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Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | (12) Stock-Based Compensation 2015 Incentive Plan The Company is authorized to grant shares of restricted stock, restricted stock units (“RSUs”), stock appreciation rights, cash incentive awards and options to purchase shares of Common Stock to employees and non-employee directors pursuant to its 2015 Incentive Plan (the “2015 Plan”). The 2015 Plan also designates measures that may be used for performance awards and market-based awards. The vesting period for awards granted under the 2015 Plan is generally determined by the Board of Directors at the date of the grant. Generally, the awards vest one third each year, over 3 years. The total number of shares of Common Stock reserved and available for distribution under the 2015 Plan, including the total number of shares of Common Stock that can be issued pursuant to stock options, is 29,235 shares. This represents an increase of 4,000 shares during the three months ended September 30, 2024, pursuant to the approval of stockholders at the 2024 meeting of stockholders. Systemic Bio Phantom Unit Plan During the year ended December 31, 2023, we began granting phantom unit awards ("Phantom Units") under a new compensation plan designed for employees and non-employees performing services for Systemic Bio, a wholly-owned subsidiary of 3D Systems Corporation. All awards granted under the plan are subsidiary-level awards. During the three and nine months ended September 30, 2024, we granted 0 and 94 Phantom Units under the plan and recognized $(2,130) and $(32) of compensation expense related to all granted awards, respectively. During the three and nine months ended September 30, 2023, we recognized $183 of compensation expense related to all granted awards. The Phantom Units granted under the plan include both a time-based vesting condition (generally 4 years, subject to acceleration in connection with specified liquidity events) and a market condition that is met if (1) the value of Systemic Bio exceeds a specified multiple of the capital invested in this subsidiary (the "hurdle") and (2) the business achieves a specified minimum internal rate of return. The market conditions will be assessed upon (A) a trigger event (e.g., change in control, IPO or plan expiration of December 31, 2030) and/or (B) an interim liquidity event (defined as January 1, 2028) that occurs prior to a trigger event. All awards under the plan will be liability-classified due to our intention to settle these awards with cash; although, we have discretion to partially or fully settle these awards in equity upon vesting. Liability classification of the awards requires them to be remeasured at their fair value at the end of each reporting period. Due to the presence of the market-condition and the fact that Systemic Bio does not have a readily available share price, the awards are valued using a Monte Carlo simulation with the assistance of a third-party valuation firm. This valuation requires significant judgment regarding the input of various assumptions and estimates, which include the projected cash flows of (including projected capital invested in) Systemic Bio, the probability and/or timing of a trigger event or a liquidity event, the expected stock price volatility for selected public companies with comparable characteristics to Systemic Bio, the discount for the lack of marketability of Systemic Bio as a privately-held company, and the risk-free interest rate. The third-party valuation as of September 30, 2024 resulted in a decrease in the estimated fair value of the Phantom Units and a corresponding $2,569 impact to the expense recognized during the three and nine months ended September 30, 2024, primarily as a result of a change regarding the estimated probability and timing for the occurrence of a trigger event. This change in estimate reduced our basic and diluted loss per share by $0.02 for the three and nine months ended September 30, 2024. Other Compensation Arrangements that Include Share Settlement Regenerative Medicine Earnout Payments and Performance-Based Stock Units Volumetric Acquisition Earnout Payments On December 1, 2021, the Company acquired Volumetric Biotechnologies, Inc. (“Volumetric”). Pursuant to the terms of the related acquisition agreement, the Company was potentially subject to aggregate earnout payments of up to $355,000 (i.e., incremental to the previously paid acquisition purchase price). These earnout payments would be triggered by (1) the achievement of seven discrete non-financial milestones, each of which required attainment prior to either December 31, 2030 or December 31, 2035, and (2) the continued employment of certain Volumetric key employees. Each potential milestone-based payment was deemed to be compensation expense that the Company would recognize ratably from the point in time when a milestone was deemed probable of achievement through the estimated time of achievement. Each milestone payment, if earned, would be expected to be settled approximately half in cash and half in shares of Common Stock and, accordingly, expense recognized for the portion of this earnout that is expected to be settled with shares of Common Stock would be reflected in the disclosure of stock-based compensation included herein, if and when accrued. In February 2024, the Company informed the former owners of Volumetric, to whom the acquisition-related earnout payments of up to $355,000 could have potentially become payable, that four of the seven milestone-related earnout payments, each of which was related to kidney and liver research, were terminated. These four milestone-based earnout payments were terminated in accordance with the terms of the Volumetric acquisition agreement, based upon a determination that achievement was no longer financially viable due to the loss of the funding required from the Company's key strategic partner for the related research and development efforts. Upon termination of the four milestone-based earnout payments, the Company's maximum liability for earnout payments attributable to the acquisition of Volumetric was reduced to $175,000, which would be payable if (1) each of the three remaining non-financial, science-based milestones was achieved within the timeframes set forth in the Volumetric acquisition agreement and (2) the certain key individuals from Volumetric continue to be employed. On April 29, 2024, two key employees from Volumetric ("Volumetric Key Employees"), who were required to be employed at the time of achievement of each non-financial, science-based milestone outlined in the Volumetric acquisition agreement for each related acquisition earnout payment to become payable, resigned from their positions with the Company. As a result of the resignation of the Volumetric Key Employees, all parties to which the remaining three milestone-based earnout payments totaling $175,000 were potentially payable were notified that such amount was no longer eligible to be earned. While the Volumetric Key Employees claim that their terminations were for good reason, which would preserve the rights to milestone-based earnout payments under the Volumetric acquisition agreement, the Company vigorously denies this claim. Refer to Note 17 for further details regarding the resignation of the certain Volumetric Key Employees and all related actions occurring thereafter. Regenerative Medicine Performance-Based Stock Units The Company has granted certain performance-based stock units (“PSUs” or the "RegMed Awards") with vesting terms that are based upon four individually-measured, science-based (i.e., non-financial) milestones to other employees who work on advancements in regenerative medicine related to lungs and tissue organs. The compensation expense associated with each individual milestone attributable to a RegMed Award is required to be recognized over the period commencing on the date that the respective milestone is deemed probable of being met through the anticipated date of achievement. Earnout and PSU Compensation Expense Prior to the quarter ended September 30, 2023, the Company recognized compensation expense based upon the assumed achievement of (1) one of the Volumetric milestones for which the potential earnout payment due to the sellers would be $65,000 and (2) one RegMed Award milestone for which the aggregate grant date fair value of the outstanding and unvested awards was $4,773. During the three months ended September 30, 2023, the Company decided to reduce its budgeted funding for the research and development related to the respective Volumetric earnout and RegMed Award milestones, which resulted in the Company concluding that it was no longer probable that these milestones would be achieved by the end of the term of the Volumetric earnout arrangement or prior to the expiration of the RegMed Awards. In concluding that the Volumetric and RegMed Award milestone would no longer be achieved, the Company reversed all of the previously accrued compensation expense, one half of which was expected to be settled with Common Stock shares, which had an income statement impact of $21,527 and $18,392 for the three and nine-months ended September 30, 2023, respectively. The reversals of the previously expensed Volumetric earnout and RegMed Award reduced our reported net loss per basic and diluted share of Common Stock by $0.17 and $0.14 for the three and nine months ended September 30, 2023, respectively. As a result of the budget reduction and the cancellation of all seven Volumetric earnout milestones described above, the Company recognized $0 of compensation expense related to the Volumetric earnout and RegMed Awards during the three and nine months ended September 30, 2024, and no liability related to the Volumetric earnout was recognized on our balance sheets as of September 30, 2024 and December 31, 2023. dp polar Earnout In connection with the Company's October 4, 2022 acquisition of dp polar GmbH ("dp polar"), the Company expects to pay $2,229 of compensation expense incremental to the acquisition purchase price. Until April 2024, this payment was contingent upon the continued employment of a key individual from dp polar through December 31, 2024. During April 2024, due to a change in the key individual's employment status, all service conditions of the dp polar earnout were deemed to have been met based on the terms of the initial arrangement. The related compensation that is due is expected to be settled via the issuance of 250 shares of Common Stock on or around December 31, 2024. All remaining expense related to these shares was recognized during the nine months ended September 30, 2024. The Company includes the compensation expense related to this arrangement within stock-based compensation reported herein. Stock-Based Compensation Activity and Expense During the three and nine months ended September 30, 2024, the Company granted 2,105 and 2,165 shares of restricted stock, respectively, which had a weighted-average grant date fair value of $1.70 and $1.82 per share, respectively. The restricted stock awards generally vest ratably over three years. The following table shows the stock-based compensation expense recognized during the three and nine months ended September 30, 2024 and September 30, 2023.
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |  |
(in thousands) |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  |
Stock-based compensation expense |  | $ | 3,666 |  |  | $ | (3,142) |  |  | $ | 17,339 |  |  | $ | 15,140 |  |  |
Included in stock-based compensation expense recognized for the three and nine months ended September 30, 2024 are $844 and $3,118, respectively, and $(1,055) and $0, for the three and nine months ended September 30, 2023, respectively, of accrued expense pertaining to annual incentive compensation for which settlement would ultimately occur using shares of Common Stock. Also included in stock-based compensation expense for the three and nine months ended September 30, 2024 are $0 and $0, respectively, and $(10,140) and $(8,640) for the three and nine months ended September 30, 2023, respectively, which relate to the RegMed Awards and the portion of the recognized Volumetric earnout expense expected to be settled using the shares of Common Stock. Finally, stock-based compensation expense for the three and nine months ended September 30, 2024 includes $0 and $975, respectively, and $175 and $727 for the three and nine months ended September 30, 2023, respectively, of expense related to the dp polar earnout arrangement that is required to be settled in shares of Common Stock. As of September 30, 2024, there was $20,752 of unrecognized stock-based compensation expense related to all unvested share-based payment awards that the Company expects to recognize over a weighted-average period of 1.6 years.

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