Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Leases

The Company leases office space in Oakwood Village, Ohio, Mountain View, California, and Denver, Colorado under non-cancelable operating lease agreements. The Company leases and occupies approximately 19,800 square feet of office space in Oakwood Village, Ohio, which expires in October 2026. The Company entered into an office lease agreement to lease approximately 25,500 square feet of office space located in Mountain View, California, with an expiration date of July 2025. Additionally, the Company entered into a lease agreement to lease additional office space in Mountain View, California of approximately 24,600 square feet, which will expire in December 2025. The Company has the option to extend the term of the lease for a period of up to five years. In March 2021, we entered into a lease agreement to lease approximately 12,800 square feet of office space in Denver, Colorado. The lease commenced on September 1, 2021 and will expire October 31, 2024.

In recognition of the right-of-use assets and the related lease liabilities, the option to extend the lease term has not been included as the Company is not reasonably certain that it will exercise any such option. At December 31, 2021, the weighted-average remaining lease term in years is 4.0 years and the weighted-average discount rate used is 7.6%. The Company recognized of $2.8 million, $3.1 million, and $2.9 million lease costs arising from lease transactions for the years December 31, 2021, 2020 and 2019, respectively.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized the following cash flow transactions arising from lease transactions (in thousands):


	For the Year Ended December 31,
	2021		2020		2019
Cash paid for amounts included in the measurement of lease liabilities	$	2,848	$	3,145	$	2,451
Right-of-use assets obtained in exchange for new operating lease liabilities	1,693		643		1,647

At December 31, 2021, the future payments and interest expense for the operating leases are as follows (in thousands):


Year Ended December 31,	Future Payments
2022	$	3,264
2023	3,357
2024	3,301
2025	2,096
2026	147
Thereafter	—
Total undiscounted cash flows	$	12,165
Less: imputed interest	(1,538)
Present value of lease liabilities	$	10,627

Rent expense for operating leases for the year ended December 31, 2019 using the accounting guidance in effect at that time was $1.4 million.

Legal Proceedings

In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.

Class Action Litigation

On September 13, 2019, a class action complaint for violation of federal securities laws was filed in U.S. District Court for the Northern District of Ohio against the Company, our chief executive officer, chief scientific officer, and former chief financial officer. On December 19, 2019, the court appointed Plymouth County Retirement Association as the lead plaintiff, and on February 28, 2020 the lead plaintiff filed an amended complaint asserting securities fraud claims against the Company, our chief executive officer, chief operating officer, chief scientific officer, and former chief executive officer and former chief financial officer. Now captioned Plymouth County Retirement Association v. ViewRay, Inc., et al., the amended complaint alleges that we violated federal securities laws by issuing materially false and misleading statements that failed to disclose adverse facts concerning our business, operations, and financial results, and seeks damages, interest, and other relief. On August 25, 2021, the District Court dismissed the lead plaintiff’s second amended complaint, with prejudice. On September 17, 2021, the lead plaintiff filed notice of its intent to appeal the District Court’s opinion and order dismissing the complaint to the Sixth Circuit Court of Appeals. The lead plaintiff filed its opening appellate brief on January 14, 2022, and the defendants’ response is due March 15, 2022. We believe the appeal is without merit and intend to vigorously defend the litigation.

Stockholder Derivative Lawsuit

On July 22, 2020, a stockholder derivative lawsuit, captioned Gile derivatively on behalf of ViewRay, Inc. v. ViewRay Inc., et al., was filed against ViewRay (as a nominal defendant) and certain of its current and former officers and directors in the U.S. District Court for the Northern District of Ohio. This action alleges, purportedly on behalf of ViewRay, that the officers and directors violated Section 14(a) of the Securities Exchange Act of 1934, breached their fiduciary duties, wasted corporate assets, and were unjustly enriched based on factual assertions substantially similar to those in the class action complaint described above. The complaint seeks, among other things, damages awarded to ViewRay, restitution and disgorgement of profits in an unspecified amount, and corporate reforms. Due to the overlap between the allegations in the derivative complaint and those in the putative securities class action complaint, this lawsuit is presently stayed, pending a decision on the appeal by the Sixth Circuit Court of Appeal.

Given the early stage of each of the litigation matters described above, at this time we are unable to reasonably estimate possible losses or form a judgment that an unfavorable outcome is either probable or remote. However, litigation is subject

to inherent uncertainties, and one or more unfavorable outcomes in any claim or litigation against us could have a material adverse effect in the period in which they are resolved and on our business generally. In addition, regardless of their merits or their ultimate outcomes, lawsuits and legal proceedings are costly, divert management attention and may materially adversely affect our reputation, even if resolved in our favor.

Purchase Commitments

At December 31, 2021, the Company had $6.4 million in outstanding firm purchase commitments.