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Fair value of financial instruments
 3 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair value of financial instruments Fair value of financial instruments
Term Loan Credit Facility and debt derivative liability
The Term Loan Credit Facility contains various features that meet the definition of an embedded derivative and require bifurcation. These features, which were necessary for the Company to accept in order for Alcon to agree to provide the term loan financing, comprise three options for early prepayment of the term loans at stated premiums above par if certain future events were to occur, as described more fully in note 9. These embedded derivatives were initially recorded at fair value as a noncurrent liability (“debt derivative liability”) offset by a discount to the carrying value of the Term Loan Credit Facility that is being amortized to interest expense over the term of that facility. The debt derivative liability is being subsequently remeasured at fair value every reporting period with changes in fair value recognized as a component of other expense, net.
The disclosed fair value of the term loan and the recorded fair value of the debt derivative liability are estimated using a discounted cash flow method (a level 3 measurement) that includes annually weighted probabilities that certain call and put premiums are exercised upon qualifying events of default or changes in control. As of September 30, 2025, the fair value of the term loan, excluding the value of the embedded debt derivative liability, was $142,700 with a carrying value of $124,045; the fair value of the debt derivative liability was $25,491, which was the same as its carrying value. As of May 25, 2025, the fair value of the term loan, excluding the value of the embedded debt derivative liability, was $132,100 with a carrying value of $115,594; the fair value of the debt derivative liability was $24,991, which was the same as its carrying value.
The debt derivative liability is currently the only financial instrument recorded at fair value on a recurring basis in the accompanying balance sheets. The following table presents information about those measurements:
Type of measurementMeasurement dateType of measurement
Level 1Level 2Level 3
Liabilities
Debt derivative liabilityRecurringSeptember 30, 2025— — 25,491 
Debt derivative liabilityRecurringMay 25, 2025— — 24,991 
The following table presents the rollforward reconciliation of this Level 3 recurring fair value measurement:
Three months ended
September 30,
2025		August 25,
2024
Balance at beginning of period$25,116 $25,400 
Change in fair value375 (900)
Balance at end of period$25,491 $24,500 
The key inputs to the valuation model are (i) the probability and timing of a change in control event occurring over the remaining term of the debt; and (ii) the discount rate, which can be influenced by changes in the risk-free rate, the Company's credit rating and/or as changes in the overall credit market. Factors that can affect the estimate of fair value at each reporting date, and therefore the amount of gain or loss recorded for a particular period, include imprecision in estimating unobservable market inputs and the selection of particular methodologies and assumptions used to determine the fair value.
During the three months ended August 25, 2024, there was a decrease in discount rates that lowered the fair value of the debt derivative liability. During the three months ended September 30, 2025, the passage of time slightly increased the fair value of the debt derivative liability.
Key inputs used to develop the fair value measurement were as follows:
September 30, 2025May 25,
2025
Probability of change in control event80.0 %80.0 %
Weighted average discount rate17.8 %18.4 %
The weighted average discount rate was calculated based on the individual discount rate used for each future payment and weighted by both the present value of the future payments and the probability of each scenario.
Cash and Revolving Credit Facility
Outstanding cash and outstanding borrowings under the Company's Revolving Credit Facility are carried at cost, which approximates fair value due to their short duration and variable rates of interest (a level 2 measurement).
Leaseback liability with related party
As discussed further in note 9, the Company maintains a financial liability for an equipment sale and leaseback with Alcon for which control of the asset was deemed not to have transferred.
In accordance with U.S. GAAP, the Company presents supplemental fair value information based on market conditions of the underlying financial instrument. The fair value information does not change the stated rate or carrying value of the instrument. The fair value of the leaseback liability was estimated using a discounted cash flow method (a level 3 measurement) that assumes a weighted-average discount rate of 5.2% and 5.8% as of September 30, 2025 and May 25, 2025, respectively. As of September 30, 2025 and May 25, 2025, the fair value of the leaseback liability approximated its carrying value.
Customer deposit
A significant customer of the Company agreed to provide an upfront cash deposit in order to finance working capital requirements for the duration of its commercial supply agreement with us. The deposit bears no interest and matures upon termination of the commercial supply agreement, which can be extended indefinitely upon mutual agreement of the parties, and was most recently extended in March 2024 for a period of 1.75 years to December 31, 2026.
In accordance with U.S. GAAP, the Company presents supplemental fair value information based on market conditions of the underlying financial instrument. The fair value information does not change the stated rate or carrying value of the instrument. The fair value of the deposit is estimated using a discounted cash flow method (a level 3 measurement) that includes assumed discount rates of 6.2% and 6.6% as of September 30, 2025 and May 25, 2025, respectively. The fair value assumes repayment in 1.3 years and 1.6 years as of September 30, 2025 and May 25, 2025, respectively, which was the remaining contractual term of the agreement as of each measurement date. As of September 30, 2025 and May 25, 2025, the fair value of the deposit approximated its carrying value.
Conversion ratio improvement provided to preferred stockholders
During the three months ended November 24, 2024, the Company performed a non-recurring fair value measurement to record the value of a conversion ratio improvement provided to preferred stockholders as a result of the October 3, 2024 Securities Purchase Agreement referenced in note 10. The fair value of the conversion feature was recorded as $2,132 adjustment to loss attributable to common stockholders. The fair value was calculated using an as-converted method based on the contractual conversion ratio of the preferred shares and the closing price of Common Stock, a level 1 measurement.
The weighted average discount rate was calculated based on the individual discount rate used for each future payment and weighted by both the present value of the future payments and the probability of each scenario.