Equity

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Equity

9. Equity

Common Stock

There were 200,000,000 shares of common stock authorized at December 31, 2021 and 2020. On March 1, 2021 the Company completed the sale of 12,421,242 shares of common stock for gross proceeds of $138.0 million, and net proceeds of approximately $131.8 million, net of $6.2 million in fees. On October 16, 2020 the Company completed the sale of 13,142,855 shares of common stock for gross proceeds of $115.0 million, resulting in net proceeds of approximately $107.7 million, net of $7.3 million in fees.

On August 3, 2021, the Company’s Board of Directors authorized the Company to repurchase an aggregate of up to $25.0 million of shares of the Company’s common stock. On August 10, 2021, The Company repurchased 1,806,358 shares of its common stock for approximately $25.0 million in privately negotiated transactions. There were no stock repurchases in 2020.

Redeemable Preferred Stock

The Company issued shares of redeemable preferred stock in connection with its initial public offering in June 2006. As of December 31, 2021, and 2020, the redeemable preferred stock carrying value was $23.6 million and there were 20 million shares of redeemable preferred stock authorized. The redeemable preferred stock is not convertible into common stock but is redeemable at $9.00 per share, (i) upon the Company’s liquidation, dissolution or winding up, or the occurrence of certain mergers, consolidations or sales of all or substantially all of the Company’s assets, before any payment to the holders of the Company’s common stock, or (ii) at the Company’s option at any time. Holders of redeemable preferred stock are generally not entitled to vote on matters submitted to the stockholders, except with respect to certain matters that will affect them adversely as a class and are not entitled to receive dividends. The carrying value of the redeemable preferred stock was $7.11 per share at December 31, 2021 and 2020. The redeemable preferred stock is presented separately from stockholders’ equity in the consolidated balance sheets and any adjustments to its carrying value up to its redemption value of $9.00 per share are reported as a dividend.

2017 PIPE Warrants

The 2017 Common Stock Warrants (the “2017 PIPE Warrants”) have a five-year life and are exercisable for cash. During the year ended December 31, 2021, there were 795,000 2017 PIPE Warrant exercises for total cash proceeds of $1.6 million. During the year ended December 31, 2020, there were 273,554 2017 PIPE Warrant exercises, for total cash proceeds of $0.6 million. As of December 31, 2021, there were 2,312,000 2017 PIPE Warrants outstanding.  

2018 PIPE Warrants

The 2018 Common Stock Warrants (the “2018 PIPE Warrants”) have a five-year life and are exercisable for cash or by cashless exercise. During the year ended December 31, 2021, there were 2,900,660 2018 PIPE Warrant exercises for total cash proceeds of $1.5 million. During the year ended December 31, 2020, there were 2,342,986 2018 PIPE Warrant exercises for total cash proceeds of $1.3 million. A total of 8,479,025 2018 PIPE Warrants remained outstanding as of December 31, 2021.

SafeOp Surgical Merger Warrants

In conjunction with the Company’s 2018 acquisition of SafeOp, the Company issued warrants to purchase 2,200,000 shares of common stock at an exercise price of $3.50 per share and contain a five-year life and are exercisable for cash or by cashless exercise. During the year ended December 31, 2021, there were 969,932 SafeOp Surgical Merger Warrant exercises for cash proceeds of $0.1 million. During the year ended December 31, 2020, there were 34,807 SafeOp Surgical Merger Warrant exercises for no cash proceeds. As of December 31, 2021, there were 1,194,943 SafeOp Surgical Merger Warrants outstanding.

Squadron Medical Warrants

During the year ended December 31, 2018, in connection with the Term Loan with Squadron Medical and a participant lender, the Company issued warrants to purchase 845,000 shares of common stock at an exercise price of $3.15 per share. An additional 4,838,710 warrants were issued at an exercise price of $2.17 per share during the second quarter of 2019, in conjunction with the Company’s draw on the expanded credit facility. In May 2020, an additional 1,075,820 warrants were issued at an exercise price of $4.88 per share in conjunction with the Company’s second amendment to the Term Loan for total warrants outstanding to Squadron Medical and the participant lender of 6,759,530. In conjunction with the second amendment, the expiration dates for all existing warrants were extended to May 29, 2027 to align all outstanding warrant expiration dates. In accordance with authoritative accounting guidance, the warrants qualified for equity treatment upon issuance and were recorded as a debt discount to the face of the debt liability based on fair value to be amortized into interest expense over the life of the debt agreement. The fair value assigned to the warrant amendment was also allocated as a debt issuance cost and amortized into interest expense. As the warrants provide for partial price protection that allow for a reduction in the price in the event of a lower per share priced issuance, the warrants were valued utilizing a Monte Carlo simulation that considers the probabilities of future financings. The Monte Carlo model simulates the present value of the potential outcomes of future stock prices of the Company over the seven-year life of the warrants. The projection of stock prices is based on the risk-free rate of return and the volatility of the stock price of the Company and correlates future equity raises based on the probabilities provided. No Squadron Medical Warrants have been exercised as of December 31, 2021.

Executive Warrants

In December 2017 the Company issued warrants to Mr. Patrick S. Miles, the Company’s Chairman and Chief Executive Officer, to purchase 1,327,434 shares of the Company’s common stock for $5.00 per share (the “Executive Warrants”). The warrants have a five-year term and are exercisable by cash or cashless exercise. The warrants issued to Mr. Miles were accounted for as share based compensation, and the fair value of the warrants of approximately $1.4 million were recognized in full in the statement of operations for the year ended December 31, 2017 as the warrants were immediately vested upon issuance. No Executive Warrants have been exercised as of December 31, 2021.

A summary of all outstanding warrants is as follows (in thousands):

	Number of Warrants		Strike Price		Expiration
2017 PIPE Warrants		2,312	$	2.00	June 2022
2018 PIPE Warrants		8,479	$	3.50	May 2023
SafeOp Surgical Merger Warrants		1,195	$	3.50	May 2023
2018 Squadron Medical Warrants		845	$	3.15	May 2027
2019 Squadron Medical Warrants		4,839	$	2.17	May 2027
2020 Squadron Medical Warrants		1,076	$	4.88	May 2027
Executive Warrants		1,327	$	5.00	December 2022
Other*		111	$	5.40	Various through December 2024
Total		20,184
*Represents weighted average strike price