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Note 8 - Share-based Compensation | 9 Months Ended
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Sep. 30, 2021
Notes to Financial Statements |
Share-based Payment Arrangement [Text Block] | 8. Share-based compensation Service vesting-based stock options The following is a summary of service vesting based stock option activity for the nine months ended September 30, 2021, and the status of stock options outstanding as of September 30, 2021:
|  | Nine Months Ended |
|  | September 30, 2021 |
|  | Shares |  |  | Wtd. Avg. Exercise Price |
Outstanding as of beginning of year |  |  | 844,455 |  |  | $ | 2.00 |
Exercised |  |  | (131,590 | ) |  |  | 1.48 |
Forfeited |  |  | (1,146 | ) |  |  | 5.69 |
Expired |  |  | (35,714 | ) |  |  | 1.73 |
Outstanding as of September 30, 2021 |  |  | 676,005 |  |  | $ | 2.12 |
Stock options exercisable as of September 30, 2021 |  |  | 671,964 |  |  | $ | 2.11 |
We recognized $6,000 and $21,000 in stock compensation expense related to service vesting-based options during the three and nine months ended September 30, 2021, respectively, and $15,000 and $104,000 during the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, there was $27.2 million of aggregate intrinsic value of outstanding service vesting-based stock options, including $27.0 million of aggregate intrinsic value of exercisable service vesting-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. This amount will change based on the fair market value of the Company’s stock. The intrinsic value of service vesting-based awards exercised was $1.4 million and $5.2 million during the three and nine months ended September 30, 2021, respectively, and $2.2 million and $6.8 million during the three and nine months ended September 30, 2020, respectively. The weighted average remaining contractual life of service vesting-based options outstanding and exercisable as of September 30, 2021 is 3.3 years. As of September 30, 2021, there was $4,000 in unrecognized compensation costs related to service vesting-based stock options. We expect to recognize those costs over 0.2 years. Performance-based stock options The following is a summary of performance-based stock option activity under our stock option plan for the nine months ended September 30, 2021, and the status of performance-based stock options outstanding as of September 30, 2021:
|  | Nine Months Ended |
|  | September 30, 2021 |
|  | Shares |  |  | Wtd. Avg. Exercise Price |
Outstanding as of beginning of year |  |  | 686,001 |  |  | $ | 1.64 |
Exercised |  |  | (501,075 | ) |  |  | 1.64 |
Outstanding as of September 30, 2021 |  |  | 184,926 |  |  | $ | 1.64 |
Stock options exercisable as of September 30, 2021 |  |  | 184,926 |  |  | $ | 1.64 |
No stock compensation expense was recognized during the three and nine months ended September 30, 2021 and 2020 related to performance-based options. As of September 30, 2021, there was $7.5 million of aggregate intrinsic value of outstanding and exercisable performance-based stock options. Intrinsic value is the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on September 30, 2021. This amount will change based on the fair market value of the Company’s stock. The intrinsic value of performance-based awards exercised was $9.7 million and $19.5 million during the three and nine months ended September 30, 2021, respectively, and $0 and $239,000 during the three and nine months ended September 30, 2020, respectively. The weighted average remaining contractual life of performance-based options outstanding and exercisable as of September 30, 2021 is 0.2 years. All compensation cost of performance-based stock options outstanding as of September 30, 2021 has been recognized. There were no stock options granted to employees and non-employee directors in the three and nine months ended September 30, 2021 and 2020. Restricted stock Service vesting-based restricted stock The following is a summary of service vesting-based restricted stock activity for the nine months ended September 30, 2021, and the status of unvested service vesting-based restricted stock outstanding as of September 30, 2021:
|  | Nine Months Ended |
|  | September 30, 2021 |
|  | Shares |  |  | Wtd. Avg. Grant Date Fair Value |
Outstanding as of beginning of year |  |  | 930,854 |  |  | $ | 19.31 |
Granted |  |  | 751,363 |  |  |  | 47.50 |
Vested |  |  | (241,590 | ) |  |  | 15.97 |
Forfeited |  |  | (79,079 | ) |  |  | 34.86 |
Non-vested as of September 30, 2021 |  |  | 1,361,548 |  |  | $ | 34.56 |
The aggregate fair value of the service vesting-based awards granted was $31.1 million and $35.7 million during the three and nine months ended September 30, 2021, respectively, and $4.2 million and $7.4 million during the three and nine months ended September 30, 2020 was, respectively, which represents the market value of BioLife common stock on the date that the restricted stock awards were granted. The aggregate fair value of the service vesting-based restricted stock awards that vested was $5.1 million and $10.3 million during the three and nine months ended September 30, 2021, respectively, and $1.6 million and $2.9 million during the three and nine months ended September 30, 2020, respectively. We recognized $4.4 million and $8.0 million in stock compensation expense related to service vesting-based restricted stock awards during the three and nine months ended September 30, 2021, respectively, and $754,000 and $1.6 million during the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, there was $41.7 million in unrecognized compensation costs related to service vesting-based restricted stock awards. We expect to recognize those costs over 3.3 years. Performance-based restricted stock We recognized stock compensation benefit of $0 and $186,000 for the three and nine months ended September 30, 2021 related to 20,285 performance-based restricted stock awards that were awarded but did not vest. We recognized stock compensation expense of $191,000 and $569,000 during the three and nine months ended September 30, 2020, respectively, related to performance-based restricted stock awards. As of September 30, 2021, there were no unrecognized non-cash compensation costs related to performance-based restricted stock awards. Market-based restricted stock The following is a summary of market-based restricted stock option activity under our stock option plan for the nine months ended September 30, 2021 and the status of market-based restricted stock options outstanding as of September 30, 2021:
|  | Nine Months Ended |
|  | September 30, 2021 |
|  | Shares |  |  | Wtd. Avg. Grant Date Fair Value |
Outstanding as of beginning of year |  |  | 224,774 |  |  | $ | 19.20 |
Granted |  |  | 152,665 |  |  |  | 30.85 |
Vested |  |  | (231,268 | ) |  |  | 26.98 |
Non-vested as of September 30, 2021 |  |  | 146,171 |  |  | $ | 20.78 |
On February 25, 2019, the Company granted 94,247 shares and on April 1, 2019 granted 29,604 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on Total Shareholder Return (“TSR”). The TSR market condition measures the Company’s performance against a peer group. On February 8, 2021, the Company determined the TSR attainment was 200% of the targeted shares and 231,268 shares were granted and immediately vested to current executives of the Company based on our total shareholder return during the period beginning on January 1, 2019 through December 31, 2020 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined as of the grant date using a Monte Carlo simulation with the following assumptions: a historical volatility of 69%, 0% dividend yield and a risk-free interest rate of 2.5%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award of $3.1 million was expensed on a straight-line basis over the grant date to the vesting date of December 31, 2020. On March 25, 2020, the Company granted 109,140 shares of market-based stock to certain executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2020 through December 31, 2021 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 78%, 0% dividend yield and a risk-free interest rate of 0.3%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2021. On February 8, 2021, the Company granted 30,616 shares of market-based stock to its executives in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 68%, 0% dividend yield and a risk-free interest rate of 0.1%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2022. On May 3, 2021, the Company granted 6,415 shares of market-based stock to one executive in the form of restricted stock. The shares granted contain a market condition based on TSR. The TSR market condition measures the Company’s performance against a peer group. The market-based restricted stock awards will vest as to between 0% and 200% of the number of restricted shares granted to each recipient based on our total shareholder return during the period beginning on January 1, 2021 through December 31, 2022 as compared to the total shareholder return of 20 of our peers. The fair value of this award was determined using a Monte Carlo simulation with the following assumptions: a historical volatility of 68%, 0% dividend yield and a risk-free interest rate of 0.2%. The historical volatility was based on the most recent 2-year period for the Company and correlated with the components of the peer group. The stock price projection for the Company and the components of the peer group assumes a 0% dividend yield. This is mathematically equivalent to reinvesting dividends in the issuing entity over the performance period. The risk-free interest rate is based on the yield on the U.S. Treasury Strips as of the Measurement Date with a maturity consistent with the 2-year term associated with the market condition of the award. The fair value of this award is being expensed on a straight-line basis over the grant date to the vesting date of December 31, 2022. We recognized $413,000 and $1.1 million in stock compensation expense related to market-based restricted stock awards during the three and nine months ended September 30, 2021, respectively, and $600,000 and $1.5 million during the three and nine months ended September 30, 2020, respectively. As of September 30, 2021, there was $1.4 million in unrecognized non-cash compensation costs related to market-based restricted stock awards expected to vest. We expect to recognize those costs over 1.1 years. We recorded total stock compensation expense for the three and nine months ended September 30, 2021 and 2020, as follows:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Research and development costs |  | $ | 551 |  |  | $ | 291 |  |  | $ | 1,171 |  |  | $ | 687 |
Sales and marketing costs |  |  | 560 |  |  |  | 256 |  |  |  | 1,012 |  |  |  | 581 |
General and administrative costs |  |  | 3,015 |  |  |  | 868 |  |  |  | 5,662 |  |  |  | 2,144 |
Cost of revenue |  |  | 742 |  |  |  | 145 |  |  |  | 1,047 |  |  |  | 406 |
Total |  | $ | 4,868 |  |  | $ | 1,560 |  |  | $ | 8,892 |  |  | $ | 3,818 |

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