Note 10. Stock-Based Compensation

The Company maintains the following equity incentive plans:

2011 Equity Incentive Plan

In 2011, the Company established its 2011 Equity Incentive Plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company. Under the 2011 Plan, the Company had the ability to issue incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights ("SARs"), RSAs, and RSUs. Options under the 2011 Plan could be granted for periods of up to 10 years. The ISOs could be granted at a price per share not less than the fair value at the date of grant.

2019 Equity Incentive Plan

The Company’s board of directors adopted and the Company’s stockholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) in May 2019 and June 2019, respectively. The 2019 Plan became effective in June 2019 in connection with the Company’s IPO, and serves as the successor to the 2011 Plan. Pursuant to the 2019 Plan, 7,440,524 shares of common stock were initially reserved for grant, including any shares that were reserved and available for issuance under the 2011 Plan at the time the 2019 Plan became effective, and any shares that become available upon forfeiture or repurchase by the Company under the 2011 Plan, will be reserved for future issuance. No further grants were made under the 2011 Plan after the adoption of 2019 Plan.

The 2019 Plan provides for the grant of ISOs, NSOs, SARs, RSAs, RSUs, PSAs, performance cash awards, and other forms of equity compensation. ISOs may be granted only to the Company’s employees and to any of the Company’s parent or subsidiary corporation’s employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants of the Company and any of the Company’s affiliates. The exercise price of a stock option generally cannot be less than 100% of the fair market value of the Company’s common stock on the date of grant. Options under the 2019 Plan may be granted for periods of up to 10 years. In addition, the number of shares of the Company's common stock available for grant and issuance shall be increased on January 1 of each calendar year during the term of the Plan by the lesser of (i) five percent (5%) of the number of shares of the common stock issued and outstanding on each December 31 immediately prior to the date of increase, or (ii) such number of shares determined by the Board.

2020 Inducement Plan

The Compensation Committee of the Company’s board of directors adopted the 2020 Inducement Plan (the “Inducement Plan”) in May 2020, which became effective upon adoption. The Inducement Plan was adopted without stockholder approval, as permitted by the Nasdaq Stock Market rules. The Inducement Plan provides for the grant of equity-based awards, including NSOs, SARs, RSAs, RSUs, PSAs, and other forms of equity compensation, and its terms are substantially similar to the stockholder-approved 2019 Plan. In accordance with relevant Nasdaq Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals' entry into employment with the Company. These Awards must be approved by either a majority of the Company’s independent directors or the Company’s compensation committee, provided such committee comprises solely independent directors (the “Independent Compensation Committee”) in order to comply with the exemption from the stockholder approval requirement for inducement grants provided under the Nasdaq Marketplace Rules. Pursuant to the Inducement Plan, the aggregate number of shares of Common Stock that may be issued will not exceed 1,000,000 shares.

2019 Employee Stock Purchase Plan

The Company’s board of directors adopted and the Company’s stockholders approved the 2019 Employee Stock Purchase Plan (the “ESPP”) in May 2019 and June 2019, respectively. Pursuant to the ESPP, 250,000 shares of common stock were initially reserved for future issuance. In addition, on each January 1 for the first ten calendar years after the first offering date, the aggregate number of common stock reserved for issuance under the ESPP shall be increased automatically by the number of shares equal to the lesser of (i) one percent (1%) of the total number of outstanding shares of common stock on the immediately preceding December 31, or (ii) 500,000 shares of common stock. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The price at which common stock is purchased under the ESPP is equal to 85% of the fair market value of the Company’s common stock on the first or last day of the offering period, whichever is lower. The ESPP provides for separate six-month offering periods beginning on May 1 and November 1 of each year.

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 $5.78 on December 31, 2024 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 $1.53 and $1.81 per share for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the unrecognized stock-based compensation of unvested options was $6.5 million, which is expected to be recognized over a weighted-average period of 1.9 years.

Valuation of Stock Options

The Company estimated the fair value of 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 2020, the Company granted 421,000 PSAs to the Company's then CEO which were vested in the same year due to fulfillment of the performance condition. These PSAs expired at the end of 2023.

During 2024, the Company granted 271,500 PSAs to the executive leadership team. Vesting of the PSAs is based upon attainment of certain Medicare reimbursement coverages 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 PSAs was $0.3 million.

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 $5.78 on December 31, 2024. As of December 31, 2024, the unrecognized stock-based compensation cost of unvested RSUs was $2.0 million, which is expected to be recognized over a weighted-average period of 1.3 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.

ESPP Activity and Valuation

Stock-based Compensation Expense