10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2023

OR

☐ 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: 001-37725

___________________________

ViewRay, Inc.

(Exact Name of Registrant as Specified in its Charter)

___________________________

Delaware	42-1777485
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1099 18th Street, Suite 3000 Denver, CO	80202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (440) 703-3210

___________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	VRAY	The Nasdaq Global 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 April 28, 2023, the registrant had 183,402,038 shares of common stock, $0.01 par value per share, outstanding.

VIEWRAY, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
	Cautionary Note Regarding Forward-Looking Statements	3
Item 1.	Unaudited Condensed Consolidated Financial Statements	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to the Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	35
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	38
	Signatures	39

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”), contains forward-looking statements, including, without limitation, in the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “will”, “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development of products, (ii) a projection of revenue, cash usage, income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation:

•our ability to grow adjusted EBITDA and achieve or maintain profitability, the sufficiency of our cash resources and our ability to operate as a going concern;

•our ability, including the timing and extent, to sufficiently manage costs and to fund our operations to maintain compliance with financial and other covenants under our indebtedness, while continuing to support the execution of our growth strategy on anticipated timelines;

•disruptions in the supply or changes in the costs of raw materials, labor, product components, or transportation services, including as a result of inflation;

•our reliance on third parties, including in supplying and distributing MRIdian®;

•delays in business operations and installation caused by factors related to the coronavirus pandemic ("COVID-19");

•our ability to procure materials and components in connection with the manufacture and installation of MRIdian;

•market acceptance of magnetic resonance imaging (“MRI”) guided radiation therapy;

•the benefits of MR Image-Guided radiation therapy;

•our ability to obtain and maintain regulatory approval in targeted markets for MRIdian;

•our ability to successfully sell and market MRIdian in our existing and expanded geographies;

•the performance of MRIdian in clinical settings;

•competition from existing technologies or products or new technologies and products that may emerge;

•the effect or impact of market consolidation;

•the pricing and reimbursement of MR Image-Guided radiation therapy;

•our ability to implement our business model and strategic plans for our business and MRIdian;

•the scope of protection we are able to establish and maintain for intellectual property rights covering MRIdian;

•the impact of the long sales cycle and low unit volume sales of MRIdian on estimates of our future revenue, expenses, capital requirements and our need for additional financing;

•our financial performance;

•the MRIdian linear accelerator technology, or MRIdian Linac, does not meet customer expectations;

•adverse developments affecting the financial services industry;

•developments relating to our competitors and the healthcare industry; and

•other risks and uncertainties, including those listed under the section titled “Risk Factors.”

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Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A, titled “Risk Factors” and discussed elsewhere in this Report, and in Part I, Item 1A, titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Given these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise, except as required by law.

This Report may also contain estimates, projections and other information concerning our industry, our business, and the markets for certain devices, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

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PART I—FINANCIAL INFORMATION

Item 1. Unaudited Condensed Consolidated Financial Statements

VIEWRAY, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	81,293	$	135,960
Accounts receivable, net of allowance of $736 and $304, respectively	47,527		41,383
Inventory, net of allowance of $1,522 and $1,522, respectively	42,192		31,303
Deposits on purchased inventory	8,742		7,484
Deferred cost of revenue	7,953		6,715
Prepaid expenses and other current assets	5,860		5,509
Total current assets	193,567		228,354
Property and equipment, net	19,039		19,641
Restricted cash	4,241		6,535
Intangible assets, net	37		38
Right-of-use assets	5,401		5,945
Other assets	10,874		10,884
TOTAL ASSETS	$	233,159	$	271,397
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,216	$	28,300
Accrued liabilities	20,759		24,682
Customer deposits	16,150		16,006
Operating lease liability, current	2,931		2,860
Current portion of credit revolver	4,278		—
Current portion of long-term debt	73,483		—
Deferred revenue, current	23,949		24,734
Total current liabilities	166,766		96,582
Deferred revenue, net of current portion	2,395		3,069
Long-term debt	—		73,339
Credit revolver	—		5,000
Warrant liabilities	2,234		4,178
Operating lease liability, noncurrent	4,441		5,205
Other long-term liabilities	2,066		1,782
TOTAL LIABILITIES	177,902		189,155
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, par value of $0.01 per share; 10,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	—		—
Common stock, par value of $0.01 per share; 300,000,000 shares authorized at March 31, 2023 and December 31, 2022; 183,384,069 and 181,586,944 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	1,824		1,806
Additional paid-in capital	926,754		924,898
Accumulated deficit	(873,321)		(844,462)
TOTAL STOCKHOLDERS’ EQUITY	55,257		82,242
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	233,159	$	271,397

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

5

VIEWRAY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Revenue:
Product	$	15,782	$	13,426
Service	6,519		5,331
Distribution rights	233		119
Total revenue	22,534		18,876
Cost of revenue:
Product	16,939		13,766
Service	7,025		5,016
Total cost of revenue	23,964		18,782
Gross profit (loss)	(1,430)		94
Operating expenses:
Research and development	8,628		7,870
Selling and marketing	7,991		6,884
General and administrative	11,582		12,814
Total operating expenses	28,201		27,568
Loss from operations	(29,631)		(27,474)
Interest income	1,341		5
Interest expense	(2,626)		(1,064)
Other (expense) income, net	2,057		2,759
Loss before provision for income taxes	$	(28,859)	$	(25,774)
Provision for income taxes	—		—
Net loss and comprehensive loss	$	(28,859)	$	(25,774)
Net loss per share, basic and diluted	$	(0.16)	$	(0.14)
Weighted-average common shares used to compute net loss per share attributable to common stockholders, basic and diluted	182,310,900		179,740,732

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

6

VIEWRAY, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share and per share data)

(Unaudited)

	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2022	181,586,944	$	1,806	$	924,898	$	(844,462)	$	82,242
Issuance of common stock from option exercises	224,741	2		286		—		288
Stock-based compensation	—	—		3,337		—		3,337
Issuance of common stock from releases of restricted stock units	1,572,384	16		(16)		—		—
Tax withholding paid on behalf of employees for stock-based awards	—	—		(1,751)		—		(1,751)
Net loss	—	—		—		(28,859)		(28,859)
Balance at March 31, 2023	183,384,069	$	1,824	$	926,754	$	(873,321)	$	55,257

	Common Stock
	Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
Balance at December 31, 2021	179,206,456	$	1,782	$	905,145	$	(737,132)	$	169,795
Issuance of common stock from option exercises	19,292	—		56		—		56
Stock-based compensation	—	—		5,032		—		5,032
Issuance of common stock from releases of restricted stock units	1,216,278	12		(12)		—		—
Tax withholding paid on behalf of employees for stock-based awards	—	—		(1,604)		—		(1,604)
Net loss	—	—		—		(25,774)		(25,774)
Balance at March 31, 2022	180,442,026	$	1,794	$	908,617	$	(762,906)	$	147,505

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

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VIEWRAY, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(28,859)	$	(25,774)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	961		1,244
Stock-based compensation	3,337		5,032
Accretion on asset retirement obligation	25		23
Change in fair value of warrant liabilities	(1,944)		(2,830)
Provision on credit losses on accounts receivable	431		—
Amortization of debt discount and interest accrual	346		246
Changes in operating assets and liabilities:
Accounts receivable	(6,575)		(6,343)
Inventory	(10,785)		3,640
Deposits on purchased inventory	(1,258)		(2,375)
Deferred cost of revenue	(1,238)		(2,097)
Prepaid expenses and other assets	(490)		(4,739)
Accounts payable	(2,414)		8
Accrued expenses and other long-term liabilities	(3,821)		(8,247)
Customer deposits and deferred revenue	(1,315)		9,827
Net cash used in operating activities	(53,599)		(32,385)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,177)		(1,218)
Net cash used in investing activities	(1,177)		(1,218)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on credit revolver	(722)		—
Proceeds from the exercise of stock options	288		56
Payments for taxes related to net share settlement of equity awards	(1,751)		(1,604)
Net cash used in financing activities	(2,185)		(1,548)
NET DECREASE IN CASH DURING THE PERIOD	(56,961)		(35,151)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — BEGINNING OF PERIOD	142,495		219,808
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — END OF PERIOD	$	85,534	$	184,657
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	2,093	$	819
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fair value of common stock warrants reclassified from liability to additional paid-in capital upon exercise	$	—	$	—
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	—
Transfer of property and equipment from inventory and deferred cost of revenue	$	(104)	$	(103)
Purchases of property and equipment in accounts payable and accrued liabilities	$	11	$	161

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

8

VIEWRAY, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1.    BACKGROUND AND ORGANIZATION

ViewRay, Inc. (“ViewRay” or the “Company”), and its wholly-owned subsidiary ViewRay Technologies, Inc., designs, manufactures and markets MRIdian, an MR Image-Guided radiation therapy system to simultaneously image and treat cancer patients.

Since inception, ViewRay Technologies, Inc. has devoted substantially all of its efforts towards research and development, selling and marketing activities, raising capital and the manufacturing, shipment and installation of MRIdian systems. In May 2012, ViewRay Technologies, Inc. was granted clearance from the U.S. Food and Drug Administration (“FDA”), to sell MRIdian with Cobalt-60. In November 2013, ViewRay Technologies, Inc. received its first clinical acceptance of a MRIdian with Cobalt-60 at a customer site, and the first patient was treated with that system in January 2014. ViewRay Technologies, Inc. has had the right to affix the CE mark to MRIdian with Cobalt-60 in the European Economic Area ("EEA") since November 2014. In September 2016, the Company received the rights to affix the CE mark to MRIdian Linac, and in February 2017, the Company received 510(k) clearance from the FDA to market MRIdian Linac. In February 2019, the Company received 510(k) clearance from the FDA for advancements in MRI, 8 frames per second cine, and Functional imaging (T1/T2/DWI) and High-Speed MLC. In December 2019, we received the CE mark for these advancements in the EEA. In December 2021, the Company received 510(k) clearance from the FDA on its recent submission for new MRIdian features ("MRIdian A3i") focused on enhancing on-table adaptive workflow efficiency and expanding clinical utility. In September 2022, the Company received approval to market the MRIdian system in China from the National Medical Products Administration ("NMPA").

Liquidity and Ability to Continue as a Going Concern

Under Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements - Going Concern, the Company is required to evaluate whether there is substantial doubt regarding its ability to continue as a going concern each reporting period, including interim periods.

In this evaluation, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of the financial statements included in this Quarterly Report on Form 10-Q (the “financial statements”), and considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations during such twelve month period. The Company’s principal sources of liquidity are cash flows from public and private offerings and available borrowings under its term loan agreement, as well as cash receipts from its sales of MRIdian systems. These have historically been sufficient to meet working capital needs, capital expenditures, operating expenses, and debt service obligations.

The Company has a history of significant net losses, including $29.6 million for the three months ended March 31, 2023, and net cash used in operations of $53.6 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had cash and cash equivalents of $81.3 million and restricted cash of $4.2 million. The Company has borrowings under the Credit Agreement with $77.8 million outstanding as of March 31, 2023, which was reclassified to current during the period (see Note 5). As of March 31, 2023, the Company was in compliance with all applicable covenants in agreements governing its debt. However, based on the Company’s projected financial performance for the twelve-month period subsequent to the date of the filing of this Quarterly Report on Form 10-Q, the Company projects that it will not be in compliance with a financial covenant under the Company’s Credit Agreement, as defined in Note 5, Debt, which could result in an event of default. Such a default would allow the Lender under the Credit Agreement to accelerate the maturity of the debt, which carries a balance of $77.8 million as of March 31, 2023, making it due and payable at that time, which the Company does not have availability liquidity to repay. The Company projects it will not have sufficient cash on hand or available liquidity to fund its operations or repay the outstanding debt in the event of default through the twelve months following the date of the issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, on April 13, 2023, the Company announced it has retained Goldman Sachs and Co. LLC as a financial advisor to undertake an evaluation of strategic alternatives, including a corporate sale, merger, or business combination. Additionally, the Company is undertaking a number of actions in order to improve its financial position and stabilize its working capital, including, but not limited to, cost reduction efforts and cash conversion initiatives. The Company’s operating plans are significantly contingent around estimates on the number of systems to be recognized in a

9

fiscal year along with the anticipated cash collections for those systems. As discussed in the Company’s announcement on April 13, 2023, the continued high inflation environment has resulted in delays on projects and elongated cash collection timing. These factors have significantly impacted the expected cash usage of the Company.

Although the Company has been reviewing a number of potential alternatives to improve its working capital, it cannot conclude it is probable that any such alternative will be achievable under favorable terms, or at all, and therefore the Company may be unable to meet its obligations as they become due within twelve months after the date that the financial statements are issued, or at all, and these conditions and events in the aggregate raise substantial doubt regarding the Company’s ability to continue as a going concern within twelve months after the date that the financial statements are issued. The Company’s financial statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming the Company will continue as a going concern.

NOTE 2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of ViewRay, Inc. and its wholly-owned subsidiary, ViewRay Technologies, Inc. All inter-company accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period. These unaudited condensed consolidated financial statements and their notes should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 28, 2023, and have not changed significantly since that filing.

NOTE 3.    BALANCE SHEET COMPONENTS

Property and Equipment, Net

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

	March 31, 2023		December 31, 2022
Prototype	$	17,641	$	17,641
Machinery and equipment	19,068		19,068
Leasehold improvements	15,365		15,365
Furniture and fixtures	1,511		1,511
Software	1,389		1,389
Construction in progress	2,775		2,417
Property and equipment, gross	57,749		57,391
Less: accumulated depreciation and amortization	(38,710)		(37,750)
Property and equipment, net	$	19,039	$	19,641

Depreciation and amortization expense related to property and equipment was $1.0 million and $1.2 million during the three months ended March 31, 2023 and 2022, respectively.

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Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Accrued payroll and related benefits	$	12,622	$	15,542
Accrued accounts payable	4,917		5,606
Payroll withholding tax, sales and other tax payable	1,352		1,660
Accrued legal, accounting and professional fees	202		241
Product upgrade reserve	900		900
Other	766		733
Total accrued liabilities	$	20,759	$	24,682

Deferred Revenue

Deferred revenue consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Deferred revenue:
Product	$	8,055	$	8,814
Service	17,590		18,057
Distribution rights	699		932
Total deferred revenue	26,344		27,803
Less: current portion of deferred revenue	(23,949)		(24,734)
Noncurrent portion of deferred revenue	$	2,395	$	3,069

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Accrued interest, noncurrent portion	$	363	$	96
Asset retirement obligation	1,082		1,057
Other accrued costs	621		629
Total other-long term liabilities	$	2,066	$	1,782

NOTE 4.    FAIR VALUE OF FINANCIAL INSTRUMENTS

Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

Level 1—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3—Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

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The assets’ or liabilities’ fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments that are carried at fair value mainly consist of Level 1 assets and Level 3 liabilities. Level 1 assets include highly liquid bank deposits and money market funds, which were not material at March 31, 2023 and December 31, 2022. Level 3 liabilities that are measured on a recurring basis relate to the 2017 and 2016 Placement Warrants, as described in Note 9. Placement warrant liabilities are valued using the Black-Scholes option-pricing model. Generally, increases (decreases) in the fair value of the underlying stock, volatility and estimated term would result in a directionally similar impact to the fair value of the warrants (see Note 9). During the three months ended March 31, 2023, and 2022, no warrants were exercised.

The gains and losses from re-measurement of Level 3 financial liabilities are recorded as part of other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss. During the three months ended March 31, 2023 and 2022, the Company recorded a gain of $1.9 million and $2.8 million, respectively, related to the change in fair value of the 2017 and 2016 Placement Warrants. There were no transfers between Level 1, Level 2 and Level 3 in any periods presented.

The following table sets forth the fair value of the Company’s financial liabilities by level within the fair value hierarchy (in thousands):

	At March 31, 2023
	Level 1		Level 2		Level 3		Total
2017 Placement Warrants Liability	$	—	$	—	$	1,718	$	1,718
2016 Placement Warrants Liability	—		—		516		516
Total	$	—	$	—	$	2,234	$	2,234

	At December 31, 2022
	Level 1		Level 2		Level 3		Total
2017 Placement Warrants Liability	$	—	$	—	$	3,127	$	3,127
2016 Placement Warrants Liability	—		—		1,051		1,051
Total	$	—	$	—	$	4,178	$	4,178

The following table sets forth a summary of the changes in fair value of the Company’s Level 3 financial liabilities (in thousands):

	Three Months Ended March 31,
	2023		2022
Fair value, beginning of period	$	4,178	$	6,795
Change in fair value of Level 3 financial liabilities	(1,944)		(2,830)
Fair value of 2016 Placement Warrants at exercise	—		—
Fair value of 2017 Placement Warrants at exercise	—		—
Fair value, end of period	$	2,234	$	3,965

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of intangible assets, right-of-use (“ROU”) assets, and property and equipment, are measured at fair value on a non-recurring basis and are reported at carrying value. These assets are subject to fair value adjustments when events or changes in circumstances indicate a significant adverse effect on the fair value of the asset. Impairment charges are recorded to reduce the carrying amount of the assets to their fair value.

During 2022, the Company recorded impairment charges of $1.5 million on its ROU asset for one of the Mountain View, California office spaces and $0.3 million on the related furniture and fixtures to reduce the carrying value to their estimated fair value in connection with the sublease discussed in Note 6.

The fair value of ROU asset and related furniture and fixtures was determined based on Level 3 measurements. Inputs to this fair value measurement included a valuation model that measures the present value of remaining lease payments less estimated sublease income at a discount rate that captures the risk associated with the future cash flows.    

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NOTE 5.    DEBT

In December 2018, the Company entered into a term loan agreement with Silicon Valley Bank (“SVB”) (as amended from time to time, the “SVB Term Loan”).

On November 14, 2022, the Company entered into a new five-year loan facility agreement with MidCap Financial (“MidCap”) and SVB (the “Credit Agreement”). The Credit Agreement consists of a term loan of up to $100 million and a revolving credit facility of up to $25 million.

On March 26, 2023, it was announced that First-Citizens Bank & Trust Company (“First-Citizens”) would assume all of SVB's deposits and loans as of March 27, 2023. This includes the Company’s SVB deposits and the Credit Agreement. The Company notes that no material impact to operations has occurred in connection with SVB’s closure and receivership under the Federal Deposit Insurance Corporation (“FDIC”), and is closely monitoring ongoing events involving the financial services industry, including First-Citizens.

On May 2 2023, we received notice from MidCap asserting failure by the Company to comply with certain obligations under the Company’s Credit Agreement. While we believe such assertions are without merit, on May 10, 2023, the Company entered into a Standstill Agreement with MidCap as discussed further below. As a result of this notice, the subjective acceleration clause was triggered and the Company reclassified its debt to current as of March 31, 2023.

Effective May 10, 2023 the Company entered into a Standstill Agreement with MidCap and First-Citizens as successor to SVB, (collectively “Lender”), pursuant to which the Company agreed to: (i) a prepayment of the term loan in the principal amount of $17,500,000 and the revolving credit facility in a principal amount of $3,540,480, respectively; and (ii) certain information rights regarding the status and prospects for completion by the Company of a strategic transaction. Lender agreed to refrain from exercising certain of their rights and remedies against the Company during a standstill period from May 10, 2023 through August 31, 2023, or longer if the Company has received sufficient additional funding following consummation of a strategic transaction, subject to additional covenants concerning: (i) achievement of strategic transaction milestones and (ii) maintenance of a minimum cash balance. The Company paid the $17,500,000 term loan amount and $3,540,480 revolving credit facility amount on May 10, 2023.

Term Loan

The key elements of the term loan include (i) a term loan commitment up to $100 million, of which $25 million may be accessed upon achievement of a gross margin target for the 2023 fiscal year; (ii) an annual interest rate of the Wall Street Journal (“WSJ”) Prime rate plus 3.5% with a floor of 9.25%; (iii) an exit fee payment of 4.00% of the aggregate principal amount, and (iv) a maturity date of November 1, 2027, with three years of interest only payments, with the option to extend the interest only period for one additional year at the election of the Company. At inception of the term loan, the Company evaluated this option as an embedded derivative and determined it to be clearly and closely related to the host contract. As such, no bifurcation of the embedded derivative from the host contract was required. 

At close, the Company drew $75 million, of which $60.0 million was used to retire its then existing SVB Term Loan. The Company accounted for the term loan portion of the Credit Agreement as a debt modification. However, given the large disproportion between the amount repaid to SVB under the SVB Term Loan and the amount received from SVB under the new Credit Agreement, the Company wrote off a pro-rata portion of the unamortized deferred fees and costs for a total of $0.5 million.

The Company received net proceeds of approximately $14.0 million after related bank and legal fees of approximately $1.0 million. Such fees are accounted for as debt discount and issuance costs and presented as a direct deduction from the carrying amount of debt on the Company’s consolidated balance sheets. Debt discount, issuance costs and the final payment are amortized or accreted as interest expense over the term of the loan using the effective interest method.

Revolving Credit Facility

The key elements of the revolving line of credit under the Credit Agreement include (i) a revolving line of credit of up to $25 million, comprised of an initial $15 million commitment, with the option to increase the line by an additional $10 million, subject to lender approval and borrowing base availability; (ii) an annual interest rate of the WSJ Prime rate plus 0.5% with a floor of 6.25%; (iii) a maturity date of November 1, 2027. At close, the Company drew $5 million. During the three months ended March 31, 2023, the Company repaid $0.7 million borrowed under of the revolving credit facility.

The Credit Agreement is secured by substantially all assets of the Company, except that the collateral does not include any intellectual property held by the Company, provided, however, the collateral does include all accounts and proceeds of such intellectual property.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, dividends and other distributions and transactions with affiliates. The Credit Agreement also contains financial covenants that require the Company to maintain a minimum net revenue threshold and a minimum backlog balance.

The Credit Agreement includes standard events of default, including, among other things, subject in certain cases to customary grace periods, thresholds and notice requirements, the Company’s failure to fulfill its obligations under the Credit Agreement or the occurrence of a material adverse change in the Company's business, operations, or condition (financial or otherwise). In the event of default by the Company under the Credit Agreement, MidCap and SVB would be entitled to exercise their remedies thereunder, including the right to accelerate the debt, upon which the Company may be required to repay all amounts then outstanding under the Credit Agreement, which could harm the Company's financial condition.

The Company’s scheduled future payments on the term loan under the Credit Agreement at March 31, 2023 are as follows (in thousands):

Year Ended December 31,
The remainder of 2023	$	—
2024	—
2025	6,250
2026	37,500
2027	31,250
Total future principal payments	75,000
Less: unamortized debt discount	(1,517)
Carrying value of long-term debt	73,483
Less: current portion	(73,483)
Long-term portion	$	—

NOTE 6.    COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company entered into agreements to lease office space in Oakwood Village, Ohio, Mountain View, California and Denver, Colorado under noncancelable operating lease agreements.

In recognition of the ROU assets and the related lease liabilities, the options to extend the lease term have not been included as the Company is not reasonably certain that it will exercise any such option.

In 2022, the Company entered into an agreement to sublease all 24,600 rentable square feet of one of its Mountain View office spaces to a subtenant to offset its cash outflow. The sublease commenced on May 2, 2022 and will expire on March 31, 2024, unless earlier terminated in accordance with the sublease agreement.

Legal Proceedings

In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.

Purchase Commitments

The Company has various manufacturing contracts with vendors as part of the normal course of its business. In order to manage future demand for its product, the Company enters into agreements with manufacturers and suppliers to procure inventory based upon backlog and estimated delivery of systems. Some of the parts used for the production of the MRIdian system have lead times of several months to over a year, as such it is necessary to order such inventory in advance to ensure the demands from the market are covered. At March 31, 2023, the Company had $14.4 million of non-cancelable purchase commitments for inventory.

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NOTE 7.    REVENUE

The Company derives revenue primarily from the sale of MRIdian systems and related services as well as support and maintenance services on sold systems. Revenue is categorized as product revenue, service revenue and distribution rights revenue.

The following table presents revenue disaggregated by type and geography (in thousands):

	Three Months Ended March 31,
	2023		2022
U.S.
Product	$	915	$	432
Service	3,720		3,099
Total U.S. revenue	$	4,635	$	3,531
Outside of U.S. ("OUS")
Product	$	14,867	$	12,994
Service	2,799		2,232
Distribution rights	233		119
Total OUS revenue	$	17,899	$	15,345
Total
Product	$	15,782	$	13,426
Service	6,519		5,331
Distribution rights	233		119
Total revenue	$	22,534	$	18,876

Arrangements with Multiple Performance Obligations

The Company frequently enters into sales arrangements that include multiple performance obligations. Such performance obligations mainly consist of (i) sale of MRIdian systems, (ii) installation of MRIdian systems, and (iii) product support, which includes extended service and maintenance. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The standalone selling price ("SSP"), is determined based on observable prices at which the Company separately sells the products and services. If a SSP is not directly observable, the Company will estimate the SSP considering market conditions or internally approved pricing guidelines related to the performance obligations.

Product Revenue

Product revenue is derived primarily from the sales of MRIdian systems. The MRIdian system contains both software and non-software components that together deliver essential functionality.

Certain revenue contracts have terms that result in the control of the system transferring to the customer upon delivery and inspection, as opposed to historically upon customer acceptance. For contracts in which control of the system transfers upon delivery and inspection, the Company recognizes revenue for the systems at the point in time when delivery and inspection by the customer has occurred. For these same contracts, the Company recognizes installation revenue over the period of installation as the installation services are performed and control is transferred to the customer. For all contracts in which control continues to transfer upon post-implementation customer acceptance, revenue for the system and installation will continue to be recognized upon customer acceptance.

Certain customer contracts with distributors do not require ViewRay installation at the ultimate user site, and the distributors may either perform the installation themselves or hire another party to perform the installation. For sales of MRIdian systems for which the Company is not responsible for installation, revenue recognition occurs when the entire system is shipped, which is when the control of the system is transferred to the customer.

Service Revenue

Service revenue is derived primarily from maintenance services. The maintenance and support service is a stand-ready obligation which is performed over the term of the arrangement and, as a result, service revenue is recognized ratably over the service period as the customers benefit from the service throughout the service period.

Distribution Rights Revenue

In December 2014, the Company entered into a distribution agreement with Itochu Corporation pursuant to which it appointed Itochu as its exclusive distributor for the promotion, sale and delivery of its MRIdian products within Japan. In consideration of the exclusive distribution rights granted, the Company received $4.0 million, which was recorded as deferred revenue. Starting in August 2016, the distribution rights revenue is recognized ratably over the remaining term of the distribution agreement, which expires in December 2023. A time-elapsed method is used to measure progress because control is transferred evenly over the remaining contractual period.

Contract Balances

The timing of revenue recognition, billings and cash collections results in short-term and long-term trade receivables, customer deposits, deferred revenues and deferred cost of revenue on the condensed consolidated balance sheets.

Trade receivables are recorded at the original invoiced amount, net of an estimated allowance for credit losses. Trade credit is generally extended on a short-term basis. The Company occasionally provides for long-term trade credit for its maintenance services so that the period between when the services are rendered to its customers and when the customers pay for that service is within one year. Thus, the Company’s trade receivables do not bear interest or contain a significant financing component. Long-term trade receivables of $8.9 million and $9.0 million were reported within other assets in the condensed consolidated balance sheets at March 31, 2023 and at December 31, 2022, respectively. These amounts are billed in accordance with the terms of the customer contracts to which they relate and are expected to be collected two to three years from the date of invoice as the underlying maintenance services are rendered. At times, billing occurs subsequent to revenue recognition, resulting in an unbilled receivable which represents a contract asset. This contract asset is recorded as an unbilled receivable and reported as part of accounts receivable on the consolidated balance sheets.

Trade receivables are periodically evaluated for collectability based on past credit history of the respective customers and their current financial condition. Changes in the estimated collectability of trade receivables are included in the results of operations for the period in which the estimate is revised. Trade receivables that are deemed uncollectible are offset against the estimated allowance for credit losses. The Company generally does not require collateral for trade receivables. There were $0.7 million and $0.3 million of estimated allowances for credit losses recorded at March 31, 2023 or December 31, 2022.

Customer deposits represent payments received in advance of system installation. For domestic and international sales, advance payments received prior to inventory shipments are recorded as customer deposits. Advance payments are subsequently reclassified to deferred revenue upon inventory shipment. All customer deposits, including those that are expected to be a deposit for more than one year, are classified as current liabilities based on consideration of the Company’s normal operating cycle (the time between acquisition of the inventory components and the final cash collection from customers on these inventory components) which is in excess of one year.

Deferred revenue consists of deferred product revenue and deferred service revenue. Deferred product revenue arises from timing differences between the fulfillment of contract obligations and satisfaction of all revenue recognition criteria consistent with the Company’s revenue recognition policy. Deferred service revenue results from the advance billing for services to be delivered over a period of time. Deferred revenues expected to be realized within one year or normal operating cycle are classified as current liabilities.

Deferred cost of revenue consists of cost for inventory items that have been shipped, but revenue recognition has not yet occurred. Deferred cost of revenue is included as part of current assets as the corresponding deferred product revenue is expected to be realized within one year or the Company’s normal operating cycle.

During the three months ended March 31, 2023 and 2022, the Company recognized $6.5 million and $4.5 million of revenue that was included in the deferred revenue balance at the beginning of the reporting period, respectively.

Variable Consideration

The Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of those goods or services. The Company estimates the transaction price at contract inception, including any variable consideration, and updates the estimate each reporting period for any changes. There were no amounts recognized during the three months ended March 31, 2023 from performance obligations satisfied in the prior period.

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NOTE 8.    WARRANTS

Equity Classified Common Stock Warrants

In connection with a March 2018 direct registered offering (the “March 2018 Direct Registered Offering”), the Company issued (i) 4,090,000 shares of its common stock; (ii) 3,000,581 shares of its Series A convertible preferred stock and (iii) warrants to purchase 1,418,116 shares of common stock at an exercise price of $8.31 per share (the “2018 Offering Warrants”). The 2018 Offering Warrants became exercisable upon issuance and expire in March 2025. None of the 2018 Offering Warrants have been exercised to date and they all remained outstanding at March 31, 2023.

As separate classes of securities were issued in a bundled transaction, the gross proceeds from the March 2018 Direct Registered Offering of $59.1 million were allocated to common stock, Series A convertible preferred stock and the 2018 Offering Warrants based on their respective relative fair value upon issuance. The aggregate fair value of the 2018 Offering Warrants of $7.4 million was estimated using the Black-Scholes option-pricing model with the following assumptions:

	Upon Issuance
Common Stock Warrants:
Expected term (in years)	7.0
Expected volatility (%)	62.5%
Risk-free interest rate (%)	2.8%
Expected dividend yield (%)	0%

The allocated proceeds from the 2018 Offering Warrants of $6.6 million were recorded in additional paid-in-capital.

Liability Classified Common Stock Warrants

In connection with private placement offerings in 2016 and 2017 (the “2016 and 2017 Private Placements”), the Company issued warrants that provide the warrant holder the right to purchase 1,720,512 and 1,380,745 shares of common stock (the “2017 and 2016 Placement Warrants”, respectively). The 2017 and 2016 Placement Warrants contain protection whereby the warrant holders will have the right to receive cash in the amount equal to the Black-Scholes value of the warrants upon the occurrence of a change of control, as defined in the warrant agreement. The 2017 and 2016 Placement Warrants were accounted for as a liability at the date of issuance and are adjusted to fair value at each balance sheet date, with the change in fair value recorded as a component of other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss.

The key terms of the 2017 and 2016 Placement Warrants are as follows:

	Issuance Date	Term	Exercise Price Per Share		Warrants Exercised during the three months ended March 31, 2023	Warrants Outstanding at March 31, 2023
2017 Placement Warrants	January 2017	7 years	$	3.17	—	1,500,022
2016 Placement Warrants	August and September 2016	7 years	$	2.95	—	536,711
Total					—	2,036,733

During the three months ended March 31, 2023 and 2022, the Company recorded a gain of $1.9 million and $2.8 million, respectively, related to the change in fair value of the 2017 and 2016 Placement Warrants. The fair value of the 2017 and

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2016 Placement Warrants at March 31, 2023 and December 31, 2022, respectively, was estimated using the Black-Scholes option-pricing model and the following weighted-average assumptions:

	2017 Placement Warrants				2016 Placement Warrants
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Expected term (in years)	0.8		1.0		0.4		0.6
Expected volatility	81.7	%	82.9	%	81.6	%	82.7	%
Risk-free interest rate	4.7	%	4.7	%	4.9	%	4.8	%
Expected dividend yield	—	%	—	%	—	%	—	%

NOTE 9.    STOCK-BASED COMPENSATION

As of March 31, 2023, the Company had an active stock-based incentive compensation plan and an employee stock purchase plan: the 2015 Equity Incentive Award Plan (as amended and restated, the “2015 Plan”), and the 2015 Employee Stock Purchase Plan (as amended and restated, the “ESPP”), respectively. All new equity compensation grants are issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans.

In 2022, the Company's board of directors determined the 2018 Inducement Program (“2018 Plan”) was no longer required under ViewRay’s compensation program and terminated it. No further awards will be granted under this plan and no such awards have been granted since August 16, 2021. As a result, all 1,501,304 shares previously available for issuance under the 2018 Plan have been restored to the Company’s general authorized but unissued share reserve, and are no longer set aside for grants under the 2018 Plan.

The 2015 Plan provides for the grant of stock and stock-based awards including stock options, restricted stock units (including deferred stock units), performance-based stock units, and stock appreciation rights. Additionally, stock units may be issued as performance-based stock units to align stock compensation awards to the attainment of annual or long-term performance goals.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and comprehensive loss is classified as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cost of revenue	$	162	$	176
Research and development	450		724
Selling and marketing	466		693
General and administrative	2,259		3,439
Total stock-based compensation expense	$	3,337	$	5,032

The Company’s stock-based compensation expense is based on the value of the portion of share-based payment awards that are ultimately expected to vest, assuming estimated forfeitures at the time of grant. Stock-based compensation relating to stock-based awards granted to consultants was insignificant for the three months ended March 31, 2023 and 2022.

Restricted Stock Units, Deferred Stock Units and Performance Share Units (collectively “Incentive Stock Units” or “ISUs”)

The Company grants restricted stock units, deferred stock units, and performance stock units (collectively "Incentive Stock Units" or "ISUs").

Restricted Stock Units ("RSUs") are granted to the Company's board of directors and employees for their services. Deferred Stock Units ("DSUs") are granted to the Company's board of directors at their election in lieu of retainer and committee service fees. The DSUs granted to board members are either fully vested upon issuance or vest over a period of time from the grant date and will be released and settled upon termination of the board member’s services, the occurrence of a change in control event, or the tenth anniversary of the grant date. The RSUs and DSUs granted to employees and/or

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board members vest in equal annual or monthly installments over one to three years from the grant date and are subject to the participants continuing service to the Company over that period.

Performance share units (“PSUs”) are granted to the Company’s employees which vest based on the achievement of performance targets set by the Company based on a three-year performance period.

The grant date fair values of ISUs are based on the closing market price of our common stock on the grant date. Stock-based compensation expense, net of forfeitures, is recognized on a straight-line basis over the requisite service period. For PSUs, compensation expense is updated for the Company’s expected performance level against performance goals at the end of each reporting period, which involves judgment as to achievement of certain performance metrics. More specifically, achievement of a compound annual revenue growth rate will result in a percentage payout of the target PSUs awarded. If the Company’s compound annual revenue growth rate is between threshold and target or between target and maximum, payouts will be linearly interpolated.

The table below summarizes the Company’s activity and related information for its ISUs:

	RSUs and DSUs			PSUs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	5,020,029	$	4.16	3,550,855	$	4.33
Granted	2,200,988	$	4.39	1,372,107	$	4.34
Performance based adjustment (1)	—	$	—	(1,150,777)	$	4.49
Vested	(1,994,691)	$	3.91	—	$	—
Cancelled or forfeited	(96,515)	$	3.31	(53,029)	$	4.34
Unvested at March 31, 2023	5,129,811	$	4.43	3,719,156	$	4.21
Vested and unreleased	274,943			—
Outstanding at March 31, 2023	5,404,754			3,719,156

(1) Represents an adjustment to the PSU accrual as of March 31, 2023 based on the expected level of achievement of previously granted awards.

The total grant date fair value of ISUs awarded was $15.6 million and $12.9 million for the three months ended March 31, 2023 and 2022, respectively. The total fair value of ISUs vested was $8.6 million and $6.9 million during the three months ended March 31, 2023 and 2022, respectively.

At March 31, 2023, total unrecognized stock-based compensation cost related to ISUs, net of estimated forfeitures, was $23.2 million, which is expected to be recognized over a weighted-average period of 2.0 years. As of March 31, 2023, 7.5 million shares of ISUs are expected to vest.

Stock Options

Stock options awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant and with a four-year vesting schedule. Stock option awards generally expire 10 years from the date of grant.

A summary of the Company’s stock option activity and related information is as follows:

	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2022	6,748,580	$	6.97	5.0	$	3,307
Options granted	—	—
Options exercised	(224,741)	$	1.28
Options cancelled or forfeited	(250,732)	$	7.20
Options outstanding at March 31, 2023	6,273,107	$	7.16	4.6	$	1,530
Options exercisable at March 31, 2023	6,100,929	$	7.30	4.7	$	1,267
Options vested and expected to vest at March 31, 2023	6,260,370	$	7.17	4.6	$	1,510

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There were no options granted to employees for the three months ended March 31, 2023 and 2022.

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The aggregate intrinsic value of options exercised was nominal for the three months ended March 31, 2023 and 2022.

At March 31, 2023, total unrecognized stock-based compensation cost related to stock options granted to employees, net of estimated forfeitures, was $0.2 million, which is expected to be recognized over a weighted-average period of 1.0 year.

The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of complex and subjective variables. The variables used to calculate the fair value of stock options using the Black-Scholes option-pricing model include actual and projected employee stock option exercise behaviors, expected price volatility of the Company’s common stock, the risk-free interest rate and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

The risk-free interest rate is based on the zero-coupon U.S. Treasury notes, with maturities similar to the expected term of the options. The Company has not paid and does not anticipate paying cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

The forfeiture rate of stock options is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures have been estimated by the Company based upon historical and expected forfeiture experience.

Employee Stock Purchase Plan

In July 2015, the Company adopted the ESPP. Certain employees, as defined by the ESPP, are eligible to participate in the ESPP if employed by the Company for at least 20 hours per week during at least five months per calendar year. Participating employees may contribute up to the lesser of 15% of their eligible earnings or $30,000 during each offering period, provided that in no event shall a participating employee be permitted to purchase more than 3,000 shares of common stock during each offering period.

During 2023, the first offering period provided to eligible employees is January 1, 2023 through June 30, 2023. The purchase price of common stock purchased under the ESPP is currently equal to 85% of the lesser of the fair market value of a share of common stock on: (1) the first trading day of an offering period and (2) the last trading of each offering period. At March 31, 2023, 3.5 million shares were reserved for issuance under the ESPP. No more than 3.5 million shares of common stock may be issued under the ESPP. As of March 31, 2023, 0.6 million shares have been issued under the ESPP and 2.9 million shares remained available for future issuance under the ESPP. Purchase rights granted under the ESPP are valued using the Black-Scholes pricing model.

NOTE 10.    INCOME TAX

Due to the current operating losses, the Company recorded zero income tax expense during the three months ended March 31, 2023 and 2022, respectively. During these periods, the Company’s activities were limited to U.S. federal and state tax jurisdictions, as it does not have any significant foreign operations.

Due to the Company’s history of cumulative losses and after considering all the available objective evidence, management concluded that it is not more likely than not that all of the Company’s net deferred tax assets will be realized in the future. Accordingly, the Company’s deferred tax assets, which include net operating loss (“NOL”), carryforwards and tax credits related primarily to research and development, continue to be subject to a valuation allowance as of March 31, 2023. The Company expects to continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.

The Company had unrecognized tax benefits of $4.0 million and $3.9 million at March 31, 2023 and December 31, 2022, respectively. The reversal of the uncertain tax benefits would not affect the effective tax rate to the extent that the Company continues to maintain a full valuation allowance against its deferred tax assets. Unrecognized tax benefits may change during the next 12 months for items that arise in the ordinary course of business.  

Interest and/or penalties related to income tax matters are recognized as a component of income tax expense. At March 31, 2023 and December 31, 2022, there were no accrued interest and penalties related to uncertain tax positions.

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NOTE 11.     NET LOSS PER SHARE

Diluted earnings per share (“EPS”) includes the dilutive effect of common stock equivalents and is computed using the weighted-average number of common stock and common stock equivalents outstanding during the reporting period. Diluted EPS for the periods ended March 31, 2023 and 2022 excluded common stock equivalents because the effect of their inclusion would be anti-dilutive or would decrease the reported loss per share. The following table sets forth securities outstanding that could potentially dilute the calculation of diluted earnings per share:

	For the three months ended March 31,
	2023	2022
Stock options outstanding	6,273,107	7,003,489
Warrants to purchase common stock - liability classified	2,036,733	2,036,733
Warrants to purchase common stock - equity classified	1,418,116	1,418,116
Unvested incentive stock units	8,848,967	7,995,614
Total	18,576,923	18,453,952

NOTE 12.    RELATED PARTY TRANSACTIONS

Hudson Cooperation Agreement

Pursuant to the Cooperation Agreement with Hudson Executive Capital LP and certain of its affiliates (collectively, “Hudson”) dated March 8, 2022, the Company concurrently entered into a Consulting Agreement with Sai Nanduri, a Senior Investment Analyst and representative of Hudson, pursuant to which the Company was required to pay Mr. Nanduri $160,000 during 2022 and consider Mr. Nanduri as a candidate for election to the Company's board of directors at the 2023 annual meeting of shareholders. This agreement expired on its terms on January 2, 2023.

Pursuant to the Cooperation Agreement with Hudson dated January 20, 2023, the Company concurrently entered into an Observer Agreement with Mr. Nanduri, pursuant to which Mr. Nanduri was appointed an observer to the board of directors of the Company and for which the Company is required to pay Mr. Nanduri $180,000 during 2023. The Company further agreed to appoint Mr. Nanduri as a member of its board of directors in the event a current director were to resign.

License Agreement with University of Florida Research Foundation, Inc.

In December 2004, the Company entered into a licensing agreement with the University of Florida Research Foundation (“UFRF”) whereby UFRF granted the Company a worldwide exclusive license to certain of UFRF’s patents in exchange for 33,652 shares of common stock and a 1% royalty, with a minimum $0.1 million royalty payment per quarter, from sales of products developed and sold by the Company utilizing the licensed patents. Minimum royalty payments in any calendar year are credited against earned royalties for such calendar year. Royalty expenses based on 1% of net sales were $0.1 million and nominal during the three months ended March 31, 2023 and 2022, respectively, and were recorded as product cost of revenue.

Distribution Agreement with Chindex Shanghai International Trading Company Limited

In November 2019, the Company entered into a distribution agreement with Chindex Shanghai International Trading Company Limited (“Chindex”) which became effective in February 2020. Chindex is a subsidiary of Fosun International Limited (“Fosun”).

Under the distribution agreement, Chindex will act as the Company’s distributor and regulatory agent for the sale and delivery of its MRIdian products within the People’s Republic of China, excluding Hong Kong, Macau and Taiwan. The distribution agreement has an initial term of five years with an option to renew for an additional five years. Under the distribution agreement, the Company will supply its products and services to Chindex based on an agreed upon price between the Company and Chindex. In accordance with the agreement, Chindex agreed to pay ViewRay an upfront fee, portions of which may be refundable under certain conditions, of $3.5 million, payable in three installments: (i) the first installment of $1.5 million due approximately 60 days after the effectiveness of the distribution agreement; (ii) the second installment of $1.0 million due on the first anniversary from the effective date of the agreement; and (iii) the third installment of $1.0 million due on the second anniversary from the effective date of the agreement. The Company has received all three installments as of March 31, 2023.

NOTE 13.    SUBSEQUENT EVENTS

On May 10, 2023, the Company announced a cost reduction program with expected annual savings of $19.0 million to $23.0 million, of which approximately 65% of the savings will be realized in fiscal year 2023. The program includes a reduction in discretionary spending and a workforce reduction of approximately 11%. The Company expects to incur restructuring charges of approximately $1.8 million associated with the workforce reduction.

Additionally, effective May 10, 2023, the Company entered into a Standstill Agreement in connection with the Company’s Credit Agreement as further described in Note 5, Debt.

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

The interim financial statements included in this Quarterly Report on Form 10-Q and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and notes thereto for the year ended December 31, 2022, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Annual Report filed with the SEC on February 28, 2023 and as amended with the filing of the Form 10-K/A on April 28, 2023. In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in this Quarterly Report and the Annual Report that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.

Unless otherwise indicated, references in this section to “ViewRay,” “we,” “us,” “our” and the “Company” refer to ViewRay, Inc. and its consolidated subsidiary, ViewRay Technologies, Inc.

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited condensed consolidated financial statements contained in this Quarterly Report, which we have prepared in accordance with U.S. GAAP. You should read the discussion and analysis together with such condensed consolidated financial statements and the related notes thereto.

Company Overview

ViewRay, Inc. designs, manufactures, and markets the MRIdian MRI-guided Radiation Therapy System. MRIdian is built upon a proprietary high-definition magnetic resonance (“MR”) imaging system designed from the ground up to address the unique challenges and clinical workflow for advanced radiation oncology. Unlike MR systems used in diagnostic radiology, MRIdian's high-definition MR was purpose-built to address specific challenges, including beam distortion, skin toxicity, and other concerns that may arise when high magnetic fields interact with radiation beams. The MRIdian MRI-guided Radiation Therapy System integrates diagnostic-quality MR imaging with radiation therapy delivery to enable on-table adaptive treatments with real-time tissue tracking and automatic beam gating. MRIdian supports the delivery of ablative radiation doses in five or fewer fractions, without implantable markers resulting in lower toxicities in hard-to-treat cancers. There are two generations of the MRIdian: the first generation MRIdian with radiation delivery using Cobalt-60 and the second generation MRIdian Linac, with a more advanced linear accelerator or ‘linac’ to deliver the radiation beams. MRIdian with Cobalt-60 is no longer commercially available.

MRIdian was designed to address the key limitations of existing external-beam radiation therapy technologies. MRIdian employs MRI-based technology to provide real-time imaging that clearly defines the targeted tumor from the surrounding soft tissue and other critical organs, both before and during radiation treatment delivery. We believe this combination of enhanced anatomical visualization and accurate dose calculation and delivery will improve the safety and efficacy of radiation therapy, leading to better outcomes for patients suffering from cancer.

Both generations of the MRIdian have received 510(k) marketing clearance from the U.S. Food and Drug Administration, (“FDA”) and permission to affix the Conformité Européene (“CE”) mark.

•We received initial 510(k) marketing clearance from the FDA for our treatment planning and delivery software in January 2011.

•We received 510(k) marketing clearance for MRIdian, with Cobalt-60, in May 2012.

•In September 2016, we received the CE mark for the MRIdian Linac in the European Economic Area ("EEA").

•In February 2017, we received 510(k) marketing clearance from the FDA to market MRIdian Linac in the United States (“U.S.”). We have also received regulatory approval for MRIdian Linac in several other markets, including Taiwan, Canada, Israel, and Japan.

•In June 2017, we received 510(k) marketing clearance to market RayZR™, our high-resolution beam-shaping multi-leaf collimator, or MLC.

•In February 2019, we received 510(k) marketing clearance for advancements in MRI, 8 frames per second cine, Functional imaging (T1/T2/DWI) and High-Speed MLC. In December 2019, we received the CE mark for these advancements in the EEA.

•In December 2021, the newest version of MRIdian Linac, MRIdian A3i, received 510(k) marketing clearance from the FDA.

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•In September 2022, the Company received approval to market the MRIdian Linac in China from the National Medical Products Administration (“NMPA”).

•We are also seeking required regulatory approvals for MRIdian Linac in other countries, including the CE mark for MRIdian A3i in the EEA.

MRIdian is the first radiation therapy solution that enables simultaneous radiation treatment delivery and real-time MRI imaging of a patient’s internal anatomy. It generates high-quality images that differentiate between the targeted tumor, surrounding soft tissue and nearby critical organs. MRIdian also records the level of radiation dose that the treatment area has received, enabling physicians to adapt the prescription between treatments, as needed. We believe this improved visualization and accurate dose recording will enable better treatment, improve patient outcomes and reduce side effects. Key benefits to users and patients include: improved imaging and patient alignment; the ability to adapt the patient’s radiation treatments to changes while the patient is still on the treatment table, or “on-table adaptive treatment planning”; MRI-based tissue tracking and automated beam gating; and an accurate recording of the delivered radiation dose. Physicians have already used MRIdian to treat a broad spectrum of radiation therapy patients with more than 65 different types of cancer, as well as patients for whom radiation therapy was previously not an option. Our customers have surpassed a significant milestone by treating over 31,000 patients on MRIdian systems to date.

At March 31, 2023, a total of 59 MRIdian systems, of which 58 are MRIdian Linac systems and one is a MRIdian with a Cobalt-60 systems, are in operation worldwide (28 in the United States and 31 outside the United States). In addition, 16 MRIdian Linacs have been delivered to customers that are in varying stages of deployment.

We currently market MRIdian through a direct sales force in the United States. In the rest of the world, we market MRIdian through a hybrid model of both a direct sales force and distribution network. We market MRIdian to a broad range of worldwide customers, including university research and teaching hospitals, community hospitals, private practices, government institutions and freestanding cancer centers. As with the traditional linac market, our sales and revenue cycles vary based on the particular customer and can be lengthy, sometimes lasting up to 18 to 24 months (or more) from initial customer contact to order contract execution. Following execution of an order contract, it generally takes nine to 15 months for a customer to customize an existing facility or construct a new vault. Upon the commencement of installation at a customer’s facility, it typically takes approximately 45 to 60 days for us to install MRIdian and perform on-site testing of the system, including the completion of acceptance test procedures.

We generated total revenue of $22.5 million and $18.9 million and had net losses of $28.9 million and $25.8 million, during the three months ended March 31, 2023 and 2022, respectively. We used net cash in operations of $53.6 million for the three months ended March 31, 2023. As of March 31, 2023, we had cash and cash equivalents of $81.3 million and restricted cash of $4.2 million. We have borrowings under the Credit Agreement with $77.8 million outstanding as of March 31, 2023, which were reclassified to current during the period (see Note 5). As of March 31, 2023, we were in compliance with all applicable covenants in agreements governing our debt. However, based on our projected financial performance for the twelve-month period subsequent to the date of the filing of this Quarterly Report on Form 10-Q, we project that we will not be in compliance with a financial covenant under the Company’s Credit Agreement, as defined in Note 5, Debt, which could result in an event of default. Such a default would allow the lender under the Credit Agreement to accelerate the maturity of the debt, which carries a balance of $77.8 million as of March 31, 2023, making it due and payable at that time, which we do not have availability liquidity to repay. In addition, in April 2023, we received notice from MidCap asserting failure by the Company to comply with certain obligations under the Company’s Credit Agreement. While we believe such assertions are without merit, on May 10, 2023, the Company entered into a Standstill Agreement with MidCap and the lenders under the Company’s Credit Agreement. See Note 5, Debt, for additional information regarding the Standstill Agreement. We project there will not be sufficient cash on hand or available liquidity to fund our operations or repay the outstanding debt in the event of default through the twelve months following the date of the issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, on April 13, 2023, we announced we have retained Goldman Sachs and Co. LLC as a financial advisor to undertake an evaluation of strategic alternatives, including a corporate sale, merger, or business combination. Additionally, we are undertaking a number of actions in order to improve our financial position and stabilize our working capital, including, but not limited to, cost reduction efforts and cash conversion initiatives. Our operating plans are significantly contingent around estimates on the number of systems to be recognized in a fiscal year along with the anticipated cash collections for those systems. As discussed in our announcement on April 13, 2023, the continued high inflation environment has resulted in delays on projects and elongated cash collection timing. These factors have significantly impacted our expected cash usage.

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Effective May 10, 2023 the Company entered into a Standstill Agreement with MidCap and First-Citizens, as successor to SVB, (collectively “Lender”), pursuant to which the Company agreed to: (i) a prepayment of the term loan in the principal amount of $17,500,000 and the revolving credit facility in a principal amount of $3,540,480, respectively; and (ii) certain information rights regarding the status and prospects for completion by the Company of a strategic transaction. Lender agreed to refrain from exercising certain of their rights and remedies against the Company during a standstill period from May 10, 2023 through August 31, 2023, or longer if the Company has received sufficient additional funding following consummation of a strategic transaction, subject to additional covenants concerning: (i) achievement of strategic transaction milestones and (ii) maintenance of a minimum cash balance. The Company paid the $17,500,000 term loan amount and $3,540,480 revolving credit facility amount on May 10, 2023.

Although we have been reviewing a number of potential alternatives to improve our working capital, we cannot conclude it is probable that any such alternative will be achievable under favorable conditions, or at all, and therefore, we may be unable to meet our obligations as they become due within twelve months after the date that the financial statements are issued, or at all, and these conditions and events in the aggregate raise substantial doubt regarding our ability to continue as a going concern within a twelve months after the date that the financial statements are issued.

We expect to continue to incur significant expenses and operating losses for the foreseeable future, as we:

•navigate our business activities through the impacts of the COVID-19 pandemic;

•continue our research and development efforts;

•seek regulatory approval for MRIdian in certain foreign countries; and

•operate as a public company.

The adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in Part II, Item 1A of this Report.

Impact of the COVID-19 Pandemic

The COVID-19 pandemic and its follow-on effects have impacted and will continue to impact business activity across industries worldwide, including ViewRay.

Due to pandemic-related factors including delays in service from our global supply chain partners and travel and quarantine restrictions imposed by government agencies and our customers in response to the spread of COVID-19, we have experienced delays in installation of systems in the United States, Asia and Europe. Similarly, our ability to conduct commercial efforts with our customers has been disrupted due to the impact of COVID-19 on our customers. If the economic effects of the COVID-19 pandemic persist or travel restrictions are reinstated, our ability to conduct our business and access capital markets will be negatively impacted. Capital equipment sales, which make up the majority of our revenue, and which were negatively impacted by the pandemic, may take longer than other areas of the economy to return to pre-pandemic levels, and this may continue to have a material impact on our business. The impacts of the COVID-19 pandemic have slowed, but they persist globally and may negatively impact our operations in areas that we are not aware of currently.

Impact of Inflation

In recent years, inflation has not had a significant impact on our operations. However, as inflation has increased over the past year, we are monitoring the actual and potential impacts on our business, including increases in product cost in connection with the parts used in our manufacturing process, freight and transportation costs, and wage pressure. Should the increase in inflation persist, it will likely increase the costs of conducting our operations, which would adversely impact our profitability.

New Orders and Backlog

New orders are defined as the sum of gross product orders, representing MRIdian contract price, recorded in backlog during the period. Backlog is the accumulation of all orders for which revenue has not been recognized and which we consider valid. Backlog includes customer deposits or letters of credit, except when the sale is to a customer where a deposit is not deemed necessary or customary. Deposits received are recorded in a customer deposit liability account on the balance sheet. Orders may be revised or cancelled according to their terms or upon mutual agreement between the parties. Therefore, it is difficult to predict with certainty the amount of backlog that will ultimately result in revenue. The determination of backlog includes objective and subjective judgment about the likelihood of an order contract becoming revenue. We perform a quarterly review of backlog to verify that outstanding orders in backlog remain valid, and based

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upon this review, orders that are no longer expected to result in revenue are removed from backlog. Among other criteria to consider for a transaction to be in backlog, we must possess both an outstanding and effective written agreement for the delivery of a MRIdian signed by a customer with a minimum customer deposit or a letter of credit requirement except when the sale is to a customer where a deposit is not deemed necessary or customary (i.e. sale to a government entity, a large hospital, group of hospitals or cancer care group that has sufficient credit, sales via tender awards, or indirect channel sales that have signed contracts with end-customers). We decide whether to remove or add back an order from or to our backlog by evaluating the following criteria: changes in customer or distributor plans or financial conditions; the customer’s or distributor’s continued intent and ability to fulfill the order contract; changes to regulatory requirements; the status of regulatory approval required in the customer’s jurisdiction, if any; the length of time the order has been on our backlog; and other reasons for potential cancellation of order contracts.

During the three months ended March 31, 2023, we received 13 new orders for MRIdian systems, totaling $68.3 million. At March 31, 2023, we had total backlog of $411.0 million.

Components of Statements of Operations

Revenue

Product Revenue. Product revenue consists of revenue recognized from sales of MRIdian systems, as well as optional components, such as additional planning workstations and body coils.

Following execution of an order contract, it generally takes nine to 15 months for a customer to customize an existing facility or construct a new vault for the purchased system. Upon the commencement of installation at a customer’s facility, it typically takes approximately 45 to 60 days to complete the installation and on-site testing of the system, including the completion of customer test procedures. On-site training can take up to multiple weeks and can be conducted concurrently with installation and acceptance testing. Order contracts generally include customer deposits upon execution of the agreement, and in certain cases, additional amounts due at shipment or commencement of installation, and final payment due generally upon customer acceptance.

For new contracts in which control of the system transfers upon delivery and inspection, the Company recognizes revenue for the system at the point in time when delivery and inspection has occurred. For these same contracts, the Company recognizes installation revenue over a period of time as control of the installation services are transferred. For all contracts in which control continues to transfer upon post-installation customer acceptance, revenue for the system and installation will continue to be recognized upon customer acceptance. For sales of MRIdian systems for which we are not responsible for installation, revenue is recognized when the entire system is delivered, which is when the control of the system is transferred to the customer.

Service Revenue. Our contracts typically include service warranty at no additional costs for one year. In addition, we offer multi-year, post-installation maintenance and support contracts that provide various levels of service support, which enables our customers to select the level of on-going support services, including parts and labor, which they require. These post-installation contracts are for a period of one to five years and provide services ranging from on-site parts and labor, and preventative maintenance to labor only with a longer response time. We also offer technology upgrades to our MRIdian systems, when and if available, for an additional fee. Service revenue is recognized ratably over the term during which the contracted services are provided.

Distribution Rights Revenue.  In December 2014, we entered into a distribution agreement with Itochu Corporation (“Itochu”) pursuant to which we appointed Itochu as our exclusive distributor for the promotion, sale and delivery of MRIdian products within Japan. As consideration for the exclusive distribution rights granted, we received $4.0 million, which was recorded as deferred revenue and since August 2016, distribution rights revenue has been recognized ratably over the remaining term of the distribution agreement, which expires in December 2023. A time-elapsed method is used to measure progress because the control is transferred evenly over the contractual period.

Cost of Revenue

Product Cost of Revenue. Product cost of revenue primarily consists of the cost of materials, installation and services associated with the manufacturing and installation of MRIdian systems, and royalty payments to the University of Florida Research Foundation. Product cost of revenue also includes lower of cost or net realizable value inventory (“LCNRV”) adjustments if the carrying value of the inventory is greater than its net realizable value.

We expect our materials, installation and service costs to decrease as we continue to scale our operations, improve product designs and work with our third-party suppliers to lower costs.

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Service Cost of Revenue. Service cost of revenue is comprised primarily of personnel costs, training and travel expenses to service and perform maintenance on installed MRIdian systems. Service cost of revenue also includes the costs of replacement parts under maintenance and support contracts.

Operating Expenses

Research and Development. Research and development expenses consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits and travel expenses. Other significant research and development costs arise from third-party consulting services, laboratory supplies, research materials, medical equipment, computer equipment and licensed technology, and related depreciation and amortization. We expense research and development costs as incurred. We will continue to invest in improving MRIdian and developing new technologies.

Selling and Marketing. Selling and marketing expenses consist primarily of compensation and related costs for our direct sales force, sales management, and marketing and customer support personnel, and include stock-based compensation, employee benefits and travel expenses. Selling and marketing expenses also include costs related to trade shows and marketing programs. We expense selling and marketing costs as incurred.

General and Administrative. Our general and administrative expenses consist primarily of compensation and related costs for our operations, finance, human resources, regulatory, and other administrative personnel, and include stock-based compensation, employee benefits and travel expenses. In addition, general and administrative expenses include third-party consulting, legal, audit, accounting services, quality and regulatory functions and facilities costs, and gain or loss on the disposal of property and equipment.

Interest Income

Interest income consists primarily of interest income received on our cash and cash equivalents.

Interest Expense

Interest expense consists primarily of interest and amortization related to our SVB Term Loan.

Other (Expense) Income, Net

Other (expense) income, net consists primarily of changes in the fair value of the 2017 and 2016 Placement Warrants and foreign currency exchange gains and losses.

The outstanding 2017 and 2016 Placement Warrants are re-measured to fair value at each balance sheet date with the corresponding gain or loss from the adjustment recorded as a component of other (expense) income, net.

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Results of Operations

The following tables set forth our results of operations for the periods presented:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Revenue:
Product	$	15,782	$	13,426
Service	6,519		5,331
Distribution rights	233		119
Total revenue	22,534		18,876
Cost of revenue:
Product	16,939		13,766
Service	7,025		5,016
Total cost of revenue	23,964		18,782
Gross profit (loss)	(1,430)		94
Operating expenses:
Research and development	8,628		7,870
Selling and marketing	7,991		6,884
General and administrative	11,582		12,814
Total operating expenses	28,201		27,568
Loss from operations	(29,631)		(27,474)
Interest income	1,341		5
Interest expense	(2,626)		(1,064)
Other (expense) income, net	2,057		2,759
Loss before provision for income taxes	$	(28,859)	$	(25,774)
Provision for income taxes	—		—
Net loss	$	(28,859)	$	(25,774)

Comparison of the three months ended March 31, 2023 and 2022

Revenue

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Product	$	15,782	$	13,426	$	2,356
Service	6,519		5,331		1,188
Distribution rights	233		119		114
Total revenue	$	22,534	$	18,876	$	3,658

Total revenue during the three months ended March 31, 2023 increased by $3.7 million compared to the same period in 2022. The increase was mainly due to a $2.4 million increase in product revenue and a $1.2 million increase in service revenue during the three months ended March 31, 2023 compared to the same period in 2022.

Product Revenue. Product revenue increased by $2.4 million for the three months ended March 31, 2023 compared to the same period in 2022. The Company recognized revenue for three MRIdian Linac systems in each of the three months ended March 31, 2023 and 2022.

Service Revenue. Service revenue increased by $1.2 million during the three months ended March 31, 2023 compared to the same period in 2022 primarily due to the increase in installed base.

Cost of Revenue

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Product	$	16,939	$	13,766	$	3,173
Service	7,025		5,016		2,009
Total cost of revenue	$	23,964	$	18,782	$	5,182

Product Cost of Revenue. Product cost of revenue increased by $3.2 million during the three months ended March 31, 2023 compared to the same period in 2022, primarily attributable to higher costs associated with the systems during the three months ended March 31, 2023.

Service Cost of Revenue. Service cost of revenue increased by $2.0 million during the three months ended March 31, 2023 compared to the same period in 2022, primarily due to the increase in installed base.

Operating Expenses

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Research and development	$	8,628	$	7,870	$	758
Selling and marketing	7,991		6,884		1,107
General and administrative	11,582		12,814		(1,232)
Total operating expenses	$	28,201	$	27,568	$	633

Research and Development. Research and development expenses during the three months ended March 31, 2023 increased by $0.8 million compared to the same period in 2022. The increase was primarily attributable to increased personnel and consulting expenses.

Selling and Marketing. Selling and marketing expenses during the three months ended March 31, 2023 increased by $1.1 million compared to the same period in 2022. The increase was primarily attributable to an increase in personnel expenses, as well as travel and marketing related expenses for additional in person events during the three months ended March 31, 2023.

General and Administrative. General and administrative expenses during the three months ended March 31, 2023 decreased by $1.2 million when compared to the same period in 2022. During the three months ended March 31, 2023, there was a $0.9 million decrease in legal expenses and a $0.2 million decrease in other consulting expenses.

Interest Income

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Interest income	$	1,341	$	5	$	1,336

Interest income increased by $1.3 million during the three months ended March 31, 2023 compared to the same period in 2022 due to an overall increase in interest rates during 2023.

Interest Expense

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Interest expense	$	(2,626)	$	(1,064)	$	(1,562)

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Interest expense increased by $1.6 million during the three months ended March 31, 2023 compared to the same period in 2022. The increase in interest expense is due to an increase in interest rates combined with higher principal amounts following the debt amendment that occurred in June 2022 and the entry into the Credit Agreement in November 2022.

Other (Expense) Income, Net

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Other (expense) income, net	$	2,057	$	2,759	$	(702)

Other (expense) income, net during the three months ended March 31, 2023 consisted primarily of a $1.9 million decrease in the fair value of warrant liabilities related to the 2017 and 2016 Placement Warrants as a result of the decrease in the Company’s stock price. Other (expense) income, net during the three months ended March 31, 2022 consisted primarily of a $2.8 million decrease in the fair value of warrant liabilities related to the 2017 and 2016 Placement Warrants.

Non-GAAP Adjusted EBITDA

	Three Months Ended March 31,
	2023		2022		Change
	(in thousands)
Adjusted EBITDA	$	(25,220)	$	(21,269)	$	(3,951)

Non-GAAP adjusted EBITDA for the three months ended March 31, 2023 was a loss of $25.2 million compared to a loss of $21.3 million for the same period in 2022. We define adjusted EBITDA as EBITDA (defined as net income before net interest expense, depreciation, and amortization), adjusted for impairment of assets, non-cash equity-based compensation, non-cash changes in warrant liability valuations, and non-recurring costs. The change in adjusted EBTIDA was primarily attributable to the increase in net loss and the decrease in stock compensation expense, offset by a change in the fair value of warrants. Refer “Non-GAAP Financial Measure” below for the reconciliation of GAAP net loss to Non-GAAP adjusted EBITDA.

Non-GAAP Financial Measure

We regularly review a number of metrics to evaluate our business, measure our progress, and make strategic decisions. Management uses a non-GAAP measure of adjusted earnings before interest, taxes, depreciation, amortization and stock-based compensation (“adjusted EBITDA”) to assess performance. We believe this measure assists our investors in gaining a meaningful understanding of our performance. Because not all companies use identical calculations, our presentation of this measure may not be comparable to other similarly titled measures of other companies. We define adjusted EBITDA as EBITDA (defined as net income before net interest expense, depreciation, and amortization), adjusted for impairment of assets, non-cash equity-based compensation, non-cash changes in warrant liability valuations, and non-recurring costs.

Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are that adjusted EBITDA:

•does not reflect any charges for the assets being depreciated and amortized that may need to be replaced in the future;

•does not reflect the significant interest expense or the cash requirements necessary to service interest or, if any, principal payments on our debt;

•does not reflect the impact of write-downs of long-lived assets;

•does not reflect the impact of share-based compensation upon our results of operations;

•does not reflect the impact of changes in fair value of our warrant liabilities; and

•does not include certain expenses that are non-recurring, infrequent and unusual in nature.

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The following table provides a reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods presented:

	Three Months Ended March 31,
	2023		2022
GAAP net loss	$	(28,859)	$	(25,774)
Depreciation and amortization	961		1,244
Stock-based compensation	3,337		5,032
Interest expense	2,626		1,064
Interest income	(1,341)		(5)
Loss (gain) on fair value of warrants (a)	(1,944)		(2,830)
Adjusted EBITDA	(25,220)		(21,269)

_________________

(a) consists of non-cash gain/losses related to our 2017 and 2016 Placement Warrants.

Liquidity and Capital Resources

Since our inception in 2004, we have incurred significant net losses and negative cash flows from operations. During the three months ended March 31, 2023 and 2022, we had net losses of $28.9 million and $25.8 million, respectively. At March 31, 2023, we had an accumulated deficit of $873.3 million.

At March 31, 2023, we had cash and cash equivalents of $81.3 million. To date, we have financed our operations principally through offerings of our capital stock, issuances of warrants, issuances of convertible promissory notes, use of term loans and receipts of customer deposits for new orders and payments from customers for systems installed and delivered. We may, from time to time, seek to raise capital through a variety of sources, including the public equity market, private equity financing, and public or private debt.

The adequacy of available funds will depend on many factors, including those set forth in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in Part II, Item 1A of this report.

On April 13, 2023, we announced we have retained Goldman Sachs and Co. LLC as a financial advisor to undertake an evaluation of strategic alternatives, including a corporate sale, merger, or business combination. Additionally, we are undertaking a number of actions in order to improve our financial position and stabilize our working capital including, but not limited to, cost reduction efforts and cash conversion initiatives. Our operating plans are significantly contingent around estimates on the number of systems to be recognized in a fiscal year along with the anticipated cash collections for those systems. As discussed in our announcement on April 13, 2023, the continued high inflation environment has resulted in delays on projects and elongated cash collection timing. These factors have significantly impacted our expected cash usage.

In addition, in April 2023, we received notice from MidCap asserting failure by the Company to comply with certain obligations under the Company’s Credit Agreement. While we believe such assertions are without merit, on May 10, 2023, the Company entered into a Standstill Agreement with MidCap and the lenders under the Company’s Credit Agreement. See Note 5, Debt, for additional information regarding the Standstill Agreement. Effective May 10, 2023 the Company entered into a Standstill Agreement with MidCap and First-Citizens, as successor to SVB, (collectively “Lender”), pursuant to which the Company agreed to: (i) a prepayment of the term loan in the principal amount of $17,500,000 and the revolving credit facility in a principal amount of $3,540,480, respectively; and (ii) certain information rights regarding the status and prospects for completion by the Company of a strategic transaction. Lender agreed to refrain from exercising certain of their rights and remedies against the Company during a standstill period from May 10, 2023 through August 31, 2023, or longer if the Company has received sufficient additional funding following consummation of a strategic transaction, subject to additional covenants concerning: (i) achievement of strategic transaction milestones and (ii) maintenance of a minimum cash balance. The Company paid the $17,500,000 term loan amount and $3,540,480 revolving credit facility amount on May 10, 2023.

Although we have been reviewing a number of potential alternatives to improve our working capital, we cannot conclude it is probable that any such alternative will be achievable under favorable terms, or at all, and therefore, we may be unable to meet our obligations as they become due within twelve months after the date that our financial statements as of and for the period ended March 31, 2023 are issued, or at all, and these conditions and events in the aggregate raise substantial doubt

31

regarding our ability to continue as a going concern within twelve months after the date that such financial statements are issued. Our condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming we will continue as a going concern.

The following table summarizes our cash flows for the periods presented:

	Three Months Ended March 31,
	2023		2022
	(in thousands)
Cash used in operating activities	$	(53,599)	$	(32,385)
Cash used in investing activities	(1,177)		(1,218)
Cash used in financing activities	(2,185)		(1,548)

Operating Activities

We have historically experienced cash outflows as we developed MRIdian with Cobalt-60 and MRIdian Linac and expanded our business. Our primary source of cash flow from operating activities is cash receipts from customers including sales of MRIdian systems and, to a lesser extent, up-front payments from customers. Our primary uses of cash from operating activities are amounts due to vendors for purchased components and employee-related expenditures.

Net cash used in operating activities for the three months ended March 31, 2023 was $53.6 million, as compared to $32.4 million for the same period in 2022. The increase in net cash flows used in operating activities as compared to the same period in 2022 is primarily driven by changes in working capital.

Investing Activities

Cash used in investing activities for the each of the three months ended March 31, 2023 and 2022 of $1.2 million, resulted from capital expenditures to purchase property and equipment.

Financing Activities

During the three months ended March 31, 2023, financing activities used $2.2 million in cash, as compared to net cash used of $1.5 million for the same period in 2022. The increase in net cash flows used from financing activities as compared to the same period in 2022 is primarily a result of the funds used to repay the borrowings under the revolving credit facility.

Off-Balance Sheet Arrangements and Contractual Obligations

We did not have any off-balance sheet arrangements as of March 31, 2023 and December 31, 2022. Additionally, there were no material changes to our contractual obligations described in our Annual Report on Form 10-K filed with the SEC on February 28, 2023.

For our contractual obligations that are expected to have an effect on our liquidity and cash flow, see section “Notes to Condensed Consolidated Financial Statements – Note 6 – Commitments and Contingencies” in the condensed consolidated financial statements and “Note 5 – Debt” in the condensed consolidated financial statements.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses. We evaluate our estimates and assumptions on an ongoing basis. Our estimates and assumptions are based on historical experience and on various other factors that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

There have been no significant changes to our accounting policies during the three months ended March 31, 2023, as compared to the critical accounting policies described in our Annual Report on Form 10-K filed with the SEC on February 28, 2023. We believe that the accounting policies discussed in that Annual Report are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Recently Issued and Adopted Accounting Pronouncements

We review new accounting standards to determine the expected financial impact, if any, that the adoption of each new standard will have. For the recently issued and adopted accounting standards that we believe may have an impact on our

32

condensed consolidated financial statements, see the section entitled “Notes to Condensed Consolidated Financial Statements – Note 2 – Summary of Significant Accounting Policies” in the condensed consolidated financial statements.

33

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer (“CEO”) and chief financial officer (“CFO”) has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our CEO and CFO have concluded that as of March 31, 2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such required information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the first quarter of 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The information under the caption “Commitments and Contingencies” in Note 6 of the unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q is incorporated herein by reference.

Item 1A. Risk Factors

The risk factors set forth below supplement the risk factors disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2022. If any of the risks discussed below or in our Annual Report on Form 10-K are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.

The Company’s ability to operate as a going concern is in doubt.

Management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern each reporting period. We have a history of significant net losses, including $28.9 million for the three months ended March 31, 2023, and net cash used in operations of $53.6 million for the three months ended March 31, 2023. Our current operating plan indicates we will continue to incur net losses and generate negative cash flows from operating activities.

On April 13, 2023, we announced we have retained Goldman Sachs and Co. LLC as a financial advisor to undertake an evaluation of strategic alternatives, including a corporate sale, merger, or business combination. Effective May 10, 2023 the Company entered into a Standstill Agreement with the Lender, pursuant to which the Company agreed to: (i) a prepayment of the term loan in the principal amount of $17,500,000 and the revolving credit facility in a principal amount of $3,540,480, respectively; and (ii) certain information rights regarding the status and prospects for completion by the Company of a strategic transaction. Lender agreed to refrain from exercising certain of their rights and remedies against the Company during a standstill period from May 10, 2023 through August 31, 2023, or longer if the Company has received sufficient additional funding following consummation of a strategic transaction, subject to additional covenants concerning: (i) achievement of strategic transaction milestones and (ii) maintenance of a minimum cash balance. The Company paid the $17,500,000 term loan amount and $3,540,480 revolving credit facility amount on May 10, 2023. Additionally, we are already undertaking a number of actions in order to improve our financial position and stabilize our working capital, including, but not limited to, cost reduction efforts and cash conversion initiatives; however, no assurance can be provided as to the effectiveness of those initiatives. If we are unable to obtain additional capital or engage in a strategic alternative, we will assess our capital resources and may be required to delay, pivot, reduce the scope of, or eliminate some or all of our operations, or downsize our organization, any of which may have a material adverse effect on our business, financial condition, results of operations, and ability to operate as a going concern.

Although we have been reviewing a number of potential alternatives to improve our working capital, such alternatives may not be achievable under favorable conditions, or at all, and therefore we may be unable to meet our obligations as they become due within twelve months after the date that our financial statements as of and for the period ended March 31, 2023 are issued, or at all, and these conditions and events in the aggregate raise substantial doubt regarding our ability to continue as a going concern within twelve months after the date that such financial statements are issued. The Company’s condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming we will continue as a going concern.

Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.

Substantially all of our cash and cash equivalents were held in accounts with SVB at the time it was closed by state regulators, and the FDIC was appointed receiver for SVB, on March 10, 2023. The FDIC created a successor bridge bank for SVB and all deposits of SVB were transferred to the bridge bank under a systemic risk exception approved by the United States Department of the Treasury, the Federal Reserve and the FDIC. Beginning Monday, March 13, 2023, we moved the majority of our cash, cash equivalents, and short-term investments held at SVB to other financial institutions. At present, we hold less than 5% of our cash, cash equivalents, and short-term investments with SVB and intend to hold a de minimus amount with SVB going forward, pending the resolution of SVB’s closure and receivership under the FDIC. If financial institutions in which we hold funds for working capital and operating expenses were to fail or become subject to significant adverse conditions in the financial or credit markets, we could be subject to a risk of loss of all or a portion of

35

our uninsured funds or be subject to a delay in accessing all or a portion of our uninsured funds, and we cannot provide any assurances that governmental agencies would take action to protect our uninsured deposits in a similar manner. Any loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations.

In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, and/or result in breaches of our financial and/or contractual obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have a material adverse effect on our liquidity and our current and/or projected business operations and financial condition and results of operations.

Further, we are party to a Credit Agreement with First-Citizens and MidCap. If we are unable to access the remaining incremental funds under our revolving credit facility, it could also adversely impact our operating liquidity and financial performance. In addition, if any parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Chief Financial Officer Transition

On May 10, 2023, as part of the Company’s cost reduction program, William P. “Bill” Burke stepped down as the Company’s Chief Financial Officer effective as of May 12, 2023. Jake Signoriello, who has served as the Company’s Vice President of Finance and Investor Relations, was appointed Interim Chief Financial Officer of the Company.

There are no arrangements or understandings between Mr. Signoriello and any other persons pursuant to which he was appointed as an officer, and Mr. Signoriello has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K. Mr. Signoriello does not have a family relationship with any member of the board of directors or any executive officer of the Company.

Mr. Burke’s departure from the Company is not the result of any issue, concern or disagreement regarding the Company’s accounting, financial reporting or internal control over financial reporting.

In connection with Mr. Burke’s resignation, on May 10, 2023, the Company entered into a general release of claims with Mr. Burke (the “Release”). Under the Release, Mr. Burke will receive, among other benefits, cash payments equal to $400,000 and reimbursement for the cost of the monthly COBRA premium for continuing health insurance coverage as elected by Mr. Burke until the earliest of: (i) 12 months and (iii) the date on which Mr. Burke secures other employment. Mr. Burke agreed to forego the right to receive: (i) payment of his signing bonus in the amount of $200,000; and (ii) a prorated annual incentive plan bonus for fiscal year 2023.

Standstill Agreement

Effective May 10, 2023 the Company entered into a Standstill Agreement with MidCap and First-Citizens, as successor to SVB, (collectively “Lender”), pursuant to which the Company agreed to: (i) a prepayment of the term loan in the

36

principal amount of $17,500,000 and the revolving credit facility in a principal amount of $3,540,480, respectively; and (ii) certain information rights regarding the status and prospects for completion by the Company of a strategic transaction. Lender agreed to refrain from exercising certain of their rights and remedies against the Company during a standstill period from May 10, 2023 through August 31, 2023, or longer if the Company has received sufficient additional funding following consummation of a strategic transaction, subject to additional covenants concerning: (i) achievement of strategic transaction milestones and (ii) maintenance of a minimum cash balance. The Company paid the $17,500,000 term loan amount and $3,540,480 revolving credit facility amount on May 10, 2023.

37

Item 6. Exhibits.

Exhibit Number		Incorporated by Reference			Filed Herewith
	Description	Form	Exhibit	Date Filed
2.1	Agreement and Plan of Merger and Reorganization, dated as of July 23, 2015, by and among ViewRay Inc., Acquisition Sub and ViewRay Technologies, Inc.	S-1/A	2.1	12/16/2015
3.1	Amended and Restated Certificate of Incorporation.	S-1/A	3.1	12/16/2015
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation of ViewRay, Inc., dated June 11, 2021.	8-K	3.1	06/11/2021
3.3	Second Amended and Restated Bylaws of ViewRay, Inc.	8-K	3.2	06/11/2021
3.4	Form of Confidential Severance Agreement				X
10.1	Cooperation Agreement dated January 20, 2023, by and between ViewRay, Inc. and Hudson Executive Capital LP, on behalf of itself and certain of its affiliates.	8-K	10.1	1/20/2023
10.2	Second Amendment to Employment Agreement, dated February 27, 2023 by and between ViewRay, Inc. and Scott Drake	10-K	10.29	2/28/2023
10.3	General Release of Claims, dated January 6, 2023, by and between ViewRay, Inc. and Zachary Stassen	10-K	10.31	2/28/2023
10.4	Offer Letter to William Burke dated January 6, 2023	10-K	10.32	2/28/2023
10.5	General Release of Claims, dated May 10, 2023, by and between ViewRay, Inc. and William P. Burke				X
10.6+	Standstill Agreement dated as of May 10, 2023, by and among ViewRay, Inc., ViewRay Technologies, Inc., and MidCap Financial Trust.				X
31.1	Certification of Principal Executive Officer Required under Securities Exchange Act Rule 13a-14(a) and 15d-14(a).				X
31.2	Certification of Principal Financial Officer under Securities Exchange Act Rule 13a-14(a) and 15d-14(a).				X
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350 and Securities Exchange Act Rule 13a-14(b).				X
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document				X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)				X

+ Certain confidential information contained in this exhibit has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.

38

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 hereunto duly authorized.

	VIEWRAY, INC.
Dated: May 11, 2023	By:	/s/ Scott Drake
	Name:	Scott Drake
	Title:	Chief Executive Officer
		(Principal Executive Officer)
Dated: May 11, 2023	By:	/s/ William P. Burke
	Name:	William P. Burke
	Title:	Chief Financial Officer
		(Principal Financial Officer)

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EX-3.4

Exhibit 3.4

CONFIDENTIAL SEVERANCE AGREEMENT

    This Confidential Severance Agreement (“Agreement”), dated as of DATE, is entered into between ViewRay, Inc., a Delaware Corporation., together with its existing and future subsidiaries and controlled affiliates (“ViewRay”), and NAME (“Employee”) (collectively, the “Parties”). Unless otherwise defined herein, any capitalized terms used in this Agreement shall have the meaning set forth in Annex A attached hereto.

The Parties agree as follows:

1.Severance Payments and other Benefits to Employee. Pursuant to the terms of this Agreement, Employee is being provided with certain severance and other benefits to which the employee would not otherwise be entitled. In consideration of the promises by Employee stated in this Agreement, which include but are not limited to the Employee agreeing to enter into certain restrictive covenants, a general release of claims after Employee’s effective termination date in the form attached hereto as Exhibit A (hereafter, the “Release”), and promise of confidentiality, ViewRay shall provide to Employee the following payments and benefits (collectively the “Severance Package”):

2.a.    Change in Control Severance Payment. In the event your employment is terminated due to a Qualifying Termination within the Covered Period related to a Change in Control (“Change in Control Event”), ViewRay agrees to make a lump sum severance payment to Employee in an amount equal to the sum of: (a)100% of Employee’s base salary; (b) Employee’s then-current target annual bonus; and (c) the pro-rata portion of Employee’s target annual bonus for the current fiscal year of the Separation Date, based on the date of separation during such fiscal year (the “Change in Control Severance Payment”). The Change in Control Severance Payment shall be paid in lump sum on ViewRay’s first payroll period beginning after the Effective Date.

b.    Non-Change in Control Severance Payment. In the event your employment is terminated and such termination is by ViewRay Without Cause or by Employee with Good Reason and such termination is not due to a Qualifying Termination within the Covered Period related to a Change in Control (a “Non-Change in Control Event”), ViewRay agrees to make a severance payment to Employee in an amount equal to: (a) 100% of Employee’s annual base salary (the “Base Salary Severance Payment”); and (b) the pro-rata portion of Employee’s Annual Incentive Plan (“AIP”) bonus for the current fiscal year of the Separation Date, based on the date of separation during such fiscal year (the “AIP Severance Payment”). The Base Salary Severance Payment shall be paid in lump sum on ViewRay’s first payroll period beginning after the Effective Date. The AIP Severance Payment shall be made in accordance with the payment schedule for that period’s AIP.

c.        COBRA Payment. To the extent the Employee timely and properly elects health insurance continuation coverage under ViewRay’s group health insurance plan under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), ViewRay shall pay for the cost of the monthly COBRA premium for continuing health insurance coverage as elected by Employee (the “COBRA Payment”) until the earliest of: (i) if a Change in Control Event, 18 months, and if a Non-Change in Control Event, 12 months from the Separation Date; (ii) the date Employee is no longer eligible to receive COBRA continuation coverage under ViewRay’s group health insurance plan; and (iii) the date on which Employee secures other employment. If ViewRay’s making the COBRA Payment under this paragraph 2.c would violate the nondiscrimination rules applicable to non-grandfathered plans under the Affordable Care Act (the “ACA”), or result in the imposition of penalties under the ACA and the related regulations and guidance promulgated thereunder, the Parties agree to reform this paragraph 2.c in a manner as is necessary to comply with the ACA.

d.    Outplacement. In ViewRay’s sole discretion based on the circumstances of Employee’s termination, Employee may be eligible for up to maximum of $10,000 in outplacement related services. In the event any amount of outplacement services are authorized, ViewRay will select the applicable outplacement service provider in its sole discretion.

    1     

Exhibit 3.4

e.    Accelerated Vesting of Equity Awards. In the event that (i) a Change of Control occurs during your employment hereunder and (ii) your employment with ViewRay is terminated by ViewRay (or its successor) without Cause or you resign for Good Reason at any time during the twelve-month period following such Change of Control, then (x) without further action by ViewRay (or its successor) or ViewRay’s board (or its successor’s board), all unvested units or shares issued under ViewRay’s Equity Incentive Program shall accelerate and become vested and exercisable as of the date of such termination.

EMPLOYEE HEREBY ACKNOWLEDGES AND AGREES THAT HIS OR HER ENTITLEMENT TO THE PAYMENTS AND BENEFITS SET FORTH IN THIS PARAGRAPH 2 ARE FULLY CONTINGENT UPON EMPLOYEE’S EXECUTION AND SUBSEQUENT NON-REVOCATION OF THE RELEASE (THE “GENERAL RELEASE OF CLAIMS”), A FORM OF WHICH IS ATTACHED AS EXHIBIT A HERETO, AFTER EMPLOYEE’S EFFECTIVE TERMINATION DATE.

Except as expressly provided in this Agreement, or an accrued benefit to which Employee is already entitled, Employee will not receive any additional compensation, bonus, severance, commissions, or other benefits after the Separation Date. Notwithstanding the foregoing, ViewRay will not oppose any application for unemployment insurance, although ViewRay will respond truthfully to any inquiries relating to such application. Further, nothing in this Agreement shall impact Employee’s rights to any vested retirement benefits. Employee acknowledges that payment of any amounts to, or on behalf of, Employee under this Agreement does not, in any way, extend the period of employment or continuous service beyond the last day of employment or confer any other rights or benefits other than what may be set forth expressly herein.

3.Taxes and Indemnification. Employee agrees to pay any and all taxes (other than payroll taxes) found to be owed from the Severance Package or other payments made pursuant to this Agreement and to indemnify and hold ViewRay harmless for any federal, state and local tax liability, including taxes, interest, penalties or the like, and required withholdings, which may be or is asserted against or imposed upon the Released Parties by any taxing authority based upon any amounts paid to Employee as a result of Employee's non-payment of taxes of such amounts for which Employee is legally responsible. Employee understands and agrees that any necessary tax documentation may be filed by ViewRay with regard to any payments made pursuant to this Agreement. Employee and ViewRay acknowledge that nothing herein shall constitute tax advice to the other Party.

4.Confidentiality.

a.Protection of Confidential and Proprietary Information. The Employee agrees not to disclose, sell or transfer to any person, firm, corporation, association or other entity, at any time in the future, any confidential and/or proprietary information concerning ViewRay or its affiliates, including, but not limited to any and all information regarding: (i) business plans and strategies; (ii) business contacts; (iii) research and development; (iv) computer programs, software, applications, directories, databases, passwords and access codes; (v) confidential personnel matters unrelated to wages, hours, or other terms and conditions of employment; (vi) operation methods and information, and accounting, financial and planning techniques; (vii) operating, administrative and training materials; (viii) marketing and sales strategies, materials and information; and (ix) any other trade secret or non-public financial, licensing, or marketing information relating to ViewRay or its affiliates (collectively, “confidential and/or proprietary information”). The Employee also agrees not to use, at any time in the future, any confidential and/or proprietary information of ViewRay or its affiliates for her own purposes and/or benefit, whether for personal or business reasons. Further, whether or not the Employee signs this Agreement, and notwithstanding the Employee’s separation from employment, the Employee agrees to abide by all of ViewRay’s policies, rules and procedures that relate to the protection of confidential and/or proprietary information. The Employee agrees that ViewRay’s confidential and/or proprietary information is: (a) is valuable, special and a unique asset of ViewRay; (b) provides ViewRay with a substantial competitive advantage; and (c) is a legitimate business interest justifying the need for the restrictions in this paragraph.

    2     

Exhibit 3.4

b.     Federal Defend Trade Secrets Act Notice. The Employee shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that: (i) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.  Should the Employee file a lawsuit against the Company for retaliation for reporting a suspected violation of law, the Employee may disclose the trade secret to the Employee’s attorney and use the trade secret information in the court proceeding, if the Employee: (a) files any document containing the trade secret under seal; and (b) does not disclose the trade secret, except pursuant to court order.

c. Return of Confidential and/or Proprietary Information. On or immediately following the Separation Date, the Employee shall return to ViewRay all documents reflecting confidential and/or proprietary information belonging to ViewRay which are in the Employee’s possession or under the Employee’s control and shall not retain any copies or other reproductions, or extracts thereof, whether paper or electronic, thereafter.

d. Confidentiality of Agreement. The Employee agrees not to disclose at any time in the future any of the terms of this Agreement, except that the Employee may disclose the terms of this Agreement: (i) as may be required by law; (ii) to any taxing authority, such as the IRS; (iii) to a court of competent jurisdiction for purposes of enforcement of, or for demonstrating a breach of this Agreement; and, (iv) to the Employee’s spouse, attorney and/or tax and financial advisors, provided that the individual first agrees to keep this information confidential. The Employee acknowledges and agrees that any other disclosure regarding the terms of this Agreement would constitute a material breach of the Agreement.

e. Response to Subpoenas. If the Employee is compelled by legal subpoena or court order to provide information covered by this paragraph 4, prior to such disclosure, the Employee will immediately provide a copy of such judicial order or subpoena, by delivery to ViewRay. The Employee agrees to provide ViewRay with a reasonable opportunity to intervene to assert what rights it may have to non-disclosure, prior to any response to the order or subpoena. However, nothing in this paragraph is intended to, nor should be construed to limit the Employee’s rights as outlined in paragraph 7 below.

5.Non-Disparagement. The Employee agrees and warrants that at no time in the future will the Employee make any statements (orally or in writing, including, without limitation, whether in fiction or nonfiction) or take any actions which in any way disparage or defame ViewRay or any of the Released Parties (as defined in the Release), or in any way, directly or indirectly, cause or encourage the making of such statements, or the taking of such actions by anyone else, including but not limited to other current or former employees of ViewRay (except as outlined in paragraph 7 below).

6.Incitement of Claims. The Employee also agrees that the Employee will not encourage or incite any person including, but not limited to, other current or former employees of ViewRay, to assert any complaint or claim in federal or state court against ViewRay or any of the Released Parties (except as outlined in paragraph 7 below).

7.Non-Interference. Notwithstanding paragraphs 4, 5, and 6 above, nothing in this Agreement shall be construed to prohibit the Employee from: (i) filing a charge or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or other federal, state or local government agency charged with enforcement of any law; (ii)  reporting possible violations of any law, rule or regulation to any governmental agency or entity charged with enforcement of any law, rule or regulation; or (iii) making other disclosures that are protected under whistleblower provisions of any law, rule or regulation. Notwithstanding the foregoing, by signing this Agreement and subsequently signing the Release, a form of which is attached as Exhibit A, the Employee acknowledges and agrees that the Employee waives not only the Employee’s right to recover money or any other relief in any action the Employee might commence against ViewRay or any of the Released Parties with respect to the claims released in

    3     

Exhibit 3.4

paragraph 2 of the Release, but also the Employee’s right to recovery in any such action brought against ViewRay or any of the Released Parties by any government agency or other party, whether brought on the Employee’s behalf or otherwise.

8.Breach. The Employee acknowledges that if the Employee materially breaches or threatens to materially breach any provision of this Agreement or the Release and/or commences a suit or action in contravention of this Agreement (except as outlined in paragraph 7 above) or the Release, ViewRay’s obligations to pay the Severance Package shall immediately cease and ViewRay shall be entitled to all other remedies allowed in law or equity, including but not limited to the return of any payments made to the Employee under this Agreement. Further, nothing in this Agreement shall prevent ViewRay from pursuing an injunction to enforce the provisions of paragraphs 4, 5, and 6 above. However, nothing in this paragraph regarding the return of monies is intended to, nor shall be construed to abrogate any contrary rights under the ADEA.

9.Non-Admission. The Parties understand that the Severance Package and other matters agreed to herein are not to be construed as an admission of or evidence of liability for any violation of the law, willful or otherwise, by any entity or any person.

10.Severability. If any provisions in this Agreement are held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

11.Complete Agreement. Any agreement to amend or modify the terms and conditions of this Agreement must be in writing and executed by the Parties. The Parties agree that this Agreement sets forth all of the promises and agreements between them concerning the subject matter and that this Agreement supersedes all prior and contemporaneous agreements, understandings, inducements or conditions, express or implied, oral or written, regarding the subject matter.

12.Sufficiency of Consideration. Employee agrees that Severance Package is made in exchange for, and constitutes good and valuable consideration for Employee's execution of this Agreement.

13.Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), including the exceptions thereto, and shall be construed and administered in accordance with such intent. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service, as a short-term deferral, or as a settlement payment pursuant to a bona fide legal dispute shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, any installment payments provided under this Agreement shall each be treated as a separate payment. To the extent required under Section 409A, any payments to be made under this Agreement in connection with a termination of employment shall only be made if such termination constitutes a “separation from service” under Section 409A. Notwithstanding the foregoing, ViewRay makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall ViewRay be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Employee on account of non-compliance with Section 409A.

14.Excess Parachute Payments. In the event that: (i) any amount or benefit paid or distributed to you pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to you (collectively, the “Covered Payments”), are or become subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended, or any similar tax that may hereafter be imposed (the “Excise Tax”), and (ii) it would be economically advantageous to you to reduce such Covered Payments to avoid imposition of the Excise Tax, the Covered Payments shall be reduced to an amount which maximizes the aggregate present value (as determined in accordance with Section 280G(d)(4) of the Code or any successor provision of the Code) of the Covered Payments without causing the Covered Payments to be subject to the Excise Tax. The reduction described herein shall only be made if the net after-tax amount to be

    4     

Exhibit 3.4

received by you after giving effect to the reduction will be greater than the net after-tax amount that would be received by you without the reduction. You shall in your sole discretion determine which and how much of the Covered Payments shall be eliminated or reduced consistent with the requirements of this paragraph.

15.Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Parties’ representatives, agents, successors, assigns, heirs, attorneys, affiliates, and predecessors.

16.Enforcement. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to its choice of law principles. If either party breaches this Agreement or any dispute arises out of or relating to this Agreement, the prevailing party shall be entitled to its reasonable attorneys’ fees, paralegals’ fees and costs, at all levels. THE PARTIES SPECIFICALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION. However, nothing in this paragraph is intended to, nor shall be construed to abrogate any contrary rights under the ADEA.

17.Interpretation. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any Party. By way of example and not in limitation, this Agreement shall not be construed in favor of the Party receiving a benefit nor against the Party responsible for any particular language in this Agreement.

18.Integration. Employee hereby acknowledges that this Agreement, constitutes the entire agreement between the Parties pertaining to the subject matter hereof, and supersede all prior or contemporaneous agreements and understandings among Employee, ViewRay and any other Released Party, whether written or oral, express or implied, with respect to the employment, termination and benefits of Employee.

19.Construction. The Parties expressly acknowledge that they have had equal opportunity to negotiate the terms of this Agreement and that this Agreement shall not be construed against the drafter.

20.Headings. The headings contained in the Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

21.Electronic Transmissions and Counterparts. This Agreement may be executed in several counterparts and by electronic transmissions (e-mail, facsimile and/or scanner) and all so executed shall constitute one Agreement, binding on all the Parties hereto, notwithstanding that the Parties are not signatories to the original or same counterpart.

Employee acknowledges that he/she has read and understands the contents of this Agreement, that he/she has received a copy of it and agrees to be bound by it.

EMPLOYEE:

________________________________

Date: ___________________________

VIEWRAY, INC.

By: Robert Fuchs

Its: Chief Human Resources Officer

Date:

    5     

Exhibit 3.4

Annex A

“Cause” means:

(a)    Employee’s willful failure to perform your duties (other than any such failure resulting from incapacity due to physical or mental illness);

(b)    Employee’s willful failure to comply with any valid and legal directive of the person or entity to whom you report;

(c)    Employee’s willful engagement in dishonesty, illegal conduct or gross misconduct, which is, in each case, materially injurious to ViewRay or its affiliates;

(d)    Employee’s embezzlement, misappropriation or fraud, related to Employee’s employment with ViewRay;

(e)    Employee’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude, if such felony or other crime is work-related, materially impairs Employee’s ability to perform services for ViewRay or results in material reputational or financial harm to ViewRay or its affiliates; or

(f)    Employee’s violation of a material policy of ViewRay.

For purposes of this definition, no act or failure to act on Employee’s part shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of ViewRay.

“Change in Control” shall mean: (i) a sale of all or substantially all of the assets of ViewRay and its subsidiaries taken as a whole or (ii) a merger, consolidation or other similar business combination involving ViewRay, if, upon completion of such transaction the beneficial owners of voting equity securities of ViewRay immediately prior to the transaction beneficially own less than fifty percent of the successor entity’s voting equity securities; provided, that “Change of Control” shall not include a transaction where the consideration received or retained by the holders of the then outstanding capital stock of ViewRay does not consist primarily of (i) cash or cash equivalent consideration, (ii) securities which are registered under the Securities Act of 1933, as amended (the “Securities Act”), or any successor statute and/or (iii) securities for which ViewRay or any other issuer thereof has agreed, including pursuant to a demand, to file a registration statement within ninety days of completion of the transaction for resale to the public pursuant to the Securities Act.

“Covered Period” means the period of time beginning on the first occurrence of a Change in Control and lasting through the eighteen (18) month anniversary of the occurrence of the Change in Control. The Covered Period shall also include the ninety (90) day period before the occurrence of the Change in Control.

“Good Reason” means:

(a)    a reduction in Employee’s base salary;

(b)    a reduction in Employee’s target annual bonus opportunity;

(c)    a relocation of Employee’s principal place of employment by more than fifty (50) miles;

(d)    ViewRay’s failure to obtain an agreement from any successor to assume and agree to perform the obligations in the same manner and to the same extent that ViewRay would be required to perform, except where such assumption occurs by operation of law; or

    6     

Exhibit 3.4

(e)    a material, adverse change in Employee’s title, reporting relationship, authority, duties or responsibilities (other than temporarily while Employee is physically or mentally incapacitated or as required by applicable law).

“Qualifying Termination” means the termination of Employee’s employment during the Covered Period either:

(a)    by ViewRay without Cause; or

(b)    by Employee for Good Reason.

A Qualifying Termination that occurs during the ninety (90) day period before the first occurrence of a Change in Control will be deemed to occur upon the occurrence of the Change in Control for purposes of this Agreement.

    7     

Exhibit 3.4

Exhibit A

GENERAL RELEASE OF CLAIMS

    This General Release of Claims (“Release”), dated as of _________ __, 20__, is entered into between ViewRay, Inc., a Delaware Corporation., together with its existing and future subsidiaries and controlled affiliates (“ViewRay”), and ________________ (“Employee”) (collectively, the “Parties”). Unless otherwise defined herein, any capitalized terms used in this Release shall have the meaning set forth in the Confidential Severance Agreement.    

The Parties agree as follows:

1.    Separation of Employment. Employee hereby acknowledges that Employee’s employment with ViewRay is terminated effective _______ ___, 20__ (the “Separation Date”). Regardless of whether Employee enters into this Release, ViewRay will pay Employee all accrued wages, earned and current-year accrued but unused paid time off,through and including the Separation Date, less applicable holdings, in accordance with ViewRay’s regular payroll practices or earlier when required by applicable state law.

2.    Release. In exchange for the Severance Package (as defined in the Confidential Severance Agreement), Employee and Employee’s representatives, heirs, successors and assigns do hereby completely release and forever discharge ViewRay and any present or past affiliates of ViewRay, and its and their present and former shareholders, officers, directors, members, agents, employees, attorneys, insurers, successors, and assigns (collectively, “Released Parties”) from all claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character, known or unknown, mature or unmatured, which Employee may now have or has ever had. This release of claims includes, but is not limited to, all claims arising out of Employee’s employment at ViewRay and the termination of that employment, or the failure/refusal of any Released Party hiring Employee, whether based on tort, contract (expressed or implied), or any federal, state, or local law, statute, or regulation (collectively, Released Claims”). By way of example and not in limitation of the foregoing, Released Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964; the Family and Medical Leave Act; the Post Civil War Civil Rights Acts (42 USC §§ 1981-1988); the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967 (the “ADEA”) (this release is meant to comply with the Older Workers Benefit Protection Act ("OWBPA"), 29 U.S.C. § 621 et seq., which statute was enacted to, among other things, ensure that individuals forty (40) years of age or older who waive their rights under the ADEA do so knowingly and voluntarily); the Equal Pay Act; the Occupational Safety and Health Act; the Americans with Disabilities Act; the Americans with Disabilities Act Amendments Act of 2008; the Uniform Services Employment and Reemployment Rights Act; the Davis-Bacon Act; the Walsh-Healey Act; the Employee Retirement Income Security Act (other than claims with regard to vested benefits); the Contract Work Hours and Safety Standards Act; Executive Order 11246; the Worker Adjustment and Retraining Notification Act; 42 U.S.C. section 1981; and any state or local statute, rule or regulation governing the employment relationship. This release further includes, any claims asserting breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, fraud or other tort claims, defamation, invasion of privacy, claims related to disability, any and all claims for wages, commissions, compensation, reimbursement, disbursements, bonuses, benefits, vacation, penalties and any other claims arising under or related to laws or regulations relating to employment. Employee likewise releases the Released Parties for any and all obligations for attorneys' fees, paralegals’ fees, and costs incurred in regard to the above claims, or otherwise. Employee further agrees that if any such claim is prosecuted in Employee’s name before any court or administrative agency, Employee waives and agrees not to take any award of money or other damages from such suit. Notwithstanding the foregoing, Released Claims shall not include any workers’ compensation benefits or other claims which cannot be waived as a matter of law. This releases all waivable claims, including those of which Employee is not aware and those not

    8     

Exhibit 3.4

specifically mentioned in this Release. This Release applies to all claims resulting from anything that has happened up through the date Employee signs this Release. Employee understands that this Release does not waive rights or claims that may arise after the date that this Release is executed.

3.    Waiver of Age Discrimination Claims. Employee understands and agrees that, by entering into this Release, (i) Employee is waiving any rights or claims Employee might have under the ADEA; (ii) Employee has received consideration beyond that to which Employee was previously entitled; (iii) Employee has been and hereby is advised in writing to consult with an attorney before signing this Release; (iv) Employee has not relied on any statement or promises by anyone other than those contained in the written terms of this Release, and that Employee has entered into this Release knowingly without reliance upon any other representation, promise, or inducement that is not set forth herein; (v) Employee has been offered the opportunity to evaluate the terms of this Release for not less than twenty-one (21) days prior to Employee’s execution of the Release, although Employee may choose to execute this Release sooner; and (vi) Employee has a period of seven (7) days following Employee’s execution of this Release in which Employee may revoke this Release (the “Revocation Period”). The Parties agree that any material or non-material changes made to this Release after Employee receives this Release do not restart the running of the 21-day period in which Employee may review this Release prior to signing this Release. Employee may revoke this Release by notifying ViewRay in writing of Employee’s decision to revoke to _______________ via email at ____________ prior to the expiration of the Revocation Period, with the original of the revocation sent via U.S. Mail to ______________________________. This Release shall become enforceable on the eighth day after the employee signs and delivers this Release to ViewRay, provided Employee does not revoke or otherwise breach Employee’s obligations hereunder prior to such time (the “Effective Date”).

4.    Employee Representations. Employee represents and warrants that Employee (i) has been paid all compensation owed (including, but not limited to, overtime and bonus compensation) and for all hours worked; (ii) has received all the leave and leave benefits and protections for which Employee was eligible, pursuant to the Family and Medical Leave Act or otherwise, and (iii) has not suffered any on-the-job injury for which Employee has not already filed a claim.

5.    General Releases Extend to Both Known and Unknown, Suspected and Unsuspected Claims (Applicable to California Employees Only). Employee acknowledges that he or she has read and fully understands the provisions of Section 1542 of the California Civil Code, which provides:

    A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

Employee intends the releases set forth in this Release to include all claims encompassed by paragraph 2, whether known and/or unknown, to waive and relinquish every right or benefit he or she has, had, or may have under California Civil Code section 1542, and intend his or her release to extend to, and include without limitation all claims which are presently unknown, unanticipated and/or unsuspected.

Employee further acknowledges and agrees that California Labor Code section 206.5 is not applicable to the resolution of this matter. That section provides in pertinent part as follows:

    No employer shall require the execution of any release of any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wage has been made.

    9     

Exhibit 3.4

    In connection with the foregoing, Employee acknowledges, agrees, represents and warrants that, at all times relevant to Employee's employment with ViewRay, Employee has been fully and properly paid for all time worked, or there is otherwise a genuine, reasonable, and good faith dispute between the parties with respect to same, and that, by this Release, Employee is releasing any claim to entitlement for any recovery of any nature whatsoever arising out of any such claim.

6.    Non-Interference. Nothing in this Release shall be construed to prohibit the Employee from: (i) filing a charge or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or other federal, state or local government agency charged with enforcement of any law; (ii)  reporting possible violations of any law, rule or regulation to any governmental agency or entity charged with enforcement of any law, rule or regulation; or (iii) making other disclosures that are protected under whistleblower provisions of any law, rule or regulation. Notwithstanding the foregoing, by signing this Release, the Employee acknowledges and agrees that the Employee waives not only the Employee’s right to recover money or any other relief in any action the Employee might commence against ViewRay or any of the Released Parties with respect to the claims released in paragraph 2 above, but also the Employee’s right to recovery in any such action brought against ViewRay or any of the Released Parties by any government agency or other party, whether brought on the Employee’s behalf or otherwise.

7.    No Claims Filed. Employee affirms that Employee has not filed, has not caused to be filed, and is not presently party to, any claims, causes of action, lawsuits or arbitrations against any of the Released Parties in any forum. Employee’s representation to same constitutes a material inducement for ViewRay entering into this Release. In the event that Employee has filed such a claim or cause of action, it will be considered a material breach of the terms of this Release.

8.    Acknowledgment. The Employee acknowledges that the Employee has been advised in writing to consult with an attorney before signing this Release and that the Employee has been afforded the opportunity to consider the terms of this Release and incorporated waiver of claims for a period of twenty-one (21) days prior to its execution. The Employee acknowledges that no representation, promise or inducement has been made other than as set forth in this Release, and that the Employee enters into this Release without reliance upon any representation, promise or inducement not set forth herein. The Employee acknowledges and represents that the Employee assumes the risk for any mistake of fact now known or unknown, and that the Employee understands and acknowledges the significance and consequences of this Release. The Employee further acknowledges that the Employee has read this Release in its entirety; that the Employee fully understands all of the terms of the Release and their significance; and that the Employee has signed the Release voluntarily and of the Employee’s own free will. The Employee further affirms that, upon receipt of her final paycheck on _____________, the Employee will have been paid and/or have received all leave (paid or unpaid), base salary, bonuses, and all other compensation and benefits to which the Employee may have been entitled from ViewRay through the Separation Date. The Employee further and specifically affirms that the Employee has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act and has not suffered any workplace injuries.

9.    Fiduciary Obligations/Cooperation: This Release in no way relieves the Employee of any fiduciary obligations the Employee may owe to ViewRay. The Employee agrees to cooperate with ViewRay in any investigations, defenses to claims, prosecution of claims, depositions, court appearances and all other inquiries of the Employee which relate to services that the Employee performed for ViewRay.

10.    Breach. The Employee acknowledges that if the Employee materially breaches or threatens to materially breach any provision of this Release and/or commences a suit or action in contravention of this Release (except as outlined in paragraph 6 above), ViewRay’s obligations to pay the Severance Package pursuant to the Confidential Severance Agreement shall immediately cease and ViewRay shall be entitled to all other remedies allowed in law or equity, including but not limited to the return of any payments made to the Employee under the Confidential Severance

    10     

Exhibit 3.4

Agreement. Nothing in this paragraph regarding the return of monies is intended to, nor shall be construed to abrogate any contrary rights under the ADEA.

11.    Non-Admission. The Parties understand that the entering into this Release, the Severance Package provided under the Confidential Severance Agreement and other matters agreed to herein are not to be construed as an admission of or evidence of liability for any violation of the law, willful or otherwise, by any entity or any person.

12.    Severability. If any provisions in this Release, other than the waiver and release provisions in paragraph 2, are held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

13.    Transfer of Claims. Employee represents and warrants that Employee has not assigned, transferred, or purported to assign or transfer, to any person, firm, corporation, association or entity whatsoever, any claims released herein. Employee agrees to indemnify and hold the Released Parties harmless against, without any limitation, any and all rights, claims, warranties, demands, debts, obligations, liabilities, costs, court costs, expenses (including attorneys' fees, paralegals' fees and costs, at all levels), causes of action or judgments based on or arising out of any such assignment or transfer. Employee further warrants that there is nothing that would prohibit Employee from entering into this Release.

14.    Binding Effect. This Release shall be binding upon and shall inure to the benefit of the Parties’ representatives, agents, successors, assigns, heirs, attorneys, affiliates, and predecessors.

15.    Enforcement. This Release shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to its choice of law principles. If either party breaches this Release or any dispute arises out of or relating to this Release, the prevailing party shall be entitled to its reasonable attorneys’ fees, paralegals’ fees and costs, at all levels. THE PARTIES SPECIFICALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION. However, nothing in this paragraph is intended to, nor shall be construed to abrogate any contrary rights under the ADEA.

16.    Interpretation. This Release shall be construed as a whole, according to its fair meaning, and not in favor of or against any Party. By way of example and not in limitation, this Release shall not be construed in favor of the Party receiving a benefit nor against the Party responsible for any particular language in this Release.

17.    Construction. The Parties expressly acknowledge that they have had equal opportunity to negotiate the terms of this Release and that this Release shall not be construed against the drafter.

18.    Headings. The headings contained in the Release are for reference purposes only and shall not in any way affect the meaning or interpretation of this Release.

19.    Electronic Transmissions and Counterparts. This Release may be executed in several counterparts and by electronic transmissions (e-mail, facsimile and/or scanner) and all so executed shall constitute one Release, binding on all the Parties hereto, notwithstanding that the Parties are not signatories to the original or same counterpart.

20.    Representation byCounsel. The Parties acknowledge that (i) they have had the opportunity to consult counsel in regard to this Release, (ii) they have read and understand the Release and they are fully aware of its legal effect; and (iii) they are entering into this Release freely and voluntarily, and based on each Party's own judgment and not on any representations or promises made by the other Party, other than those contained in this Release.

21.    Acceptance. To accept this Release, Employee must sign and date below and return an original copy to ViewRay within 21 days at the following address_________________________

    11     

Exhibit 3.4

22.    Right of Revocation/Effective Date: The Employee has the right to revoke this Release within seven (7) days after the Employee’s execution of this Release by giving notice in writing of such revocation to ViewRay, Attention: ____________, Email: __________. As such, the Release shall not become effective until the Effective Date. In the event that the Employee revokes this Release prior to the Effective Date, this Release, and the promises contained therein, shall automatically be deemed null and void.

The Employee represents and warrants that the Employee has read this Release in its entirety, has been offered a period of twenty-one (21) days to review this Release and incorporated release prior to its execution, and has been advised in writing herein to consult with counsel. The Employee further represents and warrants that the Employee is of sound mind and fully understands and voluntarily assents to all of the terms of the Release.

EMPLOYEE:

________________________________

Date: ___________________________

VIEWRAY, INC.

By: ____________________________

Its: ____________________________

Date: __________________________

    12     

EX-10.5

Exhibit 10.5

GENERAL RELEASE OF CLAIMS

    This General Release of Claims (“Release”), dated as of May 10, 2023, is entered into between ViewRay, Inc., a Delaware Corporation., together with its existing and future subsidiaries and controlled affiliates (“ViewRay”), and William P. Burke (“Employee”) (collectively, the “Parties”). Unless otherwise defined herein, any capitalized terms used in this Release shall have the meaning set forth in the Confidential Severance Agreement.    

The Parties agree as follows:

1.    Separation of Employment.

a.    Employee hereby acknowledges that effective as of May 12 2023, Employee shall no longer serve as Chief Financial Officer with ViewRay.

b.    ViewRay agrees:

i.    Notwithstanding anything to the contrary in the Confidential Severance Agreement, to make a lump sum severance payment to Employee in an amount equal to $400,000.00 (the “Severance Payment”). The Severance Payment shall be paid in lump sum on ViewRay’s first payroll period beginning after the Separation Date, and

ii.    To the extent the Employee timely and properly elects health insurance continuation coverage under ViewRay’s group health insurance plan under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), ViewRay shall pay for the cost of the monthly COBRA premium for continuing health insurance coverage as elected by Employee (the “COBRA Payment”) until the earliest of: (x) 12 months from the Separation Date; (y) the date Employee is no longer eligible to receive COBRA continuation coverage under ViewRay’s group health insurance plan; and (z) the date on which Employee secures other employment. Other than as set forth in this Release, the Severance Agreement shall remain in full force and effect under its terms.

c.    Employee agrees:

i.    To forego the right to receive payment of the signing bonus, as referenced in Employee’s offer letter dated January 6, 2023, in the amount of $200,000.00, and

ii.    To forego the right to receive the AIP Severance Payment for fiscal year 2023 as referenced in the Confidential Severance Agreement.

d.    Regardless of whether Employee enters into this Release, ViewRay will pay Employee all accrued wages, earned and through and including the Separation Date, less applicable holdings, in accordance with ViewRay’s regular payroll practices or earlier when required by applicable state law.

2.    Release. In exchange for the Severance Package (as defined in the Confidential Severance Agreement), and other good and valuable consideration set forth under this Release, Employee and Employee’s representatives, heirs, successors and assigns do hereby completely release and forever discharge ViewRay and any present or past affiliates of ViewRay, and its and their present and former shareholders, officers, directors, members, agents, employees, attorneys, insurers, successors, and assigns (collectively, “Released Parties”) from all claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character, known or unknown, mature or unmatured, which Employee may now have or has ever had. This release of claims includes, but is not limited to, all claims arising out of Employee’s employment at ViewRay and the termination of that employment, or the failure/refusal of any Released Party hiring Employee, whether based on tort, contract (expressed or implied), or any federal, state, or local law, statute, or regulation (collectively, Released Claims”). By way of example and not in

    1     

Exhibit 10.5

limitation of the foregoing, Released Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964; the Family and Medical Leave Act; the Post Civil War Civil Rights Acts (42 USC §§ 1981-1988); the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967 (the “ADEA”) (this release is meant to comply with the Older Workers Benefit Protection Act ("OWBPA"), 29 U.S.C. § 621 et seq., which statute was enacted to, among other things, ensure that individuals forty (40) years of age or older who waive their rights under the ADEA do so knowingly and voluntarily); the Equal Pay Act; the Occupational Safety and Health Act; the Americans with Disabilities Act; the Americans with Disabilities Act Amendments Act of 2008; the Uniform Services Employment and Reemployment Rights Act; the Davis-Bacon Act; the Walsh-Healey Act; the Employee Retirement Income Security Act (other than claims with regard to vested benefits); the Contract Work Hours and Safety Standards Act; Executive Order 11246; the Worker Adjustment and Retraining Notification Act; 42 U.S.C. section 1981; and any state or local statute, rule or regulation governing the employment relationship. This release further includes, any claims asserting breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, fraud or other tort claims, defamation, invasion of privacy, claims related to disability, any and all claims for wages, commissions, compensation, reimbursement, disbursements, bonuses, benefits, vacation, penalties and any other claims arising under or related to laws or regulations relating to employment. Employee likewise releases the Released Parties for any and all obligations for attorneys' fees, paralegals’ fees, and costs incurred in regard to the above claims, or otherwise. Employee further agrees that if any such claim is prosecuted in Employee’s name before any court or administrative agency, Employee waives and agrees not to take any award of money or other damages from such suit. Notwithstanding the foregoing, Released Claims shall not include any workers’ compensation benefits or other claims which cannot be waived as a matter of law. This releases all waivable claims, including those of which Employee is not aware and those not specifically mentioned in this Release. This Release applies to all claims resulting from anything that has happened up through the date Employee signs this Release. Employee understands that this Release does not waive rights or claims that may arise after the date that this Release is executed.

3.    Waiver of Age Discrimination Claims. Employee understands and agrees that, by entering into this Release, (i) Employee is waiving any rights or claims Employee might have under the ADEA; (ii) Employee has received consideration beyond that to which Employee was previously entitled; (iii) Employee has been and hereby is advised in writing to consult with an attorney before signing this Release; (iv) Employee has not relied on any statement or promises by anyone other than those contained in the written terms of this Release, and that Employee has entered into this Release knowingly without reliance upon any other representation, promise, or inducement that is not set forth herein; (v) Employee has been offered the opportunity to evaluate the terms of this Release for not less than twenty-one (21) days prior to Employee’s execution of the Release, although Employee may choose to execute this Release sooner; and (vi) Employee has a period of seven (7) days following Employee’s execution of this Release in which Employee may revoke this Release (the “Revocation Period”). The Parties agree that any material or non-material changes made to this Release after Employee receives this Release do not restart the running of the 21-day period in which Employee may review this Release prior to signing this Release. Employee may revoke this Release by notifying ViewRay in writing of Employee’s decision to revoke to Robert McCormack via email at rmccormack@viewray.com prior to the expiration of the Revocation Period, with the original of the revocation sent via U.S. Mail to: Attention: Robert McCormack, 1099 18th Street, Suite 3000, Denver, Colorado 80202. This Release shall become enforceable on the eighth day after the employee signs and delivers this Release to ViewRay, provided Employee does not revoke or otherwise breach Employee’s obligations hereunder prior to such time (the “Effective Date”).

4.    Employee Representations. Employee represents and warrants that Employee (i) has been paid all compensation owed (including, but not limited to, overtime and bonus compensation) and for all hours worked; (ii) has received all the leave and leave benefits and protections for which Employee was eligible, pursuant to the Family and Medical Leave Act or otherwise, and (iii) has not suffered any on-the-job injury for which Employee has not already filed a claim.

    2     

Exhibit 10.5

5.    General Releases Extend to Both Known and Unknown, Suspected and Unsuspected Claims (Applicable to California Employees Only). Employee acknowledges that he or she has read and fully understands the provisions of Section 1542 of the California Civil Code, which provides:

    A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

Employee intends the releases set forth in this Release to include all claims encompassed by paragraph 2, whether known and/or unknown, to waive and relinquish every right or benefit he or she has, had, or may have under California Civil Code section 1542, and intend his or her release to extend to, and include without limitation all claims which are presently unknown, unanticipated and/or unsuspected.

Employee further acknowledges and agrees that California Labor Code section 206.5 is not applicable to the resolution of this matter. That section provides in pertinent part as follows:

    No employer shall require the execution of any release of any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wage has been made.

    In connection with the foregoing, Employee acknowledges, agrees, represents and warrants that, at all times relevant to Employee's employment with ViewRay, Employee has been fully and properly paid for all time worked, or there is otherwise a genuine, reasonable, and good faith dispute between the parties with respect to same, and that, by this Release, Employee is releasing any claim to entitlement for any recovery of any nature whatsoever arising out of any such claim.

6.    Non-Interference. Nothing in this Release shall be construed to prohibit the Employee from: (i) filing a charge or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission or other federal, state or local government agency charged with enforcement of any law; (ii)  reporting possible violations of any law, rule or regulation to any governmental agency or entity charged with enforcement of any law, rule or regulation; or (iii) making other disclosures that are protected under whistleblower provisions of any law, rule or regulation. Notwithstanding the foregoing, by signing this Release, the Employee acknowledges and agrees that the Employee waives not only the Employee’s right to recover money or any other relief in any action the Employee might commence against ViewRay or any of the Released Parties with respect to the claims released in paragraph 2 above, but also the Employee’s right to recovery in any such action brought against ViewRay or any of the Released Parties by any government agency or other party, whether brought on the Employee’s behalf or otherwise.

7.    No Claims Filed. Employee affirms that Employee has not filed, has not caused to be filed, and is not presently party to, any claims, causes of action, lawsuits or arbitrations against any of the Released Parties in any forum. Employee’s representation to same constitutes a material inducement for ViewRay entering into this Release. In the event that Employee has filed such a claim or cause of action, it will be considered a material breach of the terms of this Release.

8.    Acknowledgment. The Employee acknowledges that the Employee has been advised in writing to consult with an attorney before signing this Release and that the Employee has been afforded the opportunity to consider the terms of this Release and incorporated waiver of claims for a period of twenty-one (21) days prior to its execution. The Employee acknowledges that no representation, promise or inducement has been made other than as set forth in this Release, and that the Employee enters into this Release without reliance upon any representation, promise or inducement not set forth herein. The Employee acknowledges and represents that the Employee assumes the risk for any mistake of fact now known or unknown, and that the Employee

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Exhibit 10.5

understands and acknowledges the significance and consequences of this Release. The Employee further acknowledges that the Employee has read this Release in its entirety; that the Employee fully understands all of the terms of the Release and their significance; and that the Employee has signed the Release voluntarily and of the Employee’s own free will. The Employee further affirms that, upon receipt of their final paycheck, the Employee will have been paid and/or have received all leave (paid or unpaid), base salary, bonuses, and all other compensation and benefits to which the Employee may have been entitled from ViewRay through the Separation Date. The Employee further and specifically affirms that the Employee has been provided and/or has not been denied any leave requested under the Family and Medical Leave Act and has not suffered any workplace injuries.

9.    Fiduciary Obligations/Cooperation: This Release in no way relieves the Employee of any fiduciary obligations the Employee may owe to ViewRay. The Employee agrees to cooperate with ViewRay in any investigations, defenses to claims, prosecution of claims, depositions, court appearances and all other inquiries of the Employee which relate to services that the Employee performed for ViewRay.

10.    Breach. The Employee acknowledges that if the Employee materially breaches or threatens to materially breach any provision of this Release and/or commences a suit or action in contravention of this Release (except as outlined in paragraph 6 above), ViewRay’s obligations to pay the Severance Package pursuant to the Confidential Severance Agreement shall immediately cease and ViewRay shall be entitled to all other remedies allowed in law or equity, including but not limited to the return of any payments made to the Employee under the Confidential Severance Agreement.. Nothing in this paragraph regarding the return of monies is intended to, nor shall be construed to abrogate any contrary rights under the ADEA.

11.    Non-Admission. The Parties understand that the entering into this Release, the Severance Package provided under the Confidential Severance Agreement and other matters agreed to herein are not to be construed as an admission of or evidence of liability for any violation of the law, willful or otherwise, by any entity or any person.

12.    Severability. If any provisions in this Release, other than the waiver and release provisions in paragraph 2, are held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

13.    Transfer of Claims. Employee represents and warrants that Employee has not assigned, transferred, or purported to assign or transfer, to any person, firm, corporation, association or entity whatsoever, any claims released herein. Employee agrees to indemnify and hold the Released Parties harmless against, without any limitation, any and all rights, claims, warranties, demands, debts, obligations, liabilities, costs, court costs, expenses (including attorneys' fees, paralegals' fees and costs, at all levels), causes of action or judgments based on or arising out of any such assignment or transfer. Employee further warrants that there is nothing that would prohibit Employee from entering into this Release.

14.    Binding Effect. This Release shall be binding upon and shall inure to the benefit of the Parties’ representatives, agents, successors, assigns, heirs, attorneys, affiliates, and predecessors.

15.    Enforcement. This Release shall be governed by and construed in accordance with the laws of the State of Colorado, without regard to its choice of law principles. If either party breaches this Release or any dispute arises out of or relating to this Release, the prevailing party shall be entitled to its reasonable attorneys’ fees, paralegals’ fees and costs, at all levels. THE PARTIES SPECIFICALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY SUCH ACTION. However, nothing in this paragraph is intended to, nor shall be construed to abrogate any contrary rights under the ADEA.

16.    Interpretation. This Release shall be construed as a whole, according to its fair meaning, and not in favor of or against any Party. By way of example and not in limitation, this Release shall not

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Exhibit 10.5

be construed in favor of the Party receiving a benefit nor against the Party responsible for any particular language in this Release.

17.    Construction. The Parties expressly acknowledge that they have had equal opportunity to negotiate the terms of this Release and that this Release shall not be construed against the drafter.

18.    Headings. The headings contained in the Release are for reference purposes only and shall not in any way affect the meaning or interpretation of this Release.

19.    Electronic Transmissions and Counterparts. This Release may be executed in several counterparts and by electronic transmissions (e-mail, facsimile and/or scanner) and all so executed shall constitute one Release, binding on all the Parties hereto, notwithstanding that the Parties are not signatories to the original or same counterpart.

20.    Representation byCounsel. The Parties acknowledge that (i) they have had the opportunity to consult counsel in regard to this Release, (ii) they have read and understand the Release and they are fully aware of its legal effect; and (iii) they are entering into this Release freely and voluntarily, and based on each Party's own judgment and not on any representations or promises made by the other Party, other than those contained in this Release.

21.    Acceptance. To accept this Release, Employee must sign and date below and return an original copy to ViewRay within 21 days at the following address: Attention: Robert McCormack, 1099 18th Street, Suite 3000, Denver, Colorado 80202.

22.    Right of Revocation/Effective Date: The Employee has the right to revoke this Release within seven (7) days after the Employee’s execution of this Release by giving notice in writing of such revocation to ViewRay, Attention: Robert McCormack, Email: rmccormack@viewray.com prior to the expiration of the Revocation Period. As such, the Release shall not become effective until the Effective Date. In the event that the Employee revokes this Release prior to the Effective Date, this Release, and the promises contained therein, shall automatically be deemed null and void.

The Employee represents and warrants that the Employee has read this Release in its entirety, has been offered a period of twenty-one (21) days to review this Release and incorporated release prior to its execution, and has been advised in writing herein to consult with counsel. The Employee further represents and warrants that the Employee is of sound mind and fully understands and voluntarily assents to all of the terms of the Release.

EMPLOYEE:

Date: ___________________________

VIEWRAY, INC.

By: Robert McCormack

Its: Chief Legal Officer

Date: __________________________

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EX-10.6

Exhibit 10.6

STANDSTILL AGREEMENT

This STANDSTILL AGREEMENT (this “Agreement”) is entered into as of May 10, 2023, by and among VIEWRAY, INC. (“Viewray”) and VIEWRAY TECHNOLOGIES, INC. (“Viewray Technologies” and, together with Viewray, collectively, the “Borrowers” and each individually, a “Borrower”), MIDCAP FUNDING IV TRUST, a Delaware statutory trust, as Agent (in such capacity, together with its successors and assigns, “Agent”), MIDCAP FINANCIAL TRUST, a Delaware Statutory Trust, as Term Loan Servicer (in such capacity, together with its successors and assigns, “Term Loan Servicer”), and the financial institutions or other entities party to the Credit Agreement referenced below, each as a Lender.

RECITALS

A.    Reference is made to that certain Credit, Security and Guaranty Agreement, dated as of November 14, 2022 (as amended, modified, supplemented and restated prior to the date hereof, the “Original Credit Agreement” and as the same is amended hereby and as it may be further amended, modified, supplemented and restated from time to time, the “Credit Agreement”), by and among Borrowers, Agent, Term Loan Servicer and Lenders pursuant to which the Lenders have agreed to make certain advances of money and to extend certain financial accommodations to Borrowers in the amounts and manner set forth in the Credit Agreement.

B.    As of the date hereof, the Agent has asserted that certain Events of Default identified as “Current Defaults” on Exhibit A hereto (collectively, the “Current Defaults”) have occurred and are continuing and anticipates that certain Events of Default identified as “Potential Defaults” on Exhibit A hereto (collectively, the “Potential Defaults” and together with the Current Defaults, the “Specified Defaults”) may occur prior to the expiration of the Standstill Period (as hereinafter defined).

C.    Borrowers have requested that during the Standstill Period (as hereinafter defined), Agent, Term Loan Servicer and Lenders (sometimes referred to herein individually as a “Lender Party” and collectively as the “Lender Parties”) agree to forbear from exercising certain of their rights and remedies against Borrowers and the other Credit Partieswith respect to the Specified Defaults, eachnotwithstanding the continuation of the Specified Defaults and subject to the terms and conditions set forth herein.

D.    Subject to the terms and conditions set forth herein, during the Standstill Period (as hereinafter defined), notwithstanding the continuation of the Specified Defaults, the Lender Parties have agreed to forbear from exercising certain of their rights and remedies against Borrowers and the other Credit Parties with respect to the Specified Defaults.

AGREEMENT

    NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1.        Definitions.

The Recitals set forth above shall be deemed part of this Agreement as if set forth fully in the body of this Agreement. Unless otherwise defined above or elsewhere in this

Agreement, capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement.

SECTION 2.        Confirmation by Borrowers of Obligations, Specified Defaults and Default Rate Interest

Each Credit Party acknowledges and agrees that:

(a)    as of May 10, 2023 and prior to giving effect to the Standstill Prepayments, the aggregate principal balance of the outstanding Obligations in respect of the Term Loans is at least $75,000,000 and the aggregate principal balance of the outstanding Obligations in respect of the Revolving Loans is at least $3,540,480.05, which amount does not include interest, fees, expenses or any other amounts that are chargeable or otherwise reimbursable under the Credit Agreement and the other Financing Documents.

(b)     (i) the Agent has asserted that each of the Current Defaults constitutes an Event of Default that has occurred and is continuing as of the date hereof and each of the Potential Defaults, if they occur, would constitute an Event of Default, (iii) except for the Specified Defaults, no other Events of Default have occurred and are continuing as of the date hereof, or are expected to occur during the Standstill Period, as the case may be, and (iii) prior to the effectiveness of this Agreement, the Agent has asserted that each of the Current Defaults (and each Potential Default upon its occurrence): (A) relieves the Lender Parties from any obligation to extend any Loans or provide other financial accommodations under the Credit Agreement or other Financing Documents (including consenting to Borrower’s use of cash collateral), and (B) permits the Lender Parties to, among other things, subject to the terms set forth in the Credit Agreement, (1) suspend or terminate any commitment to provide Loans or make other extensions of credit under any or all of the Credit Agreement and the other Financing Documents, (2) accelerate all or any portion of the Obligations, (3) charge default interest pursuant to Section 10.5 of the Credit Agreement (the “Default Rate”) with respect to any and all of the Obligations effective from, and retroactive to, the date of the first Specified Default to occur, and thereafter (the Lender Parties’ right to charge interest at the Default Rate are expressly preserved regardless of whether any such default interest has been charged as of the date hereof),(4) commence any legal or other action to collect any or all of the Obligations from Borrowers, any other Credit Party and/or any Collateral, (5) foreclose or otherwise realize on any or all of the Collateral, and/or set-off and apply to the payment of any or all of the Obligations, any or all of the Collateral, and/or (6) take any other enforcement action or otherwise exercise any or all rights and remedies provided for by any or all of the Credit Agreement, the other Financing Documents or applicable law.

SECTION 3.    Standstill; Standstill Default Rights and Remedies.

(a)    Effective as of the Standstill Effective Date, each of the Lender Parties agrees that until the expiration or termination of the Standstill Period, it will forbear from exercising its default-related rights and remedies against Borrowers or any other Credit Party solely with respect to the Specified Defaults; provided, however, (i) Borrowers acknowledge and agree that they shall not be entitled request and Lender Parties shall be under no obligation to make or allow any further Loans (including, for the avoidance of doubt, any Revolving Loans or the Term Loan Tranche 2) or other advances to Credit Parties during the Standstill Period or otherwise at any time an Event of Default (including any Specified Event of Default) has occurred and is continuing, and (ii) each Credit Party shall comply with all limitations, restrictions or prohibitions that are effective or applicable under the Credit Agreement and each of the other Financing Documents during the continuance of any Event of Default, including, without limitation, limitations on the making of certain Investments, undertaking Asset Dispositions,

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payment of certain Distributions or other payments by Credit Parties to any Affiliate of a Borrower, and incurring certain Debt.

As used herein:

“Standstill Period” shall mean the period beginning on the Standstill Effective Date and ending on the earliest to occur of the following (each a “Termination Event”): (i) the occurrence of any Event of Default under Section 10.1(e) or Section 10.1(f) of the Credit Agreement (a “Bankruptcy Default”), (ii) the date on which Agent delivers to a Borrower a notice terminating the Standstill Period, which notice may be delivered at any time upon or after the occurrence of any Standstill Default (as hereinafter defined) other than a Bankruptcy Default, or (iii) August 31, 2023; provided that the date in this clause (iii) shall be extended to the date that is the earlier of (x) November 30, 2023 (or such later date as Agent and Lenders may agree in their sole discretion) or (y) the outside date for closing under the Transaction Agreement (the “Extended Standstill Period”) if, and only to the extent that, (A) a Transaction Agreement providing for the acquisition of Borrowers (or substantially all of their assets) has been executed in accordance with paragraph (b) of Exhibit B hereof and is in full force and effect, and (B) Agent receives evidence satisfactory to it that the Credit Parties have received sufficient additional funding (which funding shall not contravene the terms of the Financing Documents) following the signing of the Transaction Agreement such that Agent is reasonably satisfied that Borrowers and their Subsidiaries will be adequately capitalized during the Extended Standstill Period, and

“Standstill Default” shall mean (A) the occurrence of any Event of Default other than the Specified Defaults, (B) a breach by a Borrower or any other Credit Party of any term, condition, or covenant set forth in this Agreement, including without limitation, the terms, conditions, or covenants set forth in Section 4 and Exhibit B hereof, (C) (i) the occurrence of a breach, default, event of default, or material adverse change under the Transaction Agreement, (ii) the Transaction Agreement terminates, or (iii) there is a loss of a material right of the Credit Parties under the Transaction Agreement, (D) the occurrence of a default or event of default (however defined) under the terms and conditions of any financing agreement or equity issuance agreement entered into by Borrowers in connection with the Transaction Agreement, or the failure or refusal of the lender or purchaser thereunder to provide financing to the Credit Parties in an amount sufficient to satisfy the minimum cash covenant set forth in Section 4(a) below, or (E) any representation or warranty made by a Borrower or any other Credit Party under or in connection with this Agreement shall prove to be untrue in any material respect (or, in the case of any such representation, warranty or statement that is qualified as to “materiality,” “Material Adverse Effect” or similar language, shall prove to be untrue in any respect)on the date as of which made or deemed made. Each and every Standstill Default shall constitute an immediate Event of Default under the Credit Agreement and other Financing Documents.

(b)    Upon the occurrence of a Termination Event, the agreement of the Lender Parties hereunder to forbear from exercising their respective default-related rights and remedies shall immediately terminate without the requirement of any demand, presentment, protest, or notice of any kind, all of which Borrowers and the other Credit Parties each waives. Borrowers and the other Credit Parties each agrees that any or all of the Lender Parties may at any time thereafter proceed to exercise any and all of their respective rights and remedies under any or all of the Credit Agreement, any other Financing Document and/or applicable law, including, without limitation, their respective rights and remedies with respect to the Specified Defaults. Without limiting the generality of the foregoing, upon the occurrence of a Termination Event, the Lender Parties may, in their sole discretion and without the requirement of any demand, presentment, protest, or notice of any kind, (i) suspend or terminate any commitment to provide Loans or other extensions of credit under any or all of the Credit Agreement and other

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Financing Documents, (ii) charge interest on any or all of the Obligations at the Default Rate,effective from and after the date of the first Specified Default to occur, (iii) commence any legal or other action to collect any or all of the Obligations from Borrowers, any other Credit Party and/or any Collateral, (iv) foreclose or otherwise realize on any or all of the Collateral, and/or setoff or apply to the payment of any or all of the Obligations, any or all of the Collateral, and (v) take any other enforcement action or otherwise exercise any or all rights and remedies provided for by any or all of the Credit Agreement, any other Financing Documents and/or applicable law, all of which rights and remedies are fully reserved by the Lender Parties.

(c)    Upon the occurrence of a Termination Event, without presentment, demand, protest, or any notice of any kind, all of which are hereby waived by Borrowers, or any other act by Agent or the Lenders, interest at the Default Rate shall apply and to the extent then accrued and unpaid will immediately and automatically become due and payable with respect to any and all of the Obligations effective from, and retroactive to, the date of the first Specified Default to occur, and thereafter.

(d)    Any agreement by the Lender Parties to amend this Agreement and/or extend the Standstill Period, if any, must be set forth in writing and signed by a duly authorized signatory of each of Agent and each Lender.

(e)     Borrowers and the other Credit Parties each acknowledge that the Lender Parties have not made any assurances concerning (i) any possibility of an extension of the Standstill Period, (ii) the manner in which or whether the Specified Defaults may be resolved or (iii) any additional forbearance, waiver, restructuring or other accommodations.

(f)    The parties hereto agree that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that any Lender Party may be entitled to take or bring in order to enforce its rights and remedies against any Borrower or any other Credit Party are, to the fullest extent permitted by law, tolled and suspended during the Standstill Period.

(g)    Borrowers and the other Credit Parties acknowledge and agree that any Loan or other financial accommodation that any Lender Party makes on or after the Standstill Effective Date has been made by such party in reliance upon, and is consideration for, among other things, the general releases contained in Section 6 hereof and the other covenants, agreements, representations and warranties of Borrowers and the other Credit Parties hereunder.

SECTION 4.        Supplemental Terms, Conditions and Covenants During the Standstill Period.

The parties hereto hereby agree to comply with the following terms, conditions and covenants during the Standstill Period, in each case notwithstanding any provision to the contrary set forth in this Agreement, the Credit Agreement or any other Financing Document:

(a)    Minimum Cash.

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(i)    Credit Parties shall not permit (x) at any time after the date hereof and prior to achievement of the Strategic Transaction milestone set forth in paragraph (b) of Exhibit B hereof (the “Initial Minimum Cash Period”), Credit Party Unrestricted Cash to be less than $22,000,000, (y) at any time following the Initial Minimum Cash Period and prior to August 31, 2023, Credit Party Unrestricted Cash to be less than $2,500,000, or (z) at all times during Extended Standstill Period, Credit Party Unrestricted Cash to be less than $10,000,000.

(ii)    Credit Parties shall, at all times, provide Agent with satisfactory electronic, “view-only” access to the Credit Parties’ Deposit Accounts and Securities Accounts and shall, at all times following the date hereof, comply in full with the provisions of Sections 2.11 and Section 5.14 of the Credit Agreement.

(b)    Strategic Transaction.

(i)    For purposes of this Agreement, “Strategic Transaction” means (i) the sale of all, or substantially all, of the assets of or equity in Borrowers (by merger, share purchase or otherwise), or (ii) an equity issuance transaction or debt refinancing transaction; provided that, in each case, such transaction (x) is consummated in accordance with the terms of the Financing Documents (including this Agreement), (y) will result in Borrowers’ receipt of net cash proceeds in an amount sufficient to pay the Obligations in full at the closing of such transaction, and (z) provides for the payment in full of the Obligations as a condition precedent to the closing of such transaction.

(ii)    The Credit Parties shall comply with the milestones and covenants with respect to the Strategic Transaction set forth on Exhibit B hereof in all respects.

(c)    Information Rights.

(i)    Each Borrower and other Credit Party shall reasonably cooperate with and give to the Lender Parties reasonable access to the books and records of each Borrower and other Credit Party, upon reasonable request of the Agent.

(ii)    Without limiting the foregoing, on a weekly basis or more frequently as Agent shall reasonably request, Viewray’s senior and operating management shall participate in a detailed discussion with Agent and Lenders regarding (A) status of the Strategic Transaction and the Credit Parties efforts in respect thereof, and (B) the financial and operating performance, business plans, cash burn and restructuring and sale efforts of the Credit Parties. Upon Agent’s reasonable request, one member of Viewray’s Board of Directors shall participate in such meeting(s).

(iii)    Credit Parties shall cause Goldman Sachs (the “Investment Banker”) to provide Agent and Lenders (on not less than a weekly basis) with such information, drafts, and reports, and to make the Investment Banker available for weekly discussions by phone with Agent and Lenders during normal business hours, regarding the status and prospects of the Strategic Transaction. Credit Parties shall cause the Investment Banker to maintain an appropriate data room to which Agent, Lenders, their respective counsel, and any consultant or financial advisor engaged by Agent, or by Agent's counsel, will have unlimited access and review rights at all times.

(d)    Cash Flow Projections. (i) On Friday of each calendar week, commencing on May 19, 2023, Borrowers shall deliver to the Agent a cash flow projection of Borrowers and the other Credit Parties on a consolidated, line-item and weekly basis, which shall include

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projected cash receipts and disbursements for the 13-week period commencing on that Friday (the “Cash Flow Projection”), and (ii) on Friday of each calendar week, commencing on May 26, 2023, Borrowers shall deliver to Agent a reconciliation report and a variance report with respect to the most recently delivered Cash Flow Projection, which shall (x) compare the actual cash receipts and disbursements projected in the most recently delivered Cash Flow Projection for such period, (y) indicate the percentage variance, if any, of actual results of aggregate cash receipts and aggregate cash disbursements versus projections therefor for such period, together with an explanation for such variance, and (z) otherwise be in a form reasonably satisfactory to Agent.

(e)    Other Creditor Claims. Borrowers shall provide prompt written notice upon receipt by a Borrower or any other Credit Party of a material written demand by any creditor, guarantor, vendor, operator, surety provider, supplier, or Governmental Authority with a potential claim greater than $100,000 to post additional collateral or provide additional credit support with respect to such entities’ goods, services, or obligations.

(f)    Liens. Notwithstanding any other provision of the Credit Agreement, during the Standstill Period, without the express written consent of Agent, the Credit Parties shall not pledge any assets to secure any Debt that are not already pledged to secure such Debt as of the date hereof.

(g)    Legal Fees. Consistent with the Credit Agreement, including without limitation section 13.14(a) of the Credit Agreement, and without limiting Section 10 hereof or any obligation in the Credit Agreement, Borrowers hereby acknowledge and agree to pay the reasonable and documented fees, charges and disbursements of Agent’s counsel (including any restructuring counsel) and First-Citizens Bank & Trust Company’s counsel.

SECTION 5.        Effectiveness.

This Agreement shall become effective at the time (the “Standstill Effective Date”) that all of the following conditions precedent have been met (or waived) as determined by Agent and Lenders in their sole discretion:

(a)    Agreement. Agent shall have received duly executed signature pages for this Agreement signed by Agent, each Lender, and each Borrower.

(b)    Due Authorization. Each Borrower shall have delivered to Agent (i) evidence of the corporate authority of each such party to execute, deliver and perform its obligations under this Agreement and, as applicable, all other agreements and documents executed in connection therewith, and (ii) such other documents and instruments as Agent may require, all of the foregoing of which shall be in form and substance acceptable to Agent and Lender.

(c)    Representations and Warranties. The representations and warranties contained herein shall be true and correct, and no Standstill Default or event that with notice, the passage of time or both would constitute a Standstill Default shall exist on the date hereof.

(d)    Deposit Account Control Agreements. Credit Parties shall have provided a fully executed Deposit Account Control Agreement with respect to each of its Deposit Accounts at PNC Bank, National Association and each other Deposit Account or Securities Account of Credit Parties (other than Excluded Accounts).

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(e)    Account Monitoring.    Agent shall have received satisfactory electronic, “view-only” access to monitor the Credit Parties’ Deposit Accounts and Securities Accounts.

(f)    Prepayment.    Borrowers shall have made: (i) a prepayment to Term Loan Servicer (for the benefit of the Term Lenders in accordance with their Pro Rata Shares of the Term Loan Tranche 1) of advances under the Term Loan Tranche 1 in an aggregate principal amount of $17,500,000 (the “StandstillTerm Loan Prepayment”), and (ii) a prepayment to Agent (for the benefit of the Revolving Lenders in accordance with their Pro Rata Shares of the Revolving Loan Commitments) of advances in respect of the Revolving Loans in a principal amount of $3,540,480.05, which amount is equal to the aggregate outstanding principal balance of the Revolving Loans on the date hereof (the “Standstill Revolving Loan Prepayment” and, together with the Standstill Term Loan Prepayment, the “Standstill Prepayments”). Borrowers expressly agree that (i) the Standstill Prepayments are being made to induce the Lender Parties to forbear from exercising their right to accelerate the Loans and is a condition to the Lender Parties entering into this Agreement and the commencement of the Standstill Period, and (ii) notwithstanding such forbearance, (A) the Standstill Term Loan Prepayment shall be made to Term Loan Servicer in accordance with Section 2.2(a)(iii)(C) of the Credit Agreement, and (B) the Standstill Revolving Loan Prepayment shall be made to Agent in accordance with Section 2.2(b)(iii) of the Credit Agreement, and (iii) upon payment of the Standstill Prepayments, the following have become due and owing (the “Standstill Prepayment Fees”) (A) applicable fees payable under the Fee Letters, including the Partial Exit Fee (as defined in the applicable Fee Letter), (B) the Prepayment Fee in respect of the Term Loans and (C) all other sums that shall have become due and payable under the Financing Documents. Notwithstanding the requirements of Section 2.1(a)(ii)(C) of the Credit Agreement or Section 2.1(b)(iii) of the Credit Agreement or anything to the contrary set forth in the Credit Agreement, the Fee Letters, or any other Financing Document, Lender Parties agree that Borrowers shall not be required to pay the Standstill Prepayment Fees until the first date that any other Prepayment Fee, deferred revolving loan origination fee under Section 2.2(h) of the Credit Agreement, or any Exit Fee (as defined in the applicable Fee Letter) or Partial Exit Fee (as applicable) becomes due and payable pursuant to the Credit Agreement or any Fee Letter (as applicable)). For the avoidance of doubt, the Standstill Prepayment Fees shall become immediately due and payable upon the acceleration of the Obligations in connection with an insolvency proceeding or otherwise. The Standstill Prepayments are non-refundable, shall be made in immediately available funds without setoff, deduction or counterclaim and shall be applied by Agent or Term Loan Servicer, as applicable, in accordance with the Credit Agreement. Immediately following receipt by Term Loan Servicer and Agent, respectively, of the Standstill Term Loan Payment and Standstill Revolving Loan Prepayment (as applicable), the parties acknowledge and agree that the aggregate outstanding balance of the Term Loan Tranche 1 is $57,500,000 and the aggregate outstanding balance of the Revolving Loans is $0.

SECTION 6.    General Release; Indemnity.

(a)    In consideration of, among other things, Agent’s, Term Loan Servicer’s and the Lenders’ execution and delivery of this Agreement, each Borrower and each other Credit Party, on behalf of itself and its agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns (collectively, “Releasors”), hereby forever agrees and covenants not to sue or prosecute against any Releasee (as hereinafter defined) and hereby forever waives, releases and discharges, to the fullest extent permitted by law, each Releasee from any and all claims, whether known or unknown, (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment), actions, causes of action, suits, debts, accounts, interests, liens, promises, warranties, damages and consequential damages, demands, agreements, bonds, bills, specialties, covenants, controversies, variances,

7

trespasses, judgments, executions, costs, expenses or claims whatsoever, that such Releasor now has or hereafter may have, of whatsoever nature and kind, whether known or unknown, whether now existing or hereafter arising, whether arising at law or in equity (collectively, the “Claims”), against any or all of the Lender Parties in any capacity and their respective affiliates, subsidiaries, shareholders and “controlling persons” (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, employees, agents, attorneys, advisors and other representatives of each of the foregoing (collectively, the “Releasees”), based in whole or in part on facts, whether or not now known, existing on or before the Standstill Effective Date, that relate to, arise out of or otherwise are in connection with: (i) any or all of the Financing Documents or transactions contemplated thereby or any actions or omissions in connection therewith, (ii) the Specified Defaults and the Lender Parties reservation rights in respect thereof, and (iii) any aspect of the dealings or relationships between or among Borrowers and the other Credit Parties, on the one hand, and any or all of the Lender Parties, on the other hand, relating to any or all of the documents, transactions, actions or omissions referenced in clauses (i) or (ii) hereof. The receipt by a Borrower or any other Credit Party of any financial accommodations made by any Lender Party after the date hereof shall constitute a ratification, adoption, and confirmation by such party of the foregoing general release of all Claims against the Releasees that are based in whole or in part on facts, whether or not now known or unknown, existing on or prior to the date of receipt of any such Loans or other financial accommodations. In entering into this Agreement, each Borrower and each other Credit Party consulted with, and has been represented by, legal counsel and expressly disclaims any reliance on any representations, acts or omissions by any of the Releasees and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity thereof. The provisions of this Section shall survive the termination of this Agreement, the Credit Agreement, the other Financing Documents and payment in full of the Obligations.

(b)    Each of the Borrowers and the other Credit Parties hereby agrees that it shall be, jointly and severally, obligated to indemnify and hold the Releasees harmless with respect to any and all liabilities, obligations, losses, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever incurred by the Releasees, or any of them, whether direct, indirect or consequential, as a result of or arising from or relating to any proceeding by or on behalf of any Person, including, without limitation, the respective officers, directors, agents, trustees, creditors, partners or shareholders of any Borrower, any other Credit Party, or any of their respective Subsidiaries, whether threatened or initiated, in respect of any claim for legal or equitable remedy under any statue, regulation or common law principle arising from or in connection with the negotiation, preparation, execution, delivery, performance, administration and enforcement of the Credit Agreement, the other Financing Documents, this Agreement or any other document executed and/or delivered in connection herewith or therewith; provided, that no Borrower or any other Credit Party shall have any obligation to indemnify or hold harmless any Releasee hereunder with respect to liabilities to the extent they result from the gross negligence or willful misconduct of that Releasee as finally determined by a court of competent jurisdiction. If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Borrower and other Credit Party agrees to make the maximum contribution to the payment and satisfaction thereof that is permissible under applicable law. The foregoing indemnity shall survive the termination of this Agreement, the Credit Agreement, the other Financing Documents and the payment in full of the Obligations.

(c)    Each of the Borrowers and the other Credit Parties, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee that it will not sue (at

8

law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by a Borrower or any other Credit Party pursuant to Section 6(a) hereof. If any Borrower, any other Credit Party or any of its successors, assigns or other legal representatives violates the foregoing covenant, Borrowers and the other Credit Parties, each for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys' fees and costs incurred by any Releasee as a result of such violation.

SECTION 7. Representations, Warranties, and Covenants of Borrowers and Other Credit Parties.

To induce Agent and the other Lender Parties to execute and deliver this Agreement, each Borrower and each other Credit Party represents, warrants and covenants that:

(a)    The execution, delivery and performance by Borrowers and the other Credit Parties of this Agreement and all documents and instruments delivered in connection herewith and the Credit Agreement and all other Financing Documents have been duly authorized by such Credit Parties’ respective Boards of Directors, and this Agreement and all documents and instruments delivered in connection herewith and the Credit Agreement and all other Financing Documents are legal, valid and binding obligations of such Credit Parties enforceable against such parties in accordance with their respective terms;

(b)    Except with respect to the Specified Defaults, each of the representations and warranties contained in the Credit Agreement and the other Financing Documents is true and correct in all material respects on and as of the date hereof as if made on the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date (provided, however, in each case, such materiality qualifier shall not be applicable to any representation and warranties that already are qualified or modified by materiality in the text thereof), and each of the agreements and covenants in the Credit Agreement and the other Financing Documents is hereby reaffirmed with the same force and effect as if each were separately stated herein and made as of the date hereof;

(c)    Neither the execution, delivery and performance of this Agreement and all documents and instruments delivered in connection herewith nor the consummation of the transactions contemplated hereby or thereby does or shall contravene, result in a breach of, or violate (i) any provision of any Borrower’s or any other Credit Party’s corporate charter, bylaws, articles of organization, operating agreement, or other governing documents, (ii) any law or regulation, or any order or decree of any court or government instrumentality, or (iii) any promissory note, indenture, mortgage, deed of trust, lease, agreement or other agreement or instrument to which any Borrower or any other Credit Party is a party or by which any Borrower or any other Credit Party or any of their respective property is bound;

(d)    As of the date hereof, except for the Current Defaults, no Event of Default has occurred or is continuing under this Agreement, the Credit Agreement or any other Financing Document;

(e)    The Lender Parties’ security interests in the Collateral continue to be valid, binding, and enforceable first-priority security interests that secure the Obligations, and no tax or judgment liens are currently of record against any Borrower or any other Credit Party, other than such liens which are permitted under the Credit Agreement;

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(f)    Except with respect to the Specified Defaults, any misrepresentation of a Borrower or any other Credit Party, or any failure of any such party to comply with the covenants, conditions and agreements contained in this Agreement, the Credit Agreement, any other Financing Document or in any other agreement, document or instrument at any time executed and/or delivered by a Borrower or any other Credit Party with, to or in favor of any Lender Party shall constitute an immediate Event of Default hereunder, under the Credit Agreement and other Financing Documents; and

(g)    The recitals to this Agreement are true and correct.

SECTION 8.        Ratification of Liability.

Borrowers and the other Credit Parties, as debtors, grantors, pledgors, guarantors, assignors, or in other similar capacities in which such parties grant liens or security interests in their properties or otherwise act as accommodation parties or guarantors, as the case may be, under the Financing Documents, hereby ratify and reaffirm all of their payment and performance obligations and obligations to indemnify, contingent or otherwise, under each of such Financing Documents to which it is a party, and ratify and reaffirm their grants of liens on or security interests in their properties pursuant to such Financing Documents to which they are a party, respectively, as security for the Obligations under or with respect to the Credit Agreement, and confirm and agree that such liens and security interests hereafter secure all of the Obligations, including, without limitation, all additional Obligations hereafter arising or incurred pursuant to or in connection with this Agreement, the Credit Agreement or any other Financing Document. Borrowers and the other Credit Parties further agree and reaffirm that the Financing Documents to which they are parties now apply to all Obligations as defined in the Credit Agreement (including, without limitation, all additional Obligations hereafter arising or incurred pursuant to or in connection with this Agreement, the Credit Agreement or any other Financing Document). Each such party (i) further acknowledges receipt of a copy of this Agreement and all other agreements, documents, and instruments executed and/or delivered in connection herewith, (ii) consents to the terms and conditions of same, and (iii) agrees and acknowledge that each of the Financing Documents remains in full force and effect and is hereby ratified and confirmed.

SECTION 9.        Reference To and Effect upon the Credit Agreement.

(a)    Borrowers and the other Credit Parties hereby confirm that the Credit Agreement and the other Financing Documents are in full force and effect and that no Borrower nor any other Credit Party has any right of setoff, recoupment or other offset or any defense, claim or counterclaim with respect to any of the Obligations, the Credit Agreement or any other Financing Document.

(b)    Except as expressly set forth herein, the execution, delivery and effectiveness of this Agreement shall not directly or indirectly (i) create any obligation to make any further Loans or to continue to defer any enforcement action after the occurrence of any Default or Event of Default (including, without limitation, any Standstill Default), (ii) constitute a consent or waiver of any past, present or future violations of any provisions of the Credit Agreement or any other Financing Documents nor constitute a novation of any of the Obligations under the Credit Agreement or other Financing Documents, (iii) amend, modify or operate as a waiver of any provision of the Credit Agreement or any other Financing Documents or any right, power or remedy of any Lender Party, (iv) constitute a consent to any merger or other transaction or to any sale, restructuring or refinancing transaction or (v) constitute a course of dealing or other basis for altering any Obligations or any other contract or instrument. Except as expressly set forth herein, each Lender Party reserves all of its rights, powers, and remedies under the Credit Agreement, the other Financing Documents

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and applicable law. All of the provisions of the Credit Agreement and the other Financing Documents, including, without limitation, the time of the essence provisions, are hereby reiterated, and if ever waived, are hereby reinstated.

(c)    From and after the Standstill Effective Date, (i) the term “Agreement” in the Credit Agreement, and all references to the Credit Agreement in any Financing Document, shall mean the Credit Agreement, as amended by, among things, this Agreement, and (ii) the term “Financing Documents” in the Credit Agreement and the other Financing Documents shall include, without limitation, this Agreement and any agreements, instruments and other documents executed and/or delivered in connection herewith.

(d)    No Lender Party has waived (regardless of any delay in exercising such rights and remedies), any Default or Event of Default that may be continuing on the date hereof or any Event of Default that may occur after the date hereof (whether the same or similar to the Specified Defaults or otherwise), and no Lender Party has agreed to forbear with respect to any of its rights or remedies concerning any Events of Default (other than, during the Standstill Period, the Specified Defaults solely to the extent expressly set forth herein), that may have occurred or are continuing as of the date hereof, or that may occur after the date hereof.

(e)    Borrowers and the Credit Parties acknowledge and agree that the Lender Parties’ agreement to forbear from exercising certain of their default-related rights and remedies with respect to the Specified Defaults during the Standstill Period does not in any manner whatsoever limit any Lender Party’s right to insist upon strict compliance by Borrowers and the other Credit Parties with the Credit Agreement, this Agreement or any other Financing Document during the Standstill Period, except as expressly set forth herein.

(f)    This Agreement shall not be deemed or construed to be a satisfaction, reinstatement, novation or release of the Credit Agreement or any other Financing Document.

SECTION 10.        Fees, Costs and Expenses. In addition to (to the extent not otherwise provided in the Credit Agreement), and not in lieu of, the terms of the Credit Agreement and other Financing Documents relating to the reimbursement of Lender Party fees and expenses, Borrowers shall reimburse Agent and the other Lender Parties, as the case may be, promptly on demand for all fees, costs, charges and expenses, including the fees, costs and expenses of counsel and other expenses, incurred in connection with this Agreement and the other agreements and documents executed and/or delivered in connection herewith.

SECTION 11.        Governing Law; Consent to Jurisdiction and Venue.

THIS AGREEMENT AND ALL DISPUTES AND OTHER MATTERS RELATING HERETO OR ARISING THEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPALS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW). EACH PARTY HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN THE STATE OF NEW YORK IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OR FORUM NON CONVENIENS. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES

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THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

SECTION 12.        Construction.

This Agreement and all other agreements and documents executed and/or delivered in connection herewith have been prepared through the joint efforts of all of the parties hereto. Neither the provisions of this Agreement or any such other agreements and documents nor any alleged ambiguity therein shall be interpreted or resolved against any party on the ground that such party or its counsel drafted this Agreement or such other agreements and documents, or based on any other rule of strict construction. Each of the parties hereto represents and declares that such party has carefully read this Agreement and all other agreements and documents executed in connection therewith, and that such party knows the contents thereof and signs the same freely and voluntarily. The parties hereto acknowledge that they have been represented by legal counsel of their own choosing in negotiations for and preparation of this Agreement and all other agreements and documents executed in connection herewith and that each of them has read the same and had their contents fully explained by such counsel and is fully aware of their contents and legal effect. If any matter is left to the decision, right, requirement, request, determination, judgment, opinion, approval, consent, waiver, satisfaction, acceptance, agreement, option or discretion of one or more Lender Parties or their respective employees, counsel, or agents in the Credit Agreement or any other Financing Documents, such action shall be deemed to be exercisable by such Lender Parties or such other Person in its sole and absolute discretion and according to standards established in its sole and absolute discretion. Without limiting the generality of the foregoing, “option” and “discretion” shall be implied by the use of the words “if” and “may.”

SECTION 13.        Counterparts.

This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or by electronic mail delivery of an electronic version of any executed signature page shall bind the parties hereto. In furtherance of the foregoing, the words “execution”, “signed”, “signature”, “delivery” and words of like import in or relating to any document to be signed in connection with this Agreement and the transactions contemplated hereby or thereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.  As used herein, “Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or other record.

SECTION 14.        Severability.

The invalidity, illegality, or unenforceability of any provision in or obligation under this Agreement in any jurisdiction shall not affect or impair the validity, legality, or enforceability of the remaining provisions or obligations under this Agreement or of such

12

provision or obligation in any other jurisdiction. If feasible, any such offending provision shall be deemed modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Agreement in all other respects shall remain valid and enforceable.

SECTION 15.        Time of Essence.

Time is of the essence in the performance of each of the obligations of Borrowers and the other Credit Parties hereunder and with respect to all conditions to be satisfied by such parties.

SECTION 16.        No Other Creditor Action.

The Lender Parties’ obligations to forbear and continue to make financial accommodations to Borrowers hereunder are expressly conditioned upon Borrowers providing Agent with prompt written notice if any creditors of Borrowers and the other Credit Parties (including, without limitation, trade creditors and subordinated secured and unsecured creditors) having a valid claim in excess of $500,000 accelerates such claim or takes any enforcement action to collect the full amount of such claim against any Borrower, any other Credit Party, or the Collateral (including, without limitation, acceleration of indebtedness) during the Standstill Period; provided, that Borrowers and the other Credit Parties may continue to make payments to such trade creditors in the ordinary course of business during the Standstill Period, to the extent such payments are not otherwise in contravention of this Agreement or any other Financing Document. In the event that any such creditor takes any enforcement action in respect of a claim in excess of $500,000 or obtains a judgment or order for the payment of money in excess of $500,000, all of the Lender Parties’ obligations hereunder and the Standstill Period shall automatically and immediately terminate without further notice or demand.

SECTION 17.        Further Assurances.

Each Borrower and each other Credit Party agrees to take all further actions and execute all further documents as Agent may from time to time reasonably request to carry out the transactions contemplated by this Agreement and all other agreements executed and delivered in connection herewith.

SECTION 18.        Section Headings.

Section headings in this Agreement are included herein for convenience of reference only and shall not constitute part of this Agreement for any other purpose.

SECTION 19.        Notices.

All notices, requests, and demands to or upon the respective parties hereto shall be given in accordance with the Credit Agreement.

SECTION 20.        Waivers by Borrowers and other Credit Parties.

(a)    Waiver of Jury Trial Right And Other Matters. EACH BORROWER AND THE OTHER CREDIT PARTIES EACH HEREBY WAIVES (i) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF, IN CONNECTION WITH OR RELATING TO, THIS AGREEMENT, THE OTHER FINANCING DOCUMENTS AND ANY OTHER TRANSACTION CONTEMPLATED HEREBY AND THEREBY, WHICH WAIVER APPLIES TO ANY ACTION, SUIT OR PROCEEDING

13

WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE; (ii) PRESENTMENT, DEMAND AND PROTEST, AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT, MATURITY, RELEASE WITH RESPECT TO ALL OR ANY PART OF THE OBLIGATIONS OR ANY COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY ANY LENDER PARTY ON WHICH ANY BORROWER OR ANY OTHER CREDIT PARTY MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER SUCH LENDER PARTY MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL, THE OTHER COLLATERAL OR ANY BOND OR SECURITY THAT MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING ANY LENDER PARTY TO EXERCISE ANY OF THEIR RESPECTIVE RIGHTS AND REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS AND ALL RIGHTS WAIVABLE UNDER ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE; (v) ANY RIGHT A BORROWER OR ANY OTHER CREDIT PARTY MAY HAVE UPON PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE ANY LENDER PARTY TO TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL, OTHER COLLATERAL OR IN ANY OTHER PROPERTY OF BORROWERS OR ANY OTHER CREDIT PARTY UNTIL TERMINATION OF THE FINANCING AGREEMENT IN ACCORDANCE WITH ITS TERMS AND THE EXECUTION BY BORROWERS, AND BY ANY PERSON WHO PROVIDES FUNDS TO BORROWERS THAT ARE USED IN WHOLE OR IN PART TO SATISFY THE OBLIGATIONS, OF AN AGREEMENT INDEMNIFYING ANY OR ALL OF THE LENDER PARTIES FROM ANY LOSS OR DAMAGE ANY SUCH PARTY MAY INCUR AS THE RESULT OF DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY SUCH LENDER PARTY FROM EACH BORROWER, OR ANY ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS AND RELEASING AND INDEMNIFYING, IN THE SAME MANNER AS DESCRIBED IN SECTION 6 OF THIS AGREEMENT, THE RELEASEES FROM ALL CLAIMS ARISING ON OR BEFORE THE DATE OF SUCH TERMINATION STATEMENT; AND (vi) NOTICE OF ACCEPTANCE HEREOF, AND EACH BORROWER AND THE OTHER CREDIT PARTIES EACH ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT’S AND THE OTHER LENDER PARTIES’ ENTERING INTO THIS AGREEMENT AND THAT SUCH PARTIES ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH BORROWERS AND THE OTHER CREDIT PARTIES. BORROWERS AND THE OTHER CREDIT PARTIES EACH WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

SECTION 21.        Assignments; No Third Party Beneficiaries

This Agreement shall be binding upon and inure to the benefit of Borrowers, the other Credit Parties, the Lender Parties and their respective successors and assigns; provided, that neither Borrowers nor any other Credit Party shall be entitled to delegate any of its duties hereunder or to assign any of its rights or remedies set forth in this Agreement without the prior written consent of Agent in its sole discretion. No Person other than the parties hereto, and in the case of Section 6 hereof, the Releasees, shall have any rights hereunder or be entitled to rely on this Agreement and all third-party beneficiary rights (other than the rights of the Releasees under Section 6 hereof) are hereby expressly disclaimed.

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SECTION 22.        Final Agreement

This Agreement, the Credit Agreement, the other Financing Documents, and the other written agreements, instruments, and documents entered into in connection therewith (collectively, the “Borrower/Lender Documents”) set forth in full the terms of agreement between the parties hereto and thereto with respect to the subject matter thereof and are intended as the full, complete, and exclusive contracts governing the relationship between such parties with respect to the subject matter thereof, superseding all other discussions, promises, representations, warranties, agreements, and understandings between the parties with respect thereto. Except as provided therein, no term of the Borrower/Lender Documents may be modified or amended, nor may any rights thereunder be waived, except in a writing signed by the party against whom enforcement of the modification, amendment, or waiver is sought. Any waiver of any condition in, or breach of, any of the foregoing in a particular instance shall not operate as a waiver of other or subsequent conditions or breaches of the same or a different kind. Agent’s or any Lender’s exercise or failure to exercise any rights or remedies under any of the foregoing in a particular instance shall not operate as a waiver of its right to exercise the same or different rights and remedies in any other instances. There are no oral agreements among the parties hereto.

[Signature pages to follow]

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IN WITNESS WHEREOF, this Standstill Agreement has been executed by the parties hereto as of the date first written above.

BORROWERS:

AGENT:    MIDCAP FUNDING IV TRUST

By:     Apollo Capital Management, L.P.,

its investment manager

By:    Apollo Capital Management GP, LLC,

its general partner

By:___________________________________
Name: Maurice Amsellem
Title: Authorized Signatory

TERM LOAN SERVICER:    MIDCAP FINANCIAL TRUST

By:     Apollo Capital Management, L.P.,

its investment manager

By:    Apollo Capital Management GP, LLC,

its general partner

By:___________________________________
Name: Maurice Amsellem
Title: Authorized Signatory

LENDER:    MIDCAP FUNDING V TRUST

By:     Apollo Capital Management, L.P.,

its investment manager

By:    Apollo Capital Management GP, LLC,

its general partner

By:___________________________________
Name: Maurice Amsellem
Title: Authorized Signatory

LENDER:    MIDCAP FUNDING XIII TRUST

By:     Apollo Capital Management, L.P.,

its investment manager

By:    Apollo Capital Management GP, LLC,

its general partner

By:___________________________________
Name: Maurice Amsellem
Title: Authorized Signatory

LENDER:    MIDCAP FINANCIAL TRUST

By:     Apollo Capital Management, L.P.,

its investment manager

By:    Apollo Capital Management GP, LLC,

its general partner

By:___________________________________
Name: Maurice Amsellem
Title: Authorized Signatory

LENDER:        ELM 2020-4 TRUST

By: MidCap Financial Services Capital Management, LLC, as Servicer

By:__________________________________
Name:
Title: Authorized Signatory

LENDER:    MIDCAP FINANCIAL INVESTMENT CORPORATION

    
By: ________________________________

Name: Kristin Hester

Title: Chief Legal Officer

LENDER:    FIRST-CITIZENS BANK & TRUST COMPANY (SUCCESSOR BY PURCHASE TO THE FEDERAL DEPOSIT INSURANCE CORPORATION AS RECEIVER FOR SILICON VALLEY BRIDGE BANK, N.A. (AS SUCCESSOR TO SILICON VALLEY BANK))

    
By: ________________________________

Name:

Title:

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED 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 ViewRay, Inc.;

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(s) 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(s) 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.

Dated: May 11, 2023	By:	/s/ Scott Drake
	Name:	Scott Drake
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

EXCHANGE ACT RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William P. Burke, certify that:

1.I have reviewed this quarterly report on Form 10-Q of ViewRay, Inc.;

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(s) 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(s) 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.

Dated: May 11, 2023	By:	/s/ William P. Burke
	Name:	William P. Burke
	Title:	Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of ViewRay, Inc., a Delaware corporation (the “Company”), hereby certify that:

i.the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2023 (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.

The foregoing certification (i) is given to such officers’ knowledge, based upon such officers’ investigation as such officers reasonably deem appropriate; and (ii) is being furnished solely pursuant to 18 U.S.C. § 1350 (section 906 of the Sarbanes-Oxley Act of 2002) and is not being filed as part of the Report or as a separate disclosure document and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

	VIEWRAY, INC.
Dated: May 11, 2023	By:	/s/ Scott Drake
	Name:	Scott Drake
	Title:	Chief Executive Officer
		(Principal Executive Officer)
Dated: May 11, 2023	By:	/s/ William P. Burke
	Name:	William P. Burke
	Title:	Chief Financial Officer
		(Principal Financial Officer)

XML

Cover - shares	3 Months Ended
	Mar. 31, 2023	Apr. 28, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-37725
Entity Registrant Name	ViewRay, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	42-1777485
Entity Address, Address Line One	1099 18th Street, Suite 3000
Entity Address, City or Town	Denver
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80202
City Area Code	440
Local Phone Number	703-3210
Title of 12(b) Security	Common Stock, par value $0.01
Trading Symbol	VRAY
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		183,402,038
Entity Central Index Key	0001597313
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 81,293	$ 135,960
Accounts receivable, net of allowance of $736 and $304, respectively	47,527	41,383
Inventory, net of allowance of $1,522 and $1,522, respectively	42,192	31,303
Deposits on purchased inventory	8,742	7,484
Deferred cost of revenue	7,953	6,715
Prepaid expenses and other current assets	5,860	5,509
Total current assets	193,567	228,354
Property and equipment, net	19,039	19,641
Restricted cash	4,241	6,535
Intangible assets, net	37	38
Right-of-use assets	5,401	5,945
Other assets	10,874	10,884
TOTAL ASSETS	233,159	271,397
Current liabilities:
Accounts payable	25,216	28,300
Accrued liabilities	20,759	24,682
Customer deposits	16,150	16,006
Operating lease liability, current	2,931	2,860
Current portion of credit revolver	4,278	0
Current portion of long-term debt	73,483	0
Deferred revenue, current	23,949	24,734
Total current liabilities	166,766	96,582
Deferred revenue, net of current portion	2,395	3,069
Long-term debt	0	73,339
Credit revolver	0	5,000
Warrant liabilities	2,234	4,178
Operating lease liability, noncurrent	4,441	5,205
Other long-term liabilities	2,066	1,782
TOTAL LIABILITIES	177,902	189,155
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value of $0.01 per share; 10,000,000 shares authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	0	0
Common stock, par value of $0.01 per share; 300,000,000 shares authorized at March 31, 2023 and December 31, 2022; 183,384,069 and 181,586,944 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	1,824	1,806
Additional paid-in capital	926,754	924,898
Accumulated deficit	(873,321)	(844,462)
TOTAL STOCKHOLDERS’ EQUITY	55,257	82,242
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 233,159	$ 271,397

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Allowance for credit losses	$ 736	$ 304
Inventory allowance	$ 1,522	$ 1,522
Stockholders’ equity:
Preferred stock par value (in USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock par value (in USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	183,384,069	181,586,944
Common stock, shares outstanding (in shares)	183,384,069	181,586,944

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Statement) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Total revenue	$ 22,534	$ 18,876
Total cost of revenue	23,964	18,782
Gross profit (loss)	(1,430)	94
Operating expenses:
Research and development	8,628	7,870
Selling and marketing	7,991	6,884
General and administrative	11,582	12,814
Total operating expenses	28,201	27,568
Loss from operations	(29,631)	(27,474)
Interest income	1,341	5
Interest expense	(2,626)	(1,064)
Other (expense) income, net	2,057	2,759
Loss before provision for income taxes	(28,859)	(25,774)
Provision for income taxes	0	0
Net loss and comprehensive loss	$ (28,859)	$ (25,774)
Net loss per share, basic (in USD per share)	$ (0.16)	$ (0.14)
Net loss per share, diluted (in USD per share)	$ (0.16)	$ (0.14)
Weighted-average common shares used to compute net loss per share attributable to common stockholders, basic (in shares)	182,310,900	179,740,732
Weighted-average common shares used to compute net loss per share attributable to common stockholders, diluted (in shares)	182,310,900	179,740,732
Product
Total revenue	$ 15,782	$ 13,426
Total cost of revenue	16,939	13,766
Service
Total revenue	6,519	5,331
Total cost of revenue	7,025	5,016
Distribution rights
Total revenue	$ 233	$ 119

XML

Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2021		179,206,456
Beginning balance at Dec. 31, 2021	$ 169,795	$ 1,782	$ 905,145	$ (737,132)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from option exercises (in shares)		19,292
Issuance of common stock from option exercises	56		56
Stock-based compensation	5,032		5,032
Issuance of common stock from releases of restricted stock units (in shares)		1,216,278
Issuance of common stock from releases of restricted stock units	0	$ 12	(12)
Tax withholding paid on behalf of employees for stock-based awards	(1,604)		(1,604)
Net Income (Loss) Attributable to Parent	(25,774)			(25,774)
Ending balance (in shares) at Mar. 31, 2022		180,442,026
Ending balance at Mar. 31, 2022	147,505	$ 1,794	908,617	(762,906)
Beginning balance (in shares) at Dec. 31, 2022		181,586,944
Beginning balance at Dec. 31, 2022	$ 82,242	$ 1,806	924,898	(844,462)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock from option exercises (in shares)	224,741	224,741
Issuance of common stock from option exercises	$ 288	$ 2	286
Stock-based compensation	3,337		3,337
Issuance of common stock from releases of restricted stock units (in shares)		1,572,384
Issuance of common stock from releases of restricted stock units	0	$ 16	(16)
Tax withholding paid on behalf of employees for stock-based awards	(1,751)		(1,751)
Net Income (Loss) Attributable to Parent	(28,859)			(28,859)
Ending balance (in shares) at Mar. 31, 2023		183,384,069
Ending balance at Mar. 31, 2023	$ 55,257	$ 1,824	$ 926,754	$ (873,321)

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Condensed Consolidated Statements of Stockholders’ Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Stockholders' Equity [Abstract]
Issuance of common stock from option exercises	$ 288	$ 56

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) Attributable to Parent	$ (28,859)	$ (25,774)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	961	1,244
Stock-based compensation	3,337	5,032
Accretion on asset retirement obligation	25	23
Change in fair value of warrant liabilities	(1,944)	(2,830)
Provision on credit losses on accounts receivable	431	0
Amortization of debt discount and interest accrual	346	246
Changes in operating assets and liabilities:
Accounts receivable	(6,575)	(6,343)
Inventory	(10,785)	3,640
Deposits on purchased inventory	(1,258)	(2,375)
Deferred cost of revenue	(1,238)	(2,097)
Prepaid expenses and other assets	(490)	(4,739)
Accounts payable	(2,414)	8
Accrued expenses and other long-term liabilities	(3,821)	(8,247)
Customer deposits and deferred revenue	(1,315)	9,827
Net cash used in operating activities	(53,599)	(32,385)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,177)	(1,218)
Net cash used in investing activities	(1,177)	(1,218)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on credit revolver	(722)	0
Proceeds from the exercise of stock options	288	56
Payments for taxes related to net share settlement of equity awards	(1,751)	(1,604)
Net cash used in financing activities	(2,185)	(1,548)
NET DECREASE IN CASH DURING THE PERIOD	(56,961)	(35,151)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — BEGINNING OF PERIOD	142,495	219,808
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — END OF PERIOD	85,534	184,657
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	2,093	819
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fair value of common stock warrants reclassified from liability to additional paid-in capital upon exercise	0	0
Right-of-use assets obtained in exchange for new operating lease liabilities	0	0
Transfer of property and equipment from inventory and deferred cost of revenue	(104)	(103)
Purchases of property and equipment in accounts payable and accrued liabilities	$ 11	$ 161

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BACKGROUND AND ORGANIZATION

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BACKGROUND AND ORGANIZATION

BACKGROUND AND ORGANIZATION

ViewRay, Inc. (“ViewRay” or the “Company”), and its wholly-owned subsidiary ViewRay Technologies, Inc., designs, manufactures and markets MRIdian, an MR Image-Guided radiation therapy system to simultaneously image and treat cancer patients.

Since inception, ViewRay Technologies, Inc. has devoted substantially all of its efforts towards research and development, selling and marketing activities, raising capital and the manufacturing, shipment and installation of MRIdian systems. In May 2012, ViewRay Technologies, Inc. was granted clearance from the U.S. Food and Drug Administration (“FDA”), to sell MRIdian with Cobalt-60. In November 2013, ViewRay Technologies, Inc. received its first clinical acceptance of a MRIdian with Cobalt-60 at a customer site, and the first patient was treated with that system in January 2014. ViewRay Technologies, Inc. has had the right to affix the CE mark to MRIdian with Cobalt-60 in the European Economic Area ("EEA") since November 2014. In September 2016, the Company received the rights to affix the CE mark to MRIdian Linac, and in February 2017, the Company received 510(k) clearance from the FDA to market MRIdian Linac. In February 2019, the Company received 510(k) clearance from the FDA for advancements in MRI, 8 frames per second cine, and Functional imaging (T1/T2/DWI) and High-Speed MLC. In December 2019, we received the CE mark for these advancements in the EEA. In December 2021, the Company received 510(k) clearance from the FDA on its recent submission for new MRIdian features ("MRIdian A3i") focused on enhancing on-table adaptive workflow efficiency and expanding clinical utility. In September 2022, the Company received approval to market the MRIdian system in China from the National Medical Products Administration ("NMPA").

Liquidity and Ability to Continue as a Going Concern

Under Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements - Going Concern, the Company is required to evaluate whether there is substantial doubt regarding its ability to continue as a going concern each reporting period, including interim periods.

In this evaluation, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within twelve months of the issuance date of the financial statements included in this Quarterly Report on Form 10-Q (the “financial statements”), and considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, and the Company’s conditional and unconditional obligations during such twelve month period. The Company’s principal sources of liquidity are cash flows from public and private offerings and available borrowings under its term loan agreement, as well as cash receipts from its sales of MRIdian systems. These have historically been sufficient to meet working capital needs, capital expenditures, operating expenses, and debt service obligations.

The Company has a history of significant net losses, including $29.6 million for the three months ended March 31, 2023, and net cash used in operations of $53.6 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had cash and cash equivalents of $81.3 million and restricted cash of $4.2 million. The Company has borrowings under the Credit Agreement with $77.8 million outstanding as of March 31, 2023, which was reclassified to current during the period (see Note 5). As of March 31, 2023, the Company was in compliance with all applicable covenants in agreements governing its debt. However, based on the Company’s projected financial performance for the twelve-month period subsequent to the date of the filing of this Quarterly Report on Form 10-Q, the Company projects that it will not be in compliance with a financial covenant under the Company’s Credit Agreement, as defined in Note 5, Debt, which could result in an event of default. Such a default would allow the Lender under the Credit Agreement to accelerate the maturity of the debt, which carries a balance of $77.8 million as of March 31, 2023, making it due and payable at that time, which the Company does not have availability liquidity to repay. The Company projects it will not have sufficient cash on hand or available liquidity to fund its operations or repay the outstanding debt in the event of default through the twelve months following the date of the issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, on April 13, 2023, the Company announced it has retained Goldman Sachs and Co. LLC as a financial advisor to undertake an evaluation of strategic alternatives, including a corporate sale, merger, or business combination. Additionally, the Company is undertaking a number of actions in order to improve its financial position and stabilize its working capital, including, but not limited to, cost reduction efforts and cash conversion initiatives. The Company’s operating plans are significantly contingent around estimates on the number of systems to be recognized in a

fiscal year along with the anticipated cash collections for those systems. As discussed in the Company’s announcement on April 13, 2023, the continued high inflation environment has resulted in delays on projects and elongated cash collection timing. These factors have significantly impacted the expected cash usage of the Company.

Although the Company has been reviewing a number of potential alternatives to improve its working capital, it cannot conclude it is probable that any such alternative will be achievable under favorable terms, or at all, and therefore the Company may be unable to meet its obligations as they become due within twelve months after the date that the financial statements are issued, or at all, and these conditions and events in the aggregate raise substantial doubt regarding the Company’s ability to continue as a going concern within twelve months after the date that the financial statements are issued. The Company’s financial statements do not include any adjustments that may result from the outcome of this uncertainty and have been prepared assuming the Company will continue as a going concern.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of ViewRay, Inc. and its wholly-owned subsidiary, ViewRay Technologies, Inc. All inter-company accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period. These unaudited condensed consolidated financial statements and their notes should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements are disclosed in the notes to consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 28, 2023, and have not changed significantly since that filing.

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BALANCE SHEET COMPONENTS

3 Months Ended

Mar. 31, 2023

Balance Sheet Related Disclosures [Abstract]

BALANCE SHEET COMPONENTS

BALANCE SHEET COMPONENTS

Property and Equipment, Net

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

	March 31, 2023		December 31, 2022
Prototype	$	17,641	$	17,641
Machinery and equipment	19,068		19,068
Leasehold improvements	15,365		15,365
Furniture and fixtures	1,511		1,511
Software	1,389		1,389
Construction in progress	2,775		2,417
Property and equipment, gross	57,749		57,391
Less: accumulated depreciation and amortization	(38,710)		(37,750)
Property and equipment, net	$	19,039	$	19,641

Depreciation and amortization expense related to property and equipment was $1.0 million and $1.2 million during the three months ended March 31, 2023 and 2022, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Accrued payroll and related benefits	$	12,622	$	15,542
Accrued accounts payable	4,917		5,606
Payroll withholding tax, sales and other tax payable	1,352		1,660
Accrued legal, accounting and professional fees	202		241
Product upgrade reserve	900		900
Other	766		733
Total accrued liabilities	$	20,759	$	24,682

Deferred Revenue

Deferred revenue consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Deferred revenue:
Product	$	8,055	$	8,814
Service	17,590		18,057
Distribution rights	699		932
Total deferred revenue	26,344		27,803
Less: current portion of deferred revenue	(23,949)		(24,734)
Noncurrent portion of deferred revenue	$	2,395	$	3,069

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Accrued interest, noncurrent portion	$	363	$	96
Asset retirement obligation	1,082		1,057
Other accrued costs	621		629
Total other-long term liabilities	$	2,066	$	1,782

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FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

Level 1—Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3—Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The assets’ or liabilities’ fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments that are carried at fair value mainly consist of Level 1 assets and Level 3 liabilities. Level 1 assets include highly liquid bank deposits and money market funds, which were not material at March 31, 2023 and December 31, 2022. Level 3 liabilities that are measured on a recurring basis relate to the 2017 and 2016 Placement Warrants, as described in Note 9. Placement warrant liabilities are valued using the Black-Scholes option-pricing model. Generally, increases (decreases) in the fair value of the underlying stock, volatility and estimated term would result in a directionally similar impact to the fair value of the warrants (see Note 9). During the three months ended March 31, 2023, and 2022, no warrants were exercised.

The gains and losses from re-measurement of Level 3 financial liabilities are recorded as part of other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss. During the three months ended March 31, 2023 and 2022, the Company recorded a gain of $1.9 million and $2.8 million, respectively, related to the change in fair value of the 2017 and 2016 Placement Warrants. There were no transfers between Level 1, Level 2 and Level 3 in any periods presented.

The following table sets forth the fair value of the Company’s financial liabilities by level within the fair value hierarchy (in thousands):

	At March 31, 2023
	Level 1		Level 2		Level 3		Total
2017 Placement Warrants Liability	$	—	$	—	$	1,718	$	1,718
2016 Placement Warrants Liability	—		—		516		516
Total	$	—	$	—	$	2,234	$	2,234

	At December 31, 2022
	Level 1		Level 2		Level 3		Total
2017 Placement Warrants Liability	$	—	$	—	$	3,127	$	3,127
2016 Placement Warrants Liability	—		—		1,051		1,051
Total	$	—	$	—	$	4,178	$	4,178

The following table sets forth a summary of the changes in fair value of the Company’s Level 3 financial liabilities (in thousands):

	Three Months Ended March 31,
	2023		2022
Fair value, beginning of period	$	4,178	$	6,795
Change in fair value of Level 3 financial liabilities	(1,944)		(2,830)
Fair value of 2016 Placement Warrants at exercise	—		—
Fair value of 2017 Placement Warrants at exercise	—		—
Fair value, end of period	$	2,234	$	3,965

Non-Financial Assets and Liabilities

The Company’s non-financial instruments, which primarily consist of intangible assets, right-of-use (“ROU”) assets, and property and equipment, are measured at fair value on a non-recurring basis and are reported at carrying value. These assets are subject to fair value adjustments when events or changes in circumstances indicate a significant adverse effect on the fair value of the asset. Impairment charges are recorded to reduce the carrying amount of the assets to their fair value.

During 2022, the Company recorded impairment charges of $1.5 million on its ROU asset for one of the Mountain View, California office spaces and $0.3 million on the related furniture and fixtures to reduce the carrying value to their estimated fair value in connection with the sublease discussed in Note 6.

The fair value of ROU asset and related furniture and fixtures was determined based on Level 3 measurements. Inputs to this fair value measurement included a valuation model that measures the present value of remaining lease payments less estimated sublease income at a discount rate that captures the risk associated with the future cash flows.

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DEBT

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

DEBT

DEBT

In December 2018, the Company entered into a term loan agreement with Silicon Valley Bank (“SVB”) (as amended from time to time, the “SVB Term Loan”).

On November 14, 2022, the Company entered into a new five-year loan facility agreement with MidCap Financial (“MidCap”) and SVB (the “Credit Agreement”). The Credit Agreement consists of a term loan of up to $100 million and a revolving credit facility of up to $25 million.

On March 26, 2023, it was announced that First-Citizens Bank & Trust Company (“First-Citizens”) would assume all of SVB's deposits and loans as of March 27, 2023. This includes the Company’s SVB deposits and the Credit Agreement. The Company notes that no material impact to operations has occurred in connection with SVB’s closure and receivership under the Federal Deposit Insurance Corporation (“FDIC”), and is closely monitoring ongoing events involving the financial services industry, including First-Citizens.

On May 2 2023, we received notice from MidCap asserting failure by the Company to comply with certain obligations under the Company’s Credit Agreement. While we believe such assertions are without merit, on May 10, 2023, the Company entered into a Standstill Agreement with MidCap as discussed further below. As a result of this notice, the subjective acceleration clause was triggered and the Company reclassified its debt to current as of March 31, 2023.

Effective May 10, 2023 the Company entered into a Standstill Agreement with MidCap and First-Citizens as successor to SVB, (collectively “Lender”), pursuant to which the Company agreed to: (i) a prepayment of the term loan in the principal amount of $17,500,000 and the revolving credit facility in a principal amount of $3,540,480, respectively; and (ii) certain information rights regarding the status and prospects for completion by the Company of a strategic transaction. Lender agreed to refrain from exercising certain of their rights and remedies against the Company during a standstill period from May 10, 2023 through August 31, 2023, or longer if the Company has received sufficient additional funding following consummation of a strategic transaction, subject to additional covenants concerning: (i) achievement of strategic transaction milestones and (ii) maintenance of a minimum cash balance. The Company paid the $17,500,000 term loan amount and $3,540,480 revolving credit facility amount on May 10, 2023.

Term Loan

The key elements of the term loan include (i) a term loan commitment up to $100 million, of which $25 million may be accessed upon achievement of a gross margin target for the 2023 fiscal year; (ii) an annual interest rate of the Wall Street Journal (“WSJ”) Prime rate plus 3.5% with a floor of 9.25%; (iii) an exit fee payment of 4.00% of the aggregate principal amount, and (iv) a maturity date of November 1, 2027, with three years of interest only payments, with the option to extend the interest only period for one additional year at the election of the Company. At inception of the term loan, the Company evaluated this option as an embedded derivative and determined it to be clearly and closely related to the host contract. As such, no bifurcation of the embedded derivative from the host contract was required. 

At close, the Company drew $75 million, of which $60.0 million was used to retire its then existing SVB Term Loan. The Company accounted for the term loan portion of the Credit Agreement as a debt modification. However, given the large disproportion between the amount repaid to SVB under the SVB Term Loan and the amount received from SVB under the new Credit Agreement, the Company wrote off a pro-rata portion of the unamortized deferred fees and costs for a total of $0.5 million.

The Company received net proceeds of approximately $14.0 million after related bank and legal fees of approximately $1.0 million. Such fees are accounted for as debt discount and issuance costs and presented as a direct deduction from the carrying amount of debt on the Company’s consolidated balance sheets. Debt discount, issuance costs and the final payment are amortized or accreted as interest expense over the term of the loan using the effective interest method.

Revolving Credit Facility

The key elements of the revolving line of credit under the Credit Agreement include (i) a revolving line of credit of up to $25 million, comprised of an initial $15 million commitment, with the option to increase the line by an additional $10 million, subject to lender approval and borrowing base availability; (ii) an annual interest rate of the WSJ Prime rate plus 0.5% with a floor of 6.25%; (iii) a maturity date of November 1, 2027. At close, the Company drew $5 million. During the three months ended March 31, 2023, the Company repaid $0.7 million borrowed under of the revolving credit facility.

The Credit Agreement is secured by substantially all assets of the Company, except that the collateral does not include any intellectual property held by the Company, provided, however, the collateral does include all accounts and proceeds of such intellectual property.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, dividends and other distributions and transactions with affiliates. The Credit Agreement also contains financial covenants that require the Company to maintain a minimum net revenue threshold and a minimum backlog balance.

The Credit Agreement includes standard events of default, including, among other things, subject in certain cases to customary grace periods, thresholds and notice requirements, the Company’s failure to fulfill its obligations under the Credit Agreement or the occurrence of a material adverse change in the Company's business, operations, or condition (financial or otherwise). In the event of default by the Company under the Credit Agreement, MidCap and SVB would be entitled to exercise their remedies thereunder, including the right to accelerate the debt, upon which the Company may be required to repay all amounts then outstanding under the Credit Agreement, which could harm the Company's financial condition.

The Company’s scheduled future payments on the term loan under the Credit Agreement at March 31, 2023 are as follows (in thousands):

Year Ended December 31,
The remainder of 2023	$	—
2024	—
2025	6,250
2026	37,500
2027	31,250
Total future principal payments	75,000
Less: unamortized debt discount	(1,517)
Carrying value of long-term debt	73,483
Less: current portion	(73,483)
Long-term portion	$	—

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company entered into agreements to lease office space in Oakwood Village, Ohio, Mountain View, California and Denver, Colorado under noncancelable operating lease agreements.

In recognition of the ROU assets and the related lease liabilities, the options to extend the lease term have not been included as the Company is not reasonably certain that it will exercise any such option.

In 2022, the Company entered into an agreement to sublease all 24,600 rentable square feet of one of its Mountain View office spaces to a subtenant to offset its cash outflow. The sublease commenced on May 2, 2022 and will expire on March 31, 2024, unless earlier terminated in accordance with the sublease agreement.

Legal Proceedings

In the normal course of business, the Company may become involved in legal proceedings. The Company will accrue a liability for legal proceedings when it is probable that a liability has been incurred and the amount can be reasonably estimated. Significant judgment is required to determine both probability and the estimated amount. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued.

Purchase Commitments

The Company has various manufacturing contracts with vendors as part of the normal course of its business. In order to manage future demand for its product, the Company enters into agreements with manufacturers and suppliers to procure inventory based upon backlog and estimated delivery of systems. Some of the parts used for the production of the MRIdian system have lead times of several months to over a year, as such it is necessary to order such inventory in advance to ensure the demands from the market are covered. At March 31, 2023, the Company had $14.4 million of non-cancelable purchase commitments for inventory.

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REVENUE

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

REVENUE

REVENUE

The Company derives revenue primarily from the sale of MRIdian systems and related services as well as support and maintenance services on sold systems. Revenue is categorized as product revenue, service revenue and distribution rights revenue.

The following table presents revenue disaggregated by type and geography (in thousands):

	Three Months Ended March 31,
	2023		2022
U.S.
Product	$	915	$	432
Service	3,720		3,099
Total U.S. revenue	$	4,635	$	3,531
Outside of U.S. ("OUS")
Product	$	14,867	$	12,994
Service	2,799		2,232
Distribution rights	233		119
Total OUS revenue	$	17,899	$	15,345
Total
Product	$	15,782	$	13,426
Service	6,519		5,331
Distribution rights	233		119
Total revenue	$	22,534	$	18,876

Arrangements with Multiple Performance Obligations

The Company frequently enters into sales arrangements that include multiple performance obligations. Such performance obligations mainly consist of (i) sale of MRIdian systems, (ii) installation of MRIdian systems, and (iii) product support, which includes extended service and maintenance. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The standalone selling price ("SSP"), is determined based on observable prices at which the Company separately sells the products and services. If a SSP is not directly observable, the Company will estimate the SSP considering market conditions or internally approved pricing guidelines related to the performance obligations.

Product Revenue

Product revenue is derived primarily from the sales of MRIdian systems. The MRIdian system contains both software and non-software components that together deliver essential functionality.

Certain revenue contracts have terms that result in the control of the system transferring to the customer upon delivery and inspection, as opposed to historically upon customer acceptance. For contracts in which control of the system transfers upon delivery and inspection, the Company recognizes revenue for the systems at the point in time when delivery and inspection by the customer has occurred. For these same contracts, the Company recognizes installation revenue over the period of installation as the installation services are performed and control is transferred to the customer. For all contracts in which control continues to transfer upon post-implementation customer acceptance, revenue for the system and installation will continue to be recognized upon customer acceptance.

Certain customer contracts with distributors do not require ViewRay installation at the ultimate user site, and the distributors may either perform the installation themselves or hire another party to perform the installation. For sales of MRIdian systems for which the Company is not responsible for installation, revenue recognition occurs when the entire system is shipped, which is when the control of the system is transferred to the customer.

Service Revenue

Service revenue is derived primarily from maintenance services. The maintenance and support service is a stand-ready obligation which is performed over the term of the arrangement and, as a result, service revenue is recognized ratably over the service period as the customers benefit from the service throughout the service period.

Distribution Rights Revenue

In December 2014, the Company entered into a distribution agreement with Itochu Corporation pursuant to which it appointed Itochu as its exclusive distributor for the promotion, sale and delivery of its MRIdian products within Japan. In consideration of the exclusive distribution rights granted, the Company received $4.0 million, which was recorded as deferred revenue. Starting in August 2016, the distribution rights revenue is recognized ratably over the remaining term of the distribution agreement, which expires in December 2023. A time-elapsed method is used to measure progress because control is transferred evenly over the remaining contractual period.

Contract Balances

The timing of revenue recognition, billings and cash collections results in short-term and long-term trade receivables, customer deposits, deferred revenues and deferred cost of revenue on the condensed consolidated balance sheets.

Trade receivables are recorded at the original invoiced amount, net of an estimated allowance for credit losses. Trade credit is generally extended on a short-term basis. The Company occasionally provides for long-term trade credit for its maintenance services so that the period between when the services are rendered to its customers and when the customers pay for that service is within one year. Thus, the Company’s trade receivables do not bear interest or contain a significant financing component. Long-term trade receivables of $8.9 million and $9.0 million were reported within other assets in the condensed consolidated balance sheets at March 31, 2023 and at December 31, 2022, respectively. These amounts are billed in accordance with the terms of the customer contracts to which they relate and are expected to be collected two to three years from the date of invoice as the underlying maintenance services are rendered. At times, billing occurs subsequent to revenue recognition, resulting in an unbilled receivable which represents a contract asset. This contract asset is recorded as an unbilled receivable and reported as part of accounts receivable on the consolidated balance sheets.

Trade receivables are periodically evaluated for collectability based on past credit history of the respective customers and their current financial condition. Changes in the estimated collectability of trade receivables are included in the results of operations for the period in which the estimate is revised. Trade receivables that are deemed uncollectible are offset against the estimated allowance for credit losses. The Company generally does not require collateral for trade receivables. There were $0.7 million and $0.3 million of estimated allowances for credit losses recorded at March 31, 2023 or December 31, 2022.

Customer deposits represent payments received in advance of system installation. For domestic and international sales, advance payments received prior to inventory shipments are recorded as customer deposits. Advance payments are subsequently reclassified to deferred revenue upon inventory shipment. All customer deposits, including those that are expected to be a deposit for more than one year, are classified as current liabilities based on consideration of the Company’s normal operating cycle (the time between acquisition of the inventory components and the final cash collection from customers on these inventory components) which is in excess of one year.

Deferred revenue consists of deferred product revenue and deferred service revenue. Deferred product revenue arises from timing differences between the fulfillment of contract obligations and satisfaction of all revenue recognition criteria consistent with the Company’s revenue recognition policy. Deferred service revenue results from the advance billing for services to be delivered over a period of time. Deferred revenues expected to be realized within one year or normal operating cycle are classified as current liabilities.

Deferred cost of revenue consists of cost for inventory items that have been shipped, but revenue recognition has not yet occurred. Deferred cost of revenue is included as part of current assets as the corresponding deferred product revenue is expected to be realized within one year or the Company’s normal operating cycle.

During the three months ended March 31, 2023 and 2022, the Company recognized $6.5 million and $4.5 million of revenue that was included in the deferred revenue balance at the beginning of the reporting period, respectively.

Variable Consideration

The Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of those goods or services. The Company estimates the transaction price at contract inception, including any variable consideration, and updates the estimate each reporting period for any changes. There were no amounts recognized during the three months ended March 31, 2023 from performance obligations satisfied in the prior period.

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WARRANTS

3 Months Ended

Mar. 31, 2023

Warrant [Abstract]

WARRANTS

WARRANTS

Equity Classified Common Stock Warrants

In connection with a March 2018 direct registered offering (the “March 2018 Direct Registered Offering”), the Company issued (i) 4,090,000 shares of its common stock; (ii) 3,000,581 shares of its Series A convertible preferred stock and (iii) warrants to purchase 1,418,116 shares of common stock at an exercise price of $8.31 per share (the “2018 Offering Warrants”). The 2018 Offering Warrants became exercisable upon issuance and expire in March 2025. None of the 2018 Offering Warrants have been exercised to date and they all remained outstanding at March 31, 2023.

As separate classes of securities were issued in a bundled transaction, the gross proceeds from the March 2018 Direct Registered Offering of $59.1 million were allocated to common stock, Series A convertible preferred stock and the 2018 Offering Warrants based on their respective relative fair value upon issuance. The aggregate fair value of the 2018 Offering Warrants of $7.4 million was estimated using the Black-Scholes option-pricing model with the following assumptions:

	Upon Issuance
Common Stock Warrants:
Expected term (in years)	7.0
Expected volatility (%)	62.5%
Risk-free interest rate (%)	2.8%
Expected dividend yield (%)	0%

The allocated proceeds from the 2018 Offering Warrants of $6.6 million were recorded in additional paid-in-capital.

Liability Classified Common Stock Warrants

In connection with private placement offerings in 2016 and 2017 (the “2016 and 2017 Private Placements”), the Company issued warrants that provide the warrant holder the right to purchase 1,720,512 and 1,380,745 shares of common stock (the “2017 and 2016 Placement Warrants”, respectively). The 2017 and 2016 Placement Warrants contain protection whereby the warrant holders will have the right to receive cash in the amount equal to the Black-Scholes value of the warrants upon the occurrence of a change of control, as defined in the warrant agreement. The 2017 and 2016 Placement Warrants were accounted for as a liability at the date of issuance and are adjusted to fair value at each balance sheet date, with the change in fair value recorded as a component of other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss.

The key terms of the 2017 and 2016 Placement Warrants are as follows:

	Issuance Date	Term	Exercise Price Per Share		Warrants Exercised during the three months ended March 31, 2023	Warrants Outstanding at March 31, 2023
2017 Placement Warrants	January 2017	7 years	$	3.17	—	1,500,022
2016 Placement Warrants	August and September 2016	7 years	$	2.95	—	536,711
Total					—	2,036,733

During the three months ended March 31, 2023 and 2022, the Company recorded a gain of $1.9 million and $2.8 million, respectively, related to the change in fair value of the 2017 and 2016 Placement Warrants. The fair value of the 2017 and

2016 Placement Warrants at March 31, 2023 and December 31, 2022, respectively, was estimated using the Black-Scholes option-pricing model and the following weighted-average assumptions:

	2017 Placement Warrants				2016 Placement Warrants
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Expected term (in years)	0.8		1.0		0.4		0.6
Expected volatility	81.7	%	82.9	%	81.6	%	82.7	%
Risk-free interest rate	4.7	%	4.7	%	4.9	%	4.8	%
Expected dividend yield	—	%	—	%	—	%	—	%

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STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

As of March 31, 2023, the Company had an active stock-based incentive compensation plan and an employee stock purchase plan: the 2015 Equity Incentive Award Plan (as amended and restated, the “2015 Plan”), and the 2015 Employee Stock Purchase Plan (as amended and restated, the “ESPP”), respectively. All new equity compensation grants are issued under these two plans; however, outstanding awards previously issued under inactive plans will continue to vest and remain exercisable in accordance with the terms of the respective plans.

In 2022, the Company's board of directors determined the 2018 Inducement Program (“2018 Plan”) was no longer required under ViewRay’s compensation program and terminated it. No further awards will be granted under this plan and no such awards have been granted since August 16, 2021. As a result, all 1,501,304 shares previously available for issuance under the 2018 Plan have been restored to the Company’s general authorized but unissued share reserve, and are no longer set aside for grants under the 2018 Plan.

The 2015 Plan provides for the grant of stock and stock-based awards including stock options, restricted stock units (including deferred stock units), performance-based stock units, and stock appreciation rights. Additionally, stock units may be issued as performance-based stock units to align stock compensation awards to the attainment of annual or long-term performance goals.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and comprehensive loss is classified as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cost of revenue	$	162	$	176
Research and development	450		724
Selling and marketing	466		693
General and administrative	2,259		3,439
Total stock-based compensation expense	$	3,337	$	5,032

The Company’s stock-based compensation expense is based on the value of the portion of share-based payment awards that are ultimately expected to vest, assuming estimated forfeitures at the time of grant. Stock-based compensation relating to stock-based awards granted to consultants was insignificant for the three months ended March 31, 2023 and 2022.

Restricted Stock Units, Deferred Stock Units and Performance Share Units (collectively “Incentive Stock Units” or “ISUs”)

The Company grants restricted stock units, deferred stock units, and performance stock units (collectively "Incentive Stock Units" or "ISUs").

Restricted Stock Units ("RSUs") are granted to the Company's board of directors and employees for their services. Deferred Stock Units ("DSUs") are granted to the Company's board of directors at their election in lieu of retainer and committee service fees. The DSUs granted to board members are either fully vested upon issuance or vest over a period of time from the grant date and will be released and settled upon termination of the board member’s services, the occurrence of a change in control event, or the tenth anniversary of the grant date. The RSUs and DSUs granted to employees and/or

board members vest in equal annual or monthly installments over one to three years from the grant date and are subject to the participants continuing service to the Company over that period.

Performance share units (“PSUs”) are granted to the Company’s employees which vest based on the achievement of performance targets set by the Company based on a three-year performance period.

The grant date fair values of ISUs are based on the closing market price of our common stock on the grant date. Stock-based compensation expense, net of forfeitures, is recognized on a straight-line basis over the requisite service period. For PSUs, compensation expense is updated for the Company’s expected performance level against performance goals at the end of each reporting period, which involves judgment as to achievement of certain performance metrics. More specifically, achievement of a compound annual revenue growth rate will result in a percentage payout of the target PSUs awarded. If the Company’s compound annual revenue growth rate is between threshold and target or between target and maximum, payouts will be linearly interpolated.

The table below summarizes the Company’s activity and related information for its ISUs:

	RSUs and DSUs			PSUs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	5,020,029	$	4.16	3,550,855	$	4.33
Granted	2,200,988	$	4.39	1,372,107	$	4.34
Performance based adjustment (1)	—	$	—	(1,150,777)	$	4.49
Vested	(1,994,691)	$	3.91	—	$	—
Cancelled or forfeited	(96,515)	$	3.31	(53,029)	$	4.34
Unvested at March 31, 2023	5,129,811	$	4.43	3,719,156	$	4.21
Vested and unreleased	274,943			—
Outstanding at March 31, 2023	5,404,754			3,719,156

(1) Represents an adjustment to the PSU accrual as of March 31, 2023 based on the expected level of achievement of previously granted awards.

The total grant date fair value of ISUs awarded was $15.6 million and $12.9 million for the three months ended March 31, 2023 and 2022, respectively. The total fair value of ISUs vested was $8.6 million and $6.9 million during the three months ended March 31, 2023 and 2022, respectively.

At March 31, 2023, total unrecognized stock-based compensation cost related to ISUs, net of estimated forfeitures, was $23.2 million, which is expected to be recognized over a weighted-average period of 2.0 years. As of March 31, 2023, 7.5 million shares of ISUs are expected to vest.

Stock Options

Stock options awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant and with a four-year vesting schedule. Stock option awards generally expire 10 years from the date of grant.

A summary of the Company’s stock option activity and related information is as follows:

	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2022	6,748,580	$	6.97	5.0	$	3,307
Options granted	—	—
Options exercised	(224,741)	$	1.28
Options cancelled or forfeited	(250,732)	$	7.20
Options outstanding at March 31, 2023	6,273,107	$	7.16	4.6	$	1,530
Options exercisable at March 31, 2023	6,100,929	$	7.30	4.7	$	1,267
Options vested and expected to vest at March 31, 2023	6,260,370	$	7.17	4.6	$	1,510

There were no options granted to employees for the three months ended March 31, 2023 and 2022.

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The aggregate intrinsic value of options exercised was nominal for the three months ended March 31, 2023 and 2022.

At March 31, 2023, total unrecognized stock-based compensation cost related to stock options granted to employees, net of estimated forfeitures, was $0.2 million, which is expected to be recognized over a weighted-average period of 1.0 year.

The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of complex and subjective variables. The variables used to calculate the fair value of stock options using the Black-Scholes option-pricing model include actual and projected employee stock option exercise behaviors, expected price volatility of the Company’s common stock, the risk-free interest rate and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

The risk-free interest rate is based on the zero-coupon U.S. Treasury notes, with maturities similar to the expected term of the options. The Company has not paid and does not anticipate paying cash dividends on its common stock; therefore, the expected dividend yield is assumed to be zero.

The forfeiture rate of stock options is estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures have been estimated by the Company based upon historical and expected forfeiture experience.

Employee Stock Purchase Plan

In July 2015, the Company adopted the ESPP. Certain employees, as defined by the ESPP, are eligible to participate in the ESPP if employed by the Company for at least 20 hours per week during at least five months per calendar year. Participating employees may contribute up to the lesser of 15% of their eligible earnings or $30,000 during each offering period, provided that in no event shall a participating employee be permitted to purchase more than 3,000 shares of common stock during each offering period.

During 2023, the first offering period provided to eligible employees is January 1, 2023 through June 30, 2023. The purchase price of common stock purchased under the ESPP is currently equal to 85% of the lesser of the fair market value of a share of common stock on: (1) the first trading day of an offering period and (2) the last trading of each offering period. At March 31, 2023, 3.5 million shares were reserved for issuance under the ESPP. No more than 3.5 million shares of common stock may be issued under the ESPP. As of March 31, 2023, 0.6 million shares have been issued under the ESPP and 2.9 million shares remained available for future issuance under the ESPP. Purchase rights granted under the ESPP are valued using the Black-Scholes pricing model.

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INCOME TAX

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAX

INCOME TAX

Due to the current operating losses, the Company recorded zero income tax expense during the three months ended March 31, 2023 and 2022, respectively. During these periods, the Company’s activities were limited to U.S. federal and state tax jurisdictions, as it does not have any significant foreign operations.

Due to the Company’s history of cumulative losses and after considering all the available objective evidence, management concluded that it is not more likely than not that all of the Company’s net deferred tax assets will be realized in the future. Accordingly, the Company’s deferred tax assets, which include net operating loss (“NOL”), carryforwards and tax credits related primarily to research and development, continue to be subject to a valuation allowance as of March 31, 2023. The Company expects to continue to maintain a full valuation allowance until there is sufficient evidence to support recoverability of its deferred tax assets.

The Company had unrecognized tax benefits of $4.0 million and $3.9 million at March 31, 2023 and December 31, 2022, respectively. The reversal of the uncertain tax benefits would not affect the effective tax rate to the extent that the Company continues to maintain a full valuation allowance against its deferred tax assets. Unrecognized tax benefits may change during the next 12 months for items that arise in the ordinary course of business.  

Interest and/or penalties related to income tax matters are recognized as a component of income tax expense. At March 31, 2023 and December 31, 2022, there were no accrued interest and penalties related to uncertain tax positions.

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NET LOSS PER SHARE

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

NET LOSS PER SHARE

NET LOSS PER SHARE

Diluted earnings per share (“EPS”) includes the dilutive effect of common stock equivalents and is computed using the weighted-average number of common stock and common stock equivalents outstanding during the reporting period. Diluted EPS for the periods ended March 31, 2023 and 2022 excluded common stock equivalents because the effect of their inclusion would be anti-dilutive or would decrease the reported loss per share. The following table sets forth securities outstanding that could potentially dilute the calculation of diluted earnings per share:

	For the three months ended March 31,
	2023	2022
Stock options outstanding	6,273,107	7,003,489
Warrants to purchase common stock - liability classified	2,036,733	2,036,733
Warrants to purchase common stock - equity classified	1,418,116	1,418,116
Unvested incentive stock units	8,848,967	7,995,614
Total	18,576,923	18,453,952

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Hudson Cooperation Agreement

Pursuant to the Cooperation Agreement with Hudson Executive Capital LP and certain of its affiliates (collectively, “Hudson”) dated March 8, 2022, the Company concurrently entered into a Consulting Agreement with Sai Nanduri, a Senior Investment Analyst and representative of Hudson, pursuant to which the Company was required to pay Mr. Nanduri $160,000 during 2022 and consider Mr. Nanduri as a candidate for election to the Company's board of directors at the 2023 annual meeting of shareholders. This agreement expired on its terms on January 2, 2023.

Pursuant to the Cooperation Agreement with Hudson dated January 20, 2023, the Company concurrently entered into an Observer Agreement with Mr. Nanduri, pursuant to which Mr. Nanduri was appointed an observer to the board of directors of the Company and for which the Company is required to pay Mr. Nanduri $180,000 during 2023. The Company further agreed to appoint Mr. Nanduri as a member of its board of directors in the event a current director were to resign.

License Agreement with University of Florida Research Foundation, Inc.

In December 2004, the Company entered into a licensing agreement with the University of Florida Research Foundation (“UFRF”) whereby UFRF granted the Company a worldwide exclusive license to certain of UFRF’s patents in exchange for 33,652 shares of common stock and a 1% royalty, with a minimum $0.1 million royalty payment per quarter, from sales of products developed and sold by the Company utilizing the licensed patents. Minimum royalty payments in any calendar year are credited against earned royalties for such calendar year. Royalty expenses based on 1% of net sales were $0.1 million and nominal during the three months ended March 31, 2023 and 2022, respectively, and were recorded as product cost of revenue.

Distribution Agreement with Chindex Shanghai International Trading Company Limited

In November 2019, the Company entered into a distribution agreement with Chindex Shanghai International Trading Company Limited (“Chindex”) which became effective in February 2020. Chindex is a subsidiary of Fosun International Limited (“Fosun”).

Under the distribution agreement, Chindex will act as the Company’s distributor and regulatory agent for the sale and delivery of its MRIdian products within the People’s Republic of China, excluding Hong Kong, Macau and Taiwan. The distribution agreement has an initial term of five years with an option to renew for an additional five years. Under the distribution agreement, the Company will supply its products and services to Chindex based on an agreed upon price between the Company and Chindex. In accordance with the agreement, Chindex agreed to pay ViewRay an upfront fee, portions of which may be refundable under certain conditions, of $3.5 million, payable in three installments: (i) the first installment of $1.5 million due approximately 60 days after the effectiveness of the distribution agreement; (ii) the second installment of $1.0 million due on the first anniversary from the effective date of the agreement; and (iii) the third installment of $1.0 million due on the second anniversary from the effective date of the agreement. The Company has received all three installments as of March 31, 2023.

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SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2023
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTSOn May 10, 2023, the Company announced a cost reduction program with expected annual savings of $19.0 million to $23.0 million, of which approximately 65% of the savings will be realized in fiscal year 2023. The program includes a reduction in discretionary spending and a workforce reduction of approximately 11%. The Company expects to incur restructuring charges of approximately $1.8 million associated with the workforce reduction. Additionally, effective May 10, 2023, the Company entered into a Standstill Agreement in connection with the Company’s Credit Agreement as further described in Note 5, Debt.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements include the accounts of ViewRay, Inc. and its wholly-owned subsidiary, ViewRay Technologies, Inc. All inter-company accounts and transactions have been eliminated in consolidation.

In the opinion of management, all adjustments, including normal recurring adjustments, considered necessary for a fair presentation of the Company’s unaudited condensed consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or any future period. These unaudited condensed consolidated financial statements and their notes should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Revenue from Contract with Customer

Distribution Rights Revenue

In December 2014, the Company entered into a distribution agreement with Itochu Corporation pursuant to which it appointed Itochu as its exclusive distributor for the promotion, sale and delivery of its MRIdian products within Japan. In consideration of the exclusive distribution rights granted, the Company received $4.0 million, which was recorded as deferred revenue. Starting in August 2016, the distribution rights revenue is recognized ratably over the remaining term of the distribution agreement, which expires in December 2023. A time-elapsed method is used to measure progress because control is transferred evenly over the remaining contractual period.

Contract Balances

The timing of revenue recognition, billings and cash collections results in short-term and long-term trade receivables, customer deposits, deferred revenues and deferred cost of revenue on the condensed consolidated balance sheets.

Trade receivables are recorded at the original invoiced amount, net of an estimated allowance for credit losses. Trade credit is generally extended on a short-term basis. The Company occasionally provides for long-term trade credit for its maintenance services so that the period between when the services are rendered to its customers and when the customers pay for that service is within one year. Thus, the Company’s trade receivables do not bear interest or contain a significant financing component. Long-term trade receivables of $8.9 million and $9.0 million were reported within other assets in the condensed consolidated balance sheets at March 31, 2023 and at December 31, 2022, respectively. These amounts are billed in accordance with the terms of the customer contracts to which they relate and are expected to be collected two to three years from the date of invoice as the underlying maintenance services are rendered. At times, billing occurs subsequent to revenue recognition, resulting in an unbilled receivable which represents a contract asset. This contract asset is recorded as an unbilled receivable and reported as part of accounts receivable on the consolidated balance sheets.

Trade receivables are periodically evaluated for collectability based on past credit history of the respective customers and their current financial condition. Changes in the estimated collectability of trade receivables are included in the results of operations for the period in which the estimate is revised. Trade receivables that are deemed uncollectible are offset against the estimated allowance for credit losses. The Company generally does not require collateral for trade receivables. There were $0.7 million and $0.3 million of estimated allowances for credit losses recorded at March 31, 2023 or December 31, 2022.

Customer deposits represent payments received in advance of system installation. For domestic and international sales, advance payments received prior to inventory shipments are recorded as customer deposits. Advance payments are subsequently reclassified to deferred revenue upon inventory shipment. All customer deposits, including those that are expected to be a deposit for more than one year, are classified as current liabilities based on consideration of the Company’s normal operating cycle (the time between acquisition of the inventory components and the final cash collection from customers on these inventory components) which is in excess of one year.

Deferred revenue consists of deferred product revenue and deferred service revenue. Deferred product revenue arises from timing differences between the fulfillment of contract obligations and satisfaction of all revenue recognition criteria consistent with the Company’s revenue recognition policy. Deferred service revenue results from the advance billing for services to be delivered over a period of time. Deferred revenues expected to be realized within one year or normal operating cycle are classified as current liabilities.

Deferred cost of revenue consists of cost for inventory items that have been shipped, but revenue recognition has not yet occurred. Deferred cost of revenue is included as part of current assets as the corresponding deferred product revenue is expected to be realized within one year or the Company’s normal operating cycle.

Variable ConsiderationThe Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of those goods or services. The Company estimates the transaction price at contract inception, including any variable consideration, and updates the estimate each reporting period for any changes.

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BALANCE SHEET COMPONENTS (Tables)

3 Months Ended

Mar. 31, 2023

Balance Sheet Related Disclosures [Abstract]

Property and Equipment, Net

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

	March 31, 2023		December 31, 2022
Prototype	$	17,641	$	17,641
Machinery and equipment	19,068		19,068
Leasehold improvements	15,365		15,365
Furniture and fixtures	1,511		1,511
Software	1,389		1,389
Construction in progress	2,775		2,417
Property and equipment, gross	57,749		57,391
Less: accumulated depreciation and amortization	(38,710)		(37,750)
Property and equipment, net	$	19,039	$	19,641

Schedule of Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Accrued payroll and related benefits	$	12,622	$	15,542
Accrued accounts payable	4,917		5,606
Payroll withholding tax, sales and other tax payable	1,352		1,660
Accrued legal, accounting and professional fees	202		241
Product upgrade reserve	900		900
Other	766		733
Total accrued liabilities	$	20,759	$	24,682

Schedule of Deferred Revenue

Deferred revenue consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Deferred revenue:
Product	$	8,055	$	8,814
Service	17,590		18,057
Distribution rights	699		932
Total deferred revenue	26,344		27,803
Less: current portion of deferred revenue	(23,949)		(24,734)
Noncurrent portion of deferred revenue	$	2,395	$	3,069

Other Noncurrent Liabilities

Other long-term liabilities consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Accrued interest, noncurrent portion	$	363	$	96
Asset retirement obligation	1,082		1,057
Other accrued costs	621		629
Total other-long term liabilities	$	2,066	$	1,782

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Financial Liabilities

The following table sets forth the fair value of the Company’s financial liabilities by level within the fair value hierarchy (in thousands):

	At March 31, 2023
	Level 1		Level 2		Level 3		Total
2017 Placement Warrants Liability	$	—	$	—	$	1,718	$	1,718
2016 Placement Warrants Liability	—		—		516		516
Total	$	—	$	—	$	2,234	$	2,234

	At December 31, 2022
	Level 1		Level 2		Level 3		Total
2017 Placement Warrants Liability	$	—	$	—	$	3,127	$	3,127
2016 Placement Warrants Liability	—		—		1,051		1,051
Total	$	—	$	—	$	4,178	$	4,178

Summary of Changes in Fair Value of Level 3 Financial Liabilities

The following table sets forth a summary of the changes in fair value of the Company’s Level 3 financial liabilities (in thousands):

	Three Months Ended March 31,
	2023		2022
Fair value, beginning of period	$	4,178	$	6,795
Change in fair value of Level 3 financial liabilities	(1,944)		(2,830)
Fair value of 2016 Placement Warrants at exercise	—		—
Fair value of 2017 Placement Warrants at exercise	—		—
Fair value, end of period	$	2,234	$	3,965

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DEBT (Tables)

3 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

The Company’s scheduled future payments on the term loan under the Credit Agreement at March 31, 2023 are as follows (in thousands):

Year Ended December 31,
The remainder of 2023	$	—
2024	—
2025	6,250
2026	37,500
2027	31,250
Total future principal payments	75,000
Less: unamortized debt discount	(1,517)
Carrying value of long-term debt	73,483
Less: current portion	(73,483)
Long-term portion	$	—

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REVENUE (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenue Disaggregated by Types and Geography

The following table presents revenue disaggregated by type and geography (in thousands):

	Three Months Ended March 31,
	2023		2022
U.S.
Product	$	915	$	432
Service	3,720		3,099
Total U.S. revenue	$	4,635	$	3,531
Outside of U.S. ("OUS")
Product	$	14,867	$	12,994
Service	2,799		2,232
Distribution rights	233		119
Total OUS revenue	$	17,899	$	15,345
Total
Product	$	15,782	$	13,426
Service	6,519		5,331
Distribution rights	233		119
Total revenue	$	22,534	$	18,876

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WARRANTS (Tables)

3 Months Ended

Mar. 31, 2023

Warrant [Abstract]

Summary of Assumptions using Black- Scholes Option Pricing Model to estimate fair value

The aggregate fair value of the 2018 Offering Warrants of $7.4 million was estimated using the Black-Scholes option-pricing model with the following assumptions:

	Upon Issuance
Common Stock Warrants:
Expected term (in years)	7.0
Expected volatility (%)	62.5%
Risk-free interest rate (%)	2.8%
Expected dividend yield (%)	0%

The fair value of the 2017 and

2016 Placement Warrants at March 31, 2023 and December 31, 2022, respectively, was estimated using the Black-Scholes option-pricing model and the following weighted-average assumptions:

	2017 Placement Warrants				2016 Placement Warrants
	March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Expected term (in years)	0.8		1.0		0.4		0.6
Expected volatility	81.7	%	82.9	%	81.6	%	82.7	%
Risk-free interest rate	4.7	%	4.7	%	4.9	%	4.8	%
Expected dividend yield	—	%	—	%	—	%	—	%

Schedule of Key Terms of Placement Warrants

The key terms of the 2017 and 2016 Placement Warrants are as follows:

	Issuance Date	Term	Exercise Price Per Share		Warrants Exercised during the three months ended March 31, 2023	Warrants Outstanding at March 31, 2023
2017 Placement Warrants	January 2017	7 years	$	3.17	—	1,500,022
2016 Placement Warrants	August and September 2016	7 years	$	2.95	—	536,711
Total					—	2,036,733

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STOCK-BASED COMPENSATION (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and comprehensive loss is classified as follows (in thousands):

	Three Months Ended March 31,
	2023		2022
Cost of revenue	$	162	$	176
Research and development	450		724
Selling and marketing	466		693
General and administrative	2,259		3,439
Total stock-based compensation expense	$	3,337	$	5,032

Summary of Incentive Stock Units

The table below summarizes the Company’s activity and related information for its ISUs:

	RSUs and DSUs			PSUs
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2022	5,020,029	$	4.16	3,550,855	$	4.33
Granted	2,200,988	$	4.39	1,372,107	$	4.34
Performance based adjustment (1)	—	$	—	(1,150,777)	$	4.49
Vested	(1,994,691)	$	3.91	—	$	—
Cancelled or forfeited	(96,515)	$	3.31	(53,029)	$	4.34
Unvested at March 31, 2023	5,129,811	$	4.43	3,719,156	$	4.21
Vested and unreleased	274,943			—
Outstanding at March 31, 2023	5,404,754			3,719,156

(1) Represents an adjustment to the PSU accrual as of March 31, 2023 based on the expected level of achievement of previously granted awards.

Summary of Company's Stock Option Activity and Related Information

A summary of the Company’s stock option activity and related information is as follows:

	Number of Stock Options Outstanding	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
					(In thousands)
Options outstanding at December 31, 2022	6,748,580	$	6.97	5.0	$	3,307
Options granted	—	—
Options exercised	(224,741)	$	1.28
Options cancelled or forfeited	(250,732)	$	7.20
Options outstanding at March 31, 2023	6,273,107	$	7.16	4.6	$	1,530
Options exercisable at March 31, 2023	6,100,929	$	7.30	4.7	$	1,267
Options vested and expected to vest at March 31, 2023	6,260,370	$	7.17	4.6	$	1,510

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NET LOSS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Dilutive Securities Excluded from Calculation of Diluted Earnings Per Share

The following table sets forth securities outstanding that could potentially dilute the calculation of diluted earnings per share:

	For the three months ended March 31,
	2023	2022
Stock options outstanding	6,273,107	7,003,489
Warrants to purchase common stock - liability classified	2,036,733	2,036,733
Warrants to purchase common stock - equity classified	1,418,116	1,418,116
Unvested incentive stock units	8,848,967	7,995,614
Total	18,576,923	18,453,952

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BACKGROUND AND ORGANIZATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Loss from operations	$ 29,631	$ 27,474
Net cash used in operating activities	53,599	$ 32,385
Cash and cash equivalents	81,293		$ 135,960
Restricted cash	4,241		$ 6,535
Carry amount of credit	$ 77,800

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BALANCE SHEET COMPONENTS - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 57,749	$ 57,391
Less: accumulated depreciation and amortization	(38,710)	(37,750)
Property and equipment, net	19,039	19,641
Prototype
Property, Plant and Equipment [Line Items]
Property and equipment, gross	17,641	17,641
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	19,068	19,068
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	15,365	15,365
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,511	1,511
Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,389	1,389
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 2,775	$ 2,417

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BALANCE SHEET COMPONENTS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Depreciation and amortization expense	$ 1.0	$ 1.2

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BALANCE SHEET COMPONENTS - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Accrued payroll and related benefits	$ 12,622	$ 15,542
Accrued accounts payable	4,917	5,606
Payroll withholding tax, sales and other tax payable	1,352	1,660
Accrued legal, accounting and professional fees	202	241
Product upgrade reserve	900	900
Other	766	733
Total accrued liabilities	$ 20,759	$ 24,682

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BALANCE SHEET COMPONENTS - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred Revenue Arrangement [Line Items]
Total deferred revenue	$ 26,344	$ 27,803
Less: current portion of deferred revenue	(23,949)	(24,734)
Noncurrent portion of deferred revenue	2,395	3,069
Product
Deferred Revenue Arrangement [Line Items]
Total deferred revenue	8,055	8,814
Service
Deferred Revenue Arrangement [Line Items]
Total deferred revenue	17,590	18,057
Distribution rights
Deferred Revenue Arrangement [Line Items]
Total deferred revenue	$ 699	$ 932

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BALANCE SHEET COMPONENTS - Schedule of Other Long-Term Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Balance Sheet Related Disclosures [Abstract]
Accrued interest, noncurrent portion	$ 363	$ 96
Asset retirement obligation	1,082	1,057
Other accrued costs	621	629
Other long-term liabilities	$ 2,066	$ 1,782

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Warrants to purchase (in shares)	0
Change in fair value of warrants	$ 1,944	$ 2,830
Furniture and fixtures
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Operating Lease, Impairment Loss			$ 300
Mountain View California 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Operating Lease, Impairment Loss			$ 1,500

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Schedule of Fair Value of Financial Liabilities (Details) - Fair Value Measurement on a Recurring Basis - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	$ 2,234	$ 4,178
Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	0	0
Level 2
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	0	0
Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	2,234	4,178
2017 Placement Warrants
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	1,718	3,127
2017 Placement Warrants | Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	0	0
2017 Placement Warrants | Level 2
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	0	0
2017 Placement Warrants | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	1,718	3,127
2016 Placement Warrants
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	516	1,051
2016 Placement Warrants | Level 1
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	0	0
2016 Placement Warrants | Level 2
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	0	0
2016 Placement Warrants | Level 3
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Warrant liabilities	$ 516	$ 1,051

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Summary of Changes in Fair Value of Level 3 Financial Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning of period	$ 4,178	$ 6,795
Change in fair value of Level 3 financial liabilities	1,944	2,830
Fair value, ending of period	2,234	3,965
2016 Placement Warrants
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value of Placement Warrants at exercise	0	0
2017 Placement Warrants
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value of Placement Warrants at exercise	$ 0	$ 0

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DEBT - Narrative (Details) - USD ($)				3 Months Ended
	May 10, 2023	Nov. 15, 2022	Nov. 14, 2022	Mar. 31, 2023	Mar. 31, 2022
Debt Instrument [Line Items]
Repayments on lines of credit				$ 722,000	$ 0
SVB Term Loan
Debt Instrument [Line Items]
Total future principal payments				75,000,000
Repayments of debt		$ 60,000,000
Credit Agreement | Line of Credit
Debt Instrument [Line Items]
Term (in months)			5 years
Credit Agreement | Line of Credit | Secured Debt
Debt Instrument [Line Items]
Maximum borrowing capcity			$ 100,000,000
Exit fee (as a percent)			4.00%
Proceeds from credit		14,000,000	$ 75,000,000
Unamortized debt issuance expense			$ 500,000
Commitment fees		$ 1,000,000
Credit Agreement | Line of Credit | Secured Debt | Subsequent Event
Debt Instrument [Line Items]
Maximum borrowing capcity	$ 17,500,000
Repayments on lines of credit	17,500,000
Credit Agreement | Line of Credit | Secured Debt | Prime Rate
Debt Instrument [Line Items]
Debt instrument floating rate (as a percent)			3.50%
Credit Agreement | Line of Credit | Secured Debt | Floor Rate
Debt Instrument [Line Items]
Debt instrument floating rate (as a percent)			9.25%
Credit Agreement | Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capcity			$ 25,000,000
Proceeds from credit			5,000,000
Line of credit, initial commitment amount			15,000,000
Additional borrowings			$ 10,000,000
Repayments on lines of credit				$ 700,000
Credit Agreement | Line of Credit | Revolving Credit Facility | Subsequent Event
Debt Instrument [Line Items]
Maximum borrowing capcity	3,540,480
Repayments on lines of credit	$ 3,540,480
Credit Agreement | Line of Credit | Revolving Credit Facility | Prime Rate
Debt Instrument [Line Items]
Debt instrument floating rate (as a percent)			0.50%
Credit Agreement | Line of Credit | Revolving Credit Facility | Floor Rate
Debt Instrument [Line Items]
Debt instrument floating rate (as a percent)			6.25%
Credit Agreement, Accessible Year-One | Line of Credit | Secured Debt
Debt Instrument [Line Items]
Line of credit facility, available borrowing upon achievement of gross margin target			$ 25,000,000

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DEBT - Scheduled Future Payments on Term Loan (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Debt Instrument [Line Items]
Less: current portion	$ (73,483)	$ 0
Long-term debt	0	$ 73,339
SVB Term Loan
Debt Instrument [Line Items]
The remainder of 2023	0
2024	0
2025	6,250
2026	37,500
2027	31,250
Total future principal payments	75,000
Less: unamortized debt discount	(1,517)
Carrying value of long-term debt	73,483
Less: current portion	(73,483)
Long-term debt	$ 0

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COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) $ in Millions	Mar. 31, 2023 USD ($)	Dec. 31, 2022 ft²
Other Commitments [Line Items]
Purchase commitments | $	$ 14.4
Mountain View, California 2 | Lease Agreement
Other Commitments [Line Items]
Rentable area (in square feet) | ft²		24,600

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REVENUE - Summary of Revenue Disaggregated by Types and Geography (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Disaggregation Of Revenue [Line Items]
Total revenue	$ 22,534	$ 18,876
Product
Disaggregation Of Revenue [Line Items]
Total revenue	15,782	13,426
Service
Disaggregation Of Revenue [Line Items]
Total revenue	6,519	5,331
Distribution rights
Disaggregation Of Revenue [Line Items]
Total revenue	233	119
U.S.
Disaggregation Of Revenue [Line Items]
Total revenue	4,635	3,531
U.S. | Product
Disaggregation Of Revenue [Line Items]
Total revenue	915	432
U.S. | Service
Disaggregation Of Revenue [Line Items]
Total revenue	3,720	3,099
Outside of U.S. ("OUS")
Disaggregation Of Revenue [Line Items]
Total revenue	17,899	15,345
Outside of U.S. ("OUS") | Product
Disaggregation Of Revenue [Line Items]
Total revenue	14,867	12,994
Outside of U.S. ("OUS") | Service
Disaggregation Of Revenue [Line Items]
Total revenue	2,799	2,232
Outside of U.S. ("OUS") | Distribution rights
Disaggregation Of Revenue [Line Items]
Total revenue	$ 233	$ 119

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REVENUE - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Dec. 31, 2014
Disaggregation Of Revenue [Line Items]
Long-term trade credit maintenance services term (in years)	1 year
Long-term trade receivables	$ 8,900		$ 9,000
Allowance for credit losses	736		$ 304
Deferred revenue, recognized	6,500	$ 4,500
Company recognized revenue from performance obligations satisfied in a prior period	$ 0
Minimum
Disaggregation Of Revenue [Line Items]
Expected long-term trade receivables collection period (in years)	2 years
Maximum
Disaggregation Of Revenue [Line Items]
Expected long-term trade receivables collection period (in years)	3 years
Itochu Corporation Agreement | Distribution rights
Disaggregation Of Revenue [Line Items]
Remaining performance obligation				$ 4,000

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WARRANTS - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Jan. 31, 2017	Sep. 30, 2016
Common Stock Warrants [Line Items]
Change in fair value of warrants		$ 1,944	$ 2,830
Warrant liabilities		$ 2,234		$ 4,178
March 2018 Direct Registered Offering | Common Stock
Common Stock Warrants [Line Items]
Issuance of common stock upon public offering, net (in shares)	4,090,000
March 2018 Direct Registered Offering | Series A Convertible Preferred Stock
Common Stock Warrants [Line Items]
Issuance of common stock upon public offering, net (in shares)	3,000,581
Common Stock Warrants | March 2018 Direct Registered Offering
Common Stock Warrants [Line Items]
Warrants issued (in shares)	1,418,116
Exercise price (in USD per share)	$ 8.31
Adjustments to additional paid in capital, warrant issued	$ 6,600
Warrant liabilities	7,400
Common Stock, Convertible Preferred Stock And Warrants | March 2018 Direct Registered Offering
Common Stock Warrants [Line Items]
Proceed from private placement and equity issuances, gross	$ 59,100
2016 Placement Warrants
Common Stock Warrants [Line Items]
Warrants issued (in shares)						1,720,512
Exercise price (in USD per share)		$ 2.95
2017 Placement Warrants
Common Stock Warrants [Line Items]
Warrants issued (in shares)					1,380,745
Exercise price (in USD per share)		$ 3.17

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WARRANTS - Summary of Assumptions to Use Option Pricing Model (Detail)	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2018
Common Stock Warrants | March 2018 Direct Registered Offering | Expected term (in years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs			7.0
Common Stock Warrants | March 2018 Direct Registered Offering | Expected volatility (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs			0.625
Common Stock Warrants | March 2018 Direct Registered Offering | Risk-free interest rate (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs			0.028
Common Stock Warrants | March 2018 Direct Registered Offering | Expected dividend yield (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs			0
2017 Placement Warrants | Expected term (in years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0.8	1.0
2017 Placement Warrants | Expected volatility (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0.817	0.829
2017 Placement Warrants | Risk-free interest rate (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0.047	0.047
2017 Placement Warrants | Expected dividend yield (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0	0
2016 Placement Warrants | Expected term (in years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0.4	0.6
2016 Placement Warrants | Expected volatility (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0.816	0.827
2016 Placement Warrants | Risk-free interest rate (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0.049	0.048
2016 Placement Warrants | Expected dividend yield (%)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants, fair value measurement inputs	0	0

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WARRANTS - Schedule of Key Terms of Placement Warrants (Detail)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants exercised (in shares)	0
Warrants outstanding (in shares)	2,036,733
2017 Placement Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Term	7 years
Exercise price per share (in USD per share) | $ / shares	$ 3.17
Warrants exercised (in shares)	0
Warrants outstanding (in shares)	1,500,022
2016 Placement Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Term	7 years
Exercise price per share (in USD per share) | $ / shares	$ 2.95
Warrants exercised (in shares)	0
Warrants outstanding (in shares)	536,711

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STOCK-BASED COMPENSATION - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) hour plan shares	Mar. 31, 2022 USD ($)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of plans | plan	2
Number of common stock authorized for issuance (in shares)	1,501,304
Vesting period (in years)	4 years
Weighted average period for recognition of compensation costs (in years)	1 year
Expiration period of stock option plan (in years)	10 years
Options granted to employees (in shares)	0
Unrecognized compensation cost | $	$ 200,000
Expected dividend yield	0.00%
Restricted Stock Units (RSUs) | Employees and Board Members | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period (in years)	1 year
Restricted Stock Units (RSUs) | Employees and Board Members | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period (in years)	3 years
Incentive Stock Units (ISUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total grant date fair value of ISUs | $	$ 15,600,000	$ 12,900,000
Total fair value of ISUs vested | $	8,600,000	$ 6,900,000
Unrecognized stock based compensation cost | $	$ 23,200,000
Weighted average period for recognition of compensation costs (in years)	2 years
Shares expected to vest (in shares)	7,500,000
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of common stock authorized for issuance (in shares)	3,500,000
Minimum hours worked per week | hour	20
Minimum months worked (in months)	5 months
Maximum contribution percentage amount of employee's base compensation (as a percent)	15.00%
Maximum employee contribution in to share purchase plan per offering | $	$ 30,000
Maximum number of shares allowed for purchase by each employee (in shares)	3,000
Purchase price as a percentage of fair market value per share (as a percent)	85.00%
Common stock reserved for issuance (in shares)	3,500,000
Shares issued under ESPP (in shares)	600,000
Common stock remained available for issuance pursuant to the purchase plan (in shares)	2,900,000
2021 PSU Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of years of compound annual revenue growth rate used as metric to award performance share units (in years)	3 years

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STOCK-BASED COMPENSATION - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 3,337	$ 5,032
Cost of revenue
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	162	176
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	450	724
Selling and marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	466	693
General and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 2,259	$ 3,439

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STOCK-BASED COMPENSATION - Summary of Incentive Stock Units (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
RSUs and DSUs
Number of Shares
Unvested at beginning of period (in shares)	5,020,029
ISUs granted (in shares)	2,200,988
Incremental awards (in shares)	0
ISUs vested (in shares)	(1,994,691)
ISUs forfeited (in shares)	(96,515)
Unvested at end of period (in shares)	5,129,811
Vested and unreleased (in shares)	274,943
Outstanding at end of period (in shares)	5,404,754
Weighted Average Grant Date Fair Value
Unvested at beginning of period (in USD per share) | $ / shares	$ 4.16
ISUs granted (in USD per share) | $ / shares	4.39
Incremental awards (in USD per share) | $ / shares	0
ISUs vested (in USD per share) | $ / shares	3.91
ISUs forfeited (in USD per share) | $ / shares	3.31
Unvested at end of period (in USD per share) | $ / shares	$ 4.43
PSUs
Number of Shares
Unvested at beginning of period (in shares)	3,550,855
ISUs granted (in shares)	1,372,107
Incremental awards (in shares)	(1,150,777)
ISUs vested (in shares)	0
ISUs forfeited (in shares)	(53,029)
Unvested at end of period (in shares)	3,719,156
Vested and unreleased (in shares)	0
Outstanding at end of period (in shares)	3,719,156
Weighted Average Grant Date Fair Value
Unvested at beginning of period (in USD per share) | $ / shares	$ 4.33
ISUs granted (in USD per share) | $ / shares	4.34
Incremental awards (in USD per share) | $ / shares	4.49
ISUs vested (in USD per share) | $ / shares	0
ISUs forfeited (in USD per share) | $ / shares	4.34
Unvested at end of period (in USD per share) | $ / shares	$ 4.21

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STOCK-BASED COMPENSATION - Summary of Company's Stock Option Activity and Related Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Number of Stock Options Outstanding
Outstanding at beginning of period (in shares)	6,748,580
Option granted (in shares)	0
Options exercised (in shares)	(224,741)
Options cancelled or forfeited (in shares)	(250,732)
Outstanding at end of period (in shares)	6,273,107	6,748,580
Options exercisable (in shares)	6,100,929
Options vested and expected to vest (in shares)	6,260,370
Weighted- Average Exercise Price
Options outstanding at beginning of period (in USD per share)	$ 6.97
Options granted (in USD per share)	0
Options exercised (in USD per share)	1.28
Options cancelled or forfeited (in USD per share)	7.20
Options outstanding at end of period (in USD per share)	7.16	$ 6.97
Options exercisable (in USD per share)	7.30
Options vested and expected to vest (in USD per share)	$ 7.17
Weighted- Average Remaining Contractual Life (Years)
Options outstanding (in years)	4 years 7 months 6 days	5 years
Options exercisable (in years)	4 years 8 months 12 days
Options vested and expected to vest (in years)	4 years 7 months 6 days
Aggregate Intrinsic Value
Options outstanding	$ 1,530	$ 3,307
Options exercisable	1,267
Options vested and expected to vest	$ 1,510

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INCOME TAX - Additional Information (Detail) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Income tax expense	$ 0	$ 0
Unrecognized tax benefits	4,000,000		$ 3,900,000
Accrued interest and penalties related to uncertain tax positions	$ 0		$ 0

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NET LOSS PER SHARE - Dilutive Securities Excluded from Calculation of Diluted Earnings Per Share (Detail) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Dilutive securities excluded from calculation of diluted earnings per share (in shares)	18,576,923	18,453,952
Stock options outstanding
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Dilutive securities excluded from calculation of diluted earnings per share (in shares)	6,273,107	7,003,489
Warrants to purchase common stock - liability classified
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Dilutive securities excluded from calculation of diluted earnings per share (in shares)	2,036,733	2,036,733
Warrants to purchase common stock - equity classified
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Dilutive securities excluded from calculation of diluted earnings per share (in shares)	1,418,116	1,418,116
Unvested incentive stock units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Dilutive securities excluded from calculation of diluted earnings per share (in shares)	8,848,967	7,995,614

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RELATED PARTY TRANSACTIONS - Additional Information (Detail)		1 Months Ended	3 Months Ended
	Nov. 29, 2019 USD ($) installment	Dec. 31, 2004 USD ($) shares	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Dec. 21, 2023 USD ($)	Dec. 31, 2022 USD ($)
Chindex Shanghai International Trading Company Limited
Related Party Transaction [Line Items]
Distribution agreement term (in years)	5 years
Distribution agreement additional term (in years)	5 years
Number of payment installments | installment	3
Chindex Shanghai International Trading Company Limited | Upfront Fees
Related Party Transaction [Line Items]
Distribution fees	$ 3,500,000
Chindex Shanghai International Trading Company Limited | Upfront Fees | First Installment
Related Party Transaction [Line Items]
Distribution fees	$ 1,500,000
Revenue installment period	60 days
Chindex Shanghai International Trading Company Limited | Upfront Fees | Second Installment
Related Party Transaction [Line Items]
Distribution fees	$ 1,000,000
Chindex Shanghai International Trading Company Limited | Upfront Fees | Third Installment
Related Party Transaction [Line Items]
Distribution fees	$ 1,000,000
University of Florida Research Foundation
Related Party Transaction [Line Items]
Percentage of royalty expense based on net sales			1.00%	1.00%
University of Florida Research Foundation | Licensing Agreements
Related Party Transaction [Line Items]
Common Stock granted in exchange for licensing (in shares) | shares		33,652
Percentage of royalty payment based on sale (as a percent)		1.00%
Royalty payment per quarter		$ 100,000
Royalty expense			$ 100,000	$ 0
Affiliated Entity
Related Party Transaction [Line Items]
Due to related parties						$ 160,000
Affiliated Entity | Forecast
Related Party Transaction [Line Items]
Due to related parties					$ 180,000

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SUBSEQUENT EVENTS (Details) - Subsequent Event - Employee Severance $ in Millions	May 10, 2023 USD ($)
Subsequent Event [Line Items]
Saving remainder of 2023 (as a percent)	65.00%
Reduction to workforce (as a percent)	11.00%
Expected cost	$ 1.8
Minimum [Member]
Subsequent Event [Line Items]
Annual cost reduction	19.0
Maximum
Subsequent Event [Line Items]
Annual cost reduction	$ 23.0