Employee Equity-Based Compensation

3 Months Ended

Mar. 31, 2022

Share-based Payment Arrangement [Abstract]

NOTE 12. EMPLOYEE EQUITY-BASED COMPENSATION

The following table summarizes option activity under the Company's equity-based compensation plans for the three months ended March 31, 2022:


	Number of Shares	Weighted Average Exercise Price per Share
Options Outstanding January 1, 2022	7,192,540	$	13.89
Granted	140,000	3.05
Forfeited	(104,141)	13.17
Exercised	—	—
Expired	(410,028)	12.17
Options Outstanding March 31, 2022	6,818,371	$	13.78

The table below summarizes the resulting weighted average inputs used to calculate the estimated fair value of options awarded for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022			2021
Expected term (in years)	6.30			0
Volatility	66		%	—		%
Expected dividends	—			—
Risk free interest rates	2.05		%	—		%
Weighted average fair value	$	1.88		$	—

No stock options were granted during the three months ended March 31, 2021, resulting in no summarized data for the period.

The following table shows summary information for outstanding options and options that are exercisable (vested) as of March 31, 2022:


	Options Outstanding		Options Exercisable
Number of options	6,818,371		4,916,480
Weighted average remaining contractual term (in years)	5.44		4.46
Weighted average exercise price	$	13.78	$	14.64
Weighted average fair value	$	8.56	$	9.04
Aggregate intrinsic value (in thousands)	$	120	$	120

The following table summarizes RSU and restricted stock award activity for the three months ended March 31, 2022:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
Outstanding January 1, 2022	2,090,182	$	10.77
Granted	1,740,291	2.13
Forfeited	(66,750)	11.51
Vested/released	(153,750)	10.71
Outstanding March 31, 2022	3,609,973	$	6.59

The table below summarizes equity-based compensation expense for the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
	2022		2021
Cost of sales	$	175	$	101
Research and development	362		2,746
Sales, general and administrative	2,442		5,992
	$	2,979	$	8,839

The table below summarizes share-based compensation cost capitalized to inventory or inventory transferred to property and equipment (also referred to as instruments) for the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
	2022		2021
Cost capitalized to inventory	$	43	$	155

As of March 31, 2022, unrecognized equity-based compensation expense related to unvested stock options and unvested RSUs was $4.1 million and $12.3 million, respectively. This is expected to be recognized over the years 2022 through 2026.

Included in the above-noted stock options outstanding and stock compensation expense are performance-based stock options which vest only upon the achievement of certain targets. Performance-based stock options are generally granted at-the-money, contingently vest over a period of 1 to 2 years, depending on the nature of the performance goal, and have contractual lives of 10 years. These options were valued in the same manner as the time-based options, with the assumption that performance goals will be achieved. The inputs for expected volatility, expected dividends, and risk-free rate used in estimating those options’ fair value are the same as the time-based options issued under the Company's 2012 Omnibus Equity Incentive Plan. The expected term for performance-based stock options is 5 to 7 years. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

During 2020, the Company granted 105,000 performance-based stock options. Of these performance-based stock options, performance obligations had been met for 90,000 options which became exercisable in a prior period. Of these performance-based stock options, 90,000 options expired during the three months ended March 31, 2022. No performance-based stock options were outstanding as of March 31, 2022.

The table below summarizes share-based compensation cost in connection with performance-based stock options for the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
	2022		2021
Performance-based stock option expense	$	—	$	165

Included in the above-noted RSU and restricted stock award outstanding amounts are performance-based RSUs which vest only upon the achievement of certain targets. Performance-based RSUs contingently vest over a period of 1 to 3 years, depending on the nature of the performance goal, and have contractual lives of 10 years. These units were valued in the same manner as other RSUs, based on the published closing market price on the day before the grant date. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

During 2020, the Company granted performance-based RSUs of which 165,974 were outstanding as of March 31, 2022. No changes occurred during the three months ended March 31, 2022.

During 2021, the Company granted performance-based RSUs of which 111,806 were outstanding as of March 31, 2022. No changes occurred during the three months ended March 31, 2022.

The table below summarizes share-based compensation cost in connection with performance-based RSUs for the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
	2022		2021
Performance-based RSU expense	$	—	$	547