v3.25.2
Debt
 6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
Debt

9. Debt

The Company's convertible note obligations, including the level within the fair value hierarchy (see note 4. Fair Value Measurements), are as follows:

 

 

 

As of June 30, 2025

 

As of December 31, 2024

 

 

 

Outstanding
Principal

 

Unamortized convertible note premium and issuance costs

 

Net Carrying Value

 

Fair Value

 

Outstanding
Principal

 

Unamortized convertible note premium and issuance costs

 

Net Carrying Value

 

Fair Value

 

(in thousands)

 

 

 

 

 

 

 

Amount

 

Level

 

 

 

 

 

 

 

Amount

 

Level

 

2028 Convertible Notes*

 

$

150,000

 

$

3,517

 

$

153,517

 

 

154,815

 

 

3

 

$

150,000

 

$

4,011

 

$

154,011

 

$

155,960

 

 

3

 

2026 Convertible Notes**

 

 

4,060

 

 

(32

)

 

4,028

 

 

3,756

 

 

2

 

 

63,132

 

 

(677

)

 

62,455

 

 

55,912

 

 

2

 

Total carrying value of convertible notes

 

 

 

 

 

$

157,545

 

 

 

 

 

 

 

 

 

$

216,466

 

 

 

 

 

(*) The fair value was calculated using a binomial lattice model which incorporates the terms and conditions of the convertible notes and market-based risk measurement that are indirectly observable, such as market credit spread, and therefore are Level 3 investments. The lattice model produced an estimated fair value based on changes in the price of the underlying common share price over successive periods of time. An estimated yield based on market data was used to discount straight debt cash flows.

(**) The fair value is influenced by interest rates, the Company's stock price and is determined by prices observed in market trading. Since the market for trading of the 2026 Convertible Notes is not considered to be an active market, the estimated fair value is based on Level 2 inputs.

The following table presents details of the Company's convertible notes as of June 30, 2025 which are further discussed below:

 

 

 

Date of Issuance

Maturity Date

Contractual Interest Rate

 

Outstanding Principal
(in thousands)

 

Conversion Rate for Each $1,000 Principal

 

Initial Conversion Price per Share

 

2028 Convertible Notes

 

August 2024

10/1/2028

 

7.50

%

$

150,000

 

$

62.50

 

$

16.00

 

2026 Convertible Notes

 

September 2021

10/1/2026

 

0.25

%

$

4,060

 

$

13.68

 

$

73.11

 

 

The total interest expense recognized related to the Company’s convertible notes and financing obligation consists of the following:

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

(in thousands)

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Contractual interest expense

 

$

2,815

 

 

$

223

 

 

$

5,647

 

 

$

446

 

Amortization of (premium) and issuance costs

 

 

(243

)

 

 

497

 

 

 

(458

)

 

 

994

 

Capitalization of interest expense

 

 

(50

)

 

 

0

 

 

 

(124

)

 

 

0

 

Total

 

$

2,522

 

 

$

720

 

 

$

5,065

 

 

$

1,440

 

2028 Convertible Notes

In August 2024, the Company entered into a privately negotiated exchange agreement (the "Exchange Agreement") with a holder of its 0.25 percent unsecured convertible senior notes due 2026 (the "2026 Convertible Notes"). Pursuant to the Exchange Agreement, the Company exchanged (the "Exchange Transaction") approximately $161.2 million in aggregate principal amount of the 2026 Convertible Notes for $150.0 million in aggregate principal amount of new 7.50 percent convertible senior notes due 2028 (the “2028 Convertible Notes”) and approximately $0.1 million in cash, with such payment representing the accrued and unpaid interest on such 2026 Convertible Notes.

The 2028 Convertible Notes are senior, initially unsecured obligations of the Company and accrue interest at a rate of 7.50 percent per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024. The 2028 Convertible Notes will mature on October 1, 2028, unless earlier converted, redeemed or repurchased by the Company. Before July 3, 2028, noteholders will have the right to convert their 2028 Convertible Notes only upon the occurrence of certain events. From and after July 3, 2028, noteholders may convert their 2028 Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivery, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company's election. The 2028 Convertible Notes will be convertible with an initial conversion rate of 62.5000 shares of common stock per $1,000 principal amount of 2028 Convertible Notes, which represents an initial conversion price of $16.00 per share of common stock, when certain conditions are met. The conversion rate and conversion price will be subject to adjustments related to standard anti-dilution provisions upon the occurrence of certain events.

The Company may not redeem the 2028 Convertible Notes prior to October 7, 2026. The 2028 Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company’s option at any time, and from time to time, on or after October 7, 2026 and on or before the 25th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 percent of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the 2028 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date. In addition, calling any 2028 Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that 2028 Convertible Note, in which case the conversion rate applicable to the conversion of that 2028 Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption. Pursuant to the Partial Redemption Limitation, the Company may not elect to redeem less than all of the outstanding 2028 Convertible Notes unless at least $100.0 million aggregate principal amount of 2028 Convertible Notes are outstanding and not subject to redemption as of the time the Company sends the related redemption notice.

If a “fundamental change” (as defined in the indenture for the 2028 Convertible Notes) occurs, then, subject to a limited exception, noteholders may require the Company to repurchase their 2028 Convertible Notes for cash. The repurchase price will be equal to the principal amount of the 2028 Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, up to, but excluding, the applicable repurchase date.

As of June 30, 2025, approximately $150.0 million aggregate principal amount of 2028 Convertible Notes remain outstanding. The remaining unamortized debt issuance costs are recorded as a contra-liability and are amortized utilizing the effective interest rate of approximately 8 percent over the term of the 2028 Convertible Notes. The remaining unamortized premium related to the fair value adjustment of the 2028 Convertible Notes is amortized using an effective interest rate of approximately 6 percent. The Company is in compliance with the terms of the indenture, and has not experienced any events that would constitute an event of default.

2026 Convertible Notes

As of June 30, 2025, approximately $4.0 million principal amount of 2026 Convertible Notes remain outstanding. The remaining unamortized debt issuance costs are recorded as a contra-liability and are amortized utilizing the effective interest rate of 0.84 percent over the term of the 2026 Convertible Notes.

The Company is in compliance with the terms of the indenture, and has not experienced any events that would constitute an Event of Default under the 2026 Convertible Notes.