Operating Leases

The Company subleases office space in Solana Beach, California that serves as its corporate headquarters and houses certain management and personnel. The sublease term commenced on December 15, 2020, is set to expire on December 31, 2026, and is renewable for an additional five-year period, at the Company’s option, provided that the Company’s landlord has entered into an extension of its prime lease for the office space that encompasses the Company’s office space for at least five years.

The Company also leases space in Carlsbad, California, that houses office space and a manufacturing facility under a lease that commenced on June 1, 2023 and ends on May 31, 2033. The Company has two options to extend the lease term for thirty-six or sixty months, at the fair market rental value. Upon establishment of the new manufacturing facility in Carlsbad, the Company terminated its prior manufacturing facility lease in Irvine, California, effective October 2023. The lease termination did not have a material impact on the consolidated financial statements.

The optional renewal periods for both leases are not considered in the determination of the right-of-use asset or the lease liability as the Company does not consider it reasonably certain that it would exercise either of such options. The lease arrangements contain lease components and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used the published U.S. High Yield CCC corporate bond rates at the lease commencement date of the Solana Beach lease and the current estimate of the Company's incremental borrowing rate at the lease commencement date of the Carlsbad lease. The weighted average remaining lease term of the Company's operating leases was 6.81 years and 7.38 years, and the weighted average discount rate used to determine the operating lease liability was 12% and 11.8%, as of December 31, 2024 and 2023, respectively.

The lease cost was $0.9 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively.

Purchase Commitments

The Company is a party to various purchase arrangements related to its manufacturing and research and development activities. At December 31, 2024 there was approximately $1.2 million of open purchase orders and contractual obligations in the ordinary course of business, the majority of which are due within one year. Additionally, the Company is also a party to a license and collaboration agreement which requires minimum purchase commitments for a seven-year period starting in 2023. The total remaining minimum purchase commitments related to this agreement is $4.2 million over the next five years.

Legal Contingencies

The Company was named as a defendant to a lawsuit filed by a patient who suffered an adverse outcome in connection with a surgical procedure in which the Company’s ClearPoint Navigation System was used, seeking damages in an unspecified amount with respect to the Company. The plaintiff also named as defendants the health care provider performing the surgical procedure and another medical device manufacturer whose product was also used in the procedure. A global demand of all defendants in this case has been made by the plaintiff in the amount of $13.6 million. Discovery for the lawsuit is currently in process. Based on the Company’s investigation to date, the Company believes that the claims against the Company in this lawsuit are without merit and intends to defend the lawsuit vigorously. The Company has tendered the claim to its Medical Technology Solutions policy insurer. The Company is unable to estimate the probable loss or range of loss that could potentially result from this lawsuit and will continue to evaluate information as it becomes known and will record an estimate for losses at the time when it is both probable that a loss has been incurred and the amount of the loss is reasonably estimable. Legal fees incurred by the Company are expensed in the period incurred.