Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.21.1
Debt
 3 Months Ended
Mar. 31, 2021
Debt Disclosure [Abstract]  
Debt Debt
 
The Company’s outstanding debt obligations as of March 31, 2021 and December 31, 2020 were as follows: 
  March 31, December 31,
  2021 2020
(in thousands)
Revolving credit facility balance $ —  $ — 
Convertible Notes due 2023 $ 345,000  $ 345,000 
Unamortized issuance costs on Convertible Notes due 2023 (4,503) (4,306)
Unaccreted discount on Convertible Notes due 2023 —  (24,058)
Convertible Notes due 2023 carrying value $ 340,497  $ 316,636 
Convertible Notes due 2025 $ 517,500  $ 517,500 
Unamortized issuance costs on Convertible Notes due 2025 (12,802) (11,731)
Unaccreted discount on Convertible Notes due 2025 —  (65,902)
Convertible Notes due 2025 carrying value $ 504,698  $ 439,867 

Interest expense was comprised of the following and is included in other expense, net in the condensed consolidated statement of operations:
  Three Months Ended
  March 31,
  2021 2020
(in thousands)
Coupon interest $ 2,479  $ 1,501 
Amortization of issuance costs 1,423  631 
Undrawn and other fees 313  153 
Interest on revolving credit facility —  2,518 
Accretion of debt discount —  2,331 
 Total interest expense $ 4,215  $ 7,134 
For the three months ended March 31, 2021 and 2020, the total interest expense related to the Convertible Notes was $3.7 million and $4.3 million, respectively, with coupon interest expense of $2.5 million and $1.5 million and the amortization of debt discount and issuance costs of $1.2 million and $2.8 million, respectively.

Convertible Notes due 2023

Upon adoption of ASU 2020-06, effective January 1, 2021, the embedded conversion option, or equity component, is no longer separated from the host contract and recognized within additional paid-in capital and is instead accounted for as a single liability measured at amortized cost within Long-term debt in the condensed consolidated balance sheets. Accordingly, the Convertible Notes due 2023 are presented in the condensed consolidated balance sheets at their gross proceeds of $345.0 million less unamortized debt issuance costs of $4.5 million as of March 31, 2021 with no future accretion of the original issue discount necessary.

In connection with the issuance of the Convertible Notes due 2023, the Company incurred $10.0 million of issuance costs in 2018, of which $8.6 million was originally allocated to the debt component and presented net in Long-term debt and $1.4 million was originally allocated to the equity component and presented within additional paid-in capital in the condensed consolidated balance sheets. Upon adoption of ASU 2020-06, effective January 1, 2021, the costs originally allocated to the equity component are reflected within Long-term debt and are being amortized and recorded as additional interest expense over the life of the Convertible Notes due 2023.

The effective interest rate of the Convertible Notes due 2023 for the three months ended March 31, 2021 and 2020 was approximately 2.4% and 6%. The effective interest rate of the Convertible Notes due 2023 is equal to the stated interest rate plus the amortization of the debt issuance costs subsequent to adoption. Prior to the adoption of ASU 2020-06, the effective interest rate calculation also included the amortization of the original issue discount.

Convertible Notes due 2025

Upon adoption of ASU 2020-06, effective January 1, 2021, the embedded conversion option, or equity component, is no longer separated from the host contract and recognized within additional paid-in capital and is instead accounted for as a single liability measured at amortized cost within Long-term debt in the condensed consolidated balance sheets. Accordingly, the Convertible Notes due 2025 are presented in the condensed consolidated balance sheets at their gross proceeds of $517.5 million less unamortized debt issuance costs of $12.8 million as of March 31, 2021 with no future accretion of the original issue discount necessary.

In connection with the issuance of the Convertible Notes due 2025, the Company incurred a total of $14.5 million of issuance costs in 2020, of which $12.6 million was originally allocated to the debt component and presented net in Long-term debt and $1.9 million was originally allocated to the equity component and presented within additional paid-in capital in the condensed consolidated balance sheets. Upon adoption of ASU 2020-06, effective January 1, 2021, the costs originally allocated to the equity component are reflected within Long-term debt and are being amortized and recorded as additional interest expense over the life of the Convertible Notes due 2025.

The effective interest rate of the Convertible Notes due 2025 for the three months ended March 31, 2021 was approximately 1.3%. The effective interest rate of the Convertible Notes due 2025 was equal to the stated interest rate plus the amortization of the debt issuance costs subsequent to adoption.

See “Note 13—Net Income (Loss) Per Share” for further discussion of the effect of conversion on net income per share.

Amended Credit Agreement

The credit agreement under which the Company’s revolving credit facility was issued (the “Amended Credit Agreement”) includes certain financial covenants and, as of March 31, 2021, the Company was in compliance with these requirements.
As of March 31, 2021, the Company had $500.0 million available to borrow under the revolving credit facility, subject to covenant compliance.