Equity-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

10. Equity-Based Compensation

Equity Awards

Stock options

Stock options generally vest 25% annually over four years and generally expire 10 years from the date of the grant. The 2021 Equity Incentive Plan provides that stock option grants will be made with an exercise price at no less than the estimated fair value of common stock at the date of the grant.

The following is a summary of the stock option transactions as of and for the three and six months ended June 30, 2022:


	Stock Options Outstanding
(amounts in thousands, except shares and per share amount)	Shares Subject to Options Outstanding			Weighted- Average Exercise Price per Option		Weighted- Average Remaining Contractual Terms (in years)		Aggregate Intrinsic Value
Balances as of December 31, 2021		10,938,521		$	18.02	$	9.17	$	—
Options granted		1,269,156			8.95
Options exercised		—			—
Options forfeited / expired		(282,595	)		18.02
Balances as of March 31, 2022		11,925,082			17.05		9.03		2,896
Options granted		55,557			10.02
Options exercised		—			—
Options forfeited / expired		(1,323,273	)		17.94
Balances as of June 30, 2022		10,657,366			16.91	$	8.79		3,156
Vested and Exercisable as of June 30, 2022		2,474,774			18.01		8.67		—

Aggregate intrinsic value represents the difference between the exercise price of the option and the closing price of our common stock. For the three months ended June 30, 2022 and 2021 and six months ended June 30, 2022 and 2021 no options were exercised. The aggregate fair value of options granted during the three months ended June 30, 2022 and 2021 was $260 and $158, respectively. The aggregate fair value of options granted during the six months ended June 30, 2022 and 2021 was $5,295 and $84,140, respectively.

The weighted-average assumptions used to determine the fair value of stock options granted during the period were as follows:


	Six Months Ended June 30,
	2022
Expected term (in years)(1)		6.25
Expected volatility(2)	39.5% - 44.5%
Risk-free interest rate(3)	1.4% - 3.0%
Dividend yield(4)		0.0	%

(1)

An estimated expected life of 6.25 years before exercise was used based on the midpoint of the vesting date and the full contractual term (known as the simplified method). We do not have sufficient history of exercise for similar awards.

(2)

The expected volatility for new options granted was estimated based on a combination of the historical daily price changes of our common stock and our peer companies’ common stock over the most recent period equal to the expected term of the option, adjusted for debt-equity leverage.

(3)

The risk-free interest rate for period equal to the expected term of the option was based on the rate of treasury securities with the same term as the option as of the grant date.

(4)

An expected dividend yield of 0% was used because we have not historically paid dividends.

Restricted Stock Awards

Our outstanding RSAs that were granted following the IPO generally vest 25% annually over four years. RSAs converted from pre-IPO awards generally vest on the later of the fourth anniversary of the original vesting commencement date or 50% annually on the first and second anniversary of the IPO (see “Pre-IPO Equity” and "Modifications" sections below for details).

The following is a summary of RSA transactions for the three and six months ended June 30, 2022:


	Restricted Shares			Weighted-Average Grant Date Fair Value
Unvested and outstanding as of December 31, 2021		8,613,780		$	10.32
Vested		(2,148,391	)		15.80
Forfeited		(163,064	)		3.69
Unvested and outstanding as of March 31, 2022		6,302,325			8.63
Vested		(129,053	)		0.42
Forfeited		(191,722	)		7.57
Unvested and outstanding as of June 30, 2022		5,981,550		$	8.84

Restricted Stock Units

Restricted stock units ("RSU") generally vest 25% annually over four years.

The following is a summary of RSU transactions for the three and six months ended June 30, 2022:


	Restricted Stock Units			Weighted-Average Grant Date Fair Value
Unvested and outstanding as of December 31, 2021		1,662,282		$	18.54
Granted		3,064,412			9.15
Vested(1)		(406,176	)		18.54
Cancelled/forfeited		(36,288	)		18.01
Unvested and outstanding as of March 31, 2022		4,284,230			11.83
Granted		138,239			10.11
Vested		(48,976	)		18.00
Cancelled/forfeited		(220,801	)		14.93
Unvested and outstanding as of June 30, 2022		4,152,692		$	11.53

(1) Includes 22,668 shares that vested, but the issuance and delivery of the shares was deferred

Equity-Based Compensation Expense

Total equity-based compensation expense was presented on the statement of operations as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(amounts in thousands)	2022		2021		2022		2021
Selling, general and administrative expenses	$	10,381	$	28,430	$	35,307	$	53,651
Medical expenses		1,718		2,457		4,839		9,023
Total equity-based compensation expense	$	12,099	$	30,887	$	40,146	$	62,674

As of June 30, 2022, there was $87,615 in unrecognized compensation expense related to all non-vested awards (RSAs, options and RSUs) that will be recognized over the weighted-average period of 1.79 years.