0001603756-24-000077 | 10-Q | XBRL Viewer

Nature of Operations and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Revenue Disaggregated by Product and Geographic Market

The following table provides additional information pertaining to net revenue disaggregated by product and geographic market for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
SNM net revenue
United States	$	90,072	$	72,212	$	248,988	$	198,270
International markets	2,277		1,737		6,255		5,025
	$	92,349	$	73,949	$	255,243	$	203,295
Bulkamid net revenue
United States	$	19,050	$	15,579	$	52,575	$	41,998
International markets	4,794		3,572		14,349		11,351
	$	23,844	$	19,151	$	66,924	$	53,349
Total net revenue	$	116,193	$	93,100	$	322,167	$	256,644

Schedule of Changes in Allowance for Credit Losses

The following table summarizes the changes in our allowance for credit losses (in thousands):


	Nine Months Ended September 30,
	2024		2023
Balance at beginning of period	$	442	$	321
Write-offs	(165)		(12)
Bad debt expense	921		71
Balance at end of period	$	1,198	$	380

Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the unaudited condensed consolidated balance sheets to the amounts reported within the consolidated statements of cash flows at September 30, 2024 and December 31, 2023 (in thousands):


	September 30,		December 31,
	2024		2023
	(unaudited)
Cash and cash equivalents	$	239,452	$	104,811
Restricted cash	22,082		$	12,714
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	261,534	$	117,525

Schedule of Changes in Fair Value of Liabilities Measured on Recurring Basis

The following table summarizes the changes in the fair value of recurring Level 3 fair value measurements during the nine months ended September 30, 2023 (in thousands):




Liabilities
Contingent consideration:
Balance at beginning of period	$	32,600

Change in fair value included in earnings	2,400
Payment made	(35,000)
Balance at end of period	$	—

Schedule of Fair Value Hierarchy for Assets Measured on Recurring Basis

The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):


	Fair Value Measurements at September 30, 2024
Assets:	Level 1		Level 2		Level 3		Total
Commercial paper	$	—	$	203,626	$	—	$	203,626
Corporate notes	—		7,520		—		7,520
U.S. government and agency securities	47,919		—		—		47,919
	$	47,919	$	211,146	$	—	$	259,065

_____________________________________________

(1) As of September 30, 2024, commercial paper investments of $109.6 million, U.S. government and agency securities of $39.9 million, and corporate notes of $3.8 million are included in cash and cash equivalents on the unaudited condensed consolidated balance sheets, as the investments had a maturity of three months or less from the date of purchase.


	Fair Value Measurements at December 31, 2023
Assets:	Level 1		Level 2		Level 3		Total
Commercial paper	$	—	$	179,881	$	—	$	179,881
Corporate notes	—		18,279		—		18,279
U.S. government and agency securities	91,703		—		—		91,703
	$	91,703	$	198,160	$	—	$	289,863

_____________________________________________

(1) As of December 31, 2023, commercial paper investments of $49.7 million are included in cash and cash equivalents on the condensed consolidated balance sheets, as the investments had a maturity of three months or less from the date of purchase.

Schedule of Available-for-sale Debt Securities By Significant Investment Category

The following table summarizes the Company’s cash equivalents and investments in available-for-sale debt securities by significant investment category as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
	Cost		Unrealized gains		Unrealized losses		Fair value
Cash equivalents:
Commercial paper	$	109,639	$	—	$	—	$	109,639
Corporate notes	3,753		—		—		3,753
U.S. government and agency securities	39,900		—		—		39,900
Total cash equivalents	$	153,292	$	—	$	—	$	153,292
Short-term investments:
Commercial paper	$	93,987	$	—	$	—	$	93,987
Corporate notes	3,764		3		—		3,767
U.S. government and agency securities	8,016		3		—		8,019
Total short-term investments	$	105,767	$	6	$	—	$	105,773

Total	$	259,059	$	6	$	—	$	259,065


	December 31, 2023
	Cost		Unrealized gains		Unrealized losses		Fair value
Cash equivalents:
Commercial paper	$	49,714	$	—	$	—	$	49,714


Total cash equivalents	$	49,714	$	—	$	—	$	49,714
Short-term investments:
Commercial paper	$	130,161	$	9	$	(3)	$	130,167
Corporate notes	18,272		18		(11)		18,279
U.S. government and agency securities	91,670		40		(7)		91,703
Total short-term investments	$	240,103	$	67	$	(21)	$	240,149

Total	$	289,817	$	67	$	(21)	$	289,863

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-9

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-3

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (aa)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (aaa)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-2

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-3

Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-3

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-3

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481800/320-10-50-3

+ Details

Nature of Operations and Summary of Significant Accounting Policies - Schedule of Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 239,452	$ 104,811
Restricted cash	22,082	12,714
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$ 261,534	$ 117,525	$ 147,323	$ 238,846

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flows from Operating Activities
Net loss	$ (12,234)	$ (12,662)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization	9,298	9,295
Stock-based compensation	26,393	33,388
Acquired in-process research & development	0	15,447
Provision for allowance of credit losses	756	59
Change in fair value of contingent consideration	0	2,400
Deferred income taxes	4,042	(2,896)
Other items, net	4,016	208
Changes in operating assets and liabilities
Accounts receivable	(6,016)	(4,164)
Inventory	(37,620)	(19,326)
Prepaid expenses and other current assets	666	(1,814)
Other assets	(778)	(2,326)
Accounts payable	1,564	5,577
Accrued liabilities	(4,829)	(623)
Accrued compensation and benefits	20,931	(2,502)
Operating lease liabilities	2,475	(337)
Other liabilities	0	(27,370)
Net cash provided by (used in) operating activities	8,664	(7,646)
Cash Flows from Investing Activities
Purchases of property and equipment	(7,614)	(2,243)
Purchases of short-term investments	(240,244)	(288,914)
Proceeds from sales and maturities of short-term investments	379,046	212,175
Net cash provided by (used in) investing activities	131,188	(78,982)
Cash Flows from Financing Activities
Payment of contingent consideration recognized at acquisition	0	(7,630)
Proceeds from exercise of stock options	3,014	3,672
Net cash provided by (used in) financing activities	3,014	(3,958)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	1,143	(937)
Net increase (decrease) in cash, cash equivalents, and restricted cash	144,009	(91,523)
Cash, cash equivalents and restricted cash, beginning of year	117,525	238,846
Cash, cash equivalents and restricted cash, end of period	261,534	147,323
Supplemental Disclosure of Cash Flow Information
Cash paid for interest	0	55
Cash paid for taxes	848	94
Noncash Investing and Financing Activities
Property and equipment acquired but not yet paid	0	7
Property and equipment acquired from tenant improvement allowance	4,900	0
Common stock issuance for acquired in-process research & development	$ 0	$ 15,447

Nature of Operations and Summary of Significant Accounting Policies - Narrative (Details)			1 Months Ended	3 Months Ended						9 Months Ended		12 Months Ended
	Mar. 02, 2021 USD ($) shares	Feb. 25, 2021 USD ($) shares	Apr. 30, 2023 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Jun. 30, 2024 USD ($)	Mar. 31, 2024 USD ($)	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2024 USD ($) segment $ / shares shares	Sep. 30, 2023 USD ($) shares	Dec. 31, 2013 USD ($) shares	Jan. 08, 2024 $ / shares	Dec. 31, 2023 USD ($) $ / shares	Oct. 05, 2023
Nature of Operations:
Common stock, par value (in USD per share) \| $ / shares				$ 0.0001						$ 0.0001				$ 0.0001
Basis of Presentation and Liquidity:
Net loss				$ 21,000	$ (6,899,000)	$ 19,112,000	$ (3,928,000)	$ 7,342,000	$ 9,248,000	$ 12,234,000	$ 12,662,000
Accumulated deficit				392,586,000						392,586,000				$ 380,352,000
Cash, cash equivalents, short-term investments, and restricted cash				367,300,000						367,300,000				357,700,000
Outstanding borrowings				0						0
Revenue Recognition:
Allowance for product returns				300,000						300,000				300,000
Replacement costs				0			0			100,000	100,000
Warranty liability				200,000						200,000				100,000
Restricted Cash:
Restricted cash				22,082,000						22,082,000				12,714,000
Investment Securities:
Unrealized gain (loss) on investment securities				0			0			0	0
Inventory:
Finished goods inventory				81,100,000						81,100,000				48,900,000
Work-in-process inventory				10,700,000						10,700,000				10,500,000
Raw materials inventory				22,100,000						22,100,000				20,500,000
Inventory reserves				6,300,000						6,300,000				2,300,000
Goodwill:
Impairment charges related to goodwill										0	0
Intangible Asset:
Amortization of intangible assets				2,221,000			2,302,000			6,722,000	6,803,000
Impairment of Long-Lived Assets:
Impairment of long-lived assets										0	0
Impairment of indefinite-lived intangible assets										0	0
Advertising Expense:
Advertising expense				$ 5,900,000			5,200,000			$ 16,900,000	$ 13,600,000
Net Income (Loss) per Share of Common Stock
Potentially dilutive weighted-average shares not included in computation of diluted weighted average shares (in shares) \| shares				1,481,838						1,676,402	2,144,827
Segment Reporting:
Number of operating segments \| segment										1
United States \| Revenue Benchmark \| Geographic Concentration Risk
Segment Reporting:
Concentration risk (as a percent)										90.00%
Restricted Stock Units
Stock-Based Compensation:
Vesting period (in years)										1 year
Patent license asset
Intangible Asset:
Finite-lived intangible asset acquired												$ 1,000,000.0
Finite-lived intangible assets, weighted-average amortization period (in years)												8 years 8 months 15 days
Patent license asset \| Preferred Stock
Intangible Asset:
Stock issued for purchase of intangible asset (in shares) \| shares												50,000
Fair value of shares issued for purchase of intangible asset												$ 1,000,000.0
Exclusive license asset
Intangible Asset:
Finite-lived intangible asset acquired	$ 3,300,000
Finite-lived intangible assets, weighted-average amortization period (in years)	4 years
Vendor credit in accounts payable	$ 300,000
Amortization of intangible assets				$ 300,000			300,000			$ 700,000	$ 700,000
Impairment of intangible asset										$ 0	0
Exclusive license asset \| Common Stock
Intangible Asset:
Stock issued for purchase of intangible asset (in shares) \| shares	65,594
Fair value of shares issued for purchase of intangible asset	$ 3,600,000
Minimum
Inventory:
Inventory shelf life (in months)										12 months
Property and Equipment:
Property and equipment useful life (in years)				3 years						3 years
Stock-Based Compensation:
Requisite service period of recognition of compensation cost (in years)										3 years
Minimum \| Stock Option and Restricted Stock-Based Awards
Stock-Based Compensation:
Vesting period (in years)										3 years
Maximum
Inventory:
Inventory shelf life (in months)										60 months
Property and Equipment:
Property and equipment useful life (in years)				7 years						7 years
Stock-Based Compensation:
Requisite service period of recognition of compensation cost (in years)										4 years
Maximum \| Stock Option and Restricted Stock-Based Awards
Stock-Based Compensation:
Vesting period (in years)										4 years
F15
Restricted Cash:
Net revenue previously received for sales subject to dispute (as a percent)															4.00%
Restricted cash				$ 22,100,000						$ 22,100,000				$ 12,700,000
Royalty payment (as a percent)				4.00%						4.00%
Radian, LLC
Acquisition of in-process research & development (IPR&D) from Radian, LLC:
Consideration amount, equity interest issued and issuable (in shares) \| shares			264,783
Consideration amount, contingent consideration			$ 2,500,000
Acquired in-process research & development			$ 15,400,000
Consideration amount, per share (in USD per share) \| $ / shares			$ 58.34
Boston Scientific Corporation
Nature of Operations:
Common stock, par value (in USD per share) \| $ / shares													$ 0.0001
Equity conversion to cash, per share (in USD per share) \| $ / shares													$ 71.00
Contura
Fair Value of Financial Instruments:
Cash consideration transferred		$ 141,300,000
Stock transferred in acquisition (in shares) \| shares		1,096,583
Maximum contingent consideration		$ 35,000,000
Contingent consideration, term (in months)		12 months
Amount of sales to achieve for maximum contingent consideration		$ 50,000,000
Contingent consideration, milestone met payment term after quarter (in days)		50 days
Intangible Asset:
Amortization of intangible assets				$ 2,000,000			$ 2,000,000			$ 6,100,000	6,100,000
Contura \| Customer relationships
Intangible Asset:
Impairment of intangible asset										$ 0	$ 0

Stock-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Number of Options
Outstanding at beginning of period (in shares)	814,780
Options exercised (in shares)	(132,880)
Options forfeited (in shares)	(1,125)
Outstanding at end of period (in shares)	680,775
Weighted-Average Exercise Price Per Share
Outstanding at beginning of period (in USD per share)	$ 18.47
Options exercised (in USD per share)	22.68
Options forfeited (in USD per share)	50.01
Outstanding at end of period (in USD per share)	$ 17.60
Aggregate Intrinsic Value
Intrinsic value of options outstanding	$ 35,401	$ 35,652
Intrinsic value of options exercised	$ 6,040

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Schedule of Stock-Based Compensation Expense

Stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of comprehensive income (loss) is allocated as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	1,295	$	2,344	$	4,326	$	6,962
General and administrative	1,266		3,291		4,554		9,176
Sales and marketing	5,670		5,835		17,513		17,250
	$	8,231	$	11,470	$	26,393	$	33,388

Schedule of Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2024 under the 2014 and 2018 Plans (in thousands, except share and per share data):


	Number of Options	Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at December 31, 2023	814,780	$	18.47	$	35,652

Options exercised	(132,880)	22.68		$	6,040	(1)
Options forfeited	(1,125)	50.01
Outstanding at September 30, 2024	680,775	$	17.60	$	35,401	(2)

_____________________________________________

(1) Represents the total difference between the Company’s closing stock price at the time of exercise and the stock option exercise price, multiplied by the number of options exercised.

(2) Represents the total difference between the Company’s closing stock price on the last trading day of the third quarter of 2024 and the stock option exercise price, multiplied by the number of in-the-money options as of September 30, 2024. The amount of intrinsic value will change based on the fair market value of the Company’s stock.

Schedule of Restricted Shares Awards and Restricted Stock Units Activity

The following table summarizes restricted shares awards activity for the nine months ended September 30, 2024:


	Number of Restricted Shares Awards	Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2023	1,303,704	$	55.86
Restricted shares awards granted	30,400	67.88
Restricted shares awards vested	(509,655)	53.37
Restricted shares awards forfeited	(30,513)	59.62
Outstanding at September 30, 2024	793,936	$	57.78

The following table summarizes restricted stock units activity for the nine months ended September 30, 2024:


	Number of Restricted Stock Units	Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2023	230,700	$	70.20
Restricted stock units granted	38,450	73.16
Restricted stock units vested	(206,734)	65.77

Outstanding at September 30, 2024	62,416	$	86.70

Goodwill and Intangible Assets - Schedule of Finite-Lived and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets, Net:
Accumulated Amortization	$ (33,215)	$ (26,493)
Impairment	(287)	(287)
Intangible Assets, Net (Excluding Goodwill):
Gross Carrying Amount	116,500	116,500
Accumulated Amortization	(33,215)	(26,493)
Impairment	(287)	(287)
Foreign currency translation adjustment	(4,544)	(8,345)
Intangible assets, net	78,454	81,375
Trade names and trademarks
Indefinite-lived Intangible Assets:
Gross Carrying Amount	19,700	19,700
Foreign currency translation adjustment	(542)	(1,482)
Intangible Assets, Net	$ 19,158	$ 18,218
Patent license asset
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	8 years 8 months 15 days	8 years 8 months 15 days
Finite-Lived Intangible Assets, Net:
Gross Carrying Amount	$ 1,000	$ 1,000
Accumulated Amortization	(1,000)	(1,000)
Impairment	0	0
Foreign currency translation adjustment	0	0
Intangible Assets, Net	0	0
Intangible Assets, Net (Excluding Goodwill):
Accumulated Amortization	(1,000)	(1,000)
Impairment	$ 0	$ 0
Exclusive license asset
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	4 years	4 years
Finite-Lived Intangible Assets, Net:
Gross Carrying Amount	$ 3,300	$ 3,300
Accumulated Amortization	(3,080)	(2,420)
Impairment	0	0
Foreign currency translation adjustment	0	0
Intangible Assets, Net	220	880
Intangible Assets, Net (Excluding Goodwill):
Accumulated Amortization	(3,080)	(2,420)
Impairment	$ 0	$ 0
Technology
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	12 years	12 years
Finite-Lived Intangible Assets, Net:
Gross Carrying Amount	$ 81,100	$ 81,100
Accumulated Amortization	(24,305)	(19,236)
Impairment	0	0
Foreign currency translation adjustment	(3,468)	(6,140)
Intangible Assets, Net	53,327	55,724
Intangible Assets, Net (Excluding Goodwill):
Accumulated Amortization	(24,305)	(19,236)
Impairment	$ 0	$ 0
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period	12 years	12 years
Finite-Lived Intangible Assets, Net:
Gross Carrying Amount	$ 11,400	$ 11,400
Accumulated Amortization	(4,830)	(3,837)
Impairment	(287)	(287)
Foreign currency translation adjustment	(534)	(723)
Intangible Assets, Net	5,749	6,553
Intangible Assets, Net (Excluding Goodwill):
Accumulated Amortization	(4,830)	(3,837)
Impairment	$ (287)	$ (287)

Nature of Operations and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Principles of Consolidation	Principles of Consolidation The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Axonics Europe, S.A.S., Axonics Modulation Technologies U.K. Limited, Axonics Modulation Technologies Australia Pty Ltd, Axonics Women’s Health Limited, Bulkamid SARL, Axonics GmbH, and Contura, Inc. Intercompany accounts and transactions have been eliminated in consolidation.
Basis of Presentation and Liquidity	Basis of Presentation and Liquidity Interim Financial Statements The unaudited interim condensed consolidated financial statements and related footnote disclosures as of and for the three and nine months ended September 30, 2024 are unaudited, and are not necessarily indicative of the Company’s operating results for a full year. The unaudited interim condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial results for the three and nine months ended September 30, 2024 in accordance with United States generally accepted accounting principles (GAAP), however, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the U.S. Securities and Exchange Commission (SEC) rules and regulations relating to interim financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included within the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (filed with the SEC on February 29, 2024). Liquidity The Company began full-scale commercialization of its first r-SNM System in late 2019. The Company has expended significant resources on research and development activities, growing its operations organization and building and training its sales organization.
Use of Estimates	Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. The results of this evaluation then form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates, and such differences may be material to the consolidated financial statements. Such estimates and assumptions include the useful lives of property and equipment and intangible assets, the valuation of deferred income tax assets and liabilities, the valuation of contingent consideration liability, the valuation of stock-based compensation, the product returns reserve, the inventory obsolescence reserve and accounts receivable allowance for credit losses.
Revenue Recognition	Revenue Recognition Revenue recognized during the nine months ended September 30, 2024 and 2023 relates entirely to the sale of the Company’s products to its customers and distributors. The Company has revenue arrangements that consist of a single performance obligation. The Company recognizes revenue at the point in time when it transfers control of promised goods to its customers. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as discounts, where applicable. The Company also sells to distributors and applies the same policies as its revenue arrangements with customers, specifically that revenue is recognized at the point in time when it transfers control of promised goods to its distributors. The Company does not offer rights of return or price protection. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Payment terms, typically less than three months, do not include a significant financing component. The Company extends credit to its customers and distributors based upon an evaluation of their financial condition and credit history and generally requires no collateral. The Company does not have any contract balances related to product sales. The Company also does not have significant contract acquisition costs related to product sales. In accordance with Company policy and based on the Company’s historical experience, the allowance for product returns was $0.3 million and $0.3 million at September 30, 2024 and December 31, 2023, respectively, and is recorded as a reduction of gross revenue in its unaudited condensed consolidated statements of comprehensive income (loss). Damaged or defective products are replaced at no charge under the Company’s standard warranty. For the three and nine months ended September 30, 2024, the replacement costs were minimal and $0.1 million, respectively. For the three and nine months ended September 30, 2023, the replacement costs were minimal and $0.1 million, respectively. The replacement costs are recorded within the sales and marketing expenses in its unaudited condensed consolidated statements of comprehensive income (loss). The Company offers its standard warranty to all customers. The Company does not sell any warranties on a standalone basis. The Company’s warranty provides that its products are free of material defects and conform to specifications, and includes an offer to repair, replace or refund the purchase price of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The Company estimates warranty liability at the time of revenue recognition and records it as a charge to sales and marketing expense. The warranty liability as of September 30, 2024 and December 31, 2023 was $0.2 million and $0.1 million, respectively. Shipping and handling costs incurred for the delivery of goods to customers and distributors are included in cost of goods sold. Amounts billed to customers and distributors for shipping and handling are included in net revenue.
Allowance for Credit Losses	Allowance for Credit Losses The Company makes estimates of the collectability of accounts receivable in accordance with Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Company’s estimate of future credit losses is made by management based upon historical bad debts, customer receivable balances, age of customer receivable balances, customers’ financial conditions and reasonable forecasted economic trends. Despite the Company’s efforts to minimize credit risk exposure, customers could be adversely affected if future economic and industry trends change in such a manner as to negatively impact their cash flows. As a result, the Company’s future collection experience can differ significantly from historical collection trends. If the Company’s customers experience a negative impact on their cash flows, it could have a material adverse effect on the Company’s results of operations and financial condition.
Cash and Cash Equivalents and Restricted Cash	Cash and Cash Equivalents Cash equivalents consist of short-term, highly liquid investments purchased with a maturity of three months or less. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. At times, the cash and cash equivalent balances may exceed federally insured limits. The Company does not believe that this results in any significant credit risk as the Company’s policy is to place its cash and cash equivalents in highly-rated financial institutions. The Company also holds cash in foreign banks that are not federally insured. The Company has not experienced any losses on its deposits of cash and cash equivalents. Restricted Cash Restricted cash consists of amounts held by an escrow account. On September 18, 2023, the Company commenced an arbitration against AMF with Judicial Administration and Arbitration Services (JAMS) seeking, among other things, resolution that AMF’s purported attempt to terminate the AMF License Agreement, dated October 1, 2013, was ineffective and that the Company does not owe any royalties to AMF for the Company’s F15 product and that the Company was not required to pay royalties on its F15 product under the AMF License Agreement. AMF responded to the arbitration demand and asserted multiple claims. On October 5, 2023, the Company and AMF entered into an interim agreement while the arbitration proceedings were pending. Pursuant to this interim agreement, the Company agreed to deposit into an escrow account an amount equal to 4% of the net revenues previously received for sales of the Company’s F15 product that are the subject of dispute. As of September 30, 2024 and December 31, 2023, the Company has deposited approximately $22.1 million and $12.7 million, respectively, in the escrow account, and will continue to deposit the disputed 4% of net revenues of the Company’s F15 product with interest into the escrow account during the pendency of the arbitration proceedings. The Company has paid and, under this interim agreement, will continue to pay 4% royalties on rechargeable products. While the Company believes that it has meritorious defenses against AMF’s claims and intends to vigorously defend against those claims, there can be no assurance as to the outcome of the arbitration. For additional information, see Note 3.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: •Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. •Level 2: Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. •Level 3: Inputs are unobservable inputs based on the Company’s assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. Level 1 investments include U.S. government and agency securities, which are valued based on prices readily available in the active markets in which those securities are traded. Level 2 investments include commercial paper and corporate notes, which is valued on a recurring basis based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The carrying amounts reported in the unaudited condensed consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, and accounts payable, due to their short-term nature. The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess recorded as goodwill. The Company’s business combination of Contura involved potential payment of future consideration that was contingent upon the achievement of certain product development milestones and/or contingent on the acquired business reaching certain performance milestones. A liability was recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration was remeasured at each reporting period, and the change in fair value was recognized within operating expenses in the unaudited condensed consolidated statements of comprehensive income (loss). On February 25, 2021, the Company acquired Contura and its Bulkamid product, a urethral bulking agent indicated for the treatment of female SUI. In consideration for the acquisition, the Company paid approximately $141.3 million in cash and issued 1,096,583 shares of our common stock. The agreement also provided that the Company may pay an additional $35 million in the event Bulkamid sales in any consecutive 12-month period exceed $50 million (the Milestone) before December 31, 2024, with payment due within 50 business days following the quarter in which the Milestone has been met.
Investment Securities	Investment Securities The Company classifies its investment securities as available-for-sale. Those investments in debt securities with maturities less than 12 months at the balance sheet date are considered short-term investments. Those investments in debt securities with maturities greater than 12 months at the balance sheet date are considered long-term investments. The Company’s investment securities classified as available-for-sale are recorded at fair value based on the fair value hierarchy (Level 1 and Level 2 inputs in the fair value hierarchy), and consists primarily of commercial paper, corporate notes and U.S. government and agency securities. Unrealized gains or losses, deemed temporary in nature, are reported as other comprehensive income (loss) within the unaudited condensed consolidated statements of comprehensive income (loss). There were no unrealized gains or losses during the three and nine months ended September 30, 2024 and 2023. A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to net income (loss) and the corresponding establishment of a credit loss allowance for the security. Premiums (discounts) are amortized (accreted) over the life of the related security as an adjustment to yield using the straight-line interest method. Dividend, accretion and interest income are recognized when earned. Realized gains or losses are included in net loss and are derived using the specific identification method for determining the cost of securities sold. The Company holds investments in marketable debt securities that are classified and accounted for as cash equivalents or available-for-sale and are remeasured on a recurring basis. All of the Company’s available-for-sale debt securities are classified on the unaudited condensed consolidated balance sheets as cash equivalents or short-term investments.
Inventory, Net	Inventory, Net Inventory is stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. The Company reduces the carrying value of inventory for items that are potentially excess, obsolete, or slow-moving based on changes in customer demand, technology developments, or other economic factors. The Company capitalizes inventory produced for commercial sale. The Company capitalizes manufacturing costs as inventory following both the receipt of regulatory approval from regulatory bodies and the Company’s intent to commercialize. Costs associated with developmental products prior to satisfying the Company’s inventory capitalization criteria are charged to research and development expenses as incurred. Products that have been approved by certain regulatory authorities may also be used in clinical programs to assess the safety and efficacy of the products for usage that have not been approved by the FDA or other regulatory authorities. The form of product utilized for both commercial and certain clinical programs that are identical are included as inventory with an “alternative future use” as defined in ASC 730. Component materials and purchased products associated with clinical development programs are included in inventory and charged to research and development expenses when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use.” For products that are under development and have not yet been approved by regulatory authorities, purchased component materials are charged to research and development expenses when the inventory ownership transfers to the Company. The Company analyzes inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of its net realizable value, or inventory in excess of expected sales requirements. Although the manufacturing of the Company’s SNM systems is subject to strict quality control, certain batches or units of product may no longer meet quality specifications or may expire, which would require adjustments to the Company’s inventory values. The Company also applies judgment related to the results of quality tests that are performed throughout the production process, as well as the understanding of regulatory guidelines, to determine if it is probable that inventory will be saleable. These quality tests are performed throughout the pre- and post-production processes, and the Company continually gathers information regarding product quality for periods after the manufacturing date. The Company’s products currently have a maximum estimated shelf life range of 12 to 60 months and based on sales forecasts, the Company expects to realize the carrying value of the product inventory. In the future, reduced demand, quality issues, or excess supply beyond those anticipated by management may result in a material adjustment to inventory levels, which would be recorded as an increase to cost of sales. The determination of whether inventory costs will be realizable or not requires estimates by the Company’s management. A critical input in this determination is future expected inventory requirements based on internal sales forecasts. Management then compares these requirements to the expiry dates of inventory on hand. To the extent that inventory is expected to expire prior to being sold, management will write down the value of inventory.
Foreign Currency Translation	Foreign Currency Translation The functional currencies of the Company’s subsidiaries are currencies other than the U.S. dollar. The Company translates assets and liabilities of the foreign subsidiaries into U.S. dollars at the exchange rate in effect on the balance sheet date. Revenue and expenses of the subsidiaries are translated into U.S. dollars at the average exchange rate during the period. Gains or losses from these translation adjustments are reported as a separate component of stockholders’ equity in accumulated other comprehensive gain or loss until there is a sale or complete or substantially complete liquidation of the Company’s investment in the foreign subsidiary at which time the gains or losses will be realized and included in net income (loss). As of September 30, 2024 and December 31, 2023, all foreign currency translation gains (losses) have been unrealized and included in accumulated other comprehensive income (loss). Accumulated other comprehensive income (loss) consists entirely of losses or gains from translation of foreign subsidiaries at September 30, 2024 and December 31, 2023.
Property and Equipment	Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized over the lesser of the life of the lease or the useful life of the improvements. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations.
Goodwill	Goodwill Goodwill represents the excess purchase price over the fair values of both tangible and intangible assets acquired less the liabilities assumed. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount to the fair value of the reporting unit. The fair values are estimated using an income and discounted cash flow approach. The Company evaluates its goodwill on an annual basis in the fourth quarter or more frequently if it believes indicators of impairment exist. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or performs an annual impairment test. When tested quantitatively, the Company compares the fair value of the applicable reporting unit with its carrying value. In making this assessment, management relies on a number of factors, including expected future operating results, business plans, economic projections, anticipated future cash flows, business trends and declines in the Company’s market capitalization. The Company estimates the fair value of its reporting unit using a combination of the discounted cash flow and income approaches. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value exceeds the fair value is recognized as an impairment loss. There has been no goodwill impairment charges during the nine months ended September 30, 2024 and 2023.
Intangible Assets	Intangible Assets Patent license asset The intangible asset represents exclusive rights to an additional field-of-use on the patent suite within the AMF License Agreement. The additional field-of-use was provided in exchange for 50,000 shares of Series A preferred stock, the fair value of which was $1.0 million in 2013. The intangible asset was recorded at its fair value of $1.0 million at the date contributed. In connection with the initial public offering, such shares of Series A preferred stock were converted into common stock. Amortization of this asset is recorded over the shorter of the patent or legal life on a straight-line basis. The weighted-average amortization period was 8.71 years. The asset has been fully amortized as of December 31, 2022. Exclusive license asset The intangible asset represents exclusive rights to existing technologies and development services from Micro Systems Engineering, Inc. pursuant to an agreement entered into on March 2, 2021. The rights and services were provided in exchange for 65,594 shares of common stock, the fair value of which was $3.6 million upon transfer. The intangible asset was recorded at its fair value of $3.3 million at the date of the agreement, with the difference of $0.3 million recorded as a vendor credit in accounts payable in the unaudited condensed consolidated balance sheets. Amortization of this asset is recorded over the four-year term of the agreement on a straight-line basis. The Company recorded expense for the amortization of the exclusive license asset of $0.3 million and $0.7 million during the three and nine months ended September 30, 2024. The Company recorded expense for the amortization of the exclusive license asset of $0.3 million and $0.7 million during the three and nine months ended September 30, 2023. The Company will review the intangible asset for impairment whenever an impairment indicator exists. There has been no intangible asset impairment charges during the nine months ended September 30, 2024 and 2023. Contura acquisition The intangible assets represent technology, trade names and trademarks, and customer relationships acquired from Contura on February 25, 2021. The trade names and trademarks have an indefinite life. The straight-line method over the period of estimated benefit is used to amortize technology. ASC 350-30-35-3, General Intangibles other than Goodwill, states that customer relationships generally dissipate at a more rapid rate in the earlier periods following a company’s succession to these relationships, with the rate of attrition declining over time. As such, the accelerated method is used to amortize customer relationships. The Company recorded expense for the amortization of Contura acquisition intangible assets of $2.0 million and $6.1 million during the three and nine months ended September 30, 2024, respectively. The Company recorded expense for the amortization of Contura acquisition intangible assets of $2.0 million and $6.1 million during the three and nine months ended September 30, 2023, respectively. The Company will review the intangible asset for impairment whenever an impairment indicator exists. There has been no intangible asset impairment charges during the nine months ended September 30, 2024 and 2023.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net cash flows that the assets are expected to generate. If said assets are considered to be impaired, the impairment that would be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There has been no intangible asset impairment charges during the nine months ended September 30, 2024 and 2023. Indefinite-lived intangible assets are tested for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying amount may be impaired. Impairment is calculated as the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted future cash flow analysis. There has been no impairment charges to indefinite-lived intangible assets during the nine months ended September 30, 2024 and 2023.
Leases	Leases In accordance with ASU 2016-02, Leases (Topic 842), components of a lease should be split into three categories: lease components, non-lease components, and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components. Entities may elect not to separate lease and non-lease components. Rather, entities would account for each lease component and related non-lease component together as a single lease component. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only. Topic 842 allows for the use of judgment in determining whether the assumed lease term is for a major part of the remaining economic life of the underlying asset and whether the present value of lease payments represents substantially all of the fair value of the underlying asset. Operating lease right-of-use (ROU) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the rate for a fully collateralized amortizing loan with the same maturity as the lease term in similar economic environment, based on the information available at commencement date in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred, and are included in other assets in the Company’s unaudited condensed consolidated balance sheets. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
Research and Development	Research and Development Research and development costs are charged to operations as incurred. Research and development costs include employee compensation, including stock-based compensation, product development, including testing and engineering, royalty expense, and clinical studies to develop and support the Company’s SNM systems, including clinical study and registry management and monitoring, payments to clinical investigators, and data management. Other research and development expenses include consulting and advisory fees, royalty expense, travel expenses, and equipment-related expenses and other miscellaneous office and facilities expenses related to research and development programs.
Advertising Expense	Advertising Expense The Company expenses advertising costs as they are incurred. During the three and nine months ended September 30, 2024, advertising expense totaled $5.9 million and $16.9 million, respectively, and are recorded within the sales and marketing expenses in its unaudited condensed consolidated statements of comprehensive income (loss). During the three and nine months ended September 30, 2023, advertising expense totaled $5.2 million and $13.6 million, respectively, and are recorded within the sales and marketing expenses in the Company’s unaudited condensed consolidated statements of comprehensive income (loss).
Income Taxes	Income Taxes The Company accounts for income taxes using the asset and liability method to compute the difference between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has net deferred tax assets in certain jurisdictions. The realization of these deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income in future years. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company evaluates the recoverability of the deferred tax assets annually, and maintains a full valuation allowance on its U.S. net deferred tax assets and a partial valuation allowance on certain foreign deferred tax assets. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company is subject to transfer pricing and other tax regulations designed to ensure that appropriate levels of income are reported as earned by the Company’s U.S. and foreign entities and are taxed accordingly. In the normal course of business, the Company is audited by federal, state and foreign tax authorities, and subject to inquiries from those tax authorities regarding the amount of taxes due. These inquiries may relate to the timing and amount of deductions and the allocation of income among various tax jurisdictions. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits, if any, in income tax expense.
Stock-Based Compensation	Stock-Based Compensation The Company measures the cost of employee and non-employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes compensation cost over the requisite service period (typically the vesting period), generally three or four years. Forfeitures are estimated at the time of the grant and revised in subsequent periods to reflect differences between the estimates and the number of shares that actually become exercisable. The Company uses the Black-Scholes option pricing model to determine the fair value of stock options (as of the date of grant) that have service conditions for vesting. Stock options and restricted shares awards vest based on service conditions, typically over three or four years. The Company also grants shares of performance-based restricted stock units that typically vest after one year only if the Company has also achieved certain performance objectives as defined and approved by the Company’s board of directors. The fair value of performance awards is determined based on the Company’s stock price at the date of grant and expensed over the performance period based on the probability of achieving the performance objectives. If such targets are not met or service is not rendered for the requisite service period, no compensation cost is recognized, and any recognized compensation cost in prior periods will be reversed. In addition, the Company also grants market-based RSUs that have combined market conditions and service conditions for vesting, for which the Company uses the Monte Carlo valuation model to value equity awards (as of the date of grant). Compensation cost is not adjusted if the market condition is not met, as long as the requisite service is provided.
Net Income (Loss) per Share of Common Stock	Net Income (Loss) per Share of Common Stock Basic net income (loss) per share of common stock is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net income (loss) per share calculation, common stock options, unvested RSAs and RSUs are considered to be potentially dilutive securities. During the periods in which the Company has reported a net loss, diluted net loss per share of common stock is the same as basic net loss per share of common stock for those periods.
Segment Reporting	Segment Reporting Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment, the development and commercialization of innovative and minimally invasive products to treat bladder and bowel dysfunction. Geographically, the Company sells over 90% of its products to customers in the United States. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Improvements to Reportable Segment Disclosures, to require the disclosure of segment expenses if they are (i) significant to the segment, (ii) regularly provided to the CODM, and (iii) included in each reported measure of a segment’s profit or loss. Public entities will be required to provide this disclosure quarterly. In addition, this ASU requires an annual disclosure of the CODM’s title and a description of how the CODM uses the segment’s profit/loss measure to assess segment performance and to allocate resources. This guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with early adoption permitted, and is required to be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the impact of the standard on its financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. The Company is evaluating the impact of the standard on its financial statements and related disclosures. In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The guidance is intended to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expenses captions (such as cost of sales, selling, general, and administrative expenses, and research and development expenses). This guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and is required to be either applied prospectively to financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of the standard on its financial statements and related disclosures.

Commitments and Contingencies - Narrative (Details)	3 Months Ended		9 Months Ended		33 Months Ended
Commitments and Contingencies - Narrative (Details)	Sep. 30, 2024 USD ($) claim	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) claim	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) claim	Dec. 31, 2023 USD ($)	Nov. 01, 2023 USD ($)	Oct. 05, 2023	Apr. 30, 2023 ft²	Mar. 31, 2022 ft²	Aug. 31, 2020 ft²	Jun. 30, 2019 ft²	Aug. 01, 2018 ft²	Aug. 31, 2014 ft²
Loss Contingencies [Line Items]
Right-of-use assets	$ 20,900,000		$ 20,900,000		$ 20,900,000	$ 22,500,000
Right-of-use assets obtained in exchange for operating lease liabilities	0	$ 0	0	$ 0
Cash paid for operating lease liabilities	400,000	600,000	1,300,000	1,600,000
Amortization of the ROU assets	$ 500,000	100,000	$ 1,600,000	500,000
Weighted-average remaining lease terms for operating leases (in years)	9 years 3 months 18 days		9 years 3 months 18 days		9 years 3 months 18 days
Weighted-average incremental borrowing rate for a collateralized asset of the same remaining term (as a percent)	5.80%		5.80%		5.80%
Period after first sale royalty is due (in years)			12 years
Net revenue due as royalty (as a percent)			4.00%
Royalty expense	$ 700,000	$ 600,000	$ 2,000,000.0	$ 1,700,000
Accrued royalty expense	$ 700,000		$ 700,000		$ 700,000	$ 800,000
Number of unpatentable claims \| claim	10		10		10
Number of claims \| claim	15		15		15
F15
Loss Contingencies [Line Items]
Net revenue previously received for sales subject to dispute (as a percent)								4.00%
Net restricted cash and cash equivalents subject of dispute with interest amount, held in escrow					$ 25,000,000
Royalty payment (as a percent)	4.00%		4.00%		4.00%
Maximum
Loss Contingencies [Line Items]
Royalty commitments	$ 200,000		$ 200,000		$ 200,000
First Lease
Loss Contingencies [Line Items]
Term of operating lease contract														5 years
Net rentable area (square feet) \| ft²														12,215
Second Lease
Loss Contingencies [Line Items]
Net rentable area (square feet) \| ft²													25,548
Third Lease
Loss Contingencies [Line Items]
Term of operating lease contract												8 years
Net rentable area (square feet) \| ft²												32,621
Fourth Lease
Loss Contingencies [Line Items]
Term of operating lease contract											38 months
Net rentable area (square feet) \| ft²											5,693
Fifth Lease
Loss Contingencies [Line Items]
Term of operating lease contract										18 months
Net rentable area (square feet) \| ft²										3,276
Sixth Lease
Loss Contingencies [Line Items]
Term of operating lease contract									120 months
Net rentable area (square feet) \| ft²									145,960
Renewal term of operating lease (in years)									5 years
Right-of-use assets							$ 21,900,000
Operating lease liability							$ 23,100,000

Nature of Operations and Summary of Significant Accounting Policies - Schedule of Available-for-sale Debt Securities By Significant Investment Category (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Securities, Available-for-Sale [Line Items]
Cash equivalents: Cost	$ 153,292	$ 49,714
Cash equivalents: Fair value	153,292	49,714
Short-term investments: Cost	105,767	240,103
Unrealized gains	6	67
Unrealized losses	0	(21)
Short-term investments: Fair value	105,773	240,149
Cash and cash equivalents and short term investments: Cost	259,059	289,817
Cash and cash equivalents and short term investments: Fair value	259,065	289,863
Commercial paper
Debt Securities, Available-for-Sale [Line Items]
Cash equivalents: Cost	109,639	49,714
Cash equivalents: Fair value	109,639	49,714
Short-term investments: Cost	93,987	130,161
Unrealized gains	0	9
Unrealized losses	0	(3)
Short-term investments: Fair value	93,987	130,167
Corporate notes
Debt Securities, Available-for-Sale [Line Items]
Cash equivalents: Cost	3,753
Cash equivalents: Fair value	3,753
Short-term investments: Cost	3,764	18,272
Unrealized gains	3	18
Unrealized losses	0	(11)
Short-term investments: Fair value	3,767	18,279
U.S. government and agency securities
Debt Securities, Available-for-Sale [Line Items]
Cash equivalents: Cost	39,900
Cash equivalents: Fair value	39,900
Short-term investments: Cost	8,016	91,670
Unrealized gains	3	40
Unrealized losses	0	(7)
Short-term investments: Fair value	$ 8,019	$ 91,703

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Operating Leases

In August 2014, the Company entered into a five-year operating lease for approximately 12,215 square feet of office space beginning on November 1, 2014, and expiring on October 31, 2019. In June 2019, the lease was amended to extend the expiration date to October 31, 2020. In September 2020, the lease was amended to extend the expiration date to July 31, 2022. In December 2021, the lease was amended to extend the expiration date to January 31, 2028, and in April 2023, the lease was amended to reduce the expiration date to March 31, 2024, at which time the lease expired in accordance with its terms. Upon the execution of the amendments, which were deemed to be a lease modification, the Company reassessed the lease liability using the incremental borrowing rate for a collateralized asset of the same remaining term at the modification date and adjusted the carrying amount of ROU assets by the amount of the remeasurement of the liability. The Company also reassessed the lease classification and concluded that the lease continued to be an operating lease through its expiration. Under the terms of the lease, the Company was responsible for taxes, insurance, and maintenance expense. The lease contained certain scheduled rent increases. Rent expense was recognized on a straight-line basis over the expected lease term.

The Company entered into an operating lease for approximately 25,548 square feet of office space beginning on August 1, 2018, and expiring on October 31, 2027. In April 2023, the lease was amended to reduce the expiration date to December 31, 2024 and in September 2023, the lease was amended to extend the expiration date to July 1, 2025. Upon the execution of the amendment, which was deemed to be a lease modification, the Company

reassessed the lease liability using the incremental borrowing rate for a collateralized asset of the same remaining term at the modification date and adjusted the carrying amount of ROU assets by the amount of the remeasurement of the liability. The Company also reassessed the lease classification and concluded that the lease continues to be an operating lease. Under the terms of the lease, the Company is responsible for taxes, insurance, and maintenance expense. The lease contains certain scheduled rent increases. Under the terms of the lease, the base rent payable with respect to each renewal term will be equal to the prevailing market rental rent as of the commencement of the applicable renewal term. In the event of a default of certain of the Company’s obligations under the lease, the Company’s landlord would have the right to terminate the lease.

In June 2019, the Company entered into an eight-year operating lease for approximately 32,621 square feet of office space beginning on January 15, 2020 and expiring on January 31, 2028. In April 2023, the lease was amended to reduce the expiration date to March 31, 2024 and in September 2023, the lease was amended to extend the expiration date to December 31, 2024. Upon the execution of the amendment, which was deemed to be a lease modification, the Company reassessed the lease liability using the incremental borrowing rate for a collateralized asset of the same remaining term at the modification date and adjusted the carrying amount of ROU assets by the amount of the remeasurement of the liability. The Company also reassessed the lease classification and concluded that the lease continues to be an operating lease. The Company uses these premises as its new principal executive offices and for general office space. The Company is utilizing its other currently-leased spaces to conduct the training of its sales team and for manufacturing purposes. Under the terms of the lease, the Company is responsible for taxes, insurance, and maintenance expense. The lease contains certain scheduled rent increases. Under the terms of the lease, the base rent payable with respect to each renewal term will be equal to the prevailing market rental rent as of the commencement of the applicable renewal term. In the event of a default of certain of the Company’s obligations under the lease, the Company’s landlord would have the right to terminate the lease.

In August 2020, the Company entered into a 38-month operating lease for approximately 5,693 square feet of warehouse space beginning on October 15, 2020 and expiring on December 31, 2023. In April 2023, the lease was amended to extend the expiration date to December 31, 2024 and in September 2023, the lease was amended to extend the expiration date to July 1, 2025. Upon the execution of the amendment, which was deemed to be a lease modification, the Company reassessed the lease liability using the incremental borrowing rate for a collateralized asset of the same remaining term at the modification date and adjusted the carrying amount of ROU assets by the amount of the remeasurement of the liability. The Company also reassessed the lease classification and concluded that the lease continues to be an operating lease. The Company uses these premises for general warehouse space.

In March 2022, the Company entered into an 18-month operating lease for approximately 3,276 square feet of warehouse space beginning on July 1, 2022 and expiring on December 31, 2023. In April 2023, the lease was amended to extend the expiration date to December 31, 2024 and in September 2023, the lease was amended to extend the expiration date to July 1, 2025. Upon the execution of the amendment, which was deemed to be a lease modification, the Company reassessed the lease liability using the incremental borrowing rate for a collateralized asset of the same remaining term at the modification date and adjusted the carrying amount of ROU assets by the amount of the remeasurement of the liability. The Company also reassessed the lease classification and concluded that the lease continues to be an operating lease. The Company uses these premises for general warehouse space.

In April 2023, the Company entered into a 120-month operating lease for approximately 145,960 square feet of office and warehouse space beginning on April 1, 2024 and expiring on March 31, 2034. The Company uses these premises as its new principal executive offices and for general office, manufacturing, and warehousing space. Under the terms of the lease, the Company is responsible for taxes, insurance, and maintenance expense. The lease contains certain scheduled rent increases. The Company has a renewal option to extend the term of the lease for a period of five years beyond the initial term. Under the terms of the lease, the base rent payable with respect to each renewal term will be equal to the prevailing market rental rent as of the commencement of the applicable renewal term. In the event of a default of certain of the Company’s obligations under the lease, the Company’s landlord would have the right to terminate the lease. The lease commenced on November 1, 2023, which was the date the Company was provided access to the leased property and control over its use. Therefore, the Company recorded $21.9 million of ROU assets and $23.1 million of operating lease liabilities related to this lease.

During the three and nine months ended September 30, 2024 and 2023, there were no ROU assets obtained in exchange for new operating lease liabilities. As of September 30, 2024 and December 31, 2023, the ROU assets

had a balance of $20.9 million and $22.5 million, respectively. The operating lease ROU assets are included within the Company’s non-current other assets, and lease liabilities are included in current or noncurrent liabilities in the Company’s unaudited condensed consolidated balance sheets. During the three and nine months ended September 30, 2024, cash paid for amounts included in operating lease liabilities was $0.4 million and $1.3 million, respectively. During the three and nine months ended September 30, 2023, cash paid for amounts included in operating lease liabilities was $0.6 million and $1.6 million, respectively. Amortization of the ROU assets was $0.5 million and $1.6 million for the three and nine months ended September 30, 2024, respectively. Amortization of the ROU assets was $0.1 million and $0.5 million for the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024, the weighted-average remaining lease term for the Company’s operating leases was 9.3 years. The weighted-average incremental borrowing rate for a collateralized asset of the same remaining term used to determine the present value of the Company’s operating leases’ future payments was 5.8%.

Total lease costs for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Lease cost
Operating lease cost	$	1,233	$	528	$	3,768	$	1,616
Short-term lease cost	16		25		48		70
Variable lease cost	(827)		167		712		452
Amortization of net lease liabilities	870		(549)		(880)		(1,272)
Total lease cost	$	1,292	$	171	$	3,648	$	866

License Agreement

In October 2013, the Company entered into the AMF License Agreement, pursuant to which AMF, a Company stockholder, licensed the Company certain patents and know-how (collectively, the AMF IP) relating to, in relevant part, an implantable pulse generator and related system components in development by AMF as of that date, in addition to any peripheral or auxiliary devices, including all components, that when assembled, comprise such device, excluding certain implantable pulse generators (collectively, the AMF Licensed Products). Under the AMF License Agreement, for each calendar year beginning in 2018, the Company is obligated to pay AMF a royalty on an AMF Licensed Product-by-AMF Licensed Product basis if one of the following conditions applies: (i) one or more valid claims within any of the patents licensed to the Company by AMF covers such AMF Licensed Products or the manufacture of such AMF Licensed Products or (ii) for a period of 12 years from the first commercial sale anywhere in the world of such AMF Licensed Product, in each case. The foregoing royalty is calculated as the greater of (a) 4% of all net revenue derived from the AMF Licensed Products, and (b) the Minimum Royalty, payable quarterly. The Minimum Royalty automatically increases each year after 2018, subject to a maximum amount of $200,000 per year. The Company recorded related royalties of $0.7 million and $2.0 million during the three and nine months ended September 30, 2024, respectively. The Company recorded related royalties of $0.6 million and $1.7 million during the three and nine months ended September 30, 2023, respectively. Royalty expense is included in operating expenses in the unaudited condensed consolidated statements of comprehensive income (loss). Accrued royalties of $0.7 million and $0.8 million as of September 30, 2024 and December 31, 2023, respectively, are included within accrued liabilities in the Company’s unaudited condensed consolidated balance sheets.

Legal Matters

In addition to the matters described below, the Company may, from time to time, become a party to legal proceedings. Such matters are subject to many uncertainties and to outcomes of which the financial impacts are not predictable with assurance and that may not be known for extended periods of time. When management has assessed that a loss is probable and an amount can be reasonably estimated, the Company records a liability.

On November 4, 2019, Medtronic, Inc., Medtronic Puerto Rico Operations Co., Medtronic Logistics LLC and Medtronic USA, Inc. (collectively, the Medtronic Affiliates) filed a complaint against the Company in the U.S. District Court for the Central District of California, Case No. 8:19-cv-2115, and amended the complaint on November 26, 2019. The Company refers to this matter as the Medtronic Litigation. The complaint asserted that the Company’s rechargeable SNM system infringed U.S. Patent Nos. 8,036,756, 8,626,314, 9,463,324 and 9,821,112 held by the Medtronic Affiliates, and the amended complaint further included the additional patents 8,738,148; 8,457,758; and 7,774,069 (collectively, the Medtronic Patents). The Medtronic Litigation requested customary remedies for patent infringement, including (i) a judgment that the Company has infringed and is infringing the Medtronic Patents, (ii) damages, including treble damages for willful infringement, (iii) a permanent injunction preventing the Company from infringing the Medtronic Patents, (iv) attorneys’ fees, and (v) costs and expenses. The Federal Circuit reversed the decision of the Patent Trials & Appeals Board (PTAB) of the U.S. Patent & Trademark Office that the tined leads patents (Patent Nos. 8,036,756 and 8,626,314) asserted against Axonics were valid, finding that the PTAB committed legal error in its analysis. The Federal Circuit remanded the matter to the PTAB for another review consistent with its opinion. Because of this development, the U.S. District Court issued a stay on the litigation proceedings, pending the outcome of the proceedings before the PTAB. The Federal Circuit also vacated the decision of the PTAB that certain claims of Patent Nos. 8,738,148 and 8,457,758 had not been shown to be invalid and the Federal Circuit remanded these matters for further proceedings before the PTAB. The remanded proceedings before the PTAB on Patent Nos. 8,036,756 and 8,626,314 have concluded with 10 of the 15 claims of Patent No. 8,626,314 being found unpatentable. The remaining claims of these patents were not found unpatentable based on the opinion of two administrative law judges, with a dissent by the third administrative law judge, and Axonics appealed to the Federal Circuit. The claims of Patent Nos. 8,738,148 and 8,457,758 challenged on remand were not found unpatentable. Appeals to the Federal Circuit were filed on all claims challenged before the PTAB on remand. The stay of the Medtronic Litigation was lifted on April 22, 2024. On May 1, 2024, Patent Nos. 8,738,148 and 8,457,758 were dismissed from the Medtronic Litigation with prejudice. Partial summary judgment of non-infringement was granted on all asserted claims of Patent Nos. 9,821,112 and 7,774,069 on July 11, 2024. The Medtronic Litigation proceeded to a jury trial which began on September 9, 2024, on certain claims of U.S. Patent Nos. 8,036,756, 8,626,314, and 9,463,324. The jury rendered a verdict on September 18, 2024, finding that Axonics did not infringe any of the claims at issue and awarding no damages. The jury also found that the claims had not been shown to be invalid. Judgment was entered in Axonics’ favor on October 8, 2024. Post-trial proceedings in the U.S. District Court are scheduled through February 24, 2025. Following the conclusion of any post-trial proceedings, the parties to the Medtronic Litigation may determine to appeal the verdict. The Company continues to believe that it has meritorious defenses against the allegations of the Medtronic Affiliates and is vigorously defending itself against them. The Company is unable to predict the likelihood of success of the claims of the Medtronic Affiliates against the Company or to quantify any risk of loss. The Medtronic Litigation could last for an extended period of time and require the Company to dedicate significant financial resources and management resources to its defense. An adverse ruling against the Company could materially and adversely affect its business, financial position, results of operations or cash flows and could also result in reputational harm. Even if the Company is successful in defending against these claims, the Medtronic Litigation could result in significant costs, delays in future product developments, reputational harm or other collateral consequences.

On February 28, 2024, the Medtronic Affiliates filed complaints against the Company in the U.S. International Trade Commission, now Investigation No. 337-TA-1396, and in the U.S. District Court for the Central District of Delaware, Case No. 1:24-cv-00264-JLH. The Company refers to these matters as the Medtronic ITC Investigation and the Medtronic Delaware Litigation, respectively. The complaints assert that aspects of the Company’s SNM systems infringe U.S. Patent Nos. 8,712,540 and 9,174,059 held by the Medtronic Affiliates (collectively, the Medtronic ITC Patents). The Medtronic ITC Investigation and the Medtronic Delaware Litigation request customary remedies for patent infringement, including (i) a determination that acts of importation, sale for importation, and/or sale after importation violate Section 337 of the Tariff Act of 1930, as amended 19 U.S.C. § 1337, (ii) a permanent exclusion order barring articles from entry into the United States, (iii) a permanent cease and desist order prohibiting domestically assembling, manufacturing, importing, selling, marketing, advertising, distributing, offering for sale, transporting (except for exportation), servicing, and soliciting U.S. agents or distributors, (iv) a bond during the Presidential review period, (v) a judgment that the Company has infringed and is infringing the Medtronic ITC Patents, (vi) damages, including treble damages for willful infringement, (vii) a permanent injunction preventing the Company from infringing the Medtronic ITC Patents, (viii) attorneys’ fees, and

(iv) costs, expenses, and interest. The Medtronic ITC Investigation was instituted, and the Medtronic Delaware Litigation was stayed pending resolution of the ITC Investigation. The ITC evidentiary hearing is scheduled for December 9-13, 2024, and the target date is Monday, August 4, 2025. The Company believes that it has meritorious defenses against the allegations of the Medtronic Affiliates and is vigorously defending itself against them. The Company is unable to predict the likelihood of success of the claims of the Medtronic Affiliates against the Company or to quantify any risk of loss. The Medtronic ITC Investigation and the Medtronic Delaware Litigation could last for an extended period of time and require the Company to dedicate significant financial resources and management resources to its defense. An adverse ruling against the Company could materially and adversely affect its business, financial position, results of operations or cash flows and could also result in reputational harm. Even if the Company is successful in defending against these claims, the Medtronic ITC Investigation and the Medtronic Delaware Litigation could result in significant costs, delays in future product developments, reputational harm or other collateral consequences.

On September 18, 2023, the Company commenced an arbitration against AMF with JAMS seeking, among other things, resolution that AMF’s purported attempt to terminate the AMF License Agreement, dated October 1, 2013, was ineffective and that the Company does not owe any royalties to AMF for the Company’s F15 product and the Company was not required to pay royalties on its F15 product under the AMF License Agreement. AMF responded to the arbitration demand and asserted multiple claims. On October 5, 2023, the Company and AMF entered into an interim agreement while the arbitration proceedings are pending. Pursuant to this interim agreement, the Company agreed to deposit into an escrow account an amount equal to 4% of the net revenues previously received for sales of the Company’s F15 product that are the subject of dispute, which the Company has determined is approximately $25 million from January 1, 2022 through September 30, 2024, with interest, and will continue to deposit the disputed 4% of net revenues of the Company’s F15 product with interest into the escrow account during the pendency of the arbitration proceedings. The Company has paid and, under this interim agreement, will continue to pay 4% royalties on rechargeable products. While the loss from this contingency is reasonably possible, the Company does not believe that such loss is probable. The Company believes that it has meritorious defenses against AMF’s claims and intends to vigorously defend against those claims, however, there can be no assurance as to the outcome of the arbitration.

Stock-Based Compensation - Schedule of Restricted Shares Awards Activity (Details) - Restricted Shares Awards	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Restricted Shares Awards
Outstanding at beginning of period (in shares) \| shares	1,303,704
Restricted shares awards granted (in shares) \| shares	30,400
Restricted shares awards vested (in shares) \| shares	(509,655)
Restricted shares awards forfeited (in shares) \| shares	(30,513)
Outstanding at end of period (in shares) \| shares	793,936
Weighted-Average Fair Value Per Share at Grant Date
Outstanding at beginning of period (in USD per share) \| $ / shares	$ 55.86
Restricted shares awards granted (in USD per share) \| $ / shares	67.88
Restricted shares awards vested (in USD per share) \| $ / shares	53.37
Restricted shares awards forfeited (in USD per share) \| $ / shares	59.62
Outstanding at end of period (in USD per share) \| $ / shares	$ 57.78

Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 33,592	$ 21,625
Less: accumulated depreciation	(12,894)	(10,865)
Property and equipment, net	20,698	10,760
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,987	3,169
Computer hardware and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	4,162	3,638
Tools and molds
Property, Plant and Equipment [Line Items]
Property and equipment, gross	2,518	2,315
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	19,148	4,573
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,508	1,876
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 269	$ 6,054

Employee Benefit Plan	9 Months Ended
Employee Benefit Plan	Sep. 30, 2024
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanThe Company sponsors a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan covers all U.S. employees who meet minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pre- or post-tax basis. Contributions to the plan by the Company may be made at the discretion of the board of directors. During the three and nine months ended September 30, 2024, the Company contributions to the plan amounted to $0.8 million and $2.4 million, respectively. During the three and nine months ended September 30, 2023, the Company contributions to the plan amounted to $0.7 million and $1.9 million, respectively.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 715
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+ Details

Commitments and Contingencies - Schedule of Total Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost	$ 1,233	$ 528	$ 3,768	$ 1,616
Short-term lease cost	16	25	48	70
Variable lease cost	(827)	167	712	452
Amortization of net lease liabilities	870	(549)	(880)	(1,272)
Total lease cost	$ 1,292	$ 171	$ 3,648	$ 866

Nature of Operations and Summary of Significant Accounting Policies - Schedule of Revenue Disaggregated by Product and Geographic Market (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Net revenue	$ 116,193	$ 93,100	$ 322,167	$ 256,644
SNM net revenue
Disaggregation of Revenue [Line Items]
Net revenue	92,349	73,949	255,243	203,295
SNM net revenue \| United States
Disaggregation of Revenue [Line Items]
Net revenue	90,072	72,212	248,988	198,270
SNM net revenue \| International markets
Disaggregation of Revenue [Line Items]
Net revenue	2,277	1,737	6,255	5,025
Bulkamid net revenue
Disaggregation of Revenue [Line Items]
Net revenue	23,844	19,151	66,924	53,349
Bulkamid net revenue \| United States
Disaggregation of Revenue [Line Items]
Net revenue	19,050	15,579	52,575	41,998
Bulkamid net revenue \| International markets
Disaggregation of Revenue [Line Items]
Net revenue	$ 4,794	$ 3,572	$ 14,349	$ 11,351

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Accounts receivable, allowance for credit losses	$ 1,198	$ 442
Preferred stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	75,000,000	75,000,000
Common stock, issued (in shares)	51,110,021	50,770,520
Common stock, outstanding (in shares)	51,110,021	50,770,520

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Statement of Comprehensive Income [Abstract]
Net revenue	$ 116,193	$ 93,100	$ 322,167	$ 256,644
Cost of goods sold	26,542	23,996	74,120	64,850
Gross profit	89,651	69,104	248,047	191,794
Operating expenses
Research and development	13,491	8,167	37,339	25,172
General and administrative	23,761	11,778	55,192	34,659
Sales and marketing	52,972	47,544	160,607	134,468
Amortization of intangible assets	2,221	2,302	6,722	6,803
Acquisition-related costs	3,474	0	9,953	2,368
Acquired in-process research & development	0	0	0	15,447
Total operating expenses	95,919	69,791	269,813	218,917
Loss from operations	(6,268)	(687)	(21,766)	(27,123)
Other income (expense)
Interest and other income	4,704	4,271	13,379	12,149
Interest and other expense	8	(83)	(83)	774
Other income, net	4,712	4,188	13,296	12,923
(Loss) income before income tax (benefit) expense	(1,556)	3,501	(8,470)	(14,200)
Income tax (benefit) expense	(1,535)	(427)	3,764	(1,538)
Net (loss) income	(21)	3,928	(12,234)	(12,662)
Foreign currency translation adjustment	10,438	(6,185)	9,752	636
Comprehensive income (loss)	$ 10,417	$ (2,257)	$ (2,482)	$ (12,026)
Net (loss) income per share, basic (in USD per share)	$ 0.00	$ 0.08	$ (0.24)	$ (0.26)
Weighted-average shares used to compute basic net (loss) income per share (in shares)	51,088,073	49,244,981	51,010,885	48,973,252
Net (loss) income per share, diluted (in USD per share)	$ 0.00	$ 0.08	$ (0.24)	$ (0.26)
Weighted-average shares used to compute diluted net (loss) income per share (in shares)	51,088,073	50,086,491	51,010,885	48,973,252

Stock-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 8,231	$ 11,470	$ 26,393	$ 33,388
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	1,295	2,344	4,326	6,962
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	1,266	3,291	4,554	9,176
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 5,670	$ 5,835	$ 17,513	$ 17,250

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Income Taxes - Schedule of Provision for Income Taxes and Effective Tax Rates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income tax (benefit) expense	$ (1,535)	$ (427)	$ 3,764	$ (1,538)
Effective tax rate	98.62%	(12.20%)	(44.43%)	10.83%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

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+ Details

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2024	Nov. 05, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-38721
Entity Registrant Name	Axonics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-4744083
Entity Address, Address Line One	26 Technology Drive
Entity Address, City or Town	Irvine,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92618
City Area Code	(949)
Local Phone Number	396-6322
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	AXNX
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		51,109,154
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001603756
Current Fiscal Year End Date	--12-31

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Carrying Amount of Goodwill

The change in the carrying amount of goodwill during the nine months ended September 30, 2024 included the following (in thousands):


December 31, 2023	$	99,417

Foreign currency translation adjustment	5,128
September 30, 2024	$	104,545

Schedule of Indefinite-Lived Intangible Assets

Intangible assets as of September 30, 2024 included the following (in thousands):


		September 30, 2024
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Impairment		Foreign currency translation adjustment		Intangible Assets, Net
Patent license asset	8.71 years	$	1,000	$	(1,000)	$	—	$	—	$	—
Exclusive license asset	4 years	3,300		(3,080)		—		—		220
Technology	12 years	81,100		(24,305)		—		(3,468)		53,327
Trade names and trademarks	Indefinite	19,700		—		—		(542)		19,158
Customer relationships	12 years	11,400		(4,830)		(287)		(534)		5,749
		$	116,500	$	(33,215)	$	(287)	$	(4,544)	$	78,454

Intangible assets as of December 31, 2023 included the following (in thousands):


		December 31, 2023
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Impairment		Foreign currency translation adjustment		Intangible Asset, Net
Patent license asset	8.71 years	$	1,000	$	(1,000)	$	—	$	—	$	—
Exclusive license asset	4 years	3,300		(2,420)		—		—		880
Technology	12 years	81,100		(19,236)		—		(6,140)		55,724
Trade names and trademarks	Indefinite	19,700		—		—		(1,482)		18,218
Customer relationships	12 years	11,400		(3,837)		(287)		(723)		6,553
		$	116,500	$	(26,493)	$	(287)	$	(8,345)	$	81,375

Schedule of Finite-Lived Intangible Assets

Intangible assets as of September 30, 2024 included the following (in thousands):


		September 30, 2024
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Impairment		Foreign currency translation adjustment		Intangible Assets, Net
Patent license asset	8.71 years	$	1,000	$	(1,000)	$	—	$	—	$	—
Exclusive license asset	4 years	3,300		(3,080)		—		—		220
Technology	12 years	81,100		(24,305)		—		(3,468)		53,327
Trade names and trademarks	Indefinite	19,700		—		—		(542)		19,158
Customer relationships	12 years	11,400		(4,830)		(287)		(534)		5,749
		$	116,500	$	(33,215)	$	(287)	$	(4,544)	$	78,454

Intangible assets as of December 31, 2023 included the following (in thousands):


		December 31, 2023
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Impairment		Foreign currency translation adjustment		Intangible Asset, Net
Patent license asset	8.71 years	$	1,000	$	(1,000)	$	—	$	—	$	—
Exclusive license asset	4 years	3,300		(2,420)		—		—		880
Technology	12 years	81,100		(19,236)		—		(6,140)		55,724
Trade names and trademarks	Indefinite	19,700		—		—		(1,482)		18,218
Customer relationships	12 years	11,400		(3,837)		(287)		(723)		6,553
		$	116,500	$	(26,493)	$	(287)	$	(8,345)	$	81,375

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

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+ Details

Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

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


	September 30,		December 31,
	2024		2023
Equipment	$	3,987	$	3,169
Computer hardware and software	4,162		3,638
Tools and molds	2,518		2,315
Leasehold improvements	19,148		4,573
Furniture and fixtures	3,508		1,876
Construction in progress	269		6,054
	33,592		21,625
Less: accumulated depreciation	(12,894)		(10,865)
	$	20,698	$	10,760

Nature of Operations and Summary of Significant Accounting Policies - Schedule of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Balance at beginning of period	$ 442	$ 321
Write-offs	(165)	(12)
Bad debt expense	921	71
Balance at end of period	$ 1,198	$ 380

Nature of Operations and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Axonics, Inc. (the Company) was incorporated in the State of Delaware on March 2, 2012 under the name American Restorative Medicine, Inc. The Company had no operations until October 1, 2013, when the license agreement between Alfred E. Mann Foundation for Scientific Research (AMF) and the Company (the AMF License Agreement) was entered into. In August 2013, the Company changed its name to Axonics Modulation Technologies, Inc. In March 2021, the Company changed its name to Axonics, Inc.

The Company is a medical technology company that develops and commercializes innovative and minimally invasive products to treat bladder and bowel dysfunction. The Company has designed and developed both rechargeable (R20) and recharge-free (F15) implantable sacral neuromodulation (SNM) systems, which deliver mild electrical pulses to the targeted sacral nerve in order to restore normal communication to and from the brain to reduce the symptoms of overactive bladder (OAB), urinary retention (UR) and fecal incontinence (FI). The Company’s products are protected by intellectual property based on Company-generated innovations and patents licensed from AMF. The Company has regulatory marketing approvals in the United States for all relevant clinical indications. In Europe, Canada, and Australia, the Company has regulatory marketing approvals for most relevant clinical indications. The premarket approval (PMA) application for the Company’s first rechargeable SNM system for the treatment of FI was approved by the U.S. Food and Drug Administration (FDA) on September 6, 2019, and the PMA application for the first rechargeable SNM system for the treatment of OAB and UR was approved by the FDA on November 13, 2019. Accordingly, the Company began U.S. commercialization of its first rechargeable SNM system in the fourth quarter of 2019.

Beginning in February 2021 with the acquisition of Contura Limited (Contura), the Company also markets Bulkamid, a urethral bulking agent to treat female stress urinary incontinence (SUI). Beginning in March 2022 with the FDA approval of the Company’s long-lived, recharge-free F15 SNM implantable stimulator, the Company now markets and sells the F15 recharge-free system to customers in the United States in addition to the rechargeable SNM system. The recharge-free SNM system and Bulkamid are protected by intellectual property based on Company-generated innovations or patents acquired as part of the Contura acquisition.

On January 8, 2024, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Boston Scientific Corporation, a Delaware corporation (Boston Scientific), and Sadie Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Boston Scientific (Merger Sub), providing for the merger of Merger Sub with and into the Company (the Merger), with the Company surviving the Merger as a wholly owned subsidiary of Boston Scientific. The consummation of the Merger is subject to certain closing conditions, including, among others, the approval of the Company’s stockholders of the adoption of the Merger Agreement, the expiration or termination of any waiting periods (and any extension thereof) applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act), and any agreement with a governmental authority not to consummate the Merger, and receipt of certain additional consents, approvals, non-disapprovals and other authorizations of certain other governmental bodies applicable to the Merger. If the Merger is consummated, at the effective time of the Merger (the Effective Time), each share of common stock, par value $0.0001 per share, of the Company issued and outstanding immediately prior to the Effective Time (each, a Share and collectively, the Shares), other than Shares (i) held in the treasury of the Company or owned by any direct or indirect wholly owned subsidiary of the Company, (ii) owned by Merger Sub, Boston Scientific or any direct or indirect wholly owned subsidiary of Boston Scientific or (iii) held by holders who are entitled to and have properly exercised and not waived, withdrawn, failed to perfect or otherwise lost their appraisal rights, will be automatically canceled and converted into the right to receive $71.00 in cash, without interest.

The Company’s stockholders voted to adopt the Merger Agreement with Boston Scientific at the Company’s special meeting of stockholders held on March 22, 2024. On April 3, 2024, the Company and Boston Scientific each received a request for additional information (the Second Request) from the U.S. Federal Trade Commission (the FTC) in connection with the FTC’s review of the Merger. The issuance of the Second Request extended the waiting period under the HSR Act until 30 days after both the Company and Boston Scientific have substantially complied with the Second Request, unless the waiting period is extended voluntarily by the parties or terminated earlier by the FTC. The Company and Boston Scientific continue to work cooperatively with the FTC in its review of the Merger.

Acquisition of in-process research & development (IPR&D) from Radian, LLC

In April 2023, the Company acquired the assets of Radian, LLC, for total consideration of the issuance of 264,783 shares of the Company’s common stock and a potential future milestone payment of up to $2.5 million (the Radian acquisition).

The Company evaluated this acquisition in accordance with Accounting Standards Codification (ASC) 805, Business Combinations, to determine whether the asset acquired met the definition of a business. Included in the IPR&D is the historical know-how, software, formula protocols, designs, and procedures expected to be needed to complete the technology asset and receive regulatory approval. The Company concluded that the IPR&D is an identifiable intangible asset that would be accounted for as a single asset in a business combination. The Company also qualitatively concluded that there is no fair value associated with any other assets included in the acquisition. Therefore, all of the consideration in the transaction was allocated to the IPR&D. As such, the Company concluded that substantially all of the fair value of the gross assets acquired was concentrated in the single IPR&D asset and the asset was not a business.

The Company is planning to use the acquired IPR&D technology to provide a solution to make peripheral nerve evaluation lead placement easier, faster, and more accurate. Although the acquired technology may have utility in other medical procedures, future development decisions for the acquired technology will be contingent upon the receipt of required regulatory approvals. As such, the acquired technology does not have an alternative future use at the acquisition date. In accordance with ASC 730, Research and Development, the Company concluded the entire purchase price for the asset acquisition was an expense on the acquisition date.

The consideration transferred at closing had an acquisition date fair value of $15.4 million based on a per share value of $58.34 on the acquisition date and was recognized immediately as IPR&D expense in the unaudited condensed consolidated statements of comprehensive income for the year ended December 31, 2023. The potential future milestone payment of $2.5 million, payable in either cash or shares of the Company’s common stock, will become payable if the Company receives the FDA 510(k) clearance for the acquired IPR&D technology.

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Axonics Europe, S.A.S., Axonics Modulation Technologies U.K. Limited, Axonics Modulation Technologies Australia Pty Ltd, Axonics Women’s Health Limited, Bulkamid SARL, Axonics GmbH, and Contura, Inc. Intercompany accounts and transactions have been eliminated in consolidation.

Basis of Presentation and Liquidity

Interim Financial Statements

The unaudited interim condensed consolidated financial statements and related footnote disclosures as of and for the three and nine months ended September 30, 2024 are unaudited, and are not necessarily indicative of the Company’s operating results for a full year. The unaudited interim condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial results for the three and nine months ended September 30, 2024 in accordance with United States generally accepted accounting principles (GAAP), however, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the U.S. Securities and Exchange Commission (SEC) rules and regulations relating to interim financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the

Company’s audited consolidated financial statements and notes thereto included within the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (filed with the SEC on February 29, 2024).

Liquidity

The Company began full-scale commercialization of its first r-SNM System in late 2019. The Company has expended significant resources on research and development activities, growing its operations organization and building and training its sales organization.

The Company incurred net losses of $12.2 million and $12.7 million for the nine months ended September 30, 2024 and 2023, respectively, and had an accumulated deficit of $392.6 million as of September 30, 2024 compared to $380.4 million at December 31, 2023. The Company expects to continue to spend a significant amount of its existing resources on sales and marketing activities as the Company continues to invest in commercializing and marketing its products in the United States and internationally.

As of September 30, 2024, the Company had cash, cash equivalents, short-term investments, and restricted cash of $367.3 million compared to $357.7 million at December 31, 2023. The Company expects that its cash, cash equivalents, short-term investments, and restricted cash on hand will be sufficient to fund its operations through at least the next 12 months. The Company funds its operations through a combination of proceeds from public offerings of its common stock and cash receipts from sales of its products. As of September 30, 2024, the Company had no outstanding borrowings.

The Company may need to raise additional financing in the future to facilitate its business operations. If the Company raises additional funds by issuing equity securities, its stockholders could experience dilution. Debt financing, if available, may involve covenants further restricting its operations or its ability to incur additional debt. Any debt financing or additional equity that the Company raises may contain terms that are not favorable to the Company or its stockholders. Additional financing may not be available at all, or in amounts or on terms acceptable to the Company. If the Company is unable to obtain additional financing when needed to satisfy its liquidity requirements, the Company may be required to scale back its operations.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. The results of this evaluation then form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates, and such differences may be material to the consolidated financial statements. Such estimates and assumptions include the useful lives of property and equipment and intangible assets, the valuation of deferred income tax assets and liabilities, the valuation of contingent consideration liability, the valuation of stock-based compensation, the product returns reserve, the inventory obsolescence reserve and accounts receivable allowance for credit losses.

Revenue Recognition

Revenue recognized during the nine months ended September 30, 2024 and 2023 relates entirely to the sale of the Company’s products to its customers and distributors.

The Company has revenue arrangements that consist of a single performance obligation. The Company recognizes revenue at the point in time when it transfers control of promised goods to its customers. Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods. The amount of revenue that is recognized is based on the transaction price, which represents the invoiced amount and includes estimates of variable consideration such as discounts, where applicable. The Company also sells to distributors and applies the same policies as its revenue arrangements with customers, specifically that revenue is recognized at the point in time when it transfers control of promised goods to its distributors. The Company does not offer rights of return or price protection. The amount of variable consideration included in the transaction price may be constrained and is included only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Payment terms, typically less than three months, do not include a significant financing component. The Company extends credit to its customers and

distributors based upon an evaluation of their financial condition and credit history and generally requires no collateral. The Company does not have any contract balances related to product sales. The Company also does not have significant contract acquisition costs related to product sales.

In accordance with Company policy and based on the Company’s historical experience, the allowance for product returns was $0.3 million and $0.3 million at September 30, 2024 and December 31, 2023, respectively, and is recorded as a reduction of gross revenue in its unaudited condensed consolidated statements of comprehensive income (loss). Damaged or defective products are replaced at no charge under the Company’s standard warranty. For the three and nine months ended September 30, 2024, the replacement costs were minimal and $0.1 million, respectively. For the three and nine months ended September 30, 2023, the replacement costs were minimal and $0.1 million, respectively. The replacement costs are recorded within the sales and marketing expenses in its unaudited condensed consolidated statements of comprehensive income (loss).

The Company offers its standard warranty to all customers. The Company does not sell any warranties on a standalone basis. The Company’s warranty provides that its products are free of material defects and conform to specifications, and includes an offer to repair, replace or refund the purchase price of defective products. This assurance does not constitute a service and is not considered a separate performance obligation. The Company estimates warranty liability at the time of revenue recognition and records it as a charge to sales and marketing expense. The warranty liability as of September 30, 2024 and December 31, 2023 was $0.2 million and $0.1 million, respectively.

Shipping and handling costs incurred for the delivery of goods to customers and distributors are included in cost of goods sold. Amounts billed to customers and distributors for shipping and handling are included in net revenue.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
SNM net revenue
United States	$	90,072	$	72,212	$	248,988	$	198,270
International markets	2,277		1,737		6,255		5,025
	$	92,349	$	73,949	$	255,243	$	203,295
Bulkamid net revenue
United States	$	19,050	$	15,579	$	52,575	$	41,998
International markets	4,794		3,572		14,349		11,351
	$	23,844	$	19,151	$	66,924	$	53,349
Total net revenue	$	116,193	$	93,100	$	322,167	$	256,644

Allowance for Credit Losses

The Company makes estimates of the collectability of accounts receivable in accordance with Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The Company’s estimate of future credit losses is made by management based upon historical bad debts, customer receivable balances, age of customer receivable balances, customers’ financial conditions and reasonable forecasted economic trends. Despite the Company’s efforts to minimize credit risk exposure, customers could be adversely affected if future economic and industry trends change in such a manner as to negatively impact their cash flows. As a result, the Company’s future collection experience can differ significantly from historical collection trends. If the Company’s customers experience a negative impact on their cash flows, it could have a material adverse effect on the Company’s results of operations and financial condition.

The following table summarizes the changes in our allowance for credit losses (in thousands):


	Nine Months Ended September 30,
	2024		2023
Balance at beginning of period	$	442	$	321
Write-offs	(165)		(12)
Bad debt expense	921		71
Balance at end of period	$	1,198	$	380

Cash and Cash Equivalents

Cash equivalents consist of short-term, highly liquid investments purchased with a maturity of three months or less. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. At times, the cash and cash equivalent balances may exceed federally insured limits. The Company does not believe that this results in any significant credit risk as the Company’s policy is to place its cash and cash equivalents in highly-rated financial institutions. The Company also holds cash in foreign banks that are not federally insured. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Restricted Cash

Restricted cash consists of amounts held by an escrow account. On September 18, 2023, the Company commenced an arbitration against AMF with Judicial Administration and Arbitration Services (JAMS) seeking, among other things, resolution that AMF’s purported attempt to terminate the AMF License Agreement, dated October 1, 2013, was ineffective and that the Company does not owe any royalties to AMF for the Company’s F15 product and that the Company was not required to pay royalties on its F15 product under the AMF License Agreement. AMF responded to the arbitration demand and asserted multiple claims. On October 5, 2023, the Company and AMF entered into an interim agreement while the arbitration proceedings were pending. Pursuant to this interim agreement, the Company agreed to deposit into an escrow account an amount equal to 4% of the net revenues previously received for sales of the Company’s F15 product that are the subject of dispute. As of September 30, 2024 and December 31, 2023, the Company has deposited approximately $22.1 million and $12.7 million, respectively, in the escrow account, and will continue to deposit the disputed 4% of net revenues of the Company’s F15 product with interest into the escrow account during the pendency of the arbitration proceedings. The Company has paid and, under this interim agreement, will continue to pay 4% royalties on rechargeable products. While the Company believes that it has meritorious defenses against AMF’s claims and intends to vigorously defend against those claims, there can be no assurance as to the outcome of the arbitration. For additional information, see Note 3.


	September 30,		December 31,
	2024		2023
	(unaudited)
Cash and cash equivalents	$	239,452	$	104,811
Restricted cash	22,082		$	12,714
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	261,534	$	117,525

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

•Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2: Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•Level 3: Inputs are unobservable inputs based on the Company’s assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

Level 1 investments include U.S. government and agency securities, which are valued based on prices readily available in the active markets in which those securities are traded. Level 2 investments include commercial paper and corporate notes, which is valued on a recurring basis based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets.

The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy

levels. The carrying amounts reported in the unaudited condensed consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, and accounts payable, due to their short-term nature.

The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess recorded as goodwill.

The Company’s business combination of Contura involved potential payment of future consideration that was contingent upon the achievement of certain product development milestones and/or contingent on the acquired business reaching certain performance milestones. A liability was recorded for the estimated fair value of the contingent consideration on the acquisition date. The fair value of the contingent consideration was remeasured at each reporting period, and the change in fair value was recognized within operating expenses in the unaudited condensed consolidated statements of comprehensive income (loss).

On February 25, 2021, the Company acquired Contura and its Bulkamid product, a urethral bulking agent indicated for the treatment of female SUI. In consideration for the acquisition, the Company paid approximately $141.3 million in cash and issued 1,096,583 shares of our common stock. The agreement also provided that the Company may pay an additional $35 million in the event Bulkamid sales in any consecutive 12-month period exceed $50 million (the Milestone) before December 31, 2024, with payment due within 50 business days following the quarter in which the Milestone has been met.

At March 31, 2023, the Milestone was met and payment was made during the three months ended June 30, 2023.

The following table summarizes the changes in the fair value of recurring Level 3 fair value measurements during the nine months ended September 30, 2023 (in thousands):




Liabilities
Contingent consideration:
Balance at beginning of period	$	32,600

Change in fair value included in earnings	2,400
Payment made	(35,000)
Balance at end of period	$	—

There were no transfers between Levels 1, 2 or 3 for the periods presented.

Investment Securities

The Company classifies its investment securities as available-for-sale. Those investments in debt securities with maturities less than 12 months at the balance sheet date are considered short-term investments. Those investments in debt securities with maturities greater than 12 months at the balance sheet date are considered long-term investments. The Company’s investment securities classified as available-for-sale are recorded at fair value based on the fair value hierarchy (Level 1 and Level 2 inputs in the fair value hierarchy), and consists primarily of commercial paper, corporate notes and U.S. government and agency securities. Unrealized gains or losses, deemed temporary in nature, are reported as other comprehensive income (loss) within the unaudited condensed consolidated statements of comprehensive income (loss). There were no unrealized gains or losses during the three and nine months ended September 30, 2024 and 2023.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to net income (loss) and the corresponding establishment of a credit loss allowance for the security. Premiums (discounts) are amortized (accreted) over the life of the related security as an adjustment to yield using the straight-line interest method. Dividend, accretion and interest income are recognized when earned. Realized gains or losses are included in net loss and are derived using the specific identification method for determining the cost of securities sold.

The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):


	Fair Value Measurements at September 30, 2024
Assets:	Level 1		Level 2		Level 3		Total
Commercial paper	$	—	$	203,626	$	—	$	203,626
Corporate notes	—		7,520		—		7,520
U.S. government and agency securities	47,919		—		—		47,919
	$	47,919	$	211,146	$	—	$	259,065

_____________________________________________


	Fair Value Measurements at December 31, 2023
Assets:	Level 1		Level 2		Level 3		Total
Commercial paper	$	—	$	179,881	$	—	$	179,881
Corporate notes	—		18,279		—		18,279
U.S. government and agency securities	91,703		—		—		91,703
	$	91,703	$	198,160	$	—	$	289,863

_____________________________________________

The Company holds investments in marketable debt securities that are classified and accounted for as cash equivalents or available-for-sale and are remeasured on a recurring basis. All of the Company’s available-for-sale debt securities are classified on the unaudited condensed consolidated balance sheets as cash equivalents or short-term investments. The following table summarizes the Company’s cash equivalents and investments in available-for-sale debt securities by significant investment category as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30, 2024
	Cost		Unrealized gains		Unrealized losses		Fair value
Cash equivalents:
Commercial paper	$	109,639	$	—	$	—	$	109,639
Corporate notes	3,753		—		—		3,753
U.S. government and agency securities	39,900		—		—		39,900
Total cash equivalents	$	153,292	$	—	$	—	$	153,292
Short-term investments:
Commercial paper	$	93,987	$	—	$	—	$	93,987
Corporate notes	3,764		3		—		3,767
U.S. government and agency securities	8,016		3		—		8,019
Total short-term investments	$	105,767	$	6	$	—	$	105,773

Total	$	259,059	$	6	$	—	$	259,065


	December 31, 2023
	Cost		Unrealized gains		Unrealized losses		Fair value
Cash equivalents:
Commercial paper	$	49,714	$	—	$	—	$	49,714


Total cash equivalents	$	49,714	$	—	$	—	$	49,714
Short-term investments:
Commercial paper	$	130,161	$	9	$	(3)	$	130,167
Corporate notes	18,272		18		(11)		18,279
U.S. government and agency securities	91,670		40		(7)		91,703
Total short-term investments	$	240,103	$	67	$	(21)	$	240,149

Total	$	289,817	$	67	$	(21)	$	289,863

Inventory, Net

Inventory is stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. The Company reduces the carrying value of inventory for items that are potentially excess, obsolete, or slow-moving based on changes in customer demand, technology developments, or other economic factors.

The Company capitalizes inventory produced for commercial sale. The Company capitalizes manufacturing costs as inventory following both the receipt of regulatory approval from regulatory bodies and the Company’s intent to commercialize. Costs associated with developmental products prior to satisfying the Company’s inventory capitalization criteria are charged to research and development expenses as incurred.

Products that have been approved by certain regulatory authorities may also be used in clinical programs to assess the safety and efficacy of the products for usage that have not been approved by the FDA or other regulatory

authorities. The form of product utilized for both commercial and certain clinical programs that are identical are included as inventory with an “alternative future use” as defined in ASC 730. Component materials and purchased products associated with clinical development programs are included in inventory and charged to research and development expenses when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use.”

For products that are under development and have not yet been approved by regulatory authorities, purchased component materials are charged to research and development expenses when the inventory ownership transfers to the Company.

The Company analyzes inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of its net realizable value, or inventory in excess of expected sales requirements. Although the manufacturing of the Company’s SNM systems is subject to strict quality control, certain batches or units of product may no longer meet quality specifications or may expire, which would require adjustments to the Company’s inventory values. The Company also applies judgment related to the results of quality tests that are performed throughout the production process, as well as the understanding of regulatory guidelines, to determine if it is probable that inventory will be saleable. These quality tests are performed throughout the pre- and post-production processes, and the Company continually gathers information regarding product quality for periods after the manufacturing date. The Company’s products currently have a maximum estimated shelf life range of 12 to 60 months and based on sales forecasts, the Company expects to realize the carrying value of the product inventory. In the future, reduced demand, quality issues, or excess supply beyond those anticipated by management may result in a material adjustment to inventory levels, which would be recorded as an increase to cost of sales.

The determination of whether inventory costs will be realizable or not requires estimates by the Company’s management. A critical input in this determination is future expected inventory requirements based on internal sales forecasts. Management then compares these requirements to the expiry dates of inventory on hand. To the extent that inventory is expected to expire prior to being sold, management will write down the value of inventory.

As of September 30, 2024, the Company had $81.1 million, $10.7 million and $22.1 million of finished goods inventory, work-in-process inventory and raw materials inventory, respectively, net of reserves of $6.3 million. As of December 31, 2023, the Company had $48.9 million, $10.5 million and $20.5 million of finished goods inventory, work-in-process inventory and raw materials inventory, respectively, net of reserves of $2.3 million.

Foreign Currency Translation

The functional currencies of the Company’s subsidiaries are currencies other than the U.S. dollar. The Company translates assets and liabilities of the foreign subsidiaries into U.S. dollars at the exchange rate in effect on the balance sheet date. Revenue and expenses of the subsidiaries are translated into U.S. dollars at the average exchange rate during the period. Gains or losses from these translation adjustments are reported as a separate component of stockholders’ equity in accumulated other comprehensive gain or loss until there is a sale or complete or substantially complete liquidation of the Company’s investment in the foreign subsidiary at which time the gains or losses will be realized and included in net income (loss). As of September 30, 2024 and December 31, 2023, all foreign currency translation gains (losses) have been unrealized and included in accumulated other comprehensive income (loss). Accumulated other comprehensive income (loss) consists entirely of losses or gains from translation of foreign subsidiaries at September 30, 2024 and December 31, 2023.

Customer and Vendor Concentration

As of September 30, 2024 and December 31, 2023, there were no customers who accounted for over 10% of the Company’s consolidated accounts receivable. As of September 30, 2024 and December 31, 2023, no vendors and three vendors, respectively, accounted for over 10% of the Company’s consolidated accounts payable. During the three and nine months ended September 30, 2024 and 2023, no customers accounted for over 10% of the Company’s consolidated net revenue. During the three and nine months ended September 30, 2024, three vendors and three vendors, respectively, accounted for over 10% of the Company’s inventory-related purchases. During the three and nine months ended September 30, 2023, three vendors and three vendors, respectively, accounted for over 10% of the Company’s inventory-related purchases.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized over the lesser of the life of the lease or the useful life of the improvements. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations.

Goodwill

Goodwill represents the excess purchase price over the fair values of both tangible and intangible assets acquired less the liabilities assumed. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount to the fair value of the reporting unit. The fair values are estimated using an income and discounted cash flow approach. The Company evaluates its goodwill on an annual basis in the fourth quarter or more frequently if it believes indicators of impairment exist. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or performs an annual impairment test. When tested quantitatively, the Company compares the fair value of the applicable reporting unit with its carrying value. In making this assessment, management relies on a number of factors, including expected future operating results, business plans, economic projections, anticipated future cash flows, business trends and declines in the Company’s market capitalization. The Company estimates the fair value of its reporting unit using a combination of the discounted cash flow and income approaches. If the carrying amount of a reporting unit exceeds the reporting unit’s fair value, the amount by which the carrying value exceeds the fair value is recognized as an impairment loss. There has been no goodwill impairment charges during the nine months ended September 30, 2024 and 2023.

Intangible Assets

Patent license asset

The intangible asset represents exclusive rights to an additional field-of-use on the patent suite within the AMF License Agreement. The additional field-of-use was provided in exchange for 50,000 shares of Series A preferred stock, the fair value of which was $1.0 million in 2013. The intangible asset was recorded at its fair value of $1.0 million at the date contributed. In connection with the initial public offering, such shares of Series A preferred stock were converted into common stock. Amortization of this asset is recorded over the shorter of the patent or legal life on a straight-line basis. The weighted-average amortization period was 8.71 years. The asset has been fully amortized as of December 31, 2022.

Exclusive license asset

The intangible asset represents exclusive rights to existing technologies and development services from Micro Systems Engineering, Inc. pursuant to an agreement entered into on March 2, 2021. The rights and services were provided in exchange for 65,594 shares of common stock, the fair value of which was $3.6 million upon transfer. The intangible asset was recorded at its fair value of $3.3 million at the date of the agreement, with the difference of $0.3 million recorded as a vendor credit in accounts payable in the unaudited condensed consolidated balance sheets. Amortization of this asset is recorded over the four-year term of the agreement on a straight-line basis. The Company recorded expense for the amortization of the exclusive license asset of $0.3 million and $0.7 million during the three and nine months ended September 30, 2024. The Company recorded expense for the amortization of the exclusive license asset of $0.3 million and $0.7 million during the three and nine months ended September 30, 2023. The Company will review the intangible asset for impairment whenever an impairment indicator exists. There has been no intangible asset impairment charges during the nine months ended September 30, 2024 and 2023.

Contura acquisition

The intangible assets represent technology, trade names and trademarks, and customer relationships acquired from Contura on February 25, 2021. The trade names and trademarks have an indefinite life. The straight-line method over the period of estimated benefit is used to amortize technology. ASC 350-30-35-3, General Intangibles other than Goodwill, states that customer relationships generally dissipate at a more rapid rate in the

earlier periods following a company’s succession to these relationships, with the rate of attrition declining over time. As such, the accelerated method is used to amortize customer relationships. The Company recorded expense for the amortization of Contura acquisition intangible assets of $2.0 million and $6.1 million during the three and nine months ended September 30, 2024, respectively. The Company recorded expense for the amortization of Contura acquisition intangible assets of $2.0 million and $6.1 million during the three and nine months ended September 30, 2023, respectively. The Company will review the intangible asset for impairment whenever an impairment indicator exists. There has been no intangible asset impairment charges during the nine months ended September 30, 2024 and 2023.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net cash flows that the assets are expected to generate. If said assets are considered to be impaired, the impairment that would be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There has been no intangible asset impairment charges during the nine months ended September 30, 2024 and 2023.

Indefinite-lived intangible assets are tested for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying amount may be impaired. Impairment is calculated as the excess of the asset’s carrying value over its fair value. Fair value is generally determined using a discounted future cash flow analysis. There has been no impairment charges to indefinite-lived intangible assets during the nine months ended September 30, 2024 and 2023.

Leases

In accordance with ASU 2016-02, Leases (Topic 842), components of a lease should be split into three categories: lease components, non-lease components, and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components. Entities may elect not to separate lease and non-lease components. Rather, entities would account for each lease component and related non-lease component together as a single lease component. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only. Topic 842 allows for the use of judgment in determining whether the assumed lease term is for a major part of the remaining economic life of the underlying asset and whether the present value of lease payments represents substantially all of the fair value of the underlying asset.

Operating lease right-of-use (ROU) assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the rate for a fully collateralized amortizing loan with the same maturity as the lease term in similar economic environment, based on the information available at commencement date in determining the present value of future payments. The operating lease ROU assets also include any lease payments made and excludes lease incentives and initial direct costs incurred, and are included in other assets in the Company’s unaudited condensed consolidated balance sheets. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Research and Development

Research and development costs are charged to operations as incurred. Research and development costs include employee compensation, including stock-based compensation, product development, including testing and engineering, royalty expense, and clinical studies to develop and support the Company’s SNM systems, including clinical study and registry management and monitoring, payments to clinical investigators, and data management. Other research and development expenses include consulting and advisory fees, royalty expense, travel expenses, and equipment-related expenses and other miscellaneous office and facilities expenses related to research and development programs.

Advertising Expense

The Company expenses advertising costs as they are incurred. During the three and nine months ended September 30, 2024, advertising expense totaled $5.9 million and $16.9 million, respectively, and are recorded within the sales and marketing expenses in its unaudited condensed consolidated statements of comprehensive income (loss). During the three and nine months ended September 30, 2023, advertising expense totaled $5.2 million and $13.6 million, respectively, and are recorded within the sales and marketing expenses in the Company’s unaudited condensed consolidated statements of comprehensive income (loss).

Income Taxes

The Company accounts for income taxes using the asset and liability method to compute the difference between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has net deferred tax assets in certain jurisdictions. The realization of these deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income in future years. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company evaluates the recoverability of the deferred tax assets annually, and maintains a full valuation allowance on its U.S. net deferred tax assets and a partial valuation allowance on certain foreign deferred tax assets. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company is subject to transfer pricing and other tax regulations designed to ensure that appropriate levels of income are reported as earned by the Company’s U.S. and foreign entities and are taxed accordingly. In the normal course of business, the Company is audited by federal, state and foreign tax authorities, and subject to inquiries from those tax authorities regarding the amount of taxes due. These inquiries may relate to the timing and amount of deductions and the allocation of income among various tax jurisdictions. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits, if any, in income tax expense.

Stock-Based Compensation

The Company measures the cost of employee and non-employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes compensation cost over the requisite service period (typically the vesting period), generally three or four years. Forfeitures are estimated at the time of the grant and revised in subsequent periods to reflect differences between the estimates and the number of shares that actually become exercisable.

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options (as of the date of grant) that have service conditions for vesting. Stock options and restricted shares awards vest based on service conditions, typically over three or four years.

The Company also grants shares of performance-based restricted stock units that typically vest after one year only if the Company has also achieved certain performance objectives as defined and approved by the Company’s board of directors. The fair value of performance awards is determined based on the Company’s stock price at the date of grant and expensed over the performance period based on the probability of achieving the performance objectives. If such targets are not met or service is not rendered for the requisite service period, no compensation cost is recognized, and any recognized compensation cost in prior periods will be reversed. In addition, the Company also grants market-based RSUs that have combined market conditions and service conditions for vesting, for which the Company uses the Monte Carlo valuation model to value equity awards (as of the date of grant). Compensation cost is not adjusted if the market condition is not met, as long as the requisite service is provided.

Net Income (Loss) per Share of Common Stock

Basic net income (loss) per share of common stock is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net income (loss) per share calculation, common stock options, unvested RSAs and RSUs are considered to be potentially dilutive securities. During the periods in which the Company has reported a net loss, diluted net loss per share of common stock is the same as basic net loss per share of common stock for those periods.

For the three and nine months ended September 30, 2024, there were 1,481,838 and 1,676,402 potentially dilutive weighted-average shares that were not included in the computation of diluted weighted-average shares of common stock and common stock equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. For the nine months ended September 30, 2023, there were 2,144,827 potentially dilutive weighted-average shares that were not included in the computation of diluted weighted-average shares of common stock and common stock equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss.

Segment Reporting

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined it operates in one segment, the development and commercialization of innovative and minimally invasive products to treat bladder and bowel dysfunction. Geographically, the Company sells over 90% of its products to customers in the United States. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Improvements to Reportable Segment Disclosures, to require the disclosure of segment expenses if they are (i) significant to the segment, (ii) regularly provided to the CODM, and (iii) included in each reported measure of a segment’s profit or loss. Public entities will be required to provide this disclosure quarterly. In addition, this ASU requires an annual disclosure of the CODM’s title and a description of how the CODM uses the segment’s profit/loss measure to assess segment performance and to allocate resources. This guidance is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, with early adoption permitted, and is required to be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the impact of the standard on its financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. The Company is evaluating the impact of the standard on its financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The guidance is intended to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expenses captions (such as cost of sales, selling, general, and administrative expenses, and research and development expenses). This guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted, and is required to be either applied prospectively to financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact of the standard on its financial statements and related disclosures.

Stock-Based Compensation - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Number of Restricted Stock Units
Outstanding at beginning of period (in shares) \| shares	230,700
Restricted stock units granted (in shares) \| shares	38,450
Restricted stock units vested (in shares) \| shares	(206,734)
Outstanding at end of period (in shares) \| shares	62,416
Weighted-Average Fair Value Per Share at Grant Date
Outstanding at beginning of period (in USD per share) \| $ / shares	$ 70.20
Restricted stock units granted (in USD per share) \| $ / shares	73.16
Restricted stock units vested (in USD per share) \| $ / shares	65.77
Outstanding at end of period (in USD per share) \| $ / shares	$ 86.70

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)	0	0	0	0
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period of recognition of compensation cost (in years)			3 months 18 days
Weighted-average remaining contractual term of options outstanding and exercisable (in years)			4 years 3 months 18 days
Restricted Shares Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period of recognition of compensation cost (in years)			1 year 4 months 24 days
Unrecognized compensation cost related to unvested RSAs or RSUs	$ 30.8		$ 30.8
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period of recognition of compensation cost (in years)			3 months 18 days
Unrecognized compensation cost related to unvested RSAs or RSUs	$ 0.9		$ 0.9

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 239,452	$ 104,811
Short-term investments	105,773	240,149
Accounts receivable, net of allowance for credit losses of $1,198 and $442 at September 30, 2024 and December 31, 2023, respectively	62,644	57,243
Inventory, net	113,861	79,940
Prepaid expenses and other current assets	4,184	9,279
Total current assets	525,914	491,422
Restricted cash	22,082	12,714
Property and equipment, net	20,698	10,760
Intangible assets, net	78,454	81,375
Other assets	22,478	24,235
Goodwill	104,545	99,417
Total assets	774,171	719,923
Current liabilities
Accounts payable	20,109	18,452
Accrued liabilities	5,701	10,527
Accrued compensation and benefits	35,998	15,060
Operating lease liabilities, current portion	2,611	1,777
Total current liabilities	64,419	45,816
Operating lease liabilities, net of current portion	29,900	25,840
Deferred tax liabilities, net	15,363	10,703
Total liabilities	109,682	82,359
Commitments and contingencies (Note 3)
Stockholders’ equity
Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2024 and December 31, 2023	0	0
Common stock, par value $0.0001, 75,000,000 shares authorized at September 30, 2024 and December 31, 2023; 51,110,021 and 50,770,520 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	5	5
Additional paid-in capital	1,063,185	1,033,778
Accumulated deficit	(392,586)	(380,352)
Accumulated other comprehensive loss	(6,115)	(15,867)
Total stockholders’ equity	664,489	637,564
Total liabilities and stockholders’ equity	$ 774,171	$ 719,923

Income Taxes - Narrative (Details) $ in Millions	Dec. 31, 2023 USD ($)
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 218.6
Operating loss carryforwards, subject to expiration	2.2
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, subject to expiration	$ 245.5

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

The change in the carrying amount of goodwill during the nine months ended September 30, 2024 included the following (in thousands):


December 31, 2023	$	99,417

Foreign currency translation adjustment	5,128
September 30, 2024	$	104,545

Intangible assets as of September 30, 2024 included the following (in thousands):


		September 30, 2024
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Impairment		Foreign currency translation adjustment		Intangible Assets, Net
Patent license asset	8.71 years	$	1,000	$	(1,000)	$	—	$	—	$	—
Exclusive license asset	4 years	3,300		(3,080)		—		—		220
Technology	12 years	81,100		(24,305)		—		(3,468)		53,327
Trade names and trademarks	Indefinite	19,700		—		—		(542)		19,158
Customer relationships	12 years	11,400		(4,830)		(287)		(534)		5,749
		$	116,500	$	(33,215)	$	(287)	$	(4,544)	$	78,454

Intangible assets as of December 31, 2023 included the following (in thousands):


		December 31, 2023
	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Impairment		Foreign currency translation adjustment		Intangible Asset, Net
Patent license asset	8.71 years	$	1,000	$	(1,000)	$	—	$	—	$	—
Exclusive license asset	4 years	3,300		(2,420)		—		—		880
Technology	12 years	81,100		(19,236)		—		(6,140)		55,724
Trade names and trademarks	Indefinite	19,700		—		—		(1,482)		18,218
Customer relationships	12 years	11,400		(3,837)		(287)		(723)		6,553
		$	116,500	$	(26,493)	$	(287)	$	(8,345)	$	81,375

Nature of Operations and Summary of Significant Accounting Policies - Schedule of Fair Value Hierarchy for Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	$ 105,773	$ 240,149
Commercial paper included in cash and cash equivalents	109,600	49,700
U.S. government and agency securities included in cash and cash equivalents	39,900
Corporate notes included in cash and cash equivalents	3,800
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	93,987	130,167
Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	3,767	18,279
U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	8,019	91,703
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	259,065	289,863
Fair Value, Recurring \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	203,626	179,881
Fair Value, Recurring \| Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	7,520	18,279
Fair Value, Recurring \| U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	47,919	91,703
Level 1 \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	47,919	91,703
Level 1 \| Fair Value, Recurring \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	0	0
Level 1 \| Fair Value, Recurring \| Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	0	0
Level 1 \| Fair Value, Recurring \| U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	47,919	91,703
Level 2 \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	211,146	198,160
Level 2 \| Fair Value, Recurring \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	203,626	179,881
Level 2 \| Fair Value, Recurring \| Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	7,520	18,279
Level 2 \| Fair Value, Recurring \| U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	0	0
Level 3 \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	0	0
Level 3 \| Fair Value, Recurring \| Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	0	0
Level 3 \| Fair Value, Recurring \| Corporate notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	0	0
Level 3 \| Fair Value, Recurring \| U.S. government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value	$ 0	$ 0

Employee Benefit Plan (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Employee Benefit Plan (Details) - USD ($) $ in Millions	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Retirement Benefits [Abstract]
Contributions by employer	$ 0.8	$ 0.7	$ 2.4	$ 1.9

Goodwill and Intangible Assets - Schedule of Carrying Amount of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Goodwill [Roll Forward]
Balance at beginning of period	$ 99,417
Foreign currency translation adjustment	5,128
Balance at end of period	$ 104,545

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 49
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482785/280-10-55-49

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 24
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482548/350-20-55-24

Reference 3: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 4: http://www.xbrl.org/2003/role/exampleRef
-Topic 852
-SubTopic 10
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-Section 55
-Paragraph 10
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 210
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(15))
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 350
-SubTopic 20
-Name Accounting Standards Codification
-Section 45
-Paragraph 1
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-Subparagraph (a)
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
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-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478546/942-210-S99-1

+ Details

Property and Equipment, Net

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

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


	September 30,		December 31,
	2024		2023
Equipment	$	3,987	$	3,169
Computer hardware and software	4,162		3,638
Tools and molds	2,518		2,315
Leasehold improvements	19,148		4,573
Furniture and fixtures	3,508		1,876
Construction in progress	269		6,054
	33,592		21,625
Less: accumulated depreciation	(12,894)		(10,865)
	$	20,698	$	10,760

Depreciation expense of property and equipment was $1.0 million and $2.6 million for the three and nine months ended September 30, 2024, respectively. Depreciation expense of property and equipment was $1.0 million and $2.5 million for the three and nine months ended September 30, 2023, respectively. The leasehold improvements balance primarily relates to the completed construction costs for the new principal executive offices and for general office, manufacturing, and warehousing space under an operating lease entered into in April 2023.

Nature of Operations and Summary of Significant Accounting Policies - Schedule of Changes in Fair Value of Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Contingent consideration:
Change in fair value included in earnings	$ 0	$ 2,400
Level 3 \| Contingent Consideration Liability \| Fair Value, Recurring
Contingent consideration:
Balance at beginning of period		32,600
Change in fair value included in earnings		2,400
Payment made		(35,000)
Balance at end of period		$ 0

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Schedule of Provision for Income Taxes and Effective Tax Rates

The following table presents details of the provision for income taxes and effective tax rates (in thousands, except percentages):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Income tax (benefit) expense	$(1,535)	$(427)	$3,764	$(1,538)
Effective tax rate	98.62%	(12.20)%	(44.43)%	10.83%

Property and Equipment, Net - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Property and Equipment
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 1.0	$ 1.0	$ 2.6	$ 2.5

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss
Balance at beginning of period (in shares) at Dec. 31, 2022		49,546,727
Balance at beginning of period at Dec. 31, 2022	$ 570,139	$ 5	$ 969,545	$ (374,264)	$ (25,147)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee stock option exercises for cash (in shares)		116,452
Issuance of common stock for employee stock option exercises for cash	1,930		1,930
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation (in shares)		247,770
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	7,295		7,295
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation (in shares)		199,718
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	3,419		3,419
Foreign currency translation adjustment	3,071				3,071
Net income (loss)	(9,248)			(9,248)
Balance at end of period (in shares) at Mar. 31, 2023		50,110,667
Balance at end of period at Mar. 31, 2023	576,606	$ 5	982,189	(383,512)	(22,076)
Balance at beginning of period (in shares) at Dec. 31, 2022		49,546,727
Balance at beginning of period at Dec. 31, 2022	570,139	$ 5	969,545	(374,264)	(25,147)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for acquisition of in-process research & development	15,447
Foreign currency translation adjustment	636
Net income (loss)	(12,662)
Balance at end of period (in shares) at Sep. 30, 2023		50,669,203
Balance at end of period at Sep. 30, 2023	610,620	$ 5	1,022,052	(386,926)	(24,511)
Balance at beginning of period (in shares) at Mar. 31, 2023		50,110,667
Balance at beginning of period at Mar. 31, 2023	576,606	$ 5	982,189	(383,512)	(22,076)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee stock option exercises for cash (in shares)		43,229
Issuance of common stock for employee stock option exercises for cash	864		864
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation (in shares)		42,578
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	7,676		7,676
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	3,528		3,528
Issuance of common stock for acquisition of in-process research & development (in shares)		264,783
Issuance of common stock for acquisition of in-process research & development	15,447		15,447
Foreign currency translation adjustment	3,750				3,750
Net income (loss)	(7,342)			(7,342)
Balance at end of period (in shares) at Jun. 30, 2023		50,461,257
Balance at end of period at Jun. 30, 2023	600,529	$ 5	1,009,704	(390,854)	(18,326)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee stock option exercises for cash (in shares)		34,138
Issuance of common stock for employee stock option exercises for cash	878		878
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation (in shares)		157,558
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	8,678		8,678
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation (in shares)		16,250
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	2,792		2,792
Foreign currency translation adjustment	(6,185)				(6,185)
Net income (loss)	3,928			3,928
Balance at end of period (in shares) at Sep. 30, 2023		50,669,203
Balance at end of period at Sep. 30, 2023	$ 610,620	$ 5	1,022,052	(386,926)	(24,511)
Balance at beginning of period (in shares) at Dec. 31, 2023	50,770,520	50,770,520
Balance at beginning of period at Dec. 31, 2023	$ 637,564	$ 5	1,033,778	(380,352)	(15,867)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee stock option exercises for cash (in shares)		16,068
Issuance of common stock for employee stock option exercises for cash	248		248
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation (in shares)		24,857
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	8,106		8,106
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation (in shares)		206,734
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	1,445		1,445
Foreign currency translation adjustment	(1,152)				(1,152)
Net income (loss)	(19,112)			(19,112)
Balance at end of period (in shares) at Mar. 31, 2024		51,018,179
Balance at end of period at Mar. 31, 2024	$ 627,099	$ 5	1,043,577	(399,464)	(17,019)
Balance at beginning of period (in shares) at Dec. 31, 2023	50,770,520	50,770,520
Balance at beginning of period at Dec. 31, 2023	$ 637,564	$ 5	1,033,778	(380,352)	(15,867)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for acquisition of in-process research & development	0
Foreign currency translation adjustment	9,752
Net income (loss)	$ (12,234)
Balance at end of period (in shares) at Sep. 30, 2024	51,110,021	51,110,021
Balance at end of period at Sep. 30, 2024	$ 664,489	$ 5	1,063,185	(392,586)	(6,115)
Balance at beginning of period (in shares) at Mar. 31, 2024		51,018,179
Balance at beginning of period at Mar. 31, 2024	627,099	$ 5	1,043,577	(399,464)	(17,019)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee stock option exercises for cash (in shares)		8,525
Issuance of common stock for employee stock option exercises for cash	241		241
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation (in shares)		(12,142)
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	7,937		7,937
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	674		674
Foreign currency translation adjustment	466				466
Net income (loss)	6,899			6,899
Balance at end of period (in shares) at Jun. 30, 2024		51,014,562
Balance at end of period at Jun. 30, 2024	643,316	$ 5	1,052,429	(392,565)	(16,553)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee stock option exercises for cash (in shares)		108,287
Issuance of common stock for employee stock option exercises for cash	2,525		2,525
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation (in shares)		(12,828)
Restricted Shares Award (RSA) issuances and forfeitures for terminations, net and stock-based compensation	7,550		7,550
Issuance of common stock for vesting of Restricted Stock Units (RSU) and stock-based compensation	681		681
Foreign currency translation adjustment	10,438				10,438
Net income (loss)	$ (21)			(21)
Balance at end of period (in shares) at Sep. 30, 2024	51,110,021	51,110,021
Balance at end of period at Sep. 30, 2024	$ 664,489	$ 5	$ 1,063,185	$ (392,586)	$ (6,115)

Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

Stock-Based Compensation

Stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of comprehensive income (loss) is allocated as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	1,295	$	2,344	$	4,326	$	6,962
General and administrative	1,266		3,291		4,554		9,176
Sales and marketing	5,670		5,835		17,513		17,250
	$	8,231	$	11,470	$	26,393	$	33,388

Stock Option Activity

The option awards issued under the 2014 Stock Option Plan (the 2014 Plan) and the 2018 Omnibus Incentive Plan (the 2018 Plan) were measured based on fair value. The Company used the simplified method of determining the expected term of stock options as the Company believes this represents the best estimate of the expected term of a new option. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have sufficient trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments, whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The assumptions regarding the expected term of the options and the expected volatility of the stock price are subjective, and these assumptions have a significant effect on the estimated fair value amounts. There were no stock option grants for the three and nine months ended September 30, 2024 and 2023.

As of September 30, 2024, there were minimal amounts of total unrecognized compensation cost related to unvested stock options that are expected to be recognized over a weighted-average period of approximately 0.3 years.

The following table summarizes stock option activity for the nine months ended September 30, 2024 under the 2014 and 2018 Plans (in thousands, except share and per share data):


	Number of Options	Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at December 31, 2023	814,780	$	18.47	$	35,652

Options exercised	(132,880)	22.68		$	6,040	(1)
Options forfeited	(1,125)	50.01
Outstanding at September 30, 2024	680,775	$	17.60	$	35,401	(2)

_____________________________________________

(1) Represents the total difference between the Company’s closing stock price at the time of exercise and the stock option exercise price, multiplied by the number of options exercised.

The weighted-average remaining contractual term of options outstanding and exercisable was 4.3 years at September 30, 2024.

Restricted Shares Awards Activity

As of September 30, 2024, there was $30.8 million of total unrecognized compensation cost related to unvested restricted shares awards that is expected to be recognized over a weighted-average period of approximately 1.4 years.

The following table summarizes restricted shares awards activity for the nine months ended September 30, 2024:


	Number of Restricted Shares Awards	Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2023	1,303,704	$	55.86
Restricted shares awards granted	30,400	67.88
Restricted shares awards vested	(509,655)	53.37
Restricted shares awards forfeited	(30,513)	59.62
Outstanding at September 30, 2024	793,936	$	57.78

Restricted Stock Units Activity

As of September 30, 2024, there was $0.9 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of approximately 0.3 years.

The following table summarizes restricted stock units activity for the nine months ended September 30, 2024:


	Number of Restricted Stock Units	Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2023	230,700	$	70.20
Restricted stock units granted	38,450	73.16
Restricted stock units vested	(206,734)	65.77

Outstanding at September 30, 2024	62,416	$	86.70

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule of Total Lease Cost

Total lease costs for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Lease cost
Operating lease cost	$	1,233	$	528	$	3,768	$	1,616
Short-term lease cost	16		25		48		70
Variable lease cost	(827)		167		712		452
Amortization of net lease liabilities	870		(549)		(880)		(1,272)
Total lease cost	$	1,292	$	171	$	3,648	$	866

Income Taxes

9 Months Ended

Sep. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

The following table presents details of the provision for income taxes and effective tax rates (in thousands, except percentages):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Income tax (benefit) expense	$(1,535)	$(427)	$3,764	$(1,538)
Effective tax rate	98.62%	(12.20)%	(44.43)%	10.83%

The Company periodically evaluates whether a portion or all of its deferred tax assets will be recovered. The Company records a valuation allowance against deferred tax assets if and to the extent it is more likely than not that they will not be recovered. In evaluating the need for a valuation allowance, the Company weighs all relevant positive and negative evidence, including among other factors, historical financial performance, forecasts of income over the applicable carryforward periods, and the market environment, with each consideration weighted based on its reliability. The Company continues to maintain a full valuation allowance against its otherwise recognizable U.S. deferred income tax assets and a partial valuation allowance on certain foreign deferred tax assets as of September 30, 2024 and December 31, 2023.

The effective tax rate differs from the statutory U.S. income tax rate due to differing tax rates imposed on income earned in foreign jurisdictions, losses in foreign jurisdictions, and certain nondeductible expenses. The effective tax rate could change significantly from quarter to quarter because of recurring and nonrecurring factors. The provision for income taxes for the three months ended September 30, 2024 was primarily the result of increased losses in foreign jurisdictions. The provision for income taxes for the nine months ended September 30, 2024 was primarily the result of increased income in the U.S.

At December 31, 2023, the Company had U.S. federal net operating loss (NOL) carryforwards of approximately $218.6 million. Approximately $2.2 million of U.S. federal NOLs will expire in 2037 and remaining U.S. federal NOLs will carryover indefinitely. The Company had U.S. state NOLs of $245.5 million, which will expire between 2033 and 2042.

Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), use of the Company’s NOL carryforwards may be limited if the Company experiences a cumulative change in ownership of greater than 50% in a rolling three-year period. The Company performed an analysis of changes in ownership for purposes of these Internal Revenue Code sections. Based on the studies performed in 2023, the Company determined that an ownership change did not occur in 2023. Future ownership changes could impact the Company’s ability to utilize NOL carryforwards.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Topic 740
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Paragraph 2
-Subparagraph (a)
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-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details