Common stock reserved for future issuance as of December 31, 2018 was as follows:

The Company’s Board of Directors (Board) and stockholders previously approved the 2007 Stock Option Plan (the 2007 Plan). In October 2014, the Board adopted the 2014 Equity Incentive Award Plan (the 2014 Plan and, together with the 2007 Plan, the Stock Plans). As of the effective date of the 2014 Plan, the Company suspended the 2007 Plan and no additional awards may be granted under the 2007 Plan. Any shares of common stock covered by awards granted under the 2007 Plan that terminate after the effective date of the 2014 Plan by expiration, forfeiture, cancellation or other means without the issuance of such shares, will be added to the 2014 Plan reserve.

Under the 2014 Plan, 1,854,166 shares of common stock were initially reserved for issuance, plus the number of shares remaining available for future awards under the 2007 Plan, as of the pricing of the IPO. The number of shares initially reserved for issuance under the 2014 Plan is subject to increase by (i) the number of shares represented by awards outstanding under the 2007 Plan that are forfeited or lapse unexercised and which following the pricing date are not issued under the 2007 Plan, and (ii) an annual increase on January 1 of each year.

Under the 2014 Plan, the Company may grant awards such as incentive stock options, nonstatutory stock options, restricted stock units and stock appreciation rights. Incentive stock options (ISO) may be granted only to Company employees (including directors who are also employees). Nonqualified stock options (NSO) may be granted to Company employees, directors and consultants.

Options under the 2014 Plan may be granted for periods of up to ten years and at prices no less than 100% of the estimated fair market value of the shares on the date of grant as determined by the Board, provided, however, that the exercise price of an ISO or an NSO granted to a 10% stockholder shall not be less than 110% of the estimated fair market value of the shares on the date of grant. Upon the exercise of options, the Company issues new common stock from its authorized shares. The vesting provisions of individual options vary but are generally over four years, with the exception of performance based stock options.

Pursuant to the 2014 Plan, the Company granted performance based stock options to the Company’s CEO in March 2016. This performance based stock option award is subject to the CEO’s continued service to the Company through each applicable vesting date. If a performance metric is not met within the time limits specified in the award agreements, the shares subject to vesting under the vesting tranche for that performance metric will be cancelled.

	Shares Available
	for Grant
Balance at December 31, 2015		1,856,709
Additional shares reserved		1,125,742
Options and restricted stock granted		(856,043	)
Options and restricted stock cancelled		75,831
Balance at December 31, 2016		2,202,239
Additional shares reserved		1,155,474
Shares forfeited for tax		13,094
Options and restricted stock granted		(1,002,063	)
Options and restricted stock cancelled		97,502
Balance at December 31, 2017		2,466,246
Additional shares reserved		1,189,502
Shares forfeited for tax		28,107
Options and restricted stock granted		(805,653	)
Options and restricted stock cancelled		102,560
Balance at December 31, 2018		2,980,762

	Options Outstanding					Weighted Average
	Number of			Weighted Average		Remaining	Aggregate
	Options			Exercise Price		Contractual Term	Intrinsic Value
						(in years)	(in thousands)
Outstanding at December 31, 2015		3,050,288		$	19.74	7.8	$	145,721
Options granted		498,564		$	66.74
Options exercised		(667,494	)	$	10.19		$	46,529
Options cancelled		(60,131	)	$	40.89
Outstanding at December 31, 2016		2,821,227		$	29.85	7.4	$	123,425
Options granted		503,690		$	74.71
Options exercised		(707,410	)	$	10.59		$	50,971
Options cancelled		(57,535	)	$	46.83
Outstanding at December 31, 2017		2,559,972		$	43.62	7.3	$	71,120
Options granted		236,900		$	47.96
Options exercised		(247,768	)	$	16.05		$	15,468
Options cancelled		(19,364	)	$	44.70
Outstanding at December 31, 2018		2,529,740		$	46.72	6.7	$	21,866
Options exercisable as of December 31, 2018		2,478,361		$	46.40	6.7	$	21,866
Options vested, exercisable or expected to vest as of December 31, 2018		1,700,383		$	38.33	5.8	$	21,866

The aggregate intrinsic value of options exercised is the difference between the estimated fair market value of the Company’s common stock at the date of exercise and the exercise price for in-the-money options. The aggregate intrinsic value of outstanding options is the difference between the closing price as of the date outstanding and the exercise price of the underlying stock options. The weighted-average grant-date fair value of options granted during the years ended December 31, 2018, 2017 and 2016 was $23.27, $32.35 and $32.11 per share, respectively. The total fair value of options vested during the years ended December 31, 2018, 2017 and 2016 was approximately $14.0 million, $13.3 million and $10.7 million, respectively, based on the grant date fair value.

The options outstanding and vested under the Stock Plans by exercise price, at December 31, 2018, were as follows:

	Options Outstanding					Options Vested
			Weighted Average
			Remaining
	Number		Contractual Term	Weighted Average		Number		Weighted Average
Exercise Price	Outstanding		(in years)	Exercise Price		Exercisable		Exercise Price
$1.44 — $18.00		717,786	4.29	$	8.62		717,786	$	8.62
$32.51 — $53.70		517,192	7.32	$	43.87		315,285	$	44.40
$54.50 — $63.23		543,534	6.96	$	58.63		362,733	$	59.17
$63.39 — $76.81		591,830	8.59	$	73.13		221,697	$	72.83
$86.90 — $97.52		159,398	7.89	$	88.84		82,882	$	89.05
$1.44 — $97.52		2,529,740	6.72	$	46.72		1,700,383	$	38.33

In 2015, the Company began granting restricted stock units (RSUs) under the 2014 Plan. Holders of RSUs do not have stockholder rights. Upon the release of RSUs, the Company issues new common stock from its authorized shares. RSUs generally vest four years from the date of grant.

Pursuant to the 2014 Plan, the Company granted performance based RSUs to the CEO in March 2016. The performance based RSUs are subject to the CEO’s continued service to the Company through each applicable vesting date. If a performance metric is not met within the time limits specified in the RSU agreement, the shares subject to vesting under the vesting tranche for that performance metric will be cancelled.

	Number of			Weighted Average		Aggregate
	Restricted			Grant Date		Intrinsic Value
	Stock Units			Fair Value		(in thousands)
Outstanding at December 31, 2015		5,160		$	56.09	$	348
Restricted stock granted		357,479		$	70.31
Restricted stock released		(1,384	)	$	56.65	$	115
Restricted stock cancelled		(15,700	)	$	65.15
Outstanding at December 31, 2016		345,555		$	70.39	$	25,108
Restricted stock granted		498,373		$	82.60
Restricted stock released		(83,121	)	$	69.90	$	1,175
Restricted stock cancelled		(39,967	)	$	81.57
Outstanding at December 31, 2017		720,840		$	78.26	$	49,767
Restricted stock granted		568,753		$	68.09
Restricted stock released		(196,274	)	$	77.43	$	968
Restricted stock cancelled		(83,196	)	$	81.73
Outstanding at December 31, 2018		1,010,123		$	72.41	$	39,284
Restricted stock expected to vest as of December 31, 2018		930,205				$	36,176

The aggregate intrinsic value of RSUs released is calculated using the fair market value of the Company’s common stock at the date of release. The aggregate intrinsic value of outstanding RSUs is calculated based on the closing price of the Company’s common stock as of the date outstanding.

In October 2014, the Board adopted the 2014 Employee Stock Purchase Plan (the ESPP). A total of 196,666 shares of common stock were initially available for future issuance under the 2014 Employee Stock Purchase Plan, subject to an annual increase on January 1 of each year. The ESPP provides eligible employees with an opportunity to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. Under the ESPP, the purchase price of the Company stock is equal to 85% of the lower of its fair market value at the start and end of a six-month purchase period.

	December 31,
	2018		2017		2016
Additional shares reserved		297,375		288,868		281,435
Shares issued		110,040		73,262		72,568
Shares available for future issuance		1,023,970		836,635		621,029
Employee contributions for shares issued (in thousands)	$	5,521	$	4,697	$	3,499

Stock options previously granted under the 2007 Plan allowed the Board of Directors to grant awards to provide employee option holders the right to elect to exercise unvested options in exchange for restricted common stock. Unvested shares, which amounted to 0 at December 31, 2018, 0 at December 31, 2017 and 1,836 at December 31, 2016, were subject to a repurchase right held by the Company at the original issue price in the event the optionees’ employment was terminated either voluntarily or involuntarily. For exercises of employee options, this right lapses according to the vesting schedule designated on the associated option grant. The repurchase terms are considered to be a forfeiture provision. The shares purchased by the employees pursuant to the early exercise of stock options are not deemed to be issued or outstanding for accounting purposes until those shares vest, though they are legally issued and outstanding. In addition, cash received from employees for exercise of unvested options is treated as a refundable deposit shown as a liability on the consolidated balance sheets. As of December 31, 2018 and 2017, there was no cash received related to unvested shares, respectively. Amounts recorded are transferred into common stock and additional paid-in-capital as the shares vest.

The Company estimated the fair value of stock options granted to employees and shares purchased by employees under the ESPP using the Black-Scholes option valuation model. The fair value is amortized on a straight-line basis over the requisite service period of the awards, with the exception of performance based stock options whose fair value is recorded as expenses when performance metrics are achieved. The following assumptions were used in estimating the fair value:

	Years Ended December 31,
	2018	2017		2016
Stock Options:
Expected term (in years)	5.5	5.5		5.3 — 6.1
Expected volatility	44% — 51%	44% — 46%		47% — 49%
Risk-free interest rate	2.3% — 2.9%	1.8% — 2.2%		1.3% — 1.9%
Dividend Yield	0%		0%		0%
ESPP:
Expected term (in years)	0.5	0.5		0.5
Expected volatility	44% — 57%	36% — 37%		46% — 53%
Risk-free interest rate	2.1% — 2.5%	1.0% — 1.4%		0.4% — 0.6%
Dividend Yield	0%		0%	0%

Expected Term. The expected term of stock-based awards represents the weighted-average period that the stock-based awards are expected to remain outstanding. The Company has historically opted to use the “simplified method” for estimating the expected term of the awards, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the awards. Starting in late 2016, the Company started to utilize its own historical data for the calculation of expected term.

Expected Volatility. The Company has historically determined the share price volatility for stock-based awards based on an analysis of the historical volatilities of a peer group of publicly traded medical device companies. Starting in late 2016, the Company has started to incorporate its own stock trading volatility with those of its peer group for the calculation of volatility. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size.

Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the stock-based awards.

Dividend Rate. The expected dividend was assumed to be zero as the Company has never paid dividends and has no current plans to do so.

Expected Forfeiture Rate. The Company is required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period that the estimates are revised.

The Company accounts for RSUs at their fair value, based on the closing market price of the Company’s common stock on the grant date. The fair value is amortized on a straight-line basis over the requisite service period of the awards, with the exception of performance based awards whose fair value is recorded as an expense when performance metrics are achieved.

A summary of pre-tax stock-based compensation expense by line items in the consolidated statements of operations was as follows (in thousands):

	Years Ended December 31,
	2018		2017		2016
Cost of revenue	$	2,656	$	1,878	$	1,094
Research and development		5,871		4,601		3,182
Sales, general and administrative		28,110		19,664		11,484
Total stock-based compensation expense	$	36,637	$	26,143	$	15,760

A summary of pre-tax stock-based compensation expense by category was as follows (in thousands):

	Years Ended December 31,
	2018		2017		2016
Stock options	$	13,765	$	13,412	$	10,832
Restricted stock units		21,006		11,197		3,548
Employee stock purchase plan		1,866		1,534		1,380
Total stock-based compensation expense	$	36,637	$	26,143	$	15,760

As of December 31, 2018, total stock-based compensation expense not yet recognized, net of estimated forfeitures, were as follows: