SIENTRA, INC., 10-Q filed on 11/14/2022
Quarterly Report
v3.22.2.2
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2022
Nov. 10, 2022
Cover [Abstract]    
Entity Registrant Name SIENTRA, INC.  
Entity Central Index Key 0001551693  
Document Type 10-Q  
Document Period End Date Sep. 30, 2022  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Common Stock, Shares Outstanding   100,995,909
Document Fiscal Year Focus 2022  
Document Fiscal Period Focus Q3  
Trading Symbol SIEN  
Title of 12(b) Security Common Stock, par value $0.01 per share  
Security Exchange Name NASDAQ  
Entity Interactive Data Current Yes  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity File Number 001-36709  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 20-5551000  
Entity Address, Address Line One 420 South Fairview Avenue  
Entity Address, Address Line Two Suite 200  
Entity Address, City or Town Santa Barbara  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 93117  
City Area Code 805  
Local Phone Number 562-3500  
Document Quarterly Report true  
Document Transition Report false  
v3.22.2.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Current assets:    
Cash and cash equivalents $ 18,975 $ 51,772
Accounts receivable, net of allowances for doubtful accounts of $2,741 and $2,278 at September 30, 2022 and December 31, 2021, respectively 34,360 33,105
Inventories, net 51,640 52,914
Prepaid expenses and other current assets 3,557 2,979
Current assets of discontinued operations 4 4
Total current assets 108,536 140,774
Property and equipment, net 14,059 13,998
Goodwill 9,202 9,202
Other intangible assets, net 26,361 28,765
Right of use assets, net 6,894 6,565
Other assets 881 600
Total assets 165,933 199,904
Current liabilities:    
Current portion of long-term debt 0 2,237
Accounts payable 7,352 7,402
Accrued and other current liabilities 18,320 21,298
Customer deposits 43,013 35,182
Sales return liability 12,016 13,399
Current liabilities of discontinued operations 500 500
Total current liabilities 81,201 80,018
Long-term debt 70,064 62,434
Deferred and contingent consideration 5,837 5,872
Warranty reserve 2,675 2,505
Operating Lease, Liability, Noncurrent 6,999 5,604
Other liabilities 3,488 2,614
Total liabilities 170,264 159,047
Commitments and contingencies (Note 11)
Stockholders (deficit) equity:    
Preferred stock, $0.01 par value – Authorized 10,000,000 shares; none issued or outstanding 0 0
Common stock, $0.01 par value - Authorized 200,000,000 shares; issued 63,054,802 and 62,242,090 and outstanding 62,982,075 and 62,169,363 shares at September 30, 2022 and December 31, 2021, respectively 630 622
Additional paid-in capital 667,969 661,839
Treasury stock, at cost (72,727 shares at September 30, 2022 and December 31, 2021) (260) (260)
Accumulated deficit (672,670) (621,344)
Total stockholders (deficit) equity (4,331) 40,857
Total liabilities and stockholders (deficit) equity $ 165,933 $ 199,904
v3.22.2.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Statement of Financial Position [Abstract]    
Accounts receivable, allowances (in dollars) $ 2,741 $ 2,278
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 63,054,802 62,982,075
Common stock, shares outstanding 62,242,090 62,169,363
Treasury stock, shares 72,727 72,727
v3.22.2.2
Condensed Consolidated Statements of Operations - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Income Statement [Abstract]        
Net sales $ 22,570,000 $ 19,620,000 $ 65,481,000 $ 58,035,000
Cost of goods sold 9,794,000 9,030,000 27,118,000 26,027,000
Gross profit 12,776,000 10,590,000 38,363,000 32,008,000
Operating expenses:        
Sales and marketing 12,290,000 12,052,000 41,542,000 34,348,000
Research and development 3,720,000 2,367,000 9,823,000 6,962,000
General and administrative 9,324,000 7,865,000 31,589,000 23,321,000
Total operating expenses 25,334,000 22,284,000 82,954,000 64,631,000
Loss from operations (12,558,000) (11,694,000) (44,591,000) (32,623,000)
Other (expense) income, net:        
Interest income 41,000 1,000 58,000 4,000
Interest expense (2,364,000) (2,026,000) (6,584,000) (6,143,000)
Change in fair value of derivative liability 0 35,550,000 0 (14,460,000)
Other income (expense), net (6,000) 6,672,000 (1,000) 6,575,000
Total other (expense) income, net (2,329,000) 40,197,000 (6,527,000) (14,024,000)
(Loss) Income from continuing operations before income taxes (14,887,000) 28,503,000 (51,118,000) (46,647,000)
Income tax expense 0 0 0 0
(Loss) Income from continuing operations (14,887,000) 28,503,000 (51,118,000) (46,647,000)
(Loss) income from discontinued operations, net of income taxes (94,000) (93,000) (208,000) 233,000
Net (loss) income $ (14,981,000) $ 28,410,000 $ (51,326,000) $ (46,414,000)
Basic (loss) earnings per share:        
Continuing operations $ (0.24) $ 0.49 $ (0.82) $ (0.82)
Discontinued operations (0.00) 0.00 (0.00) 0.00
Basic (loss) earnings per share (0.24) 0.49 (0.82) (0.82)
Diluted loss per share:        
Continuing operations (0.24) (0.08) (0.82) (0.82)
Discontinued operations (0.00) (0.00) (0.00) (0.00)
Diluted loss per share $ (0.24) $ (0.08) $ (0.82) $ (0.82)
Weighted average outstanding common shares used for net (loss) income per share attributable to common stockholders:        
Basic 62,848,172 58,005,784 62,613,501 56,680,594
Diluted 62,848,172 72,639,930 62,613,501 56,680,594
v3.22.2.2
Condensed Consolidated Statement 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, 2020 $ (557) $ 506 $ (260) $ 558,059 $ (558,862)
Balance, beginning of year (in shares) at Dec. 31, 2020   50,712,151 72,727    
Proceeds from follow-on offering, net of costs 39,226 $ 62   39,164  
Proceeds from follow-on offering, net of costs (shares)   6,222,222      
Stock-based compensation 3,163     3,163  
Stock option exercises 51     51  
Stock option exercises (in shares)   12,727      
Employee stock purchase program (ESPP) 323 $ 1   322  
Employee stock purchase program (ESPP) (in shares)   95,919      
Vested restricted stock 758 $ 6   752  
Vested restricted stock (in shares)   554,896      
Shares withheld for tax obligations on vested RSUs (1,215) $ (1)   (1,214)  
Shares withheld for tax obligations on vested RSUs, shares   (82,830)      
Net Income (loss) (54,690)       (54,690)
Balance, end of year at Mar. 31, 2021 (12,941) $ 574 $ (260) 600,297 (613,552)
Balance, end of year (in shares) at Mar. 31, 2021   57,515,085 72,727    
Balance, beginning of year at Dec. 31, 2020 (557) $ 506 $ (260) 558,059 (558,862)
Balance, beginning of year (in shares) at Dec. 31, 2020   50,712,151 72,727    
Net Income (loss) (46,414)        
Balance, end of year at Sep. 30, 2021 40,762 $ 581 $ (260) 645,717 (605,276)
Balance, end of year (in shares) at Sep. 30, 2021   58,129,589 72,727    
Balance, beginning of year at Mar. 31, 2021 (12,941) $ 574 $ (260) 600,297 (613,552)
Balance, beginning of year (in shares) at Mar. 31, 2021   57,515,085 72,727    
Stock-based compensation 2,584     2,584  
Stock option exercises 95 $ 1   94  
Stock option exercises (in shares)   23,636      
Vested restricted stock 247 $ 5   242  
Vested restricted stock (in shares)   471,759      
Shares withheld for tax obligations on vested RSUs (727) $ (1)   (726)  
Shares withheld for tax obligations on vested RSUs, shares   (81,386)      
Net Income (loss) (20,134)       (20,134)
Balance, end of year at Jun. 30, 2021 (30,876) $ 579 $ (260) 602,491 (633,686)
Balance, end of year (in shares) at Jun. 30, 2021   57,929,094 72,727    
Stock-based compensation 2,326     2,326  
Employee stock purchase program (ESPP) 350 $ 1   349  
Employee stock purchase program (ESPP) (in shares)   103,152      
Vested restricted stock   $ 1   (1)  
Vested restricted stock (in shares)   148,098      
Shares withheld for tax obligations on vested RSUs (478)     (478)  
Shares withheld for tax obligations on vested RSUs, shares   (50,755)      
Reclassification of derivative liability to equity 41,030     41,030  
Net Income (loss) 28,410       28,410
Balance, end of year at Sep. 30, 2021 40,762 $ 581 $ (260) 645,717 (605,276)
Balance, end of year (in shares) at Sep. 30, 2021   58,129,589 72,727    
Balance, beginning of year at Dec. 31, 2021 40,857 $ 622 $ (260) 661,839 (621,344)
Balance, beginning of year (in shares) at Dec. 31, 2021   62,242,090 72,727    
Stock-based compensation 2,196     2,196  
Employee stock purchase program (ESPP) 329 $ 1   328  
Employee stock purchase program (ESPP) (in shares)   139,574      
Vested restricted stock   $ 3   (3)  
Vested restricted stock (in shares)   265,331      
Shares withheld for tax obligations on vested RSUs (255) $ (1)   (254)  
Shares withheld for tax obligations on vested RSUs, shares   (94,068)      
Net Income (loss) (18,041)       (18,041)
Balance, end of year at Mar. 31, 2022 25,086 $ 625 $ (260) 664,106 (639,385)
Balance, end of year (in shares) at Mar. 31, 2022   62,552,927 72,727    
Balance, beginning of year at Dec. 31, 2021 40,857 $ 622 $ (260) 661,839 (621,344)
Balance, beginning of year (in shares) at Dec. 31, 2021   62,242,090 72,727    
Net Income (loss) (51,326)        
Balance, end of year at Sep. 30, 2022 (4,331) $ 630 $ (260) 667,969 (672,670)
Balance, end of year (in shares) at Sep. 30, 2022   63,054,802 72,727    
Balance, beginning of year at Mar. 31, 2022 25,086 $ 625 $ (260) 664,106 (639,385)
Balance, beginning of year (in shares) at Mar. 31, 2022   62,552,927 72,727    
Stock-based compensation 2,062     2,062  
Vested restricted stock   $ 3   (3)  
Vested restricted stock (in shares)   330,770      
Shares withheld for tax obligations on vested RSUs (175) $ (1)   (174)  
Shares withheld for tax obligations on vested RSUs, shares   (87,493)      
Net Income (loss) (18,304)       (18,304)
Balance, end of year at Jun. 30, 2022 8,669 $ 627 $ (260) 665,991 (657,689)
Balance, end of year (in shares) at Jun. 30, 2022   62,796,204 72,727    
Stock-based compensation 1,855     1,855  
Employee stock purchase program (ESPP) 144 $ 2   142  
Employee stock purchase program (ESPP) (in shares)   203,131      
Vested restricted stock   $ 1   (1)  
Vested restricted stock (in shares)   76,019      
Shares withheld for tax obligations on vested RSUs (18)     (18)  
Shares withheld for tax obligations on vested RSUs, shares   (20,552)      
Net Income (loss) (14,981)       (14,981)
Balance, end of year at Sep. 30, 2022 $ (4,331) $ 630 $ (260) $ 667,969 $ (672,670)
Balance, end of year (in shares) at Sep. 30, 2022   63,054,802 72,727    
v3.22.2.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Cash flows from operating activities:    
Net loss $ (51,326) $ (46,414)
(Loss) income from discontinued operations, net of income taxes (208) 233
Loss from continuing operations, net of income taxes (51,118) (46,647)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 4,947 3,149
Provision for doubtful accounts 1,086 875
Provision for warranties 583 684
Provision for inventory 607 638
Fair value adjustments to derivative liability 0 14,460
Fair value adjustments of other liabilities held at fair value (88) 49
Amortization of debt discount and issuance costs 3,029 2,632
Gains On Extinguishment Of Debt 0 (6,652)
Stock-based compensation expense 6,113 8,073
Payments of contingent consideration liability in excess of acquisition-date fair value 0 (2,419)
Other non-cash adjustments 135 584
Changes in operating assets and liabilities:    
Accounts receivable (2,341) (7,558)
Inventories 667 (12,999)
Prepaid expenses, other current assets and other assets 1,997 (205)
Accounts payable, accrued, and other liabilities (5,514) 1,279
Customer deposits 7,830 12,381
Sales return liability (1,383) 3,113
Net cash flow used in operating activities - continuing operations (33,450) (28,563)
Net cash flow used in operating activities - discontinued operations (208) (989)
Net cash used in operating activities (33,658) (29,552)
Cash flows from investing activities:    
Purchase of property and equipment (1,856) (4,882)
Net cash flow used in investing activities - continuing operations (1,856) (4,882)
Net cash flow used in investing activities - discontinued operations 0 11,314
Net cash (used in) provided by investing activities (1,856) 6,432
Cash flows from financing activities:    
Proceeds from issuance of common stock for employee stock-based plans 475 1,824
Net proceeds from issuance of common stock 0 39,226
Tax payments related to shares withheld for vested restricted stock units (RSUs) (448) (2,420)
Gross borrowings under the Term Loan 5,000 1,000
Gross borrowings under the Revolving Loan 5,440 0
Repayment of the Revolving Loan (7,678) 0
Payments of contingent consideration up to acquisition-date fair value 0 (4,550)
Payments for debt financing fees (73) (800)
Net cash provided by financing activities 2,716 34,280
Net (decrease) increase in cash, cash equivalents and restricted cash (32,798) 11,160
Cash, cash equivalents and restricted cash at:    
Beginning of period 52,068 55,300
End of period 19,270 66,460
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets    
Cash and cash equivalents 18,975 66,127
Restricted cash included in other assets 295 333
End of period 19,270 66,460
Supplemental disclosure of cash flow information:    
Interest paid 3,385 3,133
Supplemental disclosure of non-cash investing and financing activities:    
Property and equipment in accounts payable and accrued liabilities 1,242 323
Reclassification of derivative liability to equity 0 41,030
Deferred financing costs in accounts payable and accrued liabilities $ 250 $ 0
v3.22.2.2
Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
1.
Summary of Significant Accounting Policies
a.
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Sientra, Inc. (“Sientra”, the “Company”, “we”, “our”, or “us”) in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial reporting. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 31, 2022, or the Annual Report. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period.

As a result of the miraDry Sale discussed in Note 2, the miraDry business met the criteria to be reported as discontinued operations. Therefore, the Company is reporting the historical results of miraDry, including the results of operations, cash flows, and related assets and liabilities, as discontinued operations for all periods presented herein through the date of the Sale. Unless otherwise noted, the accompanying notes to the unaudited condensed consolidated financial statements have all been revised to reflect continuing operations only. Following the Sale the Company has one operating segment in continuing operations named Plastic Surgery, formerly known as Breast Products.

 

b.
Liquidity and Going Concern

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

 

Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these condensed consolidated financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the condensed consolidated financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

 

Since the Company’s inception, it has incurred recurring losses and cash outflows from operations and the Company anticipates that losses will continue in the near term. During the nine months ended September 30, 2022, the Company incurred net losses of $51.3 million and used $33.5 million of cash in continuing operations. As of September 30, 2022, the Company had cash and cash equivalents of $19.0 million. These conditions raise substantial doubt about

the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

 

In an effort to alleviate these conditions, management is currently evaluating various funding alternatives to improve liquidity and may seek to raise additional capital from the sale of equity securities and incremental debt financing. As the Company seeks additional sources of financing, there can be no assurance that such financing would be available to the Company on favorable terms or at all. The Company’s ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, the Company’s performance and investor sentiment with respect to the Company and its industry. These unaudited condensed financial statements do not include any adjustments relating to the carrying amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

c.
Recent Accounting Pronouncements

 

Recently Adopted Accounting Standards

 

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 adopted the applicable amendments within ASU 2020-04 prospectively in the second quarter of 2022 and there was no material impact on its condensed 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 condensed consolidated financial statements.

d.
Risks and Uncertainties

 

As an aesthetics company, surgical procedures involving the Company’s breast products are susceptible to local and national government restrictions, such as social distancing, vaccination requirements, “shelter in place” orders and business closures. In addition, some treatment facilities have reduced staffing and postponed certain non-emergency procedures in response to COVID-19 or diverted resources to treat those patients with COVID-19. The Company anticipates that the continuing shortage in staff, especially nurses, at hospitals across the U.S. due to the impact of COVID-19 may also lower number of non-emergency procedures performed. The inability or limited ability to perform such non-emergency procedures and patients electing to postpone elective aesthetics procedures due to the pandemic significantly harmed the Company’s revenues since the second quarter of 2020 and continued to harm the Company’s revenues during the nine months ended September 30, 2022. While many states have lifted certain restrictions on non-emergency procedures and procedural volume rates for non-emergency procedures have been recovering, the Company will likely continue to experience future harm to its revenues while existing or new restrictions remain in place. It is not possible to accurately predict the length or severity of the COVID-19 pandemic or the impact on the Company’s business, including the timing for a broad and sustained ability to perform non-emergency procedures involving the Company’s products. 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.

 

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. The continued spread of COVID-19, or another infectious disease, and other geopolitical conditions, could also result in delays or disruptions in the Company’s supply chain (for example, sourcing of medical-grade silicone) 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 and duration 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.

 

e.
Reclassifications

 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation, including those related to discontinued operations following the sale of the miraDry business.
v3.22.2.2
Discontinued Operations
 9 Months Ended
Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
2.
Discontinued Operations

 

On June 10, 2021, the Company completed the sale of its miraDry business (the “Sale”) to miraDry Acquisition Company, Inc., a Delaware corporation (“Buyer”), an entity affiliated with 1315 Capital II, LP, as a result of the Company’s strategic decision to focus investment on its core Plastic Surgery segment. The Sale was made pursuant to the terms and conditions of the Asset Purchase Agreement (the “Purchase Agreement”), dated May 11, 2021, among the Company and certain of its subsidiaries, Buyer, and, solely for purposes of Section 8.14 of the Purchase Agreement, 1315 Capital II, LP. The aggregate purchase price was $10.0 million, which after certain adjustments for agreed upon changes in the estimated net asset value amount of purchased assets and assumed liabilities resulted in net cash proceeds of $11.3 million to the Company on the date of close. In October 2021, the Company finalized the transaction and paid $3.2 million to the Buyer in accordance with the agreed upon post close changes in the net asset value and recognized a loss on sale of $2.5 million.

 

In accordance with the Purchase Agreement, assumed liabilities did not include product liabilities, environmental, and employee claims arising prior to the closing date. The Purchase Agreement also included customary representations and warranties, as well as certain covenants, including, among other things, that: (i) the Company will abide by certain non-solicitation, exclusivity, and non-competition covenants, and (ii) the Company would enter into a transition services agreement (“TSA”) to provide certain transition services related to the business.

 

Under the TSA, the Company provided certain post-closing services to the Buyer related to the miraDry business for a period of six months, including accounting, accounts receivable support, customer service, IT, regulatory, quality assurance, and clinical support. As consideration for these services, the Buyer reimbursed the Company for direct and certain indirect costs, as well as certain overhead or administrative expenses related to operating the business. The Company recognized $0.2 million of TSA fees and cost reimbursements in operating expenses from continuing operations in the condensed consolidated statement of operations for the nine months ended September 30, 2022. Since the closing date, the Company has received $0.3 million relating to the TSA services and has recorded a receivable of $0.1 million within other current assets in the condensed consolidated balance sheets. In connection with the accounts receivable support under the TSA, since the closing date the Company received $2.3 million in customer payments and has remitted $2.3 million to the Buyer. As of September 30, 2022, the Company does not have a payable to the Buyer on the condensed consolidated balance sheets.

 

Additionally, the Company and the Buyer entered into a sublease agreement whereby the Buyer subleased the miraDry office space in Santa Clara, CA. The sublease term was for an initial period of six months, with subsequent option periods for up to a total of twenty-four months. Following the initial period, the Buyer exercised an additional period

of six months and an additional extension of six months thereafter. During the three and nine months ended September 30, 2022, the Company recognized $0.3 million and $0.8 million, respectively, of sublease income in general and administrative expenses in the condensed consolidated statements of operations.

The Sale met the discontinued operations criteria given that the business is a component and represented a strategic shift. The following table presents the aggregate carrying amounts of major classes of assets and liabilities of discontinued operations (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets of discontinued operations:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

$

4

 

 

$

4

 

Current assets of discontinued operations

 

 

4

 

 

 

4

 

Total assets of discontinued operations

 

$

4

 

 

$

4

 

Liabilities of discontinued operations:

 

 

 

 

 

 

Accounts payable

 

$

6

 

 

$

6

 

Accrued and other current liabilities

 

 

494

 

 

 

494

 

Total liabilities of discontinued operations

 

$

500

 

 

$

500

 

 

The results of operations for the miraDry business were included in income (loss) from discontinued operations on the accompanying condensed consolidated statements of operations. The following table provides information regarding the results of discontinued operations (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

—

 

 

$

—

 

 

$

—

 

 

$

9,347

 

Cost of goods sold

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,805

 

Gross profit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,542

 

Operating expenses

 

 

94

 

 

 

57

 

 

 

208

 

 

 

1,744

 

(Loss) income from operations of discontinued operations

 

 

(94

)

 

 

(57

)

 

 

(208

)

 

 

2,798

 

Other income (expense), net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(77

)

(loss) income from discontinued operations before income taxes

 

 

(94

)

 

 

(57

)

 

 

(208

)

 

 

2,721

 

Loss on sale of discontinued operations before income taxes

 

 

—

 

 

 

(36

)

 

 

—

 

 

 

(2,488

)

Total (loss) income from discontinued operations before income taxes

 

 

(94

)

 

 

(93

)

 

 

(208

)

 

 

233

 

Income tax expense (benefit)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

(Loss) income from discontinued operations, net of income taxes

 

$

(94

)

 

$

(93

)

 

$

(208

)

 

$

233

 

 

The results of the miraDry business, including the results of operations, cashflows, and related assets and liabilities are reported as discontinued operations for all periods presented herein.
v3.22.2.2
Revenue
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Revenue
3.
Revenue

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.

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, and BIOCORNEUM, 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, which is based on the expected cost plus margin approach. 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 September 30, 2022 were as follows:

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

Balance as of December 31, 2021

 

$

3,237

 

Additions and adjustments

 

 

1,607

 

Revenue recognized

 

 

(582

)

Balance as of September 30, 2022

 

$

4,262

 

Less short-term portion

 

 

(774

)

Long-term portion

 

$

3,488

 

 

The liability for the short-term portion is included in “Accrued and other current liabilities” and the long-term portion is included in “Other liabilities” in the condensed consolidated balance sheets.

 

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. A portion of the Company’s revenue is generated from the sale of consigned inventory of breast implants and tissue expanders 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 used, not when the consigned products are delivered to the customer’s location.

Sales Return Liability

 

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):

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Beginning balance

 

$

13,399

 

 

$

9,192

 

Addition to reserve for sales activity

 

 

131,281

 

 

 

115,374

 

Actual returns

 

 

(132,351

)

 

 

(110,996

)

Change in estimate of sales returns

 

 

(313

)

 

 

(1,265

)

Ending balance

 

$

12,016

 

 

$

12,305

 
v3.22.2.2
Fair Value of Financial Instruments
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
4.
Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, customer deposits and sales return liability are reasonable estimates of their fair value because of the short maturity of these items. The fair value of the contingent consideration is discussed in Note 5. The fair value of the long-term debt is based on the amount of future cash flows associated with the instrument discounted using the Company’s market rate. As of September 30, 2022, the carrying value of the long-term debt was not materially different from the fair value. As of September 30, 2022, the carrying value and fair value of the convertible note were as follows (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Carrying value

 

$

49,674

 

 

$

47,477

 

Fair value

 

$

45,383

 

 

$

42,029

 
v3.22.2.2
Balance Sheet Components
 9 Months Ended
Sep. 30, 2022
Balance Sheet Related Disclosures [Abstract]  
Balance Sheet Components
5.
Balance Sheet Components
a.
Inventories

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Raw materials

 

$

1,754

 

 

$

2,109

 

Work in progress

 

 

4,279

 

 

 

4,796

 

Finished goods

 

 

45,607

 

 

 

46,009

 

 

 

$

51,640

 

 

$

52,914

 

 

b.
Property and Equipment

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Leasehold improvements

 

$

4,902

 

 

$

2,734

 

Manufacturing equipment and tooling

 

 

10,759

 

 

 

9,922

 

Computer equipment

 

 

1,700

 

 

 

1,672

 

Software

 

 

6,385

 

 

 

6,379

 

Furniture and fixtures

 

 

1,291

 

 

 

1,542

 

 

 

 

25,037

 

 

 

22,249

 

Less accumulated depreciation

 

 

(10,978

)

 

 

(8,251

)

 

 

$

14,059

 

 

$

13,998

 

 

Depreciation expense for the three months ended September 30, 2022 and 2021 was $0.6 million and $0.7 million, respectively. Depreciation expense for both the nine months ended September 30, 2022 and 2021 was $2.2 million.

 

c.
Goodwill and Other Intangible Assets, net

Following the sale of the miraDry business, the Company has one reporting unit, Plastic Surgery, formerly known as Breast Products. The Company evaluates goodwill for impairment at least annually on October 1st and whenever circumstances suggest that goodwill may be impaired.

The carrying amount of goodwill as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

 

 

 

Plastic Surgery

 

Balances as of December 31, 2021

 

 

 

Goodwill

 

 

23,480

 

Accumulated impairment losses

 

 

(14,278

)

Goodwill, net

 

$

9,202

 

Balances as of September 30, 2022

 

 

 

Goodwill

 

 

23,480

 

Accumulated impairment losses

 

 

(14,278

)

Goodwill, net

 

$

9,202

 

 

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

 

 

 

Average

 

 

 

 

 

 

Amortization

 

 

September 30, 2022

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

10

 

 

$

4,940

 

 

$

(4,426

)

 

$

514

 

Trade names - finite life

 

 

12

 

 

 

800

 

 

 

(439

)

 

 

361

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(2,272

)

 

 

5,968

 

Developed technology

 

 

8

 

 

 

20,954

 

 

 

(1,886

)

 

 

19,068

 

Total definite-lived intangible assets

 

 

 

 

$

34,934

 

 

$

(9,023

)

 

$

25,911

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

Total trade names - indefinite-lived

 

 

 

 

 

450

 

 

 

—

 

 

 

450

 

Total definite and indefinite-lived intangibles

 

 

 

 

$

35,384

 

 

$

(9,023

)

 

$

26,361

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

December 31, 2021

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

10

 

 

$

4,940

 

 

$

(4,224

)

 

$

716

 

Trade names - finite life

 

 

12

 

 

 

800

 

 

 

(389

)

 

 

411

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(1,652

)

 

 

6,588

 

Developed technology

 

 

8

 

 

 

20,600

 

 

 

—

 

 

 

20,600

 

Total definite-lived intangible assets

 

 

 

 

$

34,580

 

 

$

(6,265

)

 

$

28,315

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

Total trade names - indefinite-lived

 

 

 

 

 

450

 

 

 

—

 

 

 

450

 

Total definite and indefinite-lived intangibles

 

 

 

 

$

35,030

 

 

$

(6,265

)

 

$

28,765

 

 

Amortization expense for the three months ended September 30, 2022 and 2021 were $0.9 million and $0.3 million, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021 was $2.8 million and $0.9 million, respectively. Amortization expense related to developed technology is recorded in research and development and manufacturing know-how is recorded to cost of goods sold in the Consolidated Statements of Operations. The following table summarizes the future estimated amortization expense relating to the Company's definite-lived intangible assets as of September 30, 2022 (in thousands):

 

 

 

Amortization

 

Period

 

Expense

 

2022

 

$

2,136

 

2023

 

 

3,552

 

2024

 

 

3,408

 

2025

 

 

3,265

 

2026

 

 

3,092

 

Thereafter

 

 

10,458

 

 

 

$

25,911

 

 

d.
Accrued and Other Current Liabilities

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Payroll and related expenses

 

$

1,938

 

 

$

1,975

 

Accrued severance

 

 

949

 

 

 

248

 

Accrued commissions

 

 

2,027

 

 

 

4,329

 

Accrued bonuses

 

 

1,824

 

 

 

3,213

 

Deferred and contingent consideration, current portion

 

 

2,867

 

 

 

2,431

 

Lease liabilities

 

 

1,705

 

 

 

1,666

 

Other

 

 

7,010

 

 

 

7,436

 

 

 

$

18,320

 

 

$

21,298

 

 

e.
Accrued warranties

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

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Balance as of January 1

 

$

2,505

 

 

$

1,934

 

Warranty costs incurred during the period

 

 

(413

)

 

 

(270

)

Changes in accrual related to warranties issued during the period

 

 

633

 

 

 

673

 

Changes in accrual related to pre-existing warranties

 

 

(50

)

 

 

11

 

Balance as of September 30

 

$

2,675

 

 

$

2,348

 

 

As of September 30, 2022 and 2021, both balances are included in “Warranty reserve” on the condensed consolidated balance sheets.

 

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.

Contingent consideration

The contingent consideration balance consists of milestone payments related to the acquisition of AuraGen and future royalty payments related to the acquisition of BIOCORNEUM.

The Company assessed the fair value of all contingent consideration using a Monte-Carlo simulation model. The contingent consideration related to AuraGen is based on the achievement of certain clinical endpoints following the completion of a study measuring retention rates using the fat grafting products. The significant assumptions utilized in the fair value measurement was the probable retention rate based on historical data and the Company's equity volatility of 98%. Any subsequent changes to the fair value of contingent consideration will be recorded as an adjustment to the carrying value of the assets acquired.

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 20.0%.

As these inputs are not observable, the overall fair value measurement of the contingent consideration is classified as Level 3.

The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31,2021 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

 

 

 

Fair Value Measurements as of

 

 

 

September 30, 2022 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration

 

$

—

 

 

$

—

 

 

$

2,944

 

 

$

2,944

 

 

 

$

—

 

 

$

—

 

 

$

2,944

 

 

$

2,944

 

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2021 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration

 

$

—

 

 

$

—

 

 

$

3,114

 

 

$

3,114

 

 

 

$

—

 

 

$

—

 

 

$

3,114

 

 

$

3,114

 

 

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):

 

 

 

Contingent consideration liability

 

Balance, December 31, 2021

 

$

3,114

 

Change in fair value

 

 

(170

)

Balance, September 30, 2022

 

$

2,944

 

 

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 condensed consolidated balance sheets.
v3.22.2.2
Leases
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Leases
6.
Leases

 

Components of lease expense were as follows:

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

Lease Cost

 

Classification

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating lease cost

 

Operating expenses

 

$

578

 

 

$

405

 

 

$

1,429

 

 

$

1,239

 

Operating lease cost

 

Inventory

 

 

102

 

 

 

154

 

 

 

323

 

 

 

377

 

Sublease income

 

Operating expenses

 

 

(287

)

 

 

(233

)

 

 

(826

)

 

 

(301

)

Total operating lease cost

 

 

 

$

393

 

 

$

326

 

 

$

926

 

 

$

1,315

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Operating expenses

 

$

—

 

 

$

8

 

 

$

3

 

 

$

26

 

Amortization of right-of-use assets

 

Inventory

 

 

13

 

 

 

12

 

 

 

36

 

 

 

35

 

Interest on lease liabilities

 

Other income (expense), net

 

 

1

 

 

 

2

 

 

 

3

 

 

 

6

 

Total finance lease cost

 

 

 

$

14

 

 

$

22

 

 

$

42

 

 

$

67

 

Total lease cost

 

 

 

$

407

 

 

$

348

 

 

$

968

 

 

$

1,382

 

 

As mentioned above in Note 2, as part of the sale of the miraDry business the Company entered into a sublease agreement whereby the Buyer subleased the miraDry office space in Santa Clara, CA. Further, in January 2022 the Company entered into a sublease agreement to sublease a part of the office space in Santa Barbara, CA for a term of three years. For both the three and nine months ended September 30, 2022 and 2021, sublease income was recognized in general and administrative expenses in the condensed consolidated statements of operations.

 

Short-term lease expense for the three and nine months ended September 30, 2022 and 2021 was not material.

 

Supplemental cash flow information related to operating and finance leases for the nine months ended September 30, 2022 was as follows (in thousands):

 

 

 

2022

 

 

2021

 

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

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

1,277

 

 

$

1,261

 

Operating cash outflows from finance leases

 

 

40

 

 

 

56

 

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

 

 

 

 

 

 

Operating leases, net of tenant improvement allowances of $1.1 million

 

$

1,542

 

 

$

572

 

 

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Reported as:

 

 

 

 

 

 

Right of use assets, net

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

6,855

 

 

$

6,488

 

Finance lease right-of-use assets

 

 

39

 

 

 

77

 

Total right-of use assets

 

$

6,894

 

 

$

6,565

 

Accrued and other current liabilities

 

 

 

 

 

 

Operating lease liabilities

 

$

1,677

 

 

$

1,595

 

Finance lease liabilities

 

 

28

 

 

 

71

 

Lease liabilities

 

 

 

 

 

 

Operating lease liabilities

 

 

6,994

 

 

 

5,576

 

Finance lease liabilities

 

 

5

 

 

 

28

 

Total lease liabilities

 

$

8,704

 

 

$

7,270

 

Weighted average remaining lease term (years)

 

 

 

 

 

 

Operating leases

 

 

5

 

 

 

4

 

Finance leases

 

 

1

 

 

 

2

 

Weighted average discount rate

 

 

 

 

 

 

Operating leases

 

 

9.18

%

 

 

8.16

%

Finance leases

 

 

6.90

%

 

 

6.90

%

 

As of September 30, 2022, maturities of the Company’s operating and finance lease liabilities and sublease income are as follows (in thousands):

 

Period

 

Operating leases

 

 

Finance leases

 

 

Total

 

 

Sublease income

 

2022

 

$

559

 

 

$

10

 

 

$

569

 

 

$

(465

)

2023

 

 

2,628

 

 

 

23

 

 

 

2,651

 

 

 

(224

)

2024

 

 

2,369

 

 

 

1

 

 

 

2,370

 

 

 

(231

)

2025

 

 

1,467

 

 

 

—

 

 

 

1,467

 

 

 

(39

)

2026

 

 

1,438

 

 

 

—

 

 

 

1,438

 

 

 

—

 

2027 and thereafter

 

 

2,689

 

 

 

—

 

 

 

2,689

 

 

 

—

 

Total lease payments (receipts)

 

$

11,150

 

 

$

34

 

 

$

11,184

 

 

$

(959

)

Less imputed interest

 

 

2,479

 

 

 

1

 

 

 

2,480

 

 

 

 

Total lease liabilities

 

$

8,671

 

 

$

33

 

 

$

8,704

 

 

 

 

 
v3.22.2.2
Debt
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Debt
7.
Debt

 

Term Loan and Revolving Loan

 

On March 30, 2022 (the “Effective Date”), the Company entered into a Third Amendment (the “Third Amendment”) to the Term Loan Agreement, with certain of the Company’s wholly owned subsidiaries, the lenders party thereto and MidCap, in order to provide the Company an additional tranche of funding and allow the Company to draw the fourth tranche. The Third Amendment provided that the fourth tranche of $5,000,000 was to be drawn on March 31, 2022. Additionally, the Third Amendment provides the Company with a sixth tranche pursuant to which the Company may draw $9,000,000 any time after January 1, 2023 until March 31, 2023. The Third Amendment also eliminated the minimum unrestricted cash requirement and reset the minimum Net Revenue (as defined therein) requirements based on the Company’s 12-month trailing Net Revenue. Finally, the Third Amendment increased the prepayment fee by 0.5% until following the third anniversary of the Effective Date, at which point no prepayment fee shall apply.

 

As of September 30, 2022, there was $21.0 million of outstanding principal and $0.3 million of an exit fee payable related to the term loans, reduced by unamortized debt issuance costs of $0.7 million included in "Current portion of long-term debt" and $0.2 million included in “Long-term debt” on the condensed consolidated balance sheets.

 

Also on March 30, 2022, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the Revolving Loan Agreement, with certain of the Company’s wholly owned subsidiaries, the lenders party thereto and MidCap. The Sixth 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 Sixth Amendment made other conforming changes to the Restated Term Loan Agreement.

 

As of September 30, 2022, there was no amount outstanding under the Revolving Loan. As of September 30, 2022, the unamortized debt issuance costs related to the revolving loan was approximately $32,000 and was included in “Other assets” on the condensed consolidated balance sheets.

 

The amortization of debt issuance costs on the term loan and the revolving loan for both the three months ended September 30, 2022 and 2021 were $0.2 million and $0.1 million, respectively and was included in interest expense in the condensed consolidated statements of operations. The amortization of debt issuance costs on the term loan and the revolving loan for both the nine months ended September 30, 2022 and 2021 were $0.5 million and $0.4 million respectively, and was included in interest expense in the condensed consolidated statements of operations.

The Term Loan and Revolving Loan 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. See Note 12, Subsequent Events, for additional details regarding the Term Loan and Revolving Loan.

 

Convertible Note

 

As of September 30, 2022, there was $60.0 million of outstanding principal, reduced by unamortized debt discount and issuance costs of $10.3 million related to the convertible note included in “Long-term debt” on the condensed consolidated balance sheet. The Company amortizes the debt discount and debt issuance costs under the effective interest method over the term of the Note, at a resulting effective interest rate of approximately 12%. For the three months ended September 30, 2022 and 2021, the amortization of the convertible debt discount and issuance costs were $0.9 million and $0.8 million, respectively. For the nine months ended September 30, 2022 and 2021, the amortization of the convertible debt discount and issuance costs were $2.5 million and $2.2 million, respectively. Both were included in interest expense in the condensed consolidated statements of operations. See Note 12, Subsequent Events, for additional details regarding the Convertible Note.

v3.22.2.2
Stockholders' Equity
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Stockholders' Equity
8.
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 September 30, 2022 and December 31, 2021, the Company had no preferred stock issued or outstanding.

b. Stock Option Plans

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.

As of September 30, 2022, a total of 1,808,507 shares of the Company’s common stock were available for issuance under the 2014 Plan. As of September 30, 2022, inducement grants for 3,524,922 shares of common stock have been awarded, and no shares of common stock were available for future issuance under the Inducement Plan.

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

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

 

 

 

 

 

 

Weighted

 

 

Weighted
average

 

 

 

 

 

 

average

 

 

remaining

 

 

 

Option

 

 

exercise

 

 

contractual

 

 

 

Shares

 

 

price

 

 

term (year)

 

Balances at December 31, 2021

 

 

1,703,963

 

 

$

4.75

 

 

 

5.41

 

Granted

 

 

150,000

 

 

 

 

 

 

 

Forfeited

 

 

(77,034

)

 

 

5.05

 

 

 

 

Balances at September 30, 2022

 

 

1,776,929

 

 

$

4.34

 

 

 

5.27

 

 

 

For stock-based awards the Company recognizes compensation expense based on the grant date fair value using the Black-Scholes option valuation model. Stock-based compensation expense related to stock options for the three months ended September 30, 2022 and 2021 was $0.2 million and $0.1 million, respectively. Stock-based compensation expense related to stock options for the nine months ended September 30, 2022 and 2021 was $0.5 million and $0.4 million, respectively.

c. Restricted Stock Units

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

Activity related to RSUs is set forth below:

 

 

 

 

 

 

Weighted
average

 

 

 

Number

 

 

grant date

 

 

 

of shares

 

 

fair value

 

Balances at December 31, 2021

 

 

2,799,552

 

 

$

8.11

 

Granted

 

 

4,601,848

 

 

 

1.85

 

Vested

 

 

(670,824

)

 

 

5.57

 

Forfeited

 

 

(242,363

)

 

 

-

 

Balances at September 30, 2022

 

 

6,488,213

 

 

$

4.23

 

 

Stock-based compensation expense for RSUs for the three months ended September 30, 2022 and 2021 was $1.5 million and $2.1 million, respectively. Stock-based compensation expense for RSUs for the nine months ended September 30, 2022 and 2021 was $5.2 million and $7.3 million, respectively. As of September 30, 2022, there was $10.5 million of total unrecognized compensation costs related to non-vested RSU awards. The cost is expected to be recognized over a weighted average period of approximately 1.96 years.

d. Employee Stock Purchase Plan

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

During the nine months ended September 30, 2022, employees purchased 342,705 shares of common stock at a weighted average price of $1.38 per share. As of September 30, 2022, the number of shares of common stock available for future issuance for the ESPP was 1,532,603.

The Company estimated the fair value of employee stock purchase rights using the Black-Scholes model. Stock-based compensation expense related to the ESPP was $0.1 million for both the three months ended September 30, 2022 and 2021. Stock-based compensation expense related to the ESPP was $0.4 million for both the nine months ended September 30, 2022 and 2021.

v3.22.2.2
Net (Loss) Income Per Share
 9 Months Ended
Sep. 30, 2022
Earnings Per Share [Abstract]  
Net (Loss) Income Per Share
9.
Net (Loss) Income Per Share

Basic net loss per share attributable to common stockholders is computed by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding, to the extent they are dilutive. Potential dilutive shares consist of shares that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Dilutive net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive.

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(Loss) income from continuing operations

 

$

(14,887

)

 

 

$

28,503

 

 

$

(51,118

)

 

$

(46,647

)

(Loss) Income from discontinued operations, net of income taxes

 

 

(94

)

 

 

 

(93

)

 

 

(208

)

 

 

233

 

Net (loss) income

 

$

(14,981

)

 

 

$

28,410

 

 

$

(51,326

)

 

$

(46,414

)

Expenses attributable to the convertible note

 

$

-

 

 

 

$

(34,158

)

 

$

-

 

 

$

-

 

Losses attributable to common shares

 

$

(14,981

)

 

 

$

(5,748

)

 

$

(51,326

)

 

$

(46,414

)

Weighted average common shares outstanding, basic

 

 

62,848,172

 

 

 

 

58,005,784

 

 

 

62,613,501

 

 

 

56,680,594

 

Weighted average common shares outstanding, diluted

 

 

62,848,172

 

 

 

 

72,639,930

 

 

 

62,613,501

 

 

 

56,680,594

 

Basic (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.24

)

 

 

$

0.49

 

 

$

(0.82

)

 

$

(0.82

)

Discontinued operations

 

 

(0.00

)

 

 

 

0.00

 

 

 

(0.00

)

 

 

0.00

 

Basic net (loss) income per share

 

$

(0.24

)

 

 

$

0.49

 

 

$

(0.82

)

 

$

(0.82

)

Diluted loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.24

)

 

 

$

(0.08

)

 

$

(0.82

)

 

$

(0.82

)

Discontinued operations

 

 

(0.00

)

 

 

 

(0.00

)

 

 

(0.00

)

 

 

(0.00

)

Diluted net loss income per share

 

$

(0.24

)

 

 

$

(0.08

)

 

$

(0.82

)

 

$

(0.82

)

 

The Company excluded the following weighted average potentially dilutive securities, outstanding for the three and nine months ended September 30, 2022 and 2021, from the computation of diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2022 and 2021 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Stock issuable upon conversion of convertible note

 

 

14,634,146

 

 

 

—

 

 

 

14,634,146

 

 

 

14,634,146

 

Stock options to purchase common stock

 

 

—

 

 

 

1,582,901

 

 

 

1,659

 

 

 

1,629,493

 

Unvested RSUs

 

 

4,763,225

 

 

 

2,322,816

 

 

 

3,675,495

 

 

 

2,049,832

 

 

 

 

19,397,371

 

 

 

3,905,717

 

 

 

18,311,300

 

 

 

18,313,471

 
v3.22.2.2
Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
10.
Income Taxes

The Company operates in several tax jurisdictions and is subject to taxes in each jurisdiction in which it conducts business. To date, the Company has incurred cumulative net losses and maintains a full valuation allowance on its net deferred tax assets due to the uncertainty surrounding realization of such assets. The Company had no tax expense for both the three and nine months ended September 30, 2022 and 2021.

v3.22.2.2
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

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

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. On January 21, 2020, the Company filed a demurrer to the plaintiff’s complaint, which demurrer the Court granted in a tentative ruling dated March 9, 2021 with leave to replead. The Plaintiffs filed an amended complaint on April 6, 2021 and the Company filed a demurrer to that complaint on May 6, 2021. On October 25, 2021, the Court issued a ruling granting the Company’s demurrer in-part and denying it in-part, and gave plaintiffs twenty days to file an amendment complaint. A second amended complaint was filed on November 19, 2021. On December 3, 2021 the Company filed a renewed motion for demurrer as to all plaintiffs based on the recent FDA labelling updates on BIA-ALCL warnings. On January 5, 2022 the Company filed a demurrer to the second amended complaint as to plaintiff Craft and otherwise filed an Answer denying the remaining plaintiff's claims and asserting affirmative defenses. The Company's renewed demurrer as to all plaintiffs, and demurrer as to Craft is scheduled for oral argument on September 20, 2022. On August 3, 2022 the Company entered into confidential settlement agreements with the plaintiffs resolving all disputes between them and dismissing the plaintiffs’ claims with prejudice. The Court granted the dismissal with prejudice on August 4, 2022. As a result of these developments, the Company determined a probable loss had been incurred and recorded $1.6 million of legal settlement expenses within general and administrative expense in the condensed consolidated statement of operations for the nine months ended September 30, 2022.
 

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. The Company filed a motion to dismiss the complaint on December 7, 2020. On February 28, 2022 the Court granted the Company’s motion, and dismissed the plaintiff’s complaint with prejudice. On March 28, 2022, the plaintiff filed a motion for reconsideration of the Court’s order. The Company opposed that motion on April 11, 2022.

 
v3.22.2.2
Subsequent Events
 9 Months Ended
Sep. 30, 2022
Subsequent Events [Abstract]  
Subsequent Events

12. Subsequent Events

 

Amended and Restated Facility Agreement

 

On October 12, 2022, the Company entered into an Amended and Restated Facility Agreement (the “Restated Agreement”) by and among the Company as borrower, certain of the Company’s subsidiaries from time to time party thereto as guarantors and Deerfield Partners, L.P., as agent and lender (“Deerfield”). The Restated Agreement amends and restates the Company’s existing Facility Agreement with Deerfield, dated March 11, 2020 (the “Existing Agreement”), pursuant to which the Company issued and sold to Deerfield an unsecured and subordinated convertible note in a principal amount of $60.0 million (the “Original Note”). In connection with the Restated Agreement, on October 12, 2022, the Company and Deerfield entered into an Exchange Agreement pursuant to which Deerfield exchanged $10.0 million of principal under the Original Note for securities of the Company as further described below, reducing the outstanding principal amount of the Original Note to $50.0 million.

 

Pursuant to the Restated Agreement, the maturity date of the Original Note was extended until March 11, 2026, and the initial conversion price was reduced to $2.75, representing a 272% premium over the Company’s closing stock price of $0.7401 on October 11, 2022. On the date of the Restated Agreement and pursuant to the terms thereof, the

Company issued and sold an additional senior secured convertible note in a principal amount of $23.0 million (the “New Note” and, together with the Original Note, the “Convertible Notes”). The New Note matures on the fifth anniversary of the issuance date and is convertible into shares of the Company’s common stock, par value $0.01 (the “Common Stock”), at an initial conversion price of $1.00, representing a 35% premium over the Company’s closing stock price of $0.7401 on October 11, 2022. On the payment, repayment, dischargement, redemption or prepayment of the New Note or upon a Successor Major Transaction Conversion (as defined in the New Note), the Company will pay a non-refundable exit fee equal to 1.95% of the New Note so paid, repaid, discharged, redeemed or prepaid, as the case may be. The New Note was sold in a private placement to Deerfield pursuant to an exemption for transactions by an issuer not involving a public offering under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D promulgated under the Securities Act (“Regulation D”). The Company made this determination based on the representations of Deerfield in the Restated Agreement, including that Deerfield is an “accredited investor” within the meaning of Rule 501 of Regulation D. In connection with the Restated Agreement and the Convertible Notes issued thereunder, all of the Company’s operating subsidiaries (each a “Guarantor” and, collectively, the “Guarantors”) entered into a Guaranty and Security Agreement, dated as of October 12, 2022 (the “Guaranty and Security Agreement”), whereby the Guarantors agreed to guarantee the obligations and liabilities of the Company under the Restated Agreement and the Convertible Notes.

 

The Company used the proceeds from the New Note to repay in full the outstanding amounts under its Second Amended and Restated Credit and Security Agreement (Term Loan), dated December 31, 2021, by and among the Company, certain of its wholly owned subsidiaries, the lenders party thereto and MidCap Financial Trust, as administrative agent and collateral agent (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, the “MidCap Term Credit Agreement”) and repay in full the outstanding amounts, and terminate the outstanding commitments, under that certain Amended and Restated Credit and Security Agreement (Revolving Loan), dated as of July 1, 2019, by and among the Company, certain of its wholly owned subsidiaries, the lenders party thereto and MidCap Funding IV Trust, as administrative and collateral agent (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, the “MidCap Revolving Credit Agreement”).

 

The New Note bears interest at Term SOFR plus 5.75% per annum, payable quarterly on the last business day of each calendar quarter commencing with the calendar quarter ending December 31, 2022. The New Note is convertible at any time at the option of Deerfield, provided that Deerfield is prohibited from converting the New Note into shares of Common Stock if, upon 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 New Note, Deerfield has the option to demand repayment of all outstanding principal, and any unpaid interest accrued thereon and any other amounts payable under the Restated Agreement (including the Exit Fee (in the case of the New Note) and any make whole amounts), in connection with a Major Transaction (as defined in the Convertible Notes), 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 Notes) 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 Notes). The Convertible Notes are 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 Restated 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 New Note will be secured by (i) a security interest in substantially all of the assets of the Company and its subsidiaries and (ii) a pledge of the equity interests of the Company’s direct and indirect subsidiaries (the foregoing, the “Collateral”). In addition, pursuant to the Guaranty and Security Agreement the Company and the Guarantors granted a security interest in the Collateral securing the Original Note on a pari passu basis with the New Note.

 

The Restated Agreement also provides for the issuance of warrants to purchase Common Stock (the “Warrants”) to the extent that the obligations under Restated Agreement and the Convertible Notes are prepaid. If issued, the Warrants will be exercisable on a cash or cashless (net exercise) basis with an initial exercise price equal to the conversion price of the Original Note and New Note, respectively, for the number of Conversion Shares (as defined in the Convertible Notes) which the repaid amount would have been convertible into and will be subject to the Beneficial Ownership

Cap, as well as certain other customary anti-dilution adjustments upon the occurrence of certain events such as stock splits, subdivisions, reclassifications or combinations of Common Stock consistent with those included in the Convertible Notes. The Warrants will also provide, at the election of each holder thereof, for the payment of the exercise price therefor by reduction of the principal amount of any outstanding Convertible Notes held by such holder. Upon the consummation of a “Major Transaction” (as defined in the Warrants and consistent with the term as used in the Convertible Notes), holders of the Warrants may elect to (i) have their Warrants redeemed by the Company for an amount equal to the Black-Scholes value of such Warrant, in cash or, if applicable, in the form of the consideration paid to the Company’s stockholders in a Major Transaction, or (ii) have such Warrants be assumed by the successor to the Company in a Major Transaction, if applicable. Holders of the Warrants are also entitled to participate in any dividends or distributions to holders of Common Stock at the time such dividends or distributions are paid to such stockholders.

 

If issued, the Warrants and the shares of Common Stock issuable upon their exercise will be issued in a private placement pursuant to Section 3(a)(9) under the Securities Act as an exchange with existing security holders (in the case of a cashless exercise of the Warrants or, in the case of a cash exercise, Section 4(a)(2) of the Securities Act in transactions not involving a public offering).

 

The Company may redeem all or any portion of the principal amount of the Convertible Notes for cash. Upon redemption of any Convertible Notes, the Company will issue Warrants covering the same number of shares of Common Stock underlying, and at an exercise price equal to the conversion price of, the redeemed Convertible Notes. The Convertible Notes provide for the optional redemption of the Convertible Notes without issuance of any Warrants or payment of any additional make whole amount (unless such Convertible Note is converted following receipt of an optional redemption notice but prior to payment of the redemption amount) provided that each of the following is greater than 130% of the conversion price then in effect: (1) the volume weighted average price of the Common Stock on each of any twenty (20) trading days during the period of thirty (30) consecutive trading days ending on the date on which the Company delivers an optional redemption notice, (2) the volume weighted average price of the Common Stock on the last trading day of such period and (3) the closing price of the Common Stock on the last trading day of such period. The Company may not effect any optional redemption during a delisting event or unless all conversion shares and warrant shares are freely tradable.

 

The Company is subject to a number of affirmative and restrictive covenants pursuant to the Restated Agreement, including covenants regarding compliance with applicable laws and regulations, maintenance of property, payment of taxes, maintenance of insurance, business combinations, incurrence of additional indebtedness, prepayments of other unsecured indebtedness and transactions with affiliates, among other covenants. In addition, the Company is required to seek stockholder approval for either a reverse split of its common stock or an increase in the number of authorized shares of Common Stock, with such split or increase to take effect by not later than December 26, 2022. If the Company does not receive approve for such a split or increase, then the Convertible Notes and Warrants, if any, will be settleable is cash and the Company will be in default under the Convertible Notes. The Restated Agreement also includes a covenant that the Company will seek to raise capital in an equity transaction of at least $20,000,000, which the Company intends to pursue following the closing of the Restated Agreement. The Company is also restricted from paying dividends or making other distributions or payments on its capital stock, subject to limited exceptions.

 

Exchange Agreement

 

On October 12, 2022, the Company entered into an Exchange Agreement with Deerfield pursuant to which Deerfield agreed to exchange $10 million of principal amount under the Original Note for 2,967,742 shares of Common Stock (the “Exchange Shares”) and a pre-funded warrant to purchase 10,543,946 shares of Common Stock (the “Exchange Warrants”), reflecting a price per share of Common Stock equal to $0.7401, the closing price on October 11, 2022. The Exchange Shares, the Exchange Warrants and the shares of Common Stock issuable upon exercise of the Exchange Warrants (the “Exchange Warrant Shares”) were issued (or, in the case of the Exchange Warrant Shares, will be issued”) in a private placement pursuant to Section 3(a)(9) under the Securities Act as an exchange with existing security holders).

The Exchange Warrants are immediately exercisable, have an exercise price of $0.0001 per share, and may be exercised on a cash or cashless basis at any time until all of the Exchange Warrants are exercised in full. Under the terms of the Exchange Warrants, a holder will not be entitled to exercise any portion of any such warrant, if, upon

giving effect to such exercise, the aggregate number of shares of Common Stock beneficially owned by the holder (together with its affiliates, any other persons acting as a group together with the holder or any of the holder’s affiliates, and any other persons whose beneficial ownership of Common Stock would or could be aggregated with the holder’s for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended) would exceed 4.985% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.

 

The Exchange Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties, and termination provisions.

 

The foregoing description of the Exchange Agreement and the Exchange Warrants does not purport to be complete and is qualified in its entirety by reference to the Exchange Agreement and the Form of Exchange Warrant, copies of each of which are filed herewith as Exhibit 10.2 and Exhibit 4.4, respectively, and incorporated herein by reference.

 

Registration Rights Agreement

 

In connection with the Restated Agreement, on October 12, 2022, the Company and Deerfield entered into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”), which amends and restated the existing Registration Rights Agreement entered into on March 11, 2022. Pursuant to the Registration Rights Agreement, the Company has agreed to prepare and file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-3, or such other form as required to effect a registration of the Common Stock issued or issuable upon conversion of or pursuant to the Convertible Notes, the Warrants or the Exchange Warrants (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 Registrable Securities to prevent dilution resulting from certain corporate actions. Such Registration Statement must be filed within 30 calendar days following the date of the Registration Rights Agreement. In the event the SEC does not permit all of the Registrable Securities to be included in the Registration Statement or if the Registrable Securities are not otherwise included in the Registration Statement filed pursuant to the Registration Rights Agreement, the Company has agreed to file an additional Registration Statement covering the resale of all Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act as promptly as allowed by the SEC or the SEC Guidance provided to the Company. Following effectiveness of the Registration Statement, the Company will file a combined prospectus supplement under the Registration Statement and the Company’s existing Registration Statement on Form S-3 (No. 333-237636) registering for resale the shares issuable under the Original Note. The Registration Rights Agreement also provides for piggy-back registration, subject to the terms and conditions of the Registration Rights Agreement. The Company will also file a prospectus supplement to the Existing Registration Statement within two days following the date of the Restated Agreement to reflect the amendment to the Original Note.

 

U.S. Department of Justice

 

The Company received a grand jury subpoena dated September 30, 2022 from the U.S. Department of Justice (“DOJ”) requesting the production of materials concerning the trading activities of a former Chief Executive Officer of the Company in 2019 and 2020, including all documents and communications with the General Counsel regarding such activities. In addition, the U.S. Securities and Exchange Commission (the “SEC”) has subpoenaed documents and testimony from each of the Company and its General Counsel. Each of the SEC subpoenas is captioned “In the Matter of Trading in the Securities of Sientra, Inc.” The SEC subpoenas request, among other things, documents and communications relating to trading activities by each of the aforementioned individuals. The investigation by the SEC does not mean that the SEC has concluded that anyone has violated the law. Also, the investigation does not mean that the SEC has a negative opinion of any person, entity or security. The Company intends to cooperate with DOJ and the SEC. The Company is, at this time, unable to predict what action, if any, might be taken in the future by DOJ or the SEC as a result of the matters that are the subject of the subpoenas and investigation.

 

Equity Financing

 

On October 25, 2022, the Company completed a follow on public offering pursuant to an Underwriting Agreement (the “Underwriting Agreement”), dated October 21, 2022, with Craig-Hallum Capital Group LLC, acting as the

underwriter named therein (the “Underwriter”) pursuant to which the Company issued and sold 17,785,000 shares of the Company’s Common Stock, including 5,217,390 shares issued pursuant to the Underwriter’s exercise of its option to purchase additional shares, pre-funded warrants to purchase 22,214,990 shares of Common Stock and warrants to purchase 39,999,990 shares of Common Stock, including 5,217,390 shares issued pursuant to the Underwriter’s exercise of its option to purchase additional warrants (the “Offering”). The price to the public in the Offering was $0.38 per share of common stock and warrant and $0.37 per pre-funded warrant and warrant, before underwriting discounts and commissions. The net proceeds to the Company from the Offering was approximately $13.7 million, after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company.
v3.22.2.2
Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Basis of Presentation
a.
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Sientra, Inc. (“Sientra”, the “Company”, “we”, “our”, or “us”) in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial reporting. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 31, 2022, or the Annual Report. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022, any other interim periods, or any future year or period.

As a result of the miraDry Sale discussed in Note 2, the miraDry business met the criteria to be reported as discontinued operations. Therefore, the Company is reporting the historical results of miraDry, including the results of operations, cash flows, and related assets and liabilities, as discontinued operations for all periods presented herein through the date of the Sale. Unless otherwise noted, the accompanying notes to the unaudited condensed consolidated financial statements have all been revised to reflect continuing operations only. Following the Sale the Company has one operating segment in continuing operations named Plastic Surgery, formerly known as Breast Products.

Liquidity and Going Concern
b.
Liquidity and Going Concern

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

 

Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these condensed consolidated financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the condensed consolidated financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

 

Since the Company’s inception, it has incurred recurring losses and cash outflows from operations and the Company anticipates that losses will continue in the near term. During the nine months ended September 30, 2022, the Company incurred net losses of $51.3 million and used $33.5 million of cash in continuing operations. As of September 30, 2022, the Company had cash and cash equivalents of $19.0 million. These conditions raise substantial doubt about

the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

 

In an effort to alleviate these conditions, management is currently evaluating various funding alternatives to improve liquidity and may seek to raise additional capital from the sale of equity securities and incremental debt financing. As the Company seeks additional sources of financing, there can be no assurance that such financing would be available to the Company on favorable terms or at all. The Company’s ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, the Company’s performance and investor sentiment with respect to the Company and its industry. These unaudited condensed financial statements do not include any adjustments relating to the carrying amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.
Recent Accounting Pronouncements
c.
Recent Accounting Pronouncements

 

Recently Adopted Accounting Standards

 

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 adopted the applicable amendments within ASU 2020-04 prospectively in the second quarter of 2022 and there was no material impact on its condensed 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 condensed consolidated financial statements.
Risks and Uncertainties
d.
Risks and Uncertainties

 

As an aesthetics company, surgical procedures involving the Company’s breast products are susceptible to local and national government restrictions, such as social distancing, vaccination requirements, “shelter in place” orders and business closures. In addition, some treatment facilities have reduced staffing and postponed certain non-emergency procedures in response to COVID-19 or diverted resources to treat those patients with COVID-19. The Company anticipates that the continuing shortage in staff, especially nurses, at hospitals across the U.S. due to the impact of COVID-19 may also lower number of non-emergency procedures performed. The inability or limited ability to perform such non-emergency procedures and patients electing to postpone elective aesthetics procedures due to the pandemic significantly harmed the Company’s revenues since the second quarter of 2020 and continued to harm the Company’s revenues during the nine months ended September 30, 2022. While many states have lifted certain restrictions on non-emergency procedures and procedural volume rates for non-emergency procedures have been recovering, the Company will likely continue to experience future harm to its revenues while existing or new restrictions remain in place. It is not possible to accurately predict the length or severity of the COVID-19 pandemic or the impact on the Company’s business, including the timing for a broad and sustained ability to perform non-emergency procedures involving the Company’s products. 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.

 

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. The continued spread of COVID-19, or another infectious disease, and other geopolitical conditions, could also result in delays or disruptions in the Company’s supply chain (for example, sourcing of medical-grade silicone) 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 and duration 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
e.
Reclassifications

 

Certain reclassifications have been made to prior year amounts to conform to the current year presentation, including those related to discontinued operations following the sale of the miraDry business.
v3.22.2.2
Discontinued Operations (Tables)
 9 Months Ended
Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of Disposal Groups Including Discontinued Operations Balance Sheet and Income Statement The following table presents the aggregate carrying amounts of major classes of assets and liabilities of discontinued operations (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets of discontinued operations:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

$

4

 

 

$

4

 

Current assets of discontinued operations

 

 

4

 

 

 

4

 

Total assets of discontinued operations

 

$

4

 

 

$

4

 

Liabilities of discontinued operations:

 

 

 

 

 

 

Accounts payable

 

$

6

 

 

$

6

 

Accrued and other current liabilities

 

 

494

 

 

 

494

 

Total liabilities of discontinued operations

 

$

500

 

 

$

500

 
The following table provides information regarding the results of discontinued operations (in thousands):

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

—

 

 

$

—

 

 

$

—

 

 

$

9,347

 

Cost of goods sold

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,805

 

Gross profit

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,542

 

Operating expenses

 

 

94

 

 

 

57

 

 

 

208

 

 

 

1,744

 

(Loss) income from operations of discontinued operations

 

 

(94

)

 

 

(57

)

 

 

(208

)

 

 

2,798

 

Other income (expense), net

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(77

)

(loss) income from discontinued operations before income taxes

 

 

(94

)

 

 

(57

)

 

 

(208

)

 

 

2,721

 

Loss on sale of discontinued operations before income taxes

 

 

—

 

 

 

(36

)

 

 

—

 

 

 

(2,488

)

Total (loss) income from discontinued operations before income taxes

 

 

(94

)

 

 

(93

)

 

 

(208

)

 

 

233

 

Income tax expense (benefit)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

(Loss) income from discontinued operations, net of income taxes

 

$

(94

)

 

$

(93

)

 

$

(208

)

 

$

233

 
v3.22.2.2
Revenue (Tables)
 9 Months Ended
Sep. 30, 2022
Revenue from Contract with Customer [Abstract]  
Schedule of Rollforward of Sales Return Liability

The liability for unsatisfied performance obligations under the service warranty as of September 30, 2022 were as follows:

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

Balance as of December 31, 2021

 

$

3,237

 

Additions and adjustments

 

 

1,607

 

Revenue recognized

 

 

(582

)

Balance as of September 30, 2022

 

$

4,262

 

Less short-term portion

 

 

(774

)

Long-term portion

 

$

3,488

 
Schedule of Liability for Unsatisfied Performance Obligations Under Service Warranty The following table provides a rollforward of the sales return liability (in thousands):

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Beginning balance

 

$

13,399

 

 

$

9,192

 

Addition to reserve for sales activity

 

 

131,281

 

 

 

115,374

 

Actual returns

 

 

(132,351

)

 

 

(110,996

)

Change in estimate of sales returns

 

 

(313

)

 

 

(1,265

)

Ending balance

 

$

12,016

 

 

$

12,305

 
v3.22.2.2
Fair Value of Financial Instruments (Tables)
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Schedule of Carrying Value and Fair Value of Convertible Note As of September 30, 2022, the carrying value of the long-term debt was not materially different from the fair value. As of September 30, 2022, the carrying value and fair value of the convertible note were as follows (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Carrying value

 

$

49,674

 

 

$

47,477

 

Fair value

 

$

45,383

 

 

$

42,029

 
v3.22.2.2
Balance Sheet Components (Tables)
 9 Months Ended
Sep. 30, 2022
Balance Sheet Related Disclosures [Abstract]  
Schedule of inventories, net

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Raw materials

 

$

1,754

 

 

$

2,109

 

Work in progress

 

 

4,279

 

 

 

4,796

 

Finished goods

 

 

45,607

 

 

 

46,009

 

 

 

$

51,640

 

 

$

52,914

 
Schedule of property and equipment, net

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Leasehold improvements

 

$

4,902

 

 

$

2,734

 

Manufacturing equipment and tooling

 

 

10,759

 

 

 

9,922

 

Computer equipment

 

 

1,700

 

 

 

1,672

 

Software

 

 

6,385

 

 

 

6,379

 

Furniture and fixtures

 

 

1,291

 

 

 

1,542

 

 

 

 

25,037

 

 

 

22,249

 

Less accumulated depreciation

 

 

(10,978

)

 

 

(8,251

)

 

 

$

14,059

 

 

$

13,998

 
Schedule of Carrying Amount of Goodwill

The carrying amount of goodwill as of September 30, 2022 and December 31, 2021 were as follows (in thousands):

 

 

 

Plastic Surgery

 

Balances as of December 31, 2021

 

 

 

Goodwill

 

 

23,480

 

Accumulated impairment losses

 

 

(14,278

)

Goodwill, net

 

$

9,202

 

Balances as of September 30, 2022

 

 

 

Goodwill

 

 

23,480

 

Accumulated impairment losses

 

 

(14,278

)

Goodwill, net

 

$

9,202

 
Schedule of Other Intangible assets

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

 

 

 

Average

 

 

 

 

 

 

Amortization

 

 

September 30, 2022

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

10

 

 

$

4,940

 

 

$

(4,426

)

 

$

514

 

Trade names - finite life

 

 

12

 

 

 

800

 

 

 

(439

)

 

 

361

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(2,272

)

 

 

5,968

 

Developed technology

 

 

8

 

 

 

20,954

 

 

 

(1,886

)

 

 

19,068

 

Total definite-lived intangible assets

 

 

 

 

$

34,934

 

 

$

(9,023

)

 

$

25,911

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

Total trade names - indefinite-lived

 

 

 

 

 

450

 

 

 

—

 

 

 

450

 

Total definite and indefinite-lived intangibles

 

 

 

 

$

35,384

 

 

$

(9,023

)

 

$

26,361

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

December 31, 2021

 

 

 

Period

 

 

Gross Carrying

 

 

Accumulated

 

 

Intangible

 

 

 

(in years)

 

 

Amount

 

 

Amortization

 

 

Assets, net

 

Intangibles with definite lives

 

 

 

 

 

 

 

 

 

 

 

 

Customer relationships

 

 

10

 

 

$

4,940

 

 

$

(4,224

)

 

$

716

 

Trade names - finite life

 

 

12

 

 

 

800

 

 

 

(389

)

 

 

411

 

Manufacturing know-how

 

 

19

 

 

 

8,240

 

 

 

(1,652

)

 

 

6,588

 

Developed technology

 

 

8

 

 

 

20,600

 

 

 

—

 

 

 

20,600

 

Total definite-lived intangible assets

 

 

 

 

$

34,580

 

 

$

(6,265

)

 

$

28,315

 

Intangibles with indefinite lives

 

 

 

 

 

 

 

 

 

 

 

 

Total trade names - indefinite-lived

 

 

 

 

 

450

 

 

 

—

 

 

 

450

 

Total definite and indefinite-lived intangibles

 

 

 

 

$

35,030

 

 

$

(6,265

)

 

$

28,765

 
Schedule of Future Estimated Amortization Expense The following table summarizes the future estimated amortization expense relating to the Company's definite-lived intangible assets as of September 30, 2022 (in thousands):

 

 

 

Amortization

 

Period

 

Expense

 

2022

 

$

2,136

 

2023

 

 

3,552

 

2024

 

 

3,408

 

2025

 

 

3,265

 

2026

 

 

3,092

 

Thereafter

 

 

10,458

 

 

 

$

25,911

 
Schedule of accrued and other current liabilities

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

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Payroll and related expenses

 

$

1,938

 

 

$

1,975

 

Accrued severance

 

 

949

 

 

 

248

 

Accrued commissions

 

 

2,027

 

 

 

4,329

 

Accrued bonuses

 

 

1,824

 

 

 

3,213

 

Deferred and contingent consideration, current portion

 

 

2,867

 

 

 

2,431

 

Lease liabilities

 

 

1,705

 

 

 

1,666

 

Other

 

 

7,010

 

 

 

7,436

 

 

 

$

18,320

 

 

$

21,298

 
Schedule of rollforward of the accrued assurance-type warrantie

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

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Balance as of January 1

 

$

2,505

 

 

$

1,934

 

Warranty costs incurred during the period

 

 

(413

)

 

 

(270

)

Changes in accrual related to warranties issued during the period

 

 

633

 

 

 

673

 

Changes in accrual related to pre-existing warranties

 

 

(50

)

 

 

11

 

Balance as of September 30

 

$

2,675

 

 

$

2,348

 
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 September 30, 2022 and December 31,2021 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

 

 

 

Fair Value Measurements as of

 

 

 

September 30, 2022 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration

 

$

—

 

 

$

—

 

 

$

2,944

 

 

$

2,944

 

 

 

$

—

 

 

$

—

 

 

$

2,944

 

 

$

2,944

 

 

 

 

Fair Value Measurements as of

 

 

 

December 31, 2021 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Liability for contingent consideration

 

$

—

 

 

$

—

 

 

$

3,114

 

 

$

3,114

 

 

 

$

—

 

 

$

—

 

 

$

3,114

 

 

$

3,114

 

 
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):

 

 

 

Contingent consideration liability

 

Balance, December 31, 2021

 

$

3,114

 

Change in fair value

 

 

(170

)

Balance, September 30, 2022

 

$

2,944

 
v3.22.2.2
Leases (Tables)
 9 Months Ended
Sep. 30, 2022
Leases [Abstract]  
Components of Lease Expense

Components of lease expense were as follows:

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

Lease Cost

 

Classification

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating lease cost

 

Operating expenses

 

$

578

 

 

$

405

 

 

$

1,429

 

 

$

1,239

 

Operating lease cost

 

Inventory

 

 

102

 

 

 

154

 

 

 

323

 

 

 

377

 

Sublease income

 

Operating expenses

 

 

(287

)

 

 

(233

)

 

 

(826

)

 

 

(301

)

Total operating lease cost

 

 

 

$

393

 

 

$

326

 

 

$

926

 

 

$

1,315

 

Finance lease cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

Operating expenses

 

$

—

 

 

$

8

 

 

$

3

 

 

$

26

 

Amortization of right-of-use assets

 

Inventory

 

 

13

 

 

 

12

 

 

 

36

 

 

 

35

 

Interest on lease liabilities

 

Other income (expense), net

 

 

1

 

 

 

2

 

 

 

3

 

 

 

6

 

Total finance lease cost

 

 

 

$

14

 

 

$

22

 

 

$

42

 

 

$

67

 

Total lease cost

 

 

 

$

407

 

 

$

348

 

 

$

968

 

 

$

1,382

 
Supplemental Cash Flow Information Related to Operating and Finance Leases

Supplemental cash flow information related to operating and finance leases for the nine months ended September 30, 2022 was as follows (in thousands):

 

 

 

2022

 

 

2021

 

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

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

1,277

 

 

$

1,261

 

Operating cash outflows from finance leases

 

 

40

 

 

 

56

 

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

 

 

 

 

 

 

Operating leases, net of tenant improvement allowances of $1.1 million

 

$

1,542

 

 

$

572

 
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):

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Reported as:

 

 

 

 

 

 

Right of use assets, net

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

6,855

 

 

$

6,488

 

Finance lease right-of-use assets

 

 

39

 

 

 

77

 

Total right-of use assets

 

$

6,894

 

 

$

6,565

 

Accrued and other current liabilities

 

 

 

 

 

 

Operating lease liabilities

 

$

1,677

 

 

$

1,595

 

Finance lease liabilities

 

 

28

 

 

 

71

 

Lease liabilities

 

 

 

 

 

 

Operating lease liabilities

 

 

6,994

 

 

 

5,576

 

Finance lease liabilities

 

 

5

 

 

 

28

 

Total lease liabilities

 

$

8,704

 

 

$

7,270

 

Weighted average remaining lease term (years)

 

 

 

 

 

 

Operating leases

 

 

5

 

 

 

4

 

Finance leases

 

 

1

 

 

 

2

 

Weighted average discount rate

 

 

 

 

 

 

Operating leases

 

 

9.18

%

 

 

8.16

%

Finance leases

 

 

6.90

%

 

 

6.90

%
Maturities of Operating and Finance Lease Liabilities

As of September 30, 2022, maturities of the Company’s operating and finance lease liabilities and sublease income are as follows (in thousands):

 

Period

 

Operating leases

 

 

Finance leases

 

 

Total

 

 

Sublease income

 

2022

 

$

559

 

 

$

10

 

 

$

569

 

 

$

(465

)

2023

 

 

2,628

 

 

 

23

 

 

 

2,651

 

 

 

(224

)

2024

 

 

2,369

 

 

 

1

 

 

 

2,370

 

 

 

(231

)

2025

 

 

1,467

 

 

 

—

 

 

 

1,467

 

 

 

(39

)

2026

 

 

1,438

 

 

 

—

 

 

 

1,438

 

 

 

—

 

2027 and thereafter

 

 

2,689

 

 

 

—

 

 

 

2,689

 

 

 

—

 

Total lease payments (receipts)

 

$

11,150

 

 

$

34

 

 

$

11,184

 

 

$

(959

)

Less imputed interest

 

 

2,479

 

 

 

1

 

 

 

2,480

 

 

 

 

Total lease liabilities

 

$

8,671

 

 

$

33

 

 

$

8,704

 

 

 

 
v3.22.2.2
Stockholders' Equity (Tables)
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Summary of option activity

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

 

 

 

 

 

 

Weighted

 

 

Weighted
average

 

 

 

 

 

 

average

 

 

remaining

 

 

 

Option

 

 

exercise

 

 

contractual

 

 

 

Shares

 

 

price

 

 

term (year)

 

Balances at December 31, 2021

 

 

1,703,963

 

 

$

4.75

 

 

 

5.41

 

Granted

 

 

150,000

 

 

 

 

 

 

 

Forfeited

 

 

(77,034

)

 

 

5.05

 

 

 

 

Balances at September 30, 2022

 

 

1,776,929

 

 

$

4.34

 

 

 

5.27

 
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, 2021

 

 

2,799,552

 

 

$

8.11

 

Granted

 

 

4,601,848

 

 

 

1.85

 

Vested

 

 

(670,824

)

 

 

5.57

 

Forfeited

 

 

(242,363

)

 

 

-

 

Balances at September 30, 2022

 

 

6,488,213

 

 

$

4.23

 
v3.22.2.2
Net (Loss) Income Per Share (Tables)
 9 Months Ended
Sep. 30, 2022
Earnings Per Share [Abstract]  
Schedule of net loss per share, basic and diluted

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(Loss) income from continuing operations

 

$

(14,887

)

 

 

$

28,503

 

 

$

(51,118

)

 

$

(46,647

)

(Loss) Income from discontinued operations, net of income taxes

 

 

(94

)

 

 

 

(93

)

 

 

(208

)

 

 

233

 

Net (loss) income

 

$

(14,981

)

 

 

$

28,410

 

 

$

(51,326

)

 

$

(46,414

)

Expenses attributable to the convertible note

 

$

-

 

 

 

$

(34,158

)

 

$

-

 

 

$

-

 

Losses attributable to common shares

 

$

(14,981

)

 

 

$

(5,748

)

 

$

(51,326

)

 

$

(46,414

)

Weighted average common shares outstanding, basic

 

 

62,848,172

 

 

 

 

58,005,784

 

 

 

62,613,501

 

 

 

56,680,594

 

Weighted average common shares outstanding, diluted

 

 

62,848,172

 

 

 

 

72,639,930

 

 

 

62,613,501

 

 

 

56,680,594

 

Basic (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.24

)

 

 

$

0.49

 

 

$

(0.82

)

 

$

(0.82

)

Discontinued operations

 

 

(0.00

)

 

 

 

0.00

 

 

 

(0.00

)

 

 

0.00

 

Basic net (loss) income per share

 

$

(0.24

)

 

 

$

0.49

 

 

$

(0.82

)

 

$

(0.82

)

Diluted loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.24

)

 

 

$

(0.08

)

 

$

(0.82

)

 

$

(0.82

)

Discontinued operations

 

 

(0.00

)

 

 

 

(0.00

)

 

 

(0.00

)

 

 

(0.00

)

Diluted net loss income per share

 

$

(0.24

)

 

 

$

(0.08

)

 

$

(0.82

)

 

$

(0.82

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

The Company excluded the following weighted average potentially dilutive securities, outstanding for the three and nine months ended September 30, 2022 and 2021, from the computation of diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2022 and 2021 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Stock issuable upon conversion of convertible note

 

 

14,634,146

 

 

 

—

 

 

 

14,634,146

 

 

 

14,634,146

 

Stock options to purchase common stock

 

 

—

 

 

 

1,582,901

 

 

 

1,659

 

 

 

1,629,493

 

Unvested RSUs

 

 

4,763,225

 

 

 

2,322,816

 

 

 

3,675,495

 

 

 

2,049,832

 

 

 

 

19,397,371

 

 

 

3,905,717

 

 

 

18,311,300

 

 

 

18,313,471

 
v3.22.2.2
Summary of Significant Accounting Policies (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Summary Of Significant Accounting Policies [Line Items]                  
Cash and cash equivalents $ 18,975,000     $ 66,127,000     $ 18,975,000 $ 66,127,000 $ 51,772,000
Incurred net losses (14,981,000) $ (18,304,000) $ (18,041,000) $ 28,410,000 $ (20,134,000) $ (54,690,000) (51,326,000) (46,414,000)  
Cash used in operation             (33,658,000) $ (29,552,000)  
Going Concern                  
Summary Of Significant Accounting Policies [Line Items]                  
Cash and cash equivalents $ 19,000,000.0           19,000,000.0    
Incurred net losses             (51,300)    
Cash used in operation             $ 33,500,000    
v3.22.2.2
Discontinued Operations (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2022
Dec. 31, 2021
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]      
Receivable $ 34,360 $ 34,360 $ 33,105
Accounts payable 7,352 7,352 $ 7,402
Sublease Income 300 800  
Transition Services Agreement      
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]      
TSA fees and cost reimbursements in operating expenses from continuing operations   200  
Payments relating to the TSA services   300  
Receivable relating to TSA services   2,300  
Remittance relating to TSA services   $ 2,300  
Sublease Agreement      
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]      
Sublease term initial period   6 months  
Other Current Assets | Transition Services Agreement      
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]      
Receivable $ 100 $ 100  
miraDry      
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]      
Proceeds from sale of assets   10,000  
Net upfront cash proceeds   11,300  
Loss on sale of businesses   (2,500)  
Payment for post close changes in net asset value   $ 3,200  
v3.22.2.2
Discontinued Operations - Summary of Aggregate Carrying Amounts of Major Classes of Assets and Liabilities of Discontinued Operations (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Assets of discontinued operations:    
Prepaid expenses and other current assets $ 4 $ 4
Current assets of discontinued operations 4 4
Total assets of discontinued operations 4 4
Liabilities of discontinued operations:    
Accounts payable 6 6
Accrued and other current liabilities 494 494
Total liabilities of discontinued operations $ 500 $ 500
v3.22.2.2
Discontinued Operations - Summary of Information Regarding the Results of Discontinued Operations (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Discontinued Operation, Income (Loss) from Discontinued Operation Disclosures [Abstract]        
Net sales $ 0 $ 0 $ 0 $ 9,347
Cost of goods sold 0 0 0 4,805
Gross profit 0 0 0 4,542
Operating expenses 94 57 208 1,744
(Loss) income from operations of discontinued operations (94) (57) (208) 2,798
Other income (expense), net 0 0 0 (77)
(loss) income from discontinued operations before income taxes (94) (57) (208) 2,721
Loss on sale of discontinued operations before income taxes 0 (36) 0 (2,488)
Total (loss) income from discontinued operations before income taxes (94) (93) (208) 233
Income tax expense (benefit) 0 0 0 0
(Loss) income from discontinued operations, net of income taxes $ (94) $ (93) $ (208) $ 233
v3.22.2.2
Revenue (Details 1) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-06-01
Sep. 30, 2022
Product Replacement  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 20 years
Breast Products and Consumable miraDry products  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 30 days
Maximum | Financial Assistance  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 24 months
Minimum | Financial Assistance  
Revenue From Contracts With Customers [Line Items]  
Performance obligation satisfying period 3 months
v3.22.2.2
Revenue (Details)
 9 Months Ended
Sep. 30, 2022
Change in Contract with Customer, Liability [Abstract]  
Period for sales return 6 months
v3.22.2.2
Revenue - Schedule of Liability for Unsatisfied Performance Obligations Under Service Warranty and Deliverables Under Certain Marketing Programs (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
USD ($)
Change in Contract with Customer, Liability [Abstract]  
Balance as of December 31, 2021 $ 3,237
Additions and adjustments 1,607
Revenue recognized (582)
Balance as of September 30, 2022 4,262
Less short-term portion (774)
Long-term portion $ 3,488
v3.22.2.2
Revenue - Schedule of Rollforward of Sales Return Liability (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Revenue Recognition [Abstract]    
Beginning balance $ 13,399 $ 9,192
Addition to reserve for sales activity 131,281 115,374
Actual returns (132,351) (110,996)
Change in estimate of sales returns (313) (1,265)
Ending balance $ 12,016 $ 12,305
v3.22.2.2
Fair Value of Financial Instruments - Schedule of Carrying Value and Fair Value of Convertible Note (Details) - Convertible Note - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Debt Instrument [Line Items]    
Carrying Value $ 49,674 $ 47,477
Fair Value $ 45,383 $ 42,029
v3.22.2.2
Balance Sheet Components (Inventories) (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Balance Sheet Related Disclosures [Abstract]    
Raw materials $ 1,754 $ 2,109
Work in progress 4,279 4,796
Finished goods 45,607 46,009
Inventory, net $ 51,640 $ 52,914
v3.22.2.2
Balance Sheet Components (PPE) (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Dec. 31, 2021
Property Plant And Equipment [Line Items]          
Property and equipment, gross $ 25,037   $ 25,037   $ 22,249
Less accumulated depreciation (10,978)   (10,978)   (8,251)
Property and equipment, net 14,059   14,059   13,998
Depreciation expense 600 $ 700 2,200 $ 2,200  
Leasehold improvements          
Property Plant And Equipment [Line Items]          
Property and equipment, gross 4,902   4,902   2,734
Manufacturing equipment and toolings          
Property Plant And Equipment [Line Items]          
Property and equipment, gross 10,759   10,759   9,922
Computer equipment          
Property Plant And Equipment [Line Items]          
Property and equipment, gross 1,700   1,700   1,672
Software          
Property Plant And Equipment [Line Items]          
Property and equipment, gross 6,385   6,385   6,379
Furniture and fixtures          
Property Plant And Equipment [Line Items]          
Property and equipment, gross $ 1,291   $ 1,291   $ 1,542
v3.22.2.2
Balance Sheet Components - Schedule of Carrying Amount of Goodwill (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Goodwill and intangible assets    
Goodwill, net $ 9,202 $ 9,202
Plastic Surgery    
Goodwill and intangible assets    
Goodwill 23,480 23,480
Accumulated impairment losses (14,278) (14,278)
Goodwill, net $ 9,202 $ 9,202
v3.22.2.2
Balance Sheet Components - Components of Other Intangible Assets (Details) - USD ($)
$ in Thousands
 9 Months Ended 12 Months Ended
Sep. 30, 2022
Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]    
Gross Carrying Amount $ 34,934 $ 34,580
Accumulated Amortization (9,023) (6,265)
Intangible Assets, net 25,911 28,315
Intangible Asset Gross Carrying Amount 35,384 35,030
Total Intangible Assets Net $ 26,361 $ 28,765
Customer relationships    
Finite-Lived Intangible Assets [Line Items]    
Average Amortization Period 10 years 10 years
Gross Carrying Amount $ 4,940 $ 4,940
Accumulated Amortization (4,426) (4,224)
Intangible Assets, net $ 514 $ 716
Trade name    
Finite-Lived Intangible Assets [Line Items]    
Average Amortization Period 12 years 12 years
Gross Carrying Amount $ 800 $ 800
Accumulated Amortization (439) (389)
Intangible Assets, net 361 411
Indefinite-lived intangible assets $ 450 $ 450
Manufacturing know-how    
Finite-Lived Intangible Assets [Line Items]    
Average Amortization Period 19 years 19 years
Gross Carrying Amount $ 8,240 $ 8,240
Accumulated Amortization (2,272) (1,652)
Intangible Assets, net $ 5,968 $ 6,588
Developed Technology    
Finite-Lived Intangible Assets [Line Items]    
Average Amortization Period 8 years 8 years
Gross Carrying Amount $ 20,954 $ 20,600
Accumulated Amortization (1,886) 0
Intangible Assets, net $ 19,068 $ 20,600
v3.22.2.2
Balance Sheet Components (Goodwill and Other Intangible Assets) (Details) - USD ($)
$ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Other intangible assets        
Amortization expense $ 0.9 $ 0.3 $ 2.8 $ 0.9
v3.22.2.2
Balance Sheet Components - Schedule of Future Estimated Amortization Expense (Details)
$ in Thousands
Sep. 30, 2022
USD ($)
Estimated amortization expense  
2022 $ 2,136
2023 3,552
2024 3,408
2025 3,265
2026 3,092
Thereafter 10,458
Total amortization $ 25,911
v3.22.2.2
Balance Sheet Components (Accrued liabilities) (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Accrued and other current liabilities    
Payroll and related expenses $ 1,938 $ 1,975
Accrued severance 949 248
Accrued commissions 2,027 4,329
Accrued bonuses 1,824 3,213
Deferred and contingent consideration, current portion 2,867 2,431
Lease liabilities 1,705 1,666
Other 7,010 7,436
Total $ 18,320 $ 21,298
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] Accrued and Other Current Liabilities Accrued and Other Current Liabilities
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] Accrued and Other Current Liabilities Accrued and Other Current Liabilities
v3.22.2.2
Balance Sheet Components - Schedule of rollforward of the accrued assurance-type warranties (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Beginning Balance $ 2,505 $ 1,934
Warranty costs incurred during the period (413) (270)
Changes in accrual related to warranties issued during the period 633 673
Changes in accrual related to pre-existing warranties 50 11
Ending Balance $ 2,675 $ 2,348
Monte-Carlo Simulation Model | Measurement Input, Volatility Rate    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Assumption for Fair Value of Interests Continued to be Held by Transferor Servicing Assets or Liabilities Volatility Rate 98.00%  
v3.22.2.2
Balance Sheet Components (Liabilities measured at fair value) (Details)
 9 Months Ended
Sep. 30, 2022
Measurement Input, Discount Rate | BIOCORNEUM | Future Royalty Payments  
Fair Value Measurements  
Fair value measurement discount rate 20.00%
v3.22.2.2
Balance Sheet Components - Schedule of Company's Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Recurring - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Fair Value Measurements    
Fair value liability $ 2,944  
Contingent Consideration Liability    
Fair Value Measurements    
Fair value liability 2,944 $ 3,114
Derivative Liability    
Fair Value Measurements    
Fair value liability   3,114
Level 3    
Fair Value Measurements    
Fair value liability 2,944  
Level 3 | Contingent Consideration Liability    
Fair Value Measurements    
Fair value liability $ 2,944 3,114
Level 3 | Derivative Liability    
Fair Value Measurements    
Fair value liability   $ 3,114
v3.22.2.2
Balance Sheet Components - Schedule of Aggregate Fair Values of Company's Liabilities for which Fair Value is Determined by Level 3 Inputs (Details)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
USD ($)
Fair Value Measurements  
Balance at beginning of the period $ 3,114
Level 3 | Contingent Consideration Liability | Fair Value, Recurring  
Fair Value Measurements  
Change in fair value (170)
Balance at the end of the period $ 2,944
v3.22.2.2
Leases - Components of Lease Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Lessee Lease Description [Line Items]        
Total operating lease cost $ 393 $ 326 $ 926 $ 1,315
Sublease income (300)   (800)  
Finance lease cost        
Total finance lease cost 14 22 42 67
Total lease cost 407 348 968 1,382
Inventory        
Lessee Lease Description [Line Items]        
Total operating lease cost 102 154 323 377
Finance lease cost        
Amortization of right-of-use assets 13 12 36 35
Operating Expenses        
Lessee Lease Description [Line Items]        
Total operating lease cost 578 405 1,429 1,239
Sublease income (287) (233) (826) (301)
Finance lease cost        
Amortization of right-of-use assets (0) 8 3 26
Other Income (Expense), Net        
Finance lease cost        
Interest on lease liabilities $ 1 $ 2 $ 3 $ 6
v3.22.2.2
Leases (Details)
 1 Months Ended
Jan. 31, 2022
Lessee Lease Description [Line Items]  
Sublease term of contract 3 years
v3.22.2.2
Leases - Supplemental Cash Flow Information Related to Operating and Finance Leases (Details) - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash outflows from operating leases $ 1,277 $ 1,261
Operating cash outflows from finance leases 40 56
Right-of-use assets obtained in exchange for lease obligations:    
Operating leases, net of tenant improvement allowances of $1.1 million $ 1,542 $ 572
v3.22.2.2
Leases - Supplemental Cash Flow Information Related to Operating and Finance Leases (Parenthetical) (Details) - USD ($)
$ in Millions
 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Lessee Disclosure [Abstract]    
Operating leases, net of tenant improvement allowances $ 1.1 $ 1.1
v3.22.2.2
Leases - Supplemental Balance Sheet Information Related to Operating and Finance Leases (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Assets and Liabilities, Lessee [Abstract]    
Operating lease right-of-use assets $ 6,855 $ 6,488
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Total right-of use assets Total right-of use assets
Right of use assets, net $ 39 $ 77
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] Total right-of use assets Total right-of use assets
Total right-of use assets $ 6,894 $ 6,565
Operating lease liabilities $ 1,677 $ 1,595
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] Accrued and Other Current Liabilities Accrued and Other Current Liabilities
Finance lease liabilities $ 28 $ 71
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List] Accrued and Other Current Liabilities Accrued and Other Current Liabilities
Operating lease liabilities $ 6,994 $ 5,576
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] OperatingAndFinanceLeaseLiability OperatingAndFinanceLeaseLiability
Lease liabilities $ 5 $ 28
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] OperatingAndFinanceLeaseLiability OperatingAndFinanceLeaseLiability
Total lease liabilities $ 8,704 $ 7,270
Weighted average remaining lease term (years)    
Operating leases 5 years 4 years
Finance leases 1 year 2 years
Weighted average discount rate    
Operating leases 9.18% 8.16%
Finance leases 6.90% 6.90%
v3.22.2.2
Leases - Maturities of Operating and Finance Lease Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2022
Dec. 31, 2021
Operating Lease Liabilities, Payments Due [Abstract]    
Operating leases, 2022 $ 559  
Operating leases, 2023 2,628  
Operating leases, 2024 2,369  
Operating leases, 2025 1,467  
Operating leases, 2026 1,438  
Operating leases, 2027 and thereafter 2,689  
Total operating lease payments (receipts) 11,150  
Less imputed interest, Operating leases 2,479  
Total operating lease liabilities 8,671  
Finance Lease Liabilities, Payments, Due [Abstract]    
Finance leases, 2022 10  
Finance leases, 2023 23  
Finance leases, 2024 1  
Total finance lease payments (receipts) 34  
Less imputed interest, Finance leases 1  
Total finance lease liabilities 33  
Lessee Lease Liability Payments Due [Abstract]    
2022 569  
2023 2,651  
2024 2,370  
2025 1,467  
2026 1,438  
2027 and thereafter 2,689  
Total lease payments (receipts) 11,184  
Less imputed interest 2,480  
Total lease liabilities 8,704 $ 7,270
Sublease Income Payments Due [Abstract]    
Subincome lease, 2022 (465)  
Subincome lease, 2023 (224)  
Subincome lease, 2024 (231)  
Subincome lease, 2025 (39)  
Total sublease income payments (receipts) $ (959)  
v3.22.2.2
Debt (Details) - USD ($)
 3 Months Ended 9 Months Ended
Jul. 25, 2017
Sep. 30, 2022
Mar. 31, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Mar. 11, 2020
Line Of Credit Facility [Line Items]              
Additional interest (as a percent) 5.00%            
Amortization of debt issuance costs and discounts         $ 3,029,000 $ 2,632,000  
Increase in percentage of payment fee     0.50%        
Convertible Note              
Line Of Credit Facility [Line Items]              
Loan amount outstanding   $ 60,000,000.0     60,000,000.0    
Tranche 6              
Line Of Credit Facility [Line Items]              
Debt Instrument principal amount     $ 9,000,000        
Restated Term Loan Agreement              
Line Of Credit Facility [Line Items]              
Loan amount outstanding   21,000,000.0     21,000,000.0    
Unamortized debt issuance costs   200,000     200,000    
Unamortized debt discount and issuance costs   700,000     700,000    
Exit fee payable         300,000    
Revolving Loan              
Line Of Credit Facility [Line Items]              
Loan amount outstanding   0     0    
Revolving Loan | Other Assets              
Line Of Credit Facility [Line Items]              
Unamortized debt issuance costs   32,000     32,000    
Term Loan and Revolving Loan              
Line Of Credit Facility [Line Items]              
Amortization of debt issuance costs   200,000   $ 100,000 500,000 $ 400,000  
Term Loan and Revolving Loan | Tranche 4              
Line Of Credit Facility [Line Items]              
Debt Instrument principal amount     $ 5,000,000        
Deerfield Facility Agreement | Convertible Note              
Line Of Credit Facility [Line Items]              
Unamortized debt discount and issuance costs   10,300,000     10,300,000    
Debt instrument interest rate       12.00%   12.00%  
Amortization of debt issuance costs and discounts   $ 900,000   $ 800,000 $ 2,500,000 $ 2,200,000  
Debt Instrument principal amount             $ 60,000,000.0
v3.22.2.2
Stockholders' Equity (Details) - $ / shares
Sep. 30, 2022
Dec. 31, 2021
Stock other disclosures    
Common and preferred stock, shares authorized 210,000,000 210,000,000
Common stock, shares authorized 200,000,000 200,000,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
v3.22.2.2
Stockholders' Equity (Options) (Details) - USD ($)
 3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Dec. 31, 2021
Stock options        
Number of options        
Balance at the beginning of period (in shares)     1,703,963  
Options granted (in shares)     150,000  
Options forfeited (in shares)     (77,034)  
Balance at the end of the period (in shares) 1,776,929   1,776,929 1,703,963
Weighted average exercise price        
Balance at the beginning of period (in dollars per share)     $ 4.75  
Options forfeited (in dollars per share)     5.05  
Balance at the end of period (in dollars per share) $ 4.34   $ 4.34 $ 4.75
Additional information        
Weighted average remaining contractual term     5 years 3 months 7 days 5 years 4 months 28 days
Stock-based compensation expense $ 200,000 $ 100,000    
Unrecognized compensation costs (in dollars) $ 500 $ 400 $ 500  
2014 Plan        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Number of shares available for future grants 1,808,507   1,808,507  
Number of shares available for future grants (1,808,507)   (1,808,507)  
Inducement Plan        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Number of shares available for future grants 0   0  
Number of shares awarded     3,524,922  
Grant period of stock awards     10 years  
Number of additional years of requisite service period     3 years  
Vesting period     1 year  
Number of shares available for future grants 0   0  
Inducement Plan | On the first anniversary        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Vesting percentage     25.00%  
Inducement Plan | Minimum        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Purchase price of awards expressed as a percentage of fair value of shares on the date of grant     100.00%  
Percentage of possible payouts of the target award     0.00%  
Inducement Plan | Minimum | Individual options        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Vesting percentage     25.00%  
Inducement Plan | Maximum        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Percentage of possible payouts of the target award     100.00%  
2007 Plan and 2014 Plan | Stock options        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Grant period of stock awards     10 years  
2007 Plan and 2014 Plan | Stock options | Minimum        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Purchase price of awards expressed as a percentage of fair value of shares on the date of grant     100.00%  
Percentage of voting power owned by shareholder 10.00%   10.00%  
2007 Plan and 2014 Plan | Stock options | Maximum        
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]        
Purchase price of awards expressed as a percentage of fair value of shares on the date of grant     110.00%  
v3.22.2.2
Stockholders' Equity (Restricted Stock) (Details) - Restricted stock units - 2014 Plan - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Stockholders' Equity, other disclosures        
Requisite service period, annually     3 years  
Stock-based compensation expense $ 1.5 $ 2.1 $ 5.2 $ 7.3
Unrecognized compensation costs (in dollars) $ 10.5   $ 10.5  
Weighted average period over which unrecognized compensation costs are expected to be recognized     1 year 11 months 15 days  
Number of shares        
Balance at beginning of the period     2,799,552  
Granted     4,601,848  
Vested     (670,824)  
Forfeited     (242,363)  
Balance at end of the period 6,488,213   6,488,213  
Weighted average grant date fair value        
Balance at beginning of the period     $ 8.11  
Granted     1.85  
Vested     5.57  
Forfeited     0  
Balance at end of the period $ 4.23   $ 4.23  
v3.22.2.2
Stockholders' Equity (Stock Purchase) (Details) - 2014 Employee Stock Purchase Plan - USD ($)
$ / shares in Units, $ in Millions
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Oct. 31, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]          
Purchase period of offering     6 months    
Rate of purchase price of stock on fair value (as a percent)     85.00%    
Purchases under the award     342,705    
Weighted Average purchase price $ 1.38   $ 1.38    
Number of shares available for future grants 1,532,603   1,532,603    
Stock-based compensation expense $ 0.1 $ 0.1 $ 0.4 $ 0.4  
Maximum          
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]          
Discount rate on the value of shares through payroll deductions (as a percent)     15.00%    
Expiration period of each offering     27 months    
Number of shares reserved for future issuance         255,500
v3.22.2.2
Net (Loss) Income Per Share - Schedule of Net Loss Per Share, Basic and Diluted (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Jun. 30, 2022
Mar. 31, 2022
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Sep. 30, 2022
Sep. 30, 2021
Earnings Per Share [Abstract]                
(Loss) income from continuing operations $ (14,887)     $ 28,503     $ (51,118) $ (46,647)
(Loss) income from discontinued operations, net of income taxes (94)     (93)     (208) 233
Net (loss) income (14,981) $ (18,304) $ (18,041) 28,410 $ (20,134) $ (54,690) (51,326) (46,414)
Expenses attributable to the convertible note       (34,158)        
Losses attributable to common shares $ (14,981)     $ (5,748)     $ (51,326) $ (46,414)
Weighted Average Number of Shares Outstanding, Basic 62,848,172     58,005,784     62,613,501 56,680,594
Weighted Average Number of Shares Outstanding, Diluted 62,848,172     72,639,930     62,613,501 56,680,594
Continuing operations, Basic $ (0.24)     $ 0.49     $ (0.82) $ (0.82)
Discontinued operations, Basic (0.00)     0.00     (0.00) 0.00
Basic net (loss) income per share (0.24)     0.49     (0.82) (0.82)
Continuing operations, Diluted (0.24)     (0.08)     (0.82) (0.82)
Discontinued operations, Diluted (0.00)     (0.00)     (0.00) (0.00)
Diluted net loss income per share $ (0.24)     $ (0.08)     $ (0.82) $ (0.82)
v3.22.2.2
Net (Loss) Income Per Share - Schedule of Weighted Average Potentially Dilutive Securities Excluded from Computation of Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - shares
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Potentially dilutive securities        
Potentially dilutive securities 19,397,371 3,905,717 18,311,300 18,313,471
Stock issuable upon conversion of convertible note        
Potentially dilutive securities        
Potentially dilutive securities 14,634,146 0 14,634,146 14,634,146
Stock options to purchase common stock        
Potentially dilutive securities        
Potentially dilutive securities 0 1,582,901 1,659 1,629,493
Unvested RSUs        
Potentially dilutive securities        
Potentially dilutive securities 4,763,225 2,322,816 3,675,495 2,049,832
v3.22.2.2
Income Taxes (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2022
Sep. 30, 2021
Sep. 30, 2022
Sep. 30, 2021
Income Tax Disclosure [Abstract]        
Tax expense $ 0 $ 0 $ 0 $ 0
v3.22.2.2
Commitments and Contingencies (Details)
$ in Millions
 9 Months Ended
Sep. 30, 2022
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Legal settlement expense $ 1.6
v3.22.2.2
Subsequent Events (Details) - USD ($)
 3 Months Ended
Oct. 25, 2022
Oct. 12, 2022
Mar. 11, 2020
Mar. 31, 2021
Sep. 30, 2022
Dec. 31, 2021
Subsequent Event [Line Items]            
Common stock, par value (in dollars per share)         $ 0.01 $ 0.01
Common stock            
Subsequent Event [Line Items]            
Stock issued during period, shares       6,222,222    
Convertible Note | Deerfield Facility Agreement            
Subsequent Event [Line Items]            
Term loan credit and security agreement entered date     Mar. 11, 2020      
Debt Instrument principal amount     $ 60,000,000.0      
Subsequent Event | Follow-on Offering            
Subsequent Event [Line Items]            
Proceeds from the issuance of common stock, net of underwriting discounts, commissions and offering expenses $ 13,700,000          
Subsequent Event | Follow-on Offering | Common stock            
Subsequent Event [Line Items]            
Price per share $ 0.38          
Stock issued during period, shares 17,785,000          
Shares granted to underwriters 5,217,390          
Subsequent Event | Follow-on Offering | Warrant            
Subsequent Event [Line Items]            
Exercise price (in dollars per share) $ 0.38          
Stock issued during period, shares 39,999,990          
Shares granted to underwriters 5,217,390          
Subsequent Event | Follow-on Offering | Pre-funded Warrant            
Subsequent Event [Line Items]            
Exercise price (in dollars per share) $ 0.37          
Stock issued during period, shares 22,214,990          
Subsequent Event | Deerfield Exchange Agreement            
Subsequent Event [Line Items]            
Debt Instrument principal amount   $ 10,000,000        
Price per share   $ 0.740        
Debt conversion, shares Issued   2,967,742        
Debt conversion, warrants issued   10,543,946        
Exercise price (in dollars per share)   $ 0.0001        
Warrant exercise, threshold percentage   4.985%        
Subsequent Event | Convertible Note | Deerfield Facility Agreement            
Subsequent Event [Line Items]            
Percentage of transfer of assets   50.00%        
Subsequent Event | Convertible Note | Amended and Restated Facility Agreement            
Subsequent Event [Line Items]            
Term loan credit and security agreement entered date   Oct. 12, 2022        
Debt Instrument principal amount   $ 50,000,000.0        
Principal debt amount exchanged   $ 10,000,000.0        
Debt maturity date   Mar. 11, 2026        
Debt instrument conversion price   $ 2.75        
Premium over closing stock price, percentage   272.00%        
Price per share   $ 0.7401        
Subsequent Event | New Note            
Subsequent Event [Line Items]            
Debt covenant, Equity capital that can be raised   $ 20,000,000        
Subsequent Event | New Note | Deerfield Facility Agreement            
Subsequent Event [Line Items]            
Minimum percentage of number of shares of common stock owned by conversion of debt instrument   4.985%        
Subsequent Event | New Note | Amended and Restated Facility Agreement            
Subsequent Event [Line Items]            
Debt Instrument principal amount   $ 23,000,000.0        
Debt instrument conversion price   $ 1.00        
Premium over closing stock price, percentage   35.00%        
Price per share   $ 0.7401        
Common stock, par value (in dollars per share)   $ 0.01        
Exit fee percentage to aggregate amount of all term loans funded   1.95%        
Debt Conversion, terms of conversion   The Convertible Notes provide for the optional redemption of the Convertible Notes without issuance of any Warrants or payment of any additional make whole amount (unless such Convertible Note is converted following receipt of an optional redemption notice but prior to payment of the redemption amount) provided that each of the following is greater than 130% of the conversion price then in effect: (1) the volume weighted average price of the Common Stock on each of any twenty (20) trading days during the period of thirty (30) consecutive trading days ending on the date on which the Company delivers an optional redemption notice, (2) the volume weighted average price of the Common Stock on the last trading day of such period and (3) the closing price of the Common Stock on the last trading day of such period.        
Debt conversion, threshold percentage   130.00%        
Subsequent Event | New Note | Amended and Restated Facility Agreement | SOFR            
Subsequent Event [Line Items]            
Spread on variable rate basis (as a percent)   5.75%