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Equity | 9 Months Ended
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Sep. 30, 2022
Equity [Abstract] |
Equity | Equity Series B Convertible Preferred Stock The Series B Convertible Preferred Stock of the Company (the “Series B Preferred Stock”) paid a 4.0% cumulative dividend per annum prior to the quarterly dividend payment ending on June 30, 2021, and pays a 6.0% cumulative dividend per annum thereafter. Dividends, if declared, are paid at the end of each quarter based on dividend amounts that accumulate beginning on the last payment date through the day prior to the end of each quarter. In lieu of paying a dividend, the Company may elect to accrue the dividend owed to shareholders. Accrued dividend balances accumulate dividends at the prevailing dividend rate for each dividend period for which they are outstanding. Each share of Series B Preferred Stock is convertible into the Company’s common stock at any time at the option of the holder. Shares are converted based on the liquidation preference of $1,000 per share (the “Liquidation Preference”) plus any accrued or accumulated dividends through the date of the conversion at a conversion price of $3.85 per common share. The Series B Preferred Stock, including any accumulated and unpaid dividends, automatically converts into common stock at any time after July 2, 2023, provided that the common stock has traded at $7.70 per share or more for (i) 20 out of the preceding 30 consecutive trading days and (ii) on such date of conversion. The holders of the Series B Preferred Stock, voting as a class, are entitled to appoint two members to the board of directors. The holders of the Series B Preferred Stock are entitled to vote on all matters to be voted on by the Company’s shareholders on an as-converted basis as a single class with the common stock; provided that the votes represented by the Series B Preferred Stock cannot exceed 19.9% of the total voting stock of the Company and their votes cannot exceed a number of shares equal to the Liquidation Preference divided by $5.25 per share. Holders of the Series B Preferred Stock are also entitled to the Liquidation Preference plus all accumulated and unpaid dividends in the event of a liquidation, dissolution, or winding-up of the Company. If the Company undergoes a change of control (as defined), the Company will have the option to repurchase some or all of the then-outstanding shares of Series B Preferred Stock for cash in an amount equal to the Liquidation Preference plus any accumulated and unpaid dividends, subject to the rights of the holders of the Series B Preferred Stock in connection with such change in control. If the Company does not exercise such repurchase right, holders of the Series B Preferred Stock will have the option to (1) require the Company to repurchase any or all of their then-outstanding shares of Series B Preferred Stock for cash in an amount equal to the Liquidation Preference plus accumulated and unpaid dividends or (2) convert the Series B Preferred Stock into common stock and receive their pro rata consideration thereunder. Since the contingent redemption of the Series B Preferred Stock by the holders in the event of a change in control is outside the Company’s control, the Series B Preferred Stock is classified as temporary equity. There was no change in the balance of Series B Preferred Stock for the three or nine months ended September 30, 2022 or the three months ended September 30, 2021. The below table illustrates changes in the Company’s balance of Series B Preferred Stock for the nine months ended September 30, 2021 (in thousands, except share amounts):
| Series B Preferred Stock
| Shares |  | Amount
Balance at December 31, 2020 | 100,000 |  |  | $ | 91,568 |
Deemed dividends | — |  |  | 926 |
Balance at September 30, 2021 | 100,000 |  |  | $ | 92,494 |
The Company has not declared or paid any dividends on the Series B Preferred Stock since issuance. Dividends accumulated but not paid as of September 30, 2022 were $12.1 million. As this amount has not been declared, the Company has not recorded this amount on its unaudited condensed consolidated balance sheet as of September 30, 2022. Based on accumulated dividends as of September 30, 2022, the Series B Preferred Stock was convertible into an aggregate of 29,119,562 shares of the Company’s common stock. Restricted Stock Awards The Company has issued restricted stock awards (“RSAs”), restricted stock unit awards (“RSUs”), and performance stock unit awards (“PSUs”) to its employees. The following is summary information for restricted stock awards for the nine months ended September 30, 2022. As of September 30, 2022, there was $26.7 million of unrecognized share-based compensation expense related to share-based payment arrangements. This expense is expected to be recognized over a weighted-average period of 1.93 years, which approximates the remaining vesting period of these grants. The below table summarizes activity of unvested restricted stock awards by award type from January 1, 2022 through September 30, 2022. Unvested RSAs noted below are included in issued and outstanding common stock as of September 30, 2022, while unvested RSUs and unvested PSUs are not included in issued or outstanding common stock as of September 30, 2022.
| RSA |  | RSU |  | PSU |  |
| Number of Shares | Weighted-Average Grant Date Fair Value |  | Number of Shares | Weighted-Average Grant Date Fair Value |  | Number of Shares | Weighted-Average Grant Date Fair Value |  |  |
Unvested at January 1, 2022 | 877,197 |  | $ | 4.26 |  |  | 4,228,919 |  | $ | 8.64 |  |  | — |  | $ | — |  |  |  |
Granted | — |  | — |  |  | 4,181,885 |  | 4.82 |  |  | 441,964 |  | 4.62 |  |  |  |
Vested | (703,405) |  | 3.77 |  |  | (1,713,078) |  | 8.34 |  |  | — |  | — |  |  |  |
Forfeited | (5,338) |  | 5.11 |  |  | (1,274,985) |  | 6.40 |  |  | (200,893) |  | 4.62 |  |  |  |
Unvested at September 30, 2022 | 168,454 |  | $ | 6.32 |  |  | 5,422,741 |  | $ | 6.32 |  |  | 241,071 |  | $ | 4.62 |  |  |  |
Performance Stock Units The Company granted PSUs to certain executive officers during the nine months ended September 30, 2022. These PSUs vest only to the extent that stipulated cumulative net sales targets are achieved for the year ending December 31, 2022, the two-year period ending December 31, 2023, and the three-year period ending December 31, 2024. Performance factors range from 50% to 150% of the net sales targets; if performance is below 50%, the PSUs do not vest. If total shareholder return (“TSR”), as defined below, is negative, vesting is limited to 100% of the award. All of the PSUs require recipients to continue employment with the Company through the vesting date, which will occur upon approval of the results with respect to the established targets by the Compensation Committee of the Board of Directors after December 31, 2024, but no later than March 15, 2025. The TSR is calculated as the average trading price of the Company’s common stock during the final 30 trading days of 2024, adjusted for dividends paid on the Company’s common stock, less the average trading price during the final 30 trading days of 2021. Since TSR is based on the Company’s share price, it represents a market condition, which is incorporated in the grant date fair value of shares in excess of 100% vesting. These awards were valued on the date of grant using a Monte Carlo simulation, the inputs for which were informed by a Black-Scholes option pricing model. The assumptions used in determining the fair value of these PSUs were as follows:
| Assumption
Risk-free interest rate | 2.68 | %
Expected term (years) | 2.74
Expected volatility (annualized) | 63.7 | %
Dividend yield | — | %
Closing stock price on grant date | $ | 4.62 |
Grant date fair value | $ | 2.78 |
The expected term was derived from the date of the grant through the latest date of the resolution of the market condition. The risk-free interest rate was derived based on the U.S. Treasury Yield curve in effect at the date of grant for maturities of similar periods to the concluded term. The expected volatility was based on the Company’s historical daily stock price movements for a term similar in length to the expected term. The dividend yield was based on the Company’s history of dividends on its common stock. Expense related to PSUs is recognized, straight-line, based on the grant date fair value of the relevant shares, over the requisite service period related to each individual tranche, limited to the extent that the achievement of the associated performance condition associated with that tranche is probable. These expectations are derived from the Company’s latest budget and forecasts for net sales in the associated periods. The fair value of the awards subject to a market condition and expense recognized on such awards are not subsequently reconsidered based on the probability of achievement or ultimate resolution of the market condition. Accordingly, the Company may recognize share-based compensation expense for awards that do not ultimately vest. Stock Options A summary of stock option activity for the nine months ended September 30, 2022 is presented below:
| Number of Shares |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (in years) |  | Aggregate Intrinsic Value
Outstanding at January 1, 2022 | 1,444,845 |  |  | $ | 5.18 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | (285,001) |  |  | 2.01 |  |  |  |  |
Unvested options forfeited | — |  |  | — |  |  |  |  |
Vested options expired | (109,500) |  |  | 4.00 |  |  |  |
Outstanding at September 30, 2022 | 1,050,344 |  |  | 6.14 |  |  | 1.07 |  | 700 |
Exercisable at September 30, 2022 | 1,050,344 |  |  | $ | 6.14 |  |  | 1.07 |  | $ | 700 |
Employee Stock Purchase Plan On June 7, 2022, the Company adopted the MiMedx, Inc. Employee Stock Purchase Plan (the “ESPP”). The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. All regular full-time employees of the Company (including officers) and all other employees who meet the eligibility requirements of the plan may participate in the ESPP. The ESPP provides eligible employees an opportunity to acquire the Company’s common stock on a semi-annual basis at a purchase price of 85% of the lower of the closing price per share of the Company’s common stock on the first day and the last day of each six-month purchase period (the “Purchase Period”). The aggregate number of shares which may be issued and sold under the ESPP is 3 million shares of Common Stock. The first Purchase Period under the ESPP commenced on August 1, 2022 and will result in a purchase of shares on January 31, 2023. For the three and nine months ended September 30, 2022, the Company recorded $0.1 million in stock-based compensation related to the ESPP. As of the nine months ended September 30, 2022, the Company had cumulative payroll deferrals under the ESPP for future share purchases of $0.2 million. This amount is included in accrued compensation in the unaudited condensed balance sheet. No shares have been issued under the plan to date.

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI https://asc.fasb.org/topic&trid=2208762 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (c) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (d) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (g) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (h) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 14 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 18 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 16 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (i) -URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 6 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008 + Details
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