v3.26.1
Convertible Notes
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Convertible Notes Convertible Notes
As of June 30, 2026, the Company had outstanding fixed-rate convertible notes with varying maturities for an aggregate principal amount of $769.0 million (collectively the “Notes”). The Notes are senior subordinated convertible obligations, and interest, where applicable, is payable in arrears, semi-annually. Except as described below, the 2029 Notes are described in Note 10 of the “Notes to Consolidated Financial Statements” in the Annual Report.
The Notes consisted of the following (in thousands):
June 30, 2026December 31, 2025
4.00% senior subordinated convertible notes due in May 2029
$79,038 $316,226 
Unamortized debt discount and issuance costs(1,382)(6,429)
2029 Notes, net77,656 309,797 
0.00% senior subordinated convertible notes due in June 2032
690,000 — 
Unamortized debt discount and issuance costs(17,577)— 
2032 Notes, net672,423 — 
Total convertible notes payable, net$750,079 $309,797 
Fair value of fixed rate convertible notes (1):
2029 Notes$294,309 $818,485 
2032 Notes746,815 — 
Total fair value of fixed rate convertible notes$1,041,124 $818,485 
__________________
(1)The fair values were determined based on the quoted price of the convertible notes in an inactive market on the last trading day of the reporting period and have been classified as Level 2 in the fair value hierarchy.
For the fourth quarter of 2024, for each of the quarters of 2025 and for the first and second quarters of 2026, the last reported sale price of the Company’s common stock exceeded 130% of the conversion price of the 2029 Notes for more than 20 trading days during the 30 consecutive trading days ended on each respective quarter end. As a result, for the
quarterly periods ended March 31, 2026 and June 30, 2026, respectively, the 2029 Notes were, and for the quarterly period ending September 30, 2026, the 2029 Notes are, convertible at the option of the holders of the 2029 Notes.
The Company amortizes issuance costs related to the issuance of the Notes to interest expense over the term of the Notes using the effective interest method. As of June 30, 2026, the remaining amortization period of the debt issuance costs was approximately 2.8 years and 5.9 years, respectively for the 2029 Notes and the 2032 Notes, and the effective interest rates were 4.6% and 0.4%, respectively for the 2029 Notes and the 2032 Notes.
The following table sets forth interest expense recognized related to the Notes (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Coupon interest expense$1,960 $3,162 $5,122 $6,325 
Amortization of debt discount and issuance costs658 427 1,112 860 
Total interest expense on convertible notes$2,618 $3,589 $6,234 $7,185 
2032 Notes
In May 2026, the Company issued $690.0 million aggregate principal amount of its 2032 Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2032 Notes were issued pursuant to an Indenture (the “2032 Notes Indenture”), dated May 15, 2026, between the Company and U.S. Bank Trust Company, National Association, as trustee.
The Company received net proceeds of approximately $672.0 million after deducting initial purchasers’ discounts and commissions and offering expenses.
The 2032 Notes are the Company’s senior, unsecured obligations and are (i) senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated to the 2032 Notes in right of payment; (ii) equal in right of payment to any of the Company’s indebtedness that is not so subordinated, including the 2029 Notes; (iii) effectively subordinated to any of the Company’s future secured indebtedness, to the extent of the value of the collateral securing such indebtedness; and (iv) structurally subordinated to all indebtedness and other liabilities, including trade payables, and, to the extent the Company is not a holder thereof, preferred equity, if any, of the Company’s subsidiaries.
The 2032 Notes do not bear interest and will mature on June 1, 2032, unless earlier converted by the noteholders, redeemed by the Company, or repurchased by the Company. Noteholders may convert all or a portion of their 2032 Notes only under the following circumstances:
(i)during any calendar quarter, and only during such calendar quarter, commencing after the calendar quarter ending on September 30, 2026, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
(ii)during the five consecutive business days immediately after any 10 consecutive trading day period if the trading price per $1,000 principal amount of 2032 Notes for each trading day of such period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day;
(iii)upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the 2032 Notes Indenture;
(iv)if the Company calls such 2032 Notes for redemption; and
(v)at any time from March 1, 2032 until the close of business on the second scheduled trading day immediately before the maturity date.
The Company may settle conversions of the 2032 Notes by paying or delivering, as applicable, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The initial conversion rate is 7.1971 shares of common stock per $1,000 principal amount of 2032 Notes, which represents an initial conversion price of approximately $138.94 per share of common stock. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the 2032 Notes Indenture) occur, or if the Company calls any 2032 Notes for redemption, then the conversion rate will, in certain circumstances, be increased for
a specified period of time. In no event will the conversion rate be increased to an amount that exceeds 9.3562 shares of common stock per $1,000 principal amount of 2032 Notes, subject to adjustment as provided in the 2032 Notes.
The Company may not redeem the 2032 Notes at its option at any time before June 6, 2029. The 2032 Notes are redeemable, in whole or in part, subject to the partial redemption limitation described below, at the Company’s option at any time, and from time to time, on or after June 6, 2029 and, in the case of any partial redemption, on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2032 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if (i) the 2032 Notes are freely tradable as of the date the Company sends the related redemption notice and all accrued and unpaid additional interest, if any, has been paid in full as of the first interest payment date occurring on or before the date the Company sends such notice; and (ii) the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice and on the trading day immediately before the date the Company sends such notice. In addition, calling any 2032 Notes for redemption will constitute a Make-Whole Fundamental Change with respect to that 2032 Notes, in which case the conversion rate applicable to the conversion of that 2032 Notes will be increased in certain circumstances if it is converted after it is called for redemption. The Company may not elect to redeem less than all of the outstanding 2032 Notes unless at least $75.0 million aggregate principal amount of 2032 Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.
If a “Fundamental Change”, as defined in the 2032 Notes, occurs, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their 2032 Notes at a cash repurchase price equal to the principal amount of the 2032 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.
The 2032 Notes Indenture contains customary events of default with respect to the 2032 Notes and provides that upon certain events of default occurring and continuing, the trustee may, and the trustee at the request of holders of at least 25% in principal amount of the 2032 Notes shall, declare all principal and accrued and unpaid interest, if any, of the 2032 Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization involving the Company or a significant subsidiary, all of the principal of and accrued and unpaid interest, if any, on the 2032 Notes will automatically become due and payable.
2029 Notes
Induced conversions of the 2029 Notes
On May 12, 2026, the Company entered into privately negotiated exchange and repurchase transactions with certain noteholders of its 2029 Notes. Pursuant to these transactions, the Company paid $474.7 million in cash, including accrued and unpaid interest of $0.3 million, and issued 3,220,529 shares of the Company’s common stock, with such common stock having an aggregate fair value of $329.1 million, in exchange for $237.2 million aggregate principal amount of the 2029 Notes. The transactions were completed concurrently with the issuance of the Company’s 2032 Notes.
As part of the transactions, the Company extended limited-time inducement offers that provided noteholders with consideration, the fair value of which exceeded the value that would have been received under the original conversion terms of the 2029 Notes, resulting in incremental value to the noteholders. The fair value of the total consideration transferred was determined based on the quoted market price of the Company’s common stock on May 12, 2026, the date the inducement offers were accepted.
The transactions were accounted for as induced conversions. The Company recognized debt conversion inducement expense of $11.7 million during the three and six months ended June 30, 2026, measured as the fair value of the incremental consideration transferred to noteholders in excess of the consideration issuable under the original conversion terms of the 2029 Notes. Debt conversion inducement expense is included in other (expense) income, net in the Company’s unaudited condensed consolidated statements of operations.
The carrying amount of the 2029 Notes subject to the transactions, including $4.3 million of unamortized debt issuance costs, was transferred to equity with no gain or loss recognized. The exchange and repurchase transactions resulted in a decrease in additional paid-in capital of $558.9 million.