XML 27 R13.htm IDEA: XBRL DOCUMENT v3.25.2
FINANCING ARRANGEMENTS
 6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
FINANCING ARRANGEMENTS FINANCING ARRANGEMENTS
Convertible Senior Notes due 2030

On July 2, 2025, the Company issued $244.1 million aggregate principal amount of its 4.875% Convertible Senior Notes due 2030 (the “2030 Notes”), pursuant to an indenture, dated as of July 2, 2025 (the "2030 Notes Indenture"), by and between the Company and U.S. Bank Trust Company, National Association, as trustee, consisting of (i) $20.0 million aggregate principal amount of 2030 Notes issued in exchange for $20.0 million aggregate principal amount of the Company’s outstanding 2026 Notes, and (ii) $224.1 million aggregate principal amount of 2030 Notes issued in exchange for $150.0 million aggregate principal amount of the Company’s outstanding 2027 Notes, with a limited number of 2030 Notes Offering Participants.

The 2030 Notes are senior, unsecured obligations of the Company and accrue interest at a rate of 4.875% per annum, payable semi-annually in arrears on each June 30 and December 30, commencing December 30, 2025, and will mature on June 30, 2030, unless earlier converted, redeemed or repurchased. The initial conversion rate of the 2030 Notes is 18.503 shares of Company Common Stock per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of approximately $54.04 per share, subject to customary adjustments. The 2030 Notes will be convertible into Common Stock or a combination of cash and Common Stock, at the Company’s election.
The 2030 Notes Indenture contains customary provisions relating to events of default. If an event of default occurs and is continuing, the principal amount of the 2030 Notes and any accrued and unpaid interest may be declared immediately due and payable. In the case of bankruptcy or insolvency, the principal amount of the 2030 Notes and any accrued and unpaid interest would automatically become immediately due and payable. The 2030 Notes will be considered in default if there is a default by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $75.0 million.

Supplemental Indenture

On July 2, 2025, the Company entered into a First Supplemental Indenture (the “Supplemental Indenture”), by and among itself, the guarantors signatory thereto, and U.S. Bank Trust Company, National Association, as trustee and as collateral agent. The Supplemental Indenture deletes in their entirety substantially all of the negative covenants and related provisions from the 2027 Notes Indenture, and releases all of the liens on the collateral securing the obligations under the 2027 Notes.

As the 2030 Notes were issued on July 2, 2025, the Company is currently evaluating the impact of the 2030 Notes on its condensed consolidated financial statements as of, and for the period ending, September 30, 2025.

Convertible Senior Secured Notes due 2027

In November 2024, the Company issued $197.3 million aggregate principal amount of the 2027 Notes to the 2027 Notes Offering Participants in a private offering. The 2027 Notes bear interest at a rate of 6.25% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, with an annual effective interest rate of 7.17%. The 2027 Notes will mature on March 15, 2027, subject to earlier repurchase or conversion.
The initial conversion rate of the 2027 Notes is 33.333 shares of Common Stock, which is the equivalent to an initial conversion price of approximately $30 per share, subject to customary adjustments. The 2027 Notes are convertible into Common Stock or a combination of cash and Common Stock, at the Company's election. As a result of entering into the Supplemental Indenture, the Company is released of its obligation to pay additional interest of 2.5% per annum of the 2027 Notes in the event that it failed to sell or pledge certain of its assets as part of the collateral for the 2027 Notes. Upon the occurrence of a make-whole fundamental change, we will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2027 Notes in connection with such make-whole fundamental change. The 2027 Notes will be
considered in default if there is a default by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $35.0 million.
The carrying amount of the 2027 Notes consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025
December 31, 2024
Fair value of principal recorded at issuance (1)
$196,210 $196,210 
Less: debt discount
(2,780)(3,483)
Total $193,430 $192,727 
(1)    The principal of the 2027 Notes was recorded at fair value of $196.2 million, which is equal to the exchanged principal of $176.3 million and cash consideration received of $19.9 million.
We classified the fair value of the 2027 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the 2027 Notes and our cost of debt. The estimated fair value of the 2027 Notes as of June 30, 2025 and December 31, 2024 was $268.7 million and $192.0 million and was determined using a lattice model.

For the three and six months ended June 30, 2025, we recognized interest costs on the 2027 Notes as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2025
Contractual interest
$3,082 $6,164 
Amortization of debt discount
379 751 
Total $3,461 $6,915 

Following the issuance of the 2030 Notes and partial exchange of the 2027 Notes in July 2025, the remaining outstanding principal of the 2027 Notes was $47.3 million.

Convertible Senior Notes due 2026
In March and April 2021, we issued $230.0 million aggregate principal amount of 2026 Notes in a private offering to qualified institutional buyers. The 2026 Notes bear interest at a rate of 1.125% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, with an annual effective interest rate of 1.83%. The 2026 Notes will mature on March 15, 2026, subject to earlier repurchase, redemption or conversion. In connection with the issuance of the 2027 Notes in November 2024, the Company exchanged $176.3 million aggregate principal amount of 2026 Notes held by the 2026 Notes Offering Participants for $176.3 million aggregate principal amount of the 2027 Notes.
Each $1,000 of principal amount of the 2026 Notes initially is convertible into 14.6800 shares of Common Stock, which is equivalent to an initial conversion price of $68.12 per share, subject to adjustment upon the occurrence of specified events. The 2026 Notes are convertible into cash, shares of our Common Stock, or any combination of cash and shares of our Common Stock. Upon the occurrence of a make-whole fundamental change, or if we issue a notice of redemption, we will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2026 Notes in connection with such make-whole fundamental change or redemption. The 2026 Notes will be considered in default if there is a default by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $50.0 million.
The carrying amount of the 2026 Notes consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):
June 30, 2025December 31, 2024
Principal amount$53,740 $53,740 
Less: debt discount(267)(454)
Net carrying amount of liability component
$53,473 $53,286 
We classified the fair value of the 2026 Notes as a Level 3 measurement due to the lack of observable market data over fair value inputs such as our stock price volatility over the term of the 2026 Notes and our cost of debt. The estimated fair value of the 2026 Notes as of June 30, 2025 and December 31, 2024 was $52.3 million and $48.7 million and was determined using a lattice model.
During the three and six months ended June 30, 2025 and 2024, we recognized interest costs on the 2026 Notes as follows (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2025202420252024
Contractual interest$151 $647 $302 $1,377 
Amortization of debt discount94 394 187 785 
Total $245 $1,041 $489 $2,162 

Following the issuance of the 2030 Notes and partial exchange of the 2026 Notes in July 2025, the remaining outstanding principal of the 2026 Notes was $33.7 million.
Capped Call Transactions
In connection with the issuance of the 2026 Notes, we entered into privately-negotiated capped call transactions. The capped call transactions cover, subject to customary adjustments, the number of shares of Common Stock initially underlying the 2026 Notes. The capped call transactions are expected generally to reduce potential dilution to our Common Stock upon any conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, with such reduction and/or offset subject to a cap initially equal to $104.80, which represents a premium of 100% over the last reported sale price of our Common Stock on The Nasdaq Global Select Market on March 22, 2021, subject to certain adjustments under the terms of the capped call transactions.
No changes to the capped call transactions occurred in connection with the Exchange and Subscription agreements pertaining to the issuance of the 2027 Notes in November 2024.
In June 2025, in connection with the issuance of the 2030 Notes and partial exchange of the 2026 Notes, the Company entered into agreements with the bank counterparties to collectively unwind and terminate 196,200 capped call transactions, which is equal to the proportion of the total principal of the 2026 Notes that was exchanged for the 2027 Notes and 2030 Notes. Upon entering into the unwind and termination agreements, the Company determined the related portion of the capped call transactions no longer met the criteria for equity classification. Accordingly, the Company remeasured the related portion of the capped call transactions and reclassified $2.7 million from Additional paid-in-capital to Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets as of June 30, 2025. In July 2025, the Company subsequently received cash proceeds of $2.7 million for the settlement of the capped call transactions.
The remaining capped call transactions continue to be accounted for as freestanding financial instruments and recorded at the initial fair value in additional paid-in-capital in the Condensed Consolidated Balance Sheets with no recorded subsequent change to fair value as long as they meet the criteria for equity classification.
Revolving Credit Agreement
In February 2024, we prepaid $43.1 million to terminate all commitments to access further credit under the Credit Agreement using a portion of the $80.0 million in proceeds received from the Rights Offering. See Note 8, Stockholders' Equity (Deficit) and Compensation Arrangements, for additional information regarding the Rights Offering. The Payoff Amount included $42.8 million in principal, $0.1 million in interest and $0.2 million in fees. The terms of the Rights Offering permit the Company to use the proceeds for general corporate purposes, including the repayment of debt. We were not subject to any early termination penalties under the Credit Agreement. The payment of the Payoff Amount terminated our obligations under the Credit Agreement, except for ordinary and customary survival terms. In addition, we retained access to letters of credit, originally available under the Credit Agreement, pursuant to our pre-existing Cash Collateral Agreement.
The amounts committed to letters of credit under the Cash Collateral Agreement and Credit Agreement as of June 30, 2025 and December 31, 2024 were $32.8 million and $33.7 million. Pursuant to the Cash Collateral Agreement, cash collateral is required for all letters of credit and treated as restricted cash, which is presented in Prepaid expense and other current assets on the Condensed Consolidated Balance Sheets. See Note 5, Supplemental Condensed Consolidated Balance Sheets and Statements of Operations Information, for additional information.