What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 98 added, 62 removed, 297 unchanged (35% of the section changed)

44 unchanged sentences

issued and outstanding:

104,559,088 shares and 103,971,263 shares at March 31, 2022 (unaudited) and December 31, 2021, respectively

104,727,685 shares and 103,971,263 shares at June 30, 2022 (unaudited) and December 31, 2021, respectively

Additional paid-in capital 1,158,348 1,099,589

7 unchanged sentences

dollars in thousands (except share and per share data)

Three months ended March 31, Year ended December 31,

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021 2021

Unaudited Audited

Unaudited Unaudited Audited

Net revenues $ 140,866 $ 133,517 $ 278,413 $ 268,212 $ 535,031

18 unchanged sentences

dollars in thousands

Three months ended March 31, Year ended December 31,

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021 2021

Unaudited Audited

Unaudited Unaudited Audited

Net income (loss) $ ( 24,008 ) $ ( 14,641 ) $ ( 28,655 ) $ ( 18,769 ) $ ( 58,351 )

1 unchanged sentence

Change in foreign currency translation adjustments 680 413 1,010 145 302

Unrealized gain (loss) from debt securities ( 769 ) — ( 769 ) — —

Pension benefit plan ( 678 ) 416 833 2,568 361

15 unchanged sentences

Balance as of March 31, 2022 (Unaudited) 104,559,088 $ 1,127,782 $ ( 1,328 ) $ ( 690,573 ) $ 435,881

Share-based compensation to employees — 25,823 — — 25,823

Proceeds from issuance of shares 46,709 2,759 — — 2,759

Exercise of options and vested RSUs 121,888 1,984 — — 1,984

Other comprehensive income (loss), net of tax benefit of $ 0

— — ( 767 ) — ( 767 )

Net income (loss) — — — ( 24,008 ) ( 24,008 )

Balance as of June 30, 2022 (Unaudited) 104,727,685 $ 1,158,348 $ ( 2,095 ) $ ( 714,581 ) $ 441,672

Ordinary shares Additional

11 unchanged sentences

Balance as of March 31, 2021 (Unaudited) 103,187,460 $ 1,005,785 $ ( 1,948 ) $ ( 631,703 ) $ 372,134

Share-based compensation to employees — 27,881 — — 27,881

Proceeds from issuance of shares 17,291 2,371 — — 2,371

Exercise of options and vested RSUs 436,487 8,695 — — 8,695

Other comprehensive income (loss), net of tax benefit of $ 0

— — 829 — 829

Net income (loss) — — — ( 14,641 ) ( 14,641 )

Balance as of June 30, 2021 (Unaudited) 103,641,238 $ 1,044,732 $ ( 1,119 ) $ ( 646,344 ) $ 397,269

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2 unchanged sentences

dollars in thousands

Three months ended March 31, Year ended December 31,

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021 2021

Unaudited Audited

Unaudited Unaudited Audited

Cash flows from operating activities:

27 unchanged sentences

Cash, cash equivalents and restricted cash at the end of the period $ 367,763 $ 360,587 $ 367,763 $ 360,587 $ 209,609

NOVOCURE LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

dollars in thousands

Supplemental cash flow activities:

16 unchanged sentences

("Zai") to market Optune in China, Hong Kong, Macau and Taiwan ("Greater China").

See Note 12 to the Consolidated Financial Statements in the 2021 10-K.

During the year ended December 31, 2019, the Company implemented changes to its corporate entity operating structure, including transferring certain intellectual property to its Swiss subsidiary, primarily to align corporate entities with the Company’s evolving operations and business model.

6 unchanged sentences

Actual results could differ materially from those estimates.

These consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 10-K") filed with the Securities and Exchange Commission on February 24, 2022.

These consolidated financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on February 24, 2022 (the "2021 10-K").

The significant accounting policies applied in the audited annual consolidated financial statements of the Company as disclosed in the 2021 10-K are applied consistently in these unaudited interim consolidated financial statements, except as noted below:

2 unchanged sentences

Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date.

The Company classifies part of its debt securities as available-for-sale and the rest of the balance as held-to-maturity since the Company has the intent and ability to hold the securities to maturity.

The Company classifies part of its debt securities as available-for-sale ("AFS") and the rest of the balance as held-to-maturity ("HTM") when the Company has the intent and ability to hold the securities to maturity.

Available-for-sale debt securities are carried at fair value, with the unrealized gains and losses, net of tax, reported in accumulated other comprehensive income (loss) in shareholders’ equity.

7 unchanged sentences

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents include items almost as liquid as cash, with maturity periods of three months or less when purchased.

As of March 31, 2022 and December 31, 2021, the Company’s cash and cash equivalents were composed of:

2022 December 31,

Unaudited Audited

Cash equivalents include items almost as liquid as cash with maturity periods of three months or less when purchased, and short-term investments include items with maturity dates between three months and one year when purchased.

As of June 30, 2022 and December 31, 2021, the Company’s cash and cash equivalents and short-term investments were composed of:

June 30, 2022

Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments

Cash $ 7,173 $ — $ — $ 7,173 $ 7,173 $ 7,173 $ —

Money market funds 92,071 64,668

Corporate debt securities 2,580 —

Certificate of deposits, notes and term deposits 87,712 140,995

Total cash and cash equivalents $ 190,739 $ 208,802

Short-term investments include items with maturity dates between three months and one year when purchased.

As of March 31, 2022 and December 31, 2021, the Company’s short-term investments were:

Money market funds Level 1 217,498 — — 217,498 217,498 217,498 —

Certificate of deposits and term deposits Level 2 486,770 — — 486,770 486,770 140,829 345,941

AFS securities (1)

Treasury bills Level 1 547 — ( 10 ) 537 537 — 537

Government and governmental agencies Level 2 7,786 — ( 32 ) 7,754 7,754 — 7,754

Corporate debt securities Level 2 139,567 11 ( 738 ) 138,840 138,840 1,514 137,326

$ 147,900 $ 11 $ ( 780 ) $ 147,131 $ 147,131 $ 1,514 $ 145,617

HTM securities (2)

Corporate debt securities Level 2 $ 89,945 $ — $ ( 213 ) $ 89,732 $ 89,945 $ — $ 89,945

$ 89,945 $ — $ ( 213 ) $ 89,732 $ 89,945 $ — $ 89,945

Total $ 949,286 $ 11 $ ( 993 ) $ 948,304 $ 948,517 $ 367,014 $ 581,503

December 31, 2021

Unaudited Audited

Fair value level Adjusted cost basis Unrealized gains Unrealized losses Fair market value Recorded basis Cash and cash equivalents Short-term investments

Cash $ 3,139 $ — $ — $ 3,139 $ 3,139 $ 3,139 $ —

Money market funds Level 1 64,668 — — 64,668 64,668 64,668 —

Certificate of deposits, notes and term deposits Level 2 565,089 — — 565,089 565,089 140,995 424,094

HTM securities (2)

Treasury bills Level 1 199,981 8 — 199,989 199,981 — 199,981

Corporate debt securities Level 2 104,823 — — 104,823 104,823 — 104,823

$ 304,804 $ 8 $ — $ 304,812 $ 304,804 $ — $ 304,804

Total $ 937,700 937700408.11 $ 8 $ — $ 937,708 $ 937,700 $ 208,802 $ 728,898

(1) Changes in fair value of AFS securities are recorded in other comprehensive income.

If unrealized loss is identified as credit loss, this loss will be recorded as finance expenses.

(2) Changes in fair value of HTM securities are presented for disclosure purposes as required by ASC 320 and are recorded as finance expenses only if the unrealized loss is identified as a credit loss.

As of June 30, 2022 and December 31, 2021, all investments and equivalents mature in one year or less.

Unrealized losses from debt securities are primarily attributable to changes in interest rates.

The Company does not believe any remaining unrealized losses represent impairments based on the evaluation of available evidence.

Debt securities with continuous unrealized losses for less than 12 months and their related fair values were as follows:

June 30, 2022

Less than 12 months

Fair value Unrealized loss

Treasury bills $ 537 $ ( 10 )

Other government and governmental agency notes 34,786 —

Government and governmental agencies 7,754 ( 32 )

Corporate debt securities 132,264 ( 738 )

Certificate of deposits, notes and term deposits 485,645 424,094

Total short-term investments $ 741,562 $ 728,898

The Company invests in marketable U.S.

Treasury Bills (“T-bills”), other government and governmental agency notes, term deposits, notes, certificate of deposits, money market funds and corporate debt securities that are classified as "held-to-maturity" or "available for sale" securities.

These investments are presented as cash and cash equivalents or short-term investments, according their maturity periods.

The estimated fair value of the Company’s short-term investments as of March 31, 2022 and December 31, 2021 was $ 741,562 and $ 728,906 , respectively.

As of March 31, 2022 and December 31, 2021, amounts of $ 24,857 and $ 199,988 , respectively were categorized as Level 1 and the remaining balance as level 2 in accordance with ASC 820, “Fair Value Measurements and Disclosures”.

Total $ 140,555 $ ( 780 )

As of June 30, 2022, no continuous unrealized losses for 12 months or greater was identified.

Inventories are stated at the lower of cost or net realizable value.

The weighted average methodology is applied to determine cost.

As of March 31, 2022 and December 31, 2021, the Company’s inventories were composed of:

As of June 30, 2022 and December 31, 2021, the Company’s inventories were composed of:

2022 December 31,

9 unchanged sentences

Pledged deposits and bank guarantees.

As of March 31, 2022 and December 31, 2021, the Company pledged bank deposits of $ 2,344 and $ 2,350 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $ 2,692 and $ 2,698 , respectively .

As of June 30, 2022 and December 31, 2021, the Company pledged bank deposits of $ 2,319 and $ 2,350 , respectively, to cover bank guarantees in respect of its leases of operating facilities and obtained bank guarantees for the fulfillment of the Company’s lease and other contractual commitments of $ 2,642 and $ 2,698 , respectively .

Senior secured revolving credit facility.

1 unchanged sentence

For additional information, see Note 12(c) to the Consolidated Financial Statements in the 2021 10-K.

As of March 31, 2022, the Company had no outstanding balance borrowed under the facility.

As of June 30, 2022, the Company had no outstanding balance borrowed under the facility.

CONVERTIBLE NOTE

1 unchanged sentence

The Notes mature on November 1, 2025, unless earlier repurchased, redeemed or converted as set forth in the Notes.

As of March 31, 2022, the conditions allowing holders of the Notes to convert were not met.

The Notes are therefore not convertible as of March 31, 2022 and are classified as long-term liability.

As of June 30, 2022, the conditions allowing holders of the Notes to convert were not met.

The Notes are therefore not convertible as of June 30, 2022 and are classified as long-term liability.

For additional information, see Note 10(a) to the Consolidated Financial Statements in the 2021 10-K.

The net carrying amount of the liability of the Notes as of March 31, 2022 and December 31, 2021 are as follows:

The net carrying amounts of the liability of the Notes as of June 30, 2022 and December 31, 2021 are as follows:

2022 December 31,

4 unchanged sentences

Net carrying amount of liability component (1) $ 563,846 $ 562,216

(1) An effective interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair value of the net carrying amount of liability component of the Notes as of March 31, 2022 and December 31, 2021 were $ 454,285 and $ 467,469 , respectively.

(1) An effective market interest rate determines the fair value of the Notes, therefore they are categorized as Level 3 in accordance with ASC 820, "Fair Value Measurements and Disclosures." The estimated fair values of the net carrying amount of liability component of the Notes as of June 30, 2022 and December 31, 2021 were $ 430,776 and $ 467,469 , respectively.

Finance expense related to the Notes was as follows:

Three months ended March 31, Year ended December 31,

Unaudited Audited

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021

Unaudited Unaudited Audited

Amortization of debt issuance costs

6 unchanged sentences

Options granted under the 2015 Plan generally have a two-year or four-year vesting period and expire ten years after the date of grant.

Options granted under the 2015 Plan that are canceled or forfeited before expiration become

available for future grants.

Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants.

RSUs granted under the 2015 Plan generally vest over a three year period.

1 unchanged sentence

RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants.

As of March 31, 2022, 17,070,368 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of March 31, 2022 and changes during the period then ended is presented below:

Three months ended March 31, 2022

As of June 30, 2022, 16,945,169 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of June 30, 2022 and changes during the period then ended is presented below:

Six months ended June 30, 2022

of options Weighted

3 unchanged sentences

Forfeited and canceled ( 68,591 ) 79.17

Outstanding as of March 31, 2022 8,935,451 $ 36.38

Outstanding as of June 30, 2022 8,875,777 $ 36.74

Exercisable options 7,189,164 $ 24.86

For the three months ended March 31, 2022, options to purchase 175,650 ordinary shares were exercised, resulting in the issuance of 175,650 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of March 31, 2022 and changes during the period then ended is presented below.

Three months ended March 31, 2022

For the six months ended June 30, 2022, options to purchase 269,961 ordinary shares were exercised, resulting in the issuance of 269,961 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of June 30, 2022 and changes during the period then ended is presented below.

Six months ended June 30, 2022

of RSU/PSUs Weighted

4 unchanged sentences

Forfeited and cancelled ( 64,844 ) 95.64

Unvested as of March 31, 2022 (1) 4,995,559 66.83

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of March 31, 2022, in accordance with ASC 718 as follows:

March 31, 2022

Unvested as of June 30, 2022 (1) 5,058,544 66.88

(1) Includes PSUs that have a mix of service, market and other milestone performance vesting conditions which are vested upon achievements of performance milestones which are not probable, as of June 30, 2022, in accordance with ASC 718 as follows:

June 30, 2022

PSUs Fair value at grant date per PSU Total fair value at grant date

6 unchanged sentences

189,626 $ 114.26 21,667

3,162,141 $ 172,602

These PSUs will be expensed over the performance period when the vesting conditions become probable in accordance with ASC 718.

1 unchanged sentence

In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section.

As of March 31, 2022, 4,954,997 ordinary shares were available to be purchased by eligible employees under the ESPP.

As of June 30, 2022, 4,908,288 ordinary shares were available to be purchased by eligible employees under the ESPP.

The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants.

1 unchanged sentence

We assessed fair value using the following underlying assumptions:

Three months ended March 31, Year ended December 31,

Six months ended June 30, Year ended December 31,

Unaudited Audited

10 unchanged sentences

Dividend yield 0.00 % 0.00 % 0.00 %

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three months ended March 31, 2022 and 2021 and the year ended December 31, 2021 was:

Three months ended March 31, Year ended December 31,

Unaudited Audited

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three and six months ended June 30, 2022 and 2021 and the year ended December 31, 2021 was:

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021

Unaudited Unaudited Audited

Cost of revenues $ 1,029 $ 827 $ 1,981 $ 1,560 $ 3,471

7 unchanged sentences

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per ordinary share:

Three months ended March 31, Year ended December 31,

Unaudited Audited

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021

Unaudited Unaudited Audited

Net income (loss) attributable to ordinary shares as reported used in computing basic and diluted net income (loss) per share $ ( 24,008 ) $ ( 14,641 ) $ ( 28,655 ) $ ( 18,769 ) $ ( 58,351 )

Weighted average number of ordinary shares used in computing basic net income (loss) per share 104,627,789 103,484,866 104,408,164 103,061,557 103,433,274

Potentially dilutive shares that were excluded from the computation of basic net income (loss) per share:

Options — — —

Restricted share units — — —

Weighted average number of ordinary shares used in computing diluted net income (loss) per share 104,627,789 103,484,866 104,408,164 103,061,557 103,433,274

15 unchanged sentences

The Company’s revenues by geographic region, based on the customer’s location, are summarized as follows:

Three months ended March 31, Year ended December 31,

Unaudited Audited

Three months ended June 30, Six months ended June 30, Year ended December 31,

2022 2021 2022 2021

Unaudited Unaudited Audited

United States $ 108,203 $ 87,139 $ 205,619 $ 173,047 $ 353,110

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements