XML 82 R23.htm IDEA: XBRL DOCUMENT v3.22.4
Equity Compensation Plans
 12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Equity Compensation Plans EQUITY COMPENSATION PLANS
The Company has two share-based incentive plans: the 2014 Stock Incentive Plan (2014 Plan) and the 2018 Employee Stock Purchase Plan (ESPP).
Stock Incentive Plan
Under the 2014 Plan, the Board of Directors may grant restricted stock awards or restricted stock units (collectively RSAs), nonstatutory stock options, performance share awards (PSAs) or stock appreciation rights to Company employees, directors and consultants, and may grant incentive stock options to Company employees. The Compensation Committee of the Board of Directors, as the administrator of the 2014 Plan, has the authority to determine the terms of any awards, including the number of shares subject to each award, the exercisability of the awards and the form of consideration. As of December 31, 2022, 13,999 shares of common stock had been reserved for issuance under the 2014 Plan and 2,183 shares were available for future grants. Stock options, restricted stock awards and restricted stock units granted generally vest at a rate of 33.3% on the first, second and third anniversaries of the grant date. Stock options generally expire ten years from the date of grant.
The award agreements for the PSAs provide that each PSA that vests represents the right to receive one share of the Company’s common stock at the end of the performance period. With respect to the PSAs, the number of shares that vest and are issued to the recipient is based upon the Company’s performance with respect to specified targets at the end of the three year performance period. PSAs granted in 2020 have performance targets based on the Company’s compound annual revenue growth rate (CAGR) over the three year performance period, and payout opportunities range from 0% to 100% of the target amount. PSAs awarded subsequent to 2020 have two weighted performance targets: (i) the Company’s CAGR and (ii) relative total shareholder return (TSR). TSR is measured against the Nasdaq Health Care Index constituents and the 20-trading-day average stock price prior to the start and end of the performance period. PSAs granted in 2021 have payout opportunities ranging from 0% to 200% of the target amount, based on equally weighting of the performance targets. Awards granted in 2022 have payout opportunities ranging from 0% to 300% of the target amount and are weighted 60% on the CAGR performance target and 40% on the TSR performance target. These ranges are used to determine the number of shares that will be issuable when the award vests. The performance and market condition payouts will be determined independently and accumulated to determine the total payout for the three year performance period, subject to the maximum payout defined in the PSA agreements. All or a portion of the PSAs may vest following a change of control or a termination of service by reason of death or disability.
Activity under the plans during 2022 was as follows:
Weighted
 Weighted
Average
Number of
 Average
Remaining
 Aggregate
Shares
 Exercise
Contractual
 Intrinsic
Time-Based Stock OptionsOutstanding
 Price
Term
 Value
Outstanding at January 1, 2022653 $25.53 
Granted— — 
Exercised(159)11.45 
Forfeited(13)55.33 
Outstanding at December 31, 2022481 $29.34 4.2$9,437 
Vested and expected to vest479 $29.17 4.2$9,436 
Exercisable at December 31, 2022411 $23.46 3.5$9,352 
The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $5,565, $27,318 and $29,594. As a result of the Company’s full valuation allowance on its net deferred tax assets, no tax benefit was recognized related to the stock option exercises. The exercise price per share of each option is equal to the fair market value of the underlying share on the date of grant. For 2022, 2021 and 2020, $1,816, $8,175 and $10,835 in cash proceeds from the exercise of stock options were included in the Consolidated Statements of Cash Flows.
 Weighted
 Weighted
RSA
 Average
PSA
 Average
Shares
 Grant Date
Shares
 Grant Date
Restricted Stock Awards and Performance Share AwardsOutstanding
 Fair Value
Outstanding
 Fair Value
Outstanding at January 1, 2022628 $50.96227 $64.27
Awarded356 63.14117 91.05
Released(362)47.58(116)44.21
Forfeited(24)57.45(15)55.17
Outstanding at December 31, 2022598 $60.00213 $90.70
The total fair value of restricted stock vested during 2022, 2021 and 2020 was $23,242, $40,510 and $34,200. The total fair value of performance share awards vested during 2022, 2021 and 2020 was $5,185, $8,165 and $4,003. The Company issues registered shares of common stock to satisfy stock option exercises and restricted stock and performance award grants.
Employee Stock Purchase Plan
Under the ESPP, shares of the Company’s common stock may be purchased at a discount (15%) to the lesser of the closing price of the Company’s common stock on the first or last trading day of the offering period. The offering period (currently six months) and the offering price are subject to change. Participants may not purchase a value of more than $25 of the Company’s common stock in a calendar year and may not purchase a value of more than 3 shares during an offering period. As of December 31, 2022, there were 184 shares available for future issuance under the ESPP.
Valuation and Expense Information Under FASB ASC 718
The following table summarizes total share-based compensation expense related to employees, directors and consultants for 2022, 2021 and 2020. The expense was allocated as follows:
 202220212020
Cost of revenue $1,868$2,243$1,425
Research and development expenses 4,5444,2063,530
Selling, general and administrative expenses 22,35921,62917,687
Total $28,771$28,078$22,642
The expense by award type was allocated as follows:
 202220212020
Restricted Stock Awards & Time-Based Stock Options$18,633$18,727$18,612
Performance Share Awards8,7318,0952,921
ESPP1,4071,2561,109
Total $28,771$28,078$22,642
In 2020, the Compensation Committee modified the methodology for measuring performance of the 2018, 2019 and 2020 performance awards. The modification to vesting conditions and performance measures resulted in incremental compensation cost of $994, $2,856 and $569 during 2022, 2021 and 2020.
As of December 31, 2022 there was $23,252 of unrecognized compensation costs related to non-vested stock options and restricted stock arrangements ($1,160 relating to stock options and $22,092 relating to restricted stock). This cost is expected to be recognized over a weighted-average period of 1.4 years for stock options and 1.8 years for restricted stock. As of December 31, 2022 there was $11,648 of unrecognized compensation costs related to non-vested performance share awards, and this cost is expected to be recognized over a weighted-average period of 1.7 years.
In determining compensation expense, the fair value of restricted stock awards, restricted stock units and performance share awards with a performance condition is based on the market value of the Company’s stock on the grant date of the awards or subsequent modification (as applicable). The fair value of options is estimated on the grant date using the Black-Scholes model. No options were granted during 2022. Options granted in prior years included the following assumptions:
 20212020
Range of risk-free interest rate
0.43-1.22%
0.30 - 1.73%
Range of expected life of stock options (years)
5.3 to 5.7
5.2 to 5.7
Range of expected volatility of stock
40.00 - 43.00%
40.00 - 43.00%
Weighted-average volatility41.84%41.54%
Dividend yield0.00%0.00%
The Company’s estimate of volatility is based solely on the Company’s stock price over the expected option life. The risk-free interest rate assumption is based upon the U.S. treasury yield curve at the time of grant for the expected option life. The Company estimates the expected terms of options using historical employee exercise behavior.
The fair value of performance share awards with a market condition is estimated on the grant date using a Monte Carlo simulation and includes the following assumptions:
20222021
Stock price
$39.94 - $69.59
$66.31
Expected term (years)
2.6 to 2.8
2.8
Company volatility
43.50 - 46.90%
42.10%
Market index average volatility
90.30 - 92.00%
91.00%
Market index average correlation
33.50 - 35.40%
31.50%
Risk-free interest rate
1.40 - 2.70%
0.20%
Dividend yield
0.00%
0.00%
The expected term is estimated as the remaining performance period at the grant date. Expected volatility is estimated based on the Company and daily trading prices of the market index, adjusted for dividends and stock splits over the remaining performance period. The risk-free interest rate is based upon the US Constant Maturity yield curve at the time of grant for the expected term of the performance share awards.
Based on the assumptions noted above, the weighted average estimated grant date fair value per share of the stock options, restricted stock awards and performance share awards granted for 2022, 2021 and 2020 was as follows:
 202220212020
Stock options$—$27.31$15.25
Restricted stock awards63.1467.5140.77
Performance share awards91.0589.3638.42