RESTRUCTURING

12 Months Ended

Dec. 31, 2021

Restructuring and Related Activities [Abstract]

RESTRUCTURING

15. RESTRUCTURING

In the second quarter of 2020, management approved several actions as part of a restructuring plan designed to improve operational efficiency and financial results. Management approved a reduction in force, which affected 40 of the 126 employees in the regenerative medicine business segment, or approximately 31.7% of that workforce. The Company did not make any change in the workforce of its contract services segment. Total severance expense recorded for the year ended December 31, 2020 was $1.0 million. All severance was paid during 2020. Included in the restructuring plan, management recorded $1.5 million of asset abandonments within the Company’s regenerative medicine business segment related to the restructuring.

In the fourth quarter of 2020, management recorded $0.9 million in write-downs related to the abandonment of certain production assets and leasehold improvements and $0.4 million in charges related to the abandonment of right of use assets. The charges were recorded within the Company’s regenerative medicine business segment and are included in restructuring and other charges in the accompanying consolidated statement of operations.

As discussed in Note 6, the Company decided to file an IND in the second half of 2021, cease commercial sales of SkinTE by May 31, 2021, and wind down its SkinTE commercial operations. As a result, management approved several actions as part of a restructuring plan. Costs associated with the restructuring plan were included in restructuring and other charges on the consolidated statement of operations.

The following table presents the components of incremental restructuring costs and gains associated with the cessation of commercial operations and wind down on SkinTE commercial operation (in thousands):

	Year Ended			Year Ended
	December 31, 2021			December 31, 2020
Property and equipment impairment and disposal	$	425		$	2,443
Employee severance and benefit arrangements		390			1,025
Modification of employee stock options		187			–
Net gain on lease termination(1)		(324	)		–
Abandonment of ROU assets		–			366
Net restructuring costs	$	678		$	3,834

(1) During the second quarter of 2021 and effective June 30, 2021, the Company terminated a lease which included manufacturing, laboratory, and office space. The Company recorded a net gain on termination of $0.3 million.