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Stockholders' Equity
 12 Months Ended
Dec. 31, 2024
Equity [Abstract]  
Stockholders' Equity
13.
Stockholders’ Equity

Share Repurchases

In December 2023, the Board authorized and approved a stock repurchase of up to $25.0 million of the Company's common stock concurrent with the issuance of $600.0 million aggregate principal amount of its 2023 Notes. See Note 15, “Convertible Senior Notes,” for more information on the issuance. The Company used $14.4 million of the proceeds from the issuance of the 2023 Notes to repurchase 92,090 shares at a price of $156.22, including transaction costs, to offset the impact of dilution from the issuance of 2023 Notes and equity compensation programs as well as to reduce its outstanding share count. The Company has elected to retire the shares repurchased to date. Retired shares become part of the pool of authorized but unissued shares. The purchase price of the retired shares in excess of par value, including transaction costs, is recorded as a decrease to additional paid-in capital in the Company's consolidated balance sheets as of December 31, 2023.

Stock Option and Incentive Plans

At the Company’s 2018 Annual Meeting of Stockholders held on May 16, 2018, the Company’s shareholders approved the 2018 Stock Option and Incentive Plan (the “2018 Plan”). Under the 2018 Plan the number of shares of the Company’s common stock that are reserved and available for issuance shall be 2,778,000 plus the number of shares of common stock available for issuance under the Company’s Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan”). The shares of common stock underlying any awards under the 2018 Plan and 2012 Plan that are forfeited, canceled or otherwise terminated (other than by exercise) shall be added back to the shares of stock available for issuance under the 2018 Plan. At December 31, 2024, 1,479,932 shares were available for future grants under the 2018 Plan.

Former Chief Executive Officer Accounting Modifications

On June 12, 2024, upon approval by the Board, the Company entered into the Fourth Amended and Restated Employment Agreement (the “Transition Agreement”) with the Company's former Chief Executive Officer (“CEO”), Tony J. Hunt, which amends and restates Mr. Hunt's Third Amended and Restated Employment Agreement with the Company dated as of May 26, 2022. Under the terms of the Transition Agreement, Mr. Hunt relinquished his position as the Company's CEO effective September 1, 2024 (the “Transition Date”) and transitioned to a new role as Executive Chair of the Board beginning on the Transition Date (the “CEO Transition”). It is anticipated that Mr. Hunt will continue to be involved in the business as the

Executive Chair of the Board until March 2026 and will continue to be employed by the Company as an advisor thereafter, until March 2027.

Under the terms of the Transition Agreement and the award agreements governing Mr. Hunt’s outstanding equity awards, Mr. Hunt’s unvested stock awards will continue to vest in accordance with their original terms. Furthermore, on June 28, 2024, the Company entered into an amendment (the “2024 Award Amendment”) to the equity awards granted to Mr. Hunt in 2024, which consisted of a stock option, restricted stock units (“RSUs”) and performance stock units (“PSUs” and together the “2024 Grants”). Pursuant to the terms of the 2024 Award Amendment, two-thirds of the 2024 Grants were forfeited, which equates to 32,776 shares of the Company’s common stock.

Although Mr. Hunt’s unvested equity awards continue to vest in accordance with their original terms and there has been no amendment to Mr. Hunt’s outstanding equity awards other than the 2024 Award Amendment, the Company determined that under ASC 718, “Compensation - Stock Compensation”, the CEO Transition represented a significant reduction in Mr. Hunt’s operating role with the Company for accounting purposes. This determination resulted in a Type III accounting modification of certain of Mr. Hunt’s unvested stock awards (improbable to probable) under ASC 718 (the “Equity Modification”) on June 12, 2024. As a result, for accounting purposes only, Mr. Hunt’s unvested awards were deemed cancelled and a new grant issued for his unvested shares with the value of these awards recalculated using a price of $136.00 per share, which was the opening stock price of the first day of trading following the public announcement of the CEO Transition.

As a result of the Equity Modification, the Company recognized stock-based compensation expense for the modified awards of $22.4 million over the remaining requisite service period, which the Company determined to be between June 13, 2024 and September 1, 2024 and represented the remaining service period of Mr. Hunt’s role as CEO.

The Company determined that the PSUs granted to Mr. Hunt in 2022 and 2023 should be accounted for as a Type IV accounting modification (improbable to improbable) in accordance with ASC 718, because vesting conditions before and after June 12, 2024 were improbable of being achieved.

As a result of the Equity Modification and the forfeiture of the pro-rata portion of Mr. Hunt’s 2024 Grants, the Company recognized $22.4 million of incremental stock-based compensation expense for the year ended December 31, 2024.

Stock Issued for Earnout Payment

In April 2024, the Company issued 28,638 shares of its common stock to former securityholders of Avitide to satisfy the contingent consideration obligation established under the Agreement and Plan of Merger and Reorganization (the “Avitide Agreement”) which the Company entered into as part of the acquisition of Avitide in September 2021. In March 2024, the Company issued 2,770 shares of its common stock to former securityholders of FlexBiosys to satisfy the contingent consideration obligation established under the FlexBiosys Agreement, which the Company entered into as part of the acquisition of FlexBiosys in April 2023. The shares issued to FlexBiosys represent 20% of the earnout consideration earned in the First Earnout Year (as defined in the FlexBiosys Agreement) and the shares issued to Avitide represents 50% of the earnout consideration earned in the Second Earnout Year (as defined in the Avitide Agreement).

In May 2023, the Company issued 42,621 shares of its common stock to former securityholders of Avitide to satisfy the contingent consideration obligation established under the Agreement and Plan of Merger and Reorganization (the “Avitide Agreement”) which the Company entered into as part of the Avitide Acquisition. See Note 5, “Acquisitions” above for additional information on the Avitide Acquisition and the contingent consideration. The shares represent 50% of the earnout consideration earned in the First Earnout Year (as defined in the Avitide Agreement).

Stock-Based Compensation

The Company recorded stock-based compensation expense of $48.1 million, $25.6 million and $27.3 million for the years ended December 31, 2024, 2023 and 2022, respectively, for share-based awards granted under the Plans. The following table presents stock-based compensation expense in the Company’s consolidated statements of comprehensive income:

 

 

 

For the Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(Amounts in thousands)

 

Cost of product revenue

 

$

1,948

 

 

$

1,933

 

 

$

2,525

 

Research and development

 

 

3,227

 

 

 

2,855

 

 

 

2,622

 

Selling, general and administrative

 

 

42,895

 

 

 

20,787

 

 

 

22,169

 

Total stock-based compensation

 

$

48,070

 

 

$

25,575

 

 

$

27,316

 

Stock Options

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and measures stock-based compensation costs of stock options at the grant date based on the estimated fair value of the award. The Company recognizes expense on awards with service-based vesting over the employee’s requisite service period on a straight-line basis. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

The fair value of stock option awards granted during the years ended December 31, 2024, 2023 and 2022 were calculated using the following estimated assumptions:

 

 

 

For the Years Ended December 31,

 

 

2024

 

2023

 

2022

Expected term (in years)

 

5.09-6.5

 

5.14-6.5

 

5.5-6.5

Expected volatility (range)

 

46.09-48.50%

 

44.78-46.58%

 

41.44-43.96%

Risk-free interest rate

 

3.69-4.48%

 

3.56-4.71%

 

1.86-4.07%

Expected dividend yield

 

0%

 

0%

 

0%

Information regarding option activity for the year ended December 31, 2024, under the Plans is summarized below:

 

 

 

Shares

 

 

Weighted
average
exercise
price

 

 

Weighted-
Average
Remaining
Contractual
Term
(in Years)

 

 

Aggregate
Intrinsic
Value
(in Thousands)

 

Options outstanding at December 31, 2023

 

 

649,130

 

 

$

85.97

 

 

 

 

 

 

 

Granted

 

 

80,782

 

 

 

173.16

 

 

 

 

 

 

 

Exercised

 

 

(99,679

)

 

 

43.10

 

 

 

 

 

 

 

Forfeited/expired/cancelled(1)

 

 

(34,027

)

 

 

196.49

 

 

 

 

 

 

 

Options outstanding at December 31, 2024

 

 

596,206

 

 

$

98.64

 

 

 

 

 

 

 

Options exercisable at December 31, 2024

 

 

349,744

 

 

$

85.02

 

 

 

 

 

 

 

Vested and expected to vest at December 31, 2024(2)

 

 

590,960

 

 

$

98.05

 

 

 

5.37

 

 

$

35,180

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)
Includes 13,057 options forfeited pursuant to the 2024 Award Amendment discussed above under “Chief Executive Officer Accounting Modifications.”
(2)
Represents the number of vested options as of December 31, 2024 plus the number of unvested options expected to vest as of December 31, 2024, based on the unvested outstanding options at December 31, 2024 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on December 31, 2024, the last business day of 2024, of $143.94 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on December 31, 2024. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2024, 2023 and 2022 was $10.4 million, $5.8 million and $14.1 million, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2024, 2023 and 2022 was $88.00, $84.37 and $87.40, respectively. The total fair value of stock options that vested during the years ended December 31, 2024, 2023 and 2022 was $7.8 million, $4.7 million and $3.1 million, respectively.

Stock Units

The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant. The Company recognizes expense on awards with service-based vesting over the employee's requisite service period on a straight-line basis. The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved. Information regarding stock unit activity, which includes activity for restricted stock units and performance stock units, for the year ended December 31, 2024 under the Plans is summarized below:

 

 

 

Shares

 

 

Weighted Average
Grant Date
Fair Value

 

 

Unvested at December 31, 2023

 

 

474,320

 

 

$

155.59

 

 

Awarded

 

 

232,519

 

 

 

177.36

 

 

Vested

 

 

(148,429

)

 

 

148.16

 

 

Forfeited/cancelled(1)

 

 

(87,798

)

 

 

189.71

 

 

Unvested at December 31, 2024

 

 

470,612

 

 

$

162.33

 

 

Vested and expected to vest at December 31, 2024(2)

 

 

412,863

 

 

$

160.77

 

 

 

(1)
Includes 13,146 RSUs and 6,573 PSUs forfeited pursuant to the 2024 Award Amendment discussed above under “Chief Executive Officer Accounting Modifications.”
(2)
Represents the number of vested stock units as of December 31, 2024, plus the number of unvested stock units expected to vest as of December 31, 2024, based on the unvested outstanding stock units at December 31, 2024 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value of stock units vested during the years ended December 31, 2024, 2023 and 2022 was $26.7 million, $35.7 million and $43.9 million, respectively. The total fair value of stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $22.0 million, $26.2 million and $22.7 million, respectively.

As of December 31, 2024, there was $56.5 million of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.7 years. The Company expects 2,305,232 unvested options and stock units to vest over the next five years.