Asset Acquisition and Business Combination

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

Asset Acquisition and Business Combination

Asset Acquisition and Business Combination

Biotronik Asset Acquisition

In July 2019, the Company entered into a License and Distribution Agreement with Biotronik and VascoMed GmbH (collectively, the “Biotronik Parties”) whereby the Company acquired certain manufacturing equipment and obtained a license under certain patents and technology to develop, commercialize, distribute and manufacture the AcQBlate FORCE ablation catheters and Qubic Force Device. In accordance with ASC 805, the Biotronik Asset Acquisition was accounted for as an asset

acquisition, as substantially all of the $15.0 million value transferred to Biotronik was allocated to intellectual property and charged to research and development expense - license acquired in the consolidated statements of operations and comprehensive loss.

The agreement provides for additional milestone payments of up to $10.0 million contingent upon certain regulatory approvals and first commercial sale, of which $2.0 million has been paid as of December 31, 2022. upon regulatory approval of the Company’s force sensing ablation catheter in Europe. The Company determined that payment of the remaining $8.0 million of contingent milestones is not probable and estimable, and therefore the potential liability is not recorded as of December 31, 2022 and December 31, 2021.

In further consideration of the rights granted, beginning with the Company’s first commercial sale of the first force sensing ablation catheter within the licensed product line, the agreement specifies per-unit royalty payments to the Biotronik Parties. As sales of catheters are recognized, royalties are recorded as cost of products sold on the statements of operations and comprehensive loss. As of December 31, 2022, less than $0.1 million has been included within accrued liabilities for these royalties.

Rhythm Xience Business Combination

On June 18, 2019, the Company acquired an integrated family of transseptal crossing and steerable introducer systems through its acquisition of Rhythm Xience for $3.0 million in cash in exchange for all of the stock of Rhythm Xience (the “Rhythm Xience Acquisition”). The purchase agreement included a potential of $17.0 million in earn-out consideration to be paid based on the achievement of certain regulatory milestones and revenue milestones, of which $7.2 million has been paid as of December 31, 2022. In accordance with ASC 805, the Rhythm Xience Acquisition was accounted for as a business combination.

Additionally as part of the Rhythm Xience Acquisition, the Company recorded a contingent consideration liability of $13.4 million for potential payments if certain regulatory approval and revenue milestones are achieved. During the year ended December 31, 2020, the Company issued 119,993 shares of Series D convertible preferred stock (since converted to common stock) and paid $2.5 million of contingent consideration. The Company paid $0.9 million and $3.4 million of contingent consideration in the years ended December 31, 2022 and 2021, respectively.

The contingent consideration liability is recorded on the consolidated balance sheets at fair value. For the years ended December 31, 2022 and 2021, the Company recorded a $1.1 million increase and $3.7 million decrease, respectively, for the change in fair value of contingent consideration in the consolidated statements of operations and comprehensive loss. As of December 31, 2022, the fair value of the contingent consideration liability on the consolidated balance sheets is $1.8 million.