% 36.00%  
Expected volatility, maximum (as a percent) 139.00% 77.00% 42.00%  
Risk-free interest rate, minimum (as a percent) 0.14% 1.87% 1.27%  
Risk-free interest rate, maximum (as a percent) 1.57% 2.06% 3.03%  
Employee Stock Purchase Plan | Minimum        
Assumptions used to estimate the fair value of stock options        
Expected term (in years) 6 months 6 months 6 months  
Employee Stock Purchase Plan | Maximum        
Assumptions used to estimate the fair value of stock options        
Expected term (in years) 2 years 2 years 2 years  
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%      
Number of shares reserved for future issuance 1,746,258      
Rate of increase in the number of shares available for grant every year on outstanding common stock (as a percent) 1.00%      
Number of shares available for future grants 946,292      
Purchases under the award 203,728 175,624    
Weighted Average purchase price $ 4.11 $ 6.93    
Stock-based compensation expense $ 600,000 $ 800,000 $ 600,000  
Incremental compensation cost $ 0 $ 0 $ 0  
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
Number of shares available for future grants 3,000,000      
v3.20.4
Segment Reporting and Geographic Information (Details)
12 Months Ended
Dec. 31, 2020
USD ($)
Segment
Segment Reporting [Abstract]  
Number of reportable segments | Segment 2
Segments unallocated expenses | $ $ 0
v3.20.4
Segment Reporting and Geographic Information - Summary of Net Sales and Net Operating Loss by Reportable Segment (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Segment Reporting Information [Line Items]                      
Total net sales $ 22,644 $ 19,217 $ 12,448 $ 16,932 $ 23,210 $ 22,412 $ 20,525 $ 17,552 $ 71,241 $ 83,699 $ 68,126
Total loss from operations                 (70,310) (103,567) (79,774)
Total assets 168,978       204,404       168,978 204,404  
Breast Products                      
Segment Reporting Information [Line Items]                      
Total net sales                 54,997 46,363 37,016
Total loss from operations                 (46,521) (50,175) (53,047)
Total assets 151,059       169,613       151,059 169,613  
miraDry                      
Segment Reporting Information [Line Items]                      
Total net sales                 16,244 37,336 31,110
Total loss from operations                 (23,789) (53,392) $ (26,727)
Total assets $ 17,919       $ 34,791       $ 17,919 $ 34,791  
v3.20.4
Segment Reporting and Geographic Information - Summary of Net Sales by Geographical Regions (Details) - USD ($)
$ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Segment Reporting Information [Line Items]                      
Net sales $ 22,644 $ 19,217 $ 12,448 $ 16,932 $ 23,210 $ 22,412 $ 20,525 $ 17,552 $ 71,241 $ 83,699 $ 68,126
North America                      
Segment Reporting Information [Line Items]                      
Net sales                 58,752 62,277 49,975
International                      
Segment Reporting Information [Line Items]                      
Net sales                 $ 12,489 $ 21,422 $ 18,151
v3.20.4
Commitments and Contingencies (Details) - USD ($)
$ in Millions
3 Months Ended 12 Months Ended
Nov. 11, 2017
Mar. 31, 2019
Dec. 31, 2020
Contingencies      
Legal settlement paid   $ 0.4  
miraDry Class Action Litigation      
Contingencies      
Amount of Defendants (and/or their indemnitors and/or insurers) agreed to pay settlement consideration $ 0.4    
Loss contingency paid     $ 0.4
Legal settlement     $ 0.6
v3.20.4
Summary of Quarterly Financial Information (Unaudited) (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Selected Quarterly Financial Information [Abstract]                      
Net sales $ 22,644 $ 19,217 $ 12,448 $ 16,932 $ 23,210 $ 22,412 $ 20,525 $ 17,552 $ 71,241 $ 83,699 $ 68,126
Gross profit 11,075 10,826 6,898 10,140 14,239 12,658 12,712 11,078 38,939 50,687 41,304
Net loss $ (21,237) $ (5,821) $ (34,277) $ (28,612) $ (20,247) $ (22,433) $ (37,654) $ (26,484) $ (89,947) $ (106,818) $ (82,627)
Net loss per share:                      
Basic and diluted $ (0.42) $ (0.12) $ (0.68) $ (0.57) $ (0.41) $ (0.45) $ (1.10) $ (0.91) $ (1.79) $ (2.63) $ (3.25)
v3.20.4
Subsequent Events (Details) - Common stock - USD ($)
$ / shares in Units, $ in Millions
12 Months Ended
Feb. 08, 2021
Jun. 07, 2019
May 07, 2018
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Subsequent Event [Line Items]            
Stock issued during period, shares       37,000 20,000,000 8,518,519
Underwritten Follow-On Offering            
Subsequent Event [Line Items]            
Stock issued during period, shares   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      
Underwritten Follow-On Offering | Subsequent Event            
Subsequent Event [Line Items]            
Stock issued during period, shares 5,410,628          
Public offering price (in dollars per share) $ 6.75          
Additional shares granted to underwriters 811,594          
Proceeds from the issuance of common stock, net of underwriting discounts, commissions and offering expenses $ 39.1          
Payment of underwriting discounts and commissions and offering expenses 2.2          
Offering expenses $ 0.4          
v3.20.4
Label Element Value
Breast Product [Member]  
Goodwill us-gaap_Goodwill $ 9,202,000