10-Q
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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q
 
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File
Number 001-37906
 
 
ORGANOGENESIS HOLDINGS INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
98-1329150
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
85 Dan Road
Canton, MA 02021
(Address of principal executive offices) (Zip Code)
(781)
575-0775
(Registrant’s telephone number, including area code)
 
 
Securities registered pursuant to Section 12(b) of the Act.
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Class A Common Stock, $0.0001 par value
 
ORGO
 
Nasdaq Capital Market
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  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Rule 12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
       
Non-accelerated filer
     Smaller reporting company  
       
         Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2
of the Exchange Act).    Yes  ☐    No  
As of November 1, 2021, the registrant had a total of
128,641,628 shares of
 
its Class A common stock, $0.0001 par value per share, outstanding.
 
 
 
Organogenesis Holdings Inc.
Quarterly Report on Form
10-Q
For the Quarterly Period Ended September 30, 2021
Table of Contents
 
    
Page
 
     4  
Item 1.
       4  
       4  
       5  
       6  
       7  
       8  
Item 2.
       26  
Item 3.
       38  
Item 4.
       38  
     39  
Item 1.
       39  
Item 1A
       39  
Item 2.
       41  
Item 3.
       41  
Item 4.
       41  
Item 5.
       41  
Item 6.
       42  
     43  
 
2

Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on
Form 10-Q
contains forward-looking statements. These statements may relate to, but are not limited to, expectations of our future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities and the effects of competition, as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These risks and other factors include, but are not limited to, those listed under “Risk Factors.” In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “might,” “would,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Form
10-Q
may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and discussed elsewhere in this Form
10-Q
and in “Part I, Item 1A—Risk Factors” in our Annual Report on Form
10-K
for the year ended December 31, 2020, as amended. These forward-looking statements speak only as of the date of this Form
10-Q.
Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this
Form 10-Q.
As used herein, except as otherwise indicated by context, references to “we,” “us,” “our,” “the Company,” “Organogenesis” and “ORGO” will refer to Organogenesis Holdings Inc. and its subsidiaries.
 
3

Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements.
ORGANOGENESIS HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(amounts in thousands, except share and per share data)
 
    
September 30,
   
December 31,
 
    
2021
   
2020
 
 
 
 
 
 
 
 
 
 
Assets
                
Current assets:
                
Cash
   $ 102,237     $ 84,394  
Restricted cash
     487       412  
Accounts receivable, net
     74,583       56,804  
Inventory
     29,495       27,799  
Prepaid expenses and other current assets
     5,033       4,935  
    
 
 
   
 
 
 
Total current assets
     211,835       174,344  
Property and equipment, net
     74,774       55,792  
Intangible assets, net
     26,896       30,622  
Goodwill
     28,772       28,772  
Operating lease
right-of-use
assets, net
     26,522       —    
Deferred tax asset, net
     18       18  
Other assets
     1,606       670  
    
 
 
   
 
 
 
Total assets
   $ 370,423     $ 290,218  
    
 
 
   
 
 
 
Liabilities and Stockholders’ Equity
                
Current liabilities:
                
Deferred acquisition consideration
   $ —       $ 483  
Current portion of term loan
     2,186       16,666  
Current portion of finance lease obligations
     8,531       3,619  
Current portion of operating lease obligations
     4,667       —    
Current portion of deferred rent and lease incentive obligation
     —         95  
Accounts payable
     28,488       23,381  
Accrued expenses and other current liabilities
     37,128       23,973  
    
 
 
   
 
 
 
Total current liabilities
     81,000       68,217  
Line of credit
              10,000  
Term loan, net of current portion
     71,667       43,044  
Deferred acquisition consideration, net of current portion
     1,436       1,436  
Earnout liability
              3,985  
Deferred rent and lease incentive obligation, net of current portion
     —         2,315  
Finance lease obligations, net of current portion
     831       11,442  
Operating lease obligations, net of current portion
     24,204       —    
Other liabilities
     2,111       7,971  
    
 
 
   
 
 
 
Total liabilities
     181,249       148,410  
    
 
 
   
 
 
 
Commitments and contingencies (Note 18)
                
Stockholders’ equity:
                
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued
     —         —    
Common stock, $0.0001 par value; 400,000,000 shares authorized; 129,365,209 and 128,460,381 shares issued; 128,636,661 and 127,731,833 shares outstanding at September 30, 2021 and December 31, 2020, respectively.
     13       13  
Additional
paid-in
capital
     300,989       296,830  
Accumulated deficit
     (111,828     (155,035
    
 
 
   
 
 
 
Total stockholders’ equity
     189,174       141,808  
    
 
 
   
 
 
 
Total liabilities and stockholders’ equity
   $ 370,423     $ 290,218  
    
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
4

Table of Contents
ORGANOGENESIS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(amounts in thousands, except share and per share data)
 
 
  
Three Months Ended

September 30,
 
 
Nine Months Ended

September 30,
 
 
  
2021
 
 
2020
 
 
2021
 
 
2020
 
 
  
 
 
 
 
 
 
 
 
 
 
 
Net revenue
   $ 113,753     $ 100,799     $ 339,501     $ 231,491  
Cost of goods sold
     26,167       22,964       81,602       61,799  
    
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit
     87,586       77,835       257,899       169,692  
Operating expenses:
                                
Selling, general and administrative
     62,369       51,325       182,950       150,797  
Research and development
     8,953       3,709       22,482       13,787  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total operating expenses
     71,322       55,034       205,432       164,584  
    
 
 
   
 
 
   
 
 
   
 
 
 
Income from operations
     16,264       22,801       52,467       5,108  
    
 
 
   
 
 
   
 
 
   
 
 
 
Other expense, net:
                                
Interest expense, net
     (1,482     (2,969     (6,383     (8,391
Loss on extinguishment of debt
     (1,883     —         (1,883     —    
Gain on settlement of deferred acquisition consideration
     —         951       —         2,246  
Other income, net
     (19     44       (4     90  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other expense, net
     (3,384     (1,974     (8,270     (6,055
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income (loss) before income taxes
     12,880       20,827       44,197       (947
Income tax expense
     (303     (72     (990     (134
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income (loss)
   $ 12,577     $ 20,755     $ 43,207     $ (1,081
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income (loss), per share:
                                
Basic
   $ 0.10     $ 0.20     $ 0.34     $ (0.01
    
 
 
   
 
 
   
 
 
   
 
 
 
Diluted
   $ 0.09     $ 0.19     $ 0.32     $ (0.01
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted-average common shares outstanding
                                
Basic
     128,546,301       105,040,035       128,219,674       104,748,297  
    
 
 
   
 
 
   
 
 
   
 
 
 
Diluted
     133,850,216       108,489,768       133,766,004       104,748,297  
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
5

Table of Contents
ORGANOGENESIS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(unaudited)
(amounts in thousands, except share data)
 
 
  
Three and Nine Months Ended September 30, 2021
 
 
  
 
 
  
 
 
  
Additional
 
 
 
 
 
 
 
 
  
Common Stock
 
  
Paid-in
 
 
Accumulated
 
 
Total
 
 
  
Shares
 
  
Amount
 
  
Capital
 
 
Deficit
 
 
Stockholders’ Equity
 
 
  
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of June 30, 2021 (as reported)
     128,283,241      $ 13      $ 299,038     $ (120,129   $ 178,922  
Adjustment due to right of use asset amortization
    
 
 
      
 
 
       —         (4,276     (4,276
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021 (as adjusted)
     128,283,241        13        299,038       (124,405     174,646  
Exercise of stock options
     353,420        —          910       —         910  
Stock-based compensation expense
     —          —          1,041       —         1,041  
Net income
     —          —          —         12,577       12,577  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2021
     128,636,661      $ 13      $ 300,989     $ (111,828   $ 189,174  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2020 (as reported)
     127,731,833      $ 13      $ 299,129     $ (153,058   $ 146,084  
Adjustment due to Private Warrant reclassification
     —          —          (2,299     2,299       —    
Adjustment due to right of use asset amortization
     —          —          —         (4,276     (4,276
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of December 31, 2020 (as adjusted)
     127,731,833        13        296,830       (155,035     141,808  
Exercise of stock options
     716,927        —          2,115       —         2,115  
Vesting of RSUs, net of shares surrendered to pay taxes
     187,901        —          (737    
      (737
Stock-based compensation expense
     —          —          2,781       —         2,781  
Net income
     —          —          —         43,207       43,207  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2021
     128,636,661      $ 13      $ 300,989     $ (111,828   $ 189,174  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
 
 
  
Three and Nine Months Ended September 30, 2020
 
 
  
 
 
  
 
 
  
Additional
 
 
 
 
 
 
 
 
  
Common Stock
 
  
Paid-in
 
 
Accumulated
 
 
Total
 
 
  
Shares
 
  
Amount
 
  
Capital
 
 
Deficit
 
 
Stockholders’ Equity
 
 
  
 
 
  
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of June 30, 2020 (as reported)
     105,417,168      $ 11      $ 228,225     $ (192,486   $ 35,750  
Adjustment due to Private Warrant reclassification
     —          —          (2,299     2,299       —    
Adjustment due to right of use asset amortization
     —          —          —         (3,918     (3,918
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2020 (as adjusted)
     105,417,168        11        225,926       (194,105     31,832  
Exercise of stock options
     92,033        —          318       —         318  
Issuance of common stock associated with business acquisition
     1,947,953        —          7,986       —         7,986  
Stock-based compensation expense
     —          —          486       —         486  
Net 
income
     —          —          —         20,755       20,755  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2020 (as adjusted)
     107,457,154      $ 11      $ 234,716     $ (173,350   $ 61,377  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2019 (as reported)
     104,870,886      $ 10      $ 226,580     $ (171,007   $ 55,583  
Adjustment due to Private Warrant reclassification
     —          —          (2,299     2,299       —    
Adjustment due to right of use asset amortization
     —          —          —         (3,561     (3,561
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of December 31, 2019 (as adjusted)
     104,870,886        10        224,281       (172,269     52,022  
Exercise of stock options
     638,315        1        1,285       —         1,286  
Issuance of common stock associated with business acquisition
     1,947,953        —          7,986       —         7,986  
Stock-based compensation expense
     —          —          1,164       —         1,164  
Net loss
     —          —          —         (1,081     (1,081
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
Balance as of September 30, 2020 (as adjusted)
     107,457,154      $ 11      $ 234,716     $ (173,350   $ 61,377  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
6

Table of Contents
ORGANOGENESIS HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(amounts in thousands)
 
 
  
Nine Months Ended

September 30,
 
 
  
2021
 
 
2020
 
 
  
 
 
 
 
 
Cash flows from operating activities:
  
 
Net income (loss)
   $ 43,207     $ (1,081
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
                
Depreciation
     4,010       3,285  
Amortization of intangible assets
     3,726       2,518  
Amortization of operating lease
right-of-use
assets
     4,117       —    
Non-cash
interest expense
     236       160  
Deferred interest expense
     1,331       1,577  
Deferred rent expense
     —         33  
Gain on settlement of deferred acquisition consideration
     —         (2,246
Provision recorded for sales returns and doubtful accounts
     2,862       2,559  
Loss on disposal of property and equipment
     1,397       201  
Adjustment for excess and obsolete inventories
     8,045       2,024  
Stock-based compensation
     2,781       1,164  
Change in fair value of Earnout liability
     (3,985     —    
Loss on extinguishment of debt
     1,883       —    
Changes in operating assets and liabilities:
                
Accounts receivable
     (20,642     (19,160
Inventory
     (9,741     (7,757
Prepaid expenses and other current assets
     (98     (1,647
Operating leases
     (4,179     —    
Accounts payable
     5,237       (3,778
Accrued expenses and other current liabilities
     6,765       3,521  
Other liabilities
     (2,922     878  
    
 
 
   
 
 
 
Net cash provided by (used in) operating activities
     44,030       (17,749
Cash flows from investing activities:
                
Purchases of property and equipment
     (25,993     (12,260
Cash paid for business acquisition
     —         (5,820
    
 
 
   
 
 
 
Net cash used in investing activities
     (25,993     (18,080
Cash flows from financing activities:
                
Line of credit borrowings (repayments) under the 2019 Credit Agreement
     (10,000     5,869  
Term loan borrowings (repayments) under the 2019 Credit Agreement
     (60,000     10,000  
Proceeds from term loan under the 2021 Credit Agreement, net of debt discount and issuance cost
     73,174       —    
Term loan repayments under the 2021 Credit Agreement
     (469     —    
Payments of withholding taxes in connection with RSUs vesting
     (737     —    
Proceeds from the exercise of stock options
     2,115       1,286  
Principal repayments of finance lease obligations
     (2,099     (1,776
Payment to extinguish debt
     (1,620     —    
Payment of deferred acquisition consideration
     (483     (3,034
    
 
 
   
 
 
 
Net cash (used in) provided by financing activities
     (119     12,345  
Change in cash and restricted cash
     17,918       (23,484
Cash and restricted cash, beginning of period
     84,806       60,370  
    
 
 
   
 
 
 
Cash and restricted cash, end of period
   $ 102,724     $ 36,886  
    
 
 
   
 
 
 
Supplemental disclosure of cash flow information:
                
Cash paid for interest
   $ 5,830     $ 7,130  
Cash paid for income taxes
   $ 582     $ —    
Supplemental disclosure of
non-cash
investing and financing activities:
                
Fair value of shares issued for business acquisition
   $ —       $ 7,986  
Deferred acquisition consideration and earnout liability recorded for business acquisition
   $ —       $ 5,218  
Purchases of property and equipment included in accounts payable and accrued expenses
   $ 1,523     $ 2,628  
Right-of-use
assets obtained through operating lease obligations
   $ 30,639     $ —    
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
7

Table of Contents
ORGANOGENESIS HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands, except share and per share data)
1. Nature of the Business and Basis of Presentation
Organogenesis Holdings Inc. (formerly Avista Healthcare Public Acquisition Corp.) (“ORGO” or the “Company”) is a leading regenerative medicine company focused on the development, manufacture, and commercialization of solutions for the Advanced Wound Care and Surgical & Sports Medicine markets. Several of the existing and pipeline products in the Company’s portfolio have Premarket Application (“PMA”) approval, Business License Applicant (“BLA”) approval or Premarket Notification 510(k) clearance from the United States Food and Drug Administration (“FDA”). The Company’s customers include hospitals, wound care centers, government facilities, ambulatory serv
i
ce centers (“ASCs”) and physician offices. The Company has one operating and reportable segment.
COVID-19
pandemic
The emergence of the coronavirus
(COVID-19)
around th
e
 world, and particularly in the United States, continues to present risks to the Company. While the
COVID-19
pandemic has not materially adversely affected the Company’s financial results and business operations through the third quarter ended September 30, 2021, the Company is unable to predict the impact that
COVID-19
will have on its financial position and operating results because of the numerous uncertainties created by the unprecedented nature of the pandemic.
The Company is closely monitoring the evolving impact of the pandemic on all aspects of its business. The Company has implemented a number of measures designed to protect the health and safety of its employees, support its customers and promote business continuity.
Merger with Avista Healthcare Public Acquisition Corp
On December 10, 2018, Avista Healthcare Public Acquisition Corp., our predecessor company (“AHPAC”), consummated a business combination (the “Avista Merger”) pursuant to an Agreement and Plan of Merger, dated as of August 17, 2018 (as amended, the “Avista Merger Agreement”), by and among AHPAC, Avista Healthcare Merger Sub, Inc., a direct wholly-owned subsidiary of AHPAC (“Avista Merger Sub”) and Organogenesis Inc. As a result of the Avista Merger and the other transactions contemplated by the Avista Merger Agreement, Avista Merger Sub merged with and into Organogenesis Inc., with Organogenesis Inc. surviving the Avista Merger and becoming a wholly-owned subsidiary of AHPAC. AHPAC changed its name to Organogenesis Holdings Inc. (ORGO).
2. Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying unaudited consolidated financial statements have been prepared by management in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. While we believe that the disclosures presented are adequate in order to make the information not misleading, these unaudited quarterly financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form
10-K
for the fiscal year ended December 31, 2020, as amended (the “Annual Report”).
The unaudited consolidated financial statements include the accounts and results of operations of Organogenesis Holdings Inc. and its wholly-owned subsidiaries of Organogenesis Inc., including Organogenesis GmbH (a Switzerland corporation) and Prime Merger Sub, LLC. All intercompany balances and transactions have been eliminated in consolidation. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the Company’s financial position, results of operations and cash flows at the dates and for the periods indicated. The results for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, any other interim periods, or any future years or periods.
 
8

Table of Contents
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure as of the date of the consolidated financial statements and the reported results of operations during the reporting periods. Actual results could differ from those estimates.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note “2. Significant Accounting Policies” to the Consolidated Financial Statements included in the Annual Report. There have been no material changes to the significant accounting policies previously disclosed in the Annual Report, other than as it related to the recently adopted accounting pronouncement disclosed below. 
Revision to Previously Issued Financial Statements
Private Warrant Reclassification
On April 12, 2021, the Staff of the SEC issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). In the SEC Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s financial statements as opposed to equity.
As of December 31, 2018, the Company had 4.1 million private warrants outstanding, which were issued to Avista Capital Partners IV, L.P. and Avista Capital Partners IV (Offshore), L.P. in connection with the Avista Merger on December 10, 2018 (the “Private Warrants”), and 31.0 million public warrants outstanding that were issued in connection with the initial public offering of Avista Healthcare Public Acquisition Corp. on October 10, 2016 (the “Public Warrants”, together with the Private Warrants, the “Warrants”). The Company originally classified the Warrants as equity on its financial statements. In 2019, the outstanding Warrants were exchanged for 3.3 million shares of the Company’s Class A common stock. There were no Warrants outstanding as of December 31, 2019.
As a result of the SEC Statement, the Company reevaluated the historical accounting treatment of its Public Warrants and Private Warrants and determined that the Private Warrants should have been recorded at fair value as a liability in the Company’s consolidated balance sheet with changes to the fair value recorded to the consolidated statements of operations. The Company assessed the materiality of this error on prior period financial statements in accordance with the SEC Staff Accounting Bulletin Number 99, Materiality, and ASC
250-10,
Accounting Changes and Error Corrections. The Company determined that this error was not material to the financial statements of any prior annual or interim period. The Company reclassified
$
2,299
from additional
paid-in
capital to accumulated deficit on the co
n
solidated balance sheet as of December 31, 2020 as the cumulative adjustment for this error.
Right of Use Asset Amortization
In August 2021, the Company identified an error in its accounting treatment for two ass
e
ts recorded as finance leases. The Company did not record amortization expenses for these assets since the lease commencement date. This error resulted in an overstatement of property and equipment, net, and an understatement of accumulated deficit, and selling, general and administrative expenses in the financial statements included in the Company’s quarterly reports on Form 10-Q and the Company’s annual reports on Form 10-K previously filed with the SEC. The Company assessed the materiality of this error on prior period financial statements in accordance with the SEC Staff Accounting Bulletin Number 99, Materiality, and ASC 250-10, Accounting Changes and Error Corrections. The Company determined that this error was not material to the financial statements of any prior annual or interim period.
 To correct the immaterial misstatement, the Company revised its previously issued financial statements as follows:
 
 
  
As of December 31, 2020
 
CONSOLIDATED BALANCE SHEETS
  
As Previously
Reported
 
  
Adjustments
 
  
As Revised
 
Property and equipment, net
  
$
60,068
 
  
$
(4,276
  
$
55,792
 
Total assets
  
$
294,494
 
  
$
(4,276
  
$
290,218
 
Accumulated deficit
  
$
(150,759
  
$
(4,276
  
$
(155,035
Total stockholders’ equity
  
$
146,084
 
  
$
(4,276
  
$
141,808
 
Total liabilities and stockholders’ equity
  
$
294,494
 
  
$
(4,276
  
$
290,218
 
 
9

 
  
For
 
the
 
Three
 
Months
 
Ended
September
 
30,
 
2020
 
  
For
 
the
 
Nine
 
Months
 
Ended
 
September
 
30
,
 
2020
 
CONSOLIDATED STATEMENTS OF OPERATIONS
  
As
Previously
Reported
 
  
Adjustments
 
 
As
 
Revised
 
  
As
Previously
Reported
 
 
Adjustments
 
 
As
 
Revised
 
Selling, general and administrative
  
$
51,146
 
  
$
179
 
 
$
51,325
 
  
$
150,261
 
 
$
536
 
 
$
150,797
 
Total operating expenses
  
$
54,855
 
  
$
179
 
 
$
55,034
 
  
$
164,048
 
 
$
536
 
 
$
164,584
 
Income from operations
  
$
22,980
 
  
$
(179
 
$
22,801
 
  
$
5,644
 
 
$
(536
 
$
5,108
 
Net income (loss) before income taxes
  
$
21,006
 
  
$
(179
 
$
20,827
 
  
$
(411
 
$
(536
 
$
(947
Net income (loss)
  
$
20,934
 
  
$
(179
 
$
20,755
 
  
$
(545
 
$
(536
 
$
(1,081
 
 
  
Nine Months Ended September 30, 2020
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
As Previously
Reported
 
  
Adjustments
 
  
As
 
Revised
 
Net loss
  
$
(545
  
$
(536
  
$
(1,081
Depreciation
  
$
2,749
 
  
$
536
 
  
$
3,285
 
Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update
No. 2016-02
(“ASU
2016-02”), Leases
(Topic 842), as further amended (“ASC 842”), to increase transparency and comparability among organizations by requiring the recognition of, at the lease commencement date, a lease liability for the obligation to make lease payments, and a
right-of-use
(“ROU”) asset for the right to use the underlying asset, on the balance sheet. Although the Company remains an emerging growth company until December 31, 2021, it elected to early adopt ASC 842 on January 1, 2021. ASC 842 requires a modified retrospective transition method that could either be applied at the earliest comparative period in the financial statements or in the period of adoption. The Company elected to use the period of ad
o
ption (January 1, 2021) transition method and therefore did not recast prior periods. Results for reporting periods beginning on January 1, 2021 are presented under ASC 842, while prior period amounts continue to be reported and disclosed in accordance with the Company’s historical accounting treatment under Accounting Standards Codification 840, Leases (“ASC 840”). In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company: (1) to carry forward the historical lease classification; (2) not to reassess whether expired or existing contracts are or contain leases; and, (3) not to reassess the treatment of initial direct costs for existing leases. The Company made an accounting policy election under ASC 842 not to recognize the right of use assets and lease liabilities for leases with a term of
12
months or less. The Company also elected to account for lease components and the associated non-lease components in the contracts as a single lease component for most of the leased assets. Upon the adoption of this standard on January 1, 2021, the Company recognized an operating lease liability of
 $
15,935
,
representing the present value of the minimum lease payments remaining as of the adoption date, and a right-of-use asset in the amount of
 $
13,525
.
The right-of-use asset reflects adjustments for de-recognition of deferred lease liabilities and lease incentives. The Company’s accounting for finance leases (previously classified as capital leases under ASC 840) remained substantially unchanged. See Note “17. Leases” for further disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued
ASU 2016-13
, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
 (“ASU 2016-13”). Subsequent
to the issuance of
ASU 2016-13, the
FASB has issued the following updates:
ASU 2018-19,
 Codification Improvements to Topic 326, Financial Instruments- Credit Losses
,
ASU 2019-04,
 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
,
ASU 2019-05,
 Financial Instruments—Credit Losses (Topic 326)—Targeted Transition Relief
 and
ASU 2019-11,
 Codification Improvements to Topic 326, Financial Instruments—Credit Losses
. The objective of
ASU 2016-13 and
all the related updates is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this ASU replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.
ASU 2016-13 and
the related updates are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019 for public business entities excluding entities eligible to be smaller reporting companies and for fiscal years, and interim periods within those years, beginning after December 15, 2022 for all other entities. Early adoption is permitted. The Company will adopt this standard and the related improvements on January 1, 2023 by recognizing a cumulative-effect adjustment to retained earnings for any impact. The Company is currently assessing the adoption of
ASU 2016-13
and the related impact on the Company’s consolidated financial statements.
 
10

3. Acquisition
On September 17, 2020 (the “Acquisition Date”), the Company acquired certain assets and assumed certain liabilities of CPN Biosciences, LLC (“CPN”) pursuant to an asset purchase agreement dated July 24, 2020. CPN offered a physician office management solution and advanced wound care products.
The Company is obligated to pay a contingent consideration (the “Earnout”) to CPN’s former shareholders if CPN’s legacy product revenue in the Earnout Period (defined as a twelve-month period, starting on the first day of the next calendar quarter immediately following the post-closing sales meeting), exceeds CPN’s 2019 revenue. The amount of the Earnout, if any, will be equal to 70% of the excess and will be payable 60 days after the expiration of the Earnout Period. The post-closing sales meeting took place in April 2021 and the Earnout Period is July 1, 2021 to June 30, 2022. The Company recorded a
non-current
liability of $3,782 on the Acquisition Date for the fair value of the contingent consideration related to the expected Earnout. The Company assesses the fair value of the Earnout liability at each reporting period. As of September 30, 2021, the Earnout liability was estimated at $0 as a result of the Company’s updated assessment of the near-term market for the CPN product portfolio. Subsequent changes in the estimated fair value of the liability are reflected in earnings until the liability is settled (see Note “5. Fair Value Measurement of Financial Instruments”).
4. Product and Geographic Sales
The Company generates revenue through the sale of Advanced Wound Care and Surgical & Sports Medicine products. There is a single performance obligation in all of the Company’s contracts, which is the Company’s promise to transfer the Company’s products to customers based on specific payment and shipping terms in the arrangement. The entire transaction price reflects a single performance obligation. Product revenue is recognized when a customer obtains control of the Company’s products which occurs at a point in time and may be upon shipment, procedure date, or delivery, based on the terms of the contract. Revenue is recorded net of a reserve for returns, discounts and Group Purchasing Organization (“GPO”) rebates, which represent a direct reduction to the revenue recognized. These reductions are accrued at the time revenue is recognized, based upon historical experience and specific circumstances. For the three months ended September 30, 2021 and 2020, the Company recorded GPO fees of $794 and $1,013, respectively, as a direct reduction of revenue. For the nine months ended September 30, 2021 and 2020, the Company recorded GPO fees of $2,323 and $2,810, respectively, as a direct reduction of revenue.
The following tables set forth revenue by product category:
 
    
Three Months Ended

September 30,
 
    
2021
    
2020
 
Advanced Wound Care
   $ 107,341      $ 89,990  
Surgical & Sports Medicine
     6,412        10,809  
    
 
 
    
 
 
 
Total net revenue
   $ 113,753      $ 100,799  
    
 
 
    
 
 
 
 
    
Nine Months Ended

September 30,
 
    
2021
    
2020
 
Advanced Wound Care
   $ 309,485      $ 201,009  
Surgical & Sports Medicine
     30,016        30,482  
    
 
 
    
 
 
 
Total net revenue
   $ 339,501      $ 231,491  
    
 
 
    
 
 
 
For all periods presented, net revenue generated outside the United States represented less than 1% of total net revenue.
 
11

Table of Contents
5. Fair Value of Financial Assets and Liabilities
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values as of S
e
ptember 30, 2021 and December 31, 2020.
     
                  
     
                  
     
                  
     
                  
 
 
  
Fair Value Measurements
 
 
  
as of September 30, 2021 Using:
 
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
  
Total
 
Liabilities:
  
     
  
     
  
     
  
     
Earnout liability
  
$
—  
 
  
$
—  
 
  
$
  
 
  
$
  
 
    
 
 
    
 
 
    
 
 
    
 
 
 
    
$
—  
 
  
$
—  
 
  
$
  
 
  
$
  
 
    
 
 
    
 
 
    
 
 
    
 
 
 
   
 
  
Fair Value Measurements
 
 
  
as of December 31, 2020 Using:
 
 
  
Level 1
 
  
Level 2
 
  
Level 3
 
  
Total
 
Liabilities:
  
     
  
     
  
     
  
     
Earnout liability
  
$
—  
 
  
$
—  
 
  
$
3,985
 
  
$
3,985
 
    
 
 
    
 
 
    
 
 
    
 
 
 
    
$
—  
 
  
$
—  
 
  
$
3,985
 
  
$
3,985
 
    
 
 
    
 
 
    
 
 
    
 
 
 
Earnout Liability
In connection with accounting for the CPN acquisition on September 17, 2020, the Company recorded an Earnout liability of $3,782 on the Acquisition Date, representing the fair value of contingent consideration payable upon the ach
i
evement of a certain revenue target. The Earnout Liability is classified as a Level 3 measurement within the fair value hierarchy for which fair value is derived from inputs that are unobservable and significant to the overall fair value measurement. The fair value of such Earnout Liability is estimated using a Monte Carlo simulation model that utilizes key assumptions including forecasted revenues and volatilities of the underlying financial metrics during the Earnout period. The Company assesses the fair value of the Earnout liability at each reporting period. Any subsequent changes in the estimated fair value of the liability are reflected in selling, general and administrative expenses until the liability is settled. For more information about the Earnout liability, refer to Note “3. Acquisition”. As of September 30, 2021, the Earnout liability decreased to $0 as a result of the Company’s updated assessment of the near-term market for the CPN product portfolio. The following table provides a roll-forward of the fair value of the Company’s Earnout liability, for which fair value is determined using Level 3 inputs:
 
 
  
Earnout liability
 
Balance as of December 31, 2020
   $ 3,985  
Change in fair value
     (3,985
    
 
 
 
Balance as of September 30, 2021
   $     
    
 
 
 
The Company did not have any financial assets and liabilities measured at fair value on a
non-recurring
basis as of September 30, 2021 and December 31, 2020.
6. Accounts Receivable, Net
Accounts receivable consisted of the following:
 
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Accounts receivable
   $ 81,925      $ 61,792  
Less — allowance for sales returns and doubtful accounts
     (7,342      (4,988
    
 
 
    
 
 
 
     $ 74,583      $ 56,804  
    
 
 
    
 
 
 
 
12

The Company’s allowance for sales returns and doubtful accounts was comprised of the following:
 
 
  
Three Months Ended

September 30,
 
  
Nine Months Ended

September 30,
 
 
  
2021
 
  
2020
 
  
2021
 
  
2020
 
Balance at beginning of period
   $ 7,113      $ 3,928      $ 4,988      $ 3,049  
Additions
     704        1,589        2,862        2,559  
Write-offs
     (475      (392      (508      (483
    
 
 
    
 
 
    
 
 
    
 
 
 
Balance at end of period
   $ 7,342      $ 5,125      $ 7,342      $ 5,125  
    
 
 
    
 
 
    
 
 
    
 
 
 
7. Inventories
Inventories, net of related reserves for excess and obsolescence, consisted of the following:
 
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Raw materials
   $ 8,761      $ 10,075  
Work in process
     2,144        1,305  
Finished goods
     18,590        16,419  
    
 
 
    
 
 
 
     $ 29,495      $ 27,799  
    
 
 
    
 
 
 
Raw materials include various components used in the Company’s manufacturing process. The Company’s excess and obsolete inventory review process includes analysis of sales forecasts and historical sales as compared to inventory level, and working with operations to maximize recovery of excess inventory. During the three months ended September 30, 2021 and 2020, the Company charged $3,367 and $315, respectively, for inventory excess and obsolescence to cost of goods sold within the consolidated statements of operations. During the nine months ended September 30, 2021 and 2020, the Company charged $8,045 and $2,024, respectively, for inventory excess and obsolescence to cost of goods sold within the consolidated statements of operations.
8. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
 
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Subscriptions
   $ 2,091      $ 2,013  
Conferences and marketing expenses
     623        63  
Deposits
     1,185        1,438  
Reimbursement of offering expenses
               1,009  
Insurance
     997        240  
Other
     137        172  
    
 
 
    
 
 
 
     $ 5,033      $ 4,935  
    
 
 
    
 
 
 
Deposits are funds held by vendors which are expected to be released within twelve months and therefore they are recorded as current assets.
 
13

9. Property and Equipment, Net
Property and equipment consisted of the following:
 
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Leasehold improvements
   $ 45,050      $ 39,574  
Building
     4,943      $ —    
Furniture, computers and equipment
     52,696        48,236  
    
 
 
    
 
 
 
       102,689        87,810  
Accumulated depreciation and amortization
     (73,894      (73,797
Construction in progress
     45,979        41,779  
    
 
 
    
 
 
 
     $ 74,774      $ 55,792  
    
 
 
    
 
 
 
Depreciation expense was $1,937 and $1,135 for the three months ended September 30, 2021 and 2020. Depreciation expense was $4,010 and $3,285 for the nine months ended September 30, 2021 and 2020. As of December 31, 2020, the Company had $21,689 of buildings under finance leases recorded within leasehold improvements and had $18,716
recorded within accumulated depreciation related to these buildings. In August 2021, the Company purchased one building previously under a finance lease (see Note “17. Leases”) from a related party and removed the lease from leasehold improvements and recorded the asset to buildings. As of September 30, 2021, the Company had
$17,370 of buildings under finance leases recorded within leasehold improvements and had $15,873 recorded with
i
n accumulated depreciation related to these buildings. Construction in progress primarily represents unfinished construction work on the aforementioned purchased building and, more recently, improvements at the Company’s leased facilities in Canton and Norwood, Massachusetts.
10. Goodwill and Intangible Assets
Goodwill was $28,772 as of September 30, 2021 and December 31, 2020.
Identifiable intangible assets consisted of the following as of September 30, 2021:
 
 
  
Original
 
  
Accumulated
 
  
Net Book
 
 
  
Cost
 
  
Amortization
 
  
Value
 
Developed technology
   $ 32,620      $ (16,864    $ 15,756  
Trade names and trademarks
     2,080        (1,128      952  
Customer relationships
     10,690        (1,114      9,576  
Non-compete
agreements
     1,010        (398      612  
    
 
 
    
 
 
    
 
 
 
Total
   $ 46,400      $ (19,504    $ 26,896  
    
 
 
    
 
 
    
 
 
 
Identifiable intangible assets consisted of the following as of December 31, 2020:
 
 
  
Original
 
  
Accumulated
 
  
Net Book
 
 
  
Cost
 
  
Amortization
 
  
Value
 
Developed technology
   $ 32,620      $ (14,330    $ 18,290  
Trade names and trademarks
     2,080        (906      1,174  
Customer relationship
     10,690        (312      10,378  
Non-compete
agreements
     1,010        (230      780  
    
 
 
    
 
 
    
 
 
 
Total
   $ 46,400      $ (15,778    $ 30,622  
    
 
 
    
 
 
    
 
 
 
Amortization of intangible assets, calculated on a straight-line basis or using an accelerated method, was $1,240 and $885 for the three months ended September 30, 2021 and 2020, respectively, and $3,726 and $2,518 for the nine months ended September 30, 2021 and 2020, respectively.
 
14

11. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Personnel costs
   $ 25,482      $ 18,943  
Royalties
     3,338        2,971  
Accrued but unpaid lease obligations and interest
     6,390        —    
Other
     1,918        2,059  
    
 
 
    
 
 
 
     $ 37,128      $ 23,973  
    
 
 
    
 
 
 
The accrued but unpaid lease obligations and the interest accrual on these obligations were previously included in the long-term portion of the finance lease obligations, and other liabilities as of December 31, 2020. The reclassification was due to the purchase of a building previously recorded as a finance lease from a related party (see Note “17. Leases”) and the termination of the 2019 Credit Agreement (see Note “13. Long-Term Debt Obligations”).
12. Restructuring
On October 21, 2020, the Company committed to a plan to restructure the workforce and consolidate its La Jolla facilities as part of the Company’s long-term plan to consolidate manufacturing operations in Massachusetts to reduce the Company’s cost structure. The majority of the restructuring costs are expected to be incurred by the end of 2021, with certain facility and storage costs continuing through the middle of 2024. The restructuring will result in a charge of approximately $6.5 million, of which approximately $4.0 million is attributable to the retention benefits associated with approximately 65 employees and the remaining $2.5 million is related to the facility closures. As employees are required to provide future services, employee retention and other benefit-related costs related to the Company’s restructuring are expensed over the service period.
As a result of this restructuring activity, the Company incurred
a pr
e
-tax charge
of $1,010 and $2,876 during the three and nine months ended September 30, 2021. This charge was primarily related to employee retention benefits and was included in selling, g
e
neral and administrative expenses in the consolidated statements of operations. The liability related to the restructuring activities was $3,234 as of September 30, 2021 and was included in accrued expenses and other current liabilities in the consolidated balance sheets. The following table provides a roll-forward of the restructuring liability.
 
 
 
 
 
 
 
    
Employee
    
Facility
 
Liability balance as of June 30, 2021
   $ 2,381      $ 29  
Expenses
     854        156  
Payments
     (26      (160
    
 
 
    
 
 
 
Liability balance as of September 30, 2021
   $ 3,209      $ 25  
    
 
 
    
 
 
 
 
    
Employee
    
Facility
 
Liability balance as of December 31, 2020
   $ 618      $     
Expenses
     2,617        259  
Payments
     (26      (234
    
 
 
    
 
 
 
Liability balance as of September 30, 2021
   $ 3,209      $ 25  
    
 
 
    
 
 
 
13. Long-Term Debt Obligations
Long-term debt obligations consisted of the following:
 
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Line of credit
  
$
  
 
  
$
10,000
 
 
  
 
 
 
  
 
 
 
Term loan
  
 
74,531
 
  
 
60,000
 
Less debt discount and debt issuance cost
  
 
(678
  
 
(290
 
  
 
 
 
  
 
 
 
Term loan, net of debt discount and debt issuance cost
  
$
73,853
 
  
$
59,710
 
 
  
 
 
 
  
 
 
 
15

2021 Credit Agreement
In August 2021, the Company, as borrower, its subsidiaries, as guarantors, and Silicon Valley Bank (“SVB”), and the several other lenders thereto (collectively, the “Lenders”) entered into a credit agreement (the “2021 Credit Agreement”), providing for a term loan facility not to exceed $75,000 (the “Term Loan Facility”) and a revolving credit facility not to exceed $125,000 (the “Revolving Facility”). The Company’s obligations to the Lenders are secured by substantially all of Company’s assets, including intellectual property. Capitalized terms used h
e
rein and not otherwise defined are defined as set forth in the 2021 Credit Agreement.
Advances made under the 2021 Credit Agreement may be either Eurodollar Lo
a
ns or ABR Loans, at the Company’s option. For Eurodollar Loans, the interest rate is a per annum interest rate equal to LIBOR plus an Applicable Margin as follows: (i) if the Total Net Leverage Ratio is greater than or equal to 3.25x, 3.25%; (ii) if the Total Net Leverage Ratio is greater than or equal to 2.50x but less than 3.25x, 2.75% ; (iii) if the Total Net Leverage Ratio is greater than or equal to 2.00x but less than 2.50x, 2.50%; (iv) if the Total Net Leverage Ratio is greater than or equal to 1.50x but less than 2.00x, 2.25% and (v) if the Total Net Leverage Ratio is less than 1.50x, 2.00%. For ABR Loans, the interest rate is equal to (1) the highest of (a) the Wall Street Journal Prime Rate, (b) the Federal Funds Rate plus 0.50% and (c) the LIBOR rate plus 1.0%,
plus
(2) an Applicable Margin as follows: (i) if the Total Net Leverage Ratio is greater than or equal to 3.25x, 2.25%; (ii) if the Total Net Leverage Ratio is greater than or equal to 2.50x but less than 3.25x, 1.75% ; (iii) if the Total Net Leverage Ratio is greater than or equal to 2.00x but less than 2.50x, 1.50%; (iv) if the Total Net Leverage Ratio is greater than or equal to 1.50x but less than 2.00x, 1.25%; and (v) if the Total Net Leverage Ratio is less than 1.50x, 1.00%.
The interest rate as of September 30, 2021 was 2.08%.
The 2021 Credit Agreement requires the Company to make consecutive quarterly installment payments equal to the following percentages of the original principal amount of the Term Loans: (a) from September 30, 2021 through and including June 30, 2022,
0.625
 
(or $469) ; (b) from
 
September 30, 2022 through and including June 30, 2023,
1.250%
 (or $938); (c) from September 30, 2023 through and including June 30, 2025,
 
1.875
(or
 $1,406) and (d) from September 30, 2025 and the last day of each quarter thereafter until August 6, 2026 (the “Term Loan Maturity Date”),
2.50
(or
 $1,875). The Company may prepay the Term Loan Facility, provided that any Term Loans prepaid prior to August 6, 2022 must be accompanied by
 
a prepayment premium equal to
1.00%
of the aggregate amount of Term Loans prepaid. Once repaid, amounts borrowed under the Term Loan Facility
may not be re-borrowed.
The Company must pay in arrears, on the first day of each quarter prior to August 6, 2026 (the “Revolving Termination Date”) and on the Revolving Termination Date, a fee for the
Company’s non-use of
available funds in an amount equal to the Commitment Fee Rate per annum, multiplied by the difference between (x) the Total Revolving Commitments and (y) the sum of (A) the average for the period of the daily closing balance of the Revolving Loans, excluding the aggregate principal amount of Swingline Loans,
 
(B) the aggregate undrawn amount of all Letters of Credit outstanding at such time and (c) the aggregate amount of all L/C Disbursements that have not yet been reimbursed or converted into Revolving Loans or Swingline Loans. The Commitment Fee Rate is equal to (i) if the Total Net Leverage Ratio is greater than or equal to 3.25x,
0.45%
; (ii) if the Total Net Leverage Ratio is greater than or equal to 2.50x but less than 3.25x,
0.40%
; (iii) if the Total Net Leverage Ratio is greater than or equal to 2.00x but less than 2.50x,
0.35%
; (iv) if the Total Net Leverage Ratio is greater than or equal to 1.50x but less than 2.00x,
0.30%
; and (v) if the Total Net Leverage Ratio is
less
than 1.50x,
0.25%
. The maturity date for advances made under the Revolving Facility is the Revolving Termination Date. The Company may elect to reduce or terminate the Revolving Facility in its entirety at any time by repaying all outstanding principal, unpaid accrued interest and, with respect to any such reduction or termination of the Revolving Commitments made prior to August 6, 2022,
1.00%
of the aggregate amount of the Revolving Commitments so reduced or terminated.
Under the 2021 Credit Agreement, the Company is required to comply with certain financial covenants. The Company may not permit the Consolidated Fixed Charge Coverage Ratio at the last day of any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending September 30, 2021, to be less than 1.25:1.00. Additionally, the Company may not permit the Consolidated Total Net Leverage Ratio at the last day of any period of four consecutive fiscal quarters, commencing with the fiscal quarter ending September 30, 2021, to exceed the following ratios: (i) for the trailing four fiscal quarters ending September 30, 2021, December 31, 2021, March 31, 2022, June 30, 2022 and September 30, 2022, a ratio of 3.50:1.00; (ii) for the trailing four fiscal quarters ending December 31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023, a ratio of 3.25:1.00; and (iii) for the trailing four fiscal quarters ending December 31, 2023 and each fiscal quarter thereafter, a ratio of 3.00:1.00.
16

As of September 30, 2021, the Company had outstanding borrowings of $74,531 under the Term Loan Facility and $0 under the Revolving Facility with $125,000
available for future revolving borrowings. The Company recorded additional debt issuance costs and related fees of
 
$604 in connection with the Term Loan Facility, which are recorded as a reduction of the carrying value of the term loan on the Company’s consolidated balance sheets. In connection with the Revolving Facility, the Company recorded debt issuance costs and related fees of $1,223, which are recorded as other assets. Both of these costs are being amortized to interest expenses through the maturity date of the facilities.
Future payments of the 2021 Credit Agreement, as of September 30, 2021, are as follows for the calendar years ending December 31:
 
2021
     469  
2022
     2,812  
2023
     4,687  
2024
     5,625  
2025 and beyond
     60,938  
    
 
 
 
Total
   $ 74,531  
    
 
 
 
2019 Credit Agreement
In March 2019
, the Company, its subsidiaries and SVB, and the several other lenders thereto entered into a credit agreement, as amended (the “2019 Credit Agreement”), providing for a term loan facility of $
40,000
and a revolving credit facility of up to $
60,000
. Both facilities
w
ere
set to
mature in
2024
. The interest rate for the term loan facility
was
a floating per 
annum interest rate equal to the greater of 3.75% above the Wall Street Journal Prime Rate and 9.25%
.
The interest rate for advances under the revolving facility was a floating per annum interest rate equal to the greater of the Wall Street Journal Prime Rate and 5.50%.
If the Company elected to prepay the loan or terminate the facilities, the Company was required to pay a certain percentage of the outstanding principal as a prepayment fee. A final payment fee (the “Final Payment”) of
6.5
%
multiplied by the original aggregate principal amount of term loan facility was due upon the earlier to occur of the maturity date of the term loan or prepayment of all outstanding principal.
In August 2021, upon entering into the 2021 Credit Agreement, the Company paid an aggregate amount of $70,559
 due under the 2019 Credit Agreement, including unpaid principal, accrued interest, the Final Payment and a prepayment fee, with proceeds from the 2021 Credit Agreement, and the 2019 Credit Agreement was terminated. Upon termination of the 2019 Credit Agreement, the Company recognized
$1,883
as loss on the extinguishment of the loan for the three and nine months ended September 30, 2021.
14. Stockholders’ Equity
Common Stock
As of September 30, 2021, the Company was authorized to issue 400,000,000 shares of $0.0001 par value Class A common stock and 1,000,000 shares of $0.0001 par value preferred stock. 129,365,209 shares of Class A common stock were issued and 128,636,661 shares were outstanding as of September 30, 2021. No shares of preferred stock were outstanding as of September 30, 2021. The issued shares of Class A common stock include 728,548 treasury shares that were reacquired in connection with the redemption of redeemable shares in March 2019. As of September 30, 2021 and December 31, 2020, the Company reserved the following shares of Class A common stock for future issuance:
 
 
  
September 30,
 
  
December 31,
 
 
  
2021
 
  
2020
 
Shares reserved for issuance for outstanding options
     6,724,574        6,425,040  
Shares reserved for issuance for outstanding restricted stock units
     768,203        806,048  
Shares reserved for issuance for future grants
     5,635,822        6,832,649  
    
 
 
    
 
 
 
Total shares of authorized common stock reserved for future issuance
     13,128,599        14,063,737  
    
 
 
    
 
 
 
 
17

15. Stock-Based Compensation
Stock Incentive
Plans-the
2018 Plan
On November 28, 2018, the Board of Directors of the Company adopted, and on December 10, 2018, the Company’s stockholders approved, the Organogenesis 2018 Equity and Incentive Plan (the “2018 Plan”). The purposes of the 2018 Plan are to provide long-term incentives and rewards to the Company’s employees, officers, directors and other key persons (including consultants), to attract and retain persons with the requisite experience and ability, and to more closely align the interests of such employees, officers, directors and other key persons with the interests of the Company’s stockholders.
The
2018
Plan authorizes the Company’s Board of Directors or a committee of not less than two independent directors (in either case, the “Administrator”) to grant the following types of awards:
non-statutory
stock options; incentive stock options; restricted stock awards; restricted stock units; stock appreciation rights; unrestricted stock awards; performance share awards; and dividend equivalent rights. The
2018
Plan is administered by the Company’s Board of Directors.