NOVOCURE LTD, 10-Q filed on 10/28/2021
Quarterly Report
v3.21.2
Cover - shares
9 Months Ended
Sep. 30, 2021
Oct. 22, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2021  
Document Transition Report false  
Entity File Number 001-37565  
Entity Registrant Name NovoCure Limited  
Entity Incorporation, State or Country Code Y9  
Entity Tax Identification Number 98-1057807  
Entity Address, Address Line One No. 4 The Forum  
Entity Address, Address Line Two Grenville Street  
Entity Address, City or Town St. Helier  
Entity Address, Country JE  
Entity Address, Postal Zip Code JE2 4UF  
City Area Code 44 (0) 15  
Local Phone Number 3475 6700  
Title of 12(b) Security Ordinary Shares, no par value  
Trading Symbol NVCR  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   103,819,257
Amendment Flag false  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q3  
Entity Central Index Key 0001645113  
Current Fiscal Year End Date --12-31  
v3.21.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
CURRENT ASSETS:    
Cash and cash equivalents $ 689,837 $ 234,674
Short-term investments 243,948 607,902
Restricted cash 855 11,499
Trade receivables, net 94,129 96,699
Receivables and prepaid expenses 17,595 21,245
Inventories 22,642 27,422
Total current assets 1,069,006 999,441
LONG-TERM ASSETS:    
Property and equipment, net 11,699 11,395
Field equipment, net 12,553 11,230
Right-of-use assets 16,460 19,009
Other long-term assets 10,735 10,908
Total long-term assets 51,447 52,542
TOTAL ASSETS 1,120,453 1,051,983
CURRENT LIABILITIES:    
Trade payables 60,005 53,647
Other payables, lease liabilities and accrued expenses 64,544 59,965
Total current liabilities 124,549 113,612
LONG-TERM LIABILITIES:    
Long-term debt, net 561,388 429,905
Deferred revenue 7,464 12,139
Long-term leases 11,478 14,293
Employee benefits 2,031 5,171
Other long-term liabilities 379 337
Total long-term liabilities 582,740 461,845
TOTAL LIABILITIES 707,289 575,457
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:    
Ordinary shares no par value, unlimited shares authorized; issued and outstanding: 103,817,566 shares and 102,334,276 shares at September 30, 2021 (unaudited) and December 31, 2020, respectively 0 0
Additional paid-in capital 1,073,532 1,111,435
Accumulated other comprehensive income (loss) (900) (3,832)
Retained earnings (accumulated deficit) (659,468) (631,077)
TOTAL SHAREHOLDERS' EQUITY 413,164 476,526
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,120,453 $ 1,051,983
v3.21.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares
Sep. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Common stock, shares issued (in shares) 103,817,566 102,334,276
Common stock, shares outstanding (in shares) 103,817,566 102,334,276
v3.21.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2020
Income Statement [Abstract]          
Net revenues $ 133,606 $ 132,660 $ 401,818 $ 350,413 $ 494,366
Cost of revenues 30,206 28,395 85,190 78,365 106,501
Gross profit 103,400 104,265 316,628 272,048 387,865
Operating costs and expenses:          
Research, development and clinical trials 48,141 32,818 144,372 88,008 132,010
Sales and marketing 32,580 29,364 98,075 86,658 118,017
General and administrative 31,231 27,061 95,116 79,073 107,437
Total operating costs and expenses 111,952 89,243 337,563 253,739 357,464
Operating income (loss) (8,552) 15,022 (20,935) 18,309 30,401
Financial expenses (income), net 1,981 3,983 5,567 9,032 12,299
Income (loss) before income tax (10,533) 11,039 (26,502) 9,277 18,102
Income tax 2,591 1,755 5,391 (5,614) (1,706)
Net income (loss) $ (13,124) $ 9,284 $ (31,893) $ 14,891 $ 19,808
Basic net income (loss) per ordinary share (in usd per share) $ (0.13) $ 0.09 $ (0.31) $ 0.15 $ 0.20
Weighted average number of ordinary shares used in computing basic net income (loss) per share (in shares) 103,731,147 101,234,306 103,281,380 100,601,427 100,930,866
Diluted net income (loss) per ordinary share (in usd per share) $ (0.13) $ 0.09 $ (0.31) $ 0.14 $ 0.18
Weighted average number of ordinary shares used in computing diluted net income (loss) per share (in shares) 103,731,147 108,643,814 103,281,380 108,113,416 108,877,648
v3.21.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2020
Statement of Comprehensive Income [Abstract]          
Net income (loss) $ (13,124) $ 9,284 $ (31,893) $ 14,891 $ 19,808
Other comprehensive income (loss), net of tax:          
Change in foreign currency translation adjustments (202) 143 (57) 26 (85)
Pension benefit plan 421 153 2,989 (495) (980)
Total comprehensive income (loss) $ (12,905) $ 9,580 $ (28,961) $ 14,422 $ 18,743
v3.21.2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Cumulative Effect, Period of Adoption, Adjustment
Ordinary shares
Additional paid-in capital
Additional paid-in capital
Cumulative Effect, Period of Adoption, Adjustment
Accumulated other comprehensive loss
Retained earnings (accumulated deficit)
Retained earnings (accumulated deficit)
Cumulative Effect, Period of Adoption, Adjustment
Beginning balance (in shares) at Dec. 31, 2019     99,528,435          
Beginning balance at Dec. 31, 2019 $ 217,790     $ 871,442   $ (2,767) $ (650,885)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Share-based compensation to employees 16,557     16,557        
Exercise of options and vested RSUs (in shares)     834,538          
Exercise of options and vested RSUs 4,511     4,511        
Other comprehensive income (loss), net of tax benefit (862)         (862)    
Net income (loss) 3,952           3,952  
Ending balance (in shares) at Mar. 31, 2020     100,362,973          
Ending balance at Mar. 31, 2020 241,948     892,510   (3,629) (646,933)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Other comprehensive income (loss), tax benefit 0              
Beginning balance (in shares) at Dec. 31, 2019     99,528,435          
Beginning balance at Dec. 31, 2019 217,790     871,442   (2,767) (650,885)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income (loss) 14,891              
Ending balance (in shares) at Sep. 30, 2020     101,728,327          
Ending balance at Sep. 30, 2020 307,037     946,267   (3,236) (635,994)  
Beginning balance (in shares) at Dec. 31, 2019     99,528,435          
Beginning balance at Dec. 31, 2019 $ 217,790     871,442   (2,767) (650,885)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Accounting standards update [extensible enumeration] Accounting Standards Update 2020-06 [Member]              
Net income (loss) $ 19,808              
Ending balance (in shares) at Dec. 31, 2020     102,334,276          
Ending balance at Dec. 31, 2020 476,526 $ (128,972)   1,111,435 $ (132,474) (3,832) (631,077) $ 3,502
Beginning balance (in shares) at Mar. 31, 2020     100,362,973          
Beginning balance at Mar. 31, 2020 241,948     892,510   (3,629) (646,933)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Share-based compensation to employees 18,770     18,770        
Proceeds from issuance of shares (in shares)     33,075          
Proceeds from issuance of shares 1,667     1,667        
Exercise of options and warrants and vested RSUs (in shares)     624,673          
Exercise of options and vested RSUs 3,685     3,685        
Other comprehensive income (loss), net of tax benefit 97         97    
Net income (loss) 1,655           1,655  
Ending balance (in shares) at Jun. 30, 2020     101,020,721          
Ending balance at Jun. 30, 2020 267,822     916,632   (3,532) (645,278)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Other comprehensive income (loss), tax benefit 0              
Share-based compensation to employees 20,121     20,121        
Exercise of options and warrants and vested RSUs (in shares)     707,606          
Exercise of options and vested RSUs 9,514     9,514        
Other comprehensive income (loss), net of tax benefit 296         296    
Net income (loss) 9,284           9,284  
Ending balance (in shares) at Sep. 30, 2020     101,728,327          
Ending balance at Sep. 30, 2020 307,037     946,267   (3,236) (635,994)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Other comprehensive income (loss), tax benefit 0              
Beginning balance (in shares) at Dec. 31, 2020     102,334,276          
Beginning balance at Dec. 31, 2020 476,526 (128,972)   1,111,435 (132,474) (3,832) (631,077) 3,502
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Share-based compensation to employees 18,863     18,863        
Exercise of options and vested RSUs (in shares)     853,184          
Exercise of options and vested RSUs 7,961     7,961        
Other comprehensive income (loss), net of tax benefit 1,884         1,884    
Net income (loss) (4,128)           (4,128)  
Ending balance (in shares) at Mar. 31, 2021     103,187,460          
Ending balance at Mar. 31, 2021 372,134     1,005,785   (1,948) (631,703)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Other comprehensive income (loss), tax benefit 0              
Beginning balance (in shares) at Dec. 31, 2020     102,334,276          
Beginning balance at Dec. 31, 2020 476,526 $ (128,972)   1,111,435 $ (132,474) (3,832) (631,077) $ 3,502
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Net income (loss) (31,893)              
Ending balance (in shares) at Sep. 30, 2021     103,817,566          
Ending balance at Sep. 30, 2021 413,164     1,073,532   (900) (659,468)  
Beginning balance (in shares) at Mar. 31, 2021     103,187,460          
Beginning balance at Mar. 31, 2021 372,134     1,005,785   (1,948) (631,703)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Share-based compensation to employees 27,881     27,881        
Exercise of options and vested RSUs (in shares)     436,487          
Exercise of options and vested RSUs 8,695     8,695        
Proceeds from issuance of shares (in shares)     17,291          
Proceeds from issuance of shares 2,371     2,371        
Other comprehensive income (loss), net of tax benefit 829         829    
Net income (loss) (14,641)           (14,641)  
Ending balance (in shares) at Jun. 30, 2021     103,641,238          
Ending balance at Jun. 30, 2021 397,269     1,044,732   (1,119) (646,344)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Other comprehensive income (loss), tax benefit 0              
Share-based compensation to employees 25,758     25,758        
Exercise of options and vested RSUs (in shares)     176,328          
Exercise of options and vested RSUs 3,042     3,042        
Other comprehensive income (loss), net of tax benefit 219         219    
Net income (loss) (13,124)           (13,124)  
Ending balance (in shares) at Sep. 30, 2021     103,817,566          
Ending balance at Sep. 30, 2021 413,164     $ 1,073,532   $ (900) $ (659,468)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Other comprehensive income (loss), tax benefit $ 0              
v3.21.2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - USD ($)
$ in Thousands
3 Months Ended
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Statement of Stockholders' Equity [Abstract]            
Other comprehensive income (loss), tax benefit $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
v3.21.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2021
Sep. 30, 2020
Sep. 30, 2021
Sep. 30, 2020
Dec. 31, 2020
Cash flows from operating activities:          
Net income (loss) $ (13,124) $ 9,284 $ (31,893) $ 14,891 $ 19,808
Adjustments to reconcile net income (loss) to net cash used in operating activities:          
Depreciation and amortization 2,734 2,188 7,584 6,677 9,150
Asset write-downs and impairment of field equipment 113 124 467 263 429
Share-based compensation 25,758 20,121 72,502 55,448 75,721
Foreign currency remeasurement loss (gain) 495 (79) 3,024 (549) (699)
Decrease (increase) in accounts receivables (3,726) (7,678) 3,923 (33,556) (30,354)
Amortization of discount (premium) 785 424 2,313 (654) 3,260
Decrease (increase) in inventories 3,818 (55) 4,185 (2,446) (2,935)
Decrease (increase) in other long-term assets 1,367 (5,173) 4,383 (2,794) (1,366)
Increase (decrease) in accounts payables and accrued expenses 8,126 9,908 10,622 7,974 25,470
Increase (decrease) in other long-term liabilities (1,946) 1,905 (8,758) 413 664
Net cash provided by (used in) operating activities 24,400 30,969 68,352 45,667 99,148
Cash flows from investing activities:          
Purchase of property, equipment and field equipment (3,297) (2,782) (9,896) (9,209) (14,968)
Proceeds from maturity of short-term investments 350,000 150,000 958,000 150,000 150,000
Purchase of short-term investments (44,000) 0 (593,848) 0 (607,879)
Net cash provided by (used in) investing activities 302,703 147,218 354,256 140,791 (472,847)
Cash flows from financing activities:          
Proceeds from issuance of shares, net 0 0 2,371 1,667 3,370
Proceeds from long term debt, net 0 0 0 0 558,439
Repayment of long-term loan (6) (150,007) (19) (150,022) (150,028)
Exercise of options and warrants 3,042 9,514 19,698 17,710 28,428
Net cash provided by (used in) financing activities 3,036 (140,493) 22,050 (130,645) 440,209
Effect of exchange rate changes on cash, cash equivalents and restricted cash (34) 102 (139) 152 247
Increase (decrease) in cash, cash equivalents and restricted cash 330,105 37,796 444,519 55,965 66,757
Cash, cash equivalents and restricted cash at the beginning of the period 360,587 197,585 246,173 179,416 179,416
Cash, cash equivalents and restricted cash at the end of the period 690,692 235,381 690,692 235,381 246,173
Cash paid during the period for:          
Income taxes paid (refunded), net 991 4,382 1,075 11,319 (3,261)
Interest paid 1 1,840 3 8,671 8,686
Non-cash activities:          
Right-of-use assets obtained in exchange for lease liabilities $ 1,023 $ 675 $ 1,972 $ 2,849 $ 5,617
v3.21.2
Organization and Basis of Presentation
9 Months Ended
Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Basis of Presentation ORGANIZATION AND BASIS OF PRESENTATION
Organization. NovoCure Limited (including its consolidated subsidiaries, the "Company") was incorporated in the Bailiwick of Jersey and is principally engaged in the development, manufacture and commercialization of Tumor Treating Fields ("TTFields") delivery systems, including Optune and Optune Lua (collectively, our "Products"), for the treatment of solid tumor cancers. The Company currently markets Optune in the United States ("U.S."), Austria, Germany, Israel, Japan, Sweden and Switzerland. The Company currently markets Optune Lua in the U.S. The Company also has a License and Collaboration Agreement (the "Zai Agreement") with Zai Lab (Shanghai) Co., Ltd. ("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China").
Financial statement preparation. The accompanying unaudited consolidated financial statements include the accounts of the Company and intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation for the periods presented. The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. These consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the "2020 10-K") filed with the Securities and Exchange Commission on February 25, 2021.
The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2020 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:
Recently Adopted Accounting Pronouncements.
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification ("ASC Topic 815"), Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company early adopted ASU 2020-06, effective January 1, 2021 on a modified retrospective basis.
The impact of the Company’s adoption of ASU 2020-06 on the balance sheet as of January 1, 2021 was an increase in long term debt, net of $128,972, a decrease in additional paid-in capital of $132,474, and a decrease in accumulated deficit of $3,502. Interest expense recognized in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. For additional information see Note 5 of these unaudited consolidated financial statements.
In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance. ASU 2019-12 is effective for the Company as of January 1, 2021 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.
v3.21.2
Cash, Cash Equivalents and Short-Term Investments
9 Months Ended
Sep. 30, 2021
Cash, Cash Equivalents, and Short-term Investments [Abstract]  
Cash, Cash Equivalents and Short-Term Investments CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Cash equivalents include items almost as liquid as cash with maturity periods of three months or less when purchased. As of September 30, 2021 and December 31, 2020, the Company’s cash and cash equivalents were composed of:
September 30,
2021
December 31,
2020
UnauditedAudited
Cash$27,768 $20,339 
Money market funds422,082 214,335 
U.S. Treasury bills239,987 — 
Total cash and cash equivalents$689,837 $234,674 
As of September 30, 2021 and December 31, 2020, the Company’s short-term investments were:
September 30,
2021
December 31,
2020
 UnauditedAudited
U.S. Treasury bills$199,948 607,902 
Term deposits44,000 — 
Short-term investments$243,948 607,902 
The Company invests in marketable U.S. Treasury Bills (“T-bills”) that are classified as held-to-maturity securities. The amortized cost and recorded basis of the T-bills are presented as cash and cash equivalents and short-term investments according their maturity periods.
Quoted market prices were applied to determine the fair value of cash equivalents and short-term investments, therefore they were categorized as Level 1 in accordance with ASC 820, “Fair Value Measurements and Disclosures.” The estimated fair value of the Company’s short-term investments as of September 30, 2021 and December 31, 2020 was $243,964 and $607,905, respectively.
v3.21.2
Inventories
9 Months Ended
Sep. 30, 2021
Inventory Disclosure [Abstract]  
Inventories INVENTORIESInventories are stated at the lower of cost or net realizable value. The weighted average methodology is applied to determine cost. As of September 30, 2021 and December 31, 2020, the Company’s inventories were composed of:
September 30,
2021
December 31,
2020
 UnauditedAudited
Raw materials$1,615 $5,175 
Work in progress5,921 4,896 
Finished products15,106 17,351 
Total$22,642 $27,422 
v3.21.2
Commitments and Contingent Liabilities
9 Months Ended
Sep. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities COMMITMENTS AND CONTINGENT LIABILITIES
Operating Leases. The facilities of the Company are leased under various operating lease agreements for periods, including options for extensions, ending no later than 2030. The Company also leases motor vehicles under various operating leases, which expire on various dates, the latest of which is in 2024.
Pledged deposits and bank guarantees. As of September 30, 2021 and December 31, 2020, the Company pledged bank deposits of $1,408 and $1,438, respectively, to cover bank guarantees in respect of its leases of operating
facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $1,747 and $1,687, respectively.

Senior secured revolving credit facility. On November 6, 2020, the Company entered into a new three-year $150,000 senior secured revolving credit facility with a syndicate of relationship banks. For additional information, see Note 12(c) to the Consolidated Financial Statements in the 2020 10-K. As of September 30, 2021, the Company had no outstanding balance borrowed under the facility.
v3.21.2
Convertible Note
9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Convertible Note CONVERTIBLE NOTE
On November 5, 2020, the Company issued $575,000 aggregate principal amount of 0% Convertible Senior Notes due 2025 (the “Notes”).
The Notes are senior unsecured obligations of the Company. The Notes do not bear regular interest, and the principal amount of the Notes will not accrete. Special interest, if any, payable in accordance with the terms of the Notes will be payable in cash semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021. The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted. For additional information, see Note 10(a) to the Consolidated Financial Statements in the 2020 10-K.
In January 2021, the Company irrevocably elected to settle all conversions of Notes by a combination of cash and the Company's ordinary shares and that the cash portion per $1,000 principal amount of Notes for all conversion settlements shall be $1,000. Accordingly, from and after the date of the election, upon conversion of any Notes, holders of Notes will receive, with respect to each $1,000 principal amount of Notes converted, cash in an amount up to $1,000 and the balance of the conversion value, if any, in ordinary shares (the "Conversion Shares").
The net carrying amount of the liability and equity components of the Notes as of September 30, 2021 and December 31, 2020 are as follows:
September 30,
2021
December 31,
2020
UnauditedAudited
Liability component, net:
Principal amount$575,000 $575,000 
Unamortized discount — (132,797)
Unamortized issuance costs (13,612)(12,298)
Net carrying amount of liability component (1)$561,388 $429,905 
Equity component, net:
Conversion feature$— $136,402 
Issuance costs
— (3,928)
Net carrying amount of equity component$— $132,474 
(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair value of the Net carrying amount of liability component of the Notes as of September 30, 2021 and December 31, 2020 were $476,789 and $450,437, respectively.
Finance expense related to the Notes was as follows:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
2021202020212020
UnauditedUnauditedAudited
Amortization of debt discount
$— $— $— $— $3,605 
Amortization of debt issuance costs
826 — 2,511 — 333 
Total finance expense recognized
$826 $— $2,511 $— $3,938 
Effective January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach
v3.21.2
Share Option Plans and ESPP
9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Abstract]  
Share Option Plans and ESPP SHARE OPTION PLANS AND ESPP
In September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.
Options granted under the 2015 Plan generally have a four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three year period. PSUs granted under the 2015 Plan generally vest between a three- and six-year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of September 30, 2021, 14,467,854 ordinary shares were available for grant under the 2015 Plan.
A summary of the status of the Company’s option plans as of September 30, 2021 and changes during the period then ended is presented below:
Nine months ended September 30, 2021
Unaudited
Number
of options
Weighted
average
exercise
price
Outstanding at beginning of year9,220,326 $26.21 
Granted425,339 154.03 
Exercised(918,859)21.54 
Forfeited and canceled(101,320)60.64 
Outstanding as of September 30, 20218,625,486 $32.61 
Exercisable options5,153,158 $19.35 
For the nine months ended September 30, 2021, options to purchase 918,859 ordinary shares were exercised, resulting in the issuance of 918,859 ordinary shares.
A summary of the status of the Company’s RSUs and PSUs as of September 30, 2021 and changes during the period then ended is presented below.
Nine months ended September 30, 2021
Unaudited
Number
of RSU/PSUs
Weighted
average
grant date fair value
Unvested at beginning of year4,466,151 $54.06 
Granted592,104 140.46 
Vested(547,140)51.38 
Forfeited and cancelled(52,283)89.79 
Unvested as of September 30, 2021 (1)4,458,832 65.44 

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of September 30, 2021, in accordance with ASC 718 as follows:
 September 30, 2021
Number of
PSUs
Fair value at grant date per PSUTotal fair value at grant date
2,703,852 $48.16 $130,218 
108,113 69.37 7,500 
17,712 84.68 1,500 
5,266 94.94 500 
94,813 $114.26 10,833 
2,929,756 $150,551 
These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.
In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of September 30, 2021, 4,989,076 ordinary shares were available to be purchased by eligible employees under the ESPP.
The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. We assessed fair value using the following underlying assumptions: 
Nine months ended September 30,Year ended December 31,
2020
20212020
UnauditedAudited
Stock Option Plans
Expected term (years)
5.50-6.00
5.50-6.25
5.50-6.25
Expected volatility
60%-63%
54%-56%
54%-56%
Risk-free interest rate
0.78%-1.02%
0.30%-0.86%
0.30%-0.86%
Dividend yield0.00 %0.00 %0.00 %
ESPP
Expected term (years)0.500.500.50
Expected volatility
54%-81%
47%-66%
47%-66%
Risk-free interest rate
0.05%-0.09%
0.17%-1.57%
0.17%-1.57%
Dividend yield0.00 %0.00 %0.00 %
The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and nine months ended September 30, 2021 and 2020 and the year ended December 31, 2020 was:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
2021202020212020
UnauditedUnauditedAudited
Cost of revenues$808 $767 $2,368 $1,916 $2,221 
Research, development and clinical trials7,761 5,101 21,390 12,275 18,125 
Sales and marketing5,806 4,677 16,706 13,061 17,672 
General and administrative11,383 9,576 32,038 28,196 37,703 
Total share-based compensation expense$25,758 $20,121 $72,502 $55,448 $75,721 
v3.21.2
Basic and Diluted Net Income (Loss) Per Ordinary Share
9 Months Ended
Sep. 30, 2021
Earnings Per Share [Abstract]  
Basic and diluted net income (loss) per ordinary share Basic and diluted net income (loss) per ordinary shareBasic net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares outstanding during the period, plus potential dilutive shares (deriving from options, RSUs, PSUs, convertible notes and the ESPP) considered outstanding during the period, in accordance with ASC 260-10, as determined under the if-converted method. The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:
 Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
 2021202020212020
UnauditedUnauditedAudited
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share$(13,124)$9,284 $(31,893)$14,891 $19,808 
Weighted average number of ordinary shares used in computing basic net income (loss) per share103,731,147 101,234,306 103,281,380 100,601,427 100,930,866 
Potentially dilutive shares that were excluded from the computation of basic net income (loss) per share:
Options— 6,656,439 — 6,688,840 6,967,554 
Restricted share units— 738,456 — 808,536 945,612 
ESPP— 14,613 — 14,613 33,616 
Weighted average number of ordinary shares used in computing diluted net income (loss) per share103,731,147 108,643,814 103,281,380 108,113,416 108,877,648 
Weighted anti-dilutive shares outstanding which were not included in the diluted calculation8,084,045 952,823 8,827,739 717,492 1,307,762 
Basic net income (loss) per ordinary share$(0.13)$0.09 $(0.31)$0.15 $0.20 
Diluted net income (loss) per ordinary share$(0.13)$0.09 $(0.31)$0.14 $0.18 
v3.21.2
Supplemental Information
9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Supplemental Information SUPPLEMENTAL INFORMATION
The Company operates in a single reportable segment.
The following table presents long-lived assets by location:
September 30,
2021
December 31,
2020
 UnauditedAudited
United States$12,172 $11,868 
Israel5,037 4,370 
Switzerland3,978 2,849 
Japan928 1,230 
Germany1,042 1,075 
Others1,095 1,233 
Total$24,252 $22,625 

The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
2021202020212020
UnauditedUnauditedAudited
United States$88,032 $92,635 $261,079 $243,103 $340,782 
EMEA:
Germany23,208 22,756 74,934 66,027 93,264 
Other EMEA7,081 5,468 23,035 12,069 18,654 
Japan8,778 7,523 25,806 21,153 29,076 
Greater China (1)6,507 4,278 16,964 8,061 12,590 
Total net revenues$133,606 $132,660 $401,818 $350,413 $494,366 
(1) For additional information, see Note 12 to the Consolidated Financial Statements in the 2020 10-K.
v3.21.2
Organization and Basis of Presentation (Policies)
9 Months Ended
Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Recently Adopted Accounting Pronouncements
Recently Adopted Accounting Pronouncements.
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under Accounting Standards Codification ("ASC Topic 815"), Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020, and can be adopted on either a fully retrospective or modified retrospective basis. The Company early adopted ASU 2020-06, effective January 1, 2021 on a modified retrospective basis.
The impact of the Company’s adoption of ASU 2020-06 on the balance sheet as of January 1, 2021 was an increase in long term debt, net of $128,972, a decrease in additional paid-in capital of $132,474, and a decrease in accumulated deficit of $3,502. Interest expense recognized in future periods will be reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. For additional information see Note 5 of these unaudited consolidated financial statements.
In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance. ASU 2019-12 is effective for the Company as of January 1, 2021 and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.
v3.21.2
Cash, Cash Equivalents and Short-Term Investments (Tables)
9 Months Ended
Sep. 30, 2021
Cash, Cash Equivalents, and Short-term Investments [Abstract]  
Summary of Cash and Cash Equivalents As of September 30, 2021 and December 31, 2020, the Company’s cash and cash equivalents were composed of:
September 30,
2021
December 31,
2020
UnauditedAudited
Cash$27,768 $20,339 
Money market funds422,082 214,335 
U.S. Treasury bills239,987 — 
Total cash and cash equivalents$689,837 $234,674 
Summary of Amortized Cost and Recorded Basis of T-bills in Short-Term Investments
As of September 30, 2021 and December 31, 2020, the Company’s short-term investments were:
September 30,
2021
December 31,
2020
 UnauditedAudited
U.S. Treasury bills$199,948 607,902 
Term deposits44,000 — 
Short-term investments$243,948 607,902 
The Company invests in marketable U.S. Treasury Bills (“T-bills”) that are classified as held-to-maturity securities. The amortized cost and recorded basis of the T-bills are presented as cash and cash equivalents and short-term investments according their maturity periods.
v3.21.2
Inventories (Tables)
9 Months Ended
Sep. 30, 2021
Inventory Disclosure [Abstract]  
Schedule of Inventories As of September 30, 2021 and December 31, 2020, the Company’s inventories were composed of:
September 30,
2021
December 31,
2020
 UnauditedAudited
Raw materials$1,615 $5,175 
Work in progress5,921 4,896 
Finished products15,106 17,351 
Total$22,642 $27,422 
v3.21.2
Convertible Note (Tables)
9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Summary of the Convertible Notes
The net carrying amount of the liability and equity components of the Notes as of September 30, 2021 and December 31, 2020 are as follows:
September 30,
2021
December 31,
2020
UnauditedAudited
Liability component, net:
Principal amount$575,000 $575,000 
Unamortized discount — (132,797)
Unamortized issuance costs (13,612)(12,298)
Net carrying amount of liability component (1)$561,388 $429,905 
Equity component, net:
Conversion feature$— $136,402 
Issuance costs
— (3,928)
Net carrying amount of equity component$— $132,474 
(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair value of the Net carrying amount of liability component of the Notes as of September 30, 2021 and December 31, 2020 were $476,789 and $450,437, respectively.
Finance expense related to the Notes was as follows:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
2021202020212020
UnauditedUnauditedAudited
Amortization of debt discount
$— $— $— $— $3,605 
Amortization of debt issuance costs
826 — 2,511 — 333 
Total finance expense recognized
$826 $— $2,511 $— $3,938 
v3.21.2
Share Option Plans and ESPP (Tables)
9 Months Ended
Sep. 30, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Abstract]  
Schedule of Stock Option Plans
A summary of the status of the Company’s option plans as of September 30, 2021 and changes during the period then ended is presented below:
Nine months ended September 30, 2021
Unaudited
Number
of options
Weighted
average
exercise
price
Outstanding at beginning of year9,220,326 $26.21 
Granted425,339 154.03 
Exercised(918,859)21.54 
Forfeited and canceled(101,320)60.64 
Outstanding as of September 30, 20218,625,486 $32.61 
Exercisable options5,153,158 $19.35 
Schedule of RSUs and PSUs A summary of the status of the Company’s RSUs and PSUs as of September 30, 2021 and changes during the period then ended is presented below.
Nine months ended September 30, 2021
Unaudited
Number
of RSU/PSUs
Weighted
average
grant date fair value
Unvested at beginning of year4,466,151 $54.06 
Granted592,104 140.46 
Vested(547,140)51.38 
Forfeited and cancelled(52,283)89.79 
Unvested as of September 30, 2021 (1)4,458,832 65.44 

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of September 30, 2021, in accordance with ASC 718 as follows:
 September 30, 2021
Number of
PSUs
Fair value at grant date per PSUTotal fair value at grant date
2,703,852 $48.16 $130,218 
108,113 69.37 7,500 
17,712 84.68 1,500 
5,266 94.94 500 
94,813 $114.26 10,833 
2,929,756 $150,551 
Schedule of Fair Value Assumptions Used for All Equity Based Awards Estimated Using Black-Scholes Option Pricing Model
The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. We assessed fair value using the following underlying assumptions: 
Nine months ended September 30,Year ended December 31,
2020
20212020
UnauditedAudited
Stock Option Plans
Expected term (years)
5.50-6.00
5.50-6.25
5.50-6.25
Expected volatility
60%-63%
54%-56%
54%-56%
Risk-free interest rate
0.78%-1.02%
0.30%-0.86%
0.30%-0.86%
Dividend yield0.00 %0.00 %0.00 %
ESPP
Expected term (years)0.500.500.50
Expected volatility
54%-81%
47%-66%
47%-66%
Risk-free interest rate
0.05%-0.09%
0.17%-1.57%
0.17%-1.57%
Dividend yield0.00 %0.00 %0.00 %
Schedule of Non-cash Share-based Compensation Expense Related to Company's Equity-Based Awards The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and nine months ended September 30, 2021 and 2020 and the year ended December 31, 2020 was:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
2021202020212020
UnauditedUnauditedAudited
Cost of revenues$808 $767 $2,368 $1,916 $2,221 
Research, development and clinical trials7,761 5,101 21,390 12,275 18,125 
Sales and marketing5,806 4,677 16,706 13,061 17,672 
General and administrative11,383 9,576 32,038 28,196 37,703 
Total share-based compensation expense$25,758 $20,121 $72,502 $55,448 $75,721 
v3.21.2
Basic and Diluted Net Income (Loss) Per Ordinary Share (Tables)
9 Months Ended
Sep. 30, 2021
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Net Income (Loss) Per Ordinary Share The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:
 Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
 2021202020212020
UnauditedUnauditedAudited
Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share$(13,124)$9,284 $(31,893)$14,891 $19,808 
Weighted average number of ordinary shares used in computing basic net income (loss) per share103,731,147 101,234,306 103,281,380 100,601,427 100,930,866 
Potentially dilutive shares that were excluded from the computation of basic net income (loss) per share:
Options— 6,656,439 — 6,688,840 6,967,554 
Restricted share units— 738,456 — 808,536 945,612 
ESPP— 14,613 — 14,613 33,616 
Weighted average number of ordinary shares used in computing diluted net income (loss) per share103,731,147 108,643,814 103,281,380 108,113,416 108,877,648 
Weighted anti-dilutive shares outstanding which were not included in the diluted calculation8,084,045 952,823 8,827,739 717,492 1,307,762 
Basic net income (loss) per ordinary share$(0.13)$0.09 $(0.31)$0.15 $0.20 
Diluted net income (loss) per ordinary share$(0.13)$0.09 $(0.31)$0.14 $0.18 
v3.21.2
Supplemental Information (Tables)
9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Schedule of Long-Lived Assets by Location
The following table presents long-lived assets by location:
September 30,
2021
December 31,
2020
 UnauditedAudited
United States$12,172 $11,868 
Israel5,037 4,370 
Switzerland3,978 2,849 
Japan928 1,230 
Germany1,042 1,075 
Others1,095 1,233 
Total$24,252 $22,625 
Schedule of Revenues by Geographic Region
The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:
Three months ended September 30,Nine months ended September 30,Year ended December 31,
2020
2021202020212020
UnauditedUnauditedAudited
United States$88,032 $92,635 $261,079 $243,103 $340,782 
EMEA:
Germany23,208 22,756 74,934 66,027 93,264 
Other EMEA7,081 5,468 23,035 12,069 18,654 
Japan8,778 7,523 25,806 21,153 29,076 
Greater China (1)6,507 4,278 16,964 8,061 12,590 
Total net revenues$133,606 $132,660 $401,818 $350,413 $494,366 
(1) For additional information, see Note 12 to the Consolidated Financial Statements in the 2020 10-K.
v3.21.2
Organization and Basis of Presentation (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Jun. 30, 2021
Mar. 31, 2021
Dec. 31, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Dec. 31, 2019
New Accounting Pronouncement, Early Adoption [Line Items]                
Stockholders' equity $ 413,164 $ 397,269 $ 372,134 $ 476,526 $ 307,037 $ 267,822 $ 241,948 $ 217,790
Additional paid-in capital                
New Accounting Pronouncement, Early Adoption [Line Items]                
Stockholders' equity 1,073,532 1,044,732 1,005,785 1,111,435 946,267 916,632 892,510 871,442
Retained earnings (accumulated deficit)                
New Accounting Pronouncement, Early Adoption [Line Items]                
Stockholders' equity $ (659,468) $ (646,344) $ (631,703) (631,077) $ (635,994) $ (645,278) $ (646,933) $ (650,885)
Cumulative Effect, Period of Adoption, Adjustment                
New Accounting Pronouncement, Early Adoption [Line Items]                
Stockholders' equity       (128,972)        
Cumulative Effect, Period of Adoption, Adjustment | Additional paid-in capital                
New Accounting Pronouncement, Early Adoption [Line Items]                
Stockholders' equity       (132,474)        
Cumulative Effect, Period of Adoption, Adjustment | Retained earnings (accumulated deficit)                
New Accounting Pronouncement, Early Adoption [Line Items]                
Stockholders' equity       $ 3,502        
v3.21.2
Cash, Cash Equivalents and Short-Term Investments - Summary of Cash and Cash Equivalents (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Cash, Cash Equivalents, and Short-term Investments [Abstract]    
Cash $ 27,768 $ 20,339
Money market funds 422,082 214,335
U.S. Treasury bills 239,987 0
Total cash and cash equivalents $ 689,837 $ 234,674
v3.21.2
Cash, Cash Equivalents and Short-Term Investments - Summary of Amortized Cost And Recorded Basis of T-bills in Short Term Investments (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Restricted Cash and Cash Equivalents Items [Line Items]    
Short-term investments $ 243,948 $ 607,902
U.S. Treasury bills    
Restricted Cash and Cash Equivalents Items [Line Items]    
Short-term investments 199,948 607,902
Term deposits    
Restricted Cash and Cash Equivalents Items [Line Items]    
Short-term investments $ 44,000 $ 0
v3.21.2
Cash, Cash Equivalents and Short-Term Investments - Additional Information (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Cash, Cash Equivalents, and Short-term Investments [Abstract]    
Estimated fair value of short-term investments $ 243,964 $ 607,905
v3.21.2
Inventories (Details) - USD ($)
$ in Thousands
Sep. 30, 2021
Dec. 31, 2020
Inventory Disclosure [Abstract]    
Raw materials $ 1,615 $ 5,175
Work in progress 5,921 4,896
Finished products 15,106 17,351
Total $ 22,642 $ 27,422
v3.21.2
Commitments and Contingent Liabilities (Details) - USD ($)
Nov. 06, 2020
Sep. 30, 2021
Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]      
Pledged bank deposits   $ 1,408,000 $ 1,438,000
Operating lease and other contractual commitments   $ 1,747,000 $ 1,687,000
Revolving Credit Facility      
Line of Credit Facility [Line Items]      
Contractual term 3 years    
Maximum borrowing capacity $ 150,000,000    
v3.21.2
Convertible Note - Additional Information (Details) - Convertible Debt - the “Notes” - USD ($)
1 Months Ended
Jan. 31, 2021
Nov. 05, 2020
Debt Instrument [Line Items]    
Aggregate principal amount   $ 575,000,000
Stated interest rate   0.00%
Cash portion per $1,000 principal amount of Notes converted $ 1,000,000