v3.21.1

Convertible Notes | 3 Months Ended
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Mar. 31, 2021
Convertible Notes |
Convertible Notes | 8. Convertible Notes In October 2018, the Company sold, through the initial purchasers, convertible senior notes (“Convertible Notes”) to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended, for gross proceeds of $201,250. The Convertible Notes are senior, unsecured obligations with interest payable semi-annually in cash at a rate of 1.00% per annum on April 1st and October 1st of each year. The Convertible Notes will mature on October 1, 2023 unless they are redeemed, repurchased or converted prior to such date. Prior to April 1, 2023, the Convertible Notes are convertible at the option of holders only during certain periods and upon satisfaction of certain conditions. Thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Convertible Notes may be settled in shares of the Company’s common stock, cash or a combination of cash and shares of the Company’s common stock, at the Company’s election. The Convertible Notes have an initial conversion rate of 23.6323 shares of common stock per $1 principal amount of the Convertible Notes, which will be subject to customary anti-dilution adjustments in certain circumstances. This represents an initial effective conversion price of approximately $42.31 per share. The Company may redeem all or any portion of the Convertible Notes, at its option, on or after October 5, 2021, at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of the Company’s stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption. Holders of Convertible Notes may require the Company to repurchase their Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the Convertible Notes at a fundamental change repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase. In connection with certain corporate events or if the Company issues a notice of redemption prior to the maturity date, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their Convertible Notes in connection with such corporate event or notice of redemption. In connection with the pricing of the Convertible Notes, the Company entered into privately negotiated capped call transactions with a financial institution. The capped call transactions initially cover, subject to customary anti-dilution adjustments, the number of shares of the Company’s common stock that initially underlie the Convertible Notes. The cap price of the capped call transactions is initially $65.10 per share of the Company’s common stock, and is subject to certain adjustments under the terms of the capped call transactions. The capped call transactions are expected generally to reduce potential dilution to the Company’s common stock upon conversion of the Convertible Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction and/or offset subject to a cap based on the cap price. The following table summarizes the Convertible Notes: ​
​ | ​ | ​ | ​
​ | ​ | March 31,
​ |  | 2021
Par value of the Convertible Notes | ​ | $ | 201,250
Unamortized debt issuance costs | ​ |  | (3,135)
Net carrying value of Convertible Notes | ​ | $ | 198,115
​ The fair value of our Convertible Notes was $198,483 as of March 31, 2021. The estimated fair value of Convertible Notes is based on market rates and the closing trading price of the Convertible Notes as of March 15, 2021 and is classified as Level 2 in the fair value hierarchy. There were no trades between March 16, 2021 and March 31, 2021. As of March 31, 2021, the if-converted value of the Convertible Notes did not exceed the principal amount. Debt issuance costs are amortized on an effective interest basis over the term of the Convertible Notes. Debt issuance cost amortization expense, net of amounts capitalized, is included in interest expense and amortization of debt discount in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021. The following table sets forth interest expense related to the Convertible Notes for the three months ended March 31, 2021 and 2020: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Three Months Ended | ​
​ | ​ | March 31, | ​
​ | ​ | 2021 |  | 2020(2) | ​
Contractual interest expense |  | $ | 503 |  | $ | 503 | ​
Amortization of debt issuance costs | ​ |  | 307 | ​ | ​ | 220 | ​
Amortization of debt discount | ​ |  | — | ​ | ​ | 2,156 | ​
Total | ​ | $ | 810 | ​ | $ | 2,879 | ​
Effective interest rate of the liability component | ​ |  | 1.6 | % | ​ | 7.1 | %
| (2) | As noted above, prior period amounts have not been adjusted upon adoption of ASU 2020-06 under the modified retrospective method.
During the three months ended March 31, 2021 and 2020, we capitalized $433 and $650, respectively, of amortization and interest expense related to the Convertible Notes. Amortization expense for our debt issuance costs through 2023 are as follows: ​
​ | ​ | ​ | ​
​ | ​ | Debt Issuance
​ | ​ | Costs
April 1, 2021―December 31, 2021 | ​ | $ | 927
January 1, 2022―December 31, 2022 | ​ | ​ | 1,254
January 1, 2023―December 31, 2023 | ​ | ​ | 954
​ | ​ | $ | 3,135
​

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