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Summary of Significant Accounting Policies and Supplemental Balance Sheet Information | 12 Months Ended
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Sep. 30, 2023
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies and Supplemental Balance Sheet Information | 2. Summary of Significant Accounting Policies and Supplemental Balance Sheet Information Cash and Cash Equivalents Cash and cash equivalents consist of financial instruments with maturities of three months or less at the Company’s acquisition date of the security. Cash is stated at cost, which approximates fair value. Cash equivalents are stated at fair value. Cash and cash equivalents may include money market instruments, certificates of deposit, repurchase agreements and commercial paper instruments. Investments — Available-for-sale Securities As of September 30, 2023 and 2022, investments in available-for-sale debt securities totaled $3.9 million and $0.0 million, respectively, on the consolidated balance sheets. As of September 30, 2023, investments consisted of commercial paper and corporate bond securities, were classified as available-for-sale, and were reported at fair value. Interest earned on debt securities, including amortization of premiums and accretion of discounts, is included in investment income, net within other expense. Realized gains and losses from the sales of debt securities, which are included in investment income, net, are determined using the specific identification method. Investment purchases are accounted for on the date the trade is executed, which may not be the same as the date the transaction is cash settled. Unrealized gains and losses, net of tax, are excluded from the consolidated statements of operations and reported on the consolidated statements of comprehensive income (loss) and also as a separate component of stockholders’ equity on the consolidated balance sheets. For investments in an unrealized loss position, we make the following assessments. If it is more likely than not we will sell the investment before recovery of its amortized cost basis, we write down the security’s amortized cost basis to fair value and reclassify the net unrealized loss from accumulated other comprehensive (loss) income to investment income, net on the consolidated statements of operations. If the decline in fair value is deemed to be due to a credit loss, we recognize an allowance for the expected credit loss to reduce the cost basis to fair value, with a corresponding adjustment to investment income, net. As of September 30, 2023, the amortized cost, unrealized holding gains and losses, and fair value of available-for-sale securities were as follows. There were no available-for-sale securities as of September 30, 2022.
(In thousands) |  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |
Commercial paper and corporate bonds |  | $ | 3,936 |  |  | $ | — |  |  | $ | (3 | ) |  | $ | 3,933 |
Available-for-sale securities |  | $ | 3,936 |  |  | $ | — |  |  | $ | (3 | ) |  | $ | 3,933 |
There were no held-to-maturity debt securities as of September 30, 2023 and 2022. There were no realized gains or losses on sales of available-for-sale securities for fiscal 2023, 2022 or 2021. Accounts Receivable We grant credit to customers in the normal course of business and maintain an allowance for credit losses. The allowance for credit losses reflects the current estimate of credit losses expected to be incurred over the life of the accounts receivable. We consider various factors in establishing, monitoring and adjusting the allowance for credit losses including the aging of accounts and aging trends, the historical level of charge-offs, and specific exposures related to particular customers. We base our estimates of credit loss reserves on historical experience and adjust, as necessary, to reflect current conditions using reasonable and supportable forecasts not already reflected in the historical loss information. Inventories Inventories are principally stated at the lower of cost or net realizable value using the specific identification method and include direct labor, materials and overhead, with cost of product sales determined on a first-in, first-out basis. Inventories, net of reserves of $1.8 million and $1.1 million as of September 30, 2023 and 2022, respectively, consisted of the following components:
| September 30, |
(In thousands) | 2023 |  |  | 2022 |
Raw materials | $ | 8,063 |  |  | $ | 6,102 |
Work-in process |  | 2,607 |  |  |  | 1,595 |
Finished products |  | 4,169 |  |  |  | 4,122 |
Inventories, net | $ | 14,839 |  |  | $ | 11,819 |
We regularly review inventory quantities, and when appropriate, record reserves for excess and obsolete inventory to reduce the balance of inventories, net on the consolidated balance sheets, with corresponding charges to product costs on the consolidated statements of operations. We write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements based on future demand and as compared to remaining shelf life. The estimate of excess quantities is subjective and primarily dependent on our estimates of future demand for a particular product. Prepaids and Other Assets, Current Prepaids and other current assets consisted of the following:
| September 30, |
(In thousands) | 2023 |  |  | 2022 |
Prepaid expenses | $ | 2,600 |  |  | $ | 2,570 |
Irish research and development credits receivable |  | 1,322 |  |  |  | 753 |
CARES Act employee retention credit receivable (1) |  | 3,441 |  |  |  | 3,441 |
Prepaids and other | $ | 7,363 |  |  | $ | 6,764 |
(1) Receivable consisted of anticipated reimbursement of personnel expenses incurred in fiscal periods prior to fiscal 2022 as a result of our eligibility for the employee retention credit under the provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). Property and Equipment Property and equipment are stated at cost, less any impairment, and are depreciated using the straight-line method over the estimated useful lives of the assets. The Company recorded depreciation expense of $4.7 million, $4.7 million and $4.9 million in fiscal 2023, 2022 and 2021, respectively. The September 30, 2023 and 2022 balances in construction-in-progress include the cost of equipment and building improvements not yet placed in service. As assets are placed in service, construction-in-progress is transferred to the specific property and equipment categories and depreciated over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the term of the lease or the estimated useful life of the asset. Expenditures for maintenance and repairs and minor renewals and betterments that do not extend or improve the life of the respective assets are expensed as incurred. Property and equipment consisted of the following components:
| Useful Life |  | September 30, |
(Dollars in thousands) | (Years) |  | 2023 |  |  | 2022 |
Land | N/A |  | $ | 4,413 |  |  | $ | 4,409 |
Laboratory fixtures and equipment | 3 to 10 |  |  | 33,120 |  |  |  | 28,810 |
Buildings and improvements | 3 to 20 |  |  | 26,964 |  |  |  | 26,373 |
Leasehold improvements | 5 to 10 |  |  | 6,499 |  |  |  | 6,499 |
Office furniture and equipment | 3 to 10 |  |  | 9,561 |  |  |  | 9,205 |
Construction-in-progress |  |  |  | 1,936 |  |  |  | 3,175 |
Less: Accumulated depreciation |  |  |  | (56,467 | ) |  |  | (51,323 | )
Property and equipment, net |  |  | $ | 26,026 |  |  | $ | 27,148 |
Intangible Assets Intangible assets consisted of the following:
| September 30, 2023 |
(Dollars in thousands) | Weighted Average Original Life (Years) |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net |
Definite-lived intangible assets: |  |  |  |  |  |  |  |  |  |
Customer lists and relationships | 9.3 |  | $ | 11,260 |  |  | $ | (9,435 | ) |  | $ | 1,825 |
Developed technology | 11.9 |  |  | 33,929 |  |  |  | (11,048 | ) |  |  | 22,881 |
Patents and other | 14.9 |  |  | 2,338 |  |  |  | (1,418 | ) |  |  | 920 |
Total definite-lived intangible assets |  |  |  | 47,527 |  |  |  | (21,901 | ) |  |  | 25,626 |
Unamortized intangible assets: |  |  |  |  |  |  |  |  |  |
Trademarks and trade names |  |  |  | 580 |  |  |  | — |  |  |  | 580 |
Intangible assets, net |  |  | $ | 48,107 |  |  | $ | (21,901 | ) |  | $ | 26,206 |
| September 30, 2022 |
(Dollars in thousands) | Weighted Average Original Life (Years) |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net |
Definite-lived intangible assets: |  |  |  |  |  |  |  |  |  |
Customer lists and relationships | 9.3 |  | $ | 10,454 |  |  | $ | (7,927 | ) |  | $ | 2,527 |
Developed technology | 11.9 |  |  | 31,943 |  |  |  | (7,994 | ) |  |  | 23,949 |
Patents and other | 14.9 |  |  | 2,338 |  |  |  | (1,249 | ) |  |  | 1,089 |
Total definite-lived intangible assets |  |  |  | 44,735 |  |  |  | (17,170 | ) |  |  | 27,565 |
Unamortized intangible assets: |  |  |  |  |  |  |  |  |  |
Trademarks and trade names |  |  |  | 580 |  |  |  | — |  |  |  | 580 |
Intangible assets, net |  |  | $ | 45,315 |  |  | $ | (17,170 | ) |  | $ | 28,145 |
The Company recorded amortization expense of $3.8 million, $4.4 million and $3.1 million in fiscal 2023, 2022 and 2021, respectively. Based on the intangible assets in service as of September 30, 2023, estimated amortization expense for future fiscal years is as follows:
(In thousands) |  |
2024 | $ | 3,691 |
2025 |  | 3,656 |
2026 |  | 2,780 |
2027 |  | 2,534 |
2028 |  | 2,524 |
Thereafter |  | 10,441 |
Definite-lived intangible assets | $ | 25,626 |
Future amortization amounts presented above are estimates. Actual future amortization expense may be different as a result of future acquisitions, impairments, changes in amortization periods, foreign currency exchange rates or other factors. The Company defines in-process research and development (“IPR&D”) as the value of technology acquired for which the related projects have substance and are incomplete. IPR&D acquired in a business combination is recognized at fair value and is capitalized as an indefinite-lived intangible asset until completion or abandonment of the IPR&D project. Upon completion of the development project (generally when regulatory approval to market the product is obtained), an impairment assessment is performed prior to amortizing the asset over its estimated useful life. In cases where the IPR&D projects are abandoned, the related IPR&D assets are written off. The Company performs its annual assessment of indefinite-lived assets for impairment annually as of July 1st of each fiscal year and whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. Similar to the goodwill impairment assessment, the indefinite-lived assets impairment assessment requires the Company to make several estimates about fair value, most of which are based on projected future cash flows. No impairment charges were recorded in fiscal 2023, 2022 and 2021. Goodwill Goodwill in the Medical Device reporting unit represents the gross value from the fiscal 2021 acquisition of Vetex Medical Limited (“Vetex”) and the fiscal 2016 acquisitions of Creagh Medical, Ltd. (“Creagh Medical”) and NorMedix, Inc. (“NorMedix”). Goodwill in the In Vitro Diagnostics reporting unit represents the gross value from the acquisition of BioFX Laboratories, Inc. in 2007. Refer to Note 13 Acquisitions for further disclosures for Vetex. Changes in the carrying amount of goodwill by segment were as follows:
(In thousands) | In Vitro Diagnostics |  |  | Medical Device |  |  | Total |
Goodwill as of September 30, 2021 | $ | 8,010 |  |  | $ | 37,596 |  |  | $ | 45,606 |
Foreign currency translation adjustment |  | — |  |  |  | (5,173 | ) |  |  | (5,173 | )
Measurement period adjustments (1) |  | — |  |  |  | 277 |  |  |  | 277 |
Goodwill as of September 30, 2022 |  | 8,010 |  |  |  | 32,700 |  |  |  | 40,710 |
Foreign currency translation adjustment |  | — |  |  |  | 2,236 |  |  |  | 2,236 |
Goodwill as of September 30, 2023 | $ | 8,010 |  |  | $ | 34,936 |  |  | $ | 42,946 |
(1) In fiscal 2022, measurement period adjustments were recorded to finalize the allocation of purchase consideration for the fiscal 2021 Vetex acquisition (Note 13). Goodwill represents the excess of the purchase price of an acquired business over the fair value assigned to the assets purchased and liabilities assumed. Goodwill is not amortized but is subject, at a minimum, to annual tests for impairment. The carrying amount of goodwill is evaluated annually, and between annual evaluations if events occur or circumstances change indicating that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The Company’s reporting units are the Medical Device and In Vitro Diagnostics reportable segments. Inherent in the determination of fair value of the reporting units are certain estimates and judgments, including the interpretation of current economic indicators and market valuations, as well as the Company’s strategic plans with regard to its operations. When utilizing a quantitative assessment, the Company determines fair value at the reporting unit level based on a combination of an income approach and market approach. The income approach is based on estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant, while the market approach is based on sales and/or earnings multiples of similar companies. These approaches use significant estimates and assumptions, including projected future cash flows and the timing of those cash flows, discount rates reflecting risks inherent in future cash flows, perpetual growth rates, and determination of appropriate market comparables. The Company performs its assessment of goodwill for impairment as of July 1 st of each fiscal year. Goodwill was not impaired in either reporting unit based on the outcome of the fiscal 2023 annual impairment test, which utilized a quantitative assessment. No goodwill impairment charges were recorded in fiscal 2023, 2022 and 2021. Other Assets, Noncurrent Other noncurrent assets consisted of the following:
| September 30, |
(In thousands) | 2023 |  |  | 2022 |
Operating lease right-of-use assets | $ | 2,987 |  |  | $ | 3,633 |
Other |  | 877 |  |  |  | 1,136 |
Other assets, noncurrent | $ | 3,864 |  |  | $ | 4,769 |
Valuation of Long-lived Assets The Company periodically evaluates whether events and circumstances have occurred that may affect the estimated useful life or the recoverability of the remaining balance of long-lived assets, such as property and equipment, right-of-use assets, and definite-lived intangible assets. If such events or circumstances were to indicate that the carrying amount of these assets may not be recoverable, the Company would estimate the future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) were less than the carrying amount of the assets, the Company would recognize an impairment charge to reduce such assets to their fair value. In fiscal 2023, 2022 and 2021, no impairment charges were recorded related to the Company’s long-lived assets. Accrued Other Liabilities Accrued other liabilities consisted of the following:
| September 30, |
(In thousands) | 2023 |  |  | 2022 |
Accrued professional fees | $ | 178 |  |  | $ | 279 |
Accrued clinical study expense |  | 1,056 |  |  |  | 1,425 |
Accrued purchases |  | 1,142 |  |  |  | 1,655 |
Deferred consideration (1) |  | 2,661 |  |  |  | 981 |
Operating lease liability, current portion |  | 872 |  |  |  | 963 |
Other |  | 535 |  |  |  | 551 |
Accrued other liabilities | $ | 6,444 |  |  | $ | 5,854 |
(1) Deferred consideration consisted of the present value of guaranteed payments to be made in connection with the fiscal 2021 Vetex ac quisition (Note 13) and with an asset acquisition in fiscal 2019 (Note 11). Other Long-term Liabilities Other long-term liabilities consisted of the following:
| September 30, |
(In thousands) | 2023 |  |  | 2022 |
Deferred consideration (1) | $ | 1,754 |  |  | $ | 4,260 |
Contingent consideration (2) |  | — |  |  |  | 829 |
Unrecognized tax benefits (3) |  | 3,332 |  |  |  | 1,841 |
Operating lease liabilities (4) |  | 2,974 |  |  |  | 3,843 |
Other long-term liabilities | $ | 8,060 |  |  | $ | 10,773 |
(1) Deferred consideration consisted of the present value of a guaranteed payment to be made in connection with the fiscal 2021 Vetex acquisition (Note 13). (2) Contingent consideration consisted of the fair value of contingent consideration liabilities associated with the fiscal 2021 Vetex acquisition (Note 5 and Note 13). (3) Unrecognized tax benefits (Note 9) included accrued interest and penalties, if applicable. (4) Operating lease liabilities consisted of the non-current portion of the net present value of future minimum lease payments, reduced by the discounted value of leasehold improvement incentives paid or payable to the Company. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. The Company primarily sells or licenses its products, technologies and services to other medical device and diagnostics companies. Revenue is recorded net of taxes collected from customers, and taxes collected are recorded as current liabilities until remitted to the relevant government authority. The amount of foreign taxes imposed on specific revenue producing transactions that is the responsibility of the Company is expensed as incurred and reported in income tax expense on the consolidated statements of operations. For contracts that have an original duration of one year or less, the Company uses the practical expedient applicable to such contracts and does not adjust the transaction price for the time value of money. Performance Obligations We derive our revenue from three primary sources:
Product Sales |  | Royalties and License Fees |  | Research, Development and Other
IVD chemical and biological components, including protein stabilizers, substrates, surface coatings and antigens to the diagnostic and biomedical research markets (IVD segment) |  | Performance coating royalties and license fees from licensing of our proprietary performance coating technologies to medical device manufacturers (Medical Device segment) |  | Contract coating services and commercial development feasibility services (Medical Device segment)
Performance coating reagents, the chemicals used in performance coatings by licensees (Medical Device segment) |  | SurVeil™ DCB license fees associated with the Abbott Agreement (Medical Device segment) |  | Commercial development services (IVD segment)
Vascular intervention medical devices and related products to original equipment manufacturer suppliers and distributors, as well as directly to healthcare providers (Medical Device segment) |  |  |  |
The Company recognizes revenue when control is transferred to the customer. The transfer of control varies by revenue classification and is described below. If a contract contains more than one distinct performance obligation, the transaction price is allocated to each performance obligation based on relative standalone selling price. Product Sales. Revenue from product sales is recognized at the point in time control of the products is transferred, generally upon shipment based upon the standard contract terms. Shipping and handling activities are considered to be fulfillment activities rather than promised services and are not, therefore, considered to be separate performance obligations. The amount of revenue recognized is based on the transaction price, which generally represents the invoiced amount, net of administrative fees where applicable. The Company’s sales terms provide no right of return outside of a standard warranty policy, and returns are generally not significant. Payment terms for product sales are generally set at 30-45 days after shipment. Royalties. Royalties revenue consists of sales-based and recurring minimum royalties earned under licenses of our performance coating technologies. Performance obligations under these licenses, which consist of the right to use the Company’s proprietary technology, are satisfied at a point in time corresponding with delivery of the underlying technology rights to the customer, which is generally upon transfer of the licensed technology to the customer. Sales-based royalties revenue represents variable consideration under the license agreements and is recognized in the period a customer sells products incorporating the Company’s licensed technologies. Our customers generally report sales subject to royalties to us in the quarter after those sales occur. The Company estimates sales-based royalties revenue earned but unpaid at each reporting period using the expected value method based on historical sales information, adjusted for known changes such as product launches and patent expirations. The Company also considers macroeconomic factors affecting the medical device market. The Company's license arrangements also often provide for recurring fees (minimum royalties), which the Company recognizes at the later of the satisfaction of the underlying performance obligation or upon renewal of the contract, which generally occurs on a quarterly basis. Sales-based and minimum royalties are generally due within 45 days after the end of each quarter. License Fees. For distinct license performance obligations, upfront license fees are recognized when the Company satisfies the underlying performance obligation. This generally occurs upon transfer of the right to use the Company’s licensed technology to the customer, with the exception of the license of the Company’s SurVeil drug-coated balloon (the “SurVeil DCB”) disclosed below. Certain license arrangements include contingent milestone payments, which are due following achievement by our customers of specified sales or regulatory milestones. Contingent milestone payment terms vary by contract. The Company has generally fulfilled its performance obligation prior to achievement of these milestones. However, because of the uncertainty of the milestone achievement, and/or the dependence on sales of our customers, variable consideration for contingent milestones is fully constrained and excluded from the contract price until the milestone is achieved by our customer, to the extent collectability is reasonably certain. The Company has a collaborative arrangement contract with Abbott Vascular, Inc. (“Abbott”) disclosed in Note 4 Collaborative Arrangement (the “Abbott Agreement”). As of September 30, 2023, the Company has received payments totaling $87.8 million under the Abbott Agreement, and there are no remaining contingent milestone payments under the Abbott Agreement. The performance obligation identified in the Abbott Agreement includes delivery of our licensed technology and completion of research and development activities, primarily clinical trial activities (together, “R&D and Clinical Activities”). These promises are not distinct performance obligations because the product necessary for completion of the R&D and Clinical Activities is currently only able to be manufactured by the Company due to the exclusive proprietary know-how and certain regulatory requirements associated with the manufacture of the product. The customer, Abbott, simultaneously receives and consumes the benefits of the R&D and Clinical Activities as study data are generated to support regulatory approval submissions. Control is effectively transferred over time as we complete the TRANSCEND clinical study of the SurVeil DCB and related regulatory activities. License fee revenue related to this contract is recognized using the cost-to-cost method which measures progress based on costs incurred to date relative to the expected total cost of the services, as the Company believes this represents a faithful depiction of the satisfaction of its performance obligation. Use of the cost-to-cost method requires significant estimates, including the total cost of the TRANSCEND study, which is expected to be completed over the next two years. Revenue is recorded based on the cost-to-cost completion estimate relative to the transaction price, which is equal to the total upfront fee plus the expected value of the clinical and regulatory milestones. Revenue from the upfront fee and contingent clinical and regulatory milestone payments, once the underlying contingencies are achieved, is recognized within royalties and license fees on the consolidated statements of operations as the clinical and regulatory activities are performed on a proportional performance basis. Performance is measured based on actual costs incurred relative to the expected total cost of the underlying activities, most notably the completion of the TRANSCEND clinical trial. A significant component of the cost of this trial is the cost of the Company’s outsourced clinical trial clinical research organization (“CRO”) consultants, which is estimated based on executed statements of work, project budgets, and patient enrollment timing, among other factors. A significant change to the Company’s estimate of the costs to complete the TRANSCEND clinical trial could have a material effect on the Company’s results of operations. Significant judgment is used to estimate total revenue and cost at completion for this contract. To account for the Abbott Agreement, the Company applied the guidance in ASC Topic 808 (Collaborative Arrangements) as the parties are active participants and are exposed to significant risks and rewards dependent on commercial success of the collaborative activity. See Note 4 Collaborative Arrangement for further disclosures related to the Abbott Agreement. Research and Development. The Company performs research and development (“R&D”) activities as a service to customers, which are typically charged to customers on a time-and-materials basis. Generally, revenue for R&D services is recorded over time as the services are provided to the customer in the amount to which the Company has the right to invoice. These services are generally charged to the customer as they are provided. Payment terms for R&D services are generally set at 30-45 days. Contract Assets, Deferred Revenue and Remaining Performance Obligations Contract assets are generally short in duration given the nature of products produced and services provided by the Company. Contract assets consist of sales-based and minimum royalties revenue earned for which unconditional right to payment does not exist as of the balance sheet date. These assets are comprised of estimated sales-based royalties earned, but not yet reported by the Company’s customers, minimum royalties on non-cancellable contracts, and contingent milestones earned, but not yet billable based on the terms of the contract. See Note 3 Revenue for further contract asset disclosures. The Company records a contract liability, or deferred revenue, when there is an obligation to provide a product or service to the customer, and payment is received or due in advance of performance, or when payment is received for a period outside the contract term. See Note 4 Collaborative Arrangement for further deferred revenue disclosures. Remaining performance obligations include deferred revenue and amounts the Company expects to receive for goods and services that have not yet been delivered or provided under existing, noncancellable contracts. For contracts that have an original duration of one year or less, the Company has elected the practical expedient applicable to such contracts and does not disclose the transaction price for remaining performance obligations at the end of each reporting period or the expecting timing of recognition of related revenue. See Note 4 Collaborative Arrangement for further performance obligation disclosures. Product Costs Product costs consist primarily of the cost of raw materials, components, direct labor and manufacturing overhead. Overhead costs include the cost of quality assurance and control, materials procurement, inventory control, facilities, and manufacturing supervision and management, including stock-based compensation. Product costs also includes depreciation expense for production equipment and facilities, charges for excess and obsolete inventory, and certain direct costs such as shipping and handling costs. Leases The Company leases facilities for research, office, manufacturing and warehousing. The Company determines whether a contract is a lease or contains a lease at inception date. Upon commencement, the Company recognizes a right-of-use asset and lease liability based on the net present value of the future minimum lease payments over the lease term at the commencement date. The net present value of future minimum lease payments recorded upon lease commencement is reduced by the discounted value of any leasehold improvement incentives payable to the Company considered to be in-substance fixed payments. The unamortized balance of leasehold improvement incentives in the form of tenant allowances represents the primary difference between the balance of the right-of-use assets and operating lease liabilities. As the Company’s leases typically do not provide an implicit rate, the Company’s lease liabilities are measured on a discounted basis using the Company's incremental borrowing rate. Lease terms used in the recognition of right-of-use assets and lease liabilities include only options to extend the lease that are reasonably certain to be exercised. The consolidated balance sheets do not include recognized assets or liabilities for leases that, at the commencement date, have a term of twelve months or less and do not include an option to purchase the underlying asset that is reasonably certain to be exercised. The Company recognizes such leases on the consolidated statements of operations on a straight-line basis over the lease term. The Company’s leases include one or more options to renew and extend the lease term at the Company’s discretion. These renewal options are not included in right-of-use assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates renewal options, and when they are reasonably certain to be exercised, the renewal period is included in the lease term. As of September 30, 2023, operating lease maturities were as follows:
(In thousands) |  |
2024 | $ | 1,217 |
2025 |  | 1,214 |
2026 |  | 1,132 |
2027 |  | 1,135 |
2028 |  | 574 |
Total expected operating lease payments |  | 5,272 |
Less: Imputed interest |  | (1,426 | )
Total operating lease liabilities | $ | 3,846 |
Operating lease cost was $1.4 million, $1.1 million and $0.8 million for fiscal 2023, 2022 and 2021, respectively. Cash paid for operating lease liabilities approximated operating lease cost for fiscal 2023, 2022 and 2021. As of September 30, 2023, the weighted average remaining lease term for operating leases was 4.4 years, and the weighted average discount rate used to determine operating lease liabilities was 3.9%. Stock-based Compensation We measure the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award at the date of grant. Share-based payments are expensed based on their grant-date fair values on a straight-line basis over the requisite service period of the total award, less estimated forfeitures based on historical experience. Shares awarded under the Company’s stock-based compensation plans, with the exception of restricted stock awards, are not considered issued or outstanding common stock of the Company until they vest and the shares are released. New awards and forfeitures of unvested restricted stock result in an increase (decrease), respectively, in common stock issued and outstanding. Research and Development R&D expenses include costs associated with the design, development, testing, enhancement and regulatory approval of the Company’s products. R&D expenses include employee compensation (including stock-based compensation), internal and external costs associated with our regulatory compliance and quality assurance functions, the costs of product used in development and clinical trials, consulting expenses, and facilities overhead. The Company also incurs significant R&D expenses to operate clinical trials. R&D costs are expensed as incurred. Certain R&D costs are related to customer contracts, and the related revenue is recognized as described in “Revenue Recognition” in this Note 2. Costs associated with customer-related R&D include specific project direct labor and materials expenses, as well as an allocation of overhead costs based on direct labor costs. Clinical Trial Costs. The Company sponsors clinical trials intended to obtain the necessary clinical data required to obtain approval from various regulatory agencies to market medical devices developed by the Company. Costs associated with clinical trials include trial design and management expenses, clinical site reimbursements and third-party fees, among other costs. The Company’s clinical trials may be administered by third-party CROs. These CROs generally bill monthly for certain services performed, as well as upon achievement of certain milestones. The Company monitors patient enrollment, the progress of clinical studies, and related activities through internal reviews of data reported to the Company by the CROs and correspondence with the CROs. We periodically evaluate our estimates to determine if adjustments are necessary or appropriate based on information received. These estimates often require significant judgment on the part of the Company’s management. Derivative Financial Instruments We periodically enter into interest rate swaps with major financial institutions of high credit quality to mitigate exposure to changes in interest rates on our floating-rate indebtedness. Since the fair value of these interest rate swaps is derived from current market rates, they are classified as derivative financial instruments. We do not use derivatives for speculative or trading purposes. When the Company has multiple derivative financial instruments with the same counterparty subject to a master netting arrangement, we have elected to offset (i) amounts recorded as assets and liabilities, and (ii) amounts recognized for the right to reclaim cash collateral we have deposited with the counterparty (i.e., cash collateral receivable). Such offset amounts are presented as either a net asset or liability by counterparty on the consolidated balance sheets. See Note 7 Derivative Financial Instruments for further disclosures. Litigation From time to time, the Company may become involved in various legal actions involving its operations, products and technologies, including intellectual property and employment disputes. The outcomes of these legal actions are not within the Company’s complete control and may not be known for prolonged periods of time. In some actions, the claimants may seek damages as well as other relief, including injunctions barring the sale of products that are the subject of the lawsuit, which if granted, could require significant expenditures or result in lost revenue. The Company records a liability on the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. Income Taxes We record a tax (expense) benefit for the anticipated tax consequences of the reported results of operations. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date of such change. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise from net operating losses and tax credits and are primarily a result of temporary differences between the financial reporting and tax bases of assets and liabilities. We evaluate the recoverability of deferred tax assets by assessing all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. A valuation allowance is established if it is more likely than not (defined as a likelihood of more than 50%) that all or a portion of deferred tax assets will not be realized. The determination of whether a valuation allowance should be established, as well as the amount of such allowance, requires significant judgment and estimates, including estimates of future earnings. In evaluating the realizability of our net deferred tax assets, we perform an assessment each reporting period of both positive and negative evidence, including (i) the existence of three-year cumulative U.S. pre-tax income (losses) adjusted for permanent adjustments, (ii) our forecast of future earnings, and (iii) future reversal of taxable temporary differences and carryforwards. We apply judgment to consider the relative impact of negative and positive evidence, and the weight given to negative and positive evidence is commensurate with the extent to which such evidence can be objectively verified. Objective historical evidence, such as cumulative three-year pre-tax income (losses) adjusted for permanent adjustments, is given greater weight than subjective positive evidence such as forecasts of future earnings. The more objective negative evidence that exists limits our ability to consider other, potentially positive, subjective evidence, such as our future earnings projections. Due to significant estimates used to establish the valuation allowance and the potential for changes in facts and circumstances, it is reasonably possible that we will be required to record adjustments to the valuation allowance in future reporting periods that could have a material effect on our results of operations. Net (Loss) Income Per Share Data Basic net (loss) income per common share is calculated by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of common and common equivalent shares outstanding during the period. The Company’s potentially dilutive common shares are those that result from dilutive common stock options and non-vested stock relating to restricted stock awards and restricted stock units. The following table presents the denominator for the computation of diluted weighted average shares outstanding:
| Fiscal Year |
(In thousands) | 2023 |  |  | 2022 |  |  | 2021 |
Basic weighted average shares outstanding |  | 14,031 |  |  |  | 13,916 |  |  |  | 13,765 |
Dilutive effect of outstanding stock options, non-vested restricted stock, and non-vested restricted stock units |  | — |  |  |  | — |  |  |  | 224 |
Diluted weighted average shares outstanding |  | 14,031 |  |  |  | 13,916 |  |  |  | 13,989 |
The calculation of diluted (loss) income per share excluded 0.1 million, 0.1 million and less than 0.1 million in weighted-average shares for fiscal 2023, 2022 and 2021, respectively, as their effect was anti-dilutive. Repurchase of Common Stock Shares are repurchased from time to time to support the Company’s stock-based compensation programs and to return capital to stockholders, and depend upon many factors, including the Company’s results of operations, financial condition, capital requirements and contractual restrictions. The Company accounts for repurchases of common stock using the par value method. On November 6, 2015, and on November 5, 2014, the Company’s Board of Directors authorized the repurchase of up to $20.0 million and $30.0 million, respectively, of the Company’s outstanding common stock in open-market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, tender offers or by any combination of such methods. The authorizations have no fixed expiration date. As of September 30, 2023, $25.3 million remained available to the Company for the purchase of its common stock under outstanding authorizations. However, our credit agreement in effect at September 30, 2023 restricts us from repurchasing outstanding shares of the Company’s common stock. Business Combinations For acquisitions accounted for as business combinations, we record assets and liabilities acquired at their respective fair values as of the acquisition date. Contingent consideration is recognized at fair value as of the acquisition date, and changes in fair value are recognized in earnings until settlement. Acquisition-related transaction costs are expensed as incurred. Currency Translation The Company’s reporting currency is the U.S. dollar. Assets and liabilities of non-U.S. dollar functional currency subsidiaries are translated into U.S. dollars at the period-end exchange rates, and revenue and expenses are translated at the average quarterly exchange rates during the period. The net effect of these translation adjustments on the consolidated financial statements is recorded as a foreign currency translation adjustment, a component of accumulated other comprehensive loss on the consolidated balance sheets. Realized foreign currency transaction gains and losses are included in other expense, net on the consolidated statements of operations. New Accounting Pronouncements As of September 30, 2023, there were no new accounting pronouncements, pending adoption or recently adopted, that have had, or are expected to have, a material impact on the Company’s consolidated financial statements.

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