10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED

June 30, 2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______    TO ______   

Commission file number 0-19711

The Spectranetics Corporation

(Exact name of Registrant as specified in its charter)

Delaware	84-0997049
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9965 Federal Drive

Colorado Springs, Colorado 80921

(719) 633-8333

(Address of principal executive offices and telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

As of July 25, 2016, there were 42,959,354 outstanding shares of Common Stock. 

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited) as of June 30, 2016 and December 31, 2015	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three and six months ended June 30, 2016 and June 30, 2015	2
	Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2016 and June 30, 2015	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	37
ITEM 4.	Controls and Procedures	38
PART II — OTHER INFORMATION
ITEM 1.	Legal Proceedings	38
ITEM 1A.	Risk Factors	38
ITEM 6.	Exhibits	39
	Signatures	40

ii

Part I—FINANCIAL INFORMATION

Item 1.       Financial Statements

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In Thousands, Except Share Amounts)

(Unaudited)

	June 30, 2016			December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	64,343		$	84,594
Trade accounts receivable, less allowance for doubtful accounts and sales returns of $1,511 and $1,906, respectively	43,248			43,359
Inventories, net	25,672			25,155
Prepaid expenses and other current assets	5,924			5,171
Total current assets	139,187			158,279
Property and equipment, net	44,624			44,719
Goodwill	149,482			152,616
Other intangible assets, net	104,051			110,456
Other assets	1,917			1,929
Total assets	$	439,261		$	467,999
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Borrowings under revolving line of credit	$	19,232		$	24,232
Accounts payable	5,261			4,150
Accrued liabilities	34,892			33,676
Deferred revenue	1,645			1,621
Total current liabilities	61,030			63,679
Convertible senior notes, net of debt issuance costs	224,581			224,076
Term loan, net of debt issuance costs	59,628			59,601
Accrued liabilities, net of current portion	1,666			1,759
Deferred income taxes	2,105			1,915
Total liabilities	349,010			351,030
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $.001 par value; authorized 5,000,000 shares; none issued	—			—
Common stock, $.001 par value; authorized 120,000,000 shares; issued and outstanding 42,890,061 and 42,659,234 shares, respectively	43			42
Additional paid-in capital	321,900			313,442
Accumulated other comprehensive loss	(4,890		)	(1,910		)
Accumulated deficit	(226,802		)	(194,605		)
Total stockholders’ equity	90,251			116,969
Total liabilities and stockholders’ equity	$	439,261		$	467,999

The accompanying notes are an integral part of the condensed consolidated financial statements.

1

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Revenue	$	67,748		$	61,677		$	130,632		$	119,099
Cost of products sold	16,983			15,914			33,065			30,967
Gross profit	50,765			45,763			97,567			88,132
Operating expenses:
Selling, general and administrative	40,643			35,562			81,432			72,504
Research, development and other technology	17,657			16,660			33,994			31,921
Medical device excise tax	—			821			—			1,627
Acquisition transaction, integration and legal costs	500			11,106			792			21,497
Intangible asset amortization	3,202			3,612			6,405			6,782
Contingent consideration expense	67			1,060			167			2,084
Change in fair value of contingent consideration liability	—			(17,800		)	—			(17,800		)
Total operating expenses	62,069			51,021			122,790			118,615
Operating loss	(11,304		)	(5,258		)	(25,223		)	(30,483		)
Other expense:
Interest expense	(3,294		)	(1,768		)	(6,636		)	(3,522		)
Foreign currency transaction (loss) gain	(158		)	(70		)	17			(249		)
Total other expense	(3,452		)	(1,838		)	(6,619		)	(3,771		)
Loss before income tax expense	(14,756		)	(7,096		)	(31,842		)	(34,254		)
Income tax expense	150			120			355			267
Net loss	$	(14,906	)	$	(7,216	)	$	(32,197	)	$	(34,521	)
Net loss per share —
Basic and diluted	$	(0.35	)	$	(0.17	)	$	(0.75	)	$	(0.82	)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	(3,231		)	435			(2,980		)	(477		)
Comprehensive loss, net of tax	$	(18,137	)	$	(6,781	)	$	(35,177	)	$	(34,998	)
Weighted average common shares outstanding —
Basic and diluted	42,804,453			42,389,122			42,750,888			42,273,128

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(32,197	)	$	(34,521	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,862			12,959
Stock-based compensation expense	6,609			5,974
Amortization of debt issuance costs	565			490
Provision for excess and obsolete inventories	345			481
Contingent consideration expense	167			2,084
Change in fair value of contingent consideration liability	—			(17,800		)
Deferred income taxes	213			223
Net change in operating assets and liabilities	(3,881		)	(2,433		)
Net cash used in operating activities	(14,317		)	(32,543		)
Cash flows from investing activities:
Capital expenditures	(2,734		)	(5,088		)
Payments for acquisitions	—			(30,000		)
Net cash used in investing activities	(2,734		)	(35,088		)
Cash flows from financing activities:
(Repayments on) Proceeds from line of credit, net	(5,000		)	18,542
Proceeds from the exercise of stock options and employee stock purchase plan	1,850			3,088
Payment of contingent consideration	(88		)	(143		)
Net cash (used in) provided by financing activities	(3,238		)	21,487
Effect of exchange rate changes on cash	38			(106		)
Net decrease in cash and cash equivalents	(20,251		)	(46,250		)
Cash and cash equivalents at beginning of period	84,594			95,505
Cash and cash equivalents at end of period	$	64,343		$	49,255
Supplemental disclosures of cash flow information:
Cash paid for interest	$	6,006		$	3,038
Cash paid for income taxes	$	364		$	288

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 — GENERAL

The accompanying condensed consolidated financial statements include the accounts of The Spectranetics Corporation, a Delaware corporation, and its wholly-owned subsidiaries. These entities are collectively referred to as the “Company.” All intercompany balances and transactions have been eliminated in consolidation.

The Company develops, manufactures, markets, and distributes medical devices used in minimally invasive procedures within the cardiovascular system. The Company’s products are available in over 65 countries and are used to cross, prepare, and treat arterial blockages in the legs and heart and to remove pacemaker and defibrillator cardiac leads. In June 2014, the Company acquired AngioScore, Inc. (“AngioScore”), a leading developer, manufacturer and marketer of cardiovascular, specialty balloon catheters, and in January 2015, the Company acquired Stellarex™ (“Stellarex”) drug-coated balloon (“DCB”) assets from Covidien LP.

The Company prepares its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management must make certain estimates, judgments, and assumptions based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, intangible assets and goodwill, valuation allowances and reserves for receivables, inventories, deferred income tax assets, contingent consideration liabilities for acquisitions, stock-based compensation expense, estimated clinical trial expenses, accrued estimates for incurred but not reported claims under partially self-insured employee health benefit programs, and loss contingencies, including those related to litigation. Actual results could differ from those estimates.

The information included in the accompanying condensed consolidated interim financial statements is unaudited and should be read with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, all adjustments necessary for a fair presentation of the assets, liabilities and results of operations for the interim periods presented have been reflected herein and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is in the process of determining the method of adoption and assessing the impact of ASU 2016-09 on its results of operations, financial position, and consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to recognize on its balance sheet the assets and liabilities for the rights and obligations created by leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is in the process of determining the method of adoption and assessing the impact of ASU 2016-02 on its results of operations, financial position, and consolidated financial statements.

4

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. To achieve this core principle, ASU 2014-09 contains a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU 2016-10 provides for amendments to ASU 2014-09, reducing the complexity when applying the guidance for identifying performance obligations and improving the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 provides for amendments to ASU 2014-09, amending the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy U.S. GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. With the issuance of ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, these amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 and allows for both retrospective and prospective methods of adoption. The Company plans to adopt these standards for the fiscal year beginning after December 15, 2017, and is in the process of determining the method of adoption and assessing the impact of ASU 2014-09 and its related amendments on its results of operations, financial position, and consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe they are of significance, or potential significance, to the Company.

NOTE 2 — COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Inventories

Inventories, net, consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	9,320	$	10,838
Work in process	3,839		2,914
Finished goods	12,513		11,403
	$	25,672	$	25,155

5

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Property and Equipment

Property and equipment, net, consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Equipment held for rental or loan	$	59,320		$	55,774
Manufacturing equipment and computers	39,366			37,862
Leasehold improvements	9,401			8,984
Furniture and fixtures	5,075			4,841
Building and improvements	1,306			1,306
Land	270			270
Less: accumulated depreciation	(70,114		)	(64,318		)
	$	44,624		$	44,719

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Accrued payroll and employee-related expenses	$	18,916		$	15,797
Contingent consideration	5,232			5,154
Accrued clinical study expense	3,342			3,868
Deferred rent	1,466			1,485
Accrued royalties	1,048			1,044
Accrued interest	998			913
Accrued sales, income and excise taxes	909			1,318
Accrued legal costs	890			713
Other accrued expenses	3,757			5,143
Total accrued liabilities	36,558			35,435
Less: long-term portion	(1,666		)	(1,759		)
Accrued liabilities, current portion	$	34,892		$	33,676

Contingent Consideration

The Company recorded contingent liabilities as part of the AngioScore acquisition in June 2014 and the product acquisition from Upstream Peripheral Technologies, Ltd. (“Upstream”) in January 2013. The following table presents changes to the Company’s acquisition-related contingent consideration liability for the six-month period ended June 30, 2016:

	Contingent Consideration Liability
Beginning balance, January 1, 2016	$	5,153
Contingent consideration payments	(88		)
Contingent consideration accretion expense	167
Ending balance, June 30, 2016	$	5,232

6

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 — GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2016 was as follows (in thousands).

	U.S. Medical		International Medical			Total
Balance as of December 31, 2015	$	130,410	$	22,206		$	152,616
Impact of changes in foreign currency and other	—		(3,134		)	(3,134		)
Balance as of June 30, 2016	$	130,410	$	19,072		$	149,482

Goodwill is allocated to the Company’s reporting units based on an analysis of both the relative historical and expected benefits. There have been no events or circumstances since the last analysis as of December 31, 2015 to indicate that the amount of goodwill may not be recoverable.

Acquired intangible assets consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
Acquired as part of Stellarex acquisition: (1)
In-process research and development	$	13,680		$	13,680
Technology	9,000			9,000
Trademark and trade names	400			400
Transition services agreement	530			530
Acquired as part of AngioScore acquisition: (2)
Technology	73,510			73,510
Customer relationships	23,320			23,320
Trademark and trade names	4,380			4,380
In-process research and development	1,254			1,254
Distributor relationships	1,940			1,940
Non-compete agreements	580			580
Acquired as part of Upstream acquisition (3)
Technology	2,172			2,172
Non-compete agreement	200			200
Patents	530			530
Less: accumulated amortization	(27,445		)	(21,040		)
	$	104,051		$	110,456

___________________

(1) In January 2015, the Company acquired Stellarex DCB assets, which included, among other things, the intellectual property, machinery and equipment, and inventories used in connection with the Stellarex DCB catheter.

(2) In June 2014, the Company acquired AngioScore, Inc.

(3) In January 2013, the Company acquired certain product lines from Upstream. As part of the acquisition, the Company acquired core technology intangible assets and an intangible asset related to non-compete agreements.

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THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 — DEBT

The following table summarizes the Company’s total gross outstanding debt as of June 30, 2016 and December 31, 2015 and the maturity dates of the Company’s borrowing arrangements:

	As of
(amounts in thousands)	June 30, 2016		December 31, 2015		Maturity Date	Weighted Average Interest Rate
Convertible Senior Notes	$	230,000	$	230,000	June 1, 2034	2.625%
Term Loan Facility	60,000		60,000		December 7, 2020	(1)
Revolving Loan Facility	19,232		24,232		December 7, 2020	(1)
Total	$	309,232	$	314,232

(1) The interest rates on the Term Loan Facility and Revolving Loan Facility are described below.

Convertible Notes

On June 3, 2014, the Company sold $230 million aggregate principal amount of 2.625% Convertible Senior Notes due 2034 (the “Notes”) under an underwriting agreement dated May 28, 2014. Interest is paid semi-annually in arrears on December 1 and June 1 of each year. The Notes mature on June 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the Notes. The initial conversion rate of the Notes is 31.9020 shares of the Company’s common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $31.35 per share). The conversion rate is subject to adjustment upon the occurrence of certain events specified in the indenture governing the Notes. Holders may surrender their Notes for conversion at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date. On or after June 5, 2018 and prior to June 5, 2021, the Company may redeem any or all of the Notes in cash if the closing price of the Company’s common stock exceeds 130% of the conversion price then in effect for a specified number of days, and on or after June 5, 2021, the Company may redeem the Notes without any such condition.

Holders of the Notes may require the Company to repurchase all or a portion of their Notes on each of June 5, 2021, June 5, 2024 and June 5, 2029, or following a fundamental change (as defined in the indenture governing the Notes), in each case, at a repurchase price in cash equal to 100% of the principal amount of the Notes being repurchased plus accrued and unpaid interest to, but excluding, the date of repurchase.

The Notes are subject to customary events of default, which may result in the acceleration of the maturity of the Notes.

The Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with any of the Company’s unsecured indebtedness that is not so subordinated, are effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries.

The Company received $222.5 million from the issuance of the Notes, net of $7.5 million of debt issuance costs incurred. The debt issuance costs are being amortized over a seven year period using the effective interest method. The Company used all of the net proceeds to fund the acquisition of AngioScore.

Term Loan Facility and Revolving Loan Facility

On December 7, 2015, the Company entered into a term credit and security agreement (the “Term Loan Credit Agreement”) and a revolving credit and security agreement (the “Revolving Loan Credit Agreement,” and together with the Term Loan Credit Agreement, the “Credit Agreements”) with MidCap Financial Trust and the other lenders party thereto. The

8

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Agreements replaced the Credit and Security Agreement (the “Wells Fargo Credit Agreement”) entered into by the Company and Wells Fargo Bank, National Association on February 25, 2011. The Term Loan Credit Agreement provides for a five-year $60 million term loan facility (the “Term Loan Facility”) and the Revolving Loan Credit Agreement provides for a five-year $50 million revolving loan facility (the “Revolving Loan Facility”). The Revolving Loan Facility may be increased to up to $70 million, subject to lender approval. The obligations of the Company under the Credit Agreements are secured by a lien on substantially all of the assets of the Company.

The Term Loan Facility bears interest at the LIBOR Rate (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.50% per annum; provided that the applicable margin will be reduced to 6.50% if the Company’s EBITDA (as defined in the Term Loan Credit Agreement) is equal to or greater than $6 million for a specified prior period and no default or event of default has occurred and is occurring.  The Company may prepay all or a portion of the Term Loan Facility, subject to certain conditions and a prepayment fee, as specified in the Credit Agreements. The Term Loan Facility is subject to an exit fee of 4.0% of the amount advanced under the Term Loan Facility. Interest-only payments are due during the first 24 months of the Term Loan Facility, payable monthly in arrears, with principal payments beginning thereafter in equal monthly installments until maturity, provided that the Company may postpone making principal payments for an additional 12 months if certain conditions are met and the Administrative Agent and lenders agree to such extension. If the Administrative Agent and lenders do not agree to such extension, the prepayment fee and unearned portion of the exit fee will be waived.

The Company may borrow under the Revolving Loan Facility subject to borrowing base limitations, which allow the Company to borrow based on the value of eligible accounts receivable and inventory balances. As of June 30, 2016, the borrowing base was $37.3 million, based on the Company’s accounts receivable and inventory balances. Amounts drawn under the Revolving Loan Facility bear interest at the LIBOR Rate (as defined in the Revolving Loan Credit Agreement) plus 4.45% per annum, payable monthly in arrears, while the undrawn portion is subject to an unused line fee of 0.5% per annum. The Revolving Loan Facility is subject to a minimum balance, such that the Company pays the greater of (i) interest accrued on the actual amount drawn under the Revolving Loan Facility and (ii) interest accrued on 35% of the average borrowing base prior to the first anniversary of the Revolving Loan Facility and 50% of the average borrowing base thereafter. The Company may prepay and re-borrow amounts borrowed under the revolving line of credit without penalty.

The Credit Agreements require the Company to maintain minimum cash and cash equivalents of not less than $10 million and achieve net revenue in excess of certain specified thresholds. These agreements also contain certain restrictive covenants that limit and in some circumstances prohibit, the Company’s ability to, among other things, incur additional debt, sell, lease or transfer our assets, pay dividends on the Company’s common stock, make capital expenditures and investments, guarantee debt or obligations, create liens, repurchase common stock, enter into transactions with affiliates and enter into certain merger, consolidation or other reorganization transactions. The Company was in compliance with its debt covenants as of June 30, 2016.

The Credit Agreements contain customary events of default, including the failure to make required payments, the failure to comply with certain covenants or other agreements, the occurrence of a material adverse change, failure to pay certain other indebtedness and certain events of bankruptcy or insolvency. Upon the occurrence and continuation of an event of default, amounts due under the Credit Agreements may be accelerated. The Company had no events of default as of June 30, 2016.

As of June 30, 2016, the Term Loan Facility and Revolving Loan Facility had outstanding balances of $60.0 million and $19.2 million, respectively. At June 30, 2016, the interest rate on the Term Loan Facility was 8.00%, and the weighted average interest rate on the Revolving Loan Facility was 4.95%.

NOTE 5 — STOCK-BASED COMPENSATION

The Company maintains equity plans that provide for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units, performance stock units (“PSUs”) and stock appreciation rights. The plans provide that stock options may be granted with exercise prices not less than the fair market value at the date of grant. Options granted through June 30, 2016 generally vest over four years and expire ten years from the date of grant. Restricted stock

9

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

awards granted to non-employee members of the Board of Directors vest over one year. Restricted stock units granted to certain employees of the Company vest over four years. Each PSU represents the right to receive one share of the Company’s common stock upon the occurrence of certain specified events.

On March 15, 2016, the Company’s Board of Directors adopted, and stockholders approved at the Company’s annual meeting of stockholders in June 2016, The Spectranetics Corporation 2016 Incentive Award Plan (the “2016 Plan”), which authorizes the issuance for award grants of 2,500,000 shares of the Company’s common stock, plus the number of shares of common stock remaining available for future grants under the Company’s Amended and Restated 2006 Incentive Award Plan (the “2006 Plan”) on the date the Company’s stockholders approved the 2016 Plan. No further awards will be made under the 2006 Plan.

The Compensation Committee of the Board of Directors approved a grant of PSUs to certain of the Company’s officers in June 2014 and a grant of PSUs to the Company’s Chief Financial Officer in September 2015 upon the commencement of her employment (the “2014 PSUs”). The 2014 PSUs vest based on achieving specified performance measurements over a three-year “cliff” performance period plus an additional one year “cliff” time vesting. Earned 2014 PSUs vest 75% upon completion of the three-year performance period and 25%one year after the performance period. The 2014 PSUs have payout opportunities of between 0% and 250%. The performance targets include a compounded annual growth rate for revenue over a three-year period and Adjusted EBITDA for the year ended December 31, 2016.

In June 2016, the Board of Directors approved the grant of PSUs (the “2016 PSUs”) to the Company’s named executive officers and certain other employees pursuant to the 2016 Plan. The 2016 PSUs provide, among other things, that (i) the 2016 PSUs have an initial performance period of up to four years from the date of grant during which the target number of 2016 PSUs awarded to each recipient may be earned if approval of the Company’s Stellarex products is received from the U.S. Food and Drug Administration (“FDA”); (ii) the 2016 PSUs have a supplemental performance period of six calendar quarters following the calendar quarter in which FDA approval of the Company’s Stellarex products is received, and during which up to an additional 100% of the target number of 2016 PSUs may be earned depending on the degree to which the Company’s Stellarex products achieve specified U.S. market share goals; and (iii) no 2016 PSUs will be earned (and no supplemental performance period will occur) if the Company’s Stellarex products do not receive FDA approval during the initial four year performance period.

At June 30, 2016, there were 2.9 million shares available for future issuance under the Company’s incentive award plans, assuming issuance of common stock underlying all outstanding PSUs at target performance, and 1.2 million shares available, assuming issuance of common stock underlying all outstanding PSUs at maximum performance.

Valuation and Expense Information

The Company recognized stock-based compensation expense of $3.2 million and $2.8 million for the three months ended June 30, 2016 and 2015, respectively, and $6.6 million and $6.0 million for the six months ended June 30, 2016 and 2015, respectively. This expense consisted of compensation expense related to (1) employee stock options based on the value of share-based payment awards that are ultimately expected to vest during the period, (2) restricted stock awards issued to certain of the Company’s directors, (3) restricted stock units issued to certain of the Company’s employees, (4) PSUs issued to certain of the Company’s officers and other employees, and (5) the fair value of shares issued under the Company’s employee stock purchase plan. Stock-based compensation expense is recognized based on awards ultimately expected to vest and is reduced for estimated forfeitures. The Company recognizes compensation expense for non-performance related awards on a straight-line basis over the service period.

With respect to the PSUs, the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against the specified targets over the relevant performance period for each PSU grant as determined by the Compensation Committee of the Board of Directors. The Company estimates the fair value of the PSUs based on its closing stock price on the date of grant and its estimates of achieving such performance targets and records compensation expense on a graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the awards. Over the performance period, the number of shares of common stock that will

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THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

ultimately vest and be issued and the related compensation expense is adjusted based upon the Company’s estimate of achieving such performance targets. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement.

The fair value of each share option award is estimated on the date of grant using the Black-Scholes pricing model based on assumptions noted in the following table. The Company’s employee stock options have various restrictions including vesting provisions and restrictions on transfers and hedging, among others, and are often exercised prior to their contractual expiration. Expected volatilities used in the fair value estimate are based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate share option exercises, expected term and employee departure behavior used in the Black-Scholes pricing model. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield in effect at the time of grant.

The following is a summary of the assumptions used for the stock options granted during the three and six months ended June 30, 2016 and 2015, respectively, using the Black-Scholes pricing model:

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Expected life (years)	5.77		5.71		5.77		5.71
Risk-free interest rate	1.01	%	1.63	%	1.21	%	1.61	%
Expected volatility	46.54	%	42.07	%	46.27	%	42.10	%
Expected dividend yield	—		—		—		—

The weighted average grant date fair value of options granted during the three months ended June 30, 2016 and 2015 was $7.51 and $10.97, respectively, and during the six months ended June 30, 2016 and 2015 was $6.57 and $11.19, respectively.

The following table summarizes stock option activity during the six months ended June 30, 2016: 

	Shares		Weighted Average Exercise Price		Weighted Avg. Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2016	2,566,088		$	14.04
Granted	917,612		14.87
Exercised	(113,996	)	8.37
Forfeited	(52,392	)	18.75
Options outstanding at June 30, 2016	3,317,312		$	14.39	6.94	$	18,025,861
Options exercisable at June 30, 2016	1,862,559		$	11.87	5.32	$	14,113,843

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value based on the Company’s closing stock price of $18.71 as of June 30, 2016 that would have been received by the option holders had all option holders exercised their options as of that date. The total number of shares underlying in-the-money options exercisable as of June 30, 2016 was approximately 1.5 million. The total intrinsic value of options exercised was $0.9 million and $7.7 million during the six months ended June 30, 2016 and 2015, respectively.

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THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes restricted stock award activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Restricted stock awards outstanding at January 1, 2016	26,463		$	27.41
Awarded	48,643		18.71
Vested/released	(26,463	)	27.41
Restricted stock awards outstanding at June 30, 2016	48,643		$	18.71

The following table summarizes restricted stock unit activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Restricted stock units outstanding at January 1, 2016	204,893		$	24.08
Awarded	190,776		14.98
Vested/released	(42,922	)	25.14
Forfeited	(11,754	)	22.79
Restricted stock units outstanding at June 30, 2016	340,993		$	18.90

The following table summarizes PSU activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Performance stock units outstanding at January 1, 2016	496,656		$	22.82
Awarded	275,330		18.16
Vested/released	(18,101	)	23.43
Forfeited	(7,943	)	23.43
Performance stock units outstanding at June 30, 2016	745,942		$	21.08

As of June 30, 2016, there was $22.7 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Company’s incentive award plans, using the Company’s current estimate of performance for the PSUs, which could be higher or lower in the future based on the actual achievement of performance targets. This expense is based on an assumed future forfeiture rate of approximately 6.68% per year for stock options and restricted stock units for Company employees and is expected to be recognized over a weighted-average period of approximately 2.7 years.

Employee Stock Purchase Plan

On December 9, 2015, the Company’s Board of Directors adopted, and stockholders approved at the Company’s annual meeting of stockholders in June 2016, an amendment to The Spectranetics Corporation 2010 Employee Stock Purchase Plan (“ESPP”) to increase the number of shares of common stock available for sale under the ESPP by 1,000,000 shares. The amendment is effective as of January 1, 2016, the first day of the 2016 semi-annual offering period under the ESPP.

The ESPP, as amended, provides for the sale of up to 1,700,000 shares of common stock to eligible employees, limited to the lesser of 2,500 shares per employee per six-month period or a fair market value of $25,000 per employee per calendar year. Stock purchased under the ESPP is restricted from sale for one year following the date of purchase. Stock can be purchased from amounts accumulated through payroll deductions during each six-month period. The purchase price is equal to

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THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

85% of the lower of the fair market value of the Company’s common stock at the beginning or end of the respective six-month offering period. This discount does not exceed the maximum discount rate permitted for plans of this type under Section 423 of the Internal Revenue Code of 1986, as amended. The ESPP is compensatory for financial reporting purposes. At June 30, 2016, there were approximately 0.9 million shares available for future issuance under the ESPP.

The fair value of the shares offered within the semi-annual purchase periods under the ESPP is determined on the date of grant using the Black-Scholes option-pricing model. The expected term of six months is based upon the offering period of the ESPP. Expected volatility is determined based on the historical volatility from daily share price observations for the Company’s stock covering a period commensurate with the expected term of the ESPP. The risk-free interest rate is based on the six-month U.S. Treasury daily yield rate. The expected dividend yield is based on the Company’s historical practice of electing not to pay dividends to its stockholders. The Company recognized compensation expense related to the ESPP of $0.3 million and $0.2 million for the three months ended June 30, 2016 and 2015, respectively, and $0.7 million and $0.4 million for the six months ended June 30, 2016 and 2015, respectively.

NOTE 6 — NET LOSS PER SHARE

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding (excluding shares of restricted stock). Shares issued during the period and shares reacquired during the period are weighted for the portion of the period they were outstanding. Diluted net loss per share is computed in a manner consistent with that of basic net loss per share, while giving effect to all potentially dilutive common shares outstanding during the period, which include the assumed exercise of stock options and the assumed vesting of restricted stock using the treasury stock method, and the assumed conversion of shares under the Notes using the “if-converted” method.

Options to purchase common stock, the vesting of restricted stock and PSUs, and shares issuable upon conversion of the Notes are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for the three and six months ended June 30, 2016 and 2015 as a result of the net losses incurred in those periods. Therefore, diluted net loss per share was the same as basic net loss per share for the three and six months ended June 30, 2016 and 2015. Stock options, restricted stock awards, restricted stock units, PSUs, and shares issuable upon the conversion of the Notes outstanding at June 30, 2016 and 2015, which are excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2016 and 2015, are shown in the table below:

	Six Months Ended June 30,
	2016	2015
Options to purchase common stock	3,317,312	2,652,086
Non-vested restricted stock awards and restricted stock units	389,636	270,702
Non-vested PSUs	745,942	487,158
Shares issuable upon conversion of the Notes	7,337,459	7,337,459
Potentially dilutive common shares	11,790,349	10,747,405

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THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A summary of the net loss per share calculation is shown below for the periods indicated (in thousands, except share and per share amounts):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Net loss	$	(14,906	)	$	(7,216	)	$	(32,197	)	$	(34,521	)
Common shares outstanding:
Historical common shares outstanding at beginning of period	42,772,670			42,283,446			42,632,771			42,034,063
Weighted average common shares issued	31,783			105,676			118,117			239,065
Weighted average common shares outstanding — basic and diluted	42,804,453			42,389,122			42,750,888			42,273,128
Net loss per share — basic and diluted	$	(0.35	)	$	(0.17	)	$	(0.75	)	$	(0.82	)

NOTE 7 — SEGMENT REPORTING

The Company operates in one distinct line of business consisting of developing, manufacturing, marketing, and distributing disposable products and a proprietary excimer laser system to treat certain vascular and coronary conditions.

Within this line of business, the Company has two operating segments, which were identified on a geographic basis: (1) U.S. Medical and (2) International Medical. U.S. Medical and International Medical offer substantially the same products and services but operate in different geographic regions, have different distribution networks, and different regulatory environments. The primary performance measure for the operating segments is revenue.

Additional information regarding each operating segment is discussed below.

U. S. Medical

Products offered by this segment include medical devices used in minimally invasive procedures within the cardiovascular system, including fiber-optic devices and non-fiber-optic products (disposables), an excimer laser system (equipment), and the service of the excimer laser system (service). The Company is subject to product approvals from the FDA and Health Canada. The Company’s products are used in multiple vascular procedures, including peripheral atherectomy, crossing arterial blockages, coronary atherectomy and thrombectomy, and the removal of cardiac lead wires from patients with pacemakers and cardiac defibrillators. This segment’s customers are primarily located in the United States and Canada.

U.S. Medical also includes the corporate headquarters of the Company. All manufacturing, research and development, and corporate administrative functions are performed within this operating segment. For the three and six months ended June 30, 2016 and 2015, a portion of research, development and other technology expenses, and general and administrative expenses incurred in the U.S. has been allocated to International Medical based on a percentage of revenue because these expenses support the Company’s ability to generate revenue within the International Medical segment.

Manufacturing activities are performed entirely within the U.S. Medical segment. Revenue associated with intersegment product transfers to International Medical was $3.4 million and $3.6 million for the three months ended June 30, 2016 and 2015, respectively, and $6.8 million and $6.5 million for the six months ended June 30, 2016 and 2015, respectively. Revenue is based upon transfer prices, which provide for intersegment profit eliminated upon consolidation.

14

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

International Medical

The International Medical segment has its headquarters in the Netherlands, and serves Europe, the Middle East, Asia Pacific, Latin America, and Puerto Rico. Products offered by this segment are substantially the same as those offered by U.S. Medical, except that Stellarex DCB products are available for sale in Europe and certain other international markets but are not yet approved for sale in the U.S. The Company is subject to product approvals from various international regulatory bodies. The International Medical segment is engaged primarily in distribution activities, with no manufacturing or product development functions. Certain U.S.-incurred research, development and other technology expenses, and general and administrative expenses have been allocated to International Medical based on a percentage of revenue because these expenses support the Company’s ability to generate revenue within the International Medical segment.

Summary financial information relating to operating segment operations is shown below. Intersegment transfers as well as intercompany assets and liabilities are excluded from the information provided (in thousands):

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Revenue:
U.S. Medical:
Disposable products	$	53,840	$	48,793	$	104,315	$	94,280
Laser, service, and other	2,494		2,800		5,001		5,913
Subtotal	56,334		51,593		109,316		100,193
International Medical:
Disposable products	10,145		9,094		18,678		16,551
Laser, service, and other	1,269		990		2,638		2,355
Subtotal	11,414		10,084		21,316		18,906
Total revenue	$	67,748	$	61,677	$	130,632	$	119,099

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Segment operating loss:
U.S. Medical	$	(9,849	)	$	(5,174	)	$	(22,177	)	$	(30,100	)
International Medical	(1,455		)	(84		)	(3,046		)	(383		)
Total operating loss	$	(11,304	)	$	(5,258	)	$	(25,223	)	$	(30,483	)

	As of
	June 30, 2016		December 31, 2015
Segment assets:
U.S. Medical	$	405,612	$	430,956
International Medical	33,649		37,043
Total assets	$	439,261	$	467,999

For the three and six months ended June 30, 2016 and 2015, no individual customer represented 10% or more of consolidated revenue. No individual countries, other than the United States, represented at least 10% of consolidated revenue for the three and six months ended June 30, 2016 or 2015.

15

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Revenue by Product Line

	Three Months Ended   June 30,				Six Months Ended   June 30,
(in thousands)	2016		2015		2016		2015
Revenue
Disposable products:
Vascular intervention	$	46,218	$	40,630	$	88,130	$	77,143
Lead management	17,767		17,257		34,863		33,688
Total disposable products	63,985		57,887		122,993		110,831
Laser, service, and other	3,763		3,790		7,639		8,268
Total revenue	$	67,748	$	61,677	$	130,632	$	119,099

NOTE 8 — INCOME TAXES

The Company recorded income tax expense of $0.2 million and $0.1 million for the three months ended June 30, 2016 and 2015, respectively, and $0.4 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively, consisting of current foreign and state income tax expense and deferred federal and state income tax expense. The Company’s deferred U.S. federal and state tax expense in 2016 primarily represents an increase in the deferred tax liability related to the difference between tax and book accounting for the portion of its goodwill that is tax-deductible, which is amortized over 15 years for tax purposes but not amortized for book purposes. Given its continuing tax losses, the Company does not expect to incur current U.S. federal tax expense or benefit against its pretax income during the year ending December 31, 2016.

As of June 30, 2016, the Company had gross deferred tax assets of approximately $93.6 million. The Company maintains a valuation allowance against substantially all of its deferred tax assets, in excess of its nettable deferred tax liabilities, that it does not consider to meet the more-likely-than-not criteria for recognition. In assessing the realizability of deferred tax assets (“DTAs”), management considers whether it is more-likely-than-not that some portion or all of the DTAs will not be realized. The Company’s ability to realize the benefit of its DTAs in future periods will depend on the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the Company’s projected future taxable income, reversal of deferred tax liabilities and tax planning strategies in making this assessment. Because the Company expects to generate losses during the Stellarex development period through 2017, it believes that it will not be generating sufficient taxable income to realize DTAs. The Company will continue to assess the need for a valuation allowance in future periods and does not expect to reduce the valuation allowance against its DTAs until it has a sufficient historical trend of taxable income and can predict future income with a higher degree of certainty. In the event there is a change in circumstances in the future that would affect the utilization of the Company’s DTAs, the tax provision in that period would be adjusted by the amount of the assets then deemed to be realizable.

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Litigation

The Company is from time to time subject to, and is presently involved in, various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business. Such matters are subject to many uncertainties and to outcomes the financial impacts of which are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, settlements, and judgments where management has assessed that a loss is probable and an amount can be reasonably estimated. The Company’s significant legal proceedings are discussed below. The costs associated with such proceedings or other legal

16

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

proceedings that may be commenced could have a material adverse effect on the Company’s future consolidated results of operations, financial position, or cash flows.

For certain cases described herein, management is unable to provide a meaningful estimate of the possible loss, if any, or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages may not have been sought; (iii) damages may be determined to be unsupported; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties.  For these cases, however, the Company does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on the Company’s financial condition, though the outcomes could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

TriReme Patent Infringement and Breach of Fiduciary Duty

In July 2012, AngioScore sued TriReme Medical, Inc. (“TriReme”), Eitan Konstantino (“Konstantino”), Quattro Vascular Pte, Ltd. (“Quattro”), and QT Vascular Ltd. (“QT Vascular”), in the U.S. District Court for the Northern District of California (the “Court”), alleging patent infringement (the “Northern District of California Action”). In this action, AngioScore, the plaintiff, sought injunctive relief and damages. In June 2014, AngioScore amended its complaint (i) to allege that TriReme’s Chief Executive Officer, Konstantino, who is a former founder, officer, and member of the board of directors of AngioScore, breached his fiduciary duties to AngioScore by developing the Chocolate balloon catheter while he served as a member of the AngioScore board of directors, and (ii) to add claims against the other defendants for aiding and abetting that breach.

Trial on the breach of fiduciary duty case occurred in April 2015. In July 2015, the Court ruled in favor of AngioScore, finding that Konstantino breached his fiduciary duties to AngioScore, that TriReme and Quattro aided and abetted that breach, and that QT Vascular is liable for the acts of TriReme and Quattro. In its ruling, the Court found that Konstantino breached his fiduciary duties to AngioScore by developing the Chocolate balloon catheter while serving on the AngioScore board of directors and failing to present that corporate opportunity to AngioScore. Konstantino subsequently launched the product through TriReme, Quattro and QT Vascular. The Court awarded AngioScore $20.034 million against all defendants plus disgorgement from Konstantino of all benefits he accrued from his breach of fiduciary duties, including amounts he received for assigning his intellectual property rights to the Chocolate balloon, a royalty on past and future sales of the Chocolate balloon, and all of his shares and options in QT Vascular.

Trial on the patent infringement case was held in September 2015. The jury found against AngioScore in the patent infringement case and found that certain of the asserted claims of the patent are invalid. The patent infringement verdict has no impact on the Court’s findings or award of damages in connection with the breach of fiduciary duty claims or the ability of AngioScore to recover fees and costs advanced to Konstantino, as discussed below. The Court entered judgment in both the breach of fiduciary duty case and the patent infringement case in October 2015. The defendants filed an appeal of the rulings with the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”). Oral argument on the appeal was held on June 7, 2016. On July 21, 2016, the Federal Circuit reversed the breach of fiduciary duty and state law rulings on procedural grounds, finding that the trial Court lacked jurisdiction to hear the state law claims. The Federal Circuit also affirmed the trial Court’s ruling that the defendants are not entitled to attorneys’ fees in the patent infringement case. No part of the potential financial award associated with this matter has been previously reflected in the Company’s financial statements.

TriReme Inventorship

In June 2014, TriReme sued AngioScore in the Court seeking to change the inventorship of certain patents owned by AngioScore. TriReme alleged that an Israeli physician, Chaim Lotan, should be named as a co-inventor on three patents owned by AngioScore. Dr. Lotan allegedly assigned any rights he may have had in the three patents to TriReme. AngioScore moved to dismiss this litigation in January 2015, asserting that Dr. Lotan previously assigned any rights he may have had in the patents to AngioScore in 2003. In March 2015, the Court granted AngioScore’s motion to dismiss this case. TriReme appealed the Court’s ruling, and on February 5, 2016, an appellate court reversed the Court’s ruling dismissing the case and remanded the case for further proceedings.

17

THE SPECTRANETICS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Konstantino Indemnification and Advancement of Fees

In May 2014, AngioScore sued Konstantino in the Superior Court for the County of Alameda, State of California, seeking a declaratory judgment that AngioScore owes no indemnification obligations to Konstantino under the indemnification agreement between AngioScore and Konstantino (the “AngioScore Indemnification Agreement”) resulting from AngioScore’s claim that Konstantino breached his fiduciary duties to AngioScore while serving as a member of the board of directors of AngioScore (the “Alameda Action”). In November 2014, the court stayed the Alameda Action pending the outcome of the Northern District of California Action.  

In May 2014, Konstantino sued AngioScore in the Delaware Court of Chancery (the “Delaware Action”) seeking a ruling that, under the AngioScore Indemnification Agreement, AngioScore must indemnify and advance Konstantino’s attorneys’ fees and costs related to the defense of the breach of fiduciary duty claims in the Northern District of California Action and the Alameda Action and his pursuit of the Delaware Action for advancement of fees. In June 2014, AngioScore filed counter-claims against Konstantino for violating the AngioScore Indemnification Agreement, which requires, in part, that he cooperate in identifying other sources of advancement, and AngioScore filed a third-party complaint against TriReme, Quattro, and QT Vascular seeking contribution from the defendant companies for amounts advanced to Konstantino. Konstantino filed a motion for summary judgment that he is entitled to advancement from AngioScore and, in August 2014, the court granted the motion. In September 2014, AngioScore filed amended counterclaims and an amended third-party complaint that included additional defendant TriReme Singapore. The defendant companies filed a motion to dismiss the amended third-party complaint on the grounds that it failed to state a claim and the court does not have jurisdiction over three of the defendant companies that were incorporated in Singapore. In October 2015, the court denied the defendant companies’ motion to dismiss, and the Company filed a motion for summary judgment against the defendant companies seeking reimbursement and contribution of fees the Company advanced to Konstantino. In November 2015, the court granted in part the Company’s motion and ordered that TriReme is liable for 50% of advanced fees and costs, and must pay all fees and costs to be advanced moving forward until such fees and costs equal the fees and costs paid by AngioScore. Thereafter, the fees and costs will be advanced 50% by TriReme and 50% by AngioScore.

The Company cannot at this time determine the likelihood of any outcome and, as of June 30, 2016, has no amounts accrued for potential damages. During the six months ended June 30, 2016, the Company incurred $0.7 million in legal fees associated with these matters. These expenses are included within the “Acquisition transaction, integration and legal costs” line of the condensed consolidated statements of operations and comprehensive loss.

Shareholder Litigation

On August 27, 2015, a person purporting to represent a class of persons who purchased securities of the Company between February 19, 2015 and July 23, 2015 filed a lawsuit against the Company and certain of its officers in the United States District Court for the District of Colorado. The lawsuit asserts claims under Sections 10(b) and 20 of the Securities Exchange Act of 1934, alleging that certain of the Company’s public statements concerning its projected revenue for 2015 were false and misleading. On December 18, 2015, the court appointed lead plaintiff and lead counsel. On March 1, 2016, plaintiffs filed an amended complaint, including additional allegations challenging certain statements in addition to those concerning the Company’s projected revenue for 2015. The class period in the amended complaint runs from February 27, 2014 to July 23, 2015. The Company believes that the lawsuit is without merit and intends to defend itself vigorously. In June 2016, the Company filed a motion to dismiss the amended complaint, and plaintiffs filed their response in July 2016. The Company cannot at this time determine the likelihood of any outcome or whether the impact will be material and, as of June 30, 2016, has no amounts accrued for potential damages in this case. An adverse outcome could have a material adverse effect on the Company’s business, results of operations or financial condition.

Other

The Company is involved in other legal proceedings in the normal course of business and does not expect them to have a material adverse effect on its business.

18

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created by those sections. Forward-looking statements include statements about our future plans, estimates, beliefs, and anticipated, expected or projected performance. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Such statements may include words such as “anticipate,” “will,” “estimate,” “seek,” “expect,” “project,” “intend,” “should,” “plan,” “believe,” “hope,” “enable,” “potential,” and other words and terms of similar meaning in connection with any discussion of, among other things, future operating or financial performance, acquisitions, strategic initiatives and business strategies, clinical trials and FDA submissions, regulatory or competitive environments, our intellectual property, and product development. You are cautioned not to place undue reliance on these forward-looking statements and to note that they speak only as of the date hereof. Such statements are based on current assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. For a description of such risks and uncertainties, which could cause our actual results, performance, or achievements to materially differ from any anticipated results, performance, or achievements, please see the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2015. Readers are urged to carefully review and consider the various disclosures made in this report and in our other reports filed with the Securities and Exchange Commission (“SEC”) that disclose certain risks and factors that may affect our business. This analysis should be read with our consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2015. We disclaim any intention or obligation to update or revise any financial projections or forward-looking statements due to new information or other events.

Corporate Overview

We develop, manufacture, market and distribute primarily single-use medical devices used in minimally invasive procedures within the cardiovascular system. Our products are used to cross, prepare, and treat arterial blockages in the legs and heart and to remove pacemaker and defibrillator cardiac leads. We believe that the diversified nature of our business allows us to respond to a wide range of physician and patient needs. The innovative products and services we offer are divided into three categories:

• Vascular Intervention (“VI”): Our broad portfolio of VI devices consists of laser and aspiration catheters, AngioSculpt^® scoring balloon catheters, support catheters, and Stellarex™ drug-coated balloon (“DCB”) catheters, which we sell in Europe and currently are not for sale in the U.S.

• Lead Management (“LM”): We are a global leader in devices for the removal of pacemaker and defibrillator cardiac leads. Our primary LM devices consist of our excimer laser sheaths, non-laser mechanical sheaths and cardiac lead management accessories for the removal of pacemaker and defibrillator cardiac leads.

• Laser, service, and other: Our proprietary excimer laser system, the CVX-300^®, is approved in the United States, Europe, Japan and Canada for use in multiple minimally invasive cardiovascular procedures. We sell, rent and service our CVX-300 laser systems.

During the six months ended June 30, 2016, our disposable products generated 94% of our revenue, of which VI products accounted for 72% and LM products accounted for 28%. The remainder of our revenue is derived from sales and rental of our laser system and related services. 

Approximately half of our disposable product revenue is currently derived from products used with our proprietary CVX-300excimer laser system. Our laser catheters contain up to 250 small diameter, flexible optical fibers that can access difficult to reach peripheral and coronary anatomy and produce evenly distributed laser energy at the tip of the catheter.

19

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Recent Developments

In February 2016, we received 510(k) regulatory clearance for our Bridge™ Occlusion Balloon product. Bridge is a balloon designed to dramatically reduce blood loss in the event of a tear in the superior vena cava during a lead extraction procedure. The device is designed to give the physician adequate time to safely transition the patient for surgical repair and to give the surgeon the benefit of a clear field of view to repair the tear. Although a superior vena cava tear is a rare occurrence, we believe that this product is an important innovation in an effort to accomplish our goal of reducing the risk of mortality during lead extraction procedures.

In April 2016, Professor Thomas Zeller presented the first interim analysis of 12-month interim data from the ILLUMENATE Global Study at the Charing Cross Symposium in London, England. Subsequently, in June 2016, Dr. Prakash Krishnan presented the second interim analysis of 12-month data from the ILLUMENATE Global Study at the New Cardiovascular Horizons annual conference in New Orleans, Louisiana. Interim results from 220 patients (247 lesions) of the 371 patients enrolled demonstrated a primary patency rate of 90.3% at day 360 and 86.5% at day 365. Freedom from clinically-driven target lesion revascularization (“TLR”) was 93.9% at both day 360 and day 365. These interim results include a larger number of patients than, and are consistent with, the initial ILLUMENATE Global Study 12-month interim analysis and the ILLUMENATE First-In-Human Study results.

In May 2016, we received a warning letter from the FDA related to observed non-conformities with current Good Manufacturing Practice at our Colorado Springs, Colorado facility.  In January 2016, following an inspection of certain of our manufacturing facilities from November 30, 2015 through January 21, 2016, the FDA issued a Form 483, List of Inspectional Observations, identifying certain observed non-conformities with current GMP (“Good Manufacturing Practice”, as defined by the FDA).  Following the receipt of the Form 483, we provided written responses to the FDA detailing corrective actions underway to address the FDA’s observations. The FDA warning letter acknowledges the actions already taken by us to address the observations. We plan to continue to respond timely and fully to the FDA’s requests and we are working diligently to fully remediate the FDA’s observations regarding the Colorado Springs facility.  We may incur incremental expenses in this regard. We are continuing to manufacture and ship disposable products from the Colorado Springs facility and do not anticipate that customer orders will be impacted while we work to resolve the FDA’s concerns.  Until the violations are corrected, we may be subject to additional regulatory action by the FDA, including recalls, delays, suspension or withdrawal of approvals or clearances, and fines or civil penalties.

20

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Selected Consolidated Statements of Operations Data

The following table presents selected Consolidated Statements of Operations data for the three months ended June 30, 2016 and 2015 based on the percentage of revenue for each line item, and the dollar and percentage change of each of the items. For a detailed discussion of each item, please see the explanations below.

Three Months Ended June 30, 2016 Compared with Three Months Ended June 30, 2015

	Three Months Ended June 30,
(Dollars in thousands)	2016			% of revenue (1)		2015			% of revenue (1)		change			% change
Revenue	$	67,748		100	%	$	61,677		100	%	$	6,071		10	%
Gross profit	50,765			75	%	45,763			74	%	5,002			11	%
Operating expenses
Selling, general and administrative	40,643			60	%	35,562			58	%	5,081			14	%
Research, development and other technology	17,657			26	%	16,660			27	%	997			6	%
Medical device excise tax	—			—	%	821			1	%	(821		)	(100	)%
Acquisition transaction, integration and legal costs	500			1	%	11,106			18	%	(10,606		)	(95	)%
Intangible asset amortization	3,202			5	%	3,612			6	%	(410		)	(11	)%
Contingent consideration expense	67			—	%	1,060			2	%	(993		)	(94	)%
Change in fair value of contingent consideration liability	—			—	%	(17,800		)	(29	)%	17,800			(100	)%
Total operating expenses	62,069			92	%	51,021			83	%	11,048			22	%
Operating loss	(11,304		)	(17	)%	(5,258		)	(9	)%	(6,046		)	115	%
Other expense:
Interest expense	(3,294		)	(5	)%	(1,768		)	(3	)%	(1,526		)	86	%
Foreign currency transaction loss	(158		)	—	%	(70		)	—	%	(88		)	126	%
Loss before income tax expense	(14,756		)	(22	)%	(7,096		)	(12	)%	(7,660		)	108	%
Income tax expense	150			—	%	120			—	%	30			25	%
Net loss	$	(14,906	)	(22	)%	$	(7,216	)	(12	)%	$	(7,690	)	107	%
Worldwide installed base of laser systems	1,442					1,347					95			7	%

___________________________________

(1) Percentage amounts may not add due to rounding.

21

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Revenue and gross margin

In the following discussion, we disclose all growth rates on an “as reported” basis, and we specify the growth rate on a “constant currency” basis only when it differs from the “as reported” growth rate. See the “Non-GAAP Financial Measures” section below for a discussion of our use of the constant currency financial measure. The following is a summary of revenue by product line for the three months ended June 30, 2016 and 2015:

	For the Three Months Ended June 30,
(in thousands, except for percentages)	2016		% of revenue (1)		2015		% of revenue (1)		$ change			% change
Revenue:
Disposable products:
Vascular intervention	$	46,218	68	%	$	40,630	66	%	$	5,588		14	%
Lead management	17,767		26	%	17,257		28	%	510			3	%
Total disposable products	63,985		94	%	57,887		94	%	6,098			11	%
Laser, service, and other	3,763		6	%	3,790		6	%	(27		)	(1)	%
Total revenue	$	67,748	100	%	$	61,677	100	%	$	6,071		10	%

(1) Percentage amounts may not add due to rounding.

Revenue increased $6.1 million, or 10%, from $61.7 million for the quarter ended June 30, 2015 to $67.7 million for the quarter ended June 30, 2016. The increase was primarily due to an increase in VI disposables revenue, described further below.

VI revenue, which includes revenue from products used in the peripheral and coronary vascular systems, increased $5.6 million, or 14% (13% on a constant currency basis), from $40.6 million for the quarter ended June 30, 2015 to $46.2 million for the quarter ended June 30, 2016. The increase in VI revenue was driven primarily by unit volume increases in our peripheral atherectomy and coronary atherectomy products. An increase in AngioSculpt and Stellarex revenue contributed to the increase in our international VI revenue.

LM revenue, which includes revenue from excimer laser sheaths, mechanical sheaths, and cardiac lead management accessories for the removal of pacemaker and defibrillator cardiac leads, increased $0.5 million, or 3%, from $17.3 million for the quarter ended June 30, 2015 to $17.8 million for the quarter ended June 30, 2016. The growth was primarily due to revenue from our recently launched Bridge product.

Laser, service, and other revenue remained relatively flat from the quarter ended June 30, 2015 to the quarter ended June 30, 2016, with a slight increase in laser sales revenue offset by a decrease in laser rental revenue.

We placed 45 laser systems with new customers during the quarter ended June 30, 2016 compared with 49 during the quarter ended June 30, 2015.  Of these laser placements, 24 lasers were newly manufactured during the second quarter of 2016, and 21 lasers were redeployed from a previous institution. The new placements during the quarter ended June 30, 2016 brought our worldwide installed base of laser systems to 1,442 (1,032 in the U.S.) as of June 30, 2016, compared to 1,347 (953 in the U.S.) as of June 30, 2015. 

Geographically, revenue in the U.S. increased $4.7 million, or 9%, from $51.6 million for the quarter ended June 30, 2015 to $56.3 million for the quarter ended June 30, 2016, primarily due to an increase in VI revenue.  International revenue increased $1.3 million, or 13% (11% on a constant currency basis), from $10.1 million for the quarter ended June 30, 2015 to $11.4 million for the quarter ended June 30, 2016. The increase in international revenue was primarily due to an increase in VI revenue, primarily driven by an increase in AngioSculpt revenue and, to a lesser extent, an increase in Stellarex revenue. An increase in laser sales revenue and LM revenue also contributed to the increase in international revenue for the quarter ended June 30, 2016 compared with the quarter ended June 30, 2015.

22

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Gross margin was 75% for the quarter ended June 30, 2016, compared to 74% for the quarter ended June 30, 2015. Increased production efficiencies, a higher sales mix of disposable products and improvement in our average selling price contributed to our improved gross margin during the quarter ended June 30, 2016.These improvements were partially offset by lower margins on laser revenue during the quarter ended June 30, 2016.

Operating expenses

 Total operating expenses increased $11.0 million, or 22%, from $51.0 million for the quarter ended June 30, 2015 to $62.1 million for the quarter ended June 30, 2016. The following table shows the changes in operating expenses for the three months ended June 30, 2016 and 2015:

	For the Three Months Ended June 30,
(in thousands, except for percentages)	2016		% of revenue (1)		2015			% of revenue (1)		$ change			% change
Operating Expenses:
Selling, general and administrative	$	40,643	60	%	$	35,562		58	%	$	5,081		14	%
Research, development and other technology	17,657		26	%	16,660			27	%	997			6	%
Medical device excise tax	—		—	%	821			1	%	(821		)	(100)	%
Acquisition transaction, integration and legal costs	500		1	%	11,106			18	%	(10,606		)	(95)	%
Intangible asset amortization	3,202		5	%	3,612			6	%	(410		)	(11)	%
Contingent consideration expense	67		—	%	1,060			2	%	(993		)	(94)	%
Change in fair value of contingent consideration liability	—		—	%	(17,800		)	(29	)%	17,800			(100)	%
Total operating expenses	$	62,069	92	%	$	51,021		83	%	$	11,048		22	%

(1)Percentage amounts may not add due to rounding.

Selling, general and administrative.  Selling, general and administrative (“SG&A”) expenses increased $5.1 million, or 14%, from $35.6 million for the quarter ended June 30, 2015 to $40.6 million for the quarter ended June 30, 2016, primarily due to an increase in personnel expenses, as a result of the following:

•higher commissions expense on higher revenue;

•the expansion of our sales and marketing teams to support the launch of Stellarex DCB products;

•an increase in expense related to the Company’s performance bonus plan; and

•an increase in stock-based compensation expense due to performance and our organizational growth.

Research, development and other technology. Research, development and other technology expenses increased $1.0 million, or 6%, from $16.7 million for the quarter ended June 30, 2015 to $17.7 million for the quarter ended June 30, 2016. Costs included within research, development and other technology expenses are product development costs, clinical studies costs and royalty costs associated with various license agreements with third-party licensors. The increase in research, development and other technology expenses was primarily due to an increase in costs associated with the Stellarex DCB research, development and clinical studies, and, to a lesser extent, increases in regulatory and royalty expenses for the quarter ended June 30, 2016.

Medical device excise tax. The Patient Protection and Affordable Care Act of 2010 imposed a medical device excise tax on medical device manufacturers on their sales in the U.S. of certain devices, which was effective January 1, 2013. Legislation enacted in December 2015 suspended the medical device excise tax for 2016 and 2017, resulting in no expense incurred for the quarter ended June 30, 2016, compared to $0.8 million for the quarter ended June 30, 2015.

23

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Acquisition transaction, integration and legal costs. We incurred $0.5 million of costs related to the AngioScore and Stellarex acquisitions for the quarter ended June 30, 2016, which was primarily related to legal fees associated with a breach of fiduciary duty and patent infringement matter in which AngioScore is the plaintiff, further described in Note 9, “Commitments and Contingencies,” of the condensed consolidated financial statements included in Part I, Item 1 of this report.

In the quarter ended June 30, 2015, we incurred $11.1 million of costs related to acquisitions. Of this amount, $8.5 million was comprised of legal fees associated with a patent infringement and breach of fiduciary duty matter. We also incurred $0.7 million of severance, retention and consulting costs for the integration of AngioScore. Stellarex acquisition costs of $2.0 million primarily consisted of non-recurring costs associated with establishing manufacturing operations to support the Stellarex program.

Intangible asset amortization. As part of our recent acquisitions, we acquired certain intangible assets, which are being amortized over periods from two to 12 years. We recorded $3.2 million of amortization expense related to these intangible assets for the quarter ended June 30, 2016 and $3.6 million for the quarter ended June 30, 2015. See Note 3, “Goodwill and Intangible Assets,” of the condensed consolidated financial statements for further discussion.

Contingent consideration expense. For the quarters ended June 30, 2016 and June 30, 2015, we recorded $0.1 million and $1.1 million of contingent consideration expense, respectively, related to our contingent consideration liabilities from the AngioScore and Upstream acquisitions, due to the passage of time (i.e., accretion). The year-over-year decrease was primarily due to the remeasurement of our contingent consideration liability during 2015, which eliminated the liability for future revenue-related contingent payments.

Change in fair value of contingent consideration liability. During the three months ended June 30, 2015, we remeasured the contingent consideration liability related to the AngioScore acquisition to its fair value and reduced it by approximately $17.8 million. This reduction was the result of a decrease in our future revenue estimates for the AngioSculpt products.

Other expense

Total other expense increased $1.6 million, or 88%, from $1.8 million for the quarter ended June 30, 2015 to $3.5 million for the quarter ended June 30, 2016. The following table shows the changes in other expense for the three months ended June 30, 2016 and 2015:

	For the Three Months Ended June 30,
(in thousands, except for percentages)	2016			% of revenue (1)		2015			% of revenue (1)		$ change			% change
Other expense:
Interest expense, net	$	(3,294	)	(5	)%	$	(1,768	)	(3	)%	$	(1,526	)	86	%
Foreign currency transaction loss	(158		)	—	%	(70		)	—	%	(88		)	126	%
Total other expense	$	(3,452	)	(5	)%	$	(1,838	)	(3	)%	$	(1,614	)	88	%

(1) Percentage amounts may not add due to rounding.

The increase in other expense was primarily due to an increase in interest expense of $1.5 million for the quarter ended June 30, 2016, compared with the quarter ended June 30, 2015, which was primarily related to the Term Loan Facility and Revolving Loan Facility entered into by the Company in December 2015. In addition, other expense was impacted by a $0.1 million increase in the foreign currency transaction loss for the quarter ended June 30, 2016, compared with the quarter ended June 30, 2015. The foreign currency impact largely resulted from the settlement of dollar-based intercompany transactions with our Dutch subsidiary, whose functional currency is the euro, and a weakening of the euro during the quarter ended June 30, 2016.

24

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Income tax expense

We recorded income tax expense of $0.2 million and $0.1 million for the quarters ended June 30, 2016 and 2015, respectively, consisting of current foreign and state income tax expense and deferred federal and state income tax expense.

Our ability to realize the benefit of our deferred tax assets in future periods will depend on the generation of future taxable income and tax planning strategies. Due to our history of losses and our planned near-term investments in our growth, we have recorded a valuation allowance against substantially all of our deferred tax assets that are in excess of our deferred tax liabilities. We do not expect to reduce the valuation allowance against our deferred tax assets until we have a sufficient historical trend of taxable income and can predict future taxable income with a higher degree of certainty.

Net loss

Net loss increased $7.7 million, from $7.2 million for the quarter ended June 30, 2015 to $14.9 million for the quarter ended June 30, 2016. Net loss in the quarter ended June 30, 2015 was lower than the net loss in the quarter ended June 30, 2016 primarily due to the change in fair value of contingent consideration, described above.

25

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Selected Consolidated Statements of Operations Data

The following table presents selected Consolidated Statements of Operations data for the six months ended June 30, 2016 and 2015 based on the percentage of revenue for each line item, and the dollar and percentage change of each of the items. For a detailed discussion of each item, please see the explanations below.

Six Months EndedJune 30, 2016 Compared with Six Months EndedJune 30, 2015

	Six Months Ended June 30,
(Dollars in thousands)	2016			% of revenue (1)		2015			% of revenue (1)		change			% change
Revenue	$	130,632		100	%	$	119,099		100	%	$	11,533		10	%
Gross profit (2)	97,567			75	%	88,132			74	%	9,435			11	%
Operating expenses
Selling, general and administrative	81,432			62	%	72,504			61	%	8,928			12	%
Research, development and other technology	33,994			26	%	31,921			27	%	2,073			6	%
Medical device excise tax	—			—	%	1,627			1	%	(1,627		)	(100	)%
Acquisition transaction, integration and legal costs	792			1	%	21,497			18	%	(20,705		)	(96	)%
Intangible asset amortization	6,405			5	%	6,782			6	%	(377		)	(6	)%
Contingent consideration expense	167			—	%	2,084			2	%	(1,917		)	(92	)%
Change in fair value of contingent consideration liability	—			—	%	(17,800		)	(15	)%	17,800			(100	)%
Total operating expenses	122,790			94	%	118,615			100	%	4,175			4	%
Operating loss	(25,223		)	(19	)%	(30,483		)	(26	)%	5,260			(17	)%
Other expense:
Interest expense	(6,636		)	(5	)%	(3,522		)	(3	)%	(3,114		)	88	%
Foreign currency transaction gain (loss)	17			—	%	(249		)	—	%	266			(107	)%
Loss before income taxes	(31,842		)	(24	)%	(34,254		)	(29	)%	2,412			(7	)%
Income tax expense	355			—	%	267			—	%	88			33	%
Net loss	$	(32,197	)	(25	)%	$	(34,521	)	(29	)%	$	2,324		(7	)%
Worldwide installed base of laser systems	1,442					1,347					95			7	%

___________________________________

(1) Percentage amounts may not add due to rounding.

(2) Includes the impact of $0.3 million of amortization of acquired inventory step-up in 2015.

26

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Revenue and gross margin

The following is a summary of revenue by product line for the six months ended June 30, 2016 and 2015:

	For the Six Months Ended June 30,
(in thousands, except for percentages)	2016		% of revenue (1)		2015		% of revenue (1)		$ change			% change
Revenue:
Disposable products:
Vascular intervention	$	88,130	67	%	$	77,143	65	%	$	10,987		14	%
Lead management	34,863		27	%	33,688		28	%	1,175			3	%
Total disposable products	122,993		94	%	110,831		93	%	12,162			11	%
Laser, service, and other	7,639		6	%	8,268		7	%	(629		)	(8)	%
Total revenue	$	130,632	100	%	$	119,099	100	%	$	11,533		10	%

(1)Percentage amounts may not add due to rounding.

Revenue increased $11.5 million, or 10%, from $119.1 million for the six months ended June 30, 2015 to $130.6 million for the six months ended June 30, 2016. The increase was primarily due to an increase in VI disposables revenue, described further below.

VI revenue increased $11.0 million, or 14%, from $77.1 million for the six months ended June 30, 2015 to $88.1 million for the six months ended June 30, 2016. The increase in VI revenue was driven primarily by unit volume increases in our peripheral atherectomy and coronary atherectomy products. An increase in AngioSculpt and Stellarex revenue contributed to the increase in our international VI revenue.

LM revenue increased $1.2 million, or 3% (4% on a constant currency basis) from $33.7 million for the six months ended June 30, 2015 to $34.9 million for the six months ended June 30, 2016. The growth was primarily due to revenue from auxiliary products and mechanical tools, including our newly-introduced Bridge product, offset by a slight decrease in laser sheath revenue due to a decrease in unit volumes.

Laser, service, and other revenue decreased $0.6 million, or 8% (7% on a constant currency basis), from $8.3 million for the six months ended June 30, 2015 to $7.6 million for the six months ended June 30, 2016, primarily due to a decrease in laser rental revenue, partially offset by an increase in laser sales.

We placed 89 laser systems with new customers during the six months ended June 30, 2016 compared with 103 during the six months ended June 30, 2015.  Of these laser placements, 50 lasers were newly manufactured during 2016, and 39 lasers were redeployed from a previous institution. The new placements during the six months ended June 30, 2016 brought our worldwide installed base of laser systems to 1,442 (1,032 in the U.S.) as of June 30, 2016, compared to 1,347 (953 in the U.S.) as of June 30, 2015. 

Geographically, revenue in the U.S. increased $9.1 million, or 9%, from $100.2 million for the six months ended June 30, 2015 to $109.3 million for the six months ended June 30, 2016, primarily due to an increase in VI revenue, and, to a lesser extent, an increase in LM revenue, partially offset by a small decline in laser, service, and other revenue.  International revenue increased $2.4 million, or 13%, from $18.9 million for the six months ended June 30, 2015 to $21.3 million for the six months ended June 30, 2016. The increase in international revenue was primarily due to an increase in VI revenue, primarily driven by an increase in AngioSculpt revenue and, to a lesser extent, an increase in Stellarex revenue. An increase in LM revenue also contributed to the increase in international revenue for the six months ended June 30, 2016 compared with the six months ended June 30, 2015.

Gross margin was 75% for the six months ended June 30, 2016, compared with 74% for the six months ended June 30, 2015, which was negatively impacted by $0.3 million of amortization of acquired inventory step-up in the first quarter of 2015.

27

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Increased production efficiencies, a higher sales mix of disposable products and improvement in our average selling price contributed to our improved gross margin during the six months ended June 30, 2016. These improvements were partially offset by lower margins on laser revenue during the six months ended June 30, 2016.

Operating expenses

Total operating expenses increased $4.2 million, or 4%, from $118.6 million for the six months ended June 30, 2015 to $122.8 million for the six months ended June 30, 2016. The following table shows the changes in operating expenses for the six months ended June 30, 2016 and 2015:

	For the Six Months Ended June 30,
(in thousands, except for percentages)	2016		% of revenue (1)		2015			% of revenue (1)		$ change			% change
Operating Expenses:
Selling, general and administrative	$	81,432	62	%	$	72,504		61	%	$	8,928		12	%
Research, development and other technology	33,994		26	%	31,921			27	%	2,073			6	%
Medical device excise tax	—		—	%	1,627			1	%	(1,627		)	(100)	%
Acquisition transaction, integration and legal costs	792		1	%	21,497			18	%	(20,705		)	(96)	%
Intangible asset amortization	6,405		5	%	6,782			6	%	(377		)	(6)	%
Contingent consideration expense	167		—	%	2,084			2	%	(1,917		)	(92)	%
Change in fair value of contingent consideration liability	—		—	%	(17,800		)	(15	)%	17,800			(100)	%
Total operating expenses	$	122,790	94	%	$	118,615		100	%	$	4,175		4	%

(1)Percentage amounts may not add due to rounding.

Selling, general and administrative.  SG&A expenses increased $8.9 million, or 12%, from $72.5 million for the six months ended June 30, 2015 to $81.4 million for the six months ended June 30, 2016, primarily due to an increase in personnel expenses, as a result of the following:

•higher commissions expense on higher revenue;

•the expansion of our sales and marketing teams to support the launch of Stellarex DCB products;

•an increase in expense related to the Company’s performance bonus plan; and

•an increase in stock-based compensation expense due to performance and our organizational growth.

Research, development and other technology. Research, development and other technology expenses increased $2.1 million, or 6%, from $31.9 million for the six months ended June 30, 2015 to $34.0 million for the six months ended June 30, 2016. The increase in research, development and other technology expenses was primarily due to an increase in costs associated with the Stellarex DCB research, development and clinical studies, and, to a lesser extent, increases in regulatory and royalty expenses for the six months ended June 30, 2016. These increases were partially offset by decreases in other research, development and clinical trial projects, including the EXCITE trial that concluded its 12-month follow-up period during the first quarter of 2015.

Medical device excise tax. The Patient Protection and Affordable Care Act of 2010 imposed a medical device excise tax on medical device manufacturers on their sales in the U.S. of certain devices, which was effective January 1, 2013. Legislation enacted in December 2015 suspended the medical device excise tax for 2016 and 2017, resulting in no expense incurred for the six months ended June 30, 2016, compared to $1.6 million for the six months ended June 30, 2015.

Acquisition transaction, integration and legal costs. We incurred $0.8 million of costs related to the AngioScore and Stellarex acquisitions for the six months ended June 30, 2016, which was primarily related to legal fees associated with a

28

Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

breach of fiduciary duty and patent infringement matter in which AngioScore is the plaintiff, further described in Note 9, “Commitments and Contingencies,” of the condensed consolidated financial statements included in Part I, Item 1 of this report.

In the six months ended June 30, 2015, we incurred $21.5 million of costs related to acquisitions. Of this amount, $16.4 million was comprised of legal fees associated with the patent infringement and breach of fiduciary duty matter. We also incurred $1.2 million of severance, retention and consulting costs for the integration of AngioScore. Stellarex acquisition costs of $3.9 million primarily included legal and investment banking fees related to the closing of the acquisition and non-recurring costs associated with establishing manufacturing operations to support the Stellarex program.

Intangible asset amortization. As part of our recent acquisitions, we acquired certain intangible assets, which are being amortized over periods from two to 12 years. We recorded $6.4 million and $6.8 million of amortization expense related to these intangible assets for the six months ended June 30, 2016 and 2015, respectively. See Note 3, “Goodwill and Intangible Assets,” of the condensed consolidated financial statements for further discussion.

Contingent consideration expense. For the six months ended June 30, 2016 and June 30, 2015, we recorded $0.2 million and $2.1 million of contingent consideration expense, respectively, related to our contingent consideration liabilities from the AngioScore and Upstream acquisitions, due to the passage of time (i.e., accretion). The period-over-period decrease was primarily due to the remeasurement of our contingent consideration liability during 2015, which eliminated the liability for future revenue-related contingent payments.

Change in fair value of contingent consideration liability. As of June 30, 2015, we remeasured the contingent consideration liability related to the AngioScore acquisition to its fair value and reduced it by approximately $17.8 million. This reduction was the result of a decrease in our revenue estimates for the AngioSculpt products.

Other expense

Total other expense increased $2.8 million, or 76%, from $3.8 million for the six months ended June 30, 2015 to $6.6 million for the six months ended June 30, 2016. The following table shows the changes in other expense for the six months ended June 30, 2016 and 2015:

	For the Six Months Ended June 30,
(in thousands, except for percentages)	2016			% of revenue (1)		2015			% of revenue (1)		$ change			% change
Other expense:
Interest expense, net	$	(6,636	)	(5	)%	$	(3,522	)	(3	)%	$	(3,114	)	88	%
Foreign currency transaction gain (loss)	17			—	%	(249		)	—	%	266			(107)	%
Total other expense	$	(6,619	)	(5	)%	$	(3,771	)	(3	)%	$	(2,848	)	76	%

(1)Percentage amounts may not add due to rounding.

The increase in other expense was primarily due to an increase in interest expense of $3.1 million for the six months ended June 30, 2016, compared with the six months ended June 30, 2015, which was primarily related to the Term Loan Facility and Revolving Loan Facility entered into by the Company in December 2015. In addition, other expense was impacted by a $0.3 million fluctuation in foreign currency transaction impact from a loss to a gain for the six months ended June 30, 2016, compared with the six months ended June 30, 2015. The foreign currency impact largely resulted from the settlement of dollar-based intercompany transactions with our Dutch subsidiary, whose functional currency is the euro, and a strengthening of the euro during the six months ended June 30, 2016.

Income tax expense

We recorded income tax expense of $0.4 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively, consisting of current foreign and state income tax expense and deferred federal and state income tax expense.

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Our ability to realize the benefit of our deferred tax assets in future periods will depend on the generation of future taxable income and tax planning strategies. Due to our history of losses and our planned near-term investments in our growth, we have recorded a valuation allowance against substantially all of our deferred tax assets that are in excess of our deferred tax liabilities. We do not expect to reduce the valuation allowance against our deferred tax assets until we have a sufficient historical trend of taxable income and can predict future taxable income with a higher degree of certainty.

Net loss

Net loss decreased $2.3 million, from $34.5 million for the six months ended June 30, 2015 to $32.2 million for the six months ended June 30, 2016. The decrease in net loss was primarily due to an increase in gross profit as a result of increased sales, and a decrease in acquisition-related costs, described above.

Liquidity and Capital Resources

As of June 30, 2016, we had cash and cash equivalents of $64.3 million, a decrease of $20.3 million from $84.6 million at December 31, 2015.

Our future liquidity requirements will be influenced by numerous factors. We believe that our cash and cash equivalents, anticipated funds from operations, and other sources of liquidity, which may include additional borrowings under our Revolving Loan Facility described below under “Credit Facilities” or other credit or financing arrangements, will be sufficient to meet our liquidity requirements for at least the next 12 months based on our expected level of operations.

We may need or seek additional funding in the future. In addition to access to available borrowings under our Revolving Loan Facility, we have an effective shelf registration statement on file with the SEC under which we may issue, from time to time, up to $200 million of senior debt securities, subordinated debt securities, common stock, preferred stock and other securities. Our ability to issue debt securities is limited by certain covenants in the Credit Agreements described below under “Credit Facilities.” A financing transaction may not be available on terms acceptable to us, or at all, and a financing transaction may be dilutive to our current stockholders.

We have generated and used cash as follows:

	For the Six Months Ended June 30,
(in thousands)	2016			2015
Net cash used in operating activities	$	(14,317	)	$	(32,543	)
Net cash used in investing activities	(2,734		)	(35,088		)
Net cash (used in) provided by financing activities	(3,238		)	21,487

Operating Activities. For the six months ended June 30, 2016, cash used in operating activities was $14.3 million. This compared with cash used in operating activities of $32.5 million for the six months ended June 30, 2015. The primary sources and uses of cash during the six months ended June 30, 2016 were:

• During the first six months of 2016, our net loss of $32.2 million included approximately $21.8 million of net non-cash expenses, which consisted primarily of $13.9 million of depreciation and amortization and $6.6 million of stock-based compensation.

• During the first six months of 2016, cash used as a result of the net change in operating assets and liabilities of approximately $3.9 million was primarily due to an increase in equipment held for rental or loan of approximately $4.6 million as a result of placement activity of our laser systems through our rental and evaluation programs, an increase in prepaid expenses and other current assets of approximately $0.8 million, primarily due to prepayments for trade shows, conventions, and other marketing programs, and an increase in inventories of approximately $0.8 million,

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

primarily due to increased sales demand and higher disposables production. These uses of cash were partially offset by an increase in accounts payable and accrued liabilities of approximately $2.2 million, primarily due to the timing of compensation-related accruals.

The primary sources and uses of cash during the first six months of 2015 were:

• During the first six months of 2015, our net loss of $34.5 million included approximately $4.4 million of non-cash expenses, which consisted primarily of $13.0 million of depreciation and amortization, $6.0 million of stock-based compensation, and $2.1 million of contingent consideration expense, offset by a $17.8 million change in fair value of the contingent consideration liability.

• During the first six months of 2015, cash used as a result of the net change in operating assets and liabilities of approximately $2.4 million was primarily due to an increase in equipment held for rental or loan of $7.6 million as a result of placement activity of our laser systems through our rental and evaluation program, an increase in inventory of approximately $1.4 million, primarily due to increased sales demand and higher disposables and laser production and an increase in other assets of approximately $1.0 million. These uses of cash during the first six months of 2015 were partially offset by an increase in accounts payable and accrued liabilities of $5.4 million, primarily due to higher volumes of accounts payable and an increase in accrued commissions, a decrease in prepaid expenses and other current assets of $1.4 million, primarily due to the collection of escrow payments related to legal fees advanced and a decrease in accounts receivable of approximately $0.8 million, primarily due to a slight decrease in days sales outstanding.

Investing Activities. For the six months ended June 30, 2016, cash used in investing activities was $2.7 million, consisting entirely of capital expenditures. This compared with cash used in investing activities of $35.1 million in the six months ended June 30, 2015, consisting of $30.0 million of payments for the acquisition of Stellarex and $5.1 million of capital expenditures. The capital expenditures for the six months ended June 30, 2016 and 2015 included manufacturing equipment upgrades and replacements, additional capital items for research and development projects, and additional computer equipment and software purchases, including capital items required for the Stellarex product line.

Financing Activities. Cash used in financing activities for the six months ended June 30, 2016 was $3.2 million, consisting primarily of repayments on the line of credit, net, of $5.0 million, partially offset by the exercise of stock options and sale of common stock under our employee stock purchase plan of $1.9 million. In the six months ended June 30, 2015, cash provided by financing activities was $21.5 million, consisting primarily of borrowings on the line of credit, net, of $18.5 million and the exercise of stock options and sale of common stock under our employee stock purchase plan of $3.1 million. In the six months ended June 30, 2016 and 2015, we paid $0.1 million in contingent consideration payments related to the Upstream product acquisition.

The table below presents the change in receivables and inventory, in relative terms, through the presentation of financial ratios. Days sales outstanding are calculated by dividing the ending accounts receivable balance, net of allowances for sales returns and doubtful accounts, by the average daily sales for the quarter. The decrease in days sales outstanding for the six months ended June 30, 2016 was primarily due to increased collections from slower-paying customers. Inventory turns are calculated by dividing annualized cost of sales for the quarter by ending inventory.

	June 30, 2016	December 31, 2015
Days Sales Outstanding	57	60
Inventory Turns	2.5	2.4

At June 30, 2016, we had no significant capital lease obligations.

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Future Investments and Contingent Consideration Related to Acquisitions

On January 27, 2015, we completed the acquisition of Stellarex DCB assets and made a cash payment of $30 million. In addition, as planned, the Stellarex acquisition requires substantial additional investments prior to full commercialization, primarily within research, development and clinical trials.

In connection with the AngioScore acquisition, we agreed to pay additional contingent merger consideration related to revenue and regulatory milestones. No contingent revenue-based payment was incurred in 2015, and we do not expect to make any contingent revenue-based payments in the future. We expect to make a $5 million payment in the second half of 2016 for the coronary drug-coated AngioSculpt CE mark approval milestone. As of June 30, 2016, the contingent consideration liability related to the AngioScore acquisition was approximately $5.0 million.

Credit Facilities

On December 7, 2015, the Company and AngioScore Inc., as borrowers (jointly, the “Borrowers”) entered into a term credit and security agreement (the “Term Loan Credit Agreement”) and a revolving credit and security agreement (the “Revolving Loan Credit Agreement”, and together with the Term Loan Credit Agreement, the “Credit Agreements”) with MidCap Financial Trust and the other lenders party thereto.  The Credit Agreements replaced the Credit and Security Agreement (the “Wells Fargo Credit Agreement”) entered into by the Company and Wells Fargo Bank, National Association on February 25, 2011. The Term Loan Credit Agreement provides for a five-year $60 million term loan facility (the “Term Loan Facility”) and the Revolving Loan Credit Agreement provides for a five-year $50 million revolving loan facility (the “Revolving Loan Facility”). The Revolving Loan Facility may be increased to up to $70 million, subject to lender approval. The obligations of the Borrowers under the Credit Agreements are secured by a lien on substantially all of the assets of the Borrowers. For more information, see Note 4, “Debt,” of the condensed consolidated financial statements included in Part I, Item 1 of this report.

As of June 30, 2016, the Term Loan Facility and Revolving Loan Facility had outstanding balances of $60.0 million and $19.2 million, respectively. The borrowing base on the Revolving Loan Facility was $37.3 million as of June 30, 2016, based on the Company’s accounts receivable and inventory balances. We may prepay and re-borrow amounts borrowed under the Revolving Loan Facility without penalty. At June 30, 2016, the interest rate on the Term Loan Facility was 8.00%, and the weighted average interest rate on the Revolving Loan Facility was 4.95%.

Convertible Senior Notes

In June 2014, we sold $230 million aggregate principal amount of Convertible Senior Notes due 2034 (the “Notes”). Net proceeds from the sale of the Notes were used for the AngioScore acquisition. The Notes bear interest at a rate of 2.625% per annum. We pay interest on the Notes on June 1 and December 1 of each year. The Notes will mature on June 1, 2034 (“maturity date”), unless earlier repurchased, redeemed or converted.

Holders may convert their Notes into shares of our common stock at their option at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date.

The initial conversion rate is 31.9020 shares of our common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of approximately $31.35 per share of our common stock). The conversion price is subject to adjustment in some events, but will not be adjusted for accrued interest. In addition, if a fundamental change occurs or we deliver a redemption notice, in certain circumstances we will increase the conversion rate for a holder that elects to convert its Note in connection with such fundamental change or redemption notice, as the case may be.

Holders may require us to repurchase some or all of their Notes for cash on each of June 5, 2021, June 5, 2024 and June 5, 2029 and upon a fundamental change (as defined in the indenture governing the Notes) at a repurchase price equal to 100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest, if any, to, but excluding, the relevant repurchase date.

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

We may not redeem the Notes prior to June 5, 2018. On or after June 5, 2018 and prior to June 5, 2021, we may redeem for cash all or part of the Notes if the closing sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the trading day immediately prior to the date we provide the notice of redemption exceeds 130% of the applicable conversion price for the Notes. On or after June 5, 2021, we may redeem any or all of the Notes in cash. The redemption price for the Notes to be redeemed as described in the two immediately preceding sentences equals 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

The Notes are our senior unsecured obligations and rank equal in right of payment with any of our other senior unsecured indebtedness and senior in right of payment to any indebtedness that is contractually subordinated to the Notes. The Notes are effectively subordinated to all of our future secured indebtedness to the extent of the value of the collateral securing such indebtedness and structurally subordinated to the claims of our subsidiaries’ creditors, including trade creditors.

Off-Balance Sheet Arrangements

We maintain no off-balance sheet arrangements that have, or that are reasonably likely to have, a material current or future effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. We maintain operating leases for our offices in Colorado Springs, Colorado; Broomfield, Colorado; Fremont, California; Maple Grove, Minnesota; the Netherlands, Germany and France.

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements prepared in accordance with GAAP, we use certain non-GAAP financial measures in this report. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures for the respective periods can be found in the tables below. An explanation of the manner in which our management uses these non-GAAP measures to conduct and evaluate our business and the reasons management believes these non-GAAP measures provide useful information to investors are provided following the reconciliation tables.

Reconciliation of revenue by geography to non-GAAP revenue by geography on a constant currency basis (in thousands, except percentages) (unaudited)
	Three Months Ended
	June 30, 2016							June 30, 2015		Change
	Revenue, as reported		Foreign exchange impact as compared to prior period			Revenue on a constant currency basis		Revenue, as reported		As reported		Constant currency basis
United States	$	56,334	$	—		$	56,334	$	51,593	9	%	9	%
International	11,414		(209		)	11,205		10,084		13	%	11	%
Total revenue	$	67,748	$	(209	)	$	67,539	$	61,677	10	%	10	%
	Six Months Ended
	June 30, 2016							June 30, 2015		Change
	Revenue, as reported		Foreign exchange impact as compared to prior period			Revenue on a constant currency basis		Revenue, as reported		As reported		Constant currency basis
United States	$	109,316	$	—		$	109,316	$	100,193	9	%	9	%
International	21,316		123			21,439		18,906		13	%	13	%
Total revenue	$	130,632	$	123		$	130,755	$	119,099	10	%	10	%

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Reconciliation of revenue by product line to non-GAAP revenue by product line on a constant currency basis (in thousands, except percentages) (unaudited)
	Three Months Ended
	June 30, 2016							June 30, 2015		Change
	Revenue, as reported		Foreign exchange impact as compared to prior period			Revenue on a constant currency basis		Revenue, as reported		As reported		Constant currency basis
Vascular intervention	$	46,218	$	(136	)	$	46,082	$	40,630	14	%	13	%
Lead management	17,767		(62		)	17,705		17,257		3	%	3	%
Laser, service, and other	3,763		(11		)	3,752		3,790		(1	)%	(1	)%
Total revenue	$	67,748	$	(209	)	$	67,539	$	61,677	10	%	10	%
	Six Months Ended
	June 30, 2016							June 30, 2015		Change
	Revenue, as reported		Foreign exchange impact as compared to prior period			Revenue on a constant currency basis		Revenue, as reported		As reported		Constant currency basis
Vascular intervention	$	88,130	$	3		$	88,133	$	77,143	14	%	14	%
Lead management	34,863		96			34,959		33,688		3	%	4	%
Laser, service, and other	7,639		24			7,663		8,268		(8	)%	(7	)%
Total revenue	$	130,632	$	123		$	130,755	$	119,099	10	%	10	%

Reconciliation of Net Loss to Non-GAAP Net Loss (in thousands) (unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net loss, as reported	$	(14,906	)	$	(7,216	)	$	(32,197	)	$	(34,521	)
Acquisition transaction, integration and other costs (1)	500			11,106			792			21,497
Acquisition-related intangible asset amortization (2)	3,202			3,612			6,405			6,782
Contingent consideration expense (3)	67			1,060			167			2,084
Change in fair value of contingent consideration liability (4)	—			(17,800		)	—			(17,800		)
Non-GAAP net loss	$	(11,137	)	$	(9,238	)	$	(24,833	)	$	(21,958	)

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Reconciliation of Net Loss Per Share to Non-GAAP Net Loss Per Share (unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net loss per share, as reported	$	(0.35	)	$	(0.17	)	$	(0.75	)	$	(0.82	)
Acquisition transaction, integration and other costs (1)	0.01			0.26			0.02			0.51
Acquisition-related intangible asset amortization (2)	0.07			0.09			0.15			0.16
Contingent consideration expense (3)	—			0.03			—			0.05
Change in fair value of contingent consideration liability (4)	—			(0.42		)	—			(0.42		)
Non-GAAP net loss per share (5)	$	(0.26	)	$	(0.22	)	$	(0.58	)	$	(0.52	)

_________________

1) Acquisition transaction, integration and other costs relate to the AngioScore and Stellarex acquisitions, which closed on June 30, 2014 and January 27, 2015, respectively, and included investment banking fees, accounting, consulting, and legal fees, severance and retention costs, and non-recurring costs associated with establishing manufacturing operations to support the Stellarex program. In addition, these costs included $0.5 million and $8.5 million in the three months ended June 30, 2016 and 2015, respectively, and $0.7 million and $16.5 million in the six months ended June 30, 2016, and 2015, respectively, for legal fees, including legal fees associated with a patent matter and breach of fiduciary duty matter in which AngioScore is the plaintiff, and costs advanced associated with the breach of fiduciary duty matter.

2) Acquisition-related intangible asset amortization relates primarily to intangible assets acquired in the AngioScore acquisition in June 2014 and the Stellarex acquisition in January 2015.

3) Contingent consideration expense primarily represents the accretion of the estimated contingent consideration liability related to future amounts payable to former AngioScore stockholders, based on sales of the AngioScore products and achievement of regulatory milestones.

4) During the three months ended June 30, 2015, we remeasured the contingent consideration liability related to the AngioScore acquisition to its fair value and reduced it by approximately $17.8 million. This reduction was the result of a decrease in future revenue estimates for the AngioSculpt products.

5) Per share amounts may not add due to rounding.

Management uses the non-GAAP financial measures as supplemental measures to analyze the underlying trends in our business, assess the performance of our core operations, establish operational goals and forecasts that are used in allocating resources and evaluate our performance period over period on a comparable basis and in relation to our competitors’ operating results. In general, the income or expenses that are excluded from non-GAAP financial measures are intended to enhance the comparability of results between periods and are non-cash costs or non-recurring costs.

The impact of foreign exchange rates is highly variable and difficult to predict. We use a constant currency basis to show the impact from foreign exchange rates on current period revenue compared to prior period revenue using the prior period’s foreign exchange rates. In order to properly understand the underlying business trends and performance of our ongoing operations, we believe that investors may find it useful to consider the impact of excluding changes in foreign exchange rates from our revenue.

We believe that presenting the non-GAAP financial measures used in this report provides investors greater transparency to the information used by our management for financial and operational decision-making and allows investors to see our results “through the eyes” of management. We also believe that providing this information better enables our investors to understand our operating performance and evaluate the methodology used by management to evaluate and measure such performance.

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Item 2.       Management’s Discussion and Analysis of Financial Condition and Results of Operations (Cont’d)

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Some limitations associated with using these non-GAAP financial measures are provided below:

• Management exercises judgment in determining which types of charges or other items should be excluded from the non-GAAP financial measures used.

• Amortization expense, while not requiring cash settlement, is an ongoing and recurring expense, has a material impact on GAAP net loss, and reflects an economic cost to us not reflected in non-GAAP net loss.

• Items such as the acquisition transaction and integration costs and contingent consideration expense, excluded from non-GAAP net loss, can have a material impact on cash flows and GAAP net loss and reflect economic costs to us not reflected in non-GAAP net loss.

• Revenue growth rates stated on a constant currency basis, by their nature, exclude the impact of changes in foreign currency exchange rates, which may have a material impact on GAAP revenue.

• Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and therefore other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. We must make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Significant items subject to estimates and assumptions include the carrying amount of property and equipment, goodwill and intangible assets, valuation allowances and reserves for receivables, inventories and deferred income tax assets, stock-based compensation expense, estimated clinical trial expenses, accrued estimates for incurred but not reported claims under partially self-insured employee health benefit programs, contingent consideration liabilities, and loss contingencies, including those related to litigation. Actual results could differ from those estimates.

Our critical accounting policies and estimates are included in our 2015 Annual Report on Form 10-K. During the six months ended June 30, 2016, there were no significant changes to our critical accounting policies and estimates.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of changes in the value of market risk instruments caused by fluctuations in interest rates, foreign exchange rates and commodity prices. Changes in these factors could cause fluctuations in our results of operations and cash flows. In the ordinary course of business, we are primarily exposed to foreign exchange risk and interest rate risk.

Our reporting currency is the U.S. dollar and our exposure to foreign currency risk is primarily related to sales of our products in Europe, which are denominated primarily in the euro and translated into U.S. dollars.  Changes in the exchange rate between the euro and the U.S. dollar could positively or adversely affect our revenue and net loss.  In addition, we record foreign currency transaction gains and losses, included in other expense in our condensed consolidated financial statements, which result from intercompany transactions with our Dutch subsidiary, whose functional currency is the euro.

Exposure to foreign currency exchange rate risk may increase over time as our business evolves and our products continue to be introduced into international markets.  Currently, we do not hedge against any foreign currencies and, as a result, we could incur gains or losses.  The fluctuation in currency rates during the six months ended June 30, 2016, compared with the

37

six months ended June 30, 2015, caused a decrease of approximately $0.2 million in consolidated revenue and an increase in consolidated net loss of $0.1 million.

Based on our overall foreign currency exchange rate exposure as of June 30, 2016, a 10% appreciation or depreciation of the U.S. dollar would have had a positive or negative impact on our consolidated revenue for the six months ended June 30, 2016 of approximately $1.3 million

As of June 30, 2016, we are exposed to interest rate risk related to our Revolving Loan Facility and our Term Loan Facility.  A 100 basis point fluctuation in market interest rates underlying our Revolving Loan Facility and Term Loan Facility would have the effect of increasing or decreasing our cash interest expense by approximately $0.8 million for an annual period on the $19.2 million and $60.0 million balances outstanding as of June 30, 2016 under our Revolving Loan Facility and Term Loan Facility, respectively. The Notes are at fixed rates, and therefore are not subject to market risk.

Item 4.Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Exchange Act Rule 13a-15(b), we carried out an evaluation, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2016. Our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were effective as of June 30, 2016.

There has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II—OTHER INFORMATION

Item 1.Legal Proceedings

For a discussion of our legal proceedings, please refer to Note 9, “Commitments and Contingencies,” to the condensed consolidated financial statements included in Part I, Item 1 of this report.

Item 1A.   Risk Factors

On June 23, 2016, the United Kingdom (“U.K.”) held a referendum in which voters approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit”.  As a result of the referendum, it is expected that the British government will begin negotiating the terms of the U.K.’s future relationship with the E.U.  Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports between the U.K. and E.U. countries and increased regulatory complexities. These changes may adversely affect our operations and financial results.

There have been no additional material changes in our risk factors from those disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2015.

38

Item 6.Exhibits

3.1	Amended and Restated Certificate of Incorporation. Incorporated by reference to exhibit previously filed by the Company with its Current Report on Form 8-K filed on June 16, 2009.
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation. Incorporated by reference to exhibit previously filed by the Company with its Current Report on Form 8-K filed on June 12, 2014.
3.3	Amended and Restated Bylaws. Incorporated by reference to exhibit previously filed by the Company with its Current Report on Form 8-K filed on April 4, 2011.
4.1	Form of Common Stock Certificate of the Company. Incorporated by reference to exhibit previously filed by the Company with its Amendment No. 2 to the Registration Statement, filed January 24, 1992 (File No. 33-44367).
10.1	The Spectranetics Corporation 2016 Incentive Award Plan. Incorporated by reference to exhibit previously filed by the Company with its Current Report on Form 8-K filed on June 15, 2016.
10.2	The Spectranetics Corporation 2010 Employee Stock Purchase Plan, as amended as of December 9, 2015. Incorporated by reference to exhibit previously filed by the Company with its Current Report on Form 8-K filed on June 15, 2016.
10.3*	Form of Performance Stock Unit Grant Notice.
10.4*	Form of Restricted Stock Award Agreement under the 2016 Incentive Award Plan.
10.5*	Form of Stock Option Notice and Stock Option Agreement under the 2016 Incentive Award Plan
10.6*	Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the 2016 Incentive Award Plan.
31.1*	Rule 13(a)-14(a)/15d-14(a) Certification of Chief Executive Officer.
31.2*	Rule 13(a)-14(a)/15d-14(a) Certification of Chief Financial Officer.
32.1**	Section 1350 Certification of Chief Executive Officer.
32.2**	Section 1350 Certification of Chief Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*    Filed herewith

**    Furnished herewith

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The Spectranetics Corporation
	(Registrant)
July 29, 2016		/s/ Scott Drake
		Scott Drake
		President and Chief Executive Officer
July 29, 2016		/s/ Stacy P. McMahan
		Stacy P. McMahan
		Chief Financial Officer

40

EX-10.3

THE SPECTRANETICS CORPORATION

2016 INCENTIVE AWARD PLAN

PERFORMANCE STOCK UNIT GRANT NOTICE

The Spectranetics Corporation, a Delaware corporation (the “Company”), pursuant to The Spectranetics Corporation 2016 Incentive Award Plan (as it may be amended from time to time, the “Plan”), hereby grants to the individual listed below (the “Participant”) the following award of Performance Stock Units (“PSUs”). This award of PSUs is subject to all of the terms and conditions set forth in this Grant Notice, in the Performance Stock Unit Terms and Conditions (the “Terms and Conditions”) attached hereto as Appendix A and Appendix B (the “Appendices”) (this Grant Notice and the Appendices being collectively referred to as the “Award Agreement”) and in the Plan, the terms of which are incorporated herein by reference. All capitalized terms used and not otherwise defined in this Award Agreement shall have the meanings ascribed to such terms in the Plan (as it may be amended from time to time) unless the context clearly indicates otherwise.

Participant:
Grant Date:
Target Number of PSUs:
Performance Period:	See Appendix B
Performance Measures:	See Appendix B
Vesting and Payout Range:
Scheduled Vesting Date:	See Appendix B
Payment of PSUs:	The Company shall pay to the Participant in the form of one share of Stock for each vested PSU as set forth in Section 4 of the attached Terms and Conditions.
Termination of PSUs:	Unvested PSUs are forfeited and terminated to the extent set forth in Section 3 of the attached Terms and Conditions.

By his or her signature and the Company’s signature below, the Participant agrees to be bound by the terms and conditions of the Plan and this Award Agreement. The Participant has reviewed the Award Agreement, including the Appendices, and the Plan in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Award Agreement and the Plan. In the event that there are any inconsistencies between the terms of the Plan and the terms of this Award Agreement, the terms of the Plan shall control. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under this Award Agreement or the Plan.

IN WITNESS WHEREOF, this Grant Notice has been executed and delivered by the parties hereto as of the Grant Date first written above.

THE SPECTRANETICS CORPORATION:		PARTICIPANT:
By:		Signature:
Name:	Robert Fuchs	Print Name:
Title:	Senior Vice President, Global Human Resources	Address:

1

APPENDIX A
TO PERFORMANCE STOCK UNIT GRANT NOTICE

PERFORMANCE STOCK UNIT TERMS AND CONDITIONS

1.Grant. Pursuant to the Performance Stock Unit Grant Notice (the “Grant Notice”) and these Performance Stock Unit Terms and Conditions (the “Terms and Conditions”) attached to the Grant Notice, and which together with this Appendix A and the Process for Determining Earned PSUs attached hereto as Appendix B (this Grant Notice and Appendix A and Appendix B being collectively referred to as the “Award Agreement,”) The Spectranetics Corporation, a Delaware corporation (the “Company”), has granted to the Participant an award of PSUs under The Spectranetics Corporation 2016 Incentive Award Plan (as it may be amended from time to time, the “Plan”), subject to all of the terms and conditions contained in this Award Agreement and the Plan. All capitalized terms used but not defined in the Award Agreement shall have the meanings ascribed to such terms in the Plan unless the context clearly indicates otherwise.

2.PSUs. Each PSU that vests represents the right to receive payment, in accordance with Section 4 below, in the form of one share of Stock. Unless and until a PSU vests, the Participant has no right to payment in respect of any such PSU. Prior to actual payment in respect of any vested PSU, such PSU represents an unfunded and unsecured contingent obligation of the Company, payable (if at all) only from the general assets of the Company.

3.Vesting and Termination. The number of PSUs that are earned and eligible to vest is determined as set forth in this Section 3 or in Appendix B, if applicable.

3.1    Unearned PSUs. Any PSUs that have not yet been earned as of the end of a Performance Period or otherwise in the manner provided in Appendix B, if applicable, will immediately terminate and be forfeited and cancelled without payment of consideration therefor.

3.2    Voluntary Termination by the Participant or Termination by the Company for Any Reason. All PSUs that have not yet vested as of the time Participant ceases to be a Service Provider (a “Termination of Service”) due to voluntary termination by the Participant (including a voluntary Termination of Service for Good Reason) or termination by the Company (including involuntary Termination of Service without Cause) shall thereupon terminate and be forfeited and cancelled without payment of consideration therefor.

3.3    Termination by Reason of Death or Disability. If the Participant's Termination of Service occurs by reason of death or Disability prior to the Scheduled Vesting Date, the Participant, or the Participant's estate, designated beneficiary or other beneficiary contemplated by the Plan in the event of the Participant’s death, is entitled to the immediate vesting and payout of the Target Number of PSUs. Any PSUs that do not vest under the circumstances described in the preceding sentence are forfeited and cancelled without payment of consideration therefor.

3.4    Change in Control. If a Change in Control occurs prior to the Scheduled Vesting Date and prior to the Participant’s Termination of Service, vesting shall occur in accordance with the provisions of Appendix B.

4.Payment after Vesting; Code Section 409A. The Company shall issue one share of Stock (in book-entry form or otherwise) in respect of each PSU that vests in accordance herewith to the Participant (or in the event of the Participant’s death, to the Participant’s estate, designated beneficiary or other beneficiary contemplated by the Plan) as soon as practicable following the date on which such PSU vests. Notwithstanding anything herein to the contrary, no such payment shall be made to the Participant during the six-month period following the Participant’s “separation from service” (within the meaning of Section 409A of the Code) if the Participant is a “specified employee” (within the meaning of Section 409A of the Code) on the date of such separation from service (as determined by the Company in accordance with Section 409A of the Code) and the Company determines that paying such amounts at the time set forth in this Section 4 would constitute a failure to comply

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with Section 409A(a)(2)(B)(i) of the Code. If the payment of any such amounts is delayed as a result of the previous sentence, then on the first day following the end of such six-month period, the Company shall pay the Participant the cumulative amounts that would have otherwise been payable to the Participant during such six-month period.

5.Tax Withholding. The Company may deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state and local taxes (including the Participant’s employment tax obligations, if any) required by law to be withheld with respect to any taxable event arising in connection with the PSUs. Without limiting the generality of Section 14 of the Plan, the Participant may, in satisfaction of the foregoing requirement, elect to have the Company withhold or cause to be withheld shares of Stock otherwise issuable in respect of such PSUs having a Fair Market Value equal to the sums required to be withheld.

6.Rights as Shareholder. Neither the Participant nor any person claiming under or through the Participant has any of the rights or privileges of a shareholder of the Company in respect of any shares of Stock that may become deliverable hereunder unless and until certificates representing such shares of Stock have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered in certificate or book entry form to the Participant or any person claiming under or through the Participant.

7.Non-Transferability. Neither the PSUs nor any interest or right therein is liable for the debts, contracts or engagements of the Participant or his or her successors in interest or subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means, whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 7 shall not prevent transfers by will or by the applicable laws of descent and distribution or pursuant to a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. Upon any attempt by the Participant to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale by the Participant under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby shall immediately become null and void.

8.Distribution of Stock. Notwithstanding anything herein to the contrary, the Company is not required to issue or deliver any certificates evidencing shares of Stock pursuant to this Agreement unless and until the Committee has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed or traded. All Stock certificates delivered pursuant to this Agreement are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. In the event that any such issuance or delivery is delayed because the Company reasonably determines that such issuance or delivery will violate Federal securities laws or other applicable law, such issuance or delivery shall be made at the earliest date at which the Company reasonably determines that such issuance or delivery will not cause such violation. The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Committee may require that the Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee may require the Participant to comply with any timing or other restrictions with respect to the settlement of any PSUs, including a window-period limitation, as may be imposed in the discretion of the Committee. Notwithstanding any other provision of this Agreement, unless otherwise determined by the Committee or required by any applicable law, rule or regulation, the Company shall not deliver to the Participant any certificates evidencing shares of Stock issued upon settlement of any PSUs under this Agreement and instead such shares of Stock shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan

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administrator) and all references herein to certificates shall be deemed to apply instead to recordation in such books.

9.No Effect on Service Relationship. Nothing in this Agreement or in the Plan confers upon the Participant any right to serve or continue to serve as an Employee, Consultant, Independent Director or other service provider of the Company or any Subsidiary.

10.Severability. In the event that any provision in this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement, which shall remain in full force and effect.

11.Tax Consultation. The Participant understands that the Participant may suffer adverse tax consequences in connection with the PSUs granted pursuant to this Agreement. The Participant represents that the Participant has consulted with any tax consultants that the Participant deems advisable in connection with the PSUs and that the Participant is not relying on the Company for tax advice.

12.Amendments, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board.

13.Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and all applicable state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the PSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

14.Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant becomes subject to Section 16 of the Exchange Act, the Plan, the PSUs and this Agreement will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement is deemed amended to the extent necessary to conform to such applicable exemptive rule.

15.Code Section 409A. Neither the PSUs nor this Agreement is intended to provide for any deferral of compensation subject to Section 409A of the Code, and, accordingly, notwithstanding anything to the contrary, the shares of Stock issuable hereunder in settlement of vested PSUs shall be distributed no later than the later of: (i) the 15^th day of the third month following Participant’s first taxable year in which the PSUs are no longer subject to a substantial risk of forfeiture, and (ii) the 15^th day of the third month following the first taxable year of the Company in which the PSUs are no longer subject to substantial risk of forfeiture, as determined in accordance with Code Section 409A and any Treasury Regulations and other guidance issued thereunder. Nevertheless, to the extent that the Committee determines that any PSUs may not be exempt from (or compliant with) Section 409A of the Code, the Committee may (but shall not be required to) amend this Agreement in a manner intended to comply with the requirements of Section 409A of the Code or an exemption therefrom (including amendments with retroactive effect), or take any other actions as it deems necessary or appropriate to (a) exempt the PSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the PSUs, or (b) comply with the requirements of Section 409A of the Code. To the extent applicable, this Agreement shall be interpreted in accordance with the provisions of Section 409A of the Code.

16.Compensation Recovery Policy. To the extent that any compensation paid or payable pursuant to this Agreement is considered “incentive-based compensation” within the meaning and subject to the requirements of Section 10D of the Exchange Act, such compensation shall be subject to potential forfeiture or recovery by the Company in accordance with any compensation recovery policy adopted by the Board or any committee thereof in

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response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s common stock is then listed. This Agreement may be unilaterally amended by the Company to comply with any such compensation recovery policy.

17.Adjustments. The Participant acknowledges that the PSUs are subject to modification and termination in certain events as provided in this Agreement and Section 15 of the Plan.

18.Notices. Notices required or permitted hereunder must be given in writing and are deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the Participant to his or her address shown in the Company records, and to the Company at its principal executive office.

19.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement inures to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer contained herein, this Agreement shall be binding upon the Participant and his or her heirs, executors, administrators, successors and assigns.

20.Governing Law. This Agreement is intended to be administered, interpreted and enforced under the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

21.Captions. Captions provided herein are for convenience only and are not intended to serve as a basis for interpretation or construction of this Agreement.

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EX-10.4

THE SPECTRANETICS CORPORATION

2016 INCENTIVE AWARD PLAN

RESTRICTED STOCK AWARD AGREEMENT

The Spectranetics Corporation (the “Company”), pursuant to its 2016 Incentive Award Plan (the “Plan”), hereby grants an award of Restricted Stock to you, the Participant named below. The terms and conditions of this Restricted Stock Award are set forth in this Restricted Stock Award Agreement (the “Agreement”), consisting of this cover page and the Terms and Conditions attached hereto as Appendix As, and in the Plan document, a copy of which has been provided to you. Any capitalized term that is not defined in this Agreement shall have the meaning set forth in the Plan as it currently exists or as it is amended in the future.

Name of Participant:
Number of Shares of Restricted Stock:	Grant Date:
Vesting Schedule:
Vesting Date:	Number of Restricted Shares that Vest:

By signing below or otherwise evidencing your acceptance of this Agreement in a manner approved by the Company, you agree to all of the terms and conditions contained in this Agreement and in the Plan document. You acknowledge that you have received and reviewed these documents and that they set forth the entire agreement between you and the Company regarding the grant to you of the number of Shares of Restricted Stock specified in the table above.

THE SPECTRANETICS CORPORATION:		PARTICIPANT:
By:		Signature:
Name:	Robert Fuchs	Print Name:
Title:	Senior Vice President, Global Human Resources	Address:

1

APPENDIX A

TO RESTRICTED STOCK AWARD AGREEMENT

RESTRICTED STOCK AWARD TERMS AND CONDITIONS

1.Grant of Restricted Stock. The Company hereby grants to you, as of the Grant Date specified on the cover page of this Agreement and subject to the terms and conditions in this Agreement and the Plan, an Award of the number of Shares of Restricted Stock specified on the cover page of this Agreement. Unless and until these Shares vest as provided in Section 4 below, they are subject to the restrictions provided for in Section 3 of this Agreement and are referred to as “Restricted Shares.”

2.    Issuance of Restricted Shares. Until the Restricted Shares vest as provided in Section 4, the Restricted Shares will be evidenced either by a book-entry in your name with the Company’s transfer agent or by one or more stock certificates issued in your name. Any such stock certificate(s) will be deposited with the Company or its designee and will bear the following legend:

“This Certificate and the shares of stock evidenced hereby are subject to the terms and conditions (including possible forfeiture and restrictions on transfer) contained in the Restricted Stock Award Agreement (the “Agreement”) between the registered owner of the shares evidenced hereby and the Company. Release from such terms and conditions shall be made only in accordance with the provisions of the Agreement, a copy of which is on file in the office of the Company’s Secretary.”

Any book-entry will be accompanied by a similar legend and shall be subject to such stop-transfer orders and other restrictions as the Company may deem advisable. Simultaneously with the execution and delivery of this Agreement, you shall deliver to the Company one or more stock powers endorsed in blank relating to the Restricted Shares.

3.    Transfer Restrictions, Possible Forfeiture and Rights as Shareholder. Until the Restricted Shares vest as provided in Section 4, you are not entitled to sell, transfer, assign, pledge or otherwise encumber or dispose of the Restricted Shares, and the Restricted Shares remain subject to possible forfeiture as provided in Section 5. Except as otherwise provided in this Agreement or the Plan, you are entitled at all times on and after the Grant Date specified on the cover page of this Agreement to all the rights of a shareholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and the right to receive regular cash dividends thereon (subject to applicable tax withholding); provided that any dividends or distributions paid with respect to Restricted Shares will be subject to the same restrictions as the Shares to which such dividends or distributions relate, except for regular cash dividends on Restricted Shares that are subject only to service-based vesting conditions. Any Shares distributed as a stock dividend or in a stock split or otherwise with respect to the Restricted Shares before they vest shall be considered additional Restricted Shares subject to the same transfer restrictions and risk of forfeiture as the underlying Restricted Shares and shall be held as prescribed in Section 2.

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4. Vesting of Restricted Shares.

(a)Scheduled Vesting. If you remain a Service Provider continuously from the Grant Date specified on the cover page of this Agreement, then the Restricted Shares will vest in the number(s) and on the date(s) specified in the Vesting Schedule on the cover page of this Agreement.

(b)Accelerated Vesting. Notwithstanding Section 4(a):

(1)Death or Disability. If your Service terminates prior to the final scheduled vesting date due to your death or Disability, all of the Restricted Shares shall vest as of such termination date.

(2)Change in Control. The provisions of Sections 12(b) and 12(c) of the Plan shall apply in the event of a Change in Control.

5.    Effect of Termination of Service. Except as otherwise provided in accordance with Section 4(b), if you cease to be a Service Provider, you will immediately forfeit all unvested Restricted Shares.

6.    Delivery of Unrestricted Shares. After any Restricted Shares vest pursuant to Section 4, the Company shall, as soon as practicable, cause to be delivered to you, or to your designated beneficiary or estate in the event of your death, the applicable number of unrestricted Shares. Delivery of the unrestricted Shares shall be effected by the removal of restrictions on the book-entry in the stock register maintained by the Company’s transfer agent with a corresponding notice provided to you, by the electronic delivery of the Shares to a brokerage account you designate, or by delivery to you of a stock certificate without restrictive legend, and shall be subject to the tax withholding provisions of Section 7 and compliance with all applicable legal requirements as provided in Section 17(c) of the Plan.

7.    Tax Consequences and Withholding. You acknowledge that unless you make a proper and timely Section 83(b) election as described below, then at the time the Restricted Shares vest, you will be obligated to recognize ordinary income in an amount equal to the Fair Market Value as of the date of vesting of the Restricted Shares then vesting. No unrestricted Shares will be delivered to you unless you have made arrangements acceptable to the Company for payment of any federal, state, local or foreign withholding taxes that may be due as a result of the vesting of the Restricted Shares. You hereby authorize the Company (or any Affiliate) to withhold from payroll or other amounts payable to you any sums required to satisfy such withholding tax obligations, and otherwise agree to satisfy such obligations in accordance with the provisions of Section 14 of the Plan. If you wish to satisfy some or all of such withholding tax obligations by delivering Shares you already own or by having the Company retain a number of unrestricted Shares otherwise deliverable to you, you must make such a request which shall be subject to approval by the Company.

You understand that, with respect to the grant of this Restricted Stock Award, you may file an election with the Internal Revenue Service, within 30 days of the Grant Date, electing pursuant to Section 83(b) of the Internal Revenue Code to be taxed on the Fair Market Value of the Restricted Shares as of the Grant Date. You acknowledge that it is your sole responsibility to timely file an election under Section 83(b) of the Code. If you make such an election, you must promptly provide the Company with a copy, and make arrangements acceptable to the Company for the payment of withholding taxes as described above.

8.    Governing Plan Document. This Agreement and the Award are subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Board or the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.

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9.    Choice of Law. This Agreement will be interpreted and enforced under the laws of the state of Delaware (without regard to its conflicts or choice of law principles).

10.    Binding Effect. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.

11.    Other Agreements. You agree that in connection with this award of Restricted Shares or the delivery of unrestricted Shares, you will execute such documents as may be necessary to become a party to any stockholder, voting or similar agreements as the Company may require.    

By signing the cover page of this Agreement or otherwise accepting this Agreement in a manner approved by the Company, you agree to all the terms and conditions described above and in the Plan document.

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EX-10.5

THE SPECTRANETICS CORPORATION2016 INCENTIVE AWARD PLANSTOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT

The Spectranetics Corporation, a Delaware corporation (the “Company”), pursuant to its 2016 Incentive Award Plan (as it may be amended from time to time, the “Plan”), hereby grants to the holder listed below (“Participant”), an option to purchase the number of shares of the Company’s common stock, par value $0.001 per share (“Stock”), set forth below (the “Option”). This Option is subject to all of the terms and conditions set forth herein and in the Stock Option Agreement attached hereto as Appendix A (the “Stock Option Agreement”) and the Plan, which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement.

Participant:
Grant Date:
Exercise Price per Share:	$
Total Number of Shares Subject to the Option:	shares
Expiration Date:
Type of Option:	x Incentive Stock Option  o Non-Qualified Stock Option
Vesting Schedule:

No portion of the Option which is unexercisable at the Participant’s Termination of Services shall thereafter become exercisable.

By his or her signature, the Participant agrees to be bound by the terms and conditions of the Plan, the Stock Option Agreement and this Grant Notice. The Participant has reviewed the Stock Option Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Stock Option Agreement and the Plan. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan or relating to the Option.

THE SPECTRANETICS CORPORATION:		PARTICIPANT:
By:		Signature:
Name:	Robert Fuchs	Print Name:
Title:	Senior Vice President, Global Human Resources	Address:

1

APPENDIX A

TO STOCK OPTION GRANT NOTICE

STOCK OPTION AGREEMENT

Pursuant to the Stock Option Grant Notice (the “Grant Notice”) to which this Stock Option Agreement (this “Agreement”) is attached, The Spectranetics Corporation, a Delaware corporation (the “Company”), has granted to the Participant an option under the Company’s 2016 Incentive Award Plan (as amended from time to time, the “Plan”) to purchase the number of shares of Stock indicated in the Grant Notice.

ARTICLE I.

GENERAL

1.1Defined Terms. Wherever the following terms are used in this Agreement they shall have the meanings specified below, unless the context clearly indicates otherwise. Capitalized terms not specifically defined herein shall have the meanings specified in the Plan and the Grant Notice.

(a)“Administrator” shall mean the Board or the Committee responsible for conducting the general administration of the Plan in accordance with Section 3 of the Plan; provided that if the Participant is a Non-Employee Director, “Administrator” shall mean the Board.

(b)“Termination of Services” shall mean the Participant’s termination of Service under the Plan.

1.2Incorporation of Terms of Plan. The Option is subject to the terms and conditions of the Plan which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

ARTICLE II.

GRANT OF OPTION

2.1Grant of Option. In consideration of the Participant’s past and/or continued Service and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company irrevocably grants to the Participant the Option to purchase any part or all of an aggregate of the number of shares of Stock set forth in the Grant Notice, upon the terms and conditions set forth in the Plan and this Agreement. Unless designated as a Non-Qualified Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option to the maximum extent permitted by law.

2.2Exercise Price. The exercise price of the shares of Stock subject to the Option shall be as set forth in the Grant Notice, without commission or other charge; provided, however, that the price per share of the shares of Stock subject to the Option shall not be less than 100% of the Fair Market Value of a share of Stock on the Grant Date, except in the case of Substitute Awards (to the extent consistent with Code Section 409A and, in the case of Incentive Stock Options, Code Section 424). Notwithstanding the foregoing, if this Option is designated as an Incentive Stock Option and the Participant owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the price per share of the shares of Stock subject to the Option shall not be less than 110% of the Fair Market Value of a share of Stock on the Grant Date.

2.3Consideration to the Company. In consideration of the grant of the Option by the Company, the Participant agrees to render faithful and efficient Service to the Company and its Affiliates. Nothing in the Plan or this

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Agreement shall confer upon the Participant any right to continue in the Service of the Company or any Affiliate or shall interfere with or restrict in any way the rights of the Company and its Affiliates, which rights are hereby expressly reserved, to discharge or terminate the services of the Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or an Affiliate and the Participant.

ARTICLE III.

PERIOD OF EXERCISABILITY

3.1Commencement of Exercisability.

(a)Subject to Sections 3.2, 3.3, 5.11 and 5.14, the Option shall become vested and exercisable in such amounts and at such times as are set forth in the Grant Notice.

(b)No portion of the Option which has not become vested and exercisable at the date of the Participant’s Termination of Services shall thereafter become vested and exercisable, except as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and the Participant.

(c)Notwithstanding Sections 3.1(a) and 3.1(b), pursuant to Section 12.2(b)(2) of the Plan, the Option shall become fully vested and exercisable in the event of a Change in Control, in connection with which the Option is not continued, assumed or replaced. If the Option is continued, assumed or replaced pursuant to Section 12.2(b)(1) of the Plan, then no such acceleration shall apply. The remaining provisions of Section 12 of the Plan also shall apply to this Option except to the extent otherwise provided in this Agreement.

3.2Duration of Exercisability. The installments provided for in the vesting schedule set forth in the Grant Notice are cumulative. Each such installment which becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it becomes unexercisable under Section 3.3.

3.3Expiration of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events:

(a)The expiration of ten years from the Grant Date;

(b)If this Option is designated as an Incentive Stock Option and the Participant owned (within the meaning of Section 424(d) of the Code), at the time the Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the expiration of five years from the Grant Date;

(c)The expiration of one year from the date of the Participant’s Termination of Services, unless such termination occurs by reason of the Participant’s death or Disability; or

(d)The expiration of one year from the date of the Participant’s Termination of Services by reason of the Participant’s death or Disability.

The Participant acknowledges that an Incentive Stock Option exercised more than three months after the Participant’s Termination of Services, other than by reason of death or Disability, will be taxed as a Non-Qualified Stock Option.

3.4Special Tax Consequences. The Participant acknowledges that, to the extent that the aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock with respect to which Incentive Stock Options, including the Option (if applicable), are exercisable for the first time by the Participant in any calendar year exceeds $100,000, the Option and such other options shall be Non-Qualified Stock Options to the extent necessary

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to comply with the limitations imposed by Section 422(d) of the Code. The Participant further acknowledges that the rule set forth in the preceding sentence shall be applied by taking the Option and other “incentive stock options” into account in the order in which they were granted, as determined under Section 422(d) of the Code and the Treasury Regulations thereunder.

ARTICLE IV.

EXERCISE OF OPTION

4.1Person Eligible to Exercise. Except as provided in Section 5.2(b), during the lifetime of the Participant, only the Participant may exercise the Option or any portion thereof. After the death of the Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by the Participant’s personal representative or by any person empowered to do so under the deceased the Participant’s will, under the then applicable laws of descent and distribution or as otherwise permitted by the Plan.

4.2Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3.

4.3Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of the Company (or any third party administrator or other person or entity designated by the Company) of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3:

(a)An Exercise Notice in a form specified by the Administrator, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Administrator;

(b)The receipt by the Company of full payment for the shares of Stock with respect to which the Option or portion thereof is exercised, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 4.4;

(c)Any other written representations as may be required in the Administrator’s reasonable discretion to evidence compliance with the Securities Act or any other applicable law rule, or regulation; and

(d)In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Participant, appropriate proof of the right of such person or persons to exercise the Option.

Notwithstanding any of the foregoing, the Company shall have the right to specify all conditions of the manner of exercise, which conditions may vary by country and which may be subject to change from time to time.

4.4Method of Payment. Payment of the exercise price shall be by any of the following, or a combination thereof, at the election of the Participant:

(a)Cash;

(b)Check;

(c)With the consent of the Administrator, delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate exercise price; provided, that payment of such proceeds is then made to the Company at such time as may be required by the Company, but in any event not later than the settlement of such sale;

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(d)With the consent of the Administrator, surrender of other shares of Stock which have a fair market value on the date of surrender equal to the aggregate exercise price of the shares of Stock with respect to which the Option or portion thereof is being exercised;

(e)With the consent of the Administrator, surrendered shares of Stock issuable or transferable upon the exercise of the Option having a fair market value on the date of exercise equal to the aggregate exercise price of the shares of Stock with respect to which the Option or portion thereof is being exercised; or

(f)With the consent of the Administrator, property of any kind which constitutes good and valuable consideration.

4.5Conditions to Issuance of Stock Certificates. The shares of Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares of Stock or issued shares of Stock which have then been reacquired by the Company. Such shares of Stock shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any shares of Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions:

(a)The admission of such shares of Stock to listing on all stock exchanges on which such Stock is then listed;

(b)The completion of any registration or other qualification of such shares of Stock under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable;

(c)The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;

(d)The receipt by the Company of full payment for such shares of Stock, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 4.4; and

(e)The lapse of such reasonable period of time following the exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience.

4.6Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares of Stock purchasable upon the exercise of any part of the Option unless and until such shares of Stock shall have been issued by the Company to such holder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment will be made for a dividend or other right for which the record date is prior to the date the shares of Stock are issued, except as provided in Section 12(a) of the Plan.

ARTICLE V.

OTHER PROVISIONS

5.1Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Participant, the Company and all other interested persons. No member of the Committee or the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Option.

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5.2Option Not Transferable.

(a)Subject to Section 5.2(b),the Option may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares of Stock underlying the Option have been issued, and all restrictions applicable to such shares of Stock have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.

(b)Notwithstanding any other provision in this Agreement, with the consent of the Administrator, the Participant may transfer the Option (or any portion thereof) to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) any portion of the Option transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) any portion of the Option which is transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Option as applicable to the Participant (other than the ability to further transfer the Option); and (iii) the Participant and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws and (C) evidence the transfer. For purposes of this Section 5.2(b), “Permitted Transferee” shall mean, with respect to a Participant, a transferee pursuant to a domestic relations order or a transferee by gift who is a “family member” (as defined in General Instruction A(5) to Form S-8 under the Securities Act of 1933) of the Participant. Notwithstanding the foregoing, (i) in no event shall the Option be transferable by the Participant to a third party (other than the Company) for consideration, and (ii) no transfer of an Incentive Stock Option will be permitted to the extent that such transfer would cause the Incentive Stock Option to fail to qualify as an “incentive stock option” under Section 422 of the Code.

5.3Adjustments. The Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

5.4Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the address given beneath the signature of the Company’s authorized officer on the Grant Notice, and any notice to be given to Participant shall be addressed to Participant at the address given beneath Participant’s signature on the Grant Notice. By a notice given pursuant to this Section 5.4, either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to Participant shall, if Participant is then deceased, be given to the person entitled to exercise his or her Option pursuant to Section 4.1 by written notice under this Section 5.4. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

5.5Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

5.6Governing Law; Severability. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

5.7Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent

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permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

5.8Amendments, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board, provided, that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely effect the Option in any material way without the prior written consent of the Participant.

5.9Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth in Section 5.2, this Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns.

5.10Notification of Disposition. If this Option is designated as an Incentive Stock Option, Participant shall give prompt notice to the Company of any disposition or other transfer of any shares of Stock acquired under this Agreement if such disposition or transfer is made (a) within two years from the Grant Date with respect to such shares of Stock or (b) within one year after the transfer of such shares of Stock to Participant. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.

5.11Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule

5.12Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue to serve as a Service Provider.

5.13Entire Agreement. The Plan, the Grant Notice and this Agreement (including all Appendices thereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.

Section 409A. This Option is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (“Section 409A”). However, notwithstanding any other provision of the Plan, this Agreement or the Grant Notice, if at any time the Committee determines that the Option (or any portion thereof) may be subject to Section 409A, the Committee shall have the right, in its sole discretion, to adopt such amendments to the Plan, this Agreement or the Grant Notice or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for the Option to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.

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EX-10.6

THE SPECTRANETICS CORPORATION

2016 INCENTIVE AWARD PLAN

RESTRICTED STOCK UNIT GRANT NOTICE

The Spectranetics Corporation, a Delaware corporation (the “Company”), pursuant to The Spectranetics Corporation 2016 Incentive Award Plan (as it may be amended from time to time, the “Plan”), hereby grants to the individual listed below (the “Participant”) the following award of Restricted Stock Units (“RSUs”). This award of RSUs is subject to all of the terms and conditions set forth herein and in the Restricted Stock Unit Agreement attached hereto as Appendix A (the “Restricted Stock Unit Agreement”) and in the Plan, each of which is incorporated herein by reference. All capitalized terms used and not otherwise defined in this Grant Notice or the Restricted Stock Unit Agreement shall have the meanings ascribed to such terms in the Plan unless the context clearly indicates otherwise.

Participant:
Grant Date:
Number of RSUs:
Vesting Schedule:
Payment of RSUs:	Vested RSUs shall be paid to the Participant in the form of shares of Stock as set forth in Section 4 of the attached Restricted Stock Unit Agreement.
Termination of RSUs:	In the event that the Participant ceases to be a Service Provider (a “Termination of Service”), all RSUs that have not vested prior to or in connection with such Termination of Service shall be immediately forfeited by the Participant as of the date of such Termination of Service without consideration therefor.

By his or her signature and the Company’s signature below, the Participant agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Unit Agreement and this Grant Notice. The Participant has reviewed the Restricted Stock Unit Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Stock Unit Agreement and the Plan. In the event that there are any inconsistencies between the terms of the Plan and the terms of this Grant Notice or the Restricted Stock Unit Agreement, the terms of the Plan shall control. The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Grant Notice or the Restricted Stock Unit Agreement.

IN WITNESS WHEREOF, this Grant Notice has been executed and delivered by the parties hereto as of the Grant Date first written above.

THE SPECTRANETICS CORPORATION:		PARTICIPANT:
By:		Signature:
Name:	Robert Fuchs	Print Name:
Title:	Senior Vice President, Global Human Resources	Address:

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APPENDIX A
TO RESTRICTED STOCK UNIT GRANT NOTICE

RESTRICTED STOCK UNIT AGREEMENT

1.Grant. Pursuant to the Restricted Stock Unit Grant Notice (the “Grant Notice”) to which this Restricted Stock Unit Agreement (the “Agreement”) is attached, The Spectranetics Corporation, a Delaware corporation (the “Company”), has granted to the Participant an award of [___] RSUs under The Spectranetics Corporation 2016 Incentive Award Plan (as it may be amended from time to time, the “Plan”), as set forth in the Grant Notice, subject to all of the terms and conditions contained in this Agreement and the Plan. All capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Plan and the Grant Notice unless the context clearly indicates otherwise.

2.RSUs. Each RSU that vests shall represent the right to receive payment, in accordance with Section 5 below, in the form of one share of Stock. Unless and until an RSU vests, the Participant will have no right to payment in respect of any such RSU. Prior to actual payment in respect of any vested RSU, such RSU will represent an unfunded and unsecured contingent obligation of the Company, payable (if at all) only from the general assets of the Company.

3.Vesting and Termination. The RSUs shall vest and shall terminate as set forth in the Grant Notice. All RSUs that have not become vested as of the Participant’s Termination of Service shall thereupon terminate and be forfeited and canceled without payment of consideration therefor.

4.Payment after Vesting; Code Section 409A. The issuance of shares (in book-entry form or otherwise) in respect of any RSUs that vest in accordance herewith shall be made to the Participant (or in the event of the Participant’s death, to the Participant’s estate, designated beneficiary or other beneficiary contemplated by the Plan) in whole shares of Stock on as soon as practicable following the date on which such RSUs vest. The Committee shall determine, in its sole discretion, whether and how any fractional vested RSUs will be paid. Notwithstanding anything herein to the contrary, no such payment shall be made to the Participant during the six-month period following the Participant’s “separation from service” (within the meaning of Section 409A of the Code) if the Participant is a “specified employee” (within the meaning of Section 409A of the Code) on the date of such separation from service (as determined by the Company in accordance with Section 409A of the Code) and the Company determines that paying such amounts at the time set forth in this Section 4 would be a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code. If the payment of any such amounts is delayed as a result of the previous sentence, then on the first day following the end of such six-month period, the Company shall pay the Participant the cumulative amounts that would have otherwise been payable to the Participant during such six-month period.

5.Tax Withholding. The Company shall have the authority and the right to deduct or withhold, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state and local taxes (including the Participant’s employment tax obligations, if any) required by law to be withheld with respect to any taxable event arising in connection with the RSUs. Without limiting the generality of Section 14 of the Plan, the Participant may, in satisfaction of the foregoing requirement, elect to have the Company withhold or cause to be withheld shares of Stock otherwise issuable in respect of such RSUs having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan or this Agreement, the number of shares of Stock which may be so withheld shall be limited to the number of shares of Stock which have a Fair Market Value on the date of withholding equal to the aggregate amount of such liabilities based on the

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minimum statutory withholding rates for income and payroll tax purposes that are applicable to such supplemental taxable income.

6.Rights as Shareholder. Neither the Participant nor any person claiming under or through the Participant will have any of the rights or privileges of a shareholder of the Company in respect of any shares of Stock that may become deliverable hereunder unless and until certificates representing such shares of Stock shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered in certificate or book entry form to the Participant or any person claiming under or through the Participant.

7.Non-Transferability. Neither the RSUs nor any interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means, whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 7 shall not prevent transfers by will or by the applicable laws of descent and distribution or pursuant to a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. Upon any attempt by the Participant to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale by the Participant under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby shall immediately become null and void.

8.Distribution of Stock. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to this Agreement unless and until the Committee has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed or traded. All Stock certificates delivered pursuant to this Agreement shall be subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded. In the event that any such issuance or delivery is delayed because the Company reasonably determines that such issuance or delivery will violate Federal securities laws or other applicable law, such issuance or delivery shall be made at the earliest date at which the Company reasonably determines that such issuance or delivery will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii). The Company shall not delay any such recording or delivery if such delay will result in a violation of Section 409A of the Code. The Committee may place legends on any Stock certificate to reference restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the Committee may require that the Participant make such reasonable covenants, agreements, and representations as the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require the Participant to comply with any timing or other restrictions with respect to the settlement of any RSUs, including a window-period limitation, as may be imposed in the discretion of the Committee. Notwithstanding any other provision of this Agreement, unless otherwise determined by the Committee or required by any applicable law, rule or regulation, the Company shall not deliver to the Participant any certificates evidencing shares of Stock issued upon settlement of any RSUs under this Agreement and instead such shares of Stock shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator) and all references herein to certificates shall be deemed to apply instead to recordation in such books.

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9.No Effect on Service Relationship. Nothing in this Agreement or in the Plan shall confer upon the Participant any right to serve or continue to serve as an Employee, Consultant, member of the Board or other service provider of the Company or any Subsidiary.

10.Severability. In the event that any provision in this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Agreement, which shall remain in full force and effect.

11.Tax Consultation. The Participant understands that the Participant may suffer adverse tax consequences in connection with the RSUs granted pursuant to this Agreement. The Participant represents that the Participant has consulted with any tax consultants that the Participant deems advisable in connection with the RSUs and that the Participant is not relying on the Company for tax advice.

12.Amendments, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Committee or the Board.

13.Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and all applicable state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the RSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

14.Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if the Participant becomes subject to Section 16 of the Exchange Act, the Plan, the RSUs and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

15.Code Section 409A. Neither the RSUs nor this Agreement is intended to provide for any deferral of compensation subject to Section 409A of the Code, and, accordingly, notwithstanding anything to the contrary, the shares of Stock issuable hereunder shall be distributed no later than the later of: (i) the fifteenth (15^th) day of the third (3^rd) month following Participant’s first taxable year in which the RSUs are no longer subject to a substantial risk of forfeiture, and (ii) the fifteenth (15^th) day of the third (3^rd) month following the first taxable year of the Company in which the RSUs are no longer subject to substantial risk of forfeiture, as determined in accordance with Code Section 409A and any Treasury Regulations and other guidance issued thereunder. Nevertheless, to the extent that the Committee determines that any RSUs may not be exempt from (or compliant with) Section 409A of the Code, the Committee may (but shall not be required to) amend this Agreement in a manner intended to comply with the requirements of Section 409A of the Code or an exemption therefrom (including amendments with retroactive effect), or take any other actions as it deems necessary or appropriate to (a) exempt the RSUs from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the RSUs, or (b) comply with the requirements of Section 409A of the Code. To the extent

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applicable, this Agreement shall be interpreted in accordance with the provisions of Section 409A of the Code.

16.Adjustments. The Participant acknowledges that the RSUs are subject to modification and termination in certain events as provided in this Agreement and Section 15 of the Plan.

17.Notices. Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the Participant to his or her address shown in the Company records, and to the Company at its principal executive office.

18.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer contained herein, this Agreement shall be binding upon the Participant and his or her heirs, executors, administrators, successors and assigns.

19.Governing Law. This Agreement shall be administered, interpreted and enforced under the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

20.Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Scott Drake, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Spectranetics Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 29, 2016
	/s/ Scott Drake
	Scott Drake
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stacy P. McMahan, certify that:

1.        I have reviewed this quarterly report on Form 10-Q of The Spectranetics Corporation;

2.        Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.        Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.        The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.        The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

July 29, 2016
	/s/ Stacy P. McMahan
	Stacy P. McMahan
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of The Spectranetics Corporation (the “Company”) hereby certifies, to such officer's knowledge, that:

(i) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 29, 2016	/s/ Scott Drake
	Scott Drake
	Chief Executive Officer

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. §1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of The Spectranetics Corporation (the “Company”) hereby certifies, to such officer's knowledge, that:

(i) the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

July 29, 2016	/s/ Stacy P. McMahan
	Stacy P. McMahan
	Chief Financial Officer

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 25, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	SPECTRANETICS CORP
Entity Central Index Key	0000789132
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		42,959,354

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 64,343	$ 84,594
Trade accounts receivable, less allowance for doubtful accounts and sales returns of $1,511 and $1,906, respectively	43,248	43,359
Inventories, net	25,672	25,155
Prepaid expenses and other current assets	5,924	5,171
Total current assets	139,187	158,279
Property and equipment, net	44,624	44,719
Goodwill	149,482	152,616
Other intangible assets, net	104,051	110,456
Other assets	1,917	1,929
Total assets	439,261	467,999
Current liabilities:
Borrowings under revolving line of credit	19,232	24,232
Accounts payable	5,261	4,150
Accrued liabilities	34,892	33,676
Deferred revenue	1,645	1,621
Total current liabilities	61,030	63,679
Convertible senior notes, net of debt issuance costs	224,581	224,076
Term loan, net of debt issuance costs	59,628	59,601
Accrued liabilities, net of current portion	1,666	1,759
Deferred income taxes	2,105	1,915
Total liabilities	349,010	351,030
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $.001 par value; authorized 5,000,000 shares; none issued	0	0
Common stock, $.001 par value; authorized 120,000,000 shares; issued and outstanding 42,890,061 and 42,659,234 shares, respectively	43	42
Additional paid-in capital	321,900	313,442
Accumulated other comprehensive loss	(4,890)	(1,910)
Accumulated deficit	(226,802)	(194,605)
Total stockholders’ equity	90,251	116,969
Total liabilities and stockholders’ equity	$ 439,261	$ 467,999

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Trade accounts receivable, less allowance for doubtful accounts and sales returns	$ 1,511	$ 1,906
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	42,890,061	2,659,234
Common stock, shares outstanding	42,890,061	2,659,234

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Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Revenue	$ 67,748	$ 61,677	$ 130,632	$ 119,099
Cost of products sold	16,983	15,914	33,065	30,967
Gross profit	50,765	45,763	97,567	88,132
Operating expenses:
Selling, general and administrative	40,643	35,562	81,432	72,504
Research, development and other technology	17,657	16,660	33,994	31,921
Medical device excise tax	0	821	0	1,627
Acquisition transaction, integration and legal costs	500	11,106	792	21,497
Intangible asset amortization	3,202	3,612	6,405	6,782
Contingent consideration expense	67	1,060	167	2,084
Change in fair value of contingent consideration liability	0	(17,800)	0	(17,800)
Total operating expenses	62,069	51,021	122,790	118,615
Operating loss	(11,304)	(5,258)	(25,223)	(30,483)
Other expense:
Interest expense	(3,294)	(1,768)	(6,636)	(3,522)
Foreign currency transaction (loss) gain	(158)	(70)	17	(249)
Total other expense	(3,452)	(1,838)	(6,619)	(3,771)
Loss before income tax expense	(14,756)	(7,096)	(31,842)	(34,254)
Income tax expense	150	120	355	267
Net loss	$ (14,906)	$ (7,216)	$ (32,197)	$ (34,521)
Net loss per share —
Basic and diluted	$ (0.35)	$ (0.17)	$ (0.75)	$ (0.82)
Other comprehensive (loss) income, net of tax
Foreign currency translation adjustments	$ (3,231)	$ 435	$ (2,980)	$ (477)
Comprehensive loss, net of tax	$ (18,137)	$ (6,781)	$ (35,177)	$ (34,998)
Weighted average common shares outstanding —
Basic and diluted	42,804,453	42,389,122	42,750,888	42,273,128

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ (32,197)	$ (34,521)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	13,862	12,959
Stock-based compensation expense	6,609	5,974
Amortization of debt issuance costs	565	490
Provision for excess and obsolete inventories	345	481
Contingent consideration expense	167	2,084
Change in fair value of contingent consideration liability	0	(17,800)
Deferred income taxes	213	223
Net change in operating assets and liabilities	(3,881)	(2,433)
Net cash used in operating activities	(14,317)	(32,543)
Cash flows from investing activities:
Capital expenditures	(2,734)	(5,088)
Payments for acquisitions	0	(30,000)
Net cash used in investing activities	(2,734)	(35,088)
Cash flows from financing activities:
(Repayments on) Proceeds from line of credit, net	(5,000)	18,542
Proceeds from the exercise of stock options and employee stock purchase plan	1,850	3,088
Payment of contingent consideration	(88)	(143)
Net cash (used in) provided by financing activities	(3,238)	21,487
Effect of exchange rate changes on cash	38	(106)
Net decrease in cash and cash equivalents	(20,251)	(46,250)
Cash and cash equivalents at beginning of period	84,594	95,505
Cash and cash equivalents at end of period	64,343
Supplemental disclosures of cash flow information:
Cash paid for interest	6,006	3,038
Cash paid for income taxes	$ 364	$ 288

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General

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

GENERAL

The accompanying condensed consolidated financial statements include the accounts of The Spectranetics Corporation, a Delaware corporation, and its wholly-owned subsidiaries. These entities are collectively referred to as the “Company.” All intercompany balances and transactions have been eliminated in consolidation.

The Company develops, manufactures, markets, and distributes medical devices used in minimally invasive procedures within the cardiovascular system. The Company’s products are available in over 65 countries and are used to cross, prepare, and treat arterial blockages in the legs and heart and to remove pacemaker and defibrillator cardiac leads. In June 2014, the Company acquired AngioScore, Inc. (“AngioScore”), a leading developer, manufacturer and marketer of cardiovascular, specialty balloon catheters, and in January 2015, the Company acquired Stellarex™ (“Stellarex”) drug-coated balloon (“DCB”) assets from Covidien LP.

The Company prepares its condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management must make certain estimates, judgments, and assumptions based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, intangible assets and goodwill, valuation allowances and reserves for receivables, inventories, deferred income tax assets, contingent consideration liabilities for acquisitions, stock-based compensation expense, estimated clinical trial expenses, accrued estimates for incurred but not reported claims under partially self-insured employee health benefit programs, and loss contingencies, including those related to litigation. Actual results could differ from those estimates.

The information included in the accompanying condensed consolidated interim financial statements is unaudited and should be read with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. In the opinion of management, all adjustments necessary for a fair presentation of the assets, liabilities and results of operations for the interim periods presented have been reflected herein and are of a normal, recurring nature. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements and classification on the statement of cash flows. For public entities, ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is in the process of determining the method of adoption and assessing the impact of ASU 2016-09 on its results of operations, financial position, and consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to recognize on its balance sheet the assets and liabilities for the rights and obligations created by leases with a lease term of more than twelve months. Leases will continue to be classified as either financing or operating, with classification affecting the recognition, measurement and presentation of expenses and cash flows arising from a lease. For public entities, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and requires a modified retrospective approach to adoption for lessees related to capital and operating leases existing at, or entered into after, the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company is in the process of determining the method of adoption and assessing the impact of ASU 2016-02 on its results of operations, financial position, and consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. To achieve this core principle, ASU 2014-09 contains a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when (or as) an entity satisfies a performance obligation. ASU 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. ASU 2016-10 provides for amendments to ASU 2014-09, reducing the complexity when applying the guidance for identifying performance obligations and improving the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 provides for amendments to ASU 2014-09, amending the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy U.S. GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable consideration received as revenue if an arrangement does not meet the standard’s contract criteria. With the issuance of ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, these amendments are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 and allows for both retrospective and prospective methods of adoption. The Company plans to adopt these standards for the fiscal year beginning after December 15, 2017, and is in the process of determining the method of adoption and assessing the impact of ASU 2014-09 and its related amendments on its results of operations, financial position, and consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe they are of significance, or potential significance, to the Company.

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Composition of Certain Financial Statement Items

6 Months Ended

Jun. 30, 2016

Balance Sheet Related Disclosures [Abstract]

Composition of Certain Financial Statement Items

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Inventories

Inventories, net, consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	9,320	$	10,838
Work in process	3,839		2,914
Finished goods	12,513		11,403
	$	25,672	$	25,155

Property and Equipment

Property and equipment, net, consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Equipment held for rental or loan	$	59,320		$	55,774
Manufacturing equipment and computers	39,366			37,862
Leasehold improvements	9,401			8,984
Furniture and fixtures	5,075			4,841
Building and improvements	1,306			1,306
Land	270			270
Less: accumulated depreciation	(70,114		)	(64,318		)
	$	44,624		$	44,719

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Accrued payroll and employee-related expenses	$	18,916		$	15,797
Contingent consideration	5,232			5,154
Accrued clinical study expense	3,342			3,868
Deferred rent	1,466			1,485
Accrued royalties	1,048			1,044
Accrued interest	998			913
Accrued sales, income and excise taxes	909			1,318
Accrued legal costs	890			713
Other accrued expenses	3,757			5,143
Total accrued liabilities	36,558			35,435
Less: long-term portion	(1,666		)	(1,759		)
Accrued liabilities, current portion	$	34,892		$	33,676

Contingent Consideration

The Company recorded contingent liabilities as part of the AngioScore acquisition in June 2014 and the product acquisition from Upstream Peripheral Technologies, Ltd. (“Upstream”) in January 2013. The following table presents changes to the Company’s acquisition-related contingent consideration liability for the six-month period ended June 30, 2016:

	Contingent Consideration Liability
Beginning balance, January 1, 2016	$	5,153
Contingent consideration payments	(88		)
Contingent consideration accretion expense	167
Ending balance, June 30, 2016	$	5,232

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

The change in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2016 was as follows (in thousands).

	U.S. Medical		International Medical			Total
Balance as of December 31, 2015	$	130,410	$	22,206		$	152,616
Impact of changes in foreign currency and other	—		(3,134		)	(3,134		)
Balance as of June 30, 2016	$	130,410	$	19,072		$	149,482

Goodwill is allocated to the Company’s reporting units based on an analysis of both the relative historical and expected benefits. There have been no events or circumstances since the last analysis as of December 31, 2015 to indicate that the amount of goodwill may not be recoverable.

Acquired intangible assets consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
Acquired as part of Stellarex acquisition: (1)
In-process research and development	$	13,680		$	13,680
Technology	9,000			9,000
Trademark and trade names	400			400
Transition services agreement	530			530
Acquired as part of AngioScore acquisition: (2)
Technology	73,510			73,510
Customer relationships	23,320			23,320
Trademark and trade names	4,380			4,380
In-process research and development	1,254			1,254
Distributor relationships	1,940			1,940
Non-compete agreements	580			580
Acquired as part of Upstream acquisition (3)
Technology	2,172			2,172
Non-compete agreement	200			200
Patents	530			530
Less: accumulated amortization	(27,445		)	(21,040		)
	$	104,051		$	110,456

___________________

(1) In January 2015, the Company acquired Stellarex DCB assets, which included, among other things, the intellectual property, machinery and equipment, and inventories used in connection with the Stellarex DCB catheter.

(2) In June 2014, the Company acquired AngioScore, Inc.

(3) In January 2013, the Company acquired certain product lines from Upstream. As part of the acquisition, the Company acquired core technology intangible assets and an intangible asset related to non-compete agreements.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

DEBT

The following table summarizes the Company’s total gross outstanding debt as of June 30, 2016 and December 31, 2015 and the maturity dates of the Company’s borrowing arrangements:

	As of
(amounts in thousands)	June 30, 2016		December 31, 2015		Maturity Date	Weighted Average Interest Rate
Convertible Senior Notes	$	230,000	$	230,000	June 1, 2034	2.625%
Term Loan Facility	60,000		60,000		December 7, 2020	(1)
Revolving Loan Facility	19,232		24,232		December 7, 2020	(1)
Total	$	309,232	$	314,232

(1) The interest rates on the Term Loan Facility and Revolving Loan Facility are described below.

Convertible Notes

On June 3, 2014, the Company sold $230 million aggregate principal amount of 2.625% Convertible Senior Notes due 2034 (the “Notes”) under an underwriting agreement dated May 28, 2014. Interest is paid semi-annually in arrears on December 1 and June 1 of each year. The Notes mature on June 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the Notes. The initial conversion rate of the Notes is 31.9020 shares of the Company’s common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $31.35 per share). The conversion rate is subject to adjustment upon the occurrence of certain events specified in the indenture governing the Notes. Holders may surrender their Notes for conversion at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date. On or after June 5, 2018 and prior to June 5, 2021, the Company may redeem any or all of the Notes in cash if the closing price of the Company’s common stock exceeds 130% of the conversion price then in effect for a specified number of days, and on or after June 5, 2021, the Company may redeem the Notes without any such condition.

Holders of the Notes may require the Company to repurchase all or a portion of their Notes on each of June 5, 2021, June 5, 2024 and June 5, 2029, or following a fundamental change (as defined in the indenture governing the Notes), in each case, at a repurchase price in cash equal to 100% of the principal amount of the Notes being repurchased plus accrued and unpaid interest to, but excluding, the date of repurchase.

The Notes are subject to customary events of default, which may result in the acceleration of the maturity of the Notes.

The Notes are the Company’s senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes, rank equally in right of payment with any of the Company’s unsecured indebtedness that is not so subordinated, are effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness and are structurally subordinated to all indebtedness and other liabilities of the Company’s subsidiaries.

The Company received $222.5 million from the issuance of the Notes, net of $7.5 million of debt issuance costs incurred. The debt issuance costs are being amortized over a seven year period using the effective interest method. The Company used all of the net proceeds to fund the acquisition of AngioScore.

Term Loan Facility and Revolving Loan Facility

On December 7, 2015, the Company entered into a term credit and security agreement (the “Term Loan Credit Agreement”) and a revolving credit and security agreement (the “Revolving Loan Credit Agreement,” and together with the Term Loan Credit Agreement, the “Credit Agreements”) with MidCap Financial Trust and the other lenders party thereto. The Credit Agreements replaced the Credit and Security Agreement (the “Wells Fargo Credit Agreement”) entered into by the Company and Wells Fargo Bank, National Association on February 25, 2011. The Term Loan Credit Agreement provides for a five-year $60 million term loan facility (the “Term Loan Facility”) and the Revolving Loan Credit Agreement provides for a five-year $50 million revolving loan facility (the “Revolving Loan Facility”). The Revolving Loan Facility may be increased to up to $70 million, subject to lender approval. The obligations of the Company under the Credit Agreements are secured by a lien on substantially all of the assets of the Company.

The Term Loan Facility bears interest at the LIBOR Rate (as defined in the Term Loan Credit Agreement) plus an applicable margin of 7.50% per annum; provided that the applicable margin will be reduced to 6.50% if the Company’s EBITDA (as defined in the Term Loan Credit Agreement) is equal to or greater than $6 million for a specified prior period and no default or event of default has occurred and is occurring.  The Company may prepay all or a portion of the Term Loan Facility, subject to certain conditions and a prepayment fee, as specified in the Credit Agreements. The Term Loan Facility is subject to an exit fee of 4.0% of the amount advanced under the Term Loan Facility. Interest-only payments are due during the first 24 months of the Term Loan Facility, payable monthly in arrears, with principal payments beginning thereafter in equal monthly installments until maturity, provided that the Company may postpone making principal payments for an additional 12 months if certain conditions are met and the Administrative Agent and lenders agree to such extension. If the Administrative Agent and lenders do not agree to such extension, the prepayment fee and unearned portion of the exit fee will be waived.

The Company may borrow under the Revolving Loan Facility subject to borrowing base limitations, which allow the Company to borrow based on the value of eligible accounts receivable and inventory balances. As of June 30, 2016, the borrowing base was $37.3 million, based on the Company’s accounts receivable and inventory balances. Amounts drawn under the Revolving Loan Facility bear interest at the LIBOR Rate (as defined in the Revolving Loan Credit Agreement) plus 4.45% per annum, payable monthly in arrears, while the undrawn portion is subject to an unused line fee of 0.5% per annum. The Revolving Loan Facility is subject to a minimum balance, such that the Company pays the greater of (i) interest accrued on the actual amount drawn under the Revolving Loan Facility and (ii) interest accrued on 35% of the average borrowing base prior to the first anniversary of the Revolving Loan Facility and 50% of the average borrowing base thereafter. The Company may prepay and re-borrow amounts borrowed under the revolving line of credit without penalty.

The Credit Agreements require the Company to maintain minimum cash and cash equivalents of not less than $10 million and achieve net revenue in excess of certain specified thresholds. These agreements also contain certain restrictive covenants that limit and in some circumstances prohibit, the Company’s ability to, among other things, incur additional debt, sell, lease or transfer our assets, pay dividends on the Company’s common stock, make capital expenditures and investments, guarantee debt or obligations, create liens, repurchase common stock, enter into transactions with affiliates and enter into certain merger, consolidation or other reorganization transactions. The Company was in compliance with its debt covenants as of June 30, 2016.

The Credit Agreements contain customary events of default, including the failure to make required payments, the failure to comply with certain covenants or other agreements, the occurrence of a material adverse change, failure to pay certain other indebtedness and certain events of bankruptcy or insolvency. Upon the occurrence and continuation of an event of default, amounts due under the Credit Agreements may be accelerated. The Company had no events of default as of June 30, 2016.

As of June 30, 2016, the Term Loan Facility and Revolving Loan Facility had outstanding balances of $60.0 million and $19.2 million, respectively. At June 30, 2016, the interest rate on the Term Loan Facility was 8.00%, and the weighted average interest rate on the Revolving Loan Facility was 4.95%.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

The Company maintains equity plans that provide for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units, performance stock units (“PSUs”) and stock appreciation rights. The plans provide that stock options may be granted with exercise prices not less than the fair market value at the date of grant. Options granted through June 30, 2016 generally vest over four years and expire ten years from the date of grant. Restricted stock awards granted to non-employee members of the Board of Directors vest over one year. Restricted stock units granted to certain employees of the Company vest over four years. Each PSU represents the right to receive one share of the Company’s common stock upon the occurrence of certain specified events.

On March 15, 2016, the Company’s Board of Directors adopted, and stockholders approved at the Company’s annual meeting of stockholders in June 2016, The Spectranetics Corporation 2016 Incentive Award Plan (the “2016 Plan”), which authorizes the issuance for award grants of 2,500,000 shares of the Company’s common stock, plus the number of shares of common stock remaining available for future grants under the Company’s Amended and Restated 2006 Incentive Award Plan (the “2006 Plan”) on the date the Company’s stockholders approved the 2016 Plan. No further awards will be made under the 2006 Plan.

The Compensation Committee of the Board of Directors approved a grant of PSUs to certain of the Company’s officers in June 2014 and a grant of PSUs to the Company’s Chief Financial Officer in September 2015 upon the commencement of her employment (the “2014 PSUs”). The 2014 PSUs vest based on achieving specified performance measurements over a three-year “cliff” performance period plus an additional one year “cliff” time vesting. Earned 2014 PSUs vest 75% upon completion of the three-year performance period and 25%one year after the performance period. The 2014 PSUs have payout opportunities of between 0% and 250%. The performance targets include a compounded annual growth rate for revenue over a three-year period and Adjusted EBITDA for the year ended December 31, 2016.

In June 2016, the Board of Directors approved the grant of PSUs (the “2016 PSUs”) to the Company’s named executive officers and certain other employees pursuant to the 2016 Plan. The 2016 PSUs provide, among other things, that (i) the 2016 PSUs have an initial performance period of up to four years from the date of grant during which the target number of 2016 PSUs awarded to each recipient may be earned if approval of the Company’s Stellarex products is received from the U.S. Food and Drug Administration (“FDA”); (ii) the 2016 PSUs have a supplemental performance period of six calendar quarters following the calendar quarter in which FDA approval of the Company’s Stellarex products is received, and during which up to an additional 100% of the target number of 2016 PSUs may be earned depending on the degree to which the Company’s Stellarex products achieve specified U.S. market share goals; and (iii) no 2016 PSUs will be earned (and no supplemental performance period will occur) if the Company’s Stellarex products do not receive FDA approval during the initial four year performance period.

At June 30, 2016, there were 2.9 million shares available for future issuance under the Company’s incentive award plans, assuming issuance of common stock underlying all outstanding PSUs at target performance, and 1.2 million shares available, assuming issuance of common stock underlying all outstanding PSUs at maximum performance.

Valuation and Expense Information

The Company recognized stock-based compensation expense of $3.2 million and $2.8 million for the three months ended June 30, 2016 and 2015, respectively, and $6.6 million and $6.0 million for the six months ended June 30, 2016 and 2015, respectively. This expense consisted of compensation expense related to (1) employee stock options based on the value of share-based payment awards that are ultimately expected to vest during the period, (2) restricted stock awards issued to certain of the Company’s directors, (3) restricted stock units issued to certain of the Company’s employees, (4) PSUs issued to certain of the Company’s officers and other employees, and (5) the fair value of shares issued under the Company’s employee stock purchase plan. Stock-based compensation expense is recognized based on awards ultimately expected to vest and is reduced for estimated forfeitures. The Company recognizes compensation expense for non-performance related awards on a straight-line basis over the service period.

With respect to the PSUs, the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against the specified targets over the relevant performance period for each PSU grant as determined by the Compensation Committee of the Board of Directors. The Company estimates the fair value of the PSUs based on its closing stock price on the date of grant and its estimates of achieving such performance targets and records compensation expense on a graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the awards. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense is adjusted based upon the Company’s estimate of achieving such performance targets. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement.

The fair value of each share option award is estimated on the date of grant using the Black-Scholes pricing model based on assumptions noted in the following table. The Company’s employee stock options have various restrictions including vesting provisions and restrictions on transfers and hedging, among others, and are often exercised prior to their contractual expiration. Expected volatilities used in the fair value estimate are based on the historical volatility of the Company’s common stock. The Company uses historical data to estimate share option exercises, expected term and employee departure behavior used in the Black-Scholes pricing model. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield in effect at the time of grant.

The following is a summary of the assumptions used for the stock options granted during the three and six months ended June 30, 2016 and 2015, respectively, using the Black-Scholes pricing model:

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Expected life (years)	5.77		5.71		5.77		5.71
Risk-free interest rate	1.01	%	1.63	%	1.21	%	1.61	%
Expected volatility	46.54	%	42.07	%	46.27	%	42.10	%
Expected dividend yield	—		—		—		—

The weighted average grant date fair value of options granted during the three months ended June 30, 2016 and 2015 was $7.51 and $10.97, respectively, and during the six months ended June 30, 2016 and 2015 was $6.57 and $11.19, respectively.

The following table summarizes stock option activity during the six months ended June 30, 2016: 

	Shares		Weighted Average Exercise Price		Weighted Avg. Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2016	2,566,088		$	14.04
Granted	917,612		14.87
Exercised	(113,996	)	8.37
Forfeited	(52,392	)	18.75
Options outstanding at June 30, 2016	3,317,312		$	14.39	6.94	$	18,025,861
Options exercisable at June 30, 2016	1,862,559		$	11.87	5.32	$	14,113,843

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value based on the Company’s closing stock price of $18.71 as of June 30, 2016 that would have been received by the option holders had all option holders exercised their options as of that date. The total number of shares underlying in-the-money options exercisable as of June 30, 2016 was approximately 1.5 million. The total intrinsic value of options exercised was $0.9 million and $7.7 million during the six months ended June 30, 2016 and 2015, respectively.

The following table summarizes restricted stock award activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Restricted stock awards outstanding at January 1, 2016	26,463		$	27.41
Awarded	48,643		18.71
Vested/released	(26,463	)	27.41
Restricted stock awards outstanding at June 30, 2016	48,643		$	18.71

The following table summarizes restricted stock unit activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Restricted stock units outstanding at January 1, 2016	204,893		$	24.08
Awarded	190,776		14.98
Vested/released	(42,922	)	25.14
Forfeited	(11,754	)	22.79
Restricted stock units outstanding at June 30, 2016	340,993		$	18.90

The following table summarizes PSU activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Performance stock units outstanding at January 1, 2016	496,656		$	22.82
Awarded	275,330		18.16
Vested/released	(18,101	)	23.43
Forfeited	(7,943	)	23.43
Performance stock units outstanding at June 30, 2016	745,942		$	21.08

As of June 30, 2016, there was $22.7 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Company’s incentive award plans, using the Company’s current estimate of performance for the PSUs, which could be higher or lower in the future based on the actual achievement of performance targets. This expense is based on an assumed future forfeiture rate of approximately 6.68% per year for stock options and restricted stock units for Company employees and is expected to be recognized over a weighted-average period of approximately 2.7 years.

Employee Stock Purchase Plan

On December 9, 2015, the Company’s Board of Directors adopted, and stockholders approved at the Company’s annual meeting of stockholders in June 2016, an amendment to The Spectranetics Corporation 2010 Employee Stock Purchase Plan (“ESPP”) to increase the number of shares of common stock available for sale under the ESPP by 1,000,000 shares. The amendment is effective as of January 1, 2016, the first day of the 2016 semi-annual offering period under the ESPP.

The ESPP, as amended, provides for the sale of up to 1,700,000 shares of common stock to eligible employees, limited to the lesser of 2,500 shares per employee per six-month period or a fair market value of $25,000 per employee per calendar year. Stock purchased under the ESPP is restricted from sale for one year following the date of purchase. Stock can be purchased from amounts accumulated through payroll deductions during each six-month period. The purchase price is equal to 85% of the lower of the fair market value of the Company’s common stock at the beginning or end of the respective six-month offering period. This discount does not exceed the maximum discount rate permitted for plans of this type under Section 423 of the Internal Revenue Code of 1986, as amended. The ESPP is compensatory for financial reporting purposes. At June 30, 2016, there were approximately 0.9 million shares available for future issuance under the ESPP.

The fair value of the shares offered within the semi-annual purchase periods under the ESPP is determined on the date of grant using the Black-Scholes option-pricing model. The expected term of six months is based upon the offering period of the ESPP. Expected volatility is determined based on the historical volatility from daily share price observations for the Company’s stock covering a period commensurate with the expected term of the ESPP. The risk-free interest rate is based on the six-month U.S. Treasury daily yield rate. The expected dividend yield is based on the Company’s historical practice of electing not to pay dividends to its stockholders. The Company recognized compensation expense related to the ESPP of $0.3 million and $0.2 million for the three months ended June 30, 2016 and 2015, respectively, and $0.7 million and $0.4 million for the six months ended June 30, 2016 and 2015, respectively.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Loss Per Share

NET LOSS PER SHARE

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding (excluding shares of restricted stock). Shares issued during the period and shares reacquired during the period are weighted for the portion of the period they were outstanding. Diluted net loss per share is computed in a manner consistent with that of basic net loss per share, while giving effect to all potentially dilutive common shares outstanding during the period, which include the assumed exercise of stock options and the assumed vesting of restricted stock using the treasury stock method, and the assumed conversion of shares under the Notes using the “if-converted” method.

Options to purchase common stock, the vesting of restricted stock and PSUs, and shares issuable upon conversion of the Notes are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for the three and six months ended June 30, 2016 and 2015 as a result of the net losses incurred in those periods. Therefore, diluted net loss per share was the same as basic net loss per share for the three and six months ended June 30, 2016 and 2015. Stock options, restricted stock awards, restricted stock units, PSUs, and shares issuable upon the conversion of the Notes outstanding at June 30, 2016 and 2015, which are excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2016 and 2015, are shown in the table below:

	Six Months Ended June 30,
	2016	2015
Options to purchase common stock	3,317,312	2,652,086
Non-vested restricted stock awards and restricted stock units	389,636	270,702
Non-vested PSUs	745,942	487,158
Shares issuable upon conversion of the Notes	7,337,459	7,337,459
Potentially dilutive common shares	11,790,349	10,747,405

A summary of the net loss per share calculation is shown below for the periods indicated (in thousands, except share and per share amounts):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Net loss	$	(14,906	)	$	(7,216	)	$	(32,197	)	$	(34,521	)
Common shares outstanding:
Historical common shares outstanding at beginning of period	42,772,670			42,283,446			42,632,771			42,034,063
Weighted average common shares issued	31,783			105,676			118,117			239,065
Weighted average common shares outstanding — basic and diluted	42,804,453			42,389,122			42,750,888			42,273,128
Net loss per share — basic and diluted	$	(0.35	)	$	(0.17	)	$	(0.75	)	$	(0.82	)

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Segment Reporting

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company operates in one distinct line of business consisting of developing, manufacturing, marketing, and distributing disposable products and a proprietary excimer laser system to treat certain vascular and coronary conditions.

Within this line of business, the Company has two operating segments, which were identified on a geographic basis: (1) U.S. Medical and (2) International Medical. U.S. Medical and International Medical offer substantially the same products and services but operate in different geographic regions, have different distribution networks, and different regulatory environments. The primary performance measure for the operating segments is revenue.

Additional information regarding each operating segment is discussed below.

U. S. Medical

Products offered by this segment include medical devices used in minimally invasive procedures within the cardiovascular system, including fiber-optic devices and non-fiber-optic products (disposables), an excimer laser system (equipment), and the service of the excimer laser system (service). The Company is subject to product approvals from the FDA and Health Canada. The Company’s products are used in multiple vascular procedures, including peripheral atherectomy, crossing arterial blockages, coronary atherectomy and thrombectomy, and the removal of cardiac lead wires from patients with pacemakers and cardiac defibrillators. This segment’s customers are primarily located in the United States and Canada.

U.S. Medical also includes the corporate headquarters of the Company. All manufacturing, research and development, and corporate administrative functions are performed within this operating segment. For the three and six months ended June 30, 2016 and 2015, a portion of research, development and other technology expenses, and general and administrative expenses incurred in the U.S. has been allocated to International Medical based on a percentage of revenue because these expenses support the Company’s ability to generate revenue within the International Medical segment.

Manufacturing activities are performed entirely within the U.S. Medical segment. Revenue associated with intersegment product transfers to International Medical was $3.4 million and $3.6 million for the three months ended June 30, 2016 and 2015, respectively, and $6.8 million and $6.5 million for the six months ended June 30, 2016 and 2015, respectively. Revenue is based upon transfer prices, which provide for intersegment profit eliminated upon consolidation.

International Medical

The International Medical segment has its headquarters in the Netherlands, and serves Europe, the Middle East, Asia Pacific, Latin America, and Puerto Rico. Products offered by this segment are substantially the same as those offered by U.S. Medical, except that Stellarex DCB products are available for sale in Europe and certain other international markets but are not yet approved for sale in the U.S. The Company is subject to product approvals from various international regulatory bodies. The International Medical segment is engaged primarily in distribution activities, with no manufacturing or product development functions. Certain U.S.-incurred research, development and other technology expenses, and general and administrative expenses have been allocated to International Medical based on a percentage of revenue because these expenses support the Company’s ability to generate revenue within the International Medical segment.

Summary financial information relating to operating segment operations is shown below. Intersegment transfers as well as intercompany assets and liabilities are excluded from the information provided (in thousands):

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Revenue:
U.S. Medical:
Disposable products	$	53,840	$	48,793	$	104,315	$	94,280
Laser, service, and other	2,494		2,800		5,001		5,913
Subtotal	56,334		51,593		109,316		100,193
International Medical:
Disposable products	10,145		9,094		18,678		16,551
Laser, service, and other	1,269		990		2,638		2,355
Subtotal	11,414		10,084		21,316		18,906
Total revenue	$	67,748	$	61,677	$	130,632	$	119,099

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Segment operating loss:
U.S. Medical	$	(9,849	)	$	(5,174	)	$	(22,177	)	$	(30,100	)
International Medical	(1,455		)	(84		)	(3,046		)	(383		)
Total operating loss	$	(11,304	)	$	(5,258	)	$	(25,223	)	$	(30,483	)

	As of
	June 30, 2016		December 31, 2015
Segment assets:
U.S. Medical	$	405,612	$	430,956
International Medical	33,649		37,043
Total assets	$	439,261	$	467,999

For the three and six months ended June 30, 2016 and 2015, no individual customer represented 10% or more of consolidated revenue. No individual countries, other than the United States, represented at least 10% of consolidated revenue for the three and six months ended June 30, 2016 or 2015.

Revenue by Product Line

	Three Months Ended   June 30,				Six Months Ended   June 30,
(in thousands)	2016		2015		2016		2015
Revenue
Disposable products:
Vascular intervention	$	46,218	$	40,630	$	88,130	$	77,143
Lead management	17,767		17,257		34,863		33,688
Total disposable products	63,985		57,887		122,993		110,831
Laser, service, and other	3,763		3,790		7,639		8,268
Total revenue	$	67,748	$	61,677	$	130,632	$	119,099

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company recorded income tax expense of $0.2 million and $0.1 million for the three months ended June 30, 2016 and 2015, respectively, and $0.4 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively, consisting of current foreign and state income tax expense and deferred federal and state income tax expense. The Company’s deferred U.S. federal and state tax expense in 2016 primarily represents an increase in the deferred tax liability related to the difference between tax and book accounting for the portion of its goodwill that is tax-deductible, which is amortized over 15 years for tax purposes but not amortized for book purposes. Given its continuing tax losses, the Company does not expect to incur current U.S. federal tax expense or benefit against its pretax income during the year ending December 31, 2016.

As of June 30, 2016, the Company had gross deferred tax assets of approximately $93.6 million. The Company maintains a valuation allowance against substantially all of its deferred tax assets, in excess of its nettable deferred tax liabilities, that it does not consider to meet the more-likely-than-not criteria for recognition. In assessing the realizability of deferred tax assets (“DTAs”), management considers whether it is more-likely-than-not that some portion or all of the DTAs will not be realized. The Company’s ability to realize the benefit of its DTAs in future periods will depend on the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the Company’s projected future taxable income, reversal of deferred tax liabilities and tax planning strategies in making this assessment. Because the Company expects to generate losses during the Stellarex development period through 2017, it believes that it will not be generating sufficient taxable income to realize DTAs. The Company will continue to assess the need for a valuation allowance in future periods and does not expect to reduce the valuation allowance against its DTAs until it has a sufficient historical trend of taxable income and can predict future income with a higher degree of certainty. In the event there is a change in circumstances in the future that would affect the utilization of the Company’s DTAs, the tax provision in that period would be adjusted by the amount of the assets then deemed to be realizable.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Litigation

The Company is from time to time subject to, and is presently involved in, various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business. Such matters are subject to many uncertainties and to outcomes the financial impacts of which are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its consolidated financial statements for costs related to claims, settlements, and judgments where management has assessed that a loss is probable and an amount can be reasonably estimated. The Company’s significant legal proceedings are discussed below. The costs associated with such proceedings or other legal proceedings that may be commenced could have a material adverse effect on the Company’s future consolidated results of operations, financial position, or cash flows.

For certain cases described herein, management is unable to provide a meaningful estimate of the possible loss, if any, or range of possible loss because, among other reasons, (i) the proceedings are in various stages; (ii) damages may not have been sought; (iii) damages may be determined to be unsupported; (iv) there is uncertainty as to the outcome of pending appeals or motions; (v) there are significant factual issues to be resolved; and/or (vi) there are novel legal issues or unsettled legal theories to be presented or a large number of parties.  For these cases, however, the Company does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on the Company’s financial condition, though the outcomes could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

TriReme Patent Infringement and Breach of Fiduciary Duty

In July 2012, AngioScore sued TriReme Medical, Inc. (“TriReme”), Eitan Konstantino (“Konstantino”), Quattro Vascular Pte, Ltd. (“Quattro”), and QT Vascular Ltd. (“QT Vascular”), in the U.S. District Court for the Northern District of California (the “Court”), alleging patent infringement (the “Northern District of California Action”). In this action, AngioScore, the plaintiff, sought injunctive relief and damages. In June 2014, AngioScore amended its complaint (i) to allege that TriReme’s Chief Executive Officer, Konstantino, who is a former founder, officer, and member of the board of directors of AngioScore, breached his fiduciary duties to AngioScore by developing the Chocolate balloon catheter while he served as a member of the AngioScore board of directors, and (ii) to add claims against the other defendants for aiding and abetting that breach.

Trial on the breach of fiduciary duty case occurred in April 2015. In July 2015, the Court ruled in favor of AngioScore, finding that Konstantino breached his fiduciary duties to AngioScore, that TriReme and Quattro aided and abetted that breach, and that QT Vascular is liable for the acts of TriReme and Quattro. In its ruling, the Court found that Konstantino breached his fiduciary duties to AngioScore by developing the Chocolate balloon catheter while serving on the AngioScore board of directors and failing to present that corporate opportunity to AngioScore. Konstantino subsequently launched the product through TriReme, Quattro and QT Vascular. The Court awarded AngioScore $20.034 million against all defendants plus disgorgement from Konstantino of all benefits he accrued from his breach of fiduciary duties, including amounts he received for assigning his intellectual property rights to the Chocolate balloon, a royalty on past and future sales of the Chocolate balloon, and all of his shares and options in QT Vascular.

Trial on the patent infringement case was held in September 2015. The jury found against AngioScore in the patent infringement case and found that certain of the asserted claims of the patent are invalid. The patent infringement verdict has no impact on the Court’s findings or award of damages in connection with the breach of fiduciary duty claims or the ability of AngioScore to recover fees and costs advanced to Konstantino, as discussed below. The Court entered judgment in both the breach of fiduciary duty case and the patent infringement case in October 2015. The defendants filed an appeal of the rulings with the United States Court of Appeals for the Federal Circuit (the “Federal Circuit”). Oral argument on the appeal was held on June 7, 2016. On July 21, 2016, the Federal Circuit reversed the breach of fiduciary duty and state law rulings on procedural grounds, finding that the trial Court lacked jurisdiction to hear the state law claims. The Federal Circuit also affirmed the trial Court’s ruling that the defendants are not entitled to attorneys’ fees in the patent infringement case. No part of the potential financial award associated with this matter has been previously reflected in the Company’s financial statements.

TriReme Inventorship

In June 2014, TriReme sued AngioScore in the Court seeking to change the inventorship of certain patents owned by AngioScore. TriReme alleged that an Israeli physician, Chaim Lotan, should be named as a co-inventor on three patents owned by AngioScore. Dr. Lotan allegedly assigned any rights he may have had in the three patents to TriReme. AngioScore moved to dismiss this litigation in January 2015, asserting that Dr. Lotan previously assigned any rights he may have had in the patents to AngioScore in 2003. In March 2015, the Court granted AngioScore’s motion to dismiss this case. TriReme appealed the Court’s ruling, and on February 5, 2016, an appellate court reversed the Court’s ruling dismissing the case and remanded the case for further proceedings.

Konstantino Indemnification and Advancement of Fees

In May 2014, AngioScore sued Konstantino in the Superior Court for the County of Alameda, State of California, seeking a declaratory judgment that AngioScore owes no indemnification obligations to Konstantino under the indemnification agreement between AngioScore and Konstantino (the “AngioScore Indemnification Agreement”) resulting from AngioScore’s claim that Konstantino breached his fiduciary duties to AngioScore while serving as a member of the board of directors of AngioScore (the “Alameda Action”). In November 2014, the court stayed the Alameda Action pending the outcome of the Northern District of California Action.  

In May 2014, Konstantino sued AngioScore in the Delaware Court of Chancery (the “Delaware Action”) seeking a ruling that, under the AngioScore Indemnification Agreement, AngioScore must indemnify and advance Konstantino’s attorneys’ fees and costs related to the defense of the breach of fiduciary duty claims in the Northern District of California Action and the Alameda Action and his pursuit of the Delaware Action for advancement of fees. In June 2014, AngioScore filed counter-claims against Konstantino for violating the AngioScore Indemnification Agreement, which requires, in part, that he cooperate in identifying other sources of advancement, and AngioScore filed a third-party complaint against TriReme, Quattro, and QT Vascular seeking contribution from the defendant companies for amounts advanced to Konstantino. Konstantino filed a motion for summary judgment that he is entitled to advancement from AngioScore and, in August 2014, the court granted the motion. In September 2014, AngioScore filed amended counterclaims and an amended third-party complaint that included additional defendant TriReme Singapore. The defendant companies filed a motion to dismiss the amended third-party complaint on the grounds that it failed to state a claim and the court does not have jurisdiction over three of the defendant companies that were incorporated in Singapore. In October 2015, the court denied the defendant companies’ motion to dismiss, and the Company filed a motion for summary judgment against the defendant companies seeking reimbursement and contribution of fees the Company advanced to Konstantino. In November 2015, the court granted in part the Company’s motion and ordered that TriReme is liable for 50% of advanced fees and costs, and must pay all fees and costs to be advanced moving forward until such fees and costs equal the fees and costs paid by AngioScore. Thereafter, the fees and costs will be advanced 50% by TriReme and 50% by AngioScore.

The Company cannot at this time determine the likelihood of any outcome and, as of June 30, 2016, has no amounts accrued for potential damages. During the six months ended June 30, 2016, the Company incurred $0.7 million in legal fees associated with these matters. These expenses are included within the “Acquisition transaction, integration and legal costs” line of the condensed consolidated statements of operations and comprehensive loss.

Shareholder Litigation

On August 27, 2015, a person purporting to represent a class of persons who purchased securities of the Company between February 19, 2015 and July 23, 2015 filed a lawsuit against the Company and certain of its officers in the United States District Court for the District of Colorado. The lawsuit asserts claims under Sections 10(b) and 20 of the Securities Exchange Act of 1934, alleging that certain of the Company’s public statements concerning its projected revenue for 2015 were false and misleading. On December 18, 2015, the court appointed lead plaintiff and lead counsel. On March 1, 2016, plaintiffs filed an amended complaint, including additional allegations challenging certain statements in addition to those concerning the Company’s projected revenue for 2015. The class period in the amended complaint runs from February 27, 2014 to July 23, 2015. The Company believes that the lawsuit is without merit and intends to defend itself vigorously. In June 2016, the Company filed a motion to dismiss the amended complaint, and plaintiffs filed their response in July 2016. The Company cannot at this time determine the likelihood of any outcome or whether the impact will be material and, as of June 30, 2016, has no amounts accrued for potential damages in this case. An adverse outcome could have a material adverse effect on the Company’s business, results of operations or financial condition.

Other

The Company is involved in other legal proceedings in the normal course of business and does not expect them to have a material adverse effect on its business.

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Composition of Certain Financial Statement Items (Tables)

6 Months Ended

Jun. 30, 2016

Balance Sheet Related Disclosures [Abstract]

Schedule of Inventories

Inventories, net, consisted of the following (in thousands):

	June 30, 2016		December 31, 2015
Raw materials	$	9,320	$	10,838
Work in process	3,839		2,914
Finished goods	12,513		11,403
	$	25,672	$	25,155

Schedule of Property and Equipment

Property and equipment, net, consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Equipment held for rental or loan	$	59,320		$	55,774
Manufacturing equipment and computers	39,366			37,862
Leasehold improvements	9,401			8,984
Furniture and fixtures	5,075			4,841
Building and improvements	1,306			1,306
Land	270			270
Less: accumulated depreciation	(70,114		)	(64,318		)
	$	44,624		$	44,719

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands): 

	June 30, 2016			December 31, 2015
Accrued payroll and employee-related expenses	$	18,916		$	15,797
Contingent consideration	5,232			5,154
Accrued clinical study expense	3,342			3,868
Deferred rent	1,466			1,485
Accrued royalties	1,048			1,044
Accrued interest	998			913
Accrued sales, income and excise taxes	909			1,318
Accrued legal costs	890			713
Other accrued expenses	3,757			5,143
Total accrued liabilities	36,558			35,435
Less: long-term portion	(1,666		)	(1,759		)
Accrued liabilities, current portion	$	34,892		$	33,676

Schedule of Changes in Contingent Consideration

The following table presents changes to the Company’s acquisition-related contingent consideration liability for the six-month period ended June 30, 2016:

	Contingent Consideration Liability
Beginning balance, January 1, 2016	$	5,153
Contingent consideration payments	(88		)
Contingent consideration accretion expense	167
Ending balance, June 30, 2016	$	5,232

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The change in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2016 was as follows (in thousands).

	U.S. Medical		International Medical			Total
Balance as of December 31, 2015	$	130,410	$	22,206		$	152,616
Impact of changes in foreign currency and other	—		(3,134		)	(3,134		)
Balance as of June 30, 2016	$	130,410	$	19,072		$	149,482

Schedule of Acquired Intangible Assets

Acquired intangible assets consisted of the following (in thousands):

	June 30, 2016			December 31, 2015
Acquired as part of Stellarex acquisition: (1)
In-process research and development	$	13,680		$	13,680
Technology	9,000			9,000
Trademark and trade names	400			400
Transition services agreement	530			530
Acquired as part of AngioScore acquisition: (2)
Technology	73,510			73,510
Customer relationships	23,320			23,320
Trademark and trade names	4,380			4,380
In-process research and development	1,254			1,254
Distributor relationships	1,940			1,940
Non-compete agreements	580			580
Acquired as part of Upstream acquisition (3)
Technology	2,172			2,172
Non-compete agreement	200			200
Patents	530			530
Less: accumulated amortization	(27,445		)	(21,040		)
	$	104,051		$	110,456

___________________

(1) In January 2015, the Company acquired Stellarex DCB assets, which included, among other things, the intellectual property, machinery and equipment, and inventories used in connection with the Stellarex DCB catheter.

(2) In June 2014, the Company acquired AngioScore, Inc.

(3) In January 2013, the Company acquired certain product lines from Upstream. As part of the acquisition, the Company acquired core technology intangible assets and an intangible asset related to non-compete agreements.

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of Outstanding Debt

The following table summarizes the Company’s total gross outstanding debt as of June 30, 2016 and December 31, 2015 and the maturity dates of the Company’s borrowing arrangements:

	As of
(amounts in thousands)	June 30, 2016		December 31, 2015		Maturity Date	Weighted Average Interest Rate
Convertible Senior Notes	$	230,000	$	230,000	June 1, 2034	2.625%
Term Loan Facility	60,000		60,000		December 7, 2020	(1)
Revolving Loan Facility	19,232		24,232		December 7, 2020	(1)
Total	$	309,232	$	314,232

(1) The interest rates on the Term Loan Facility and Revolving Loan Facility are described below.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Options, Valuation Assumptions

The following is a summary of the assumptions used for the stock options granted during the three and six months ended June 30, 2016 and 2015, respectively, using the Black-Scholes pricing model:

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Expected life (years)	5.77		5.71		5.77		5.71
Risk-free interest rate	1.01	%	1.63	%	1.21	%	1.61	%
Expected volatility	46.54	%	42.07	%	46.27	%	42.10	%
Expected dividend yield	—		—		—		—

Summary of Stock Options, Activity

The following table summarizes stock option activity during the six months ended June 30, 2016: 

	Shares		Weighted Average Exercise Price		Weighted Avg. Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2016	2,566,088		$	14.04
Granted	917,612		14.87
Exercised	(113,996	)	8.37
Forfeited	(52,392	)	18.75
Options outstanding at June 30, 2016	3,317,312		$	14.39	6.94	$	18,025,861
Options exercisable at June 30, 2016	1,862,559		$	11.87	5.32	$	14,113,843

Summary of Restricted Stock and Restricted Stock Unit Activity

The following table summarizes restricted stock award activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Restricted stock awards outstanding at January 1, 2016	26,463		$	27.41
Awarded	48,643		18.71
Vested/released	(26,463	)	27.41
Restricted stock awards outstanding at June 30, 2016	48,643		$	18.71

The following table summarizes restricted stock unit activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Restricted stock units outstanding at January 1, 2016	204,893		$	24.08
Awarded	190,776		14.98
Vested/released	(42,922	)	25.14
Forfeited	(11,754	)	22.79
Restricted stock units outstanding at June 30, 2016	340,993		$	18.90

Summary of PSU Activity

The following table summarizes PSU activity during the six months ended June 30, 2016:

	Shares		Weighted Average Grant Date Fair Value
Performance stock units outstanding at January 1, 2016	496,656		$	22.82
Awarded	275,330		18.16
Vested/released	(18,101	)	23.43
Forfeited	(7,943	)	23.43
Performance stock units outstanding at June 30, 2016	745,942		$	21.08

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Stock options, restricted stock awards, restricted stock units, PSUs, and shares issuable upon the conversion of the Notes outstanding at June 30, 2016 and 2015, which are excluded from the computation of diluted net loss per share for the three and six months ended June 30, 2016 and 2015, are shown in the table below:

	Six Months Ended June 30,
	2016	2015
Options to purchase common stock	3,317,312	2,652,086
Non-vested restricted stock awards and restricted stock units	389,636	270,702
Non-vested PSUs	745,942	487,158
Shares issuable upon conversion of the Notes	7,337,459	7,337,459
Potentially dilutive common shares	11,790,349	10,747,405

Schedule of Earnings Per Share, Basic and Diluted

A summary of the net loss per share calculation is shown below for the periods indicated (in thousands, except share and per share amounts):

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Net loss	$	(14,906	)	$	(7,216	)	$	(32,197	)	$	(34,521	)
Common shares outstanding:
Historical common shares outstanding at beginning of period	42,772,670			42,283,446			42,632,771			42,034,063
Weighted average common shares issued	31,783			105,676			118,117			239,065
Weighted average common shares outstanding — basic and diluted	42,804,453			42,389,122			42,750,888			42,273,128
Net loss per share — basic and diluted	$	(0.35	)	$	(0.17	)	$	(0.75	)	$	(0.82	)

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of Revenue by Reporting Segments

Summary financial information relating to operating segment operations is shown below. Intersegment transfers as well as intercompany assets and liabilities are excluded from the information provided (in thousands):

	Three Months Ended   June 30,				Six Months Ended   June 30,
	2016		2015		2016		2015
Revenue:
U.S. Medical:
Disposable products	$	53,840	$	48,793	$	104,315	$	94,280
Laser, service, and other	2,494		2,800		5,001		5,913
Subtotal	56,334		51,593		109,316		100,193
International Medical:
Disposable products	10,145		9,094		18,678		16,551
Laser, service, and other	1,269		990		2,638		2,355
Subtotal	11,414		10,084		21,316		18,906
Total revenue	$	67,748	$	61,677	$	130,632	$	119,099

Schedule of Operating Profit (Loss) by Reporting Segments

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Segment operating loss:
U.S. Medical	$	(9,849	)	$	(5,174	)	$	(22,177	)	$	(30,100	)
International Medical	(1,455		)	(84		)	(3,046		)	(383		)
Total operating loss	$	(11,304	)	$	(5,258	)	$	(25,223	)	$	(30,483	)

Schedule of Assets by Reporting Segment

	As of
	June 30, 2016		December 31, 2015
Segment assets:
U.S. Medical	$	405,612	$	430,956
International Medical	33,649		37,043
Total assets	$	439,261	$	467,999

Schedule of Revenue from External Customers by Products and Services

Revenue by Product Line

	Three Months Ended   June 30,				Six Months Ended   June 30,
(in thousands)	2016		2015		2016		2015
Revenue
Disposable products:
Vascular intervention	$	46,218	$	40,630	$	88,130	$	77,143
Lead management	17,767		17,257		34,863		33,688
Total disposable products	63,985		57,887		122,993		110,831
Laser, service, and other	3,763		3,790		7,639		8,268
Total revenue	$	67,748	$	61,677	$	130,632	$	119,099

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General (Details) (Details)	Jun. 30, 2016 country
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of Countries in which Entity Operates	65

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Composition of Certain Financial Statement Items (Schedule of Inventories) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Balance Sheet Related Disclosures [Abstract]
Raw materials	$ 9,320	$ 10,838
Work in process	3,839	2,914
Finished goods	12,513	11,403
Inventories, net	$ 25,672	$ 25,155

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Composition of Certain Financial Statement Items (Schedule of Property and Equipment) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Less: accumulated depreciation	$ (70,114)	$ (64,318)
Property and equipment, net	44,624	44,719
Equipment held for rental or loan
Property, Plant and Equipment [Line Items]
Property and equipment, gross	59,320	55,774
Manufacturing equipment and computers
Property, Plant and Equipment [Line Items]
Property and equipment, gross	39,366	37,862
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	9,401	8,984
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	5,075	4,841
Building and improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,306	1,306
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 270	$ 270

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Composition of Certain Financial Statement Items (Schedule of Accrued Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accrued Liabilities, Current [Abstract]
Accrued payroll and employee-related expenses	$ 18,916	$ 15,797
Contingent consideration	5,232	5,154
Accrued clinical study expense	3,342	3,868
Deferred rent	1,466	1,485
Accrued royalties	1,048	1,044
Accrued interest	998	913
Accrued sales, income and excise taxes	909	1,318
Accrued legal costs	890	713
Other accrued expenses	3,757	5,143
Total accrued liabilities	36,558	35,435
Less: long-term portion	(1,666)	(1,759)
Accrued liabilities, current portion	$ 34,892	$ 33,676

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Composition of Certain Financial Statement Items (Schedule of Changes in Contingent Consideration) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Business Combinations [Abstract]
Beginning balance, January 1, 2016			$ 5,153
Contingent consideration payments			(88)
Contingent consideration accretion expense	$ 67	$ 1,060	167	$ 2,084
Ending balance, June 30, 2016	$ 5,232		$ 5,232

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Goodwill and Intangible Assets (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Goodwill [Roll Forward]
Goodwill	$ 149,482	$ 152,616
U.S. Medical
Goodwill [Roll Forward]
Goodwill	130,410	130,410
International Medical
Goodwill [Roll Forward]
Goodwill	$ 19,072	$ 22,206

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Goodwill and Intangible Assets (Schedule of Goodwill) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Goodwill [Line Items]
Beginning balance	$ 152,616
Impact of changes in foreign currency and other	(3,134)
Ending balance	149,482
U.S. Medical
Goodwill [Line Items]
Beginning balance	130,410
Impact of changes in foreign currency and other	0
Ending balance	130,410
International Medical
Goodwill [Line Items]
Beginning balance	22,206
Impact of changes in foreign currency and other	(3,134)
Ending balance	$ 19,072

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Goodwill and Intangible Assets (Schedule of Acquired Intangible Assets) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Less: accumulated amortization	$ (27,445)	$ (21,040)
Other intangible assets, net	104,051	110,456
Patents
Finite-Lived Intangible Assets [Line Items]
Patents	530	530
Stellarex | Technology
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	9,000	9,000
Stellarex | Trademark and trade names
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	400	400
Stellarex | In-process research and development
Finite-Lived Intangible Assets [Line Items]
In-process research and development (“IPR&D”)	13,680	13,680
Stellarex | Transition services agreement
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	530	530
AngioScore | Technology
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	73,510	73,510
AngioScore | Customer relationships
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	23,320	23,320
AngioScore | Trademark and trade names
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	4,380	4,380
AngioScore | In-process research and development
Finite-Lived Intangible Assets [Line Items]
In-process research and development (“IPR&D”)	1,254	1,254
AngioScore | Distributor relationships
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	1,940	1,940
AngioScore | Non-compete agreement
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	580	580
Upstream | Technology
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	2,172	2,172
Upstream | Non-compete agreement
Finite-Lived Intangible Assets [Line Items]
Acquired intangible assets	$ 200	$ 200

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Debt (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		6 Months Ended
	Jun. 03, 2014	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Convertible Senior Notes		$ 230,000	$ 230,000
Line of credit, borrowing capacity		37,300
Revolving Loan Facility, minimum cash and cash equivalents required		10,000
Term Loan Facility		60,000	60,000
Revolving Loan Facility		$ 19,232	$ 24,232
Convertible Notes
Debt Instrument [Line Items]
Convertible Senior Notes	$ 230,000
Stated interest rate	2.625%	2.625%
Conversion ratio		31.9020
Conversion price		$ 31.35
Threshold percentage of stock price trigger		130.00%
Percent of principal amount redeemed		100.00%
Proceeds from debt, net of issuance costs	$ 222,500
Debt issuance costs	$ 7,500
Discount amortization period		7 years
Term Loan
Debt Instrument [Line Items]
Stated interest rate		8.00%
Debt instrument, term		5 years
Debt instrument, face amount		$ 60,000
Debt Instrument, exit fee		4.00%
Line of Credit
Debt Instrument [Line Items]
Stated interest rate		4.95%
Debt instrument, term		5 years
Line of credit, maximum availability		$ 50,000
Line of credit, fee percentage on unused portion		0.50%
Borrowings under revolving line of credit		35.00%
Percentage of average borrowing base after first anniversary		50.00%
Minimum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Debt instrument, EBITDA required to reduce LIBOR margin rate		$ 6,000
Minimum | Term Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Line of credit, interest rate spread		6.50%
Maximum | Term Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Line of credit, interest rate spread		7.50%
Maximum | Line of Credit
Debt Instrument [Line Items]
Line of credit, maximum availability		$ 70,000
Maximum | Line of Credit | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Line of credit, interest rate spread		4.45%

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Debt (Schedule of Outstanding Debt) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015	Jun. 03, 2014
Debt Instrument [Line Items]
Convertible Senior Notes	$ 230,000	$ 230,000
Term Loan Facility	60,000	60,000
Revolving Loan Facility	19,232	24,232
Total	$ 309,232	$ 314,232
Convertible Notes
Debt Instrument [Line Items]
Convertible Senior Notes			$ 230,000
Maturity date	Jun. 01, 2034
Interest rate	2.625%		2.625%
Term Loan
Debt Instrument [Line Items]
Maturity date	Dec. 07, 2020
Interest rate	8.00%
Line of Credit
Debt Instrument [Line Items]
Maturity date	Dec. 07, 2020
Interest rate	4.95%

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Stock-Based Compensation (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future issuance	2,900,000		2,900,000
Share price	$ 18.71		$ 18.71
Unrecognized compensation expense	$ 22,700,000		$ 22,700,000
Estimated forfeiture rate	6.68%		6.68%
Weighted-average recognition period			2 years 8 months 16 days
Number of shares authorized	2,500,000		2,500,000
Stock-based compensation expense	$ 3,200,000	$ 2,800,000	$ 6,609,000	$ 5,974,000
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future issuance	900,000		900,000
Number of additional shares authorized			1,000,000
Number of shares authorized	1,700,000		1,700,000
Maximum number of shares per employee			2,500
Maximum fair value per employee			$ 25,000
Stock purchase holding period			1 year
Employee stock purchase plan purchase period			6 months
Purchase price of common stock, percent			85.00%
Expected term			6 months
Stock-based compensation expense	$ 300,000	$ 200,000	$ 700,000	$ 400,000
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for future issuance	1,200,000		1,200,000
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			4 years
Award expiration period			10 years
Weighted average grant date fair value of options	$ 7.51	$ 10.97	$ 6.57	$ 11.19
In-the-money options exercisable amount	1,500,000		1,500,000
Total intrinsic value of options exercised			$ 900,000	$ 7,700,000
Expected term	5 years 9 months 7 days	5 years 8 months 16 days	5 years 9 months 7 days	5 years 8 months 16 days
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			1 year
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			4 years
Performance Stock Units 2014 [Member] | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target payout opportunities	0.00%		0.00%
Performance Stock Units 2014 [Member] | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Target payout opportunities	250.00%		250.00%
Performance Stock Units 2014 [Member] | Vesting after three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
Award vesting percent			75.00%
Performance Stock Units 2014 [Member] | Vesting in fourth year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			1 year
Award vesting percent			25.00%
Performance Stock Units 2016 [Member] | Initial Performance Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			4 years
Performance Stock Units 2016 [Member] | Supplemental Performance Period [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			1 year 6 months
Target payout opportunities	100.00%		100.00%

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Stock-Based Compensation (Summary of Stock Options, Valuation Assumptions) (Details) - Stock Options	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (years)	5 years 9 months 7 days	5 years 8 months 16 days	5 years 9 months 7 days	5 years 8 months 16 days
Risk-free interest rate	1.01%	1.63%	1.21%	1.61%
Expected volatility	46.54%	42.07%	46.27%	42.10%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%

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Stock-Based Compensation (Summary of Stock Options, Activity) (Details)	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Shares
Beginning balance (shares) | shares	2,566,088
Granted (shares) | shares	917,612
Exercised (shares) | shares	(113,996)
Forfeited (shares) | shares	(52,392)
Ending balance (shares) | shares	3,317,312
Options exercisable (shares) | shares	1,862,559
Weighted Average Exercise Price
Beginning balance (in dollars per share) | $ / shares	$ 14.04
Granted, weighted average exercise price (in dollars per share) | $ / shares	14.87
Exercised, weighted average exercise price (in dollars per share) | $ / shares	8.37
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	18.75
Ending balance (in dollars per share) | $ / shares	14.39
Options exercisable, weighted average exercise price (in dollars per share) | $ / shares	$ 11.87
Options outstanding, weighted average remaining contractual term (in years)	6 years 11 months 9 days
Options exercisable, weighted average remaining contractual term (in years)	5 years 3 months 26 days
Options outstanding, aggregate intrinsic value | $	$ 18,025,861
Options exercisable, aggregate intrinsic value | $	$ 14,113,843

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Stock-Based Compensation (Summary of Restricted Stock and Restricted Stock Unit Activity) (Details)	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Restricted Stock
Shares
Beginning balance (shares) | shares	26,463
Awarded (shares) | shares	48,643
Vested/released (shares) | shares	(26,463)
Ending balance (shares) | shares	48,643
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 27.41
Awarded (in dollars per share) | $ / shares	18.71
Vested/released (in dollars per share) | $ / shares	27.41
Ending balance (in dollars per share) | $ / shares	$ 18.71
Restricted Stock Units (RSUs)
Shares
Beginning balance (shares) | shares	204,893
Awarded (shares) | shares	190,776
Vested/released (shares) | shares	(42,922)
Forfeited (shares) | shares	(11,754)
Ending balance (shares) | shares	340,993
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 24.08
Awarded (in dollars per share) | $ / shares	14.98
Vested/released (in dollars per share) | $ / shares	25.14
Forfeited (in dollars per share) | $ / shares	22.79
Ending balance (in dollars per share) | $ / shares	$ 18.90

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Stock-Based Compensation (Summary of PSU Activity) (Details) - Performance Stock Units	6 Months Ended
	Jun. 30, 2016 $ / shares shares
Shares
Beginning balance (shares) | shares	496,656
Awarded (shares) | shares	275,330
Vested/released (shares) | shares	(18,101)
Forfeited (shares) | shares	(7,943)
Ending balance (shares) | shares	745,942
Weighted Average Grant Date Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 22.82
Awarded (in dollars per share) | $ / shares	18.16
Vested/released (in dollars per share) | $ / shares	23.43
Forfeited (in dollars per share) | $ / shares	23.43
Ending balance (in dollars per share) | $ / shares	$ 21.08

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Net Loss Per Share (Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share) (Details) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	11,790,349	10,747,405
Equity Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	3,317,312	2,652,086
Restricted Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	389,636	270,702
Performance Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	745,942	487,158
Convertible Debt Securities
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	7,337,459	7,337,459

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Net Loss Per Share (Schedule of Earnings Per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Net loss	$ (14,906)	$ (7,216)	$ (32,197)	$ (34,521)
Common shares outstanding:
Historical common shares outstanding at beginning of period	42,772,670	42,283,446	42,632,771	42,034,063
Weighted average common shares issued	31,783	105,676	118,117	239,065
Weighted average common shares outstanding — basic and diluted	42,804,453	42,389,122	42,750,888	42,273,128
Net loss per share — basic and diluted	$ (0.35)	$ (0.17)	$ (0.75)	$ (0.82)

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Segment Reporting (Narrative) (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) country Segments Line_of_Business customer	Jun. 30, 2015 USD ($) country Segments Line_of_Business customer	Jun. 30, 2016 USD ($) Segments Line_of_Business customer	Jun. 30, 2015 USD ($) country Segments Line_of_Business customer
Segment Reporting Information [Line Items]
Number of lines of business | Line_of_Business	1	1	1	1
Number of reportable segments | Segments	2	2	2	2
Sales Revenue | Customer Concentration Risk
Segment Reporting Information [Line Items]
Number of major customers | customer	0	0	0	0
Sales Revenue | Geographic Concentration Risk
Segment Reporting Information [Line Items]
Number of major countries	0	0	0	0
U.S. Medical
Segment Reporting Information [Line Items]
Intersegment revenue | $	$ 3.4	$ 3.6	$ 6.8	$ 6.5

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Segment Reporting (Schedule of Revenue by Reporting Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 67,748	$ 61,677	$ 130,632	$ 119,099
Disposable products
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	63,985	57,887	122,993	110,831
U.S. Medical
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	56,334	51,593	109,316	100,193
U.S. Medical | Disposable products
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	53,840	48,793	104,315	94,280
U.S. Medical | Laser, service, and other
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	2,494	2,800	5,001	5,913
International Medical
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	11,414	10,084	21,316	18,906
International Medical | Disposable products
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	10,145	9,094	18,678	16,551
International Medical | Laser, service, and other
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenue	$ 1,269	$ 990	$ 2,638	$ 2,355

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Segment Reporting (Schedule of Operating Profit (Loss) by Reporting Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating loss	$ (11,304)	$ (5,258)	$ (25,223)	$ (30,483)
U.S. Medical
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating loss	(9,849)	(5,174)	(22,177)	(30,100)
International Medical
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Operating loss	$ (1,455)	$ (84)	$ (3,046)	$ (383)

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Segment Reporting (Schedule of Assets by Reporting Segment) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 439,261	$ 467,999
U.S. Medical
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	405,612	430,956
International Medical
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 33,649	$ 37,043

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Segment Reporting (Schedule of Revenue from External Customers by Products and Services) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue from External Customer [Line Items]
Revenue	$ 67,748	$ 61,677	$ 130,632	$ 119,099
Disposable products
Revenue from External Customer [Line Items]
Revenue	63,985	57,887	122,993	110,831
Laser, service, and other
Revenue from External Customer [Line Items]
Revenue	3,763	3,790	7,639	8,268
Vascular intervention | Disposable products
Revenue from External Customer [Line Items]
Revenue	46,218	40,630	88,130	77,143
Lead management | Disposable products
Revenue from External Customer [Line Items]
Revenue	$ 17,767	$ 17,257	$ 34,863	$ 33,688

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Income tax expense	$ 150	$ 120	$ 355	$ 267
Goodwill, amortization period for tax purposes			15 years
Gross deferred tax assets	$ 93,600		$ 93,600

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Commitments and Contingencies (Details) $ in Thousands		3 Months Ended		6 Months Ended
	Jun. 25, 2014 patent	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Loss Contingencies [Line Items]
Accrued legal costs		$ 890		$ 890		$ 713
Acquisition transaction, integration and legal costs		500	$ 11,106	792	$ 21,497
Trireme Litigation
Loss Contingencies [Line Items]
Proceeds from litigation settlement				20,034
Accrued legal costs		0		0
Acquisition transaction, integration and legal costs				700
US District Court of Northern California
Loss Contingencies [Line Items]
Number of patents involved in litigation | patent	3
Shareholder Litigation [Member]
Loss Contingencies [Line Items]
Accrued legal costs		$ 0		$ 0