Note 9. Stock-Based Compensation

Service-Based Stock Option Activity

Options granted to new hires generally vest over a four-year period, with 25% vesting at the end of one year and the remaining vesting monthly thereafter. Options granted as merit awards generally vest monthly over a three- or four-year period.

The aggregate intrinsic value of unexercised stock options is calculated as the difference between the closing price of the Company’s common stock of $13.40 on June 30, 2026 and the exercise prices of the underlying stock options. Out-of-the money stock options are excluded from aggregate intrinsic value.

The weighted-average grant date fair value of options granted was $5.35 and $3.47 per share for the three months ended June 30, 2026 and 2025, respectively, and $5.30 and $2.74 per share for the six months ended June 30, 2026 and 2025, respectively. The total intrinsic value of options exercised was $5.1 million and immaterial for the three months ended June 30, 2026 and 2025, respectively, and $5.6 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the unrecognized stock-based compensation cost of unvested options was $27.9 million, which is expected to be recognized over a weighted-average period of 2.3 years.

Valuation of Service-Based Stock Options

The Company estimated the fair value of service-based stock options using the Black-Scholes option-pricing model. Fair value of stock options is recognized as compensation expense on a straight-line basis over the requisite service periods of the awards. Fair value of stock options was estimated using the following range of assumptions:

Performance-Based Stock Option Activity

During 2024, the Company granted performance-based stock options ("PSOs") to the executive leadership team. The PSOs were eligible to vest upon attainment of certain Medicare reimbursement coverages (as certified by the Compensation Committee) by the end of 2025 and subject to continuous service by the executives. Fair value was estimated using the Black-Scholes option-pricing model. Total grant-date fair value of the PSOs was $0.3 million. As of December 31, 2025, not all the Medicare reimbursement coverages were obtained and the Company canceled a portion of the PSOs. Accordingly, the Company reversed previously recognized stock-based compensation expense associated with the performance conditions that were not met. For the three and six months ended June 30, 2026, the recognized stock-based compensation cost related to vested PSOs was nil and immaterial, respectively.

Restricted Stock Units ("RSU") Activity and Valuation

The Company grants RSUs to employees to receive shares of the Company’s common stock. The RSUs awarded are subject to the individual’s continued service to the Company through each applicable vesting date. RSUs granted to new hires generally vest annually over a four-year period. RSUs granted as merit awards generally vest semi-annually over a three- or four-year period. The Company accounts for the fair value of RSUs using the closing market price of the Company’s common stock on the date of grant.

The aggregate fair value of unvested RSUs is calculated using the closing price of the Company’s common stock of $13.40 on June 30, 2026. The total fair value of shares vested were $0.2 million and $0.6 million for the three months ended June 30, 2026 and 2025, respectively, and $0.2 million and $0.7 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, the unrecognized stock-based compensation cost of unvested RSUs was $3.3 million, which is expected to be recognized over a weighted-average period of 2.2 years.

The Company’s default tax withholding method for RSUs is the sell-to-cover method, in which shares with a market value equivalent to the tax withholding obligation are sold on behalf of the holder of the RSUs upon vesting and settlement to cover the tax withholding liability and the cash proceeds from such sales are remitted by the Company to taxing authorities.

Performance-Based RSU Activity

In March 2025, the Company granted performance-based RSUs ("PSUs") to the executive leadership team. A percentage of the number of RSUs will vest based upon achieving the Company's operational target as of the end of 2026, and subject to continuous service by the executives throughout March 2028. Fifty percent of the aggregate number of achieved PSUs (if any) will vest upon certification in March 2027, with the remaining fifty percent vesting in March 2028. The total grant-date fair value of the PSUs was $2.1 million. As of December 31, 2025, the Company no longer considered the achievement of the operational target to be probable. Accordingly, the Company reversed previously recognized stock-based compensation expense and no stock-based compensation cost was recognized for the year ended December 31, 2025, and the three and six months ended June 30, 2026.

ESPP Activity and Valuation

Stock-Based Compensation Expense

The following is a summary of stock-based compensation expense by function (in thousands):

At-the-Market Equity Offerings

In December 2021, the Company entered into an At-the-Market ("ATM") Sales Agreement with BTIG, LLC (“BTIG”), as amended in December 2023 (the “Sales Agreement”), under which it was permitted to offer and sell its common stock from time to time through BTIG as its sales agent. BTIG agreed to use commercially reasonable efforts to sell the Company’s common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company agreed to pay BTIG a commission of up to 3% of the gross sales proceeds of any common stock sold through BTIG under the Sales Agreement. The Company was not obligated to make any sales of common stock under the Sales Agreement.

In December 2024, the Company entered into an Amended and Restated At-the-Market Sales Agreement (the "Amended Sales Agreement") with Piper Sandler & Co. (“Piper”) and BTIG. The Amended Sales Agreement amends and restates the Sales Agreement to add Piper as a sales agent (Piper and BTIG, together, the “Sales Agents”), among certain other changes. The Sales Agents have agreed to use commercially reasonable efforts to sell the Company's common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company agreed to pay the applicable Sales Agent a commission of up to 3% of the gross sales proceeds of any common stock sold through such Sales Agent under the Amended Sales Agreement. The Company is not obligated to make any sales of common stock under the Amended Sales Agreement.

During the three months ended June 30, 2026, the Company issued and sold 700,000 shares of its common stock under the Amended Sales Agreement at a weighted-average price of $6.60 per share and received $4.6 million in proceeds, net of commissions.

During the six months ended June 30, 2026, the Company issued and sold 2,827,155 shares of its common stock under the Amended Sales Agreement at a weighted-average price of $9.02 per share and received $25.5 million in proceeds, net of commissions.